Preview of our top selling Asia - Joint Venture Agreement
Exodus / Global Crossing - Asia Joint Venture Agreement
EXHIBIT 99.03
JOINT VENTURE AGREEMENT
Relating To
EXODUS ASIA-PACIFIC LTD.
Dated as ocf September 28, 2000
SHAREHOLDERS:
1. EXODUS EXODUS COMMUNICATIONS, INC., a Delaware corporation
with offices located at 2831 Mission College Blvd.,
Santa Clara, California 95054, United States of
America; and
2. ASIA GLOBAL ASIA GLOBAL CROSSING, LTD., a company organized
CROSSING under the laws of Bermuda, with offices located at
Wessex House, 45 Reid Street, Hamilton HM12, Bermuda.
TABLE OF CONTENTS
RECITALS
ARTICLE 1: DEFINITIONS.................................................. 1
ARTICLE 2: OBJECT OF THE COMPANY; NAME.................................. 8
ARTICLE 3: COMPLETION................................................... 9
ARTICLE 4: APPOINTMENT OF DIRECTORS..................................... 11
ARTICLE 5: ADDITIONAL FUNDING........................................... 12
ARTICLE 6: COVENANTS, REPRESENTATIONS AND WARRANTIES.................... 14
ARTICLE 7: CONDUCT OF THE COMPANY'S AFFAIRS............................. 21
ARTICLE 8: DISPUTE RESOLUTION........................................... 27
ARTICLE 9: INDEMNIFICATION; LIMITATIONS ON DAMAGES; CONTRACTUAL
LIMITATIONS.................................................. 27
ARTICLE 10: CONFIDENTIAL INFORMATION; PUBLIC ANNOUNCEMENTS............... 29
ARTICLES 11: TRANSFERS OF INTERESTS AND ISSUANCE OF ADDITIONAL INTERESTS.. 30
ARTICLE 12: VOTING AGREEMENT............................................. 36
ARTICLE 13: DISSOLUTION AND WINDING UP................................... 36
ARTICLE 14: INDEPENDENT VALUATION........................................ 37
ARTICLE 15: MISCELLANEOUS PROVISIONS..................................... 38
ARTICLE 16: WAIVER OF CONFLICT OF INTEREST............................... 41
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SCHEDULES: ---------
Schedule 1.52 Network Agreement
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Schedule 6.4 No Conflict
------------
Schedule 6.10 Encumbrances on Joint Venture Interest
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Schedule 6.13 Business Interests in the Territory
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JOINT VENTURE AGREEMENT
relating to
EXODUS ASIA-PACIFIC LTD.
THIS JOINT VENTURE AGREEMENT ("Joint Venture Agreement") relating to EXODUS ASIA-PACIFIC LTD., a company with limited liability organized under the laws of Bermuda made as of this 28th day of September, 2000.
RECITALS
A. EXODUS is in the business of providing mission critical Internet hosting,
managed and professional services and content distribution services to
business customers.
B. ASIA GLOBAL CROSSING is in the business of providing pan-Asian Internet and
long distance telecommunications facilities and services utilizing a
network of undersea digital fiber optic cable systems and associated
terrestrial backhaul capacity.
C. EXODUS and ASIA GLOBAL CROSSING desire to enter into a joint venture (the
"Joint Venture") which shall operate through a company organized under the
laws of Bermuda to be known as "Exodus Asia-Pacific Ltd." (the "Company")
on the terms and conditions set out below.
D. The Shareholders desire to set out the rights, duties and obligations of
the Shareholders in connection with the formation, ownership and operation
of the Company.
NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, the Shareholders hereto, intending to be legal bound hereby, agree as follows:
ARTICLE 1:
DEFINITIONS
-----------
Terms defined in the preamble, in the recitals and in the text hereof shall have their respective meanings when used herein, and the following terms used in this Joint Venture Agreement, whether singular or plural, shall (unless otherwise expressly provided herein or unless the context otherwise requires) have the following respective meanings:
1.1 "Acceptance" is defined in Section 5.35.3.
1.2 "Acceptance Period" is defined in Section 11.2.
1.3 "Affiliate" means any corporation, company, partnership, joint venture, firm and/or entity which Controls, is Controlled by, or is under common Control with a Shareholder, except that such term shall not include the Company.
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1.4 "Agreed Proportions" initially means 67% in respect of EXODUS and 33% in respect of ASIA GLOBAL CROSSING and thereafter the percentages which the nominal value of the Shares beneficially owned by each Shareholder respectively bears to the combined nominal value of the fully issued and paid-up Shares of the Company.
1.5 "ASIA GLOBAL CROSSING" means Asia Global Crossing Ltd., a company organized under the laws of Bermuda.
1.6 "ASIA GLOBAL CROSSING Director" is defined in Section 4.2(b).
1.7 "Bankruptcy" means the entry of an order for relief with respect to a Shareholder in proceedings under any bankruptcy, insolvency or similar law of the jurisdiction of organization of such Shareholder.
1.8 "Board" means the Board of Directors of the Company.
1.9 "Business" is defined in Section 2.1(a).
1.10 "Business Combination" is defined in Section 7.4(a).
1.11 "Buy-Out Event" means:
(a) The filing of an application by a Shareholder for, or its consent
to, the appointment of a trustee, receiver, custodian or similar
person under the applicable laws of the jurisdiction of organization
of such Shareholder, for the assets of a Shareholder;
(b) The entry of a final order, judgment or decree by any court of
competent jurisdiction appointing a trustee, receiver, custodian or similar
person under the applicable laws of the jurisdiction of organization of
such Shareholder, for the assets of a Shareholder;
(c) The failure by a Shareholder generally to pay its debts as they
become due or a Shareholder's admission in writing of its inability to pay
its debts as they become due;
(d) A Shareholder's Joint Venture Interest in the Company becoming
subject to the enforcement of any rights of a creditor of a Shareholder,
whether arising out of an attempted charge upon that Shareholder's Joint
Venture Interest by judicial process or otherwise, if that Shareholder
fails to effectuate the release of those enforcement rights, whether by
legal process, bonding, or otherwise, within one hundred eighty (180) days;
or
(e) The Bankruptcy of a Shareholder.
1.12 "Buy-Out Event Date" means the date of an occurrence of a Buy-Out Event.
1.13 "Closing" shall mean the "Closing" as defined in the Merger Agreement.
1.14 "Company" means "Exodus Asia-Pacific Ltd.", a company formed pursuant to this Joint Venture Agreement and organized under the laws of Bermuda and any successor thereto.
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1.15 "Confidential Information" means any intellectual property of non- public technical or business information written or orally disclosed or delivered by one Shareholder or any of its Affiliates (the "Disclosing Party") to another Shareholder or any of its Affiliates (the "Receiving Party"). Notwithstanding anything to the contrary in this Joint Venture Agreement, Confidential Information shall not include:
(i) any information or material that is publicly known or
available, or becomes publicly known or available, without any
act or omission of the Receiving Party;
(ii) any information or material which prior to disclosure was
rightfully in the possession of the Receiving Party without
restriction on use or disclosure;
(iii) any information or material that is rightfully received by the
Receiving Party from a non-party without an obligation of
confidence; or
(iv) any information or material that is independently developed by
the Receiving Party without use or reference to any
Confidential Information of the Disclosing Party.
1.16 "Contributed Assets" is defined in Section 3.1(c)(ii).
1.17 "Control", "Controlled" or "Controlling" means the control of a person exercised through the direct or indirect ownership of greater than fifty percent (50%) of the stock, shares or other voting interest of such person.
1.18 "Dedicated Private Extranet Network" shall mean a private IP Network connecting communities of interests.
1.19 "Defaulting Shareholder" is defined in Section 11.9.
1.20 "Director" means a director of the Company including, where applicable, an alternate director.
1.21 "Disposition," "Dispose" or "Disposing" refers to and means the sale, assignment, transfer, exchange, pledge or encumbrance or other disposition of all or any part of such Shareholder's Joint Venture Interest in the Company or of some other specified property, in any manner, whether, voluntarily or involuntarily, or by operation of law or otherwise; provided, however, that a merger or other business combination of
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EXODUS or ASIA GLOBAL CROSSING shall not be deemed a Disposition for purposes of this Joint Venture Agreement.
1.22 "Dispute" is defined in Section 8.1.
1.23 "Dollar" or "$." means U.S. Dollars.
1.24 "Effective Time" means the Closing.
1.25 "Entitlement" is defined in Section 5.3.
1.26 "Equity Share Capital" means all of the fully issued and paid up Shares of the Company.
1.27 "EXODUS" means EXODUS COMMUNICATIONS, INC., a Delaware corporation.
1.28 "EXODUS Core Technologies" means the "EXODUS Core Technologies" as defined in the Licensing Agreement.
1.29 "EXODUS Director" is defined in Section 4.2(a).
1.30 "EXODUS Services" means all technical, professional and other services required in connection with the design, development, construction and operation of data centers and the conduct of the Company's Business furnished to the Company by Exodus.
1.31 "EXODUS Standard Business Practices and Methodologies" means the standard business practices and methodologies as executed by EXODUS globally as part of EXODUS' global operations, as adapted to local conditions if necessary.
1.32 "EXODUS Technical Specifications and Standards" means the EXODUS technical specifications and standards as promulgated by EXODUS globally as part of EXODUS' global operations, as adapted to local conditions if necessary. The Exodus Technical Specifications and Standards shall be applicable to the distribution of the Company's Services pursuant to reseller agreements to be entered into between the Company and its customers.
1.33 "Export Administration Act" is defined in Section 6.11.
1.34 "Fiscal Year" means the annual accounting period of the Company, which is the twelve months ended December 31, except that for 2000, it is the period from the date of the Company's incorporation and ending on December 31, 2000.
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1.35 "GLOBAL CROSSING" means GLOBAL CROSSING LTD., a company organized under the laws of Bermuda.
1.36 "Indemnitees" is defined in Section 9.1.
1.37 "Intellectual Property Rights" means all patent rights, copyright rights (including, but not limited to, rights in music and audiovisual works and Moral Rights), trademark rights, trade secret rights, design rights and confidentiality rights and any other intellectual property rights recognized by the law of each applicable jurisdiction.
1.38 "Internet" means a series of interconnected networks linked together by a globally unique address space based on the Internet Protocol (or a subsequent amendment or replacement protocol) and which supports the exchange of data and other messages using Transmission Control Protocol/Internet Protocol (TCP/IP) (or a subsequent amendment or replacement protocol).
1.39 "Internet Backbone" means a wireline or wireless network which: (i) can or does (a) assign IP addresses or manage IP address assignments for machines or networks to which it is connected, (b) accept or deliver IP datagrams from machines or networks to which it is connected, or (c) maintain IP packet traffic to other machines or networks; and (ii) provides IP connectivity on a regional, national or international basis.
1.40 "Internet Data Center Services" means services such as hosting, co- location and content distribution for the Internet.
1.41 "Internet Protocols" or "IP" means the Internet Protocols as defined by the document titled RFC-91, by John Postell of the University of Southern California, dated 1981, or subsequent revisions thereof.
1.42 "Internet Web Hosting" means the provision of Internet connectivity interconnected with servers, located within data centers used for the purpose of accessing content and applications.
1.43 "Joint Venture" means the joint venture entered into pursuant to this Joint Venture Agreement.
1.44 "Joint Venture Agreement" means this Joint Venture Agreement, as originally executed and as amended from time to time in accordance with the terms hereof.
1.45 "Joint Venture Interest" means, with respect to each Shareholder, the Shares that are owned by such Shareholder and all rights appurtenant thereto as a Shareholder of the Company under the Company's Memorandum of Association and as provided under the applicable provisions of the laws of Bermuda.
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1.46 "Licensing Agreement" means the Licensing Agreement to be entered into by and between EXODUS and/or any of its Affiliates and the Company on or prior to the Effective Time in a form to be mutually agreed upon by the parties hereto which, at a minimum, shall grant to the Company an exclusive license in the Territory to all Intellectual Property Rights of EXODUS necessary for the Company to pursue the Business and for the use of all trademarks owned by EXODUS in connection with the Business in consideration for the payment by the Company to EXODUS of a reasonable royalty not less favorable than that granted to unaffiliated third parties which royalty shall begin to accrue and be payable as measured from the first fiscal quarter that the Company becomes profitable.
1.47 "Local Participant" is defined in Section 6.14(c).
1.48 "Losses" shall mean any claims, losses, liabilities, damages, penalties, costs and expenses, including reasonable legal fees and expenses, incident to any of the foregoing or incurred in investigating or attempting to avoid the same or to oppose the imposition thereof, or in enforcing any indemnity.
1.49 "Memorandum of Association" means the Memorandum of Association of the Company and related By-laws of the Company.
1.50 "Merger Agreement" means the Agreement and Plan of Merger, dated as of the date hereof, among EXODUS and GLOBAL CROSSING and certain affiliated companies, as the same may from time to time be amended, modified or supplemented.
1.51 "Moral Rights" shall mean any right of paternity or integrity, any right to claim authorship, to object to or prevent any distortion, mutilation or modification of, or other derogatory action in relation to the subject work whether or not such would be prejudicial to the author's honor or reputation, to withdraw from circulation or control the publication or distribution of the subject work, and any similar right, existing under judicial or statutory law of any country in the world, or under any treaty, regardless of whether or not such right is denominated or generally referred to as a "moral" right.
1.52 "Network Agreement" means the Network Services Agreement, Marketing and Cooperation Agreement, as amended, supplemented or otherwise modified from time to time, and to be executed by such parties in the form attached as Schedule 1.48 hereto on or prior to the Effective Time. -------------
1.53 "Notice of Proposed Sale" is defined in Section 11.2.
1.54 "Person" shall mean any individual, sole proprietorship, corporation, partnership, company with limited liability, unincorporated society or association, trust, or other legal entity.
1.55 "Qualified Initial Public Offering" is defined in Section 11.12.
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1.56 "Quorum" is defined in Section 7.2(e).
1.57 "Related Agreements" means the Licensing Agreement, the Network Agreements and the Services Agreement.
1.58 "Representatives" is defined in Section 10.1.
1.59 "Required Additional Equity Share Capital" is defined in Section 5.1.
1.60 "Restricted Business" shall mean the provision of physical space with Internet connectivity interconnected with servers or other types of data processing equipment (other than solely data communications/networking equipment).
1.61 "Sale Notice" is defined in Section 11.10(b).
1.62 "Seller" is defined in Section 11.10(a).
1.63 "Selling Shareholder" is defined in Section 11.2.
1.64 "Services" means the web hosting services provided by the Company directly or through one or more of its subsidiaries in the Territory.
1.65 "Services Agreement" means the Services Agreement to be entered into by and between EXODUS and the Company on or prior to the Effective Time in a form to be mutually agreed upon by the parties hereto for the provision of the EXODUS Services to the Company and which shall provide for the reimbursement by the Company of EXODUS' fully-burdened costs of providing such EXODUS Services.
1.66 "Shareholder" means each of EXODUS and ASIA GLOBAL CROSSING and each other Person that from time to time becomes a Shareholder pursuant to the terms of this Joint Venture Agreement.
1.67 "Shares" means ordinary shares of par value $0.01 each in the capital of the Company with the rights, preferences and designations set out in the Company's Memorandum of Association.
1.68 "Subsidiary" or "Subsidiaries" means with respect to any Person (other than a natural individual), any other Person Controlled by such Person.
1.69 "Tag-Along Right" is defined in Section 11.10(a).
1.70 "Tag-Along Notice" is defined in Section 11.10(b).
1.71 "Tax" and "Taxes" shall mean any and all national, local and foreign taxes, assessment and other governmental charges, duties, impositions and liabilities including taxes based upon or measured by gross receipts, income, profits, sales, use or occupation, and value added, ad valorem, transfer, franchise, withholding, payroll,
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recapture, employment, excise and property taxes, together with all interest, penalties and additions imposed with respect to such amounts.
1.72 "Technical Data" means all documentation and other technical information provided by any Shareholder and/or its Affiliates pursuant to this Joint Venture Agreement or the Related Agreements.
1.73 "Term" means the Term of this Joint Venture Agreement as set out in Section 3.3.
1.74 "Termination Notice" is defined in Section 3.3.
1.75 "Territory" means the collective reference to Brunei, Burma, Cambodia, China (including Hong Kong), Fiji, Indonesia, Japan, Kiribati, Laos, Macau, Malaysia, Marshall Islands, Federated States of Micronesia, Mongolia, Nauru, North Korea, Palau, Papua New Guinea, Philippines, Samoa (formerly Western Samoa), Singapore, Solomon Islands, South Korea, Taiwan, Thailand, Tonga, Tuvalu, Vanuatu and Vietnam.
1.76 "Transfer Taxes" is defined in Section 3.1(c)(ii).
1.77 "Trigger Event" is defined in Section 3.3.
1.78 "Valuation Date" is defined in Section 14.3.
ARTICLE 2:
OBJECT OF THE COMPANY; NAME
---------------------------
2.1 Business. The Shareholders are entering into the Joint Venture and
-------- forming the Company under the laws of Bermuda for the purpose and scope as follows:
(a) Purpose. The purpose of the Joint Venture is to directly or
-------
indirectly through one or more subsidiaries provide EXODUS' existing and
future services made available to customers including, without limitation,
Internet Data Center Services and Internet connectivity for data centers,
managed service offerings, professional services and content distribution
in accordance with EXODUS' Standard Business Practices and Methodologies in
the Territory (the "Business").
(b) Other Activities. Subject to Section 7.4, the Shareholders may
----------------
expand the scope of the Business as provided herein and will determine
appropriate business models covering any expanded businesses.
2.2 Name. The name of the Company shall be "Exodus Asia-Pacific Ltd." in
---- English, and all business of the Company shall be conducted under such name or any other name approved at a general meeting of the Shareholders of the Company, but in any case only to the extent permitted by applicable law and only to the extent that the license granted to the Company
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for the use of the "EXODUS" trade name and all associated Intellectual Property Rights is permitted under the terms and conditions of the Licensing Agreement.
2.3 Principal Place of Business. The registered office of the Company
--------------------------- shall be in Hamilton, Bermuda and the principal place of business of the Company at which the records required to be maintained by the laws of Bermuda are to be kept shall be in such place or places as the Board shall specify.
ARTICLE 3:
COMPLETION
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3.1 Formation of the Company. As soon as practicable following the full
------------------------
execution of this Joint Venture Agreement and in accordance with all
applicable law:
(a) Organization. The Shareholders shall cause the Company to be
-------------
established under the laws of Bermuda, or such other jurisdiction of
organization as may be mutually agreed by the Shareholders, on the
following basis:
(i) the Company shall be a company limited by Shares;
(ii) the name of the Company shall be "Exodus Asia-Pacific
Ltd." in English or such other name as agreed by the Shareholders;
(iii) the registered head office of the Company will be as
specified in Section 2.3; and
(iv) the authorized share capital of the Company shall be
$10.00 divided into 1,000 Shares of $0.01 each.
(b) Subscription of Shares. Upon the Closing, or on a subsequent
----------------------
date to be mutually agreed by the Shareholders, the Shareholders shall
subscribe for their respective Shares as set out below and pay to the
Company (into a designated bank account at in Bermuda) in full in cash:
Shareholder No. of Shares Consideration
----------- ------------- -------------
EXODUS 670 U.S. $ 67,000,000
ASIA GLOBAL CROSSING 330 U.S. $ 33,000,000
Total 1000 U.S. $100,000,000
(c) In-Kind Capital Contributions.
-----------------------------
(i) Except for the Intellectual Property Rights licensed pursuant
to the Licensing Agreement and subject to Section 6.14 concurrent with
the subscription
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of Shares provided for in subsection (b) above, each of the
Shareholders shall contribute to the Company, free and clear of all
liens, security interests, mortgages or other encumbrances, all
tangible and intangible assets, real and personal, necessary to the
conduct of the Business in the Territory now owned or hereafter
acquired by such Shareholders, including all equity ownership
interests in Persons, data centers, equipment, real property,
improvements, software, applications, databases, employees, customers,
agreements, prospective Web addresses, licenses and permits, in each
case to the Company or to the Company's Subsidiaries organized to
pursue the Business in the Territory, which assets shall include at a
minimum those set forth on Schedule 6.13 (collectively, the
-------------
"Contributed Assets").
(ii) Each Shareholder shall pay all sales, use, transfer, real
property transfer, recording, gains, stock transfer and other similar
taxes and fees ("Transfer Taxes") incurred in connection with their
respective in-kind capital contributions to the Company and shall be
responsible for filing all necessary documentation and tax returns
with respect to such Transfer Taxes.
(d) Each of the Shareholders shall take or cause to be taken the
following steps at Directors' and Shareholders' meetings of the Company (as
appropriate):
(i) the appointment of the individuals specified in Section 12.1
as Directors of the Company ;
(ii) the appointment of KPMG as statutory auditor(s) of the
Company;
(iv) the allotment and issue by the Company of 670 Shares to
EXODUS;
(v) the allotment and issue by the Company of 330 Shares to ASIA
GLOBAL CROSSING; and
(vi) the execution of the Licensing Agreement, the Network
Agreements and the Services Agreement.
(e) The Shareholders shall commence efforts to identify, recruit and
hire senior management personnel, subject to Board approval and
appointment.
3.2 Payment for Shares. The Shares shall be subscribed for cash and shall
------------------ be issued only upon the Company's receipt of payment in full.
3.3 Duration. The Term of this Joint Venture Agreement shall commence on
-------- the Effective Time and shall continue in effect until terminated upon:
(a) The mutual agreement of all Shareholders;
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(b) if the Effective Time does not occur and the Merger Agreement is
terminated; or
(c) A resolution of Shareholders (subject to Section 7.4(a)(ii)) or of
a court with jurisdiction over the Company's affairs causing the Company to
be wound-up.
Upon the occurrence of the event specified in Section 3.3(a) ("Trigger Event"), either Shareholder may, within twenty-one (21) days of the Trigger Event, serve a notice on the other Shareholder stating its desire to terminate this Joint Venture Agreement (a "Termination Notice") whereupon the Company shall be wound- up and dissolved in accordance with Article 13 hereof.
(d) In the event that EXODUS shall no longer have the right to appoint
a majority of the Directors comprising the Company's Board, then upon the
occurrence of any of the following events:
(i) the unauthorized use by the Company of the EXODUS Core
Technologies or EXODUS Marks (as each term is defined in the
Licensing Agreement), and such use is not promptly
terminated by the Company upon its receipt of notice
thereof; or
(ii) the failure of the Company to adhere in any material
respect to EXODUS Technical Specifications and Standards or
the EXODUS Standard Business Practices and Methodologies
and such failure is not cured by the Company within thirty
(30) days upon its receipt of notice thereof; or
(iii) the failure of the Company to make any payment under the
Licensing Agreement and such failure continues for a period
of not less than sixty (60) days; or
(iv) any action by the Company which materially injures or
degrades the "EXODUS" brand;
then EXODUS may by written notice served upon the other Shareholders (a "EXODUS Termination Notice") terminate this Joint Venture Agreement whereupon the Company shall be wound-up and dissolved in accordance with Article 13 hereof.
ARTICLE 4:
APPOINTMENT OF DIRECTORS
------------------------
4.1 Number. The maximum number of Directors holding office at any time
------ shall be six (6) unless otherwise approved by the Shareholders in accordance with this Joint Venture Agreement.
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4.2 Appointment. The Directors of the Company shall be appointed as
----------- follows:
(a) EXODUS shall be entitled to appoint four (4) Directors to be
designated as the EXODUS Directors ("EXODUS Directors"); and
(b) ASIA GLOBAL CROSSING shall be entitled to appoint two (2) Director
to be designated as the ASIA GLOBAL CROSSING Director ("ASIA GLOBAL
CROSSING DIRECTORS").
In the event that the Board shall delegate any of its responsibilities to a committee of the Board, the proportion of EXODUS Directors to ASIA GLOBAL CROSSING Directors shall be no greater than two to one (2-1)
4.3 Appointment of Chief Executive Officer. As soon as practicable after
-------------------------------------- the Effective Time, EXODUS shall nominate a candidate for election as the Company's Chief Executive Officer subject to the approval of the Company's Board of Directors (the "Chief Executive Officer"). The Chief Executive Officer shall serve for four (4) years from the date of such appointment. If the Chief Executive Officer's employment shall terminate for any reason during this four year period, EXODUS may nominate a further Chief Executive Officer to serve for the remainder of such four (4) year term, subject to Board approval.
ARTICLE 5:
ADDITIONAL FUNDING
------------------
5.1 Subscription for Additional Equity Share Capital by the Shareholders.
-------------------------------------------------------------------- Subject to Section 11.9 hereinbelow, as determined by the Board, each Shareholder may required to subscribe for additional Shares in the Agreed Proportions, up to an aggregate additional amount of (i) $200,000,000 (including the $100,000,000 initial capital subscription) during the fiscal year, (ii) $200,000,000 during the second year, and (iii) $200,000,000 during the third year, each such period being measured from the Effective Time. Such Shares shall be subscribed for in such amount and at such times as determined by the Board upon a simple majority vote at which a Quorum is present and acting throughout, as may be necessary and/or prudent to fund the requirements of the Company as determinedin the sole discretion of the Board (the "Required Additional Equity Share Capital"). All subscriptions for Required Additional Equity Share Capital shall be made at a subscription price per Share based upon the valuation of the Company at the time of subscribtion, as determined in good faith by the Board. If any other person shall become a Shareholder, such person shall be obligated to subscribe for addtional Shares in the Agreed Proportions, as amended, at the same time as the existing Shareholders and the REquired Additional Equity Share Capital shall be increased in accordance with the following formula:
E = R x EQ'/ EQ
where:
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E = the Required Additional Equity Share Capital after admission
of the additional Shareholder, in U.S. Dollars.
R = the Required Additional Equity Share Capital prior to
admission of such Additional Shareholder, in U.S. Dollars.
EQ' = the aggregate amount of Equity Share Capital, in U.S.
Dollars, paid in by all Shareholders of the Company,
including the additional Shareholder.
EQ = the aggregate amount of Equity Share Capital, in U.S.
Dollars, paid in by all Shareholders of the Company,
excluding the additional Shareholder.
Notwithstanding the foregoing, the Shareholders shall cause the Company to procure that the requirements of the Company for further capital to finance the Business are met, as far as reasonably practicable in order to reduce the Shareholders' capital contributions and maximize their return on invested equity on the most favorable terms readily available which may include, without limitation: borrowings from banks and other similar sources on the most favorable terms reasonably obtainable as to interest, repayment and security, but without allowing a prospective lender a right to participate in the Equity Share Capital of the Company as a condition of a loan.
5.2 Notice and Acceptance. Shareholders must respond, if at all, to the
--------------------- Notice within thirty (30) days of receipt, informing the Company in writing how many Shares they wish to purchase, which may be more or less than their Entitlement (an "Acceptance"). Such Acceptances, once given, shall be irrevocable by the Shareholder. If, with respect to any Notice, Shareholders fail to give Acceptances within the requisite time period, in respect of all Shares offered, the Company shall have ninety (90) days after the expiration of the time in which the Acceptances are required to be delivered, in which to sell the number of Shares for which Acceptances have not been received at a price not less than that described in the Notice to such persons as holders of a majority of the Shares held by Shareholders who have submitted Acceptances shall approve.
5.3 Excess Acceptances. If the number of Shares in respect of which
------------------ Acceptances have been received exceeds the number of Shares being offered, the Company may (i) increase the size of the offering to equal the number of Shares in respect of which Acceptances have been received or (ii) allot each accepting Shareholder its Entitlement and allot the balance of the Shares among those Shareholders whose Acceptances are for a greater number of Shares than their Entitlement, pro rata in accordance with their Entitlement, but not to exceed the number of Shares specified in their respective Acceptances.
5.4 Loan Finance. Subject to Section 7.4(a), following the subscription
------------ by the Shareholders of all Required Additional Equity Share Capital or otherwise at any time, the Shareholders may cause the Company to procure that the requirements of the Company for
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working capital to finance the Business are met, as far as reasonably practicable, by borrowings from banks and other similar sources on the most favorable terms reasonably obtainable as to interest, repayment and security, but without allowing a prospective lender a right to participate in the Equity Share Capital of the Company as a condition of a loan.
5.5 Guarantees Given by Shareholders. Any guarantee or indemni...
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