EXHIBIT 99.2
CONFIDENTIAL
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SHARE AND ASSET PURCHASE AGREEMENT
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Between
ASIA GLOBAL CROSSING LTD.
and
ASIA NETCOM CORPORATION LIMITED
Dated as of November 17, 2002
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TABLE OF CONTENTS
Page
Article I Definitions...........................................................15
SECTION 1.01 Certain Defined Terms......................................15
SECTION 1.02 Interpretation and Rules of Construction...................28
Article II PURCHASE AND SALE....................................................28
SECTION 2.01 Purchase and Sale of Assets................................28
SECTION 2.02 Assumption and Exclusion of Liabilities....................29
SECTION 2.03 Purchase Price.............................................29
SECTION 2.04 Closing...................................................29
SECTION 2.05 Closing Deliveries by the Seller...........................29
SECTION 2.06 Closing Deliveries by the Purchaser........................30
SECTION 2.07 Closing Adjustments........................................31
Article III REPRESENTATIONS AND WARRANTIES OF THE SELLER........................32
SECTION 3.01 Organization, Authority and Qualification of the Seller...33
SECTION 3.02 Organization, Authority and Qualification of the
Acquired Subsidiaries.....................................33
SECTION 3.03 Capitalization, Corporate Books and Records...............34
SECTION 3.04 No Conflict...............................................35
SECTION 3.05 Consents and Approvals....................................35
SECTION 3.06 SEC Reports...............................................36
SECTION 3.07 Financial Information; Books and Records..................36
SECTION 3.08 Absence of Undisclosed Liabilities........................37
SECTION 3.09 Receivables...............................................38
SECTION 3.10 Regulatory Matters........................................38
SECTION 3.11 Acquired Assets and Assumed Liabilities...................40
8
SECTION 3.12 Conduct in the Ordinary Course; Absence of
Certain Changes, Events and Conditions.....................41
SECTION 3.13 Litigation.................................................43
SECTION 3.14 Compliance with Laws.......................................44
SECTION 3.15 Environmental and Other Permits and Licenses;
Related Matters............................................44
SECTION 3.16 Material Contracts.........................................45
SECTION 3.17 Intellectual Property; Technology..........................47
SECTION 3.18 Title to Property..........................................47
SECTION 3.19 Network Facilities.........................................48
SECTION 3.20 Customers..................................................50
SECTION 3.21 Suppliers..................................................50
SECTION 3.22 Employee Benefit Matters...................................50
SECTION 3.23 Labor Matters; Employee Relations..........................52
SECTION 3.24 Key Employees..............................................53
SECTION 3.25 Taxes......................................................53
SECTION 3.26 Insurance..................................................55
SECTION 3.27 Brokers....................................................55
Article IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER......................55
SECTION 4.01 Organization and Authority of the Purchaser................55
SECTION 4.02 No Conflict................................................56
SECTION 4.03 Governmental Consents and Approvals........................56
SECTION 4.04 Financing..................................................56
SECTION 4.05 Litigation.................................................57
SECTION 4.06 Brokers....................................................57
SECTION 4.07 Acquisition for Investment.................................57
SECTION 4.08 Assumption of Liabilities..................................57
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Article V ADDITIONAL AGREEMENTS.................................................57
SECTION 5.01 Conduct of Business Prior to the Closing...................57
SECTION 5.02 Access to Information......................................59
SECTION 5.03 Delivery of Financial Information..........................59
SECTION 5.04 Co-operation regarding Activation Costs and Vendor
Releases...................................................60
SECTION 5.05 Confidentiality............................................60
SECTION 5.06 Regulatory and Other Authorizations; Notices and Consents..61
SECTION 5.07 Notice of Developments.....................................61
SECTION 5.08 No Solicitation or Negotiation.............................62
SECTION 5.09 Excluded Liabilities.......................................62
SECTION 5.10 Global Crossing...........................................62
SECTION 5.11 Winding-up of Seller and Excluded Subsidiaries.............63
SECTION 5.12 Currency..................................................63
SECTION 5.13 Insurance..................................................63
SECTION 5.14 Finance Co................................................63
SECTION 5.15 Taiwan Share Transfer......................................63
SECTION 5.16 Further Action............................................64
Article VI EMPLOYEE MATTERS.....................................................64
SECTION 6.01 Employees..................................................64
SECTION 6.02 Transfer and Assumption of the Retirement Plan;
Contributions for Periods Prior to Closing.................64
SECTION 6.03 Directors and Officers of Acquired Subsidiaries............65
SECTION 6.04 Employee Confidentiality Agreements........................65
Article VII CONDITIONS TO CLOSING...............................................65
SECTION 7.01 Conditions to Obligations of the Seller....................65
SECTION 7.02 Conditions to Obligations of the Purchaser.................66
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Article VIII U.S. BANKRUPTCY COURT AND BERMUDA COURT............................69
SECTION 8.01 Chapter 11 Case...........................................69
SECTION 8.02 U.S. Bankruptcy Court Approvals...........................69
SECTION 8.03 Bermuda Case..............................................70
SECTION 8.04 Co-operation..............................................70
Article IX JOINT PROVISIONAL LIQUIDATORS........................................71
SECTION 9.01 Joint Provisional Liquidators' Approval...................71
SECTION 9.02 Exclusion of Personal Liability...........................71
SECTION 9.03 The Actions of the Bermuda Debtor.........................71
SECTION 9.04 Purpose of the Joint Provisional Liquidators as a Party...72
SECTION 9.05 Joint Provisional Liquidators.............................72
SECTION 9.06 Governing Law; Submission to Jurisdiction.................72
SECTION 9.07 Entire Agreement..........................................73
SECTION 9.08 Amendments................................................73
SECTION 9.09 Notices to Joint Provisional Liquidators..................73
Article X TERMINATION...........................................................73
SECTION 10.01 Termination...............................................73
SECTION 10.02 Break-up Fee..............................................75
SECTION 10.03 Effect of Termination.....................................77
Article XI SURVIVAL PERIOD......................................................77
SECTION 11.01 Survival of Representations, Warranties, Covenants
and Agreements............................................77
SECTION 11.02 Damage Claims.............................................77
Article XII GENERAL PROVISIONS..................................................78
SECTION 12.01 Expenses..................................................78
SECTION 12.02 Notices...................................................78
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SECTION 12.03 Public Announcements......................................79
SECTION 12.04 Severability..............................................79
SECTION 12.05 Entire Agreement..........................................79
SECTION 12.06 Assignment................................................79
SECTION 12.07 Amendment.................................................79
SECTION 12.08 Waiver....................................................79
SECTION 12.09 No Third Party Beneficiaries..............................80
SECTION 12.10 Governing Law.............................................80
SECTION 12.11 Waiver of Jury Trial......................................80
SECTION 12.12 Headings..................................................80
SECTION 12.13 Counterparts..............................................81
SECTION 12.14 Service of Process........................................81
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EXHIBITS
1.01(a) Form of AGC Payables Agreement
1.01(b) Form of Assignment of Intellectual Property
1.01(c) Form of Assumption Agreement
1.01(d) Form of Bermuda Order
1.01(e) Form of ▇▇▇▇ of Sale and Assignment
6.03 Form of Release of Directors and Officers of Acquired Subsidiaries
7.01(h) Form of Release of Seller and Excluded Subsidiaries
7.02(c) Form of Legal Opinion
7.02(k) Form of Consolidated Schedule of Cash Receipts and Cash Disbursements
8.02(b) Form of Bidding Procedures Order
8.02(c) Form of Approval Order
SCHEDULES
1.01(a) Assigned AGC Contracts
1.01(b) Assigned Non-AGC Contracts
1.01(c) Knowledge of the Seller
2.01(a) Acquired Assets
Attachment A Shares and Acquired Subsidiaries
2.01(b) Excluded Assets
2.02(a) Assumed Liabilities
2.02(b) Excluded Liabilities
5.06(b) Required Contractual Consents
DISCLOSURE SCHEDULE
13
SHARE AND ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of November
17, 2002, between Asia Global Crossing Ltd., a company organized under the laws
of Bermuda (the "Seller"), and Asia Netcom Corporation Limited, a company
organized under the laws of Bermuda (the "Purchaser").
W I T N E S S E T H
WHEREAS, the Seller owns shares described in column 2 of Attachment A to
Schedule 2.01(a) (the "Shares") or indirect equity interests described in column
3 of Attachment A to Schedule 2.01(a) (the "Indirect Interests") in each company
(each, an "Acquired Subsidiary" and collectively, the "Acquired Subsidiaries")
described in column 1 of Attachment A to Schedule 2.01(a);
WHEREAS, the Seller, directly and through its various Subsidiaries,
including the Acquired Subsidiaries, is engaged in the business of
telecommunication network services (including, bandwidth and value-added data
services) to enterprise and carrier customers at various locations in Asia using
the Network Facilities and other telecommunications facilities (the "Business");
WHEREAS, the Seller intends to file a voluntary petition for relief
commencing a case (the "Chapter 11 Case") under Chapter 11 of Title 11 of the
United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court
for the Southern District of New York (the "U.S. Bankruptcy Court");
WHEREAS, immediately following the commencement of the Chapter 11 Case, the
Seller (in such capacity, the "Bermuda Debtor") intends to petition the Supreme
Court of Bermuda (the "Bermuda Court") for, inter alia, the appointment of the
Joint Provisional Liquidators (the "Bermuda Case");
WHEREAS, it is a condition precedent to the closing of the transactions
contemplated under this Agreement that the Joint Provisional Liquidators shall,
following their appointment, be joined as a party to this Agreement for the sole
purpose of agreeing to the matters set forth in Article IX;
WHEREAS, the Seller wishes to sell to the Purchaser, and the Purchaser
wishes to purchase from the Seller, the Business, including, without limitation,
the Acquired Assets, and in connection therewith the Purchaser is willing to
assume the Assumed Liabilities, all upon the terms and subject to the conditions
set forth herein and in accordance with sections 105, 363 and 365 of the
Bankruptcy Code;
WHEREAS, the Purchaser is an indirect wholly owned subsidiary of China
Netcom Corporation (Hong Kong) Limited ("CNC"); and
WHEREAS, in support of Purchaser's obligations hereunder, CNC has,
concurrently herewith, provided to the Seller a guarantee of payment and
performance of Purchaser's obligations in an aggregate amount of up to $16
million.
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NOW, THEREFORE, in consideration of the promises and the mutual agreements
and covenants hereinafter set forth, the Seller and the Purchaser hereby agree
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 .Certain Defined Terms. For purposes of this Agreement:
"Acquired Assets" shall have the meaning ascribed thereto in Section
2.01(a).
"Acquired Subsidiary" shall have the meaning ascribed thereto in the
Recitals.
"Acquisition Proposal" means any proposal or offer from any Person other
than the Purchaser, its Affiliates or the Taiwan Assignee for any or any
combination of the following transactions between the Seller or any of its
equity holders, or any Subsidiary of the Seller, and any Person other than the
Purchaser, its Affiliates or the Taiwan Assignee: (i) the acquisition, transfer,
purchase or other disposition of any equity interests of the Seller which would
be reasonably expected to have any of the consequences described in clause (v)
of this paragraph or any Acquired Subsidiary, (ii) any business combination
involving or otherwise relating to the Seller or any Acquired Subsidiary, (iii)
any offer or proposal to acquire all or any part of the Seller's or any Acquired
Subsidiary's assets or business that are all or a part of the Acquired Assets,
(iv) any offer or proposal to restructure all or any part of the liabilities of
the Seller and the Acquired Subsidiaries that are all or a part of the Assumed
Liabilities (except as contemplated hereby), or (v) any other similar
transaction the consummation of which would reasonably be expected to prevent or
materially delay the transactions contemplated by this Agreement or which would
reasonably be expected to dilute materially the benefits to the Purchaser of
such transactions; provided, however, that the term "Acquisition Proposal" shall
not include any proposal or offer relating to any of the foregoing transactions
involving (1) PCL or (2) the acquisition of the Seller's shares of Broadband
Tower (Japan) ("BBT") by any other shareholder of BBT upon exercise of such
shareholder's right of first refusal; and; provided, further, that (a) clause
(i) of this definition shall not include any sale, transfer or other disposition
of shares of Seller's common stock by any shareholder of the Seller who is not
an Affiliate (for purpose of such determination the Global Crossing Entities
shall be deemed Affiliates) of the Seller; and (b) Acquisition Proposal shall
not include the consummation of any transaction pursuant to the GC Purchase
Agreement.
"Action" means any claim, action, suit, arbitration, inquiry, proceeding or
investigation by or before any Governmental Authority.
"Activation Costs" means the Seller's good faith estimate of the aggregate
backhaul costs, costs relating to carrying network traffic on the PC-1 system
and the costs of using network facilities not owned by the Seller or any
Acquired Subsidiary, to the extent the same are expected by the Seller to be
incurred by the Seller and the Acquired Subsidiaries in connection with the
satisfaction of their respective obligations pursuant to the Customer IRU
Agreements.
"Actual Closing Cash Balance" means the actual amount of cash and Cash
Equivalents held by the Seller, Excluded Subsidiaries (excluding PCL) and the
Acquired Subsidiaries as of the Closing Date.
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"Additional Contract" shall have the meaning ascribed thereto in Section
8.02(e).
"Affiliate" means, with respect to any specified Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person; provided,
however, that, unless otherwise indicated, neither PCL nor any of the Global
Crossing Entities shall be deemed an Affiliate of the Seller.
"AGC Payables Agreements" means the assignment and assumption agreement and
the waiver agreement relating to certain intercompany amounts owed by the
Acquired Subsidiaries to the Seller or the Excluded Subsidiaries, substantially
in the form of Exhibit 1.01(a).
"AGC Policies" shall have the meaning ascribed thereto in Section 3.26.
"Ancillary Agreements" means the ▇▇▇▇ of Sale, the Assignment of
Intellectual Property, the Assumption Agreements, the Release of Directors and
Officers of Acquired Subsidiaries to be delivered pursuant to Section 6.03, the
Release of Seller and Excluded Subsidiaries to be delivered pursuant to Section
7.01(h), and the AGC Payables Agreements.
"Approval Order" shall have the meaning ascribed thereto in Section
8.02(c).
"Assets" means the Acquired Assets and the assets and properties of the
Acquired Subsidiaries.
"Assigned AGC Contracts" means contracts set forth on Schedule 1.01(a).
"Assigned Contracts" means, collectively, the Assigned AGC Contracts and
the Assigned Non-AGC Contracts.
"Assigned Non-AGC Contracts" means the contracts set forth on Schedule
1.01(b).
"Assignment of Seller Intellectual Property" means the assignment of Seller
Intellectual Property to be executed by the Seller on the Closing Date,
substantially in the form of Exhibit 1.01(b).
"Assumed Liabilities" shall have the meaning ascribed thereto in Section
2.02(a).
"Assumption Agreements" means each Assumption Agreement to be executed by
the Purchaser and the Seller on the Closing Date, substantially in the form of
Exhibit 1.01(c).
"Bankruptcy Code" shall have the meaning ascribed thereto in the Recitals.
"Bermuda Case" shall have the meaning ascribed thereto in the Recitals.
"Bermuda Court" shall have the meaning ascribed thereto in the Recitals.
▇▇
"▇▇▇▇▇▇▇ ▇▇▇▇▇▇" shall have the meaning ascribed thereto in the Recitals.
"Bermuda Order" means an order in the form of Exhibit 1.01(d), pursuant to
which the Joint Provisional Liquidators shall be appointed by the Bermuda Court
in respect of the Bermuda Debtor.
"Bermuda Law" means the laws from time to time in force in Bermuda.
"Bidding Procedures Order" shall have the meaning ascribed thereto in
Section 8.02(b).
"▇▇▇▇ of Sale" means the ▇▇▇▇ of Sale and Assignment to be executed by the
Seller on the Closing Date, substantially in the form of Exhibit 1.01(e).
"Break-up Fee" shall have the meaning ascribed thereto in Section 10.02(a).
"Business" shall have the meaning ascribed thereto in the Recitals.
"Business Day" means any day on which banks in Hong Kong are ordinarily
open for business, excluding Saturday and Sunday and any other day that is a
public holiday in Hong Kong.
"Cash Equivalents" means any of the following, to the extent owned by the
Seller, the Acquired Subsidiaries or the Excluded Subsidiaries free and clear of
all Encumbrances and having a maturity of not greater than 180 days from the
date of acquisition or issuance thereof: (a) readily marketable direct
obligations of the Government of the United States or any agency or
instrumentality thereof or obligations unconditionally guaranteed by the full
faith and credit of the Government of the United States, (b) insured
certificates of deposit of or time deposits with any commercial bank that is (i)
a member of the Federal Reserve System, (ii) issues (or the parent of which
issues) commercial paper rated as described in clause (c), (iii) is organized
under the laws of the United States or any State thereof and (iv) has combined
capital and surplus of at least $1 billion (provided, that in the case of any
certificates of deposit or time deposits held by Seller or any of its
Subsidiaries that are denominated in a foreign currency, clauses (i) through
(iv) hereof shall be deemed to refer to the reasonably equivalent criteria for a
commercial bank in the jurisdiction in question), or (c) commercial paper in an
aggregate amount of no more than $25,000,000 per issuer outstanding at any time,
issued by any corporation organized under the laws of any State of the United
States and rated at least "Prime-1" (or the then equivalent grade) by ▇▇▇▇▇'▇
Investors Service, Inc. or "A-1" (or the then equivalent grade) by Standard &
Poor's Ratings Group.
"Chapter 11 Case" shall have the meaning ascribed thereto in the Recitals.
"Claim" means a claim as defined in Section 101 of the Bankruptcy Code.
"Closing" shall have the meaning ascribed thereto in Section 2.04.
"Closing Date" shall have the meaning ascribed thereto in Section 2.04.
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"CNC" shall have the meaning ascribed thereto in the Recitals.
"Code" means the Internal Revenue Code.
"Commercial Payables" means the amount payable or other Liabilities to
commercial suppliers including, without limitation, accounts payable consisting
of accrued cost of access, customer deposits, accrued OA&M Liabilities and other
third party accounts payable accrued and arising in the ordinary course of
business of the Seller and the Acquired Subsidiaries.
"Commitment Letter" shall have the meaning ascribed thereto in Section
4.04(c).
"Communications Licenses" shall have the meaning ascribed thereto in
Section 3.10(a).
"Confidentiality Agreement" shall have the meaning ascribed thereto in
Section 5.02(a).
"Confirmation Date" shall mean the date initially set by the U.S.
Bankruptcy Court as the date on which the confirmation hearing in respect of the
Seller's Chapter 11 plan of reorganization shall be held.
"Control" (including the terms "controlled by" and "under common control
with"), with respect to the relationship between or among two or more Persons,
means the possession, directly or indirectly or as trustee, personal
representative or executor, of the power to direct or cause the direction of the
affairs or management of a Person, whether through the ownership of voting
securities, as trustee, personal representative or executor, by contract, credit
arrangement or otherwise.
"Cure Costs" means the liabilities and obligations of the Seller or any
Acquired Subsidiary that must be paid or otherwise satisfied to cure all
defaults by the Seller or any Acquired Subsidiary under the Assigned Contracts
at the time of assignment thereof to and the assumption thereof by the Purchaser
as provided herein.
"Customer Access Rights" shall have the meaning ascribed thereto in Section
3.19(c).
"Customer Base" shall mean those Persons to which the Seller or any
Acquired Subsidiary provides any telecommunications network services, whether
over the Network Facilities (inclusive of any Customer Access Rights) or on a
resale basis, including the sale of capacity, and services based on Frame Relay
Networks, ATM Networks, private lines, IP transit, dedicated internet access, IP
networks and voice.
"Customer IRU Agreements" shall have the meaning ascribed thereto in
Section 3.19(a).
"Damage Claim" shall have the meaning ascribed thereto in Section 11.02.
18
"Disclosure Schedule" means the disclosure schedule attached hereto and
made a part hereof, dated as of the date hereof.
"Distribution Amount" shall mean (a) if Final Cash is greater than or equal
to $81,200,000, an amount equal to $81,200,000, and (b) if Final Cash is less
than $81,200,000, an amount equal to Final Cash.
"EAC" means East Asia Crossing Ltd., a company organized under the laws of
Bermuda.
"EAC Shares" means the 1,200,000 share, par value $0.01 per share, issued
and outstanding, constituting 100% of the outstanding capital stock of EAC, all
of which are held by GCT.
"Encumbrances" shall have the meaning ascribed thereto in Section 2.01(a).
"Environmental Laws" shall mean any and all applicable international,
federal, state, or local laws, statutes, ordinances, regulations, policies,
guidance, rules, judgments, orders, court decisions or rule of common law,
permits, restrictions and licenses, which: (i) regulate or relate to the
protection or clean up of the environment; the use, treatment, storage,
transportation, handling, disposal or release of Hazardous Materials, the
preservation or protection of waterways, groundwater, drinking water, air,
wildlife, plants or other natural resources; or (ii) impose liability or
responsibility with respect to any of the foregoing, or any other Law of similar
effect.
"Environmental Permits" means all permits, approvals, identification
numbers, licenses and other authorizations required under or issued pursuant to
any applicable Environmental Law.
"ERISA" shall have the meaning ascribed thereto in Section 3.22(a).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Exchange Act of 1934, as amended, shall
include reference to the comparable section, if any, of any such successor
federal statute.
"Excluded Assets" shall have the meaning ascribed thereto in Section
2.01(b).
"Excluded Liabilities" shall have the meaning ascribed thereto in Section
2.02(b).
"Excluded Subsidiaries" means Subsidiaries other than the Acquired
Subsidiaries.
"Filing Subsidiary" shall have the meaning ascribed thereto in Section
5.16(c).
"Final Cash" shall mean the Actual Closing Cash Balance, plus the Paid
Activation Costs, less the Vendor Payables.
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"Final Order" means an order, judgment, ruling or decree issued by the U.S.
Bankruptcy Court, the Bermuda Court, or other court having jurisdiction of the
same, that is in full force and effect, that has not been reversed, stayed,
modified or amended, and for which the time for any appeal or request for
rehearing or reargument or petition for certiorari thereof shall have expired
without the filing of any appeal, request for rehearing or reargument or
petition for certiorari having been made.
"Finance Co" shall mean a direct or indirect Subsidiary of Seller to be
formed to hold intercompany payables between the Seller and the Excluded
Subsidiaries on the one hand and certain Acquired Subsidiaries on the other
hand, which shall, when formed, be included as an Acquired Subsidiary for all
purposes hereof.
"Financial Statements" shall have the meaning ascribed thereto in Section
3.07(a).
"GC Payables" means the amounts owed by the Seller and the Acquired
Subsidiaries to Global Crossing Entities prior to the Chapter 11 Case.
"GC Policies" shall have the meaning ascribed thereto in Section 3.26.
"GCT" means GCT Pacific Holdings Ltd., a company organized under the laws
of Bermuda.
"Global Crossing" means Global Crossing Ltd., a company organized under the
laws of Bermuda.
"Global Crossing Entities" means Global Crossing and all of its
Subsidiaries (other than the Seller and the Seller's Subsidiaries).
"Governmental Authority" means any United States or non-United States
federal, national, supranational, state, provincial, local, or similar
government, governmental, regulatory or administrative authority, agency or
commission or any court, tribunal, or judicial or arbitral body.
"Governmental Order" means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority, except that Governmental Order shall not include the Communications
Licenses or Other Licenses.
"Hazardous Materials" means (a) petroleum and petroleum products,
radioactive materials, asbestos-containing materials, urea formaldehyde foam
insulation, transformers or other equipment that contain polychlorinated
biphenyls and radon gas, (b) any other chemicals, materials or substances
defined as or included in the definition of "hazardous substances", "hazardous
wastes", "hazardous materials", "extremely hazardous wastes", "restricted
hazardous wastes", "toxic substances", "toxic pollutants", "contaminants" or
"pollutants", or words of similar import, under any applicable Environmental
Law, and (c) any other chemical, material or substance which is regulated by any
Environmental Law.
"ICBC" shall have the meaning ascribed thereto in Section 4.04(c).
20
"Indebtedness" means, with respect to any Person, (a) all indebtedness of
such Person, whether or not contingent, for borrowed money, (b) all obligations
of such Person for the deferred purchase price of property or services
(excluding accounts payable arising in the ordinary course of business), (c) all
obligations of such Person evidenced by notes, bonds, debentures or other
similar instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (e) all obligations of such Person as lessee under
leases that have been or should be, in accordance with U.S. GAAP, recorded as
capital leases, (f) all obligations, contingent or otherwise, of such Person
under acceptance, letter of credit or similar facilities, (g) all obligations of
such Person to purchase, redeem, retire, defease or otherwise acquire for value
any capital stock of such Person or any warrants, rights or options to acquire
such capital stock, valued, in the case of redeemable preferred stock, at the
greater of its voluntary or involuntary liquidation preference plus accrued and
unpaid dividends, (h) all Indebtedness of others referred to in clauses (a)
through (g) above guaranteed directly or indirectly in any manner by such
Person, or in effect guaranteed directly or indirectly by such Person through an
agreement (i) to pay or purchase such Indebtedness or to advance or supply funds
for the payment or purchase of such Indebtedness, (ii) to purchase, sell or
lease (as lessee or lessor) property, or to purchase or sell services, primarily
for the purpose of enabling the debtor to make payment of such Indebtedness or
to assure the holder of such Indebtedness against loss, (iii) to supply funds to
or in any other manner invest in the debtor (including any agreement to pay for
property or services irrespective of whether such property is received or such
services are rendered) or (iv) otherwise to assure a creditor against loss, and
(i) all Indebtedness referred to in clauses (a) through (g) above secured by (or
for which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Encumbrance on property (including, without
limitation, accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness.
"Indirect Interests" shall have the meaning ascribed thereto in the
Recitals.
"Intellectual Property" shall mean all intellectual property, including
trademarks, service marks, trade names, trade dress, domain names, logos,
business and product names, and slogans including registrations and applications
to register or renew the registration of any of the foregoing copyrights and
registrations or renewals thereof; letters patent and patent applications,
including all reissues, continuations, divisions, continuations-in-part or
renewals or extensions thereof; inventions, processes, designs, formulae, trade
secrets, know-how, confidential business and technical information; software and
computer programs of any kind whatsoever (including all modeling software in
both source code and object code versions) and all documentation relating
thereto; Internet websites; mask works and other semiconductor chip rights and
registrations or renewals thereof; and all other intellectual property and
proprietary rights, tangible embodiments of any of the foregoing (in any form or
medium including electronic media), and licenses of any of the foregoing.
"IRS" means the Internal Revenue Service.
"IRU" shall mean an indefeasible right of use.
21
"Independent Accounting Firm" means any internationally recognized
accounting firm not representing the Seller or the Purchaser and reasonably
acceptable to both parties.
"Joint Provisional Liquidators" means each and all of the joint provisional
liquidators of the Bermuda Debtor appointed by the Bermuda Court in their
capacity as joint provisional liquidators of the Bermuda Debtor.
"JV" means each Acquired Subsidiary whose capital stock is not 100% owned
by the Seller or one of its Subsidiaries.
"JV Shares" means the shares of capital stock or other equity interests of
the JVs that are owned of record and beneficially by the Seller or one of its
Subsidiaries.
"KDDI" means KDDI Submarine Cable Systems, Inc., a company organized under
the laws of Japan.
"KDDI Payment Deferral Option Agreement" means that Payment Deferral Option
Agreement, dated as of March 25, 2002, among KDDI, the Seller and EAC, as
amended.
"KDDI Supply Agreement" means that Project Development and Construction
Contract, dated December 17, 1999, as amended and restated on July 28, 2000,
between Seller and KDDI, as amended.
"Knowledge of the Seller" means the knowledge of the individuals listed on
Schedule 1.01(c) after due and reasonable inquiry.
"Law" means any national, supranational, state, provincial, local or
similar statute, law, ordinance, regulation, rule, code, order, judgment, decree
requirement or rule of law (including, without limitation, common law).
"Lease Guaranties" shall have the meaning ascribed thereto in Section
3.18(c).
"Leased Real Property" shall have the meaning ascribed thereto in Section
3.18(b).
"Liabilities" means any and all debts, liabilities and obligations, whether
accrued or fixed, absolute or contingent, matured or unmatured or determined or
determinable, including, without limitation, those arising under any Law
(including, without limitation, any Environmental Law), Action or Governmental
Order and those arising under any contract, agreement, arrangement, commitment
or undertaking.
"Litigation" shall have the meaning ascribed thereto in Section 3.13.
"Losses" shall have the meaning ascribed thereto in Section 11.02.
"Material Adverse Effect" means any circumstance, change in, or effect on
the Acquired Assets, the Assumed Liabilities or any Acquired Subsidiary that,
individually or in the aggregate with all other circumstances, changes in or
effects on the Acquired Assets, the
22
Assumed Liabilities or any Acquired Subsidiary: (a) has had or is reasonably
likely to have a material adverse effect on the business, operations, assets or
liabilities (including, without limitation, contingent liabilities), prospects,
results of operations or the condition (financial or otherwise) of the Acquired
Assets, the Assumed Liabilities or the Acquired Subsidiaries, in each case taken
as a whole, (b) is reasonably likely to have a material adverse effect on the
ability of the Seller to perform any of its material obligations under this
Agreement or to consummate the transactions contemplated hereby or (c) that
causes the sum of (x) the net cash balance of the Seller, the Excluded
Subsidiaries (excluding PCL) and the Acquired Subsidiaries at December 31, 2002,
and (y) the Activation Costs incurred and paid by the Seller from the date of
this Agreement through and including December 31, 2002 to be less than
$150,000,000; provided, however, that a circumstance, change or effect arising
from or related to any of the following shall not give rise to a Material
Adverse Effect: (1) the Chapter 11 Case, (2) the Bermuda Case, (3) the existence
or public announcement of this Agreement, (4) any event or circumstance
affecting the telecommunications industry generally which does not
disproportionately affect the Acquired Assets, the Assumed Liabilities or the
Acquired Subsidiaries, in each case taken as a whole, (5) any action directly
taken or not taken by the Seller pursuant to a requirement of this Agreement; or
(6) the assignment of rights to acquire the Taiwan Shares under this Agreement
or the transfer of the Taiwan Shares to the Taiwan Assignee. For the avoidance
of doubt, any actual or prospective decrease in the revenues of the Acquired
Subsidiaries or the Business that primarily results from the Chapter 11 Case,
the Bermuda Case or any of the other items listed in clauses (1) through (5) of
this definition shall not be deemed a Material Adverse Effect.
"Material Contracts" shall have the meaning ascribed thereto in Section
3.16.
"Multiemployer Plan" shall have the meaning ascribed thereto in Section
3.22(b).
"Multiple Employer Plan" shall have the meaning ascribed hereto in Section
3.22(b).
"NEC" means NEC Corporation, a company organized under the laws of Japan.
"NEC Payment Deferral Agreement" means that Payment Deferral Loan
Agreement, dated as of March 29, 2002, among NEC, the Seller and EAC, as
amended.
"NEC Supply Agreement" means that Project Development and Construction
Contract, dated as of October 13, 2000, between October 13, 2000, between NEC
and EAC, as amended.
"Network Facilities" shall have the meaning ascribed thereto in Section
3.19(d).
"Network IRU Agreements" shall have the meaning ascribed thereto in Section
3.19(a).
"Non-U.S. Benefit Plan" shall have the meaning ascribed thereto in Section
3.22(g).
"OA&M Liabilities" means amounts payable to third party telecommunications
services providers for (i) maintenance under Network IRU Agreements, (ii)
maintenance on the
23
EAC cable system and (iii) insurance and facilities management for cable landing
stations relating to the EAC cable system.
"Other Licenses" shall have the meaning set forth in Section 3.10(g).
"Owned Real Property" means (a) the real property owned by the Seller that
is related to the Business, together with all buildings and other structures,
facilities or improvements currently or hereafter located thereon, all fixtures,
systems, equipment and items of personal property of the Seller that are related
to the Business attached or appurtenant thereto and all easements, licenses,
rights and appurtenances relating to the foregoing, and (b) the real property
owned by the Seller or any Acquired Subsidiary, together with all buildings and
other structures, facilities or improvements currently or hereafter located
thereon, all fixtures, systems, equipment and items of personal property of the
Seller or any Acquired Subsidiary attached or appurtenant thereto and all
easements, licenses, rights and appurtenances relating to the foregoing.
"Paid Activation Costs" means Activation Costs that are incurred and paid
by the Seller during the period commencing on the date of this Agreement and
ending on the Closing Date.
"PCL" means Pacific Crossing Holdings Limited, a company organized under
the laws of Bermuda and any of its direct or indirect Subsidiaries.
"Pending Policies" shall have the meaning ascribed thereto in Section 3.26.
"Permitted Encumbrances" shall have the meaning ascribed thereto in Section
3.18(a).
"Person" means any individual, partnership, firm, corporation, limited
liability company, association, trust, unincorporated organization or other
entity, as well as any syndicate or group that would be deemed to be a person
under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.
"Process Agent" shall have the meaning ascribed thereto in Section 12.14.
"Purchase Price" shall have the meaning ascribed thereto in Section
2.03(a).
"Purchaser" shall have the meaning ascribed thereto in the Recitals.
"Purchaser Approvals" shall have the meaning ascribed thereto in Section
4.03.
"Purchaser Fees and Expenses Reimbursement" shall have the meaning ascribed
thereto in Section 10.02(a).
"Purchaser Material Default" shall have the meaning ascribed thereto in
Section 10.01(h).
24
"Purchaser's Accountants" means Ernst & Young, independent accountants of
the Purchaser.
"Real Property" shall have the meaning ascribed thereto in Section 3.18(b).
"Real Property Leases" shall have the meaning ascribed thereto in Section
3.18(b).
"Receivables" means any and all accounts receivable, notes and other
amounts receivable from third parties by the Acquired Subsidiaries, including,
without limitation, customers arising from the conduct of the Business before
the Closing Date, whether or not in the ordinary course, together with any
unpaid financing charges accrued thereon.
"Reference Balance Sheet" means the unaudited consolidated balance sheet of
the Acquired Assets and Assumed Liabilities as of September 30, 2002.
"Regulatory Approvals" shall mean all approvals, consents (including
consents to assignments of permits and authorizations to use public rights of
way), certificates, waivers and other authorizations (inclusive of the Telecom
Approvals) or orders required to be obtained from, or filings or other notices
required to be made with or to, any Governmental Authorities in order to enter
into this Agreement and consummate the transactions contemplated by this
Agreement.
"Reorganization Expenses" means the costs incurred and expenses paid or
payable by the Seller in connection with the administration of the Chapter 11
Case and the Bermuda Case, including (a) fees and expenses related to any
debtor-in-possession financing agreement, (b) obligations to pay professionals'
fees and expenses in connection with the Chapter 11 Case and the Bermuda Case
(including fees of the Joint Provisional Liquidators and of attorneys,
accountants, investment bankers, financial advisors and consultants retained by
the Seller or the Joint Provisional Liquidators, or any official committee
appointed in the Chapter 11 Case, and any compensation for making a substantial
contribution in the Chapter 11 Case) and reimbursement of any expenses incurred
by the Seller prior to the Closing Date in connection therewith (including any
obligations to pay any holdback of any such fees and expenses), (c) fees and
expenses payable to the United States trustee under Section 1930 of Title 28 of
the U.S. Bankruptcy Code, and (d) expenses of members of any official committee
appointed in the Chapter 11 Case.
"Required Contractual Consents" shall have the meaning ascribed thereto in
Section 5.06(b).
"Restricted Group Cash Financials" shall have the meaning ascribed thereto
in Section 3.07(a)(v).
"Retirement Plans" shall have the meaning ascribed thereto in Section 6.02.
"Returns" means all returns, reports, tax computations, schedules and all
forms relating to Taxes of the Seller and the Acquired Subsidiaries that are due
on or before or relate to any taxable period ending on or before the Closing
Date.
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"Revised Statement of Closing Cash Balance" shall have the meaning ascribed
thereto in Section 2.07(b).
"SEC" means the United States Securities and Exchange Commission and any
successor Governmental Authority.
"SEC Reports" shall have the meaning ascribed thereto in Section 3.06.
"Section 365 Order" shall have the meaning ascribed thereto in Section
8.02(e).
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the SEC thereunder,
all as the same shall be in effect at the time. Reference to a particular
section of the Securities Act shall include reference to the comparable section,
if any, of such successor federal statute.
"Seller" shall have the meaning ascribed thereto in the Recitals.
"Seller Approvals" shall have the meaning ascribed thereto in Section 3.05.
"Seller Benefit Plans" shall have the meaning ascribed thereto in Section
3.22(a).
"Seller Intellectual Property" means Intellectual Property owned or
licensed by the Seller or any Acquired Subsidiary and used in connection with
the Business as presently conducted.
"Seller Material Default" shall have the meaning ascribed thereto in
Section 10.01(g).
"Seller's Accountants" means PricewaterhouseCoopers, independent
accountants of the Seller.
"Senior Notes" means $408,000,000 13.375% senior notes issued pursuant to
the Indenture among the Seller, the guarantors from time to time and the United
States Trust Company of New York dated October 12, 2000.
"Shares" shall have the meaning ascribed thereto in the Recitals.
"Singapore-Sub" shall have the meaning ascribed thereto in Section 2.01(a).
"Statement of Closing Cash Balance" means the statement of Actual Closing
Cash Balance and Paid Activation Costs as of the Closing.
"Subsidiaries" means any and all corporations, partnerships, limited
liability companies, joint ventures, associations and other entities controlled
or owned by the Seller directly or indirectly through one or more
intermediaries.
26
"Subsidiary Bankruptcy Case" shall mean any case commenced by any direct or
indirect Subsidiary of the Seller under the Bankruptcy Code or any other
insolvency or similar Law.
"Taiwan Assignee" means a Person designated by the Purchaser in its sole
discretion prior to the Closing.
"Taiwan Shares" means the shares of Mebane Limited, a Hong Kong company
that is in the process of changing its name to Asia Global Crossing Holdings
(HK) Limited.
"Tax" or "Taxes" means any and all taxes, fees, levies, duties, tariffs,
imposts, and other charges of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect thereto)
imposed by any government or taxing authority, including, without limitation,
taxes or other charges on or with respect to income, franchises, windfall or
other profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers' compensation, unemployment compensation,
or net worth; taxes or other charges in the nature of excise, withholding, ad
valorem, stamp, transfer, value added, or gains taxes; license, registration and
documentation fees; and customs' duties, tariffs, and similar charges.
"Telecom Approvals" shall mean all approvals, consents (including consents
to the transfer of the Shares, where applicable), certificates, waivers and
other authorizations required to be obtained from, or filings or other notices
required to be made with any Governmental Authority with respect to the
Communications Licenses in order to consummate the transactions contemplated by
this Agreement and the other Ancillary Agreements.
"U.S. Bankruptcy Court" shall have the meaning ascribed thereto in the
Recitals.
"U.S. GAAP" means United States generally accepted accounting principles
and practices in effect from time to time applied consistently throughout the
periods involved.
"Vendors" means NEC and KDDI.
"Vendor Contracts" means the NEC Payment Deferral Agreement, the NEC Supply
Agreement, the KDDI Payment Deferral Option Agreement and the KDDI Supply
Agreement.
"Vendor Liens" means the security interests granted to the Vendors in the
assets of the Seller and its direct and indirect Subsidiaries related to the
East Asia Crossing Cable System, including, without limitation, in the equity
securities of the Seller's direct and indirect Subsidiaries that were pledged to
the Vendors or their agents as security for the obligations of the Seller and
EAC under the Vendor Contracts.
"Vendor Payables" means the portion of the amounts owed by EAC at the
Closing to the Vendors for settlement of outstanding claims under the Vendor
Contracts, which portion aggregates $28,300,000.
27
SECTION 1.02 Interpretation and Rules of Construction. In this Agreement,
except to the extent that the context otherwise requires
(a) when a reference is made in this Agreement to an Article, Section,
Exhibit or Schedule, such reference is to an Article or Section of, or a
Schedule to, this Agreement unless otherwise indicated;
(b) the table of contents and headings for this Agreement are for reference
purposes only and do not affect in any way the meaning or interpretation of this
Agreement;
(c) whenever the words "include," "includes" or "including" are used in
this Agreement, they are deemed to be followed by the words "without
limitation";
(d) the words "hereof," "herein" and "hereunder" and words of similar
import, when used in this Agreement, refer to this Agreement as a whole and not
to any particular provision of this Agreement;
(e) all terms defined in this Agreement have the defined meanings when used
in any certificate or other document made or delivered pursuant hereto, unless
otherwise defined therein;
(f) the definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms;
(g) any Law defined or referred to herein or in any agreement or instrument
that is referred to herein means such Law or statute as from time to time
amended, modified or supplemented, including by succession of comparable
successor Laws;
(h) references to a Person are also to its permitted successors and
assigns; and
(i) the use of "or" is not intended to be exclusive unless expressly
indicated otherwise.
ARTICLE II
PURCHASE AND SALE
SECTION 2.01 Purchase and Sale of Assets. (a) Upon the terms and subject to
the conditions of this Agreement and subject to approval of the U.S. Bankruptcy
Court pursuant to Sections 105, 363 and 365 of the Bankruptcy Code and to the
agreement of the Joint Provisional Liquidators in accordance with Section 9.01
of this Agreement, at the Closing, the Seller shall sell, assign, transfer,
convey and deliver, or cause to be sold, assigned, transferred, conveyed and
delivered, to the Purchaser or to a wholly-owned subsidiary of the Purchaser
("Singapore-Sub") as determined by the Purchaser and notified to the Seller in
writing, as soon as reasonably practicable but in any event no later than twenty
(20) Business Days prior to the Closing, and the Purchaser or Singapore-Sub (as
the case may be) shall purchase from the Seller, the Shares, the Indirect
Interests and all the assets, properties and rights set forth in Schedule
2.01(a), (the Shares, the Indirect Interests and the assets, properties and
rights to be purchased by the Purchaser or Singapore-Sub (as the case may be)
being referred to as the "Acquired Assets"), free and clear of any and all
Claims and any other interests, liens, mortgages, pledges, security interests,
rights of first refusal, obligations and encumbrances of
28
any kind whatsoever (collectively, "Encumbrances"), except for the Permitted
Encumbrances, in accordance with Section 363 of the Bankruptcy Code, provided,
that any Acquired Assets the Seller causes to be sold, assigned, transferred,
conveyed and delivered to the Purchaser or Singapore-Sub (as the case may be)
pursuant to this Section 2.01(a) that are not directly owned or held by the
Seller shall not be subject to Section 363 of the Bankruptcy Code and shall not
be deemed to be free and clear of Encumbrances pursuant thereto.
(b) Notwithstanding anything in Section 2.01(a) to the contrary, the
Acquired Assets shall exclude the assets, properties and rights set forth in
Schedule 2.01(b) including, without limitation, all claims, rights or causes of
action arising under Chapter 5 of the Bankruptcy Code (the "Excluded Assets").
SECTION 2.02 Assumption and Exclusion of Liabilities. (a) Upon the terms
and subject to the conditions of this Agreement, at the Closing, the Purchaser
shall assume and shall agree to pay, perform and discharge the Liabilities of
the Seller set forth in Schedule 2.02(a) (together with the Liabilities of the
Acquired Subsidiaries, the "Assumed Liabilities"). For the avoidance of doubt,
from and after the Closing Date, neither the Seller nor any Excluded Subsidiary
shall have any responsibility for paying, performing or discharging the Assumed
Liabilities.
(b) The Seller shall retain, and shall be responsible for paying,
performing and discharging when due, and the Purchaser and Singapore-Sub shall
not assume, be deemed to have assumed or have any responsibility for, all
Liabilities of the Seller and the Excluded Subsidiaries as of the Closing Date
set forth in Schedule 2.02(b) (including, without limitation, all Reorganization
Expenses) other than the Assumed Liabilities (the "Excluded Liabilities").
SECTION 2.03 Purchase Price. The aggregate consideration given by the
Purchaser and Singapore-Sub for the Acquired Assets shall be the sum of (a)
$81,200,000 in cash to be retained by or transferred to the Seller and subject
to adjustment pursuant to Section 2.07(e) and (b) the Assumed Liabilities
(together, the "Purchase Price").
SECTION 2.04 Closing. Subject to the terms and conditions of this
Agreement, the sale and purchase of the Acquired Assets and the assumption of
the Assumed Liabilities contemplated by this Agreement shall take place at a
closing (the "Closing") to be held at the offices of Shearman & Sterling in Hong
Kong at 10 A.M (Hong Kong) time) on the fifth Business Day following the
satisfaction or waiver of all conditions to the obligations of the parties set
forth in Sections 7.01 and 7.02 or at such other place or at such other time or
on such other date as the Seller and the Purchaser may mutually agree upon in
writing (the day on which the Closing takes place being the "Closing Date").
SECTION 2.05 Closing Deliveries by the Seller. At the Closing, the Seller
shall deliver or cause to be delivered to the Purchaser:
(a) share certificates evidencing the Shares duly endorsed in blank, or
accompanied by share transfer forms duly executed in blank, in form satisfactory
to the Purchaser and with all required share transfer tax stamps affixed in
accordance with Section 12.01, except in the case of (i) the Taiwan Shares which
shall be delivered only to the Taiwan
29
Assignee and (ii) the Shares which are identified in accordance with Section
2.01 shall be delivered to the Singapore-Sub;
(b) the Ancillary Agreements duly executed by the Seller;
(c) the resignations, effective as of the Closing, of all of the directors
and officers of each Acquired Subsidiary, except for such persons as shall have
been designated in writing prior to the Closing by the Purchaser to the Seller;
(d) a copy of (i) the Certificates of Incorporation, as amended (or similar
organizational documents), of each Acquired Subsidiary, certified by the
Secretary of State of the jurisdiction in which each such entity is incorporated
or organized (or equivalent official depending on the applicable jurisdiction),
as of a date not earlier than ten Business Days prior to the Closing Date and
accompanied by an appropriate certificate of each such entity, dated as of the
Closing Date, stating that no amendments have been made to such Certificate of
Incorporation (or similar organizational documents) since such date, and (ii)
the Bye-laws (or similar organizational documents) of each Acquired Subsidiary,
certified by the Secretary or Assistant Secretary (or equivalent official) of
each such entity;
(e) good standing certificates (or equivalent certificates), to the extent
available in the applicable jurisdiction, for the Seller and for each Acquired
Subsidiary from the Secretary of State (or equivalent official depending on the
applicable jurisdiction) of the jurisdiction in which case such entity is
incorporated or organized and from the Secretary of State (or equivalent
official depending on the applicable jurisdiction) in each other jurisdiction in
which the properties owned or leased by any of the Seller or any Acquired
Subsidiary, or the operation of its business in such jurisdiction, requires the
Seller or any Acquired Subsidiary to qualify to do business as a foreign
corporation, or such equivalent certificate or document as may be available in
the jurisdiction of organization for a particular Acquired Subsidiary and in
form and substance reasonably satisfactory to the Purchaser, in each case dated
as of a date not earlier than five Business Days prior to the Closing Date;
(f) the opinions, certificates and other documents required to be delivered
pursuant to Section 7.02; and
(g) all such other bills of sale, assignments and other instruments of
sale, assignment, transfer or conveyance as the Purchaser may reasonably request
or as may be otherwise necessary to evidence and effect the sale, transfer,
assignment, conveyance and delivery of the Acquired Assets and the Shares to the
Purchaser and to put the Purchaser in actual possession or control of the
Acquired Assets.
SECTION 2.06 Closing Deliveries by the Purchaser. At the Closing, the
Purchaser shall deliver to the Seller:
(a) executed counterparts of the Ancillary Agreements to which the
Purchaser or Singapore-Sub is a party;
(b) all such instruments of assumption as the Seller may reasonably require
or as may be otherwise necessary to evidence and effect the assumption of the
Assumed Liabilities by the Purchaser; and
30
(c) the certificates and other documents required to be delivered pursuant
to Section 7.02.
SECTION 2.07 Closing Adjustments.
(a) Closing Cash Balance. No later than 5 Business Days after the Closing
Date, the Seller shall deliver to the Purchaser the Statement of Closing Cash
Balance prepared by the Seller's Accountants on the basis of accounting
principles and practices used by the Seller in the preparation of the Financial
Statements, which shall, amongst other items, clearly identify the Paid
Activation Costs. Seller shall also deliver copies of all documents, including
work papers of the Seller's Accountants used in preparing the Statement of
Closing Cash Balance and other information that may be reasonably requested by
the Purchaser or the Purchaser's Accountants and otherwise provide the Purchaser
or the Purchaser's Accountants access to such information for the purpose of
verifying the accuracy of the Statement of Closing Cash Balance, including
(which for purposes of this Section 2.07 shall include Cash Equivalents),
without limitation, all receipts and other documents evidencing the Paid
Activation Costs.
(b) Revised Statement of Closing Cash Balance. As promptly as practicable,
but in any event within 10 Business Days following the receipt of the Statement
of Closing Cash Balance, the Purchaser shall determine whether to accept the
Statement of Closing Cash Balance or dispute it. If the Purchaser chooses to
dispute the Statement of Closing Cash Balance, it shall deliver to the Seller a
revised Statement of Closing Cash Balance, prepared by the Purchaser's
Accountants in the form of the Statement of Closing Cash Balance and prepared on
the basis of accounting principles and practices used by the Seller in the
preparation of the Statement of Closing Cash Balance (the "Revised Statement of
Closing Cash Balance"). Following the delivery of the Revised Statement of
Closing Cash Balance, the Purchaser shall, promptly upon request therefor by the
Seller, provide copies of any documents, including the work papers of the
Purchaser's Accountants used in preparing the Revised Statement of Closing Cash
Balance, and other information that may be reasonably requested by the Seller or
the Seller's Accountants or otherwise provide the Seller or the Seller's
Accountants with reasonable access to such information for the purpose of
verifying the Revised Statement of Closing Cash Balance.
(c) Disputes. (i) Subject to clause (ii) of this Section 2.07(c) and
Section 2.07(d), the Revised Statement of Closing Cash Balance delivered by the
Purchaser to the Seller shall be deemed to be and shall be final, binding and
conclusive on the parties hereto.
(ii) Seller may dispute any amounts reflected on the Revised Statement
of Closing Cash Balance; provided, however, that the Seller shall have
notified the Purchaser and the Purchaser's Accountants in writing of the
amount thereof in dispute and setting forth, in reasonable detail, the
basis for such dispute, within 10 Business Days of the Purchaser's delivery
of the Revised Statement of Closing Cash Balance to the Seller. In the
event of such a dispute, the Seller and the Purchaser shall attempt in good
faith to reconcile their differences, and any resolution by them of the
Revised Statement of Closing Cash Balance or as to any disputed amounts in
connection therewith shall be final, binding and conclusive on the parties
hereto. If the Seller and the Purchaser are unable to reach a resolution
with such effect within 10 Business Days after the receipt by the Purchaser
of the Seller's written notice of dispute, the dispute shall be submitted
to the Independent Accounting Firm for expedited resolution. In acting
under this
31
Agreement, the Independent Accounting Firm shall be entitled to the
privileges and immunities of arbitrators.
(d) Final Statement of Closing Cash Balance. The Statement of Closing Cash
Balance shall be deemed final and the Distribution Amount shall be calculated in
reference thereto, unless Purchaser disputes such amount pursuant to Section
2.07(b). In the event of such a dispute, the Revised Statement of Closing Cash
Balance shall be deemed final and the Distribution Amount shall be calculated in
reference thereto upon the earliest of (i) the failure of the Seller to notify
the Purchaser of a dispute within 10 Business Days of the Purchaser's delivery
of the Revised Statement of Closing Cash Balance to the Seller and (ii) the
resolution of all disputes, pursuant to Section 2.07(c).
(e) Cash Transfers. (i) Within 5 Business Days of calculating the
Distribution Amount, transfers of cash shall be made such that the aggregate
amount of cash held by the Seller and the Excluded Subsidiaries (excluding PCL)
as of the Closing Date after giving effect to the transfers contemplated by this
Section 2.07(e) shall be equal to the Distribution Amount. If the aggregate
amount of cash held by the Seller and the Excluded Subsidiaries (excluding PCL)
as of the Closing Date (prior to any transfers under this Section 2.07(e)(i)) is
less than the Distribution Amount, cash shall be transferred to the Seller:
(A) first, to the extent necessary and possible, from the Acquired
Subsidiaries; and
(B) second, to the extent necessary, from the Purchaser;
such that the aggregate amount of cash held by the Seller and the Excluded
Subsidiaries (excluding PCL) as of the Closing Date (including amounts
transferred pursuant to this Section 2.07(e)(i)) was equal to the Distribution
Amount.
(ii) In the event that the aggregate amount of cash held by the Seller
and the Excluded Subsidiaries (excluding PCL) as of the Closing Date (prior
to any transfers under this subsection (e)(ii) was greater than the
Distribution Amount, the Seller shall, and the Seller shall cause the
Excluded Subsidiaries (excluding PCL) to, transfer to the Acquired
Subsidiaries or the Purchaser, the excess of (x) the aggregate amount of
cash held by the Seller and the Excluded Subsidiaries (excluding PCL) as of
the Closing Date (prior to any transfers under this subsection (e)(ii))
over (y) the Distribution Amount.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SELLER
Except as set forth in the Disclosure Schedule (which Disclosure Schedule
shall be arranged in Sections corresponding to the numbered and lettered
sections of this Article III, and any information disclosed in any such Section
shall be deemed to be disclosed only for purposes of such section, unless it is
readily apparent that the disclosure contained in such section contains enough
information regarding the subject matter of other representations and
32
warranties contained in this Agreement so as to clearly qualify or otherwise
clearly apply to such representations and warranties), as an inducement to the
Purchaser to enter into this Agreement, the Seller hereby represents and
warrants to the Purchaser as follows:
SECTION 3.01 Organization, Authority and Qualification of the Seller. The
Seller is a company duly organized, validly existing and in good standing
(except for the commencement of the Bermuda Case and the appointment of the
Joint Provisional Liquidators in Bermuda) under the laws of Bermuda and, subject
to the requirements that, (i) under Section 9.01 the Joint Provisional
Liquidators obtain sanction from the Bermuda Court of their decision to approve
the Bermuda Debtor's entry into this Agreement, (ii) the U.S. Bankruptcy Court
approves the Seller's entry into this Agreement, and (iii) the Joint Provisional
Liquidators do not withdraw their approval of the Bermuda Debtor's entry into
this Agreement pursuant to their fiduciary duties under Bermuda Law, has all
necessary corporate power and authority to enter into this Agreement and the
Ancillary Agreements, to carry out its obligations hereunder and thereunder and
to consummate the transactions contemplated by this Agreement and thereby. The
Seller is duly licensed or qualified to do business and is in good standing
(except for the commencement of the Bermuda Case and the appointment of the
Joint Provisional Liquidators in Bermuda) in each jurisdiction (to the extent
such concept is recognized therein) in which the properties owned or leased by
it or the operation of its business makes such licensing or qualification
necessary, except to the extent that the failure to be so licensed or qualified
and in good standing would not (a) have a material adverse effect on the ability
of the Seller to carry out its obligations under, and to consummate the
transactions contemplated by, this Agreement and the Ancillary Agreements or (b)
have a material adverse effect on the ability of the Seller and the Acquired
Subsidiaries to conduct the Business. The execution and delivery of this
Agreement and the Ancillary Agreements by the Seller, the performance by the
Seller of its obligations hereunder and thereunder and the consummation by the
Seller of the transactions contemplated by this Agreement and thereby have been
duly authorized by all requisite action on the part of the Seller. Upon the
entry of the Approval Order, and the obtaining of sanction from the Bermuda
Court under Section 9.01 by the Joint Provisional Liquidators, this Agreement
and the Ancillary Agreements shall have been duly executed and delivered by the
Seller, and (assuming due authorization, execution and delivery by the
Purchaser) this Agreement shall constitute, and upon their execution the
Ancillary Agreements shall constitute, legal, valid and binding obligations of
the Seller, enforceable against the Seller in accordance with their respective
terms.
SECTION 3.02 Organization, Authority and Qualification of the Acquired
Subsidiaries. Section 3.02 of the Disclosure Schedule sets forth a true and
complete list of all Acquired Subsidiaries, listing for each its name, type of
entity, the jurisdiction and date of its incorporation or organization, its
authorized capital stock, partnership capital or equivalent, the number and type
of its issued and outstanding shares of capital stock, partnership interests or
similar ownership interests and the current ownership of such shares,
partnership interests or similar ownership interests. Each Acquired Subsidiary
is a corporation duly organized, validly existing and, to the extent such
concept is recognized therein, in good standing under the laws of the
jurisdiction of its incorporation and has all necessary corporate or
organizational power and authority to own, operate or lease the properties and
assets now owned, operated or leased by it and to carry on the Business as it
has been and is currently conducted by it, except to the extent that the failure
to be so organized, existing and in good standing would not (a) have a material
adverse effect on the ability of the Seller to carry out its obligations under,
and to consummate the transactions contemplated by, this Agreement and the
Ancillary Agreements or (b) have a
33
material adverse effect on the ability of the Seller and the Acquired
Subsidiaries to conduct the Business. Each Acquired Subsidiary is duly licensed
or qualified to do business and is in good standing (in jurisdictions where such
concept is recognized) in each jurisdiction in which the properties owned or
leased by it or the operation of its business makes such licensing or
qualification necessary or desirable, except to the extent that the failure to
be so licensed or qualified and in good standing would not materially (x)
adversely affect the ability of the Seller to carry out its obligations under,
and to consummate the transactions contemplated by, this Agreement and the
Ancillary Agreements, or (y) adversely affect the ability of the Seller and the
Acquired Subsidiaries to conduct the Business, and all such jurisdictions are
set forth in Section 3.02 of the Disclosure Schedule. All corporate actions
taken by each Acquired Subsidiary in connection with the negotiation, execution,
delivery and performance of this Agreement and the Ancillary Agreements have
been duly authorized, and no Acquired Subsidiary has taken any action in
connection therewith that in any respects conflicts with, constitutes a default
under or results in a violation of any provision of its Certificate of
Incorporation or By-laws or similar organizational documents. True and correct
copies of the Certificate of Incorporation, By-laws or similar organizational
documents of each Acquired Subsidiary, each as in effect on the date hereof,
have been delivered by the Seller to the Purchaser.
SECTION 3.03 Capitalization, Corporate Books and Records. (a) None of the
issued and outstanding Shares were issued in violation of any preemptive rights.
There are no options, warrants, convertible securities or other rights,
agreements, arrangements or commitments of any character relating to the Shares,
the Indirect Interests or any Acquired Subsidiary or obligating the Seller, the
Excluded Subsidiaries or any Acquired Subsidiary to issue or sell any Shares, or
any other interest in, any Acquired Subsidiary. There are no outstanding
contractual obligations of any Acquired Subsidiary to repurchase, redeem or
otherwise acquire any Shares or any other securities issued by any Acquired
Subsidiary or to provide funds to, or make any investment (in the form of a
loan, capital contribution or otherwise) in, any other Person. The Shares and
the Indirect Interests constitute all of the issued and outstanding capital
stock of the Acquired Subsidiaries (except the JVs) and are owned of record and
beneficially by the Seller or its Acquired Subsidiaries free and clear of all
Encumbrances (except the Vendor Liens). Upon consummation of the transactions
contemplated by this Agreement and registration of the Shares and the EAC Shares
in the name of the Purchaser in the stock records of the Acquired Subsidiaries,
the Purchaser, assuming it shall have purchased such interests for value in good
faith and without notice of any adverse claim, will own, directly or indirectly,
all the issued and outstanding capital stock of the Acquired Subsidiaries
(except the JVs), free and clear of all Encumbrances (except the Vendor Liens).
Upon consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements, the Shares and the EAC Shares will be fully paid and
non-assessable (in jurisdictions where such concept is recognized). There are no
voting trusts, shareholder agreements, proxies or other agreements or
understandings in effect with respect to the voting or transfer of any of the
Shares. The JV Shares represent the percentage of the outstanding capital stock
or other equity interests and the number of such interests of each JV set forth
next to such JV's name on Attachment A to Schedule 2.01(a) and are owned of
record and beneficially by the Seller or one of its Subsidiaries, free and clear
of all Encumbrances (except the Vendor Liens). Upon consummation of the
transactions contemplated by this Agreement and registration of the JV Shares in
the name of the Purchaser in the stock records of the respective JVs, the
Purchaser, assuming it shall have purchased the JV Shares for value in good
faith and without notice of any adverse claim, will own the JV Shares free and
clear of all Encumbrances (except the Vendor
34
Liens). Section 3.03 of the Disclosure Schedule sets forth the exceptions to the
representations and warranties made by the Seller in this Section 3.03(a).
(b) The share register of each Acquired Subsidiary accurately records: (i)
the name and address of each Person owning shares and (ii) the certificate
number of each certificate evidencing shares of capital stock issued by the
Acquired Subsidiary, the number of shares evidenced by each such certificate,
the date of issuance thereof and, in the case of cancellation, the date of
cancellation.
(c) The minute books of the Acquired Subsidiaries contain accurate records
of all meetings and accurately reflect all other actions taken by the
shareholders, boards of directors and all committees of the boards of directors
of the Acquired Subsidiaries.
SECTION 3.04 No Conflict. Assuming that all consents, approvals,
authorizations and other actions described in Section 3.05 have been obtained,
except as may result from any facts or circumstances relating solely to the
Purchaser or any Affiliate of the Purchaser, the execution, delivery and
performance of this Agreement and the Ancillary Agreements by the Seller do not
and will not (a) violate, conflict with or result in the breach of any provision
of the Certificate of Incorporation or By-laws (or similar organizational
documents) of the Seller or any Acquired Subsidiary, (b) except as set forth in
Section 3.04 of the Disclosure Schedule, conflict with or violate any material
Law or Governmental Order applicable to the Seller or any Acquired Subsidiary,
or any of their respective assets, properties or businesses including, without
limitation, the Business, or (c) except as set forth in Section 3.04 of the
Disclosure Schedule, conflict with, result in any breach of, constitute a
default (or event which with the giving of notice or lapse of time, or both,
would become a default) under, require any consent under, or give to others any
rights of termination, amendment, acceleration, suspension, revocation or
cancellation of, or result in the creation of any Encumbrance on any of the
Acquired Assets pursuant to, any note, bond, mortgage or indenture, contract,
agreement, lease, sublease, license, permit, franchise or other instrument or
arrangement to which the Seller or any Acquired Subsidiary is a party or by
which any of the Acquired Assets is bound or affected, except, in the case of
clauses (b) and (c), to the extent that such conflicts, breaches, defaults or
other matters would not have a material adverse effect on (i) the ability of the
Seller to carry out its obligations under, and to consummate the transactions
contemplated by, this Agreement and the Ancillary Agreements, or (ii) the
ability of the Seller and the Acquired Subsidiaries to conduct the Business.
SECTION 3.05 Consents and Approvals. The execution, delivery and
performance of this Agreement and each Ancillary Agreement by the Seller do not
and will not require any Regulatory Approvals, except (a) the entry by the U.S.
Bankruptcy Court of the Bidding Procedures Order, the Approval Order, any
Section 365 Orders and related orders of the U.S. Bankruptcy Court affecting
matters of procedure; (b) the approval by the Bermuda Court of the decision of
the Joint Provisional Liquidators to enter into this Agreement, (c) the approval
of the Joint Provisional Liquidators, subject to the sanction of the Bermuda
Court, of the entry by the Bermuda Debtor into this Agreement; (d) the approval
of the Bermuda Monetary Authority; (e) the Regulatory Approvals listed in
Section 3.05 of the Disclosure Schedule; and (f) the Telecom Approvals (the
Regulatory Approvals referred to in (a) through (f) being the "Seller
Approvals").
35
SECTION 3.06 SEC Reports. Except as set forth in Section 3.06 of the
Disclosure Schedule, the Seller has timely filed all proxy statements, reports,
registration statements, schedules, forms and other documents required to be
filed by it under the Exchange Act and the Securities Act and has made available
to the Purchaser complete copies of all such proxy statements, reports,
registration statements, schedules, forms and other documents and other reports
filed by the Seller since May 23, 2000 under the Exchange Act and the Securities
Act, each as filed with the SEC (collectively, the "SEC Reports"). All SEC
Reports filed by the Seller and/or the Acquired Subsidiaries after the date
hereof through the Closing Date will, if and when filed, be in compliance in all
material respects with the requirements of its respective report form, the
Exchange Act and the Securities Act and will not, at the time they are filed or
declared effective, contain any untrue statement of a material fact or omit 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 are made, not
misleading. The failure of Seller to file any SEC Reports shall not constitute a
breach of this Agreement. None of the Acquired Subsidiaries are required to file
any statements or reports with the SEC.
SECTION 3.07 Financial Information; Books and Records. Except as set forth
in Section 3.07 of the Disclosure Schedule, (a) True and complete copies of (i)
the Reference Balance Sheet, (ii) the audited consolidated balance sheet of the
Seller for the fiscal year ended as of December 31, 2000 and the related audited
consolidated statements of income, consolidated statement of cash flow, retained
earnings, shareholders' equity and changes in financial position of the Seller,
together with all related notes and schedules thereto, accompanied by the
reports thereon of the Seller's Accountants, (iii) the unaudited consolidated
balance sheet of the Seller and the unaudited balance sheet of each Acquired
Subsidiary, in each case for the fiscal year ended as of December 31, 2001, and
the related unaudited consolidated statements of income, cash flow, retained
earnings, shareholders' equity and changes in financial position of the Seller
for such fiscal year, together with (except in the case of the balance sheet of
each Acquired Subsidiary) all related notes and schedules thereto, and (iv) the
unaudited consolidated balance sheet of the Seller and the unaudited balance
sheet of each Acquired Subsidiary, in each case for each of the three fiscal
quarters ended as of March 31, 2002, June 30, 2002, and September 30, 2002 and
the related unaudited consolidated statements of income and cash flow of the
Seller for each of such fiscal quarters ((ii) -- (iv) inclusive collectively
referred to herein as the "Financial Statements") and (v) the cash financials of
the Seller and its Subsidiaries (excluding PCL) for the three fiscal quarters
ended as of March 31, 2002, June 30, 2002, and September 30, 2002 (the
"Restricted Group Cash Financials") have been delivered by the Seller to the
Purchaser provided, however, that the balance sheet for Broadband Tower (Japan)
dated as of March 31, 2002, and June 30, 2002 and the balance sheet for
Philippines Crossing Land Corporation dated as of December 31, 2001 have not
been so delivered and shall not be included in the term Financial Statements.
The Reference Balance Sheet (i) was prepared in accordance with the books of
account and other financial records of the Seller and the Acquired Subsidiaries,
(ii) presents fairly in all material respects as required under U.S. GAAP the
consolidated financial condition of the Acquired Subsidiaries, the Assumed
Liabilities and the Acquired Assets as of the date thereof (except that they
exclude the Excluded Assets and Excluded Liabilities), (iii) has been prepared
in accordance with U.S. GAAP applied on a basis consistent with the preparation
of the Financial Statements (except that (A) it excludes the Excluded Assets and
Excluded Liabilities and (B) long-lived asset impairments have not been
reflected in the Reference Balance Sheet), and (iv) includes all adjustments
(consisting only of normal recurring accruals) that are necessary for a fair
presentation of the consolidated financial condition of the Acquired
Subsidiaries,
36
Assumed Liabilities and the Acquired Assets as of the date thereof. The
Financial Statements and the audited statements, when delivered (w) were, or
will have been, prepared in accordance with the books of account and other
financial records of the Seller and, as applicable, the Acquired Subsidiaries,
(x) present fairly in all material respects the consolidated financial
condition, results of operations and cash flow of the Seller and, as applicable,
the Acquired Subsidiaries as of the dates thereof or for the periods covered
thereby, (y) have been, or will have been, prepared in accordance with U.S. GAAP
applied on a basis consistent with the past practices of the Seller and, as
applicable, the Acquired Subsidiaries (except (1) for the absence of footnotes
from the quarterly financial statements and (2) that long-lived asset
impairments have not been reflected in the Financial Statements), and (z) except
in the case of the quarterly financial statements, include all adjustments
(consisting only of normal recurring accruals) that are necessary for a fair
presentation of the consolidated financial condition of the Seller and, as
applicable, the Acquired Subsidiaries, the results of the operations and cash
flow of the Seller as of the dates thereof or for the periods covered thereby.
The Restricted Group Cash Financials: (a) were prepared in accordance with the
books of account and other financial records of the Seller and its Subsidiaries
(excluding PCL) and (b) present fairly in all material respects the results of
operations of the Seller and, as applicable, its Subsidiaries (excluding PCL)
based on the methodology set forth in the Restricted Group Cash Financials.
(b) The books of account and other financial records of the Seller and the
Acquired Subsidiaries: (i) reflect all items of income and expense and all
assets and Liabilities required to be reflected therein in accordance with U.S.
GAAP applied on a basis consistent with the past practices of the Seller and the
Acquired Subsidiaries, respectively (except that long-lived asset impairments
have not been reflected therein), (ii) are in all material respects complete and
correct, and do not contain or reflect any material inaccuracies or
discrepancies and (iii) have been maintained in accordance with good business
and accounting practices.
(c) Since January 1, 2001, the Seller and the Acquired Subsidiaries have
maintained a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
U.S. GAAP, (iii) access to assets is permitted only in accordance with
management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(d) The Seller has not factored any of its receivables or entered into any
off balance sheet or other financing arrangements of a type that would not be
required to be shown or reflected on the Reference Balance Sheet or the SEC
Reports.
SECTION 3.08 Absence of Undisclosed Liabilities. As of the date of this
Agreement, there are no material Liabilities of the Seller or any Acquired
Subsidiary, other than Liabilities (i) reflected on or reserved against the
Reference Balance Sheet, (ii) set forth in Section 3.08 of the Disclosure
Schedule, or (iii) incurred in connection with the transactions contemplated by
this Agreement. As of the Closing Date, there will be no material Liabilities of
the Seller or any Acquired Subsidiary, other than (i) reflected on or reserved
against the Reference Balance Sheet, (ii) set forth in Section 3.08 of the
Disclosure Schedule, (iii) incurred in the ordinary course of business after the
date of this Agreement, (iv) incurred in connection
37
with the transactions contemplated by this Agreement or (v) the Activation
Costs. To the extent required by U.S. GAAP, reserves are reflected on the
Reference Balance Sheet against all material Liabilities of the Seller and the
Acquired Subsidiaries as of the date thereof, other than Liabilities relating to
the Excluded Assets and Excluded Liabilities, in amounts established on a basis
consistent with the past practices of the Seller and the Acquired Subsidiaries
and in accordance with U.S. GAAP.
SECTION 3.09 Receivables. Section 3.09 of the Disclosure Schedule is an
aged list of the Receivables (based on 30, 60, 90 and 120-day Receivables) of
the Seller and each of the Acquired Subsidiaries included on the Reference
Balance Sheet. All Receivables reflected on the Reference Balance Sheet (other
than those identified as inter-company receivables) arose from the sale of
services to Persons who are not Affiliates of the Seller or any Acquired
Subsidiary in the ordinary course of business consistent with past practice.
Neither the Seller nor any Acquired Subsidiary has received notice of any claims
of setoff or other defenses or counterclaims to any Receivable, other than
normal cash discounts accrued in the ordinary course of business consistent with
past practice. The reserves for doubtful accounts on the Reference Balance Sheet
is adequate in accordance with U.S. GAAP and the Seller's past practices.
Neither the Seller nor any Acquired Subsidiary has any Encumbrance subsisting
over any part of its present or future revenues or any other obligation having
similar effect.
SECTION 3.10 Regulatory Matters. (a) The Seller or the Acquired
Subsidiaries have all licenses, permits, certificates, franchises, consents,
waivers, registrations or other regulatory authorizations from the appropriate
Governmental Authority in each applicable jurisdiction required to provide the
telecommunications network services and operate the Network Facilities or
otherwise provide telecommunication services as presently conducted by the
Business (the "Communications Licenses"). All of the Communications Licenses are
set forth in Section 3.10(a) of the Disclosure Schedule.
(b) Each of the Communications Licenses was duly issued, is valid and in
full force and effect, has not been suspended, canceled, revoked or modified in
any adverse manner, and is validly held, free and clear of all Encumbrances and,
in each case, to the Knowledge of the Seller and upon the grant of the Telecom
Approvals, shall remain so immediately following the consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements. Except
as set forth on Section 3.10(b) of the Disclosure Schedule, to the Knowledge of
the Seller, there is no circumstance, Law, event or other reason that exists or
is likely to exist that would prevent the granting of the Telecom Approvals or
the transfer of the Communications Licenses.
(c) Except as set forth in Section 3.10(c) of the Disclosure Schedule, each
holder of a Communications License (i) has operated in all material respects in
compliance with all terms thereof including all systems build-out requirements,
and (ii) is in all material respects in compliance with, and the conduct of its
business has been and is in all material respects in compliance with, the
applicable Law, and has filed all registrations, statements, documents and
reports and paid all fees required by all applicable Law, in each case, relating
to the Communications Licenses and any other applicable Law. There is no pending
or, to the Knowledge of the Seller, threatened action by or before any
Governmental Authority to revoke, cancel, suspend, modify or refuse to renew any
of the Communications Licenses, there is not now issued, outstanding or, to the
Knowledge of the Seller, threatened, any notice by any
38
Governmental Authority of any violation or complaint, or any application,
complaint, or proceeding (other than applications, proceedings, or complaints
that generally affect the Seller's industry as a whole) relating to the business
or operations of the Seller or any Acquired Subsidiary. To the Knowledge of the
Seller, no Person has asserted in writing to a Governmental Authority that a
material Communications License should be modified or revoked, or that the
Seller or any Acquired Subsidiary is not in material compliance with any
Communications License.
(d) To the Knowledge of the Seller, no event has occurred which would
permit the revocation or termination of any of the Communications Licenses or
the imposition of any restriction thereon, or that would prevent any of the
Communications Licenses from being renewed on a routine basis or in the ordinary
course.
(e) To the Knowledge of the Seller, Section 3.10(e) of the Disclosure
Schedule sets forth a complete list of all Telecom Approvals required by Seller
in connection with the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements. Assuming the receipt of the Telecom
Approvals, to the Knowledge of the Seller, none of the execution, delivery or
performance of this Agreement or any of the other Ancillary Agreements by the
Seller, nor the consummation by Seller of the transactions contemplated hereby
or thereby, will result in any revocation, cancellation, suspension or
modification of any Communications Licenses or give rise to the right of any
Governmental Authority to take any such action or to fail to renew any
Communications License.
(f) No Acquired Subsidiary has (i) a security clearance issued by any
Governmental Authority or (ii) a request for a new or upgraded security
clearance in process with any Governmental Authority.
(g) In addition to the Communications Licenses, the Seller and each
Acquired Subsidiary holds and is in compliance with all other material licenses,
franchise permits, consents, registrations, certificates, and other governmental
or regulatory permits, authorizations or approvals required for the operation of
the business as presently conducted and for the ownership, lease or operation of
the Seller's and the Acquired Subsidiaries' properties (collectively, "Other
Licenses"). All of such Other Licenses are valid and in full force and effect
and, to the Knowledge of the Seller, upon grant of any Regulatory Approvals
applicable to the Other Licenses, shall remain so immediately following the
consummation of the transactions contemplated by this Agreement and the other
Ancillary Agreements, and the Seller and the Acquired Subsidiaries have duly
performed and are in compliance in all material respects with all of their
respective obligations under such Other Licenses. Except as set forth on Section
3.10(g) of the Disclosure Schedule, to the Knowledge of the Seller, there is no
circumstance, Law, event or other reason that exists or is likely to exist that
would prevent the granting of the Regulatory Approvals or the transfer of the
Other Licenses. To the Knowledge of the Seller, no Person has alleged any
violation or failure to comply by the Seller or any Acquired Subsidiary, with
any Other License, no suspension, cancellation or termination of any such Other
License is threatened, and no event has occurred or circumstances exist that may
(with or without notice or lapse of time) constitute or result directly or
indirectly in a violation of or failure to comply with any term or requirement
of any such Other License, or result directly or indirectly in the revocation,
withdrawal, suspension, cancellation or termination of, or any modification to,
any such Other License.
39
SECTION 3.11 Acquired Assets and Assumed Liabilities. (a) Except as set
forth in Section 3.11(a) of the Disclosure Schedule, all of the Assets acquired
since the date of the Reference Balance Sheet and that would otherwise have been
set forth in the Reference Balance Sheet have been acquired for consideration
not less or greater than the fair market value of such Assets at the date of
such acquisition.
(b) Except as set forth in Section 3.11(b) of the Disclosure Schedule, each
of the Seller or an Acquired Subsidiary, as the case may be, owns, leases or has
the legal right to use all the properties and assets, including, without
limitation, the Seller Intellectual Property and the Real Property, used or
intended by Seller to be used in the conduct of the Business or otherwise owned,
leased or used by the Seller or any Acquired Subsidiary, and, with respect to
contract rights, is a party to and enjoys the right to the benefits of all
contracts, agreements and other arrangements used or intended to be used by the
Seller (as such relate to the Business), or any Acquired Subsidiary or in or
relating to the conduct of the Business, all of which properties, assets and
rights constitute Acquired Assets or Excluded Assets. Each of the Seller or an
Acquired Subsidiary (as the case may be) has good and marketable title to, or,
in the case of leased or subleased Acquired Assets, valid and subsisting
leasehold interests in, all the Acquired Assets, free and clear of all
Encumbrances other than Permitted Encumbrances.
(c) Except as set forth in Section 3.11(c) of the Disclosure Schedule, the
Acquired Assets constitute all the properties, assets and rights forming a part
of, used or held in the conduct of, the Business (other than the Excluded
Assets).
(d) Except as set forth in Section 3.11(d) of the Disclosure Schedule, the
Seller has the complete and unrestricted power and unqualified right to sell,
assign, transfer, convey and deliver the Acquired Assets to the Purchaser,
Singapore-Sub or the Taiwan Assignee (as the case may be) in accordance with the
terms of this Agreement without penalty or other materially adverse
consequences. Following the consummation of the transactions contemplated by
this Agreement and the execution of the instruments of transfer contemplated by
this Agreement, the Purchaser, Singapore-Sub or the Taiwan Assignee (as the case
may be) will own, with good, valid and marketable title, or lease, under valid
and subsisting leases, or otherwise acquire the interests of the Seller (as the
case may be) in the Acquired Assets, free and clear of any Encumbrances, other
than Permitted Encumbrances, and without incurring any penalty or other
materially adverse consequence, including, without limitation, any increase in
rentals, royalties, or license or other fees imposed as a result of, or arising
from, the consummation of the transactions contemplated by this Agreement.
(e) Other than the network facilities which are addressed in Section 3.19
below, the Acquired Assets are structurally sound, are in good operating
condition and repair as is consistent with standards generally followed in the
industry and have been maintained in accordance with good business practice. The
Acquired Assets are adequate for the uses to which they are being and intended
by Seller to be put, and none of the Acquired Assets is in need of maintenance
or repairs except for ordinary, routine maintenance and repairs that are not
material in nature or cost and taking into account the age and length of the use
of the same, ordinary wear and tear excepted. There are no facts or conditions
affecting any of the Acquired Assets which could, individually or in the
aggregate, interfere in any material respect with the occupancy or operation
thereof as currently occupied or operated.
40
SECTION 3.12 Conduct in the Ordinary Course; Absence of Certain Changes,
Events and Conditions. Since the date of the Reference Balance Sheet, except as
contemplated by this Agreement or as set forth in Section 3.12 of the Disclosure
Schedule, the Business has been conducted in the ordinary course and consistent
with past practice. As amplification and not limitation of the foregoing, except
as contemplated by this Agreement or as set forth in Section 3.12 of the
Disclosure Schedule, since the date of the Reference Balance Sheet, none of the
Seller or any Acquired Subsidiary has:
(a) permitted or allowed any of the Assets to be subjected to any
Encumbrance, other than Permitted Encumbrances and Encumbrances that will be
released at or prior to the Closing;
(b) written down or written up (or failed to write down or write up) as
required by U.S. GAAP consistent with past practice the value of any Receivables
or revalued any of the Assets;
(c) made any change in any method of accounting or accounting practice or
policy used by the Seller or any Acquired Subsidiary, except as may have been
required by a change in U.S. GAAP or by applicable Law;
(d) amended, terminated, cancelled or compromised any material claims of
the Seller (related to the Business) or any Acquired Subsidiary or waived any
other rights of substantial value to the Seller (related to the Business) or any
Acquired Subsidiary;
(e) sold, transferred, leased, subleased, licensed or otherwise disposed of
any material properties or assets, real, personal or mixed (including, without
limitation, leasehold interests and intangible property);
(f) issued or sold any capital stock, notes, bonds or other securities, or
any option, warrant or other right to acquire the same, of the Seller or any
Acquired Subsidiary;
(g) redeemed any of the capital stock or declared, made or paid any
dividends or distributions (whether in cash, securities or other property) to
the holders of capital stock of the Seller or any Acquired Subsidiary or
otherwise, other than dividends, distributions and redemptions declared, made or
paid by the Seller solely to the Seller or by any Acquired Subsidiary solely to
the Seller or another Acquired Subsidiary;
(h) merged or amalgamated with, entered into a consolidation with or
acquired an interest in any Person or acquired any portion of the assets or
business of any Person or any division or line of business thereof, or otherwise
acquired any material assets, except as provided in Section 3.12(i) below.
(i) issued any sales orders or otherwise agreed to make any purchases
involving exchanges in value in excess of $500,000 individually or $1,500,000 in
the aggregate, other than the sale or purchase of capacity arrangements
(including IRUs) in the ordinary course of business that are on terms consistent
with market practice and that provide a positive cash contribution over the life
of the agreement;
41
(j) made any material changes in the customary methods of operations of the
Seller, any Acquired Subsidiary or the Business, including, without limitation,
practices and policies relating to maintenance, purchasing, inventories,
marketing, selling and pricing;
(k) shortened or lengthened the customary payment cycles for any of their
payables or receivables including the Commercial Payables and Receivables;
(l) entered into any contracts, agreements or other obligations for the
expenditure of any amounts in respect of capital expenditures (as such term is
used in the Financial Statements) otherwise than as reasonably required in the
ordinary course of business or made any capital expenditures that are in excess
of or less than otherwise reasonably required in the ordinary course of
business;
(m) made any express or deemed election or settled or compromised any
liability with respect to Taxes of the Seller or any Acquired Subsidiary;
(n) incurred any Indebtedness (including Indebtedness incurred in the
ordinary course) in excess of $500,000 individually or $1,500,000 in the
aggregate;
(o) made any loan to, guaranteed any Indebtedness of or otherwise incurred
any Indebtedness on behalf of any Person, in each case in excess of $500,000
individually or $1,000,000 in the aggregate;
(p) paid any creditor any material amount owed to such creditor except with
the prior written approval of the Purchaser and/or, if applicable, pursuant to
an order of the U.S. Bankruptcy Court or the Bermuda Court, including, without
limitation, (i) making any overhang payments other than payments necessary to
consummate the transactions contemplated by this Agreement, (ii) making any
payments to Vendors, other than Vendor Payables, and (iii) making any payments
on the Senior Notes;
(q) (i) granted any increase, or announced any increase, in the wages,
salaries, compensation, bonuses, incentives, pension or other benefits payable
by the Seller or any Acquired Subsidiary to any of its employees in excess of
10% of base cash compensation for any individual and $2,000,000 in the aggregate
for all such employees, including, without limitation, any increase or change
pursuant to any Seller Benefit Plan, or (ii) established or increased or agreed
to increase any benefits under any Seller Benefit Plan, in either case except as
required by the terms of any existing agreement or by applicable Law;
(r) entered into any agreement, arrangement or transaction with any of its
directors, officers, employees or shareholders (or with any relative,
beneficiary, spouse or Affiliate of such Persons);
(s) terminated, discontinued, closed or disposed of any facility or other
business operation, or laid off any employees (other than layoffs of fewer than
50 employees in any six-month period in the ordinary course of business
consistent with past practice);
(t) disclosed any secret or confidential Intellectual Property (except by
way of issuance of a patent) or permitted to lapse or become abandoned any
Intellectual Property (or any
42
registration or grant thereof or any application relating thereto) to which, or
under which, the Seller or any Acquired Subsidiary has any right, title,
interest or license;
(u) allowed any Environmental Permit that was issued or relates to the
Seller or any Acquired Subsidiary or otherwise relates to the Business to lapse
or terminate or failed to renew any insurance policy or Environmental Permit
that is scheduled to terminate or expire within 45 calendar days of the Closing
Date;
(v) amended or modified any material provision of, or consented to the
termination of any Material Contract or the Seller's or any Acquired
Subsidiary's rights thereunder;
(w) amended or restated the certificate of incorporation or Bye-laws (or
other organizational documents) of the Seller or any Acquired Subsidiary;
(x) made any charitable contribution (other than contributions not
exceeding $25,000 in the aggregate);
(y)(i) abandoned, sold, assigned, or granted any security interest in or to
any item of the Seller Intellectual Property, including, without limitation, to
the Seller's Knowledge, failing to perform or cause to be performed all
applicable filings, recordings and other acts, and pay or caused to be paid all
required fees and taxes, to maintain and protect its interest in such Seller
Intellectual Property, (ii) granted to any third party any license with respect
to any Seller Intellectual Property, (iii) developed, created or invented any
Intellectual Property jointly with any third party, or (iv) disclosed, or allow
to be disclosed, any confidential Intellectual Property, unless such disclosure
of Intellectual Property is subject to a confidentiality or non-disclosure
covenant or in connection with the issuance of a patent; or
(z) agreed, whether in writing or otherwise, to take any of the actions
specified in this Section 3.12 or granted any options to purchase, rights of
first refusal, rights of first offer or any other similar rights or commitments
with respect to any of the actions specified in this Section 3.12, except as
expressly contemplated by this Agreement and the Ancillary Agreements.
SECTION 3.13 Litigation. Except as set forth in Section 3.13 of the
Disclosure Schedule, (a) there is no claim, action, suit, investigation or
proceeding ("Litigation") against the Seller or any of its direct or indirect
Subsidiaries or, to the Knowledge of the Seller, any Global Crossing Entity
pending or, to the Knowledge of the Seller, threatened before any court,
arbitrator or other Governmental Authority which (i) seeks to restrain,
materially modify, prevent or materially delay the consummation of the
transactions contemplated by this Agreement and the other Ancillary Agreements,
(ii) to the Seller's Knowledge, which seeks to prohibit or limit the ownership
or operation by the Purchaser or any of its Affiliates of any material portion
of the Acquired Assets or the Acquired Subsidiaries taken as a whole or any
material business or asset of the Purchaser or any of its Affiliates, or to
compel the Purchaser, any of its Affiliates or any of the Acquired Subsidiaries
to dispose or hold separate any portion of such business or assets, (iii) to the
Seller's Knowledge, which seeks damages or a discovery order in connection with
such transactions against the Purchaser or any of its Affiliates, or (iv) if
resolved adversely to the Seller or any Acquired Subsidiary, would reasonably be
expected to result in, individually or in
43
the aggregate, a material liability or obligation of or on the Acquired Assets,
the Assumed Liabilities or the Acquired Subsidiaries.
(b) None of the Seller, any Acquired Subsidiary or GCT is a party or
subject to any order, judgment, injunction or decree of any court, arbitrator or
other Governmental Authority other than those directly resulting from or
pursuant to the Chapter 11 Case, the Bermuda Case or the execution of this
Agreement.
SECTION 3.14 Compliance with Laws. (a) Except as set forth in Section
3.14(a) of the Disclosure Schedule or as would not materially (i) adversely
affect the ability of the Seller to carry out its obligations under, and to
consummate the transactions contemplated by, this Agreement and the Ancillary
Agreements or (ii) adversely affect the ability of the Purchaser and the
Acquired Subsidiaries to conduct the Business, the Seller and the Acquired
Subsidiaries have each conducted and continue to conduct the Business in
accordance with all Laws and Governmental Orders applicable to the Seller or any
Acquired Subsidiary or any of their properties or assets, including, without
limitation, the Acquired Assets, and neither the Seller nor any Acquired
Subsidiary is in violation of any such Law or Governmental Order.
(b) Section 3.14(b) of the Disclosure Schedule sets forth a list of each
Governmental Order applicable to the Seller (related to the Business), GCT
(related to any Assets) or any Acquired Subsidiary or any of their properties or
assets, including, without limitation, the Acquired Assets or the Business, and
no such Governmental Order has or has had a Material Adverse Effect or would
reasonably be expected to affect the legality, validity or enforceability of
this Agreement, any Ancillary Agreement or the consummation of the transactions
contemplated by this Agreement or thereby.
(c) None of the Seller, any Acquired Subsidiary or any officer, director,
employee, agent or representative of the Seller, or any Acquired Subsidiary has
offered, given, paid, authorized the payment of, or promised, directly or
indirectly, any money, gift, promise or other thing of value to any Person for
the purpose of inducing such Person to do or omit to do any action in violation
of their lawful duty, or unlawfully inducing such Person to use their influence
with any Governmental Authority to affect or influence any act or decision of
such Governmental Authority, in order to assist the Seller or any Acquired
Subsidiary to obtain or retain business for or with, or in directing business
to, any Person.
SECTION 3.15 Environmental and Other Permits and Licenses; Related Matters.
Except as described in Section 3.15 of the Disclosure Schedule, (a) each of the
Seller and the Acquired Subsidiaries and their respective predecessors and
Affiliates (collectively for this Section 3.15, the "Companies") are now and
have always been in compliance in all material respects with all Environmental
Laws and the Companies have all Environmental Permits, in each case, necessary
for the conduct and operation of the business as now being conducted, and all
such permits are in good standing; (b) there is not now and has not been any
Hazardous Material used, generated, treated, stored, transported, disposed of,
released, handled or otherwise existing on, under, about, or emanating from or
to, any of the Companies' owned, leased or operated property associated with the
Business except in full compliance with all applicable Environmental Laws; (c)
none of the Companies has received any written notice of alleged, actual or
potential responsibility or liability for, or any written inquiry or
investigation regarding, any release or threatened release of Hazardous
Materials or alleged violation of, or non-
44
compliance with, any Environmental Law, nor to the Knowledge of the Seller are
any of the Companies aware of any information which might form the basis of any
such notice or claim; (d) there is no site to which any of the Companies have
transported or arranged for the transport of Hazardous Materials which is or may
become the subject of any environmental action; (e) there is not now nor has
there ever been any underground storage tank at any of the Companies' owned,
leased or operated property; (f) none of the Companies has released any other
Person from claims or liability under any Environmental Law nor waived any
rights concerning any claims under any Environmental Law; and (g) true, complete
and correct copies of sampling results, environmental or safety audits or
inspections, or other written reports concerning environmental, health or safety
issues, pertaining to any operations of any of the Companies or property owned,
leased or operated by any of the Companies, have been provided to the Purchaser.
SECTION 3.16 Material Contracts. (a) Section 3.16(a) of the Disclosure
Schedule lists each of the following contracts and agreements (including,
without limitation, oral agreements) of the Seller (relating to the Acquired
Assets, the Assumed Liabilities or the Business) and the Acquired Subsidiaries
(such contracts and agreements, being "Material Contracts"):
(i) each contract, agreement, invoice, purchase order and other
arrangement, for the purchase of materials or personal property, with any
supplier or for the furnishing of services to the Seller (related to the
Business), any Acquired Subsidiary or otherwise related to the Business
under the terms of which the Seller or any Acquired Subsidiary: (A) is
contractually required to pay or otherwise give consideration of more than
$500,000 in the aggregate during the calendar year ending December 31,
2002, (B) is contractually required to pay or otherwise give consideration
of more than $2,000,000 in the aggregate over the remaining term of such
contract or (C) cannot be cancelled by the Seller or such Acquired
Subsidiary without more than 30 days' notice and without penalty or further
payment beyond such 30 days notice;
(ii) each contract, agreement, invoice, sales order and other
arrangement, for the furnishing of services by the Seller (relating to the
Business) or any Acquired Subsidiary pursuant to which: (A) the Seller or
such Acquired Subsidiary will receive more than $500,000 in the aggregate
during the calendar year ending December 31, 2002, or more than $2,000,000
in the aggregate over the remaining term of the contract or (B) cannot be
cancelled by the Seller or such Acquired Subsidiary without more than 30
days' notice and without penalty or further payment beyond such 30 days'
notice;
(iii) all material distributor, dealer, franchise and agency
agreements to which any Acquired Subsidiary is a party;
(iv) all management contracts and contracts with independent
contractors or consultants (or similar arrangements) to which the Seller or
any Acquired Subsidiary is a party, which involve payments by the Seller or
any Acquired Subsidiary in excess of $500,000 over the remaining life of
the contract, and which are not cancellable without more than 30 days'
notice and without penalty or further payment beyond such 30 days notice;
45
(v) all contracts and agreements relating to Indebtedness of the
Seller (as it relates to the Business) or any Acquired Subsidiary, in any
case involving amounts in excess of $500,000;
(vi) all material contracts and agreements with any Governmental
Authority to which the Seller or any Acquired Subsidiary is a party;
(vii) all contracts and agreements that limit or purport to limit the
ability of the Seller (as it relates to the Business) or any Acquired
Subsidiary to compete in any line of business or with any Person or in any
geographic area or during any period of time;
(viii) all contracts and agreements between or among any Acquired
Subsidiary, on the one hand, and the Seller or any Affiliate of the Seller
(other than the Seller or any Acquired Subsidiary), on the other hand;
(ix) all licenses of Intellectual Property that are material to the
Seller and the Acquired Subsidiaries, taken as a whole, or the Business,
from third parties and all material licenses of Seller Intellectual
Property to third parties; and
(x) all other contracts and agreements, whether or not made in the
ordinary course of business, which are material to the Seller and the
Acquired Subsidiaries, taken as a whole, or the conduct of the Business, or
the absence of which would have a Material Adverse Effect.
For purposes of this Section 3.16, the term "lease" shall include any and all
leases, subleases, sale/leaseback agreements or similar arrangements.
(b) Each Material Contract: (i) is valid and binding on the parties thereto
except as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting enforcement of creditors'
rights generally, and is in full force and effect, (ii) except as set forth in
Section 3.16(b)(ii) of the Disclosure Schedule, in the case of Material
Contracts to which the Seller is a party and which constitute Acquired Assets or
Assumed Liabilities, is freely and fully assignable to the Purchaser without
penalty or other similar adverse consequences and (iii) except as set forth in
Section 3.16(b)(iii) of the Disclosure Schedule, upon consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements, except
to the extent that any consents set forth in Section 3.05 of the Disclosure
Schedule are not obtained, shall continue in full force and effect without
penalty or other similar adverse consequence. None of the Seller nor any
Acquired Subsidiary is in material breach of, or material default under, any
Material Contract.
(c) To the Knowledge of the Seller, no other party to any Material Contract
is in material breach thereof or material default thereunder and none of the
Seller or any Acquired Subsidiary has received any notice of termination,
cancellation, breach or default under any Material Contract.
(d) The Seller has made available to the Purchaser true and complete copies
of all Material Contracts.
(e) There is no contract, agreement or other arrangement granting any
Person any preferential right to purchase, any of the Acquired Assets.
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SECTION 3.17 Intellectual Property; Technology. (a) Section 3.17(a) of the
Disclosure Schedule sets forth a true and complete list of all material Seller
Intellectual Property, all of which is held by the Seller or one of the Acquired
Subsidiaries, free and clear of all Encumbrances. No other Intellectual Property
right is necessary for the conduct of the businesses of the Seller or any
Acquired Subsidiary as presently conducted and as presently planned by Seller to
be conducted. To the Knowledge of the Seller, the Seller Intellectual Property
is valid and enforceable.
(b) (i) The Seller Intellectual Property and the business of the Seller and
the Acquired Subsidiaries (as presently and proposed to be conducted) do not
infringe upon, violate or misappropriate the rights of any Person, (ii) the
consummation of the transactions contemplated hereby will not result in the loss
or impairment of any of the Seller Intellectual Property, or any right
pertaining thereto, and (iii) the Seller and each Acquired Subsidiary have taken
all reasonable precautions and security measures to protect the secrecy,
confidentiality and value of its trade secrets. Except as set forth in Section
3.17(b) of the Disclosure Schedule, (A) neither the Seller nor any Acquired
Subsidiary is aware of any infringement or unauthorized use by any Person of any
of the Seller Intellectual Property, and (B) the Seller Intellectual Property
(including the validity and title thereto) has not been questioned in or the
subject of any prior Litigation, is not being questioned in or the subject of
any pending Litigation, and, to the Knowledge of the Seller, is not the subject
of any threatened or proposed Litigation.
SECTION 3.18 Title to Property. (a) Neither the Seller nor any Acquired
Subsidiary owns any real property or interests in real property except for the
Owned Real Property, as set forth on Section 3.18(a) of the Disclosure Schedule.
With respect to any Owned Real Property set forth in Section 3.18(a) of the
Disclosure Schedule, the Seller and the Acquired Subsidiaries have good, valid
and marketable title to the Owned Real Property, free and clear of all
Encumbrances other than (i) liens for Taxes not yet due and payable (or that are
being contested in good faith), (ii) landlords', mechanics', workmen's,
materialmen's, or similar liens, to the extent the obligations secured thereby
are not past due, (iii) the Vendor Liens, (iv) the encumbrances set forth in
Section 3.18(a) of the Disclosure Schedule and (v) any Encumbrances that would
not reasonably be expected to materially affect the use of such asset as used by
the Seller or its Acquired Subsidiaries (the Encumbrances referred to in clauses
(i), (ii), (iii), (iv) and (v) being, collectively, the "Permitted Encumbrances"
and shall apply to Encumbrances against both real and personal property of the
Seller). Except as set forth in Schedule 3.18(a), neither the Seller nor any
Acquired Subsidiary is a lessor, sublessor or grantor under any lease, sublease
or other instrument granting to another Person any material right to the
possession, lease, occupancy or enjoyment of the Owned Real Property.
(b) Section 3.18(b)(i) of the Disclosure Schedule sets forth a true and
complete list of all leases, subleases, licenses and other agreements in effect
as of the date hereof (collectively, the "Real Property Leases") under which the
Seller and any Acquired Subsidiary leases, subleases, uses or occupies or has
the right to use or occupy, now or in the future, any real property which
require payments in excess of $1,000,000 in the aggregate over its remaining
term (the land, buildings and other improvements covered by the Real Property
Leases, collectively, the "Leased Real Property"). The Seller has heretofore
made available to the Purchaser true, correct and complete copies of all of the
Real Property Leases (including all modifications thereof and all amendments and
supplements thereto). Except as set forth in Section 3.18(b)(ii) of the
Disclosure Schedule or as enforcement may be limited by applicable
47
bankruptcy, insolvency, reorganization, moratorium and other laws affecting
enforcement of creditors' rights generally, each Real Property Lease is valid,
binding and in full force and effect; no notice of default or termination under
any Real Property Lease is outstanding; no termination event or condition or
uncured default on the part of the Seller or any Acquired Subsidiary, or, to the
Knowledge of the Seller, the landlord, exists under any Real Property Lease and,
to the Knowledge of the Seller, no event has occurred and no condition exists
which, with the giving of notice or the lapse of time or both, would constitute
such a default or termination event. The Seller and each Acquired Subsidiary has
good and valid title to the leasehold estates under each Real Property Lease
that it is a party to, free and clear of all Encumbrances except for matters set
forth in the Real Property Leases and except for Permitted Encumbrances. The
Owned Real Property and the Leased Real Property (collectively, the "Real
Property") constitute all material real property interests held and used by the
Seller and the Acquired Subsidiaries in the operation of the Business. Neither
the Seller nor any Acquired Subsidiary is obligated under any option, right of
first refusal or other contractual right to purchase, acquire, sell or dispose
of any material real property interests included in the Real Property or any
material portion thereof. Neither the Seller nor any Acquired Subsidiary has
received written notice of any actual, pending or threatened condemnation
proceeding affecting, in any material respect the Real Property or any material
part thereof. No portion of the Real Property nor the use, occupancy and
operation thereof, is in violation of any Law or any building zoning or other
ordinance code or regulation.
(c) Neither the Seller nor any Acquired Subsidiary is a guarantor of any
Indebtedness of any party under any lease, sublease or other occupancy agreement
which require payments in excess of $1,000,000 in the aggregate over its
remaining term, other than the agreements listed in Schedule 3.18(c) of the
Disclosure Schedule (collectively, the "Lease Guaranties"). Except as set forth
in Schedule 3.18(c) of the Disclosure Schedule, neither the Seller nor any
Acquired Subsidiary has received any notice of any default or any claim, for any
amounts required to be paid by the Seller or any Acquired Subsidiary under any
Lease Guaranties and all such Lease Guaranties are in full, force and effect.
SECTION 3.19 Network Facilities. (a) Section 3.19(a) of the Disclosure
Schedule contains a map of the longhaul network (including the subsea,
terrestrial, national and international fiber optic networks extending over
approximately 17,900 kilometers, in the case of the subsea networks, and 870
kilometers, in the case of the terrestrial networks) which is owned or leased by
the Seller or the Acquired Subsidiaries and each longhaul segment therein, with
each longhaul network and each longhaul segment clearly labeled. Section 3.19(a)
of the Disclosure Schedule separately describes the Seller's and the Acquired
Subsidiaries' longhaul network and each longhaul segment therein, setting forth,
for each longhaul segment, the Seller or Acquired Subsidiary which owns or
leases the segment, the number of route miles in the segment and the number of
wavelengths (with a description of the capacity of such wavelengths), fibers and
fiber miles owned by the Seller or the relevant Acquired Subsidiary (indicating
those fibers that are currently equipped for the transmission of
telecommunication services and those that are not yet so equipped, i.e., both
light and dark fibers). Section 3.19(a) of the Disclosure Schedule sets forth
the number of route miles of fibers on each route provided by the Seller or the
relevant Acquired Subsidiary to third parties pursuant to agreements providing
for an IRU (the "Customer IRU Agreements"), lease or other agreements. Section
3.19(a) of the Disclosure Schedule also sets forth the portions of the longhaul
network and the longhaul segments (including the number of fibers on each route)
that are provided by third parties to the Seller or any Acquired Subsidiary
through IRU agreements ("Network IRU
48
Agreements"), lease or other agreements and the Seller and/or Acquired
Subsidiary party thereto. Section 3.19(a) of the Disclosure Schedule sets forth
a list of the landing stations with their respective locations and the owners or
lessors of the landing stations.
(b) Section 3.19(b) of the Disclosure Schedule sets forth the Layer 2 (ATM
network map, frame relay map), the Layer 3 (IP network map), equipment list
related to layers 2 and 3 and the asset register of the Acquired Subsidiaries
and each longhaul segment therein which are currently under construction and not
available to the Seller or the Acquired Subsidiaries with each longhaul network
and each longhaul segment therein clearly labeled. Section 3.19(b) of the
Disclosure Schedule describes the Seller's and the Acquired Subsidiaries'
longhaul network and each longhaul segment therein which is currently under
construction and not available for use, setting forth, for each longhaul
segment, the expected number of route miles in the segment and the expected
number of wavelengths (with a description of the capacity of such wavelengths),
and the expected date of completion of construction and availability of the
fibers and fiber miles to the Seller or the relevant Acquired Subsidiary.
(c) Except to the extent that the Seller or an Acquired Subsidiary can
access the Seller's Customer Base directly through the facilities set forth in
Section 3.19(a) of the Disclosure Schedule, the Seller or an Acquired Subsidiary
has all rights necessary to offer telecommunication services to the Seller's
Customer Base on a resale or other basis ("Customer Access Rights") from a local
exchange carrier.
(d) The facilities shown in the maps and described in Sections 3.19 (a)-(b)
of the Disclosure Schedule and the related rights and interests and other
personal property (including the equipment located on or required to operate
such facilities and the layer 2 and layer 3 equipments and software) of the
Seller and the Acquired Subsidiaries, both tangible and intangible
(collectively, the "Network Facilities"), are sufficient, structurally sound and
are in such operating condition and repair (given due account to the age and
length of use of the same, ordinary wear and tear excepted) as is reasonably
required to conduct the business as it is currently conducted by the Seller and
the Acquired Subsidiaries and provide all the services currently provided by the
Seller and the Acquired Subsidiaries and all warranties applicable to the
Network Facilities are in full force and effect other than those that have
expired in accordance with their normal terms. The information provided in the
maps in Sections 3.19(a)-(b) of the Disclosure Schedule is true, complete and
current in all material respects subject to inherent dimensional limitations of
the presentation of such information on maps. Except as set forth in Section
3.19(d) of the Disclosure Schedule, since January 1, 2002, there has been no
material interruption or disruption of services provided to or by the Seller or
any Acquired Subsidiary or for which the Seller or any Acquired Subsidiary is
liable, which resulted from (i) a series of repeated outages or (ii) a single
outage which lasted continuously for one hour or longer at the optical level
(OCS/STMI and above).
(e) Except as set forth in Section 3.19(e) of the Disclosure Schedule, the
Seller or an Acquired Subsidiary has good and marketable title to each Network
Facility owned by the Seller or a Subsidiary. Each of the Network Facilities
owned by the Seller or an Acquired Subsidiary: (i) is located on property in
which the Seller or such Acquired Subsidiary holds either good and marketable
title or valid right of entry, easement or other right to access the facility;
(ii) is free and clear of any Encumbrances except Permitted Encumbrances; (iii)
is not subject to any pending Litigation or administrative actions relating to
any such property or right of way; (iv) has received all approvals of
Governmental Authorities required in the ownership or
49
operation thereof and has been operated and maintained in accordance with all
applicable Laws; and (v) is not subject to any lease, sublease, license,
concession or other agreement, written or oral, granting to any party or parties
the right of use or occupancy of any portion of any property or right of way,
except for such leases, subleases, licenses, concessions or other agreements
granted to any party or parties in the ordinary course of business.
(f) Each Network IRU Agreement, lease or other agreement permitting the
Seller or any Acquired Subsidiary to use each Network Facility is legal, valid
and binding on the parties thereto in accordance with it terms, subject to
bankruptcy or insolvency Laws and permits the Seller and the relevant Acquired
Subsidiary to use the applicable Network Facility listed in Section 3.19(a) of
the Disclosure Schedule, and is enforceable in accordance with its terms. The
Seller or an Acquired Subsidiary has a Network IRU Agreement or other agreement
permitting it to use all of the Network Facilities (as presently used and as
expected to be used by the Seller and the Acquired Subsidiaries) that are not
owned by the Seller or an Acquired Subsidiary.
SECTION 3.20 Customers. Listed in Section 3.20 of the Disclosure Schedule
are the names and addresses of the 50 most significant customers (by monthly
recurring revenue for the month of August 2002) of the Business during the
period beginning January 1, 2002 and ending August 30, 2002 and the amount for
which each such customer was invoiced during such period. As of the date hereof,
neither the Seller nor any Acquired Subsidiary has received any notice that any
customer listed in Section 3.20 of the Disclosure Schedule has ceased, or will
cease, to use the services of the Seller or any Acquired Subsidiary, or has
substantially reduced, or will substantially reduce, the use of such services at
any time.
SECTION 3.21 Suppliers. Listed in Section 3.21 of the Disclosure Schedule
is a complete and accurate list of the twenty most significant (a) equipment
suppliers, (b) maintenance suppliers, and (c) access providers of the Seller and
the Acquired Subsidiaries (based upon dollars billed to the Seller or any
Acquired Subsidiary) during the period beginning January 1, 2002 and ending
August 30, 2002, showing the approximate total ▇▇▇▇▇▇▇▇ to the Seller or any
Acquired Subsidiary from each such supplier or access provider during such
fiscal period. Except as set forth in Section 3.21 of the Disclosure Schedule,
since the date of the Reference Balance Sheet, there has not been any (i)
termination, cancellation, curtailment or material change in terms of the
business relationship of the Seller or any Acquired Subsidiary with any of the
equipment suppliers or access providers set forth in Section 3.21 of the
Disclosure Schedule or (ii) notice (written or otherwise) from any of the
equipment suppliers or access providers set forth in Section 3.21 of the
Disclosure Schedule of an intent or request to so terminate, cancel, curtail or
materially change, and, to the Knowledge of the Seller, no threat or indication
that any such termination, cancellation, curtailment or material change is
reasonably foreseeable, other than as may directly result from this Agreement,
the Chapter 11 Case or the Bermuda Case.
SECTION 3.22 Employee Benefit Matters. (a) Plans and Material Documents.
Section 3.22(a) of the Disclosure Schedule sets forth a true and complete list
as of the date hereof each material employee benefit plan, program, agreement
and contract (including, without limitation, each "employee benefit plan, as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) with respect to which the Seller or any Acquired
Subsidiary has any obligation and that is maintained, contributed to or
sponsored by the Seller or any Acquired Subsidiary for the benefit of any
current or former employee, officer or director of the Seller or any Acquired
Subsidiary, or with respect to which the Seller or any
50
Acquired Subsidiary could incur liability under Sections 4069 or 4212(c) of
ERISA (collectively, the "Seller Benefit Plans"). Each Seller Benefit Plan is in
writing and the Seller has furnished to the Purchaser a complete and accurate
copy of each Seller Benefit Plan and, a complete and accurate copy of each
material document currently in effect prepared in connection with each such
Seller Benefit Plan, including, without limitation and where applicable, a copy
of (i) each trust or other funding arrangement, (ii) each summary plan
description and summary of material modifications, (iii) the most recently filed
IRS Form 5500, (iv) the most recently received IRS determination letter for each
such Seller Benefit Plan, and (v) the most recently prepared actuarial report
and financial statement in connection with each such Seller Benefit Plan.
Neither the Seller nor any Acquired Subsidiary has any express or implied
commitment, whether legally enforceable or not, to (i) create, incur liability
with respect to or cause to exist any other employee benefit plan, program or
arrangement, (ii) to enter into any contract or agreement to provide
compensation or benefits to any individual, or (iii) to modify, change or
terminate any Seller Benefit Plan, other than with respect to a modification,
change or termination required by applicable Law.
(b) Absence of Certain Types of Plans. None of the Seller Benefit Plans is
a multiemployer plan (within the meaning of Section 3(37) or 4001(a)(3) of
ERISA) (a "Multiemployer Plan") or a single employer pension plan (within the
meaning of Section 4001(a)(15) of ERISA) for which the Seller or any Acquired
Subsidiary could incur liability under Section 4063 or 4064 of ERISA (a
"Multiple Employer Plan"). Except as set forth on Section 3.22(b) of the
Disclosure Schedule, (i) none of the Seller Benefit Plans provides for the
payment of separation, severance, termination or similar-type benefits to any
Person or obligates the Seller or any Acquired Subsidiary to pay separation,
severance, termination or similar-type benefits solely as a result of any
transaction contemplated by this Agreement or as a result of a "change in
control", within the meaning of such term under Section 280G of the Code and
(ii) none of the Seller Benefit Plans provides for or promises retiree medical,
disability or life insurance benefits to any current or former employee, officer
or director of the Seller or any Acquired Subsidiary.
(c) Compliance with Applicable Law. Each Seller Benefit Plan is now and
always has been operated in all material respects in accordance with the
requirements of all applicable Law. The Seller (and each Acquired Subsidiary)
has performed all obligations required to be performed by it under, is not in
any respect in default under or in violation of, and has no knowledge of any
default or violation by any party to, any Seller Benefit Plan, except where the
failure of any of the foregoing actions would not result in a material
liability. No legal action, suit or claim is pending or, to the Knowledge of the
Seller, threatened with respect to any Seller Benefit Plan (other than claims
for benefits in the ordinary course) and no fact or event exists that could give
rise to any such action, claim or proceeding.
(d) Qualification of Certain Plans. Each Seller Benefit Plan that is
intended to be qualified under Section 401(a) of the Code or Section 401(k) of
the Code has received a favorable determination letter from the IRS that it is
so qualified, and each trust established in connection with any Seller Benefit
Plan that is intended to be exempt from federal income taxation under Section
501(a) of the Code has received a determination letter from the IRS that it is
so exempt, and, to the Knowledge of the Seller, no fact or event has occurred
since the date of such determination letter from the IRS to adversely affect the
qualified status of any such Seller Benefit Plan or the exempt status of any
such trust.
51
(e) Absence of Certain Liabilities and Events. There has been no prohibited
transaction (within the meaning of Section 406 of ERISA or Section 4975 of the
Code) with respect to any Seller Benefit Plan. Neither the Seller nor any
Acquired Subsidiary has incurred any liability for any penalty or tax arising
under Section 4971, 4972, 4980, 4980B or 6652 of the Code or any liability under
Section 502 of ERISA, and, to the Knowledge of the Seller, no fact or event
exists that could give rise to any such liability. Neither the Seller nor any
Acquired Subsidiary has incurred any liability under, arising out of or by
operation of Title IV of ERISA (other than liability for premiums to the Pension
Benefit Guaranty Corporation arising in the ordinary course), including, without
limitation, any liability in connection with (i) the termination or
reorganization of any employee benefit plan subject to Title IV of ERISA or (ii)
the withdrawal from any Multiemployer Plan or Multiple Employer Plan, and no
fact or event exists that could give rise to any such liability. No complete or
partial termination has occurred within the five years preceding the date hereof
with respect to any Seller Benefit Plan. No reportable event (within the meaning
of Section 4043 of ERISA) has occurred or is expected to occur with respect to
any Seller Benefit Plan subject to Title IV of ERISA. No Seller Benefit Plan had
an accumulated funding deficiency (within the meaning of Section 302 of ERISA or
Section 412 of the Code), whether or not waived, as of the most recently ended
plan year of such Seller Benefit Plan. None of the assets of the Seller or any
Acquired Subsidiary is the subject of any lien arising under Section 302(f) of
ERISA or Section 412(n) of the Code; neither the Seller nor any Acquired
Subsidiary has been required to post any security under Section 307 of ERISA or
Section 401(a)(29) of the Code; and no fact or event exists which could give
rise to any such lien or requirement to post any such security.
(f) Seller Benefit Plan Contributions and Funding. All contributions,
premiums or payments required to be made with respect to any Seller Benefit Plan
have been made on or before their due dates. All such contributions have been
fully deducted for income tax purposes and no such deduction has been challenged
or disallowed by any Governmental Authority and no fact or event exists that
could give rise to any such challenge or disallowance. As of the Closing Date,
no Seller Benefit Plan that is subject to Title IV of ERISA will have an
"unfunded benefit liability" (within the meaning of Section 4001(a)(18) of
ERISA).
(g) Non-U.S. Benefit Plans. With respect to each Seller Benefit Plan that
is not subject to United States Law (a "Non-U.S. Benefit Plan"), all employer
and employee contributions to each Non-U.S. Benefit Plan required by Law or by
the terms of such Non-U.S. Benefit Plan have been made or, if applicable,
accrued in accordance with normal accounting practices and each Non-U.S. Benefit
Plan required to be registered has been registered and has been maintained in
good standing with applicable regulatory authorities.
SECTION 3.23 Labor Matters; Employee Relations. (a) Except as set forth in
Section 3.23(a) of the Disclosure Schedule, (i) there are no material claims or
proceedings pending or, to the Knowledge of the Seller, threatened, between the
Seller or any Acquired Subsidiary and any of their respective employees; (ii)
neither the Seller nor any Acquired Subsidiary is a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by the Seller or any Acquired Subsidiary; (iii) there is no activity
or, to the Knowledge of the Seller, any threatened activity the purpose of which
is to achieve representation of Persons employed by the Seller or any Acquired
Subsidiary; and (iv) there are no strikes, slowdowns, work stoppages, lockouts,
or, to the Knowledge of the Seller, threats thereof, by or with respect to any
employees of the Seller or any Acquired Subsidiary.
52
(b) The Seller and each Acquired Subsidiary are and have been in compliance
in all material respects with all applicable Laws respecting employment,
employment practices, labor, terms and conditions of employment and wages and
hours, in each case, with respect to employees.
(c) Except as disclosed in Section 3.23(c) of the Disclosure Schedule, no
term of employment of any employee of the Seller or any Acquired Subsidiary
provides that a change in control of the Seller or any Acquired Subsidiary
entitles such employee to treat the change of control as amounting to a breach
of such employee's contract or entitles such employee to any payment or benefit
whatsoever or entitles such employee to treat himself or herself as redundant or
otherwise dismissed or released from any obligation.
SECTION 3.24 Key Employees. Section 3.24 of the Disclosure Schedule lists
the name, place of employment, the current annual salary rates, bonuses,
deferred or contingent compensation, accrued vacation, "golden parachute" and
other like benefits paid or payable (in cash or otherwise) in 2002, the date of
employment and a description of the position of each current salaried employee,
officer, director, consultant or agent of the Seller or any Acquired Subsidiary
whose annual compensation in 2002 exceeds or is expected to exceed, $150,000.
SECTION 3.25 Taxes. (a) Except as set forth in Section 3.25(a) of the
Disclosure Schedule, (i) all Returns required to be filed with respect to the
Seller and each Acquired Subsidiary (for purposes of this Section 3.25 all
references to the Seller and the Acquired Subsidiaries shall include any company
or partnership to which the Seller or one of the Acquired Subsidiaries is a
successor or assign) including any Return that includes the Seller or any
Acquired Subsidiary on a consolidated, combined or unitary basis have been filed
in accordance with the provisions of the relevant jurisdiction and tax
legislation; (ii) all Taxes required to be shown in accordance with the
provisions of the relevant jurisdiction and tax legislation on such Returns have
been timely paid; (iii) all such Returns (insofar as they relate to the
activities, business or income of the Seller or any Acquired Subsidiary) are
true, correct and complete in all material respects; (iv) neither Seller nor any
Acquired Subsidiary has received any written proposal from, nor, to the
knowledge of the Seller, is any such proposal expected from any Tax authority
for any adjustment relating to the transactions occurring prior to the Closing
Date in such Returns (insofar as either relates to the activities, business or
income of the Seller or any Acquired Subsidiary or could result in liability of
the Seller or any Acquired Subsidiary on the basis of joint and/or several
liability) and, to the Knowledge of the Seller, no basis exists for any such
adjustment; (v) there are no pending or, to the Knowledge of the Seller,
threatened actions, enquiries, disputes or proceedings for the assessment or
collection of Taxes against the Seller or any Acquired Subsidiary or (insofar as
either relates to the activities, business or income of the Seller or any
Acquired Subsidiary or could result in liability of the Seller or any Acquired
Subsidiary on the basis of joint and/or several liability) any corporation that
was included in the filing of a return with the Seller on a consolidated,
combined or unitary basis; (vi) all sales and license transactions between
Global Crossing or any Affiliate of Global Crossing other than the Seller and
its Subsidiaries and the Seller or any Acquired Subsidiary and between the
Seller and any Acquired Subsidiary and between any of the Acquired Subsidiaries,
have been conducted on an arm's-length basis; (vii) there are no Tax liens on
any assets of the Seller or any Acquired Subsidiary, other than liens for Taxes
that are not yet due and payable; (viii) none of the Seller or any Acquired
Subsidiary has been includible in any combined, consolidated or unitary return
(other than a return that includes the Seller as the parent) for any
53
Tax period for which the statute of limitations is still open, and none of the
Seller or any Acquired Subsidiary is liable for Tax of another company which
shall include all taxes other than that of the Seller and any Acquired
Subsidiary relating to Tax periods ending on or before the Closing Date which
the Tax authorities could impose; (ix) none of the Seller or Acquired
Subsidiaries has incurred or will incur any Taxes involving network service
transfer pricing among the Acquired Subsidiaries, the Seller or the Excluded
Subsidiaries in the ordinary course of business or otherwise; and (x) none of
the Seller or Acquired Subsidiaries is doing business in or engaged in a trade
or business in any jurisdiction in which it has not filed all required income or
franchise or any other necessary Return.
(b) Except as set forth in Section 3.25(b) of the Disclosure Schedule, (i)
there are no outstanding waivers or agreements extending the statute of
limitations for any period with respect to any Tax to which the Seller or any
Acquired Subsidiary may be subject; (ii) there are no requests for information
currently outstanding that could affect the Taxes of the Seller or any Acquired
Subsidiary; (iii) there are no proposed reassessments of any property owned by
the Seller or any Acquired Subsidiary or other proposals that could increase the
amount of any Tax to which the Seller or any Acquired Subsidiary would be
subject; (iv) no power of attorney that is currently in force has been granted
with respect to any matter relating to Taxes that could affect the Seller or any
Acquired Subsidiary; and (v) except in connection with sales of IRUs in the
ordinary course of business, none of the Seller or Acquired Subsidiaries has any
additional Tax adjustments arising from income reportable for a period ending
before the Closing Date and in respect of transactions occurring after the
Closing Date but attributable to a transaction occurring in or for a period
ending on or prior to the Closing Date.
(c) The Seller has delivered or has otherwise made available to the
Purchaser: (i) correct and complete copies of all income and similar Returns,
examination reports, all correspondence with the Tax authorities and statements
of deficiencies assessed against or agreed to by the Seller or any Acquired
Subsidiary for all Tax periods for which the statute of limitations remains
open, (ii) a true and complete copy of any Tax-sharing or allocation or tax
consolidation agreement or arrangement involving the Seller or any Acquired
Subsidiary and a true and complete description of any such unwritten or informal
agreement or arrangement, and (iii) all Tax correspondence with Tax authorities
and all formal written Tax advice obtained from Seller's external Tax advisors,
including but not limited to compliance and Tax planning matters, transfer
pricing, shared services and all inter-company charge and revenue sharing
arrangements in each case only to the extent the same relates to Tax periods for
which the applicable statute of limitation remains open.
(d) (i) The Seller will, and will cause the Acquired Subsidiaries to, file
in accordance with the provisions of the relevant jurisdiction and tax
legislation, all Tax Returns required to be filed between the date of this
Agreement and the Closing Date with respect to the Seller and each Acquired
Subsidiary and (ii) the Seller will use its commercially reasonable efforts to
cooperate with the Purchaser in the preparation of any Tax Returns that are
required to be filed after the Closing Date with respect to the Seller or any
Acquired Subsidiary for any Tax period ending prior to or on the Closing Date.
The Seller will prepare the Tax computations with respect to the Seller or any
Acquired Subsidiary which includes computing the tax loss position or assessable
profits (the latter, if any) up to the financial year ended December 31, 2001
and for the period from January 1, 2002 up to the Closing Date. The Seller will
deliver such Tax computations for the period from January 1, 2002 up to the
Closing Date within thirty (30)
54
Business Days of the Closing Date, or if transfers pursuant to Section 2.07
would otherwise prevent the Tax computations and delivery, as soon as
practicable after such transfers have been made.
SECTION 3.26 Insurance. Section 3.26 of the Disclosure Schedule contains a
complete and correct list and summary description (including the name of
insurer(s), amount of coverage, type of coverage and deductible amounts) of all
material insurance policies (including directors' and officers' liability
insurance) (i) maintained by Seller and any Acquired Subsidiary (the "AGC
Policies") or by Global Crossing (to the extent Seller, the Acquired
Subsidiaries and their respective assets are covered thereby) (the "GC
Policies") and (ii) all pending applications for material policies of insurance,
by or on behalf of the Seller or any Acquired Subsidiary in respect of the
Acquired Assets or the Acquired Subsidiaries (the "Pending Policies"). The
Seller has made available to the Purchaser complete and correct copies of the
AGC Policies, together with all riders and amendments thereto and all material
correspondence (including any notices of cancellation) thereof. No notice of
cancellation, termination or reduction of coverage, or increase of premium, or
intention to cancel, terminate or reduce coverage or increase premium, has been
received by the Seller or any Acquired Subsidiary with respect to any AGC
Policies or GC Policies. To the Knowledge of the Seller, the insurance coverage
contemplated by the Pending Policies: (i) is on such terms (including as to
deductibles and self-insured retentions), (ii) covers such categories of risk
(including errors and omissions, property and casualty, directors' and officers'
liability, and workers' compensation liability, securities liability, fiduciary
liability, employment practices), and (iii) is in such amounts as, with respect
to each of the criteria set forth in the foregoing clauses (i) through (iii), is
adequate and suitable for the Business and operations of the Acquired Assets and
the Acquired Subsidiaries. Neither the Seller nor any Acquired Subsidiary has
done or omitted to do any act, or knowingly allowed any Person to do or omit to
do any act, which act or omission might render any of the AGC Policies or GC
Policies void or voidable.
SECTION 3.27 Brokers. Except for Lazard Freres & Co. LLC and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement or the Ancillary Agreements based
upon arrangements made by or on behalf of the Seller. The Seller is solely
responsible for the fees and expenses of Lazard Freres & Co. LLC and ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
As an inducement to the Seller to enter into this Agreement, the Purchaser
(on behalf of itself and, from and after the date of incorporation of the
Singapore Sub, the Singapore Sub) hereby represents and warrants to the Seller
as follows:
SECTION 4.01 Organization and Authority of the Purchaser. Such Person is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all necessary corporate power
and authority to enter into this Agreement and the Ancillary Agreements to which
it is a party, to carry out its obligations hereunder and thereunder and to
consummate the transactions contemplated by this Agreement and thereby. The
execution and delivery by such Person of this Agreement and the Ancillary
55
Agreements to which it is a party, the performance by such Person of its
obligations hereunder and thereunder and the consummation by such Person of the
transactions contemplated by this Agreement and thereby have been duly
authorized by all requisite corporate action on the part of such Person. This
Agreement has been, and upon their execution the Ancillary Agreements to which
such Person is a party shall have been, duly executed and delivered by such
Person, and (assuming due authorization, execution and delivery by the Seller)
this Agreement constitutes, and upon their execution the Ancillary Agreements to
which such Person is a party shall constitute, legal, valid and binding
obligations of such Person, enforceable against such Person in accordance with
their respective terms.
SECTION 4.02 No Conflict. Assuming all Purchaser Approvals are obtained,
except as may result from any facts or circumstances relating solely to the
Seller, the execution, delivery and performance by such Person of this Agreement
and the Ancillary Agreements to which it is a party do not and will not (a)
violate, conflict with or result in the breach of any provision of the
Certificate of Incorporation or By-laws (or similar organizational documents) of
such Person, (b) conflict with or violate any Law or Governmental Order
applicable to such Person or (c) conflict with, or result in any breach of,
constitute a default (or event which with the giving of notice or lapse of time,
or both, would become a default) under, require any consent under, or give to
others any rights of termination, amendment, acceleration, suspension,
revocation or cancellation of, any note, bond, mortgage or indenture, contract,
agreement, lease, sublease, license, permit, franchise or other instrument or
arrangement to which such Person is a party, which would adversely affect the
ability of such Person to carry out its obligations under, and to consummate the
transactions contemplated by, this Agreement or by the Ancillary Agreements.
SECTION 4.03 Governmental Consents and Approvals. The execution, delivery
and performance by such Person of this Agreement and each Ancillary Agreement to
which such Person is a party do not and will not require any Regulatory
Approvals except (i) the approval of each of the State Development Planning
Commission, the Ministry of Finance, the State Administration of Foreign
Exchange and the Ministry of Foreign Trade and Economic Cooperation (the
"Purchaser Approvals") may be required and (ii) the Telecom Approvals. Purchaser
reasonably believes that it will be able to obtain all Purchaser Approvals by
January 15, 2003.
SECTION 4.04 Financing. Concurrently herewith, in support of the
Purchaser's obligations hereunder, Purchaser has delivered to Seller (a) an
original guarantee by CNC of Purchaser's obligations hereunder in an aggregate
amount of up to $16 million, (b) a true and correct copy of a commitment letter
from CNC to the Purchaser to invest $120 million in equity in the Purchaser, and
(c) a true and correct copy of a commitment letter from The Industrial and
Commercial Bank of China (Asia) Limited ("ICBC") evidencing its commitment to
provide $150 million in debt financing to Purchaser to enable Purchaser to
perform its obligations hereunder (the "Commitment Letter"). Such documents have
been duly executed and delivered and are legal, valid and binding obligations of
the parties thereto, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws affecting enforcement of
creditor's rights generally. The Purchaser agrees to use its commercially
reasonable efforts to cause the Commitment Letter not to expire, be terminated
or otherwise cease to be in full force and effect through the Closing Date or
any earlier date on which the definitive loan documents contemplated by the
Commitment Letter shall have been executed by
56
Purchaser and ICBC (in which case Purchaser will use its commercially reasonable
efforts to cause such loan documents not to expire, be terminated or otherwise
cease to be in full force and effect through the Closing Date). The Purchaser
has or as of the Closing Date will have sufficient cash, available lines of
credit or other sources of immediately available funds such that it will be able
to provide the consideration for the Purchase Price and consummate the
transactions contemplated hereby (including the Vendor Contracts). From the date
hereof through and including the Closing Date, the equity interests of the
Purchaser that are owned by CNC shall represent directly or indirectly at least
50% of the Purchaser's total issued and outstanding equity.
SECTION 4.05 Litigation. There is no Litigation pending, or to the
knowledge of such Person, threatened before any court, arbitrator or other
Governmental Authority which (i) seeks to restrain, materially modify, prevent,
or materially delay the consummation of the transactions contemplated by this
Agreement and/or the Ancillary Agreements, (ii) seeks to impose material
limitations on the ability of such Person to acquire or hold, or exercise full
rights of ownership of, any Acquired Assets, (iii) seeks damages or a discovery
order in connection with such transactions against such Person, or (iv) if
resolved adversely to such Person, would reasonably be expected to have,
individually or in the aggregate, a material adverse effect on the ability of
such Person to consummate the transactions contemplated by this Agreement.
SECTION 4.06 Brokers. Except for ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement or
the Ancillary Agreements based upon arrangements made by or on behalf of the
Purchaser. The Purchaser is solely responsible for the fees and expenses of
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney.
SECTION 4.07 Acquisition for Investment. Such Person is acquiring the
Shares for its own account for investment and not with a view to the
distribution thereof within the meaning of the Securities Act.
SECTION 4.08 Assumption of Liabilities. Upon the consummation of the
transactions contemplated by this Agreement and the execution of the Assumption
Agreements, the Purchaser will have validly assumed the obligations of the
Seller in the Assumed Liabilities.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01 Conduct of Business Prior to the Closing. The Seller covenants
and agrees that, except as (i) approved in writing by the Purchaser, (ii)
required by the terms of this Agreement, (iii) described in Section 5.01 of the
Disclosure Schedule, or (iv) required by, arising out of, relating to or
resulting from its obligations as a debtor or debtor in possession under the
Bankruptcy Code and as approved by the U.S. Bankruptcy Court, or any
requirements of the Joint Provisional Liquidators (whether pursuant to the
Bermuda Order or any other order of the Bermuda Court), and/or any order of the
Bermuda Court, between the date hereof and the time of the Closing:
(a) Neither the Seller (as it relates to the Business), any Acquired
Subsidiary nor the Excluded Subsidiaries (excluding PCL) shall conduct its
business other than in the ordinary course and consistent with the Seller's,
such Acquired Subsidiary's or Excluded Subsidiaries'
57
prior practice, including meeting its post-petition obligations as they become
due. Without limiting the generality of the foregoing the Seller shall (as it
relates to the Business), and shall cause each Acquired Subsidiary and each
Excluded Subsidiary (excluding PCL) to, (v) not shorten or lengthen the
customary payment cycles for any of their payables or receivables, including the
Commercial Payables and Receivables; (w) use their reasonable efforts to (A)
preserve intact their business organizations and the business organization of
the Business, the Acquired Subsidiaries and the Excluded Subsidiaries (excluding
PCL), (B) not terminate the employment of any employees of Acquired Subsidiaries
with an annual base salary in excess of $100,000 (C) continue in full force and
effect without material modification all existing policies or binders of
insurance currently maintained in respect of the Seller, each Acquired
Subsidiary and the Business (except the GC Policies, as to which Seller makes no
covenants) and, and (D) preserve their current relationships with their
customers, suppliers and other persons with which they have had significant
business relationships; (x) not exercise, without the Purchaser's prior written
approval, any rights of renewal pursuant to the terms of any of the leases or
subleases set forth in Section 3.18(b)(i) of the Disclosure Schedule which by
their terms would otherwise expire; (y) enter into any contracts, agreements or
other obligations for the expenditure of any amounts in respect of capital
expenditures (as such term is used in the Financial Statements) otherwise than
as reasonably required in the ordinary course of business or not make any
capital expenditures in excess of or less than otherwise required in the
ordinary course of business, and after December 31, 2002, the Seller shall not
make any expenditure of any amounts in respect of capital expenditures (other
than Activation Costs) in excess of $200,000 per item unless the request for
expenditure was itemized at the biweekly management meeting between Seller and
Purchaser setting out the forthcoming two week plan for capital expenditure and
Purchaser consents, such consent not to be unreasonably withheld, within three
(3) Business Days after such meeting to such expenditure; and (z) not engage in
any practice, take any action, fail to take any action or enter into any
transaction which would reasonably be expected to cause any representation or
warranty of the Seller to be untrue or result in a breach of any covenant made
by the Seller in this Agreement.
(b) Except as set forth in Section 5.01 of the Disclosure Schedule, between
the date hereof and the time of the Closing, without the prior written consent
of the Purchaser, none of the Seller, any Acquired Subsidiary (in respect of any
Assets) or any Excluded Subsidiary (excluding PCL) will do any of the things
enumerated in the second sentence of Section 3.12 (including, without
limitation, clauses (a) through (z) thereof).
(c) Between the date hereof and Closing, the Seller shall and shall cause
the Acquired Subsidiaries to (i) use commercially reasonable efforts to
safeguard, preserve and maintain the condition of the Acquired Assets; (ii) not
without the prior written consent of the Purchaser, lease, license, or otherwise
surrender, relinquish, encumber or dispose of any of the Acquired Assets;
provided, however, that nothing shall prohibit or restrict the Seller from
selling capacity arrangements (including IRUs) in the ordinary course of
business that are on terms consistent with market practice and that provide a
positive cash contribution over the life of the agreement; and (iii) not
dissolve, re-organize or take any steps towards the winding-up or the
liquidation of the Excluded Subsidiaries; provided, however, that the foregoing
clause (c)(iii) shall not apply to PCL or Asia Global Crossing Development Co.
(d) The Seller shall, and shall cause each of the Acquired Subsidiaries and
each Excluded Subsidiary (excluding PCL) to, use its reasonable commercial
efforts to implement and
58
maintain cost reduction initiatives consistent with the plans disclosed to the
Purchaser prior to the date hereof or as otherwise agreed in advance in writing
with the Purchaser.
The Purchaser shall not unreasonably withhold or delay any approval or
consent requested by the Seller pursuant to this Section 5.01. Any such approval
or consent shall be deemed given if, within ten Business Days after the
Purchaser's receipt of a written request for any such approval or consent
(specifically stating that the matter requires prompt attention and referring to
this Section 5.01 and the ten Business Day period), the Purchaser shall not have
given written notice to the Seller of its denial, approval or consent.
SECTION 5.02 Access to Information. (a) From the date hereof until the
Closing, upon reasonable notice, the Seller shall cause its officers, directors,
employees, agents, representatives, accountants and counsel and shall cause the
Acquired Subsidiaries and each of the Seller's and the Acquired Subsidiaries'
officers, directors, employees, agents, representatives, accountants and counsel
to: (i) afford the officers, employees, agents, accountants, counsel, financing
sources and representatives of the Purchaser reasonable access, during normal
business hours, to the offices, properties, plants, other facilities, books and
records of the Seller relating to the Acquired Assets, the Assumed Liabilities
and each Acquired Subsidiary and to those officers, directors, employees,
agents, accountants and counsel of the Seller and of each Acquired Subsidiary
who have any knowledge relating to the Seller, any Acquired Subsidiary or the
Business, (ii) furnish to the officers, employees, agents, accountants, counsel,
financing sources and representatives of the Purchaser such additional financial
and operating data, including, but not limited to, internal management reports
and financial information, and other information regarding the assets,
properties, liabilities and goodwill of the Seller, the Acquired Subsidiaries
and the Business (or legible copies thereof) as the Purchaser may from time to
time reasonably request and (iii) consult with the Purchaser on all matters
outside the ordinary course of business of the Seller or any Acquired Subsidiary
relating to the Seller's or any Acquired Subsidiary's business, strategy and
financing, including matters related to this Agreement. The Purchaser shall hold
all information obtained hereunder in confidence in accordance with the
provisions of the Confidentiality Letter, dated March 5, 2002, between the
Seller and CNC (the "Confidentiality Agreement"). The parties hereto agree that
no investigation by the Purchaser or its Affiliates or their representatives
shall affect or limit the scope of the representations or warranties of the
Seller contained in this Agreement or in any Ancillary Agreement delivered
pursuant hereto or limit the liability for breach of any such representation or
warranty.
(b) After the Closing, the Seller may retain: (i) any information relating
to the Seller, the Excluded Subsidiaries, PCL, the Excluded Liabilities and the
Excluded Assets, (ii) copies of information relating to the Seller and its
Subsidiaries that is required by the Seller in connection with the Chapter 11
Case, the Bermuda Case, the Seller's Tax affairs or other matters reasonably
determined by the Seller, and (iii) the Purchaser will provide the Seller and/or
its representatives, at the cost of the Seller, with copies of any information
regarding the Acquired Assets, the Acquired Subsidiaries and the Business that
may be reasonably requested by the Seller in connection with the Chapter 11
Case, the Bermuda Case, the Seller's Tax affairs or other matters for which such
information may be reasonably requested by the Seller.
SECTION 5.03 Delivery of Financial Information. From the date hereof until
the Closing, the Seller agrees to, and shall cause the Acquired Subsidiaries to
provide to the
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Purchaser (a) a written report delivered each Friday (or the immediately
preceding Business Day if such Friday is not a Business Day) containing the
amount of cash and Cash Equivalents held by the Seller, the Acquired
Subsidiaries and the Excluded Subsidiaries (excluding PCL) as of the immediately
preceding Friday, as reflected in each such entity's respective bank balances,
(b) copies of all sales reports prepared by or for executive management promptly
after such reports are delivered to executive management, (c) balance sheets of
the Acquired Assets, the Assumed Liabilities and the Acquired Subsidiaries
within 2 weeks of each month-end prior to the Closing and (d) as promptly as
practicable after a written request, other information reasonably requested by
the Purchaser regarding the financial and operational status of the Seller and
the Acquired Subsidiaries.
SECTION 5.04 Co-operation regarding Activation Costs and Vendor Releases.
(a) The Seller shall, and shall cause the Acquired Subsidiaries to negotiate in
good faith with the counterparties to the overhang contracts to reduce the
Activation Costs.
(b) The Purchaser shall cooperate in good faith to assist the Seller in
causing reductions in the Activation Costs and to obtain the releases from the
Vendors referenced in Section 7.01(f).
SECTION 5.05 Confidentiality. The Seller agrees to, and shall cause the
Acquired Subsidiaries and their agents, representatives, Affiliates, employees,
officers and directors to (other than as required by the Chapter 11 Case or the
Bermuda Case or in connection with the winding up of Seller): (a) treat and hold
as confidential and not disclose or provide access to any Person to) all
information relating to this Agreement or to trade secrets, processes, patent
and trademark applications, product development, price, customer and supplier
lists, pricing and marketing plans, policies and strategies, details of client
and consultant contracts, operations methods, product development techniques,
business acquisition plans, new personnel acquisition plans and all other
confidential or proprietary information with respect to the Business, the Seller
and each Acquired Subsidiary, (b) in the event that the Seller, an Acquired
Subsidiary or any such agent, representative, Affiliate, employee, officer or
director thereof becomes legally compelled to disclose any such information,
provide the Purchaser with prompt written notice of such requirement so that the
Purchaser, the Seller or any Acquired Subsidiary may seek a protective order or
other remedy or waive compliance with this Section 5.05, (c) in the event that
such protective order or other remedy is not obtained, or the Purchaser waives
compliance with this Section 5.05, furnish only that portion of such
confidential information which is legally required to be provided and exercise
its reasonable efforts to obtain assurances that confidential treatment will be
accorded such information, and (d) promptly furnish (prior to, at, or as soon as
practicable following, the Closing) to the Purchaser any and all copies (in
whatever form or medium) of all such confidential information then in the
possession of the Seller or any of its agents, representatives, Affiliates,
employees, officers and directors and, except as otherwise required by Section
5.02(b), destroy any and all additional copies then in the possession of the
Seller or any of its agents, representatives, Affiliates, employees, officers
and directors of such information and of any analyses, compilations, studies or
other documents prepared, in whole or in part, on the basis thereof; provided,
however, that this sentence shall not apply to any information that, at the time
of disclosure, is available publicly and was not disclosed in breach of this
Agreement by the Seller, any Acquired Subsidiary, or any of their agents,
representatives, Affiliates, employees, officers or directors; and; provided,
further, that, with respect to Intellectual Property, specific information shall
not be deemed to be within the
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foregoing exception merely because it is embraced in general disclosures in the
public domain. In addition, with respect to Intellectual Property, any
combination of features shall not be deemed to be within the foregoing exception
merely because the individual features are in the public domain unless the
combination itself and its principle of operation are in the public domain. The
Seller agrees and acknowledges that remedies at law for any breach of its
obligations under this Section 5.03 are inadequate and that in addition thereto
the Purchaser shall be entitled to seek equitable relief, including injunction
and specific performance, in the event of any such breach.
SECTION 5.06 Regulatory and Other Authorizations; Notices and Consents. (a)
The Seller shall use its commercially reasonable efforts to obtain (or cause the
Acquired Subsidiaries to obtain) all Regulatory Approvals that may be or become
necessary or advisable for its execution and delivery of, and the performance of
its obligations pursuant to, this Agreement and the Ancillary Agreements,
including, without limitation, all Seller Approvals and will cooperate fully
with the Purchaser in promptly seeking to obtain all such authorizations,
consents, orders and approvals and all Purchaser Approvals and Telecom
Approvals.
(b) The Seller shall or shall cause the Acquired Subsidiaries to give
promptly such notices to third parties and use its or their commercially
reasonable efforts to obtain the third party consents and estoppel certificates
set forth in Schedule 5.06(b) (the "Required Contractual Consents").
(c) The Purchaser shall cooperate fully with Seller and the Acquired
Subsidiaries and use its commercially reasonable efforts to assist the Seller in
giving such notices and obtaining such Required Contractual Consents which may
include providing guarantees in substitution for guarantees previously provided
by Seller or an Excluded Subsidiary; provided, however, that the Purchaser shall
have no obligation to consent to any change in the terms of any agreement or
arrangement which the Purchaser in its reasonable discretion may deem materially
adverse to the interests of the Purchaser, the Acquired Assets or any Acquired
Subsidiary.
(d) Purchaser shall use its commercially reasonable efforts to obtain all
Purchaser Approvals by January 15, 2003 and will cooperate fully with the Seller
and the Acquired Subsidiaries and use its commercially reasonable efforts to
assist the Seller and the Acquired Subsidiaries to obtain the Seller Approvals.
SECTION 5.07 Notice of Developments. Prior to the Closing, (a) the Seller,
on the one hand, and the Purchaser, on the other, shall each promptly notify the
other in writing of all events, circumstances, facts and occurrences arising
subsequent to the date of this Agreement which have resulted or would be
reasonably expected to result in any breach of a representation or warranty or
covenant of such Person contained in this Agreement or which have had or would
be reasonably expected to have the effect of making any representation or
warranty of such Person contained in this Agreement untrue or incorrect in any
respect, and (b) the Seller, on the one hand, and the Purchaser, on the other,
shall each promptly notify the other of such Person's receipt of any notice
(written or oral) or other communication from any Person (including any
Governmental Authority) with respect to (i) the requirement for consent from any
Person (including any Governmental Authority) in connection with the execution
and delivery of this Agreement and the Ancillary Agreements and the performance
by the parties hereunder and thereunder, and (ii) in the case of the Seller, any
Actions commenced against or involving or
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relating to, directly or indirectly, the Seller, the Acquired Assets, the
Assumed Liabilities or any Acquired Subsidiary.
SECTION 5.08 No Solicitation or Negotiation. (a) Except for (i) motions and
related pleadings and documents to be filed by the Seller with the U.S.
Bankruptcy Court in connection with the Seller's efforts to cause the U.S.
Bankruptcy Court to enter the Bidding Procedures Order, the Approval Order and
any Section 365 Order and (ii) any and all actions that may be taken by or on
behalf of the Seller in furtherance of the foregoing, from the date hereof until
the moment the Bidding Procedures Order has been entered by the U.S. Bankruptcy
Court, the Seller shall not, nor shall the Seller authorize or permit any of its
Subsidiaries or any officer, director, employee, agent or representative of the
Seller or any of its Subsidiaries (including, without limitation, any investment
banker, attorney or accountant retained by the Seller or any of its
Subsidiaries) to (i) solicit, initiate, encourage or accept any inquiries,
proposals or offers in respect of any Acquisition Proposal, (ii) participate in
any discussions or negotiations regarding, or furnish to any other Person any
information with respect to, or otherwise cooperate in any way with, or assist
or participate in, facilitate or encourage, any effort or attempt by any other
Person to do or seek any Acquisition Proposal and, the Seller shall immediately
cease and cause to be terminated all existing discussions or negotiations with
any parties conducted heretofore with respect to any of the foregoing. The
Seller shall notify Purchaser promptly of any Acquisition Proposal (or any
amendment in respect thereof) made by any third party or any inquiry or contact
with any Person with respect thereto, that is made and shall, in any such notice
to Purchaser, indicate in reasonable detail the identity of the Person making
such Acquisition Proposal or related inquiry or contact and the terms and
conditions of such Acquisition Proposal or related inquiry or contact until the
moment that the Bidding Procedures Order has been entered by the U.S. Bankruptcy
Court. The Seller shall not release any third party from, or waive any provision
of, any confidentiality or standstill agreement to which it is a party until the
moment that the Bidding Procedures Order has been entered by the U.S. Bankruptcy
Court.
(b) The commitments and agreements contained in Section 5.08(a) shall
expire and be of no further force and effect at the moment that the U.S.
Bankruptcy Court enters the Bidding Procedures Order. Thereafter, the Bidding
Procedures Order shall govern all proceedings relating to the Seller's or any of
its Subsidiaries' consideration of any Acquisition Proposal. As used in this
Section 5.08, the term "Subsidiaries" does not include PCL.
SECTION 5.09 Excluded Liabilities. The Seller shall pay and discharge the
Excluded Liabilities as and when the same become due and payable, except as
otherwise contemplated hereby or as may be required or prohibited by applicable
provisions of the U.S. Bankruptcy Code and the Bermuda Companies Act and in each
case any case law arising thereunder.
SECTION 5.10 Global Crossing. (a) The Seller shall use its commercially
reasonable efforts to negotiate with Global Crossing definitive versions of the
Transition Agreement, Ongoing Support Services Agreement, Operational Interface
Agreement, GC Product Supply Agreement and AGC Product Supply Agreement which
definitive agreements shall be reasonably acceptable to the Purchaser.
(b) The Seller shall use its commercially reasonable efforts to negotiate
with Global Crossing Entities a reduction in the GC Payables. If following such
negotiations the GC
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Payables due by the Acquired Subsidiaries have not been reduced to zero, the
Seller and the Purchaser shall negotiate in good faith an alternate arrangement
to achieve this result.
(c) The Seller shall use its commercially reasonable efforts to negotiate
an agreement with Global Crossing preventing any Global Crossing Entity from
using, or from entering into any agreement or license with any other Person that
would provide such Person (other than the Purchaser or any Acquired Subsidiary)
with the right to use, the name "Asia Global Crossing Limited" and all similar
or related names and marks, for a period of three years after the Closing Date.
Seller and the Excluded Subsidiaries shall not use any of the foregoing names,
marks or logos from and after the Closing, except as necessary or convenient in
connection with the winding-up of Seller.
SECTION 5.11 Winding-up of Seller and Excluded Subsidiaries. The Seller
shall not (a) consummate any plan of reorganization pursuant to Chapter 11 of
the U.S. Bankruptcy Code and relevant Bermuda Law, (b) effect, under applicable
non-bankruptcy Law, the liquidation, winding-up or dissolution of the Seller and
the Excluded Subsidiaries, or (c) otherwise distribute any assets to Persons
holding Claims against the Seller in the Chapter 11 Case, prior to the 60th day
immediately following the Closing Date at which time the Seller may distribute
any or all assets of the Seller except for that amount of cash and/or Cash
Equivalents equal to the sum of: (x) any amounts that are the subject of a post
Closing dispute subject to resolution in accordance with Sections 2.07(c) or
2.07(d); and (y) subject to the provisions of Section 11.01, any amounts
reasonably and in good faith claimed as damages by the Purchaser due to, arising
from or related to any breach by the Seller of any representation, warranty,
covenant or agreement in this Agreement. The parties hereto shall use their
commercially reasonable efforts to resolve any such disputes or claims as soon
as possible after the Closing.
SECTION 5.12 Currency. Unless otherwise specified in this Agreement, all
references to currency, monetary values and dollars set forth herein shall mean
United States (U.S.) dollars and all payments hereunder shall be made in United
States dollars.
SECTION 5.13 Insurance. The Seller will use its reasonable efforts (to be
deemed not to include or require expenditure of any monies other than de minimis
amounts) to cause the Pending Policies to take effect at the Closing, subject to
the payment by Purchaser at the Closing of the premiums due under such Pending
Policies. The Purchaser hereby agrees to pay the premiums due under such Pending
Policies at or prior to the Closing in order that they may take effect at the
Closing; provided, however, that Purchaser shall be reimbursed by the Seller the
amount of all premiums, net of any cancellation penalties or other amounts
withheld by the insurer or broker if the Closing does not occur and the
Purchaser does not otherwise receive reimbursement for such paid premiums.
SECTION 5.14 Finance Co. The Seller shall cause Finance Co to be
established and cause the relevant intercompany amounts between the Seller and
the Excluded Subsidiaries on the one hand and certain Acquired Subsidiaries on
the other hand to be transferred to Finance Co after receipt of the Approval
Order and prior to the Closing Date.
SECTION 5.15 Taiwan Share Transfer. Prior to Closing, the Purchaser shall
irrevocably and unconditionally assign its rights hereunder to acquire the
Taiwan Shares to the Taiwan Assignee (which shall be identified to the Seller
prior to Closing).
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SECTION 5.16 Further Action. (a) Each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all appropriate action, do or
cause to be done all things necessary, proper or advisable under applicable Law,
and to execute and deliver such documents and other papers, as may be required
to carry out the provisions of this Agreement, to satisfy all conditions to the
obligations of the parties and to consummate and make effective the transactions
contemplated by this Agreement; provided, however, that nothing in this
Agreement or the Ancillary Agreements shall obligate the Seller or the
Purchaser, or any of their respective Affiliates, to waive or modify any of the
terms and conditions of this Agreement or any of the documents contemplated
hereby, except as expressly set forth herein.
(b) To the extent any Acquired Asset is not capable of being transferred to
the Purchaser at the Closing in accordance with this Agreement, the Purchaser
and the Seller agree to cooperate to devise appropriate alternative arrangements
to transfer the benefit of such Acquired Asset to the Purchaser or to make such
other alternative arrangements as the Seller and the Purchase may mutually
agree.
(c) In the event that any Subsidiary of the Seller that holds any Indirect
Interests or other Acquired Assets that the Seller is causing to be sold,
assigned, transferred, conveyed and delivered pursuant to Section 2.01 of this
Agreement shall, after the date hereof, commence a Subsidiary Bankruptcy Case
(each, a "Filing Subsidiary"), the Seller, prior to the commencement of such
Subsidiary Bankruptcy Case, shall (i) agree to such amendments to this
Agreement, the Bidding Procedures Order and the Approval Order as the Purchaser
may reasonably request in order to effect the transactions contemplated
hereunder (including, without limitation, the addition of any such Filing
Subsidiary as a party to this Agreement), and (ii) use its best efforts to cause
any such Filing Subsidiary to execute this Agreement (as so amended) as a party
hereto.
ARTICLE VI
EMPLOYEE MATTERS
SECTION 6.01 Employees. From the date hereof through the Closing, the
Seller shall permit the Purchaser to, at reasonable times and upon reasonable
notice to the Seller, communicate in writing with the Seller's and the Acquired
Subsidiaries' employees and consultants concerning the Purchaser's plans,
operations, business, customer relations, and general personnel matters and to
interview the Seller and the Acquired Subsidiaries' employees and consultants
and review the personnel records and such other information concerning the
Seller and the Acquired Subsidiaries' employees and consultants as the Purchaser
may reasonably request (subject to obtaining any legally required written
permission of any affected employee or consultant and to other applicable law
and provided, that none of the foregoing shall be conducted in a manner that is
unreasonably disruptive to the business of the Seller or any Acquired
Subsidiary).
SECTION 6.02 Transfer and Assumption of the Retirement Plan; Contributions
for Periods Prior to Closing. As of the Closing Date, the Purchaser shall adopt
the retirement plans listed in Section 6.02 of the Disclosure Schedules
(together, the "Retirement Plans") and the related trusts, and the Seller shall
cause all right, title, interest, duties, liabilities and authorities of the
Seller in, to and under the Retirement Plans and the related trusts to be
transferred to the Purchaser in accordance with the applicable Law. At the
Closing, the parties shall execute and deliver such documents and instruments as
may be required to effect such an assumption and transfer and to reflect the
parties' intent that the Retirement Plans not be or be
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deemed to be terminated, or partially terminated, as a result of this Agreement
or the transactions contemplated herein and that all assets of the Retirement
Plans, as the same exist immediately prior to the Closing Date, shall be
transferred with the Retirement Plans as provided in this Section 6.02. As of
the Closing Date, the Seller shall have made or caused each employer under the
Retirement Plans to have made all contributions to the Retirement Plans for the
portion of the current plan year which will be completed as of the Closing Date.
SECTION 6.03 Directors and Officers of Acquired Subsidiaries. The Purchaser
shall deliver to the Seller a binding agreement regarding each director and
officer of an Acquired Subsidiary releasing and forever discharging, on behalf
of the Purchaser and the Acquired Subsidiaries, such officers and directors from
all past, present and future claims, demands, actions and causes of action of
any kind or nature whether known or unknown, for any Liability, loss, damage,
claim, charge, action, proceedings, deficiency, payments, interest, penalty,
costs and expenses arising out of or relating to such Person's employment or
other similar relationship with any Acquired Subsidiary prior to the Closing in
the form set forth in Exhibit 6.03; provided, however, that such release shall
not release any such claims arising from or related to fraud or willful
misconduct.
SECTION 6.04 Employee Confidentiality Agreements. The Seller shall use
reasonable efforts (to be deemed not to include or require expenditure of any
monies other than de minimis amounts, provided, however, that Seller shall not
be required to pay any consideration to any employee in connection with this
Section 6.04) to cause all directors, officers, management, employees and
technical and professional employees of the Seller and each Acquired Subsidiary
to execute and deliver a written obligation to maintain in confidence all
confidential or proprietary information acquired by them in the course of their
employment at the Seller or an Acquired Subsidiary and to assign to the Seller
or such Acquired Subsidiary all inventions made by them within the scope of
their employment during such employment and for a reasonable period thereafter.
ARTICLE VII
CONDITIONS TO CLOSING
SECTION 7.01 Conditions to Obligations of the Seller. The obligations of
the Seller to consummate the transactions contemplated by this Agreement shall
be subject to the fulfillment or written waiver, at or prior to the Closing, of
each of the following conditions:
(a) Representations, Warranties and Covenants. (i) The representations and
warranties of the Purchaser contained in this Agreement shall have been true and
correct in all material respects when made and shall be true and correct in all
material respects as of the Closing, except to the extent such representations
and warranties are as of another date, in which case such representations and
warranties shall be true and correct as of that other date, in each case, with
the same force and effect as if made as of the Closing Date, (ii) the covenants
and agreements contained in this Agreement to be complied with by the Purchaser
on or before the Closing Date shall have been complied with in all material
respects, and (iii) the Seller shall have received a certificate from the
Purchaser to such effect signed by a duly authorized officer thereof.
(b) No Proceeding or Litigation. No Action shall have been commenced and
remain pending, or shall have been threatened by or before any Governmental
Authority against
65
either the Seller or the Purchaser, seeking to restrain or materially and
adversely alter the transactions contemplated by this Agreement which, in the
reasonable, good faith determination of the Seller, is likely to render it
impossible or unlawful to consummate such transactions or which would reasonably
be expected to have a Material Adverse Effect; provided, however, that the
provisions of this Section 7.01(b) shall not apply if the Seller has directly or
indirectly solicited or encouraged any such Action.
(c) Ancillary Agreements. The Purchaser shall have executed and delivered
to the Seller each of the Ancillary Agreements to which it is a party.
(d) Joint Provisional Liquidators. The Joint Provisional Liquidators shall
have been appointed pursuant to the Bermuda Order, and shall have executed this
Agreement for the sole purpose of agreeing to the matters set forth in Article
IX, and shall have obtained sanction from the Bermuda Court for such appointment
and execution in accordance with Section 9.01.
(e) Entry of Orders. The U.S. Bankruptcy Court shall have entered the
Bidding Procedures Order and the Approval Order and any Section 365 Orders for
which motions for approval thereof shall have been filed no less than
twenty-five (25) days prior to the Closing Date, and such Bidding Procedures
Order and such Approval Order and each such Section 365 Order shall be in full
force and effect and shall not have been stayed, modified, reversed or amended
as of the Closing Date.
(f) Vendor Releases. NEC and KDDI shall have executed and delivered to the
Seller a full release of the Seller and its Affiliates (other than the Acquired
Subsidiaries) from any and all obligations under the Vendor Contracts, each in
form and substance reasonably satisfactory to the Seller.
(g) Consents and Approvals. (i) The Seller and the Acquired Subsidiaries
shall have received all Seller Approvals and Purchaser shall have received all
Purchaser Approvals, in each such case in form and substance reasonably
satisfactory to the Seller and the Purchaser and (ii) the Seller and the
Acquired Subsidiaries shall have received all Required Contractual Consents;
provided that clause (ii) shall be deemed satisfied if Purchaser waives each
Required Contractual Consent that has not been received and the assumption of
such agreements and contracts without such consent would not be reasonably
likely to cause the Seller to incur material damages.
(h) Release of Seller and Excluded Subsidiaries. The Purchaser shall have
delivered appropriate releases in favor of the Seller and the Excluded
Subsidiaries with respect to all Assumed Liabilities in the form set forth in
Exhibit 7.01(h).
(i) AGC Payables Agreements. All assignments and transfers provided for in
the AGC Payables Agreement (or under an alternate arrangement agreed by the
Seller and the Purchaser) shall have been completed with no material adverse
financial effect on the Seller or the Excluded Subsidiaries.
SECTION 7.02 Conditions to Obligations of the Purchaser. The obligations of
the Purchaser to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment or written waiver, at or prior to the
Closing, of each of the following conditions:
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(a) Representations, Warranties and Covenants. (i) The representations and
warranties of the Seller contained in this Agreement (x) that are not qualified
by the words "material" or "Material Adverse Effect" shall have been true and
correct in all material respects when made and shall be true and correct in all
material respects as of the Closing Date with the same force and effect as if
made as of the Closing Date and (y) that are qualified by the words "material"
or "Material Adverse Effect" shall have been true and correct when made and
shall be true and correct as of the Closing Date with the same force and effect
as if made as of the Closing Date, except, in the case of both clauses (x) and
(y), to the extent such representations and warranties are as of another date,
in which case, such representations and warranties shall be true and correct in
all material respects as of that other date; provided, however, that this
condition shall be deemed satisfied unless the failure of the representations
and warranties not qualified by the words "Material Adverse Effect," to be true
and correct would reasonably be expected to have a Material Adverse Effect, (ii)
the covenants and agreements contained in this Agreement to be complied with by
the Seller on or before the Closing Date shall have been complied with by the
Seller and the Acquired Subsidiaries in all material respects and (iii) the
Purchaser shall have received a certificate of the Seller to such effect signed
by a duly authorized officer thereof;
(b) No Proceeding or Litigation. No Action shall have been commenced and
remain pending or shall have been threatened by or before any Governmental
Authority against either the Seller or the Purchaser, seeking to restrain or
materially and adversely alter the transactions contemplated by this Agreement
which, in the reasonable, good faith determination of the Purchaser, is likely
to render it impossible or unlawful to consummate such transactions or which
would reasonably be expected to have a Material Adverse Effect; provided,
however, that the provisions of this Section 7.02(b) shall not apply if the
Purchaser has directly or indirectly solicited or encouraged any such Action;
(c) Legal Opinion. The Purchaser shall have received from ▇▇▇▇▇▇▇▇-▇▇▇▇▇
and ▇▇▇▇▇ a legal opinion, addressed to the Purchaser and dated the Closing Date
in the form set forth in Exhibit 7.02(c).
(d) Consents and Approvals. (i) The Purchaser shall have received all
Purchaser Approvals and Seller and the Acquired Subsidiaries shall have received
all Seller Approvals, in each case in form and substance reasonably satisfactory
to the Purchaser and the Seller and (ii) the Seller and the Acquired
Subsidiaries shall have received all Required Contractual Consents; provided,
however, that this condition shall be deemed satisfied unless the failure of
Seller to obtain any Seller Approval or Required Contractual Consent would
result in a Material Adverse Effect.
(e) No Material Adverse Effect. There shall not have been a Material
Adverse Effect since the date of this Agreement;
(f) Amendments to Certain Contracts. The amendments to the NEC Deferral
Agreement and the KDDI Payment Deferral Option Agreement executed by Seller,
Purchaser and the Vendors on or about the date hereof shall be in full force and
effect, or such effectiveness shall be subject only to the Closing;
(g) Entry of Orders. The U.S. Bankruptcy Court shall have entered the
Bidding Procedures Order, the Approval Order and any Section 365 Orders for
which motions for
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approval thereof shall have been filed no less than twenty-five (25) days prior
to the Closing Date, and such Bidding Procedures Order and such Approval Order
and each such Section 365 Order shall be in full force and effect and shall not
have been stayed, modified, reversed or amended as of the Closing Date.
(h) Ancillary Agreements. The Seller shall have executed and delivered to
the Purchaser each of the Ancillary Agreements to which it is a party.
(i) Joint Provisional Liquidators. The Joint Provisional Liquidators shall
have been appointed pursuant to the Bermuda Order, and shall have executed this
Agreement for the sole purpose of agreeing to the matters set forth in Article
IX, and shall have obtained sanction from the Bermuda Court for such appointment
and execution in accordance with Section 9.01.
(j) Communications Licenses. No event has occurred and no circumstance
exists or will exist as a result of the Closing or otherwise which would permit
the revocation or termination of any of the Communications Licenses or the
imposition of any material restriction thereon, or that would prevent any of the
Communications Licenses from being renewed on a routine basis or in the ordinary
course as a result of the consummation of the transactions contemplated by this
Agreement or otherwise; provided, however, that this condition shall be deemed
to be satisfied unless the failure of such condition would reasonably be
expected to have a Material Adverse Effect.
(k) Financial Statements. The Seller shall have delivered a consolidated
Schedule of Cash Receipts and Cash Disbursements for Seller and its Subsidiaries
(excluding PCL) substantially in the format of Exhibit 7.02(k) for the nine
month period ended September 30, 2002, together with the related notes thereto
and an unqualified audit opinion thereon. The Seller shall also have delivered a
Consolidated Statement of Net Assets of Seller and its Subsidiaries (excluding
PCL) as of September 30, 2002, and shall have used commercially reasonable
efforts to obtain an unqualified audit opinion thereon. Seller shall have also
delivered consolidating schedules (which need not contain any notes or be
audited) of the Consolidated Statement of Net Assets for the foregoing period
for each of the Seller and its Subsidiaries (excluding PCL).
(l) Insurance. The Pending Policies shall be in full force and effect,
subject only to payment of any premiums due thereon by the Purchaser.
(m) AGC Payables Agreement. All assignments and transfers provided for in
the AGC Payables Agreements (or under an alternate arrangement agreed by the
Seller and the Purchaser) shall have been completed with no material adverse
financial effect on the Purchaser or the Acquired Subsidiaries.
(n) Minute Books. Complete and accurate copies of all minute books and
share registers or stock record books of each Acquired Subsidiary have been
provided by the Seller to the Purchaser.
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ARTICLE VIII
U.S. BANKRUPTCY COURT AND BERMUDA COURT
SECTION 8.01 Chapter 11 Case. In connection with the transactions
contemplated by this Agreement, the Seller shall, within two 2 Business Days of
the date hereof file with the U.S. Bankruptcy Court the petition necessary to
commence the Chapter 11 Case.
SECTION 8.02 U.S. Bankruptcy Court Approvals. (a) In connection with the
transactions contemplated by this Agreement, the Seller shall, within one (1)
Business Day of the commencement of the Chapter 11 Case, file with the U.S.
Bankruptcy Court one or more motions seeking entry of the following orders:
(b) Bidding Procedures Order. An order in the form of Exhibit 8.02(b),
subject only to such material and non-material changes as the Purchaser in its
sole discretion may consent to (provided, however, that with respect to
non-material changes only, the Purchaser's consent to such non-material changes
shall not be unreasonably withheld) in writing (the "Bidding Procedures Order")
providing, among other things, for the payment of the Break-Up Fee and the
Purchaser Fees and Expenses Reimbursement in the circumstances and on the terms
set forth in this Agreement.
(c) Approval Order. An order in the form of Exhibit 8.02(c), subject only
to such material and non-material changes as the Purchaser in its sole
discretion may consent to (provided, however, that with respect to non-material
changes only, the Purchaser's consent to such non-material changes shall not be
unreasonably withheld) in writing, pursuant to Sections 105, 363, 365 and other
applicable provisions of the Bankruptcy Code (the "Approval Order"), among other
things, (A) authorizing and approving the sale to the Purchaser pursuant to this
Agreement of the Acquired Assets, and approving the terms of this Agreement, (B)
authorizing and approving the assumption by the Seller, and the assignment to
the Purchaser, of the Assigned AGC Contracts, (C) finding the Purchaser is
acting in good faith, and is entitled to the protections of a good faith
purchaser under Section 363(m) of the Bankruptcy Code, and (D) containing such
other findings and provisions consistent with applicable Law as may be
reasonably requested by the Purchaser.
(d) Within five (5) Business Days of the entry of the Bidding Procedures
Order, Seller shall file with the U.S. Bankruptcy Court, and serve on all
counter-parties to the Assigned AGC Contracts, a notice of (i) the Seller's
intent to assume and assign to the Purchaser (or its designee) the Assigned AGC
Contracts in accordance with Section 365 of the Bankruptcy Code, and (ii) the
Cure Costs (if any) with respect to each Assigned AGC Contract.
(e) If the Purchaser determines at any time after the date hereof
(including, without limitation, after the Closing Date but not later than 30
days prior to the Confirmation Date) that the Seller is a party to any
contracts, agreements, leases, licenses, commitments, sales or purchase orders
or other instruments primarily related to the Business that have not been
previously designated to be Assigned AGC Contracts, the Purchaser shall have the
right in its discretion to demand, by written notice delivered to the Seller not
less than 30 days prior to the Confirmation Date, that any such contracts,
agreements, leases, licenses, commitments, sales or purchase orders or other
instruments (each, an "Additional Contract") be assumed by the Seller and
assigned to the Purchaser and thereby transferred to the Purchaser or its
designee effective upon the Closing as an Acquired Asset without any additional
consideration; provided that the
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Purchaser may not demand the assumption or assignment of any Additional Contract
that has been previously rejected by the Seller. Upon receipt of any such
notice, the Seller shall promptly file with the U.S. Bankruptcy Court a motion
for an order (each, a "Section 365 Order") authorizing such assumption and
assignment to the Purchaser pursuant to Section 365 of the Bankruptcy Code. Any
such motion and Section 365 Order shall be in form and substance reasonably
acceptable to Purchaser. The Seller shall file such motion and deliver notice
thereof to all Persons entitled to notice thereof, all in accordance with the
applicable provisions of the U.S. Bankruptcy Code and applicable order(s) of the
U.S. Bankruptcy Court. If such Section 365 Order is entered after the Closing
Date, promptly upon approval of any such Section 365 Order (unless such Section
365 Order shall have been stayed, modified, reversed or amended), the Seller and
the Purchaser shall take, or cause to be taken, all actions necessary or
desirable to effect the assumption and assignment to the Purchaser of the
applicable Additional Contracts.
SECTION 8.03 Bermuda Case. The Seller shall, promptly following the
commencement of the Chapter 11 Case, petition the Bermuda Court for the
commencement of the Bermuda Case and shall, as soon as practicable after the
appointment of the Joint Provisional Liquidators by the Bermuda Court in
accordance with the Bermuda Order, seek the approval by the Joint Provisional
Liquidators of this Agreement in accordance with Section 9.01.
SECTION 8.04 Co-operation. (a) The Seller and the Purchaser shall each use
their commercially reasonable efforts, and shall cooperate, assist and consult
with each other, and take all actions reasonably necessary, in order to secure
(i) the commencement of the Chapter 11 Case by no later than two (2) Business
Days after the date hereof, (ii) the U.S. Bankruptcy Court's approval of (A) the
Bidding Procedures Order by no later than thirty (30) days after the
commencement of the Chapter 11 Case, (B) the Approval Order by no later than
seventy-five (75) days after the commencement of the Chapter 11 Case, and (C)
any Section 365 Order or any other order of the U.S. Bankruptcy Court relating
to this Agreement, the Ancillary Agreements or the transactions contemplated
hereby or thereby, within twenty-five (25) days following the date of filing of
the motion for approval thereof (including, without limitation, with respect to
satisfying the Seller's burden to demonstrate under Sections 365(b)(1)(C) or
365(f)(2(B) of the Bankruptcy Code, as applicable, "adequate assurance of future
performance" by the Purchaser under each Assigned AGC Contract or any Additional
Contract (and, in connection therewith, the Purchaser agrees to provide to the
Seller, for use in any hearing before the U.S. Bankruptcy Court relating to the
Seller's request for entry of the Approval Order or any Section 365 Order, such
financial or other information regarding the Purchaser as may reasonably be
necessary or appropriate to satisfy such burden)), (iii) the appointment of the
Joint Provisional Liquidators in accordance with the Bermuda Order and the
approval by the Joint Provisional Liquidators in accordance with Section 9.01
within seven (7) days of the commencement of the Bermuda Case, and (iv) the
Bermuda Court's approval of the decision of the Joint Provisional Liquidators to
enter into this Agreement within twenty-eight (28) days of the commencement of
the Bermuda Case. The Seller and the Purchaser shall consult with, and seek the
advice of, one another regarding pleadings which any of them intends to file, or
positions any of them intends to take, with the U.S. Bankruptcy Court in
connection with or which might reasonably affect, the U.S. Bankruptcy Court's
approval of the Bidding Procedures Order, the Approval Order, any Section 365
Order and the appointment of the Joint Provisional Liquidators by the Bermuda
Court pursuant to the Bermuda Order, or any other such order that could
reasonably be anticipated to effect the transactions contemplated by this
Agreement. None of the Seller or the Purchaser will file any pleading or take
any position that is inconsistent with
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obtaining the U.S. Bankruptcy Court's approval of the Bidding Procedures Order,
the Approval Order, any Section 365 Order, or any other such order and the
appointment of the Joint Provisional Liquidators by the Bermuda Court pursuant
to the Bermuda Order. The Seller shall provide notice to the Purchaser of all
the pleadings filed by the Seller in the Chapter 11 Case and, in the event that
the Purchaser's counsel shall have informed the Seller's counsel that it cannot,
after reasonable efforts, receive electronic access to such pleadings filed, the
Seller shall promptly provide the Purchaser's counsel with copies of all
motions, applications, supporting papers and notices, prepared and filed by the
Seller in the U.S. Bankruptcy Court or the Bermuda Court or any other court
pertaining to the motion for approval of the Bidding Procedures Order, the
Approval Order, any Section 365 Order, or any other order relating to any of the
transactions contemplated by this Agreement and the Ancillary Agreements or that
could reasonably be anticipated to have a material effect thereon. The Seller's
counsel further shall provide the Purchaser's counsel with copies of all
applications, petitions, pleadings and supporting papers and notices submitted
by the Seller to the Bermuda Court in connection with the appointment of the
Joint Provisional Liquidators.
(b) If the Approval Order shall be appealed by any Person (or if any
petition for certiorari or motion for reconsideration, amendment, clarification,
modification, vacation, stay, rehearing or reargument shall be filed with
respect to the Approval Order), Seller and Purchaser will cooperate in taking
diligent steps and using commercially reasonable efforts for the purpose of
consummating the transactions contemplated by this Agreement and the Approval
Order prior to the entry of an order of a court of competent jurisdiction
staying the Approval Order.
(c) The Seller shall give appropriate notice, and provide appropriate
opportunity for hearing to all parties entitled thereto, of all motions, orders,
hearings, or other proceedings relating to the Chapter 11 Case or the Bermuda
Case unless otherwise required by the U.S. Bankruptcy Court or the Bermuda
Court.
ARTICLE IX
JOINT PROVISIONAL LIQUIDATORS
SECTION 9.01 Joint Provisional Liquidators' Approval. Subject to (a) their
fiduciary duties under Bermuda Law and (b) their obtaining sanction from the
Bermuda Court, the Joint Provisional Liquidators, by executing this Agreement,
hereby approve the entry by the Bermuda Debtor into this Agreement, the
Ancillary Agreements and the transactions contemplated thereby.
SECTION 9.02 Exclusion of Personal Liability. The parties agree that the
Joint Provisional Liquidators shall have no personal liability whatsoever
arising howsoever under or in connection with this Agreement, the Ancillary
Agreements and the transactions contemplated thereby.
SECTION 9.03 The Actions of the Bermuda Debtor. It is acknowledged by the
parties that the Joint Provisional Liquidators have not given any authority to
the Board of Directors to act on behalf of the Bermuda Debtor, and that the
Board of Directors is causing the Bermuda Debtor to enter into this Agreement
and the other Ancillary Agreements to which it is a party, solely in accordance
with the authority conferred upon it by the Bye-laws of the Seller and the
Companies ▇▇▇ ▇▇▇▇ and related regulations and in accordance with its authority
derived from the Bermuda Case.
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SECTION 9.04 Purpose of the Joint Provisional Liquidators as a Party. It is
acknowledged that the Joint Provisional Liquidators are joined as a party to
this Agreement for the purpose of the matters set out in this Article IX only.
In particular, but without limiting the generality of the foregoing, it is
acknowledged and agreed by the parties hereto that:
(a) the Joint Provisional Liquidators shall provide no confirmation of any
nature whatsoever in respect of the representations, warranties and covenants of
the Seller set out in this Agreement; and
(b) the Joint Provisional Liquidators shall not, by reason of being party
to this Agreement, submit to the jurisdiction (exclusive or otherwise) of the
U.S. Bankruptcy Court.
SECTION 9.05 Joint Provisional Liquidators. Subject to the exercise of
their fiduciary duties under Bermuda Law and in accordance with the powers
conferred upon them by the Bermuda Court, the Joint Provisional Liquidators will
take all actions necessary or appropriate to give effect to the transactions
contemplated by this Agreement, the Ancillary Agreements and the transactions
contemplated thereby. Should the Joint Provisional Liquidators take any action
or make any omission which causes the transactions contemplated by this
Agreement not to be effected, and the Purchaser wishes to challenge the Joint
Provisional Liquidators' action or omission, then the Joint Provisional
Liquidators will not object to the Purchaser making whatever submissions it
considers to be appropriate to the Bermuda Court. Should the Joint Provisional
Liquidators, acting pursuant to their fiduciary duties under Bermuda Law,
consider that it is or may be appropriate to vary, modify or withdraw their
consent in Section 9.01, then they will seek directions from the Bermuda Court
so that the Bermuda Court may determine whether it is appropriate for the Joint
Provisional Liquidators' approval to be varied, modified or withdrawn and they
will give notice of the hearing of their application for directions to, inter
alia, the Purchaser, as soon as reasonably practicable following the issue of
their application, and the Joint Provisional Liquidators will not object to the
Purchaser making any submissions it considers to be appropriate to the Bermuda
Court. The Joint Provisional Liquidators shall promptly provide the Seller's
counsel and the Purchaser's counsel with copies of all applications, petitions,
pleadings and supporting papers and notices filed or submitted by the Joint
Provisional Liquidators to the Bermuda Court in connection with the transactions
contemplated by this Agreement and the Ancillary Agreements and shall not object
to counsel for the Seller and/or the Purchaser appearing at the hearing of such
application and making submissions to the Bermuda Court.
SECTION 9.06 Governing Law; Submission to Jurisdiction. This Article IX
shall be governed by and construed, interpreted and enforced in accordance with
the Laws of Bermuda, without giving effect to the principles of conflicts of
laws thereof. The parties hereby agree that, (a) the Supreme Court of Bermuda
shall retain exclusive jurisdiction to enforce the terms of this Article IX and
to decide any claims or disputes involving the Joint Provisional Liquidators
that may arise or result from, or be connected with, this Agreement, any breach
or default hereunder, or the transactions contemplated herein, and (b) any and
all claims, causes of action, suits and proceedings relating to the foregoing
shall be filed and maintained only in the Supreme Court of Bermuda, and the
parties hereby consent and submit to the exclusive jurisdiction of the Supreme
Court of Bermuda for this purpose.
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SECTION 9.07 Entire Agreement. This Article IX contains the entire
agreement among the parties with respect to the subject matter of this Article
and supersedes all prior and contemporaneous arrangements or understandings with
respect hereto. This Article IX shall be binding and effective as between the
Seller and the Purchaser as of the date of this Agreement, and shall be binding
and effective on the Joint Provisional Liquidators as of the date of their
execution of this Agreement.
SECTION 9.08 Amendments. The terms and provisions of this Article IX may be
modified or amended, or any of the provisions hereof waived, temporarily or
permanently, in writing executed and delivered by the Joint Provisional
Liquidators and the other parties. No waiver of any of the provisions of this
Article IX shall be deemed to be, or shall constitute, a waiver of any other
provision hereof (whether or not similar). No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof. Any amendment of this Agreement under this Section 9.08 will require
the express consent of the Joint Provisional Liquidators.
SECTION 9.09 Notices to Joint Provisional Liquidators. All notices,
requests, claims, demands and other communications hereunder to the Joint
Provisional Liquidators shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by an internationally recognized overnight courier service, by telecopy
or registered or certified mail (postage prepaid, return receipt requested) to
the Joint Provisional Liquidators at the following addresses (or at such other
address for a Joint Provisional Liquidator as shall be specified in a notice
given in accordance with Section 12.02); all such communications from or by the
Joint Provisional Liquidators shall be to the addresses set forth in Section
12.02 of this Agreement but shall otherwise be governed by the terms of this
Section 9.09. The address for the Joint Provisional Liquidators is as follows:
Deloitte & Touche
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇
Fax: ▇-▇▇▇-▇▇▇-▇▇▇▇
Attention: Mr. ▇▇▇▇ ▇▇▇▇▇
ARTICLE X
TERMINATION
SECTION 10.01 Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) by mutual written consent of the Seller and the Purchaser;
(b) by the Purchaser or the Seller if the Closing shall not have occurred
by January 31, 2003; provided, however, that if, on such date, the only
unsatisfied condition to Closing is the lack of receipt of any Regulatory
Approval, such date shall be extended to March 31, 2003 or such later date as
may be mutually agreed by the Seller and the Purchaser; provided, further, that
no party shall be entitled to terminate this Agreement pursuant to this Section
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10.01(b) if the failure of the Closing to occur is the result of the failure of
such party to comply fully with its obligations hereunder;
(c) by either party if (i) there shall be any law or regulation that makes
consummation of the transactions contemplated hereby illegal or otherwise
prohibited or (ii) consummation of the transactions contemplated hereby would
violate any Final Order or non-appealable Governmental Order as the case may be,
of (A) the U.S. Bankruptcy Court, (B) the Bermuda Court, or (C) any Governmental
Authority having competent jurisdiction;
(d) by the Purchaser if, (i) within two (2) Business Days of the date
hereof the Seller shall not have commenced the Chapter 11 Case and within one
(1) Business Day thereafter, the Seller shall not have commenced the Bermuda
Case, (ii) the Seller shall not have filed with the U.S. Bankruptcy Court a
motion or motions seeking entry of the Bidding Procedures Order and the Approval
Order within one (1) Business Day of the commencement of the Chapter 11 Case;
(iii) the Bidding Procedures Order shall not have been approved by the U.S.
Bankruptcy Court within thirty (30) days of the commencement of the Chapter 11
Case; (iv) the Approval Order shall not have been approved by the U.S.
Bankruptcy Court within seventy-five (75) days of the commencement of the
Chapter 11 Case, (v) the Bermuda Court shall not have approved the appointment
of the Joint Provisional Liquidators in accordance with the Bermuda Order within
seven (7) days of the commencement of the Bermuda Case, (vi) the Bermuda Court
shall not have sanctioned the decision of the Joint Provisional Liquidators to
enter into this Agreement within twenty-eight days of the commencement of the
Bermuda Case; or (vii) any Section 365 Order for which approval is sought prior
to the Closing Date shall not have been approved within twenty-five (25) days of
the filing of the motion for approval thereof; provided, however, that Purchaser
may only terminate this Agreement due to the failure of any of the deadlines (as
such deadlines may be extended by amendment or waiver in accordance with
Sections 12.07 and 12.08 of this Agreement) referred to in clauses (i) through
(vii) of this Section 10.01(d) to be met if the Purchaser provides written
notice to the Seller of its intent to terminate this Agreement within 5 Business
Days after the expiration of the applicable deadline.
(e) by the Purchaser, if (i) the Seller shall (a) prior to approval of the
Bidding Procedures Order, accept any Acquisition Proposal, (b) prior to approval
of the Bidding Procedures Order, seek the approval by the U.S. Bankruptcy Court
of any Acquisition Proposal (whether pursuant to Section 363 of the Bankruptcy
Code, in a Chapter 11 plan of reorganization or otherwise), or (c) following
approval of the Bidding Procedures Order, take any action to pursue any
Acquisition Proposal other than as expressly permitted by the Bidding Procedures
Order, (ii) any Person or group shall have entered into a definitive agreement
or any agreement in principle with the Seller with respect to any Acquisition
Proposal, (iii) the board of directors of the Seller, or any committee thereof,
shall have resolved to do any of the foregoing or (iv) the U.S. Bankruptcy Court
shall have entered an order approving (x) an Acquisition Proposal, (y) any sale
of the Acquired Assets (or any material portion thereof) other than to the
Purchaser, or (z) any of the foregoing;
(f) by the Purchaser upon (i) the dismissal of the Chapter 11 Case or the
conversion of the Chapter 11 Case to a case under Chapter 7 of the Bankruptcy
Code; (ii) the appointment of a trustee or the appointment of an examiner with
expanded powers in the Chapter 11 Case, or the appointment by the Bermuda Court
of a liquidator of the Seller other than the appointment of the Joint
Provisional Liquidators in accordance with the Bermuda Order; or (iii)
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the filing of a plan of reorganization for the Seller that is in any manner or
respect materially inconsistent with, or would otherwise reasonably be expected
to materially delay, materially adversely effect, or materially conflicts,
directly or indirectly, with the transactions contemplated or the benefits
reasonably expected to be gained by the Purchaser under this Agreement;
(g) by the Purchaser if, between the date hereof and the Closing: (i) any
representations and warranties of the Seller contained in this Agreement (1)
that are not qualified by the word "material" shall not have been true and
correct in all material respects when made or (2) that are qualified by the
words "material" or "Material Adverse Effect" shall not have been true and
correct when made; or (ii) the Seller shall not have complied in all material
respects with the covenants or agreements contained in this Agreement to be
complied with by it, in each case, such that the conditions set forth in Section
7.02(a) would not be satisfied (any of the foregoing, a "Seller Material
Default"); provided, however, that if such Seller Material Default is curable by
the Seller, the Purchaser may not terminate this Agreement under this Section
10.01(g) for so long as the Seller continues to use commercially reasonable
efforts to cure such breach, unless such breach is not cured within 30 days
after notice of such breach and demand for a cure is provided by the Purchaser
to the Seller;
(h) by Seller if, between the date hereof and the Closing: (i) any
representations and warranties of the Purchaser contained in this Agreement (1)
that are not qualified by the word "material" shall not have been true and
correct in all material respects when made or (2) that are qualified by the word
"material" shall not have been true and correct when made; or (ii) the Purchaser
shall not have complied in all material respects with the covenants or
agreements contained in this Agreement to be complied with by it, in each case,
such that the conditions set forth in Section 7.01(a) would not be satisfied
(any of the foregoing, a "Purchaser Material Default"); provided, however, that
if such Purchaser Material Default is curable by the Purchaser, the Seller may
not terminate this Agreement under this Section 10.01(h) for so long as the
Purchaser continues to use commercially reasonable efforts to cure such breach,
unless such breach is not cured within 30 days after notice of such breach and
demand for a cure is provided by the Seller to the Purchaser; or
(i) by the Purchaser if, after the date hereof, a Subsidiary Bankruptcy
Case shall be commenced by a Filing Subsidiary (i) under Chapter 7 of the
Bankruptcy Code or any other insolvency or similar Law, (ii) in which there
shall be appointed a trustee or an examiner with expanded powers, or (iii)
without (A) this Agreement having been amended in the manner set forth in
Section 5.16(c), and (B) the applicable Filing Subsidiary having executed this
Agreement (as so amended) and become a party hereto.
The party desiring to terminate this Agreement pursuant to this Section
10.01 shall give written notice of such termination to the other party hereto.
SECTION 10.02 Break-up Fee. (a) The Seller acknowledges (i) that the
Purchaser has made a substantial investment of management time and incurred
substantial out-of-pocket expenses in connection with the negotiation and
execution of this Agreement, its due diligence of the Business, and the Seller
and its effort to consummate the transactions contemplated hereby, and (ii) that
the Purchaser's efforts have substantially benefited the Seller and will benefit
the Seller and will benefit the bankruptcy estate of the Seller through the
submission of the offer that is reflected in this Agreement, that will serve as
a minimum bid on
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which other potential interested bidders can rely, thus increasing the
likelihood that the price at which the Acquired Assets are sold will reflect its
true worth. Therefore, as compensation for entering into this Agreement, taking
action to consummate the transactions hereunder and incurring the costs and
expenses related thereto and other losses and damages, including foregoing other
opportunities, the Seller agrees to pay to the Purchaser, in accordance with the
provisions of this Section 10.02, either (x) the amount of $16 million (the
"Break-Up Fee"), which amount shall be inclusive of the reimbursement by the
Seller of the reasonable, actual and documented out-of-pocket expenses of the
Purchaser incurred in connection with the transactions contemplated by this
Agreement (including, without limitation, professional fees and expenses), in an
amount up to $7 million (the "Purchaser Fees and Expenses Reimbursement"), or
(y) the Purchaser Fees and Expenses Reimbursement, in accordance with this
Section 10.02.
(b) In the event of a termination by the Purchaser pursuant to Sections
10.01(e), (f)(iii), (g), or (i) or a termination by the Seller pursuant to
Section 10.01(b), the Seller shall pay to the Purchaser the Break-Up Fee not
later than the close of business on the third Business Day following such
termination.
(c) In the event of a termination by the Purchaser pursuant to Sections
10.01(b), (c), (d), (f)(i), or f(ii) the Seller shall pay to the Purchaser the
Purchaser Fees and Expenses Reimbursement not later than the close of business
on the third Business Day following such termination; provided, however, that in
the event of termination by the Purchaser pursuant to Section 10.01(d), where
the failure to satisfy the requirements thereof was caused by the Seller's
failure to fulfill its obligations under Article VIII of this Agreement, the
Seller shall instead pay to the Purchaser the Break-Up Fee on the third Business
Day following such termination; and; provided, further, that in the event of a
termination by the Purchaser or the Seller pursuant to Section 10.01(b), where
the only Regulatory Approval that has not been obtained is one or more Purchaser
Approvals, Telecom Approvals or Regulatory Approvals or orders from any Taiwan
Governmental Authority, the Purchaser shall not be entitled to the Break-Up Fee
or the Purchaser Fees and Expenses Reimbursement (as applicable) following such
termination by Purchaser or Seller.
(d) Payment of the Break-Up Fee or the Purchaser Fees and Expenses
Reimbursement, as the case may be, shall be made by wire transfer of immediately
available funds to an account designated by the Purchaser.
(e) All amounts payable in accordance with this Section 10.02 shall
constitute an administrative expense in the Chapter 11 Case under Section 503(b)
and 507(a)(1) of the Bankruptcy Code and shall be payable as specified herein.
(f) In the event this Agreement is terminated pursuant to any provision of
Section 10.01 above, payment of the Break-Up Fee or the Purchaser Fees and
Expenses Reimbursement (as the case may be) in accordance with this Section
10.02 with shall constitute the Purchaser's sole remedy for (and such amounts
shall constitute liquidated damages and not a penalty in respect of) any and all
claims for monetary damages for any breach by the Seller of its obligations
under this Agreement and any other claim for monetary damages the Purchaser may
have against the Seller in connection with this Agreement and the transactions
contemplated hereby; provided that nothing in this Section 10.02(f) shall be
deemed to prevent or in any manner limit any claims for any equitable remedies
available under this Agreement; and; provided, further, that in the event of a
termination of the Agreement in accordance with Section
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10.01 above that does not give rise to any right to payment for the Purchaser
(or that gives rise to a right to receive the Purchaser Fees and Expenses
Reimbursement only), upon any subsequent claim or claims for money damages by
the Purchaser based on the Seller's (i) fraud, (ii) intentional and knowing
breach of a covenant or agreement, or (iii) other willful misconduct, the
Purchaser may seek payment of an amount equal to the Break-Up Fee less (if such
amount was paid by the Seller upon the termination of the Agreement) the
Purchaser Fees and Expenses Reimbursement, and such amount shall constitute
liquidated damages and not a penalty.
SECTION 10.03 Effect of Termination. In the event of the termination of
this Agreement as provided in Article X, this Agreement shall forthwith become
void and there shall be no liability on the part of either party hereto, except
as otherwise provided in Section 10.02; provided, however, that no termination
will release Purchaser from liability for any breach of this Agreement.
Notwithstanding the foregoing, the Confidentiality Agreement, as well as Article
X and XII hereof, shall survive any termination of this Agreement.
ARTICLE XI
SURVIVAL PERIOD
SECTION 11.01 Survival of Representations, Warranties, Covenants and
Agreements. (a) The representations, warranties, covenants and agreements
contained in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Closing through the 60th day immediately following
the Closing; except that this Section 11.01 shall not limit any covenant or
agreement of the parties contained in this Agreement that by its terms requires
or contemplates performance after the Closing.
(b) Neither the period of survival nor the liability of the Seller, with
respect to the Seller's representations and warranties, or the Purchaser, with
respect to the Purchaser's representations and warranties, shall be reduced by
any investigation made at any time by or on behalf of the Purchaser or the
Seller, as the case may be.
SECTION 11.02 Damage Claims. No claim, action, suit, arbitration,
proceeding, inquiry or investigation (collectively, a "Damage Claim") may be
made or pursued by a party hereto for any losses, diminution in value, damages,
claims, costs and expenses, interest, awards, judgments and penalties (including
without limitation attorney's fees and expenses) ("Losses") actually suffered by
such party due to the breach of any representation or warranty herein by the
other party hereto more than 60 days after the Closing; provided, however, that
the foregoing time limitation shall not apply to any Damage Claim if the party
making such Damage Claim provides written notice to the other party hereto
(specifying in reasonable detail the nature and basis of such Damage Claim)
within such 60 day period. In calculating such Losses, the relevant
representation or warranty shall be interpreted without giving effect to any
limitations or qualifications as a result of the inclusion of the word
"material" or "Material Adverse Effect" set forth therein. No party to this
Agreement shall be liable to another party hereto for any Losses unless and
until the aggregate amount of such Losses which may be recovered by such party
equals or exceeds $5,000,000, after which such party may recover such aggregate
Losses in addition to any Losses in excess of such $5,000,000.
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ARTICLE XII
GENERAL PROVISIONS
SECTION 12.01 Expenses. Except as otherwise specified in this Agreement,
all costs and expenses, including, without limitation, fees and disbursements of
counsel, financial advisors and accountants, incurred in connection with this
Agreement and the transactions contemplated by this Agreement shall be paid by
the party incurring such costs and expenses, whether or not the Closing shall
have occurred. Without limiting the generality of the foregoing, any stamp or
transfer taxes incurred in connection with the transactions contemplated hereby
shall be paid by the party required to do so in accordance with applicable Law.
SECTION 12.02 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by an internationally recognized overnight courier service, by telecopy
or registered or certified mail (postage prepaid, return receipt requested) to
the respective parties at the following addresses (or at such other address for
a party as shall be specified in a notice given in accordance with this Section
12.02):
(a) if to the Seller:
Asia Global Crossing Ltd.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
(b) if to the Purchaser:
Asia Netcom Corporation Limited
▇/▇ ▇▇▇▇▇ Netcom Corporation Limited
▇/▇ ▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, P.R. China
Fax: (8601) ▇▇▇▇-▇▇▇▇
Attention: Wenlong Sun
with a copy to:
Shearman & Sterling
12th Floor Gloucester Tower
The Landmark
▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
Fax: (▇▇▇) ▇▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
SECTION 12.03 Public Announcements. Except as required by any applicable
Law or by the U.S. Bankruptcy Court, no party to this Agreement shall make, or
cause to be made, any press release or public announcement in respect of this
Agreement or the transactions contemplated by this Agreement or otherwise
communicate with any news media without the prior written consent of the other
party and the parties shall cooperate as to the timing and contents of any such
press release or public announcement.
SECTION 12.04 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect for so long as the economic or
legal substance of the transactions contemplated by this Agreement is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated by
this Agreement are consummated as originally contemplated to the greatest extent
possible.
SECTION 12.05 Entire Agreement. This Agreement and the Ancillary Agreements
constitute the entire agreement of the parties hereto with respect to the
subject matter hereof and thereof and supersede all prior agreements and
undertakings, both written and oral, between the Seller and the Purchaser with
respect to the subject matter hereof and thereof (other than the Confidentiality
Agreement, which shall remain in full force and effect).
SECTION 12.06 Assignment. Except as required under Section 5.15, this
Agreement may not be assigned by operation of law or otherwise without the
express written consent of the Seller and the Purchaser (which consent may be
granted or withheld in the sole discretion of the Seller or the Purchaser);
provided, however, that the Purchaser may assign this Agreement or any of its
rights and obligations hereunder to one or more Affiliates of the Purchaser with
prior written consent of the Seller (which consent may not be unreasonably
withheld); provided, further, that no such assignment by Purchaser shall relieve
Purchaser of its obligations hereunder.
SECTION 12.07 Amendment. This Agreement may not be amended or modified
except (a) by an instrument in writing signed by, or on behalf of, the Seller
and the Purchaser or (b) by a waiver in accordance with Section 12.08.
SECTION 12.08 Waiver. Either party to this Agreement may (a) extend the
time for the performance of any of the obligations or other acts of the other
party, (b) waive any inaccuracies in the representations and warranties of the
other party contained herein or in any document delivered by the other party
pursuant hereto or (c) waive compliance with any of the agreements of the other
party or conditions to such party's obligations contained herein. Any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed by the
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party to be bound thereby. Any waiver of any term or condition shall not be
construed as a waiver of any subsequent breach or a subsequent waiver of the
same term or condition, or a waiver of any other term or condition of this
Agreement. The failure of any party to assert any of its rights hereunder shall
not constitute a waiver of any of such rights. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
SECTION 12.09 No Third Party Beneficiaries. This Agreement shall be binding
upon and inure solely to the benefit of the parties hereto and their permitted
assigns and nothing herein, express or implied, is intended to or shall confer
upon any other Person, including, without limitation, any union or any employee
or former employee of the Seller (other than the releases provided for in
Section 6.03 which shall be for the benefit of such officers and directors), any
legal or equitable right, benefit or remedy of any nature whatsoever, including,
without limitation, any rights of employment for any specified period, under or
by reason of this Agreement.
SECTION 12.10 Governing Law. This Agreement (other than Article IX hereof)
shall be governed by, and construed, interpreted and enforced first in
accordance with the Bankruptcy Code and the applicable case law thereunder and,
to the extent that the Bankruptcy Code and the applicable case law thereunder do
not address the matter at hand, then in accordance with the internal Laws of the
State of New York, without giving effect to the principles of conflicts of law
thereof. The parties hereby agree that (except as provided otherwise in Article
IX hereof), without limitation of any party's right to appeal any order of the
U.S. Bankruptcy Court, (a) the U.S. Bankruptcy Court shall retain exclusive
jurisdiction to enforce the terms of this Agreement and to decide any claims or
disputes that may relate to, arise or result from, or be connected with, this
Agreement, any breach or default hereunder, or the transactions contemplated
herein, and (b) any and all claims, causes of action, suits and proceedings
relating to the foregoing shall be filed and maintained only in the U.S.
Bankruptcy Court, and each party hereto hereby consents and submits to the
jurisdiction of the U.S. Bankruptcy Court, agrees not to assert any claim,
motion or defense that is not subject to the jurisdiction of the U.S. Bankruptcy
Court and waives any claim that its property is exempt or immune from attachment
or execution, that the Action is brought in an inconvenient forum, that the
venue of the Action is improper or that this Agreement may not be enforced by
the U.S. Bankruptcy Court.
SECTION 12.11 Waiver of Jury Trial. Each of the parties hereto hereby
waives to the fullest extent permitted by applicable law any right it may have
to a trial by jury with respect to any litigation directly or indirectly arising
out of, under or in connection with this Agreement or the transactions
contemplated by this Agreement. Each of the parties hereto (a) certifies that no
representative, agent or attorney of any other party has represented, expressly
or otherwise, that such other party would not, in the event of litigation, seek
to enforce that foregoing waiver and (b) acknowledges that it and the other
party hereto have been induced to enter into this Agreement and the transactions
contemplated by this Agreement, as applicable, by, among other things, the
mutual waivers and certifications in this Section 12.11.
SECTION 12.12 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
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SECTION 12.13 Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original, but all of which taken together shall
constitute one and the same agreement.
SECTION 12.14 Service of Process. Purchaser hereby irrevocably appoints CT
Corporation System (the "Process Agent," which has consented thereto) with
offices on the date hereof at ▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇▇, as Process Agent to receive for and on behalf of the Purchaser
service of process in the County of New York relating to this Agreement. SERVICE
OF PROCESS IN ANY ACTION OR PROCEEDING AGAINST THE PURCHASER MAY BE MADE ON THE
PROCESS AGENT BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY
ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER APPLICABLE LAW IN EFFECT IN THE
STATE OF NEW YORK, AND THE PROCESS AGENT IS HEREBY AUTHORIZED AND DIRECTED TO
ACCEPT SUCH SERVICE FOR AND ON BEHALF OF THE PURCHASER AND TO ADMIT SERVICE WITH
RESPECT THERETO. SUCH SERVICE UPON THE PROCESS AGENT SHALL BE DEEMED EFFECTIVE
PERSONAL SERVICE ON THE PURCHASER, SUFFICIENT FOR PERSONAL JURISDICTION, AND
SHALL BE LEGAL AND BINDING UPON THE PURCHASER FOR ALL PURPOSES, NOTWITHSTANDING
ANY FAILURE OF THE PROCESS AGENT TO MAIL COPIES OF SUCH LEGAL PROCESS TO THE
PURCHASER, OR ANY FAILURE ON THE PART OF THE PURCHASER TO RECEIVE THE SAME. The
Purchaser confirms that it has instructed the Process Agent to mail to the
Purchaser, upon service of process being made on the Process Agent pursuant to
this Section, a copy of the summons and complaint or other legal process served
upon it, by registered mail, return receipt requested, at the Purchaser's
address set forth in Section 12.02, or to such other address as the Purchaser
may notify the Process Agent in writing. The Purchaser agrees that it will
maintain a process agent to receive service of process in the County of New York
on its behalf with respect to this Agreement for the one-year period following
the date hereof. If for any reason the Process Agent or any successor thereto
shall no longer serve as such process agent or shall have changed its address
without notification thereof to the Seller, the Purchaser, immediately after
gaining knowledge thereof, irrevocably shall appoint a substitute process agent
acceptable to the Seller in the County of New York and advise the Seller
thereof.
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IN WITNESS WHEREOF, the Seller and the Purchaser have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
ASIA GLOBAL CROSSING LTD.
By: _______________________________
Name:
Title:
ASIA NETCOM CORPORATION LIMITED
By:_________________________________
Name:
Title:
JOINT PROVISIONAL LIQUIDATORS
(IN RESPECT OF ARTICLE IX ONLY)
By:_________________________________
Name:
Title:
Date:
By:_________________________________
Name:
Title:
Date:
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