EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
DATED AS OF MARCH 16, 1999
AMONG
GLOBAL CROSSING LTD.,
GCF ACQUISITION CORP.
AND
FRONTIER CORPORATION
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TABLE OF CONTENTS
Page
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ARTICLE I THE MERGER
1.1 THE MERGER. 2
1.2 CLOSING. 2
1.3 EFFECTIVE TIME 3
1.4 EFFECTS OF THE MERGER 3
1.5 CERTIFICATE OF INCORPORATION 3
1.6 BY-LAWS 3
1.7 OFFICERS AND DIRECTORS OF SURVIVING CORPORATION 3
1.8 EFFECT ON CAPITAL STOCK 4
1.9 VOTING AGREEMENT 5
1.10 ALTERNATIVE TRANSACTION STRUCTURE 5
ARTICLE II EXCHANGE OF CERTIFICATES
2.1 EXCHANGE FUND 13
2.2 EXCHANGE PROCEDURES 13
2.3 DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED
SHARES 14
2.4 NO FURTHER OWNERSHIP RIGHTS IN FRONTIER COMMON
STOCK 15
2.5 NO FRACTIONAL SHARES OF GLOBAL COMMON STOCK 15
2.6 TERMINATION OF EXCHANGE FUND 16
2.7 NO LIABILITY 16
2.8 INVESTMENT OF THE EXCHANGE FUND 16
2.9 LOST CERTIFICATES 17
2.10 WITHHOLDING RIGHTS 17
2.11 FURTHER ASSURANCES 17
2.12 STOCK TRANSFER BOOKS 17
ARTICLE III REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF FRONTIER 18
3.2 REPRESENTATIONS AND WARRANTIES OF GLOBAL 27
3.3 REPRESENTATIONS AND WARRANTIES OF GLOBAL AND
MERGER SUB 34
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 COVENANTS OF FRONTIER 35
4.2 COVENANTS OF GLOBAL 39
4.3 ADVICE OF CHANGES; GOVERNMENTAL FILINGS 43
4.4 TRANSITION PLANNING; CONTINUED OPERATIONS OF
FRONTIER 44
4.5 SERVICES AGREEMENT 44
4.6 CONTROL OF OTHER PARTY'S BUSINESS 44
ARTICLE V ADDITIONAL AGREEMENTS
5.1 PREPARATION OF PROXY STATEMENT; SHAREHOLDERS
MEETINGS 45
5.2 GLOBAL BOARD OF DIRECTORS; OFFICERS; HEADQUARTERS 47
5.3 ACCESS TO INFORMATION 47
5.4 REASONABLE BEST EFFORTS 48
5.5 ACQUISITION PROPOSALS 50
5.6 ASSUMPTION OF FRONTIER STOCK OPTIONS AND
WARRANTS; OTHER STOCK PLANS; EMPLOYEE BENEFITS
MATTERS 52
5.7 FEES AND EXPENSES 54
5.8 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND
INSURANCE 54
5.9 REDEMPTION OF FRONTIER PREFERRED STOCK 55
5.10 PUBLIC ANNOUNCEMENTS 55
5.11 ACCOUNTANTS' LETTERS 55
5.12 LISTING OF SHARES OF GLOBAL COMMON STOCK 56
5.13 VOTING TRUST 56
ARTICLE VI CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT
THE MERGER 56
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF GLOBAL
AND MERGER SUB 57
6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF FRONTIER 59
ARTICLE VII TERMINATION AND AMENDMENT
7.1 TERMINATION 60
7.2 EFFECT OF TERMINATION 63
7.3 AMENDMENT 64
7.4 EXTENSION; WAIVER 64
ARTICLE VIII GENERAL PROVISIONS
8.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS 64
8.2 NOTICES 65
8.3 INTERPRETATION 66
8.4 COUNTERPARTS 66
8.5 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES 66
8.6 GOVERNING LAW 67
8.7 SEVERABILITY 67
8.8 ASSIGNMENT 67
8.9 SUBMISSION TO JURISDICTION; WAIVERS 67
8.10 ENFORCEMENT 68
8.11 DEFINITIONS 68
8.12 OTHER AGREEMENTS 70
LIST OF EXHIBITS
EXHIBIT TITLE
A Form of Stock Option Agreement
1.9 Form of Voting Agreement
3.1(k) Form of Affiliate Agreement
4.5 Services Agreement Term Sheet
5.2 Classification of Directors
5.6 Assumption of Frontier Stock Options and Frontier Warrants
GLOSSARY OF DEFINED TERMS
Definition Location of Definition
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Acquisition Proposal Section 5.5
Affiliate Agreement Section 3.1(k)
Agreement Preamble
Alternative Merger Section 1.10(a)
Alternative Merger Notice Section 1.10(a)
Alternative Merger Notice Date Section 1.10(a)
Amalgamation Agreement Section 1.10(j)(iii)
Applicable Closing Conditions Section 8.11(a)
Average Price Section 1.8(a)
Blue Sky Laws Section 3.1(c)(iii)
Board of Directors Section 8.11(b)
Business Day Section 8.11(c)
Cash Top-Up Section 7.1(g)
Cash Top-Up Election Section 7.1(g)
Certificate Section 1.8(b)
Closing Section 1.2
Closing Date Section 1.2
Code Recitals
Combination Election Section 7.1(g)
Combined Voting Power Section 8.11(d)
Communications Act Section 3.1(c)(iii)
Confidentiality Agreement Section 5.3
Determination Date Section 1.8(a)
DOJ Section 5.4(b)
Effective Time Section 1.3
Employees Section 1.10(f)(i)
ERISA Section 3.1(o)(i)
ERISA Affiliate Section 3.1(o)(i)
Exchange Act Section 3.1(c)(iii)
Exchange Agent Section 2.1
Exchange Fund Section 2.1
Exchange Ratio Section 1.8(a)
Expenses Section 5.7
FCC Section 3.1(c)(iii)
Form S-4 Section 5.1(a)
Frontier Preamble
Frontier Affiliate Letter Section 3.1(k)
Frontier Benefit Plans Section 3.1(o)(i)
Frontier Board Approval Section 3.1(f)
Frontier Common Stock Recitals
Frontier Disclosure Schedule Section 3.1
Frontier Employees Section 1.10(f)(i)
Frontier Evaluation Period Section 7.1(g)
Frontier Financial Advisor Section 3.1(i)
Frontier Merger Sub Section 1.10(b)
Frontier Preferred Stock Section 3.1(b)(i)
Frontier SEC Reports Section 3.1(d)(i)
Frontier Shareholders Meeting Section 5.1(b)
Frontier Stock Option Plans Section 3.1(b)(i)
Frontier Stock Options Section 3.1(b)(i)
Frontier Sub Section 3.1(d)(i)
Frontier Voting Debt Section 3.1(b)(ii)
Frontier Warrants Section 3.1(b)(i)
GAAP Section 3.1(d)(i)
Global Preamble
Global Adjustment Election Section 7.1(g)
Global Benefit Plans Section 3.2(m)
Global Charter Amendment Section 3.2(c)(i)
Global Common Stock Recitals
Global Disclosure Schedule Section 3.2
Global Draft Disclosures Section 3.2(d)(ii)
Global Election Period Section 7.1(g)
Global Employees Section 1.10(f)(i)
Global Financial Advisor Section 3.2(h)
Global Holdings Section 3.2(d)(i)
Global Merger Sub Section 1.10(b)
Global SEC Reports Section 3.2 (d)(i)
Global Shareholders Meeting Section 5.1(c)
Global Stock Option Plan Section 3.2(b)(i)
Global Transaction Information Section 3.2(d)(ii)
Global Voting Debt Section 3.2(b)(ii)
Global Warrants Section 3.2 (b)(i)
Governmental Entity Section 3.1(c)(iii)
HSR Act Section 3.1(c)(iii)
Joint Proxy Statement/Prospectus Section 5.1(a)
Material Adverse Effect Section 8.11(e)
Material Network Contract Section 8.11(f)
Merger Recitals
Merger Consideration Section 1.8(a)
Merger Sub Preamble
NASDAQ Section 1.8(a)
New Global Section 1.10(b)
New Global Common Stock Section 1.10(c)(i)
New Global Share Issuance Section 1.10(h)(ii)
New York Certificate of Merger Section 1.3
NYBCL Section 1.1
NYSE Section 3.1(c)(iii)
Person Section 8.11(g)
Plans Section 1.10(f)(i)
Principal Shareholders Recitals
PUCs Section 3.1(c)(iii)
Regulatory Law Section 5.4(b)
Required Consents Section 3.1(c)(iii)
Required Frontier Vote Section 3.l(g)
Required Global Vote Section 3.2(g)
Rights Section 3.1(b)(i)
Rights Agreement Section 3.1(b)(i)
Rule 145 Section 3.1(k)
SAS 72 Section 5.11
SEC Section 3.1(d)(i)
Securities Act Section 3.1(c)(iii)
Share Issuance Section 3.2(c)(i)
Stock Option Agreement Recitals
Subsidiary Section 8.11(h)
Superior Proposal Section 8.11(i)
Surviving Corporation Section 1.1
Termination Date Section 7.1(b)
Termination Fee Section 7.2(b)
Termination Notice Section 7.1(g)
The Other Party Section 8.11(j)
The Trigger Event Section 8.11(k)
Violation Section 3.1(c)(ii)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 16, 1999 (this
"AGREEMENT"), among Global Crossing Ltd., a company formed under the laws of
Bermuda ("GLOBAL"), GCF Acquisition Corp., a New York corporation and a direct
wholly-owned subsidiary of Global ("MERGER SUB"), and Frontier Corporation, a
New York corporation ("FRONTIER").
W I T N E S S E T H
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WHEREAS, the respective Boards of Directors of Global, Merger Sub and
Frontier have each determined that the merger of Merger Sub with and into
Frontier (the "MERGER") is in the best interests of their respective
shareholders, and such Boards of Directors have approved such Merger and the
Alternative Merger (as defined in Section 1.10), upon the terms and subject to
the conditions set forth in this Agreement, pursuant to which each outstanding
share of common stock, par value $1.00 per share, of Frontier ("FRONTIER COMMON
STOCK") issued and out standing immediately prior to the Effective Time (as
defined in Section 1.3), other than shares owned or held directly or indirectly
by Global or directly by Frontier will be converted into the right to receive
shares of common stock, par value $.01 per share, of Global ("GLOBAL COMMON
STOCK") as set forth in Section 1.8 or as otherwise provided in Section 1.10
hereof;
WHEREAS, Global, Merger Sub and Frontier desire to make certain
representations, warranties, covenants and agreements in connection with the
transactions contemplated hereby and also to prescribe various conditions to the
transactions contemplated hereby;
WHEREAS, Global, Merger Sub and Frontier intend, by approving
resolutions authorizing this Agreement, to adopt this Agreement as a plan of
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "CODE"), and the regulations promulgated
thereunder;
WHEREAS, the Boards of Directors of Frontier and Global have approved
and concurrently with the execution of this Agreement Frontier and Global will
execute an Agreement in the form attached hereto as Exhibit A (the "STOCK OPTION
AGREEMENT") whereby Frontier will grant Global an option to purchase shares of
Frontier Common Stock upon the terms and conditions provided in such agreement;
WHEREAS, concurrently herewith certain shareholders of Global
(collectively, the "PRINCIPAL SHAREHOLDERS") have agreed to vote their shares in
favor of the transactions contemplated hereby pursuant to the Voting Agreement
(as defined in Section 1.9); and
NOW, THEREFORE in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the New York Business
Corporation Law (the "NYBCL"), Merger Sub shall be merged with and into Frontier
at the Effective Time. Following the Merger, the separate corporate existence of
Merger Sub shall cease and Frontier shall continue as the surviving corporation
(the "SURVIVING CORPORATION").
1.2 CLOSING. The closing of the Merger (the "CLOSING") will take
place on the second Business Day after the satisfaction or waiver (subject to
applicable law) of the conditions (excluding conditions that, by their terms,
cannot be satisfied until the Closing Date) set forth in Article VI (the
"CLOSING DATE"); PROVIDED, HOWEVER, that if the Average Price is less than
$34.5625, then the Closing shall not occur prior to (i) if Frontier shall not
deliver a Termination Notice (as defined in Section 7.1(g)) to Global in
accordance with Section 7.1(g), the second Business Day following the expiration
of the Frontier Evaluation Period (as defined in Section 7.1(g)), or (ii) if
Frontier shall deliver a Termination Notice to Global in accordance with Section
7.1(g), the second Business Day following the earlier of (A) Global's delivery
of a Global Adjustment Election, a Cash Top-Up Election or a Combination
Election (in each case, as defined in Section 7(g)) and (B) the expiration of
the Global Election Period, in all cases, unless another time or date is agreed
to by the parties hereto. The Closing shall be held at the offices of Skadden,
Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
unless another place is agreed to by the parties hereto.
1.3 EFFECTIVE TIME. As soon as practicable following the Closing,
the parties shall (i) file a certificate of merger (the "NEW YORK CERTIFICATE
OF MERGER") in such form as is required by and executed in accordance with the
relevant provisions of the NYBCL and (ii) make all other filings or record
required under the NYBCL. The Merger shall become effective at such
time as the New York Certificate of Merger is duly filed with the New York
Department of State in accordance with Section 904 of the NYBCL or at such
subsequent time as Global and Frontier shall agree and as shall be specified in
the New York Certificate of Merger (the date and time the Merger becomes
effective being the "EFFECTIVE TIME").
1.4 EFFECTS OF THE MERGER. At and after the Effective Time, the
Merger will have the effects set forth in Section 906 of the NYBCL. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time all the property, rights, privileges, powers and franchises of Frontier and
Merger Sub shall be vested in the Surviving Corporation, and all debts,
liabilities and duties of Frontier and Merger Sub shall become the debts,
liabilities and duties of the Surviving Corporation.
1.5 CERTIFICATE OF INCORPORATION. At the Effective Time, the
certificate of incorporation of the Surviving Corporation shall be amended in
accordance with the NYBCL such that the certificate of incorporation of the
Surviving Corporation shall consist of the provisions of the certificate of
incorpora incorporation of Merger Sub.
1.6 BY-LAWS. The by-laws of Merger Sub as in effect at the Effective
Time shall be the by-laws of the Surviving Corporation until thereafter changed
or amended as provided therein or by applicable law.
1.7 OFFICERS AND DIRECTORS OF SURVIVING CORPO RATION. The officers
of Frontier as of the Effective Time shall be the officers of the Surviving
Corporation, until the earlier of their resignation or removal or otherwise
ceasing to be an officer or until their respective successors are duly elected
and qualified, as the case may be. The directors of Merger Sub as of the
Effective Time shall be the directors of the Surviving Corporation until the
earlier of their resignation or removal or otherwise ceasing to be a director or
until their respective successors are duly elected and qualified.
1.8 EFFECT ON CAPITAL STOCK.
(a) At the Effective Time by virtue of the Merger and without any
action on the part of the holder thereof, each share of Frontier Common Stock
issued and outstanding immediately prior to the Effective Time (other than
shares of Frontier Common Stock owned or held directly or indirectly by Global
or directly by Frontier, all of which shall be canceled as provided in Section
1.8(c)) shall, except as provided in Section 7.1(g), be converted into the right
to receive that number of shares of Global Common Stock equal to the Exchange
Ratio (as defined below) (the "MERGER CONSIDERATION"). "EXCHANGE RATIO" means
the quotient (rounded to the nearest 1/10,000) determined by dividing $62.00 by
the Average
Price as defined below. "AVERAGE PRICE" means the average (rounded to the
nearest 1/10,000) of the volume weighted averages (rounded to the nearest
1/10,000) of the trading prices of Global Common Stock on the Nasdaq National
Market ("NASDAQ"), as reported by Bloomberg Financial Markets (or such other
source as the parties shall agree in writing), for the 15 trading days randomly
selected by lot by Frontier and Global together from the 30 consecutive trading
days ending on the trading day immediately preceding the date on which all the
conditions to Closing (other than conditions that, by their terms, cannot be
satisfied until the Closing Date so long as it is reasonably apparent that such
conditions will be able to be satisfied on the Closing Date) set forth in
Article VI shall have been satisfied or waived (the "DETERMINATION DATE");
PROVIDED, that the Exchange Ratio shall not be less than 1.0919, or, unless
Global shall have exercised its rights to make a Global Adjustment Election or a
Combination Election under Section 7.1(g), greater than 1.7939. If prior to the
Effective Time, Global should split or combine the shares of Global Common
Stock, or pay a stock dividend or other stock distribution in shares of Global
Common Stock, or otherwise change the shares of Global Common Stock into any
other securities, or make any other dividend or distribution on the shares of
Global Common Stock, then the Exchange Ratio will be appropriately adjusted to
reflect such split, combination, dividend or other distribution or change.
(b) As a result of the Merger and without any action on the part of
the holders thereof, at the Effective Time, all shares of Frontier Common Stock
shall cease to be outstanding and shall be canceled and retired and shall cease
to exist, and each holder of a certificate which immediately prior to the
Effective Time repre represented any such shares of Frontier Common Stock (a
"CERTIFICATE") (other than Merger Sub, Global and Frontier) shall thereafter
cease to have any rights with respect to such shares of Frontier Common Stock,
except the right to receive the applicable Merger Consideration in accordance
with Article II upon the surrender of such certificate.
(c) Each share of Frontier Common Stock issued and owned or held
directly or indirectly by Global or directly by Frontier at the Effective time
shall, by virtue of the Merger, cease to be outstanding and shall be canceled
and retired and no stock of Global or other consideration shall be delivered in
exchange therefor.
(d) Each share of common stock, par value $1.00 per share, of Merger
Sub issued and outstanding immediately prior to the Effective Time shall
forthwith cease to exist and shall be converted into one validly issued, fully
paid and non-assessable share of common stock, par value $1.00 per share, of the
Surviving Corporation as of the Effective Time.
1.9 VOTING AGREEMENT. Concurrently with the execution and delivery
of this Agreement, Frontier and the Principal Shareholders are executing and
delivering an agreement substantially in the form of Exhibit 1.9 hereto,
pursuant to which, among other things, the Principal Shareholders are agreeing
to vote all of the shares of Global Common Stock owned, beneficially or of
record, by them to approve the Share Issuance and the Global Charter Amendment
(in each case, as defined in Section 3.2(c)(i)) and such shares in the aggregate
constitute, and at the record date for the Global Shareholders Meeting (as
defined in Section 5.1(d)), will constitute at least 51% of the Combined Voting
Power (as defined in Section 8.11).
1.10 ALTERNATIVE TRANSACTION STRUCTURE.
(a) ALTERNATIVE MERGER NOTICE. Frontier shall be entitled to give
Global a notice to adopt the alternative merger structure (the "ALTERNATIVE
MERGER") as described in Section 1.10(b) (the "ALTERNATIVE MERGER NOTICE") if
(i) the Applicable Closing Conditions (as defined in Section 8.11) have been
satisfied, (ii) a Trigger Event (as defined in Section 8.11) has not occurred or
is no longer in effect for any reason, and (iii) at least 180 days have passed
since the date of this Agreement; provided, however, that if a Trigger Event
occurs between 180 days and 240 days after the date of this Agreement, the
Alternative Merger Structure Notice shall be deemed terminated if the Form S-4
which contains the Joint Proxy Statement/Prospectus (as defined in Section 5.1)
relating to the Merger could be declared effective by the SEC under the
Securities Act at an earlier time than the Form S-4 which contains the Joint
Proxy Statement/Prospectus relating to the Alternative Merger. Unless the
parties otherwise agree, without action on the part of either Global or
Frontier, an Alternative Merger Notice shall be deemed to have been given on the
date that is 240 days after the date of this Agreement, provided that if a
Trigger Event has not occurred or is no longer in effect for any reason, or, if
a Trigger Event had occurred, on the later date that such Trigger Event is no
longer in effect for any reason. In the event an Alternative Merger Notice is
given or deemed to have been given (the "ALTERNATIVE MERGER NOTICE DATE"), the
Merger contemplated by Section 1.1 of this Agreement shall be restructured in
the manner set forth in this Section 1.10. In such event, all references to the
term "MERGER" in this Agreement shall be deemed references to the transactions
contemplated by this Section 1.10, all references to the term "EFFECTIVE TIME"
in this Agreement shall be deemed references to the time at which (i) the
certificate of merger is duly filed with the New York Department of State in
accordance with Section 904 of the NYBCL and (ii) the registration of an
amalgamated company and such other documents as are required
by the Companies ▇▇▇ ▇▇▇▇ Bermuda in connection with the merger are duly filed
with the Registrar of Companies Bermuda (or at such later time as is specified
in the certificate of merger) with respect to the Merger as restructured in the
manner contemplated by this Section 1.10 and except as provided below, Sections
1.8 and 2.5 shall no longer be of any force or effect and the provisions of this
Section 1.10 shall govern the terms of the Merger. In the event that the
Alternative Merger Notice is given or deemed to be given, references to the term
Merger shall be deemed to be a reference to the Alternative Merger.
(b) THE ALTERNATIVE MERGER. In the event an Alternative Merger Notice
is given or deemed to have been given, New Global corporation, a Delaware
corporation ("NEW GLOBAL"), will promptly be formed by and owned equally by
Global and Frontier. Global and Frontier will cause New Global to become a
party to this Agreement. Prior to the Effective Time of the Alternative Merger,
Global and Frontier will cause New Global to incorporate two wholly owned
subsidiaries ("GLOBAL MERGER SUB", a Bermuda company and "FRONTIER MERGER SUB",
a New York corporation). At the Effective Time of the Alternative Merger, (i)
Global Merger Sub shall be amalgamated with and into Global in accordance with
the Companies Act of 1981 of Bermuda whereupon the separate existence of Global
Merger Sub shall cease, and Global shall continue in the form of the amalgamated
company, and (ii) Frontier Merger Sub shall be merged with and into Frontier in
accordance with New York Law, whereupon the separate existence of Frontier
Merger Sub shall cease, and Frontier shall be the surviving corporation.
Frontier and Global are sometimes referred to herein as the "SURVIVING
CORPORATIONS".
(c) EFFECT OF ALTERNATIVE MERGER ON CAPITAL STOCK.
(i) At the Effective Time of the Alternative Merger, (A) each
share of Frontier Common Stock outstanding immediately prior to such Effective
Time shall, except as otherwise provided below, be converted into the right to
receive that number of shares of New Global Common Stock, par value $.01 per
share (the "NEW GLOBAL COMMON STOCK"), equal to the Exchange Ratio (as defined
in section 1.8(a)) and (B) each share of Global Common Stock outstanding
immediately prior to such Effective Time shall be converted into the right to
receive 1.0 share of New Global Common Stock. For purposes of the immediately
preceding sentence, any cash transferred to the Frontier shareholders pursuant
to the Cash Top-Up Election or the Combination Election shall be paid by New
Global.
(ii) As a result of the Alternative Merger and without any action
on the part of the holders thereof, at the Effective Time, all shares of
Frontier Common Stock and Global Common Stock shall cease to be outstanding and
shall be canceled and retired and shall cease to exist, and each holder of a
certificate which
immediately prior to the Effective Time represented any such shares of Frontier
Common Stock or Global Common Stock (a "CERTIFICATE") (other than New Global,
Global Merger Sub, Frontier Merger Sub, Global and Frontier) shall thereafter
cease to have any rights with respect to such shares of Frontier Common Stock or
Global Common Stock, except the right to receive the applicable Merger Consider
ation upon the surrender of such certificate.
(iii) Each share of Frontier Common Stock issued and owned or
held directly or indirectly by Global or directly by Frontier at the Effective
Time and each Share of Global Common Stock issued and owned or held directly or
indirectly by Frontier or directly by Global at the Effective Time shall, by
virtue of the Alternative Merger, cease to be outstanding and shall be canceled
and retired and no stock of New Global or other consideration shall be delivered
in exchange therefor.
(iv) Each share of common stock of Global Merger Sub or Frontier
Merger Sub issued and outstanding immediately prior to the Effective Time shall
forthwith cease to exist and shall be converted into one validly issued, fully
paid and non-assessable share of common stock of the respective surviving
corporation as of the Effective Time.
(d) MERGER CONSIDERATION. The New Global Common Stock to be received
as consideration in the Alternative Merger by holders of Global Common Stock or
Frontier Common Stock is referred to herein as the "MERGER CONSIDERATION".
(e) ASSUMPTION OF STOCK OPTIONS AND WARRANTS. New Global shall assume
the Frontier Stock Options and Frontier Warrants (as defined in Section 3.1(b))
and the Global Stock Options and Global Warrants (as defined in Section 3.2(b))
on the terms set forth in Exhibits 5.6(i) and (ii) hereto respectively.
Frontier and Global agree that each of the company's other stock plans and
treatment of each of the company's officers and employees shall be as set forth
in the respective exhibits. Frontier and Global shall take all such steps as
may be required to cause the transactions contemplated by this Section 1.10(e)
and any other dispositions of Frontier and Global equity securities (including
derivative securities) or acquisitions of New Global equity securities
(including derivative securities) in connection with this Agreement by each
individual who (x) is a director or officer of Frontier or Global or (y) at the
Effective Time, will become a director or officer of New Global, to be exempt
under Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as
amended, such steps to be taken in accordance with the
No-Action Letter dated January 12, 1999, issued by the SEC to Skadden, Arps,
Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP.
(f) EMPLOYEE BENEFITS.
(i) OBLIGATIONS OF NEW GLOBAL; COMPARA BILITY OF BENEFITS. Each
Frontier and Global Benefit Plan as to which Frontier or Global or any of their
respective Subsidiaries has any obligation with respect to any current or former
employee (the "FRONTIER EMPLOYEES" and the "GLOBAL EMPLOYEES" together the
"EMPLOYEES") shall, as of the Effective Time, be the obligations of New Global
and the respective Surviving Corporations. At the Effective Time and for at
least two years thereafter, New Global shall, or shall cause the respective
Surviving Corporations to, provide benefits, in the aggregate, that are no less
favorable than the benefits provided, in the aggregate, under Fron tier's and
Global's respective Benefit Plans (the "PLANS") to the Employees immediately
prior to the Effective Time. Notwithstanding the foregoing, nothing herein
shall require (A) the continuation of any particular Plan or prevent the
amendment or termination thereof (subject to the maintenance, in the aggregate,
of the benefits as provided in the preceding sentence) or (B) New Global or the
respective Surviving Corporations to continue or maintain any stock purchase or
other equity plan related to the equity of Frontier or Global or the respective
Surviving Corporations.
(ii) PRE-EXISTING LIMITATIONS; DEDUCTIBLE; SERVICE CREDIT. With
respect to any New Global Benefit Plans in which the Employees participate
effective as of the Closing Date or thereafter, New Global shall, or shall cause
each of the Surviving Corporations to: (A) not impose any limitations more
onerous than those currently in effect as to pre-existing conditions, exclusions
and waiting periods with respect to participation and coverage requirements
applicable to the Employees under any welfare New Global Benefit Plan in which
such Employees may be eligible to participate after the Effective Time, (B)
provide each Employee with credit for any co-payments and deductibles paid prior
to the Effective Time in satisfying any applicable deductible or out-of-pocket
requirements under any welfare New Global Benefit Plan in which such employees
may be eligible to participate after the Effective Time, and (C) recognize all
service of the Employees with Frontier and Global respectively for all purposes
(including, without limitation, purposes of eligibility to participate, vesting
credit, entitlement for benefits, and benefit accrual) in any New Global Benefit
Plan in which such employ ees may be eligible to participate after the
Effective Time, to the same extent taken into account under a comparable
Frontier or Global Plan immediately prior to the Closing Date.
(g) NO FRACTIONAL SHARES OF NEW GLOBAL COMMON STOCK.
(i) No certificates or scrip for shares of New Global Common
Stock representing fractional shares of New Global Common Stock shall be issued
upon the surrender for exchange of Certificates and such fractional share
interests will not entitle the owner thereof to vote or to have any rights of a
share holder of New Global or a holder of shares of New Global Common Stock.
(ii) Notwithstanding any other provision of this Agreement, each
holder of shares of Frontier Common Stock exchanged pursuant to the Alternative
Merger who would otherwise have been entitled to receive a fraction of a share
of New Global Common Stock (after taking into account all Certificates delivered
by such holder) shall receive, in lieu thereof, cash (without interest) in an
amount equal to the product of (A) such fractional part of a share of New Global
Common Stock multiplied by (B) the last sales price per share of Global Common
Stock reported on NASDAQ as reported in THE WALL STREET JOURNAL, Eastern
edition, on the Closing Date. As promptly as practicable after the determina
tion of the amount of cash, if any, to be paid to holders of fractional
interests, the Exchange Agent shall notify New Global, and New Global shall
cause the surviving corporation to deposit such amount with the Exchange Agent
and shall cause the Exchange Agent to forward payments to such holders of
fractional interests subject to and in accordance with the terms hereof.
(h) REPRESENTATIONS AND WARRANTIES OF NEW GLOBAL. Immediately prior to
the Effective Time of the Alternative Merger, New Global will become a party to
this Agreement and make the following representa tions and warranties to each
of Global and Frontier:
(i) ORGANIZATION, STANDING AND POWER. At the Effective Time, New
Global will be a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization,
and will have all requisite power and authority to own, lease and operate its
properties and to carry on its business as now being conducted by Frontier and
Global and will be duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification necessary other than in such
jurisdictions where the failure so to qualify or to be in good standing would
not, either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on New Global.
(ii) AUTHORITY; NO CONFLICTS
(A) At the Effective Time, New Global will have all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby, subject, in the case of the
issuance of the shares of New Global Common Stock to be issued in the Merger
(the "NEW GLOBAL SHARE ISSUANCE") and the New Global certificate of incorpo
ration will provide for authorized shares of New Global Common Stock of not less
than 2 billion shares. The execution and delivery of this Agreement and the
consum mation of the transactions contemplated hereby will be duly authorized by
all necessary corporate action on the part of New Global. This Agreement will be
duly executed and delivered by New Global and will constitute a valid and
binding agreement of New Global, enforceable against it in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws relating to or affecting creditors
generally, by general equity principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law) or by an
implied covenant of good faith and fair dealing.
(B) At the Effective Time, the execution and delivery of
this Agreement by New Global will not, and the consummation by New Global of the
Alternative Merger and the other transactions contemplated hereby will not,
conflict with, or result in a Violation (as defined in Section 3.1(c)(ii))
pursuant to: (x) any provision of the certificate of incorporation or by-laws of
New Global or any charter document of any Subsidiary of New Global, or (y)
except as would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on New Global, subject to obtaining or making the
consents, approvals, orders, authorizations, registrations, declarations and
filings referred to in paragraph (C) below, any loan or credit agreement, note,
mortgage, bond, indenture, lease, benefit plan or other agreement, obligation,
instrument, permit, concession, ▇▇▇▇ ▇▇▇▇▇, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to New Global or any
Subsidiary of New Global or their respective properties or assets.
(C) At the Effective Time, no consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmen
tal Entity will be required by or with respect to New Global or any Subsidiary
of New Global in connection with the execution and delivery of this Agreement by
New Global or the consummation of the Alternative Merger and the other
transactions contemplated hereby, except for the Required Consents, and such
consents, approvals, orders, authorizations, registrations, declarations and
filings the failure of which to make or obtain would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on New
Global.
(iii) BOARD APPROVAL. At the Effective Time, the
Board of Directors of New Global, by resolutions duly adopted at a meeting duly
called and held and not subsequently rescinded or modified in any way, will duly
(A) determine that this Agreement and the Alternative Merger are in the best
interests of New Global and its shareholders, and (B) approve this Agreement,
the Alternative Merger and the issuance of shares of New Global Common Stock,
and (C) recommend that the shareholders of New Global approve this Agreement
and the issuance of shares of New Global Common Stock in the Alternative Merger.
(iv) SHAREHOLDER VOTE. Global and Frontier as the holders of
all of the outstanding shares of New Global Common Stock shall vote to approve
this Agreement and the issuance of shares of New Global Common Stock in the
Alternative Merger.
(i) COVENANTS OF GLOBAL AND FRONTIER. Prior to the Effective Time of
the Alternative Merger, Global and Frontier shall ensure that New Global, Global
Merger Sub and Frontier Merger Sub take no actions and undertake no operations
except as may be necessary in connection with the consummation of the Merger and
the transactions contemplated hereby.
(j) MODIFICATIONS TO AGREEMENT.
(i) At the time of the Alternative Merger Notice Date, and
without any further action on the part of either Frontier or Global, a new
Section 6.2(e) and 6.3(d) to this Agreement will be added as follows:
"New Global shall have performed in all material respects all of
its obligations hereunder required to be performed by it at or prior to the
Effective Time, and the representations and warranties of New Global shall be
accurate in all material respects at and as of the Effective Time."
and a new Section 6.1(h) will be added as follows:
"The shares of New Global Common Stock to be issued in the
Alternative Merger and such other shares to be reserved for issuance in the
Alterna tive Merger shall have been approved upon official notice of issuance
for quotation on NASDAQ."
(ii) Global and Frontier agree that in the event of the
Alternative Merger Notice, any and all other appropriate adjustments shall be
made to the other terms and conditions of this Agreement to reflect the
transactions
contemplated by this Section 1.10.
(iii) For the purposes of implementing the Alternative Merger,
Global and Global Merger Sub shall enter into an Amalgamation Agreement (the
"AMALGAMATION AGREEMENT") in accordance with the laws of Bermuda for
presentation to and approval of the shareholders of Global and Global Merger
Sub.
(k) LISTING OF SHARES OF NEW GLOBAL COMMON STOCK. New Global shall
use its best efforts to cause the shares of New Global Common Stock to be issued
in the Alternative Merger, and the shares of New Global Common Stock to be
reserved for issuance upon exercise of the Frontier Stock Options, the Frontier
Warrants, the Frontier Convertible Debt (as defined in Section 3.1(b)), and the
Global Stock Options and Warrants, to be approved for quotation, upon official
notice of issuance, on NASDAQ.
ARTICLE II
EXCHANGE OF CERTIFICATES
2.1 EXCHANGE FUND. Prior to the Effective Time, Global shall appoint
First Chicago Trust Company of New York or another commercial bank or trust
company having net capital of not less than $100,000,000, or a subsidiary
thereof, to act as exchange agent hereunder for the purpose of exchanging
Certificates for the Merger Consideration (the "EXCHANGE AGENT"). At or prior
to the Effective Time, Global shall deposit with the Exchange Agent, in trust
for the benefit of holders of shares of Frontier Common Stock, certificates
representing the Global Common Stock issuable pursuant to Section 1.8 in
exchange for outstanding shares of Frontier Common stock and, if applicable,
cash to be paid as a result of the Cash Top-Up pursuant to Section 7.1(g).
Global agrees to make available to the Exchange Agent from time to time as
needed, cash sufficient to pay cash in lieu of fractional shares pursuant to
Section 2.5, and any dividends and other distributions pursuant to Section 2.3.
Any cash and certificates of Global Common Stock depos ited with the Exchange
Agent shall hereinafter be referred to as the "EXCHANGE FUND."
2.2 EXCHANGE PROCEDURES. As soon as reasonably practicable after the
Effective Time, the Surviving Corporation shall cause the Exchange Agent to mail
to each holder of a Certificate (i) a letter of transmittal which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Exchange Agent, and
which letter shall be in customary form and have such other provisions as Global
may reasonably specify and (ii) instructions for effecting the surrender of such
Certificates in exchange for the applicable Merger Consideration. Upon surrender
of a Certificate to the Exchange Agent together with such letter of transmittal,
duly executed and completed in accordance with the instructions thereto, and
such other documents as may reasonably be required by the Exchange Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor (A)
one or more certifi ▇▇▇▇▇ for Global Common Stock representing, in the
aggregate, the whole number of shares that such holder has the right to receive
pursuant to Section 1.8 (after taking into account all shares of Frontier Common
Stock then held by such holder) and (B) a check in the amount equal to the cash
that such holder has the right to receive pursuant to the provisions of this
Article II, including cash in lieu of any fractional shares of Global Common
Stock pursuant to Section 2.5, any dividends and other distributions pursuant to
Section 2.3 and any cash to be paid as a result of a Cash Top-Up pursuant to
Section 7.1(g). No interest will be paid or will accrue on any cash payable
pursuant to Section 2.3, Section 2.5 or as a result of a Cash Top-Up pursuant to
Section 7.1(g). In the event of a transfer of ownership of Frontier Common
Stock which is not registered in the transfer records of Frontier, certificates
for one or more shares of Global Common Stock evidencing, in the aggregate, the
proper number of shares of Global Common Stock and a check in the proper amount
of cash in lieu of any fractional shares of Global Common Stock pursuant to
Section 2.5, any dividends or other distributions to which such holder is
entitled pursuant to Section 2.3, and as a result of a Cash Top-Up pursuant to
Section 7.1(g) may be issued with respect to such Frontier Common Stock to such
a transferee if the Certificate representing such shares of Frontier Common
Stock is presented to the Exchange Agent, accompanied by all documents required
to evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid.
2.3 DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends
or other distributions declared or made with respect to shares of Global Common
Stock with a record date after the Effective Time (if any) shall be paid to the
holder of an unsurrendered Certificate with respect to the shares of Global
Common Stock that such holder would be entitled to receive upon surrender of
such Certificate, no cash payment in lieu of fractional shares of Global Common
Stock shall be paid to any such holder pursuant to Section 2.5 and no cash
payment as a result of a Cash Top-Up pursuant to Section 7.1(g) shall be paid to
any such holder, until such holder shall surrender such Certificate in
accordance with Section 2.2. Subject to the effect of applicable laws,
following surrender of any such Certificate, there shall be paid to such holder
of shares of Global Common Stock issuable in exchange therefor, without
interest, (a) promptly after the time of such surrender, the amount of any cash
payable in lieu of fractional shares of Global Common Stock to which such holder
is entitled pursuant to Section 2.5, the amount
of any dividends or other distributions with a record date after the Effective
Time theretofore paid with respect to such whole shares of Global Common Stock
and any cash payment as a result of a Cash Top-Up pursuant to Section 7.1(g),
and (b) at the appropriate payment date, the amount of any dividends or other
distributions with a record date after the Effective Time but prior to such
surrender and a payment date subsequent to such surrender payable with respect
to such shares of Global Common Stock.
2.4 NO FURTHER OWNERSHIP RIGHTS IN FRONTIER COMMON STOCK. All shares
of Global Common Stock issued and cash paid upon conversion of shares of
Frontier Common Stock in accordance with the terms of Article I and this Article
II (including any cash paid pursuant to Section 2.3, 2.5 or as a result of a
Cash Top-Up pursuant to Section 7.1(g)) shall be deemed to have been issued or
paid in full satisfaction of all rights pertaining to the shares of Frontier
Common Stock.
2.5 NO FRACTIONAL SHARES OF GLOBAL COMMON STOCK.
(a) No certificates or scrip for shares of Global Common Stock
representing fractional shares of Global Common Stock shall be issued upon the
surrender for exchange of Certificates and such fractional share interests will
not entitle the owner thereof to vote or to have any rights of a shareholder of
Global or a holder of shares of Global Common Stock.
(b) Notwithstanding any other provision of this Agreement, each holder
of shares of Frontier Common Stock exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a share of Global Common
Stock (after taking into account all Certificates delivered by such holder)
shall receive, in lieu thereof, cash (without interest) in an amount equal to
the product of (i) such fractional part of a share of Global Common Stock
multiplied by (ii) the last sales price per share of Global Common Stock
reported on NASDAQ as reported in THE WALL STREET JOURNAL, Eastern edition, on
the Closing Date. As promptly as practicable after the determination of the
amount of cash, if any, to be paid to holders of fractional interests, the
Exchange Agent shall notify Global, and Global shall cause the Surviving
Corporation to deposit such amount with the Exchange Agent and shall cause the
Exchange Agent to forward payments to such holders of fractional interests
subject to and in accordance with the terms hereof.
2.6 TERMINATION OF EXCHANGE FUND. Any portion of
the Exchange Fund which remains undistributed to the holders of Certificates for
twelve months after the Effective Time shall be delivered to the Surviving
Corpora tion or otherwise on the instruction of the Surviving Corporation, and
any holders of the Certificates who have not theretofore complied with this
Article II shall thereafter look only to the Surviving Corporation and Global
for the Merger Consideration with respect to the shares of Frontier Common Stock
formerly represented thereby to which such holders are entitled pursuant to
Section 1.8 and Section 2.2, any cash in lieu of fractional shares of Global
Common Stock to which such holders are entitled pursuant to Section 2.5, any
dividends or distributions with respect to shares of Global Common Stock to
which such holders are entitled pursuant to Section 2.3 and any cash payment as
a result of a Cash Top-Up pursuant to Section 7.1(g).
2.7 NO LIABILITY. None of Global, Merger Sub, Frontier, the
Surviving Corporation or the Exchange Agent shall be liable to any Person in
respect of any Merger Consideration from the Exchange Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
2.8 INVESTMENT OF THE EXCHANGE FUND. Except as provided below, the
Exchange Agent shall invest any cash included in the Exchange Fund as directed
by the Surviving Corporation on a daily basis. If Global exercises the Cash
Top-Up Election pursuant to Section 7.1(g), then the Exchange Agent shall invest
the cash included in the Exchange Fund only in one or more of the following
investments as directed by the Surviving Corporation from time to time in (a)
obligations of the United States government maturing not more than 180 days
after the date of purchase; (b) certificates of deposit maturing not more than
180 days after the date of purchase issued by a bank organized under the laws of
the United States or any state thereof having combined capital and surplus of at
least $500,000,000; (c) a money market fund having assets of at least
$3,000,000,000; or (d) tax-exempt or corporate debt obligations maturing not
more than 180 days after the date of pur chase given the highest investment
grade rating by Standard & Poor's and ▇▇▇▇▇'▇ Investor Service. Any interest
and other income resulting from such investments shall promptly be paid to the
Surviving Corporation.
2.9 LOST CERTIFICATES. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such Person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent will deliver in exchange for such lost, stolen or destroyed
Certificate the applicable Merger Consideration with respect to the shares of
Frontier Common Stock formerly represented thereby, any cash in lieu of
fractional shares of Global Common Stock, and unpaid dividends and distributions
on shares of Global Common Stock
deliverable in respect thereof, pursuant to this Agreement.
2.10 WITHHOLDING RIGHTS. Each of the Surviving Corpora tion and
Global shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of shares of Frontier Common
Stock such amounts as it is required to deduct and withhold with respect to the
making of such payment under the Code and the rules and regulations promul
gated thereunder, or any provision of state, local or foreign tax law. To the
extent that amounts are so withheld by the Surviving Corporation or Global, as
the case may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of Frontier Common
Stock in respect of which such deduction and withholding was made by the
Surviving Corporation or Global, as the case may be.
2.11 FURTHER ASSURANCES. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of Frontier or Merger Sub, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of Frontier or Merger Sub, any other actions and things to vest,
perfect or confirm of record or otherwise in the Surviving Corporation any and
all right, title and interest in, to and under any of the rights, properties or
assets acquired or to be acquired by the Surviving Corporation as a result of,
or in connection with, the Merger.
2.12 STOCK TRANSFER BOOKS. At the close of business, New York City
time, on the day the Effective Time occurs, the stock transfer books of Frontier
shall be closed and there shall be no further registration of transfers of
shares of Frontier Common Stock thereafter on the records of Frontier. From and
after the Effective Time, the holders of Certificates shall cease to have any
rights with respect to such shares of Frontier Common Stock formerly represented
thereby, except as otherwise provided herein or by law. On or after the
Effective Time, any Certificates presented to the Exchange Agent, the Surviving
Corporation or Global for any reason shall be converted into the Merger
Consideration with respect to the shares of Frontier Common Stock formerly
represented thereby, any cash in lieu of fractional shares of Global Common
Stock to which the holders thereof are entitled pursuant to Section 2.5, any
dividends or other distributions to which the holders thereof are entitled
pursuant to Section 2.3 and any cash payment as a result of a Cash Top-Up
pursuant to Section 7.1(g).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF FRON TIER. Except as set forth
in the Frontier Disclosure Schedule delivered by Frontier to Global prior to the
execution of this Agreement (the "FRONTIER DISCLOSURE SCHEDULE"), Frontier
represents and warrants to Global as follows:
(a) ORGANIZATION, STANDING AND POWER. Each of Frontier and each of
its Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organiza tion,
has all requisite power and authority to own, lease and operate its properties
and to carry on its business as now being conducted and is duly qualified and in
good standing to do business in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
necessary other than in such jurisdictions where the failure so to qualify or to
be in good standing would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect (as defined in Section 8.11) on
Frontier. The copies of the restated certificate of incorporation and by-laws
of Frontier which were previously furnished to Global are true, complete and
correct copies of such documents as in effect on the date of this Agreement.
(b) CAPITAL STRUCTURE.
(i) As of March 12, 1999, the authorized capital stock of
Frontier consisted of (A) 300,000,000 shares of Frontier Common Stock, of which
172,321,329 shares were outstanding, (B) 850,000 shares of Cumulative Preferred
Stock, par value $100 per share, of which 53,067 shares of Cumulative Preferred
Stock, 5% Series, 38,492 shares of Cumulative Preferred Stock, Second 5% Series,
48,044 shares of Cumulative Preferred Stock, 5.65% Series, 41,514 shares of
Cumulative Preferred Stock, 4.60% Series (collectively, the "FRONTIER PRE FERRED
STOCK") and no shares of Convertible Preferred Stock, 5% Series were
outstanding, (C) 4,000,000 shares of Class A Preferred Stock, par value $100 per
share, of which no shares were outstanding, and (D) 3,000,000 shares of Junior
Participating Class A Preferred Stock which were reserved for issuance upon
exercise of the rights (the "RIGHTS") distributed to the holders of Frontier
Common Stock pursuant to the Rights Agreement, dated as of April 9, 1995,
between Frontier and First National Bank of Boston, as Rights Agent, as amended
(the "RIGHTS AGREEMENT"). Since March 12, 1999 to the date of this Agreement,
there have
been no issuances of shares of the capital stock of Frontier or any
other securities of Frontier other than issuances of shares (and accompanying
Rights) pursuant to options or rights outstanding as of March 12, 1999 under the
Frontier Benefit Plans (as defined in Section 3.1(o)). All issued and
outstanding shares of the capital stock of Frontier are duly authorized, validly
issued, fully paid and non-assessable, and no class of capital stock is entitled
to preemptive rights. There were outstanding as of March 12, 1999 no options,
warrants or other rights to acquire capital stock from Frontier other than (w)
the Rights, (x) options representing in the aggregate the right to purchase
14,902,015 shares of Frontier Common Stock (collectively, the "FRONTIER STOCK
OPTIONS") under the Directors' Stock Incentive Plan, the Employees' Stock Option
Plan, the Management Stock Incentive Plan, the ALC Communications Corporation
1994 Non-Employee Director Stock Option Plan, the ALC Communications
Corporation 1990 Stock Option Plan, the ALC Communications Corporation 1986
Stock Option Plan, the GlobalCenter, Inc. 1997 Stock Plan Stock Option Agreement
and the (GlobalCenter) Primenet Services for the Internet, Inc. 1995 Stock
Option Plan (collectively, the "FRONTIER STOCK OPTION PLANS"), (y) warrants to
purchase up to 27,699 shares of Frontier Common Stock (the "FRONTIER
WARRANTS"), and (z) 10.46% convertible debenture due October 27, 2008 with the
▇▇▇▇▇▇▇ Trust (Canandaigua National Bank) which are Convertible into Frontier
Common Stock at $10.5375 per share (the "FRONTIER CONVERTIBLE DEBT"). As of
March 12, 1999, Frontier had further reserved 17,857,123 shares of Frontier
Common Stock for purchase pursuant to the Frontier Stock Option Plans,
Convertible Debentures and the Frontier Warrants. Other than pursuant to the
Stock Option Agreement, the associated Rights issued with the shares issued as
described above, no options or warrants or other rights to acquire capital stock
from Frontier have been issued or granted since March 12, 1999 to the date of
this Agreement.
(ii) As of the date of this Agreement, no bonds, debentures,
notes or other indebtedness of Frontier having the right to vote on any matters
on which shareholders may vote ("FRONTIER VOTING DEBT") are issued or
outstanding.
(iii) Except as otherwise set forth in this Section 3.1(b) and
the Stock Option Agreement and as contemplated by Section 5.6, as of the date of
this Agreement, there are no securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which
Frontier or any of its Subsidiaries is a party or by which any of them is bound
obligating Frontier or any of its Subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or
other voting securities of Frontier or any of its Subsidiaries or obligating
Frontier or any of its Subsidiaries to issue, grant, extend or enter into any
such security, option, warrant, call, right, commitment, agreement, arrangement
or undertaking. As of the date of this Agreement, and except as contemplated by
Section 5.9, there are no outstanding obligations of Frontier or any
of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock of Frontier or any of its Subsidiaries.
(c) AUTHORITY; NO CONFLICTS.
(i) Frontier has all requisite corporate power and authority to
enter into this Agreement and the Stock Option Agreement and to consummate the
transactions contemplated hereby and thereby, subject in the case of the
consummation of the Merger to the adoption of this Agreement by the Required
Frontier Vote (as defined in Section 3.1(g)). The execution and delivery of this
Agreement and the Stock Option Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Frontier, subject in the case of the
consummation of the Merger to the adoption of this Agreement by the Required
Frontier Vote. This Agreement and the Stock Option Agreement have been duly
executed and delivered by Frontier and each constitutes a valid and binding
agreement of Frontier, enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws relating to or affecting creditors
generally, by general equity principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law) or by an
implied covenant of good faith and fair dealing.
(ii) The execution and delivery of this Agreement and the Stock
Option Agreement by Frontier does not and the consummation of the Merger by
Frontier and the other transactions contemplated hereby or thereby will not,
conflict with, or result in any violation of, or constitute a default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, amend ment, cancellation or acceleration of any obligation or the
loss of a material benefit under, or the creation of a lien, pledge, security
interest, charge or other encumbrance on any assets (any such conflict,
violation, default, right of termination, amendment, cancellation or
acceleration, loss or creation, a "VIOLATION") pursuant to: (A) any provision of
the certificate of incorporation or by-laws of Frontier or any Subsidiary of
Frontier, or (B) except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Frontier, subject to
obtaining or making the consents, approvals, orders, authorizations,
registrations, declarations and filings referred to in paragraph (iii) below,
any loan or credit agreement, note, mortgage, bond, indenture, lease, benefit
plan or other agreement, Material Network Contract (as defined in Section 8.11),
obligation, instrument, permit, concession, franchise, license, judgment, order,
decree, statute, law,
ordinance, rule or regulation applicable to Frontier or any Subsidiary of
Frontier or their respective properties or assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any supranational, national, state,
municipal or local government, any instrumentality, subdivision, court,
administrative agency or commission or other authority thereof, or any quasi-
governmental or private body exercising any regulatory, taxing, importing or
other governmental or quasi-governmental authority (a "GOVERNMENTAL ENTITY"), is
required by or with respect to Frontier or any Subsidiary of Frontier in
connection with the execu tion and delivery of this Agreement and the Stock
Option Agreement by Frontier or the consummation of the Merger and the other
transactions contemplated hereby or thereby, except for those required under or
in relation to (A) the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended (the "HSR ACT"), (B) the Communications Act of 1934, as amended (the
"COMMUNICATIONS ACT"), and any rules and regulations promulgated by the Federal
Communications Commission ("FCC"), (C) state securities or "blue sky" laws (the
"BLUE SKY LAWS"), (D) the Securities Act of 1933, as amended (the "SECURITIES
ACT"), (E) the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"),
(F) the NYBCL with respect to the filing of the New York Certificate of Merger,
(G) laws, rules, regula tions, practices and orders of any state or state
public service commissions ("PUCS"), local franchising authorities, foreign
telecommunications regulatory agencies or similar state or foreign regulatory
bodies, (H) rules and regulations of NASDAQ and the New York Stock Exchange,
Inc. (the "NYSE"), (I) antitrust or other competition laws of other
jurisdictions, and (J) such consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of which to make or obtain
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Frontier. Consents, approvals, orders,
authorizations, registrations, declarations and filings required under or in
relation to any of the foregoing clauses (A) through (I) are hereinafter
referred to as "REQUIRED CONSENTS."
(d) REPORTS AND FINANCIAL STATEMENTS.
(i) Frontier and Frontier Telephone of Rochester, Inc., a New York
corporation ("FRONTIER SUB"), have filed all required reports, schedules,
forms, statements and other documents required to be filed by it with the
Securities and Exchange Commission (the "SEC") since January 1, 1998 including
Frontier's Current Report on Form 8-K, dated January 26, 1999, containing
Frontier's audited financial statements for the year ended December 31, 1998 and
its proxy statement with respect to the proposed 1999 annual meeting of
shareholders of Frontier (collectively, including all exhibits thereto, the
"FRONTIER SEC REPORTS"). Other than Frontier Sub, no Subsidiary of Frontier
is required to file any form, report or other document with the SEC. None of
the Frontier SEC
Reports, as of their respective dates (and, if amended or superseded by a filing
prior to the date of this Agreement, then on the date of such filing), contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. Each of
the financial statements (including the related notes) included in the Frontier
SEC Reports presents fairly, in all material respects, the consolidated
financial position and consolidated results of operations and cash flows of
Frontier and its Subsidiaries as of the respective dates or for the respective
periods set forth therein, all in conformity with United States generally
accepted accounting principles ("GAAP") consistently applied during the periods
involved except as otherwise noted therein, and subject, in the case of the
unaudited interim financial statements, to normal and recurring year-end
adjustments that have not been and are not expected to be material in amount.
All of such Frontier SEC Reports, as of their respective dates, complied as to
form in all material respects with the applicable requirements of the Securities
Act and the Exchange Act and the rules and regulations promulgated thereunder.
(ii) From December 31, 1998 until the date of this Agreement,
Frontier and its Subsidiaries have not incurred any liabilities that are of a
nature that would be required to be disclosed on a balance sheet of Frontier and
its Subsidiaries or the footnotes thereto prepared in conformity with GAAP,
other than (A) liabilities incurred in the ordinary course of business or (B)
liabilities that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Frontier.
(e) INFORMATION SUPPLIED.
(i) None of the information supplied or to be supplied by
Frontier for inclusion or incorporation by reference in (A) the registration
statement on Form S-4 (as defined in Section 5.1) to be filed with the SEC by
Global in connection with the issuance of the Global Common Stock in the Merger
will, at the time it becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
and (B) the Joint Proxy Statement/Prospectus (as defined in Section 5.1)
included in the Form S-4 relating to the Frontier Shareholders Meeting and the
Global Shareholders Meeting (each, as defined in Section 5.1) and the Global
Common Stock to be issued in the Merger will, on the date it is first mailed to
Frontier shareholders or Global shareholders or at the time of the Frontier
Shareholders Meeting or the Global Shareholders Meeting, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(ii) Notwithstanding the foregoing provisions of this Section
3.1(e), no representation or warranty is made by Frontier with respect to
statements made or incorporated by reference in the Form S-4 or the Joint Proxy
Statement/Prospectus based on information supplied by Global for inclusion or
incorporation by reference therein.
(f) BOARD APPROVAL. The Board of Directors of Frontier, by
resolutions duly adopted at a meeting duly called and held and not subsequently
rescinded or modified in any way (the "FRONTIER BOARD APPROVAL"), has duly (i)
determined that this Agreement, the Stock Option Agreement, the Merger and the
Alternative Merger are in the best interests of Frontier and its shareholders,
(ii) adopted this Agreement and approved the Stock Option Agreement, the Merger
and the Alternative Merger and (iii) recommended that the shareholders of
Frontier adopt this Agreement and approve the Merger or, if applicable, the
Alternative Merger. The Frontier Board Approval constitutes approval of this
Agreement, the Stock Option Agreement, the Merger and the Alternative Merger for
purposes of Section 912 of the NYBCL (assuming that Global is not an "interested
shareholder" under Section 912 of the NYBCL immediately before the execution and
delivery of this Agreement and the Stock Option Agreement and does not take any
other actions to become an "interested shareholder" thereunder).
(g) VOTE REQUIRED. The affirmative vote of the holders of two-thirds
of the outstanding shares of Frontier Common Stock (the "REQUIRED FRONTIER
VOTE") is the only vote of the holders of any class or series of Frontier
capital stock necessary to adopt this Agreement and approve the transactions
contemplated hereby (assuming that Global is not an "interested shareholder"
under Section 912 of the NYBCL immediately before the execution and delivery of
this Agreement and the Stock Option Agreement and does not take any other
actions to become an "interested shareholder" thereunder); provided that the
redemption notice described in Frontier's restated certificate of incorporation
is given and all funds necessary for such redemption are set aside prior to the
Frontier Shareholders Meeting. No vote of the shareholders of Frontier is
required to approve the Stock Option Agreement.
(h) RIGHTS AGREEMENT. The Board of Directors of Frontier has approved
an amendment to the Rights Agreement to the effect that none of Global or its
affiliates or associates shall become an "Acquiring Person" (as defined in the
Rights Agreement) by reason of the execution of this Agreement or the Stock
Option Agreement, the exercise of the option granted thereby or the consummation
of the Merger or the Alternative Merger.
(i) BROKERS OR FINDERS. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any broker's
or finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement, except ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated (the "FRONTIER FINANCIAL ADVISOR"), whose fees and expenses will
be paid by Frontier in accordance with Frontier's agreement with such firm,
based upon arrangements made by or on behalf of Frontier and previously
disclosed to Global.
(j) OPINION OF FRONTIER FINANCIAL ADVISOR. Frontier has received the
opinion of the Frontier Financial Advisor, dated the date of this Agreement, to
the effect that, as of such date, the Exchange Ratio is fair, from a financial
point of view, to the holders of Frontier Common Stock, a copy of which opinion
has been made available to Global.
(k) AFFILIATE LETTER AND AGREEMENTS. On or prior to the date of the
Frontier Shareholders Meeting, Frontier will deliver to Global a letter (the
"FRONTIER AFFILIATE LETTER") identifying all persons who may, at the time this
Agreement is submitted for adoption by the shareholders of Frontier, be deemed
to be "affiliates" of Frontier for purposes of Rule 145 under the Securities Act
("RULE 145"). On or prior to the Closing Date, Frontier will use all reasonable
efforts to cause each person identified as an "affiliate" in the Frontier
Affiliate Letter to deliver a written agreement (an "AFFILIATE AGREEMENT") in
substantially the form of Exhibit 3.1(k) attached hereto in connection with
restrictions on affiliates under Rule 145.
(l) LITIGATION. Except as disclosed in the Frontier SEC Reports and
except for claims, actions, suits, proceedings or investigations which would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Frontier, there are no claims, actions, suits,
proceedings or investigations pending or, to Frontier's knowledge, threatened
against Frontier or any of its Subsidiaries, or any properties or rights of
Frontier or any of its Subsidiaries, before any Governmental Entity.
(m) NO VIOLATION OF LAW. The business of Frontier and its
Subsidiaries is not being conducted in violation of any statute, law, ordinance,
regulation, judgment, order or decree of any Governmental Entity (including any
stock exchange or other self-regulatory body), or in violation of any permits,
franchises, licenses, authorizations or consents that are granted by any
Governmental Entity (including any stock exchange or other self-regulatory
body), except for
possible violations which would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Frontier, and except
as disclosed in the Frontier SEC Reports. Except as disclosed in the Frontier
SEC Reports and except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Frontier, no
investigation or review by any Governmental Entity (including any stock exchange
or other self-regulatory body) with respect to Frontier or its Subsidiaries in
relation to any alleged violation of law or regulation is pending or, to
Frontier's knowledge, threatened, nor has any Govern mental Entity (including
any stock exchange or other self-regulatory body) indicated in writing an
intention to conduct the same. Neither Frontier nor any of its Subsid iaries is
subject to any cease and desist or other order, judgment, injunction or decree
issued by, or is a party to any written agreement, consent agreement or
memorandum of understanding with, or is a party to any commitment letter or
similar undertaking to, or is subject to any order or directive by, or has
adopted any board resolutions at the request of, any Governmental Entity that
materially restricts the conduct of its business other than those which would
not, individually or in the aggregate, reason ably be expected to have a
Material Adverse Effect on Frontier, nor has Frontier or any of its Subsidiaries
been advised in writing that any Governmental Entity is considering issuing or
requesting any of the foregoing.
(n) TAXES. All material Federal, state, local, and foreign tax
returns required to be filed by Frontier and its Subsidiaries have been timely
filed. All material taxes shown on such returns as being due or claimed to be
due from Frontier and its Subsidiaries in a written statement have been paid
other than those (i) currently payable without penalty or interest or (ii) being
contested in good faith and by appropriate proceedings timely instituted and
diligently pursued and for which adequate reserves have been established on the
books and records of Frontier and its Subsidiaries, as the case may be, in
accordance with generally accepted accounting principles.
(o) FRONTIER BENEFIT PLANS
(i) Each deferred compensation and each incentive compensation,
equity compensation plan, "welfare" plan, fund or program (within the meaning of
section 3(1) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")); "pension" plan, fund or program (within the meaning of section 3(2)
of ERISA); each employment, consulting, continuation, termination or severance
agreement; and each other employee benefit plan, fund, program, agreement or
arrangement, in each case, that is sponsored, maintained or contributed to or
required to be contributed to by Frontier or by any trade or business, whether
or
not incorporated (an "ERISA AFFILIATE"), that together with Frontier would be
deemed a "single employer" within the meaning of section 4001(b) of ERISA, or to
which Frontier or an ERISA Affiliate is party, whether written or oral, for the
benefit of any employee or former employee of Frontier or any Subsidiary (the
"FRONTIER BENEFIT PLANS") is in compliance with all applicable provisions of
ERISA and the Code, and neither Frontier nor any ERISA Affiliates have any
liabilities or obligations with respect to any such Frontier Benefit Plans,
whether or not accrued, contingent or otherwise, except (x) as described in any
of the Frontier SEC Reports or set forth in Section 3.1(o)(i) of the Frontier
Disclosure Schedule or (y) for in stances of noncompliance or liabilities or
obligations that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Frontier.
(ii) No amount in excess of $150 million, which amount relates
to "parachute payments" (as defined in the Code) to the nineteen executive
officers of Frontier under the change in control agreements to which each such
executive officer is a party or under the Frontier Benefit Plans in which such
executive officers participate, shall fail to be deductible for federal income
tax purposes by virtue of Section 280G of the Code.
3.2 REPRESENTATIONS AND WARRANTIES OF GLOBAL. Except as set forth in
the Global Disclosure Schedule delivered by Global to Frontier prior to the
execution of this Agreement (the "GLOBAL DISCLOSURE SCHED ULE"), Global
represents and warrants to Frontier as follows:
(a) ORGANIZATION, STANDING AND POWER. Each of Global and each of its
Subsidiaries is a company, or a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation or
organization, has all requisite power and authority to own, lease and operate
its properties and to carry on its business as now being conducted and is duly
qualified and in good standing to do business in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties makes such
qualification necessary other than in such jurisdictions where the failure so to
qualify or to be in good standing would not, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Global.
The copies of the memoran dum of association and bye-laws of Global which were
previously furnished to Frontier are true, complete and correct copies of such
documents as in effect on the date of this Agreement.
(b) CAPITAL STRUCTURE.
(i) As of March 12, 1999, the authorized capital stock of Global
consisted of 600,000,000 shares of Global Common Stock of which 411,357,572
shares were outstanding. Since March 12, 1999 to the date of this
Agreement, there have been no issuances of shares of the capital stock of Global
or any other securities of Global other than issuances of shares pursuant to
options or rights outstanding under the Global Benefit Plans (as defined in
Section 3.2(m)). All issued and outstanding shares of the capital stock of
Global are duly authorized, validly issued, fully paid and non-assessable, and
no class of capital stock is entitled to preemptive rights. There were
outstanding as of March 12, 1999 no options, warrants or other rights to acquire
capital stock from Global other than (A) options representing in the aggregate
the right to purchase 32,403,528 shares of Global Common Stock issued to current
or former employees and directors of Global and its Subsidiaries pursuant to
Global's 1998 Stock Incentive Plan (the "GLOBAL STOCK OPTION PLAN") and (B) (i)
12,500,012 warrants expiring August 13, 2003, exercisable at $9.50 per share of
Global Common Stock, and (ii) 5,108,358 warrants expiring August 13, 2008,
exercisable at $9.50 per share of Global Common Stock (collectively, the "GLOBAL
WARRANTS"). No options or warrants or other rights to acquire capital stock from
Global have been issued or granted since March 12, 1999 to the date of this
Agreement.
(ii) As of the date of this Agreement, no bonds, debentures,
notes or other indebtedness of Global having the right to vote on any matters on
which Shareholders may vote ("GLOBAL VOTING DEBT") are issued or outstanding.
(iii) Except as otherwise set forth in this Section 3.2(b), as
of the date of this Agreement, there are no securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any kind
to which Global or any of its Subsidiaries is a party or by which any of them is
bound obligat ing Global or any of its Subsidiaries to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of capital stock or
other voting securities of Global or any of its Subsidiaries or obligating
Global or any of its Subsidiaries to issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment, agreement, arrangement or
undertaking. As of the date of this Agree ment, there are no outstanding
obligations of Global or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock of Global or any of its
Subsidiaries.
(c) AUTHORITY; NO CONFLICTS.
(i) Global has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby, subject, to the approval of the issuance of the shares of Global Common
Stock to be issued in the Merger (the "SHARE ISSUANCE") and to the adoption of
an amendment to the memorandum of association of Global increasing the number of
authorized shares of Global Common Stock to not less than 2 billion shares (the
"GLOBAL CHARTER AMENDMENT") by the Required Global Vote (as defined in Section
3.2(g)) and the filing of the requisite Memorandum of Increase with the
Registrar of Companies of Bermuda and the approval of the Share Issuance (and
the subsequent free transferability of the corresponding shares between
nonresident persons for exchange control purposes) by the Bermuda Monetary
Authority. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Global, subject to the approval by the
shareholders of Global of the Share Issuance and the Global Charter Amendment.
This Agreement has been duly executed and delivered by Global and constitutes a
valid and binding agreement of Global, enforceable against it in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and similar laws relating to or affecting
creditors generally, by general equity principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law) or by an
implied covenant of good faith and fair dealing.
(ii) The execution and delivery of this Agreement by Global does
not or will not, as the case may be, and the consummation by Global of the
Merger and the other transactions contemplated hereby will not, conflict with,
or result in a Violation pursuant to: (A) any provision of the memorandum of
associa tion or bye-laws of Global or any other constitient document of any
Subsidiary of Global, or (B) except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Global,
subject to obtaining or making the consents, approvals, orders, authorizations,
registrations, declarations and filings referred to in paragraph (iii) below,
any loan or credit agreement, note, mortgage, bond, indenture, lease, benefit
plan or other agreement, obligation, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Global or any Subsidiary of Global or their respective properties
or assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required by
or with respect to Global or any Subsidiary of Global in connection with the
execution and delivery of this Agreement by Global or the consummation of the
Merger and the other transactions contemplated hereby, except for the Required
Consents, filing of the requisite Memorandum of Increase with the Registrar of
Companies of Bermuda and the approval of the Share Issuance (and of the
subsequent free transferability of
the corresponding shares between nonresident persons for exchange control
purposes) by the Bermuda Monetary Authority and such consents, approvals,
orders, authorizations, registrations, declarations and filings the failure of
which to make or obtain would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on Global.
(d) REPORTS AND FINANCIAL STATEMENTS.
(i) Global and Global Crossing Holdings Ltd. ("GLOBAL HOLDINGS")
have filed all required reports, schedules, forms, statements and other
documents required to be filed by it with the SEC since January 1, 1998
(collectively, including all exhibits thereto, the "GLOBAL SEC REPORTS"). No
Subsid iary of Global other than Global Holdings is required to file any form,
report or other document with the SEC. None of the Global SEC Reports, as of
their respective dates (and, if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing), contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of the financial
statements (including the related notes) included in the Global SEC Reports
presents fairly, in all material respects, the consolidated financial position
and consolidated results of operations and cash flows of Global and its
Subsidiaries as of the respective dates or for the respective periods set forth
therein, all in conformity with GAAP consistently applied during the periods
involved except as otherwise noted therein, and subject, in the case of the
unaudited interim financial statements, to normal and recurring year-end
adjustments that have not been and are not expected to be material in amount.
All of such Global SEC Reports, as of their respective dates, complied as to
form in all material respects with the applicable requirements of the Securities
Act and the Exchange Act and the rules and regulations promulgated thereunder.
(ii) Global has made available to Frontier drafts of the
consolidated financial statements of Global and its Subsidiaries at and for the
year ended December 31, 1998 of Global (in the respective form thereof as of the
date of this Agreement, collectively, the "GLOBAL DRAFT DISCLOSURES"). To the
knowledge of Global, each of the Global Draft Disclosures, including the
financial statements included therein, is in substantially final form, except
that the Global Draft Disclosures do not disclose any information with respect
to this Agreement, the transactions contemplated hereby or the effect that this
Agreement or such transactions might have on the business, financial condition
or results of operations (actual, pro forma or projected) of Global and its
Subsidiaries (collectively, the "GLOBAL TRANSACTION INFORMATION"). The Global
Draft Disclosures were not prepared for the purpose of providing to Frontier or
any other Person any Global Transaction Information. To the knowledge of Global,
except with respect to Global Transaction Information, (x) the draft financial
statements (including the related
notes) included in the Global Draft Disclosures present fairly, in all material
respects, the consolidated financial position and consolidated results of
operations and cash flows of Global and its Subsidiaries as of the respective
dates or for the respective periods set forth therein, all in conformity with
GAAP consistently applied during the periods involved except as otherwise noted
therein and (y) all of the Global Draft Disclosures comply as to form in all
material respects with the applicable requirements of the Exchange Act and the
rules and regulations promulgated thereunder.
(iii) From December 31, 1998 until the date of this Agreement,
Global and its Subsidiaries have not incurred any liabilities that are of a
nature that would be required to be disclosed on a balance sheet of Global and
its Subsidiar ies or the footnotes thereto prepared in conformity with GAAP,
other than (A) liabilities incurred in the ordinary course of business or (B)
liabilities that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Global.
(e) INFORMATION SUPPLIED.
(i) None of the information supplied or to be supplied by Global
for inclusion or incorporation by reference in (A) the Form S-4 will, at the
time the Form S-4 becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
(B) the Joint Proxy Statement/Prospectus will, on the date it is first mailed to
Frontier sharehold ers or Global shareholders or at the time of the Frontier
Shareholders Meeting or the Global Shareholders Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The Form S-4 and
the Joint Proxy Statement/Prospectus will comply as to form in all material
respects with the requirements of the Exchange Act and the Securities Act and
the rules and regulations of the SEC thereunder.
(ii) Notwithstanding the foregoing provisions of this Section
3.2(e), no representation or warranty is made by Global with respect to
statements made or incorporated by reference in the Form S-4 or the Joint Proxy
Statement/Prospectus based on information supplied by Frontier for inclusion or
incorporation by reference therein.
(f) BOARD APPROVAL. The Board of Directors of Global, by resolutions
duly adopted at a meeting duly called and held and not subsequently rescinded or
modified in any way, has duly (i) determined that this Agreement, the Merger and
the Alternative Merger are in the best interests of Global and its share
holders, (ii) approved this Agreement, the Merger and the Alternative Merger,
(iii) approved the Global Charter Amendment and the Share Issuance and (iv)
recom mended that the shareholders of Global approve the Global Charter
Amendment, the Share Issuance or, if applicable, the Alternative Merger.
(g) VOTE REQUIRED. The affirmative vote of holders of shares of
Global Common Stock representing a simple majority of votes that may be cast by
all holders of shares of Global Common Stock (the "REQUIRED GLOBAL VOTE") is the
only vote of the holders of any class or series of Global capital stock
necessary to approve the Global Charter Amendment, the Share Issuance and, if
applicable, the Alternative Merger. The Principal Shareholders hold, and as of
the record date for the Global Shareholders Meeting will hold, shares of Global
Common Stock which are subject to the Voting Agreement and that, in the
aggregate, constitute at least 51% of the Combined Voting Power.
(h) BROKERS OR FINDERS. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any broker's
or finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Global, except ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney (collectively, the "GLOBAL FINANCIAL
ADVISORS") and Chase Securities Inc., whose fees and expenses will be paid by
Global in accordance with Global's agreement with such firms based upon
arrangements made by or on behalf of Global and previously disclosed to
Frontier.
(i) OPINIONS OF FINANCIAL ADVISORS. Global has received the opinions
of the Global Financial Advisors, dated the date of this Agreement, to the
effect that, as of such date, the Exchange Ratio is fair, from a financial point
of view, to Global, a copy of which opinions have been made available to
Frontier.
(j) LITIGATION. Except as disclosed in the Global SEC Reports and
except for claims, actions, suits, proceedings or investigations which would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Global, there are no claims, actions, suits, proceedings or
investigations pending or, to Global's knowledge, threatened against Global or
any of its Subsidiaries, or any properties or rights of Global or any of its
Subsidiaries, before any Governmental Entity.
(k) NO VIOLATION OF LAW. The business of Global and its
Subsidiaries is not being conducted in violation of any statute, law, ordinance,
regulation, judgment, order or decree of any Governmental Entity (including any
stock exchange or other self-regulatory body), or in violation of any permits,
franchises, licenses, authorizations or consents that are granted by any
Governmental Entity (including any stock exchange or other self-regulatory
body), except for possible violations which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Global.
Except as disclosed in the Global SEC Reports and except as would not,
individually or in the aggregate reasonably be expected to have a Material
Adverse Effect on Global, no investigation or review by any Governmental Entity
(including any stock exchange or other self-regulatory body) with respect to
Global or its Subsidiaries in relation to any alleged violation of law or
regulation is pending or, to Global's knowledge, threatened, nor has any
Governmental Entity (including any stock exchange or other self-regulatory body)
indicated in writing an intention to conduct the same. Neither Global nor any of
its Subsidiaries is subject to any cease and desist or other order, judgment,
injunction or decree issued by, or is a party to any written agreement, consent
agreement or memorandum of understanding with, or is a party to any commitment
letter or similar undertaking to, or is subject to any order or directive by, or
has adopted any board resolutions at the request of, any Governmental Entity
that materially restricts the conduct of its business other than those which
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Global, nor has Global or any of its Subsidiaries
been advised in writing that any Governmental Entity is considering issuing or
requesting any of the foregoing.
(l) TAXES. All material Federal, state, local, and foreign tax
returns required to be filed by Global and its Subsidiaries have been filed.
All material taxes shown on such returns as being due or claimed to be due from
Global and its Subsidiaries in a written assessment have been paid other than
those (i) currently payable without penalty or interest or (ii) being contested
in good faith and by appropriate proceedings timely instituted and diligently
pursued and for which adequate reserves have been established on the books and
records of Global and its Subsidiaries, as the case may be, in accordance with
generally accepted accounting principles.
(m) GLOBAL BENEFIT PLANS. Each deferred compensation and each
incentive compensation, equity compensation plan, "welfare" plan, fund or
program (within the meaning of Section 3(1) of the ERISA); "pension" plan, fund
or program (within the meaning of section 3(2) of ERISA); each employment,
consulting, continuation, termination or severance agreement; and each other
employee benefit plan, fund, program, agreement or arrangement, in each case,
that is spon sored, maintained or contributed to or required to be contributed
to by Global or by any trade or business, whether or not incorporated (an "ERISA
AFFILIATE"), that together with Global would be deemed a "single employer"
within the meaning of section 4001(b) of ERISA, or to which Global or an ERISA
Affiliate is party, whether written or oral, for the benefit of any employee or
former employee of Global or any Subsidiary (the "GLOBAL BENEFIT PLANS") is in
compliance with all applicable provisions of ERISA and the Code, and neither
Global nor any ERISA Affiliates have any liabilities or obligations with respect
to any such Global Benefit Plans, whether or not accrued, contingent or
otherwise, except (x) as described in any of the Global SEC Reports or (y) for
instances of noncompliance or liabilities or obligations that would not,
individually or in the aggregate, have a Material Adverse Effect on Global.
Except with respect to awards granted under the Global Benefit Plans that are in
effect on the date hereof, no employee of Global will be entitled to any
additional benefits or any acceleration of the time of payment or vesting of any
benefits under any Global Benefit Plan as a result of the transactions
contemplated by this Agreement, either alone or in combination with another
event.
3.3 REPRESENTATIONS AND WARRANTIES OF GLOBAL AND MERGER SUB. Global
and Merger Sub represent and warrant to Frontier as follows:
(a) ORGANIZATION AND CORPORATE POWER. Merger Sub is a corporation
duly incorporated, validly existing and in good standing under the laws of New
York. Merger Sub is a direct wholly-owned subsidiary of Global.
(b) CORPORATE AUTHORIZATION. Merger Sub has all requisite corporate
power and authority to enter into this Agreement and to consum mate the
transactions contemplated hereby. The execution, delivery and performance by
Merger Sub of this Agreement and the consummation by Merger Sub of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Merger Sub. This Agreement has been duly
executed and delivered by Merger Sub and constitutes a valid and binding
agreement of Merger Sub, enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors generally, by general equity principles (regardless or whether such
enforceability is considered in a proceeding in equity or at law) or by an
implied covenant of good faith and fair dealing.
(c) NON-CONTRAVENTION. The execution, delivery and
performance by Merger Sub of this Agreement and the consummation by Merger Sub
of the transactions contemplated hereby do not and will not contravene or
conflict with the certificate of incorporation or by-laws of Merger Sub.
(d) NO BUSINESS ACTIVITIES. Merger Sub has not conducted any
activities other than in connection with the organization of Merger Sub, the
negotiation and execution of this Agreement and the consummation of the
transactions contemplated hereby. Merger Sub has no Subsidiaries.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 COVENANTS OF FRONTIER. During the period from the date of this
Agreement and continuing until the Effective Time, Frontier agrees as to itself
and its Subsidiaries that (except as expressly contemplated or permitted by this
Agreement or as otherwise indicated on the Frontier Disclosure Schedule or as
required by a Governmental Entity of competent jurisdiction or to the extent
that Global shall otherwise consent in writing, which consent shall not be
unreasonably withheld or delayed):
(a) ORDINARY COURSE.
(i) Frontier and its Subsidiaries shall carry on their respective
businesses in the usual, regular and ordinary course in all material respects,
in substantially the same manner as heretofore conducted, and shall use all
reasonable efforts to preserve intact their present lines of business, maintain
their rights, franchises and licenses and other authorizations issued by
Governmental Entities, and preserve their relationships with customers,
suppliers and others having business dealings with them to the end that their
ongoing businesses shall not be impaired in any material respect at the
Effective Time; PROVIDED, HOWEVER, that no action by Frontier or its
Subsidiaries with respect to matters specifically addressed by any other
provision of this Section 4.1 shall be deemed a breach of this Section 4.1(a)(i)
unless such action would constitute a breach of one or more of such other
provisions.
(ii) Frontier shall not, and shall not permit any of its
Subsidiaries to, (A) enter into any new material line of business or (B) incur
or commit to any capital expenditures other than capital expenditures incurred
or committed to in the ordinary course of business consistent with past practice
and which, together with all such expenditures incurred or committed for fiscal
year 1999, are not in excess of $900 million or, if the Closing Date has not
occurred prior to December 31, 1999, such additional amounts for any subsequent
period as may be
consented to by Global, such consent not to be unreasonably withheld or delayed,
or, if Global shall not have so consented, an amount not greater than an amount
equal to a pro rata portion of Frontier's 1999 capital expenditure budget
included in Section 4.1(a) of the Frontier Disclosure Schedule.
(b) DIVIDENDS; CHANGES IN SHARE CAPITAL. Frontier shall not, and
shall not permit any of its Subsidiaries to, and shall not propose to, (i)
declare or pay any dividends on or make other distributions in respect of any of
its capital stock, except (x) dividends by wholly owned Subsidiaries of
Frontier, (y) the regular dividends on Frontier Common Stock in the amount of
$.05 per share of Frontier Common Stock per quarter, and (z) regular dividends
on Frontier Preferred Stock, (ii) split, combine or reclassify any of its
capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for, shares of its
capital stock, except for any such transaction by a wholly owned Subsidiary of
Frontier which remains a wholly owned Subsidiary after consumma tion of such
transaction, or (iii) except for the purchase from time to time by Frontier of
Frontier Common Stock (and the associated Rights) in the ordinary course of
business consistent with past practice in connection with the Frontier Benefit
Plans, or as contemplated in Section 5.9, repurchase, redeem or otherwise
acquire any shares of its capital stock or any securities convertible into or
exercisable for any shares of its capital stock.
(c) ISSUANCE OF SECURITIES. Frontier shall not, and shall not permit
any of its Subsidiaries to, issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock of any class, or
any securities convertible into or exercisable for, or any rights, warrants or
options to acquire, any such shares, or enter into any agreement with respect to
any of the foregoing, other than (i) the issuance of Frontier Common Stock (and
the associated Rights) upon the exercise of stock options or warrants or in
connection with other stock-based benefits plans outstanding on the date hereof
in accordance with their present terms, (ii) issuances by a wholly owned
Subsidiary of Frontier of capital stock to such Subsidiary's parent, (iii)
issuances in accordance with the Rights Agreement or (iv) issuances of shares,
options, rights or other awards in numbers not greater than those set forth in
Section 4.1(c) of the Frontier Disclosure Schedule.
(d) GOVERNING DOCUMENTS. Except to the extent required to comply with
their respective obligations hereunder, required by law or required by the rules
and regulations of the NYSE, Frontier and its Subsidiaries shall not amend, in
the case of Subsidiaries, in any material respect, or propose to so amend their
respective certificates of incorporation, by-laws or other governing documents.
(e) NO ACQUISITIONS. Except for (i) acquisitions that are part of,
related to or in support of the communications or internet business and provide
for less than $500 million of consideration (excluding assumption of debt) in
the aggregate and (ii) acquisitions or investments that are made by Frontier
Internet Ventures, Inc. that are not in excess of $30 million of consideration
(excluding assumption of debt), Frontier shall not, and shall not permit any of
its Subsidiaries to, acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial portion
of the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof or
otherwise acquire or agree to acquire any assets (other than the acquisition of
assets used in the operations of the business of Frontier and its Subsidiaries
in the ordinary course); PROVIDED, HOWEVER, that the foregoing shall not
prohibit (x) internal reorganizations or consolidations involving existing
Subsidiaries of Frontier or (y) the creation of new Subsidiaries of Frontier
organized to conduct or continue activities otherwise permitted by this
Agreement.
(f) NO DISPOSITIONS. Other than (i) internal reorganizations or
consolidations involving existing Subsidiaries of Frontier, (ii) dispositions
referred to in Frontier SEC Reports filed prior to the date of this Agreement,
(iii) as may be required by or in conformance with law or regulation in order to
permit or facilitate the consummation of the transactions contemplated hereby or
(iv) in the ordinary course of business, Frontier shall not, and shall not
permit any Subsidiary of Frontier to, sell, lease, encumber (other than in
connection with secured debt) or otherwise dispose of, or agree to sell, lease,
encumber or otherwise dispose of, any of its assets (including capital stock of
Subsidiaries of Frontier) which are material, individually or in the aggregate,
to Frontier.
(g) INVESTMENTS; INDEBTEDNESS. Frontier shall not, and shall not
permit any of its Subsidiaries to, (i) other than in connection with actions
permitted by Section 4.1(e), make any loans, advances or capital contributions
to, or investments in, any other Person, other than by Frontier or an affiliate
of Frontier to or in Frontier or any affiliate of Frontier, (ii) pay, discharge
or satisfy any claims, liabilities or obligations (absolute, accrued, asserted
or unasserted, contingent or otherwise), other than loans, advances, capital
contributions, investments, payments, discharges or satisfactions incurred or
committed to in the ordinary course of business consistent with past practice or
(iii) other than in connection with actions permitted by Section 4.1(e), create,
incur, assume or suffer to exist any indebtedness, issuances of debt securities,
guarantees, loans or advances not in existence as of the date of this Agreement
except pursuant to the credit facilities, indentures and other
arrangements in existence on the date of this Agreement and in the ordinary
course of business, and any other indebtedness existing on the date of this
Agreement, in each case as such credit facilities, indentures, other
arrangements and other existing indebtedness may be amended, extended, modified,
refunded, renewed or refinanced after the date of this Agreement, but only if
the aggregate principal amount thereof is not increased thereby, the term
thereof is not extended thereby and the other terms and conditions thereof,
taken as a whole, are not less advantageous to Frontier and its Subsidiaries
than those in existence as of the date of this Agreement.
(h) TAX-FREE QUALIFICATION. Frontier shall not, and shall not permit
any of its Subsidiaries to, take any action that would prevent or impede the
Merger from qualifying as a reorganization under Section 368 of the Code.
(i) COMPENSATION. Other than as contemplated by Section 5.6 or by
Section 4.1(i) of the Frontier Disclosure Schedule, Frontier shall not, and
shall not permit any of its Subsidiaries to, increase the amount of compensation
of any senior executive officer except in the ordinary course of business
consistent with past practice or as required by an existing agreement, make any
increase in or commitment to increase any employee benefits, issue any
additional Frontier Stock Options, adopt or make any commitment to adopt any
additional employee benefit plan or make any contribution, other than regularly
scheduled contributions, to any Frontier Benefit Plan.
(j) OTHER ACTIONS. Frontier shall not, and shall not permit any of
its Subsidiaries to, take any action that would, or that would reasonably be
expected to, result in, except as otherwise permitted by Section 5.5, any of the
conditions to the Merger set forth in Article VI not being satisfied.
(k) ACCOUNTING METHODS; INCOME TAX ELECTIONS. Except as disclosed in
Frontier SEC Reports filed prior to the date of this Agreement, or as required
by a Governmental Entity, Frontier shall not change its methods of accounting in
effect at December 31, 1998, except as required by GAAP or changes in GAAP as
concurred to by Frontier's independent auditors. Frontier shall not (i) change
its fiscal year or (ii) make any material tax election, other than in the
ordinary course of business consistent with past practice, without the prior
approval of Global, which approval shall not be unreasonably withheld.
(l) RIGHTS AGREEMENT. Frontier shall not amend, modify or waive any
provision of the Rights Agreement, and shall not take any action to redeem the
Rights or render the Rights inapplicable to any transaction, other than to
permit another transaction that the Frontier Board has determined is a Superior
Proposal (as defined in Section 8.11), to be consummated after termination of
this Agreement.
4.2 COVENANTS OF GLOBAL. During the period from the date of this
Agreement and continuing until the Effective Time, Global agrees as to itself
and its Subsidiaries that (except as expressly contemplated or permitted by this
Agreement or as otherwise indicated on the Global Disclosure Schedule or as
required by a Governmental Entity of competent jurisdiction or to the extent
that Frontier shall otherwise consent in writing, which consent shall not be
unreasonably withheld or delayed):
(a) ORDINARY COURSE.
(i) Global and its Subsidiaries shall carry on their respective
businesses in the usual, regular and ordinary course in all material respects,
in substantially the same manner as heretofore conducted, and shall use all
reasonable efforts to preserve intact their present lines of business, maintain
their rights and franchises and preserve their relationships with customers,
suppliers and others having business dealings with them to the end that their
ongoing businesses shall not be impaired in any material respect at the
Effective Time; PROVIDED, HOWEVER, that no action by Global or its Subsidiaries
with respect to matters specifically addressed by any other provisions of this
Section 4.2 shall be deemed a breach of this Section 4.2(a)(i) unless such
action would constitute a breach of one or more of such other provisions.
(ii) Global shall not, and shall not permit any of its
Subsidiaries to, enter into any new material line of business that is not part
of, related to or in support of the communications business, other than
incidentally as part of a larger acquisition within an existing line of
business.
(b) DIVIDENDS; CHANGES IN SHARE CAPITAL. Global shall not, and shall
not permit any of its Subsidiaries to, and shall not propose to, (i) declare or
pay any dividends on or make other distributions in respect of any of its
capital stock, except (x) dividends by wholly owned Subsidiaries of Global or
Global Holdings, or (y) dividends to joint venture parties or (ii) repurchase,
redeem or otherwise acquire any shares of its capital stock or any securities
convertible into or exercisable for any shares of its capital stock except for
(x) the purchase from time to time by Global of Global Common Stock in the
ordinary course of business required by any Global Benefit Plan on a non-
discretionary basis, or (y) regular purchases pursuant to a stock purchase plan
approved by the Global Board of Directors.
(c) ISSUANCE OF SECURITIES. Global shall not, and shall not permit
any of its Subsidiaries to, issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock of any class, any
Global Voting Debt or any securities convertible into or exercisable for, or any
rights, warrants or options to acquire, any such shares or Global Voting Debt,
or enter into any agreement with respect to any of the foregoing other than (i)
the issuance of Global Common Stock upon the exercise of stock options or
warrants or in connection with other stock-based benefit plans, (ii) issuances
by a wholly owned Subsidiary of Global of capital stock to such Subsidiary's
parent or another wholly owned Subsidiary of Global, (iii) issuances of options,
awards, and amendments to equity-related awards pursuant to Global benefit
plans as in effect from time to time, (iv) issuances made to newly hired
employees of Global or its Subsidiaries, (v) issuances in respect of any
acquisitions, mergers, share exchanges, consolidations, business combinations or
similar transactions by Global or its Subsidiaries permitted by Section 4.2(e),
or (vi) any other issuance of any Global Common Stock; provided that, with
respect to clauses (v) and (vi), any such issuances prior to the termination of
the Voting Agreement would not cause the shares of Global Comon Stock that are
subject to the Voting Agreement to constitute, in the aggregate, less than 51%
of the Combined Voting Power.
(d) GOVERNING DOCUMENTS. Except to the extent required to comply with
their respective obligations hereunder, required by law or required by the rules
and regulations of NASDAQ, Global and its material Subsidiaries shall not amend,
in the case of Subsidiaries, in any material respect, or propose to so amend
their respective certificates of incorporation, bye-laws or other governing
documents, except for the Global Charter Amendment.
(e) NO ACQUISITIONS. Global shall not, and shall not permit any of
its Subsidiaries to, acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial portion
of the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof or
otherwise acquire or agree to acquire any assets (other than the acquisition of
assets used in the operations of the business of Global and its Subsidiaries in
the ordinary course), except for acquisitions that are part of, related to or in
support of the communications business, which acquisitions Global may enter into
in its discretion, so long as (i) such acquisitions would not, individually or
in the aggregate, reasonably be expected to prevent or materially delay the
Merger, (ii) the issuance of any Global Common Stock in such acquisitions prior
to the termination of the Voting Agreement would not cause the shares of Global
Common Stock that are subject to the Voting Agreement to constitute, in the
aggregate, less than 51% of the Combined Voting Power, (iii) such acquisitions
provide less than $2.5 billion of consideration
(excluding assumption of debt) per acquisition and consideration (excluding
assumption of debt) no greater than $8.5 billion in the aggregate, and (iv) no
more than $7.5 billion, in the aggregate, of the consideration provided for such
acquisitions consists of Global Common Stock or other voting equity securities;
PROVIDED, HOWEVER, that the foregoing shall not prohibit (x) internal
reorganizations or consolidations involving existing Subsidiaries of Global or
(y) the creation of new Subsidiaries of Global organized to conduct or continue
activities otherwise permitted by this Agreement.
(f) NO DISPOSITIONS. Other than (i) internal reorganizations or
consolidations involving existing Subsidiaries of Global, (ii) dispositions
referred to in Global SEC Reports filed prior to the date of this Agreement,
(iii) as may be required by or in conformance with law or regulation in order to
permit or facilitate the consummation of the transactions contemplated hereby or
(iv) in the ordinary course of business, Global shall not, and shall not permit
any Subsidiary of Global to, sell, lease, encumber (other than in connection
with secured debt) or otherwise dispose of, or agree to sell, lease, encumber or
otherwise dispose of, any of its assets (including capital stock of Subsidiaries
of Global) which are material, individually or in the aggregate, to Global.
(g) INVESTMENTS. Other than in the ordinary course of business or as
permitted by Section 4.2(e), or as otherwise set forth in the Global SEC
Reports, Global shall not, and shall not permit any of its Subsidiaries to make
any loans, advances or capital contributions to, or investments in, any other
Person, other than by Global or an affiliate of Global (including Global
Holdings) to or in Global or any affiliate of Global.
(h) TAX-FREE QUALIFICATION. Each of Global and Merger Sub shall not,
and shall not permit any of their Subsidiaries to, take any action that would
prevent or impede the Merger from qualifying as a reorganization under Section
368 of the Code.
(i) OTHER ACTIONS. Global shall not, and shall not permit any of its
Subsidiaries to, take any action that would, or that would reasonably be
expected to, result in any of the conditions to the Merger set forth in Article
VI not being satisfied.
(j) ACCOUNTING METHODS; INCOME TAX ELECTIONS. Except as disclosed in
the Global SEC Reports filed prior to the date of this Agree ment, or as
required by a Governmental Entity, Global shall not change its methods of
accounting in effect at December 31, 1998, except as required by GAAP or changes
in GAAP as concurred to by Global's independent auditors. Global shall not (i)
change its fiscal year or (ii) make any material tax election, other than in the
ordinary course of business consistent with past practice, without the prior
approval
of Frontier, which approval shall not be unreasonably withheld.
(k) CERTAIN TRANSACTIONS. Global agrees that prior to the Closing
Date it shall not, without the prior written consent of Frontier (which consent
shall not to be unreasonably withheld or delayed), agree to enter into any
merger, reorganization, share exchange, business combination or similar
transaction pursuant to which the shareholders of Global will receive any
consideration (whether payable in cash, securities, property or other
consideration) in exchange for their shares of Global Common Stock unless (i)
such transaction is not to be consummated until after the Effective Time or the
termination of this Agreement pursuant to Section 7.1, (ii) the consideration
per share of Global Common Stock payable in connection therewith has a value, as
reasonably determined by, Global of not less than $34.5625 and (iii) either (A)
if the Merger is to be effected as described herein, such transac tion will not
result in the Merger failing to qualify as a reorganization under Section 368(a)
of the Code or failing to satisfy the requirements of Section 367 of the Code or
(B) if the Alternative Merger is to be effected pursuant to Section 1.10, such
transaction will not result in the Alternative Merger failing to qualify as a
reorganiza tion under Section 368(a) of the Code, unless the Alternative Merger
otherwise qualifies for non-recognition treatment under Section 351 of the Code.
Notwithstanding anything set forth in this Agreement to the contrary, and in
addition to the restrictions set forth above, during the period during which the
Average Price is to be determined for purposes of calculating the Exchange
Ratio, Global shall not (and shall not announce an intention to) (1) acquire any
Global Common Stock in the open market, (2) sell or issue any shares of Global
Common Stock (other than pursuant to clause (i) of Section 4.2(c)), (3) redeem
or purchase any shares of Global Common Stock, (4) take any other action
prohibited under Regulation M promul gated under the Securities Act, (5) enter
into any material acquisition or disposition transaction or (6) except as
required by applicable law or by obligations pursuant to any listing agreement
with or rules of NASDAQ, make any announcement which would reasonably be
expected to have the effect of resulting in a change in the trading prices of
the Global Common Stock.
(l) REQUIRED GLOBAL VOTE. Notwithstanding anything in this Agreement
to the contrary between the date of this Agreement and the termina tion of the
Voting Agreement, in no event shall Global take any actions that, taken together
with any transfers of shares by the Principal Shareholders under the Voting
Agreement, cause the shares subject to the Voting Agreement to constitute less
than the Required Global Vote.
4.3 ADVICE OF CHANGES; GOVERNMENTAL FILINGS. Each party shall (a)
confer on a regular and frequent basis with the other and (b) report (to the
extent permitted by law or regulation or any applicable confidentiality
agreement) on operational matters. Frontier and Global shall file all reports
required to be filed by each of them with the SEC (and all other Governmental
Entities) between the date of this Agreement and the Effective Time and shall
(to the extent permitted by law or regulation or any applicable confidentiality
agreement) deliver to the other party copies of all such reports, announcements
and publications promptly after the same are filed. Subject to applicable laws
relating to the exchange of information, each of Frontier and Global shall have
the right to review in advance, and will consult with the other with respect to,
all the information relating to the other party and each of their respective
Subsidiaries, which appears in any filings, announcements or publications made
with, or written materials submitted to, any third party or any Governmental
Entity in connection with the transactions contem plated by this Agreement. In
exercising the foregoing right, each of the parties hereto agrees to act
reasonably and as promptly as practicable. Each party agrees that, to the
extent practicable and as timely as practicable, it will consult with, and
provide all appropriate and necessary assistance to, the other party with
respect to the obtaining of all permits, consents, approvals and authorizations
of all third parties and Governmental Entities necessary or advisable to
consummate the transactions contemplated by this Agreement and each party will
keep the other party informed of the status of matters relating to completion of
the transactions contemplated hereby.
4.4 TRANSITION PLANNING; CONTINUED OPERATIONS OF FRONTIER. Frontier
and Global shall collectively appoint eight (8) officers, to be evenly divided
between Frontier and Global, to serve from time to time as their respective
representatives on a committee that will be responsible for coordinating
transition planning and implementation relating to the Merger.
4.5 SERVICES AGREEMENT. Frontier and Global will exercise reasonable
good faith efforts as soon as practicable after execution of this Agreement to
negotiate and finalize a Services Agreement pursuant to which each party shall
provide certain services to the other consistent with the terms included in the
Term Sheet attached as Exhibit 4.5 hereto.
4.6 CONTROL OF OTHER PARTY'S BUSINESS. Nothing contained in this
Agreement shall give Frontier, directly or indirectly, the right to control or
direct Global's operations prior to the Effective Time. Nothing contained in
this Agreement shall give Global, directly or indirectly, the right to control
or
direct Frontier's operations prior to the Effective Time. Prior to the
Effective Time, each of Frontier and Global shall exercise, consistent with the
terms and conditions of this Agreement, complete control and supervision over
its respective operations.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 PREPARATION OF PROXY STATEMENT; SHAREHOLDERS MEETINGS.
(a) As promptly as practicable following the date hereof, Global
shall, in cooperation with Frontier, prepare and file with the SEC preliminary
proxy materials which shall constitute the Joint Proxy Statement/Prospectus
(such proxy statement/prospectus, and any amendments or supplements thereto, the
"JOINT PROXY STATEMENT/PROSPECTUS") and a registration statement on Form S-4
with respect to the issuance of Global Common Stock in the Merger (the "FORM S-
4"). The Joint Proxy Statement/Prospectus will be included in the Form S-4 as
Global's prospectus. The Form S-4 and the Joint Proxy Statement/Prospectus
shall comply as to form in all material respects with the applicable provisions
of the Securities Act and the Exchange Act and the rules and regulations
thereunder. Each of Global and Frontier shall use all reasonable efforts to
have the Form S-4 cleared by the SEC as promptly as practicable after filing
with the SEC and to keep the Form S-4 effective as long as is necessary to
consummate the Merger. Global shall, as promptly as practicable after receipt
thereof, provide copies of any written comments received from the SEC with
respect to the Joint Proxy Statement/Prospectus to Frontier and advise Frontier
of any oral comments with respect to the Proxy State ment/Prospectus received
from the SEC. Global agrees that none of the information supplied or to be
supplied by Global for inclusion or incorporation by reference in the Joint
Proxy Statement/Prospectus and each amendment or supplement thereto, at the time
of mailing thereof and at the time of the Frontier Shareholders Meeting or the
Global Shareholders Meeting, will contain an 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 were
made, not misleading. Frontier agrees that none of the information supplied or
to be supplied by Frontier for inclusion or incorporation by reference in the
Joint Proxy State ment/Prospectus and each amendment or supplement thereto, at
the time of mailing thereof and at the time of the Frontier Shareholders Meeting
or the Global Sharehold ers Meeting, will contain an 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 were made, not misleading. For purposes of the foregoing, it is
understood and agreed that information concern ing or related to Global and the
Global Shareholders Meeting will be deemed to have been supplied by Global and
information concerning or related to Frontier and the Frontier Shareholders
Meeting shall be deemed to have been supplied by Frontier. Global will provide
Frontier with a reasonable opportunity to review and comment on any amendment or
supplement to the Joint Proxy Statement/Prospectus prior to filing such with the
SEC, and will provide Frontier with a copy of all such filings made with the
SEC. No amendment or supplement to the information supplied by Frontier for
inclusion in the Joint Proxy Statement/Prospectus shall be made without the
approval of Frontier, which approval shall not be unreasonably withheld or
delayed.
(b) Subject to Sections 5.1(c), 5.5 and 7.1(f), Frontier shall, as
promptly as practicable following the execution of this Agreement, duly call,
give notice of, convene and hold a meeting of its shareholders (the "FRONTIER
SHAREHOLDERS MEETING") for the purpose of obtaining the Required Frontier Vote
with respect to the transactions contemplated by this Agreement, shall take all
lawful action to solicit the adoption of this Agreement by the Required Frontier
Vote and the Board of Directors of Frontier shall recommend adoption of this
Agreement by the Shareholders of Frontier. Without limiting the generality of
the foregoing but subject to its rights pursuant to Sections 5.5 and 7.1(f),
Frontier agrees that its obligations pursuant to the first sentence of this
Section 5.1(b) shall not be affected by the commencement, public proposal,
public disclosure or communication to Frontier of any Acquisition Proposal.
(c) Notwithstanding Section 5.1(b) hereof, it is the intention of the
parties that the Frontier Shareholders Meeting be scheduled to the extent
reasonably practicable such that it shall occur reasonably proximate to the
Effective Time: provided that to the extent not prohibited by law, Frontier
shall duly call, give notice of, convene and hold the Frontier Shareholders
Meeting within 120 days following the occurrence of a Trigger Event (as defined
in Section 8.11); provided, however, that if a Trigger Event has occurred and
the Applicable Closing Conditions (as defined in Section 8.11) have been
satisfied, then Frontier shall, as promptly as practicable, duly call, give
notice of, convene and hold the Frontier Shareholders Meeting.
(d) Global shall, as promptly as practicable following the execu tion
of this Agreement, duly call, give notice of, convene and hold a meeting of its
Shareholders (the "GLOBAL SHAREHOLDERS MEETING") for the purpose of obtaining
the Required Global Vote, shall take all lawful action to solicit the ap proval
of the Share Issuance and the Global Charter Amendment by the Required Global
Vote and the Board of Directors of Global shall recommend approval of the
transactions contemplated by this Agreement by the shareholders of Global. Not
withstanding the foregoing, Global shall not be obligated to duly call, give
notice of, convene and hold the Global Shareholders Meeting until such time as
Frontier is obligated to do the same with respect to the Frontier Shareholders
Meeting.
(e) Global may elect to duly call, give notice of, convene and hold
the Global Shareholders Meeting prior to the Frontier Shareholders Meeting (an
"EARLY GLOBAL MEETING") for the purposes of approving the Alternative Merger (in
addition to the Share Issuance and the Global Charter Amendment),
notwithstanding that no Alternative Merger Notice has been delivered to Global.
If Global elects to hold an Early Global Meeting, then Frontier shall (i)
cooperate in the formation of New Global and (ii) assist Global in the
preparation of an appropriate registration statement for the issuance of New
Global Common Stock that will accompany the proxy statement/prospectus for the
Early Global Meeting; provided that Global shall pay the SEC filing fee with
respect thereto. In the event that the Early Global Meeting is held and the
actions presented to Global Shareholders are approved at such meeting, then
subsequently Global shall not call, give notice of, convene or hold any meeting
of Global Shareholders at which action would be taken which would reasonably be
expected to cause the conditions set forth in Section 6.3 to fail to become
satisfied.
5.2 GLOBAL BOARD OF DIRECTORS; OFFICERS; HEAD QUARTERS OF FRONTIER
SUB. At or prior to the Effective Time, the Board of Directors of Global will
take all action necessary to (i) elect four (4) individuals to be designated by
Frontier as members of the Board of Directors of Global to serve in the classes
set forth in Exhibit 5.2 hereto, (ii) elect ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ as Vice Chairman
of Global and (iii) elect ▇▇▇▇▇ ▇. ▇▇▇▇ as President and Chief Operating Officer
of North American Operations of Global. The headquarters of Frontier Sub shall
remain in Rochester, New York.
5.3 ACCESS TO INFORMATION. Upon reasonable notice, each party shall
(and shall cause its Subsidiaries to) afford to the officers, employees,
accountants, counsel, financial advisors and other representatives of the other
party reasonable access during normal business hours, during the period prior to
the Effective Time, to all its properties, books, contracts, commitments and
records and, during such period, such party shall (and shall cause its
Subsidiaries to) furnish promptly to the other party (a) a copy of each report,
schedule, registration statement and other document filed, published, announced
or received by it during such period pursuant to the requirements of Federal or
state securities laws, as applicable (other than documents which such party is
not permitted to disclose under applicable law), and (b) consistent with its
legal obligations, all other information concerning its business, properties and
personnel as such other party may reasonably request; PROVIDED, HOWEVER, that
either party may restrict the foregoing access to the extent that (i) a
Governmental Entity requires such party or any of its Subsidiaries to
restrict access to any properties or information reasonably related to any such
contract on the basis of applicable laws and regulations with respect to
national security matters, (ii) any law, treaty, rule or regulation of any
Governmental Entity applicable to such party requires such party or its
Subsidiaries to restrict access to any properties or information or (iii) such
party or its Subsidiaries is bound by a confidentiality agreement that requires
such party or its Subsidiaries to restrict such access. The parties will hold
any such information which is non-public in confidence to the extent required
by, and in accordance with, the provisions of the letter dated November 30, 1998
between Frontier and Global (the "CONFIDENTIALITY AGREEMENT"). Any investigation
by Global or Frontier shall not affect the representations and warranties of
Frontier or Global, as the case may be.
5.4 REASONABLE BEST EFFORTS.
(a) Subject to the terms and conditions of this Agreement, each party
will use its reasonable best efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate the Merger (or the Alternative
Merger, as the case may be) and the other transactions contemplated by this
Agreement as soon as practicable after the date hereof. In furtherance and not
in limitation of the forego ing, each party hereto agrees (i) to make an
appropriate filing of a Notification and Report Form pursuant to the HSR Act
with respect to the transactions contemplated hereby as promptly as practicable
after the date hereof and to supply as promptly as practicable any additional
information and documentary material that may be requested pursuant to the HSR
Act and to take all other actions necessary to cause the expiration or
termination of the applicable waiting periods under the HSR Act as soon as
practicable and (ii) to file all necessary applications for Required Consents at
the FCC, PUCs and local franchising authorities with respect to the transactions
contemplated hereby as promptly as practical after the date hereof. Nothing in
this Section 5.4(a) shall require any of Global and its Subsidiaries to sell or
otherwise dispose of, or permit the sale or other disposition of, any assets of
Global, Frontier or their respective Subsidiaries, whether as a condition to
obtaining any approval from a Governmental Entity or any other Person or for any
other reason, if Global reason ably determines that such sale or other
disposition would reasonably be expected to have a Material Adverse Effect on
Global and its Subsidiaries (including the Surviv ing Corporation and its
Subsidiaries), taken together, after giving effect to the Merger.
(b) Each of Global and Frontier shall, in connection with the efforts
referenced in Section 5.4(a) to obtain all requisite approvals and
authorizations for the transactions contemplated by this Merger Agreement under
the HSR Act or any other Regulatory Law (as defined below), use its reasonable
best efforts to (i) cooperate in all respects with each other in connection with
any filing or submission and in connection with any investigation or other
inquiry, including any proceeding initiated by a private party, (ii) promptly
inform the other party of any communication received by such party from, or
given by such party to, the FCC, PUCs, the Antitrust Division of the Department
of Justice (the "DOJ") or any other Govern mental Entity and of any material
communication received or given in connection with any proceeding by a private
party, in each case regarding any of the transactions contemplated hereby, and
(iii) permit the other party to review any communication given by it to, and
consult with each other in advance of any meeting or conference with, the FCC,
PUCs, the DOJ or any such other Governmental Entity or, in connection with any
proceeding by a private party, with any other Person, and to the extent
permitted by the FCC, PUCs, the DOJ or such other applicable Governmental Entity
or other Person, give the other party the opportunity to attend and participate
in such meetings and conferences. For purposes of this Agreement, "REGULATORY
LAW" means the ▇▇▇▇▇▇▇ Act, as amended, the ▇▇▇▇▇▇▇ Act, as amended, the HSR
Act, the Federal Trade Commission Act, as amended, the Communications Act,
Bermuda law (including the filing of the requisite Memorandum of Increase with
the Registrar of Companies in Bermuda and the approval of the Share Issuance
(and the subsequent free transferability of the corresponding shares between
nonresident persons for exchange control purposes) by the Bermuda Monetary
Authority), and all other federal, state and foreign, if any, statutes, rules,
regulations, orders, decrees, administrative and judicial doctrines and other
laws that are designed or intended to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of trade or
lessening of competition, whether in the communications industry or otherwise
through merger or acquisition.
(c) In furtherance and not in limitation of the covenants of the
parties contained in Sections 5.4(a) and 5.4(b), if any administrative or
judicial action or proceeding, including any proceeding by a private party, is
instituted (or threat ened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any Regulatory Law, each of
Global and Frontier shall cooperate in all respects with each other and use its
respective reasonable best efforts to contest and resist any such action or
proceeding and to have vacated, lifted, reversed or over turned any decree,
judgment, injunction or other order, whether temporary, prelimi nary or
permanent, that is in effect and that prohibits, prevents or restricts consum
mation of the transactions contemplated by this Agreement. Notwithstanding the
foregoing or any other provision of this Agreement, nothing in this Section 5.4
shall limit a party's right to terminate this Agreement pursuant to Section
7.1(b) or 7.1(c) so long as such party has up to then complied in all respects
with its obligations under this Section 5.4.
(d) If any objections are asserted with respect to the transactions
contemplated hereby under any Regulatory Law or if any suit is instituted by any
Governmental Entity or any private party challenging any of the transactions
contemplated hereby as violative of any Regulatory Law, each of Global and
Frontier shall use its reasonable best efforts to resolve any such objections or
challenge as such Governmental Entity or private party may have to such
transactions under such Regulatory Law so as to permit consummation of the
transactions contemplated by this Agreement.
5.5 ACQUISITION PROPOSALS. Frontier agrees that neither it nor any
of its Subsidiaries nor any of the officers and directors of it or its
Subsidiaries shall, and that it shall direct and use its best efforts to cause
its and its Subsidiaries' employees, agents and representatives (including any
investment banker, attorney or accountant retained by it or any of its
Subsidiaries) not to, directly or indirectly, initiate, solicit, encourage or
knowingly facilitate (including by way of furnishing information) any inquiries
or the making of any proposal or offer with respect to a merger, reorganization,
share exchange, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving, or any purchase or
sale of all or any significant portion of the assets or more than 20% of the
common stock of, it or any of its Subsidiaries (any such proposal or offer
(other than a proposal or offer made by Global or an affiliate thereof) being
hereinafter referred to as an "ACQUISITION PROPOSAL"). Frontier further agrees
that neither it nor any of its Subsidiaries nor any of the officers and
directors of it or its Subsidiaries shall, and that it shall direct and use its
best efforts to cause its and its Subsidiaries' employees, agents and
representatives (including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) not to, directly or indirectly, have
any discussion with or provide any confidential information or data to any
Person relating to an Acquisition Proposal, or engage in any negotiations
concerning an Acquisition Proposal, or knowingly facilitate any effort or
attempt to make or implement an Acquisition Proposal or accept an Acquisition
Proposal. Notwithstanding the foregoing, Frontier or its Board of Directors
shall be permitted to (A) to the extent applicable, comply with Rule 14d-9 and
Rule 14e-2(a) promul gated under the Exchange Act with regard to an Acquisition
Proposal, (B) in response to an unsolicited bona fide written Acquisition
Proposal by any Person, recommend approval of such an unsolicited bona fide
written Acquisition Proposal to the shareholders of Frontier or withdraw or
modify in any adverse manner the Frontier Board Approval, or (C) engage in any
discussions or negotiations with, or provide any information to, any Person in
response to an unsolicited bona fide written Acquisition Proposal by any such
Person, if and only to the extent that, in any such case as is referred to in
clause (B) or (C), (i) the Frontier
Shareholders Meeting shall not have occurred, (ii) the Board of Directors of
Frontier concludes in good faith that such Acquisition Proposal (x) in the case
of clause (B) above would, if consummated, constitute a Superior Proposal (as
defined in Section 8.11) or (y) in the case of clause (C) above could reasonably
be expected to constitute a Superior Proposal, (iii) prior to providing any
information or data to any Person in connection with an Acquisition Proposal by
any such Person, the Board of Directors of Frontier receives from such Person an
executed confidentiality agreement on terms substantially similar to those
contained in the Confidentiality Agreement (except as to the standstill
provisions, provided that if under the aforementioned circumstances Frontier
enters into any such confidentiality agreement without standstill provisions
substantially similar to those contained in the Confidentiality Agreement, then
Global shall to the extent of the difference be relieved of compliance with the
Confidentiality Agreement's standstill provisions), and (iv) prior to providing
any information or data to any Person or entering into discussions or
negotiations with any Person, the Board of Directors of Frontier notifies Global
promptly of such inquiries, proposals or offers received by, any such
information requested from, or any such discussions or negotiations sought to be
initiated or continued with, any of its representatives indicating, in
connection with such notice, the name of such Person and the material terms and
conditions of any proposals or offers. Frontier agrees that it will keep Global
informed, on a current basis, of the status and terms of any such proposals or
offers and the status of any such discussions or negotiations. Frontier agrees
that it will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any Acquisition Proposal. Frontier agrees that it will take the
necessary steps to promptly inform the individuals or entities referred to in
the first sentence of this Section 5.5 of the obligations undertaken in this
Section 5.5. Nothing in this Section 5.5 shall (x) permit Frontier to terminate
this Agreement (except as specifi cally provided in Article VII hereof) or (y)
affect any other obligation of Frontier under this Agreement.
5.6 ASSUMPTION OF FRONTIER STOCK OPTIONS AND WARRANTS; OTHER STOCK
PLANS; EMPLOYEE BENEFITS MATTERS.
(a) OPTIONS AND WARRANTS; OTHER STOCK PLANS. Global shall assume the
Frontier Stock Options and Warrants on the terms set forth in Exhibit 5.6
hereto. Frontier and Global agree that Frontier's other stock plans and
treatment of Frontier's officers and employees shall be as set forth in Exhibit
5.6 hereto. Frontier and Global shall take all such steps as may be required to
cause the transactions contemplated by this Section 5.6 and any other
dispositions of Frontier equity securities (including derivative securities) or
acquisitions of Global equity securities (including derivative securities) in
connection with this Agreement by each individual who (a) is a director or
officer of Frontier or (b) at the Effective Time, will become a director or
officer of Global, to be exempt under Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended, including, without
limitation, steps to be taken in accordance with the No-Action Letter dated
January 12, 1999, issued by the SEC to Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP.
(b) EMPLOYEE BENEFITS.
(i) OBLIGATIONS OF GLOBAL; COMPARABILITY OF BENEFITS. Each
Frontier Benefit Plan as to which Frontier or any of its Subsidiaries has any
obligation with respect to any current or former employee (the "FRONTIER
EMPLOYEES") shall, as of the Effective Time, be the obligations of Global and
the Surviving Corporation. At the Effective Time and for at least two years
thereafter, Global shall, or shall cause the Surviving Corporation to, provide
benefits, in the aggregate, that are no less favorable than the benefits
provided, in the aggregate, under such Frontier Benefit Plans to the Frontier
Employees immediately prior to the Effective Time. Notwithstanding the
foregoing, nothing herein shall require (A) the continuation of any particular
Frontier Plan or prevent the amend ment or termination thereof (subject to the
maintenance, in the aggregate, of the benefits as provided in the preceding
sentence) or (B) require Global or the Surviving Corporation to continue or
maintain any stock purchase or other equity plan related to the equity of
Frontier or the Surviving Corporation; provided, however, that the Surviving
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Company shall maintain, for a period of two (2) years following the Effective
Time, substantially in the form in effect at the Effective Time (except for
amendments required by applicable law), the Employee Telecommunications Benefit
program, the Educational Assistance Fund, the Educational Assistance Program,
the Executive Perquisite program and the Change in Control Severance Plan for
Salary Band Levels 25 and Above. In the event of any sale, transfer or other
disposition of any of the businesses or operations of Frontier or the Surviving
Corporation (whether by merger, sale of stock or assets or otherwise) prior to
the second anniversary of the Effective Time, Global shall cause any such
purchaser to assume and perform all obligations of Global under this Section
5.6(b) for not less than the balance of the period ending on the second
anniversary of the Effective Time.
(ii) PRE-EXISTING LIMITATIONS; DEDUCTIBLE; SERVICE CREDIT. With
respect to any Global Benefit Plans in which the Frontier Employees participate
effective as of the Closing Date or thereafter, Global shall, or shall cause the
Surviving Corporation to: (A) not impose any limitations more onerous than those
currently in effect as to pre-existing conditions, exclusions and waiting
periods with respect to participation and coverage requirements applicable to
the Frontier Employees under any welfare Global Benefit Plan in which such
employees may be eligible to participate after the Effective Time, (B) provide
each
Frontier Employee with credit for any co-payments and deductibles paid
prior to the Effective Time in satisfying any applicable deductible or out-of-
pocket requirements under any welfare Global Benefit Plan in which such
employees may be eligible to participate after the Effective Time, and (C)
recognize all service of the Frontier Employees with Frontier for all purposes
(including, without limitation, purposes of eligibility to participate, vesting
credit, entitlement for benefits, and benefit accrual) in any Global Benefit
Plan in which such employees may be eligible to participate after the Effective
Time, to the same extent taken into account under a comparable Frontier Plan
immediately prior to the Closing Date.
(iii) CHANGE IN/OF CONTROL. Frontier and Global agree that, for
purposes of the Frontier Benefit Plans, the consummation of the transactions
contemplated by this Agreement shall constitute a Change in Control or Change of
Control, as applicable under such Frontier Benefit Plans.
(iv) RETENTION BONUS PROGRAMS. The transition committee
appointed pursuant to Section 4.4 shall jointly administer how the retention
bonus programs of $35 million in the aggregate to employees of Frontier at the
level of VP-2 and below will be administered.
5.7 FEES AND EXPENSES. Whether or not the Merger is consummated, all
Expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such Expenses, except
(a) if the Merger is consummated, the Surviving Corporation shall pay, or cause
to be paid, any and all property or transfer taxes imposed on Frontier or its
Subsidiaries and any real property transfer tax imposed on any holder of shares
of capital stock of Frontier resulting from the Merger, (b) Expenses incurred in
connec tion with the filing, printing and mailing of the Joint Proxy
Statement/Prospectus, which shall be shared equally by Global and Frontier and
(c) as provided in Section 7.2. As used in this Agreement, "EXPENSES" includes
all out-of-pocket expenses (including, without limitation, all fees and expenses
of counsel, accountants, invest ment bankers, experts and consultants to a
party hereto and its affiliates) incurred by a party or on its behalf in
connection with or related to the authorization, preparation, negotiation,
execution and performance of this Agreement and the transactions contemplated
hereby, including the preparation, printing, filing and mailing of the Joint
Proxy Statement/Prospectus and the solicitation of shareholder approvals and all
other matters related to the transactions contemplated hereby.
5.8 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE. The
Surviving Corporation shall cause to be maintained in effect in its certificate
of incorporation and by-laws (i) for a period of six years after the Effective
Time, the current provisions regarding elimination of liability of directors and
indemnification of officers, directors and employees contained in the
certificate
of incorporation and by-laws of Frontier and (ii) for a period of six years, the
current policies of directors' and officers' liability insurance and fiduciary
liability insurance maintained by Frontier (PROVIDED that the Surviving
Corporation may substitute therefor policies of at least the same coverage and
amounts containing terms and conditions which are, in the aggregate, no less
advantageous to the insured) with respect to claims arising from facts or events
that occurred on or before the Effective Time; PROVIDED, HOWEVER, that in no
event shall the Surviving Corporation be required to expend in any one year an
amount in excess of 200% of the annual premiums currently paid by Frontier for
such insurance; and, PROVIDED, further, that if the annual premiums of such
insurance coverage exceed such amount, the Surviving Corporation shall be
obligated to obtain a policy with the greatest coverage available for a cost
not exceeding such amount. The provisions of the immediately preceding sentence
shall be deemed to have been satisfied if prepaid policies have been obtained by
Frontier prior to the Closing for purposes of this Section 5.8, which policies
provide such directors and officers with coverage for an aggregate period of six
years with respect to claims arising from facts or events that occurred on or
before the Effective Time, including, without limitation, in respect of the
transactions contemplated by this Agreement and for a premium not in excess of
the aggregate of the premiums set forth in the preceding sentence. If such
prepaid policies have been obtained by Frontier prior to the Closing, Global
shall and shall cause the Surviving Corporation to maintain such policies in
full force and effect, and continue to honor Frontier's obligations thereunder.
5.9 REDEMPTION OF FRONTIER PREFERRED STOCK. At or prior to the
mailing of the Joint Proxy Statement/Prospectus by Frontier in accordance with
Section 5.1, Frontier shall mail a notice of redemption of the Frontier
Preferred Stock to all holders of the Frontier Preferred Stock and shall set
aside all funds necessary for such redemption prior to the Frontier Shareholders
Meeting and shall take all other actions as are necessary to redeem all the
Frontier Preferred Stock then outstanding, using its own cash, and in compliance
with the applicable provisions as set forth in its restated certificate of
incorporation.
5.10 PUBLIC ANNOUNCEMENTS. Frontier and Global shall use all
reasonable efforts to develop a joint communications plan and each party shall
use all reasonable efforts (i) to ensure that all press releases and other
public statements with respect to the transactions contemplated hereby shall be
consistent with such joint communications plan, and (ii) unless otherwise
required by applicable law or by obligations pursuant to any listing agreement
with or rules of any securities exchange or NASDAQ, to consult with each other
before issuing any press release or otherwise making any public statement with
respect to this Agreement or the transactions
contemplated hereby.
5.11 ACCOUNTANTS' LETTERS. Upon reasonable notice from the other,
Frontier and Global shall use their respective reasonable best efforts to cause
PricewaterhouseCoopers LLP and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., respectively, to deliver
to Frontier or Global, as the case may be, a letter, dated within two business
days of the Effective Time of the Form S-4 covering such matters as are
requested by Global or Frontier, as the case may be, and as are customarily
addressed in accoun tant's "comfort" letters. In connection with Frontier's
efforts to obtain such letter, if requested by PricewaterhouseCoopers LLP,
Global shall provide a representation letter to PricewaterhouseCoopers LLP
complying with the statement on Auditing Standards No. 72 ("SAS 72"), if then
required. In connection with Global's efforts to obtain such letter, if
requested by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., Frontier shall provide a representation
letter to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co. complying with SAS 72, if then required.
5.12 LISTING OF SHARES OF GLOBAL COMMON STOCK. Global shall use its
best efforts to cause the shares of Global Common Stock to be issued in the
Merger and the shares of Global Common Stock to be reserved for issuance upon
exercise of the Frontier Stock Options to be approved for quotation, upon
official notice of issuance, on NASDAQ.
5.13 VOTING TRUST. If at any time prior to the Frontier Share holders
Meeting, a third party shall make an unsolicited tender or exchange offer to
acquire control of Frontier, which offer is not recommended by Frontier's Board
of Directors, then Global and Frontier will use their reasonable best efforts to
consum mate the transactions contemplated hereby by implementing a "voting
trust" or similar structure permitting consummation of the transactions
contemplated hereby prior to the receipt of final FCC and PUC approvals.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
obligations of Frontier, Global and Merger Sub to effect the Merger are subject
to the satisfaction or waiver of, on or prior to the Closing Date, of the
following conditions:
(a) SHAREHOLDER APPROVAL. (i) Frontier shall have obtained the
Required Frontier Vote in connection with the adoption of this Agree ment by
the shareholders of Frontier and (ii) (x) if the Merger is to be effected,
Global shall have obtained the Required Global Vote in connection with the
approval of the Share Issuance and the Global Charter Amendment by the
shareholders of Global, or (y) if the Alternative Merger is to be effected,
Global shall have obtained the required Global Vote in connection with the
Alternative Merger.
(b) NO INJUNCTIONS OR RESTRAINTS, ILLEGALITY. No Laws shall have been
adopted or promulgated, and no temporary restraining order, preliminary or
permanent injunction or other order issued by a court or other Govern mental
Entity of competent jurisdiction shall be in effect, having the effect of making
the Merger illegal or otherwise prohibiting consummation of the Merger;
PROVIDED, HOWEVER, that the provisions of this Section 6.1(b) shall not be
available to any party whose failure to fulfill its obligations pursuant to
Section 5.4 shall have been the cause of, or shall have resulted in, such order
or injunction.
(c) FCC AND PUBLIC UTILITY COMMISSION APPROV ALS. All approvals for
the Merger from the FCC and PUCs shall have been obtained (i) other than those
the failure of which to be obtained would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Global and its
Subsidiaries (including following the Merger the Surviving Corporation and its
Subsidiaries), taken together, and (ii) without the imposition of conditions
that would individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Global and its Subsidiaries (including following the
Merger, the Surviving Corporation and its Subsidiaries), taken together.
(d) HSR ACT. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired.
(e) NASDAQ LISTING. The shares of Global Common Stock to be issued in
the Merger and such other shares to be reserved for issuance in connection
with the Merger shall have been approved upon official notice of issuance for
quotation on NASDAQ.
(f) EFFECTIVENESS OF THE FORM S-4. The Form S-4 shall have been
declared effective by the SEC under the Securities Act. No stop order
suspending the effectiveness of the Form S-4 shall have been issued by the SEC
and no proceedings for that purpose shall have been initiated or threatened by
the SEC.
(g) BERMUDA APPROVAL. The Share Issuance (and the subsequent free
transferability of the corresponding shares between nonresident persons for
exchange control purposes) shall have been approved by the Bermuda
Monetary Authority.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF GLOBAL AND MERGER SUB.
The obligations of Global and Merger Sub to effect the Merger are subject to the
satisfaction of, on or waiver by Global, on or prior to the Closing Date, of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. (i) Each of the representations
and warranties of Frontier set forth in this Agreement that is qualified as to
Material Adverse Effect shall have been true and correct on the date of this
Agreement and (except to the extent such representations and warranties speak as
of a specified date) shall also be true and correct on and as of the Closing
Date, and (ii) each of the representations and warranties of Frontier that is
not so qualified shall have been true and correct in all material respects on
the date of this Agreement and (except to the extent such representations and
warranties speak as of a specified date) shall also be true and correct in all
material respects on and as of the Closing Date provided that clause (ii) of
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this paragraph (a) shall be deemed satisfied so long as all failures of such
representations and warranties referred to therein to be so true and correct,
taken together, would not reasonably be expected to have a Material Adverse
Effect on Frontier; and Global shall have received a certificate of the chief
executive officer and the chief financial officer of Frontier to the effect of
the foregoing.
(b) PERFORMANCE OF OBLIGATIONS OF FRONTIER. Frontier shall have
performed or complied with all agreements and covenants required to be performed
by it under this Agreement at or prior to the Closing Date that are qualified as
to materiality and shall have performed or complied in all material respects
with all other agreements and covenants required to be performed by it under
this Agreement at or prior to the Closing Date that are not so qualified as to
materiality, and Global shall have received a certificate of the chief executive
officer and the chief financial officer of Frontier to such effect.
(c) TAX OPINION. Global shall have received from Skadden, Arps,
Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel to Global and Merger Sub, on the Closing
Date, a written opinion dated as of such date substantially in the form of (i)
Section 6.2(c)(i) of the Global Disclosure Schedule with respect to the Merger
or (ii) Section 6.2(c)(ii) of the Global Disclosure Schedule with respect to
the Alternative Merger, as the case may be. In rendering such opinion, counsel
to Global shall be entitled to rely upon representations of officers of Global
and Frontier satisfactory to it and substantially in the form of Section
6.2(c)(1) of the Global Disclosure Schedule or Section 6.2(c)(2) of the
Frontier Disclosure Schedule, respectively
(allowing for such amendments to the representations as counsel to Global deems
necessary or appropriate).
(d) REDEMPTION OF FRONTIER PREFERRED STOCK. Frontier shall have
redeemed all of the Frontier Preferred Stock.
6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF FRONTIER. The obligations
of Frontier to effect the Merger are subject to the satisfaction of, or waiver
by Frontier, on or prior to the Closing Date of the following additional
conditions:
(a) REPRESENTATIONS AND WARRANTIES. (i) Each of the representations
and warranties of Global and Merger Sub set forth in this Agree ment that is
qualified as to Material Adverse Effect shall have been true and correct on the
date of this Agreement and (except to the extent such representations and
warranties speak as of a specified date) shall also be true and correct on and
as of the Closing Date, and (ii) each of the representations and warranties of
each of Global and Merger Sub that is not so qualified shall have been true and
correct in all material respects on the date of this Agreement and (except to
the extent such representations and warranties speak as of a specified date)
shall also be true and correct in all material respects on and as of the Closing
Date provided that clause (ii) of this paragraph (a) shall be deemed satisfied
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so long as all failures of such repre sentations and warranties referred to
therein to be so true and correct, taken together, would not reasonably be
expected to have a Material Adverse Effect on Global; and Frontier shall have
received a certificate of the chief executive officer and the chief financial
officer of Global to the effect of the foregoing.
(b) PERFORMANCE OF OBLIGATIONS OF GLOBAL. Global shall have performed
or complied with all agreements and covenants required to be performed by it
under this Agreement at or prior to the Closing Date that are quali fied as to
materiality and shall have performed or complied in all material respects with
all agreements and covenants required to be performed by it under this Agree
ment at or prior to the Closing Date that are not so qualified as to
materiality, and Frontier shall have received a certificate of the chief
executive officer and the chief financial officer of Global to such effect.
(c) TAX OPINION. Frontier shall have received from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, counsel to Frontier, on the Closing Date, a written opinion dated as
of such date substantially in the form of (i) Section 6.3(c)(i) of the Frontier
Disclosure Schedule with respect to the Merger or (ii) Section 6.3(c)(ii) of
the Frontier Disclosure Schedule with respect to the Alternative Merger, as the
case may be. In rendering such opinion, counsel to Frontier shall be entitled to
rely upon representations of officers of Global and Frontier satisfactory to it
and substantially in the form of Section 6.2(c)(1) of the Global Disclosure
Schedule or 6.2(c)(2) of the
Frontier Disclosure Schedule, respectively
(allowing for such amendments to the representations as counsel to Frontier
deems necessary or appropriate).
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 TERMINATION. This Agreement may be terminated at any time prior
to the Effective Time, by action taken or authorized by the Board of Directors
of the terminating party or parties, and except as provided below, whether
before or after approval of the matters presented in connection with the Merger
by the shareholders of Frontier or Global:
(a) By mutual written consent of Global and Frontier, by action of
their respective Boards of Directors;
(b) By either Frontier or Global if the Effective Time shall not have
occurred on or before the first anniversary date of this Agreement (the
"TERMINATION DATE"); PROVIDED, HOWEVER, in the event that a Trigger Event had
occurred and is no longer in effect, the Termination Date shall be the later of
(i) the first anniversary date of this Agreement, or (ii) 180 days after the
date on which the Trigger Event is no longer in effect, PROVIDED FURTHER, that
the right to terminate this Agreement under this Section 7.1(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement (including without limitation Section 5.4) has to any extent been the
cause of, or resulted in, the failure of the Effective Time to occur on or
before the Termination Date;
(c) By either Frontier or Global if any Governmental Entity (i) shall
have issued an order, decree or ruling or taken any other action (which the
parties shall have used their reasonable best efforts to resist, resolve or
lift, as applicable, in accordance with Section 5.4) permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement, and such order, decree, ruling or other action shall have become
final and nonappealable or (ii) shall have failed to issue an order, decree or
ruling or to take any other action (which order, decree, ruling or other action
the parties shall have used their reasonable best efforts to obtain, in
accordance with Section 5.4), in each case of (i) and (ii) which is necessary to
fulfill the conditions set forth in subsections 6.1(c) and (d), as applicable,
and such denial of a request to issue such order, decree, ruling or take such
other action shall have become final and nonappealable; PROVIDED,
HOWEVER, that the right to terminate this Agreement under this Section 7.1(c)
shall not be available to any party whose failure to comply with Section 5.4 has
to any extent been the cause of such action or inaction;
(d) By either Frontier or Global if (i) the approval by the share
holders of Frontier required for the consummation of the Merger shall not have
been obtained by reason of the failure to obtain the Required Frontier Vote or
(ii) the approval by the shareholders of Global required for the consummation of
the Merger shall not have been obtained by reason of the failure to obtain the
Required Global Vote, in each case upon the taking of such vote at a duly held
meeting of sharehold ers of Frontier or Global, as the case may be, or at any
adjournment thereof;
(e) By Global if the Board of Directors of Frontier, prior to the
Frontier Shareholders Meeting (i) shall withdraw or modify in any adverse manner
the Frontier Board Approval, (ii) shall approve or recommend a Superior Proposal
pursuant to Section 5.5 or (iii) shall resolve to take any of the actions
specified in clauses (i) or (ii) above;
(f) By Frontier at any time prior to the Frontier Shareholders
Meeting, upon three Business Days' prior notice to Global, if the Board of
Directors of Frontier shall approve a Superior Proposal; PROVIDED, HOWEVER, that
(i) Frontier shall have complied with Section 5.5, (ii) the Board of Directors
of Frontier shall have concluded in good faith, after giving effect to all
concessions which may be offered by Global pursuant to clause (iii) below, on
the basis of the advice of its financial advisors and outside counsel, that such
proposal is a Superior Proposal and (iii) prior to any such termination,
Frontier shall, and shall cause its financial and legal advisors to, negotiate
with Global to make such adjustments in the terms and conditions of this
Agreement as would enable Global to proceed with the transac tions contemplated
hereby; PROVIDED, HOWEVER, that it shall be a condition to termination by
Frontier pursuant to this Section 7.l(f) that Frontier shall have made the
payment of the Termination Fee to Global required by Section 7.2(b);
(g) By Frontier, if its Board of Directors so determines by a vote of
the majority of the members of its entire Board, at any time during the three-
Business Day period commencing on the Determination Date (the "FRON TIER
EVALUATION PERIOD"), if the Average Price is less than $34.5625, SUBJECT,
HOWEVER, to the following: (A) if Frontier elects to exercise its termination
right pursuant to this Section 7.1(g), it shall give Global written notice of
its intention to terminate (the "TERMINATION NOTICE"), which termination shall
be effective at the close of business on the third Business Day following the
delivery of the
Termination Notice (which Termination Notice may be withdrawn by Frontier
at any time prior to the effectiveness of such termination), (B) during
the two-Business Day period commencing with the delivery of a Termination Notice
(the "GLOBAL ELECTION PERIOD"), Global shall have the option of (x) adjusting
the Exchange Ratio to equal the quotient determined by dividing $62.00 by the
Average Price (rounded to the nearest 1/10,000) by delivering written notice to
Frontier within such two-Business Day period of its intention to so adjust the
Exchange Ratio, (y) paying Merger Consideration consisting of shares of Global
Common Stock equal to the Exchange Ratio and cash (the "CASH TOP-UP") equal to
the difference between $62.00 and the Exchange Ratio multiplied by the Average
Price or (z) any combination of an adjustment in the Exchange Ratio and a Cash
Top-Up provided that the sum of (i) the Cash Top-Up and (ii) the Exchange Ratio,
as adjusted, multiplied by the Average Price, equals $62.00 and (C) if Global
makes an election to adjust the Exchange Ratio pursuant to the preceding clause
(B)(x) (a "GLOBAL ADJUSTMENT ELECTION"), or to pay Merger Consideration that
includes the Cash Top-Up (the "CASH TOP-UP ELECTION") pursuant to the preceding
clause (B)(y), or a combination of an adjustment to the Exchange Ratio and a
Cash Top-Up pursuant to Clause (B)(z) a ("COMBINATION ELECTION"), then this
Agreement shall not terminate pursuant to this Section 7.1(g) and this Agreement
shall remain in effect in accordance with its terms (except as the Ex change
Ratio shall have been so modified or the Merger Consideration so modified), and
any references in this Agreement to "Exchange Ratio" or "Merger Consideration,"
as applicable, shall thereafter be deemed to refer to the Exchange Ratio
or Merger Consideration, as applicable, as adjusted pursuant to this Section
7.1(g). Unless the Alternative Merger is consummated pursuant to Section 1.10
hereof and such Alternative Merger qualifies for non-recognition treatment under
Section 351 of the Code, cash paid pursuant to the Cash Top-Up Election or the
Combination Election in accordance with Sections (B)(y) or (B)(z) of the
immediately preceding sentence, shall be less than the amount, taken together
with all other cash to be paid in the Merger or the Alternative Merger, that
would result in the Merger or the Alternative Merger failing to qualify as a
reorganization under Section 368 of the Code and any reduction in the cash paid
pursuant to a Cash Top-Up shall be compen sated by an adjustment in the
Exchange Ratio.
7.2 EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement by either Frontier
or Global as provided in Section 7.1, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of Global or Frontier
or their respective officers or directors except with respect to Section 3.1(i),
Section 3.2(h), the second sentence of Section 5.3, Section 5.7, this Section
7.2 and Article VIII.
(b) Global and Frontier agree that Frontier shall pay to Global the
sum of $270 million (the "TERMINATION FEE") solely as follows: (i) if Frontier
shall terminate this Agreement pursuant to Section 7.1(f), (ii) if (A) Frontier
or Global shall terminate this Agreement pursuant to Section 7.1(d)(i) due to
the failure of Frontier's shareholders to approve and adopt this Agreement, (B)
at any time after the date of this Agreement and at or before the time of the
event giving rise to such termination there shall exist an Acquisition Proposal
and (C) within 12 months of the termination of this Agreement, Frontier enters
into a definitive agreement with any third party with respect to an Acquisition
Proposal or an Acquisition Proposal is consummated, (iii) if Global shall
terminate this Agreement pursuant to Section 7.1(e), or (iv) if (A) Global shall
terminate this Agreement pursuant to Section 7.1(b) or Frontier or Global shall
terminate this Agreement pursuant to Section 7.1(c), (B) at any time after the
date of this Agreement and at or before the time of the event giving rise to
such termination there shall exist an Acquisition Proposal with respect to
Frontier, (C) following the existence of such Acquisition Proposal and prior to
any such termination, Frontier shall have intentionally breached (and not cured
after notice thereof) any of its material covenants or agreements set forth in
this Agreement in any material respect and (D) within 12 months of any such
termination of this Agreement, Frontier shall enter into a definitive agreement
with any third party with respect to an Acquisition Proposal or an Acquisition
Proposal is consummated.
(c) The Termination Fee required to be paid pursuant to Section 7.2(b)
shall be made prior to, and shall be a pre-condition to the effectiveness of
termination of this Agreement by Frontier pursuant to Section 7.1(f). Any other
payment required to be made pursuant to Section 7.2(b) shall be made to Global
not later than two Business Days after the entering into of a definitive
agreement with respect to, or the consummation of, an Acquisition Proposal, as
applicable, or a termination pursuant to Section 7.1(e). All payments under
this Section 7.2 to Global shall be made by wire transfer of immediately
available funds to an account designated by Global.
7.3 AMENDMENT. This Agreement may be amended by the parties hereto,
by action taken or authorized by their respective Boards of Directors, at any
time before or after approval of the matters presented in connection with the
Merger by the shareholders of Frontier and Global, but, after any such approval,
no amendment shall be made which by law or in accordance with the rules of any
relevant stock exchange requires further approval by such shareholders without
such further approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
7.4 EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agree ments or conditions contained herein. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid only
if set forth in a written instrument signed on behalf of such party. The
failure of any party to this Agreement to assert any of its rights under this
Agreement or otherwise shall not constitute a waiver of those rights.
ARTICLE VIII
GENERAL PROVISIONS
8.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
None of the representations, warranties, covenants and other agreements in this
Agreement or in any instrument delivered pursuant to this Agreement, including
any rights arising out of any breach of such representations, warranties,
covenants and other agreements, shall survive the Effective Time, except for
those covenants and agreements contained herein and therein that by their terms
apply or are to be performed in whole or in part after the Effective Time and
this Article VIII. Nothing in this Section 8.1 shall relieve any party for any
breach of any representation, warranty, covenant or other agreement in this
Agreement occurring prior to termination.
8.2 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed duly given (a) on the date of delivery if
delivered personally, or by telecopy or telefacsimile, upon confirmation of
receipt, (b) on the first Business Day following the date of dispatch if
delivered by a recognized next-day courier service, or (c) on the tenth
Business Day following the date of mailing if delivered by registered or
certified mail, return receipt requested, postage prepaid. All notices
hereunder shall be delivered as set forth below, or pursuant to such other
instructions as may be designated in writing by the party to receive such
notice:
(a) if to Global or Global Sub, to
Global Crossing Ltd.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇▇ ▇▇, ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
and an additional copy to
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(b) if to Frontier to
Frontier Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
with a copy to
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
8.3 INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents, glossary of defined terms and headings contained in this Agreement are
for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation".
8.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that both
parties need not sign the same counterpart.
8.5 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIA ▇▇▇▇.
(a) This Agreement, the Stock Option Agreement and the agreements
referred to in Sections 1.9, 4.5 and 5.3 constitute the entire agreement and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof, other than the
Confidentiality Agreement, which shall survive the execution and delivery of
this Agreement.
(b) This Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or implied,
is intended to or shall confer upon any other Person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement, other than
Section 5.8 (which is intended to be for the benefit of the Persons covered
thereby and may be enforced by such Persons).
8.6 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of New York.
8.7 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 so long as the economic or legal substance of the
transactions contemplated hereby 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 hereby are consummated as originally
contemplated to the greatest extent possible.
8.8 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto, in whole or in part (whether by operation of law or otherwise), without
the prior written
consent of the other party, and any attempt to make any such assignment without
such consent shall be null and void, except that Merger Sub may assign, in its
sole discretion, any or all of its rights, interests and obligations under this
Agreement to any direct wholly owned Subsidiary of Global without the consent of
Frontier, but no such assignment shall relieve Merger Sub of any of its
obligations under this Agreement. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective succes sors and assigns.
8.9 SUBMISSION TO JURISDICTION; WAIVERS. Each of Global and Frontier
irrevocably agrees that any legal action or proceeding with respect to this
Agreement or for recognition and enforcement of any judgment in respect hereof
brought by the other party hereto or its successors or assigns may be brought
and determined in the Courts of the State of New York, and each of Global and
Frontier hereby irrevocably submits with regard to any such action or proceeding
for itself and in respect to its property, generally and unconditionally, to the
nonex clusive jurisdiction of the aforesaid courts. Each of Global and
Frontier hereby irrevocably waives, and agrees not to assert, by way of motion,
as a defense, counter claim or otherwise, in any action or proceeding with
respect to this Agreement, (a) any claim that it is not personally subject to
the jurisdiction of the above-named courts for any reason other than the failure
to serve process in accordance with this Section 8.9, (b) that it or its
property is exempt or immune from jurisdiction of any such court or from any
legal process commenced in such courts (whether through service of notice,
attachment prior to judgment, attachment in aid of execution of judgment,
execution of judgment or otherwise), and (c) to the fullest extent permitted by
applicable law, that (i) the suit, action or proceeding in any such court is
brought in an inconvenient forum, (ii) the venue of such suit, action or
proceeding is im proper and (iii) this Agreement, or the subject matter hereof,
may not be enforced in or by such courts. This Agreement does not involve less
than $250,000 and the parties intend that Section 5-1401 of the New York General
Obligations Law shall apply to this Agreement.
8.10 ENFORCEMENT. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly agreed
that the parties shall be entitled to specific performance of the terms hereof,
this being in addition to any other remedy to which they are entitled at law or
in equity.
8.11 DEFINITIONS. As used in this Agreement:
(a) "APPLICABLE CLOSING CONDITIONS" means the conditions to Closing
set forth in Sections 6.1(b), 6.1(c) and 6.1(d) hereof.
(b) "BOARD OF DIRECTORS" means the Board of Directors of any specified
Person and any committees thereof.
(c) "BUSINESS DAY" means any day on which banks are not required or
authorized to close in the City of New York.
(d) "COMBINED VOTING POWER" means the combined voting power of Global
Common Stock on a fully diluted basis and for purposes of computing such "fully
diluted basis", the following shall be excluded: (i) any options, warrants or
other securities exchangeable or convertible into Global Com mon Stock
(collectively, "Convertible Voting Securities"), which are not and cannot become
exercisable prior to the earlier of (x) the Termination Date, or (y) the date of
the Global Shareholders Meeting, and (ii) any Convertible Voting Securities that
are held by a shareholder of Global who owns more than 200,000 shares of Global
Common Stock that enters into an agreement with Global for the benefit of
Frontier and which gives Frontier the right of specific performance thereunder,
that is reasonably acceptable to Frontier, which provides that such shareholder
shall not exercise any of its Convertible Voting Securities prior to the earlier
of (x) the Termination Date or (y) the termination of the Voting Agreement.
(e) "MATERIAL ADVERSE EFFECT" means, with respect to any entity, any
adverse change, circumstance or effect that is or is reasonably likely to be
materially adverse to the business, financial condition or results of operations
of such entity and its Subsidiaries taken as a whole, other than any change,
circum stance or effect relating to (i) the economy or securities markets in
general or (ii) the industries in which Global or Frontier operate and not
specifically relating to Global or Frontier.
(f) "MATERIAL NETWORK CONTRACT" means any material contract relating
to the construction, installation (including, but not limited to, any upgrade),
operation, maintenance, provision of capacity for, sale or use of capacity on
(including, but not limited to, the provision for web hosting services)
Frontier's fiber optic network.
(g) "PERSON" means an individual, corporation, company, limited
liability company, partnership, association, trust, unincorporated organization,
other entity or group (as defined in the Exchange Act).
(h) "SUBSIDIARY" when used with respect to any party means any
corporation or other organization, whether incorporated or unincorporated, (i)
of which such party or any other Subsidiary of such party is a general partner
(excluding
partnerships, the general partnership interests of which held by such party or
any Subsidiary of such party do not have a majority of the voting interests in
such partnership) or (ii) at least a majority of the securities or other
interests of which having by their terms ordinary voting power to elect a
majority of the Board of Directors or others performing similar functions with
respect to such corporation or other organization is directly or indirectly
owned or controlled by such party or by any one or more of its Subsidiaries, or
by such party and one or more of its Subsidiaries.
(i) "SUPERIOR PROPOSAL" means a bona fide written Acquisition
Proposal which the Board of Directors of Frontier or Global, as applicable,
concludes in good faith (after consultation with its financial advisors and
legal counsel), taking into account all legal, financial, regulatory and other
aspects of the proposal and the Person making the proposal, (i) would, if
consummated, result in a transaction that is more favorable to Frontier's
shareholders (in their capacities as shareholders) from a financial point of
view, than the transactions contemplated by this Agreement and (ii) is
reasonably capable of being completed (provided that for purposes of this
definition the term Acquisition Proposal shall have the meaning assigned to such
term in Section 5.5 except that the references to "20%" in the definition of
"Acquisition Proposal" shall be deemed to be a reference to "50%" and
"Acquisition Proposal" shall only be deemed to refer to a transaction involving
Frontier, or with respect to assets (including the shares of any Subsidiary of
Frontier) of Frontier and its Subsidiaries, taken as a whole, and not any of its
Subsidiaries alone).
(j) "THE OTHER PARTY" means, with respect to Frontier, Global and
means, with respect to Global, Frontier.
(k) "TRIGGER EVENT" occurs when all of the following conditions are
and remain satisfied: (i) Global has consummated an acquisition of a trade or
business outside the United States consistent with its business plan and (ii)
counsel to Global and Frontier confirm that, based upon the facts and
circumstances of such acquisition, they each could render the respective
opinions required by Sections 6.2(c)(i) and 6.3(c)(i) hereof.
8.12 OTHER AGREEMENTS. The parties hereto acknowledge and agree that,
except as otherwise expressly set forth in this Agreement, the rights and
obligations of Frontier and Global under any other agreement between the parties
shall not be affected by any provision of this Agreement.
IN WITNESS WHEREOF, Global, Merger Sub and Frontier have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of March 16, 1999.
GLOBAL CROSSING LTD.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice Chairman
GCF ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice Chairman
FRONTIER CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Executive Officer
EXHIBIT A
FORM OF STOCK OPTION AGREEMENT
[An executed copy of the Stock Option Agreement has been filed as Exhibit 10.1
to this Form 8-K and is incorporated herein by reference]
EXHIBIT 1.9
FORM OF VOTING AGREEMENT
[An executed copy of the Voting Agreement has been filed as Exhibit 10.2
to this Form 8-K and is incorporated herein by reference]
EXHIBIT 3.1(K)
Form of Frontier Affiliate Letter
---------------------------------
Gentlemen:
The undersigned, a holder of shares of Common Stock, par value $1.00
per share ("Frontier Common Stock"), of Frontier Corporation, a New York
----------------------
corporation ("Frontier"), will be entitled to receive in connection with the
--------
merger (the "Merger") of GCF Acquisition Corp., a New York corporation, with and
------
into Frontier, securities (the "Global Securities") of Global Crossing Ltd., a
-----------------
company formed under the laws of Bermuda ("Global"), into which the shares of
------
Frontier Common Stock owned by the undersigned are converted at the effective
time of the Merger. The undersigned acknowledges that the undersigned may be
deemed an "affiliate" of Frontier within the meaning of Rule 145 ("Rule 145")
--------
promulgated under the Securities Act of 1933 (together with the rules and
regulations thereunder, the "Act"), although nothing contained herein should be
---
construed as an admission of such fact.
If in fact the undersigned were an affiliate under the Act, the
undersigned's ability to sell, assign or transfer the Global Securities received
by the undersigned in exchange for any shares of Frontier Common Stock pursuant
to the Merger may be restricted unless such transaction is registered under the
Act or an exemption from such registration is available. The undersigned
understands that such exemptions are limited and the undersigned has obtained
advice of counsel as to the nature and conditions of such exemptions, including
information with respect to the applicability to the sale of such securities of
Rules 144 and 145(d) promulgated under the Act. The undersigned understands
that Global will not be required to maintain the effectiveness of any
registration statement under the Act for the purposes of resale of Global
Securities by the undersigned.
The undersigned hereby represents to and covenants with Global that
the undersigned will not sell, assign or transfer any of the Global Securities
received by the undersigned in exchange for any shares of Frontier Common Stock
pursuant to the Merger except (i) pursuant to an effective registration
statement under the Act, (ii) in conformity with the volume and other
limitations of Rule 145 or (iii) in a transaction which, in the opinion of
counsel reasonably satisfactory to Global or as described in a "no-action" or
interpretive letter from the Staff of the Securities and Exchange Commission
(the "SEC"), is not required to be registered under the Act.
---
In the event of a sale or other disposition by the undersigned of
Global Securities pursuant to Rule 145, the undersigned will supply Global with
evidence of compliance with such Rule, in the form of a letter in the form of
Annex I hereto. The undersigned understands that Global may instruct its
transfer agent to withhold the transfer of any Global Securities disposed of by
the undersigned, but that upon receipt of such evidence of compliance the
transfer agent shall effectuate the transfer of the Global Securities sold as
indicated in the letter (issuing certificates without any restrictive legend to
the transferee).
The undersigned acknowledges and agrees that Global reserves the right
to place the following legend on certificates representing Global Securities
received by the undersigned in the Merger:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES AND MAY BE SOLD OR OTHERWISE TRANSFERRED ONLY IN
COMPLIANCE WITH THE REQUIREMENTS OF RULE 145 OR PURSUANT TO A
REGISTRATION STATEMENT UNDER SAID ACT OR AN EXEMPTION FROM SUCH
REGISTRATION."
The undersigned also acknowledged and agrees that unless a sale or transfer
of the Global Securities received by the undersigned in connection with the
Merger is made in conformity with the provisions of Rule 145 or pursuant to a
registration statement (in which case certificates issued to the transferee
shall not contain any restrictive legend), Global reserves the right to place
the following legend (or other appropriate legend) on the certificates issued to
any transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO
RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN
ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION
WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES
ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT IN ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933."
It is understood and agreed that such legends will be substituted by delivery of
certificates without such legends if (i) one year shall have elapsed from the
date of the effective time of the Merger and the provisions of Rule 145(d)(2)
under the Act are then available to the undersigned or (ii) Global shall have
received an opinion in form and substance reasonably satisfactory to Global from
independent counsel reasonably satisfactory to Global or a Ano-action" or
interpretive letter from the Staff of the SEC to the effect that such legends
are not required for purposes of the Act.
The undersigned acknowledges that (i) the undersigned has carefully
read this letter and understands the requirements hereof and the limitations
imposed upon the distribution, sale, transfer or other disposition of Global
Securities and (ii) the receipt by Global of this letter is an inducement and a
condition to Global's obligations to consummate the Merger.
By Global's acceptance of this letter, Global agrees with the
undersigned that, if the undersigned receives any Global Securities in the
Merger: (i) for so long as and to the extent
necessary to permit the undersigned to sell such Global Securities pursuant to
Rule 145 and, to the extent applicable, Rule 144 under the Act, Global shall
take all such actions as may be reasonably available to it to file, on a timely
basis, all reports and data required to be filed with the SEC by it pursuant to
Section 13 of the Securities and Exchange Act of 1934, as amended, and furnish
to the undersigned upon request a written statement as to whether Global has
complied with such reporting requirements during the 12 months preceding any
proposed sale of Global Securities by the undersigned under Rule 145, and Global
shall otherwise take all such actions as may be reasonably available to it to
permit such sales pursuant to Rule 145 and Rule 144.
Very truly yours,
--------------------------------------------
Name:
ACCEPTED AND AGREED:
Global Crossing Ltd.
By:
-------------------------
Name:
Title:
Date:
ANNEX I
TO EXHIBIT 3.1(K)
[Name] [Date]
On the undersigned sold the securities ("Securities") of
---------- ----------
Global ("Global") described below in the space provided for that purpose (the
------
"Securities"). The Securities were received by the undersigned in connection
----------
with the merger of Merger Sub with and into Frontier.
Based upon the most recent report or statement filed by Global with
the Securities and Exchange Commission, the Securities sold by the undersigned
were within the prescribed limitations set forth in paragraph (e) of Rule 144
promulgated under the Securities Act of 1933, as amended (the "Act").
---
The undersigned hereby represents that the Securities were sold in
"brokers' transactions" within the meaning of Section 4(4) of the Act or in
transactions directly with a "market maker" as that term is defined in Section
3(a)(38) of the Securities Exchange Act of 1934, as amended. The undersigned
further represents that the undersigned has not solicited or arranged for the
solicitation of orders to buy the Securities, and that the undersigned has not
made any payment in connection with the offer or sale of the Securities to any
person other than to the broker who executed the order in respect of such sale.
Very truly yours,
[Space to be provided for description of securities]
Exhibit 4.5
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SERVICES AGREEMENT TERM SHEET.
-----------------------------
Frontier and Global will exercise reasonable good faith efforts as soon as
practicable after the execution of this agreement to negotiate and finalize an
agreement or agreements whereby each party will provide agreed amounts of lit
capacity derived from electronics on its network to the other party, for a term
of three (3) years, at rates that are (a) at the same level as the lowest bona
fide bid procured on an arms' length basis from another provider of available
fiber capacity for the same areas and the same capabilities/characteristics, or
(b) in lieu thereof, at rates that are most competitive with rates paid by other
similarly-situated customers, taking into account the term, the fiber
capability/characteristics sought, expected volume, and locations at which
traffic originates and terminates. Where traffic is to be exchanged in
comparable amounts, the parties will share the costs of establishing connections
between points of presence (POPs) in the same metropolitan areas. Each party
will agree to make reasonable space available to the other party for collocation
at POPs or Telehouses in the metropolitan center or city nearest the other's
access point or point of landing for interconnection, and at selected other
sites identified and agreed upon by the parties, at rates and charges most
recently quoted to the party's best customers for similar amounts and types of
space and collocation services and equipment, and assuming such space can be
made available. Each party will consider avenues for joint marketing of
services, including the development of marketing plans and sales incentives to
promote sales of one another's products and services. The parties will consider
methods to engage in joint billing, and to have available for the other party
certain customer care, network monitoring and other services on mutually
acceptable and compensatory terms and conditions.
Exhibit 5.2
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CLASSIFICATION OF DIRECTORS
---------------------------
(I) One director, selected by Frontier, shall be elected to the Global Board
of Directors, Class B, with a term expiring in 2000.
(II) One director, selected by Frontier, shall be elected to the Global Board
of Directors, Class C, with a term expiring in 2001.
(III) Two directors, selected by Frontier, shall be elected to the Global Board
of Directors, Class A, with a term expiring in 2002.
Exhibit 5.6
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Assumption of Frontier Stock Options and Frontier Warrant
---------------------------------------------------------
(1) Each Frontier Stock Option and each Frontier Warrant outstanding
at the Effective Time shall be assumed by Global. Each Frontier Stock Option
shall be deemed to constitute an option to acquire, and each Frontier Warrant
shall be deemed to constitute a warrant to acquire, on the same terms and
conditions, mutatis mutandis, as were applicable under such Frontier Stock
------- --------
Options or such Frontier Warrants, prior to the Effective Time, the number of
shares of Global Common Stock (or in the event of the Alternative Merger, New
Global Common Stock) as the holder of each such Frontier Stock Option or
Frontier Warrant would have been entitled to receive pursuant to the Merger had
such holder exercised such Frontier Stock Option or such Frontier Warrant in
full immediately prior to the Effective Time (not taking into account whether or
not such option was in fact exercisable). The price per share subject to each
such option and warrant shall be equal to (a) the aggregate exercise price for
Frontier Common Stock otherwise purchasable pursuant to such Frontier Stock
Option or Frontier Warrant divided by (b) the number of shares of Global Common
Stock (or in the event of the Alternative Merger, New Global Common Stock)
deemed purchasable pursuant to such assumed Frontier Stock Option or such
Frontier Warrant; provided, that the number of shares of Global Common Stock
--------
that may be purchased upon exercise of any such Frontier Stock Option or such
Frontier Warrant shall not include any fractional share and, upon exercise of
such Frontier Stock Option or such Frontier Warrant, a cash payment shall be
made for any fractional share based upon the last sale price per share of Global
Common Stock (or in the event of the Alternative Merger, New Global Common
Stock) on the trading day immediately preceding the date of exercise; provided,
--------
further, that in the event of a Cash Top-Up Election, the appropri ate committee
-------
of the Board of Directors of Frontier (or of the applicable Frontier Benefit
Plan) shall determine, subject to the terms of the applicable Frontier Benefit
Plan or Frontier Warrant, as the case may be, in their reasonable discretion,
the manner and method by which the Frontier Stock Options and Frontier Warrants
will be adjusted to account for any cash payments to be made pursuant to such
Cash Top-Up Election. All such Frontier Stock Options shall be immediately
exercisable by the holder thereof at or after the Effective Time,
notwithstanding any provision to the contrary set forth in any option agreement.
As soon as practicable (but in no event later than fourteen Business Days) after
the Effective Time, Global shall cause to be delivered to each holder of an
outstanding Frontier Stock Option an appropriate notice setting forth such
holder's rights pursuant thereto, and such assumed Frontier Stock Option or such
Frontier Warrant (as adjusted with respect to exercise price and the purchasable
number of shares of Global Common Stock (or in the event of the Alternative
Merger, New Global Common Stock)) shall continue in effect on the
same terms and conditions. From and after the Effective Time, Global shall
comply with the terms of the warrant agreement pursuant to which the Frontier
Warrant was issued (the "Warrant Agreements") and the Frontier Stock Option
Plans pursuant to which the Frontier Stock Options were granted. The adjustments
provided in this Exhibit 5.6 with respect to any Stock Options that are
"incentive stock options" (as defined in section 422 of the Code) shall be
effected in a manner consistent with Section 424(a) of the Code.
(2) Global shall cause to be taken all corporate action necessary to
reserve for issuance a sufficient number of shares of Global Common Stock for
delivery upon exercise of Frontier Stock Options and Frontier Warrants in accor
dance with this Exhibit 5.6. Within three Business Days after the Effective
Time, Global shall cause the Global Common Stock subject to Frontier Stock
Options and, to the extent required by the respective Warrant Agreements, the
Frontier Warrants to be registered under the Securities Act pursuant to a
registration statement on Form S-8 (or any successor or other appropriate
forms), and shall use its best efforts to cause the effectiveness of such
registration statement (and the current status of the prospectus or prospectuses
contained therein) to be maintained for so long as the Frontier Stock Options
and, if applicable, the Frontier Warrants remain outstanding.