Articles of Association – Global Crossing Ltd. LDC
AMENDED AND RESTATED
ARTICLES OF ASSOCIATION
OF
GLOBAL CROSSING LTD., LDC
January [ ], 1998
THE COMPANIES LAW
COMPANY LIMITED BY SHARES
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AMENDED AND RESTATED
ARTICLES OF ASSOCIATION
OF
GLOBAL CROSSING LTD., LDC
INTERPRETATION
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1. (a) The regulations contained or incorporated in Table "A" in the First
Schedule of the Companies Law (1995 Revision) shall not apply to this
Company and the following regulations shall comprise the Articles of
Association of the Company.
(b) In these Articles the words standing in the first column of the table
next hereinafter contained shall bear the meanings set opposite to
them respectively in the second column hereof, if not inconsistent
with the subject or context.
Words Meanings
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Administration Agreement The agreement dated March 25, 1997 or any
subsequent agreement in substitution therefor,
between the Company and the Administrator setting
forth the terms and conditions under which the
Administrator will be engaged by the Company.
Administrator W.S. Walker & Company, or such other independent
Cayman Islands company engaged by the Company to
perform certain administrative functions for and
on behalf of the Company.
Affiliate Shall mean any other person, directly or
indirectly, controlling or controlled by or under
direct or indirect common control with such
person.
Bank Event of Default Shall mean an event of default under the Senior
Credit Facilities or under the Senior Notes (each
as defined in the Purchase Agreement) or under
the Purchase Agreement that would permit the
lenders under such agreement or instrument to
accelerate the maturity of amounts owing
thereunder.
Board of Directors The Board of Directors of the Company.
Business Day Any day (except Saturday and Sunday) on which
banks in the Cayman Islands, Bermuda and New
York, New York are open for business.
Cash Payment The initial payment made to the Company in respect
of Shares.
Class A Member A holder of Class A Shares.
Class B Member A holder of Class B Shares.
Class C Member A holder of Class C Shares.
Class D Member A holder of Class D Shares.
Class E Member A holder of Class E Shares.
Class A Shares The Company's Class A Common Shares, par value of
U.S.$0.000001 per share.
Class B Shares The Company's Class B Common Shares, par value of
U.S.$0.000001 per share.
Class C Shares The Company's Class C Common Shares, par value of
U.S.$0.000001 per share.
Class D Shares The Company's Class D Common Shares, par value of
U.S.$0.000001 per share.
Class E Shares The Company's Class E Common Shares, par value of
U.S. $0.000001 per share.
Code The United States Internal Revenue Code of 1986,
as amended.
Company Global Crossing Ltd., LDC.
Companies Law The Companies Law (1995 Revision) of the Cayman
Islands and any statutory amendment or modification
thereof. Any reference to a provision of the
Companies Law is to that provision as modified by
law for the time being in force.
Distribution All payments or distributions to holders of Shares.
Dollars The lawful currency of the United States.
Fiscal Quarters Shall have the meaning set forth in Article 20
hereof.
Fiscal Year Shall have the meaning set forth in Article 20
hereof.
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Investment Any investment authorized by the Memorandum of
Association of the Company.
in writing Written, printed, lithographed, photographed,
telefaxed or telexed or represented by any other
substitute for writing or partly one and partly
another.
Manager Initially, PCG, in its capacity as Manager.
Member A person who is registered as the holder of
Shares in the Register for the time being kept by
or on behalf of the Company.
month Calendar month.
"Net Income" or "Net Loss" For any taxable period, the net income or net
loss of the Company for such period, determined
in accordance with section 703(a) of the Code,
including any items that are separately stated
for purposes of section 702(a) of the Code, as
determined in accordance with Federal income tax
accounting principles with the following
adjustments: (i) any income of the Company that
is exempt from Federal income tax (or would be
exempt if the Company were subject to Federal
income taxation) shall be included as income,
(ii) any expenditures of the Company described in
section 705(a)(2)(B) of the Code or treated as
section 705(a)(2)(B) of the Code expenditures
pursuant to Treasury Regulation section 1.704-
1(b)(2)(iv) shall be treated as current expenses,
and (iii) without giving effect to any
adjustments made pursuant to section 734 or 743
of the Code.
Net Proceeds Proceeds derived from the Company's investments,
including all cash proceeds and other property
received by the Company in respect of its
investments, including without limitation, any
dividends, interest or other amounts received on
investments and any proceeds received in
connection with dispositions in whole or in part
of any Investment.
Non-Qualified Person A person or persons holding Shares in breach of
any restriction mentioned in Article 14 hereof.
PCG Pacific Capital Group, Inc., a California
corporation.
Purchase Agreement The Note Purchase Agreement (as defined in the
Stockholders Agreement).
Register The register of members of the Company maintained
in accordance with Section 39 of the Companies
Law as supplemented by these Articles.
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Seal The common seal of the Company including any
facsimile thereof.
Shares The Company's Class A Shares, Class B Shares, Class
C Shares, Class D Shares and Class E Shares.
signed Includes a signature or representation of a
signature affixed by mechanical means.
Stockholders Agreement Stockholders Agreement, dated as of March 25, 1997,
among the Company and the Members party thereto, as
amended, supplemented or otherwise modified from
time to time.
Subscription Agreement As defined in the Stockholders Agreement.
Term The term of the Company shall mean thirty years
from the date of organization subject to earlier
termination.
Treasury Regulations The regulations promulgated under the Code by the
United States Treasury Department.
U.S. Person The term "U.S. Person" shall mean (i) a citizen or
resident of the United States, (ii) a corporation,
partnership, or other entity created or organized
in the United States or under the laws of the
United States or of any political subdivision
thereof, (iii) an estate whose income is includible
in gross income for United States Federal income
tax purposes regardless of its source, or (iv) a
trust whose administration is subject to the
primary supervision of a United States court and
which has one or more United States fiduciaries who
have the authority to control all substantial
decisions of the trust.
2. In these Articles, unless there be something in the subject or context
inconsistent with such construction:
(a) Words importing the singular number shall include the plural number
and vice versa.
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(b) Words importing the masculine gender only shall include the feminine
gender.
(c) Words importing persons only shall include companies or associations
or bodies of persons, whether corporate or not.
(d) The word "may" shall be construed as permissive and the word "shall"
shall be construed as imperative.
(e) References to enactments shall include reference to any modification
or re-enactments thereof for the time being in force.
(f) References to dollars (or $) are references to dollars of the United
States of America.
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3. Subject to the two preceding Articles any words defined in the Companies
Law shall, if not inconsistent with the subject or context, bear the same
meaning in these Articles.
PRELIMINARY
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4. The preliminary expenses incurred in forming the Company and in connection
with its initial offer and issue of its Shares shall be paid by the
Company.
5. The business of the Company shall be commenced as soon after the
organization of the Company as practicable.
SITUATION OF REGISTERED OFFICE OF THE COMPANY
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6. (a) The Registered Office shall be at such address in the Cayman Islands
as the Manager shall from time to time determine.
(b) The Company in addition to its Registered Office may establish and
maintain such other offices and places of business and agencies in the
Cayman Islands, Bermuda or elsewhere as the Manager may from time to
time determine.
MANAGEMENT
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7. The management of the Company shall be vested exclusively with the Manager
in accordance with these Articles and subject to the Stockholders
Agreement; provided, however, that the Manager shall have no authority with
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respect to Global Telesystems Holdings Ltd., a Bermuda corporation and a
wholly owned subsidiary of the Company ("GTH"), and the subsidiaries of
GTH. All authority, including, without limitation, the election of
directors, with respect to GTH and its subsidiaries shall be vested
exclusively with the Board of Directors except as provided in the
Stockholders Agreement.
8. Except as provided under the Companies Law and as otherwise explicitly
stipulated in these Articles of Association, Members shall have no part in
the management of the Company and shall have no authority or right in their
capacity as Members to act on behalf of the Company in connection with any
matter. Employees of the Company and the Administrator shall have
authority to act on behalf and in the name of the Company only to the
extent authorized by the Manager or the Administration Agreement or as
expressly authorized by these Articles.
SHARE CAPITAL; RIGHTS
---------------------
9. (a) The authorized share capital of the Company at the date of the
adoption of these Articles is US$ $50,000, divided into 1,000,000,000
Class A Shares of par value $0.000001 per share, 1,000,000,000 Class B
Shares of par value $0.000001 per share, 1,000,000,000 Class C Shares
of par value $0.000001 per share, 3,000,000,000 Class D Shares of par
value $0.000001 per share, 1,000,000,000 Class E shares of par value
$0.000001 per share and 43,000,000,000 undesignated shares of par
value $.000001 per share.
(b) Subject to the Stockholders Agreement, each Class B Share shall be
exchangeable at any time or from time to time, at the option of the
holder thereof, into a Class A Share.
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(c) Each Class D Share shall be exchangeable at any time or from time to
time, at the option of the holder thereof, into (i) a Class E Share
upon the payment to the Company by the holder thereof of a cash
payment of US $2.20 per share (less actual cash distributions received
by such time on each Class C Share) or (ii) a fractional share of a
Class E Share, where the numerator of such fraction shall be the
difference between (x) the market value of each Class E Share at the
time of such exchange as determined by resolution of the Directors and
(y) US $2.20 (less actual cash distributions received by such time on
each Class C Share) and where the denominator of such fraction shall
be such market value. If any holder of a Class D Share shall exchange
its Class D Shares into Class E Shares in accordance with clause (ii)
of the preceding sentence then, at the time of any such exchange, the
holder shall receive from the Company, for no additional
consideration, a warrant (exercisable for ten years from the date of
the exchange) to receive additional Class E Shares in an amount equal
to the difference between (x) the number of Class D Shares exchanged
and (y) the number of Class E Shares received, in each case pursuant
to clause (ii) of the preceding sentence. The per share exercise price
in respect of such warrant shall be the per share market value of the
Class E Shares as determined in accordance with the foregoing clause
(ii). If the Company shall make any distribution or dividend on the
Common Stock in securities of another entity, the holder of each Class
D Share shall be entitled at its option to receive in exchange for
such Class D Share a warrant (exercisable for ten years from the date
of the exchange) to purchase voting common stock of such entity at the
equivalent of US $2.20 per share (less actual cash distributions
received by such time on each Class C Share), adjusted to give effect
to the revised capitalization structure of such new entity.
Immediately prior to an initial public offering or a change in control
transaction, each Class E Share shall be exchangeable, at the option
of the holder thereof, into a Class B Share for no consideration other
than the surrender of such Class E Share.
(d) Any share exchangeable pursuant to the terms of this Article into a
Share (including a multiple or fraction thereof) of another class
shall upon satisfaction of all preconditions to such exchange as set
forth above and subject to the Stockholders Agreement, be repurchased
by the Company in such manner as the Manager or the Board of Directors
shall determine and the Company shall issue such Share (including a
multiple or fraction thereof) of such other class as provided for
herein in consideration thereof, and such transaction shall not
constitute a Transfer in terms of the Stockholders Agreement.
ALTERATION OF SHARE CAPITAL
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10 The Company may from time to time by ordinary resolution increase the share
capital by such sum, to be divided into shares of such amount as the
resolution shall prescribe.
11 The new Shares shall be subject to the same provisions with reference to
dividend, distribution, lien, transfer, transmission, forfeiture and
otherwise as the Shares in the original share capital.
12 The Company may by ordinary resolution:
(a) consolidate and divide all or any of its share capital into shares of
larger amount than its existing Shares;
(b) sub-divide its existing Shares, or any of them into shares of smaller
amount than is fixed by the Memorandum of Association, subject
nevertheless to the provisions of Section 12 of the Companies Law; and
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(c) cancel any shares which, at the date of the passing of the resolution,
have not been taken or agreed to be taken by any person.
13 The Company may by special resolution reduce its share capital and any
capital redemption reserve in any manner authorized by law.
NON-QUALIFIED PERSONS
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14 The Manager may impose such procedures and restrictions as it considers
necessary or desirable for the purpose of ensuring that no Shares of the
Company are held by any person or persons in circumstances (whether
directly or indirectly affecting such person or persons and whether taken
alone or in conjunction with any other person or persons, connected or not,
or any other circumstance appearing to the Manager to be relevant) which in
the opinion of the Manager might result in the Company incurring any tax
liability, the Company being involved in any litigation, the Company
becoming a reporting person, or otherwise subject to any other requirements
it was not subject to immediately prior to such transaction, under United
States federal or state securities laws or regulations, the Company or any
of its subsidiaries becoming a "controlled foreign corporation" under
section 951 et seq. of the Code, any person becoming a "U.S. shareholder"
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under section 951 et seq. of the Code, or the Company being registered or
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regulated as an investment company under the United States Investment
Company Act of 1940, as amended, or suffering any other pecuniary or fiscal
disadvantage or other adverse effect which the Company might not otherwise
incur or suffer.
15 A person who becomes aware that he is holding or owning Shares in breach of
any restriction mentioned in Article 14 above shall promptly notify the
Manager in writing of his status as a Non-Qualified Person.
16 If it comes to the notice of the Manager that any Shares are so held by any
such Non-Qualified Person, the Manager, by written notice, will instruct
the Non-Qualified Person as to the steps to be taken to cure such status in
accordance with the provisions of these Articles, and such Non-Qualified
Person will immediately comply with such instructions.
17 No person shall be recognized by the Company as holding any Share upon any
trust, and the Company shall not be bound by or recognize (even when having
notice thereof) any equitable, contingent, future or partial interest in
any Share, or (save only as by these Articles otherwise provided or as by
law required) any other right in respect of any Share, except an absolute
right thereto in the Register.
18 The Manager shall keep or cause to be kept a Register as required by
Section 39 of the Companies Law.
19 The Manager in each year shall prepare or cause to be prepared an annual
return and declaration setting forth the particulars required by Section
186 of the Companies Law and deliver a copy thereof to the Registrar of
Companies.
FISCAL PERIODS
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20 The "Fiscal Year" of the Company shall end on December 31 of each year.
The "Fiscal Quarters" of the Company shall end on March 31, June 30,
September 30 and December 31 of each Fiscal Year.
PURPOSES OF THE COMPANY
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21 Without limiting the objects of the Company as set forth in the Company's
Memorandum of Association, the principal purposes for which the Company is
established are for seeking capital appreciation through investment in the
securities of companies engaged in the development, sales and operation of
telecommunications systems and to engage in all activities and transactions
as the Board of Directors may deem reasonably necessary or advisable or
incidental in connection therewith.
AUTHORITY OF THE MANAGER
------------------------
22 Subject to Articles 7 and 113 and the Stockholders Agreement, the Manager
shall have the power by itself on behalf and in the name of the Company to
carry out any and all of the objectives and purposes of the Company set
forth in the Memorandum of Association, and to perform all acts and enter
into and perform all contracts and other undertakings which it may deem
necessary or advisable or incidental thereto, including, without
limitation, the power to:
(a) engage the Administrator under such terms and conditions as the
Manager shall determine;
(b) open, maintain and close accounts with brokers, dealers, banks,
currency dealers and others, including the Manager and its affiliates,
and issue all instructions and authorizations to entities regarding
the purchase and sale or entering into, as the case may be, of
securities, options, certificates of deposit, bankers acceptances,
agreements for the lending of portfolio securities and other assets,
instruments and investments for the purpose of seeking to achieve the
Company's purposes as well as to facilitate capital contributions,
distributions, withdrawals, the payment of Company expenses and the
affairs of the Company in general;
(c) open, maintain and close bank accounts and draw cheques or other
orders for the payment of monies;
(d) acquire, lease, sell, hold or dispose of any assets or investments in
the name of or for the account of the Company or enter into any
contract or endorsement in the name of or for the account of the
Company with respect to any such assets or investments or in any other
manner bind the Company to acquire, lease, sell, hold or dispose of
any such assets or investments whatsoever on such terms as it shall
determine and to otherwise deal in any manner with the assets of the
Company in accordance with the purposes of the Company;
(e) borrow money, post margin on securities or enter into transactions
having a similar leveraging effect or for temporary purposes on behalf
of the Company, from any source or with any party, upon such terms and
conditions as it may deem advisable and proper, to execute promissory
notes, drafts, bills of exchange and other instruments and evidences
of indebtedness and to secure the payment thereof by mortgage, pledge
or assignment of or security interest in all or any part of property
then owned or thereafter acquired by the Company, and refinance,
recast, modify or extend any of the obligations of the Company and the
instruments securing those obligations;
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(f) employ, retain, or otherwise secure or enter into contracts,
agreements and other undertakings with persons in connection with the
management and operation of the Company, including, without
limitation, any attorneys and accountants, and including, without
limitation, contracts, agreements or other undertakings and
transactions with the Manager, any other Member, or any person
controlling, under common control with or controlled by the Manager or
any other Member, all on such terms and for such consideration as the
Manager deems advisable; provided, however, that any such contracts,
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agreements or other undertakings and transactions with the Manager,
any other Member or any person controlling, under common control with
or controlled by the Manager or any other Member shall be on terms and
for consideration which are arm's length and fair to the parties
consistent with the fiduciary standards applicable to the Member;
(g) take any and all action which is permitted under the Companies Law and
which is customary or reasonably related to the operation of the
Company;
(h) make such elections under the Code, and other relevant tax laws as to
the treatment of items of Company income, gain, loss, deduction and
credit, and as to all other relevant matters, as the Manager deems
necessary or appropriate, including, without limitation, determination
of which items of cash outlay are to be capitalised or treated as
current expenses, and selection of the method of accounting and
bookkeeping procedures to be used by the Company;
(i) bring or defend, pay, collect, compromise, arbitrate, resort to legal
action, or otherwise adjust claims or demands of or against the
Company;
(j) deposit, withdraw, invest, pay, retain and distribute the Company's
funds in a manner consistent with the provisions of these Articles;
(k) cause the Company to carry such insurance as the Manager deems
necessary to protect it and any other individual or entity entitled to
indemnification by the Company pursuant to Article 27 hereof;
(l) do any and all acts on behalf of the Company, and exercise all rights
of the Company, with respect to its interest in any property or any
person, firm, corporation or other entity, including, without
limitation, the voting of securities, participation in arrangements
with creditors, if any, the institution and settlement or compromise
of suits and administrative proceedings and other like or similar
matters; and
(m) authorize any officer, director, employee or other agent of the
Manager and its subsidiaries or any Member, employee or agent of the
Company to act for and on behalf of the Company in any or all of the
foregoing matters and all matters incidental thereto as fully as if
such person were the Manager.
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REMOVAL OF THE MANAGER
----------------------
23 (a) The Board of Directors may remove the Manager (i) upon the vote of
eleven members of the Board of Directors, for any reason, or (ii) upon
the vote of a majority of the members of the Board of Directors
following a determination, by a court of competent jurisdiction no
longer subject to review or appeal, that the Manager had been grossly
negligent or engaged in willful misconduct in the performance of its
duties hereunder.
(b) Upon the removal of the Manager in accordance with the provisions of
Article 23(a), or the resignation or death of the Manager, the Board
of Directors may appoint a new Manager upon the vote of eight members
of the Board of Directors. Any new Manager shall be a shareholder of
the Company.
ADMINISTRATOR
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24 The Manager will appoint the Administrator and shall entrust to and confer
upon the Administrator so appointed certain of the powers exercisable by it
as the Manager upon such terms and conditions including the right of the
Administrator to remuneration and with such restrictions and with such
powers of delegation as it thinks fit collaterally with or to the exclusion
of its own powers.
25 Subject to obtaining the consent of the Manager, which may be withheld in
its sole discretion, the Administrator may assign, sub-contract or delegate
the performance of any of its duties either in whole or in part, to such
persons or corporations as its deems fit, provided, however, that an
assignment, as the case may be, and/or any subcontracting or delegation of
administrative functions to an Affiliate of the Administrator shall not
require a special resolution.
ACTIVITIES OF MANAGER; CONFLICTS OF INTEREST
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26 Except as specifically provided in this Article 26 or with respect to the
construction, management or operation of, or sale of capacity on, (i)
submarine fiber optic cable telecommunications systems and directly related
services (including, without limitation, spurs to the Cable System (as
defined in the Stockholders Agreement)), (ii) terrestrial fiber optic cable
telecommunications systems and (iii) satellite telecommunications systems
which are competitive with fiber optic cable telecommunications systems
owned by the Company (collectively, the "Company Business") these Articles
shall not be construed in any manner to preclude the Manager or its
Affiliates from engaging in any activity whatsoever, including, without
limitation, receiving reasonable compensation for services from companies
in which the Company invests, managing investments, advising entities whose
investment objectives are the same as or overlap with those of the Company,
participating in investments made directly by any stockholder or the
Company (without regard to whether such stockholder or the Company has
secured its full desired investment position), entering into any brokerage
or consulting arrangements with or acting as a director or officer of,
advisor to or participant in any corporation, partnership, trust or other
business entity or receiving compensation or profit therefor. Except with
respect to companies primarily engaged in the Company Business, the Manager
and its Affiliates shall not be precluded from investing in, or causing the
Company to invest in, companies that are competitive with the Company or
companies that engage in business with affiliates of the Manager. The
foregoing notwithstanding, the provisions of this Article 26 shall not
preclude the Manager or its Affiliates from (x) engaging in any such
activity or making any such investment if the Board of Directors chooses
not to authorize the Company to pursue such activity or investment
presented to the Finance Committee of the Board of Directors by the Manager
or its Affiliates or (y) making passive investments in public companies.
The provisions of this
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Article 26 shall terminate upon the occurrence of the IPO (as defined in
the Stockholders Agreement).
INDEMNIFICATION AND EXCULPATION
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27 (a) To the full extent permitted by law, the Company, out of the Company's
assets and not out of the assets of any Member, shall indemnify and
hold harmless the Manager, the Administrator and any partner,
director, officer, employee or agent of the Manager and the
Administrator, and/or the legal representatives or controlling persons
of any of them and any employee or agent of the Company and each
member of the Board of Directors (herein collectively called the
"Indemnified Persons"), from and against any loss, expense, judgment,
settlement, fee and related expenses (including attorneys' fees and
expenses), costs or damages suffered or sustained by reason of being
or having been the Manager, the Administrator, an officer, partner,
employee or agent (or a legal representative or controlling person of
any of them) of them or any employee or agent of the Company or any
member of the Board of Directors, or arising out of or in connection
with action or failure to act on the part of such Indemnified Person
unless such act or failure to act shall have been finally, judicially
determined to have resulted from the wilful misconduct, bad faith or
knowing violation of law of such Indemnified Person. The Company
shall advance to any Indemnified Person reasonable attorneys' fees and
other costs and expenses incurred in connection with the defense of
any action or proceeding which arises out of conduct which is the
subject of the indemnification provided hereunder. Each Indemnified
Person shall agree, as a precondition to any advance to such
Indemnified Person as aforesaid, that in the event such Indemnified
Person receives any such advance, such Indemnified Person shall
reimburse the Company for such advance to the extent that it shall be
finally judicially determined that such Indemnified Person was not
entitled to indemnification under this Article.
(b) No Indemnified Person shall be liable to any Member or the Company for
any act or failure to act on behalf of the Company, unless such act or
failure to act shall have been finally, judicially determined to have
resulted from the willful misconduct, bad faith or knowing violation
of law of the Indemnified Person. Each Indemnified Person may consult
with legal counsel and accountants in respect of Company affairs and
shall be fully protected and justified in any action or inaction which
is taken in accordance with the advice or opinion of such counsel or
accountants. Notwithstanding any of the foregoing to the contrary,
the provisions of this subsection (b) shall not be construed so as to
relieve (or attempt to relieve) any Indemnified Person of any
liability, to the extent (but only to the extent) that such liability
may not be waived, modified or limited under applicable law, but shall
be construed so as to effect the provisions of this subsection (b) to
the full extent permitted by law.
CAPITAL ACCOUNTS
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28 (a) The Company shall establish and maintain a separate account (the
"Capital Account") for each Member. The initial balance of the
Capital Account for each Member shall be such Member's Cash Payment.
The Capital Account of each Member shall be adjusted as of the last
day of each Fiscal Year. The Capital Account of each Member shall be
increased by (i) the dollar amount of any additional contributions
made by such Member, (ii) the fair market value of any property (other
than cash) contributed to the Company by such Member (net of any
liabilities to which such property is subject), and (iii) allocations
to such Member of income and gain (including income exempt from tax).
The Capital Ac-
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count of each Member shall be decreased by (i) the dollar amount of
any distributions made to such Member, (ii) the fair market value of
any property distributed to such Member (net of any liabilities to
which such property is subject), and (iii) allocations to such Member
of loss and deduction (including expenditures not deductible in
computing the Company's income or loss for Federal income tax
purposes).
(b) Notwithstanding any other provision of this Agreement to the contrary,
the foregoing provisions of Article 28(a) regarding the maintenance of
Capital Accounts shall be construed so as to comply with the
provisions of the Treasury Regulations promulgated pursuant to Section
704 of the Code (the "Treasury Regulations"). The Members may modify
the foregoing provisions to the minimum extent necessary to comply
with such Treasury Regulations. Any such modification shall be made
in a manner that does not alter the Members' rights to distributions
under Article 33.
ALLOCATIONS OF NET PROFIT AND LOSS
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29 (a) Except as otherwise provided in these Articles of Association , Net
Income and Net Loss of the Company for any Fiscal Year shall be
allocated among the Members in a manner such that the Capital Account
of each Member immediately after making such allocation, is, as nearly
as possible, equal (proportionately) to the distributions that would
be made to such Member during such Fiscal Year pursuant to Article 33
if (i) the Company were dissolved and its affairs wound up and any
remaining assets were sold for cash in an amount equal to their
adjusted basis (or, in the case of a Fiscal Year in which the Company
terminates pursuant to Article 135, such assets were sold for cash in
an amount equal to their fair market value), (ii) all Company
liabilities were satisfied (limited with respect to each nonrecourse
liability to the fair market value of the assets securing such
liability), and (iii) the net assets of the Company were distributed
in accordance with Article 33 to the Members immediately after making
such allocation.
(b) For U.S. federal income tax purposes only, each item of income, gain,
loss and deduction of the Company shall be allocated among the Members
in the same manner as the corresponding items of Net Income and Net
Loss and specially allocated items are allocated for Capital Account
purposes; provided that (i) the allocation of taxable profit and loss
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for U.S. Federal income tax purposes will be adjusted to eliminate, to
the extent possible, any disparity between a Member's Capital Account
and the tax basis of Company property, consistent with principles set
forth in section 704(c) of the Code and (ii) solely for U.S. federal
income tax purposes, in the event that the Company engages in any
reorganization transaction pursuant to which (A) the Company receives
stock and warrants in any corporation and (B) the Company subsequently
distributes such stock and warrants to the Members pursuant to a
liquidation of the Company, then items of Company taxable income and
gain, if any, attributable to the receipt of warrants shall be
specifically allocated to those Members to whom such warrants are
distributed. The amount of taxable income and gain allocated to a
Member pursuant to proviso (ii) in the previous sentence shall be
determined by multiplying the taxable income and gain attributable to
the warrants by a fraction, the numerator of which is the value of the
warrants distributed to such Member and the denominator of which is
the aggregate value of all the warrants received by the Company.
SPECIAL ALLOCATIONS FOR U.S. FEDERAL TAX PURPOSES
-------------------------------------------------
30 The following special allocations shall be made in the following order:
12
(a) Qualified Income Offset. If any Member unexpectedly receives any
-----------------------
adjustment, allocation or distribution described in Treasury
Regulation section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of
Company income and gain shall be specifically allocated to such Member
in an amount and manner sufficient to eliminate, to the extent
required by the Treasury Regulations, any deficit in its Capital
Account created by such adjustment, allocation or distribution as soon
as practicable. This Article 30(a) is intended to constitute a
"qualified income offset" within the meaning of Treasury Regulation
section 1.704-1(b)(2)(ii)(d)(3).
(b) Basis Adjustment. In the event of a transfer of all or any part of
----------------
the Shares of a Member, the death of a Member, or the distribution of
assets in kind to a Member, the Manager may cause the Company to elect
to adjust the basis of the Company's assets pursuant to an election
made under section 754 of the Code.
(c) Assignment During Fiscal Year. If a Member's Shares in the Company
-----------------------------
are transferred at any time other than at the end of a Fiscal Year of
the Company, each item of income, gain, loss, deduction and credit
attributable to such Shares for the Fiscal Year in which the transfer
occurs shall be divided and allocated proportionately between the
transferor and the transferee in the same ratio as the number of days
in the Fiscal Year respectively before and after the date the transfer
is recognized by the Company bears to the number of days in such
Fiscal Year.
(d) Nonrecourse Deductions. Any Nonrecourse Deductions for any Fiscal
----------------------
Year or other period shall be allocated to each Member by multiplying
the Nonrecourse Deductions by a fraction the numerator of which is the
Capital Account of such Member and the denominator of which is the
aggregate Capital Accounts of all Members.
(e) Notwithstanding the foregoing, if, upon the final dissolution and
termination of the Company and after taking into account all
allocations of Net Profit and Net Losses (and other tax items) under
Articles 29 and 30, the Distributions to be made in accordance with
the positive Capital Account balances of the Members would result in a
Distribution that would be different from the Distributions under
Article 33 then gross items of income and gain (and other tax items)
for the taxable year of the final dissolution and termination (and to
the extent permitted under section 761(c) of the Code, gross items of
income and gain (and other tax items) for the immediately preceding
taxable year) shall be allocated to the Members to increase or
decrease Capital Account balances, as the case may be, in a manner so
that the final Distribution will occur as nearly as possible in the
same manner as a Distribution under Article 33.
LIMITATION ON REDEMPTIONS AND DISTRIBUTIONS
-------------------------------------------
31 Except with the unanimous approval of the Board of Directors, no Member
shall be entitled (i) to receive Distributions from the Company other than
as provided in Article 33; or (ii) to cause the Company to redeem such
Member's Shares.
REDEMPTION AND PURCHASE OF COMPANY'S SHARES
-------------------------------------------
32 (a) Subject to the provisions of the Companies Law and the Stockholders
Agreement and solely in connection with redemptions of Shares as
provided in these Articles, the Company may:
13
(i) issue shares which are to be redeemed or are liable to be
redeemed;
(ii) purchase its own shares (including any redeemable shares); and
(iii) make a payment in respect of the redemption or purchase of its
own shares otherwise than out of profits or the proceeds of a
new issue of shares.
(b) A Share that is liable to be redeemed may be redeemed by the Company
giving to the Member not fewer than thirty days notice in writing of
the intention to redeem such Shares specifying the date of such
redemption which must be a day on which banks in the Cayman Islands
are open for business.
(c) The amount payable on such redemption on each Share so redeemed shall
be the amount determined by the Manager.
(d) Any Share in respect of which notice of redemption has been given
shall not be entitled to participate in the profits of the Company in
respect of the period after the date specified as the date of
redemption in the notice of redemption.
(e) The redemption or purchase of any Share shall not be deemed to give
rise to the redemption or purchase of any other Share.
(f) At the date specified in the notice of redemption or purchase, the
holder of the Shares being redeemed or purchased shall be bound to
deliver up to the Company at its registered office the certificate
thereof for cancellation and thereupon the Company shall pay to him
the redemption or purchase monies in respect thereof.
(g) The Manager may when making payments in respect of redemption or
purchase of Shares in accordance with the provisions of this Article,
if authorized by the terms of issue of the Shares being redeemed or
purchased or with the agreement of the holder of such Shares, make
such payment either in cash or in specie.
(h) The Shares are not redeemable, whether at the request of a holder or
the Company, except in accordance with the provisions of the
Stockholders Agreement and the Subscription Agreement.
DISTRIBUTIONS
-------------
33 Distributions shall be made to the Members in the sole discretion of the
Manager (except as otherwise provided in Section 1(e) (v) of the
Stockholders Agreement). The Net Proceeds derived from the Company's
investments, after provision for reserves, expenses, fees and taxes, if
any, of the Company, shall be distributed to the Members in the manner and
order of priority set forth below.
(a) first, 100% to the Class A, B, C and E Members, proportionate to their
-----
ownership of the total number of Class A, B, C and E Shares
outstanding, until the Class C Members have received cumulative
distributions in an amount that will yield an internal rate of return
of 10% (the "10% IRR"), compounded annually, on the aggregate Cash
Payments paid in respect of the Class C Shares; provided, however,
-------- -------
that any distributions made to the Class C Members in respect of their
Class C Shares prior to the third anniversary of initial
14
issuance of the Class C Shares shall be deemed to be made, solely for
purposes of computing the 10% IRR hereunder, on the date of such third
anniversary.
(b) second, 90% to the Class A, B, C and E Members, proportionate to their
------
ownership of the total number of Class A, B, C and E Shares
outstanding, and 10% to the Class D Members proportionate to their
ownership of the Class D Shares, until the Class C Members have
received cumulative distributions in an amount that will yield an
internal rate of return of 30% (the "30% IRR"), compounded annually,
on the aggregate Cash Payments paid in respect of the Class C Shares;
provided, however, that any distributions made to the Class C Members
-------- -------
in respect of their Class C Shares prior to the third anniversary of
initial issuance of the Class C Shares shall be deemed to be made,
solely for purposes of computing the 30% IRR hereunder, on the date of
such third anniversary.
(c) third, 80% of the remaining Net Proceeds, if any, to the Class A, B, C
-----
and E Members, proportionate to their ownership of the Class total
number of A, B, C and E Shares outstanding, and 20% of the remaining
Net Proceeds, if any, to the Class D Members proportionate to their
ownership of the Class D Shares.
34 The Manager shall use its best efforts to make Distributions only in cash
or marketable securities unless members holding a majority of the shares
consent to an in-kind Distribution pursuant to which all members
participate in each asset distributed in the proportions established under
Article 33. In the context of a liquidation of the Company, the Manager
shall use its best efforts to make Distributions only in cash or marketable
securities, provided that if such distributions cannot, with such best
efforts, be made, the Manager may cause the Company to make in-kind
Distributions pursuant to which all members participate in each asset
distributed in the proportions established under Article 33. In the event
that the Manager makes a Distribution of property other than in cash, such
property shall be deemed to be sold for its fair market value on the date
of such Distribution and any gain or loss associated with such deemed sale
shall be included in determining Net Profit and Net Loss for the applicable
Fiscal Year. Any such Distribution shall be made after giving effect to
the allocations of Net Profit and Net Loss required under Article 29. All
Distributions pursuant to this Article 34 shall be made in the same
priority and proportions as Distributions at such time would be made
pursuant to Article 33.
35 Notwithstanding anything in these Articles to the contrary, no Distribution
shall be made (i) if such Distribution would violate any contract or
agreement to which the Company is then a party or any law then applicable
to the Company, or (ii) to the extent that the Manager, in its sole
discretion, determines that any amount otherwise distributable should be
retained by the Company to pay, or establish a reserve for the payment of,
any liability or obligation of the Company, including obligations to pay or
withhold any U.S. federal income or other taxes or taxes imposed by any
other jurisdiction.
36 Notwithstanding anything in these Articles to the contrary, the Manager is
authorized to take any action that it determines to be necessary or
appropriate to cause the Company to comply with any U.S. federal
withholding requirement or any withholding requirements of any other
jurisdictions with respect to any payment or Distribution by the Company to
any Member or other person. All amounts so withheld, and, in the manner
determined by the Manager, amounts withheld with respect to any payment or
Distribution by any person to the Company shall be treated as Distributions
to the Members to which such amounts would have been distributed (under
these Articles) but for withholding. If any such withholding requirement
with respect to any Member exceeds the amount distributable to such Member
under these Articles or if any such withholding requirement was not
satisfied with respect to any amount previously distributed to such Member,
such Member and any successor or assignee with respect to such Member's
interest in the Shares of the Company will
15
indemnify and hold harmless the Manager and the Company for such excess
withholding requirement, as the case may be.
37 No Distribution shall be paid otherwise than out of profits, the share
premium account or, subject to the restrictions of the Companies Law,
capital.
38 If several persons are registered as joint holders of any Share, any of
them may give effectual receipts for any Distribution or other monies
payable on or in respect of the Share.
39 No Distribution shall bear interest against the Company.
CLASS A SHARES
--------------
40 The names of all of the Class A Members shall be filed with the Register.
41 The Class A Members of the Company shall not be liable for the repayment
and discharge of any debts and obligations of the Company except to the
extent of the Cash Payments made in respect of the Class A Shares held by
them, the amount of which Cash Payments, less any portion that previously
has been dividended to a holder thereof, or distributed to a holder thereof
or applied in accordance with the provisions of the Companies Law, may be
used to discharge all liabilities and expenses of the Company.
42 In no event shall any Class A Member be obligated to make any contribution
to the Company.
CLASS B SHARES
--------------
43 The names of all the Class B Members shall be filed with the Register.
44 The Class B Members shall not be liable for the repayment and discharge of
any debts and obligations of the Company except to the extent of the Cash
Payments made in respect of the Class B Shares held by them, the amount of
which Cash Payments, less any portion that previously has been dividended
to a holder thereof, or distributed to a holder thereof or applied in
accordance with the provisions of the Companies Law, may be used to
discharge all liabilities and expenses of the Company.
45 In no event shall any Class B Member be obligated to make any contribution
to the Company.
CLASS C SHARES
--------------
46 (a) The names of all the Class C Members shall be filed with the Register.
(b) No Class C Shares shall be, nor shall any Class C Member take any
actions or knowingly fail to take any actions that would cause the
Class C Shares to be, owned directly or treated as being owned
indirectly, constructively, by means of attribution, or otherwise, by,
for, or on behalf of a U.S. Person for purposes of section 951 et seq.
-- ---
of the Code.
16
47 The Class C Members shall not be liable for the repayment and discharge of
any debts and obligations of the Company except to the extent of the Cash
Payments made in respect of the Class C Shares held by them, the amount of
which Cash Payments, less any portion that previously has been dividended
to a holder thereof, or distributed to a holder thereof or applied in
accordance with the provisions of the Companies Law, may be used to
discharge all liabilities and expenses of the Company.
48 In no event shall any Class C Member be obligated to make any contribution
to the Company.
CLASS D SHARES
--------------
49 The names of all the Class D Members shall be filed with the Register.
50 The Class D Members shall not be liable for the repayment and discharge of
any debts and obligations of the Company except to the extent of the Cash
Payments made in respect of the Class D Shares held by them, the amount of
which Cash Payments, less any portion that previously has been dividended
to a holder thereof, or distributed to a holder thereof or applied in
accordance with the provisions of the Companies Law, may be used to
discharge all liabilities and expenses of the Company.
51 In no event shall any Class D Member be obligated to make any contribution
to the Company.
CLASS E SHARES
--------------
52 The names of all the Class E Members shall be filed with the Register.
53 The Class E Members shall not be liable for the repayment and discharge of
any debts and obligations of the Company except to the extent of the Cash
Payments made in respect of the Class E Shares held by them, the amount of
which Cash Payments, less any portion that previously has been dividended
to a holder thereof, or distributed to a holder thereof or applied in
accordance with the provisions of the Companies Law, may be used to
discharge all liabilities and expenses of the Company.
54 In no event shall any Class E Member be obligated to make any contribution
to the Company.
MODIFICATION OF RIGHTS
----------------------
55 Whenever the capital of the Company is divided into different classes of
shares the special rights attached to any class may (unless otherwise
provided by the terms of issue of the shares of that class) be varied or
abrogated either whilst the Company is a going concern or during or in
contemplation of a winding up, with the consent in writing of the holders
of not less than 80% of the issued shares of the class, or with the
sanction of a resolution passed at a separate meeting of the holders of the
Shares of the class by 80% of the votes cast at such meeting, but not
otherwise. To every such separate meeting all the provisions of these
Articles relating to general meetings of the Company or to the proceedings
thereat shall, mutatis mutandis, apply except that the necessary quorum
------- --------
shall be one or more persons at least holding or representing by proxy one-
half in nominal amount of the issued shares of the class (but so that if at
any adjourned meeting of such holders a
17
quorum as above defined is not present, those Members who are present shall
be a quorum) and that every member of the class shall on a poll have one
vote for each share of the class held by him.
56 The rights attached to Class A Shares, Class B Shares, Class C Shares,
Class D Shares and Class E Shares shall be deemed to be varied by the
creation or issue of any shares (other than Class A Shares, Class B Shares,
Class C Shares, Class D Shares and Class E Shares) ranking pari passu with
---- -----
or in priority to them as regards participating in the profits or assets of
the Company.
CERTIFICATES
------------
57 Every person whose name is entered as a Member in the Register shall be
entitled, without payment, to a certificate specifying the share or shares
held by him, provided that in the case of shares held jointly by several
--------
persons, the Company shall not be bound to issue more than one certificate
therefor, and delivery of a certificate for a Share to one of several joint
holders shall be sufficient delivery to all.
58 Where a Member has transferred or exchanged part of the Shares comprised in
his holding he shall be entitled to a certificate for the balance.
59 If a share certificate is defaced, lost or destroyed, it may be renewed on
such terms (if any) as to evidence any indemnity as the Manager thinks fit.
TRANSFER OF SHARES
------------------
60 The instrument of transfer of any share shall be executed by or on behalf
of the transferor and if so required by the Manager shall also be executed
on behalf of the transferee and the transferor shall be deemed to remain a
holder of the share until the name of the transferee is entered in the
Register of Members in respect thereof.
61 The following provisions shall apply to all shares:
(a) Shares shall be transferred in any usual or common form approved by
the Manager or failing such determination in the following form
accompanied by any certificate or other documentation required by the
Stockholders Agreement:
I [Transferor] for good and valuable consideration received by me from
[Transferee] do hereby transfer to the said [Transferee] the [ ]
share(s) standing in my name in the Register of Global Crossing Ltd.,
LDC to hold unto the said [Transferee] his executors, administrators
and assigns, and I, the said [Transferor] do hereby consent that my
name remain on the Register of the said Company until such time as the
said Company may enter the transferee's name thereon; And I the said
[Transferee] do hereby agree to take the said share(s).
As witness our hands
Signed by the said [Transferor]
on the day of [month, year]
in the presence of:
18
________________ ______________________
Witness Transferor
Signed by the said [Transferee]
on the day of [month, year]
in the presence of:
________________ ______________________
Witness Transferor
(b) The Manager may suspend the registration of transfers during the
fourteen days immediately preceding a general meeting. The Manager
may decline to recognize any instrument of transfer unless the
instrument of transfer is accompanied by the certificate of the shares
to which it relates, and such other evidence as the Manager may
reasonably require to show the right of the transferor to make the
transfer. If the Manager refuses to register a transfer of any
shares, the Manager shall within two months after the day on which the
transfer was lodged with the Company send to the transferee notice of
the refusal.
(c) The transfer of shares shall be subject to the terms and conditions
set forth in the Stockholders Agreement including those relating to
transfer, first refusal, "tag along" and "drag along."
(d) The legal personal representative of a deceased sole holder of a share
shall be the only person recognized by the Company as having any title
to the share. In the case of a share registered in the name of two or
more holders, the survivors or survivor, or the legal personal
representatives of the deceased survivor, shall be the only person
recognized by the Company as having any title to the share.
(e) Any person becoming entitled to a share in consequence of the death or
bankruptcy of a member shall, upon such evidence being produced as may
from time to time be properly required by the Manager, have the right
either to be registered as a member in respect of the share or,
instead of being registered himself, to make such transfer of the
share as the deceased or bankrupt person could have made; but the
Manager shall, in either case, have the same right to decline or
suspend registration as the Manager would have had in the case of a
transfer of the share by the deceased or bankrupt person before the
death or bankruptcy.
(f) A person becoming entitled to a share by reason of the death or
bankruptcy of the holder shall be entitled to the same dividends and
other advantages to which he would be entitled if he were the
registered holder of the share, except that he shall not, before being
registered as a member in respect of the share, be entitled in respect
of it to exercise any right conferred by membership in relation to
meetings of the Company.
GENERAL MEETING
---------------
62 The Manager may, whenever it thinks fit, convene a general meeting of all
Members or of the Class A, Class B, Class C, Class D and Class E Members.
19
63 Articles 65 through 87 below shall apply to any general meetings of Members
or any class of Members. Class A Members, Class B Members, Class C Members,
Class D Members and Class E Members shall be entitled to receive notice of,
and attend, general meetings held by Class A Members, Class B Members and
Class C Members. Only Class D Members and Class E Members, as the case may
be, shall be entitled to receive notice of, and attend, general meetings
held by Class D Members and Class E Members, respectively.
64 Holders of 10% of the outstanding Shares of any class may convene a general
meeting of the members of such class in the same manner as nearly as
possible as that in which meetings may be convened by the Manager. Holders
of 25% of the Class B Shares or Class C Shares may convene a general
meeting of the Members in the same manner as nearly as possible as that in
which meetings may be convened by the Manager.
NOTICE OF GENERAL MEETINGS
--------------------------
65 Subject to the provisions of Section 59 of the Companies Law relating to
special resolutions, seven days' notice at the least counting from the date
service is deemed to take place as provided in these Articles specifying
the place, the day and the hour of the meeting and, in case of special
business, the general nature of that business, shall be given in the manner
hereafter provided or in such other manner (if any) as may be prescribed by
the Company in general meeting to such persons as are, under the Articles
of the Company, entitled to receive such notices from the Company; but with
the consent of all the Members entitled to receive notice of some
particular meeting, that meeting may be convened by such shorter notice or
without notice and in such manner as those Members may think fit.
66 The accidental omission to give notice of a meeting to or the non-receipt
of a notice of a meeting by any Member shall not invalidate the proceedings
at any meeting.
PROCEEDINGS AT GENERAL MEETINGS
-------------------------------
67 All business carried out at a general meeting shall be deemed special with
the exception of the consideration of the accounts, balance sheets, and
ordinary report of the Manager and Auditors, the election of directors by
the Members, and the fixing of the remuneration of the Auditors. No
special business shall be transacted at any general meeting without the
consent of all Members entitled to receive notice of that meeting unless
notice of such special business has been given in the notice convening that
meeting.
68 No business shall be transacted at any general meeting of the Class A, B
and C members unless a quorum of such Members and a majority of the holders
of Class B Shares and a majority of the holders of Class C Shares are
present at the time when the meeting proceeds to business; save as herein
otherwise provided, Members holding at least a majority in number of the
issued Shares in the applicable class of the Company present in person or
by proxy shall be a quorum.
69 If within two hours from the time appointed for the meeting a quorum is not
present, the meeting, if convened upon the requisition of Members, shall
stand adjourned to the second business day thereafter, at the same time and
place, and the quorum necessary for the transaction of the business of
Members at such meeting shall be a majority of the Shares. In any other
case it shall stand adjourned to the second business day thereafter, at the
same time and place, and the quorum necessary for the transaction of the
business of Members at such meeting shall be a majority of the Shares.
20
70 The Chairman of the Board of Directors shall preside as chairman at every
general meeting of the Company.
71. If there is no such Chairman, or if at any meeting he is not present in
person or by proxy within one hour after the time appointed for holding the
meeting or is unwilling to act as chairman, the Manager shall choose one of
the directors or officers of the Company or Members to be chairman.
72. The Chairman may with the consent of any meeting at which a quorum is
present (and shall if so directed by the meeting) adjourn a meeting from
time to time and from place to place, but no business shall be transacted
at any adjourned meeting other than the business left unfinished at the
meeting from which the adjournment took place. When a meeting is adjourned
for ten days or more, notice of the adjourned meeting shall be given as in
the case of an original meeting. Save as aforesaid it shall not be
necessary to give any notice of an adjournment or of the business to be
transacted at an adjourned meeting.
73. At any general meeting a resolution put to the vote of the meeting shall be
decided by a poll.
VOTES OF MEMBERS
----------------
74. (a Every Class A Member, Class B Member and Class C Member present in
person or by proxy shall be entitled to one vote in respect of each
Class A, Class B and Class C Share held by him.
(b The Class A Members, voting separately as a class, shall be entitled
to elect one member of the Board of Directors.
(c Subject to the following sentence, the Class B Members, voting
separately as a class, shall be entitled to elect six members of the
Board of Directors and, if the number of directors shall be increased
to 15 in accordance with the provisions of Article 87, shall be
entitled to elect eight members of the Board of Directors.
Notwithstanding the foregoing, (i) MRCo., Inc. ("MRC"), a Maryland
corporation and a wholly owned subsidiary of ULLICO, Inc., a Maryland
corporation ("ULLICO"), shall be entitled to elect one of the
directors provided for in the preceding sentence, so long as MRC or
any 80% or more owned subsidiary of ULLICO shall own, in the
aggregate, more than 10% of the outstanding shares of Class B Stock;
(ii) Ridgestone Corp., a Delaware corporation, shall be entitled to
elect one of the directors provided for in the preceding sentence, so
long as it or its Permitted Transferees (as defined in the
Stockholders Agreement) owns not less than 75% of the shares of Class
B Stock purchased by it pursuant to the Subscription Agreement; (iii)
San Pasqual Corp., a Delaware corporation, shall be entitled to elect
one of the directors provided for in the preceding sentence, so long
as it or its Permitted Transferees owns not less than 75% of the
shares of Class B Stock purchased by it pursuant to the Subscription
Agreement; (iv) Galenight Corp., a Delaware corporation, shall be
entitled to elect one of the directors provided for in the preceding
sentence, so long as it or its Permitted Transferees owns not less
than 75% of the shares of Class B Stock purchased by it pursuant to
the Subscription Agreement and (v) Lodwrick Cook shall be entitled to
elect one of the directors provided for in the preceding sentence, so
long as Lodwrick Cook or his Permitted Transferees owns not less than
75% of the shares of Class B Stock purchased by him pursuant to the
Subscription Agreement, dated January [ ], 1998.
21
(d The Class C Members, voting separately as a class, shall be entitled
to elect six members of the Board of Directors.
(e For the avoidance of doubt, it is declared that the Class D Members
and the Class E Members shall have no right to vote at any general
meeting of the Company; provided, however, that such Members shall
-------- -------
be entitled to vote on matters in accordance with Article 55 and the
Companies Law and shall be entitled to one vote with respect thereto
for each Class D Share and each Class E Share held by such Member.
75. In the case of joint holders of a Share, the vote of the senior who tenders
a vote, whether in person or by proxy, shall be accepted to the exclusion
of the votes of the other joint holders, and for this purpose seniority
shall be determined by the order in which the names stand in the Register
in respect of the Shares.
76. A Member who has appointed special or general attorneys or a Member who is
subject to a disability may vote, by his said attorney, curator, committee,
receiver, curator bonis or other person in the nature of a committee,
receiver, or curator bonis appointed by a court and such attorney,
committee, receiver, curator bonis or other person may on a poll vote by
proxy.
77. No objection shall be raised to the qualification of any voter except at
the meeting or adjourned meeting at which the vote objected to is given or
tendered, and every vote not disallowed at such meeting shall be valid for
all purposes. Any such objection made in due time shall be referred to the
Chairman of the meeting, whose decision shall be final and conclusive.
78. Votes may be given either personally or by proxy.
79. A Member entitled to more than one vote need not, if it votes, use all his
votes or cast all the votes it uses in the same way.
80. The instrument appointing a proxy shall be in writing under the hand of the
appointee or of his attorney duly authorized in writing, or if the
appointor is a corporation, either under its common seal or under the hand
of an officer or attorney so authorized.
81. Any person (whether a Member of the Company or not) may be appointed to act
as a proxy. A Member may appoint more than one proxy to attend on the same
occasion.
82. No instrument appointing a proxy shall be valid after the expiration of
twelve months from the date named in it as the date of its execution,
except at an adjourned meeting or on a poll demanded at a meeting or an
adjourned meeting in cases where the meeting was originally held within
twelve months from such date.
83. An instrument of proxy shall be in the following form or such other form as
the Manager may approve:
GLOBAL CROSSING LTD., LDC
-------------------------
(Name or Names) of (address) being a Member/Members of the above-named
Company hereby appoint (Name of Proxy) or failing him, (Name of
Alternative Proxy) of (Address) as my/our proxy to vote for me/us on
my/our behalf at the general meeting of the Class __ Members to be
held on the day of , and at all contributions or
adjournments thereof.
22
Signed this day of .
------------------------------
(Signature)
84. The Manager may at the expense of the Company send, by post or otherwise,
to the Members instruments of proxy (with or without prepaid postage for
their return) for use at any general meeting or at any meeting of any class
of Members of the Company. If for the purpose of any meeting invitations to
appoint as proxy a person or one of a number of persons specified in the
invitations are issued at the expense of the Company, such invitations
shall be issued to all (and not to some only) of the Members entitled to be
sent a notice of the meeting and to vote thereat by proxy.
85. A vote given in accordance with the terms of an instrument of proxy shall
be valid notwithstanding the death or insanity of the principal or the
revocation of the instrument of proxy, or of the authority under which the
instrument of proxy was executed, or the transfer of the Share in respect
of which the instrument of proxy is given; provided that no intimation in
--------
writing of such death, insanity, revocation or transfer shall have been
received by the Company at the registered office before commencement of the
meeting or adjourned meeting at which the instrument of proxy is used.
86. Any corporation which is a Member of the Company may by resolution of its
directors or other governing body, authorize such person as it thinks fit
to act as its representative at any meeting of the Company or at any
meeting of any class of Members of the Company, and the person so
authorized shall be entitled to exercise the same powers on behalf of the
corporation which he represents as that corporation could exercise if it
were an individual Member of the Company and such corporation shall for the
purposes of these presents be deemed to be present in person at any such
meeting if a person so authorized is present thereat.
DIRECTORS
---------
87. The number of Directors shall be 13, provided that upon the occurrence and
--------
during the continuance of a Bank Event of Default, the number of Directors
shall, upon the vote or consent of the holders of a majority of the Class B
Stock owned by PCG or its Permitted Transferees, be increased to 15 until
such time as the Bank Event of Default shall no longer be continuing, when
the number of Directors shall be decreased to 13 and the term of office of
the two Directors elected to fill vacancies created by such increase of the
number of Directors from 13 to 15 shall terminate. The first Directors
shall be appointed by the subscriber to the Memorandum of Association.
88. Subject to the provisions of these Articles of Association and the
Stockholders Agreement, a Director shall hold office until such time as he
is removed from office by an ordinary resolution of the Company in general
meeting.
89. The remuneration of the Directors shall from time to time be determined by
the Board of Directors.
90. There will be no share qualification for Directors.
ALTERNATE DIRECTOR
------------------
91. Any Director may in writing appoint another person to be his alternate to
act in his place at any meeting of the Directors at which he is unable to
be present. Every such alternate shall be entitled to notice of meetings
of the Directors and to attend and vote thereat as a Director when the
person
23
appointing him is not personally present and where he is a Director
to have a separate vote on behalf of the Director he is representing in
addition to his own vote. A Director may at any time in writing revoke the
appointment of an alternate appointed by him. Such alternate shall not be
an officer of the Company and shall be deemed to be the agent of the
Director appointing him. The remuneration of such alternate shall be
payable out of the remuneration of the Director appointing him and the
proportion thereof shall be agreed between them.
92. Any Director may appoint any person, whether or not a Director of the
Company, to be the proxy of that Director to attend and vote on his behalf,
in accordance with instructions given by that Director, or in the absence
of such instructions at the discretion of the proxy, at a meeting or
meetings of the Directors which that Director is unable to attend
personally. The instrument appointing the proxy shall be in writing under
the hand of the appointing Director and shall be in the form printed below
or any other form approved by the Directors, and must be lodged with the
chairman of the meeting of the Directors at which such proxy is to be used,
or first used, prior to the commencement of the meeting:
GLOBAL CROSSING LTD., LDC
-------------------------
I the undersigned being a Director of the above Company HEREBY APPOINT [
], and when failing, [ ] to be my Proxy and on my behalf to attend,
vote at a meeting of Directors of the said Company to be held on the
day of and at all continuations and adjournments thereof
Date: _____________ _______________________
Signature of Director
POWERS AND DUTIES
-----------------
93. Subject to the provisions of Article 7 and the Stockholders Agreement, the
business of the Company shall be managed by the Directors, who may pay all
expenses incurred in setting up and registering the Company and may
exercise all such powers of the Company as are not, by the Law or these
Articles, required to be exercised by the Company in general meeting,
subject, nevertheless, to any Regulation of these Articles, to the
provisions of the Law, and to such regulations, being not inconsistent with
the aforesaid Regulations, or provisions as may be prescribed by the
Company in general meeting; but no regulation made by the Company in
general meeting shall invalidate any prior act of the Directors which would
have been valid if that regulation had not been made.
94. Subject to the provisions of Article 7 and the Stockholders Agreement, the
Directors may from time to time appoint any person, whether or not a
director of the Company to hold such office in the Company as the Directors
may think necessary for the administration of the Company, including
without prejudice to the foregoing generality, the office of Chief
Executive Officer, Chief Operating Officer, President, one or more Vice-
Presidents, Treasurer, Assistant Treasurer, Chief Financial Officer,
Manager or Controller, and for such term and at such remuneration (whether
by way of salary or commission or participation in profits or partly in one
way and partly in another), and with such powers and duties at the
Directors may think fit.
95. The Directors shall appoint the Company Secretary (and if need be an
Assistant Secretary or Assistant Secretaries) who shall hold office for
such term, at such remuneration and upon such
24
conditions and with such powers as they think fit. Any Secretary or
Assistant Secretary so appointed by the Directors may be removed by the
Directors.
96. Subject to the provisions of Article 7 and the Stockholders Agreement:
(a The Directors may from time to time and at any time by power of
attorney appoint any company, firm or person or body of persons,
whether nominated directly or indirectly by the Directors, to be the
attorney or attorneys of the Company for such purposes and with such
powers, authorities and discretion (not exceeding those vested in or
exercisable by the Directors under these Articles) and for such period
and subject to such conditions as they may think fit, and any such
power of attorney may contain such provisions for the protection and
convenience of persons dealing with any such attorney as the Directors
may think fit, and may also authorize any such attorney to delegate
all or any of the powers, authorities and discretion vested in him.
(b The Directors may from time to time provide for the management of the
affairs of the Company in such manner as they shall think fit.
DISQUALIFICATION OF DIRECTORS
-----------------------------
97. The office of Director shall be vacated, if the Director:
(a files a petition in bankruptcy or makes any arrangement or composition
with his creditors;
(b is found to be or becomes of unsound mind; or
(c resigns his office by notice in writing to the Company.
PROCEEDINGS OF DIRECTORS
------------------------
98. The Directors may meet together (either within or without the Cayman
Islands) for the despatch of business, adjourn, and otherwise regulate
their meetings and proceedings as they think fit consistent with the
Stockholders Agreement. Questions arising at any meeting shall be decided
by a majority of votes consistent with the Stockholders Agreement. A
Chairman or the Manager may at any time summon a meeting of the Directors,
and 25% of the Directors may at any time summon a meeting of the Directors
in the same manner as nearly as possible as that in which meetings may be
summoned by the Chairman or the Manager.
99. A Director or Directors may participate in any meeting of the Board, or of
any committee appointed by the Board of which such Director or Directors
are members, by means of telephone or similar communication equipment by
way of which all persons participating in such meeting can hear each other
and such participation shall be deemed to constitute presence in person at
the meeting.
100. (a The quorum necessary for the transaction of the business of Directors
shall be a majority of the Directors, provided, that one director
--------
elected by the Class B Members and one director elected by the Class C
Members is present. A director represented by proxy or by an
Alternate Director at any meeting shall be deemed to be present for
the purposes of determining whether or not a quorum is present.
25
(b If within two hours from the time appointed for the meeting a director
elected by the Class B Members or a Class C Members, as the case may
be, is not present, the meeting shall stand adjourned to the second
business day thereafter, at the same time and place, at which the
quorum necessary for the transaction of the business of Directors
shall be a majority of the Directors.
101. A Director who is in any way, whether directly or indirectly, interested in
a contract or proposed contract with the Company shall declare the nature
of his interest at a meeting of the Directors. A general notice given to
the Directors by any Director to the effect that he is a member of any
specified company or firm and is to be regarded as interested in any
contract which may thereafter be made with that company or firm shall be
deemed a sufficient declaration of interest in regard to any contract so
made. A Director may vote in respect of any contract or proposed contract
or arrangement notwithstanding that he may be interested therein and if he
does so his vote shall be counted and he may be counted in the quorum at
any meeting of the Directors at which any such contract or proposed
contract or arrangement shall come before the meeting for consideration.
102. A Director may hold any other office or place of profit under the Company
(other than the office of auditor) in conjunction with his office of
Director for such period and on such terms (as to remuneration and
otherwise) as the Directors may determine and no Director or intending
Director shall be disqualified by his office from contracting with the
Company either with regard to his tenure of any such other office or place
of profit or as vendor, purchaser or otherwise, nor shall any such contract
or arrangement entered into by or on behalf of the Company in which any
Director is in any way interested, be liable to be avoided, nor shall any
Director so contracting or being so interested be liable to account to the
Company for any profit realized by any such contract or arrangement by
reason of such Director holding that office or of the fiduciary relation
thereby established. A Director, notwithstanding his interest, may be
counted in the quorum present at any meeting whereat he or any other
Director is appointed to hold any such office or place of profit under the
Company or whereat the terms of any such appointment are arranged and he
may vote on any such appointment or arrangement.
103. Any Director may act by himself or his firm in a professional capacity for
the Company, and he or his firm shall be entitled to remuneration for
professional services as if he were not a Director; provided that nothing
herein contained shall authorize a Director or his firm to act as auditor
to the Company.
104. The Directors shall cause minutes to be made in books or loose-leaf folders
provided for the purpose of recording:
(a all appointments of officers made by the Directors;
(b the names of the Directors present at each meeting of the Directors
and of any committee of the Directors;
(c all resolutions and proceedings at all meetings of the Company, and of
the Directors and of committees of Directors.
105. When the Chairman and Secretary of a meeting of the Directors sign the
minutes of such meeting the same shall be deemed to have been duly held
notwithstanding that all the Directors have not actually come together or
that there may have been a technical defect in the proceedings.
106. A resolution signed by all the Directors shall be as valid and effectual as
if it had been passed at a Meeting of the Directors duly called and
constituted. When signed a resolution may consist of several documents
each signed by one or more of the Directors.
26
107. The continuing Directors may act notwithstanding any vacancy in their body
but if and so long as their number is reduced below the number fixed by or
pursuant to the Articles of the Company as the necessary quorum of
Directors, the continuing Directors may act for the purpose of increasing
the number, or of summoning a general meeting of the Company, but for no
other purpose.
108. Subject to the Stockholders Agreement, the Directors may elect a chairman
of their meetings and determine the period for which he is to hold office;
but if no such chairman is elected, or if at any meeting the chairman is
not present within one hour after the time appointed for holding the same,
the Director Designees (as defined in the Stockholders Agreement) of the
Class B Members present may choose one of their number to be chairman of
the meeting.
109. A committee appointed by the Directors may elect a chairman of its
meetings; if no such chairman is elected, or if at any meeting the chairman
is not present within 30 minutes after the time appointed for holding the
same, the members present may choose one of their number to be chairman of
the meeting.
110. A committee appointed by the Directors may meet and adjourn as it thinks
proper. Questions arising at any meeting shall be determined by a majority
of votes of the committee members present and in case of an equality of
votes the chairman shall have a second or casting vote.
111. All acts done by any meeting of the Directors or of a committee of
Directors, or by any person acting as a Director, shall notwithstanding
that it be afterwards discovered that there was some defect in the
appointment of any such Director or person acting as aforesaid, or that
they or any of them were disqualified, be a valid act as if every such
person had been duly appointed and was qualified to be a Director.
EXPENSES OF THE COMPANY
-----------------------
112. The Company shall pay all expenses incurred by the Company (and shall
reimburse to the Manager all reasonable bona fide out-of-pocket expenses
incurred by the Manager on behalf of the Company).
LIMITATIONS
-----------
113. [Intentionally Omitted]
ACCOUNTS
--------
114. The Manager shall cause to be kept proper accounts with respect to:
(a all sums of money received and expended by the Company and the matters
in respect of which such receipt and expenditure take place; and
(b all sales and purchases by the Company; and
(c the assets and liabilities of the Company.
115. The books of account shall be kept at the registered office or at such
other place outside the U.S. as the Manager thinks fit, and shall always be
open to inspection by the Directors. No Member, other than the Manager,
shall have any right of inspecting any account or book or document of the
27
Company except as conferred by the Companies Law or authorized by the
Manager or by the Class B Members in general meeting.
INDEPENDENT ACCOUNTANTS
-----------------------
116. The books and records of the Company shall be audited outside the United
States by independent certified accountants selected by the Board of
Directors, as of the end of each Fiscal Year, commencing with the first
partial Fiscal Year, of the Company.
FILING OF TAX RETURNS
---------------------
117. The Manager shall prepare and file, or cause the accountants of the Company
to prepare and file, a federal information tax return in compliance with
Section 6031 of the Code, if required by applicable U.S. law, and any tax
or other information returns required by Cayman Islands law or any other
law of any other jurisdiction for each tax year of the Company, and shall
be authorized to make any tax elections as permitted by the Company. The
Manager shall cause the Company to be treated as a partnership for United
States Federal income tax purposes, including, without limitation, cause
the Company to file Form 8832 and any successor forms thereto.
TAX
---
118. The Manager shall be designated on the Company's annual U.S. federal
information tax return, if any is filed for a particular year, as the Tax
Matters Partner of the Company (the "Tax Matters Partner") as provided in
Section 6231(a)(7) of the Code. In the event the Company shall be the
subject of an income tax audit by any U.S. federal, state or local
authority or taxing authority of any other jurisdiction, to the extent the
Company is treated as an entity for purposes of such audit, including
administrative settlement and judicial review, the Tax Matters Partner
shall be authorized to act for, and its decision shall be final and binding
upon, the Company and each Member thereof unless otherwise required by
applicable law; provided, however, that, in any such material proceeding,
-------- -------
the Tax Matters Partner shall furnish to the holders of Shares a copy of
all material notices and other written communications received by the Tax
Matters Partner from any such taxing authority and shall keep the holders
of Shares reasonably informed of all material matters which may come to its
attention in its capacity as Tax Matters Partner; and provided further
that, unless all Members of the same class are adversely affected in a
proportionate manner, the Manager may not take any action under this
Article 118 that could reasonably be expected to result in a material tax
liability to any Member without such Member's consent. All expenses
incurred in connection with any such audit, investigation, settlement or
review shall be borne by the Company.
REPORTS TO CURRENT MEMBERS
--------------------------
119. Within 90 days after the end of each Fiscal Year, the Company shall prepare
and mail to each Member annual audited financial statements, prepared in
accordance with U.S. Generally Accepted Accounting Principles at the
Members' respective registered address, as maintained in the Register of
the Company by March 31 of the following year. Within 60 days from the end
of each quarter, the Company shall prepare and mail to each Member,
quarterly unaudited financial statements. Upon written request, a Member
holding 5% of the outstanding shares shall have reasonable access to the
books and records of the Company during normal business hours and shall
have reasonable access to appropriate Company management.
28
120. The financial report for each Fiscal Year shall be accompanied by the
report thereon of the independent accountants for the Company selected by
the Tax Matters Partner.
CAPITALIZATION OF PROFITS
-------------------------
121. The Manager may determine that it is desirable to capitalize any part of
the amount for the time being standing to the credit of any of the
Company's reserve accounts or to the credit of the profit and loss account
or otherwise available for distribution, and accordingly that such sum be
set free for distribution amongst the Members who would have been entitled
thereto if distributed by way of dividend and in the same proportions on
condition that the same be not paid in cash but be applied either in or
towards paying up any amounts for the time being unpaid on any Shares held
by such Members respectively or paying up in full unissued shares or
debentures of the Company to be allotted and distributed credited as fully
paid up to and amongst such Members in the proportion aforesaid, or partly
in the one way and partly in the other, and the Manager shall give effect
to such determination; provided always that a share premium account and
capital redemption reserve may only be applied in accordance with the
provisions of the Companies Law.
122. When such determination pursuant to Article 121 hereof has been made, the
Manager shall make all appropriations and applications of the undivided
profits resolved to be capitalised thereby, and all allotments and issues
of fully paid shares or debentures, if any, and generally shall do all acts
and things required to give effect thereto, with full power to the Manager
to make such provision by payment in cash or otherwise as it thinks fit for
the case of shares or debentures becoming distributable in fractions.
NOTICES
-------
123. Any notice or document may be served by the Company, from the Cayman
Islands or any other location, on any Member either personally, by
facsimile or by sending it through the post in a prepaid letter or via a
recognized courier service, fees prepaid, addressed to such Member at his
address as appearing in the Register. In the case of joint holders of a
Share, all notices shall be given to that one of the joint holders whose
name stands first in the Register in respect of the joint holding, and
notice so given shall be sufficient notice to all the joint holders.
124. Notices to be posted to addresses outside the Cayman Islands shall be
forwarded by prepaid airmail.
125. Any Member present, either personally or by proxy, at any meeting of the
Company shall for all purposes be deemed to have received due notice of
such meeting and, where requisite, of the purposes for which such meeting
was convened.
126. Any notice or other document, if served by (a) post, shall be deemed to
have been served five days after the time when the letter containing the
same is posted and if served by courier, shall be deemed to have been
served five days after the time when the letter containing the same is
delivered to the courier (in proving such service it shall be sufficient to
prove that the letter containing the notice or document was properly
addressed and duly posted or delivered to the courier), or, (b) facsimile,
shall be deemed to have been served upon confirmation of receipt or (c)
recognized delivery service, shall be deemed to have been served 48 hours
after the time when the letter containing the same is delivered to the
courier service and in proving such service it shall be sufficient to prove
that the letter containing the notice or document was properly addressed
and duly posted or delivered to the courier.
29
127. Any notice or document delivered or sent by post to or left at the
registered address of any Member in pursuance of these Articles shall
notwithstanding that such Member be then dead or bankrupt, and whether or
not the Company has notice of his death or bankruptcy, be deemed to have
been duly served in respect of any share registered in the name of such
Member as sole or joint holder, unless his name shall at the time of the
service of the notice or document, have been removed from the Register as
the holder of the share, and such service shall for all purposes be deemed
a sufficient service of such notice or document on all persons interested
(whether jointly with or as claiming through or under him) in the share.
CLOSING REGISTER OF MEMBERS OR FIXING RECORD DATE
-------------------------------------------------
128. For the purpose of determining Members entitled to notice of or to vote at
any Meeting of Members or any adjournment thereof, or in order to make a
determination of Members for any other proper purpose, the Manager of the
Company may provide that the Register shall be closed for transfers for a
stated period.
129. In lieu of or apart from closing the Register the Manager may fix in
advance a date as the record date for any such determination of Members
entitled to notice of or to vote at a Meeting of the Members and for the
purpose of determining the Members entitled to receive a Distribution the
Manager may either before or on the date of declaration of such
Distribution fix a date as the record date for such determination.
130. If the Register is not so closed and no record date is fixed for the
determination of Members entitled to notice of or to vote at a Meeting of
Members or Members entitled to receive a Distribution, the date on which
notice of the Meeting is mailed or the date on which the resolution of the
Manager declaring such Distribution is adopted, as the case may be, shall
be the record date for such determination of Members. When a determination
of Members entitled to vote at any Meeting has been made in the manner
provided in this Article, such determination shall apply to any adjournment
thereof.
THE SEAL
--------
131. The Manager shall provide for the safe custody of the Seal and the Seal
shall never be used except by the authority of the Manager. The Manager
may keep for use outside the Cayman Islands a facsimile Seal. The Manager
may from time to time as it sees fit (subject to the provisions of these
Articles relating to share certificates) determine the persons and the
number of such persons in whose presence the Seal or the facsimile thereof
shall be used, and until otherwise so determined the Seal or the facsimile
thereof shall be affixed in the presence of the Manager or of some other
person duly authorized by the Manager.
DISCLOSURE
----------
132. The Manager shall if lawfully required to do so under the laws of any
jurisdiction to which the Company is subject or in compliance with the
rules of any Stock Exchanges upon which Shares are listed be entitled to
disclose any information regarding the affairs of the Company including
without limitation information contained in the Register and transfer books
of the Company.
REGISTRATION BY WAY OF CONTINUATION
-----------------------------------
30
133. (a The Company may by special resolution resolve to be registered by way
of continuation in a jurisdiction outside the Cayman Islands or such
other jurisdiction in which it is for the time being incorporated,
registered or existing.
(b In furtherance of a resolution adopted pursuant to sub-clause (a) of
this Article, the Manager may cause an application to be made to the
Registrar of Companies to deregister the Company in the Cayman Islands
or such other jurisdiction in which it is for the time being
incorporated, registered or existing and may cause all such further
steps as they consider appropriate to be taken to effect the transfer
by way of continuation of the Company.
DISTRIBUTION OF SHARES
----------------------
134. If the Company shall make any distribution or dividend on the Shares in
securities of another entity, the Members shall enter into an agreement
with respect to such securities containing provisions substantially the
same as contained in these Articles and the Stockholders Agreement. Prior
to any liquidation or dissolution of the Company or any distribution by the
Company of any equity securities of GTH, the Company shall take all action
as is required to effect the following: (a) the amendment of the Memorandum
of Association and bye-laws of GTH so that the provisions thereof, taken as
a whole, resemble, as closely as would be permitted by the laws of Bermuda,
the provisions of these Articles and the Stockholders Agreement (including,
without limitation, the terms of the Class A, Class B, Class C, Class D and
Class E Stock), (b) the redemption of its Shares in exchange for shares of
GTH that have rights that resemble, as closely as would be permitted by the
laws of Bermuda, the rights of the Shares and (c) the execution and
delivery among GTH and the Members of an agreement that resembles, as
closely as would be permitted by the laws of Bermuda, the terms and
provisions of these Articles and the Stockholders Agreement.
TERMINATION
-----------
135. The Company shall be dissolved and terminated and its affairs wound up upon
the occurrence of any of the following events (an "Event of Termination"):
(a the expiration of its Term;
(b ninety days after the removal of the Manager by the Board of Directors
pursuant to Article 23; or
(c the written consent of the Manager and the approval of the holders of
80% of the outstanding shares of Class B Stock, voting as a class and
the approval of the holders of 80% of the outstanding shares of Class
C Stock, voting as a class;
provided, however, the Company will not terminate in accordance with clause
-------- -------
(b) above if the Directors elect in accordance with the provisions of
Article 23 (b), within ninety days of the removal of the Manager, a new
Manager (other than the removed Manager) to continue the activities of the
Company; and Section 199(1)(c) of the Companies Law shall not apply.
136. Upon the occurrence of an Event of Termination, the Company shall be
dissolved and wound up. In connection with the dissolution and winding-up
of the Company, the Manager or, if there is no Manager, a liquidator,
appointed by a majority of the Class B Members shall proceed, in its sole
31
discretion, with the sale or liquidation of all of the assets of the
Company and the final distribution of the assets of the Company, in the
following manner and order of priority:
(a to payment and discharge of the claims of all creditors of the Company
who are not Members;
(b to payment and discharge of the claims of all creditors of the Company
who are Members; and
(c to payment and discharge to the Members in accordance with the
provisions of Article 33, after giving effect to any prior payments in
accordance with the such provisions.
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