AGREEMENT AND PLAN OF MERGER
DATED AS OF MARCH 16, 1999
AMONG
GLOBAL CROSSING LTD.,
GCF ACQUISITION CORP.
AND
FRONTIER CORPORATION
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TABLE OF CONTENTS
Page
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ARTICLE I THE MERGER
1.1 THE MERGER. 2
1.2 CLOSING. 2
1.3 EFFECTIVE TIME 3
1.4 EFFECTS OF THE MERGER 3
1.5 CERTIFICATE OF INCORPORATION 3
1.6 BY-LAWS 3
1.7 OFFICERS AND DIRECTORS OF SURVIVING CORPORATION 3
1.8 EFFECT ON CAPITAL STOCK 4
1.9 VOTING AGREEMENT 5
1.10 ALTERNATIVE TRANSACTION STRUCTURE 5
ARTICLE II EXCHANGE OF CERTIFICATES
2.1 EXCHANGE FUND 13
2.2 EXCHANGE PROCEDURES 13
2.3 DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED
SHARES 14
2.4 NO FURTHER OWNERSHIP RIGHTS IN FRONTIER COMMON
STOCK 15
2.5 NO FRACTIONAL SHARES OF GLOBAL COMMON STOCK 15
2.6 TERMINATION OF EXCHANGE FUND 16
2.7 NO LIABILITY 16
2.8 INVESTMENT OF THE EXCHANGE FUND 16
2.9 LOST CERTIFICATES 17
2.10 WITHHOLDING RIGHTS 17
2.11 FURTHER ASSURANCES 17
2.12 STOCK TRANSFER BOOKS 17
ARTICLE III REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF FRONTIER 18
3.2 REPRESENTATIONS AND WARRANTIES OF GLOBAL 27
3.3 REPRESENTATIONS AND WARRANTIES OF GLOBAL AND
MERGER SUB 34
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 COVENANTS OF FRONTIER 35
4.2 COVENANTS OF GLOBAL 39
4.3 ADVICE OF CHANGES; GOVERNMENTAL FILINGS 43
4.4 TRANSITION PLANNING; CONTINUED OPERATIONS OF
FRONTIER 44
4.5 SERVICES AGREEMENT 44
4.6 CONTROL OF OTHER PARTY'S BUSINESS 44
ARTICLE V ADDITIONAL AGREEMENTS
5.1 PREPARATION OF PROXY STATEMENT; SHAREHOLDERS
MEETINGS 45
5.2 GLOBAL BOARD OF DIRECTORS; OFFICERS; HEADQUARTERS 47
5.3 ACCESS TO INFORMATION 47
5.4 REASONABLE BEST EFFORTS 48
5.5 ACQUISITION PROPOSALS 50
5.6 ASSUMPTION OF FRONTIER STOCK OPTIONS AND
WARRANTS; OTHER STOCK PLANS; EMPLOYEE BENEFITS
MATTERS 52
5.7 FEES AND EXPENSES 54
5.8 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND
INSURANCE 54
5.9 REDEMPTION OF FRONTIER PREFERRED STOCK 55
5.10 PUBLIC ANNOUNCEMENTS 55
5.11 ACCOUNTANTS' LETTERS 55
5.12 LISTING OF SHARES OF GLOBAL COMMON STOCK 56
5.13 VOTING TRUST 56
ARTICLE VI CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT
THE MERGER 56
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF GLOBAL
AND MERGER SUB 57
6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF FRONTIER 59
ARTICLE VII TERMINATION AND AMENDMENT
7.1 TERMINATION 60
7.2 EFFECT OF TERMINATION 63
7.3 AMENDMENT 64
7.4 EXTENSION; WAIVER 64
ARTICLE VIII GENERAL PROVISIONS
8.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS 64
8.2 NOTICES 65
8.3 INTERPRETATION 66
8.4 COUNTERPARTS 66
8.5 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES 66
8.6 GOVERNING LAW 67
8.7 SEVERABILITY 67
8.8 ASSIGNMENT 67
8.9 SUBMISSION TO JURISDICTION; WAIVERS 67
8.10 ENFORCEMENT 68
8.11 DEFINITIONS 68
8.12 OTHER AGREEMENTS 70
LIST OF EXHIBITS
EXHIBIT TITLE
A Form of Stock Option Agreement
1.9 Form of Voting Agreement
3.1(k) Form of Affiliate Agreement
4.5 Services Agreement Term Sheet
5.2 Classification of Directors
5.6 Assumption of Frontier Stock Options and Frontier Warrants
GLOSSARY OF DEFINED TERMS
Definition Location of Definition
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Acquisition Proposal Section 5.5
Affiliate Agreement Section 3.1(k)
Agreement Preamble
Alternative Merger Section 1.10(a)
Alternative Merger Notice Section 1.10(a)
Alternative Merger Notice Date Section 1.10(a)
Amalgamation Agreement Section 1.10(j)(iii)
Applicable Closing Conditions Section 8.11(a)
Average Price Section 1.8(a)
Blue Sky Laws Section 3.1(c)(iii)
Board of Directors Section 8.11(b)
Business Day Section 8.11(c)
Cash Top-Up Section 7.1(g)
Cash Top-Up Election Section 7.1(g)
Certificate Section 1.8(b)
Closing Section 1.2
Closing Date Section 1.2
Code Recitals
Combination Election Section 7.1(g)
Combined Voting Power Section 8.11(d)
Communications Act Section 3.1(c)(iii)
Confidentiality Agreement Section 5.3
Determination Date Section 1.8(a)
DOJ Section 5.4(b)
Effective Time Section 1.3
Employees Section 1.10(f)(i)
ERISA Section 3.1(o)(i)
ERISA Affiliate Section 3.1(o)(i)
Exchange Act Section 3.1(c)(iii)
Exchange Agent Section 2.1
Exchange Fund Section 2.1
Exchange Ratio Section 1.8(a)
Expenses Section 5.7
FCC Section 3.1(c)(iii)
Form S-4 Section 5.1(a)
Frontier Preamble
Frontier Affiliate Letter Section 3.1(k)
Frontier Benefit Plans Section 3.1(o)(i)
Frontier Board Approval Section 3.1(f)
Frontier Common Stock Recitals
Frontier Disclosure Schedule Section 3.1
Frontier Employees Section 1.10(f)(i)
Frontier Evaluation Period Section 7.1(g)
Frontier Financial Advisor Section 3.1(i)
Frontier Merger Sub Section 1.10(b)
Frontier Preferred Stock Section 3.1(b)(i)
Frontier SEC Reports Section 3.1(d)(i)
Frontier Shareholders Meeting Section 5.1(b)
Frontier Stock Option Plans Section 3.1(b)(i)
Frontier Stock Options Section 3.1(b)(i)
Frontier Sub Section 3.1(d)(i)
Frontier Voting Debt Section 3.1(b)(ii)
Frontier Warrants Section 3.1(b)(i)
GAAP Section 3.1(d)(i)
Global Preamble
Global Adjustment Election Section 7.1(g)
Global Benefit Plans Section 3.2(m)
Global Charter Amendment Section 3.2(c)(i)
Global Common Stock Recitals
Global Disclosure Schedule Section 3.2
Global Draft Disclosures Section 3.2(d)(ii)
Global Election Period Section 7.1(g)
Global Employees Section 1.10(f)(i)
Global Financial Advisor Section 3.2(h)
Global Holdings Section 3.2(d)(i)
Global Merger Sub Section 1.10(b)
Global SEC Reports Section 3.2 (d)(i)
Global Shareholders Meeting Section 5.1(c)
Global Stock Option Plan Section 3.2(b)(i)
Global Transaction Information Section 3.2(d)(ii)
Global Voting Debt Section 3.2(b)(ii)
Global Warrants Section 3.2 (b)(i)
Governmental Entity Section 3.1(c)(iii)
HSR Act Section 3.1(c)(iii)
Joint Proxy Statement/Prospectus Section 5.1(a)
Material Adverse Effect Section 8.11(e)
Material Network Contract Section 8.11(f)
Merger Recitals
Merger Consideration Section 1.8(a)
Merger Sub Preamble
NASDAQ Section 1.8(a)
New Global Section 1.10(b)
New Global Common Stock Section 1.10(c)(i)
New Global Share Issuance Section 1.10(h)(ii)
New York Certificate of Merger Section 1.3
NYBCL Section 1.1
NYSE Section 3.1(c)(iii)
Person Section 8.11(g)
Plans Section 1.10(f)(i)
Principal Shareholders Recitals
PUCs Section 3.1(c)(iii)
Regulatory Law Section 5.4(b)
Required Consents Section 3.1(c)(iii)
Required Frontier Vote Section 3.l(g)
Required Global Vote Section 3.2(g)
Rights Section 3.1(b)(i)
Rights Agreement Section 3.1(b)(i)
Rule 145 Section 3.1(k)
SAS 72 Section 5.11
SEC Section 3.1(d)(i)
Securities Act Section 3.1(c)(iii)
Share Issuance Section 3.2(c)(i)
Stock Option Agreement Recitals
Subsidiary Section 8.11(h)
Superior Proposal Section 8.11(i)
Surviving Corporation Section 1.1
Termination Date Section 7.1(b)
Termination Fee Section 7.2(b)
Termination Notice Section 7.1(g)
The Other Party Section 8.11(j)
The Trigger Event Section 8.11(k)
Violation Section 3.1(c)(ii)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 16, 1999 (this
"AGREEMENT"), among Global Crossing Ltd., a company formed under the laws of
Bermuda ("GLOBAL"), GCF Acquisition Corp., a New York corporation and a direct
wholly-owned subsidiary of Global ("MERGER SUB"), and Frontier Corporation, a
New York corporation ("FRONTIER").
W I T N E S S E T H
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WHEREAS, the respective Boards of Directors of Global, Merger Sub and
Frontier have each determined that the merger of Merger Sub with and into
Frontier (the "MERGER") is in the best interests of their respective
shareholders, and such Boards of Directors have approved such Merger and the
Alternative Merger (as defined in Section 1.10), upon the terms and subject to
the conditions set forth in this Agreement, pursuant to which each outstanding
share of common stock, par value $1.00 per share, of Frontier ("FRONTIER COMMON
STOCK") issued and out standing immediately prior to the Effective Time (as
defined in Section 1.3), other than shares owned or held directly or indirectly
by Global or directly by Frontier will be converted into the right to receive
shares of common stock, par value $.01 per share, of Global ("GLOBAL COMMON
STOCK") as set forth in Section 1.8 or as otherwise provided in Section 1.10
hereof;
WHEREAS, Global, Merger Sub and Frontier desire to make certain
representations, warranties, covenants and agreements in connection with the
transactions contemplated hereby and also to prescribe various conditions to the
transactions contemplated hereby;
WHEREAS, Global, Merger Sub and Frontier intend, by approving
resolutions authorizing this Agreement, to adopt this Agreement as a plan of
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "CODE"), and the regulations promulgated
thereunder;
WHEREAS, the Boards of Directors of Frontier and Global have approved
and concurrently with the execution of this Agreement Frontier and Global will
execute an Agreement in the form attached hereto as Exhibit A (the "STOCK OPTION
AGREEMENT") whereby Frontier will grant Global an option to purchase shares of
Frontier Common Stock upon the terms and conditions provided in such agreement;
WHEREAS, concurrently herewith certain shareholders of Global
(collectively, the "PRINCIPAL SHAREHOLDERS") have agreed to vote their shares in
favor of the transactions contemplated hereby pursuant to the Voting Agreement
(as defined in Section 1.9); and
NOW, THEREFORE in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the New York Business
Corporation Law (the "NYBCL"), Merger Sub shall be merged with and into Frontier
at the Effective Time. Following the Merger, the separate corporate existence of
Merger Sub shall cease and Frontier shall continue as the surviving corporation
(the "SURVIVING CORPORATION").
1.2 CLOSING. The closing of the Merger (the "CLOSING") will take
place on the second Business Day after the satisfaction or waiver (subject to
applicable law) of the conditions (excluding conditions that, by their terms,
cannot be satisfied until the Closing Date) set forth in Article VI (the
"CLOSING DATE"); PROVIDED, HOWEVER, that if the Average Price is less than
$34.5625, then the Closing shall not occur prior to (i) if Frontier shall not
deliver a Termination Notice (as defined in Section 7.1(g)) to Global in
accordance with Section 7.1(g), the second Business Day following the expiration
of the Frontier Evaluation Period (as defined in Section 7.1(g)), or (ii) if
Frontier shall deliver a Termination Notice to Global in accordance with Section
7.1(g), the second Business Day following the earlier of (A) Global's delivery
of a Global Adjustment Election, a Cash Top-Up Election or a Combination
Election (in each case, as defined in Section 7(g)) and (B) the expiration of
the Global Election Period, in all cases, unless another time or date is agreed
to by the parties hereto. The Closing shall be held at the offices of Skadden,
Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York 10022,
unless another place is agreed to by the parties hereto.
1.3 EFFECTIVE TIME. As soon as practicable following the Closing,
the parties shall (i) file a certificate of merger (the "NEW YORK CERTIFICATE
OF MERGER") in such form as is required by and executed in accordance with the
relevant provisions of the NYBCL and (ii) make all other filings or record
required under the NYBCL. The Merger shall become effective at such
time as the New York Certificate of Merger is duly filed with the New York
Department of State in accordance with Section 904 of the NYBCL or at such
subsequent time as Global and Frontier shall agree and as shall be specified in
the New York Certificate of Merger (the date and time the Merger becomes
effective being the "EFFECTIVE TIME").
1.4 EFFECTS OF THE MERGER. At and after the Effective Time, the
Merger will have the effects set forth in Section 906 of the NYBCL. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time all the property, rights, privileges, powers and franchises of Frontier and
Merger Sub shall be vested in the Surviving Corporation, and all debts,
liabilities and duties of Frontier and Merger Sub shall become the debts,
liabilities and duties of the Surviving Corporation.
1.5 CERTIFICATE OF INCORPORATION. At the Effective Time, the
certificate of incorporation of the Surviving Corporation shall be amended in
accordance with the NYBCL such that the certificate of incorporation of the
Surviving Corporation shall consist of the provisions of the certificate of
incorpora incorporation of Merger Sub.
1.6 BY-LAWS. The by-laws of Merger Sub as in effect at the Effective
Time shall be the by-laws of the Surviving Corporation until thereafter changed
or amended as provided therein or by applicable law.
1.7 OFFICERS AND DIRECTORS OF SURVIVING CORPO RATION. The officers
of Frontier as of the Effective Time shall be the officers of the Surviving
Corporation, until the earlier of their resignation or removal or otherwise
ceasing to be an officer or until their respective successors are duly elected
and qualified, as the case may be. The directors of Merger Sub as of the
Effective Time shall be the directors of the Surviving Corporation until the
earlier of their resignation or removal or otherwise ceasing to be a director or
until their respective successors are duly elected and qualified.
1.8 EFFECT ON CAPITAL STOCK.
(a) At the Effective Time by virtue of the Merger and without any
action on the part of the holder thereof, each share of Frontier Common Stock
issued and outstanding immediately prior to the Effective Time (other than
shares of Frontier Common Stock owned or held directly or indirectly by Global
or directly by Frontier, all of which shall be canceled as provided in Section
1.8(c)) shall, except as provided in Section 7.1(g), be converted into the right
to receive that number of shares of Global Common Stock equal to the Exchange
Ratio (as defined below) (the "MERGER CONSIDERATION"). "EXCHANGE RATIO" means
the quotient (rounded to the nearest 1/10,000) determined by dividing $62.00 by
the Average
Price as defined below. "AVERAGE PRICE" means the average (rounded to the
nearest 1/10,000) of the volume weighted averages (rounded to the nearest
1/10,000) of the trading prices of Global Common Stock on the Nasdaq National
Market ("NASDAQ"), as reported by Bloomberg Financial Markets (or such other
source as the parties shall agree in writing), for the 15 trading days randomly
selected by lot by Frontier and Global together from the 30 consecutive trading
days ending on the trading day immediately preceding the date on which all the
conditions to Closing (other than conditions that, by their terms, cannot be
satisfied until the Closing Date so long as it is reasonably apparent that such
conditions will be able to be satisfied on the Closing Date) set forth in
Article VI shall have been satisfied or waived (the "DETERMINATION DATE");
PROVIDED, that the Exchange Ratio shall not be less than 1.0919, or, unless
Global shall have exercised its rights to make a Global Adjustment Election or a
Combination Election under Section 7.1(g), greater than 1.7939. If prior to the
Effective Time, Global should split or combine the shares of Global Common
Stock, or pay a stock dividend or other stock distribution in shares of Global
Common Stock, or otherwise change the shares of Global Common Stock into any
other securities, or make any other dividend or distribution on the shares of
Global Common Stock, then the Exchange Ratio will be appropriately adjusted to
reflect such split, combination, dividend or other distribution or change.
(b) As a result of the Merger and without any action on the part of
the holders thereof, at the Effective Time, all shares of Frontier Common Stock
shall cease to be outstanding and shall be canceled and retired and shall cease
to exist, and each holder of a certificate which immediately prior to the
Effective Time repre represented any such shares of Frontier Common Stock (a
"CERTIFICATE") (other than Merger Sub, Global and Frontier) shall thereafter
cease to have any rights with respect to such shares of Frontier Common Stock,
except the right to receive the applicable Merger Consideration in accordance
with Article II upon the surrender of such certificate.
(c) Each share of Frontier Common Stock issued and owned or held
directly or indirectly by Global or directly by Frontier at the Effective time
shall, by virtue of the Merger, cease to be outstanding and shall be canceled
and retired and no stock of Global or other consideration shall be delivered in
exchange therefor.
(d) Each share of common stock, par value $1.00 per share, of Merger
Sub issued and outstanding immediately prior to the Effective Time shall
forthwith cease to exist and shall be converted into one validly issued, fully
paid and non-assessable share of common stock, par value $1.00 per share, of the
Surviving Corporation as of the Effective Time.
1.9 VOTING AGREEMENT. Concurrently with the execution and delivery
of this Agreement, Frontier and the Principal Shareholders are executing and
delivering an agreement substantially in the form of Exhibit 1.9 hereto,
pursuant to which, among other things, the Principal Shareholders are agreeing
to vote all of the shares of Global Common Stock owned, beneficially or of
record, by them to approve the Share Issuance and the Global Charter Amendment
(in each case, as defined in Section 3.2(c)(i)) and such shares in the aggregate
constitute, and at the record date for the Global Shareholders Meeting (as
defined in Section 5.1(d)), will constitute at least 51% of the Combined Voting
Power (as defined in Section 8.11).
1.10 ALTERNATIVE TRANSACTION STRUCTURE.
(a) ALTERNATIVE MERGER NOTICE. Frontier shall be entitled to give
Global a notice to adopt the alternative merger structure (the "ALTERNATIVE
MERGER") as described in Section 1.10(b) (the "ALTERNATIVE MERGER NOTICE") if
(i) the Applicable Closing Conditions (as defined in Section 8.11) have been
satisfied, (ii) a Trigger Event (as defined in Section 8.11) has not occurred or
is no longer in effect for any reason, and (iii) at least 180 days have passed
since the date of this Agreement; provided, however, that if a Trigger Event
occurs between 180 days and 240 days after the date of this Agreement, the
Alternative Merger Structure Notice shall be deemed terminated if the Form S-4
which contains the Joint Proxy Statement/Prospectus (as defined in Section 5.1)
relating to the Merger could be declared effective by the SEC under the
Securities Act at an earlier time than the Form S-4 which contains the Joint
Proxy Statement/Prospectus relating to the Alternative Merger. Unless the
parties otherwise agree, without action on the part of either Global or
Frontier, an Alternative Merger Notice shall be deemed to have been given on the
date that is 240 days after the date of this Agreement, provided that if a
Trigger Event has not occurred or is no longer in effect for any reason, or, if
a Trigger Event had occurred, on the later date that such Trigger Event is no
longer in effect for any reason. In the event an Alternative Merger Notice is
given or deemed to have been given (the "ALTERNATIVE MERGER NOTICE DATE"), the
Merger contemplated by Section 1.1 of this Agreement shall be restructured in
the manner set forth in this Section 1.10. In such event, all references to the
term "MERGER" in this Agreement shall be deemed references to the transactions
contemplated by this Section 1.10, all references to the term "EFFECTIVE TIME"
in this Agreement shall be deemed references to the time at which (i) the
certificate of merger is duly filed with the New York Department of State in
accordance with Section 904 of the NYBCL and (ii) the registration of an
amalgamated company and such other documents as are required
by the Companies Act 1981 Bermuda in connection with the merger are duly filed
with the Registrar of Companies Bermuda (or at such later time as is specified
in the certificate of merger) with respect to the Merger as restructured in the
manner contemplated by this Section 1.10 and except as provided below, Sections
1.8 and 2.5 shall no longer be of any force or effect and the provisions of this
Section 1.10 shall govern the terms of the Merger. In the event that the
Alternative Merger Notice is given or deemed to be given, references to the term
Merger shall be deemed to be a reference to the Alternative Merger.
(b) THE ALTERNATIVE MERGER. In the event an Alternative Merger Notice
is given or deemed to have been given, New Global corporation, a Delaware
corporation ("NEW GLOBAL"), will promptly be formed by and owned equally by
Global and Frontier. Global and Frontier will cause New Global to become a
party to this Agreement. Prior to the Effective Time of the Alternative Merger,
Global and Frontier will cause New Global to incorporate two wholly owned
subsidiaries ("GLOBAL MERGER SUB", a Bermuda company and "FRONTIER MERGER SUB",
a New York corporation). At the Effective Time of the Alternative Merger, (i)
Global Merger Sub shall be amalgamated with and into Global in accordance with
the Companies Act of 1981 of Bermuda whereupon the separate existence of Global
Merger Sub shall cease, and Global shall continue in the form of the amalgamated
company, and (ii) Frontier Merger Sub shall be merged with and into Frontier in
accordance with New York Law, whereupon the separate existence of Frontier
Merger Sub shall cease, and Frontier shall be the surviving corporation.
Frontier and Global are sometimes referred to herein as the "SURVIVING
CORPORATIONS".
(c) EFFECT OF ALTERNATIVE MERGER ON CAPITAL STOCK.
(i) At the Effective Time of the Alternative Merger, (A) each
share of Frontier Common Stock outstanding immediately prior to such Effective
Time shall, except as otherwise provided below, be converted into the right to
receive that number of shares of New Global Common Stock, par value $.01 per
share (the "NEW GLOBAL COMMON STOCK"), equal to the Exchange Ratio (as defined
in section 1.8(a)) and (B) each share of Global Common Stock outstanding
immediately prior to such Effective Time shall be converted into the right to
receive 1.0 share of New Global Common Stock. For purposes of the immediately
preceding sentence, any cash transferred to the Frontier shareholders pursuant
to the Cash Top-Up Election or the Combination Election shall be paid by New
Global.
(ii) As a result of the Alternative Merger and without any action
on the part of the holders thereof, at the Effective Time, all shares of
Frontier Common Stock and Global Common Stock shall cease to be outstanding and
shall be canceled and retired and shall cease to exist, and each holder of a
certificate which
immediately prior to the Effective Time represented any such shares of Frontier
Common Stock or Global Common Stock (a "CERTIFICATE") (other than New Global,
Global Merger Sub, Frontier Merger Sub, Global and Frontier) shall thereafter
cease to have any rights with respect to such shares of Frontier Common Stock or
Global Common Stock, except the right to receive the applicable Merger Consider
ation upon the surrender of such certificate.
(iii) Each share of Frontier Common Stock issued and owned or
held directly or indirectly by Global or directly by Frontier at the Effective
Time and each Share of Global Common Stock issued and owned or held directly or
indirectly by Frontier or directly by Global at the Effective Time shall, by
virtue of the Alternative Merger, cease to be outstanding and shall be canceled
and retired and no stock of New Global or other consideration shall be delivered
in exchange therefor.
(iv) Each share of common stock of Global Merger Sub or Frontier
Merger Sub issued and outstanding immediately prior to the Effective Time shall
forthwith cease to exist and shall be converted into one validly issued, fully
paid and non-assessable share of common stock of the respective surviving
corporation as of the Effective Time.
(d) MERGER CONSIDERATION. The New Global Common Stock to be received
as consideration in the Alternative Merger by holders of Global Common Stock or
Frontier Common Stock is referred to herein as the "MERGER CONSIDERATION".
(e) ASSUMPTION OF STOCK OPTIONS AND WARRANTS. New Global shall assume
the Frontier Stock Options and Frontier Warrants (as defined in Section 3.1(b))
and the Global Stock Options and Global Warrants (as defined in Section 3.2(b))
on the terms set forth in Exhibits 5.6(i) and (ii) hereto respectively.
Frontier and Global agree that each of the company's other stock plans and
treatment of each of the company's officers and employees shall be as set forth
in the respective exhibits. Frontier and Global shall take all such steps as
may be required to cause the transactions contemplated by this Section 1.10(e)
and any other dispositions of Frontier and Global equity securities (including
derivative securities) or acquisitions of New Global equity securities
(including derivative securities) in connection with this Agreement by each
individual who (x) is a director or officer of Frontier or Global or (y) at the
Effective Time, will become a director or officer of New Global, to be exempt
under Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as
amended, such steps to be taken in accordance with the
No-Action Letter dated January 12, 1999, issued by the SEC to Skadden, Arps,
Slate, Meagher & Flom LLP.
(f) EMPLOYEE BENEFITS.
(i) OBLIGATIONS OF NEW GLOBAL; COMPARA BILITY OF BENEFITS. Each
Frontier and Global Benefit Plan as to which Frontier or Global or any of their
respective Subsidiaries has any obligation with respect to any current or former
employee (the "FRONTIER EMPLOYEES" and the "GLOBAL EMPLOYEES" together the
"EMPLOYEES") shall, as of the Effective Time, be the obligations of New Global
and the respective Surviving Corporations. At the Effective Time and for at
least two years thereafter, New Global shall, or shall cause the respective
Surviving Corporations to, provide benefits, in the aggregate, that are no less
favorable than the benefits provided, in the aggregate, under Fron tier's and
Global's respective Benefit Plans (the "PLANS") to the Employees immediately
prior to the Effective Time. Notwithstanding the foregoing, nothing herein
shall require (A) the continuation of any particular Plan or prevent the
amendment or termination thereof (subject to the maintenance, in the aggregate,
of the benefits as provided in the preceding sentence) or (B) New Global or the
respective Surviving Corporations to continue or maintain any stock purchase or
other equity plan related to the equity of Frontier or Global or the respective
Surviving Corporations.
(ii) PRE-EXISTING LIMITATIONS; DEDUCTIBLE; SERVICE CREDIT. With
respect to any New Global Benefit Plans in which the Employees participate
effective as of the Closing Date or thereafter, New Global shall, or shall cause
each of the Surviving Corporations to: (A) not impose any limitations more
onerous than those currently in effect as to pre-existing conditions, exclusions
and waiting periods with respect to participation and coverage requirements
applicable to the Employees under any welfare New Global Benefit Plan in which
such Employees may be eligible to participate after the Effective Time, (B)
provide each Employee with credit for any co-payments and deductibles paid prior
to the Effective Time in satisfying any applicable deductible or out-of-pocket
requirements under any welfare New Global Benefit Plan in which such employees
may be eligible to participate after the Effective Time, and (C) recognize all
service of the Employees with Frontier and Global respectively for all purposes
(including, without limitation, purposes of eligibility to participate, vesting
credit, entitlement for benefits, and benefit accrual) in any New Global Benefit
Plan in which such employ ees may be eligible to participate after the
Effective Time, to the same extent taken into account under a comparable
Frontier or Global Plan immediately prior to the Closing Date.
(g) NO FRACTIONAL SHARES OF NEW GLOBAL COMMON STOCK.
(i) No certificates or scrip for shares of New Global Common
Stock representing fractional shares of New Global Common Stock shall be issued
upon the surrender for exchange of Certificates and such fractional share
interests will not entitle the owner thereof to vote or to have any rights of a
share holder of New Global or a holder of shares of New Global Common Stock.
(ii) Notwithstanding any other provision of this Agreement, each
holder of shares of Frontier Common Stock exchanged pursuant to the Alternative
Merger who would otherwise have been entitled to receive a fraction of a share
of New Global Common Stock (after taking into account all Certificates delivered
by such holder) shall receive, in lieu thereof, cash (without interest) in an
amount equal to the product of (A) such fractional part of a share of New Global
Common Stock multiplied by (B) the last sales price per share of Global Common
Stock reported on NASDAQ as reported in THE WALL STREET JOURNAL, Eastern
edition, on the Closing Date. As promptly as practicable after the determina
tion of the amount of cash, if any, to be paid to holders of fractional
interests, the Exchange Agent shall notify New Global, and New Global shall
cause the surviving corporation to deposit such amount with the Exchange Agent
and shall cause the Exchange Agent to forward payments to such holders of
fractional interests subject to and in accordance with the terms hereof.
(h) REPRESENTATIONS AND WARRANTIES OF NEW GLOBAL. Immediately prior to
the Effective Time of the Alternative Merger, New Global will become a party to
this Agreement and make the following representa tions and warranties to each
of Global and Frontier:
(i) ORGANIZATION, STANDING AND POWER. At the Effective Time, New
Global will be a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization,
and will have all requisite power and authority to own, lease and operate its
properties and to carry on its business as now being conducted by Frontier and
Global and will be duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification necessary other than in such
jurisdictions where the failure so to qualify or to be in good standing would
not, either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on New Global.
(ii) AUTHORITY; NO CONFLICTS
(A) At the Effective Time, New Global will have all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby, subject, in the case of the
issuance of the shares of New Global Common Stock to be issued in the Merger
(the "NEW GLOBAL SHARE ISSUANCE") and the New Global certificate of incorpo
ration will provide for authorized shares of New Global Common Stock of not less
than 2 billion shares. The execution and delivery of this Agreement and the
consum mation of the transactions contemplated hereby will be duly authorized by
all necessary corporate action on the part of New Global. This Agreement will be
duly executed and delivered by New Global and will constitute a valid and
binding agreement of New Global, enforceable against it in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws relating to or affecting creditors
generally, by general equity principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law) or by an
implied covenant of good faith and fair dealing.
(B) At the Effective Time, the execution and delivery of
this Agreement by New Global will not, and the consummation by New Global of the
Alternative Merger and the other transactions contemplated hereby will not,
conflict with, or result in a Violation (as defined in Section 3.1(c)(ii))
pursuant to: (x) any provision of the certificate of incorporation or by-laws of
New Global or any charter document of any Subsidiary of New Global, or (y)
except as would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on New Global, subject to obtaining or making the
consents, approvals, orders, authorizations, registrations, declarations and
filings referred to in paragraph (C) below, any loan or credit agreement, note,
mortgage, bond, indenture, lease, benefit plan or other agreement, obligation,
instrument, permit, concession, fran chise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to New Global or any
Subsidiary of New Global or their respective properties or assets.
(C) At the Effective Time, no consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmen
tal Entity will be required by or with respect to New Global or any Subsidiary
of New Global in connection with the execution and delivery of this Agreement by
New Global or the consummation of the Alternative Merger and the other
transactions contemplated hereby, except for the Required Consents, and such
consents, approvals, orders, authorizations, registrations, declarations and
filings the failure of which to make or obtain would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on New
Global.
(iii) BOARD APPROVAL. At the Effective Time, the
Board of Directors of New Global, by resolutions duly adopted at a meeting duly
called and held and not subsequently rescinded or modified in any way, will duly
(A) determine that this Agreement and the Alternative Merger are in the best
interests of New Global and its shareholders, and (B) approve this Agreement,
the Alternative Merger and the issuance of shares of New Global Common Stock,
and (C) recommend that the shareholders of New Global approve this Agreement
and the issuance of shares of New Global Common Stock in the Alternative Merger.
(iv) SHAREHOLDER VOTE. Global and Frontier as the holders of
all of the outstanding shares of New Global Common Stock shall vote to approve
this Agreement and the issuance of shares of New Global Common Stock in the
Alternative Merger.
(i) COVENANTS OF GLOBAL AND FRONTIER. Prior to the Effective Time of
the Alternative Merger, Global and Frontier shall ensure that New Global, Global
Merger Sub and Frontier Merger Sub take no actions and undertake no operations
except as may be necessary in connection with the consummation of the Merger and
the transactions contemplated hereby.
(j) MODIFICATIONS TO AGREEMENT.
(i) At the time of the Alternative Merger Notice Date, and
without any further action on the part of either Frontier or Global, a new
Section 6.2(e) and 6.3(d) to this Agreement will be added as follows:
"New Global shall have performed in all material respects all of
its obligations hereunder required to be performed by it at or prior to the
Effective Time, and the representations and warranties of New Global shall be
accurate in all material respects at and as of the Effective Time."
and a new Section 6.1(h) will be added as follows:
"The shares of New Global Common Stock to be issued in the
Alternative Merger and such other shares to be reserved for issuance in the
Alterna tive Merger shall have been approved upon official notice of issuance
for quotation on NASDAQ."
(ii) Global and Frontier agree that in the event of the
Alternative Merger Notice, any and all other appropriate adjustments shall be
made to the other terms and conditions of this Agreement to reflect the
transactions
contemplated by this Section 1.10.
(iii) For the purposes of implementing the Alternative Merger,
Global and Global Merger Sub shall enter into an Amalgamation Agreement (the
"AMALGAMATION AGREEMENT") in accordance with the laws of Bermuda for
presentation to and approval of the shareholders of Global and Global Merger
Sub.
(k) LISTING OF SHARES OF NEW GLOBAL COMMON STOCK. New Global shall
use its best efforts to cause the shares of New Global Common Stock to be issued
in the Alternative Merger, and the shares of New Global Common Stock to be
reserved for issuance upon exercise of the Frontier Stock Options, the Frontier
Warrants, the Frontier Convertible Debt (as defined in Section 3.1(b)), and the
Global Stock Options and Warrants, to be approved for quotation, upon official
notice of issuance, on NASDAQ.
ARTICLE II
EXCHANGE OF CERTIFICATES
2.1 EXCHANGE FUND. Prior to the Effective Time, Global shall appoint
First Chicago Trust Company of New York or another commercial bank or trust
company having net capital of not less than $100,000,000, or a subsidiary
thereof, to act as exchange agent hereunder for the purpose of exchanging
Certificates for the Merger Consideration (the "EXCHANGE AGENT"). At or prior
to the Effective Time, Global shall deposit with the Exchange Agent, in trust
for the benefit of holders of shares of Frontier Common Stock, certificates
representing the Global Common Stock issuable pursuant to Section 1.8 in
exchange for outstanding shares of Frontier Common stock and, if applicable,
cash to be paid as a result of the Cash Top-Up pursuant to Section 7.1(g).
Global agrees to make available to the Exchange Agent from time to time as
needed, cash sufficient to pay cash in lieu of fractional shares pursuant to
Section 2.5, and any dividends and other distributions pursuant to Section 2.3.
Any cash and certificates of Global Common Stock deposited with the Exchange
Agent shall hereinafter be referred to as the "EXCHANGE FUND."
2.2 EXCHANGE PROCEDURES. As soon as reasonably practicable after the
Effective Time, the Surviving Corporation shall cause the Exchange Agent to mail
to each holder of a Certificate (i) a letter of transmittal which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Exchange Agent, and
which letter shall be in customary form and have such other provisions as Global
may reasonably specify and (ii) instructions for effecting the surrender of such
Certificates in exchange for the applicable Merger Consideration. Upon surrender
of a Certificate to the Exchange Agent together with such letter of transmittal,
duly executed and completed in accordance with the instructions thereto, and
such other documents as may reasonably be required by the Exchange Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor (A)
one or more certifi cates for Global Common Stock representing, in the
aggregate, the whole number of shares that such holder has the right to receive
pursuant to Section 1.8 (after taking into account all shares of Frontier Common
Stock then held by such holder) and (B) a check in the amount equal to the cash
that such holder has the right to receive pursuant to the provisions of this
Article II, including cash in lieu of any fractional shares of Global Common
Stock pursuant to Section 2.5, any dividends and other distributions pursuant to
Section 2.3 and any cash to be paid as a result of a Cash Top-Up pursuant to
Section 7.1(g). No interest will be paid or will accrue on any cash payable
pursuant to Section 2.3, Section 2.5 or as a result of a Cash Top-Up pursuant to
Section 7.1(g). In the event of a transfer of ownership of Frontier Common
Stock which is not registered in the transfer records of Frontier, certificates
for one or more shares of Global Common Stock evidencing, in the aggregate, the
proper number of shares of Global Common Stock and a check in the proper amount
of cash in lieu of any fractional shares of Global Common Stock pursuant to
Section 2.5, any dividends or other distributions to which such holder is
entitled pursuant to Section 2.3, and as a result of a Cash Top-Up pursuant to
Section 7.1(g) may be issued with respect to such Frontier Common Stock to such
a transferee if the Certificate representing such shares of Frontier Common
Stock is presented to the Exchange Agent, accompanied by all documents required
to evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid.
2.3 DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends
or other distributions declared or made with respect to shares of Global Common
Stock with a record date after the Effective Time (if any) shall be paid to the
holder of an unsurrendered Certificate with respect to the shares of Global
Common Stock that such holder would be entitled to receive upon surrender of
such Certificate, no cash payment in lieu of fractional shares of Global Common
Stock shall be paid to any such holder pursuant to Section 2.5 and no cash
payment as a result of a Cash Top-Up pursuant to Section 7.1(g) shall be paid to
any such holder, until such holder shall surrender such Certificate in
accordance with Section 2.2. Subject to the effect of applicable laws,
following surrender of any such Certificate, there shall be paid to such holder
of shares of Global Common Stock issuable in exchange therefor, without
interest, (a) promptly after the time of such surrender, the amount of any cash
payable in lieu of fractional shares of Global Common Stock to which such holder
is entitled pursuant to Section 2.5, the amount
of any dividends or other distributions with a record date after the Effective
Time theretofore paid with respect to such whole shares of Global Common Stock
and any cash payment as a result of a Cash Top-Up pursuant to Section 7.1(g),
and (b) at the appropriate payment date, the amount of any dividends or other
distributions with a record date after the Effective Time but prior to such
surrender and a payment date subsequent to such surrender payable with respect
to such shares of Global Common Stock.
2.4 NO FURTHER OWNERSHIP RIGHTS IN FRONTIER COMMON STOCK. All shares
of Global Common Stock issued and cash paid upon conversion of shares of
Frontier Common Stock in accordance with the terms of Article I and this Article
II (including any cash paid pursuant to Section 2.3, 2.5 or as a result of a
Cash Top-Up pursuant to Section 7.1(g)) shall be deemed to have been issued or
paid in full satisfaction of all rights pertaining to the shares of Frontier
Common Stock.
2.5 NO FRACTIONAL SHARES OF GLOBAL COMMON STOCK.
(a) No certificates or scrip for shares of Global Common Stock
representing fractional shares of Global Common Stock shall be issued upon the
surrender for exchange of Certificates and such fractional share interests will
not entitle the owner thereof to vote or to have any rights of a shareholder of
Global or a holder of shares of Global Common Stock.
(b) Notwithstanding any other provision of this Agreement, each holder
of shares of Frontier Common Stock exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a share of Global Common
Stock (after taking into account all Certificates delivered by such holder)
shall receive, in lieu thereof, cash (without interest) in an amount equal to
the product of (i) such fractional part of a share of Global Common Stock
multiplied by (ii) the last sales price per share of Global Common Stock
reported on NASDAQ as reported in THE WALL STREET JOURNAL, Eastern edition, on
the Closing Date. As promptly as practicable after the determination of the
amount of cash, if any, to be paid to holders of fractional interests, the
Exchange Agent shall notify Global, and Global shall cause the Surviving
Corporation to deposit such amount with the Exchange Agent and shall cause the
Exchange Agent to forward payments to such holders of fractional interests
subject to and in accordance with the terms hereof.
2.6 TERMINATION OF EXCHANGE FUND. Any portion of
the Exchange Fund which remains undistributed to the holders of Certificates for
twelve months after the Effective Time shall be delivered to the Surviving
Corpora tion or otherwise on the instruction of the Surviving Corporation, and
any holders of the Certificates who have not theretofore complied with this
Article II shall thereafter look only to the Surviving Corporation and Global
for the Merger Consideration with respect to the shares of Frontier Common Stock
formerly represented thereby to which such holders are entitled pursuant to
Section 1.8 and Section 2.2, any cash in lieu of fractional shares of Global
Common Stock to which such holders are entitled pursuant to Section 2.5, any
dividends or distributions with respect to shares of Global Common Stock to
which such holders are entitled pursuant to Section 2.3 and any cash payment as
a result of a Cash Top-Up pursuant to Section 7.1(g).
2.7 NO LIABILITY. None of Global, Merger Sub, Frontier, the
Surviving Corporation or the Exchange Agent shall be liable to any Person in
respect of any Merger Consideration from the Exchange Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
2.8 INVESTMENT OF THE EXCHANGE FUND. Except as provided below, the
Exchange Agent shall invest any cash included in the Exchange Fund as directed
by the Surviving Corporation on a daily basis. If Global exercises the Cash
Top-Up Election pursuant to Section 7.1(g), then the Exchange Agent shall invest
the cash included in the Exchange Fund only in one or more of the following
investments as directed by the Surviving Corporation from time to time in (a)
obligations of the United States government maturing not more than 180 days
after the date of purchase; (b) certificates of deposit maturing not more than
180 days after the date of purchase issued by a bank organized under the laws of
the United States or any state thereof having combined capital and surplus of at
least $500,000,000; (c) a money market fund having assets of at least
$3,000,000,000; or (d) tax-exempt or corporate debt obligations maturing not
more than 180 days after the date of pur chase given the highest investment
grade rating by Standard & Poor's and Moody's Investor Service. Any interest
and other income resulting from such investments shall promptly be paid to the
Surviving Corporation.
2.9 LOST CERTIFICATES. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such Person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent will deliver in exchange for such lost, stolen or destroyed
Certificate the applicable Merger Consideration with respect to the shares of
Frontier Common Stock formerly represented thereby, any cash in lieu of
fractional shares of Global Common Stock, and unpaid dividends and distributions
on shares of Global Common Stock
deliverable in respect thereof, pursuant to this Agreement.
2.10 WITHHOLDING RIGHTS. Each of the Surviving Corpora tion and
Global shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of shares of Frontier Common
Stock such amounts as it is required to deduct and withhold with respect to the
making of such payment under the Code and the rules and regulations promul
gated thereunder, or any provision of state, local or foreign tax law. To the
extent that amounts are so withheld by the Surviving Corporation or Global, as
the case may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of Frontier Common
Stock in respect of which such deduction and withholding was made by the
Surviving Corporation or Global, as the case may be.
2.11 FURTHER ASSURANCES. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of Frontier or Merger Sub, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of Frontier or Merger Sub, any other actions and things to vest,
perfect or confirm of record or otherwise in the Surviving Corporation any and
all right, title and interest in, to and under any of the rights, properties or
assets acquired or to be acquired by the Surviving Corporation as a result of,
or in connection with, the Merger.
2.12 STOCK TRANSFER BOOKS. At the close of business, New York City
time, on the day the Effective Time occurs, the stock transfer books of Frontier
shall be closed and there shall be no further registration of transfers of
shares of Frontier Common Stock thereafter on the records of Frontier. From and
after the Effective Time, the holders of Certificates shall cease to have any
rights with respect to such shares of Frontier Common Stock formerly represented
thereby, except as otherwise provided herein or by law. On or after the
Effective Time, any Certificates presented to the Exchange Agent, the Surviving
Corporation or Global for any reason shall be converted into the Merger
Consideration with respect to the shares of Frontier Common Stock formerly
represented thereby, any cash in lieu of fractional shares of Global Common
Stock to which the holders thereof are entitled pursuant to Section 2.5, any
dividends or other distributions to which the holders thereof are entitled
pursuant to Section 2.3 and any cash payment as a result of a Cash Top-Up
pursuant to Section 7.1(g).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF FRON TIER. Except as set forth
in the Frontier Disclosure Schedule delivered by Frontier to Global prior to the
execution of this Agreement (the "FRONTIER DISCLOSURE SCHEDULE"), Frontier
represents and warrants to Global as follows:
(a) ORGANIZATION, STANDING AND POWER. Each of Frontier and each of
its Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organiza tion,
has all requisite power and authority to own, lease and operate its properties
and to carry on its business as now being conducted and is duly qualified and in
good standing to do business in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
necessary other than in such jurisdictions where the failure so to qualify or to
be in good standing would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect (as defined in Section 8.11) on
Frontier. The copies of the restated certificate of incorporation and by-laws
of Frontier which were previously furnished to Global are true, complete and
correct copies of such documents as in effect on the date of this Agreement.
(b) CAPITAL STRUCTURE.
(i) As of March 12, 1999, the authorized capital stock of
Frontier consisted of (A) 300,000,000 shares of Frontier Common Stock, of which
172,321,329 shares were outstanding, (B) 850,000 shares of Cumulative Preferred
Stock, par value $100 per share, of which 53,067 shares of Cumulative Preferred
Stock, 5% Series, 38,492 shares of Cumulative Preferred Stock, Second 5% Series,
48,044 shares of Cumulative Preferred Stock, 5.65% Series, 41,514 shares of
Cumulative Preferred Stock, 4.60% Series (collectively, the "FRONTIER PRE FERRED
STOCK") and no shares of Convertible Preferred Stock, 5% Series were
outstanding, (C) 4,000,000 shares of Class A Preferred Stock, par value $100 per
share, of which no shares were outstanding, and (D) 3,000,000 shares of Junior
Participating Class A Preferred Stock which were reserved for issuance upon
exercise of the rights (the "RIGHTS") distributed to the holders of Frontier
Common Stock pursuant to the Rights Agreement, dated as of April 9, 1995,
between Frontier and First National Bank of Boston, as Rights Agent, as amended
(the "RIGHTS AGREEMENT"). Since March 12, 1999 to the date of this Agreement,
there have
been no issuances of shares of the capital stock of Frontier or any
other securities of Frontier other than issuances of shares (and accompanying
Rights) pursuant to options or rights outstanding as of March 12, 1999 under the
Frontier Benefit Plans (as defined in Section 3.1(o)). All issued and
outstanding shares of the capital stock of Frontier are duly authorized, validly
issued, fully paid and non-assessable, and no class of capital stock is entitled
to preemptive rights. There were outstanding as of March 12, 1999 no options,
warrants or other rights to acquire capital stock from Frontier other than (w)
the Rights, (x) options representing in the aggregate the right to purchase
14,902,015 shares of Frontier Common Stock (collectively, the "FRONTIER STOCK
OPTIONS") under the Directors' Stock Incentive Plan, the Employees' Stock Option
Plan, the Management Stock Incentive Plan, the ALC Communications Corporation
1994 Non-Employee Director Stock Option Plan, the ALC Communications
Corporation 1990 Stock Option Plan, the ALC Communications Corporation 1986
Stock Option Plan, the GlobalCenter, Inc. 1997 Stock Plan Stock Option Agreement
and the (GlobalCenter) Primenet Services for the Internet, Inc. 1995 Stock
Option Plan (collectively, the "FRONTIER STOCK OPTION PLANS"), (y) warrants to
purchase up to 27,699 shares of Frontier Common Stock (the "FRONTIER
WARRANTS"), and (z) 10.46% convertible debenture due October 27, 2008 with the
Walters Trust (Canandaigua National Bank) which are Convertible into Frontier
Common Stock at $10.5375 per share (the "FRONTIER CONVERTIBLE DEBT"). As of
March 12, 1999, Frontier had further reserved 17,857,123 shares of Frontier
Common Stock for purchase pursuant to the Frontier Stock Option Plans,
Convertible Debentures and the Frontier Warrants. Other than pursuant to the
Stock Option Agreement, the associated Rights issued with the shares issued as
described above, no options or warrants or other rights to acquire capital stock
from Frontier have been issued or granted since March 12, 1999 to the date of
this Agreement.
(ii) As of the date of this Agreement, no bonds, debentures,
notes or other indebtedness of Frontier having the right to vote on any matters
on which shareholders may vote ("FRONTIER VOTING DEBT") are issued or
outstanding.
(iii) Except as otherwise set forth in this Section 3.1(b) and
the Stock Option Agreement and as contemplated by Section 5.6, as of the date of
this Agreement, there are no securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which
Frontier or any of its Subsidiaries is a party or by which any of them is bound
obligating Frontier or any of its Subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or
other voting securities of Frontier or any of its Subsidiaries or obligating
Frontier or any of its Subsidiaries to issue, grant, extend or enter into any
such security, option, warrant, call, right, commitment, agreement, arrangement
or undertaking. As of the date of this Agreement, and except as contemplated by
Section 5.9, there are no outstanding obligations of Frontier or any
of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock of Frontier or any of its Subsidiaries.
(c) AUTHORITY; NO CONFLICTS.
(i) Frontier has all requisite corporate power and authority to
enter into this Agreement and the Stock Option Agreement and to consummate the
transactions contemplated hereby and thereby, subject in the case of the
consummation of the Merger to the adoption of this Agreement by the Required
Frontier Vote (as defined in Section 3.1(g)). The execution and delivery of this
Agreement and the Stock Option Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Frontier, subject in the case of the
consummation of the Merger to the adoption of this Agreement by the Required
Frontier Vote. This Agreement and the Stock Option Agreement have been duly
executed and delivered by Frontier and each constitutes a valid and binding
agreement of Frontier, enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws relating to or affecting creditors
generally, by general equity principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law) or by an
implied covenant of good faith and fair dealing.
(ii) The execution and delivery of this Agreement and the Stock
Option Agreement by Frontier does not and the consummation of the Merger by
Frontier and the other transactions contemplated hereby or thereby will not,
conflict with, or result in any violation of, or constitute a default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, amend ment, cancellation or acceleration of any obligation or the
loss of a material benefit under, or the creation of a lien, pledge, security
interest, charge or other encumbrance on any assets (any such conflict,
violation, default, right of termination, amendment, cancellation or
acceleration, loss or creation, a "VIOLATION") pursuant to: (A) any provision of
the certificate of incorporation or by-laws of Frontier or any Subsidiary of
Frontier, or (B) except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Frontier, subject to
obtaining or making the consents, approvals, orders, authorizations,
registrations, declarations and filings referred to in paragraph (iii) below,
any loan or credit agreement, note, mortgage, bond, indenture, lease, benefit
plan or other agreement, Material Network Contract (as defined in Section 8.11),
obligation, instrument, permit, concession, franchise, license, judgment, order,
decree, statute, law,
ordinance, rule or regulation applicable to Frontier or any Subsidiary of
Frontier or their respective properties or assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any supranational, national, state,
municipal or local government, any instrumentality, subdivision, court,
administrative agency or commission or other authority thereof, or any quasi-
governmental or private body exercising any regulatory, taxing, importing or
other governmental or quasi-governmental authority (a "GOVERNMENTAL ENTITY"), is
required by or with respect to Frontier or any Subsidiary of Frontier in
connection with the execu tion and delivery of this Agreement and the Stock
Option Agreement by Frontier or the consummation of the Merger and the other
transactions contemplated hereby or thereby, except for those required under or
in relation to (A) the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR ACT"), (B) the Communications Act of 1934, as amended (the
"COMMUNICATIONS ACT"), and any rules and regulations promulgated by the Federal
Communications Commission ("FCC"), (C) state securities or "blue sky" laws (the
"BLUE SKY LAWS"), (D) the Securities Act of 1933, as amended (the "SECURITIES
ACT"), (E) the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"),
(F) the NYBCL with respect to the filing of the New York Certificate of Merger,
(G) laws, rules, regula tions, practices and orders of any state or state
public service commissions ("PUCS"), local franchising authorities, foreign
telecommunications regulatory agencies or similar state or foreign regulatory
bodies, (H) rules and regulations of NASDAQ and the New York Stock Exchange,
Inc. (the "NYSE"), (I) antitrust or other competition laws of other
jurisdictions, and (J) such consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of which to make or obtain
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Frontier. Consents, approvals, orders,
authorizations, registrations, declarations and filings required under or in
relation to any of the foregoing clauses (A) through (I) are hereinafter
referred to as "REQUIRED CONSENTS."
(d) REPORTS AND FINANCIAL STATEMENTS.
(i) Frontier and Frontier Telephone of Rochester, Inc., a New York
corporation ("FRONTIER SUB"), have filed all required reports, schedules,
forms, statements and other documents required to be filed by it with the
Securities and Exchange Commission (the "SEC") since January 1, 1998 including
Frontier's Current Report on Form 8-K, dated January 26, 1999, containing
Frontier's audited financial statements for the year ended December 31, 1998 and
its proxy statement with respect to the proposed 1999 annual meeting of
shareholders of Frontier (collectively, including all exhibits thereto, the
"FRONTIER SEC REPORTS"). Other than Frontier Sub, no Subsidiary of Frontier
is required to file any form, report or other document with the SEC. None of
the Frontier SEC
Reports, as of their respective dates (and, if amended or superseded by a filing
prior to the date of this Agreement, then on the date of such filing), contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. Each of
the financial statements (including the related notes) included in the Frontier
SEC Reports presents fairly, in all material respects, the consolidated
financial position and consolidated results of operations and cash flows of
Frontier and its Subsidiaries as of the respective dates or for the respective
periods set forth therein, all in conformity with United States generally
accepted accounting principles ("GAAP") consistently applied during the periods
involved except as otherwise noted therein, and subject, in the case of the
unaudited interim financial statements, to normal and recurring year-end
adjustments that have not been and are not expected to be material in amount.
All of such Frontier SEC Reports, as of their respective dates, complied as to
form in all material respects with the applicable requirements of the Securities
Act and the Exchange Act and the rules and regulations promulgated thereunder.
(ii) From December 31, 1998 until the date of this Agreement,
Frontier and its Subsidiaries have not incurred any liabilities that are of a
nature that would be required to be disclosed on a balance sheet of Frontier and
its Subsidiaries or the footnotes thereto prepared in conformity with GAAP,
other than (A) liabilities incurred in the ordinary course of business or (B)
liabilities that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Frontier.
(e) INFORMATION SUPPLIED.
(i) None of the information supplied or to be supplied by
Frontier for inclusion or incorporation by reference in (A) the registration
statement on Form S-4 (as defined in Section 5.1) to be filed with the SEC by
Global in connection with the issuance of the Global Common Stock in the Merger
will, at the time it becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
and (B) the Joint Proxy Statement/Prospectus (as defined in Section 5.1)
included in the Form S-4 relating to the Frontier Shareholders Meeting and the
Global Shareholders Meeting (each, as defined in Section 5.1) and the Global
Common Stock to be issued in the Merger will, on the date it is first mailed to
Frontier shareholders or Global shareholders or at the time of the Frontier
Shareholders Meeting or the Global Shareholders Meeting, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(ii) Notwithstanding the foregoing provisions of this Section
3.1(e), no representation or warranty is made by Frontier with respect to
statements made or incorporated by reference in the Form S-4 or the Joint Proxy
Statement/Prospectus based on information supplied by Global for inclusion or
incorporation by reference therein.
(f) BOARD APPROVAL. The Board of Directors of Frontier, by
resolutions duly adopted at a meeting duly called and held and not subsequently
rescinded or modified in any way (the "FRONTIER BOARD APPROVAL"), has duly (i)
determined that this Agreement, the Stock Option Agreement, the Merger and the
Alternative Merger are in the best interests of Frontier and its shareholders,
(ii) adopted this Agreement and approved the Stock Option Agreement, the Merger
and the Alternative Merger and (iii) recommended that the shareholders of
Frontier adopt this Agreement and approve the Merger or, if applicable, the
Alternative Merger. The Frontier Board Approval constitutes approval of this
Agreement, the Stock Option Agreement, the Merger and the Alternative Merger for
purposes of Section 912 of the NYBCL (assuming that Global is not an "interested
shareholder" under Section 912 of the NYBCL immediately before the execution and
delivery of this Agreement and the Stock Option Agreement and does not take any
other actions to become an "interested shareholder" thereunder).
(g) VOTE REQUIRED. The affirmative vote of the holders of two-thirds
of the outstanding shares of Frontier Common Stock (the "REQUIRED FRONTIER
VOTE") is the only vote of the holders of any class or series of Frontier
capital stock necessary to adopt this Agreement and approve the transactions
contemplated hereby (assuming that Global is not an "interested shareholder"
under Section 912 of the NYBCL immediately before the execution and delivery of
this Agreement and the Stock Option Agreement and does not take any other
actions to become an "interested shareholder" thereunder); provided that the
redemption notice described in Frontier's restated certificate of incorporation
is given and all funds necessary for such redemption are set aside prior to the
Frontier Shareholders Meeting. No vote of the shareholders of Frontier is
required to approve the Stock Option Agreement.
(h) RIGHTS AGREEMENT. The Board of Directors of Frontier has approved
an amendment to the Rights Agreement to the effect that none of Global or its
affiliates or associates shall become an "Acquiring Person" (as defined in the
Rights Agreement) by reason of the execution of this Agreement or the Stock
Option Agreement, the exercise of the option granted thereby or the consummation
of the Merger or the Alternative Merger.
(i) BROKERS OR FINDERS. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any broker's
or finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement, except Morgan Stanley & Co.
Incorporated (the "FRONTIER FINANCIAL ADVISOR"), whose fees and expenses will
be paid by Frontier in accordance with Frontier's agreement with such firm,
based upon arrangements made by or on behalf of Frontier and previously
disclosed to Global.
(j) OPINION OF FRONTIER FINANCIAL ADVISOR. Frontier has received the
opinion of the Frontier Financial Advisor, dated the date of this Agreement, to
the effect that, as of such date, the Exchange Ratio is fair, from a financial
point of view, to the holders of Frontier Common Stock, a copy of which opinion
has been made available to Global.
(k) AFFILIATE LETTER AND AGREEMENTS. On or prior to the date of the
Frontier Shareholders Meeting, Frontier will deliver to Global a letter (the
"FRONTIER AFFILIATE LETTER") identifying all persons who may, at the time this
Agreement is submitted for adoption by the shareholders of Frontier, be deemed
to be "affiliates" of Frontier for purposes of Rule 145 under the Securities Act
("RULE 145"). On or prior to the Closing Date, Frontier will use all reasonable
efforts to cause each person identified as an "affiliate" in the Frontier
Affiliate Letter to deliver a written agreement (an "AFFILIATE AGREEMENT") in
substantially the form of Exhibit 3.1(k) attached hereto in connection with
restrictions on affiliates under Rule 145.
(l) LITIGATION. Except as disclosed in the Frontier SEC Reports and
except for claims, actions, suits, proceedings or investigations which would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Frontier, there are no claims, actions, suits,
proceedings or investigations pending or, to Frontier's knowledge, threatened
against Frontier or any of its Subsidiaries, or any properties or rights of
Frontier or any of its Subsidiaries, before any Governmental Entity.
(m) NO VIOLATION OF LAW. The business of Frontier and its
Subsidiaries is not being conducted in violation of any statute, law, ordinance,
regulation, judgment, order or decree of any Governmental Entity (including any
stock exchange or other self-regulatory body), or in violation of any permits,
franchises, licenses, authorizations or consents that are granted by any
Governmental Entity (including any stock exchange or other self-regulatory
body), except for
possible violations which would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Frontier, and except
as disclosed in the Frontier SEC Reports. Except as disclosed in the Frontier
SEC Reports and except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Frontier, no
investigation or review by any Governmental Entity (including any stock exchange
or other self-regulatory body) with respect to Frontier or its Subsidiaries in
relation to any alleged violation of law or regulation is pending or, to
Frontier's knowledge, threatened, nor has any Govern mental Entity (including
any stock exchange or other self-regulatory body) indicated in writing an
intention to conduct the same. Neither Frontier nor any of its Subsid iaries is
subject to any cease and desist or other order, judgment, injunction or decree
issued by, or is a party to any written agreement, consent agreement or
memorandum of understanding with, or is a party to any commitment letter or
similar undertaking to, or is subject to any order or directive by, or has
adopted any board resolutions at the request of, any Governmental Entity that
materially restricts the conduct of its business other than those which would
not, individually or in the aggregate, reason ably be expected to have a
Material Adverse Effect on Frontier, nor has Frontier or any of its Subsidiaries
been advised in writing that any Governmental Entity is considering issuing or
requesting any of the foregoing.
(n) TAXES. All material Federal, state, local, and foreign tax
returns required to be filed by Frontier and its Subsidiaries have been timely
filed. All material taxes shown on such returns as being due or claimed to be
due from Frontier and its Subsidiaries in a written statement have been paid
other than those (i) currently payable without penalty or interest or (ii) being
contested in good faith and by appropriate proceedings timely instituted and
diligently pursued and for which adequate reserves have been established on the
books and records of Frontier and its Subsidiaries, as the case may be, in
accordance with generally accepted accounting principles.
(o) FRONTIER BENEFIT PLANS
(i) Each deferred compensation and each incentive compensation,
equity compensation plan, "welfare" plan, fund or program (within the meaning of
section 3(1) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")); "pension" plan, fund or program (within the meaning of section 3(2)
of ERISA); each employment, consulting, continuation, termination or severance
agreement; and each other employee benefit plan, fund, program, agreement or
arrangement, in each case, that is sponsored, maintained or contributed to or
required to be contributed to by Frontier or by any trade or business, whether
or
not incorporated (an "ERISA AFFILIATE"), that together with Frontier would be
deemed a "single employer" within the meaning of section 4001(b) of ERISA, or to
which Frontier or an ERISA Affiliate is party, whether written or oral, for the
benefit of any employee or former employee of Frontier or any Subsidiary (the
"FRONTIER BENEFIT PLANS") is in compliance with all applicable provisions of
ERISA and the Code, and neither Frontier nor any ERISA Affiliates have any
liabilities or obligations with respect to any such Frontier Benefit Plans,
whether or not accrued, contingent or otherwise, except (x) as described in any
of the Frontier SEC Reports or set forth in Section 3.1(o)(i) of the Frontier
Disclosure Schedule or (y) for in stances of noncompliance or liabilities or
obligations that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Frontier.
(ii) No amount in excess of $150 million, which amount relates
to "parachute payments" (as defined in the Code) to the nineteen executive
officers of Frontier under the change in control agreements to which each such
executive officer is a party or under the Frontier Benefit Plans in which such
executive officers participate, shall fail to be deductible for federal income
tax purposes by virtue of Section 280G of the Code.
3.2 REPRESENTATIONS AND WARRANTIES OF GLOBAL. Except as set forth in
the Global Disclosure Schedule delivered by Global to Frontier prior to the
execution of this Agreement (the "GLOBAL DISCLOSURE SCHED ULE"), Global
represents and warrants to Frontier as follows:
(a) ORGANIZATION, STANDING AND POWER. Each of Global and each of its
Subsidiaries is a company, or a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation or
organization, has all requisite power and authority to own, lease and operate
its properties and to carry on its business as now being conducted and is duly
qualified and in good standing to do business in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties makes such
qualification necessary other than in such jurisdictions where the failure so to
qualify or to be in good standing would not, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Global.
The copies of the memoran dum of association and bye-laws of Global which were
previously furnished to Frontier are true, complete and correct copies of such
documents as in effect on the date of this Agreement.
(b) CAPITAL STRUCTURE.
(i) As of March 12, 1999, the authorized capital stock of Global
consisted of 600,000,000 shares of Global Common Stock of which 411,357,572
shares were outstanding. Since March 12, 1999 to the date of this
Agreement, there have been no issuances of shares of the capital stock of Global
or any other securities of Global other than issuances of shares pursuant to
options or rights outstanding under the Global Benefit Plans (as defined in
Section 3.2(m)). All issued and outstanding shares of the capital stock of
Global are duly authorized, validly issued, fully paid and non-assessable, and
no class of capital stock is entitled to preemptive rights. There were
outstanding as of March 12, 1999 no options, warrants or other rights to acquire
capital stock from Global other than (A) options representing in the aggregate
the right to purchase 32,403,528 shares of Global Common Stock issued to current
or former employees and directors of Global and its Subsidiaries pursuant to
Global's 1998 Stock Incentive Plan (the "GLOBAL STOCK OPTION PLAN") and (B) (i)
12,500,012 warrants expiring August 13, 2003, exercisable at $9.50 per share of
Global Common Stock, and (ii) 5,108,358 warrants expiring August 13, 2008,
exercisable at $9.50 per share of Global Common Stock (collectively, the "GLOBAL
WARRANTS"). No options or warrants or other rights to acquire capital stock from
Global have been issued or granted since March 12, 1999 to the date of this
Agreement.
(ii) As of the date of this Agreement, no bonds, debentures,
notes or other indebtedness of Global having the right to vote on any matters on
which Shareholders may vote ("GLOBAL VOTING DEBT") are issued or outstanding.
(iii) Except as otherwise set forth in this Section 3.2(b), as
of the date of this Agreement, there are no securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any kind
to which Global or any of its Subsidiaries is a party or by which any of them is
bound obligat ing Global or any of its Subsidiaries to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of capital stock or
other voting securities of Global or any of its Subsidiaries or obligating
Global or any of its Subsidiaries to issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment, agreement, arrangement or
undertaking. As of the date of this Agree ment, there are no outstanding
obligations of Global or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock of Global or any of its
Subsidiaries.
(c) AUTHORITY; NO CONFLICTS.
(i) Global has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby, subject, to the approval of the issuance of the shares of Global Common
Stock to be issued in the Merger (the "SHARE ISSUANCE") and to the adoption of
an amendment to the memorandum of association of Global increasing the number of
authorized shares of Global Common Stock to not less than 2 billion shares (the
"GLOBAL CHARTER AMENDMENT") by the Required Global Vote (as defined in Section
3.2(g)) and the filing of the requisite Memorandum of Increase with the
Registrar of Companies of Bermuda and the approval of the Share Issuance (and
the subsequent free transferability of the corresponding shares between
nonresident persons for exchange control purposes) by the Bermuda Monetary
Authority. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Global, subject to the approval by the
shareholders of Global of the Share Issuance and the Global Charter Amendment.
This Agreement has been duly executed and delivered by Global and constitutes a
valid and binding agreement of Global, enforceable against it in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and similar laws relating to or affecting
creditors generally, by general equity principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law) or by an
implied covenant of good faith and fair dealing.
(ii) The execution and delivery of this Agreement by Global does
not or will not, as the case may be, and the consummation by Global of the
Merger and the other transactions contemplated hereby will not, conflict with,
or result in a Violation pursuant to: (A) any provision of the memorandum of
associa tion or bye-laws of Global or any other constitient document of any
Subsidiary of Global, or (B) except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Global,
subject to obtaining or making the consents, approvals, orders, authorizations,
registrations, declarations and filings referred to in paragraph (iii) below,
any loan or credit agreement, note, mortgage, bond, indenture, lease, benefit
plan or other agreement, obligation, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Global or any Subsidiary of Global or their respective properties
or assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required by
or with respect to Global or any Subsidiary of Global in connection with the
execution and delivery of this Agreement by Global or the consummation of the
Merger and the other transactions contemplated hereby, except for the Required
Consents, filing of the requisite Memorandum of Increase with the Registrar of
Companies of Bermuda and the approval of the Share Issuance (and of the
subsequent free transferability of
the corresponding shares between nonresident persons for exchange control
purposes) by the Bermuda Monetary Authority and such consents, approvals,
orders, authorizations, registrations, declarations and filings the failure of
which to make or obtain would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on Global.
(d) REPORTS AND FINANCIAL STATEMENTS.
(i) Global and Global Crossing Holdings Ltd. ("GLOBAL HOLDINGS")
have filed all required reports, schedules, forms, statements and other
documents required to be filed by it with the SEC since January 1, 1998
(collectively, including all exhibits thereto, the "GLOBAL SEC REPORTS"). No
Subsid iary of Global other than Global Holdings is required to file any form,
report or other document with the SEC. None of the Global SEC Reports, as of
their respective dates (and, if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing), contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of the financial
statements (including the related notes) included in the Global SEC Reports
presents fairly, in all material respects, the consolidated financial position
and consolidated results of operations and cash flows of Global and its
Subsidiaries as of the respective dates or for the respective periods set forth
therein, all in conformity with GAAP consistently applied during the periods
involved except as otherwise noted therein, and subject, in the case of the
unaudited interim financial statements, to normal and recurring year-end
adjustments that have not been and are not expected to be material in amount.
All of such Global SEC Reports, as of their respective dates, complied as to
form in all material respects with the applicable requirements of the Securities
Act and the Exchange Act and the rules and regulations promulgated thereunder.
(ii) Global has made available to Frontier drafts of the
consolidated financial statements of Global and its Subsidiaries at and for the
year ended December 31, 1998 of Global (in the respective form thereof as of the
date of this Agreement, collectively, the "GLOBAL DRAFT DISCLOSURES"). To the
knowledge of Global, each of the Global Draft Disclosures, including the
financial statements included therein, is in substantially final form, except
that the Global Draft Disclosures do not disclose any information with respect
to this Agreement, the transactions contemplated hereby or the effect that this
Agreement or such transactions might have on the business, financial condition
or results of operations (actual, pro forma or projected) of Global and its
Subsidiaries (collectively, the "GLOBAL TRANSACTION INFORMATION"). The Global
Draft Disclosures were not prepared for the purpose of providing to Frontier or
any other Person any Global Transaction Information. To the knowledge of Global,
except with respect to Global Transaction Information, (x) the draft financial
statements (including the related
notes) included in the Global Draft Disclosures present fairly, in all material
respects, the consolidated financial position and consolidated results of
operations and cash flows of Global and its Subsidiaries as of the respective
dates or for the respective periods set forth therein, all in conformity with
GAAP consistently applied during the periods involved except as otherwise noted
therein and (y) all of the Global Draft Disclosures comply as to form in all
material respects with the applicable requirements of the Exchange Act and the
rules and regulations promulgated thereunder.
(iii) From December 31, 1998 until the date of this Agreement,
Global and its Subsidiaries have not incurred any liabilities that are of a
nature that would be required to be disclosed on a balance sheet of Global and
its Subsidiar ies or the footnotes thereto prepared in conformity with GAAP,
other than (A) liabilities incurred in the ordinary course of business or (B)
liabilities that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Global.
(e) INFORMATION SUPPLIED.
(i) None of the information supplied or to be supplied by Global
for inclusion or incorporation by reference in (A) the Form S-4 will, at the
time the Form S-4 becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
(B) the Joint Proxy Statement/Prospectus will, on the date it is first mailed to
Frontier sharehold ers or Global shareholders or at the time of the Frontier
Shareholders Meeting or the Global Shareholders Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The Form S-4 and
the Joint Proxy Statement/Prospectus will comply as to form in all material
respects with the requirements of the Exchange Act and the Securities Act and
the rules and regulations of the SEC thereunder.
(ii) Notwithstanding the foregoing provisions of this Section
3.2(e), no representation or warranty is made by Global with respect to
statements made or incorporated by reference in the Form S-4 or the Joint Proxy
Statement/Prospectus based on information supplied by Frontier for inclusion or
incorporation by reference therein.
(f) BOARD APPROVAL. The Board of Directors of Global, by resolutions
duly adopted at a meeting duly called and held and not subsequently rescinded or
modified in any way, has duly (i) determined that this Agreement, the Merger and
the Alternative Merger are in the best interests of Global and its share
holders, (ii) approved this Agreement, the Merger and the Alternative Merger,
(iii) approved the Global Charter Amendment and the Share Issuance and (iv)
recom mended that the shareholders of Global approve the Global Charter
Amendment, the Share Issuance or, if applicable, the Alternative Merger.
(g) VOTE REQUIRED. The affirmative vote of holders of shares of
Global Common Stock representing a simple majority of votes that may be cast by
all holders of shares of Global Common Stock (the "REQUIRED GLOBAL VOTE") is the
only vote of the holders of any class or series of Global capital stock
necessary to approve the Global Charter Amendment, the Share Issuance and, if
applicable, the Alternative Merger. The Principal Shareholders hold, and as of
the record date for the Global Shareholders Meeting will hold, shares of Global
Common Stock which are subject to the Voting Agreement and that, in the
aggregate, constitute at least 51% of the Combined Voting Power.
(h) BROKERS OR FINDERS. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any broker's
or finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Global, except Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Salomon Smith Barney (collectively, the "GLOBAL FINANCIAL
ADVISORS") and Chase Securities Inc., whose fees and expenses will be paid by
Global in accordance with Global's agreement with such firms based upon
arrangements made by or on behalf of Global and previously disclosed to
Frontier.
(i) OPINIONS OF FINANCIAL ADVISORS. Global has received the opinions
of the Global Financial Advisors, dated the date of this Agreement, to the
effect that, as of such date, the Exchange Ratio is fair, from a financial point
of view, to Global, a copy of which opinions have been made available to
Frontier.
(j) LITIGATION. Except as disclosed in the Global SEC Reports and
except for claims, actions, suits, proceedings or investigations which would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Global, there are no claims, actions, suits, proceedings or
investigations pending or, to Global's knowledge, threatened against Global or
any of its Subsidiaries, or any properties or rights of Global or any of its
Subsidiaries, before any Governmental Entity.
(k) NO VIOLATION OF LAW. The business of Global and its
Subsidiaries is not being conducted in violation of any statute, law, ordinance,
regulation, judgment, order or decree of any Governmental Entity (including any
stock exchange or other self-regulatory body), or in violation of any permits,
franchises, licenses, authorizations or consents that are granted by any
Governmental Entity (including any stock exchange or other self-regulatory
body), except for possible violations which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Global.
Except as disclosed in the Global SEC Reports and except as would not,
individually or in the aggregate reasonably be expected to have a Material
Adverse Effect on Global, no investigation or review by any Governmental Entity
(including any stock exchange or other self-regulatory body) with respect to
Global or its Subsidiaries in relation to any alleged violation of law or
regulation is pending or, to Global's knowledge, threatened, nor has any
Governmental Entity (including any stock exchange or other self-regulatory body)
indicated in writing an intention to conduct the same. Neither Global nor any of
its Subsidiaries is subject to any cease and desist or other order, judgment,
injunction or decree issued by, or is a party to any written agreement, consent
agreement or memorandum of understanding with, or is a party to any commitment
letter or similar undertaking to, or is subject to any order or directive by, or
has adopted any board resolutions at the request of, any Governmental Entity
that materially restricts the conduct of its business other than those which
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Global, nor has Global or any of its Subsidiaries
been advised in writing that any Governmental Entity is considering issuing or
requesting any of the foregoing.
(l) TAXES. All material Federal, state, local, and foreign tax
returns required to be filed by Global and its Subsidiaries have been filed.
All material taxes shown on such returns as being due or claimed to be due from
Global and its Subsidiaries in a written assessment have been paid other than
those (i) currently payable without penalty or interest or (ii) being contested
in good faith and by appropriate proceedings timely instituted and diligently
pursued and for which adequate reserves have been established on the books and
records of Global and its Subsidiaries, as the case may be, in accordance with
generally accepted accounting principles.
(m) GLOBAL BENEFIT PLANS. Each deferred compensation and each
incentive compensation, equity compensation plan, "welfare" plan, fund or
program (within the meaning of Section 3(1) of the ERISA); "pension" plan, fund
or program (within the meaning of section 3(2) of ERISA); each employment,
consulting, continuation, termination or severance agreement; and each other
employee benefit plan, fund, program, agreement or arrangement, in each case,
that is spon sored, maintained or contributed to or required to be contributed
to by Global or by any trade or business, whether or not incorporated (an "ERISA
AFFILIATE"), that together with Global would be deemed a "single employer"
within the meaning of section 4001(b) of ERISA, or to which Global or an ERISA
Affiliate is party, whether written or oral, for the benefit of any employee or
former employee of Global or any Subsidiary (the "GLOBAL BENEFIT PLANS") is in
compliance with all applicable provisions of ERISA and the Code, and neither
Global nor any ERISA Affiliates have any liabilities or obligations with respect
to any such Global Benefit Plans, whether or not accrued, contingent or
otherwise, except (x) as described in any of the Global SEC Reports or (y) for
instances of noncompliance or liabilities or obligations that would not,
individually or in the aggregate, have a Material Adverse Effect on Global.
Except with respect to awards granted under the Global Benefit Plans that are in
effect on the date hereof, no employee of Global will be entitled to any
additional benefits or any acceleration of the time of payment or vesting of any
benefits under any Global Benefit Plan as a result of the transactions
contemplated by this Agreement, either alone or in combination with another
event.
3.3 REPRESENTATIONS AND WARRANTIES OF GLOBAL AND MERGER SUB. Global
and Merger Sub represent and warrant to Frontier as follows:
(a) ORGANIZATION AND CORPORATE POWER. Merger Sub is a corporation
duly incorporated, validly existing and in good standing under the laws of New
York. Merger Sub is a direct wholly-owned subsidiary of Global.
(b) CORPORATE AUTHORIZATION. Merger Sub has all requisite corporate
power and authority to enter into this Agreement and to consum mate the
transactions contemplated hereby. The execution, delivery and performance by
Merger Sub of this Agreement and the consummation by Merger Sub of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Merger Sub. This Agreement has been duly
executed and delivered by Merger Sub and constitutes a valid and binding
agreement of Merger Sub, enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors generally, by general equity principles (regardless or whether such
enforceability is considered in a proceeding in equity or at law) or by an
implied covenant of good faith and fair dealing.
(c) NON-CONTRAVENTION. The execution, delivery and
performance by Merger Sub of this Agreement and the consummation by Merger Sub
of the transactions contemplated hereby do not and will not contravene or
conflict with the certificate of incorporation or by-laws of Merger Sub.
(d) NO BUSINESS ACTIVITIES. Merger Sub has not conducted any
activities other than in connection with the organization of Merger Sub, the
negotiation and execution of this Agreement and the consummation of the
transactions contemplated hereby. Merger Sub has no Subsidiaries.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 COVENANTS OF FRONTIER. During the period from the date of this
Agreement and continuing until the Effective Time, Frontier agrees as to itself
and its Subsidiaries that (except as expressly contemplated or permitted by this
Agreement or as otherwise indicated on the Frontier Disclosure Schedule or as
required by a Governmental Entity of competent jurisdiction or to the extent
that Global shall otherwise consent in writing, which consent shall not be
unreasonably withheld or delayed):
(a) ORDINARY COURSE.
(i) Frontier and its Subsidiaries shall carry on their respective
businesses in the usual, regular and ordinary course in all material respects,
in substantially the same manner as heretofore conducted, and shall use all
reasonable efforts to preserve intact their present lines of business, maintain
their rights, franchises and licenses and other authorizations issued by
Governmental Entities, and preserve their relationships with customers,
suppliers and others having business dealings with them to the end that their
ongoing businesses shall not be impaired in any material respect at the
Effective Time; PROVIDED, HOWEVER, that no action by Frontier or its
Subsidiaries with respect to matters specifically addressed by any other
provision of this Section 4.1 shall be deemed a breach of this Section 4.1(a)(i)
unless such action would constitute a breach of one or more of such other
provisions.
(ii) Frontier shall not, and shall not permit any of its
Subsidiaries to, (A) enter into any new material line of business or (B) incur
or commit to any capital expenditures other than capital expenditures incurred
or committed to in the ordinary course of business consistent with past practice
and which, together with all such expenditures incurred or committed for fiscal
year 1999, are not in excess of $900 million or, if the Closing Date has not
occurred prior to December 31, 1999, such additional amounts for any subsequent
period as may be
consented to by Global, such consent not to be unreasonably withheld or delayed,
or, if Global shall not have so consented, an amount not greater than an amount
equal to a pro rata portion of Frontier's 1999 capital expenditure budget
included in Section 4.1(a) of the Frontier Disclosure Schedule.
(b) DIVIDENDS; CHANGES IN SHARE CAPITAL. Frontier shall not, and
shall not permit any of its Subsidiaries to, and shall not propose to, (i)
declare or pay any dividends on or make other distributions in respect of any of
its capital stock, except (x) dividends by wholly owned Subsidiaries of
Frontier, (y) the regular dividends on Frontier Common Stock in the amount of
$.05 per share of Frontier Common Stock per quarter, and (z) regular dividends
on Frontier Preferred Stock, (ii) split, combine or reclassify any of its
capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for, shares of its
capital stock, except for any such transaction by a wholly owned Subsidiary of
Frontier which remains a wholly owned Subsidiary after consumma tion of such
transaction, or (iii) except for the purchase from time to time by Frontier of
Frontier Common Stock (and the associated Rights) in the ordinary course of
business consistent with past practice in connection with the Frontier Benefit
Plans, or as contemplated in Section 5.9, repurchase, redeem or otherwise
acquire any shares of its capital stock or any securities convertible into or
exercisable for any shares of its capital stock.
(c) ISSUANCE OF SECURITIES. Frontier shall not, and shall not permit
any of its Subsidiaries to, issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock of any class, or
any securities convertible into or exercisable for, or any rights, warrants or
options to acquire, any such shares, or enter into any agreement with respect to
any of the foregoing, other than (i) the issuance of Frontier Common Stock (and
the associated Rights) upon the exercise of stock options or warrants or in
connection with other stock-based benefits plans outstanding on the date hereof
in accordance with their present terms, (ii) issuances by a wholly owned
Subsidiary of Frontier of capital stock to such Subsidiary's parent, (iii)
issuances in accordance with the Rights Agreement or (iv) issuances of shares,
options, rights or other awards in numbers not greater than those set forth in
Section 4.1(c) of the Frontier Disclosure Schedule.
(d) GOVERNING DOCUMENTS. Except to the extent required to comply with
their respective obligations hereunder, required by law or required by the rules
and regulations of the NYSE, Frontier and its Subsidiaries shall not amend, in
the case of Subsidiaries, in any material respect, or propose to so amend their
respective certificates of incorporation, by-laws or other governing documents.
(e) NO ACQUISITIONS. Except for (i) acquisitions that are part of,
related to or in support of the communications or internet business and provide
for less than $500 million of consideration (excluding assumption of debt) in
the aggregate and (ii) acquisitions or investments that are made by Frontier
Internet Ventures, Inc. that are not in excess of $30 million of consideration
(excluding assumption of debt), Frontier shall not, and shall not permit any of
its Subsidiaries to, acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial portion
of the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof or
otherwise acquire or agree to acquire any assets (other than the acquisition of
assets used in the operations of the business of Frontier and its Subsidiaries
in the ordinary course); PROVIDED, HOWEVER, that the foregoing shall not
prohibit (x) internal reorganizations or consolidations involving existing
Subsidiaries of Frontier or (y) the creation of new Subsidiaries of Frontier
organized to conduct or continue activities otherwise permitted by this
Agreement.
(f) NO DISPOSITIONS. Other than (i) internal reorganizations or
consolidations involving existing Subsidiaries of Frontier, (ii) dispositions
referred to in Frontier SEC Reports filed prior to the date of this Agreement,
(iii) as may be required by or in conformance with law or regulation in order to
permit or facilitate the consummation of the transactions contemplated hereby or
(iv) in the ordinary course of business, Frontier shall not, and shall not
permit any Subsidiary of Frontier to, sell, lease, encumber (other than in
connection with secured debt) or otherwise dispose of, or agree to sell, lease,
encumber or otherwise dispose of, any of its assets (including capital stock of
Subsidiaries of Frontier) which are material, individually or in the aggregate,
to Frontier.
(g) INVESTMENTS; INDEBTEDNESS. Frontier shall not, and shall not
permit any of its Subsidiaries to, (i) other than in connection with actions
permitted by Section 4.1(e), make any loans, advances or capital contributions
to, or investments in, any other Person, other than by Frontier or an affiliate
of Frontier to or in Frontier or any affiliate of Frontier, (ii) pay, discharge
or satisfy any claims, liabilities or obligations (absolute, accrued, asserted
or unasserted, contingent or otherwise), other than loans, advances, capital
contributions, investments, payments, discharges or satisfactions incurred or
committed to in the ordinary course of business consistent with past practice or
(iii) other than in connection with actions permitted by Section 4.1(e), create,
incur, assume or suffer to exist any indebtedness, issuances of debt securities,
guarantees, loans or advances not in existence as of the date of this Agreement
except pursuant to the credit facilities, indentures and other
arrangements in existence on the date of this Agreement and in the ordinary
course of business, and any other indebtedness existing on the date of this
Agreement, in each case as such credit facilities, indentures, other
arrangements and other existing indebtedness may be amended, extended, modified,
refunded, renewed or refinanced after the date of this Agreement, but only if
the aggregate principal amount thereof is not increased thereby, the term
thereof is not extended thereby and the other terms and conditions thereof,
taken as a whole, are not less advantageous to Frontier and its Subsidiaries
than those in existence as of the date of this Agreement.
(h) TAX-FREE QUALIFICATION. Frontier shall not, and shall not permit
any of its Subsidiaries to, take any action that would prevent or impede the
Merger from qualifying as a reorganization under Section 368 of the Code.
(i) COMPENSATION. Other than as contemplated by Section 5.6 or by
Section 4.1(i) of the Frontier Disclosure Schedule, Frontier shall not, and
shall not permit any of its Subsidiaries to, increase the amount of compensation
of any senior executive officer except in the ordinary course of business
consistent with past practice or as required by an existing agreement, make any
increase in or commitment to increase any employee benefits, issue any
additional Frontier Stock Options, adopt or make any commitment to adopt any
additional employee benefit plan or make any contribution, other than regularly
scheduled contributions, to any Frontier Benefit Plan.
(j) OTHER ACTIONS. Frontier shall not, and shall not permit any of
its Subsidiaries to, take any action that would, or that would reasonably be
expected to, result in, except as otherwise permitted by Section 5.5, any of the
conditions to the Merger set forth in Article VI not being satisfied.
(k) ACCOUNTING METHODS; INCOME TAX ELECTIONS. Except as disclosed in
Frontier SEC Reports filed prior to the date of this Agreement, or as required
by a Governmental Entity, Frontier shall not change its methods of accounting in
effect at December 31, 1998, except as required by GAAP or changes in GAAP as
concurred to by Frontier's independent auditors. Frontier shall not (i) change
its fiscal year or (ii) make any material tax election, other than in the
ordinary course of business consistent with past practice, without the prior
approval of Global, which approval shall not be unreasonably withheld.
(l) RIGHTS AGREEMENT. Frontier shall not amend, modify or waive any
provision of the Rights Agreement, and shall not take any action to redeem the
Rights or render the Rights inapplicable to any transaction, other than to
permit another transaction that the Frontier Board has determined is a Superior
Proposal (as defined in Section 8.11), to be consummated after termination of
this Agreement.
4.2 COVENANTS OF GLOBAL. During the period from the date of this
Agreement and continuing until the Effective Time, Global agrees as to itself
and its Subsidiaries that (except as expressly contemplated or permitted by this
Agreement or as otherwise indicated on the Global Disclosure Schedule or as
required by a Governmental Entity of competent jurisdiction or to the extent
that Frontier shall otherwise consent in writing, which consent shall not be
unreasonably withheld or delayed):
(a) ORDINARY COURSE.
(i) Global and its Subsidiaries shall carry on their respective
businesses in the usual, regular and ordinary course in all material respects,
in substantially the same manner as heretofore conducted, and shall use all
reasonable efforts to preserve intact their present lines of business, maintain
their rights and franchises and preserve their relationships with customers,
suppliers and others having business dealings with them to the end that their
ongoing businesses shall not be impaired in any material respect at the
Effective Time; PROVIDED, HOWEVER, that no action by Global or its Subsidiaries
with respect to matters specifically addressed by any other provisions of this
Section 4.2 shall be deemed a breach of this Section 4.2(a)(i) unless such
action would constitute a breach of one or more of such other provisions.
(ii) Global shall not, and shall not permit any of its
Subsidiaries to, enter into any new material line of business that is not part
of, related to or in support of the communications business, other than
incidentally as part of a larger acquisition within an existing line of
business.
(b) DIVIDENDS; CHANGES IN SHARE CAPITAL. Global shall not, and shall
not permit any of its Subsidiaries to, and shall not propose to, (i) declare or
pay any dividends on or make other distributions in respect of any of its
capital stock, except (x) dividends by wholly owned Subsidiaries of Global or
Global Holdings, or (y) dividends to joint venture parties or (ii) repurchase,
redeem or otherwise acquire any shares of its capital stock or any securities
convertible into or exercisable for any shares of its capital stock except for
(x) the purchase from time to time by Global of Global Common Stock in the
ordinary course of business required by any Global Benefit Plan on a non-
discretionary basis, or (y) regular purchases pursuant to a stock purchase plan
approved by the Global Board of Directors.
(c) ISSUANCE OF SECURITIES. Global shall not, and shall not permit
any of its Subsidiaries to, issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock of any class, any
Global Voting Debt or any securities convertible into or exercisable for, or any
rights, warrants or options to acquire, any such shares or Global Voting Debt,
or enter into any agreement with respect to any of the foregoing other than (i)
the issuance of Global Common Stock upon the exercise of stock options or
warrants or in connection with other stock-based benefit plans, (ii) issuances
by a wholly owned Subsidiary of Global of capital stock to such Subsidiary's
parent or another wholly owned Subsidiary of Global, (iii) issuances of options,
awards, and amendments to equity-related awards pursuant to Global benefit
plans as in effect from time to time, (iv) issuances made to newly hired
employees of Global or its Subsidiaries, (v) issuances in respect of any
acquisitions, mergers, share exchanges, consolidations, business combinations or
similar transactions by Global or its Subsidiaries permitted by Section 4.2(e),
or (vi) any other issuance of any Global Common Stock; provided that, with
respect to clauses (v) and (vi), any such issuances prior to the termination of
the Voting Agreement would not cause the shares of Global Comon Stock that are
subject to the Voting Agreement to constitute, in the aggregate, less than 51%
of the Combined Voting Power.
(d) GOVERNING DOCUMENTS. Except to the extent required to comply with
their respective obligations hereunder, required by law or required by the rules
and regulations of NASDAQ, Global and its material Subsidiaries shall not amend,
in the case of Subsidiaries, in any material respect, or propose to so amend
their respective certificates of incorporation, bye-laws or other governing
documents, except for the Global Charter Amendment.
(e) NO ACQUISITIONS. Global shall not, and shall not permit any of
its Subsidiaries to, acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial portion
of the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof or
otherwise acquire or agree to acquire any assets (other than the acquisition of
assets used in the operations of the business of Global and its Subsidiaries in
the ordinary course), except for acquisitions that are part of, related to or in
support of the communications business, which acquisitions Global may enter into
in its discretion, so long as (i) such acquisitions would not, individually or
in the aggregate, reasonably be expected to prevent or materially delay the
Merger, (ii) the issuance of any Global Common Stock in such acquisitions prior
to the termination of the Voting Agreement would not cause the shares of Global
Common Stock that are subject to the Voting Agreement to constitute, in the
aggregate, less than 51% of the Combined Voting Power, (iii) such acquisitions
provide less than $2.5 billion of consideration
(excluding assumption of debt) per acquisition and consideration (excluding
assumption of debt) no greater than $8.5 billion in the aggregate, and (iv) no
more than $7.5 billion, in the aggregate, of the consideration provided for such
acquisitions consists of Global Common Stock or other voting equity securities;
PROVIDED, HOWEVER, that the foregoing shall not prohibit (x) internal
reorganizations or consolidations involving existing Subsidiaries of Global or
(y) the creation of new Subsidiaries of Global organized to conduct or continue
activities otherwise permitted by this Agreement.
(f) NO DISPOSITIONS. Other than (i) internal reorganizations or
consolidations involving existing Subsidiaries of Global, (ii) dispositions
referred to in Global SEC Reports filed prior to the date of this Agreement,
(iii) as may be required by or in conformance with law or regulation in order to
permit or facilitate the consummation of the transactions contemplated hereby or
(iv) in the ordinary course of business, Global shall not, and shall not permit
any Subsidiary of Global to, sell, lease, encumber (other than in connection
with secured debt) or otherwise dispose of, or agree to sell, lease, encumber or
otherwise dispose of, any of its assets (including capital stock of Subsidiaries
of Global) which are material, individually or in the aggregate, to Global.
(g) INVESTMENT