EXHIBIT 10.16
AMENDED AND RESTATED SECURITYHOLDERS' AGREEMENT
DATED JULY 14, 1999
BY AND AMONG
GLOBENET COMMUNICATIONS GROUP LIMITED,
TELEBERMUDA INTERNATIONAL LIMITED,
GLOBENET COMMUNICATIONS LTD.,
ATLANTICA NETWORK (BERMUDA) LTD.,
▇▇▇▇▇▇▇ ▇▇▇▇▇,
TELEBERMUDA (BVI) LIMITED,
IHI HYDRO, INC.,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
BOSTON VENTURES LIMITED PARTNERSHIP V, L.P.,
▇▇▇▇▇ INVESTMENT ASSOCIATES VI, L.P.,
KEP VI, L.L.C.,
PROVIDENCE EQUITY PARTNERS III L.P.,
PROVIDENCE EQUITY OPERATING PARTNERS III L.P.,
SPECTRUM EQUITY INVESTOR III, L.P.,
SEI III ENTREPRENEURS' FUND, L.P.,
SPECTRUM III INVESTMENT MANAGERS' FUND, L.P.,
CAPITAL COMMUNICATIONS CDPQ, INC.,
SANDLER CAPITAL PARTNERS IV, L.P.,
SANDLER CAPITAL PARTNERS IV FTE, L.P.,
ONTARIO MUNICIPAL EMPLOYEES RETIREMENT BOARD,
NAUTILUS EQUITY INVESTORS, L.L.C.,
AND
TD CAPITAL GROUP LIMITED
TABLE OF CONTENTS
Page
----
ARTICLE 1 -- DEFINITIONS........................................................... 2
1.1 Definitions................................................................. 2
1.2 Rules of Construction....................................................... 8
ARTICLE 2 -- MANAGEMENT OF THE COMPANY AND CERTAIN ACTIVITIES...................... 8
2.1 Special Voting Provisions................................................... 8
2.2 Special Board Votes......................................................... 10
2.3 Other Activities of the Holders; Fiduciary Duties........................... 11
2.4 Board Representation........................................................ 11
2.5 Board Materials............................................................. 13
2.6 Subsidiary Boards........................................................... 13
2.7 Committees.................................................................. 13
2.8 Organizational Documents.................................................... 13
ARTICLE 3 -- TRANSFERS OF SECURITIES............................................... 14
3.1 Preemptive Rights........................................................... 14
3.2 Drag-Along Rights........................................................... 16
3.3 Tag-Along Rights............................................................ 18
3.4 Right of First Refusal...................................................... 19
3.5 Exempt Transfers............................................................ 21
3.6 [intentionally omitted]..................................................... 21
3.7 Lock-Up of Senior Management and Additional Investors....................... 21
3.8 Transfer and Exchange....................................................... 21
ARTICLE 4 -- LIMITATION ON TRANSFERS............................................... 22
4.1 Restrictions on Transfer.................................................... 22
4.2 Restrictive Legends......................................................... 22
4.3 Notice of Proposed Transfers................................................ 23
4.4 Termination of Certain Restrictions......................................... 24
4.5 Additional Restrictions on Transactions..................................... 24
4.6 Transfers of Class B Shares................................................. 26
ARTICLE 5 -- ACCESS TO INFORMATION................................................. 26
5.3 Disclosure.................................................................. 28
5.4 Accounting Standards........................................................ 28
5.5 Inquiries and Inspections................................................... 28
5.6 Conduct of Holders.......................................................... 29
5.7 Termination................................................................. 30
ARTICLE 6 -- COVENANTS OF THE CORPORATIONS; COVENANTS OF TDG AND NAUTILUS.......... 30
6.1 Covenants of the Corporations............................................... 30
6.2 Covenant of TDG............................................................. 31
6.3 Covenant of Nautilus........................................................ 31
ARTICLE 7 -- NON-COMPETITION COVENANT.............................................. 32
7.1 Non-Competition by Kedar.................................................... 32
7.2 Other Activities............................................................ 34
i
ARTICLE 8 -- REPRESENTATIONS AND WARRANTIES................................. 34
8.1 Holder Representations............................................... 34
8.2 Kedar and BVI Representations........................................ 35
8.3 Company Representations and Covenants................................ 35
8.4 Representations of the Corporations.................................. 36
8.5 Representation of TDG................................................ 37
8.6 Representation of Non-U.S. Status for CFC Purposes................... 37
8.7 Kedar Representations................................................ 37
8.8 Representation of Nautilus........................................... 37
ARTICLE 9 -- TERMINATION.................................................... 37
ARTICLE 10 -- MISCELLANEOUS................................................. 38
10.1 Notices.............................................................. 38
10.2 Legal Holidays....................................................... 38
10.3 Governing Law; Consent to Jurisdiction............................... 39
10.4 Successors and Assigns............................................... 39
10.5 Counterparts......................................................... 39
10.6 Severability......................................................... 39
10.7 No Waivers: Amendments............................................... 39
10.8 Entire Agreement..................................................... 40
10.9 Remedy for Breach of Section 8.3(c), (d) or (e), 8.5(b) or 8.6....... 40
10.10 Appraisal.......................................................... 40
10.11 Consents........................................................... 41
10.12 Additional Investors............................................... 41
EXHIBIT A -- CURRENT SECURITY OWNERSHIP OF THE HOLDERS
SCHEDULE 2.1(A) --EXISTING OPTIONS AND WARRANTS
SCHEDULE 3.1(A) --PREEMPTIVE RIGHTS
SCHEDULE 3.7 -- SHARES OF SENIOR MANAGEMENT NOT SUBJECT TO SECTION 3.7
ii
AMENDED AND RESTATED
SECURITYHOLDERS' AGREEMENT
THIS AMENDED AND RESTATED SECURITYHOLDERS' AGREEMENT (this
"Securityholders' Agreement"), dated July 14, 1999, is entered into by and among
GlobeNet Communications Group Limited, an exempted company incorporated and
registered pursuant to The Companies Act 1981 of Bermuda (including its
successors, the "Company"), TeleBermuda International Limited, a local company
incorporated and registered pursuant to The Companies ▇▇▇ ▇▇▇▇ of Bermuda
("TBI"), GlobeNet Communications Ltd., an exempted company incorporated and
registered pursuant to The Companies Act 1981 of Bermuda ("GCL"), Atlantica
Network (Bermuda) Ltd., an exempted company incorporated and registered pursuant
to The Companies ▇▇▇ ▇▇▇▇ of Bermuda ("Atlantica"), ▇▇▇▇▇▇▇ ▇▇▇▇▇, an individual
residing in Toronto, Ontario ("Kedar"), TeleBermuda (BVI) Limited, a corporation
incorporated under the laws of the British Virgin Islands ("BVI"), IHI Hydro,
Inc., a corporation incorporated under the Canada Business Corporations Act
("IHI"), Boston Ventures Limited Partnership V, L.P., a Delaware limited
partnership ("BV"), ▇▇▇▇▇ Investment Associates VI, L.P., a Delaware limited
partnership ("▇▇▇▇▇"), KEP VI, L.L.C., a Delaware limited liability company
("KEP"), Providence Equity Partners III L.P., a Delaware limited partnership
("Providence"), Providence Equity Operating Partners III L.P., a Delaware
limited partnership ("PEOP"), Spectrum Equity Investor III, L.P., a Delaware
limited partnership ("Spectrum"), SEI III Entrepreneurs' Fund, L.P., a Delaware
limited partnership ("SEI"), Spectrum III Investment Managers' Fund, L.P., a
Delaware limited partnership ("Managers"), Capital Communications CDPQ, Inc., a
corporation formed under the Companies Act (Quebec) ("CDPQ"), Sandler Capital
Partners IV, L.P. ("Sandler"), Sandler Capital Partners IV FTE, L.P ("SCP"),
Ontario Municipal Employees Retirement Board, a corporation organized under the
laws of Ontario ("OMERS"), Nautilus Equity Investors, L.L.C. ("Nautilus"), and
TD Capital Group Limited, a corporation incorporated under the Canada Business
Corporations Act ("TDG"), and solely for the purposes of Sections 3.2, 3.3 and
3.7 and Articles 4, 9 and 10 hereof, the members of Senior Management listed on
the signature pages hereto and the Additional Investors (as defined herein)
listed on the signature pages hereto, and solely for the purpose of agreeing to
this amendment and restatement, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, an individual residing in
Hamilton, Bermuda ("▇▇▇▇▇▇▇").
WHEREAS, the authorized capital of the Company consists of 24,000,000
common shares having a par value of $1.50 per share, 100 class A restricted
voting shares having a par value of $1.50 per share, and 2,000 class B
restricted voting shares having a par value of $1.50 per share;
WHEREAS, as of this date, the New Investors hold in the aggregate 1,000
Class B Shares and 15,735,257 Common Shares (including 110 Class B Shares and
1,635,286 Common Shares held by IHI), each in such individual amounts as set
forth in Exhibit A attached hereto;
WHEREAS, the Original Investors currently hold in the aggregate 110 Class B
Shares, 2,471,611 Common Shares, and warrants and/or options to purchase 320,000
additional Common Shares, each in such individual amounts as set forth in
Exhibit A attached hereto;
WHEREAS, in connection with their holdings in the Company, the Original
Investors, the Company, TBI, ▇▇▇▇▇▇▇, and Tyco Submarine Systems, Ltd. ("Tyco")
executed that certain Securityholders' Agreement in April of 1999 (the "Original
Agreement");
WHEREAS, on or before the date hereof, Tyco assigned all of its rights and
obligations under the Original Agreement to IHI;
WHEREAS, in connection with and in order to facilitate the investment by
the New Investors in the Company, the Original Investors, ▇▇▇▇▇▇▇, the Company
and TBI wish to amend and restate the Original Agreement in its entirety and to
admit the New Investors, GCL and Atlantica as signatories hereto, such amended
and restated securityholders' agreement to govern the matters set forth herein
with respect to the Corporations;
NOW, THEREFORE, in consideration of the premises, mutual covenants and
agreements hereinafter contained and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1.
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following words and
-----------
phrases shall have the following meanings, respectively:
"Accredited Investor" means either (i) an "Accredited Investor," as defined
in Regulation D, or any successor rule then in effect, or (ii) to the extent
permitted by the laws of any jurisdiction applicable to the Company, an investor
that is not a resident or citizen of the United States of America who is
permitted by the laws of the jurisdiction applicable to that investor to make
the purchase contemplated by this Agreement without the preparation by the
seller or the Company of a prospectus or other qualifying document.
"Accredited Offeree" shall have the meaning provided in Section 3.1 hereof.
"Additional Investor" shall have the meaning provided in Section 10.12.
"Affiliate" means, with respect to any Person, any Person who, directly or
indirectly, controls, is controlled by or is under common control with that
Person. For purposes of this definition, "control" when used with respect to any
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise. Specifically for the purposes of Section 2.2, a Person
shall be deemed to control another Person if it owns 25% or more of such
Person's voting securities or if it has a representative on such Person's board
of directors or other governing body.
"Affiliated Successor" shall have the meaning set forth in Section 3.1
hereof.
2
"Agreement" shall mean this Amended and Restated Securityholders'
Agreement, as such may be amended from time to time.
"Atlantica" shall mean Atlantica Network (Bermuda) Ltd., an exempted
company incorporated and registered pursuant to The Companies ▇▇▇ ▇▇▇▇ of
Bermuda.
"Board of Directors" shall mean the Company's board of directors, as such
is duly constituted pursuant to the Company's bye-laws.
"Business Day" means a day that is not a Legal Holiday.
"BV" shall mean Boston Ventures Limited Partnership V, L.P., a Delaware
limited partnership.
"BVI" shall mean TeleBermuda (BVI) Limited, a corporation incorporated
under the laws of the British Virgin Islands.
"Canadian Majority" shall have the meaning set forth in Section 4.5(b).
"CDPQ" shall mean Capital Communications CDPQ, Inc., a corporation formed
under the Companies Act (Quebec).
"CFC" shall have the meaning set forth in Section 2.4(c).
"Class B Shares" means the class B restricted voting shares, having a par
value of $1.50 per share, of the Company, and any shares into which such class B
restricted voting shares thereafter may be converted.
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended.
"Common Shares" means the common shares, having a par value of $1.50 per
share, of the Company, and any shares into which such common shares thereafter
may be converted.
"Common Share Equivalents" means, without duplication with any Common
Shares, any rights, warrants, options, convertible securities or indebtedness,
exchangeable securities or indebtedness, or other rights, exercisable for or
convertible or exchangeable into, directly or indirectly, Common Shares, whether
at the time of issuance or upon the passage of time or the occurrence of some
future event.
"Company" shall have the meaning set forth in the introductory paragraph
hereof.
"Competitive Business" shall have the meaning set forth in Section 7.1(b)
hereof.
"Controlled Foreign Affiliate" shall have the meaning set forth in Section
4.5 hereof.
"▇▇▇▇▇▇▇" shall mean ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, an individual residing in
Hamilton, Bermuda.
3
"Corporations" shall mean the Company, TBI, GCL and Atlantica.
"Co-Seller" shall have the meaning set forth in Section 3.2 hereof.
"Exchange Act" means the United States Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the SEC thereunder.
"Fully-Diluted Common Shares" means, at any time, the then outstanding
Common Shares plus (without duplication) all Common Shares issuable, whether at
such time or upon the passage of time or the occurrence of future events, upon
the exercise, conversion, or exchange of all then outstanding Common Share
Equivalents if, at the close of business on the Business Day immediately
preceding the date of determination, the exercise price or consideration payable
per share as provided in such Common Share Equivalent is less than or equal to
the fair market value of a Common Share, but excluding Common Share Equivalents
that are not exercisable immediately following the transaction triggering the
event in Section 3.2 or 3.3 giving rise to the determination.
"GCL" shall mean GlobeNet Communications Ltd., an exempted company
incorporated and registered pursuant to The Companies ▇▇▇ ▇▇▇▇ of Bermuda.
"Holder" means (i) an Original Investor, (ii) a New Investor and (iii) any
direct or indirect transferee thereof who shall become a party to this Agreement
pursuant to Section 4.1.
"IHI" shall mean IHI Hydro, Inc., a corporation incorporated under the
Canada Business Corporations Act.
"Immediate Family Members" shall mean with respect to any individual, his
or her parents, grandparents, spouse or ex-spouse(s), siblings, children,
grandchildren and great-grand children.
"Kedar" shall mean ▇▇▇▇▇▇▇ ▇▇▇▇▇, an individual residing in ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇.
"▇▇▇▇▇" shall mean ▇▇▇▇▇ Investment Associates VI, L.P., a Delaware limited
partnership.
"KEP" shall mean KEP VI, L.L.C., a Delaware limited liability company.
"Legal Holiday" shall have the meaning provided in Section 10.2 hereof.
"Managers" shall mean Spectrum III Investment Managers' Fund, L.P., a
Delaware limited partnership.
"Nautilus" shall mean Nautilus Equity Investors, L.L.C.
4
"New Investors" shall mean BV, ▇▇▇▇▇, KEP, Providence, PEOP, Spectrum, SEI,
Managers, CDPQ, Sandler, SCP, OMERS, Nautilus, IHI and TDG, and any transferee
of the Common Shares or Class B Shares currently held by such New Investors who
shall become a party to this Agreement pursuant to Section 4.1.
"Offer Notice" shall have the meaning provided in Section 3.1 hereof.
"Offered Securities" shall have the meaning provided in Section 3.1 hereof.
"OMERS" shall mean Ontario Municipal Employees Retirement Board, a
corporation organized under the laws of Ontario.
"Original Agreement" shall mean that certain Securityholders' Agreement,
executed in April 1999, by and among the Original Investors, ▇▇▇▇▇▇▇ and Tyco.
"Original Investors" shall mean BVI, IHI and Kedar and any transferee of
the Common Shares or Class B Shares currently held by such Original Investors
and admitted as a party to this Agreement pursuant to Section 4.1.
"Original New Investors" shall mean BV, ▇▇▇▇▇, KEP, Providence, PEOP,
Spectrum, SEI, Managers, CDPQ, Sandler, SCP, OMERS, Nautilus, IHI and TDG, and
any Affiliated transferee of the Common Shares or Class B Shares currently held
by such Original New Investors who is admitted as a party to this Agreement
pursuant to Section 4.1.
"Other New Investors" shall have the meaning set forth in Section 3.4
hereof.
"Participation Offer" shall have the meaning provided in Section 3.3
hereof.
"PEOP" shall mean Providence Equity Operating Partners III L.P., a Delaware
limited partnership.
"Person" or "person" means any individual, company, corporation,
partnership, limited liability company, joint venture, association, joint-stock
company, trust, unincorporated organization or government or other agency or
political subdivision thereof.
"Preemptive Rights Offer" shall have the meaning set forth in Section 3.1
hereof.
"Preemptive Rights Transaction" shall have the meaning set forth in Section
3.1 hereof.
"Providence" shall mean Providence Equity Partners III L.P. a Delaware
limited partnership.
"Qualified Public Offering" means an underwritten public offering of Common
Shares pursuant to a prospectus, registration statement, statement of material
facts, or similar document filed with the relevant regulatory body in the United
States or Canada pursuant to which the aggregate gross proceeds to the Company
(prior to deducting any underwriters' discounts and
5
commissions), when added to the aggregate gross proceeds to the Company (prior
to deducting any underwriters' discounts and commissions) from all previous
underwritten public offerings of Common Shares in the United States and/or
Canada, equal or exceed $150 million (or such lesser amount, but not less than
$100 million, as may be approved by the holders of a majority of the Class B
Shares) and following which the Common Shares are listed for trading on the New
York Stock Exchange or on the Nasdaq stock market.
"Registration Rights Agreement" shall have the meaning set forth in
Section 2.1(j).
"Regulation D" means Regulation D promulgated under the Securities Act
by the SEC.
"Required Holders" means New Investors who then hold more than 50% of
the aggregate number of outstanding Class B Shares entitled to vote under this
definition; provided, however, that,
-----------------
(i) in the case of each New Investor that is a "United States person"
(within the meaning of section 957(c) of the Code) and that is not a
"United States shareholder" (within the meaning of section 951(b) of the
Code, as determined without regard to any of the rights or obligations
set forth in this Agreement) of the Company, the number of Class B
Shares considered held by such New Investor for purposes of this
definition shall be deemed reduced so that such New Investor is
considered to have (after taking into account the attribution principles
set forth in section 958 of the Code) less than 10% of the aggregate
number of outstanding Class B Shares entitled to vote under this
definition; and
(ii) in the case of the New Investors that are "United States persons"
(within the meaning of section 957(c) of the Code) and that are not
described in clause (i) hereof, the number of Class B Shares considered
held by such New Investors for purposes of this definition shall be
deemed reduced so that such New Investors are not considered to have,
individually or in the aggregate (after taking into account the
attribution principles set forth in section 958 of the Code), more than
50% of the aggregate number of outstanding Class B Shares entitled to
vote under this definition.
Clause (i) hereof shall be applied prior to clause (ii) hereof and then clause
(i) and (ii) shall be applied repeatedly until no reduction is required pursuant
to either clause. Any reduction pursuant to clause (ii) in the number of Class B
Shares deemed to be held by the New Investors described therein shall be made in
proportion to the number of Class B Shares actually held by such New Investors.
Factual determinations for purposes of this definition shall be reasonably made
in good faith by holders of a majority of the Class B Shares who are "United
States persons" (within the meaning of section 957(c) of the Code).
"ROFR Offeror" shall have the meaning set forth in Section 3.4 hereof.
"ROFR Shares" shall have the meaning set forth in Section 3.4 hereof.
"Sandler" shall mean Sandler Capital Partners IV, L.P.
6
"SCP" shall mean Sandler Capital Partners IV FTE, L.P.
"SEC" means the United States Securities and Exchange Commission.
"Securities" means the Common Shares, the Class A Shares and the Class B
Shares.
"Securities Act" means the United States Securities Act of 1933, as
amended, and the rules and regulations promulgated by the SEC thereunder.
"Securities Act (Ontario)" means the Securities Act of the Province of
Ontario, Canada, R.S.O. 1990, c. S.5, the regulations promulgated thereunder and
all rules, policies, and orders of the Ontario Securities Commission thereunder,
all as amended from time to time.
"SEI" shall mean Spectrum III Entrepreneurs' Fund, L.P., a Delaware limited
partnership.
"Selling Investors" shall have the meaning provided in Section 3.2 hereof.
"Selling ROFR Holder" shall have the meaning set forth in Section 3.4
hereof.
"Senior Facility" means collectively the $10 million senior secured working
capital facility, the $60 million senior secured multiple draw facility, the $80
million senior secured multiple draw facility, the $150 million senior secured
multiple draw facility, and the $100 million senior secured working capital
facility, entered into pursuant to the commitment letter, dated on or about July
9, 1999, by and among the GlobeNet Communications Holdings Ltd., an exempted
Bermuda company and a wholly-owned subsidiary of the Company, as the borrower,
and TD Securities (USA), Inc. and Credit Suisse First Boston Corporation, as the
lead banks, together with certain other financial institutions.
"Senior Management shall have the meaning provided in Section 2.1(j)
hereof.
"Significant Sale" shall have the meaning provided in Section 3.2 hereof.
"Spectrum" shall mean Spectrum Equity Investors III, L.P., a Delaware
limited partnership.
"Subsidiary" of any Person means (i) a corporation a majority of whose
outstanding shares of capital stock or other equity interests with voting power,
under ordinary circumstances, to elect directors, is at the time, directly or
indirectly, owned by such Person, by one or more subsidiaries of such Person or
by such Person and one or more subsidiaries of such Person, and (ii) any other
Person (other than a corporation) in which such Person, a subsidiary of such
Person or such Person and one or more subsidiaries of such Person, directly or
indirectly, at the date of determination thereof, has (x) at least a majority
ownership interest or (y) the power to elect or direct the election of a
majority of the directors or other governing body of such Person.
7
"TBI" shall mean TeleBermuda International Limited, a local company
incorporated and registered pursuant to The Companies ▇▇▇ ▇▇▇▇ of Bermuda.
"TDG" shall mean TD Capital Group Limited, a corporation incorporated under
the Canada Business Corporations Act.
"Transfer" means any disposition of any Security or any interest therein
that would constitute a "sale" thereof within the meaning of the Securities Act.
"Transfer Notice" shall have the meaning provided in Section 4.3 hereof.
"Tyco" shall mean Tyco Submarine Systems, Ltd., a Delaware corporation.
"U.S. Majority" shall have the meaning provided in Section 2.4(c) hereof.
1.2 Rules of Construction. Unless the context otherwise requires
---------------------
(a) a term has the meaning assigned to it;
(b) words in the singular include the plural, and words in the plural
include the singular;
(c) "herein," "thereof" and other words of similar import refer to this
Agreement as a whole and not to any particular Article, Section or other
subdivision; and
(d) all dollars or "$" referred to herein are United States dollars.
ARTICLE 2.
MANAGEMENT OF THE COMPANY AND CERTAIN ACTIVITIES
2.1 Special Voting Provisions. The Company hereby covenants and agrees
-------------------------
that it shall not take (and shall cause each of its Subsidiaries not to take)
any of the following actions without the prior approval of the Required Holders:
(a) issue any Common Shares, Common Share Equivalents or any other equity
securities or securities convertible into or exercisable for equity securities
of the Company or any of its Subsidiaries; provided, however, that nothing
contained herein shall limit the Company's ability to (i) issue such securities
with respect to the exercise of options or warrants to purchase Company
securities granted (x) pursuant to any employee, officer or director share
option or share purchase plan, benefit plan or arrangement previously approved
by the Board of Directors and set forth on Schedule 2.1(a) hereto or approved by
the Board of Directors (or the compensation committee thereof) after the date
hereof, or (y) pursuant to options or warrants the grant of which was previously
approved by the Board of Directors and set forth on Schedule 2.1(a) hereto or
approved by the Board of Directors and the Required Holders after the date
hereof, or (ii) issue in any consecutive 12-month period equity securities or
securities convertible
8
into or exercisable for equity securities of the Company constituting no more
than 20% of the outstanding class of such securities on a fully-diluted basis so
long as no Person (together with its Affiliates) would obtain more than 25% of
the securities issued pursuant to this Section 2.1(a)(ii) during such 12 month
period; and provided further that any securities issued pursuant to this Section
2.1(a)(ii) shall be issued by the Company solely with respect to or in
connection with (A) any acquisitions of equity interests or operating assets by
the Company or its Affiliates, (B) the entering into of joint ventures,
partnerships, or other similar arrangements by the Company or its Affiliates, or
(C) the entering into of capacity swaps, joint construction agreements or other
similar arrangements by the Company or its Affiliates;
(b) issue any Class B Shares or class A restricted voting shares of the
Company or any of its Subsidiaries or securities convertible into or
exchangeable for Class B Shares or class A restricted voting shares of the
Company or any of its Subsidiaries;
(c) declare or pay any dividends (or other distributions with respect to
equity securities) or repurchase or redeem any equity securities other than in
connection with the self-tender for $30.6 million of Common Shares contemplated
by the offer made by the Company to its shareholders in July 1999; provided,
however, that nothing contained herein shall limit the Company's ability to
declare and pay a dividend if, in the opinion of legal counsel reasonably
acceptable to the Required Holders, the payment of such dividend is necessary to
avoid or ameliorate an adverse tax consequence arising under the United States
federal income tax laws or Canadian income tax laws applicable to the Company or
any of the New Investors and in connection with the holding of Common Shares;
(d) sell, lease or exchange (other than in the ordinary course of
business) any material assets or rights of the Company and its Subsidiaries
(taken as a whole), such as, but not limited to, the sale or lease of (i) more
than ▇▇▇ ▇▇▇-▇ ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇ the Company's undersea fiber optic cable
system in one transaction or a series of related transactions, (ii) more than
25% of the other assets or holdings of the Company or its Subsidiaries (taken as
a whole), in one transaction or a series of related transactions; or (iii) a
material interest in any material Subsidiary (whether by sale or issuance of
shares);
(e) incur indebtedness or guarantee the payment of indebtedness except to
the extent (i) such indebtedness (whether incurred or guaranteed), together with
all indebtedness then outstanding (other than indebtedness described in clauses
(ii), (iii) or (iv)), does not exceed in the aggregate $25 million in
outstanding principal amount at any time, not including for this purpose any
indebtedness permitted by clause (ii), (iii) and (iv) hereof, (ii) such
indebtedness constitutes trade payables occurring in the ordinary course of
business, (iii) such indebtedness is incurred pursuant to the Senior Facility,
or (iv) such indebtedness is incurred pursuant to the pending offering of $300
million of senior notes, pursuant to the Company's offering memorandum, dated as
of July 8, 1999, as such may be amended or supplemented prior to the
consummation of such offering.
(f) adopt any annual budget or business plan, or make any amendments to
such annual budgets or business plans; provided, however, that this provision
shall not apply to budgeted amounts (whether incurred in 1999 or otherwise)
approved by the Company's Board of
9
Directors prior to the date hereof with respect to the construction of the
Atlantica-1 network (other than the construction or completion of an undersea
ring from Fortaleza to and from ▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, which specifically is subject to this Section 2.1), to the extent
such budgeted amounts are reflected in the supplemental letter, dated July 9,
1999, from the Company to the New Investors.
(g) invest or commit or agree to invest in equity investments in an amount
in excess of 5% above the amount contemplated for equity investments by the most
recent annual budget or business plan, or make or commit or agree to make
capital expenditures in an amount in excess of 5% above the amount contemplated
for capital expenditures by the most recent annual budget or business plan;
(h) merge, amalgamate, or consolidate with any other Person;
(i) effect any reorganization or recapitalization, or any combination or
reclassification of the Company's shares;
(j) hire or fire ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇,
or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or any other member of the Company's senior management team
designated by the Board of Directors (hereinafter "Senior Management"), provided
further that the Company shall use its commercially reasonable efforts to
require such Persons to become a party to this Agreement and the Registration
Rights Agreement, dated of even date herewith, by and among the Company and
certain of its shareholders, as such agreement may be amended from time to time
(the "Registration Rights Agreement");
(k) terminate or suspend construction under the Project Development and
Construction Contract entered into by and among Atlantica, Alcatel Submarine
Networks, and Alcatel Submarine Networks, Ltd.; or
(l) adopt any material amendment to any license or contract disclosed to
the New Investors on Schedules 4.1(d) and 4.1(f), respectively, to the
Subscription Agreements, dated June 16, 1999, by and between the Company and the
New Investors.
2.2 Special Board Votes. The approval of a majority (by headcount) of
-------------------
the disinterested members of the Board of Directors of the Company shall be
required for the Company or any of its Subsidiaries to enter into any contract
or agreement with, to provide any services to, or to accept any services from
any Affiliate of the Company or of any member of Senior Management, or from any
New Investor or Additional Investor or any Affiliate thereof, unless the
consideration payable under such contract, agreement or arrangement, when
considered together with all other contracts, agreements or arrangements entered
into by and between the Company and such Person (collectively with each of its
Affiliates) calls for aggregate consideration payable by the Company of less
than $1 million.
2.3 Other Activities of the Holders; Fiduciary Duties. It is
-------------------------------------------------
understood and accepted that the Holders and their Affiliates have interests in
other business ventures which may be in conflict with the activities of the
Company and its Subsidiaries and that, subject to applicable
10
law and Article 7 hereof, nothing in this Agreement shall limit the current or
future business activities of the Holders whether or not such activities are
competitive with those of the Company and its Subsidiaries. Nothing in this
Agreement, express or implied, shall relieve any officer or director of the
Company or any of its Subsidiaries, or any Holder, of any fiduciary or other
duties or obligations they may have to the Company or its shareholders.
2.4 Board Representation.
--------------------
(a) If any of the Persons named in Bye-Law 2A(7)(d) of the Company's Bye-
Laws, together with such Person's Affiliates, shall at any time reduce its
Common Share holdings in the Company to less than 880,000 Common Shares
(adjusted, as appropriate, for stock splits or bonus issuances, reverse stock
splits or consolidations, reclassifications, stock dividends or similar
transactions) by reason of a transfer (or series of transfers) to an Original
New Investor (or an Affiliate thereof) of 880,000 or more Common Shares, then in
such circumstances the holders of the Class B Shares shall take such action as
they can (exercising commercially reasonable efforts) to (i) amend Bye-Law
2A(7)(d) to provide that the director (and alternate director) formerly
appointed by such Person shall instead be appointed by the Original New Investor
(or its Affiliate) that acquires such Common Shares, in which event such party's
appointment rights shall also be subject to this Section 2.4, and (ii) cause the
current director (and alternate director) appointed by such Person to be
replaced by the appointee of such Original New Investor (or an Affiliate
thereof).
(b) If any of the Persons named in Bye-Law 2A(7)(d) of the Company,
together with such Person's Affiliates, shall at any time reduce its Common
Share holdings to less than 880,000 Common Shares (adjusted as appropriate, for
stock splits or bonus issuances, reverse stock splits or consolidations,
reclassifications, stock dividends or similar transactions) by reason of a
transfer to which Section 2.4(a) does not apply, then the holders of the Class B
Shares shall take such action as they can (exercising commercially reasonable
efforts) to (i) amend Bye-Law 2A(7)(d) to provide that the director (and
alternate director) formerly appointed by such Person shall instead be appointed
by one or more of the holders of Class B Shares selected by the Required
Holders, and (ii) cause the current director (and alternate director) appointed
by such Person to be replaced by the appointee of one or more of the holders of
Class B Shares selected by the Required Holders, provided that the selection of
such holder(s) of Class B Shares must be made in a manner that does not cause
the Company to breach the representations made in Section 8.3(c) or (e).
(c) A resolution described in Bye-Law 2A(7)(e) of the Company, providing
for the amendment of the number of votes to which directors of the Company are
entitled, may be approved by holders of a majority of the Class B Shares held by
New Investors who are "U.S. persons" within the meaning of section 957(c) of the
Code (a "U.S. Majority") only if (i) the U.S. Majority has made its
determination with respect to the Company's status as a "controlled foreign
corporation" for U.S. federal income tax purposes (a "CFC") based on advice of a
nationally recognized U.S. law firm and after consultation with Providence and
Spectrum, and (ii) the amendment of the number of votes to which directors are
entitled is determined in accordance with the following principles:
11
(A) If the U.S. Majority determines that the amendment is reasonably
necessary to prevent either Providence or Spectrum from being considered a
"United States shareholder" (within the meaning of section 951(b) of the Code),
then the voting rights of any director appointed by such Person (but not the
other Person except to the extent necessary to prevent such other Person from
being considered a "U.S. shareholder" (within the meaning of section 951(b) of
the Code)) shall be reduced by increasing the number of votes the other
directors are entitled to cast until Providence and Spectrum would reasonably be
expected not to be considered a "United States shareholder" (within the meaning
of section 951(b) of the Code); provided that without such Person's consent the
voting rights of any director appointed by such Person shall not be reduced
pursuant to this Section 2.4(c)(A) to the extent such reduction would cause such
Person to own (directly and by attribution) less than 9.8% of the total combined
voting power of all classes of stock entitled to vote within the meaning of
Section 951(b) of the Code).
(B) If the U.S. Majority determines that the amendment is reasonably
necessary to prevent ▇▇▇▇▇ and BV from being treated as owning (directly and by
attribution) individually or in the aggregate more than 50% of the total
combined voting power of all classes of shares of the Company entitled to vote
(within the meaning of section 957(a)(1) of the Code), then the voting rights of
the directors appointed by ▇▇▇▇▇ and BV shall be reduced by increasing the
number of votes other directors (excluding those appointed by New Investors who
are "U.S. persons" within the meaning of section 957(c) of the Code) are
entitled to cast by the least number necessary such that, following such
reduction, ▇▇▇▇▇ and BV would no longer reasonably be expected to be treated as
owning (directly and by attribution) individually or in the aggregate more than
50% of the total combined voting power of all classes of shares of the Company
entitled to vote (within the meaning of section 957(a)(1) of the Code).
(C) If due to a change in law or circumstance the U.S. Majority
determines that it would be possible to (i) reverse (in whole or in part) any
reduction in the number of votes cast by directors appointed by Providence or
Spectrum pursuant to clause (A) hereof or (ii) reapportion votes from directors
appointed by ▇▇▇▇▇ and BV to the directors appointed by Providence and Spectrum,
in each case without causing the Company to become a CFC, then the New Investors
who are "U.S. persons" within the meaning of section 957(c) of the Code shall
adopt a resolution pursuant to Bye-Law 2A(7)(e) of the Company providing for the
voting rights of the directors appointed by Providence and Spectrum to be so
increased (but not to the extent that the voting rights of the directors
appointed by Providence and Spectrum would exceed the voting rights of the
directors appointed by ▇▇▇▇▇ and BV).
(D) If due to a change in law or circumstance the U.S. Majority
determines that it would be possible to reverse (in whole or part) a prior
adjustment to the votes of the directors pursuant to clause (B) hereof without
causing ▇▇▇▇▇ and BV to be treated as owning (directly and by attribution) in
the aggregate more than 50% of the total combined voting power of all classes of
shares of the Company entitled to vote (within the meaning of section 957(a)(1)
of the Code), then the New Investors who are "U.S. persons" within the meaning
of section 957(c) of the Code shall adopt a resolution pursuant to Bye-Law
2A(7)(e) of the Company providing for an adjustment to the votes of the
directors that effects such reversal.
12
(E) In no event shall any such amendment reduce the proportionate
number of votes to which any director appointed by a New Investor who is not a
"U.S. person" within the meaning of section 957(c) of the Code is entitled in
relation to the total number of votes to which all of the directors are entitled
on the date hereof (without taking into account any changes made pursuant to
this Section 2.4(c)), unless such reduction is consented to by such New
Investor.
If requested by Providence or Spectrum, the New Investors who are "U.S. persons"
(within the meaning of section 957(c) of the Code) will make a good-faith
determination whether it is possible to adopt a resolution of the type described
in clause (C) above, and, if a U.S. Majority determines that it would be
possible to adopt such a resolution, such U.S. Majority shall approve such a
resolution. To the extent appropriate, the limitations set forth in this Section
2.4(c) on the ability of the New Investors to adopt a resolution described in
Bye-Law 2A(7) of the Company shall be interpreted to apply to transferees of
▇▇▇▇▇, BV, Providence or Spectrum, as the case may be. All determinations under
this Section 2.4(c) (other than Section 2.4(c)(E)) shall be made by the U.S.
Majority.
2.5 Board Materials. The Company shall deliver to each Original New
---------------
Investor or its Affiliated designee, so long as such Original New Investor (and
its Affiliates) owns 250,000 or more Common Shares (adjusted, as appropriate,
for stock splits or bonus issuances, reverse stock splits or consolidations,
reclassifications, stock dividends, and similar transactions), (a) copies of all
materials distributed to the Board of Directors of the Company, and (b) notice
of all actions taken by the Board of Directors of the Company.
2.6 Subsidiary Boards. The Company shall, to the extent requested by the
-----------------
Required Holders, take such action as may be necessary to cause the board of
directors of each of the Company's Subsidiaries to consist of the same directors
as the Board of Directors of the Company.
2.7 Committees. The Company shall, to the extent requested by the
----------
Required Holders and to the extent permissible under applicable law and stock
exchange rules, take such action as may be necessary to cause each committee of
the Board of Directors of the Company and each committee of the board of
directors of each of the Company's Subsidiaries to be constituted such that the
persons appointed to the Board of Directors by the New Investors shall sit on
such committees in the same proportion as the proportion of directors appointed
to the Board of Directors by the New Investors.
2.8 Organizational Documents.
------------------------
(a) No New Investor (the "first investor") shall vote in favor of any
amendment to the Company's Bye-Laws or other constitutional documents if such
amendment adversely and discriminatorily changes (i) the rights and obligations
of any other New Investor or New Investors (or their Affiliates) in a manner
that is materially different from the change in the rights and obligations of
the first investor, or (ii) the number of directors or the rights to appoint the
directors, unless such amendment is required by the provisions of this Agreement
or the New Investor or New Investors affected thereby shall have consented
thereto in writing.
13
(b) In the event that (i) there is a change in law or facts, (ii) as a
result of such change in law or facts, the grant to Spectrum and Providence of a
right to vote in the election of the independent directors (on the same terms as
the shareholders of the Company that are otherwise entitled to vote in the
election of such directors) will not cause the Company to be a CFC, and (iii)
Spectrum and Providence provide the Company with an opinion of a nationally
recognized United States law firm, in a form and substance reasonably acceptable
to the Company and the holders of a majority of the Common Shares held by the
New Investors who are United States persons within the meaning of section 957(c)
of the Code (which majority shall be deemed to have approved such opinion if no
objection is raised by one or more of such New Investors with the Company,
Spectrum and Providence within 20 days of the receipt of such proposed opinion
by such New Investors), to the effect that the grant of such a right to Spectrum
and Providence will not cause the Company to be a CFC, then the Company and each
New Investor shall take such steps as they can (using commercially reasonable
efforts) to amend this Agreement and the Bye-Laws and other constitutional
documents of the Company to permit Spectrum and Providence to be granted such a
right. The Company and each party to this Agreement will provide counsel such
information as is reasonably necessary in order to render such opinion, and
counsel shall be entitled to rely upon such information in rendering such
opinion.
2.9 Termination. The terms and provisions of this Article 2 shall
-----------
terminate upon the earlier of (a) the completion by the Company of a Qualified
Public Offering, or (b) the New Investors (together with their Affiliates)
holding in the aggregate less than 4,000,000 Common Shares (adjusted, as
appropriate, for stock splits or bonus issuances, reverse stock splits or
consolidations, reclassifications, stock dividends and similar transactions),
and upon either such event the holders of the Class B Shares shall take such
actions as they can (exercising commercially reasonable efforts) to (i) amend
Bye-Law 2A(7)(d) to provide that the directors previously appointed or elected
pursuant to the provisions of this Article 2 shall thereafter be elected by
holders of the Common Shares, and (ii) cause the current directors (and
alternate directors) appointed or elected pursuant to this Article 2 to be
replaced by Persons so elected.
ARTICLE 3.
TRANSFERS OF SECURITIES
3.1 Preemptive Rights.
-----------------
(a) Rights to Participate in Future Sales. In case the Company or any
-------------------------------------
Affiliated Successor (as hereinafter defined) proposes to issue or sell any
Common Shares or Common Share Equivalents (the "Offered Securities"), the
Company shall, no later than 30 days prior to the consummation of such
transaction (a "Preemptive Rights Transaction"), give notice in writing (the
"Offer Notice") to each Holder of such Preemptive Rights Transaction.
(i) The Offer Notice shall describe the proposed Preemptive Rights
Transaction, identify the proposed purchaser (and its controlling
Affiliates, if any), and contain an offer (the "Preemptive Rights Offer")
to sell to each Holder (or its assignee; provided that no consideration is
paid or payable to the Holder in respect of the assignment of such right)
who certifies (to the reasonable satisfaction of the Company)
14
that such Holder (or such assignee) is an Accredited Investor (an
"Accredited Offeree") and that no consideration is paid or payable for the
assignment of such rights, if applicable, at the same price and for the
same consideration to be paid by the proposed purchaser (or the equivalent
amount in cash), all or part of such Accredited Offeree's pro rata portion
of the Offered Securities (which shall be the percentage ownership of the
Fully-Diluted Common Shares held by such Holder (considered, for this
purpose, together with its Affiliates), excluding, for the purposes of such
calculation, any Common Shares issuable upon exercise of any Common Share
Equivalents granted pursuant to any employee, officer or director share
option or share purchase plan, benefit plan or arrangement); provided that
the Company shall be free to reallocate the Offered Securities for the
purposes hereof to the extent necessary to prevent the making or acceptance
of an offer in respect of fractional Offered Securities.
(ii) Each Holder (or assignee) electing to purchase all or part of
its pro rata portion of the Offered Securities shall notify the Company in
writing within 15 days after its receipt of the Offer Notice of the number
of Offered Securities it elects to purchase, and shall tender on or before
the close of such 15-day period the purchase price for such Offered
Securities. If requested during such 15-day period, the Company shall
advise each Holder of the names of each Holder who has responded (or
assignee who has responded) to such Offer Notice and the number of Offered
Securities in respect of which each has elected to purchase. The Company
shall issue the purchased Offered Securities to the electing and tendering
Holders (or assignees) upon the close of such 15-day period, and shall
cause its registrar and transfer agent to deliver to such Holders (or
assignees) as soon as practicable thereafter, certificates representing the
Offered Securities registered in their respective names in an aggregate
number equal to the number of Offered Securities purchased by them.
(iii) If any such Holder fails to accept such offer by written notice
within 15 days after its receipt of the Offer Notice, fails to elect to
purchase all of its prescribed share or fails to timely tender the purchase
price for such Offered Securities, the Company or such Affiliated Successor
may proceed with the proposed issue or sale of the remaining Offered
Securities, free of any right on the part of such Holder under this Section
3.1(a) in respect thereof, provided that such issuance or sale occurs in
compliance with the terms and conditions set forth in the Offer Notice.
The sale of such securities shall not constitute a waiver of any claims for
damages or otherwise the Company may have against an electing Holder (or
designee) who fails to timely tender the purchase price for such Offered
Securities.
(iv) As used herein, the term "Affiliated Successor" means a
successor entity to the Company (whether by merger, amalgamation
consolidation, reorganization, or otherwise) in which the Holders own (as a
group) at least the same percentage of the fully-diluted common stock of
such entity (after giving effect to the merger, amalgamation,
consolidation, reorganization, or other transaction) as the Holders own (as
a group) of the Fully-Diluted Common Shares of the Company, excluding, for
the purposes of such calculation, any Common Shares issuable upon exercise
of any
15
Common Share Equivalents granted pursuant to any employee, officer or
director share option or share purchase plan, benefit plan or arrangement.
(b) Exceptions to Preemptive Rights. This Section 3.1 shall not apply to
-------------------------------
(i) issuances or sales of Common Shares or Common Share Equivalents to
employees, officers, and/or directors of the Company and/or any of its
Subsidiaries pursuant to employee, officer or director share option or share
purchase plans, benefit plans or arrangements of the Company and/or its
Subsidiaries which have been approved by the Board of Directors of the Company,
(ii) issuances or sales of Common Shares or Common Share Equivalents upon the
exercise of any currently outstanding options or warrants evidenced on Exhibit A
attached hereto or any Common Share Equivalent which, when issued, was subject
to or exempt from the preemptive rights under this Section 3.1 and, to the
extent in existence on the date hereof, which are set forth on Schedule 3.1(b)
hereto, (iii) securities distributed or set aside ratably to all holders of
Common Shares and Common Share Equivalents (or any class or series thereof) on a
per share equivalent basis, or (iv) issuances or sales of Common Shares or
Common Share Equivalents pursuant to a registered and broadly distributed
underwritten public offering, a merger or amalgamation of the Company or a
Subsidiary of the Company into or with another entity or an acquisition by the
Company or a Subsidiary of the Company of another business or corporation if
such transaction was approved in accordance with the Bye-laws of the Company and
the terms of this Agreement. In the event of any issuances or sales of Common
Shares or Common Share Equivalents as a unit with any other security of the
Company or its Subsidiaries, the preemptive rights under this Section 3.1 shall
be applicable to the entire unit rather than only the Common Shares or Common
Share Equivalent included in the unit.
(c) Designees. Any party exercising a Holder's preemptive rights
---------
hereunder shall take any Common Shares or Common Share Equivalents acquired
pursuant to such exercise subject to Article III and Article IV of this
Agreement, and such Holder shall ensure that such party shall execute a
counterpart to this Agreement or such other instrument as may be required by the
Company to acknowledge such party's obligations and benefits hereunder.
(d) Termination. This Section 3.1 shall terminate immediately prior to,
-----------
and shall not be exercisable in connection with, the completion by the Company
of a Qualified Public Offering.
3.2 Drag-Along Rights.
-----------------
(a) Applicability. In connection with any proposed Transfer after the
-------------
third anniversary of the date hereof by New Investors (the "Selling Investors")
of more than 50% of the Company, whether structured as a sale of shares,
amalgamation, merger, recapitalization, sale of assets or otherwise (a
"Significant Sale") other than a Transfer to a New Investor pursuant to Section
3.4 hereof, the Selling Investors shall have the right to require each non-
selling Holder, member of Senior Management and Additional Investor (each, a
"Co-Seller") to Transfer a portion of its Common Shares which represents the
same percentage of the Fully-Diluted Common Shares held by such Co-Seller as the
shares being disposed of by the Selling Investors represent of the Fully-Diluted
Common Shares held by the Selling Investors (adjusted for the effects of any
rights exercised under this Section 3.2). Each Co-Seller shall, to the extent
16
necessary to enable such Co-Seller to meet its obligations hereunder, convert
its Common Share Equivalents into Common Shares, if convertible at such time.
All Common Shares Transferred by Co-Sellers pursuant to this Section 3.2 shall
be sold at the same price and otherwise treated identically with the Common
Shares being sold by the Selling Investors in all respects including, without
limitation, with respect to representations and warranties, escrow arrangements
and indemnification; provided, however, that any representations and warranties
relating specifically to any Selling Investor or Co-Seller shall be made only by
that Selling Investor or Co-Seller and any indemnification provided by any such
Selling Investor or Co-Seller with respect to such representations and
warranties shall be on a several, not joint, basis. Any indemnification for
breaches of representations and warranties and covenants relating to the Company
generally shall be limited to an escrowed amount and each Co-Seller's liability
with respect thereto shall be pro rata, based on the number of Common Shares
being sold by each Co-Seller and the Selling Investors. All fees and expenses
incurred in connection with a Significant Sale pursuant to this Section 3.2,
including, without limitation, investment banking fees and expenses, shall be
borne ratably by the Selling Investors and the Co-Sellers. No Selling Investor
or Co-Seller shall exercise any dissenter's rights with respect to the
consummation of any Significant Sale pursuant to this Section 3.2.
(b) Notice of Significant Sale. The Selling Investors shall give each Co-
--------------------------
Seller at least 30 days' prior written notice of any Significant Sale as to
which the Selling Investors intend to exercise their rights under Section 3.2.
If the Selling Investors elect to exercise their rights under Section 3.2, the
Co-Sellers shall take such actions as may be reasonably required and otherwise
cooperate in good faith with the Selling Investors in connection with
consummating the Significant Sale (including, without limitation, the voting of
any Common Shares or other voting shares of the Company to approve such
Significant Sale or to amend the Bye-Laws of the Company or to cause directors
of the Company to be replaced in connection therewith). At the closing of such
Significant Sale, each Co-Seller shall deliver certificates for all Common
Shares to be sold by such Co-Seller, duly endorsed for transfer, with the
signature guaranteed, to the purchaser against payment of the appropriate
purchase price.
(c) Cooperation. Subject to applicable laws and any fiduciary duties
-----------
arising thereunder, the Company and the members of Senior Management party to
this Agreement shall use all reasonable efforts to cooperate with the Selling
Investors in connection with a proposed Significant Sale pursuant to this
Section 3.2, including, without limitation, by providing or not preventing the
Selling Investors from providing information (which may be confidential
information) to the proposed purchaser and its advisors in order to enable such
proposed purchaser to evaluate the proposed Significant Sale, provided that such
proposed purchaser enters into a customary confidentiality agreement with the
Company.
3.3 Tag-Along Rights.
----------------
(a) Applicability. In the event some or all of the New Investors desire
-------------
to effect a Significant Sale after the third anniversary of the date hereof
(including a sale to a New Investor pursuant to Section 3.4 hereof) and they do
not elect to exercise their rights (if any) under Section 3.2 hereof, then at
least 30 days prior to the closing of such Significant Sale, the Selling
Investors shall make an offer (the "Participation Offer") to each Co-Seller to
include in the
17
proposed Significant Sale up to a portion of his or its Common Shares which
represents the same percentage of such Co-Seller's Fully-Diluted Common Shares
as the shares being sold by the Selling Investors represent of their Fully-
Diluted Common Shares (taking into account any reduction pursuant to Section
3.3(b) in the number of shares to be sold by the Selling Investors); provided
that, if the consideration to be received by the Selling Investors includes any
securities, only Co-Sellers who have certified to the reasonable satisfaction of
the Selling Investors that they are Accredited Investors shall be entitled to
participate in such Transfer, unless the transferee consents otherwise.
(b) Terms of Participation Offer. The Participation Offer shall describe
----------------------------
the terms and conditions of the proposed Significant Sale and shall be
conditioned upon (i) the consummation of the transactions contemplated in the
Participation Offer with the transferee named therein, and (ii) each Co-Seller's
execution and delivery of all agreements and other documents as the Selling
Investors are required to execute and deliver in connection with such
Significant Sale; provided, however, that any representations and warranties
relating specifically to any Selling Investor or Co-Seller shall be made only by
that Selling Investor or Co-Seller and any indemnification provided by any such
Selling Investor or Co-Seller with respect to such representations and
warranties shall be on a several, not joint, basis. Any indemnification for
breaches of representations and warranties and covenants relating to the Company
generally shall be limited to an escrowed amount and each Co-Seller's liability
with respect thereto shall be pro rata, based on the number of Common Shares
being sold by each Co-Seller and the Selling Investors. All fees and expenses
incurred in connection with a Significant Sale pursuant to this Section 3.3,
including, without limitation, investment banking fees and expenses, shall be
borne ratably by the Selling Investors and the Co-Sellers. No Selling Investor
or Co-Seller shall exercise any dissenter's rights with respect to the
consummation of any Significant Sale pursuant to this Section 3.3. If any Co-
Seller shall accept the Participation Offer, the Selling Investors shall reduce,
to the extent necessary, the number of Common Shares they otherwise would have
sold in the proposed Transfer so as to permit those Co-Sellers who have accepted
the Participation Offer to sell the number of Common Shares that they are
entitled to sell under this Section 3.3, and the Selling Investors and such Co-
Sellers shall Transfer the number of Common Shares specified in the
Participation Offer to the proposed transferee in accordance with the terms of
such transfer as set forth in the Participation Offer.
(c) Applicability of Section 3.4. Notwithstanding anything to the
----------------------------
contrary contained herein, a Transfer by a Co-Seller pursuant to this Section
3.3 shall not be subject to Section 3.4 of this Agreement.
3.4 Right of First Refusal.
----------------------
(a) Notice Regarding Offer to Purchase Common Shares. Except in the
------------------------------------------------
context of a Significant Sale in which the Selling Investors exercise their
rights pursuant to Section 3.2 of this Agreement, no New Investor (hereinafter
referred to as a "Selling ROFR Holder") shall Transfer any of its Common Shares
to any Person, except as otherwise permitted by this Agreement, unless such
Selling ROFR Holder shall first deliver to the other New Investors and to the
Company a written notice (a "Notice") stating:
18
(i) that such Selling ROFR Holder has received a bona fide offer
(which may be conditional) from an offeror (the "ROFR Offeror") to purchase
all or a portion of the Common Shares owned by such Selling ROFR Holder and
to assume the obligations of such Selling ROFR Holder under this Agreement
with regard to the Common Shares and Class B Shares to be sold;
(ii) the name and address of the ROFR Offeror and its controlling
Affiliates, if any;
(iii) the number and type of Common Shares (including for this
purpose, Class B Shares) which the Selling ROFR Holder desires to sell (the
"ROFR Shares");
(iv) the price currently being offered to the Selling ROFR Holder
by the ROFR Offeror, including the terms of payment and the other terms of
such offer;
(v) the proposed closing date of the transaction; and
(vi) a copy of the written offer, if any, from the ROFR Offeror;
provided, that any such Notice stating a proposed closing date less than 90 days
after the date of delivery of the Notice to the Company and to the New Investors
shall be null and void and of no legal force or effect. Such Notice shall
constitute an offer to sell all, but not less than all, of the ROFR Securities
to the New Investors and their Affiliates (other than the Selling ROFR Holder
and its Affiliates) (collectively, the "Other New Investors") on the terms and
conditions stated in the Notice, subject to Section 3.4(e) below.
(b) Rights of Other New Investors to Purchase. Upon the receipt of the
-----------------------------------------
Notice described in Section 3.4(a) above, each Other New Investor shall then
have the right within ten days after receipt of such Notice to notify the
Selling ROFR Holder in writing of his or its election to purchase some or all of
the ROFR Shares offered for sale. Each electing Other New Investor shall have
the right to purchase the number of ROFR Shares equal to the product of (i) the
number of ROFR Shares offered for sale multiplied by (ii) the quotient of (A)
the number of Fully-Diluted Common Shares held by such Other New Investor
divided by (B) the number of Fully-Diluted Common Shares held by all of the
Other New Investors. To the extent one or more Other New Investors do not
exercise their rights in full pursuant to this Section 3.4, each electing Other
New Investor shall be entitled (but not obligated) to purchase the remaining
ROFR Shares in an amount equal to the maximum number of ROFR Shares such Other
New Investor elected to purchase less the number of ROFR Shares it is entitled
to purchase pursuant to the preceding sentence; provided that if (x) the
remaining ROFR Shares are oversubscribed, such remaining ROFR Shares shall be
allocated to the electing Other New Investors who desire to purchase such
remaining ROFR Shares pro rata on the basis of the maximum number of ROFR Shares
stated in their election notices, and (y) the remaining ROFR Shares are
undersubscribed, the Selling ROFR Holder shall give the Other New Investors
notice to that effect and any Other New Investor may elect to purchase all or a
portion of such remaining ROFR Shares (which shall be allocated on the basis of
maximum subscriptions therefor in the event of an oversubscription) within five
days of such additional notice. If the ROFR Shares are
19
fully subscribed for by the Other New Investors, the Selling ROFR Holder shall
sell such ROFR Shares to the Other New Investors at the price and terms
disclosed in the Notice (except that such closing shall be held as soon as
practicable after all of the ROFR Shares are subscribed for). If any Other New
Investor fails to notify the Selling ROFR Holder and the Company within the ten
days of its election or shall elect not to purchase all of its pro rata portion
of the ROFR Shares subject to the offer, such Other New Investor's right to
purchase the ROFR Shares not subscribed for subject to the offer on the terms of
such offer shall terminate.
(c) Sale to ROFR Offeror. If the Other New Investors do not elect to (or
--------------------
otherwise fail to) purchase all of the ROFR Shares, the Selling ROFR Holder may
accept or reject all or a portion (on a pro rata basis) of the acceptances from
the Other New Investors and may, within a period of 90 days from the date the
Notice was first delivered to the Company, sell to the ROFR Offeror all ROFR
Shares to which the Notice related, or such portion of the ROFR Shares as to
which acceptances by the Other New Investors were not accepted or were not
consummated, at a price not less than the price stated in the Notice and upon
terms, including terms of payment, stated therein. Before such sale shall be
consummated, the ROFR Offeror shall have executed and delivered to the Company
and the Other New Investors his or its agreement that the ROFR Offeror and the
Common Shares held by the ROFR Offeror shall be bound by the terms of this
Agreement to the same extent as if the ROFR Offeror had been the transferring
Holder. If such ROFR Shares are not sold to the ROFR Offeror within such 90 day
period, such ROFR Shares shall again become subject to all of the restrictions
of this Agreement.
(d) Closing. The closing of the sale of the Securities to the Other New
-------
Investors and/or the ROFR Offeror pursuant to this Section 3.4 shall be held at
the principal office of the Company and (i) with respect to the ROFR Offeror, on
the date specified in the Notice, and (ii) with respect to the Other New
Investors, as soon as practicable after all of the ROFR Shares are subscribed
for.
(e) Restrictions on Sales. Notwithstanding anything to the contrary
---------------------
contained herein, no sale shall be made of ROFR Shares by a Selling ROFR Holder
hereunder except for (i) cash, (ii) publicly-traded securities traded on the New
York Stock Exchange, the American Stock Exchange, the Nasdaq stock market or The
Toronto Stock Exchange, or (iii) any other non-cash consideration, the value of
which may be determined by appraisal in accordance with Section 10.10. If the
proposed consideration is not cash, each Other New Investor purchasing any
portion of the ROFR Shares (and any other Securities as a result of an exercise
of the tag-along rights pursuant to Section 3.3) shall be required to pay cash
equal to the fair market value of the applicable portion of such consideration.
For the purposes hereof, the fair market value of (x) any publicly-traded
security shall be determined as of the close of business on the day immediately
preceding the closing date for the sale hereunder and shall be the closing price
at which such securities were traded; provided that if such securities were not
traded on such day, the fair market value shall be deemed to be the bid price
for such securities on the relevant exchange on such day, and (y) any other non-
cash consideration shall be its agreed value, if all of the Selling ROFR Holders
and the Other New Investors so agree, or in the absence of such an agreement its
appraised value, as determined pursuant to Section 10.10.
20
(f) Superseded by Section 3.2. Notwithstanding anything contained in
-------------------------
this Section 3.4 to the contrary, the rights and obligations granted under this
Section 3.4 shall not apply to proposed Significant Sales for which the rights
of Section 3.2 are exercised by the Selling Investors.
3.5 Exempt Transfers. The provisions of Sections 3.2, 3.3 and 3.4 shall
----------------
not apply to (a) Transfers to Affiliates of the transferring New Investor, (b)
Transfers pursuant to registration statements filed by the Company with the SEC
or under the applicable securities laws of Canada pursuant to the terms and
provisions of the Registration Rights Agreement, dated of even date herewith, by
and among the Company and certain of its shareholders, as such agreement may be
amended from time to time, or (c) non-negotiated sales to the public on a United
States national stock exchange, The Toronto Stock Exchange, the Bermuda Stock
Exchange or the Nasdaq stock market.
3.6 [intentionally omitted.]
3.7 Lock-Up of Senior Management and Additional Investors. Prior to the
-----------------------------------------------------
completion by the Company of a Qualified Public Offering, except as contemplated
by Sections 3.2 and 3.3 and except to the extent of the number of Common Shares
set forth opposite such Person's name on Schedule 3.7 hereto (adjusted, as
appropriate, for stock splits or bonus issuances, reverse stock splits or
consolidations, stock dividends or similar transactions), no individual member
of the Company's Senior Management and no Additional Investor may Transfer any
of his, her or its Common Shares or Common Share Equivalents without the prior
consent of the Company's Board of Directors; provided, however, that (i) nothing
contained herein shall limit any such individual's or Person's ability to make
transfers to Immediate Family Members or trusts, partnerships or other entities
established for the sole benefit of such individual and/or his or her Immediate
Family Members, in each case who become parties to this Agreement and thereby
assume the same rights and obligations hereunder as are applicable to such
individual, and (ii) this Section 3.7 shall no longer apply to any member of
Senior Management whose employment with the Company (and its Affiliates) is
terminated by the Company without cause or is terminated by the employee for
good reason (as "cause" and "good reason" are defined in such employee's
employment contract); provided further that this Section 3.7 shall continue to
apply to any member of Senior Management whose employment with the Company (and
its Affiliates) is terminated (including by reason of voluntary termination) for
any other reason.
3.8 Transfer and Exchange. When Securities are presented to the Company
---------------------
by a Holder with a request to register the transfer of such Securities or to
exchange such Securities for Securities of other authorized denominations, the
Company shall register the Transfer or make the exchange as requested if the
requirements of this Agreement for such transaction are met; provided, however,
that the Securities surrendered for Transfer or exchange shall be duly endorsed
or accompanied by a written instrument of Transfer in form satisfactory to the
Company, duly executed by the Holder thereof or its attorney and duly authorized
in writing. No service charge shall be made for any registration of Transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
Transfer tax or similar governmental charge payable in connection therewith.
21
ARTICLE 4.
LIMITATION ON TRANSFERS
4.1 Restrictions on Transfer.
------------------------
(a) The Securities shall not be Transferred or otherwise conveyed,
assigned or hypothecated, and the Company shall not register any such Transfer,
before satisfaction of (i) the conditions specified in this Section 4.1, Section
4.2, and Section 4.3, which conditions are intended to ensure compliance with
the provisions of the Securities Act and the applicable prospectus requirements
of the securities laws of Canada with respect to the Transfer of any Security
and (ii) if applicable, Article 3 and Section 4.5 hereof. Other than Transfers
to the public pursuant to an effective registration statement or prospectus,
sales to the public pursuant to Rule 144 under the Securities Act otherwise
permitted hereunder, or sales pursuant to Section 3.5(c), each Holder will cause
any proposed transferee of any Security or any interest therein held by it to
agree to take and hold such Securities subject to the provisions and upon the
conditions specified in this Agreement by executing and delivering a counterpart
signature page to this Agreement. The preceding sentence shall survive any
Qualified Public Offering.
(b) Notwithstanding anything in this Agreement to the contrary, the
Securities held by any Holder or any member of Senior Management shall not be
Transferred, and the Company shall not register any such Transfer, to any Person
who is not an Accredited Investor, other than pursuant to a Transfer pursuant to
Section 3.7 or a sale on a United States national stock exchange, the Nasdaq
stock market, the Bermuda Stock Exchange or The Toronto Stock Exchange.
4.2 Restrictive Legends.
-------------------
(a) Securities Act Legend. Except as otherwise provided in Section 4.4
---------------------
hereof, the certificates relating to each Security held by a Holder, and to each
Security issued to any subsequent transferee of such Security, shall be stamped
or otherwise imprinted with a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, NOR PURSUANT TO THE SECURITIES
OR "BLUE SKY" LAWS OF ANY STATE, NOR HAVE SUCH SECURITIES BEEN QUALIFIED FOR
DISTRIBUTION IN CANADA PURSUANT TO CANADIAN SECURITIES LAWS OR IN ANY OTHER
JURISDICTION. SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE ASSIGNED, EXCEPT PURSUANT TO (i) A REGISTRATION
STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS EFFECTIVE UNDER SUCH ACT,
(ii) RULE 144 UNDER SUCH ACT, (iii) ANY OTHER EXEMPTION FROM REGISTRATION UNDER
SUCH ACT, (iv) A PROSPECTUS FILED UNDER CANADIAN SECURITIES LAWS OR AN EXEMPTION
FROM THE PROSPECTUS REQUIREMENTS OF SUCH SECURITIES LAWS OR UPON EXPIRY OF
22
THE APPLICABLE HOLD PERIOD IMPOSED BY SUCH LAWS, OR (v) COMPLIANCE WITH THE
SECURITIES LAWS OF ANY OTHER APPLICABLE JURISDICTION.
(b) Other Legends. The certificates relating to each Security issued to
-------------
each Holder and to each Additional Investor and each member of Senior Management
or to a subsequent transferee (unless the transferee acquired such security in a
transaction permitted by Section 3.5(c)) shall include a legend in substantially
the following form:
THIS SECURITY IS SUBJECT TO RESTRICTIONS ON TRANSFER, VOTING AND OTHER
TERMS AND CONDITIONS SET FORTH IN THE AMENDED AND RESTATED SECURITYHOLDERS'
AGREEMENT DATED JULY 14, 1999, A COPY OF WHICH MAY BE OBTAINED FROM GLOBENET
COMMUNICATIONS GROUP LIMITED AT ITS PRINCIPAL EXECUTIVE OFFICES.
4.3 Notice of Proposed Transfers. Prior to any Transfer or attempted
----------------------------
Transfer of any Security (other than a Transfer pursuant to Section 3.2 or a
non-negotiated public sale on a United States national stock exchange, the
Nasdaq stock market, the Bermuda Stock Exchange or The Toronto Stock Exchange),
the Holder of such Security shall (i) give ten days' prior written notice (a
"Transfer Notice") to the Company of such Holder's intention to effect such
Transfer, describing the manner and circumstances of the proposed Transfer, and
(ii) either (A) provide to the Company an opinion reasonably satisfactory to the
Company from counsel who shall be reasonably satisfactory to the Company (or
supply such other evidence reasonably satisfactory to the Company) that the
proposed Transfer of such Security may be effected without registration under
the Securities Act or applicable prospectus requirements of the securities laws
of Canada, or (B) certify to the Company that the Holder reasonably believes the
proposed transferee is a "qualified institutional buyer" and that such Holder
has taken reasonable steps to make the proposed transferee aware that such
Holder may rely on Rule 144A under the Securities Act in effecting such
Transfer. After receipt of the Transfer Notice and opinion (if required), the
Company shall, within five days thereof, so notify the Holder of such Security
and such Holder shall thereupon be entitled to Transfer such Security in
accordance with the terms of the Transfer Notice. The certificate relating to
such Security issued upon such Transfer shall bear the restrictive legend set
forth in Section 4.2(a), unless in the opinion of such counsel such legend is
not required in order to ensure compliance with the Securities Act. The Holder
of the Security giving the Transfer Notice shall not be entitled to Transfer
such Security until receipt of the notice from the Company under this Section
4.3.
4.4 Termination of Certain Restrictions. Notwithstanding the foregoing
-----------------------------------
provisions of this Article 4 and Section 4.6, the restrictions imposed by
Section 4.1 upon the transferability of the Securities, the legend requirements
of Section 4.2(a), and the restrictions imposed by Section 4.6 shall terminate
as to any Security (i) when and so long as such Security shall have been
effectively registered under the Securities Act or qualified for distribution
under the applicable securities laws of Canada or any similar laws of any other
applicable jurisdiction and disposed of pursuant thereto or (ii) when the
Company shall have received an opinion of counsel reasonably satisfactory to it
that such Security may be transferred without registration thereof under the
Securities Act or qualified for distribution under the applicable securities
laws of Canada or any similar laws of any other applicable jurisdiction and that
such legend may be removed.
23
Whenever the restrictions imposed by Section 4.1 shall terminate as to any
Security, the Holder thereof shall be entitled to receive from the Company, at
the Company's expense, a new Security not bearing the restrictive legend set
forth in Section 4.2(a).
4.5 Additional Restrictions on Transactions.
---------------------------------------
(a) Basic Provision. Notwithstanding any other provision of this
---------------
Agreement, neither the Company, any Holder, any Additional Investor nor any
member of Senior Management shall take any action or engage in any transaction
(or, in the case of the Company, shall refrain from taking any action)
(including, without limitation, any sale, issuance or other disposition of any
Common Shares or Common Share Equivalents), taking into account any rights under
the Bye-Laws to appoint, nominate and vote on directors (and any attribution
rules), that could reasonably be expected to cause (x) prior to the second
anniversary of the date hereof, the Company to become a "controlled foreign
affiliate" of a New Investor within the meaning of Section 95(1) of the Income
Tax Act (Canada) (a "Controlled Foreign Affiliate"), or (y) any of the
representations made by the Company in Sections 8.3(c) or (e) to become untrue
(as if made immediately after giving effect to such event or transaction);
provided, however, that this Section 4.5(a) shall not
(i) apply to transfers pursuant to Section 3.2 or 3.3 of this
Agreement,
(ii) be construed to prohibit the exercise of the right to appoint
directors under the Bye-Laws (but may, however, be construed to prohibit an
amendment of the Bye-Laws related to the appointment of directors), or
(iii) apply to the Company's registration of a Transfer of Common
Shares by a shareholder who is not a party to this Agreement or
registration of a Transfer of Common Shares on a stock exchange.
(b) Required Sales. If, notwithstanding the foregoing, (i) an event is
--------------
reasonably likely to occur with respect to any Holder (e.g., the acquisition of
such Holder by a U.S. person) that could reasonably be expected to cause (A) one
-
or more of the representations of the Company contained in Section 8.3(c) or
(e) to become untrue (as if made immediately after giving effect to such event)
or (B) the Company to become a Controlled Foreign Affiliate (prior to the second
-
anniversary of the date hereof), such Holder shall (if requested by a U.S.
Majority in the case of clause (A) or if requested by holders of a majority of
the Class B Shares held by New Investors who are Canadian residents (as that
term is interpreted for Canadian income tax purposes) (a "Canadian Majority") in
the case of clause (B)) use its best efforts to dispose of its interest in the
Company prior to such event in a manner that will allow the representations of
the Company in Section 8.3(c) and (e) to be true (as if made immediately after
giving effect to such event) or allow the Company not to be a Controlled Foreign
Affiliate (prior to the second anniversary of the date hereof), as applicable,
whether or not such event occurs, and (ii) an event occurs with respect to any
Holder that causes (A) one or more of the representations of the Company
contained in Section 8.3(c) or (e) to become untrue (as if made immediately
after giving effect to such event) or (B) the Company to become a Controlled
Foreign Affiliate (prior to the second anniversary of the date hereof), such
Holder shall (if requested by a U.S. Majority
24
in the case of clause (A) or if requested by a Canadian Majority in the case of
clause (B)) use its best efforts promptly (and, in any event, within 30 days or
such shorter period as is required to prevent an amount from being includable in
income by any person under section 951(a) of the Code) to dispose of its
interest in the Company in a manner that will allow the representations of the
Company made in Section 8.3(c) and (e) to become true (as if then made) or allow
the Company not to be a Controlled Foreign Affiliate (prior to the second
anniversary of the date hereof), as applicable.
(c) Survival. This Section 4.5 shall survive a Qualified Public Offering.
--------
(d) Miscellaneous.
-------------
(i) If (1) a Holder proposes to Transfer Securities to any Person
(a "proposed transferee"), (2) the proposed transferee represents to (A)
the Company and each Holder that constitutes (or would constitute as a
result of such Transfer) a "United States shareholder" (within the meaning
of section 951(b) of the Code) that the proposed Transfer will not cause
one or more of the Company's representations made in Section 8.3(c) or (e)
to become untrue (as if made immediately after giving effect to such event
or transaction), and (B) if the transfer is prior to the second anniversary
of the date hereof, to the Company and each Holder that is a Canadian
resident taxpayer that the proposed Transfer will not cause the Company to
be a Controlled Foreign Affiliate, (3) the proposed transferee agrees to
indemnify each affected Holder in the event that the Transfer does cause
one or more of such representations to become untrue or causes the Company
to be a Controlled Foreign Affiliate, and (4) such representation and
indemnity are in form and substance reasonably acceptable to the Company
and each such Holder (taking into account the creditworthiness of the
indemnitor), then the transferring Holder shall not be liable for monetary
damages for violating this Section 4.5 in the event that the Transfer
causes one or more the Company's representations made in Section 8.3(c) or
(e) to become untrue (as if made immediately after giving effect to such
event or transaction) or causes the Company to be a Controlled Foreign
Affiliate.
(ii) For the avoidance of doubt, the parties agree that a
Transfer pursuant to Section 3.5(b) or (c) ordinarily would not reasonably
be expected to cause (x) any of the representations made by the Company in
Section 8.3(c) or (e) to become untrue (as if made immediately after giving
effect to such event or transaction), or (y) the Company to be a Controlled
Foreign Affiliate.
(iii) The Company and each party to this Agreement will
provide such information to the proposed transferee as is reasonably
necessary in order to make the representations required in Section
4.5(d)(i)(2) above, and the proposed transferee shall be entitled to rely
upon such information in making such representations. The parties will use
commercially reasonable efforts to simplify the procedures set forth in
this Section 4.5 on a case-by-case basis.
25
4.6 Transfers of Class B Shares.
---------------------------
(a) Except with respect to a non-negotiated public sale or a registered
sale of Common Shares on a United States national securities exchange, the
Nasdaq stock market, the Bermuda Stock Exchange or The Toronto Stock Exchange,
no Holder shall be entitled to Transfer all or a portion of his Common Shares
without Transferring, or causing to be Transferred, the same percentage of Class
B Shares held by such Holder or its Affiliates. The rights provided in Sections
3.2, 3.3 and 3.4 hereof shall apply to such Class B Shares as if such shares
were "Common Shares" within the meaning thereof (except with respect to the
consideration payable therefor).
(b) If a Holder Transfers Common Shares pursuant to a registered sale or a
non-negotiated public sale of Common Shares on a United States national
securities exchange, the Nasdaq stock market, the Bermuda Stock Exchange or The
Toronto Stock Exchange, such Holder shall surrender the same percentage of his
Class B Shares to the Company for cancellation, subject to applicable law, in
exchange for the paid up capital with respect to such Class B Shares.
(c) Except as permitted in Section 4.6(b), no Holder shall be entitled to
Transfer all or a portion of his Class B Shares without Transferring, or causing
to be Transferred, the same percentage of Common Shares held by such Holder or
its Affiliates.
ARTICLE 5.
ACCESS TO INFORMATION
5.1 Annual Budget and Business Plan. An annual budget and business plan
-------------------------------
for the succeeding fiscal year shall be delivered to each of the members of the
board of directors of each Corporation and to each Original New Investor who
continues to hold, together with its Affiliates, 250,000 or more Common Shares
(adjusted, as appropriate, for stock splits or bonus issuances, reverse stock
splits or consolidations, stock dividends or similar transactions) within 30
days prior to the end of such Corporation's fiscal year, which budget and
business plan shall include financial statements, cash flow schedules, a
schedule of planned capital expenditures for the upcoming fiscal year and
comparison of the projected consolidated statement of income to the audited
consolidated statement of income. If no objection is raised to such annual
budget and business plan within twenty days of delivery thereof, such annual
budget and business plan shall be deemed to be approved by the Required Holders
pursuant to Section 2.1 hereof. To the extent a specific objection is raised to
one or more line items of such annual budget or business plan and such line
items are not approved by the Required Holders prior to the commencement of the
succeeding fiscal year, the Company's management may, pending approval of the
annual budget and business plan, (i) in good faith act in accordance with all
provisions of such annual budget and business plan to which no objections have
been raised and (ii) in good faith act in accordance with all provisions of such
annual budget and business plan to which objections have been raised to the
extent authorized by the Required Holders.
26
5.2 Information. Each Corporation shall provide each of the members of
-----------
its board of directors and each Original New Investor who continues to hold,
together with its Affiliates, 250,000 or more Common Shares (adjusted, as
appropriate, for stock splits or bonus issuances, reverse stock splits or
consolidations, stock dividends or similar transactions) with:
(a) its balance sheet at the close of its fiscal year and its related
statements of operations, retained earnings or deficit, and changes in financial
position, as may be relevant, in each case (with comparable information at the
close of and for the prior fiscal year) promptly when available, and in any
event within 120 days after the close of its fiscal year, which balance sheet
and related statements shall be consolidated and reported on by an independent
certified public or chartered accountant of recognized international standing;
(b) its balance sheet at the close of each fiscal quarter and its
related statements of operations, retained earnings or deficit, and changes in
financial position, as may be relevant; in each case, for such fiscal quarter
and for the period commencing at the close of the previous fiscal year and
ending with the close of such fiscal quarter (with comparable information at the
close of and for the corresponding fiscal quarter of the prior fiscal year and
for the corresponding portion of such prior fiscal year) promptly when
available, and in any event within 60 days after the close of each fiscal
quarter, which balance sheet and related statements shall be consolidated and
certified by its president, chief financial officer and treasurer;
(c) in connection with each annual or interim audit made by an independent
chartered accountant or certified public accountant, as the case may be, of the
books of such Corporation, copies of all detailed financial and management
reports submitted to such Corporation by such independent chartered accountant
or certified public accountant, as the case may be;
(d) a detailed report of any material change or modification to (i) the
Project Development and Construction Contract dated June 16, 1999 by and among
Atlantica, Alcatel Submarine Networks and Alcatel Submarine Networks, Inc., (ii)
the cable station resources and cable maintenance agreement between TeleBermuda
and AT&T Corp., or (iii) the Atlantic Cable Maintenance and Repair Agreement by
and between TBI and Atlantic Cable Maintenance Organization, in each case
promptly upon the occurrence thereof;
(e) a comparison (and variance analysis) of the year-end and quarterly
financial results, as applicable, to the annual budget approved by its Board of
Directors, and a comparison to the same period in such Corporation's prior
fiscal year, such comparison to be delivered with the annual and quarterly
financial statements and reports described above;
(f) a comparison (and variance analysis) of the year-end or quarterly
financial results, as the case may be, to the projections set out in the then
current business plan of such Corporation, such comparison to be delivered with
the annual and quarterly financial statements and reports described above;
(g) notice of the occurrence of any default or event of default by any
party under, or any other material change in or circumstance affecting, any of
the material contracts to which any of the Corporations or any of their
Affiliates is a party which, either singularly or
27
cumulatively with any other such default or event of default, would have a
materially adverse effect on any of the Corporations or their businesses;
(h) any additional financial information or reports (financial or
otherwise) as are delivered to any one or more of the lenders under the Senior
Facility, or its agents or their agent(s), at the time of such delivery to such
holder or agent; and
(i) such other information with respect to such Corporation's financial
condition, business, property, assets, revenues and operations as any such
director or Original New Investor may from time to time reasonably request.
5.3 Disclosure. Subject to applicable law and to their fiduciary duties
----------
to the Corporations, the appointees of any of the Holders as directors shall be
entitled to discuss the affairs of the Corporations with the officers,
directors, general partners and members of such Holder, as the case may be, and
their respective Affiliates, provided that (i) such disclosure is reasonably
necessary in the course of business of such Holder, and (ii) such persons to
whom disclosure is made agree to treat the information received by them as
confidential and in accordance with applicable laws relating to the use of
material undisclosed information relating to the Corporations.
5.4 Accounting Standards. Each of the Corporations will maintain at all
--------------------
times a system of accounting established and administered in accordance with
generally accepted accounting principles consistently applied and in accordance
with sound business practices and will therein make complete, true and correct
entries of all dealings and transactions relating to its business. All financial
statements furnished to each director and Original New Investor (who continues
to hold, together with its Affiliates, 250,000 or more Common Shares (adjusted,
as appropriate, for stock splits or bonus issuances, reverse stock splits or
consolidations, stock dividends or similar transactions)) will fairly represent
the financial condition and the results of the operations of the relevant
Corporation and all other information, certificates, schedules, reports and
other papers and data furnished to each director and each such Original New
Investor will be accurate, complete and correct in all material respects.
5.5 Inquiries and Inspections.
-------------------------
(a) Subject to applicable laws and to the duties of their respective
directors, each of the Corporations will discuss and review with each of its
directors and each Original New Investor (who continues to hold, together with
its Affiliates, 250,000 or more Common Shares (adjusted, as appropriate, for
stock splits or bonus issuances, reverse stock splits or consolidations, stock
dividends or similar transactions)) any matters relating to the business of such
Corporation or pertaining to all or any part of its properties as each such
director or Original New Investor may reasonably request, and it will permit
each such director and Original New Investor to visit, inspect and have access
to its property and assets at any and all reasonable times on reasonable notice
and during business hours on a Business Day.
(b) Subject to applicable laws and to the fiduciary duties of their
respective directors, each of the Corporations will permit, and will cause each
of its Subsidiaries to permit, at any and
28
all reasonable times and in reasonable frequency and upon reasonable notice,
each of its directors and any Original New Investor (who continues to hold,
together with its Affiliates, 250,000 or more Common Shares (adjusted, as
appropriate, for stock splits or bonus issuances, reverse stock splits or
consolidations, stock dividends or similar transactions)) and their respective
authorized representatives to examine all of the books of account, records,
reports, documents, papers, and data of such Corporation and its Subsidiaries
whether in ordinary or machine language and to make copies and take extracts,
and to discuss its business, affairs, finances and accounts with its executive
officers, senior financial officers, accountants and other financial advisors;
each of the Corporations authorizes its accountants and other financial advisors
to discuss its finances and affairs in the presence of a representative of such
Corporation, and agrees to furnish each such director and Original New Investor
and their authorized representatives with any information reasonably requested
regarding its business, affairs, finances and accounts at the cost of such
Corporation. It is hereby acknowledged and agreed by each Holder that if any of
its directors or an Original New Investor requires the assistance of any third
party consultant, advisor or other representative in connection with its review
of such books, records and documents of a Corporation, any and all amounts
payable to such third party consultants, advisors or representatives shall be at
the sole cost of such director or Original New Investor or the Holder of which
such director is the appointee. The Investors' exercise of rights under this
Section 5.5 hereof shall not unreasonably interfere with the operations of the
Corporations.
5.6 Conduct of Holders.
------------------
(a) Except as contemplated in Section 3.2(c) and except to the extent
approved by the Board of Directors of the Company, the Holders will not, and
will cause their officers and employees and their appointees as directors not
to, disclose or allow disclosure to others of any portion of the non-public
information provided to them pursuant to Article 5 of this Agreement (unless
such information shall be publicly disclosed other than as a result of a breach
by such Holder of its confidentiality obligations under this Agreement) except
(i) to those of its directors, officers, general partners, members, employees
and advisors who have agreed to be bound by the terms of this Section 5.6 and
any other confidentiality provisions of this Agreement, (ii) by New Investors in
connection with a Transfer of Common Shares and Class B Shares to a Person who
has executed a confidentiality agreement requiring the recipient to maintain the
confidentiality of such information and not use same for any purpose other than
consideration of the acquisition of such Common Shares and Class B Shares and
(iii) to the shareholders, members and limited partners of a New Investor in
connection with the reporting obligations of such New Investor to its equity
holders pursuant to the organizational documents of such New Investor.
Notwithstanding the foregoing, a Holder and members of Senior Management
may provide summary financial information in respect of the Company to any
Person to whom that Holder or member is permitted under this Agreement to
transfer Common Shares, provided that such Person agrees to be bound by this
Section 5.6 and any other confidentiality provisions of this Agreement and to
use such information only for the purpose of evaluating a purchase of Common
Shares.
29
(b) Unless supported by an opinion of a nationally recognized United
States law firm, in form and substance reasonably acceptable to the Company and
the holders of a majority of the Common Shares held by New Investors who are
United States persons within the meaning of section 957(c) of the Code, no
Holder will (except to the extent required by law) take a reporting position for
United States federal income tax purposes that the Company is a CFC, a "passive
foreign investment corporation," a "personal holding company," or a "foreign
personal holding company", within the meaning of the United States federal
income tax laws for the purposes of such United States federal income tax laws.
5.7 Termination. Sections 5.1, 5.2, 5.4 and 5.5 shall terminate upon the
-----------
completion by the Company of a Qualified Public Offering.
ARTICLE 6.
COVENANTS OF THE CORPORATIONS;
COVENANTS OF TDG AND NAUTILUS
6.1 Covenants of the Corporations.
-----------------------------
(a) Until the completion by the Company of a Qualified Public Offering,
TBI, GGL and Atlantica each hereby covenants and agrees that it will not issue,
redeem or permit the transfer of any of its shares or securities convertible
into its shares, or any subscription rights, warrants or options in respect of
its shares or other securities convertible into its shares except to the Company
or with the prior written consent of the Required Holders.
(b) Each of the Company and Atlantica covenants and agrees that it will
not issue any of its shares or securities convertible into its shares, or any
subscription rights, warrants or options in respect of its shares or other
securities convertible into its shares, or any subscription rights, warrants or
options in respect of its shares or other securities convertible into its
shares, including the issuance of shares pursuant to any outstanding options or
warrants, which would cause a violation of any of the terms of any license
granted to Atlantica for landing stations or otherwise.
(c) Without the consent of the holders of a majority of the Common Shares
held by New Investors who are United States persons within the meaning of
section 957(c) of the Code, the Company shall not (and shall not permit its
Subsidiaries to) take any act or omit to take any action if (i) such action or
omission is inconsistent with the then-applicable business plan approved by the
Board of Directors prior to the date hereof or subsequently, and (ii) such
action or omission reasonably could be expected to increase the likelihood that
the Company and/or its Subsidiaries would be treated as a CFC, a "passive
foreign investment corporation," a "personal holding company," or a "foreign
personal holding company" within the meaning of the United States federal income
tax laws.
(d) The Company shall take such commercially reasonable steps as may be
necessary to avoid being deemed to (or having any Subsidiary deemed to be) a
CFC, a "passive foreign investment corporation," a "personal holding company,"
or a "foreign personal holding
30
company", within the meaning of the United States federal income tax laws for
the purposes of such United States federal income tax laws; provided, however,
that the registration of a Transfer of Common Shares by a shareholder who is not
a party to this Agreement or the registration of a Transfer of Common Shares on
a stock exchange shall not be deemed to be a breach of this Agreement. Unless
supported by an opinion of a nationally recognized United States law firm, in
form and substance reasonably acceptable to the holders of a majority of the
Common Shares held by New Investors who are United States persons within the
meaning of section 957(c) of the Code, the Company will not take a reporting
position for United States federal income tax purposes that it is a CFC, a
"passive foreign investment corporation," a "personal holding company," or a
"foreign personal holding company", within the meaning of the United States
federal income tax laws for the purposes of such United States federal income
tax laws.
(e) In the event the Company (or any of its Subsidiaries) is determined to
be a CFC, a "passive foreign investment corporation," a "personal holding
company," or a "foreign personal holding company" within the meaning of the
United States federal income tax laws for the purposes of United States federal
income tax purposes, the Company will (and will cause any such Subsidiary to)
use its best efforts to manage the Company's and any such Subsidiary's cash
investments and other passive investment activities in a manner to minimize, to
the extent possible, the adverse United States federal income tax consequences
incurred by the Company or any of the Holders by reason of such determination
and such Holder's holding of Common Shares.
6.2 Covenant of TDG. So long as IHI holds any Common Shares and/or Class
---------------
B Shares of the Company, TDG shall not, without the prior consent of the holders
of a majority of the Class B Shares, directly or indirectly transfer equity
interests in IHI (or cause or allow IHI to issue new equity interests in IHI)
if, as a result of such transfer (or issuance) TDG would no longer be the holder
of 100% of the equity interests in IHI.
6.3 Covenant of Nautilus. So long as Nautilus holds any Common Shares
--------------------
and/or Class B Shares of the Company, no interests in Nautilus shall, without
the prior consent of the holders of a majority of the Class B Shares, directly
or indirectly, be transferred or issued if, as a result of such transfer (or
issuance) Nautilus would no longer be owned 100% by Credit Suisse First Boston
Corporation, its 100% wholly-owned Affiliates or its employees.
ARTICLE 7.
NON-COMPETITION COVENANT
7.1 Non-Competition by Kedar.
------------------------
(a) Kedar covenants and agrees with TBI, the Company, Atlantica, GCL, and
the Holders that, while he is an employee of the Company, TBI, Atlantica, GCL or
TeleBermuda International (Canada) Ltd. and for a period of two years
thereafter, he will not, without the prior written consent of each of the
Holders, either directly or indirectly:
31
(i) solicit any contractors, customers or distributors of TBI,
Atlantica, GCL, the Company or its Affiliates or endeavor to entice away
from TBI, Atlantica, GCL, the Company or any Affiliate thereof any such
Person or otherwise interfere with the relationship between such Person and
TBI, Atlantica, GCL, the Company or any Affiliate thereof for the purposes
of competing with TBI, Atlantica, GCL or the Company;
(ii) endeavor to entice away from TBI, Atlantica, GCL, the Company
or any Affiliate thereof any Person who was employed by TBI, Atlantica,
GCL, the Company or such Affiliate at the date upon which Kedar ceases to
be an employee of TBI, Atlantica, GCL, the Company or TeleBermuda
International (Canada) Ltd., either directly or indirectly, or interfere in
any way with the employer/employee relations between any such employee and
TBI, Atlantica, GCL, the Company or any Affiliate thereof; or
(iii) offer employment to any Person who was employed by TBI,
Atlantica, GCL, the Company or such Affiliate at the date upon which Kedar
ceases to be an employee of TBI, Atlantica, GCL, the Company or TeleBermuda
International (Canada) Ltd.
(b) Kedar covenants and agrees with TBI, the Company, Atlantica, GCL and
each of the Holders that, while he is an employee of TBI, the Company,
Atlantica, GCL or TeleBermuda International (Canada) Ltd. and for a period of
two years following the date he ceases such employment for whatever reason, he
will not, directly or indirectly, in any manner whatsoever, including, without
limitation, either individually or in partnership or jointly or in conjunction
with any other person or Persons, firm, association, syndicate, company or
corporation, as principal, agent, shareholder, employee or in any other manner
whatsoever, carry on or be engaged in or concerned with or interested in or lend
money to, guarantee the debts or obligations of or permit his name to be used by
a Competitive Business (as defined below) within Bermuda, the United Kingdom,
the United States, Europe, Canada and any other country in which the Company,
TBI, Atlantica or GCL or any Affiliate thereof directly offered its services to
potential customers at any time hereafter while he is an employee of the
Company, TBI, Atlantica, GCL or TeleBermuda International (Canada) Ltd. Kedar
expressly acknowledges that while he is an employee of TBI, Atlantica, GCL, the
Company or TeleBermuda International (Canada) Ltd., any of such companies or
their Affiliates may offer services to potential customers in geographic areas
not specifically named herein, and agrees that if such services are offered to
potential customers in such geographic areas by any such company, his covenants
shall extend to such geographic areas, as if named herein. In that regard, Kedar
specifically acknowledges that the Company, TBI, Atlantica, GCL and TeleBermuda
International (Canada) Ltd. intend to pursue appropriate licenses in Brazil,
Venezuela and Argentina. Kedar agrees that the restrictions contained herein are
reasonable.
(c) For the purposes of this Article 7, a "Competitive Business" shall
mean (i) while Kedar is an employee of the Company, TBI, Atlantica, GCL or
TeleBermuda International (Canada) Ltd., any business which is the same as or
similar to the international telecommunications business carried on by the
Company, TBI, Atlantica, GCL or TeleBermuda International (Canada) Ltd. or any
of their subsidiaries, and (ii) from and after the time Kedar
32
ceases to be an employee of the Company, TBI, Atlantica, GCL or TeleBermuda
International (Canada) Ltd., any business which is the same or similar to the
international telecommunications business carried on by the Company, TBI,
Atlantica, GCL or TeleBermuda International (Canada) Ltd. or any of their
subsidiaries while Kedar was an employee of the Company, TBI, Atlantica, GCL or
TeleBermuda International (Canada) Ltd.
(d) Kedar covenants and agrees that until the expiration of his covenants
set out in Section 7.1(a) and (b) hereof, he shall use his reasonable best
efforts to ensure that any and all current and future opportunities relating to
the international telecommunications businesses of the Company, TBI, Atlantica,
GCL and their Subsidiaries and any businesses ancillary thereto shall be carried
out through the Company, TBI, Atlantica, GCL or their Subsidiaries.
(e) The foregoing covenants are given by Kedar acknowledging that he has
specific knowledge of the affairs of TBI, Atlantica, GCL and the Company.
(f) Kedar acknowledges and agrees that the nature of the confidential
information to which he will have access during his employment by the Company,
TBI, Atlantica, GCL or TeleBermuda International (Canada) Ltd. would make it
difficult, if not impossible, for him to perform in a similar capacity for a
Competitive Business without disclosing or utilizing the confidential
information and that if he were to perform in a similar capacity for a
Competitive Business it would be inevitable that he would disclose and/or use
confidential information.
(g) Kedar acknowledges that violations of the provisions of this Section
7.1 will cause immediate and irreparable harm to the Company, entitling the
Company and the Holders to an injunction in a court of competent jurisdiction in
addition to any other remedies the Company or the Holders may have at law or in
equity, including recovery of reasonable attorneys' fees and costs incurred by
the Company or the Holders in enforcing the provisions of this Section 7.1. In
the event that any covenant contained in this Article 7 or portion of any such
covenant should be unenforceable or be declared invalid for any reason
whatsoever, such unenforceability or invalidity shall not affect the
enforceability or validity of the remaining portions of the covenants and such
unenforceable or invalid portions shall be severable from the remainder of this
agreement. Kedar hereby acknowledges and agrees that all restrictions contained
in this Article 7 are reasonable and valid and all defenses to the strict
enforcement thereof by TBI, Atlantica, GCL and/or the Company and/or the Holders
are hereby waived by him.
(h) Notwithstanding the provisions of Section 10.3 hereof, Article 7 of
this Agreement and any disputes in connection with or arising out of the
provisions of Article 7 of this Agreement, shall be governed by and construed in
accordance with the laws of the Province of Ontario, without regard to
principles of conflicts of law.
7.2 Other Activities. Nothing in this Article 7 shall be deemed to
----------------
prevent or prohibit Kedar from making investments in his personal capacity
unless such investments are of a type that may conflict with the efficient
performance of his duties or with any of his obligations to TBI, Atlantica, GCL
or the Company; provided further that nothing contained herein shall preclude
Kedar from purchasing or owning stock in any corporation or firm engaged in a
33
Competitive Business whose shares are traded on a recognized stock exchange or
over-the-counter market, so long as Kedar's holdings therein do not exceed five
percent (5%) of the issued and outstanding capital of the corporation or firm in
question. Notwithstanding the foregoing, it is acknowledged and agreed by the
parties hereto that Kedar shall be entitled (a) prior to the nine-month
anniversary of the date hereof, to own a controlling interest in MK Telecom
Network Inc. and MK Telecom Network Holdings Inc., and (b) to be a member of the
board of directors of (i) any corporation that does not carry on, directly or
indirectly, an undersea fiber optic cable business, and (ii) any corporation not
described in clause (i) with the prior approval of the Company's board of
directors.
7.3 Consideration. Kedar acknowledges and agrees that he has received
-------------
good and valuable consideration in exchange for his covenants and obligations
under this Agreement.
ARTICLE 8.
REPRESENTATIONS AND WARRANTIES
8.1 Holder Representations. Each Holder respectively warrants with
----------------------
respect to itself in favor of each other Holder as follows, and hereby
acknowledges and agrees that each of the other Holders has relied and is relying
on such representations and warranties in entering into this Agreement:
(a) it is the beneficial owner of that number and class of the issued and
outstanding securities of the Company set out opposite its name on Exhibit A
attached hereto, and holds such securities free and clear of all claims, liens,
security interests and encumbrances whatsoever and, except as provided in the
warrants or the options disclosed on such Exhibit A, no person will have any
agreement or option or right capable of becoming an agreement for the purchase
of any such securities;
(b) it has all necessary power and authority to own its Common Shares and
to enter into and carry out the provisions of this Agreement, and has taken all
acts (corporate or otherwise) necessary to authorize the execution and delivery
of this Agreement;
(c) this Agreement constitutes the binding obligations of such Holder,
enforceable in accordance with its terms;
(d) neither the execution and delivery of this Agreement nor the
fulfillment or compliance with the terms and conditions hereof:
(i) conflicts with or will conflict with or result in a breach of any
of the terms, conditions, or provisions of or constitute a material default
under such Holder's organizational documents; or
(ii) conflicts with or will conflict with or result in a material
breach of any of the terms, conditions, or provisions of or constitute a
material default under any agreement or instrument to which such Holder is
a party or by which it is bound; and
34
(e) there are no actions, suits or proceedings pending, or to the
knowledge of such Holder threatened, against such Holder or its Affiliates
which, if adversely determined, could materially adversely affect the ability of
such Holder or its Affiliates to perform its obligations under this Agreement.
8.2 Kedar and BVI Representations. Each of Kedar and BVI jointly and
-----------------------------
severally represents and warrants to the other Holders that:
(a) as of the date hereof, Kedar is the beneficial owner of 51,132 Class A
Series 1; 74,369 Class A Series 2; 17,187 Class A Series 3; 22,508 Class A
Series 4; and 162,559 Class A Series 5 shares of BVI, and such shares of BVI
entitle Kedar to 52.942% of the voting rights attached to all outstanding shares
of BVI;
(b) no Person has any agreement or option or right capable of becoming an
agreement for the purchase, subscription or issuance of any of the unissued
class A shares of BVI; and
(c) the shares described in Subsection 8.2(a) hereof are free and clear of
all claims, liens, security interests and encumbrances whatsoever and no person
has any agreement or option or right capable of becoming an agreement for the
purchase of any such shares.
8.3 Company Representations and Covenants. The Company hereby represents,
-------------------------------------
warrants and convenants to the Holders that:
(a) the Company owns 100% of the issued and outstanding capital shares of
TBI, GCL and Atlantica;
(b) other than the warrants and the options set forth on Exhibit A
attached hereto, no Person has any agreement or option or right capable of
becoming an agreement for the purchase, subscription or issuance of any of the
unissued shares of the Company, and no Person has any agreement or option or
right capable of becoming an agreement for the purchase, subscription or
issuance of any of the unissued shares of TBI, GCL or Atlantica;
(c) no person (other than BV, ▇▇▇▇▇, and KEP or their transferees) is a
"United States shareholder" (within the meaning of section 951(b) of the
Internal Revenue Code of 1986, as amended (the "Code")) of the Company;
(d) BV, ▇▇▇▇▇ and KEP do not own (within the meaning of section 958(a) of
the Code), and are not considered as owning by applying the rules of ownership
of section 958(a) of the Code, more than 50 percent of (i) the total combined
voting power of all classes of stock of the Company entitled to vote, or (ii)
the total value of the stock of the Company, in each case as defined in section
957(a) of the Code; and
(e) the Company is not a "controlled foreign corporation" (within the
meaning of section 957(a) of the Code).
35
8.4 Representations of the Corporations. Each of the Corporations hereby
-----------------------------------
represents and warrants to the Holders as follows:
(a) it is a corporation duly organized and in good standing under the laws
of its jurisdiction of organization;
(b) it has all necessary power and authority to enter into and carry out
the provisions of this Agreement, and has taken all acts (corporate or
otherwise) necessary to authorize the execution and delivery of this Agreement.
(c) this Agreement constitutes the binding obligations of such
Corporation, enforceable in accordance with its terms;
(d) neither the execution and delivery of this Agreement nor the
fulfillment or compliance with the terms and conditions hereof:
(i) conflicts with or will conflict with or result in a breach of
any of the terms, conditions, or provisions of or constitute a material
default under such Corporation's organizational documents; or
(ii) conflicts with or will conflict with or result in a material
breach of any of the terms, conditions, or provisions of or constitute a
material default under any agreement or instrument to which such
Corporation is a party or by which it is bound;
(e) there are no actions, suits or proceedings pending, or to the
knowledge of such Corporation threatened, against such Corporation or its
Affiliates which, if adversely determined, could materially adversely affect the
ability of such Corporation or its Affiliates to perform its obligations under
this Agreement.
8.5 Representation of TDG. TDG hereby represents and warrants to the
---------------------
Company and each other Holder that:
(a) TDG currently holds 100% of the issued and outstanding equity
interests in IHI, and there is no outstanding contract, agreement, warrant,
option, convertible debt instrument or other right or arrangement pursuant to
which any other Person can require (i) IHI to issue equity securities to it or
(ii) TDG to sell, transfer or otherwise convey any of TDG's equity interests in
IHI to it.
(b) TDG is not a "United States shareholder" (within the meaning of
section 951(b) of the Code) of the Company, and no United States person (within
the meaning of section 957(c) of the Code), by virtue of a direct or indirect
ownership interest in TDG, is a "United States shareholder" (within the meaning
of section 951(b) of the Code) of the Company by virtue of TDG's ownership of
Securities or any other interests in the Company.
8.6 Representation of Non-U.S. Status for CFC Purposes. Each Holder (other
--------------------------------------------------
than ▇▇▇▇▇, KEP, BV, Providence, PEOP, Nautilus, Spectrum, SEI and Managers)
hereby represents
36
and warrants to the Company and each other Holder that (i) it is not a "United
States shareholder" (within the meaning of section 951(b) of the Code) of the
Company, and (ii) if such Holder is an entity, no United States person (within
the meaning of section 957(c) of the Code), by virtue of a direct or indirect
ownership interest in it, is a "United States shareholder" (within the meaning
of section 951(b) of the Code) of the Company by virtue of its ownership
interest of Common Shares or any other interests in the Company.
8.7 Kedar Representations. Kedar represents to the Company and each other
---------------------
Holder that he is not a citizen or resident of the United States within the
meaning of section 552(b) of the Code.
8.8 Representation of Nautilus. Nautilus hereby represents and warrants to
--------------------------
the Company and each other Holder that all of the interests of Nautilus are
owned, directly or indirectly, by Credit Suisse First Boston Corporation, its
100% wholly-owned Affiliates, and/or its employees.
ARTICLE 9.
TERMINATION
Unless specifically stated to the contrary herein, the provisions of this
Agreement shall terminate upon the completion of a Qualified Public Offering;
provided that any such termination shall be without prejudice to the rights of
any party hereto arising out of a breach by any other party of any covenant,
agreement, representation or warranty contained in this Agreement. The parties
specifically understand and agree that Article 4, Section 5.6 and Article 7 may,
on their terms, survive the completion of a Qualified Public Offering.
ARTICLE 10.
MISCELLANEOUS
10.1 Notices. All notices, requests, demands or other communications by
-------
the terms hereof required or permitted to be given by one party to any other
party, or to any other person shall be given in writing by personal delivery or
by registered mail, postage prepaid, or by facsimile transmission to such other
party as follows:
(a) to TBI, GCL, Atlantica ▇ ▇▇▇▇▇▇'▇ ▇▇▇ ▇▇▇▇
and the Company at: Southside, St. David's
Bermuda
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) to the Holders, members of Senior Management or Additional Investors
at the respective addresses set forth on the signature pages attached hereto;
37
or at such other address as may be given by such person to the other parties
hereto in writing from time to time. If any party bound hereby shall not have
given the parties hereto notice setting forth an address for the giving of
notices, the notice for such person shall be deemed to have been properly given
if given in accordance with the terms hereof as if given to the transferor(s) of
such shares.
Any such notice, request, demand, or other communication shall be deemed to
be given (a) when received, if personally delivered; (b) if mailed, on the fifth
day after it is deposited in the United States, Canadian or Bermuda mail,
properly addressed, with proper postage affixed; (c) if sent by facsimile or
similar device, when electronically confirmed; and (d) if sent by courier, 24
hours after delivery to such courier service.
10.2 Legal Holidays. A "Legal Holiday" used with respect to a particular
--------------
place of payment or delivery of notice is a Saturday, a Sunday or a day on which
banking institutions at such place are not required to be open. If a payment
date or notice date is a Legal Holiday at such place, payment or delivery of
notice may be made at such place on the next succeeding day that is not a Legal
Holiday, and (i) no interest on the amount of such payment shall accrue for the
intervening period, and (ii) such notice shall be deemed timely received.
10.3 Governing Law; Consent to Jurisdiction.
--------------------------------------
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF BERMUDA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
(b) To the fullest extent permitted by applicable law, each party hereto
irrevocably submits to the non-exclusive jurisdiction of any Federal or State
court located in the Borough of Manhattan in the City of New York, New York in
any action, suit, or proceeding based on or arising out of or relating to this
Agreement, and irrevocably agrees that all claims in respect of such suit or
proceeding may be determined in any such court. Each party hereto irrevocably
waives, to the fullest extent permitted by applicable law, any objection which
it may have to the laying of the venue of any such suit, action or proceeding
brought in such a court as an inconvenient forum. Each party agrees that final
judgment in any such suit, action or proceeding brought in such a court (upon
the passage of time for appeal or the determination of such appeal) shall be
conclusive and binding upon the parties hereto and may be enforced in the courts
of Bermuda (or any other courts to the jurisdiction of which the parties hereto
are subject) by suit upon such judgment, provided that service of process is
effected upon such party in the manner specified herein or as otherwise
permitted by law.
10.4 Successors and Assigns. The provisions of this Agreement that are for
----------------------
the Holders' benefit as the holders of any Securities are also for the benefit
of, and enforceable by, all subsequent holders of Securities who become a party
to this Agreement by executing and delivering a counterpart signature page
hereto, except as otherwise expressly provided herein. This Agreement shall be
binding upon the Company, each Holder, and their respective successors and
permitted assigns.
38
10.5 Counterparts. This Agreement may be executed in several counterparts,
------------
each of which so executed shall be deemed to be an original and such
counterparts together shall be but one and the same instrument.
10.6 Severability. In case any provision in this Agreement shall be held
------------
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and the
remaining provisions shall not in any way be affected or impaired thereby.
10.7 No Waivers: Amendments.
----------------------
(a) No failure or delay on the part of the Company or any Holder in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Company or
any Holder at law or in equity or otherwise.
(b) Any provision of this Agreement may be amended or waived if, but only
if, such amendment or waiver is in writing and is signed by the Company and the
holders of 2/3 of the Class B Shares; provided, however, that no such amendment
shall be effective against (i) a holder of Class B Shares without the consent of
such holder if such amendment or waiver adversely and discriminatorily changes
the rights or obligations of such holder (or its Affiliates) in a manner that is
materially different from the changes to the rights or obligations of the other
holders of Class B Shares, (ii) a member of Senior Management (now or hereafter
made a party hereto) without the consent of such member if such amendment or
waiver adversely and discriminatorily affects in a material way the rights of or
obligations of such member or such member's permitted assignees, or (iii)
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, without his consent if such amendment changes the rights or
obligations of ▇▇. ▇▇▇▇▇▇▇ in any way.
10.8 Entire Agreement. This Agreement constitutes the entire agreement
----------------
among the parties with respect to the matters herein and its execution has not
been induced by, nor do any of the parties rely upon or regard as material, any
representations or writings whatever not incorporated herein and made a part
hereof.
10.9 Remedy for Breach of Section 8.3(c), (d) or (e), 8.5(b) or 8.6.
--------------------------------------------------------------
(a) The parties hereto understand and agree that no party may bring any
action, claim or proceeding for monetary damages against the Company or any of
its directors or officers for a breach of the representations set forth in
Section 8.3(c), (d) or (e) of this Agreement.
(b) The parties hereto understand and agree that no party may bring any
action, claim or proceeding for monetary damages against a Holder for a breach
of the representations or covenants set forth in Section 8.5(b) or 8.6 of this
Agreement.
39
10.10 Appraisal. In the event a Selling ROFR Holder and the Other New
---------
Investors cannot agree upon the fair market value of any non-cash consideration
that is offered in a transaction subject to Section 3.4(a) and is not publicly
traded, either the Selling ROFR Holder or the Other New Investors can request an
appraisal pursuant to this Section 10.10 as soon as such disagreement becomes
evident to such party. The appraised value of any such non-cash consideration
means the fair market value on the date of the Notice of such non-cash
consideration, without premiums for control or discounts for minority interest
or restrictions on transfer, determined by an appraiser designated by the
Selling ROFR Holder and an appraiser designated by the Other New Investors, and
if such two appraisers cannot agree on the fair market value, then the two
appraisers shall select a third appraiser mutually agreeable to the two
appraisers, which third appraiser shall, upon the basis of an independent
analysis, determine the fair market value. The Selling ROFR Holder and the Other
New Investors shall use reasonable efforts to designate their respective
appraisers, and to cause such appraisers to complete their work, as quickly as
is reasonably practicable. The Selling ROFR Holder and the Other New Investors,
as a group, shall each pay 50% of the cost and expenses of such appraisal
proceeding (including appraisers' fees), provided that the Selling ROFR Holder
and the Other New Investors, as a group, shall each bear their own professional
fees and expenses (legal, accounting, financial advisory or otherwise) incurred
in connection therewith.
10.11 Consents. Whenever any matter is to be approved by a vote of the
--------
holders of the Class B Shares, all holders of the Class B Shares shall, if
requested by holders of a number of Class B Shares sufficient to approve such
matter, execute written consents voting all of their Class B Shares in favor of
such matter.
10.12 Additional Investors. If consented to by holders of a majority of
--------------------
the Class B Shares, any Affiliate of the Company or of any New Investor (or any
employee of any such Affiliate) who has acquired Common Shares on the Bermuda
Stock Exchange (an "Additional Investor") may, by executing and delivering a
counterpart signature page to this Agreement, become a party hereto solely for
purposes of Sections 3.2, 3.3 and 3.7 and Articles 4, 9 and 10 hereof. Each
Additional Investor shall promptly deliver to the Company all certificates
relating to such Common Shares, and the Company shall affix thereon the legend
set forth in Section 4.2(b).
40
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed, all as of the date first written above.
THE CORPORATIONS:
GLOBENET COMMUNICATIONS GROUP LIMITED
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
Title: Chief Financial Officer
-------------------------------
TELEBERMUDA INTERNATIONAL LIMITED
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
Title: Vice President, Finance
-------------------------------
GLOBENET COMMUNICATIONS LTD.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------
Title: Vice President
-------------------------------
ATLANTICA NETWORK (BERMUDA) LTD.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------
Title: Vice President
-------------------------------
41
THE HOLDERS:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
Address: TeleBermuda International Ltd.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
TELEBERMUDA (BVI) LIMITED
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Title: President
------------------------------------
Address: TeleBermuda International
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
IHI HYDRO, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
Title: Vice President
------------------------------------
Address: ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇
TD ▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
42
BOSTON VENTURES LIMITED PARTNERSHIP
V, L.P.
By: BOSTON VENTURES COMPANY V, LLC,
its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Title: Managing Director
-------------------------------
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇ INVESTMENT ASSOCIATES VI, L.P.
By: ▇▇▇▇▇ ▇▇ VI, LLC, its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Title: Managing Member
-------------------------------
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
KEP VI, L.L.C.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Title: Managing Member
-------------------------------
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
43
PROVIDENCE EQUITY PARTNERS III L.P.
By: Providence Equity Partners III L.L.C, its
general partner
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
______________________________________
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its President
Address: Fleet Center, 9th Floor
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
PROVIDENCE EQUITY OPERATING PARTNERS III L.P.
By: Providence Equity Partners III L.L.C, its
general partner
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
______________________________________
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its President
Address: Fleet Center, 9th Floor
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
44
SPECTRUM EQUITY INVESTORS III, L.P.
By: Spectrum Equity Associates III, L.P., its
General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
___________________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its General Partner
Address: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
SPECTRUM III ENTREPRENEURS' FUND, L.P.
By: SEI III Entrepreneurs' LLC, its General
Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
___________________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its Managing Member
Address: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
SPECTRUM III INVESTMENT MANAGERS' FUND, L.P.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
___________________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its General Partner
Address: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
CAPITAL COMMUNICATIONS CDPQ, INC.
45
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------------
Title: Manager
------------------------------------------
By: /s/ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------------
Title: Vice President
------------------------------------------
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
SANDLER CAPITAL PARTNERS IV, L.P.
By: Sandler Investment Partners, L.P., its
general partner
By: Sandler Capital Management, its general
partner
By: MJDM Corp., a general partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
Title: President
------------------------------------
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
46
SANDLER CAPITAL PARTNERS IV FTE, L.P.
By: Sandler Investment Partners, L.P., its
general partner
By: Sandler Capital Management, its general
partner
By: MJDM Corp., a general partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------------
Title: President
-----------------------------------
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
ONTARIO MUNICIPAL EMPLOYEES
RETIREMENT BOARD
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Title: Vice President
---------------------------------------
By: /s/ ▇▇▇▇▇ ▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
----------------------------------------
Title: Senior Portfolio Manager
---------------------------------------
Address: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
47
NAUTILUS EQUITY INVESTORS, L.L.C.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Its Managing Member
Address:
TD CAPITAL GROUP LIMITED
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------------
Title: Vice President
----------------------------------------
Address: ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
TD ▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
48
Solely for the purposes of Sections 3.2, 3.3 and 3.7 and Articles 9 and 10 of
this Agreement:
SENIOR MANAGEMENT
/s/ ▇▇▇▇▇ ▇▇▇▇▇
________________________________________________
▇▇▇▇▇ ▇▇▇▇▇
Address: GlobeNet Communications Group
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
________________________________________________
▇▇▇▇ ▇▇▇▇▇▇▇
Address: GlobeNet Communications Group
Limited
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
/s/ Laurent Duplantie
________________________________________________
Laurent Duplantie
Address: GlobeNet Communications Group
Limited
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
49
/s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇
_______________________________________________
▇▇▇ ▇▇▇▇▇▇▇▇▇
Address: GlobeNet Communications Group
▇ ▇▇▇▇▇▇'▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇'▇ ▇▇▇▇
▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
50
Solely for the purposes of acknowledging his consent to this amendment and
restatement of the Original Agreement and the termination of his rights
thereunder:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
______________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Address: First Bermuda Securities
Chevron ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇ ▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
51
EXHIBIT A
CURRENT SECURITY OWNERSHIP OF THE HOLDERS
----------------------------------------------------------------------------------------
Securityholder Common Shares Class B Common Share
-------------- ------------ Shares(C) Options
--------- -------
----------------------------------------------------------------------------------------
Kedar(A) 200,000
----------------------------------------------------------------------------------------
BVI 836,325 120,000
----------------------------------------------------------------------------------------
IHI(B) 1,635,286(C) 110
----------------------------------------------------------------------------------------
BV 2,941,176 199
----------------------------------------------------------------------------------------
▇▇▇▇▇ 2,500,000 169
----------------------------------------------------------------------------------------
KEP 441,176 30
----------------------------------------------------------------------------------------
Providence 1,508,378 98
----------------------------------------------------------------------------------------
PEOP 11,230 1
----------------------------------------------------------------------------------------
Spectrum 1,458,824 97
----------------------------------------------------------------------------------------
SEI 45,588 1
----------------------------------------------------------------------------------------
MANAGERS 15,196 1
----------------------------------------------------------------------------------------
CDPQ 1,470,588 100
----------------------------------------------------------------------------------------
Sandler 521,176 35
----------------------------------------------------------------------------------------
SCP 214,118 14
----------------------------------------------------------------------------------------
OMERS 558,824 38
----------------------------------------------------------------------------------------
Nautilus 294,118 20
----------------------------------------------------------------------------------------
TDG 1,283,254 87
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
(A) The amount set forth above does not reflect 92,353 Common Shares held by a
trust for the benefit of a charitable organization and a family member of Mr.
Kedar. Mr. Kedar is not the trustee of the trust, and has no beneficial
ownership interest in such shares. The amount set forth above also does not
include shares attributable to Mr. Kedar pursuant to his interests in BVI. Mr.
Kedar has preference shares in BVI which carry more than 50% of the voting
rights of BVI.
(B) IHI is a wholly-owned subsidiary of TDG.
(C) Reflects interest owed by the Company to IHI through July 13, 1999.
52
SCHEDULE 2.1(A)
EXISTING OPTIONS AND WARRANTS
53
SCHEDULE 3.1(B)
PREEMPTIVE RIGHTS
The only persons with preemptive rights to issuances of the Company's shares are
set forth below:
Tyco Submarine Systems, Ltd.
IHI Hydro, Inc.
TeleBermuda (BVI) Limited
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
These rights exist by reason of the Original Agreement. Each of these persons
has waived its right to purchase a portion of the Common Shares and Class B
Shares sold to the New Investors. The rights of Tyco will be transferred to IHI
or its Affiliates on or before the Closing Date. The rights of ▇▇. ▇▇▇▇▇▇▇ will
terminate upon the execution of this Agreement.
54
SCHEDULE 3.7
SHARES OF SENIOR MANAGEMENT NOT SUBJECT TO SECTION 3.7
------------------------------------------------------------------------------------------------
Member of Senior Management Cumulative Sales not Subject to Section 3.7
----------------- -------------------------------------------
------------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇ 145,020 Common Shares
------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇ 39,500 Common Shares
------------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇ 27,000 Common Shares
------------------------------------------------------------------------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇▇ 27,313 Common Shares
------------------------------------------------------------------------------------------------
Laurent Duplantie 27,000 Common Shares
------------------------------------------------------------------------------------------------
55
