Belize Telecom Ltd. v. Government of Belize

Full title: BELIZE TELECOM LTD. and INNOVATIVE COMMUNICATION COMPANY, LLC Plaintiffs…

Court: United States District Court, S.D. Florida

Date published: Aug 16, 2005

Case No. 05-20470-CIV-UNGARO-BENAGES (S.D. Fla. Aug. 16, 2005)

Opinion

Case No. 05-20470-CIV-UNGARO-BENAGES.

August 16, 2005

FINDINGS OF FACT AND CONCLUSIONS OF LAW

URSULA UNGARO-BENAGES, District Judge

THIS CAUSE was tried before the Court from June 8, 2005 to June 10, 2005, from June 20, 2005 to June 21, 2005 and on June 23, 2005.

THE COURT has considered the pertinent portions of the record and is otherwise fully advised in the premises.

FINDINGS OF FACT

The Parties

1. Plaintiff Belize Telecom Ltd. ("BT") is a Belizean limited liability company organized under the laws of Belize with its principal place of business located in Belize. (Am. Compl. ¶ 1; Answer ¶ 1).

2. Plaintiff Innovative Communication Company, LLC ("ICC") is the parent of BT and is a Delaware limited liability company with its principal place of business located in West Palm Beach, Florida. (Am. Compl. ¶ 2; Answer ¶ 2).

3. The Government of Belize ("Government") is a foreign sovereign nation located in Central America. (Am. Compl. ¶ 3; Answer ¶ 3).

4. Belize Telecommunications Ltd. ("BTL") is a Belizean company and is the main provider of telecommunications services in Belize. (Pl. Exs. 1, 2).

The Government And Jeffrey Prosser Enter Into Negotiations To Acquire BTL

5. In 2003, the Government concluded that the current majority shareholder of BTL. Carlisle Holdings Ltd. ("CHL"), a company controlled by Lord Michael Ashcroft ("Lord Ashcroft"), was providing poor telecommunications services and charging Belizeans unfair rates and therefore needed to be replaced. (Tx. 398:1-398:17; Pl. Ex. 442 at 55:5-55:14; Am. Compl. ¶¶ 15-16; Answer ¶¶ 15-16).

6. The Government and Jeffrey Prosser, an owner of telecommunications companies throughout the Caribbean, entered into negotiations with the goal that ICC would replace CHL as the majority shareholder of BTL and assume control of BTL. (Pl. Ex. 442 at 55:5-60:8).

7. Prosser, on behalf of ICC, entered into a Memorandum of Understanding with the Government in October 2003 in which the Government agreed to acquire CHL's shares in BTL and sell those shares, along with other BTL shares held by the Government, to Prosser's company, ICC. Once this transaction was consummated, Prosser would have a super-majority ownership interest in BTL. (Tx. 394:8-395:11; Pl. Ex. 16).

8. After signing the Memorandum of Understanding, Prosser and ICC performed due diligence on BTL and the Belizean telecommunications sector. (Tx. 395:11-397:2; Am. Compl. ¶ 21; Answer ¶ 21).

BTL Board Of Directors And Share Classes

9. Under BTL's Articles of Association, BTL is comprised of a board of eight directors with the right to remove and appoint directors depending on who holds the two classes of ordinary shares, B and C, and who holds one special rights preferred redeemable preference share ("Special Share"). (Tx. 33:5-33:8; Pl. Ex. 8).

Shareholders Of BTL

10. At the time the Government approached Prosser and ICC about acquiring a majority interest in BTL, there were 36,869,719 shares outstanding, consisting of 8,000,000 class B shares, 28,869,718 class C shares and the Special Share. (Pl. Ex. 35; Am. Compl. ¶ 30; Answer ¶ 30).

11. At that time, CHL had an approximate 52% interest in BTL: 19,343,451 shares comprised of 7,520,000 class B shares and 11,823,451 class C shares. (Pl. Ex. 35; Am. Compl. ¶ 31; Answer ¶ 31).

12. The Government, and/or entities for whom the Government held shares, had an approximate 32% interest in BTL: 11,950,663 shares comprised of 480,000 class B shares and 11,470,663 class C shares as well as the one Special Share. (Pl. Exs. 1, 2; Am. Compl. ¶ 32; Answer ¶ 32).

13. The remaining outstanding shares, 5,575,605 class C shares, were held by other minority shareholders. (Am. Compl. ¶ 33; Answer ¶ 33).

The Government's Purchase Of CHL Shares

14. ICC agreed to purchase all of the respective shareholdings of the Government and CHL in BTL. (Am. Compl. ¶ 39; Answer ¶ 39).

15. The purchase was to be accomplished in two steps. First, the Government would acquire the BTL shares held by CHL and Lord Ashcroft ("CHL Shares"). Second, the Government would sell to ICC the CHL Shares as well as the other BTL shares held by the Government ("Government Shares") (collectively the CHL Shares and the Government Shares shall be referred to as the "BTL Shares"). (Am. Compl. ¶ 40; Answer ¶ 40).

16. On December 9, 2003, CHL and the Government entered into a Share Purchase Deed in which CHL agreed to sell the CHL Shares to the Government for a total price of $57 million. (Pl. Ex. 35; Am. Compl. ¶¶ 41-43; Answer ¶¶ 41-43).

Acquisition Of BTL

17. On March 22, 2004, the Government and ICC entered into a Master Agreement regarding the purchase of the BTL Shares and the acquisition of BTL ("Master Agreement"). (Pl. Ex. 1).

18. The Master Agreement incorporates by reference (1) an Agreement for the Acquisition of Shares in BTL ("Share Purchase Agreement"), as amended on March 31, 2004, and (2) an Agreement for the Acquisition of Assets and Liabilities of BTL ("Asset Purchase Agreement"). (Pl. Ex. 1).

19. The Master Agreement provides that the transaction for the acquisition of BTL shall proceed in the following steps. First, ICC shall execute the Share Purchase Agreement. Second, ICC shall establish an entity in Belize (the "NewCo") to close the Share Purchase Agreement. Third, ICC, through NewCo, shall acquire the BTL Shares pursuant to the Share Purchase Agreement. Fourth, NewCo, as then owner of BTL, shall cause the Asset Purchase Agreement to be executed by and between NewCo, on the one hand, and on the other hand, the Government and BTL. Fifth, NewCo shall take the appropriate steps to comply with the corporate laws of Belize with respect to the Asset Purchase Agreement. Sixth, NewCo. in a businesslike manner and with reasonable dispatch, shall close the Asset Purchase Agreement according to its terms and conditions. (Pl. Ex. 1).

20. The Master Agreement and the Share Purchase Agreement were executed on March 31, 2004. (Pl. Exs. 1, 2).

21. ICC established an entity in Belize, BT, to close the Share Purchase Agreement and assigned its rights under the Share Purchase Agreement to BT. (Pl. Exs. 1-4).

BT's Shareholdings In BTL After Acquisition

22. On March 31, 2004, pursuant to the Share Purchase Agreement, BT acquired from the Government the CHL Shares and the Government Shares. Specifically BT acquired 31,294,115 shares consisting of 8,000,000 class B shares, 23,294,114 class C shares, and the Special Share. This represented 100% of the B shares, approximately 79% of the C shares and an approximate 85% super-majority ownership interest in BTL. (Pl. Ex. 2).

23. As consideration for the purchase of the BTL Shares, BT issued to the Government two unsecured promissory notes, both dated March 31, 2004: one in a principal amount of $57 million, maturing on April 30, 2004, for the CHL Shares ("BT April Note") and one in a principal amount of $32,729,838, maturing on August 31, 2004, for the Government Shares ("BT August Note"). Both promissory notes were guaranteed in all respects by ICC, but were unsecured by any collateral. (Def. Exs. 3, 4).

BT's Appointment Of BTL Directors

24. On or about April 14, 2004, BT appointed the following seven individuals to serve as directors of BTL:¹

1 As explained in the Court's Conclusions of Law, these appointments were inconsistent with appointment provisions of BTL's Articles of Association.

• Jeffrey Prosser as a B Director;

• Sir Ronald M. Sanders as a B Director;

• John G. Vondras as a C Director;

• Sir Shridath Ramphal as a C Director;

• Herbert M. Sampson III as a C Director;

• Joe C. Minor as a Special Share Director; and

• Edward Musa as a Government Appointed Director.

(Pl. Exs. 21, 22).

25. As of April 14, 2004, John Searle, the representative of the remaining minority shareholders, was already a C Director of BTL. (Pl. Ex. 21).

26. On April 14, 2004, the board appointed Vondras, a non-Belizean citizen, as Managing Director of BTL.² (Pl. Ex. 21).

2 This was done despite the fact that Article 120(B) forbids non-Belizeans from holding the position of "chief executive or joint chief executive of the Company (by whatsoever name called)." (Pl. Ex. 8).

27. On April 14, 2004, the board named Sampson as Deputy Secretary of BTL. (Pl. Ex. 21).

The Government's Obligations To The International Bank Of Miami

28. Unrelated to BT's purchase of the BTL Shares from the Government and the issuance of the BT April Note, the Government and The Central Bank of Belize ("Central Bank") earlier had issued to The International Bank of Miami ("TIBOM") certain promissory notes ("TIBOM Government Notes") in the amount of $100 million. (Pl. Ex. 3; Am. Compl. ¶ 51; Answer ¶ 51).

BT's Partial Payment On The BT August Note And Assumption Of The Government's Obligations To TIBOM

29. On April 26, 2004, BT partially satisfied its obligations to the Government pursuant to the BT August Note by paying the Government $28.5 million and returning to the Government 567,666 class C shares valued at $1,554,827.³ (Compl. ¶ 53; Answer ¶ 53). Thereafter, the Government transferred the 567,666 class C shares to Belizean unions who continue to hold these shares. (Pl. Ex. 461 at 61:19-62:6).

3 This left BT holding 30,726,449 shares consisting of 8,000,000 B shares, 22,726,448 C shares and the Special Share. (Compl. ¶ 53; Answer ¶ 53) This represented an approximate 83% interest in BTL.

30. This left an outstanding balance of $2,675,011 owed on the BT August Note. (Pl. Ex. 393).

BT Is Unable To Meet Its Obligations On The April Note

31. Despite their efforts to obtain financing, BT and ICC were unable to make the required payment of $57,000,000 on the BT April Note. (Pl. Ex. 470 at 76:15-77:7). Rather than pursue BT and ICC for their default, the Government chose to enter into a new set of agreements extending the date by which BT and ICC would be required to satisfy their obligations under the BT April Note. (Pl. Ex. 470 at 77:8-18). Those agreements were: the Payment Agreement, the Forbearance Agreement and the Share Pledge Agreement. The Payment Agreement

32. On April 30, 2004, the Government, ICC, BT, TIBOM, and Central Bank entered into the Payment Agreement ("Payment Agreement") by which BT and ICC agreed to make any and all payments to TIBOM on behalf of and for the account of the Government arising under the TIBOM Government Notes, such that all payments to TIBOM would fully amortize the $57 million obligation of BT and ICC to the Government under the BT April Note ("Debt Service Payments"). (Pl. Ex. 3).

33. In return for each Debt Service Payment made by BT and ICC on behalf of the Government to TIBOM, the Government agreed to grant to BT and ICC a dollar-for-dollar credit against the outstanding amounts due to the Government under the BT April Note. (Tx. 126:4-127:8; Pl. Ex. 3).

34. The due dates for the Debt Service Payments per Schedule A attached to the Payment Agreement were as follows:

1. $1,250,000.00 due May 20, 2004;

2. $747,500.00 due June 13, 2004;

3. $1,277,777.78 due on August 20, 2004;

4. $747,500.00 due on September 13, 2004;

5. $51,305,555.56 due on November 22, 2004; and

6. $5,333,822.52 due on December 13, 2004.

(Pl. Ex. 431).

35. The Payment Agreement effectively replaced the BT April Note. (Tx. 124:11-125:24).

The Forbearance Agreement

36. On April 30, 2004, the Government, ICC, BT, and Central Bank entered into a Forbearance Agreement in which the Government agreed to forbear from exercising any and all of its rights and remedies against BT and ICC arising under the BT April Note ("Forbearance Agreement") provided BT and ICC made all required payments under the Payment Agreement. (Pl. Ex. 436).

The Share Pledge Agreement

37. On April 30, 2004, ICC, BT, and TIBOM entered into a Share Pledge Agreement in which ICC and BT agreed to pledge the CHL Shares to TIBOM as security for their agreement to make payments to TIBOM ("Share Pledge Agreement"). (Pl. Ex. 4).

Key Terms Of The Payment Agreement

38. Section 7(a) of the Payment Agreement, "Event of Default," includes (1) the failure or refusal of BT or ICC to pay any sum required under the Payment Agreement and (2) the breach by BT of any of the conditions in the Forbearance Agreement. (Pl. Ex. 3).

39. Under Section 7(b), upon the occurrence of an Event of Default. TIBOM shall have the right to pursue and exercise any and all rights and remedies set forth in the Government Notes, the Share Pledge Agreement, the Florida Uniform Commercial Code ("Florida UCC") and/or any applicable law or regulation. (Pl. Ex. 3).

40. Furthermore, under Section 7(c), in the event the Government or Central Bank cures any Event of Default, TIBOM must deliver share certificates representing the CHL Shares to the Government or Central Bank, assign all of its rights, title and interest in the Payment Agreement and the Share Pledge Agreement to the Government and deliver physical possession of any other share certificates representing the CHL Shares in its custody to the Central Bank, which will hold such shares in custody for the benefit of the Government. (Pl. Ex. 3).

41. Section 8(g) provides that the Payment Agreement shall be governed and construed in accordance with the laws of the State of Florida. (Pl. Ex. 3).

42. Section 8(n) provides that each of the parties submit "to the nonexclusive jurisdiction of the United States District Court for the Southern District of Florida, for the purposes of any suit, action or other proceeding arising out of this Agreement." (Pl. Ex. 3).

Key Terms Of The Share Pledge Agreement

43. Under Section 7 of the Share Pledge Agreement, an "Event of Default" is defined as a default under the Payment Agreement or a breach of any of the conditions of the Share Pledge Agreement. (Pl. Ex. 4).

44. Under Section 7(a), so long as there is no Event of Default. ICC and BT are entitled to exercise any and all voting rights in the CHL Shares. (Pl. Ex. 4).

45. However, under Section 7(b), if there is an Event of Default, ICC's and BT's voting rights, upon notice from TIBOM or its assignee, will cease, and those rights shall vest with TIBOM or its assignee. (Pl. Ex. 4).

46. Further, under Section 9, ICC and BT appointed TIBOM as their attorney-in-fact with full authority in the place of ICC and BT and upon the occurrence and continuation of an Event of Default to take any action to accomplish the purposes of the Share Pledge Agreement including (1) to execute and complete and otherwise perfect any share transfers (including the blank certificates delivered to TIBOM) to any purchaser and (2) to exercise all voting rights in the CHL Shares for the purpose of summoning shareholders meetings, terminating the appointment of directors and appointing new directors in their stead. (Pl. Ex. 4).

47. Under Section 12 of the Share Pledge Agreement, should any Event of Default occur, TIBOM, or its assignee, may sell the CHL Shares ( i.e., the "collateral") with the proceeds being credited to the debtor. (Pl. Ex. 4).

48. Section 12 also states that TIBOM, as Grantee may "exercise any and all rights and remedies of . . . [BT and ICC, as] Grantors under or in connection with the [c]ollateral." (Pl. Ex. 4).

Debt Service Payments By Plaintiffs

49. From May to September 2004, BT and ICC made the first four Debt Service Payments in accordance with Schedule A of the Payment Agreement for a total of $4,022,777.78. (Tx. 129:24-130:3; Am. Compl. ¶ 68; Answer ¶ 68).

50. The Government failed to credit the first four Debt Service Payments from BT and ICC against the outstanding balance. (Tx. 134:2-134:8; Pl. Ex. 179).

Plaintiffs' Failure To Make November 22, 2004 Debt Service Payment

51. On November 22, 2004, BT and ICC failed to make the scheduled Debt Service Payment of $51,305,555.56. (Am. Compl. ¶ 74; Answer ¶ 74).

The Government Is Assigned Rights

52. To cover the November 22, 2004 Debt Service Payments, the Government re-profiled the TIBOM Government Notes and made a payment of $51,305,555.56 to TIBOM. (Am. Compl. ¶ 75; Answer ¶ 75).

53. Thereafter, on November 24, 2004, the Government executed an Assignment and Assumption Agreement with TIBOM ("Assignment Agreement"), and TIBOM assigned to the Government the CHL Shares pledged under the Share Pledge Agreement. (Pl. Ex. 36; Am. Compl. ¶ 76; Answer ¶ 76).

54. The Assignment Agreement provided that the Government "assumes all of the Assignor's [TIBOM's] right, title and interest in and to the Share Pledge Agreement and agrees to perform, comply with and be subject to and bound by the Share Pledge Agreement in all respects." (Pl. Ex. 36).

BT Removes And Appoints BTL Directors

55. Notwithstanding BT's default, the Government took no immediate action to wrest control of BTL from BT. Therefore, on November 23, 2004, BT was able to remove the then-existing BTL directors and appoint eight new directors in their place as follows:⁴

4 As explained in the Court's Conclusions of Law, these appointments were inconsistent with the appointment provisions of BTL's Articles of Association.

• Indigo Enterprises Limited as a B Director;

• Alto Consultants Limited as a B Director;

• Beta Consultants Limited as a C Director;

• Maroon Enterprises Limited as a C Director;

• Karma Enterprises Limited as a C Director;

• Omega Enterprises Limited as a C Director;

• Prosser as a Special Share Director; and

• Vondras as a Special Share Director.

(Pl. Exs. 23, 24).

The Government Grants Extension To Pay

56. On December 10, 2004, the Government granted Plaintiffs an extension of seventy-five days, i.e., from November 22, 2004, until February 7, 2005, to pay the Government for the outstanding balance on the CHL Shares. (Pl. Ex. 393; Am. Compl. ¶ 79; Answer ¶ 79).

57. The Government stated, both privately and publicly, that if BT did not make the required $57 million payment on February 7, 2005, the Government would take control of BTL from BT. (Pl. Exs. 393; 307).

58. During the extension period, Plaintiffs sought to obtain financing for the $57 million owed to the Government. Their efforts were unsuccessful in part due to lawsuits filed by minority shareholders and Ashcroft. (Pl. Ex. 353).

The Government's Seizure Of BTL

59. On February 7, 2005, Plaintiffs failed to pay the outstanding balance owed to the Government. (Pl. Ex. 461 at 107:4-107:6).

60. On February 9, 2005, the Government seized the CHL Shares that Plaintiffs had pledged under the Share Pledge Agreement pursuant to its rights as TIBOM's assignee of the Payment Agreement and the Share Pledge Agreement. (Pl. Ex. 461 at 80:17-80:23).

61. On February 9, 2005, once the Government seized control, the Government held approximately 41% of the C shares and 94% of the B shares. (Tx. 369:25-370:7).

62. Also, on February 9, 2005, the Government sent a notice to the Secretary of BTL stating that as the holder of a majority of the C shares, and in accordance with Article 90(D)(i) of BTL's Articles of Association, it was replacing the four C Directors appointed by BT ( i.e., Beta Consultants Limited, Maroon Enterprises Limited, Karma Enterprises Limited and Omega Enterprises Limited) with:

• Joseph Waight;

• Sydney Campbell;

• Gian C. Gandhi; and

• Luis A. Lue.

(Pl. Ex. 15).

63. Furthermore, on February 9, 2005, the Government sent a notice to the Secretary of BTL stating that as the majority holder of the B shares, under Article 90(B) of BTL's Articles of Association it was replacing the two B Directors appointed by BT ( i.e., Indigo Enterprises Limited and Alto Consultants Limited) with:

• Carla Barnett; and

• Edward N. Musa, Sr.

(Pl. Ex. 15).

64. The Government now had six directors on the board and Plaintiffs had two.

65. The Government also removed Vondras from his position as Managing Director of BTL and replaced him with Gaspar Aguilar, the former CFO under Vondras. (Am. Compl. ¶ 105; Answer ¶ 105).

Intelco Transaction And The 24,000,000 C Shares

66. Throughout 2004, ICC considered the possibility of acquiring, for the benefit of BTL, the assets of Intelco, a competitor of BTL. (Tx. 403:23-405:13, 407:16-409:15; Pl. Ex. 457).

67. Intelco held a number of valuable assets, including a switch and one of the three telephone licenses issued by the Public Utilities Commission ("PUC") in Belize. (Tx. 398:18-398:23).

68. In 2004, Intelco owed approximately $27 million to the RBTT Merchant Bank Limited ("RBTT"). (Pl. Ex. 461 at 63:7-63:8). Intelco's debt to RBTT was secured by a bond that Intelco issued to RBTT which granted RBTT, as holder of the bond, a first lien against the assets of Intelco. (Pl. Ex. 461 at 68:5-68:10).

69. On or about October 2004, Intelco defaulted on the approximate $27 million bond held by RBTT. Accordingly, RBTT went to court in Belize and had a receiver appointed for Intelco. (Tx. 427:13-428:10).

70. BTL, at the direction of the receiver, operated the Intelco switch and utilized its license under an agreement between it, Intelco and the PUC which was due to end on December 31, 2004. (Pl. Ex. 461 at 68:21-69:3).

71. On December 29, 2004, the board of BTL met and discussed two options to acquire the Intelco assets. (Tx. 410:16-410:23).

72. The first option that the board considered for acquiring the Intelco assets was that BTL's holding company, BT, would acquire the Intelco bond from RBTT, and, upon Intelco coming out of receivership, BT would lease Intelco's assets to BTL. (Tx. 410:18-410:23; Pl. Ex. 461 at 69:8-70:3).

73. The second option that the board considered was that BTL would purchase the Intelco bond directly from RBTT, leaving BTL in line to acquire the assets of Intelco upon termination of its receivership. The board chose the second option. (Tx. 411:1-411:12; Pl. Exs. 18, 461 at 69:8-70:3).

74. At the December 29, 2004 meeting, the board of BTL resolved to purchase the Intelco bond from RBTT. (Pl. Ex. 18). The total purchase price was to be approximately $27 million. (Pl. Ex. 18). The board resolved to raise the funds by having BTL issue a combination of debt and equity as follows: (i) BTL would borrow from BT the sum of $15 million in exchange for a promissory note secured by the Intelco bond that BTL would acquire from RBTT. (Pl. Exs. 18, 461 at 70:8-70:20); (ii) BTL would then issue and sell to BT 24,000,000 C shares in BTL at nominal ( i.e., par) value or $0.50 each for a total price of $12 million. (Pl. Exs. 18; 461 at 70:8-70:20).

75. BT, on the other hand, needed to raise $27 million in order to pay for the 24,000,000 shares and loan BTL $15 million. To do so, BT arranged to borrow $27 million from RBTT in return for a promissory note to be secured by the Government Shares which BT owned outright. (Pl. Ex. 461 at 67:15-68:16; Def. Ex. 463).

76. Pursuant to BT's and BTL's agreement, on December 29, 2004, BTL voted to issue and issued share certificate No. 2920 for 24,000,000 C shares to BT. (Pl. Ex. 7). As a result, BTL's issued share capital increased from 36,869,719 to 60,869,719, well within the total of 100,000,001 shares authorized by BTL's Memorandum of Association. (Tx. 105:3-105:14; Pl. Ex. 8).

77. The Intelco transaction closed on December 31, 2004 as follows:

First, BT executed and delivered a promissory note to RBTT for approximately $27 million, secured by the Government Shares. (Pl. Ex. 461 at 67:15-68:16; Def. Ex. 463).

Second, RBTT, BT and BTL executed a Purchase Agreement and Authorization to Transfer Funds. Under this agreement, RBTT agreed to sell the Intelco bond to BTL. BT agreed, as parent of BTL, that the funds it was borrowing from RBTT to fund the purchase of the Intelco bond by BTL, as authorized by the December 29, 2004 BTL board resolution, would be paid by BTL directly to RBTT and that RBTT was authorized to accept the funds. RBTT agreed that the transfer of such funds would have the same effect as if paid by BT to RBTT in satisfaction of the promissory note. (Def. Ex. 463).

Third, Lyndon Guiseppi, on behalf of RBTT, and Prosser, on behalf of BTL, executed a sale confirmation in which BTL purchased the Intelco bond from RBTT in return for the $27 million that BT had borrowed from RBTT. (Def. Ex. 463).

Fourth, for the consideration that it had received from BT, RBTT assigned to BTL the Intelco bond. (Def. Ex. 463).

78. On January 3, 2005, BTL's deputy secretary, Herbert Sampson, instructed BTL's secretary, Wilman Black, to register the 24,000,000 C shares in the name of BT. (Tx. 323:2-323:6).

79. The shares were never registered. (Pl. Ex. 469 187:16-188:4; 188:20-189:11).

January 18, 2005 BTL Board Resolution

80. On January 8, 2005, Musa raised an objection to the board's decision to acquire the Intelco assets for debt and equity. (Def. Ex. 207). In particular, Musa expressed a preference for a lease option rather than the purchase option because the minority shareholders' interest had been dramatically diluted by the issuance of the 24,000,000 shares. (Tx. 414:5-417:4; Pl. Ex. 334; Def. Ex. 207).

81. To address Musa's concerns, Prosser, as BTL's Chairman, convened a board meeting for January 18, 2005 to revisit the resolution of December 29, 2004. (Tx. 416:15-417:4: Pl. Ex. 19). Prosser chaired the meeting.

82. At the January 18, 2005 board meeting, the board members unanimously resolved to rescind the "decision pertaining to the share issuance by BTL to [BT] contained in the Resolution of 29th December 2004." (Pl. Ex. 19).

83. BT, through Prosser, consented to the rescission of the resolution passed on December 29, 2004 with respect to the issuance of the 24,000,000 shares from BTL to BT. (Pl. Ex. 19).

84. In its place, the board of BTL resolved to issue an all-debt instrument to BT for the $27 million that BT advanced to BTL to purchase the Intelco bond from RBTT. (Pl. Ex. 19).

85. Despite the January 18, 2005 resolution, BTL never issued an all-debt instrument to BT because some of BTL's minority shareholders filed a lawsuit in Belize seeking a court injunction to prevent BTL from issuing the debt. In that proceeding, the minority shareholders contended that the amount borrowed would exceed the issued share capital of the company in violation of BTL's Articles of Association. (Tx. 418:15-419:1). This issue has never been adjudicated.

86. Shortly after the suit was filed, BTL's board received a legal opinion from its counsel, Michael Young, advising it that BTL could not issue an all debt instrument for the Intelco bond. (Pl. Ex. 461 at 75:11-75:15).

87. During the minority shareholder suit, Prosser declared under oath that "after further internal consultation the board has decided (with the consent of Belize Telecom [BT]) to rescind the issuance of the shares and treat the moneys advanced by [BT] and utilized to purchase the Note and the Security Interests as a loan from [BT] to be secured by a mortgage on assets of BTL." (Def. Ex. 220). Prosser so attested in his capacity as BTL's Chairman, ICC's President. and BT's President. (Def. Ex. 220).

88. On February 8, 2005, in the same proceeding, Dr. Ursula Barrow, who purportedly became a C director representing Omega Enterprises on November 23, 2004, also declared under oath "that the decision pertaining to the share issuance be rescinded and that the Respondent be entitled to borrow the [BZ] $54 million from [BT]." (Def. Ex. 232).

89. Similarly on February 9, 2005, Sir Ronald Sanders testified under oath "that the decision pertaining to the share issuance be rescinded." (Def. Ex. 238).

Purported March 29, 2005 BTL Board Meeting

90. On March 11, 2005, this Court granted in part Plaintiffs' Motion for Preliminary Injunction thereby restoring Plaintiffs' four C directors removed by the Government on February 9, 2005. (D.E. 80).

91. On March 29, 2005, Prosser attempted to convene a BTL board meeting. The meeting was attended by Plaintiffs' six directors who were in place prior to the Government's takeover on February 9, 2005. (Tx. 420:7-422:18). Musa attended the beginning of the meeting but left after informing Prosser and the other purported directors that the Government had replaced him as a B director with Keith Arnold on March 21, 2005. (Pl. Ex. 38; Def. Ex. 68).

92. At the meeting, it was resolved that the 24,000,000 C shares remained issued and outstanding and a part of the share capital of BTL, and that the holder, BT, was to be accorded all the rights of a member inherent in such shares. (Tx. 422:25-423:25; Pl. Ex. 38). It also was resolved that the resolution of January 18, 2005 be declared a nullity, that the original resolutions providing for the acquisition of the Intelco bond by a combination of debt and equity financing dated December 29, 2004 be reinstated, and that BTL's management be authorized and instructed to conclude the debt instrument as provided in the December 29, 2004 board resolution.⁵ (Tx. 422:25-423:25; Pl. Ex. 38).

5 As discussed in the Court's Conclusions of Law, Plaintiffs' four C directors were improperly appointed under BTL's Articles of Association and thus any actions taken at this meeting are a nullity.

93. It was also resolved that BTL could repurchase the 24,000,000 C shares from BT at par value plus interest. (Pl. Exs. 38; 461 at 88:9-88:12).

94. On the same day of the meeting, Herbert Sampson, the Deputy Secretary of BTL. registered the 24,000,000 shares in a branch registry created that day and located in the United States. (Tx. 332:9-332:19; Pl. Ex. 374).

The Government's Management Of BTL After February 9, 2005

95. On or about February 9, 2005, the Government appointed Gaspar Aguilar as interim CEO of BTL, replacing John Vondras. (Tx. 335:24-336:1). At the same time, all of the remaining executives of BTL, including all department heads, were confirmed in the same positions that they had when Vondras was CEO. (Pl. Ex. 469 at 270:6-19).

96. Aguilar had twenty-five years experience at BTL. He had served as chief financial officer (CFO) of BTL for five years and was confirmed in that position by Plaintiffs. (Pl. Ex. 469 at 267:14-268:6).

97. Vondras testified that he considered Aguilar to be an "excellent" CFO. (252:6-10).

98. Aguilar had run the day-to-day affairs of BTL whenever Vondras was outside of Belize, which amounted to approximately two weeks out of every month. (Pl. Ex. 469 at 271:20-23). In fact, prior to February 9, 2005, Vondras had decided to recommend to the BTL board that Aguilar be appointed as the CEO of BTL. (Tx. 251:18-22).

99. Since the Government's takeover on February 9, 2005, Aguilar has been operating as the CEO, CFO and head of human resources. (Tx. 216:22-24).

100. During Aguilar's tenure from February 9, 2005 to March 31, 2005. BTL was 3% off budget compared with 1% off budget during the nine months Plaintiffs controlled BTL. (Tx. 143:15-18; 146:5-8).

101. The only evidence introduced at trial explaining the cause for this variation was a drop in international settlement rates imposed by American phone companies and the sabotage of the phone lines in Belize. (Tx. 591:19-24; 593:11-15; Pl. Ex. 469 at 149:17-21).

Interconnection With Speednet

102. Establishing interconnection with Speednet is required by Belizean law and is a condition of BTL's license. (Tx. 258:21-259:11).

103. While Ashcroft was still in control of BTL, BTL entered into an interconnection agreement with Speednet which established interconnection rates below BTL's cost. (Tx. 195:14-196:19; 261:19-262:11). The PUC declined to approve the rate structure for this reason. (Tx. 262:17-263:8).

104. After Plaintiffs acquired BTL, Vondras and others began negotiating new rates with Speednet. (Tx. 263:9-19). Aguilar and other members of the management team, in place before and after the Government takeover of BTL, participated in the negotiations. (Tx. 263:20-264:13; 267:14-268:4; 269:9-12).

105. By late October 2004, BTL and Speednet had agreed to new rates on a number of the open issues, including interconnection rates in four categories: Speednet's mobile connection to BTL's fixed local network; Speednet's mobile connection to BTL's fixed national network; Speednet's mobile connection to BTL's mobile network; and BTL's mobile connection to Speednet's mobile network. (Tx. 201:16-21; Def. Ex. 136).

106. On October 22, 2004, Vondras and Jaime Briceno,⁶ the Chairman of Speednet, signed an amendment to the prior interconnection agreement thereby agreeing to the new rates. (Tx. 201:22-24; Def. Ex. 136). Vondras and Briceno also advised the PUC that they were "committed to achieving physical interconnection no later than December 1, 2004." (Def. Ex. 136). The open issues left to finalize were the rates for access to the ARCOS undersea cable and rates for some international traffic. (Tx. 267:1-15).

6 Jaime Briceno's brother, John Briceno, is the Deputy Prime Minister of Beize. Plaintiffs failed to introduce any evidence demonstrating that this relationship influenced the interconnection agreements entered into between Speednet and BTL when the Government controlled the board.

107. Interconnection, however, did not occur by December 1, 2004 in large part because Speednet did not yet have its equipment ready. (Tx. 265:15-266:22).

108. In early March, 2005, BTL, now under Aguilar's management, finalized a Memorandum of Understanding (MOU) with Speednet. (Tx. 211:8-14; Pl. Ex. 414).

109. Under the MOU, the interconnection terms already negotiated by BTL prior to February 9, 2005, when Plaintiffs controlled BTL, remained in place. (Pl. Ex. 469 at 293:4-296:6).

110. On the issues left open in early February, 2005, Aguilar and his management team negotiated terms that were similar to those proposed by Vondras and were above BTL's cost of providing the service. (Pl. Ex. at 294:12-296:22). Transactions With Vendors

111. When the Government took control on February 9, 2005, BTL, as part of its ordinary course of business, was involved in negotiations with vendors, including Siemens and Nortel. (Pl. Ex. 469 at 274:16-275:18). BTL continued to pursue these negotiations resulting in the execution of a number of agreements, while other negotiations are ongoing. (Pl. Ex. 469 at 276:13-19).

112. The agreements with Siemens relate to an increase in licenses for capacity on the Siemens switch. (Pl. Ex. 469 at 275:11-276:25).

113. The terms and rates for the new licenses are the same as the terms negotiated prior to February 9, 2005. (Pl. Ex. 469 at 278:5-25).

114. BTL has also entered into a contract with Comarch for an upgrade in billing software. (Pl. Ex. 469 279:17-281:4).

115. All of these agreements were entered into without any direction from or consultation with the Government. (Pl. Ex. 469 at 283:23-284:17).

Disclosure Of ICC's Management Fees

116. During his deposition, the Hon. Ralph Fonseca, the Minister of Home Affairs and Investment of Belize, produced a document titled "Summary of payments made to ICC and related parties." (Pl. Ex. 426).

117. The one page document includes lists of payments made by BTL to, among other groups and individuals, board members of BT and ICC. (Pl. Ex. 426).

118. Fonseca claimed at his deposition that the document had been "floating around the streets" of Belize. (Def. Ex. 480 at 180). Sale Of Shares to ECOM

119. On March 22, 2005, the Government privately sold a block of the CHL Shares that it had seized under the Share Pledge Agreement, consisting of 4,000,000 B shares and 1,531,278 C shares, to ECOM Ltd. For $14.5 million. (Pl. Exs. 179; 391).

120. Plaintiffs introduced no evidence demonstrating that the sale was conducted in a commercially unreasonable manner.

CONCLUSIONS OF LAW

Jurisdiction And Venue

1. The Court has original jurisdiction over this action pursuant to 28 U.S.C. § 1330 as the defendant is a foreign state. The relevant subsection provides:

(a) The district courts shall have original jurisdiction without regard to amount in controversy of any nonjury civil actions against a foreign state as defined in section 1603(a) of this title as to any claim for relief in personam with respect to which the foreign state is not entitled to immunity either under sections 1605-1607 of this title.

28 U.S.C. § 1330(a) (2004).

2. Pursuant to 28 U.S.C. § 1605(a)(1) (2004) of the Foreign Sovereign Immunities Act ("FSIA"), the Government is not immune from the Court's jurisdiction under 28 U.S.C. § 1330 because it waived sovereign immunity when it took assignment of the Share Pledge Agreement dated April 30, 2004, executed by ICC and BT for the benefit of TIBOM. Shapiro v. Republic of Bolivia, 930 F.2d 1013, 1017 (2d Cir. 1991) (citing H.R. REP. No. 1487, 94th Cong., 2d Sess. 18, reprinted in 1976 U.S. Code Cong. Admin. News 6604, 6617); Foremost-McKesson, Inc. v. Islamic Republic of Iran, 905 F.2d 438, 444 (D.C. Cir. 1990); Joseph v. Office of the Consulate General, 830 F.2d 1018, 1022 (9th Cir. 1987), cert denied, 485 U.S. 905 (1988); Frovola v. USSR, 761 F.2d 370, 377 (7th Cir. 1985); L'Europeene de Banque v. La Republica de Venzuela, 700 F.Supp. 114, 123 (S.D.N.Y. 1988). Section 1605(a)(1) provides:

(a) A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case

(1) in which the foreign state has waived its immunity either explicitly or by implication, notwithstanding any withdrawal of the waiver which the foreign state may purport to effect except in accordance with the terms of the waiver.

28 U.S.C. § 1605(a)(1).

3. Section 20 of the Share Pledge Agreement and Section 8(n) of the Payment Agreement dated April 30, 2004, between ICC, BT, TIBOM and the Government provide as follows:

Each of the parties hereto (i) irrevocably submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of Florida, for the purpose of any suit, action or other proceeding arising out of this Agreement, or the subject matter hereof or any of the transactions contemplated hereby or thereby brought by any of the parties hereto or their successors or assigns, (ii) hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such Federal court, and (iii) hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding any claim that it is not personally subject to the jurisdiction of the above-named court, that the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court.

(Pl. Exs. 3, 4).

4. Accordingly, the Government contractually agreed to submit to this Court's jurisdiction by entering into the Assignment Agreement in which the Government assumed all of the rights and obligations of TIBOM under the Share Pledge Agreement.

5. Section 12 of the Share Pledge Agreement states that the Grantee "may exercise any and all rights and remedies of any of the Grantors under or in connection with the collateral." (Pl. Ex. 4). The Court's jurisdiction logically extends to how the Government exercised those rights, including the right to remove and appoint directors.

6. The Court's jurisdiction also extends to whether BT owns the 24,000,000 C shares issued by BTL on December 29, 2004. In order to determine whether the Government exceeded the rights of the Grantor in the CHL Shares when it removed BT's directors thereby breaching the Share Pledge Agreement, the Court must first account for the total shares issued by BTL and owned by the parties. In order to account for the total shares issued, the Court must determine whether the 24,000,000 C shares remain issued and outstanding to BT. Thus, because (i) the Government "irrevocably submit[ted] to the nonexclusive jurisdiction of the United States District Court for the Southern District of Florida, for the purpose of any suit, action or other proceeding arising out of this Agreement," (ii) this suit is one "arising out of this Agreement." (iii) the suit involves whether the Government exceeded its rights in the pledged shares when it removed BT's directors, and (iv) the Court must account for the total shares issued by BTL and owned by the parties in order to determine whether the Government exceeded its rights, the Court has jurisdiction to determine whether the 24,000,000 C shares are issued, outstanding and owned by BT.

7. Venue lies in this district because the parties to the Share Pledge Agreement and the Payment Agreement and the Government expressly agreed that venue in this Court is proper. (Pl. Exs. 3, 4). Event of Default

8. Initially, Plaintiffs contended that although they failed to pay the $51,305,555.66 by November 22, 2004 and again on February 7, 2005, that the Government wrongfully seized the CHL Shares because it caused Plaintiffs to default by failing to keep certain promises. Specifically, Plaintiffs claimed that the Government promised to "change the Belizean telecommunications licensing rules . . . change its rate rules . . . [and] ensure that CHL and Lord Aschroft completely and permanently divest their ownership interests in BTL." (Pl. Compl. ¶ 112; See also Preliminary Injunction Hearing, Testimony of Jeffrey Prosser at 71-74). Both parties agreed that judicial inquiry into such actions would be barred by the act of state doctrine if their validity or legality was questioned. (Def. Memo. on Jurisdictional Issues at 10-12; Pl. Resp. to Def. Memo. on Jurisdictional Issues at 6-7). Their dispute centered on to what extent those acts would need to be questioned, probed or held invalid for Plaintiffs to prevail on their claims for breach of contract, rescission and fraudulent inducement.

9. Prior to trial, the Court ruled that the act of state doctrine precluded any inquiry into whether the Government should have kept these promises. (D.E. 80 at 25). The Court found that whether the Government's failure to keep such promises amounted to breach of contract or fraudulent inducement could not be determined without the Court inquiring into the Government's motivations for its promises, whether it had the ability to make good on those promises, and the reasons the promises were not fulfilled. See World Wide Minerals v. Republic of Kazakhstan, 296 F.3d 1154, 1165 (D.C. Cir. 2002) (holding that the act of state doctrine barred judicial inquiry into the plaintiff's breach of contract claim because such an inquiry "would require [the court] to question the `legality' of Kazakhstan's denial of the export license by ruling that denial a breach of contract."). Therefore, the Court dismissed Plaintiffs' claims for rescission and fraudulent inducement as well as its breach of contract claim to the extent it was based on the Government's failure to implement legislative and regulatory changes. Consequently, there was no determination as to whether the Government actually kept the promises, much less whether the promises were material, whether there was reasonable reliance by Plaintiffs, or whether any failure to keep the promises was a material reason for the failure to obtain financing.

10. Finally, even if the act of state doctrine did not preclude inquiry into whether the Government induced Plaintiffs' default by failing to perform the alleged promises, the Court would find from the evidence introduced at the preliminary injunction hearing that the promises were immaterial. For example, Plaintiffs' negotiations with Speednet for interconnection and their attempt to acquire the Intelco assets demonstrate that the Government's alleged promises to eliminate competition by changing the licensing and rate rules were immaterial to Plaintiffs' acquisition of BTL. As for the promise to ensure that CHL and Lord Ashcroft divest their ownership interest in BTL, Plaintiffs never produced any evidence that Lord Ashcroft reacquired any shares in BTL until after Plaintiffs' default.

11. Accordingly, the Court finds that Plaintiffs inexcusably defaulted on their obligations under the Payment Agreement and the Share Pledge Agreement when they failed to pay the Government $51,305,555.56 on November 22, 2004 and then failed to cure such default by the Government's extension date of February 7, 2005. COUNT I: Breach Of The Share Pledge Agreement COUNT III: Violation Of Fla Stat. § 679.2071(1)

12. In Count I, Plaintiffs allege that the Government breached the Share Pledge Agreement in two ways: (i) by failing to use reasonable care in the custody and preservation of the collateral; and (ii) by exceeding its rights under the Share Pledge Agreement when the Government claimed the right to name four C directors and replace Vondras as managing director of BTL.⁷ The Court addresses each alleged breach separately below. In Count III. Plaintiffs allege the Government failed to "use reasonable care in the custody and preservation" of the pledged shares as required by Fla. Stat. § 679.2071(1).⁸ Failure To Use Reasonable Care

7 In the Amended Complaint, Plaintiffs allege a third breach: that the Government failed to give reasonable notice when it sold a minority stake of the pledged shares to ECOM. The Court granted summary judgment in favor of the Government on this Count. (D.E. 225).

8 In their amended complaint, Plaintiffs also allege violations of Sections 679.611, 679.613, 679.614, 679.610(2), 679.620, 679.622 and 679.623 which all relate to the sale of C shares by the Government to ECOM. In its Summary Judgment Order, the Court found that Plaintiffs are only entitled to the loss of any surplus resulting from the sale to ECOM which only becomes an issue once Plaintiffs' deficiency is eliminated and the Government seeks a deficiency judgment. Because the Government has not sought a deficiency judgment, the Court finds that Plaintiffs are unable to demonstrate damages resulting from the Government's violations of any of the above provisions of the Florida UCC. Furthermore, Plaintiffs failed to introduce evidence at trial that the sale to ECOM was conducted in a commercially unreasonable manner.

13. Plaintiffs allege that the Government breached the Share Pledge Agreement by "disrupting the operation of BTL, thereby harming the [c]ollateral." (Am. Compl. ¶ 131). Under Section 11 of the Share Pledge Agreement the Government had the duty to exercise reasonable care over the pledged shares:

Grantee's Duties — The powers conferred on the Grantee hereunder are solely to protect the Grantee's interest in the Collateral and shall not impose any duties upon it to exercise any such powers. Except for the safe custody of any Collateral in its possession and the accounting for monies actually received by it hereunder, the Grantee shall have no duty as to any Collateral. . . . The Grantee shall be deemed to have exercised reasonable care in the custody and preservation of any Collateral in its possession if such Collateral is accorded treatment substantially equal to that which it accords its own property.

14. The duty contained in Section 11 of the Share Pledge Agreement is co-extensive with the Florida UCC's requirement that a secured party in possession of collateral use "reasonable care in the custody and preservation of collateral in the secured party's possession." Fla. Stat. § 679.2071(1). Because the standards of care with respect to the collateral under the Florida UCC and the Share Pledge Agreement are the same, in this section the Court analyzes together Plaintiffs' claims for breach of the Share Pledge Agreement (Count I) and violation of the Florida UCC's duty of reasonable care under § 679.2071(1) (Count III).

15. Under Florida law and the Share Pledge Agreement, the Government is a secured party rightfully in possession of the CHL Shares after default.

16. Under a claim for either a breach of contract or a violation of the Florida UCC. Plaintiffs bear the burden to prove by a preponderance of the evidence that the Government failed to use reasonable care in the custody of the collateral (the CHL Shares) and that this failure caused actual harm to the collateral. See Becker Holding Corp. v. Becker, 1994 WL 1867249, *12 (S.D. Fla. March 7, 1994), aff'd in part, rev'd in part, 78 F.31 514 (11th Cir. 1996) ("Under Florida law, `[i]t is elementary that in order to recover on a claim for breach of contract the burden is upon the claimant to prove by a preponderance of the evidence the existence of a contract, a breach thereof and damages flowing from the breach.'") (quoting Knowles v. C.I.T. Corp., 346 So.2d 1042, 1043 (Fla. 1st DCA 1977)). Plaintiffs failed to prove either a breach of the duty to use reasonable care or any causal link between such breach and any harm to the CHL Shares.

17. Under Florida law, the general rule is that "`a pledgee's duty with regards to the care of the pledged chattel is confined solely to the physical care of the chattel and a pledgee is not liable for a decline in the value of the pledged instruments.'" Citibank, N.A. v. Data Lease Financial Corp., 828 F.2d 686, 697 (11th Cir. 1987) (quoting Tepper v. Chase Manhattan Bank, N.A., 376 So.2d 35, 36 (Fla. 3rd DCA 1979)). "This rule is based on the common sense notion that a pledgee who has no control over a corporation cannot be held responsible for a dip in the price of stock." Id. The law, however, "makes an exception when the pledged stock represents a controlling interest and the pledgee becomes involved in the management of the company." Id.

18. Plaintiffs allege that after the Government took control of BTL on February 9, 2005, the Government failed to use reasonable care in the preservation of the collateral in four ways: (i) by appointing Aguilar as acting CEO of BTL; (ii) by causing BTL to enter into a memorandum of understanding for interconnection with Speednet on unfavorable terms: (iii) by supposedly permitting a competitor (Speednet) to obtain trade secrets of BTL; and (iv) by causing BTL to enter into disadvantageous contracts with vendors. (Am. Compl. ¶ 133).

The Appointment of Aguilar

19. The Court is unable to find from the evidence that Aguilar's appointment as acting CEO harmed the collateral or constituted a failure to use reasonable care under the Share Pledge Agreement or § 679.2071(1) of the Florida UCC.⁹

9 This is actually the only decision that Plaintiffs proved to have been taken by the Government with respect to the management or operation of BTL. All other subsequent managerial or operational decisions appear to have been made by Aguilar or his management team, with no interference by the Government. (Pl. Ex. 469 at 272:11-24).

20. As explained in Paragraphs 95-115, supra, Aguilar, the long time CFO of BTL, had been running the day-to-day operations of BTL for many months while Plaintiffs controlled the company. (Pl. Ex. 469 at 271:20-272:3). By Vondras's own admission, Aguilar was the person in Belize most competent to run BTL. (Tx. 251:18-25). Indeed, Vondras was ready to recommend that the board appoint Aguilar as CEO of BTL.¹⁰ (Tx. 251:18-22). Additionally, Aguilar has retained the same management team that ran BTL when Plaintiffs were in control and has concluded important agreements on more or less the same or better terms than had been contemplated by Vondras. (Pl. Ex. 469 at 270:6-19). As for BTL's financial performance. Plaintiffs were unable to demonstrate that it had declined under Aguilar, let alone that any minor negative variations in actual budget performance as compared to budget projections could be attributed to any of Aguilar's management decisions.

10 Vondras was not eligible to head BTL because he is not Belizean as required under Article 120(B) of the BTL's Articles of Association. (Def. Ex. 13).

BTL's Memorandum of Understanding for Interconnection With Speednet

21. Plaintiffs' contention that the interconnection agreement with Speednet constitutes a failure to use reasonable care in respect of the care and custody of the collateral is also unsupported by the evidence introduced at trial.

22. Belizean law and BTL's license both require interconnection with Speednet. (Tx. 258:21-259:11). On February 9, 2005, Vondras and BTL's management team were negotiating the final terms for interconnection. (Tx. 263:9-19). At that time, the only items left for negotiation were the international rates and the rate for using the ARCOS undersea cable. (Tx. 267:1-9). Vondras's main concern, shared by Aguilar and by the Chairman of the PUC, was that the agreed upon rates not be below BTL's cost so that BTL would not be subsidizing Speednet. (Tx. 262:17-263:11).

23. It is uncontroverted that BTL has not agreed to any terms that harm BTL. (Pl. Ex. 469 at 296:8-22). Aguilar testified, and Plaintiffs failed to rebut with any credible evidence, that BTL is not subsidizing Speednet in any way. Id. There is no evidence then that the interconnection agreement has harmed BTL. In fact, the only evidence about the impact of the agreement on BTL is positive as the rates agreed to under Aguilar are based on cost plus a reasonable markup. ( Id.; Pl. Ex. 428 at 9). Plaintiffs also presented no evidence that the Government interfered with or influenced the Speednet negotiations in any way.

24. Therefore, the Court concludes that Plaintiffs did not demonstrate that the Government failed to use reasonable care in the custody and preservation of the collateral under the Share Pledge Agreement or § 679.2071(1) based on the terms of the interconnection agreement finalized by Aguilar and his management team.

The Purported Trade Secrets and Speednet

25. The contention that the Government failed to use reasonable care because Speednet obtained BTL trade secrets also fails.

26. Plaintiffs' sole piece of evidence on this claim is the document produced by Fonseca listing management fees paid by BTL to ICC. (Pl. Ex. 426).

27. As an initial matter, the Court is doubtful that such information, while being part of BTL's audited financial statements and likely distributed to the hundreds of BTL shareholders. even qualifies for trade secret protection.

28. More importantly, Plaintiffs presented no evidence that the Government gave the information to Speednet or to any other party unauthorized to possess it. Fonseca's statement that "people from Speednet have declared this type of thing [the money expended for management fees] outrageous" (Def. Ex. 480 at 167:3-11), may demonstrate that Speednet had knowledge of the management fees; however it fails to demonstrate by a preponderance of the evidence that the Government is responsible for Speednet possessing such information.

29. Having failed to present any evidence linking the Government to the disclosure of ICC's management fees, the Court finds that Plaintiffs have failed to prove by a preponderance of the evidence that the Government failed to use reasonable care in the preservation of the collateral by disclosing BTL trade secrets.

Contracts With Vendors

30. Plaintiffs' final allegation that the Government failed to use reasonable care in the custody and preservation of the collateral is derived from contracts that BTL entered into with vendors after the Government took control of BTL on February 9, 2005.

31. Again, Plaintiffs presented no evidence that the terms of any contract entered into by BTL after February 9, 2005 were unreasonable or disadvantageous to BTL. Instead, Aguilar testified, and Plaintiffs failed to dispute, that the contracts entered into by BTL since February 9, 2005 have been in the ordinary course of business, and were entered into on terms consistent with historical rates or only after a bid process. (Pl. Ex. 469 275:11-13; 278:5-25). The evidence is also undisputed that the Government did not direct or interfere with these negotiations or contractual relationships. (Pl. Ex. 469 at 283:23-284:17).

32. Therefore, because Plaintiffs have failed to present evidence that BTL entered into any disadvantageous contracts, much less that the Government directed BTL to enter into the contracts, the Court finds for the Government on this claim as well.

Causation

33. Plaintiffs also failed to prove that any of the above actions, even if the Court were to find them negligent and attributable to the Government, were the proximate cause of any harm to the collateral. Prestige Dev. Group, Inc. v. Russell, 612 So.2d 691, 692 (Fla 1st DCA 1993) ("The burden is on the plaintiff in a contract dispute to prove that his damages were caused by a breach of the contract.").

34. Plaintiffs relied on certain financial statements to show that from April 1, 2004 to December 31, 2004, BTL was 1% off budget for net income (Tx. 143:15-18), while by March 31, 2005 BTL was 3% off budget for net income. (Tx. 146:5-8). However, evidence of this variation alone does not demonstrate that any action taken by the Government was the proximate cause of any harm to the collateral.

35. Initially, the Court observes that only fifty days elapsed between the time the Government took control on February 9, 2005 and March 31, 2005. The Court finds that fifty days is too short of a time period to permit a meaningful and accurate comparison of BTL's financial performance after the Government took control to its financial performance during Plaintiffs' nine-month tenure.

36. Furthermore, Plaintiffs failed to provide evidence linking any of the Government's actions to this 2% variation. The only evidence presented as causes for this variation were (1) a drop in international settlement rates imposed by carriers such as ATT (Tx. 591:19-24; 593:11-15), and (2) sabotage of the phone lines in Belize. (Pl. Ex. 469 at 149:17-21). Plaintiffs failed to attribute either of these reasons to a decision made by the BTL management or the Government. Id.

37. Since Plaintiffs failed to satisfy their burden of proving by a preponderance of the evidence that the Government failed to use reasonable care in the custody and preservation of the collateral, much less that this failure was the proximate cause of actual harm to BTL, the Court finds for the Government on Plaintiffs' claims that the Government breached the Share Pledge Agreement by failing to use reasonable care in the preservation of the collateral (Count I) and on their claim for failure to use reasonable care as required under the Florida UCC (Count III).

The Government's Exercise Of Its Voting Rights Under The Share Pledge Agreement

38. Plaintiffs seek injunctive relief, or, in the alternative, damages for breach of the Share Pledge Agreement based on their claim that the Government exceeded its rights in the CHL Shares when it took control of the board and replaced Vondras. Specifically, Plaintiffs allege that the "[Government's] power[s] over the pledged shares are governed by the Share Pledge Agreement. The [Government's] powers cannot exceed those granted by that Agreement." (Am. Compl. ¶ 121). They further allege that "[t]he Share Pledge Agreement requires that the [Government] exercise its rights in conformity with the Articles of Association." (Am. Compl. ¶ 122). As a result, Plaintiffs allege, "the [Government] received its rights under the Share Pledge Agreement and Assumption Agreement, and thereby breached the Share Pledge Agreement by appointing four C Directors in addition to the two B Directors." (Am. Compl. ¶ 130).

39. Whether the Government exceeded its rights when it did so is governed, at least in the first instance, by Articles 90(D)(i), D(ii), and (E) of BTL's Articles of Association.

40. Article 90(D)(i) states

[t]he holders of a majority of the `C' Ordinary shares apart from the holder of the Special Share or any Associate of such holder for the time being issued may from time to time appoint any person to be a Director but so that the number of `C' Directors (including any Director appointed pursuant to subparagraph (ii) hereof if any) shall not at any time exceed one half of the maximum number of Directors for the time being authorised. Each person holding office pursuant to this Article is herein called a `C' Director.

(Pl. Ex. 8).

41. Article 90(D)(ii) states

[t]he holder of the Special Share shall so long as it is the holder of `C' Ordinary shares amounting to 37.5% or more of the issued share capital of the Company be entitled at any time by written notice served upon the company to appoint two of the Directors designated `C' Directors and by like notice to remove any Director so appointed and appoint another in his or her place.

(Pl. Ex. 8).

42. Article 90(E) states

[e]ach `C' Director shall hold office subject only to Article 112 of Table A as extended hereunder, but (except as regards any Director appointed pursuant to paragraph D(ii) above) may at any time be removed from office by the holders of a majority of the `C' ordinary shares.

(Pl. Ex. 8).

43. The above provisions dictate that the Court engage in a three-step analysis in order to determine whether the Government exceeded its rights under the Share Pledge Agreement when it removed Plaintiffs' four C directors and appointed its own on February 9, 2005. First, the Court must account for the issued share capital of the company and the respective shareholdings of the parties. Next, the Court must determine whether Plaintiffs' four C directors in place before February 9, 2005, were properly appointed and in proper control of their directorships under BTL's Articles of Association. Finally, the Court must determine whether the Government properly appointed its four C directors on February 9, 2005.

The 24,000,000 C Shares

44. A determination of the issued share capital of BTL and the respective shareholdings of the parties first requires that the Court account for the 24,000,000 C shares. For the following reasons, the Court finds that, although the 24,000,000 C shares remain issued, they are now owned by BTL, not BT as Plaintiffs claim.

45. To resolve this issue, the Court must look to the law of Belize because, as the shares are not part of those pledged under the Share Pledge Agreement, they are not governed by that Agreement's forum and choice of law provisions.

46. The shares were issued by a Belizean corporation governed by the laws of Belize: and the putative holder of the shares, BT, is a Belizean company. In re Shultz, 208 B.R. 723, 729 (Bkrtcy. M.D.Fla. 1997) (applying the Restatement (Second) of Conflict: "Section 302 provides that the law of the state of incorporation shall be applied to determine issues involving the rights and liabilities of a corporation, unless it can be shown that some other state has a more significant relationship to the occurrence and the parties.").

47. Registration required to vote: As an initial matter, the Court notes that the 24,000,000 shares have never been registered in the share register and that registration is required to vote the shares by the Articles of Association and the Belize Companies Act ("BCA").

48. Article 37 of the Articles of Association states that "the transferor shall be deemed to remain the holder of the shares until the name of the transferee is entered in the register in respect thereof." (Def. Ex. 8; Def. Ex. 87).

49. Section 25(2) of the BCA also requires registration of the shares. (Def. Ex. 33 § 25(2)) ("Every other person who agrees to become a member of a company, and whose name is entered in the registrar of members, shall be a member of the company.")

50. Both parties' legal experts agree that registration is a prerequisite to the voting of shares. (Tx. 114:13-17; Def. Ex. 479 at 22:24-23:16).

51. Plaintiffs claim that Sampson's registration of the 24,000,000 shares in the branch registry satisfies the registration requirements under the Articles of Association and the BCA. The Court rejects this claim because it is contrary to the clear language of the BCA. Section 35(1) of the BCA does not permit the maintenance of branch registries outside of Belize for companies whose business is conducted in Belize. (Def. Ex. 33). The BCA only allows branch registries to be kept outside of Belize if the objects of the business comprise the transaction of business outside of Belize. (Def. Ex. 33 § 35(1)); (Def. Ex. 479 at 25:17-26:15).

52. Here, it is beyond dispute that BTL's business is conducted within Belize and Plaintiffs have failed to allege that BTL conducts business within the United States, a prerequisite to maintaining a branch registry in the United States.

53. Accordingly, the Court finds that the 24,000,000 C shares were not properly registered under Belizean law and therefore, even if the Court found BT to be the owner of the 24,000,000 shares, BT was not entitled to vote them.

54. Plaintiffs are not the owners of the 24,000,000 shares: Plaintiffs claim they are the owners of the 24,000,000 shares because, under Belizean law, the January 18, 2005 resolution by the board of BTL was ineffective to rescind the issuance of the 24,000,000 shares.

55. Plaintiffs' expert, David Oliver, testified as follows:

Q. Now, Sir, once shares are issued, how can they be rescinded, if at all?

A. Well, once they're issued and the capital has been paid up, the only way in which a rescission could effectively be conducted would be if the contract pursuant to which they were issued was in some way vitiated, for example, by fraud, mistake, misrepresentation, or otherwise if the contract could not be vitiated in that sort of way, pursuant to a reduction of share capital in the case of Belizean issued share capital, pursuant to Section 48 — well, Sections 48 to 58 inclusive of the [BCA], which would require confirmation by the Court.

(Tx. 63:13-24). Oliver further testified:

[W]hat I was accepting and do accept is that if two parties enter into a valid binding contract for a mutual consideration, it is perfectly open to those parties to enter into a further contract eliminating the first contract by the release of the obligations undertaken under the first contract.

(Tx. 110:5-10).

Q. What would BTL have needed to do to terminate the contract [governing the acquisition of the Intelco bond]?

A. I don't see how it could simply terminate the contract in terms of the contract as we know it.

Q. Could it get consent?

A. It could — yes, it could terminate with consent, because that would involve a mutual release of what are otherwise obligations and the consideration for the mutual release would be the release of the other party's obligation.

(Tx. 69:23-70:1). Plaintiffs' own expert makes clear the distinction between the procedure necessary to validly rescind the issuance of the 24,000,000 shares and the procedure necessary to rescind the contract by which the purchase of the Intelco bond was financed in part by the issuance and delivery of the 24,000,000 shares to BT.

56. After careful consideration of the relevant facts, the Court agrees with Plaintiffs that the resolution made at the January 18, 2005 board meeting was ineffective to rescind the issuance of the 24,000,000 C shares. However, the Court concludes from the evidence that the contract to finance the acquisition of the Intelco bond with debt and equity was rescinded and, as a result, the shares reverted to BTL. The facts upon which the Court bases its conclusion that the contract was rescinded include the following: On January 18, 2005, the BTL board met and voted to rescind the "decision pertaining to the share issuance by BTL [to BT] contained in the Resolution of 29th December 2004," and instead voted to finance BTL's purchase of the Intelco bond by the issuance of an all debt instrument to BT (Pl. Ex. 19); Prosser, who was then chairman of BTL and President of BT, voted in favor of the motion; Prosser, Sanders and Barrow all testified in January 2005 in a proceeding then pending in a Belizean court that the contract had been rescinded; Prosser so testified in his capacity as Chairman of BTL. President of BT and President of ICC and specifically testified that BT consented to the rescission; and BT took no steps to register the share certificate until after the Government took control of BTL. The only material evidence to the contrary is the undisputed fact that BT remains in possession of the unregistered share certificate for the 24,000,000 shares naming BT as holder. (Pl. Ex. 7). However, given BT's acquiescence in the rescission of the related contract, the Court concludes that the certificate was effectively rescinded as well.¹¹

11 None of the parties' legal experts testified that the parties' failure or inability to conclude the all debt transaction operated to "revive" the earlier debt and equity financing.

57. On the other hand, the record contains no evidence that, after the rescission of the contract to finance the purchase of the Intelco bond with debt and equity, the 24,000,000 shares were cancelled on BTL's books in accordance with Belizean law or otherwise. The Court thus concludes based on the uncontroverted testimony of Plaintiffs' expert, that the shares were not cancelled by the January 18, 2005 resolution and therefore, that they must have reverted to BTL upon rescission of the contract.¹² March 29, 2005 Board Meeting

12 Because, as explained in Paragraphs 72-95, infra, the 24,000,000 shares are in the possession of BTL, the Court assumes that no voting rights attach to the shares and the Court excludes them in its analysis of the voting rights of the parties in the following section.

58. Alternatively, Plaintiffs claim that even if the January 18, 2005 resolution rescinded the contract for the 24,000,000 shares, the March 29, 2005 board meeting subsequently reaffirmed and restored the original contract for the issuance of the 24,000,000 shares by BT.

59. As an initial matter, the Court notes that this action appears to violate the terms of the Court's March 11, 2005 Injunction Order which stated:

Pending the resolution of the expedited trial on the merits, neither party shall cause or, to the extent within the party's control, permit BTL to make or incur any Extraordinary Expenses or Extraordinary Transactions unless both parties so consent in advance in writing. "Extraordinary Expenses" shall mean any payments of money to third parties not made in the ordinary course of business, or any incurrence of debt or of any other obligation not made in the ordinary course of business. "Extraordinary Transactions" shall mean any transaction requiring board approval.

(D.E. 80 at 43-44).

60. More importantly however, as discussed in Paragraphs 72-95, infra, the Court concludes that Plaintiffs were not entitled to control of BTL's board on February 9, 2005, thus rendering any decision taken by the board on March 29, 2005 a nullity. Shareholdings of the Parties

61. Apart from the 24,000,000 C shares, the parties are in agreement as to the issued share capital of BTL and the shareholdings of the parties. The parties agree that the total issued share capital of BTL is 36,869,719 shares. Of that 36,869,719 shares, 28,869,718 are class C ordinary shares and 8,000,000 are class B ordinary shares. Additionally, there is the Special Share.

62. On February 9, 2005, the division of the C shares was as follows:No. of shares % of C shares % of issued share capital

Government: 11,823,451 41 32 BT: 10,902,997 38 30 minority shareholders: 6,143,270 21 17 63. On February 9, 2005, the division of the B shares was as follows:No. of shares % of B shares % of issued share capital Government: 7,520,000 94 20 BT: 480,000 6 1 64. At the time of trial, the division of the C shares was as follows:No. of shares % of C shares % of issued share capital Government 10,292,173 36 28 BT: 10,902,997 38 30 minority shareholders: 7,674,548 26 21 65. At the time of trial, the division of the B shares was as follows:No. of shares % of B shares % of issued share capital Government 3,520,000 44 9 BT: 480,000 6 1 minority shareholders: 4,000,000 50 11

66. The parties agree that because Plaintiffs hold the Special Share, they are entitled to two directors pursuant to Article 88(a) of BTL's Articles of Association. (Def. Proposed Findings of Fact Conclusions of Law). The parties further agree that because the Government held a majority of the class B shares on February 9, 2005, it was entitled to two B directors pursuant to Articles 90(B) and (C).¹³ (Pl. Proposed Findings of Fact Conclusions of Law). Accordingly, the issue that remains is which party was entitled to the remaining four C directors and therefore control of BTL's board and management as of February 9, 2005.

13 Pursuant to the sale with ECOM, the Government no longer holds a majority of the B shares.

Preliminary Injunction Order

67. Two of Plaintiffs' C directors were appointed pursuant to Article 90(D)(i) of BTL's Articles of Association and two were appointed pursuant to Article 90(D)(ii).

68. On March 11, 2005, this Court granted in part Plaintiffs' Motion for Preliminary Injunction and found that the Government improperly removed Plaintiffs' two 90(D)(i) directors because the Government did not hold a majority of the C ordinary shares as required for removal under Article 90(E). (D.E. 80 at 34).

69. This Court also found that the Government improperly removed Plaintiffs' two 90(D)(ii) directors because Article 90(E) does not authorize the holders of a majority of the C ordinary shares to remove directors appointed under 90(D)(ii). (D.E. 80 at 34).

70. This Court, however, is not bound by findings it made when it entered the Preliminary Injunction Order. E. Remy Martin Co., S.A. v. Shaw-Ross Int'l Imports, Inc., 756 F.2d 1525, 1527 n. 1 (11th Cir. 1985).

71. During the preliminary injunction hearing, the arguments of the parties and, ultimately, the resolution reached by the Court, focused on whether the Government had the power to remove Plaintiffs' two 90(D)(i) directors. However, after having the benefit of a full trial, including the testimony of two experts in Belizean law, the Court finds that its analysis should begin with whether Plaintiffs' two 90(D)(i) directors were properly appointed under 90(D)(i) and whether Plaintiffs' two 90(D)(ii) directors were entitled to hold their directorships on February 9, 2005.

Plaintiffs' Two 90(D)(i) Directors

72. Article 90(D)(i) states:

[t]he holders of a majority of the `C' Ordinary shares apart from the holder of the Special Share or any Associate of such holder for the time being issued may from time to time appoint any person to be a Director but so that the number of `C' Directors (including any Director appointed pursuant to subparagraph (ii) hereof if any) shall not at any time exceed one half of the maximum number of Directors for the time being authorised. Each person holding office pursuant to this Article is herein called a `C' Director.

(Pl. Ex. 8).

73. The Government's expert, Albert Fiadjoe, and Plaintiffs' expert, Oliver, both agree on the meaning of 90(D)(i) if the Court were to give literal effect to the Article's plain language. (Tx. 79:4-79:16; Def. Ex. 479 at 36:3-20). Their disagreement lies in the effect that a plain reading of the Article might have on the operation of the company.

74. According to both experts, a literal reading of 90(D)(i) provides for the appointment of up to four C directors, subject to 90(D)(ii), by the holders of a majority of the C shares other than the holder of the Special Share. Putting aside for the moment how one would identify such "holders," it is undisputed that at all times Plaintiffs owned the Special Share and therefore lacked the power to appoint any directors pursuant to the literal language of 90(D)(i).¹⁴

14 Contrary to the experts' literal reading of 90(D)(i), it appears to the Court that if read literally, the Article would prevent the holder of the Special Share from being deemed the majority C shareholder, but would not exclude the Special Shareholder's C shares from being included in the total amount of C shares from which the majority C shareholder is determined. However, the Court notes that such a reading could lead to the possibility where, if the Special Shareholder held a majority of the C shares, no holder or combination of holders would have a majority of C shares to appoint the two directors under 90(D)(i). This would result in a six member board of directors which appears to contravene Article 85 which states that "the number of directors shall be eight. (Pl. Ex. 8). Therefore, the Court accepts the opinion of the two experts and concludes that a plain reading of Article 90(D)(i), and one in harmony with the other Articles, is that the majority C shareholder is identified after first excluding from the calculation any C shares held by the party who also holds the Special Share.

75. While acknowledging the "literal language" of 90(D)(i), Oliver claims that a Special Shareholder holding a majority of the C shares should not be excluded, and, in turn prevented from appointing C directors under 90(D)(i), because two commercial absurdities would result:

The first absurdity, accordingly to Oliver, is the possibility of a deadlock in the situation where, if the holder of the Special Share also held a majority of the C shares, that party would have the ability under 90(E) to remove any directors that were appointed under 90(D)(i) by the holder or holders of a majority of the C shares apart from the holder of the Special Share. (Tx. 79:7-16). In other words, the qualifying shareholder under 90(D)(i) could have his chosen directors incessantly removed by a shareholder who is unable to appoint directors under 90(D)(i) but has the power to remove them under 90(E). (Tx. 79:7-80:3).

The second absurdity, according to Oliver, is the possibility that the Special Shareholder, who also holds C shares amounting to less than 37.5% of the issued share capital, is effectively disenfranchised with respect to his C shares under both Article 90(D)(i) and 90(D)(ii). (Tx. 79:7-80:3).

76. As agreed to by both experts, the Court should strive to give effect to the plain language of the Articles of Association, even more than that of an ordinary contract, and should only disregard unambiguous language when enforcing the plain language will be "openly unpalatable to the Court." (Tx. 78:3-8; 83:21-84:14). For the following reasons, the Court rejects Plaintiffs' argument that, because of the aforementioned "absurdities," the language. "apart from the holder of the Special Share," should be disregarded by the Court in its determination of whether Plaintiffs properly appointed their 90(D)(i) directors.

77. The Court disagrees with Oliver that a deadlock is a commercial absurdity and its possibility is insufficient to persuade this Court to depart from the Belizean common law's strong legal principle of giving the Articles their plain meaning. Instead, the Court agrees with Fiadjoe, the Government's expert, and recognizes that deadlocks are not a commercial absurdity, but commonly occur and are frequently resolved through compromise among shareholders. The Court also notes that Article 85 calls for a board of eight directors and by virtue of the even number of directors, contemplates the possibility of a deadlock.

78. The Court is equally unpersuaded that a Special Shareholder who holds C shares totaling less than 37.5% of the issued share capital of BTL is disenfranchised with respect to his C shares by 90(D)(i) and 90(D)(ii). The Special Shareholder is not completely disenfranchised, but rather, his voting rights as a C shareholder are not triggered until he also holds C shares amounting to at least 37.5% of the issued share capital of BTL. (Pl. Ex. 8). Second, and more importantly, the extent to which 90(D)(i) and 90(D)(ii) limit the voting rights of the Special Shareholder appears reasonable in light of the disproportionate amount of power given to the Special Shareholder by the Articles. The Special Shareholder is not only entitled to 25% of the board of directors, but those directors receive privileges and exemptions not enjoyed by the C and B directors.¹⁵ (Pl. Ex. 8). Additionally, by virtue of holding the Special Share, a party has the ability to appoint two C directors under 90(D)(ii) without having a majority of the C shares.¹⁶

15 Article 88(D) grants special exemption to Special Share Directors and reads:

(i) The Government Appointed Directors [Special Share Directors] shall not be required to retire or be taken into account in determining the number of directors to retire pursuant to any provision of the Articles.

(ii) The provisions of the Articles relating to the removal of directors by Extraordinary Resolution shall not apply to Government Appointed Directors.

(iii) If a Government Appointed Director [Special Share Director] retires from office the vacancy may only be filled by appointment of a director by the Special Shareholder pursuant to this Article.

(iv) The provisions of the Articles relating to the appointment of directors shall not apply to Government Appointed Directors [Special Share Directors].

Additionally, Article 88(C) permits the Special Shareholder, if he also holds C shares amounting to at least 37.5% of the issued share capital of BTL, to appoint any Special Share director or 90(D)(ii) director to the position of non-executive chairman BTL's board of directors.

16 A Special Shareholder holding 13,900,000 C shares, which amounts to 37.7% of the issued share capital of BTL but only 48% of the C shares, can appoint two directors under 90(D)(ii).

79. In their final argument, Plaintiffs claim that if the Court interprets 90(D)(i) to exclude from the calculation of the majority of C shares any C shares held by the Special Shareholder, then the Special Shareholder could circumvent 90(D)(i)'s exclusion by transferring its C shares to a different entity, such as a shell corporation, have that corporation vote in two directors, and then transfer the C shares back to the Special Shareholder. The Court is unpersuaded by Plaintiffs' argument because 90(D)(i) specifically excludes the Special Shareholder "or any [a]ssociate of" the Special Shareholder from voting C shares under 90(D)(i).

80. In sum, the Court concludes that 90(D)(i)'s exclusion of the Special Shareholder and the requirement that the Special Shareholder hold C shares amounting to 37.5% or more of the issued share capital of BTL in order to appoint C directors pursuant to 90(D)(ii) are not commercial absurdities but are the logical and reasonable result of the Articles' plain language. Therefore, the Court finds that Plaintiffs' purported appointments of C directors pursuant to Article 90(D)(i) on April 14, 2004 and November 23, 2004 contravened the plain language of BTL's Articles of Association and thus were void.

81. Because Plaintiffs' 90(D)(i) directors were not lawfully appointed, the Government's actions on February 9, 2005 with respect to those two directors were not subject to 90(E)'s removal provisions. Rather, the Court reviews the Government's actions according to the appointment provisions of Article 90(D)(i).

82. On February 9, 2005, the Government held 11,823,451 C shares. Apart from the C shares held by Plaintiffs, the total C shares in BTL were 17,966,721. The Government therefore held approximately 66% of the C shares apart from the holder of the Special Share.

83. Accordingly, the Court finds that the Government had the power to appoint two C directors under 90(D)(i) on February 9, 2005 pursuant to BTL's Articles of Association, and therefore did not exceed the Grantor's rights in the CHL Shares under the Share Pledge Agreement. Plaintiffs' 90(D)(ii) Directors

84. Judge Conteh's Decision And Res Judicata : On April 6, 2005, during proceedings in which the Government and Plaintiffs participated, Chief Justice Abdulai Conteh issued an opinion concluding that a party's two directors appointed under 90(D)(ii) remain in office "so long as" that party holds the Special Share and C shares amounting to at least 37.5% of issued share capital of BTL, but cease to be directors if that party fails to maintain either of these share requirements. (Pl. Ex. 463).

85. The Government claims that Conteh's opinion should be recognized by this Court under principles of res judicata and comity. Plaintiffs respond that while this Court may choose to give res judicata effect to the Belizean Supreme Court's judgment, it should choose not to do so because the judgment runs contrary to the basic principles of Belizean law with regard to the interpretation of the Articles.

86. In diversity cases, an action to recognize and enforce the judgment of a foreign court is a matter of state law. Turner Entertainment Co. v. Degeto Film GmbH, 25 F.3d 1512, 1520 n. 12 (11th Cir. 1994). In deciding whether to honor the judgment of a foreign court. Florida courts look to principles of international comity, focusing on whether in the prior action the parties were given notice and an opportunity to be heard, whether the foreign court had original jurisdiction, and whether the foreign judgment offends the public policy of Florida. Nahar v. Nahar, 656 So.2d 225, 229 (Fla. 3d DCA 1991), review denied, 664 So.2d 249 (Fla. 1995). However, when parallel litigation is ongoing in a domestic and foreign jurisdiction, the domestic court is not required to defer in favor of the foreign proceeding and both may proceed to a final judgment. Turner, 25 F.3d at 1519 n. 10.

87. Again, as noted in the Court's Order Granting in Part Defendant's Motion for Summary Judgment, were this Court to find the Belizean Supreme Court's opinion res judicata, it would be condoning the Government's race to another jurisdiction for the purpose of circumventing this Court's jurisdiction and ruling. It appears that such a resolution would run contrary to "the processes of accommodation and cooperation which form the basis for a genuine system of international comity." Laker Airways Ltd. v. Sabena, Belgian World Airlines, 731 F.2d 909, 915-16 (D.C. Cir. 1984) (holding that "[l]imitations on the application of comity dating from the origins of the doctrine recognize that a domestic forum is not compelled to acquiesce in pre- or postjudgment conduct by litigants which frustrates the significant policies of the domestic forum"). Therefore, while the Court finds Judge Conteh's opinion instructive on Belizean law, the Court will consider his opinion along with the other evidence presented at trial in reaching its conclusion with respect to the interpretation of Article 90(D)(ii).

88. Interpretation of Article 90(D)(ii): The relevant portion of 90(D)(ii) states, "the holder of the Special Share shall so long as it is the holder of C Ordinary shares amounting to 37.5% or more of the issued share capital of the Company be entitled . . . to appoint two of the Directors designated C Directors and by like notice to remove." (Pl. Ex. 8) (emphasis added).

89. The Government claims that the language "so long as" should be interpreted to mean that any director appointed under 90(D)(ii) ceases to serve if the Special Shareholder ceases to own C shares amounting to at least 37.5% of the issued share capital of BTL. Plaintiffs reject the Government's interpretation and urge that any director appointed under 90(D)(ii) remains in office subject only to Article 112¹⁷ or unless removed by the Special Shareholder owning C shares totaling at least 37.5% of the issued share capital even if this means that the 90(D)(ii) directors become entrenched for life.

17 Article 112 lists circumstances where a director must be disqualified including: (1) if the director holds another office of profit other than managing director; (2) if the director becomes bankrupt; (3) if the director is found lunatic or of unsound mind; and (4) if the director participates in the profits of any contract with the company.

90. The Court agrees with the Government that the language "so long as" must be interpreted to mean that a party who does not continue to hold the Special Share or C shares amounting to at least 37.5% of the issued share capital of BTL also loses the right to name or maintain two C directors under Article 90(D)(ii).

91. The Court reaches this conclusion because any other reading of 90(D)(ii), and specifically Plaintiffs, would produce results perverse to the basic operation of BTL:

Under Plaintiffs' interpretation, because a 90(D)(ii) director can only be removed from office by a Special Shareholder owning C shares amounting to at least 37.5% of the issued share capital of BTL, Plaintiffs could qualify to appoint the two 90(D)(ii) directors and then sell all of their shares in the company, yet still retain two seats on the board unless and until another Special Shareholder acquired enough C shares to total at least 37.5% of the issued share capital of BTL. Under this scenario, Plaintiffs' two 90(D)(ii) directors could serve for life even if Plaintiffs owned not one share of stock.

92. While Plaintiffs assert that the idea of an entrenched director is not unheard of in the English common law, they failed to present any justifiable rationale for the situation where a party would have the right to control 25% of the seats on the board without maintaining any share ownership in BTL.

93. The Court thus finds Plaintiffs' interpretation of 90(D)(ii) unpalatable and concludes that the common sense interpretation of 90(D)(ii) is as follows: the party who appointed two directors under Article 90(D)(ii) retains that right only "so long as" that party owns the Special Share and C shares totaling at least 37.5% of the issued share capital of BTL. It therefore follows that, on February 9, 2005, when Plaintiffs held the Special Share and 10,902,997 C shares amounting to only 30% of the issued share capital of BTL they ceased to be entitled to maintain two board seats pursuant to 90(D)(ii).

94. The Court therefore reviews the Government actions under Article 90(D)(i) which allows the "holders of a majority of the C [o]rdinary shares apart from the holder of the Special Share . . . [to] appoint" up to four C directors unless the Special Shareholder has the right to appoint two of the C directors by reason of its ownership of C shares amounting to at least 37.5% of the issued share capital. (Pl. Ex. 8). As the Court found in the previous section, the Government held a majority of the C shares apart from the holder of the Special Share on February 9, 2005. Accordingly, the Court concludes that on February 9, 2005 the Government properly appointed all four C directors under BTL's Articles of Association and did not exceed the Grantor's rights in the CHL Shares under the Share Pledge Agreement when it did so.

95. Because the Court has found that the Government properly appointed its four C directors on February 9, 2005, Plaintiffs were not entitled to control of BTL's board on February 9, 2005 or on March 29, 2005. Consequently, Plaintiffs' March 29, 2005 board meeting is a nullity. COUNT II: Breach of the Payment Agreement

96. Plaintiffs claim that the Government breached the Payment Agreement because it failed to credit the first four debt service payments made by BT to TIBOM totaling $4,022,777.78.

97. Plaintiffs further claim that they have suffered damages totaling $4,022,777.78 as a result of the Government's breach.

98. The Government responds that Plaintiffs have failed to prove that such a breach, even if true, is material or that Plaintiffs suffered any damages as a result.

99. The evidence introduced at trial demonstrates that as of April 27, 2005 the Government had failed to credit Plaintiffs' payments totaling $4,022,777.78 as required under the Payment Agreement. (Pl. Ex. 179).

100. This breach is material because the central purpose of the Payment Agreement was the payment by BT of specific debt payments and the crediting of those payments by the Government.

101. However, Plaintiffs failed to introduce any evidence demonstrating that they have suffered anything more than nominal damages as a result of the Government's breach.

102. In their Proposed Findings of Fact and Conclusions of Law the Government now admits that Plaintiffs' deficiency has been reduced by $4,022,777.78.

103. Therefore, the Court finds that Plaintiffs have proven by a preponderance of the evidence that the Government breached the Payment Agreement by failing to credit the $4,022,777.78 in payments made by Plaintiffs but are only entitled to nominal damages.

CONCLUSIONS

Based on the findings and conclusions set forth above, the Court finds that:

(1) the Government is entitled to a judgment in their favor on Count I and III as Plaintiffs have failed to prove by a preponderance of the evidence that the Government is liable for breach of the Share Pledge Agreement or violation of the Florida UCC.

(2) Plaintiffs are entitled to judgment on Count II as they proved by a preponderance of the evidence that the Government is liable for breach of the Payment Agreement. Plaintiffs are entitled to nominal damages on this Count.

(3) The Court declines to enter a permanent injunction as requested by Plaintiffs and it is hereby ORDERED AND ADJUDGED that the Court's Preliminary Injunction entered March 11, 2005 is VACATED.

DONE AND ORDERED.