B Y E - L A W S
of
GLOBAL CROSSING LTD.
I HEREBY CERTIFY that the within written amended and restated Bye-Laws are a
true copy of the Bye-Laws of GLOBAL CROSSING LTD. as adopted by written
resolution of the Shareholder of the Company on 13 August, 1998 in substitution
of the Bye-laws originally adopted on 18th March, 1998.
Director
Prepared by
Messrs Appleby Spurling & Kempe
Cedar House
41 Cedar Avenue
Hamilton, Bermuda
BYE-LAW SUBJECT PAGE
------- ------- ----
90 Directors' Fees and Additional
Remuneration and Expenses 43
91 Directors' Interests 43,44
92-94 Powers and Duties of the Board 44-47
95 Gratuities, Pensions and Insurance 47
96-99 Delegation of the Board's Powers 47-49
100-111 Proceedings of the Board 49-52
112 Officers 53
113-115 Executive Directors 53,54
116 Minutes 54,55
117-118 Secretary and Resident Representative 55
119 The Seal 55,56
120-126 Dividends and Other Payments 56-58
127 Reserves 58,59
128-129 Capitalisation of Profits 59,60
130 Record Dates 60
131-133 Accounting Records 60,61
134 Audit 61
136-137 Service of Notices and Other Documents 62
138 Destruction of Documents 62,63
139 Untraced Shareholders 63-65
140 Winding Up 66
141-145 Indemnity 66-68
146 Amalgamation 69
147 Continuation 69
148 Alteration of Bye-Laws 69,70
B Y E - L A W S
OF
GLOBAL CROSSING LTD.
INTERPRETATION
1. (1) In these Bye-Laws unless the context otherwise requires: -
"AFFILIATES OR AFFILIATES" means any other person directly or
indirectly controlling, controlled by or under direct or indirect
common control with any other person. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling" "controlled by" and "under common control with"), as
used with respect to any person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the
management or policies of such person, whether through the ownership
of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting stock of a person
shall be deemed to be control;
"BERMUDA" means the Islands of Bermuda;
"BOARD" means the Board of Directors of the Company or the Directors
present at a meeting of Directors at which there is a quorum;
"CIBC" means Global Crossing Ltd., LDC, Canadian Imperial Bank of
Commerce, CIBC Wood Gundy Capital (SFC) Inc., CIBC WG Argosy Fund 3
L.P., Co-Investment Merchant Fund LLC, CIBC Capital Partners (Cayman)
No. 1, any Affiliates of Canadian Imperial Bank of Commerce and all
Permitted Transferees (as defined in the Stockholders Agreement) of
each of the foregoing;
"THE CODE" means the United States Internal Revenue Code of 1986, as
amended from time to time;
"COMMON SHARES" means all the authorised common shares of par value
US$0.01 each in the capital of the Company;
"THE COMPANIES ACTS" means every Bermuda statute from time to time in
force concerning companies insofar as the same applies to the Company;
"COMPANY" means the company incorporated in Bermuda under the name of
Global Crossing Holdings Ltd. (but now named Global Crossing Ltd.) on
18 March, 1998;
"CONTINENTAL" means Continental Casualty Company, Continental Casualty
Company on behalf of its subaccount Designated High Yield, Global
Crossing Trust 1998 and Global Crossing Partners;
"CONTROLLED SHARES" in reference to any Shareholder means:
(i) all common shares directly, indirectly, or constructively owned
by such Shareholders within the meaning of Section 958 of the
Code and the Treasury regulations promulgated thereunder; and
(ii) all common shares directly or indirectly owned as a result of
voting power held or shared by any Person or "group" of Persons
within the meaning of Section 13(d) of the Exchange Act (the
"13(d) Formula").
For the purposes of the application of the 13(d) Formula only,
"Person" means any individual, firm, partnership, company, limited
liability company, association or other entity or any "group" of
Persons with respect to the exercise of voting power within the
meaning of Section 13(d) of the Exchange Act;
"THE EXCHANGE ACT" means the United States Securities Exchange Act of
1934 as amended, and the rules and regulations promulgated thereunder;
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"FAIR MARKET VALUE" means, with respect to a repurchase of any Shares
in accordance with these Bye-Laws, (i) if such Shares are listed on a
United States national securities exchange, the average closing sale
price of such Shares on such exchange, or, if such Shares are listed
on more than one such exchange, the average closing sale price of the
Shares on the principal securities exchange on which such Shares are
then traded, or, if such Shares are not then listed on a United States
national securities exchange but are traded in the over-the-counter
market, the average of the latest bid and asked quotations for such
Shares in such market, in each case for the last five trading days
immediately preceding the day on which notice of the repurchase of
such Shares is sent pursuant to these Bye-Laws or (ii) if no such
closing sales prices or quotations are available because such Shares
are not publicly traded or otherwise, the fair value of such Shares as
determined by one independent nationally recognised investment banking
firm chosen by the Company and reasonably satisfactory to the
Shareholder whose shares are to be so repurchased by the Company. The
calculation of the Fair Market Value of the Shares made by such
appointed investment banking firm shall be final and the fees and
expenses stemming from such calculation shall be borne by the Company
or its assignee, as the case may be. The Fair Market Value of any
interest in Shares other than sole, direct ownership shall be
determined by the Company on the basis of the Fair Market Value of the
related Shares;
"GKW" means GKW Unified Holdings, LLC;
"MR CO." means MR Co. Inc.;
"OFFICER" means a person appointed by the Board pursuant to Bye-Law
112 of these Bye-Laws and shall not include an auditor of the Company;
"PACIFIC CAPITAL" means Pacific Capital Group Inc.;
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"PAID UP" means paid up or credited as paid up;
"REGISTER" means the Register of Shareholders of the Company;
"REGISTERED OFFICE" means the registered office for the time being of
the Company;
"REPURCHASE PRICE" means, with respect to any Shares (or interest
therein), the lesser of (x) the Fair Market Value of such Shares (or
interest therein) on the date the Company sends the Repurchase Notice
and (y) the price paid for such Shares (or interest therein) by the
Shareholder whose Shares (or interest therein) are to be repurchased,
less, in each case, an amount equal to the amount of all dividends
received or receivable on, or in respect of, such Shares by such
Shareholder;
"RESIDENT REPRESENTATIVE" means the person (or, if permitted in
accordance with the Companies Acts, the company) appointed to perform
the duties of resident representative set out in the Companies Acts
and includes any assistant or deputy Resident Representative appointed
by the Board to perform any of the duties of the Resident
Representative;
"RESOLUTION" means a resolution of the Shareholders or, where
required, of a separate class or separate classes of Shareholders,
adopted either in general meeting or by written resolution, in
accordance with the provisions of these Bye-Laws;
"SEAL" means the common seal of the Company and includes any duplicate
thereof;
"SECRETARY" includes a temporary or assistant or deputy Secretary and
any person appointed by the Board to perform any of the duties of the
Secretary;
"SHARES" means all shares in the capital of the Company whether
preferred or common;
"SHAREHOLDER" means a shareholder or member of the Company;
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"STOCK EXCHANGE" means The Nasdaq National Stock Market, The Bermuda
Stock Exchange or any other stock exchange on which shares of the
Company may be listed from time to time;
"STOCKHOLDER AGREEMENT" means the Stockholders Agreement dated 12
August, 1998 and entered into among the Company, CIBC, Pacific
Capital, GKW, Continental, Winnick and MR Co. and the other parties
thereto;
"SPECIFIED PLACE" means the place, if any, specified in the notice of
any meeting of the shareholders, or adjourned meeting of the
shareholders, at which the chairman of the meeting shall preside;
"THESE BYE-LAWS" means these Bye-Laws in their present form or as from
time to time amended;
"UNITED STATES PERSON" means (i) an individual who is a citizen or
resident of the United States of America, its territories or
possessions and all areas subject to its jurisdiction including the
Commonwealth of Puerto Rico ("United States"), (ii) a corporation or
partnership created or organised in or under the laws of the United
States or any political subdivision thereof, (iii) an estate, the
income of which is subject to United States federal income taxation
regardless of its source, and (iv) a trust which is subject to the
supervision of a court within the United States and the control of
United States Fiduciary as described in Section 7701(a)(30) of the
Code; and
"WINNICK" means Gary Winnick.
(2) For the purposes of these Bye-Laws a corporation shall be deemed to be
present in person if its representative duly authorised pursuant to
the Companies Acts is present.
(3) Words importing only the singular number include the plural number and
vice versa.
(4) Words importing only the masculine gender include the feminine and
neuter genders respectively.
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(5) Words importing persons include companies or associations or bodies of
persons, whether corporate or un-incorporate.
(6) Reference to writing shall include typewriting, printing, lithography,
photography and other modes of representing or reproducing words in a
legible and non-transitory form.
(7) Any words or expressions defined in the Companies Acts in force at the
date when these Bye-Laws or any part thereof are adopted shall bear
the same meaning in these Bye-Laws or such part (as the case may be).
(8) In these Bye-Laws, (a) powers of delegation shall not be restrictively
construed but the widest interpretation shall be given thereto, (b)
the word "Board" in the context of the exercise of any power contained
in these Bye-Laws includes any committee consisting of one or more
Directors, any Director holding executive office and any local or
divisional Board, manager or agent of the Company to which or, as the
case may be, to whom the power in question has been delegated, (c) no
power of delegation shall be limited by the existence of any other
power of delegation, and (d) except where expressly provided by the
terms of delegation, the delegation of a power shall not exclude the
concurrent exercise of that power by any other body or person who is
for the time being authorised to exercise it under these Bye-Laws or
under another delegation of the powers.
REGISTERED OFFICE
2. The Registered Office shall be at such place in Bermuda as the Board shall
from time to time appoint.
6
SHARE RIGHTS
3. (1) Subject to any special rights conferred on the holders of any
share or class of shares, any share in the Company may be issued
with or have attached thereto such preferred, deferred, qualified
or other special rights or such restrictions, whether in regard
to dividends, voting, return of capital or otherwise, as the
Company may by Resolution determine or, if there has not been any
such determination or so far as the same shall not make specific
provision, as the Board may determine.
(2) If the Company creates, pursuant to Bye-Law 3(1) or otherwise,
any new class or series of voting shares, the Company shall
""impose voting restrictions on any such new class or series of
shares as though such class or series of shares were additional
common shares subject to Bye-Law 63.
4. (1) Subject to the Companies Acts, any preference shares may, with
the sanction of a resolution of the Board, be issued on terms:
(a) that they are to be redeemed on the happening of a specified
event or on a given date; and/or,
(b) that they are liable to be redeemed at the option of the
Company; and/or,
(c) if authorised by the memorandum/Incorporating Act of the
Company, that they are liable to be redeemed at the option
of the holder.
The terms and manner of redemption shall be provided for in such
resolution of the Board and shall be attached to but shall not
form part of these Bye-Laws.
(2) The Board may, at its discretion and without the sanction of a
Resolution, authorise the purchase by the Company of its own
7
shares, of any class, at any price (whether at par or above or
below par), and so that any shares to be so purchased may be
selected in any manner whatsoever, upon such terms as the Board
may in its discretion determine; PROVIDED ALWAYS that such
purchase is effected in accordance with the provisions of the
Companies Acts.
MODIFICATION OF RIGHTS
5. Subject to the Companies Acts and except as otherwise set forth in these
Bye-Laws, all or any of the special rights for the time being attached to
any class of shares for the time being issued may from time to time
(whether or not the Company is being wound up) be altered or abrogated with
the consent in writing of the holders of not less than seventy five percent
of the issued shares of that class or with the sanction of a resolution
passed at a separate general meeting of the holders of such shares voting
in person or by proxy. To any such separate general meeting, all the
provisions of these Bye-Laws as to general meetings of the Company shall
mutatis mutandis apply, but so that the necessary quorum shall be two or
more persons holding or representing by proxy shares of the relevant class
representing a majority of the votes that may be cast by all holders of
shares of that class, that every holder of shares of the relevant class
shall be entitled on a poll to the number of votes for every such share
held by him determined in accordance with Bye-Laws 62 and 63 and that any
holder of shares of the relevant class present in person or by proxy may
demand a poll; provided, however, that if the Company or a class of
Shareholders shall have only one Shareholder, one Shareholder present in
person or by proxy shall constitute the necessary quorum.
6. For the purposes of this Bye-Law, unless otherwise expressly provided by
the rights attached to any shares or class of shares, those rights shall be
8
deemed to be altered by the reduction of the capital paid up on those
shares otherwise than by a purchase or redemption by the Company of its own
shares and by the allotment of other shares ranking in priority for payment
of a dividend or in respect of capital or which confer on the holders
voting rights more favourable than those conferred by such first mentioned
shares but shall not otherwise be deemed to be altered by the creation or
issue of further shares ranking pari passu therewith or by the purchase or
redemption by the Company of any of its own shares.
SHARES
7. Subject to the provisions of these Bye-Laws, the unissued shares of the
Company (whether forming part of the original capital or any increased
capital) shall be at the disposal of the Board, which may offer, allot,
grant options over or otherwise dispose of them to such persons, at such
times and for such consideration and upon such terms and conditions as the
Board may determine.
8. The Board may in connection with the issue of any shares exercise all
powers of paying commission and brokerage conferred or permitted by law.
Subject to the provisions of the Companies Acts, any such commission or
brokerage may be satisfied by the payment of cash or by the allotment of
fully or partly paid shares or partly in one way and partly in the other.
9. Except as ordered by a court of competent jurisdiction or as required by
law or as specifically provided in these Bye-Laws, no person shall be
recognised by the Company as holding any share upon trust and the Company
shall not be bound by or required in any way to recognise (even when having
notice thereof) any equitable, contingent, future or partial interest in
any share or any interest in any fractional part of a share or (except only
as otherwise
9
provided in these Bye-Laws, or by law) any other right in respect of any
share except an absolute right to the entirety thereof in the registered
holder.
CERTIFICATES
10. The preparation, issue and delivery of certificates shall be governed by
the Companies Acts. In the case of a share held jointly by several
persons, delivery of a certificate to one of several joint holders shall be
sufficient delivery to all.
11. If a share certificate is defaced, lost or destroyed it may be replaced
without fee but on such terms (if any) as to evidence and indemnity and to
payment of the costs and out of pocket expenses of the Company in
investigating such evidence and preparing such indemnity as the Board may
think fit and, in case of defacement, on delivery of the old certificate to
the Company.
12. All certificates for share or loan capital or other securities of the
Company (other than letters of allotment, scrip certificates and other like
documents) shall, except to the extent that the terms and conditions for
the time being relating thereto otherwise provide, be issued under the
Seal. The Board may by resolution determine, either generally or in any
particular case, that any signatures on any such certificates need not be
autographic but may be affixed to such certificates by some mechanical
means or may be printed thereon or that such certificates need not be
signed by any persons, or may determine that a representation of the Seal
may be printed on any such certificates.
13. Nothing in these Bye-Laws shall prevent title to any securities of the
Company from being evidenced and/or transferred without a written
instrument in accordance with regulations made from time to time in this
10
regard under the Companies Acts, and the Board shall have power to
implement any arrangements which it may think fit for such evidencing
and/or transfer which accord with those regulations.
LIEN
14. The Company shall have a first and paramount lien on every share (not being
a fully paid share) for all monies, whether presently payable or not,
called or payable, at a date fixed by or in accordance with the terms of
issue of such share in respect of such share. The Company's lien on a share
shall extend to all dividends payable thereon. The Board may at any time,
either generally or in any particular case, waive any lien that has arisen
or declare any share to be wholly or in part exempt from the provisions of
this Bye-Law.
15. The Company may sell, in such manner as the Board may think fit, any share
on which the Company has a lien but no sale shall be made unless some sum
in respect of which the lien exists is presently payable nor until the
expiration of 14 days after a notice in writing, stating and demanding
payment of the sum presently payable and giving notice of the intention to
sell in default of such payment, has been served on the holder for the time
being of the share.
16. The net proceeds of sale by the Company of any shares on which it has a
lien shall be applied in or towards payment or discharge of the debt or
liability in respect of which the lien exists so far as the same is
presently payable, and any residue shall (subject to a like lien for debts
or liabilities not presently payable as existed upon the share prior to the
sale) be paid to the person who was the holder of the share immediately
before such sale. For giving effect to any such sale the Board may
authorise some person to transfer the share
11
sold to the purchaser thereof. The purchaser shall be registered as the
holder of the share and he shall not be bound to see to the application of
the purchase money, nor shall his title to the share be affected by any
irregularity or invalidity in the proceedings relating to the sale.
17. Whenever any law for the time being of any country, state or place imposes
or purports to impose any immediate or future or possible liability upon
the Company to make any payment or empowers any government or taxing
authority or government official to require the Company to make any payment
in respect of any shares registered in any of the Company's registers as
held either jointly or solely by any Shareholder or in respect of any
dividends, bonuses or other monies due or payable or accruing due or which
may become due or payable to such Shareholder by the Company on or in
respect of any shares registered as aforesaid or for or on account or in
respect of any Shareholder and whether in consequence of:-
(a) the death of such Shareholder;
(b) the non-payment of any income tax or other tax by such
Shareholder;
(c) the non-payment of any estate, probate, succession, death, stamp,
or other duty by the executor or administrator of such
Shareholder or by or out of his estate;
(d) any other act or thing;
in every such case (except to the extent that the rights conferred upon
holders of any class of shares render the Company liable to make additional
payments in respect of sums withheld on account of the foregoing):-
(i) the Company shall be fully indemnified by such Shareholder or his executor
or administrator from all liability;
12
(ii) the Company shall have a lien upon all dividends and other monies payable
in respect of the shares registered in any of the Company's registers as
held either jointly or solely by such Shareholder for all monies paid or
payable by the Company in respect of such shares or in respect of any
dividends or other monies as aforesaid thereon or for or on account or in
respect of such Shareholder under or in consequence of any such law
together with interest at the rate of fifteen percent per annum thereon
from the date of payment to date of repayment and may deduct or set off
against such dividends or other monies payable as aforesaid any monies
paid or payable by the Company as aforesaid together with interest as
aforesaid;
(iii) the Company may recover as a debt due from such Shareholder or his
executor or administrator wherever constituted any monies paid by the
Company under or in consequence of any such law and interest thereon at
the rate and for the period aforesaid in excess of any dividends or other
monies as aforesaid then due or payable by the Company; and
(iv) the Company may if any such money is paid or payable by it under any such
law as aforesaid refuse to register a transfer of any shares by any such
Shareholder or his executor or administrator until such money and
interest as aforesaid is set off or deducted as aforesaid or in case the
same exceeds the amount of any such dividends or other monies as
aforesaid then due or payable by the Company until such excess is paid to
the Company.
Subject to the rights conferred upon the holders of any class of shares,
nothing herein contained shall prejudice or affect any right or remedy
which any law may confer or purport to confer on the Company and as between
the Company and every such Shareholder as aforesaid, his executor,
administrator and estate wheresoever constituted or situate, any right or
13
remedy which such law shall confer or purport to confer on the Company
shall be enforceable by the Company.
CALLS ON SHARES
18. The Board may from time to time make calls upon the Shareholders in respect
of any monies unpaid on their shares (whether on account of the par value
of the shares or by way of premium) and not by the terms of issue thereof
made payable at a date fixed by or in accordance with such terms of issue,
and each Shareholder shall (subject to the Company serving upon him at
least fourteen days notice specifying the time or times and place of
payment) pay to the Company at the time or times and place so specified the
amount called on his shares. A call may be revoked or postponed as the
Board may determine.
19. A call may be made payable by instalments and shall be deemed to have been
made at the time when the resolution of the Board authorising the call was
passed.
20. The joint holders of a share shall be jointly and severally liable to pay
all calls in respect thereof.
21. If a sum called in respect of the share shall not be paid before or on the
day appointed for payment thereof the person from whom the sum is due shall
pay interest on the sum from the day appointed for the payment thereof to
the time of actual payment at such rate as the Board may determine, but the
Board shall be at liberty to waive payment of such interest wholly or in
part.
22. Any sum which, by the terms of issue of a share, becomes payable on
allotment or at any date fixed by or in accordance with such terms of
issue,
14
whether on account of the nominal amount of the share or by way of premium,
shall for all the purposes of these Bye-Laws be deemed to be a call duly
made, notified and payable on the date on which, by the terms of issue, the
same becomes payable and, in case of non-payment, all the relevant
provisions of these Bye-Laws as to payment of interest, forfeiture or
otherwise shall apply as if such sum had become payable by virtue of a call
duly made and notified.
23. The Board may on the issue of shares differentiate between the allottees or
holders as to the amount of calls to be paid and the times of payment.
FORFEITURE OF SHARES
24. If a Shareholder fails to pay any call or instalment of a call on the day
appointed for payment thereof, the Board may at any time thereafter during
such time as any part of such call or instalment remains unpaid serve a
notice on him requiring payment of so much of the call or instalment as is
unpaid, together with any interest which may have accrued.
25. The notice shall name a further day (not being less than 14 days from the
date of the notice) on or before which, and the place where, the payment
required by the notice is to be made and shall state that, in the event of
non-payment on or before the day and at the place appointed, the shares in
respect of which such call is made or instalment is payable will be liable
to be forfeited. The Board may accept the surrender of any share liable to
be forfeited hereunder and, in such case, references in these Bye-Laws to
forfeiture shall include surrender.
26. If the requirements of any such notice as aforesaid are not complied with,
any share in respect of which such notice has been given may at any time
15
thereafter, before payment of all calls or instalments and interest due in
respect thereof has been made, be forfeited by a resolution of the Board to
that effect. Such forfeiture shall include all dividends declared in
respect of the forfeited shares and not actually paid before the
forfeiture.
27. When any share has been forfeited, notice of the forfeiture shall be served
upon the person who was before forfeiture the holder of the share; but no
forfeiture shall be in any manner invalidated by any omission or neglect to
give such notice as aforesaid.
28. A forfeited share shall be deemed to be the property of the Company and may
be sold, re-offered or otherwise disposed of either to the person who was,
before forfeiture, the holder thereof or entitled thereto or to any other
person upon such terms and in such manner as the Board shall think fit, and
at any time before a sale, re-allotment or disposition the forfeiture may
be cancelled on such terms as the Board may think fit.
29. A person whose shares have been forfeited shall thereupon cease to be a
Shareholder in respect of the forfeited shares but shall, notwithstanding
the forfeiture, remain liable to pay to the Company all monies which at the
date of forfeiture were presently payable by him to the Company in respect
of the shares with interest thereon at such rate as the Board may determine
from the date of forfeiture until payment, and the Company may enforce
payment without being under any obligation to make any allowance for the
value of the shares forfeited.
30. An affidavit in writing that the deponent is a Director of the Company or
the Secretary and that a share has been duly forfeited on the date stated
in the affidavit shall be conclusive evidence of the facts therein stated
as against all persons claiming to be entitled to the share. The Company
may receive the
16
consideration (if any) given for the share on the sale, re-allotment or
disposition thereof and the Board may authorise some person to transfer the
share to the person to whom the same is sold, re-allotted or disposed of,
and he shall thereupon be registered as the holder of the share and shall
not be bound to see to the application of the purchase money (if any) nor
shall his title to the share be affected by any irregularity or invalidity
in the proceedings relating to the forfeiture, sale, re-allotment or
disposal of the share.
REGISTER OF SHAREHOLDERS
31. The Company shall establish and maintain the Register in the manner
prescribed by the Companies Acts. Unless the Board otherwise determines,
the Register shall be open to inspection in the manner prescribed by the
Companies Acts between 9.00 a.m. and 5.00 p.m. in Bermuda, on every working
day. Unless the Board so determines, no Shareholder or intending
Shareholder shall be entitled to have entered in the Register any
indication of any trust or any equitable, contingent, future or partial
interest in any share or any interest in any fractional part of a share and
if any such entry exists or is permitted by the Board it shall not be
deemed to abrogate any of the provisions of Bye-Law 9.
32. Subject to the provisions of the Companies Acts, the Company may keep one
or more overseas or branch registers in any place, and the Board may make,
amend and revoke any such regulations as it may think fit respecting the
keeping of such registers.
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REGISTER OF DIRECTORS AND OFFICERS
33. The Company shall establish and maintain a register of the Directors and
Officers of the Company as required by the Companies Acts. The register of
Directors and Officers shall be open to inspection in the manner prescribed
by the Companies Acts between 9:00 a.m. and 5:00 p.m. in Bermuda on every
working day.
TRANSFER OF SHARES
34. (1) Subject to the Companies Acts, to the provisions of Bye-Laws 34(2) and
34(3) and to such of the restrictions contained in these Bye-Laws as
may be applicable, any Shareholder may transfer all or any of his
shares by an instrument of transfer in the usual common form or in any
other form which the Board may approve.
(2) Any transfer of shares (or any interest therein) that results in (i)
any Shareholder (regardless of whether such Shareholder is a natural
person) (other than Pacific Capital, GKW, CIBC, Continental or MR Co.,
or their Affiliates or, solely upon a foreclosure on the Shares
constituting collateral for a loan, any bona fide third party lender
to any of them) beneficially owning (within the provisions of Section
13(d) of the Exchange Act), directly or indirectly, Controlled Shares
in excess of the Maximum Percentage of the outstanding common shares
of the Company, or (ii) in the case of any Shareholder who is a
natural person, any such Shareholder beneficially owning, directly,
indirectly or constructively (within the meaning of Section 544 of the
Code and Treasury Regulations promulgated thereunder) common shares in
excess of the maximum percentage of the outstanding common shares of
the Company, in either case without the approval of a majority of the
members of the Board and Shareholders holding
18
75% of the votes that may be cast by all holders of common shares of
the Company shall not be registered in the share register of the
Company and shall be void and of no effect.
(3) The restrictions on transfer authorised or imposed by these Bye-Laws
shall not be imposed in any circumstances in a way that would
interfere with the settlement of trades or transactions entered into
through the facilities of a Stock Exchange; provided, however, that
the Company may decline to register transfers in accordance with these
Bye-Laws and resolutions of the Board after a settlement has taken
place.
(4) For the purposes of this Bye-Law 34, "Maximum Percentage" means (x) in
the case of a natural person, 5% measured by vote or value, and (y) in
the case of any Shareholder (other than a natural person) or any group
(as used in Section 13(d) of the Exchange Act), 9.5% measured by vote
or value.
(5) Subject to Section 42(A) of the Companies Act 1981, upon the
occurrence of any transfer or purported transfer of Shares (or any
interest therein) in violation of Bye-Law 34(2), the Company will have
the option, but not the obligation, to repurchase from the transferee
all or part of such Shares (or interest therein) for immediately
available funds in an amount equal to the Repurchase Price; provided
that the Board will use its best efforts to exercise this option
equally among similarly situated Shareholders (to the extent possible
under the circumstances). The Company may assign its repurchase right
to a third party or parties including the other Shareholders, with the
consent of such assignee. Each Shareholder shall be bound by the
determination by the Company to repurchase or assign its right to
repurchase such Shares (or interest therein) and, if so required by
the Company shall sell the number of Shares (or interest therein) that
the Company requires to sell.
19
(6) In the event that the Company or its assignee(s) determines to
repurchase any such shares (or interest therein), the Company shall
provide each Shareholder concerned with written notice of such
determination ("Repurchase Notice") at least seven (7) calendar days
prior to such repurchase or such shorter period as each such
Shareholder may authorise, specifying the date on which any such
Shares (or interest therein) are to be repurchased and the Repurchase
Price. The Company may revoke the Repurchase Notice at any time
before it (or its assignee) pays for the Shares (or interest therein).
Neither the Company nor its assignee(s) shall be obliged to give
general notice to the Shareholders of any intention to purchase or the
conclusion of any purchase of Shares (or interest therein). Payment
of the Repurchase Price by the Company of its assignee(s) shall be by
wire transfer and made at a closing to be held no less than seven (7)
calendar days after receipt of the Repurchase Notice by the
Shareholder.
35. The instrument of transfer of a share shall be signed by or on behalf of
the transferor and where any share is not fully-paid, the transferee and
the transferor shall be deemed to remain the holder of the share until the
name of the transferee is entered in the Register in respect thereof. All
instruments of transfer when registered may be retained by the Company.
The Board may, in its absolute discretion and without assigning any reason
therefor, decline to register any transfer of any share which is not a
fully-paid share. The Board may also decline to register any transfer
unless:-
(1) the instrument of transfer is duly stamped and lodged with the
Company, at such place as the Board shall appoint for the purpose,
accompanied by the certificate for the shares (if any has been issued)
to which it relates, and such other evidence as the Board may
20
reasonably require to show the right of the transferor to make the
transfer;
(2) the instrument of transfer is in respect of only one class of share;
and
(3) all applicable consents, authorisations, permissions or approvals of
any governmental body or agency in Bermuda, the United States or any
other applicable jurisdiction required to be obtained prior to such
transfer shall have been obtained.
Subject to any directions of the Board from time to time in force, the
Secretary may exercise the powers and discretions of the Board under this
Bye-Law and Bye-Law 36.
36. If the Board declines to register a transfer it shall, within ten (10) days
after the date on which the instrument of transfer was lodged, send to the
transferor and the transferee notice of such refusal.
37. A fee may be charged by the Company for registering any transfer, probate,
letters of administration, certificate of death or marriage, power of
attorney, distringas or stop notice, order of court or other instrument
relating to or affecting the title to any share, or otherwise making an
entry in the Register relating to any share.
TRANSMISSION OF SHARES
38. In the case of the death of a Shareholder, the survivor or survivors, where
the deceased was a joint holder, and the estate representative, where he
was sole holder, shall be the only person recognised by the Company as
having any title to his shares; but nothing herein contained shall release
the estate of a deceased holder (whether the sole or joint) from any
liability in respect of any share held by him solely or jointly with other
persons. For the purpose of this Bye-Law, estate representative means the
person to whom probate or
21
letters of administration has or have been granted in Bermuda or, failing
any such person, such other person as the Board may in its absolute
discretion determine to be the person recognised by the Company for the
purpose of this Bye-Law.
39. Any person becoming entitled to a share in consequence of the death of a
Shareholder or otherwise by operation of applicable law may, subject to
Bye-Laws 34 and 35, and subject as hereafter provided and upon such
evidence being produced as may from time to time be required by the Board
as to his entitlement, either be registered himself as the holder of the
share or elect to have some person nominated by him registered as the
transferee thereof. If the person so becoming entitled elects to be
registered himself, he shall deliver or send to the Company a notice in
writing signed by him stating that he so elects. If he shall elect to have
his nominee registered, he shall signify his election by signing an
instrument of transfer of such share in favour of his nominee. All the
limitations, restrictions and provisions of these Bye-Laws relating to the
right to transfer and the registration of transfer of shares shall be
applicable to any such notice or instrument of transfer as aforesaid as if
the death of the Shareholder or other event giving rise to the transmission
had not occurred and the notice or instrument of transfer was an instrument
of transfer signed by such Shareholder.
40. A person becoming entitled to a share in consequence of the death of a
Shareholder or otherwise by operation of applicable law shall (upon such
evidence being produced as may from time to time be required by the Board
as to his entitlement) be entitled to receive and may give a discharge for
any dividends or other monies payable in respect of the share, but he shall
not be entitled in respect of the share to receive notices of or to attend
or vote at general meetings of the Company or, save as aforesaid, to
exercise in respect of the share any of the rights or privileges of a
Shareholder until he shall
22
have become registered as the holder thereof. The Board may at any time
give notice requiring such person to elect either to be registered himself
or to transfer the share and, if the notice is not complied with within
sixty days, the Board may thereafter withhold payment of all dividends and
other monies payable in respect of the shares until the requirements of the
notice have been complied with.
41. Subject to any directions of the Board from time to time in force, the
Secretary may exercise the powers and discretions of the Board under Bye-
Laws 38, 39 and 40.
INCREASE OF CAPITAL
42. The Company may from time to time increase its capital by such sum to be
divided into shares of such par value as the Company by Resolution shall
prescribe.
43. The Company may, by the Resolution increasing the capital, direct that the
new shares or any of them shall be offered in the first instance either at
par or at a premium or (subject to the provisions of the Companies Acts) at
a discount to all the holders for the time being of shares of any class or
classes in proportion to the number of such shares held by them
respectively or make any other provision as to the issue of the new shares.
44. Except as otherwise determined by the Company (but subject always to Bye-
Law 3(2)), the new shares shall be subject to all the provisions of these
Bye-Laws with reference to lien, the payment of calls, forfeiture,
transfer, transmission and otherwise.
23
ALTERATION OF CAPITAL
45. The Company may from time to time by Resolution:-
(1) divide its shares into several classes and attach thereto respectively
any preferential, deferred, qualified or special rights, privileges or
conditions;
(2) consolidate and divide all or any of its share capital into shares of
larger par value than its existing shares;
(3) sub-divide its shares or any of them into shares of smaller par value
than is fixed by its memorandum, so, however, that in the sub-division
the proportion between the amount paid and the amount, if any, unpaid
on each reduced share shall be the same as it was in the case of the
share from which the reduced share is derived;
(4) make provision for the issue and allotment of shares which do not
carry any voting rights;
(5) cancel shares which, at the date of the passing of the resolution in
that behalf, have not been taken or agreed to be taken by any person,
and diminish the amount of its share capital by the amount of the
shares so cancelled; and
(6) change the currency denomination of its share capital.
Where any difficulty arises in regard to any division, consolidation, or
sub-division under this Bye-Law, the Board may settle the same as it thinks
expedient and, in particular, may arrange for the sale of the shares
representing fractions and the distribution of the net proceeds of sale in
due proportion amongst the Shareholders who would have been entitled to the
fractions, and for this purpose the Board may authorise some person to
transfer the shares representing fractions to the purchaser thereof, who
shall not be bound to see to the application of the purchase money nor
shall his
24
title to the shares be affected by any irregularity or invalidity in the
proceedings relating to the sale.
46. Subject to the Companies Acts and to any confirmation or consent required
by law or these Bye-Laws, the Company may by Resolution from time to time
convert any preference shares into redeemable preference shares.
REDUCTION OF CAPITAL
47. Subject to the Companies Acts, its memorandum and any confirmation or
consent required by law or these Bye-Laws, the Company may from time to
time by Resolution authorise the reduction of its issued share capital or
any share premium or contributed surplus account in any manner.
48. In relation to any such reduction, the Company may by Resolution determine
the terms upon which such reduction is to be effected including in the case
of a reduction of part only of a class of shares, those shares to be
affected.
GENERAL MEETINGS AND WRITTEN RESOLUTIONS
49. (1) The Board shall convene and the Company shall hold general meetings as
Annual General Meetings in accordance with the requirements of the
Companies Acts at such times and places as the Board shall appoint.
The Board may, whenever it thinks fit, and shall, when requisitioned
by shareholders pursuant to the provisions of the Companies Acts,
convene general meetings other than Annual General Meetings which
shall be called Special General Meetings.
(2) Except in the case of the removal of auditors and Directors, anything
which may be done by resolution of the Company in general meeting or
by resolution of a meeting of any class of the Shareholders of the
25
Company may, without a meeting and without any previous notice being
required, be done by resolution in writing, signed by all of the
Shareholders or their proxies, or in the case of a Shareholder that is
a corporation (whether or not a company within the meaning of the
Companies Acts) on behalf of such Shareholder, being all of the
Shareholders of the Company who at the date of the resolution in
writing would be entitled to attend a meeting and vote on the
resolution. Such resolution in writing may be signed by, or in the
case of a Shareholder that is a corporation (whether or not a company
within the meaning of the Companies Acts), on behalf of, all the
Shareholders of the Company, or any class thereof, in as many
counterparts as may be necessary.
(3) For the purposes of this Bye-Law, the date of the resolution in
writing is the date when the resolution is signed by, or in the case
of a Shareholder that is a corporation (whether or not a company
within the meaning of the Companies Acts), on behalf of, the last
Shareholder to sign and any reference in any enactment to the date of
passing of a resolution is, in relation to a resolution in writing
made in accordance with this section, a reference to such date.
(4) A resolution in writing made in accordance with this Bye-Law is as
valid as if it had been passed by the Company in general meeting or,
if applicable, by a meeting of the relevant class of Shareholders of
the Company, as the case may be. A resolution in writing made in
accordance with this section shall constitute minutes for the purposes
of the Companies Acts and these Bye-Laws.
NOTICE OF GENERAL MEETINGS
50. An Annual General Meeting shall be called by not less than 30 days notice
in writing and a Special General Meeting shall be called by not less than
26
30 days notice in writing. The notice shall be exclusive of the day on
which it is served or deemed to be served and of the day for which it is
given, and shall specify the place, day and time of the meeting, and, the
nature of the business to be considered. Notice of every general meeting
shall be given in any manner permitted by Bye-Laws 135 and 136 to all
Shareholders other than such as, under the provisions of these Bye-Laws or
the terms of issue of the shares they hold, are not entitled to receive
such notice from the Company and to each Director, and to any Resident
Representative who or which has delivered a written notice upon the
Registered Office requiring that such notice be sent to him or it.
51. The accidental omission to give notice of a meeting or (in cases where
instruments of proxy are sent out with the notice) the accidental omission
to send such instrument of proxy to, or the non-receipt of notice of a
meeting or such instrument of proxy by, any person entitled to receive such
notice shall not invalidate the proceedings at that meeting.
52. A Shareholder present, either in person or by proxy, at any meeting of the
Company or of the holders of any class of shares in the Company shall be
deemed to have received notice of the meeting and, where requisite, of the
purposes for which it was called.
GENERAL MEETINGS AT MORE THAN ONE PLACE
53. (1) The provisions of this Bye-Law shall apply if any general meeting is
convened at or adjourned to more than one place.
(2) The notice of any meeting or adjourned meeting may specify the
Specified Place and the Board shall make arrangements for simultaneous
attendance and participation at other places (whether adjoining the
Specified Place or in a different and separate place or
27
places altogether or otherwise) by Shareholders, provided that persons
attending at any particular place shall be able to see and hear and be
seen and heard (whether by audio visual links or otherwise howsoever
enabling the same) by persons attending at the other places at which
the meeting is convened.
(3) The Board may from time to time make such arrangements for the purpose
of controlling the level of attendance at any such place (whether
involving the issue of tickets or the imposition of some means of
selection or otherwise) as they shall in their absolute discretion
consider appropriate, and may from time to time vary any such
arrangements or make new arrangements in place of them, provided that
a Shareholder who is not entitled to attend, in person or by proxy, at
any particular place shall be entitled so to attend at one of the
other places; and the entitlement of any Shareholder so to attend the
meeting or adjourned meeting at such place shall be subject to any
such arrangements as may be for the time being in force and by the
notice of meeting or adjourned meeting stated to apply to the meeting.
(4) For the purposes of all other provisions of these Bye-Laws any such
meeting shall be treated as being held at the Specified Place.
(5) If a meeting is adjourned to more than one place, notice of the
adjourned meeting shall be given notwithstanding any other provision
of these Bye-Laws.
PROCEEDINGS AT GENERAL MEETINGS
54. No business shall be transacted at any general meeting unless a quorum is
present when the meeting proceeds to business, but the absence of a quorum
shall not preclude the appointment, choice or election of a chairman which
shall not be treated as part of the business of the meeting. Save as
otherwise
28
provided by these Bye-Laws, at least two Shareholders present in person or
by proxy and entitled to vote and holding shares representing more than 50%
of the votes that may be cast by all holders of shares shall be a quorum
for all purposes; provided, however, that if the Company or a class of
Shareholders shall have only one Shareholder, one Shareholder present in
person or by proxy shall constitute the necessary quorum.
55. If within five minutes (or such longer time as the chairman of the meeting
may determine to wait) after the time appointed for the meeting, a quorum
is not present, the meeting, if convened on the requisition of
Shareholders, shall be dissolved. In any other case, it shall stand
adjourned to such other day and such other time and place as the chairman
of the meeting may determine and at such adjourned meeting two Shareholders
present in person or by proxy and entitled to vote and holding shares
representing more than 50% of the votes that may be cast by all holders of
shares shall be a quorum, provided that if the Company or a class of
Shareholders shall have only one Shareholder, one Shareholder present in
person or by proxy shall constitute the necessary quorum. The Company
shall give not less than 7 days notice of any meeting adjourned through
want of a quorum and such notice shall state that the sole Shareholder or,
if more than one, two Shareholders present in person or by proxy and
entitled to vote and holding shares representing more than 50% of the votes
that may be cast by all holders of shares shall be a quorum. If at the
adjourned meeting a quorum is not present within fifteen minutes after the
time appointed for holding the meeting, the meeting shall be dissolved.
56. A meeting of the Shareholders or any class thereof may be held by means of
such telephone, electronic or other communication facilities as permit all
persons participating in the meeting to communicate with each other
29
simultaneously and instantaneously and participation in such a meeting
shall constitute presence in person at such meeting.
57. The Resident Representative, if any, upon giving the notice referred to in
Bye-Law 50 above, shall be entitled to attend any general meeting of the
Company and each Director shall be entitled to attend and speak at any
general meeting of the Company.
58. The Chairman or Co-Chairman (if any) of the Board or, in their absence, the
President or Chief Executive Officer shall preside as chairman at every
general meeting. If there is no such Chairman or Co-Chairman or President
or Chief Executive Officer, or if at any meeting none of the Chairman, Co-
Chairman, Chief Executive Officer or President is present within five
minutes after the time appointed for holding the meeting, or if neither of
them is willing to act as chairman, the Directors present shall choose one
of their number to act or if one Director only is present he shall preside
as chairman if willing to act. If no Director is present, or if each of
the Directors present declines to take the chair, the persons present and
entitled to vote on a poll shall elect one of their number to be chairman.
59. The chairman of the meeting may, with the consent of any meeting at which a
quorum is present (and shall if so directed by the meeting), adjourn the
meeting from time to time and from place to place but no business shall be
transacted at any adjourned meeting except business which might lawfully
have been transacted at the meeting from which the adjournment took place.
In addition, the chairman may adjourn the meeting to another time and place
without such consent if it appears to him that it is likely to be
impracticable to hold or continue that meeting because of the number of
members wishing to attend who are not present. When a meeting is adjourned
for three
30
months or more or for an indefinite period, at least seven clear days'
notice shall be given of the adjourned meeting as in the case of an
original meeting.
60. Save as expressly provided by these Bye-Laws, it shall not be necessary to
give any notice of an adjournment or of the business to be transacted at an
adjourned meeting.
VOTING
61. If an amendment shall be proposed to any resolution under consideration but
shall in good faith be ruled out of order by the chairman of the meeting,
the proceedings on the substantive resolution shall not be invalidated by
any error in such ruling. With the consent of the chairman of the meeting,
an amendment may be withdrawn by its proposer before it is voted upon.
62. Save where a greater percentage is required by the Companies Acts or these
Bye-Laws, any question proposed for consideration at any general meeting
shall be decided on by a simple majority of votes that may be cast by all
holders of shares.
63. (1) Subject to Bye-Law 63(2) and to any rights or restrictions attached to
any class of shares, at any meeting of the Company, each Shareholder
present in person shall be entitled to one vote on any question to be
decided on a show of hands and each Shareholder present in person or
by proxy shall be entitled on a poll to one vote for each share held
by him.
(2) In the case of a Shareholder who is an Over-the-Threshold Shareholder
as defined below, each issued common share constituting a part of the
Controlled Shares of such Shareholder held by such Shareholder shall
confer only a fraction of a vote according
31
to the following formula (the "Cut-back Formula"): AV multiplied by
the applicable Maximum Vote (rounded down to the nearest whole number)
divided by CS.
Where: "AV" is the aggregate number of votes conferred by all the
issued and outstanding common shares
"CS" is the number of Controlled Shares of such Shareholder.
In determining the votes allocable to common shares beneficially owned
by CIBC, the preceding formula shall be applied to all of the common
shares beneficially owned by persons constituting a part of CIBC, in
the aggregate. In determining the votes allocable to common shares
beneficially owned by any member of a group (within the meaning of
Section 13(d) of the Exchange Act), the preceding formula shall be
applied to all of the common shares beneficially owned by persons
constituting a part of the group, in the aggregate.
Any person (a "Related Holder") who owns Controlled Shares which are
deemed to be owned directly, indirectly or constructively (within the
meaning of Section 958 of the Code and the Treasury Regulations
promulgated thereunder) by one or more Over-the-Threshold Shareholders
shall have the vote allocable to such Controlled Shares held by the
Related Holder reduced, in a manner consistent with this Bye-Law
63(2), so as to prevent the Over-the Threshold Shareholders from
having voting power greater than the Maximum Vote applicable to such
Over-the Threshold Shareholders.
32
A number of votes equal to the excess (the "Re-allocable Votes") of
(i) the number of votes that could have been cast by the Controlled
Shares held by all Over-the-Threshold Shareholders if the Cut-back
Formula were not applicable over (ii) the number of votes that may be
cast by such Controlled Shares after application of the Cut-back
Formula shall be reallocated among the common shares that are not
included in such Controlled Shares and that are not held by other
Over-the-Threshold Shareholders in accordance with the following
formula (the "Reallocation Formula"):
RV
------------
AV-ACS
Where: "RV" is the Re-allocable Votes
"AV" is used in the manner defined in the Cut-back Formula
"ACS" is the aggregate number of Controlled Shares of all
Over-the-Threshold Shareholders
If the application of the Reallocation Formula causes any Shareholder
to become an Over-the-Threshold Shareholder, the Cut-back Formula
shall be applied to such Shareholder's controlled Shares (taking into
account the additional votes of such shares after the application of
the Reallocation Formula), and the Cut-back Formula and the
Reallocation Formula shall continue to be applied until there are no
Over-the-Threshold Shareholders.
(3) The Board shall have the power and authority to make all
determinations that may be required to effectuate the provisions of
this Bye-Law, including any required determination of the number of
Shares that may be deemed to be held by any Shareholder, and such
determinations shall be conclusive in the absence of manifest error.
33
All record and beneficial owners of Shares (and all potential
transferees of Shares) shall be deemed to have agreed, by virtue of
their ownership thereof, to provide to the Board, at such times and in
such detail as the Board may reasonably request, any information that
the Board may require in order to make such determinations.
(4) The following definitions shall apply for the purposes of this Bye-
Law:
"Maximum Vote" means (x) in the case of all Shareholders other
than CIBC, 9.5% of the votes that may be cast by all holders of
common shares of the Company and (y) in the case of CIBC in the
aggregate, the number of votes that may be cast by all holders of
shares of the Company multiplied by 35%"".
An "Over-the-Threshold Shareholder" for the purposes of this Bye-
Law is a Shareholder in respect of whom, by virtue of their
holding of Controlled Shares would, upon giving effect to the
principle that holders of common shares shall have one vote for
each common share so registered, have greater than the Maximum
Vote.
64. At any general meeting, a resolution put to the vote of the meeting shall
be decided on a poll.
65. On a poll, votes may be cast either personally or by proxy.
66. A person entitled to more than one vote on a poll need not use all his
votes or cast all the votes he uses in the same way.
34
67. In the case of an equality of votes, the chairman of such meeting shall not
be entitled to a second or casting vote and the resolution shall fail.
68. 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 joint holding.
69. A Shareholder who is a patient for any purpose of any statute or applicable
law relating to mental health or in respect of whom an order has been made
by any Court having jurisdiction for the protection or management of the
affairs of persons incapable of managing their own affairs may vote,
whether on a show of hands or on a poll, by his receiver, committee,
curator bonis or other person in the nature of a receiver, committee or
curator bonis appointed by such Court and such receiver, committee, curator
bonis or other person may vote on a poll by proxy, and may otherwise act
and be treated as such Shareholder for the purpose of general meetings.
70. No Shareholder shall, unless the Board otherwise determines, be entitled to
vote at any general meeting unless all calls or other sums presently
payable by him in respect of shares in the Company have been paid.
71. If:
(1) any objection shall be raised to the qualification of any voter; or,
(2) any votes have been counted which ought not to have been counted or
which might have been rejected; or,
(3) any votes are not counted which ought to have been counted,
the objection or error shall not vitiate the decision of the meeting or
adjourned meeting on any resolution unless the same is raised or pointed
out
35
at the meeting or, as the case may be, the adjourned meeting at which the
vote objected to is given or tendered or at which the error occurs. Any
objection or error shall be referred to the chairman of the meeting and
shall only vitiate the decision of the meeting on any resolution if the
chairman decides that the same may have affected the decision of the
meeting. The decision of the chairman on such matters shall be final and
conclusive.
PROXIES AND CORPORATE REPRESENTATIVES
72. The instrument appointing a proxy shall be in writing under the hand of the
appointor or of his attorney authorised by him in writing or, if the
appointor is a corporation, either under its seal or under the hand of an
officer, attorney or other person authorised to sign the same.
73. Any Shareholder may appoint a standing proxy or (if a corporation)
representative by depositing at the Registered Office, or at such place or
places as the Board may otherwise specify for the purpose, a proxy or (if a
corporation) an authorisation and such proxy or authorisation shall be
valid for all general meetings and adjournments thereof or, resolutions in
writing, as the case may be, until notice of revocation is received at the
Registered Office, or at such place or places as the Board may otherwise
specify for the purpose. Where a standing proxy or authorisation exists,
its operation shall be deemed to have been suspended at any general meeting
or adjournment thereof at which the Shareholder is present or in respect to
which the Shareholder has specially appointed a proxy or representative.
The Board may from time to time require such evidence as it shall deem
necessary as to the due execution and continuing validity of any such
standing proxy or authorisation and the operation of any such standing
proxy or authorisation shall be deemed to be suspended until such time as
the Board determines that it has received the requested evidence or other
evidence satisfactory to
36
it. A person so authorised as a representative of a corporation shall be
entitled to exercise the same power on behalf of the grantor of the
authority as the grantor could exercise if it were an individual
Shareholder of the Company and the grantor shall for the purposes of these
Bye-Laws be deemed to be present in person at any such meeting if a person
so authorised is present at it.
74. Subject to Bye-Law 73, the instrument appointing a proxy together with such
other evidence as to its due execution as the Board may from time to time
require, shall be delivered at the Registered Office (or at such place or
places as may be specified in the notice convening the meeting or in any
notice of any adjournment or, in either case or the case of a written
resolution, in any document sent therewith) not less than 24 hours or such
other period as the Board may determine, prior to the holding of the
relevant meeting or adjourned meeting at which the person named in the
instrument proposes to vote or, in the case of a poll taken subsequently to
the date of a meeting or adjourned meeting, before the time appointed for
the taking of the poll, or, in the case of a written resolution, prior to
the effective date of the written resolution and in default the instrument
of proxy shall not be treated as valid.
75. Instruments of proxy shall be in any common form or in such other form as
the Board may approve and the Board may, if it thinks fit, send out with
the notice of any meeting or any written resolution forms of instruments of
proxy for use at that meeting or in connection with that written
resolution. The instrument of proxy shall be deemed to confer authority to
demand or join in demanding a poll and to vote on any amendment of a
written resolution or amendment of a resolution put to the meeting for
which it is given as the proxy thinks fit. The instrument of proxy shall
unless the
37
contrary is stated therein be valid as well for any adjournment of the
meeting as for the meeting to which it relates.
76. A vote given in accordance with the terms of an instrument of proxy shall
be valid notwithstanding the previous death or unsoundness of mind of the
principal, or revocation of the instrument of proxy or of the authority
under which it was executed, provided that no intimation in writing of such
death, insanity or revocation shall have been received by the Company at
the Registered Office (or such other place as may be specified for the
delivery of instruments of proxy in the notice convening the meeting or
other documents sent therewith) one hour at least before the commencement
of the meeting or adjourned meeting, or the taking of the poll, or the day
before the effective date of any written resolution at which the instrument
of proxy is used.
77. Subject to the Companies Acts, the Board may at its discretion waive any of
the provisions of these Bye-Laws related to proxies or authorisations and,
in particular, may accept such verbal or other assurances as it thinks fit
as to the right of any person to attend and vote on behalf of any
Shareholder at general meetings or to sign written resolutions.
APPOINTMENT AND REMOVAL OF DIRECTORS
78. (1) At the date of adoption of these Bye-Laws, the Board shall consist of
the following persons: -
Jay R. Bloom
Abbott L. Brown
William E. Conway
Lodwrick Cook
Dean C. Kehler
Geoffrey J.W. Kent
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David L. Lee
Jay R. Levine
Toshiaki Ogasawara
William D. Phoenix
Barry Porter
Bruce Raben
Jack M. Scanlon
Michael R. Steed
Hillel Weinberger
Gary Winnick
(3) Each of Abbott Brown, William Conway, Jay Levine, William Phoenix and
Barry Porter are hereby designated as "A" Directors for the purposes
of this Bye-Law. Each of Lodwrick Cook, Jeffrey Kent, David Lee,
Bruce Raben, and Jack Scanlon are hereby designated "B" Directors, and
each of Jay Bloom, Dean Kehler, Toshiaki Ogasawara, Michael Steed,
Hillel Weinberger and Gary Winnick are hereby designated as "C"
Directors.
(4) Upon the resignation or removal of a Director, if any new Director
shall be appointed to the Board they shall be designated to fill the
vacancy arising and shall, for the purposes of these Bye-Laws,
constitute a member of the class represented by the person that they
replaced. If there are more than two vacancies on the Board, then the
Shareholders or the Directors, when appointing a person to fill a
vacancy, shall designate the class of director they shall belong to by
the resolution appointing such person.
79. (1) The A Directors shall serve initially until the conclusion of the
Annual General Meeting of the Company held in the calendar year 1999,
at which consideration is made of financial statements for the period
ending 31 December 1998, and thereafter shall serve for
39
a three-year term, concluding at the third Annual General Meeting
after his appointment or reappointment.
(2) The B Directors shall serve initially until the conclusion of the
Annual General Meeting of the Company held in the calendar year 2000,
at which consideration is made of financial statements for the period
ending 31 December 1999, and thereafter shall serve for a three-year
term, concluding at the third Annual General Meeting after his
appointment or reappointment.
(3) The C Directors shall serve initially until the conclusion of the
Annual General Meeting of the Company held in the calendar year 2001,
at which consideration is made of financial statements for the period
ending 31 December 2000, and thereafter shall serve for a three-year
term, concluding at the third Annual General Meeting after his
appointment or reappointment.
80. If the Company, at the meeting at which a Director retires by rotation or
otherwise, does not fill the vacancy, the retiring Director shall, if
willing to act, be deemed to have been reappointed unless at the meeting it
is resolved not to fill the vacancy or unless a resolution for the
reappointment of the Director is put to the meeting and lost.
81. No person other than a Director retiring by rotation shall be appointed a
Director at any general meeting unless:-
(a) he is recommended by the Board; or
(b) not less than 60 nor more than 90 clear days before the date appointed
for the meeting, notice executed by a Shareholder qualified to vote at
the meeting (not being the person to be proposed) has been given to
the Company of the intention to propose that
40
person for appointment setting forth as to each person whom the Shareholder
proposes to nominate for election or re-election as a Director, (i) the
name, age, business address and residence address of the person, (ii) the
principal occupation or employment of the person, (iii) the class, series
and number of shares of the Company which are beneficially owned by the
person, (iv) particulars which would, if he were so appointed, be required
to be included in the Company's register of Directors and Officers, and (v)
all other information relating to that person that is required to be
disclosed in solicitations for proxies for the election of Directors
pursuant to the Rules and Regulations of the Securities and Exchange
Commission under Section 14 of the Securities Exchange Act of 1934 of the
United States of America as amended, together with notice executed by that
person of his willingness to serve as a Director if so elected.
82. Except as otherwise authorised by the Companies Acts, the appointment of
any person proposed as a Director shall be effected by a separate
resolution.
83. All Directors (other then the initial Directors set forth herein), upon
election or appointment, must provide written acceptance of their
appointment, in such form as the Board may think fit, by notice in writing
to the Registered Office within 30 days of their appointment.
84. The Company shall determine, at the Annual General Meeting and may by
Resolution, (a) the minimum number of Directors, which shall be not less
than 11, and (b) the maximum number of Directors, which shall not be
more than 18, and may by Resolution determine that one or more vacancies in
the Board shall be deemed casual vacancies for the purposes of these Bye-
Laws. Without prejudice to the power of the Company by Resolution in
pursuance of any of the provisions of these Bye-Laws to
41
appoint any person to be a Director, the Board, so long as a quorum of
Directors remains in office, shall have power at any time and from time to
time to appoint any individual to be a Director so as to fill a casual
vacancy. A Director so appointed shall hold office only until the next
following Annual General Meeting and shall not be taken into account in
determining the Directors who are to retire by rotation at the meeting. If
not reappointed at such Annual General Meeting, he shall vacate office at
the conclusion thereof.
85. The Shareholders may in a Special General Meeting called for that purpose
remove a Director provided notice of any such meeting shall be served upon
the Director concerned not less than 14 days before the meeting and he
shall be entitled to be heard at that meeting. Any vacancy created by the
removal of a Director at a Special General Meeting may be filled at the
Meeting by the election of another Director in his place or, in the absence
of any such election, by the Board.
RESIGNATION AND DISQUALIFICATION OF DIRECTORS
86. The office of a Director shall be vacated upon the happening of any of the
following events:
(1) if he resigns his office by notice in writing delivered to the
Registered Office or tendered at a meeting of the Board;
(2) if he becomes of unsound mind or a patient for any purpose of any
statute or applicable law relating to mental health and the Board
resolves that his office is vacated;
(3) if he becomes bankrupt under the laws of any country or compounds with
his creditors;
(4) if he is prohibited by law from being a Director;
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(5) if he ceases to be a Director by virtue of the Companies Acts or these
Bye-Laws or is removed from office pursuant to these Bye-Laws;
(6) he shall for more than six consecutive months have been absent without
permission of the Board from meetings of the Board held during that
period and his Alternate Director (if any) shall not during such
period have attended in his stead and the Board resolves that his
office be vacated; or
(7) after the initial term he is requested to resign in writing by not
less than three quarters of the other Directors. In calculating the
number of Directors who are required to make such a request to the
Director, (i) there shall be excluded any Alternate Director appointed
by him acting in his capacity as such; and (ii) a Director and any
Alternate Director appointed by him and acting in his capacity as such
shall constitute a single Director for this purpose, so that the
signature of either shall be sufficient.
ALTERNATE DIRECTORS
87. Any Director (other than an Alternate Director) may appoint any other
Director, or any other person approved by resolution of the Board and
willing to act, to be an Alternate Director and may remove from office an
Alternate Director so appointed by him. Any appointment or removal of an
Alternate Director by a Director shall be effected by depositing a notice
of appointment or removal with the Secretary at the Registered Office,
signed by such Director, and such appointment or removal shall become
effective on the date of receipt by the Secretary. Any Alternate Director
may also be removed by resolution of the Board. An Alternate Director may
also be a Director in his own right and may act as alternate to more than
one Director.
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88. An Alternate Director shall cease to be an Alternate Director:-
(a) if his appointor ceases to be a Director; but, if a Director retires
by rotation or otherwise but is reappointed or deemed to have been
reappointed at the meeting at which he retires, any appointment of an
Alternate Director made by him which was in force immediately prior to
his retirement shall continue after his reappointment;
(b) on the happening of any event which, if he were a Director, would
cause him to vacate his office as Director;
(c) if he is removed from office pursuant to Bye-Law 85; or
(d) if he resigns his office by notice to the Company.
89. An Alternate Director shall be entitled to receive notices of all meetings
of Directors, to attend, be counted in the quorum and vote at any such
meeting at which any Director to whom he is alternate is not personally
present, and generally to perform all the functions of any Director to whom
he is alternate in his absence.
90. Every person acting as an Alternate Director shall (except as regards
powers to appoint an alternate and remuneration) be subject in all respects
to the provisions of these Bye-Laws relating to Directors and shall alone
be responsible to the Company for his acts and defaults and shall not be
deemed to be the agent of or for any Director for whom he is alternate. An
Alternate Director may be paid expenses and shall be entitled to be
indemnified by the Company to the same extent mutatis mutandis as if he
were a Director. Every person acting as an Alternate Director shall have
one vote for each Director for whom he acts as alternate (in addition to
his own vote if he is also a Director). The signature of an Alternate
Director to any resolution in writing of the Board or a committee of the
Board shall, unless the terms of his appointment provides to the contrary,
be as effective as the signature of the Director or Directors to whom he is
alternate.
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DIRECTORS' FEES AND
ADDITIONAL REMUNERATION AND EXPENSES
91. The ordinary remuneration of the Directors who do not hold executive office
for their services (excluding amounts payable under any other provision of
these Bye-Laws) shall be such amount as the Company may from time to time
by Resolution determine and in the absence of a determination to the
contrary such fees shall be deemed to accrue from day to day. Subject
thereto, each such Director shall be paid a fee (which shall be deemed to
accrue from day to day) at such rate as may from time to time be determined
by the Board. Each Director may be paid his reasonable travel, hotel and
incidental expenses in attending and returning from meetings of the Board
or committees constituted pursuant to these Bye-Laws or general meetings
and shall be paid all expenses properly and reasonably incurred by him in
the conduct of the Company's business or in the discharge of his duties as
a Director. Any Director who, by request, goes or resides abroad for any
purposes of the Company or who performs services which in the opinion of
the Board go beyond the ordinary duties of a Director may be paid such
extra remuneration (whether by way of salary, commission, participation in
profits or otherwise) as the Board may determine, and such extra
remuneration shall be in addition to any remuneration provided for by or
pursuant to any other Bye-Law.
DIRECTORS' INTERESTS
92. (1) A Director may hold any other office or place of profit with the
Company (except that of auditor) in conjunction with his office of
Director for such period and upon such terms as the Board may
determine, and may be paid such extra remuneration therefor
45
(whether by way of salary, commission, participation in profits or
otherwise) as the Board may determine, and such extra remuneration
shall be in addition to any remuneration provided for by or pursuant
to any other Bye-Law.
(2) A Director may act by himself or his firm in a professional capacity
for the Company (otherwise than as auditor) and he or his firm shall
be entitled to remuneration for professional services as if he were
not a Director.
(3) Subject to the provisions of the Companies Acts, a Director may
notwithstanding his office be a party to, or otherwise interested in,
any transaction or arrangement with the Company or in which the
Company is otherwise interested; and be a director or other officer
of, or employed by, or a party to any transaction or arrangement with,
or otherwise interested in, any body corporate promoted by the Company
or in which the Company is interested. The Board may also cause the
voting power conferred by the shares in any other company held or
owned by the Company to be exercised in such manner in all respects as
it thinks fit, including the exercise thereof in favour of any
resolution appointing the Directors or any of them to be directors or
officers of such other company, or voting or providing for the payment
of remuneration to the directors or officers of such other company.
(4) So long as, where it is necessary, he declares the nature of his
interest at the first opportunity at a meeting of the Board or by
writing to the Directors as required by the Companies Acts, a Director
shall not by reason of his office be accountable to the Company for
any benefit which he derives from any office or employment to which
these Bye-Laws allow him to be appointed or from any transaction or
arrangement in which these Bye-Laws allow
46
him to be interested, and no such transaction or arrangement shall be
liable to be avoided on the ground of any interest or benefit.
(5) A Director who has disclosed his interest in a transaction or
arrangement with the Company, or in which the Company is otherwise
interested, may be counted in the quorum and vote at any meeting at
which such transaction or arrangement is considered by the Board;
provided that, notwithstanding the foregoing, (i) when the Board is
considering a resolution to fill a vacancy on the Board or (ii) the
Board is voting on a resolution for the nomination or recommendation
of the slate of Directors as required under Bye-Law 81, Gary Winnick,
so long as he is a Director, shall not be entitled to vote on any of
such resolutions and may not be counted in the quorum of the meeting.
(6) Subject to the Companies Acts and any further disclosure required
thereby, a general notice to the Directors by a Director or Officer
declaring that he is a director or officer or has an interest in a
person and is to be regarded as interested in any transaction or
arrangement made with that person, shall be a sufficient declaration
of interest in relation to any transaction or arrangement so made.
(7) For the purposes of these Bye-Laws, without limiting the generality of
the foregoing, a Director is deemed to have an interest in a
transaction or arrangement with the Company if he is the holder of or
beneficially interested in five per cent or more of any class of the
equity share capital of any body corporate (or any other body
corporate through which his interest is derived) or of the voting
rights available to members of the relevant body corporate with which
the Company is proposing to enter into a transaction or arrangement,
provided that there shall be disregarded any shares held by such
Director as bare or custodian trustee and in which he has no
beneficial interest, any shares comprised in a trust in which the
47
Director's interest is in reversion or remainder if and so long as
some other person is entitled to receive the income thereof, and any
shares comprised in an authorised unit trust in which the Director is
only interested as a unit holder. For the purposes of this Bye-Law,
an interest of a person who is connected with a Director shall be
treated as an interest of the Director.
POWERS AND DUTIES OF THE BOARD
93. Subject to the provisions of the Companies Acts and these Bye-Laws and to
any directions given by the Company by Resolution, the Board shall manage
the business of the Company and may pay all expenses incurred in promoting
and incorporating the Company and may exercise all the powers of the
Company. No alteration of these Bye-Laws and no such direction shall
invalidate any prior act of the Board which would have been valid if that
alteration had not been made or that direction had not been given. The
powers given by this Bye-Law shall not be limited by any special power
given to the Board by these Bye-Laws and a meeting of the Board at which a
quorum is present shall be competent to exercise all the powers,
authorities and discretions for the time being vested in or exercisable by
the Board.
94. The Board may exercise all the powers of the Company to borrow money and to
mortgage or charge all or any part of the undertaking, property and assets
(present and future) and uncalled capital of the Company and to issue
debentures and other securities, whether outright or as collateral security
for any debt, liability or obligation of the Company or of any other
persons.
95. All cheques, promissory notes, drafts, bills of exchange and other
instruments, whether negotiable or transferable or not, and all receipts
for money paid to the Company shall be signed, drawn, accepted, endorsed or
48
otherwise executed, as the case may be, in such manner as the Board shall
from time to time by resolution determine.
GRATUITIES, PENSIONS AND INSURANCE
96. (1) The Board may (by establishment of or maintenance of schemes or
otherwise) provide benefits, whether by the payment of gratuities or
pensions or by insurance or otherwise, for any past or present
Director or employee of the Company or any of its subsidiaries or any
body corporate associated with, or any business acquired by, any of
them, and for any member of his family (including a spouse and a
former spouse) or any person who is or was dependent on him, and may
(as well before as after he ceases to hold such office or employment)
contribute to any fund and pay premiums for the purchase or provision
of any such benefit.
(2) Without prejudice to the provisions of Bye-Laws 141 and 142, the Board
shall have the power to purchase and maintain insurance for or for the
benefit of any persons who are or were at any time Directors,
Officers, or employees of the Company, or of any other Company which
is its holding company or in which the Company or such holding company
has any interest whether direct or indirect or which is in any way
allied to or associated with the Company, or of any subsidiary
undertaking of the Company or any such other company, or who are or
were at any time trustees of any pension fund in which employees of
the Company or any such other company or subsidiary undertaking are
interested, including (without prejudice to the generality of the
foregoing) insurance against any liability incurred by such persons in
respect of any act or omission in the actual or purported execution or
discharge of their duties or in the exercise or purported exercise of
their powers or otherwise in
49
relation to their duties, powers or offices in relation to the Company
or any such other company, subsidiary undertaking or pension fund.
(3) No Director or former Director shall be accountable to the Company or
the Shareholders for any benefit provided pursuant to this Bye-Law and
the receipt of any such benefit shall not disqualify any person from
being or becoming a Director of the Company.
DELEGATION OF THE BOARD'S POWERS
97. The Board may by power of attorney appoint any company, firm or person or
any fluctuating body of persons, whether nominated directly or indirectly
by the Board, to be the attorney or attorneys of the Company for such
purposes and with such powers, authorities and discretions (not exceeding
those vested in or exercisable by the Board under these Bye-Laws) and for
such period and subject to such conditions as it 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 and of such attorney
as the Board may think fit, and may also authorise any such attorney to
sub-delegate all or any of the powers, authorities and discretions vested
in him.
98. The Board may entrust to and confer upon any Director, Officer or, without
prejudice to the provisions of Bye-Law 99, other individual any of the
powers exercisable by it upon such terms and conditions with such
restrictions as it thinks fit, and either collaterally with, or to the
exclusion of, its own powers, and may from time to time revoke or vary all
or any of such powers but no person dealing in good faith and without
notice of such revocation or variation shall be affected thereby.
99. The Board may delegate any of its powers, authorities and discretions to
committees, consisting of such person or persons (whether a member or
50
members of its body or not) as it thinks fit. Any committee so formed
shall, in the exercise of the powers, authorities and discretions so
delegated, and in conducting its proceedings conform to any regulations
which may be imposed upon it by the Board. If no regulations are imposed
by the Board the proceedings of a committee with two or more members shall
be, as far as is practicable, governed by the Bye-Laws regulating the
proceedings of the Board.
PROCEEDINGS OF THE BOARD
100. The Board may meet for the despatch of business, adjourn and otherwise
regulate its meetings as it thinks fit. Questions arising at any meeting
shall be determined by the affirmative vote of a majority of the Directors
then in office. In the case of an equality of votes the motion shall be
deemed to have been lost. A Director may, and the Secretary on the
requisition of a Director shall, at any time summon a meeting of the Board.
101. Notice of a meeting of the Board shall be deemed to be duly given to a
Director if it is given to him personally or by word of mouth or sent to
him by post, cable, telex, telecopier or other mode of representing or
reproducing words in a legible and non-transitory form at his last known
address or any other address given by him to the Company for this purpose.
A Director may retrospectively waive the requirement for notice of any
meeting by consenting in writing to the business conducted at the meeting.
102. (1) The quorum necessary for the transaction of the business of the Board
may be fixed by the Board and, unless so fixed at any other number,
shall be two individuals. Any Director who ceases to be a Director at
a meeting of the Board may continue to be present and to act as a
Director and be counted in the quorum until the termination
51
of the meeting if no other Director objects and if otherwise a quorum
of Directors would not be present.
(2) The Resident Representative shall, upon delivering written notice of
an address for the purposes of receipt of notice, to the Registered
Office, be entitled to receive notice of, attend and be heard at, and
to receive minutes of all meetings of the Board.
103. So long as a quorum of Directors remains in office, the continuing
Directors may act notwithstanding any vacancy in the Board but, if no such
quorum remains, the continuing Directors or a sole continuing Director may
act only for the purpose of calling a general meeting.
104. The Chairman or Co-Chairman (or President) or, in his absence, the Deputy
Chairman or Co-Chairman (or Vice-President), shall preside as chairman at
every meeting of the Board. If at any meeting the Chairman or Deputy
Chairman (or the President or Vice-President) is not present within five
minutes after the time appointed for holding the meeting, or is not willing
to act as chairman, the Directors present may choose one of their number to
be chairman of the meeting.
105. The meetings and proceedings of any committee consisting of two or more
members shall be governed by the provisions contained in these Bye-Laws for
regulating the meetings and proceedings of the Board so far as the same
are applicable and are not superseded by any regulations imposed by the
Board.
106. A resolution in writing signed by all the Directors for the time being
entitled to receive notice of a meeting of the Board or by all the members
of a committee for the time being shall be as valid and effectual as a
resolution passed at a meeting of the Board or, as the case may be, of such
committee
52
duly called and constituted. Such resolution may be contained in
one document or in several documents in the like form each signed by one or
more of the Directors or members of the committee concerned.
107. A meeting of the Board or a committee appointed by the Board may be held by
means of such telephone, electronic or other communication facilities as
permit all persons participating in the meeting to communicate with each
other simultaneously and instantaneously and participation in such a
meeting shall constitute presence in person at such meeting. Such a
meeting shall be deemed to take place where the largest group of those
participating in the meeting is physically assembled, or, if there is no
such group, where the chairman of the meeting then is. The word "meeting"
in these Bye-Laws shall be construed accordingly.
108. All acts done by the Board or by any committee or by any person acting as a
Director or member of a committee or any person duly authorised by the
Board or any committee, shall, notwithstanding that it is afterwards
discovered that there was some defect in the appointment of any member of
the Board or such committee or person acting as aforesaid or that they or
any of them were disqualified or had vacated their office, be as valid as
if every such person had been duly appointed and was qualified and had
continued to be a Director, member of such committee or person so
authorised.
109. The Company may by Resolution suspend or relax to any extent, either
generally or in respect of any particular matter, any provision of these
Bye-Laws prohibiting a Director from voting at a meeting of the Board or of
a committee of the Board, or ratify any transaction not duly authorised by
reason of a contravention of any such provisions.
53
110. Where proposals are under consideration concerning the appointment
(including fixing or varying the terms of appointment) of two or more
Directors to offices or employments with the Company or any body corporate
in which the Company is interested, the proposals may be divided and
considered in relation to each Director separately and in such cases each
of the Directors concerned (if not debarred from voting) provision of
paragraph 5 of Bye-Law 97 shall be entitled to vote and be counted in the
quorum in respect of each resolution except that concerning his own
appointment.
111. If a question arises at a meeting of the Board or a committee of the Board
as to the entitlement of a Director to vote or be counted in a quorum, the
question may, before the conclusion of the meeting, be referred to the
chairman of the meeting and his ruling in relation to any Director other
than himself shall be final and conclusive except in a case where the
nature or extent of the interests of the Director concerned have not been
fairly disclosed. If any such question arises in respect of the chairman
of the meeting, it shall be decided by resolution of the Board (on which
the chairman shall not vote) and such resolution will be final and
conclusive except in a case where the interests of the chairman have not
been fairly disclosed.
OFFICERS
112. The Officers of the Company shall include a President and a Vice-President
or a Chairman and Co-Chairman and a Deputy Chairman who shall be Directors
and shall be elected by the Board as soon as possible after the statutory
meeting and each Annual General Meeting. In addition, the Board may
appoint any person whether or not he is a Director to hold such office as
the Board may from time to time determine. Any person elected or
54
appointed pursuant to this Bye-Law shall hold office for such period and
upon such terms as the Board may determine and the Board may revoke or
terminate any such election or appointment. Any such revocation or
termination shall be without prejudice to any claim for damages that such
Officer may have against the Company or the Company may have against such
Officer for any breach of any contract of service between him and the
Company which may be involved in such revocation or termination. Save as
provided in the Companies Acts or these Bye-Laws, the powers and duties of
the Officers of the Company shall be such (if any) as are determined from
time to time by the Board.
EXECUTIVE DIRECTORS
113. Subject to the provisions of the Companies Acts, the Board may appoint one
or more of its body to be the holder of any executive office (except that
of auditor) under the Company and may enter into any agreement or
arrangement with any Director for his employment by the Company or for the
provision by him of any services outside the scope of the ordinary duties
of a Director. Any such appointment, agreement or arrangement may be made
upon such terms, including terms as to remuneration, as the Board
determines, and any remuneration which is so determined may be in addition
to or in lieu of any ordinary remuneration as a Director. The Board may
revoke or vary any such appointment but without prejudice to any rights or
claims which the person whose appointment is revoked or varied may have
against the Company by reason thereof.
114. Any appointment of a Director to an executive office shall terminate if he
ceases to be a Director but without prejudice to any rights or claims which
he may have against the Company by reason of such cesser. A Director
55
appointed to an executive office shall not ipso facto cease to be a
Director if his appointment to such executive office terminates.
115. The emoluments of any Director holding executive office for his services as
such shall be determined by the Board, and may be of any description, and
(without limiting the generality of the foregoing) may include admission to
or continuance of membership of any scheme (including any share acquisition
scheme) or fund instituted or established or financed or contributed to by
the Company for the provision of pensions, life assurance or other benefits
for employees or their dependants, or the payment of a pension or other
benefits to him or his dependants on or after retirement or death, apart
from membership or any such scheme or fund.
MINUTES
116. The Board shall cause minutes to be made and books kept for the purpose of
recording -
(1) all appointments of Officers made by the Board;
(2) the names of the Directors and other persons (if any) present at each
meeting of the Board and of any committee;
(3) all proceedings at meetings of the Company, of the holders of any
class of shares in the Company, of the Board and of committees
appointed by the Board or the Shareholders;
(4) all proceedings of its managers (if any).
Shareholders shall only be entitled to see the register of Directors and
Officers, the Register, the financial information provided for in Bye-Law
132 and the minutes of meetings of the Shareholders of the Company.
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SECRETARY AND RESIDENT REPRESENTATIVE
117. The Secretary (including one or more deputy or assistant secretaries) and,
if required, the Resident Representative, shall be appointed by the Board
at such remuneration (if any) and upon such terms as it may think fit and
any Secretary and Resident Representative so appointed may be removed by
the Board. The duties of the Secretary and the duties of the Resident
Representative shall be those prescribed by the Companies Acts together
with such other duties as shall from time to time be prescribed by the
Board.
118. A provision of the Companies Acts or these Bye-Laws requiring or
authorising a thing to be done by or to a Director and the Secretary shall
not be satisfied by its being done by or to the same person acting both as
Director and as, or in the place of, the Secretary.
THE SEAL
119. (1) The Seal shall consist of a circular metal device with the name of the
Company around the outer margin thereof and the country and year of
incorporation across the centre thereof. Should the Seal not have
been received at the Registered Office in such form at the date of
adoption of this Bye-Law then, pending such receipt, any document
requiring to be sealed with the Seal shall be sealed by affixing a red
wafer seal to the document with the name of the Company, and the
country and year of incorporation type written across the centre
thereof.
(2) The Board shall provide for the custody of every Seal. A Seal shall
only be used by authority of the Board or of a committee constituted
by the Board. Subject to these Bye-Laws, any instrument to which a
Seal is affixed shall be signed by either two Directors, or by the
57
Secretary and one Director, or by the Secretary or by any one person
whether or not a Director or Officer, who has been authorised either
generally or specifically to affirm the use of a Seal; provided that
the Secretary or a Director may affix a Seal over his signature alone
to authenticate copies of these Bye-Laws, the minutes of any meeting
or any other documents requiring authentication.
DIVIDENDS AND OTHER PAYMENTS
120. The Board may from time to time declare dividends or distributions out of
contributed surplus to be paid to the Shareholders according to their
rights and interests including such interim dividends as appear to the
Board to be justified by the position of the Company. The Board, in its
discretion, may determine that any dividend shall be paid in cash or shall
be satisfied, subject to Bye-Law 128, in paying up in full shares in the
Company to be issued to the Shareholders credited as fully paid or partly
paid or partly in one way and partly the other. The Board may also pay any
fixed cash dividend which is payable on any shares of the Company half
yearly or on such other dates, whenever the position of the Company, in the
opinion of the Board, justifies such payment.
121. Except insofar as the rights attaching to, or the terms of issue of, any
share otherwise provide:-
(1) all dividends or distributions out of contributed surplus may be
declared and paid according to the amounts paid up on the shares in
respect of which the dividend or distribution is paid, and an amount
paid up on a share in advance of calls may be treated for the purpose
of this Bye-Law as paid-up on the share;
(2) dividends or distributions out of contributed surplus may be
apportioned and paid pro rata according to the amounts paid-up on
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the shares during any portion or portions of the period in respect of
which the dividend or distribution is paid.
122. The Board may deduct from any dividend, distribution or other monies
payable to a Shareholder by the Company on or in respect of any shares all
sums of money (if any) presently payable by him to the Company on account
of calls or otherwise in respect of shares of the Company.
123. No dividend, distribution or other monies payable by the Company on or in
respect of any share shall bear interest against the Company.
124. Any dividend, distribution or interest, or part thereof payable in cash,
or any other sum payable in cash to the holder of shares may be paid by
cheque or warrant sent through the post addressed to the holder at his
address in the Register or, in the case of joint holders, addressed to the
holder whose name stands first in the Register in respect of the shares at
his registered address as appearing in the Register or addressed to such
person at such address as the holder or joint holders may in writing
direct. Every such cheque or warrant shall, unless the holder or joint
holders otherwise direct, be made payable to the order of the holder or, in
the case of joint holders, to the order of the holder whose name stands
first in the Register in respect of such shares, and shall be sent at his
or their risk and payment of the cheque or warrant by the bank on which it
is drawn shall constitute a good discharge to the Company. Any one of two
or more joint holders may give effectual receipts for any dividends,
distributions or other monies payable or property distributable in respect
of the shares held by such joint holders.
125. Any dividend or distribution out of contributed surplus unclaimed for a
period of six years from the date of declaration of such dividend or
distribution shall be forfeited and shall revert to the Company and the
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payment by the Board of any unclaimed dividend, distribution, interest or
other sum payable on or in respect of the share into a separate account
shall not constitute the Company a trustee in respect thereof.
126. The Board may also, in addition to its other powers, direct payment or
satisfaction of any dividend or distribution out of contributed surplus
wholly or in part by the distribution of specific assets, and in particular
of paid-up shares or debentures of any other company, and where any
difficulty arises in regard to such distribution or dividend the Board may
settle it as it thinks expedient, and in particular, may authorise any
person to sell and transfer any fractions or may ignore fractions
altogether, and may fix the value for distribution or dividend purposes of
any such specific assets and may determine that cash payments shall be made
to any Shareholders upon the footing of the values so fixed in order to
secure equality of distribution and may vest any such specific assets in
trustees as may seem expedient to the Board provided that such dividend or
distribution may not be satisfied by the distribution of any partly paid
shares or debentures of any company without the sanction of a Resolution.
RESERVES
127. The Board may, before recommending or declaring any dividend or
distribution out of contributed surplus, set aside such sums as it thinks
proper as reserves which shall, at the discretion of the Board, be
applicable for any purpose of the Company and pending such application may,
also at such discretion, either be employed in the business of the Company
or be invested in such investments as the Board may from time to time think
fit. The Board may also without placing the same to reserve carry forward
any sums which it may think it prudent not to distribute.
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CAPITALIZATION OF PROFITS
128. The Board may, from time to time, resolve to capitalise all or any part of
any amount for the time being standing to the credit of any reserve or fund
which is available for distribution or to the credit of any share premium
account and accordingly that such amount be set free for distribution
amongst the Shareholders or any class of Shareholders who would be entitled
thereto if distributed by way of dividend and in the same proportions, on
the footing that the same be not paid in cash but be applied either in or
towards paying up amounts for the time being unpaid on any shares in the
Company held by such Shareholders respectively or in payment up in full of
unissued shares, debentures or other obligations of the Company, to be
allotted and distributed credited as fully paid amongst such Shareholders,
or partly in one way and partly in the other, provided that for the purpose
of this Bye-Law, a share premium account may be applied only in paying up
of unissued shares to be issued to such Shareholders credited as fully paid
and provided further that any sum standing to the credit of a share premium
account may only be applied in crediting as fully paid shares of the same
class as that from which the relevant share premium was derived.
129. Where any difficulty arises in regard to any distribution under the last
preceding Bye-Law, the Board may settle the same as it thinks expedient
and, in particular, may authorise any person to sell and transfer any
fractions or may resolve that the distribution should be as nearly as may
be practicable in the correct proportion but not exactly so or may ignore
fractions altogether, and may determine that cash payments should be made
to any Shareholders in order to adjust the rights of all parties, as may
seem expedient to the Board. The Board may appoint any person to sign on
behalf of the persons entitled to participate in the distribution any
contract
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necessary or desirable for giving effect thereto and such appointment shall
be effective and binding upon the Shareholders.
RECORD DATES
130. Notwithstanding any other provisions of these Bye-Laws, the Company may by
Resolution or the Board may fix any date as the record date for any
dividend, distribution, allotment or issue and for the purpose of
identifying the persons entitled to receive notices of general meetings.
Any such record date may be on or at any time not more than 60 days before
any date on which such dividend, distribution, allotment or issue is
declared, paid or made or not more than 60 days nor less than 10 days
before the date of any such meetings.
ACCOUNTING RECORDS
131. The Board shall cause to be kept accounting records sufficient to give a
true and fair view of the state of the Company's affairs and to show and
explain its transactions, in accordance with the Companies Acts.
132. The records of account shall be kept at the Registered Office or at such
other place or places as the Board thinks fit, and shall at all times be
open to inspection by the Directors; PROVIDED that if the records of
account are kept at some place outside Bermuda, there shall be kept at an
office of the Company in Bermuda such records as will enable the Directors
to ascertain with reasonable accuracy the financial position of the Company
at the end of each three month period. No Shareholder (other than an
Officer of the Company) shall have any right to inspect any accounting
record or book or document of the Company except as conferred by law or
authorised by the Board or by Resolution.
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133. A copy of every balance sheet and statement of income and expenditure,
including every document required by law to be annexed thereto, which is to
be laid before the Company in general meeting, together with a copy of the
auditors' report, shall be sent to each person entitled thereto in
accordance with the requirements of the Companies Acts.
AUDIT
134. Save and to the extent that an audit is waived in the manner permitted by
the Companies Acts, auditors shall be appointed and their duties regulated
in accordance with the Companies Acts, any other applicable law and such
requirements not inconsistent with the Companies Acts as the Board may from
time to time determine.
SERVICE OF NOTICES AND OTHER DOCUMENTS
135. Any notice or other document (including a share certificate) may be served
on or delivered to any Shareholder by the Company either personally or by
sending it through the post (by airmail where applicable) in a pre-paid
letter addressed to such Shareholder at his address as appearing in the
Register or by delivering it to or leaving it at such registered address.
In the case of joint holders of a share, service or delivery of any notice
or other document on or to one of the joint holders shall for all purposes
be deemed as sufficient service on or delivery to all the joint holders.
Any notice or other document if sent by post shall be deemed to have been
served or delivered seven days after it was put in the post, and in proving
such service or delivery, it shall be sufficient to prove that the notice
or document was properly addressed, stamped and put in the post.
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136. Any notice of a general meeting of the Company shall be deemed to be duly
given to a Shareholder, or other person entitled to it, if it is sent to
him by cable, telex, telecopier or other mode of representing or
reproducing words in a legible and non-transitory form at his address as
appearing in the Register or any other address given by him to the Company
for this purpose. Any such notice shall be deemed to have been served
twenty-four hours after its despatch.
137. Any notice or other document delivered, sent or given to a Shareholder in
any manner permitted by these Bye-Laws shall, notwithstanding that such
Shareholder is then dead or bankrupt or that any other event has occurred,
and whether or not the Company has notice of the death or bankruptcy or
other event, be deemed to have been duly served or delivered in respect of
any share registered in the name of such Shareholder as sole or joint
holder unless his name shall, at the time of the service or delivery of the
notice or document, have been removed from the Register as the holder of
the share, and such service or delivery shall for all purposes be deemed as
sufficient service or delivery of such notice or document on all persons
interested (whether jointly with or as claiming through or under him) in
the share.
DESTRUCTION OF DOCUMENTS
138. The Company shall be entitled to destroy all instruments of transfer of
shares which have been registered, and all other documents on the basis of
which any entry is made in the Register, at any time after the expiration
of six years from the date of registration thereof and all dividends
mandates or variations or cancellations thereof and notifications of change
of address at any time after the expiration of two years from the date of
recording thereof and all share certificates which have been cancelled at
any time after the expiration of one year from the date of cancellation
thereof and all paid
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dividends, warrants and cheques at any time after the expiration of one
year from the date of actual payment thereof and all instruments of proxy
which have been used for the purpose of a poll at any time after the
expiration of one year from the date of such use and all instruments of
proxy which have not been used for the purpose of a poll at any time after
one month from the end of the meeting to which the instrument of proxy
relates and at which no poll was demanded. It shall conclusively be
presumed in favour of the Company that every entry in the Register
purporting to have been made on the basis of an instrument of transfer or
other document so destroyed was duly and properly made, that every
instrument of transfer so destroyed was a valid and effective instrument
duly and properly registered, that every share certificate so destroyed was
a valid and effective certificate duly and properly cancelled and that
every other document hereinbefore mentioned so destroyed was a valid and
effective document in accordance with the recorded particulars thereof in
the books or records of the Company, provided always that:-
(a) the provisions aforesaid shall apply only to the destruction of a
document in good faith and without notice of any claim (regardless of
the parties thereto) to which the document might be relevant;
(b) nothing herein contained shall be construed as imposing upon the
Company any liability in respect of the destruction of any such
document earlier than as aforesaid or in any other circumstances which
would not attach to the Company in the absence of this Bye-Law; and
(c) references herein to the destruction of any document include
references to the disposal thereof in any manner.
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UNTRACED SHAREHOLDERS
139. (1) The Company shall be entitled to sell at the best price reasonably
obtainable, or if the shares are listed on a Stock Exchange to
purchase at the trading price on the date of purchase, the shares of a
Shareholder or the shares to which a person is entitled by virtue of
transmission on death, bankruptcy, or otherwise by operation of law if
and provided that:-
(a) during the period of 12 years prior to the date of the
publication of the advertisements referred to in paragraph (b)
below (or, if published on different dates, the first thereof) at
least three dividends in respect of the shares in question have
been declared and all dividends, warrants and cheques which have
been sent in the manner authorised by these Bye-Laws in respect
of the shares in question have remained uncashed; and
(b) the Company shall as soon as practicable after expiry of the said
period of 12 years have inserted advertisements both in a
national daily newspaper and in a newspaper circulating in the
area of the last known address of such Shareholder or other
person giving notice of its intention to sell or purchase the
shares; and
(c) during the said period of 12 years and the period of three months
following the publication of the said advertisements the Company
shall have received no indication either of the whereabouts or of
the existence of such Shareholder or person; and
(d) if the shares are listed on a Stock Exchange, notice shall have
been given to the relevant department of such Stock
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Exchange of the Company's intention to make such sale or purchase
prior to the publication of advertisements.
If during any 12-year period referred to in paragraph (a) above,
further shares have been issued in right of those held at the
beginning of such period or of any previously issued during such
period and all the other requirements of this Bye-Law (other than the
requirement that they be in issue for 12 years) have been satisfied in
regard to the further shares, the Company may also sell or purchase
the further shares.
(2) To give effect to any such sale or purchase, the Board may authorise
some person to execute an instrument of transfer of the shares sold or
purchased to, or in accordance with the directions of, the purchaser
and an instrument of transfer executed by that person shall be as
effective as if it had been executed by the holder of, or person
entitled by transmission to, the shares. The transferee of any shares
sold shall not be bound to see to the application of the purchase
money, nor shall his title to the shares be affected by any
irregularity in, or invalidity of, the proceedings in reference to the
sale.
(3) The net proceeds of sale or purchase of shares shall belong to the
Company which, for the period of six years after the transfer or
purchase, shall be obliged to account to the former Shareholder or
other person previously entitled as aforesaid for an amount equal to
such proceeds and shall enter the name of such former Shareholder or
other person in the books of the Company as a creditor for such
amount. No trust shall be created in respect of the debt, no interest
shall be payable in respect of the same and the Company shall not be
required to account for any money earned on the net proceeds, which
may be employed in the business of the Company or invested in such
investments as the Board from time to time thinks fit. After the said
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six-year period has passed, the net proceeds of share shall become the
property of the Company, absolutely, and any rights of the former
Shareholder or other person previously entitled as aforesaid shall
terminate completely.
WINDING UP
140. If the Company shall be wound up, the liquidator may, with the sanction of
a Resolution of the Company and any other sanction required by the
Companies Acts, divide amongst the Shareholders in specie or kind the whole
or any part of the assets of the Company (whether they shall consist of
property of the same kind or not) and may for such purposes set such values
as he deems fair upon any property to be divided as aforesaid. Following
settlement by the liquidator of the liabilities of the Company, the
remaining assets of the Company shall be distributed to the Shareholders
pro rata their shareholdings. The liquidator may, with the like sanction,
--------
vest the whole or any part of such assets in trustees upon such trust for
the benefit of the contributories as the liquidator, with the like
sanction, shall think fit, but so that no Shareholder shall be compelled to
accept any shares or other assets upon which there is any liability.
INDEMNITY
141. Subject to the proviso below, every Director, Officer, member of a
committee constituted under Bye-Law 99 and any Resident Representative of
the Company shall be indemnified out of the funds of the Company
against all liabilities, loss, damage or expense (including but not limited
to liabilities under contract, tort and statute or any applicable foreign
law or regulation and all reasonable legal and other costs and expenses
properly payable) incurred or suffered by him as such Director, Officer,
committee
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member or Resident Representative and the indemnity contained in this Bye-
Law shall extend to any person acting as a Director, Officer, committee
member or Resident Representative in the reasonable belief that he has been
so appointed or elected notwithstanding any defect in such appointment or
election; PROVIDED ALWAYS that the indemnity contained in this Bye-Law
shall not extend to any matter which would render it void pursuant to the
Companies Acts.
142. Every Director, Officer, member of a committee duly constituted under Bye-
Law 99 or Resident Representative of the Company shall be indemnified out
of the funds of the Company against all liabilities incurred by him as such
Director, Officer, committee member or Resident Representative in defending
any proceedings, whether civil or criminal, in which judgement is given in
his favour, or in which he is acquitted, or in connection with any
application under the Companies Acts in which relief from liability is
granted to him by the court.
143. To the extent that any Director, Officer, member of a committee duly
constituted under Bye-Law 99 or Resident Representative is entitled to
claim an indemnity pursuant to these Bye-Laws in respect of amounts paid or
discharged by him, the relative indemnity shall take effect as an
obligation of the Company to reimburse the person making such payment or
effecting such discharge.
144. Each Shareholder and the Company agree to waive any claim or right of
action he or it may at any time have, whether individually or by or in the
right of the Company, against any Director, Officer or member of a
committee duly constituted under Bye-Law 99 on account of any action taken
by such Director, Officer or member of a committee or the failure of such
Director, Officer or member of a committee to take any action in the
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performance of his duties with or for the Company; PROVIDED HOWEVER that
such waiver shall not apply to any claims or rights of action arising out
of the fraud of such Director, Officer or member of a committee duly
constituted under Bye-Law 99 or to recover any gain, personal profit or
advantage to which such Director, Officer or member of a committee duly
constituted under Bye-Law 99 is not legally entitled.
145. Subject to the Companies Acts, expenses incurred in defending any civil or
criminal action or proceeding for which indemnification is required
pursuant to Bye-Laws 141 and 142 shall be paid by the Company in advance of
the final disposition of such action or proceeding upon receipt of an
undertaking by or on behalf of the indemnified party to repay such amount
if it shall ultimately be determined that the indemnified party is not
entitled to be indemnified pursuant to Bye-Laws 142 and 143 provided that
no monies shall be paid hereunder unless payment of the same shall be
authorised in the specific case upon a determination that indemnification
of the Director or officer would be proper in the circumstances because he
has met the standard of conduct which would entitle him to the
indemnification thereby provided and such determination shall be made:
(a) by the Board, by a majority vote at a meeting duly constituted by a
quorum of Directors not party to the proceedings or matter with regard
to which the indemnification is, or would be, claimed; or
(b) in the case such a meeting cannot be constituted by lack of a
disinterested quorum, by independent legal counsel in a written
opinion; or
(c) by a majority vote of the Shareholders.
Each Shareholder of the Company, by virtue of its acquisition and continued
holding of a share, shall be deemed to have acknowledged and agreed that
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the advances of funds may be made by the Company as aforesaid, and when
made by the Company under this Bye-Law 145 are made to meet expenditures
incurred for the purpose of enabling such Director, Officer, or member of a
committee duly constituted under Bye-Law 99 to properly perform his or her
duties as an officer of the Company.
AMALGAMATION
146. Any Resolution proposed for consideration at any general meeting to approve
the amalgamation of the Company with any other company, wherever
incorporated, shall require the approval of a simple majority of votes cast
at such meeting and the quorum for such meeting shall be that required in
Bye-Law 54 and a poll may be demanded in respect of such Resolution in
accordance with the provisions of Bye-Law 64.
CONTINUATION
147. Subject to the Companies Act, the Shareholders may by Resolution approve
the discontinuation of the Company in Bermuda and the continuation of the
Company in a jurisdiction outside Bermuda. The Shareholders, having
resolved to approve the discontinuation of the Company, may by Resolution
further resolve not to proceed with any application to discontinue the
Company in Bermuda or may vary such application as they see fit.
ALTERATION OF BYE-LAWS
148. (1) These Bye-Laws may be amended, from time to time by resolution of the
Board, subject to approval by resolution at a General Meeting of the
Shareholders.
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(2) The vote or consent of the holders of 75% of the issued shares and the
approval of a majority of the Board shall be required to effect:-
(a) any amendments to the provisions of Bye-Laws 3, 34, 63 and this
Bye-Law 148 provided that if the provisions of Bye-Law 3, 43 or
63 are so amended or the Board and Shareholders upon receipt of a
written request for approval approve, by an actual vote as
described in Bye-Law 34(2), an otherwise prohibited transfer
under Bye-Law 34(2), the Company will indemnify each holder of
shares who becomes subject to treatment as a "United States
shareholder" for purposes of Section 951 et. seq. of the Code as
--- ---
a result of such amendment from and against any and all losses,
costs, damages, liabilities and expenses arising out of, directly
or indirectly, such treatment. Notwithstanding the foregoing
provisions of Bye-Law 148(2)(a), in no event shall the Company
have any indemnity obligation under this Bye-Law with respect to
any transfer of shares for which approval was required (whether
or not granted) pursuant to Bye-Law 34(2) to any holder of shares
who either (i) received such shares in connection with such
transfer, or (ii) voted in favour of such transfer; and
(b) any amendment to the maximum or minimum number of Directors
specified in Bye-Law 84.
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