<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
SCHEDULE 14D-1
Tender Offer Statement Pursuant to Section 14(d)(1)
of the Securities Exchange Act of 1934
and
SCHEDULE 13D
Under the Securities Exchange Act of 1934
----------------
Global Crossing Ltd.
(Name of Subject Company)
U S WEST, Inc.
(Bidder)
Common Stock, $.01 Par Value
(Titles of Class of Securities)
CUSIP: G3921A100
(CUSIP Number of Class of Securities) (Common Stock)
U S WEST, Inc.
1801 California Street
Denver, CO 80202
(303) 672-2700
(Name, address and telephone number of person authorized to receive notices
and communications on behalf of bidder)
Copies to:
Dennis J. Block, Esq.
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
(212) 504-6000
Thomas O. McGimpsey, Esq.
U S WEST, Inc.
1801 California Street
Suite 5100
Denver, CO 80202
(303) 672-2712
May 17, 1999
(Date Of Event Which Requires Filing Statement On Schedule 14D-1)
----------------
CALCULATION OF FILING FEE
===============================================================================
Transaction
Valuation Amount of Filing Fee+
- -------------------------------------------------------------------------------
$2,463,521,389 $492,704.28
===============================================================================
+ For the purpose of calculating the fee only, this amount assumes the
purchase of 39,259,305 shares of Common Stock of Berra at $62.75 per share.
The amount of the filing fee, calculated in accordance with Rule 0-11(d)
under the Securities Exchange Act of 1934, equals 1/50 of one percent of
the cash offered by the Bidder.
[_]Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: N/A Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
<PAGE>
- --------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON.
U S WEST, Inc.
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(a) [_]
(b) [X]
- --------------------------------------------------------------------------------
3.SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCES OF FUNDS (SEE INSTRUCTIONS)
BK, AF, WC, OO
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(e) OR 2(f) [_]
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
39,259,305
- --------------------------------------------------------------------------------
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 7 EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS) [X]
- --------------------------------------------------------------------------------
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 7
9.49% *
- --------------------------------------------------------------------------------
10. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
HC, CO
- --------------------------------------------------------------------------------
- --------
* Pursuant to the Tender and Voting Agreement, dated as of May 16, 1999,
certain parties thereto agreed to tender at least 39,259,305 shares of Common
Stock beneficially owned by them in the Offer.
2
<PAGE>
This Statement relates to a tender offer by U S WEST, Inc., a Delaware
corporation ("Offeror"), to purchase just below 9.5% of the shares of Common
Stock, par value $.01 per share (the "Common Stock" or the "Shares"), of
Global Crossing Ltd., a Company organized under the laws of Bermuda (the
"Company"), at a purchase price of $62.75 per share of Common Stock (the
"Offer Price") net to the seller in cash, without interest, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated May 21,
1999 (the "Offer to Purchase"), and in the Letter of Transmittal relating to
such Shares (which, as either may be amended or supplemented from time to
time, collectively constitute the "Offer"), copies of which are filed as
Exhibits hereto, respectively, and which are incorporated herein by reference.
The 39,259,305 shares of Common Stock sought to be purchased pursuant to the
Offer represent, to the best knowledge of the Offeror, just below 9.5% of the
shares of Common Stock outstanding as of the date of the Offer. This Statement
shall also constitute a Statement on Schedule 13D with respect to shares of
Common Stock which Offeror may be deemed to beneficially own.
Item 1. Security and Subject Company.
(a) The name of the subject company is Global Crossing Ltd. The address of
the principal executive offices of the Company is set forth in Section 8
("Certain Information Concerning the Company") of the Offer to Purchase and is
incorporated herein by reference.
(b) The exact title of the class of equity securities of the Company being
sought in the Offer is common stock, par value $.01 per share. The information
set forth in the Introduction to the Offer to Purchase is incorporated herein
by reference.
(c) The information set forth in Section 6 ("Price Range of Common Stock;
Dividends") of the Offer to Purchase is incorporated herein by reference.
Item 2. Identity and Background.
(a) through (d), (g) The information set forth in the Introduction and
Section 9 ("Certain Information Concerning the Offeror") of the Offer to
Purchase, and in Schedule I thereto, is incorporated herein by reference.
(e) and (f) Neither the Offeror nor, to the best of its knowledge, any of
the persons listed in Schedule I of the Offer to Purchase, has during the last
five years (i) been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) been a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and as a result
of such proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting activities subject to, federal
or state securities laws or finding any violation of such laws.
Item 3. Past Contacts, Transactions or Negotiations With the Subject Company.
(a) The information set forth in Section 11 ("Background of the Offer; Past
Contacts with the Company") of the Offer to Purchase is incorporated herein by
reference.
(b) The information set forth in the Introduction and Section 11
("Background of the Offer; Past Contacts with the Company"), Section 8
("Certain Information Concerning the Company") and Section 9 ("Certain
Information Concerning the Offeror") of the Offer to Purchase is incorporated
herein by reference.
Item 4. Source and Amount of Funds or Other Consideration.
(a) through (c) The information set forth in Section 10 ("Source and Amount
of Funds") of the Offer to Purchase is incorporated herein by reference.
Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder.
(a) through (e) The information set forth in the Introduction, Section 11
("Background of the Offer; Past Contacts with the Company"), Section 12
("Purpose of the Offer; Plans for the Company") and Section 13 ("The Tender
Offer and Purchase Agreement") of the Offer to Purchase is incorporated herein
by reference.
(f) and (g) The information set forth in Section 7 ("Effect of the Offer on
the Market for the Common Stock and Registration under the Exchange Act") of
the Offer to Purchase is incorporated herein by reference.
3
<PAGE>
Item 6. Interest in Securities of the Subject Company.
(a) and (b) The information set forth in the Introduction, Section 9
("Certain Information Concerning the Offeror") and Section 13 ("The Merger
Agreement and Related Agreements") of the Offer to Purchase is incorporated
herein by reference.
Item 7. Contracts, Arrangements, Understandings or Relationships With Respect
to the Subject Company's Securities.
The information set forth in the Introduction, Section 11 ("Background of
the Offer; Past Contacts with the Company") and Section 13 ("The Tender Offer
and Purchase Agreement and Related Agreements") of the Offer to Purchase is
incorporated herein by reference.
Item 8. Persons Retained, Employed or to be Compensated.
The information set forth in the Introduction and in Section 17 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
Item 9. Financial Statements of Certain Bidders.
The information set forth in Section 9 ("Certain Information Concerning the
Offeror") of the Offer to Purchase is hereby incorporated by reference.
Item 10. Additional Information.
(a) The information set forth in Section 11 ("Background of the Offer; Past
Contacts with the Company"), Section 12 ("Purpose of the Offer; Short Form
Merger; Plans for the Company") and Section 13 ("The Merger Agreement and
Related Agreements") of the Offer to Purchase is incorporated herein by
reference.
(b) and (c) The information set forth in Section 16 ("Certain Legal Matters;
Required Regulatory Approvals") of the Offer to Purchase is incorporated
herein by reference.
(d) The information set forth in Section 7 ("Effect of the Offer on the
Market for the Common Stock and Registration under the Exchange Act") is
incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letters of
Transmittal is incorporated herein by reference in its entirety.
Item 11. Material to be Filed as Exhibits.
(a)(1) Offer to Purchase, dated May 21, 1999.
(a)(2) Letter of Transmittal relating to the Common Stock.
(a)(3) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(4) Letter from Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees to Clients.
(a)(5) Notices of Guaranteed Delivery relating to the Common Stock.
(a)(6) Press Release issued by the Offeror and the Company on May 17, 1999.
(a)(7) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
4
<PAGE>
(b)(1) $1,000,000,000 Five-Year Credit Agreement, dated as of May 8, 1998,
among U S WEST Capital Funding, Inc., U S WEST, Inc., USW-C, Inc., the
Banks listed therein and Morgan Guaranty Trust Company of New York.
(b)(2) $3,500,000,000 364-Day Credit Agreement, dated as of May 8, 1998,
among U S WEST Capital Funding Inc., U S WEST, Inc., USW-C, Inc., the Banks
listed therein and Morgan Guaranty Trust Company of New York.
(b)(3) Amendment No. 1 to Credit Agreements, dated as of June 30, 1998, to
the 364-Day Credit Agreement dated as of May 8, 1998 and the Five-Year
Credit Agreement dated as of May 8, 1998 among U S WEST Capital Funding,
Inc., U S WEST, Inc., the Banks listed on the signature pages thereto and
Morgan Guaranty Trust Company of New York.
(b)(4) Amended and Restated by Credit Agreement, dated as of May 7, 1999
among U S WEST Capital Funding, Inc., U S WEST, Inc. and the Banks listed
on the signature pages thereof.
(c)(1) Agreement and Plan of Merger, dated as of May 16, 1999, between
Global Crossing Ltd. and U S WEST, Inc.
(c)(2) Tender Offer and Purchase Agreement, dated as of May 16, 1999,
between Global Crossing Ltd. and U S WEST, Inc.
(c)(3) Voting Agreement, dated as of May 16, 1999, between Global Crossing
Ltd. and U S WEST, Inc.
(c)(4) Standstill Agreement, dated as of May 16, 1999, between Global
Crossing Ltd. and U S WEST, Inc.
(c)(5) Tender and Voting Agreement, dated as of May 16, 1999, between U S
WEST, Inc. and each of the parties listed on the signature page thereto.
(c)(6) Agreement, dated as of May 16, 1999, between U S WEST, Inc., Global
Crossing Ltd. and each person whose name appears on the signature page
thereto.
(c)(7) Letter Agreement, dated as of May 16, 1999, between U S WEST, Inc.
and Global Crossing Ltd.
(d) None.
(e) Not applicable.
(f) None.
5
<PAGE>
SIGNATURE
After due inquiry and to the best of its knowledge and belief, each of the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: May 21, 1999
U S WEST, INC.
/s/ Thomas O. McGimpsey
By: _________________________________
Thomas O. McGimpsey
Assistant Secretary and Senior
Attorney
6
<PAGE>
EXHIBIT INDEX
(a)(1) Offer to Purchase, dated May 21, 1999.
(a)(2) Letter of Transmittal relating to the Common Stock.
(a)(3) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(4) Letter from Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees to Clients.
(a)(5) Notices of Guaranteed Delivery relating to the Common Stock.
(a)(6) Press Release issued by the Offeror and the Company on May 17, 1999.
(a)(7) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(b)(1) $1,000,000,000 Five-Year Credit Agreement, dated as of May 8, 1998,
among U S WEST Capital Funding, Inc., U S WEST, Inc., USW-C, Inc., the Banks
listed therein and Morgan Guaranty Trust Company of New York.
(b)(2) $3,500,000,000 364-Day Credit Agreement, dated as of May 8, 1998,
among U S WEST Capital Funding Inc., U S WEST, Inc., USW-C, Inc., the Banks
listed therein and Morgan Guaranty Trust Company of New York.
(b)(3) Amendment No. 1 to Credit Agreements, dated as of June 30, 1998, to
the 364-Day Credit Agreement dated as of May 8, 1998, and the Five-Year Credit
Agreement, dated as of May 8, 1998 among U S WEST Capital Funding, Inc., U S
WEST, Inc., the Banks listed on the signature pages thereto and Morgan
Guaranty Trust Company of New York.
(b)(4) Amended and Restated 364-Day Credit Agreement, dated as of May 7,
1999 among U S WEST Capital Funding, Inc., U S WEST, Inc. and the Banks listed
on the signature pages hereof.
(c)(1) Agreement and Plan of Merger, dated as of May 16, 1999, between
Global Crossing Ltd. and U S WEST, Inc.
(c)(2) Tender Offer and Purchase Agreement, dated as of May 16, 1999,
between Global Crossing Ltd. and U S WEST, Inc.
(c)(3) Voting Agreement, dated as of May 16, 1999, between Global Crossing
Ltd. and U S WEST, Inc.
(c)(4) Standstill Agreement, dated as of May 16, 1999, between Global
Crossing Ltd. and U S WEST, Inc.
(c)(5) Tender and Voting Agreement, dated as of May 16, 1999, between U S
WEST, Inc. and each of the parties listed on the signature page thereto.
(c)(6) Agreement, dated as of May 16, 1999, between U S WEST, Inc., Global
Crossing Ltd. and each person whose name appears on the signature page
thereto.
(c)(7) Letter Agreement, dated as of May 16, 1999, between U S WEST, Inc.
and Global Crossing Ltd.
(c)(8) Transfer Agreement, dated as of May 16, 1999, between Global Crossing
Ltd. and each person whose name appears on the signature page thereto.
(d) None.
(e) Not applicable.
(f) None.
<PAGE>
EXHIBIT (a)(1)
Offer to Purchase for Cash
39,259,305 of the Outstanding Shares of Common Stock
of
Global Crossing Ltd.
at
$62.75 Net Per Share of Common Stock
by
U S WEST, Inc.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JUNE 18, 1999, UNLESS THE OFFER IS
EXTENDED.
THE OFFER (THE "OFFER") IS CONDITIONED UPON THE SATISFACTION OF CERTAIN
TERMS AND CONDITIONS. SEE SECTIONS 1 AND 15. THE OFFER IS NOT CONDITIONED ON
ANY MINIMUM NUMBER OF SHARES BEING TENDERED.
---------------
The Offer is being made pursuant to a Tender Offer and Purchase Agreement,
dated as of May 16, 1999 (the "Agreement"), between Global Crossing Ltd., a
Bermuda company (the "Company" or "Global"), and U S WEST, Inc., a Delaware
corporation (the "Offeror" or "U S WEST"). The Board of Directors of the
Company has unanimously approved the Offer and the Agreement and recommends
that shareholders of the Company who desire to receive cash at this time
tender their shares of Common Stock pursuant to the Offer.
---------------
IMPORTANT
Any shareholder desiring to tender shares of Common Stock should either (1)
complete and sign the appropriate Letter of Transmittal (or a facsimile
thereof) in accordance with the instructions in the appropriate Letter of
Transmittal, including any required signature guarantees, and mail or deliver
the appropriate Letter of Transmittal (or such facsimile) with the
certificate(s) for the tendered shares and all other required documents to the
Depositary (as hereinafter defined) or tender such shares pursuant to the
procedures for book-entry transfer set forth in Section 3, or (2) request such
shareholder's broker, dealer, commercial bank, trust company or other nominee
effect the transaction for such shareholder. Shareholders having shares
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact such broker, dealer, commercial bank, trust company
or other nominee if they desire to tender shares so registered.
A shareholder who desires to tender shares of Common Stock and whose
certificates representing such shares are not immediately available, or who
cannot comply with the procedures for book-entry transfer on a timely basis,
must tender such shares by following the procedures for guaranteed delivery
set forth in Section 3.
QUESTIONS AND REQUESTS FOR ASSISTANCE MAY BE DIRECTED TO THE INFORMATION
AGENT, BEACON HILL PARTNERS, INC. OR THE DEALER MANAGER FOR THIS OFFER,
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED AT THEIR RESPECTIVE
ADDRESSES AND TELEPHONE NUMBERS SET FORTH ON THE BACK COVER OF THIS OFFER TO
PURCHASE. ADDITIONAL COPIES OF THIS OFFER TO PURCHASE, THE LETTER OF
TRANSMITTAL, THE NOTICE OF GUARANTEED DELIVERY AND OTHER RELATED MATERIALS MAY
ALSO BE OBTAINED FROM THE INFORMATION AGENT OR FROM BROKERS, DEALERS,
COMMERCIAL BANKS OR TRUST COMPANIES.
---------------
Dealer Manager for the Offer is:
Merrill Lynch & Co.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
INTRODUCTION............................................................. 1
1.Terms of the Offer.................................................... 2
2.Acceptance for Payment, Proration and Payment for Shares.............. 3
3.Procedure for Tendering Shares........................................ 5
4.Withdrawal Rights..................................................... 7
5.Certain Federal Income Tax Consequences............................... 8
6.Price Range of Common Stock; Dividends................................ 9
7.Effect of the Offer on the Market for Common Stock and Registration
under the Exchange Act.................................................. 9
8.Certain Information Concerning the Company............................ 9
9.Certain Information Concerning the Offeror............................ 16
10.Source and Amount of Funds............................................ 21
11.Background of the Offer; Past Contacts with the Company............... 21
12.Purpose of the Offer; Plans for the Company........................... 23
13.The Tender Offer and Purchase Agreement and Related Agreements........ 23
14.Dividends and Distributions........................................... 43
15.Certain Conditions of the Offer....................................... 43
16.Certain Legal Matters; Required Regulatory Approvals.................. 44
17.Fees and Expenses..................................................... 45
18.Miscellaneous......................................................... 46
Schedule I--Directors and Executive Officers of the Offeror.............. I-1
</TABLE>
<PAGE>
To: The Holders of Common Stock of Global Crossing Ltd.
INTRODUCTION
U S WEST, Inc., a Delaware corporation (the "Offeror" or "U S WEST"), hereby
offers to purchase 39,259,305 shares of common stock, par value $.01 per share
(the "Common Stock" or the "Shares"), of Global Crossing Ltd., a company
formed under the laws of Bermuda (the "Company"), at a purchase price of
$62.75 per share of Common Stock (the "Offer Price"), in each case net to the
seller in cash, without interest, upon the terms and subject to the conditions
set forth in this Offer to Purchase and in the Letter of Transmittal relating
to such Shares, including the proration provisions set forth in Section 2
hereof (which, as either may be amended or supplemented from time to time,
collectively constitute the "Offer"). The 39,259,305 shares of Common Stock
sought to be purchased pursuant to the Offer represent, to the best knowledge
of the Offeror, just below 9.5% of the shares of Common Stock outstanding as
of the date of the Offer. Tendering holders of Shares will not be obligated to
pay brokerage fees or commissions or, except as set forth in the appropriate
Letter of Transmittal, transfer taxes on the purchase of Shares by the Offeror
pursuant to the Offer. The Offeror will pay all charges and expenses of
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), which
firm is acting as dealer manager (the "Dealer Manager"), The Bank of New York,
which firm is acting as the depositary (the "Depositary"), and Beacon Hill
Partners, Inc., which firm is acting as the information agent (the
"Information Agent"), incurred in connection with the Offer. See Section 17.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED.
IF MORE THAN 39,259,305 SHARES ARE VALIDLY TENDERED AND NOT WITHDRAWN, THE
OFFEROR WILL ACCEPT FOR PURCHASE AN AMOUNT OF TENDERED SHARES EQUAL TO
39,259,305 SHARES OF COMMON STOCK, ON A PRO RATA BASIS, SUBJECT TO THE TERMS
AND CONDITIONS HEREIN. SEE SECTION 2. THE OFFER IS CONDITIONED UPON CERTAIN
TERMS AND CONDITIONS. SEE SECTIONS 1 AND 15.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER AND
THE AGREEMENT, AND RECOMMENDS THAT SHAREHOLDERS OF THE COMPANY WHO DESIRE TO
RECEIVE CASH AT THIS TIME TENDER THEIR SHARES PURSUANT TO THE OFFER.
The purpose of the Offer is to facilitate the terms and conditions and the
transactions contemplated by the Agreement and Plan of Merger, dated as of May
16, 1999, between the Offeror and the Company.
The Offer is being made pursuant to a Tender Offer and Purchase Agreement,
dated as of May 16, 1999 (the "Agreement"), between the Offeror and the
Company. See Section 5 for a description of certain federal income tax
consequences of the Offer.
In connection with the Agreement, certain shareholders of the Company
owning, in the aggregate, approximately 77.1% of the outstanding Common Stock,
entered into an agreement with the Offeror pursuant to which such shareholders
agreed to tender 12.3045% of the shares of Common Stock owned by them in the
Offer. See Section 13.
As of the date hereof, except pursuant to the Agreement and the agreements
described in Section 13, the Offeror does not beneficially own any shares of
Common Stock.
The Offer Price represents the price at which the Offeror is willing to
purchase the Shares. No independent person has been retained by the Offeror to
evaluate or render any opinion with respect to the fairness of the Offer Price
and no representation is made by the Offeror or any affiliate of the Offeror
as to such fairness. Other measures of the value of the Shares may be relevant
to shareholders. Shareholders are urged to consider carefully all of the
information contained herein and consult with their own advisors, tax,
financial or otherwise in evaluating the terms of the Offer before deciding
whether to tender Shares.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
1
<PAGE>
THE TENDER OFFER
1. Terms of the Offer. Upon the terms and subject to the conditions of the
Offer (including, if the Offer is extended or amended, the terms and
conditions of any such extension or amendment), the Offeror will accept for
payment and thereby purchase up to 39,259,305 Shares validly tendered and not
theretofore withdrawn in accordance with the procedures set forth in Section 4
hereto prior to the Expiration Date (as hereinafter defined), including the
proration provisions set forth in Section 2. If more than 39,259,305 shares of
Common Stock are validly tendered and not withdrawn, the Offeror will accept
for purchase an amount of tendered shares equal to 39,259,305 shares of Common
Stock, on a pro rata basis, subject to the terms and conditions specified
herein based upon the number of Shares validly tendered by the Expiration Date
and not withdrawn (including shares tendered pursuant to the guaranteed
delivery procedures set forth in Section 3). The term "Expiration Date" means
12:00 Midnight, New York City time, on June 18, 1999, unless the Offeror has
extended the period of time for which the Offer is open, in which event the
term "Expiration Date" will mean the latest time and date at which the Offer,
as so extended by the Offeror, will expire.
THE OFFER IS ALSO SUBJECT TO CERTAIN TERMS AND CONDITIONS. SEE SECTION 15.
The Offeror reserves the right (but will not be obligated), in accordance with
applicable rules and regulations of the United States Securities and Exchange
Commission (the "Commission") to waive any condition of the Offer, subject to
the terms of the Agreement. If any condition set forth in Section 15 has not
been satisfied by 12:00 Midnight, New York City time, on June 18, 1999 (or any
other time then set as the Expiration Date), the Offeror may, subject to the
terms of the Agreement, elect to terminate the Offer (whether or not any
Shares have theretofore been accepted for payment) and not accept for payment
any Shares and return all tendered Shares to tendering shareholders. Under the
terms of the Agreement, the Offeror may not (except as described in the next
sentence), without the prior written consent of the Company, increase or
reduce the maximum number of Shares subject to the Offer, decrease the Offer
Price to be paid pursuant to the Offer, change the form of consideration
payable in the Offer, amend or impose additional conditions or make other
changes adverse to the Company or any shareholders of the Company or which may
delay the consummation of the Offer. Notwithstanding the foregoing, the
Offeror shall extend the Offer if, at the then scheduled Expiration Date, any
of the conditions to the Offeror's obligation to accept for payment and pay
for the Shares have not been satisfied or waived, each such extension not to
exceed (unless otherwise consented to in writing by the Company) the lesser of
10 additional business days or such fewer number of days that the Offeror and
the Company reasonably believe are necessary to cause those conditions to be
satisfied. In any event, no extension will be less than the minimum number of
days required by the Securities Exchange Act of 1934, as amended (the
"Exchange Act") the rules and regulations promulgated thereunder or by other
applicable law. Assuming the prior satisfaction or waiver of the conditions of
the Offer, the Offeror will accept for payment and pay for the Shares validly
tendered and not withdrawn pursuant to the Offer as soon as legally permitted
after the commencement thereof.
The Offeror agrees not to let the Offer expire if the Offer conditions have
not been satisfied or waived and for so long as the Agreement shall not have
been terminated pursuant to its terms (See Section 13, description of the
Agreement).
Subject to the limitations set forth in the Agreement, the Offeror expressly
reserves the right (but will not be obligated) in its sole discretion, at any
time and from time to time, to extend the period during which the Offer is
open for any reason by giving oral or written notice of such extension to the
Depositary and by making a public announcement of such extension as more fully
specified below. There can be no assurance that the Offeror will exercise its
right to extend the Offer. During any such extension, all Shares previously
tendered and not withdrawn will remain subject to the Offer and subject to the
right of a tendering shareholder to withdraw such Shares.
Subject to the applicable rules and regulations of the Commission and
subject to the limitations set forth in the Agreement, the Offeror also
expressly reserves the right, at any time and from time to time, in its sole
discretion, (i) to delay payment for any Shares regardless of whether such
Shares had theretofore been accepted for payment, or to terminate the Offer
and not to accept for payment or pay for any Shares not theretofore accepted
for payment or paid for, upon the occurrence of any of the conditions set
forth in Section 15, by giving
2
<PAGE>
oral or written notice of such delay or termination to the Depositary and (ii)
at any time or from time to time, to amend the Offer in any respect. The
Offeror's right to delay payment for any Shares or not to pay for any Shares
theretofore accepted for payment is subject to the applicable rules and
regulations of the Commission, including Rule 14e-1(c) of the Exchange Act,
relating to the Offeror's obligation to pay the consideration offered or
return tendered Shares promptly after the termination or withdrawal of the
Offer.
Any extension of the period during which the Offer is open, delay in
acceptance for payment or payment, termination or amendment of the Offer will
be followed, as promptly as practicable, by public announcement thereof, such
announcement in the case of an extension to be issued not later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date in accordance with the public announcement
requirements of Rules 14d-4(c), 14d-6(d) and 14e-1(d) under the Exchange Act.
Without limiting the obligation of the Offeror under such rule or the manner
in which the Offeror may choose to make any public announcement, the Offeror
currently intends to make announcements by issuing a press release to the Dow
Jones News Service.
If the Offeror makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, the Offeror will disseminate additional tender offer materials and
extend the Offer if and to the extent required by Rules 14d-4(c), 14d-6(d) and
14(e)-1 under the Exchange Act. In addition, notwithstanding anything to the
contrary in the Agreement or in the conditions to the Offeror's obligations to
accept for payment and pay for the Shares, the Offeror may waive any of the
conditions to such obligations only after giving 5 business days prior written
notice of its intention to do so to the Company. The minimum period during
which the Offer must remain open following material changes in the terms of
the Offer or the information concerning the Offer, other than a change in
price or a change in percentage of securities sought, will depend upon the
facts and circumstances, including the relative materiality of the terms or
information changes. In a public release, the Commission has stated its view
that an offer must remain open for a minimum period of time following a
material change in the terms of the Offer and that waiver of a material
condition is a material change in the terms of the Offer. The release states
that an offer should remain open for a minimum of five business days from the
date a material change is first published, sent or given to securityholders
and that, if material changes are made with respect to information not
materially less significant than the offer price and the number of shares
being sought, a minimum of 10 business days may be required to allow adequate
dissemination and investor response. For purposes of the Offer, a "business
day" means any day other than a Saturday, Sunday or a federal holiday, and
consists of the time period from 12:01 a.m. through 12:00 midnight, New York
City time. The requirement to extend the Offer will not apply to the extent
that the number of business days remaining between the occurrence of the
change and the then-scheduled Expiration Date equals or exceeds the minimum
extension period that would be required because of such amendment. If, prior
to the Expiration Date, the Offeror increases the consideration offered to
holders of Shares pursuant to the Offer, such increased consideration will be
paid to all holders whose Shares are purchased in the Offer whether or not
such Shares were tendered prior to such increase.
The Company has provided the Offeror with a copy of the register of
shareholders of the Company for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of
Transmittal will be mailed to registered holders of the Shares whose names
appear on the register of shareholders of the Company and will be furnished to
brokers, dealers, commercial banks, trust companies, nominees or similar
persons, who are listed as participants in a clearing agency's security
position listing for subsequent transmittal to beneficial owners of Shares.
2. Acceptance for Payment, Proration and Payment for Shares. Upon the terms
and subject to the conditions of the Offer (including, if the Offer is
extended or amended, the terms and conditions of the Offer as so extended or
amended), the Offeror will accept for payment and will pay for up to
39,259,305 Shares, except that if more than 39,259,305 Shares are validly
tendered and not withdrawn, the Offeror will accept for purchase an amount of
the tendered Shares equal to 39,259,305 shares of Common Stock, on a pro rata
basis, validly
3
<PAGE>
tendered prior to the Expiration Date and not theretofore withdrawn in
accordance with Section 4 promptly after the later to occur of (a) the
Expiration Date and (b) subject to compliance with Rule 14e-1(c) under the
Exchange Act, the satisfaction or waiver of the conditions set forth in
Section 15. Subject to compliance with Rule 14e-1(c) under the Exchange Act,
the Offeror expressly reserves the right to delay payment for Shares in order
to comply in whole or in part with any applicable law. See Sections 1 and 16.
In the event that proration of tendered Shares is required, the Offeror will
determine the proration as soon as practicable following the Expiration Date.
Proration for each shareholder tendering Shares will be based on the ratio of
the number of Shares properly tendered and not withdrawn by a shareholder to
the total number of Shares properly tendered and not withdrawn by all
shareholders (with adjustments to avoid purchases of fractional shares).
Because of the difficulty in determining the number of Shares properly
tendered (including Shares tendered by guaranteed delivery procedures) and not
withdrawn, the Offeror does not expect that it will be able to announce the
final proration factor or commence payment for any Shares purchased pursuant
to the Offer until approximately five trading days after the Expiration Date.
The preliminary results of any proration will be announced by press release as
promptly as practicable after the Expiration Date. Shareholders may obtain
such preliminary information from the Information Agent and may be able to
obtain such information from their brokers. In the event of any proration, the
Depositary shall select certain identifiable Shares for payment from the total
Shares properly tendered and not withdrawn by a shareholder in accordance with
such shareholder's directions, if any, as set forth in such shareholder's
Letter of Transmittal.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates
for such Shares or timely confirmation (a "Book-Entry Confirmation") of a
book-entry transfer of such Shares into the Depositary's account at The
Depositary Trust Company (the "Book-Entry Transfer Facility"), pursuant to the
procedures set forth in Section 3, (ii) a properly completed and duly executed
Letter of Transmittal (or a manually signed facsimile thereof) with all
required signature guarantees or, in the case of Shares, an Agent's Message
(as defined below) in connection with a book-entry transfer and (iii) any
other documents required by the Letter of Transmittal.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility
has received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Offeror may enforce such agreement against the participant.
For purposes of the Offer, the Offeror will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn,
except if more than 39,259,305 Shares are validly tendered and not withdrawn,
the Offeror will accept for purchase an amount of the tendered Shares equal to
39,259,305 Shares, on a pro rata basis as described herein, if and when the
Offeror gives oral or written notice to the Depositary of the Offeror's
acceptance of such Shares for payment pursuant to the Offer. In all cases,
upon the terms and subject to the conditions of the Offer, payment for Shares
accepted for payment pursuant to the Offer will be made by deposit of the
purchase price with the Depositary, which will act as agent for tendering
shareholders for the purpose of receiving payment from the Offeror and
transmitting such payment to validly tendering shareholders. If, for any
reason whatsoever, acceptance for payment of any Shares tendered pursuant to
the Offer is delayed, or the Offeror is unable to accept for payment Shares
tendered pursuant to the Offer, then, without prejudice to the Offeror's
rights under Section 1, the Depositary may, nevertheless, on behalf of the
Offeror, retain tendered Shares, and such Shares may not be withdrawn, except
to the extent that the tendering shareholders are entitled to withdrawal
rights as described in Section 4 below and as otherwise required by Rule 14e-
1(c) under the Exchange Act. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE OFFER
PRICE FOR SHARES BE PAID BY THE OFFEROR.
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason, including as a result of
proration, certificates for such unpurchased or untendered Shares will be
returned, without expense to the tendering shareholder (or, in the case of
Shares delivered by book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility, such Shares will be credited to an account
4
<PAGE>
maintained within the Book-Entry Transfer Facility), as promptly as
practicable following the expiration, termination or withdrawal of the Offer.
3. Procedure for Tendering Shares.
Valid Tenders
For Shares to be validly tendered pursuant to the Offer, a properly
completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof), with any required signature guarantees, or, in the case of
a book-entry transfer, an Agent's Message, and any other required documents,
must be received by the Depositary at one of its addresses set forth on the
back cover of this Offer to Purchase on or prior to the Expiration Date, or
the tendering shareholder must comply with the guaranteed delivery procedure
set forth below. In addition, either (i) certificates representing such Shares
must be received by the Depositary or such Shares must be tendered pursuant to
the procedure for book-entry set forth below, and a Book-Entry Confirmation
must be received by the Depositary, in each case prior to the Expiration Date
or (ii) the guaranteed delivery procedures set forth below must be complied
with. No alternative, conditional or contingent tenders will be accepted.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF TENDERING SHAREHOLDERS.
SHARES WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUIRED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
Book-Entry Transfer
The Depositary will make a request to establish an account with respect to
the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Shares by causing the Book-
Entry Transfer Facility to transfer such Shares into the Depositary's account
at the Book-Entry Transfer Facility in accordance with the Book-Entry Transfer
Facility's procedures for such transfer. Although delivery of Shares may be
effected through book-entry transfer at the Book-Entry Transfer Facility prior
to the Expiration Date, (i) an appropriate Letter of Transmittal (or a
manually signed facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or an Agent's Message in connection with a
book-entry transfer, and any other required documents, must, in any case, be
transmitted to and received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase or (ii) the guaranteed
delivery procedures described below must be complied with. DELIVERY OF THE
LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS TO THE BOOK-ENTRY
TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S
PROCEDURE WILL NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Signature Guarantee
Signatures on all of the appropriate Letters of Transmittal must be
guaranteed by a financial institution (which includes most commercial banks,
savings and loan associations and brokerage houses) that is a participant in
the Security Transfer Agent's Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(each of the foregoing being referred to as an "Eligible Institution"), unless
the Shares tendered thereby are tendered (i) by a registered holder of Shares
who has not completed either the box labeled "Special Delivery Instructions"
or the box labeled "Special Payment Instructions" on the Letter of Transmittal
or (ii) for the account of any Eligible Institution. See Instructions 1 and 5
of the Letter of Transmittal.
5
<PAGE>
If the certificates evidencing Shares are registered in the name of a person
or persons other than the signer of the Letter of Transmittal, or if payment
is to be made, or delivered to, or certificates for unpurchased Shares are to
be issued or returned to, a person other than the registered holder or
holders, then the tendered certificates must be endorsed or accompanied by
duly executed stock powers, in either case signed exactly as the name or names
of the registered holder or holders appear on the certificates, with the
signatures on the certificates or stock powers guaranteed by an Eligible
Institution as provided in the Letter of Transmittal. See Instructions 1 and 5
of the Letter of Transmittal.
Guaranteed Delivery
If a shareholder desires to tender Shares pursuant to the Offer and such
shareholder's certificates for such Shares are not immediately available or
time will not permit all required documents to reach the Depositary on or
prior to the Expiration Date or the procedure for book-entry transfer cannot
be completed on a timely basis, such Shares may nevertheless be tendered if
all of the following guaranteed delivery procedures are duly complied with:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Offeror herewith, is
received by the Depositary, as provided below, prior to the Expiration
Date; and
(iii) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation), together with a properly completed
and duly executed Letter of Transmittal relating to the Common Stock (or a
manually signed facsimile thereof), and any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message, and any other
documents required by the Letter of Transmittal are received by the
Depositary within three trading days after the date of such Notice of
Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, telex, facsimile transmission or mail to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in the
Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) certificates for such Shares or a Book-Entry
Confirmation, (ii) a properly completed and duly executed Letter of
Transmittal relating to the Common Stock (or a manually signed facsimile
thereof), with all required signature guarantees, or, in the case of a book-
entry transfer, an Agent's message and (iii) any other documents required by
the Letter of Transmittal. Accordingly, tendering shareholders may be paid at
different times depending upon when certificates for Shares or Book-Entry
Confirmation are actually received by the Depositary. Under no circumstances
will interest be paid on the purchase price of the Shares to be paid by the
Offeror, regardless of any extension of the Offer or any delay in making such
payment.
The valid tender of Shares pursuant to one of the procedures described above
will constitute a binding agreement between the tendering shareholder and the
Offeror upon the terms and subject to the conditions of the Offer.
Backup Withholding
In order to avoid "backup withholding" of federal income tax on payments of
cash pursuant to the Offer, each shareholder surrendering Shares in the Offer
must provide the Depositary with such shareholder's correct taxpayer
identification number ("TIN") on a Substitute Form W-9 and certify under
penalties of perjury that such TIN is correct and that such shareholder is not
subject to backup withholding. Certain shareholders (including, among others,
all domestic corporations and certain foreign individuals and entities) are
not subject
6
<PAGE>
to backup withholding. If a shareholder does not provide its correct TIN or
fails to provide the certifications described above, the Internal Revenue
Service may impose a penalty on such shareholder, and payment of the gross
proceeds to such shareholder pursuant to the Offer may be subject to backup
withholding of 31%. All shareholders surrendering Shares pursuant to the Offer
should complete and sign the main signature form and the Substitute Form W-9
included as part of the Letter of Transmittal to provide the information and
certification necessary to avoid backup withholding (unless an applicable
exemption exists and is proved in a manner satisfactory to the Offeror and the
Depositary). Foreign shareholders should complete and sign the main signature
form and a Form W-8, Certificate of Foreign Status, a copy of which may be
obtained from the Depositary, in order to avoid backup withholding. See
Instruction 9 to the Letter of Transmittal.
Determination of Validity
All questions as to the form of documents and the validity, eligibility
(including time of receipt) and acceptance for payment of any tender of Shares
will be determined by the Offeror, in its sole discretion, and its
determination will be final and binding on all parties. The Offeror reserves
the absolute right to reject any or all tenders of any Shares that are
determined by it not to be in proper form or the acceptance of or payment for
which may, in the opinion of the Offeror's counsel, be unlawful. The Offeror
also reserves the absolute right to waive any of the conditions of the Offer,
subject to the limitations set forth in the Agreement, or any defect or
irregularity in the tender of any particular Shares, whether or not similar
defects or irregularities are waived in the case of other Shares.
The Offeror's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the Instructions thereto) will be
final and binding on all parties. No tender of Shares will be deemed to have
been validly made until all defects and irregularities have been cured or
waived by the Offeror. None of the Offeror or any of its affiliates or
assignees, the Depositary, the Information Agent or any other person will be
under any duty to give notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification.
Appointment
By executing the appropriate Letter of Transmittal as set forth above
(including delivery through an Agent's Message), a tendering Shareholder
irrevocably appoints designees of the Offeror as such shareholder's attorneys-
in-fact and proxies, each with full power of substitution, in the manner set
forth in the Letter of Transmittal, to the full extent of such shareholder's
right with respect to the Shares tendered by such shareholder and accepted for
payment by the Offeror (and any and all other Shares or other securities or
rights issued or issuable in respect of such Shares on or after May 16, 1999).
All such powers of attorney and proxies will be considered irrevocable and
coupled with an interest in the tendered Shares. This appointment is effective
upon the acceptance for payment of such Shares by the Offeror in accordance
with the terms of the Offer. Upon acceptance for payment, all prior proxies
given by the shareholder with respect to such Shares or other securities or
rights will, without further action, be revoked and no subsequent proxies may
be given or written consent executed (and, if given or executed, will not be
deemed effective). The proxies or corporate representative of the Offeror
will, with respect to the Shares and other securities or rights, be empowered
to exercise all voting and other rights of such shareholder as they in their
sole judgment deem proper in respect of any annual or special general meeting
of the Company's shareholders, or any adjournment or postponement thereof, or
by consent in lieu of any such meeting or otherwise. The Offeror reserves the
right to require that, in order for Shares to be deemed validly tendered,
immediately upon the Offeror's payment for such Shares, the Offeror or its
designee must be able to exercise full voting and other rights with respect to
such Shares and the other securities or rights issued or issuable in respect
of such Shares, including voting at any meeting of Shares (whether annual or
special or whether or not adjourned) in respect of such Shares.
4. Withdrawal Rights. Except as otherwise provided in this Section 4 or as
provided by applicable law, tenders of Shares made pursuant to the Offer are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn at any
time prior to the Expiration Date and, unless theretofore accepted for payment
pursuant to the
7
<PAGE>
Offer, may also be withdrawn at any time after July 19, 1999. If purchase of
or payment for Shares is delayed for any reason or if the Offeror is unable to
purchase or pay for Shares for any reason, then, without prejudice to the
Offeror's right under the Offer, tendered Shares may be retained by the
Depositary on behalf of the Offeror and may not be withdrawn except to the
extent that tendering shareholders are entitled to withdrawal rights as set
forth in this Section 4 and subject to Rule 14e-1(c) under the Exchange Act,
which provides that no person who makes a tender offer shall fail to pay the
consideration offered or fail to return the securities deposited by or on
behalf of security holders promptly after the termination or withdrawal of the
Offer.
For a withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase.
Any notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name in
which the certificates representing such Shares are registered, if different
from that of the person who tendered the Shares. If certificates for Shares to
be withdrawn have been delivered or otherwise identified to the Depositary,
then, prior to the physical release of such certificates, the serial numbers
shown on such certificates must be submitted to the Depositary and, unless
such Shares have been tendered by an Eligible Institution, the signatures on
the notice of withdrawal must be guaranteed by an Eligible Institution. If
Shares have been tendered pursuant to the procedure for book-entry transfer
set forth in Section 3, any notice of withdrawal must also specify the name
and number of the account at the Book-Entry Transfer Facility to be credited
with the withdrawn Shares, in which case a notice of withdrawal will be
effective if delivered to the Depositary by any method of delivery described
in the first sentence of this paragraph. Withdrawals of Shares may not be
rescinded. Any Shares properly withdrawn will be deemed not validly tendered
for purposes of the Offer, but may be retendered at any subsequent time prior
to the Expiration Date by following any of the procedures described in Section
3.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Offeror, in its sole
discretion, and its determination will be final and binding on all parties.
None of the Offeror, the Depositary, the Information Agent or any other person
will be under any duty to give notification of any defects or irregularities
in any notice of withdrawal or incur any liability for failure to give any
such notification.
5. Certain Federal Income Tax Consequences. The following is a summary of
certain federal income tax consequences of the Offer to holders whose Shares
are purchased pursuant to the Offer. The discussion applies only to holders of
Shares in whose hands Shares are capital assets, and may not apply to Shares
received upon conversion of securities or exercise of warrants or other rights
to acquire Shares or pursuant to the exercise of stock options or otherwise as
compensation, or to holders of Shares who are in special tax situations (such
as insurance companies, tax-exempt organizations, non-U.S. persons, dealers in
securities or commodities, holders that own (or are deemed for U.S. federal
income tax purposes to own under certain attribution or constructive ownership
rules) 10% or more of the voting stock of the Company, or persons who hold
Shares as a position in a "straddle" or as part of a "hedging" or "conversion"
transaction for United States federal income tax purposes).
THE FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW ARE INCLUDED FOR GENERAL
INFORMATIONAL PURPOSES ONLY AND ARE BASED UPON CURRENT LAW. BECAUSE INDIVIDUAL
CIRCUMSTANCES MAY DIFFER, EACH HOLDER OF SHARES SHOULD CONSULT SUCH HOLDER'S
TAX ADVISOR TO DETERMINE THE APPLICABILITY OF THE RULES DISCUSSED BELOW TO
SUCH SHAREHOLDER AND THE PARTICULAR TAX EFFECTS OF THE OFFER, INCLUDING THE
APPLICATION AND EFFECT OF STATE, LOCAL AND OTHER INCOME TAX LAWS.
The receipt of cash for Shares pursuant to the Offer will be a taxable
transaction for federal income tax purposes (and also may be a taxable
transaction under applicable state, local and other income tax laws). In
general, for federal income tax purposes, a holder of Shares will recognize
gain or loss equal to the difference between the holder's adjusted tax basis
in the Shares sold pursuant to the Offer and the amount of cash received
therefor. Gain or loss must be determined separately for each block of Shares
(i.e., Shares acquired at the same
8
<PAGE>
cost in a single transaction) sold pursuant to the Offer. Such gain or loss
will be capital gain or loss and will be treated as long-term capital gain if
the Shares were held for more than a year at the time of the sale.
The Company has indicated in publicly available documents that it does not
believe that it is a "passive foreign investment company" (a "PFIC"). However,
if the Company is or was a PFIC for any taxable year in which the holder held
Shares and the holder has not, in the first taxable year in which the Shares
were held, elected to treat the Company as a "qualified electing fund" with
respect to the holder or to mark to market the Shares on an annual basis
(i.e., treat the Shares as sold and repurchased at the end of each taxable
year), any gain recognized in respect of Shares sold pursuant to the Offer
would be generally allocated ratably to each day of the holder's holding
period before such election. The amounts allocated to the current taxable year
would be included as ordinary income in the holder's gross income for the
current taxable year. The amounts allocated to each prior taxable year would
be taxable as ordinary income in the current taxable year at the highest rate
in effect for the holder in each such prior taxable year and the tax liability
on such income would be subject to an additional tax in the nature of an
interest charge at the rates applicable to deficiencies in income taxes.
Holders should consult their tax advisors regarding the possible status of the
Company as a PFIC and the federal income tax consequences to them if the
Company is treated as a PFIC.
6. Price Range of Common Stock; Dividends. According to the Company's Annual
Report on Form 10-K for the year ended December 31, 1998, the Common Stock has
been trading on The Nasdaq Stock Market, Inc.'s ("Nasdaq") National Market
System ("NMS") under the symbol "GBLX" since its initial public offering of
common stock on August 14, 1998. The following table sets forth, for the
periods indicated, the high and low closing sales prices for the Common Stock
as reported on NMS (adjusted for a two for one stock split which occurred on
March 10, 1999):
<TABLE>
<CAPTION>
High Low
------ ------
<S> <C> <C>
Fiscal Year 1999
Second Quarter (through May 20, 1999)........................ $61.38 $41.75
First Quarter................................................ $56.56 $20.06
Fiscal Year 1998
Fourth Quarter............................................... $23.50 $ 8.63
Third Quarter (from August 14, 1998)......................... $12.75 $ 8.00
------
</TABLE>
On May 14, 1999, the last trading day before public announcement of the
execution of the Agreement, the last sale price of Common Stock, as reported
on the NMS, was $61.38 per share. On May 20, 1999, the last full trading day
prior to the commencement of the Offer, the closing price per share as
reported on the NMS was $50.94. Shareholders are urged to obtain current
market quotations for the Shares.
The Company has never paid any dividends on the Common Stock.
7. Effect of the Offer on the Market for Common Stock and Registration under
the Exchange Act. The Offer standing alone, is not anticipated by the Offeror
to have a long-term impact on the price of the Common Stock.
8. Certain Information Concerning the Company. The Company is a Bermuda
company with its principal executive offices located at Wessex House, 45 Reid
Street, Hamilton HM12, Bermuda. Except as otherwise set forth herein, the
information concerning the Company contained in this Offer to Purchase,
including financial information, has been furnished by the Company or has been
taken from or based upon publicly available documents and records on file with
the Commission and other public sources. Although the Offeror has no knowledge
that would indicate that statements contained herein based upon such documents
or otherwise provided are untrue, neither the Offeror nor the Information
Agent assumes any responsibility for the accuracy or completeness of the
information concerning the Company, furnished by the Company, or contained
9
<PAGE>
in such documents and records or for any failure by the Company to disclose
events which may have occurred or may affect the significance or accuracy of
any such information but which are unknown to the Offeror.
According to the Company's most recent quarterly report to shareholders
filed on Form 10-Q, the Company is the world's first independent global
provider of state-of-the-art Internet and long distance telecommunications
facilities and related services utilizing a network of undersea and
terrestrial digital fiber optic cable systems (the "Global Crossing Ltd.
Network"). The Company believes that it is the first to offer "one-stop
shopping" for their customers to multiple destinations worldwide. The Company
currently operates as a "carriers' carrier", providing tiered pricing and
segmented products to licensed providers of international telecommunications
services. Capacity on the Global Crossing Ltd. Network is offered to all
customers on an open, equal access basis. The Company anticipates that the
systems completed or under development will form a state-of-the-art
interconnected worldwide high capacity fiber optic network: Atlantic Crossing
("AC-1") and Atlantic Crossing-2, undersea systems connecting the United
States and Europe; Pacific Crossing ("PC-1"), an undersea system connecting
the United States and Asia; Mid Atlantic Crossing ("MAC"), an undersea system
connecting the eastern United States and the Caribbean; Pan American Crossing
("PAC"), an undersea system connecting the western United States, Mexico,
Panama, Venezuela and the Caribbean; South American Crossing, an undersea and
terrestrial system connecting the major cities of South America to MAC, PAC
and the rest of the Global Crossing Ltd. Network; Pan European Crossing, a
terrestrial system connecting 24 European cities to AC-1; and a terrestrial
system to be operated by the Company connecting certain cities in Japan to PC-
1. The undersea component of this initial portion of the Global Crossing Ltd.
Network totals 74,500 km and the terrestrial component adds 13,400 km for a
total of 87,900 km. The Company is in the process of developing several new
undersea and terrestrial cable systems and evaluating other business
development opportunities which will complement the Global Crossing Ltd.
Network.
10
<PAGE>
Set forth below is certain summary consolidated financial data with respect
to the Company excerpted or derived from financial information contained in
the Company's Annual Report on Form 10-K for the year ended December 31, 1998
and Quarterly Report on Form 10-Q for the quarter ended March 31, 1999. More
comprehensive financial information is included in such report and other
documents filed by the Company with the Commission, and the following summary
is qualified in its entirety by reference to such reports and such other
documents and all the financial information (including any related notes)
contained therein. Such reports and other documents should be available for
inspection and copies thereof should be obtainable in the manner set forth
below.
GLOBAL CROSSING LTD.
SELECTED SUMMARY CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
Period from
Three-Months March 19, 1997
Ended Year Ended (Date of Inception)
March 31, 1999 December 31, 1998 to December 31, 1997
-------------- ----------------- --------------------
(unaudited)
(In thousands, except share and
per share information)
<S> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Revenues................ $ 178,183 $ 424,099 $ --
Expenses:
Cost of capacity sold... 69,387 178,492 --
Operations,
administration and
maintenance............ 11,861 18,056 --
Sales and marketing..... 9,758 26,194 1,366
Network development..... 4,905 10,962 78
General and
administrative......... 22,625 26,844 1,657
Stock related expense... 16,716 39,374 --
Provision for doubtful
accounts............... 1,864 4,233 --
Termination of advisory
services agreement..... -- 139,669 --
----------- ------------ ------------
137,116 443,824 3,101
----------- ------------ ------------
Operating income
(loss)................. 41,067 (19,725) (3,101)
Equity in loss of
affiliates............. (2,736) (2,508) --
Interest income
(expense):
Interest income....... 14,392 29,986 2,941
Interest expense...... (23,779) (42,880) --
Provision for income
taxes.................. (16,142) (33,067) --
----------- ------------ ------------
Income (loss) before
extraordinary item and
cumulative effect of
change in accounting
principle.............. 12,802 (68,194) (160)
Extraordinary loss on
retirement of senior
notes.................. -- (19,709) --
Cumulative effect of
change in accounting
principle, net of
income tax benefit of
$1400.................. (14,710) -- --
----------- ------------ ------------
Net loss................ (1,908) (87,903) (160)
Preferred stock
dividends.............. (13,044) (12,681) (12,690)
Redemption of preferred
stock.................. (34,140) --
----------- ------------ ------------
Net loss applicable to
common shareholders.... $ (14,952) $ (134,724) $ (12,850)
=========== ============ ============
NET LOSS PER COMMON
SHARE
Loss applicable to
common shareholders
before extraordinary
item and cumulative
effect of change in
accounting principle
Basic and diluted.... $(0.00) $ (0.32) $ (0.04)
Extraordinary item and
cumulative effect of
change in accounting
principle
Basic and diluted.... $(0.04) $ (0.06) $ --
Net loss applicable to
common shareholders
Basic and diluted..... $(0.04) $ (0.38) $ (0.04)
Shares used in computing
basic and diluted loss
per share.............. 410,797,073 358,735,340 325,773,934
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
March 31, December 31,
----------- -----------------------
1999 1998 1997
----------- -------------- --------
(unaudited) (in thousands)
<S> <C> <C> <C> <C> <C>
Balance sheet data:
Current assets including cash and
cash equivalents and restricted
cash and cash equivalents........ $ 766,469 $ 976,615 $ 27,744
Long term restricted cash and cash
equivalents...................... 422,933 367,600 --
Long term accounts receivable..... 70,884 43,315 --
Property, plant and equipment,
net.............................. 45,400 5,500 --
Construction in progress and
capacity available for sale...... 1,109,926 1,003,056 518,519
Deferred finance and organization
costs, net of accumulated
amortization..................... 42,527 45,757 25,934
Investment in affiliates.......... 187,458 177,334 --
Other Assets...................... 44,200 20,000 --
---------- ---------- --------
Total assets...................... $2,689,797 $2,639,177 572,197
---------- ---------- --------
Current liabilities............... $ 273,664 $ 251,890 $ 90,817
Long term debt.................... 248,475 269,598 162,325
Senior notes...................... 796,588 796,495 150,000
Deferred revenue.................. 50,725 25,325 --
Obligations under inland service
agreements and capital leases.... 16,158 24,520 3,009
Deferred income taxes............. 31,779 9,654 --
---------- ---------- --------
Total liabilities................. 1,417,389 1,377,482 406,151
---------- ---------- --------
Mandatorily redeemable preferred
stock............................ 500,419 487,375 91,925
Shareholders' equity
Common stock.................... 4,331 4,328 3,258
Treasury stock.................. (209,415) (209,415) --
Other shareholders' equity........ 1,067,044 1,067,470 71,023
Accumulated deficit............... (89,971) (88,063) (160)
---------- ---------- --------
Total shareholders' equity........ 771,989 774,320 74,121
---------- ---------- --------
Total liabilities and
shareholders' equity............. $2,689,797 $2,639,177 $572,197
========== ========== ========
</TABLE>
Certain Company Projections
To the knowledge of the Offeror, the Company does not as a matter of course
make public forecasts as to its future financial performance. However, in
connection with the discussions and negotiations described in Section 11, the
Company furnished the Offeror with certain financial projections which the
Offeror believes are not publicly available. The Offeror has not verified the
accuracy of such financial forecasts. These projections assume the completion
of the Frontier merger and the acquisition of Cable & Wireless Global Marine
on a pro forma basis.
12
<PAGE>
Income Statement
(Dollars in Millions, Except Per Share Amounts)
<TABLE>
<CAPTION>
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 CAGR
-------- -------- -------- -------- -------- -------- -------- -------- -------- -------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total Revenues...... 4,068.5 5,065.7 5,983.8 7,523.0 9,372.9 10,666.7 12,418.7 14,289.7 16,319.7 18,792.9 18.5%
EBITDA.............. 1,125.6 1,673.0 2,001.3 2,905.0 3,974.9 4,585.3 5,553.6 6,534.0 7,547.2 8,860.9 25.8%
Adjusted EBITDA*.... 1,156.1 1,760.6 2,122.8 3,058.7 4,178.4 4,839.5 5,845.7 6,862.7 7,910.4 9,277.7 26.0%
Operating income.... 647.4 813.5 1,121.1 1,882.5 2,538.7 3,305.2 4,038.1 4,831.6 5,831.6 6,847.0 --
Net income to
common............. $ 20.5 $ (344.7) $ (118.7) $ 550.1 $1,218.8 $2,009.3 $2,827.5 $3,782.2 $5,167.6 $6,509.3 --
======== ======== ======== ======== ======== ======== ======== ======== ======== ======== ====
EPS to common....... $ 0.03 $ (0.53) $ (0.18) $ 0.85 $ 1.89 $ 3.12 $ 4.38 $ 5.86 $ 8.01 $ 10.09 --
EPS to common before
goodwill........... $ 0.38 $ 0.43 $ 0.78 $ 1.81 $ 2.85 $ 4.08 $ 5.35 $ 6.83 $ 8.97 $ 11.05 --
Dividend to common.. 35.3 36.6 37.2 38.0 38.8 38.8 38.8 38.8 38.8 38.8 --
Capital
Expenditures....... $2,294.8 $1,662.7 $1,064.4 $1,324.0 $ 1319.4 $1,508.9 $1,252.7 $1,698.3 $1,469.2 $1,221.4 --
</TABLE>
- ------
* Includes change in deferred revenues.
13
<PAGE>
[This Page Left Blank For Filing Only]
14
<PAGE>
The following sets forth the material assumptions used in the preparation of
the above financial projections:
(1) The financial projections contain projections for the Company, Frontier
(including cost synergies), and Global Marine. It is important to note
that the Frontier and Global Marine acquisitions have not yet closed.
These projections do not reflect the financial or accounting impact of the
merger with U S WEST.
(2) The Company revenue assumptions are based on the following systems: AC-1
(Initial RFS 1998), PC-1 (Initial RFS 1999), MAC (Initial RFS 1999), PAC
(Initial RFS 2000), PEC (Initial RFS 1999), GAL (Initial RFS 1999), SAC
(Initial RFS 2001), Services Business (Initial RFS 2000), System X
(Initial RFS 2003), AC-2 (Initial RFS 2005), PC-2 (Initial RFS 2005). The
underlying revenue assumptions are based largely on third party consulting
reports. PC-1 is accounted for on the equity method of accounting.
(3) The goodwill created by both the Frontier and Global Marine transactions
are projected to be amortized over 20 years and 10 years, respectively.
IT IS THE UNDERSTANDING OF THE OFFEROR THAT THE PROJECTIONS INCLUDED IN THIS
OFFER TO PURCHASE WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR
COMPLIANCE WITH PUBLISHED GUIDELINES OF THE COMMISSION OR THE GUIDELINES
ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
REGARDING PROJECTIONS OR FORECASTS AND ARE INCLUDED HEREIN ONLY BECAUSE SUCH
INFORMATION WAS PROVIDED TO THE OFFEROR. THESE FORWARD-LOOKING STATEMENTS (AS
THAT TERM IS DEFINED IN THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995)
ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS
TO DIFFER MATERIALLY FROM THE PROJECTIONS. THE COMPANY HAS ADVISED THE OFFEROR
THAT ITS INTERNAL FINANCIAL FORECASTS (UPON WHICH THE PROJECTIONS PROVIDED
WERE BASED IN PART) ARE, IN GENERAL, PREPARED SOLELY FOR INTERNAL USE AND
CAPITAL BUDGETING AND OTHER MANAGEMENT DECISIONS, AND ARE SUBJECTIVE IN MANY
RESPECTS AND THUS SUSCEPTIBLE TO INTERPRETATIONS AND PERIODIC REVISION BASED
ON ACTUAL EXPERIENCE AND BUSINESS DEVELOPMENTS. THE PROJECTIONS ALSO REFLECT
NUMEROUS ASSUMPTIONS (NOT ALL OF WHICH WERE PROVIDED TO OFFEROR), ALL MADE BY
MANAGEMENT OF THE COMPANY, WITH RESPECT TO INDUSTRY PERFORMANCE, GENERAL
BUSINESS, ECONOMIC, MARKET AND FINANCIAL CONDITIONS AND OTHER MATTERS,
INCLUDING EFFECTIVE TAX RATES CONSISTENT WITH HISTORICAL LEVELS FOR THE
COMPANY, ALL OF WHICH ARE DIFFICULT TO PREDICT, MANY OF WHICH ARE BEYOND THE
COMPANY'S CONTROL AND NONE OF WHICH WERE SUBJECT TO APPROVAL BY THE OFFEROR.
ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THE ASSUMPTIONS MADE IN PREPARING
THE PROJECTIONS WILL PROVE ACCURATE, AND ACTUAL RESULTS MAY BE MATERIALLY
GREATER OR LESS THAN THOSE CONTAINED IN THE PROJECTIONS. THE INCLUSION OF THE
PROJECTIONS HEREIN SHOULD NOT BE REGARDED AS AN INDICATION THAT THE OFFEROR,
THE COMPANY OR THEIR RESPECTIVE AFFILIATES OR REPRESENTATIVES CONSIDERED OR
CONSIDER THE PROJECTIONS TO BE A RELIABLE PREDICTION OF FUTURE EVENTS, AND THE
PROJECTIONS SHOULD NOT BE RELIED UPON AS SUCH. NONE OF THE OFFEROR, THE
COMPANY NOR ANY OF THEIR RESPECTIVE AFFILIATES ASSUMES ANY RESPONSIBILITY FOR
THE VALIDITY, REASONABLENESS, ACCURACY OR COMPLETENESS OF THE PROJECTIONS.
NONE OF THE OFFEROR, THE COMPANY OR ANY OF THEIR RESPECTIVE AFFILIATES OR
REPRESENTATIVES HAS MADE, OR MAKES, ANY REPRESENTATION TO ANY PERSON REGARDING
THE INFORMATION CONTAINED IN THE PROJECTIONS AND NONE OF THEM INTENDS TO
UPDATE OR OTHERWISE REVISE THE PROJECTIONS TO REFLECT CIRCUMSTANCES
15
<PAGE>
EXISTING AFTER THE DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF FUTURE
EVENTS EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE
PROJECTIONS ARE SHOWN TO BE IN ERROR.
Available Information
The Company is subject to the reporting requirements of the Exchange Act
and, in accordance therewith, is required to file reports and other
information with the Commission relating to its business, financial condition
and other matters. Information as of particular dates concerning the Company's
directors and officers, their remuneration, stock options and other matters,
the principal holders of the Company's securities and any material interest of
such persons in transactions with the Company is required to be disclosed in
proxy statements distributed to the Company's shareholders and filed with the
Commission. Such reports, proxy statements and other information should be
available for inspection at the public reference facilities of the Commission
located at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional
offices of the Commission located in the Citicorp Center, 500 West Madison
Street (suite 1400), Chicago, Illinois 60661, and at Seven World Trade Center,
13th Floor, New York, New York 10048. Such reports, proxy statements and other
information may also be obtained at the web site that the Commission maintains
at http://www.sec.gov. Copies may be obtained by mail, upon payment of the
Commission's customary charges, by writing to the Commission's principal
office at 450 Fifth Street, N.W., Washington, DC 20549. Such information
should also be on file at the offices of Nasdaq Operations, l735 K Street,
N.W., Washington, D.C. 20006.
9. Certain Information Concerning the Offeror.
Except pursuant to the Agreement and related agreements and except for
Solomon D. Trujillo, the Chairman and Chief Executive Officer of the Offeror,
who owns approximately 1200 shares of the Company, and George J. Harad, a
Director of the Offeror, who owns, together with his spouse, approximately 200
shares of the Company, to the best knowledge of the Offeror, none of the
persons listed on Schedule I hereto or any associate of the Offeror, including
Offeror, or any of the persons so listed, beneficially owns or has a right to
acquire directly or indirectly any securities of the Company. Neither the
Offeror, nor, to the best knowledge of the Offeror, any of the persons or
entities referred to above, or any of the respective executive officers,
directors or subsidiaries of any of the foregoing, has effected any
transactions in the securities of the Company during the past 60 days.
Offeror is incorporated under the laws of the State of Delaware and has its
principal executive offices at 1801 California Street, Denver, Colorado 80202,
telephone number (303) 672-2700. Offeror is a diversified communications
company providing services principally to customers in a 14-state mountain and
western region of the United States, which is comprised of the states of
Arizona, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, New Mexico,
North Dakota, Oregon, South Dakota, Utah, Washington and Wyoming (the
"Region"). Offeror's services include telecommunications and related services,
wireless services, high-speed data and Internet services and directory
services. The largest component of U S WEST, Inc. is U S WEST Communications,
Inc. ("U S WEST Communications"), a wholly-owned subsidiary, which provides
communications services to more than 25 million residential and business
customers in the Region. U S WEST Communications serves approximately 75% of
the Region's population.
16
<PAGE>
Set forth below is certain summary consolidated financial data with respect
to the Offeror excerpted or derived from financial information contained in
the Offeror's Annual Report on Form 10-K/A for the year ended December 31,
1998 and Quarterly Report on Form 10-Q for the period ended March 31, 1999.
More comprehensive financial information is included in such report and other
documents filed by the Offeror with the Commission, and the following summary
is qualified in its entirety by reference to such reports and such other
documents and all the financial information (including any related notes)
contained therein. Such reports and other documents should be available for
inspection and copies thereof should be obtainable in the manner set forth
below.
U S WEST, INC.
CONSOLIDATED ANNUAL STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------
1998 1997 1996
------- ------- -------
(Dollars in Millions,
except Per Share
Amounts)
<S> <C> <C> <C>
Operating revenues:
Local service..................................... $ 5,525 $ 5,016 $ 4,770
Interstate access service......................... 2,816 2,666 2,507
Intrastate access service......................... 822 761 770
Long-distance network services.................... 779 885 1,100
Directory services................................ 1,277 1,197 1,120
Other services.................................... 1,159 954 901
------- ------- -------
Total operating revenues........................ 12,378 11,479 11,168
------- ------- -------
Operating expenses:
Employee-related expenses......................... 4,312 3,953 3,893
Other operating expenses.......................... 2,818 2,587 2,305
Depreciation and amortization..................... 2,199 2,163 2,158
------- ------- -------
Total operating expenses........................ 9,329 8,703 8,356
------- ------- -------
Operating income.................................... 3,049 2,776 2,812
Other income (expense):
Interest expense.................................. (543) (405) (448)
Gains on sales of local telephone exchanges....... -- 77 59
Gain on sale of investment in Bellcore............ -- 53 --
Other expense--net................................ (87) (72) (46)
------- ------- -------
Total other expense--net........................ (630) (347) (435)
------- ------- -------
Income before income taxes, extraordinary item and
cumulative effect of change in accounting
principle.......................................... 2,419 2,429 2,377
Provision for income taxes.......................... 911 902 876
Income before extraordinary item and cumulative
effect of change in accounting principle........... 1,508 1,527 1,501
Extraordinary item--early extinguishment of debt--
net of tax......................................... -- (3) --
Income before cumulative effect of change in
accounting principle............................... 1,508 1,524 1,501
Cumulative effect of change in accounting
principle--net of tax.............................. -- -- 34
------- ------- -------
Net income.......................................... $ 1,508 $ 1,524 $ 1,535
======= ======= =======
</TABLE>
17
<PAGE>
U S WEST, INC.
CONSOLIDATED ANNUAL STATEMENTS OF INCOME (CONTINUED)
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------
1998 1997 1996
-------- -------- --------
(Dollars in Millions,
except Per Share Amounts)
<S> <C> <C> <C>
Basic earnings per share:
Income before extraordinary item and cumulative
effect of change in accounting principle........ $ 3.05 $ 3.16 $ 3.14
Extraordinary item--early extinguishment of
debt............................................ -- (0.01) --
Cumulative effect of change in accounting
principle....................................... -- -- 0.07
Basic earnings per share........................... $ 3.05 $ 3.16 $ 3.21
Basic average shares outstanding (in 000's)........ 494,395 482,751 477,549
Diluted earnings per share:
Income before extraordinary item and cumulative
effect of change in accounting principle........ $ 3.02 $ 3.13 $ 3.10
Extraordinary item--early extinguishment of
debt............................................ -- (0.01) --
Cumulative effect of change in accounting
principle....................................... -- -- 0.07
Diluted earnings per share......................... $ 3.02 $ 3.12 $ 3.17
Diluted average shares outstanding (in 000's)...... 498,798 491,232 488,591
Dividends per share................................ $ 2.14 $ 2.14 $ 2.14
</TABLE>
18
<PAGE>
U S WEST, INC.
CONSOLIDATED QUARTERLY STATEMENT OF INCOME
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended
March 31,
------------------
1999 1998
-------- --------
(Dollars in
millions, except
Per Share
Amounts)
<S> <C> <C>
Operating revenues:
Local services............................................ $ 1,867 $ 1,730
Access services........................................... 681 665
Long-distance services.................................... 174 204
Directory services........................................ 326 306
Other Services............................................ 134 104
-------- --------
Total operating revenues................................ 3,182 3,009
Operating expenses:
Employee-related expenses................................. 1,125 1,006
Other operating expenses.................................. 662 656
Depreciation and amortization............................. 602 532
-------- --------
Total operating expenses................................ 2,389 2,194
-------- --------
Operating income............................................ 793 815
Other expense:
Interest expense.......................................... (153) (97)
Other expense-net......................................... (1) (25)
-------- --------
Total other expense-net................................. (154) (122)
-------- --------
Income before income taxes.................................. 639 693
Provision for income taxes.................................. 242 259
-------- --------
Net income.................................................. $ 397 $ 434
======== ========
Basic earnings per share.................................... $ 0.79 $ 0.89
======== ========
Basic average shares outstanding (in 000's)................. 503,306 484,964
======== ========
Diluted earnings per share.................................. $ 0.78 $ 0.89
======== ========
Diluted average shares outstanding (in 000's)............... 508,121 489,113
======== ========
Dividends per share......................................... $ 0.535 $ 0.535
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
19
<PAGE>
U S WEST, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, March 31,
--------------- -----------
1998 1997 1999
------- ------- -----------
(unaudited)
(Dollars in Millions,
except per Share Amounts)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................ $ 49 $ 27 $ 36
Accounts receivable less allowance for
uncollectibles of $70, $69 and $72,
respectively.................................... 1,743 1,717 1,700
Inventories and supplies......................... 197 150 236
Deferred directory costs......................... 274 257 276
Deferred tax assets.............................. 151 271 161
Prepaid and other................................ 78 82 127
------- ------- -------
Total current assets............................... 2,492 2,504 2,536
------- ------- -------
Property, plant and equipment--net................. 14,908 14,308 15,098
Other assets--net.................................. 1,007 855 1,075
------- ------- -------
Total assets....................................... $18,407 $17,667 $18,709
------- ------- -------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt.................................. $ 1,277 $ 695 $ 1,393
Accounts payable................................. 1,347 1,377 1,326
Accrued expenses................................. 1,702 1,791 1,753
Advance billings and customer deposits........... 370 336 377
------- ------- -------
Total current liabilities.......................... 4,696 4,199 4,849
------- ------- -------
Long-term debt..................................... 8,642 5,020 8,642
Postretirement and other postemployment benefit
obligations....................................... 2,643 2,534 2,632
Deferred income taxes.............................. 786 791 811
Unamortized investment tax credits................. 159 168 159
Deferred credits and other......................... 726 588 696
Commitments and Contingencies
Shareholders' equity:
Preferred stock--$1.00 par value, 190,000,000
shares authorized, none issued and outstanding.. -- -- --
Series A junior preferred stock--$1.00 par value,
10,000,000 shares authorized, none issued and
outstanding..................................... -- -- --
Common stock--$0.01 par value, 2,000,000,000
shares authorized, 503,207,058, 484,522,015 and
503,797,638 issued, 502,903,055, 484,515,415 and
503,493,635 outstanding......................... 532 -- 553
Retained earnings................................ 223 -- 352
Pre-separation equity............................ -- 4,367 --
Accumulated and other comprehensive income....... -- -- 15
------- ------- -------
Total shareholders' equity......................... 755 4,367 920
------- ------- -------
Total liabilities and shareholders' equity......... $18,407 $17,667 $18,709
======= ======= =======
</TABLE>
20
<PAGE>
The notes to the Selected Summary Consolidated Financial Statements set
forth in the Offeror's annual report to shareholders on Form 10-K/A are an
integral part of the consolidated financial statements.
Except as described in this Offer to Purchase, neither the Offeror, nor to
the best knowledge of the Offeror, any of the persons listed on Schedule I
hereto, has any contract, arrangement, understanding or relationship with any
other person with respect to any securities of the Company, including, but not
limited to, contracts, arrangements, understandings or relationships
concerning the transfer or voting of such securities, joint ventures, loan or
option arrangements, puts or calls, guaranties of loans, guaranties against
loss or the giving or withholding or proxies. Except as described in this
Offer to Purchase, the Offeror, nor to the best knowledge of the Offeror, none
of the persons listed on Schedule I hereto, has had since the formation of the
Company any business relationships or transactions with the Company or any of
its executive officers, directors or affiliates that are required to be
reported under the rules and regulations of the Commission applicable to the
Offer. Except as described in this Offer to Purchaser, there have been no
contracts, negotiations or transactions between the Offeror nor, to the best
knowledge of the Offeror, any of the persons listed in Schedule I hereto, on
the one hand, and the Company or its affiliates, on the other hand, concerning
a merger, consolidation or acquisition, a tender offer or other acquisition of
securities, an election of directors, or a sale or other transfer of a
material amount of assets.
10. Source and Amount of Funds. The total funds required by the Offeror to
purchase 39,259,305 Shares pursuant to the Offer and to pay related fees and
expenses will be approximately $2.5 billion. These funds will be obtained by
the Offeror from working capital and/or borrowings. A portion of the
borrowings will be obtained under the Offeror's ongoing Section 4(2)
Commercial Paper Program (the "Program"). Under the Program, U S WEST Capital
Funding, Inc., a Colorado corporation and a wholly-owned subsidiary of the
Offeror ("Capital Funding"), issues commercial paper which is unconditionally
guaranteed by the Offeror. Capital Funding and the Offeror maintain unsecured
bank borrowing facilities sufficient to support the outstanding commercial
paper. The Offeror recently increased the borrowing capacity under the Program
to accommodate the purchase of the Common Stock pursuant to the Offer. The
commercial paper issued under the Program has a maturity of up to 270 days and
will be rated by Standard & Poor's Rating Service, Moody's Investors Service,
Inc. and Duff & Phelps. The commercial paper ranks pari passu with Capital
Funding's other unsubordinated and unsecured indebtedness. The Offeror intends
to refinance the commercial paper indebtedness relating to the purchase
through additional private placements, public offerings and/or third party
financings.
The Offeror is in discussions with various lending sources relating to
additional financing for the Offer and is considering, among other
alternatives, entering into financing arrangements with banks and/or other
financial institutions and/or completing a private placement of securities
under Rule 144A of the Securities Act.
11. Background of the Offer; Past Contacts with the Company.
On October 25, 1997, the Board of Directors of the former parent of the
Offeror ("Old U S WEST") adopted a proposal to separate Old U S WEST into two
independent companies (the "Separation"). The Separation became effective on
June 12, 1998. Subsequent to the Separation, the Offeror commenced a
comprehensive review of its strategic position and objectives in light of
changes in the competitive marketplace as evidenced by recent significant
consolidations and mergers in the telecommunications industry, swiftly
advancing technology and changes in the regulatory landscape.
From September 30 through October 2, 1998, the Board of Directors of the
Offeror held a strategy session during which it reviewed the changes in the
competitive marketplace, technology, regulation and customer demands. With
this background it considered various strategic alternatives. These
alternatives included potential relationships and alliances with other
entities.
Following this session, during the Fall of 1998, senior management of the
Company and the Offeror met on various occasions to discuss a potential
transaction involving the Company and the Offeror's data business. These
discussions ended in January, 1999.
21
<PAGE>
On February 4 and 5, 1999, in the context of the discussion of a potential
opportunity, the Board of Directors of the Offeror had lengthy discussions
regarding the various strategies the Offeror could pursue.
Through February and into April, 1999, senior management of the Company and
the Offeror had further discussions about ways of combining the Company and
the data business of the Offeror.
At a regular meeting of the Board of Directors of the Offeror held on April
4, 1999, the Board reviewed the strategic objectives of the Offeror and
requested that Solomon D. Trujillo, the Chief Executive Officer of the
Offeror, together with senior management of the Offeror, further investigate
possible long-term strategic alternatives and options for the Offeror
including the possibility of a business combination transaction involving the
Company. Analysis of possible strategies to either acquire or build the
technology necessary to advance the Offeror into the forefront of the rapidly
expanding data and telecommunication industry was undertaken. The Offeror
considered a number of potential acquisition candidates with a variety of
technologies that would enhance the Offeror's products or services.
Thereafter, the Offeror had preliminary discussions with a number of
significant potential partners that could strategically fit with the Offeror's
goals of becoming a global leader in the data/communications race. The Offeror
retained Merrill Lynch to advise it with respect to a possible transaction.
On April 22, 1999, Mr. Trujillo and Gary Winnick, Co-Chairman of the Board
of Directors of the Company, met in Beverly Hills, California for the purpose
of discussing industry-related matters. At such meeting, Messrs. Trujillo and
Winnick discussed the possibility of a business combination or a joint venture
between the Offeror and the Company. At the end of the meeting, Messrs.
Trujillo and Winnick agreed to meet again and direct their respective senior
managements to pursue further the possibility of a business combination
between the Offeror and the Company. Shortly following these meetings, in
light of the pending merger transaction with Frontier Corporation
("Frontier"), Mr. Winnick preliminarily advised senior management of Frontier
of his discussions with the Offeror.
Subsequent thereto, senior management of the Offeror and representatives of
Merrill Lynch had several meetings with senior management of the Company and
its financial advisor, Salomon Smith Barney, Inc., to discuss the feasibility
and advisability of a business alliance or combination between the Offeror and
the Company, including tours of various facilities.
On May 3, 1999, the Offeror and the Company executed a mutual
confidentiality agreement and agreed to exchange non-public information.
During the first two weeks of May, senior managements of the Company and the
Offeror and their respective financial and legal advisors met to discuss a
possible structure for a business combination between the Offeror and the
Company and agreed that any business combination transaction between the
Company and the Offeror would include the Offer.
On May 11, 1999, at a regular meeting of the Board of Directors of the
Offeror, senior management of the Offeror and the Offeror's financial and
legal advisors reviewed with the Board of Directors of the Offeror possible
long-term strategic alternatives for the Offeror and the status of the
discussions between the Offeror and the Company. The Board of Directors of the
Offeror then authorized senior management of the Offeror to continue
discussions with the Company.
Senior management of the Offeror and the Company and their respective legal
and financial advisors continued to meet to negotiate the terms of a possible
business combination including the terms of the Offer and commenced
negotiations for the Mergers and the Offer.
On May 16, 1999, the Board of Directors of the Offeror met for the purpose
of considering the terms and conditions of the Merger Agreement, the Mergers,
the Offer and the related transactions and agreements. The
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Offeror's financial and legal advisors were present at such meeting. The Board
of Directors of the Offeror was advised that another company that had become
aware of the possible combination with the Company and requested that the
Offeror delay negotiations while it continued to consider making an
alternative proposal. However, the third party indicated that it was unwilling
to make an offer at that time. Throughout the day and evening, management
encouraged the third party to make a firm and specific proposal that could be
considered. No proposal was received and the Offeror was informed that no
proposal was imminent. At the Board of Directors meeting, senior management of
the Offeror and representatives of the Offeror's legal and financial advisors
reviewed with the Board of Directors the terms and conditions of the Merger
Agreement, the Mergers, the Offer and the related transactions. Merrill Lynch
addressed certain financial aspects of the Mergers. Counsel reviewed legal
considerations to be considered by the Board of Directors of the Offeror in
approving the Merger and the Offer. Extensive discussion followed relating to
the financial and legal aspects of the transaction as well as the status of
the conversations with the third party. After discussion, the Board of
Directors of the Offeror unanimously approved the Merger, the Offer, the
Merger Agreement and the related transactions and agreements and agreed to
reconvene later that evening to authorize management to execute and deliver
the Merger Agreement and the related agreements.
Following the meeting of the Board of Directors of the Offeror, the Board of
Directors of the Company met to consider, among other things, the terms and
conditions of the Merger Agreement, the Mergers, the Offer and the related
transactions and agreements. The Company's financial and legal advisors
attended the meeting. Senior management of the Company and representatives of
the Company's legal and financial advisors reviewed with the Board of
Directors of the Company the terms and conditions of the Merger Agreement, the
Mergers, the Offer and the related transactions. Counsel to the Company
reviewed legal considerations to be considered by the Board of Directors of
the Company in approving the Merger and the Offer. Extensive discussion
followed relating to the financial and legal aspects of the transaction. After
discussion, the Board of Directors of the Company unanimously approved the
Merger, the Offer, the Merger Agreement and the related transactions and
agreements. Senior management of the Company was authorized to execute and
deliver the Merger Agreement.
At approximately 10:30 p.m., the Board of Directors of the Offeror
reconvened and, after being advised that no proposal from the third party was
imminent and that the Company would not defer entering into the Merger
Agreement, authorized senior management of the Offeror to execute and deliver
the Merger Agreement and commence the Offer.
Prior to the opening of business on May 17, 1999, each of the Offeror and
the Company executed and delivered the Merger Agreement and the related
documents.
12. Purpose of the Offer; Plans for the Company.
The purpose of the Offer is to facilitate the terms and conditions and the
transactions contemplated by the Merger Agreement. See Section 13. Except as
contemplated by the Merger Agreement, as more fully described in Section 13,
the Offeror does not have any present intentions or plans with respect to the
Company.
13. The Tender Offer and Purchase Agreement and Related Agreements.
TENDER OFFER AND PURCHASE AGREEMENT
General
The Agreement provides that U S WEST will commence this offer. Because the
description of the tender offer agreement contained in this document is a
summary, it does not contain all the information that may be important to you.
A copy of the Agreement is filed as Exhibit (c)(2) to the Schedule 14D-1 filed
by U S WEST with the Securities and Exchange Commission on May 21, 1999.
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The Offer
Subject to the satisfaction of certain conditions (see "--Offer
Conditions"), and unless the parties agree to exercise their respective
termination rights (see "--Termination"), U S WEST or one of its direct or
indirect wholly-owned subsidiaries will commence an offer to purchase for cash
up to 39,259,305 shares of Global common stock at a price of $62.75 per share
net to the seller in cash. The number of shares of Global common stock subject
to the tender offer will be adjusted for any change or distribution in respect
of Global's common stock by reason of a stock split, combination,
reclassification, stock dividend, or any similar event, so as to provide U S
WEST and the tendering shareholders the economic benefits provided under the
Agreement. If, at the expiration of the tender offer, more than 39,259,305
Shares of common stock have been tendered and not withdrawn, U S WEST will
purchase such shares on a pro rata basis, based on the number of shares
tendered by each Global shareholder, with appropriate adjustment to avoid
purchase of fractional shares. U S WEST and Global agree to cooperate to make
necessary adjustments to the proration mechanism to allow holders of
exercisable options to purchase Global common stock (issued by the Company) to
tender shares issuable upon exercise of such options without exercising such
options until such time as it is determined that such shares will be purchased
by U S WEST pursuant to the tender offer.
U S WEST will pay for tendered shares of Global common stock as soon as it
is permitted to do so under applicable law. U S WEST's obligation to pay for
tendered shares of Global common stock is subject only to certain conditions
(see "--Offer Conditions"). U S WEST reserves the right to waive any tender
offer condition and make any other changes in the terms of the tender offer.
However, unless U S WEST receives the written approval of Global, it may not:
a. decrease the price offered per share of Global common stock;
b. change the form of consideration payable in the tender offer;
c. increase or reduce the maximum number of shares of Global common
stock to be purchased in the tender offer;
d. amend or impose additional tender offer conditions; or
e. make other changes adverse to Global or its shareholders or which
may delay the consummation of the tender offer.
Offering Period. The tender offer will remain open for an initial period of
twenty business days after its commencement. Unless the Agreement has been
terminated, U S WEST will extend the tender offer from time to time if, at the
then-scheduled expiration date, all the tender offer conditions (see --"Offer
Conditions") have not been satisfied or waived. Unless Global consents in
writing, each extension will not exceed ten business days. However, if U S
WEST and Global reasonably believe fewer than ten business days are necessary
to satisfy the tender offer conditions, then the extension will not exceed
such fewer number of days. Any extension will not be less than the minimum
number of days required by the Exchange Act or any applicable law.
Securities and Exchange Commission filings. As soon as reasonably
practicable on the date the tender offer is commenced, U S WEST will file a
tender offer statement on Schedule 14D-1 with the Securities and Exchange
Commission. The Schedule 14D-1 will contain an "Offer to Purchase" and forms
of the related letter of transmittal, in compliance with the rules under the
Exchange Act. U S WEST agrees to give Global and its counsel an opportunity to
review the Schedule 14D-1 before it is filed with the Securities and Exchange
Commission. U S WEST and Global agree to promptly correct any information they
provide which becomes false or misleading in any material respect. U S WEST
agrees to cause any corrected Schedule 14D-1 to be filed with the Securities
and Exchange Commission and to disseminate to Global common shareholders the
corrected "Offer to Purchase" and forms of the related letter of transmittal,
to the extent required by federal securities laws. As soon as U S WEST
receives any comments from the Securities and Exchange Commission, U S WEST
will provide Global with a copy of such comments.
Contemporaneously with the commencement of the tender offer, Global will
file with the Securities and Exchange Commission a Solicitation/Recommendation
Statement on Schedule 14D-9 containing Global's board
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of directors' recommendation that shareholders accept the offer and tender
their shares of common stock. Global will also promptly mail the Schedule 14D-
9 to its shareholders. The Schedule 14D-9 and all amendments thereto will
comply in all material respect with the rules of the Exchange Act. Global and
U S WEST agree to promptly correct any information they provide which becomes
false or misleading in any material respect. Global agrees to cause any
corrected Schedule 14D-9 to be filed with the Securities and Exchange
Commission, and disseminated to its common shareholders, to the extent
required by federal securities laws.
Global Action. In connection with the tender offer, Global will promptly
furnish U S WEST with mailing labels, security position listings, any non-
objecting beneficial owner lists and any available listings or computer files
containing the names and addresses of the record holders of shares of Global
Common Stock. Global will furnish U S WEST with such additional information
and assistance as Global or its agents may reasonably require to communicate
the tender offer to the record and beneficial holders of shares of Global
Common Stock. U S WEST will use such information only in connection with the
tender offer. U S WEST will deliver to Global all copies of such information
in its possession if the Agreement is terminated.
Representations and Warranties by Global
The Agreement contains representations and warranties, subject to
qualifications, made by Global to U S WEST as to, among other things:
. its due organization, valid existence and good standing;
. corporate authorization to enter into the Agreement, to perform its
obligations under the Agreement and to consummate the transactions
contemplated thereby, and the enforceability of the Agreement against
Global;
. absence of conflicts of the Agreement with its organizational documents,
any law or regulation and any agreement to which it is party (including
the registration rights agreement, dated as of August 12, 1998); and
. consents and filings needed in connection with the execution and
delivery by Global of the Agreement.
Representations and Warranties by U S WEST
The Tender Offer and Purchase Agreement contains representations and
warranties, subject to qualifications, made by U S WEST to Global as to, among
other things:
. its due organization, valid existence and good standing;
. corporate authorization to enter into the Agreement, to perform its
obligations under the Agreement and to consummate the transactions
contemplated thereby, and the enforceability of the Agreement against U
S WEST;
. absence of conflicts of the Agreement with its organizational documents,
any law or regulation and any agreement to which it is party;
. consents and filings needed in connection with the execution and
delivery by U S WEST of the Agreement;
. compliance with state and federal securities laws regarding unregistered
shares of Global common stock; and
. necessary financing.
Additional Agreements
Registration Rights. U S WEST will have the right to exercise certain
registration rights as provided in the registration rights agreement as if U S
WEST were a party thereto. Global entered an agreement, dated as of May 16,
1999, with the shareholders who are parties to the registration rights
agreement granting U S WEST
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such registration rights. U S WEST cannot exercise any of these registration
rights until the later of (i) the termination of the Frontier Merger Agreement
(as defined below) (or consummation of the transactions pursuant thereto) and
(ii) the termination of the Merger Agreement.
Board Representation. After the merger agreement is terminated and as long
as U S WEST beneficially owns more than 5% of Global's outstanding shares of
Common Stock (for purposes hereof, if U S WEST's ownership of Global Common
Stock is reduced to less than 5% because of issuances by Global of Global
Common Stock, U S WEST will be deemed to beneficially own 5% until it
transfers shares of Global Common Stock), Global agrees to use its best
efforts to cause one individual designated by U S WEST to be nominated to
serve on its board of directors. Global agrees to solicit proxies for such
individual to the same extent as for other members of its slate of nominees.
After U S WEST no longer beneficially owns 5% of Global Common Stock, at the
request of Global, U S WEST will cause any U S WEST designee to resign.
Hart-Scott-Rodino Act. U S WEST and Global agree to make all filings and
submissions required by the Hart-Scott-Rodino Act (with respect to the tender
offer). U S WEST and Global will provide to each other any assistance,
information, or documents necessary to comply with the Hart-Scott-Rodino Act.
U S WEST and Global will provide each other copies of all correspondence each
has with any governmental authority in connection with the Agreement.
Public Announcements. U S WEST and Global agree not to issue any press
release or public statement without prior approval, unless required by law.
Legend. Following consummation of the tender offer, the parties agree to
cooperate to legend the Global common stock certificates purchased pursuant to
the tender offer to refer to the applicable restrictions on the transfer of
such certificate under the voting agreement, the standstill agreement, the
Agreement and applicable law.
Termination
The Tender Offer and Purchase Agreement provides that prior to the closing
of the tender offer, the agreement may be terminated:
. by mutual written consent of U S WEST and Global; or
. by U S WEST or Global on or after May 16, 2000, but only if the merger
agreement has previously been terminated; or
. by U S WEST at any time after the termination of the merger agreement
pursuant to Section 9.1(d)(ii)(A) or 9.1(e) of the merger agreement (see
"--The Merger Agreement") or by Global pursuant to Section 9(h)(i) of
the merger agreement; or
. by Global at any time beginning on the first business day prior to the
mailing of the proxy statement in connection with the Agreement and Plan
of Merger, dated as of March 16, 1999 among Global, GCF Acquisition
Corp. and Frontier (the "Frontier Merger Agreement"); or
. by U S WEST at any time beginning on the first business day following
the termination of the Frontier Merger Agreement in accordance with its
terms.
If the Agreement is terminated, U S WEST will promptly terminate the tender
offer without accepting any shares of Global Common Stock for payment.
Amendment
U S WEST and Global may amend the Agreement at any time by a writing signed
by both parties.
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Offer Conditions
U S WEST will not accept or pay for any shares tendered, if prior to the
termination of the tender offer the Hart-Scott Rodino Act waiting period is
not expired or the tender offer has been terminated. U S WEST will not be
required to accept or pay for any shares tendered, and may amend or terminate
the tender offer if, prior to the expiration of the tender offer, any order or
injunction is entered or any other action taken which makes illegal or
prohibits payment for shares of Global Common Stock pursuant to the tender
offer.
The above tender offer conditions may be asserted by U S WEST regardless of
the circumstances (subject to the other terms of the Agreement). U S WEST may
waive any of the above conditions only after giving five business days' notice
to Global.
TENDER AND VOTING AGREEMENT
General
The tender and voting agreement establishes certain rights and obligations
of the signatory shareholders of the Company in connection with the tender
offer by U S WEST for Shares and the Merger. Because the description of the
tender and voting agreement contained in this document is a summary, it does
not contain all the information that may be important to you. A copy of the
tender and voting agreement is attached as Exhibit (c)(5) to the Schedule 14D-
1 filed by U S WEST with the Securities and Exchange Commission on May 21,
1999.
Agreement to Tender Shares
Each shareholder who is a party to the tender and voting agreement agrees to
tender and not to withdraw at least 12.3045% of the total number of Shares
owned by such shareholder.
Agreement to Vote Shares
Each shareholder who is a party to the tender and voting agreement agrees
to:
. be present, in person or by proxy, at all Global shareholders meetings,
so that all Shares then held by such shareholder and entitled to vote
may be counted; and
. vote, or deliver a written consent covering, all the Shares then held by
such shareholder to approve the merger and against any action which
would reasonably be expected to result in a failure of the conditions to
the Merger to occur.
Waiver of Appraisal Rights
To the extent permitted by law, each shareholder who is a party to the
tender and voting agreement agrees to waive any appraisal, dissenters' or
similar rights that such shareholder may have under Bermuda law with respect
to the merger.
Restriction on Transfer--Global Merger
Until the Merger is consummated or the Merger Agreement is terminated, the
shareholders who are a party to the Tender and Voting Agreement agree not to
transfer Shares representing 15% of the issued and outstanding
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shares of Global Common Stock to any single person or group unless such
recipient agrees to comply with the voting requirements of the tender and
voting agreement.
Restriction on Transfer--Frontier Merger
Until Global's merger with Frontier is consummated or the Frontier Merger
Agreement is terminated, each shareholder who is a party to the tender and
voting agreement (other than certain shareholders identified on Exhibit A to
the tender and voting agreement) agrees not to transfer the shares without
Global's consent. The certain shareholders of Global identified as Exhibit A
to the tender and voting agreement have entered into a separate transfer
agreement with Global pursuant to which each such shareholder has agreed not
to transfer their shares until the Frontier merger is consummated or
terminated without Global's consent, which consent is not to be unreasonably
withheld. A copy of such transfer agreement is attached as Exhibit (c)(8) to
the Schedule 14D-1 filed by U S WEST with the Securities and Exchange
Commission on May 21, 1999.
Representations and Warranties of Shareholders
Each shareholder who is a party to the tender and voting agreement
represents and warrants, among other things:
. if a corporation, that it is duly incorporated and validly existing and
has the authority and power to enter the tender and voting agreement;
. valid execution and due authorization of the tender and voting agreement
and absence of any violation with the shareholder's charter documents;
. the agreement is binding and enforceable against each signing
shareholder;
. each shareholder is the owner of the shares listed beside its name on
Exhibit A to the tender and voting agreement; and
. absence of material litigation.
Termination
The obligations of the shareholders who are party to the tender and voting
agreement under the tender and voting agreement terminate upon the first to
occur of the consummation of the Global Merger, the termination of the Merger
Agreement, the approval of the Global Merger and the Merger Agreement have
been approved by the requisite vote of the shareholders of the Company and the
Offeror or the termination of the Agreement without the purchase of shares of
Global Common Stock.
THE STANDSTILL AGREEMENT
General
The standstill agreement establishes certain arrangements between U S WEST
and Global with respect to U S WEST's ownership of Global Common Stock.
Because the description of the standstill agreement contained in this document
is a summary, it does not contain all the information that may be important to
you. A copy of the standstill agreement is filed as Exhibit (c)(4) to the
Schedule 14D-1 filed by U S WEST with the Securities and Exchange Commission
on May 21, 1999.
Covenants with Respect to Global Voting Securities
Acquisition of Global Common Stock. U S WEST and its affiliates (other than
Global) agree not to acquire any Global Common Stock during the standstill
period, except pursuant to the Agreement. However, U S WEST and its affiliates
may buy Global Common Stock directly from Global. The standstill period began
on May 16, 1999 and continues until the earlier of May 16, 2009 or the
effective time (as defined in the Merger Agreement (see description of merger
agreement)). However, the standstill period will expire May 16, 2004 if the
Merger Agreement is terminated by Global or U S WEST pursuant to certain
termination provisions of the Merger Agreement.
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Disposition of Global Common Stock. Until the later of the termination or
consummation of the merger agreement and the termination or consummation of
the Frontier Merger Agreement (as defined in the voting agreement (see
description of voting agreement), U S WEST and its affiliates will not sell,
transfer, pledge or otherwise dispose of any beneficial interest in any Global
common stock. During the standstill period, U S WEST and its affiliates will
not sell or otherwise dispose of any Global common stock if U S WEST knows
that such transaction will result in any person or group controlling more than
5% of the voting power of Global, unless such transferee would own between 5%
and 9.5% of Global voting securities and agrees in writing to be bound by this
standstill agreement. However, U S WEST may sell Global voting securities
under the following circumstances: (i) to its affiliates that agree to be
bound by the provisions of the standstill agreement; (ii) pursuant to a tender
or exchange offer for Global voting securities which is not opposed by
Global's board of directors; (iii) in a business combination; or (iv) as
provided by the registration rights given U S WEST in the Agreement (see
description of Tender Offer and Purchase Agreement). U S WEST agrees not to
transfer all or a substantial part of any affiliate's or subsidiary's capital
stock which purchases Global common stock pursuant to the tender offer,
without first acquiring such Global Stock from its subsidiary or affiliate.
Proxy Solicitations/Voting. During the standstill period, U S WEST and its
affiliates will not solicit proxies or participate in a proxy solicitation in
opposition to Global's board of directors' recommendation or proposal.
U S WEST will not submit a proposal or induce any person to do so or influence
any person with respect to Global common stock without a formal resolution
adopted by Global's board approving such action. At any meeting or consent
solicitation to elect the Global board of directors, U S WEST and its
affiliates will vote all of their shares in favor of the individuals
recommended for election by the Global board of directors.
No Voting Trusts, Pooling Agreements or Formation of Groups. Except as
contemplated by the voting agreement, during the standstill period, U S WEST
and its affiliates will not participate in a pooling agreement, syndicate,
voting trust or other group for the purpose of acquiring, holding, voting or
disposing of Global common stock.
Limitation on Various Other Actions. During the standstill period, U S WEST
and its affiliates will not, among other things, take any of the following
actions:
. seek to effect a change in control or reorganization of Global;
. seek to effect any influence over Global's management, directors, or
policies;
. assist anyone in circumventing the provisions of the standstill
agreement;
. present any proposal, or encourage any person to make such a proposal,
expected to result in any of the above-mentioned actions or result in U
S WEST increasing its Global common stock in violation of the standstill
agreement;
. publicly suggest its willingness to engage in any of the above-mentioned
actions; or
. request a waiver or amendment of any of the covenants with respect to
Global common stock.
Representations
During standstill period and if requested by Global, U S WEST will be
present at all meetings of shareholders at which Global board members are to
be elected.
VOTING AGREEMENT
General
The voting agreement establishes, among other things, how U S WEST will vote
its shares of Global common stock. Because the description of the voting
agreement contained in this document is a summary, it does not contain all the
information that may be important to you. A copy of the voting agreement is
filed as Exhibit (c)(3) to the 14D-1 filed by U S WEST with the Securities and
Exchange Commission on May 21, 1999.
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Agreement to Vote Shares
The voting agreement provides that at every Global shareholder meeting and
on every action taken by written consent, U S WEST agrees to vote its shares
in favor of the following:
. the Merger (See "--The Merger Agreement") and any action required in
furtherance thereof; and
. the Frontier Merger Agreement and any action required in furtherance
thereof.
The voting agreement also provides that at every Global shareholder meeting
and on every action taken by written consent, unless otherwise agreed to by
Global, U S WEST agrees to vote its shares against the following:
. any action which would reasonably be expected to result in a failure to
satisfy the conditions to the consummation of the merger agreement.
Representations and Warranties of U S WEST
The voting agreement contains representations and warranties, subject to
qualifications, made by U S WEST to Global as to, among other things:
. its current ownership of no shares of Global Common Stock;
. its sole power to vote, dispose of, convert, or demand appraisal rights
with respect to shares of Global Common Stock it acquires;
. corporate authorization to enter into the voting agreement, to
consummate the transactions contemplated thereby, and the enforceability
of the voting agreement against U S WEST;
. absence of conflicts with its organizational documents, any law or
regulation and any agreement to which it is a party;
. consents and filings required in connection with the voting agreement;
and
. absence of liens on U S WEST's shares of Global Common Stock.
Representations and Warranties of Global
The voting agreement contains representations and warranties, subject to
qualifications, made by Global to U S WEST as to, among other things:
. corporate authorization to enter into the voting agreement, to
consummate the transactions contemplated thereby, and the enforceability
of the voting agreement against Global;
. absence of conflicts with its organizational documents, any law or
regulation and any agreement to which it is a party; and
. consents and filings required in connection with the voting agreement.
Covenants of U S WEST
Restriction on Transfer, Proxies and Noninterference. The voting agreement
contains certain covenants whereby U S WEST agrees not to:
. offer, sell, or otherwise dispose of, or enter into an arrangement to
offer, sell or otherwise dispose of, any shares of Global Common Stock;
. grant proxies or powers of attorney with respect to such shares;
. deposit such shares into a voting trust or enter into a voting agreement
with respect to such shares.
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U S WEST further agrees not to take any action that would make any of its
representations and warranties contained in the voting agreement (see "--
Representations and Warranties" of U S WEST) untrue or which would prevent U S
WEST from performing its obligations under the voting agreement. U S WEST
agrees to use its reasonable efforts to consummate the transactions
contemplated by the merger agreement and the voting agreement.
Termination
The voting agreement terminates upon the later of:
. the earlier of (a) the consummation of the merger and (b) the
termination of the merger agreement pursuant to its terms; and
. the earlier of (a) the consummation of the Frontier merger and (b) the
termination of the Frontier merger agreement pursuant to its terms.
Upon termination, the voting agreement will become void and there will be no
liability on any party or any of its directors, officers, partners,
shareholders, employees, agents, advisors, representatives and affiliates in
connection with the voting agreement or the transactions contemplated thereby.
However, parties remain liable for their breach of the voting agreement. The
voting agreement provides that it does not limit or modify the rights,
obligations or liabilities of any person under any other contract, including
the merger agreement.
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THE MERGER AGREEMENT
General
The merger agreement provides that U S WEST and Global will form a
corporation under Delaware law that, after the merger becomes effective, will
be the Parent corporation. Parent will be equally owned by U S WEST and
Global. Parent will issue two classes of common stock. One class, the Parent
Class A Common Stock, will reflect the local service provider business of
Parent. The other class, the Parent Class B Common Stock will reflect the
global service provider business of Parent. Promptly after the formation of
Parent, U S WEST and Global will cause Parent to form two wholly owned
subsidiaries. At the effective time of the merger, U S WEST Merger Sub will be
merged into U S WEST and U S WEST will be the surviving company and Global
Merger Sub will merge into Global and Global will be the surviving company.
This section of the document describes material provisions of the merger
agreement. Because the description of the merger agreement contained in this
document is a summary, it does not contain all the information that may be
important to you. A copy of the Merger Agreement is filed as Exhibit (c)(1) to
the Schedule 14D-1 filed by U S WEST with the Securities and Exchange
Commission on May 21, 1999.
General Information Regarding the Mergers
Closing of the Mergers. The mergers will close as soon as practicable upon
the fulfillment or waiver of all closing conditions. The mergers are expected
to close shortly after the approval of the shareholders of U S WEST and
Global, respectively.
Effective Time of the Mergers. At the closing of the mergers, the parties to
the merger agreement will file a certificate of merger with the Delaware
Secretary of State and an application for a certificate of amalgamation with
the Bermuda Registrar of Companies. The mergers will become effective at the
time specified in the certificate of merger and the certificate of
amalgamation referenced in the preceding sentence.
Operation of Parent Following the Mergers. In addition to containing the
terms of Parent Class A Common Stock and Parent Class B Common Stock (as
described elsewhere in this Offer to Purchase), the certificate of
incorporation of Parent will contain such other provisions as are customary
for public companies, including a classified board of directors. In addition,
the parties have agreed that Parent will also adopt an appropriate shareholder
rights plan.
Parent's board of directors will have twenty-two members, ten of whom will
be designated by U S WEST, ten of whom will be designated by Global and two of
who will be designated by U S WEST (and be reasonably satisfactory to Global)
and will not be affiliated with either U S WEST or Global.
The merger agreement also provides that Mr. Trujillo and Robert Annunziata,
currently the Chief Executive Officer of U S WEST, will serve as Co-Chairmen
and Co-Chief Executive Officers of Parent following the Closing.
Alternative Structure. U S WEST and Global agree to use their best efforts
to restructure the mergers to qualify as tax-free, if Global's acquisition of
Frontier is consummated pursuant to Section of 1.10 of the Frontier Merger
Agreement.
Location and Corporate Identity of Parent. At the effective time, the
Parent's headquarters will be located in New York City and Parent's corporate
name will be "Global Crossing, Inc."
Conversion
Common Stock. At the time the merger becomes effective, each share of Global
Common Stock and each share of U S WEST Common Stock (excluding treasury
shares and shares of Global Common Stock owned by
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U S WEST and shares of U S WEST Common Stock owned by Global) shall be
converted into shares of Parent Class A Common Stock and shares of Parent
Class B Common Stock according to the conversion and election procedures
below.
Options, Warrants and Other Rights. Each option, warrant and other right to
purchase or otherwise acquire Global Common Stock or U S WEST Common Stock
(excluding any such options, warrants or other rights owned by U S WEST or
Global) shall be converted into options, warrants or rights to purchase or
otherwise acquire Parent Class A Common Stock and Parent Class B Common Stock
according to the conversion and election procedures below. The exercise price
of the new options, warrant or rights will be adjusted in proportion to the
Class B to Class A Value Ratio (as defined below).
Conversion Ratio. Each holder of Global Common Stock or options, warrants,
or rights to purchase or otherwise acquire Global Common Stock (with the same
exceptions as noted above) shall have the right to make a number of elections
for Parent Class A Common Stock and Parent Class B Common Stock equal to the
sum of the number of shares of Global Common Stock held by the holder at the
effective time of the merger and the number of shares of Global Common Stock
issuable upon exercise of options, warrants or rights held by the holder at
the effective time (with the same exceptions as noted above) could be
exchanged if exercised. Each holder of U S WEST Common Stock or options,
rights or warrants to purchase or otherwise acquire U S WEST Common Stock
(with the same exceptions as noted above) shall have the right to make a
number of elections between Parent Class A Common Stock and Parent Class B
Common Stock equal to the sum of the shares of U S WEST Common Stock held by
the holder at the effective time of the merger and the number of shares of U S
WEST Common Stock issuable upon exercise of options, warrants or rights held
by the holder at the effective time of the merger (with the same exceptions as
noted above) multiplied by the conversion ratio. The conversion ratio is
determined by dividing the total number of shares of Global Common Stock
outstanding on the date of the Merger Agreement (on a fully diluted basis,
using the treasury method of calculation) less 39,259,305, divided by the
total number of shares of U S WEST Common Stock outstanding on the date of the
Merger Agreement (on a fully diluted basis, using the treasury method of
calculation). For the purpose of calculating the conversion ratio above, the
number of outstanding shares of Global Common Stock outstanding on the date of
the Merger Agreement includes the number of shares of Global Common Stock to
be issued in exchange for Frontier shares according to the terms of the
Global/Frontier Merger Agreement.
Election. Each election entitles the holder to make an election for Parent
Class A Common Stock or Parent Class B Common Stock. For each election made
for Parent Class B Common Stock, the holder shall be entitled to receive a
number of shares of Parent Class B Common Stock equal to the sum of 1 plus the
Class B to Class A Value Ratio (as defined below) divided by the Class B to
Class A Value Ratio (as defined below) for each election made for. If Parent
Class A Common Stock, the holder shall be entitled to receive a number of
shares of Parent Class A Common Stock equal to the sum of 1 plus the Class A
to Class B Value Ratio (as defined below) multiplied by the number of
elections.
Pro Rata Adjustment. The maximum aggregate number of shares of Parent Class
A Common Stock or Parent Class B Common Stock that may be elected equal the
maximum number of elections that can be made. If the holders of Global Common
Stock and U S WEST Common Stock and the holders of options, warrants or rights
to purchase Global Common Stock or U S WEST Common Stock elect, in the
aggregate, a number of shares of Parent Class A Common Stock or Parent Class B
common stock exceeding the applicable cap, the number of shares exceeding the
cap will be reduced pro rata.
Election Procedures
Not later than thirty days prior to the anticipated effective time of the
merger or such other date as the parties may agree in writing, Global and U S
WEST shall fix a record date for determining which of its shareholders and
holders of options, warrants or rights to purchase common stock are entitled
to make an election and will mail a form of election together with a letter of
transmittal to such holders and each person who subsequently becomes a holder.
The election will be made by delivering the form of election to the exchange
agent mutually
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chosen by Global and U S WEST. Such election will be made in terms of the
percentage (in increments of one percent (1%)) that such holder seeks of
shares of Parent Class B Common Stock and/or shares of Parent Class A Common
Stock. The form of election must be properly completed, signed and submitted
to the exchange agent by 5:00 p.m. (New York City time) on the last business
day prior to the effective time of the merger (or such other time and date as
the Parties may agree) and accompanied by the following (other than in the
case of holders of Global and U S WEST options, warrants and rights to acquire
their respective common stock):
. the certificates as to which the election is being made; or
. an appropriate guarantee of delivery of such certificates from a firm
which is a member of a registered national securities exchange or of the
National Association of Securities Dealers, Inc., or a commercial bank
or trust company having an office or correspondent in the United States
and such certificates are delivered to the exchange agent:
(i) within three NYSE trading days after the date of execution of
the guarantee of delivery, and
(ii) with a properly completed and signed letter of transmittal.
Failure to deliver certificates covered by a guarantee of delivery within
three New York Stock Exchange trading days will invalidate the election.
Parent will have the discretion, which it may delegate to the exchange
agent, to determine in good faith whether forms of election have been
properly completed and is under no obligation to notify any person of a
defect. Any form of election may be changed or revoked prior to the
election deadline, and if so revoked Parent or the exchange agent will
return the certificates representing the shares of the Global or U S WEST
common stock covered by such form of election to be promptly returned
without charge. If a holder of Global or U S WEST common stock or holder of
options, warrants or rights to purchase such common stock:
. does not submit a form of election which is received by the exchange
agent prior to the Election deadline (including a holder who submits and
then revokes his or her form of election and does not resubmit a form
election which is timely received by the exchange agent); or
. submits a form of election without the corresponding certificates or
guarantee; or
. if the exchange agent cannot reasonably determine the election
preference of such holder submitting a form of election
then such holder shall be deemed to have elected shares of Parent Class B
Common Stock and shares of Parent Class A Common Stock in the same
proportion as the holders of Global Common Stock or U S WEST Common Stock,
respectively, who actually made elections.
Certificates surrendered for exchange by any affiliate of Global or U S
WEST shall not be exchanged until Parent shall have received a signed
agreement from such affiliate.
Exchange of Shares
Exchange Agent. Prior to the merger, Global and U S WEST will choose an
exchange agent to effect the exchange of certificates representing shares of U
S WEST and Global common stock for certificates representing shares of Parent
Class A Common Stock and Parent Class B Common Stock and cash to be paid in
lieu of fractional shares. From time to time after the merger, Parent will
deposit with the exchange agent certificates representing Parent Class A and
Class B stock.
Exchange of Shares. U S WEST and Global shareholders who surrender their
stock certificates to the exchange agent, or to the Parent (if the exchange
agent's appointment is terminated) will receive certificates representing the
number of whole shares of Parent Class A Common Stock and Class B Common Stock
to which the holders are entitled in accordance with the election procedure
described above, with cash being paid in lieu of fractional shares. Holders of
unexchanged U S WEST and Global stock certificates will not receive any
dividends or other distributions made by Parent after the mergers until their
stock certificates are surrendered. Upon surrender, however, the holders will
receive all dividends and distributions made on the related Parent shares
subsequent to the mergers, without interest, together with cash in lieu of
fractional shares. If the exchange
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agent's appointment is terminated, holders will look solely to the Parent for
payment of such dividends and distributions. No party will be liable to U S
WEST or Global shareholders for any Parent shares or cash delivered to a
public official pursuant to any abandoned property, escheat or similar laws.
Fractional Shares. No fractional Parent Common Stock shares will be issued
to holders of U S WEST or Global common stock. In lieu of fractional shares,
each holder of fractional shares of Parent common stock will receive a cash
payment.
Conditions to the Mergers
Conditions to Each Party's Obligation to Effect the Mergers. The obligations
of each party to effect the mergers are subject to the following conditions:
. the approval by the shareholders of Global and U S WEST of the mergers;
. the approval by Parent shareholders of the issuance of Parent Class A
Common Stock and Parent Class B Common Stock;
. the absence of any order, injunction or other legal restraint making
illegal or prohibiting the consummation of the mergers or creating an
adverse effect on Global or U S WEST;
. the expiration or early termination of the waiting period under the
Hart-Scott-Rodino Act;
. the receipt of all material approvals or permits from any governmental
authority necessary to consummate the mergers;
. the Securities and Exchange Commission not having issued a stop order
suspending the effectiveness of the registration statement and there not
being pending or threatened any proceedings for such purpose;
. the receipt of all required state securities or "blue sky" permits or
approvals;
. the approval for listing on the New York Stock Exchange or the Nasdaq
National Market System of the Parent Class A Common Stock and Parent
Class B Common Stock, subject to official notice of issuance;
. the receipt by Global and U S WEST of all approvals or consents required
under any agreement, except where it would not materially adversely
affect Parent, U S WEST or Global;
. the consummation of Global's acquisition of Frontier pursuant to the
Frontier Merger Agreement; and
. Global's filing of a notice of discontinuance, an application for the
sanctioning of a "scheme of arrangement", or an application for a
certificate of amalgamation, as the case may be, with the appropriate
Bermuda authority.
Additional Conditions to Obligations of Global. The obligations of Global to
effect the mergers are further subject to the following additional conditions:
. the representations and warranties of U S WEST set forth in the merger
agreement being true and correct in all material respects on May 16,
1999 and as of the closing date, or another date stated any
representation or warranty, and an officer's certificate received by
Global to such effect;
. compliance by U S WEST in all material respects with its agreements and
covenants under the merger agreement, and an officer's certificate
received by Global to such effect;
. the receipt by Global of a written opinion of Skadden, Arps, Slate,
Meagher & Flom LLP that the consummation of the transactions will for
U.S. federal income tax purposes:
a. constitute a tax-free exchange of shares of Global Common Stock
for shares of Parent Common Stock; and
b. be a non-recognition transaction for both Global and Parent
. if the opinion of Cadwalader, Wickersham & Taft that the consummation of
the transactions will be a non-recognition transaction as to U S WEST
and Parent is not rendered to U S WEST, then Global will not be
obligated to effect the mergers (even if U S WEST waives the condition)
provided that Global has received an opinion of Skadden, Arps, Slate,
Meagher & Flom LLP that there exists a substantial likelihood of a tax
liability that would result in a material adverse effect on U S WEST or
Parent, as the case may be.
. the receipt by Global of affiliate agreements from each affiliate of U S
WEST;
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. U S WEST taking all actions necessary so that the Parent's board will
have the agreed-upon composition as described under "Operation of Parent
Following the Mergers."
Additional Conditions to Obligations of U S WEST. The obligations of U S
WEST to effect the merger are further subject to the following additional
conditions:
. the representations and warranties of Global set forth in the merger
agreement being true and correct in all material respects on May 16,
1999 and as of the closing date, or another date stated in any
representation or warranty, and an officer's certificate received by U S
WEST to such effect;
. compliance by Global in all material respects with its agreements and
covenants under the merger agreement, and an officer's certificate
received by U S WEST to such effect;
. the receipt by U S WEST of a written opinion of Cadwalader, Wickersham &
Taft that the consummation of the transactions will for U.S. federal
income tax purposes:
a. not cause the spin-off of U S WEST completed on June 12, 1998 to
become taxable, including taxability pursuant to Section 355(e) of the
Internal Revenue Code;
b. constitute for U.S. federal income tax purposes a tax-free
exchange of shares of U S WEST common stock for shares of Parent common
stock; and
c. be a non-recognition transaction as to U S WEST and Parent.
. if the opinion of Skadden, Arps, Slate, Meagher & Flom LLP that the
consummation of the transactions will be a non-recognition as to Global
and Parent are not rendered, with respect to Global or Parent, then U S
WEST shall not be obligated to effect the mergers, even if Global waives
the condition, provided that U S WEST has received an opinion of
Cadwalader, Wickersham & Taft, that there exists a substantial
likelihood of a tax liability that would represent a material adverse
effect to Global or Parent, as the case may be.
. the receipt by U S WEST of affiliate agreements from each affiliate of
Global;
. Global taking all actions necessary so that the Parent's board will be
comprised of twenty-two people, ten of which appointed by Global, ten of
which appointed by U S WEST, and the remaining two shall be appointed by
U S WEST, but shall be independent directors not affiliated with U S
WEST; and
. the Mergers being accounted for under the purchase method of accounting,
with U S WEST as the acquiror.
Representations and Warranties
In the merger agreement U S WEST and Global each make similar
representations and warranties, which include, among other things:
. its organization and the organization of its significant subsidiaries;
. effectiveness of its certificate of incorporation and bylaws, and the
certificate and bylaws of its significant subsidiaries, and there being
no violation of such certificates and bylaws;
. its capital structure;
. corporate power and authorization to enter into the merger agreement and
to consummate the merger and related transactions;
. absence of conflict with its charter documents and receipt of all
required consents and approvals;
. all recent required reports having been filed with the SEC and the
accuracy of those reports;
. absence of material adverse changes since December 31, 1998;
. the absence of material litigation;
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. compliance with laws and permits;
. accuracy of information supplied for use in the registration statement
and joint proxy statement;
. employee benefit matters;
. labor matters;
. environmental matters;
. board approval;
. approval by a majority of votes cast being the only shareholder vote
required;
. the opinion of its financial advisor;
. brokers' and finders' fees;
. tax matters;
. intellectual property matters;
. insurance matters;
. its ownership of less than 10% of the other's outstanding shares;
. material contracts;
. necessary licenses;
. year 2000 readiness matters; and
. no violation of, among other things, Section 104 of the Foreign Corrupt
Practices Act or similar laws.
Conduct of U S WEST and Global prior to the Mergers
Transition Planning. Global and U S WEST have agreed to establish a four-
person committee (comprised equally of representatives) responsible for
coordinating all transition planning and implementation relating to the
mergers, including examining alternatives regarding the future organization
and management of Global and U S WEST and the coordination of policies and
strategies with respect to regulatory authorities.
Operating Covenants. Prior to the mergers Global, U S WEST and their
respective subsidiaries have agreed to conduct their operations in the
ordinary course consistent with past practice, and will use their best efforts
to preserve intact their business organization, keep available the services of
their officers and employees and maintain advantageous relationships with
persons having business relationships with them. Subject to some exceptions,
including obtaining the written consent of the transition committee, the
merger agreement places specific restrictions on the ability of Global and U S
WEST and their respective subsidiaries to, among other things:
. issue, sell, encumber or dispose of its capital stock or securities
convertible into or exercisable for its capital stock (excluding
employee benefit plans);
. amend or propose to amend its certificate of incorporation, bylaws, or
shareholder rights plan except as disclosed in the draft proxy statement
of Global and Frontier to be filed in connection with the Frontier
Merger Agreement;
. split, combine or reclassify its outstanding shares of common stock;
. with respect to Global, declare or pay any dividend (U S WEST is
permitted to pay dividends consistent with past practice);
. redeem, purchase or acquire its capital stock, except in connection with
its employee benefit plans;
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. acquire any corporation, partnership or business or increase any
investment if the aggregate of such transactions exceeds $3 billion
. except in the ordinary course of business, make certain capital
expenditures;
No Solicitation. Pursuant to the merger agreement and except as described
below, Global and U S WEST agree that neither they nor their respective
subsidiaries will, solicit, initiate, encourage (including by way of
furnishing information) or knowingly facilitate any alternative transaction,
as defined below, or participate in any discussions regarding any alternative
transaction.
Under the merger agreement, "alternative transaction" means, with respect to
Global or U S WEST:
. any acquisition by a third party of more than 20% of its outstanding
shares pursuant to a tender offer, exchange offer or otherwise;
. any merger or other business combination involving it or one of its
subsidiaries, regardless of who the surviving corporation may be; or
. any other transaction pursuant to which any third party acquires control
of its assets or its subsidiaries' assets for consideration equal to 20%
or more of the fair market value of its outstanding common stock.
Notwithstanding the foregoing, the board of directors of Global or U S WEST,
as the case may be, is permitted under the merger agreement to:
. engage in discussions or negotiations with, or provide information to,
any person in response to an unsolicited alternative transaction
proposal submitted to it prior to the date its shareholders adopt the
merger agreement, if, among other things, prior to participating in
discussions or furnishing information:
a. it executes a confidentiality agreement with the third party in
question containing terms at least as favorable to it as the one
previously entered into between Global and U S WEST; and
b. it determines that the alternative transaction proposal is a
superior proposal (as defined in the merger agreement) and, after
receiving the advice of outside Counsel, determines that failing to
participate in discussions with the third party in question or to
furnish information would result in a reasonable likelihood that it
would breach its fiduciary duties to its shareholders.
Global and U S WEST must also provide the other with contemporaneous notice
of entering into any discussions or furnishing any information and prompt
notice of the terms and conditions of any alternative transaction and the
identity of the person making it.
Global and U S WEST agree not to release any third party from any provision
of any standstill agreement which could affect an alternative transaction and
agree that either party will be entitled to enforce the other party's rights
and remedies in connection with such agreements. Nothing shall prohibit either
party (i) from taking and disclosing to its shareholders a position
contemplated by Rule 14e-9 or Rule 14e-2(a) under the Exchange Act regarding
the tender offer or (ii) from making any disclosure to its shareholders if, in
the good faith judgment of such party's board of directors, after receipt of
advice from outside counsel, failure to disclose would result in a possible
breach of fiduciary duty.
Other Covenants Regarding the Period Prior to the Mergers.
. Global and U S WEST have agreed to consult regarding their disclosure
and filings of financial statements prior to the merger; and
. neither U S WEST nor Global has the right to control the other's
operations prior to the merger.
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Covenants and Other Agreements. The merger agreement contains additional
agreements relating to, among other things:
. the preparation, filing, and distribution of the registration statement
and the mailing of the joint proxy statement subject to the delivery of
"comfort" letters from each company's independent accountants;
. mutual access to information;
. cooperation in the issuance of press releases relating to the merger;
. cooperation regarding certain filings with governmental authorities and
other agencies and organizations;
. notification upon the occurrence or non-occurrence of an event that
would:
a. violate a representation, warranty, covenant or condition in the
merger agreement or,
b. have a material adverse effect on such party or require an amendment
to the registration and joint proxy statement.
. cooperation to cause the merger to qualify as a tax free exchange;
. each parties' best efforts to obtain blue sky permits for Parent Class A
Common Stock and Parent Class B Common Stock prior to the merger; and
. obtaining the prior written consent of the other party to engage in
acquisitions prior to the merger in excess of $3 billion in the
aggregate.
Board Recommendation; Shareholders Meetings. Global and U S WEST have each
agreed to convene a shareholders meeting as soon as practicable for the
purpose of voting on the adoption of the merger agreement. Each company's
board of directors may not withdraw or modify its recommendation in any manner
adverse to the other company, unless:
. it has concluded in good faith, on the advice of its outside financial
advisors, that the proposal is a superior proposal.
Affiliate Agreements. Each of Global and U S WEST have agreed to disclose to
the other party all persons who may be deemed an affiliate of such party for
purposes of Rule 145 under the Securities Act. Each of Global and U S WEST has
further agreed to use its reasonable best efforts to deliver to the other
party, a letter from each such affiliate in the form agreed to in the Merger
Agreement.
Listing of Shares. The parties agree to use their best efforts to cause the
Parent Class A Common Stock and Parent Class B Common Stock shares to be
listed on the New York Stock Exchange or Nasdaq.
Directors' and Officers' Indemnification and Insurance. For a period of six
years following the merger, U S WEST and Global agree:
. not to modify the provisions in their respective charter documents
regarding director and officer indemnification;
. to maintain in effect their current director and officer liability
insurance; and
. to indemnify the directors of U S WEST and Global, respectively, as
permitted by their charter documents and applicable law.
Determination of Class B to Class A Value Ratio. At least sixty days prior
to the anticipated effective time, U S WEST and Global will retain a
nationally recognized investment bank as an appraiser to determine the "Class
B to Class A Value Ratio", The Class B to Class A Value Ratio represents the
appraiser's assessment of the relative value of Parent Class B Common Stock to
Parent Class A Common Stock. In determining such
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valuations, the appraiser will employ methodologies and analyses consistent
with those traditionally utilized by investment banking firms in performing
public company valuations:
Global/Frontier Merger. In connection with Frontier Merger, Global agrees
to:
. use its reasonable best efforts to close the transactions contemplated
by the Frontier Merger Agreement;
. not take any action which would materially adversely impact the timing
of the closing of the transactions contemplated by the Frontier Merger
Agreement;
. not waive or amend any material economic provision of the Frontier
Merger Agreement without the prior written approval of U S WEST (Global
may increase the merger consideration without consent in the event an
Acquisition Proposal (as defined in the Frontier Merger Agreement) is
made to Frontier, but, if the increase is in cash, not in excess of $3
billion.
Global's Cable & Wireless Acquisition. Global agrees, in connection with its
acquisition of Cable & Wireless Global Marine, to use its reasonable efforts
to close the Cable & Wireless acquisition and not to take any action which
would materially adversely impact the timing of the closing of the Cable &
Wireless acquisition or on its ability to satisfy the conditions precedent.
Interim Dividend Policy. Global agrees not to declare any dividend without U
S WEST's written consent. U S WEST is permitted, without Global's consent, to
pay dividends not in excess of $0.75 per quarter. Additionally, U S WEST may
declare and pay to shareholders of record on the date immediately prior to the
effective time: (i) a special dividend of $1.00 per share and (ii) the pro
rata portion of the then regular quarterly dividend through such date.
Services Agreement. U S WEST and Global have agreed to use their best
efforts to enter into a retail marketing and services agreement within thirty
30 days of the date of the merger agreement, covering the marketing of U S
WEST's services and the purchase by U S WEST of Global's services. U S WEST
and Global further agree to use their best efforts to enter into an agreement
to form and operate outside of U S WEST's service territory a data-focused
competitive local exchange carrier.
Global Group/Local Group Definitions. Sixty days prior to the merger, U S
WEST and Global will agree on the definitions of Global Group and Local Group
to be used for purposes of the determination of the Class B to Class A Value
Ratio.
Termination
The merger agreement provides that prior to the merger, the merger agreement
may be terminated:
. by mutual written consent of Global and U S WEST;
. by either Global or U S WEST if:
a. the merger is not consummated by May 16, 2000 (or November 30,
2000 if all conditions, except those relating to the expiration of the
Hart-Scott-Rodino waiting period and other regulatory consents, have
been fulfilled prior to May 16, 2000), so long as the party seeking to
terminate did not prevent consummation by failing to fulfill any of its
obligations under the merger agreement;
b. any court or other governmental authority issues a non-appealable
final order, decree or ruling or takes any other action which prohibits
the merger, so long as the party seeking termination on that basis has
used its reasonable best efforts to prevent such action;
c. the shareholders of Global or U S WEST fail to adopt the merger
agreement;
d. the other party materially breaches the merger agreement and the
breach is incapable of being cured prior to May 16, 2000 (or November
30, 2000 if all conditions, except those relating to the
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expiration of the Hart-Scott-Rodino waiting period and other regulatory
consents, have been fulfilled prior to May 16, 2000);
e. the other party's board of directors withdraws or adversely
modifies its approval or recommendation that its shareholders adopt the
merger agreement, or fails to reaffirm such approval or recommendation
upon request;
f. the other party's board of directors approves or recommends any
alternative transaction;
g. the other party's board of directors fails to include its
unqualified recommendation that its shareholders approve the merger;
h. the other party's board resolves to take any of the action
specified in e. through f. above;
i. the Frontier Merger Agreement is terminated;
j. prior to the vote of its respective shareholders adopting the
merger agreement, its board of directors decides to accept a
transaction proposal which is a superior proposal provided that:
i. it has complied with the covenant described under "--No
Solicitation";
ii. its board determines in good faith, on the basis of advice
from outside counsel that proposal is a superior proposal; and
iii. its board determines in good faith, on the basis of advice
from outside counsel, that accepting the superior proposal
would likely be required to prevent the board from breaching
its fiduciary duties.
. by Global, if:
a. U S WEST fails to consummate the purchase of Global shares
pursuant to its tender offer by July 31, 1999 (or August 30, 1999, if
the Hart-Scott-Rodino Act waiting period applicable to the tender offer
has not expired) (see description of Tender Offer).
b. it determines that the approval of the fair value of Global common
stock, as determined by the Bermuda Court, is excessive.
Termination Fees and Expenses
Termination Fee Payable to Global
The merger agreement provides for U S WEST to pay Global a termination fee,
in cash, of $850 million if the merger agreement is:
. terminated by Global because:
a. U S WEST's board withdraws or adversely modifies its approval or
recommendation that U S WEST's shareholders adopt the merger agreement
or fails to reaffirm such approval or recommendation upon request;
b. U S WEST's board approves or recommends any "alternative
transaction";
c. U S WEST's board fails to include its unqualified recommendation
that its shareholders approve the merger; or
d. U S WEST's board resolves to take any of the above actions.
. terminated by U S WEST or Global because of the failure to obtain U S
WEST's shareholder approval (and the agreement could not have been
terminated by Global for any of the conditions listed in a. through d.
above), and:
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a.prior to U S WEST's shareholders' meeting an "alternative
transaction" proposal is made involving the acquisition of more than
40% of the outstanding shares of U S WEST or any of its subsidiaries,
and
b.within twelve months after the termination of the merger agreement,
U S WEST enters into a definitive agreement with respect to an
"alternative transaction."
. terminated by Global as a result of U S WEST's material breach
concerning:
a. its covenant concerning the preparation, filing, and distribution
of the registration statement and the mailing of the joint proxy
statement to its shareholders, subject to the delivery of "comfort"
letters from its independent accountants, which remains uncured for 30
days after notice.
b. its covenant regarding the convening of a shareholders meeting as
soon as practicable for the purposes of voting on the adoption of the
merger agreement which remains uncured for 30 days after notice, and
its board of directors not withdrawing or modifying its recommendation
in any manner adverse to Global unless it has concluded in good faith,
on the advice of its outside financial advisors, that the proposal is a
superior proposal.
. terminated by U S WEST pursuant to the provision which allows
termination where prior to the vote of its shareholders adopting the
merger agreement, its board of directors decides to accept a transaction
proposal which is a superior proposal provided that:
i. it has complied with the covenant described under "--No
Solicitation";
ii. its board determines in good faith, on the basis of advice from
outside counsel that proposal is a superior proposal; and
iii. its board determines in good faith, on the basis of advice from
outside counsel, that accepting the superior proposal would
likely be required to prevent the board from breaching its
fiduciary duties.
Termination Fee Payable to U S WEST
The merger agreement provides for the payment by Global to U S WEST of a
termination fee, in cash, of $850 million if the merger agreement is:
. terminated by U S WEST because:
a. Global's board withdraws or adversely modifies its approval or
recommendation that Global's shareholders adopt the merger agreement or
fails to reaffirm such approval or recommendation upon request;
b. Global's board approves or recommends any "alternative
transaction";
c. Global's board fails to include its unqualified recommendation
that its shareholders approve the merger; or
d. Global's board resolves to take any of the above actions.
. terminated by Global or U S WEST because of the failure to obtain
Global's shareholder approval (and where the agreement could have been,
but was not, terminated by U S WEST for any of the conditions listed in
a. through d. above.)
. terminated by Global or U S WEST because of the failure to obtain
Global's shareholder approval (and the agreement could not have been
terminated by U S WEST for any of the conditions listed in a. through d.
above), and:
a. prior to Global's shareholders' meeting an "alternative
transaction" proposal is made involving the acquisition of more than
40% of the outstanding shares of Global or any of its subsidiaries, and
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b. within twelve months after the termination of the merger
agreement, Global enters into a definitive agreement with respect to an
"alternative transaction."
. terminated by U S WEST as a result of Global's material breach
concerning:
a. its covenant concerning the preparation, filing, and distribution
of the registration statement and the mailing of the joint proxy
statement to its shareholders, subject to the delivery of "comfort"
letters from its independent accountants, which remains uncured for 30
days after notice.
b. its covenant regarding the convening of a shareholders meeting as
soon as practicable for the purposes of voting on the adoption of the
merger agreement which remains uncured for 30 days after notice, and
its board of directors not withdrawing or modifying its recommendation
in any manner adverse to U S WEST unless it has concluded in good
faith, on the advice of its outside financial advisors, that the
proposal is a superior proposal.
. terminated by Global pursuant to the provision which allows termination
where prior to the vote of its shareholders adopting the merger
agreement, its board of directors decides to accept a transaction
proposal which is a superior proposal provided that:
i. it has complied with the covenant described under "--No
Solicitation";
ii. its board determines in good faith, on the basis of advice from
outside counsel that proposal is a superior proposal; and
iii. its board determines in good faith, on the basis of advice from
outside counsel, that accepting the superior proposal would
likely be required to prevent the board from breaching its
fiduciary duties.
The termination fee is payable within one business day following the
delivery of notice of termination to the other party, or within one business
day after such party enters into any definitive agreement regarding an
"alternative transaction" which gives rise to the termination fee. If either
party fails to promptly pay the other any termination fee, they will pay the
costs and expenses (including legal fees and expenses) in connection with any
action taken to collect payment.
Amendment; Extension and Waiver.
Global and U S WEST may amend the merger agreement pursuant to a writing
adopted by their respective boards at any time before the merger, but after
the merger agreement is adopted by either Global's or U S WEST's shareholders,
no amendment may reduce or change the consideration to be paid in the merger,
or alter or change any of the terms and conditions of the merger agreement if
such change would adversely affect U S WEST's or Global's shareholders. At any
time before the merger, either Global or U S WEST may:
. extend the other party's time to perform their obligations;
. waive any inaccuracies in the representations and warranties contained
in the merger agreement; and
. waive compliance with any of the agreements or conditions contained in
the merger agreement.
14. Dividends and Distributions. As noted in Section 6 of this Offer to
Purchase, the Company has not paid cash dividends on the Common Stock.
15. Certain Conditions of the Offer. Notwithstanding any other term of the
Offer, the Offeror will not accept for payment or, subject to any applicable
rules and regulations of the Commission, including Rule 14e-1(c) under the
Exchange Act (relating to the Offeror's obligation to pay for or return
tendered shares of Common Stock promptly after termination or withdrawal of
the Offer), pay for any shares of Common Stock tendered pursuant to the Offer
unless any waiting periods applicable to the Offer under the HSR Act shall
have expired or been terminated and the Agreement shall not have been
terminated in accordance with its terms (See Section 13, description of the
Agreement). Furthermore, notwithstanding any other provision of the Offer or
the Agreement,
43
<PAGE>
the Offeror shall not be required to accept for payment or, subject to the
restriction referred to above, pay for any shares of Common Stock tendered
pursuant to the Offer, and may, subject to the terms of the Agreement,
terminate the Offer if, prior to the expiration of the Offer, any of the
following conditions exist or have occurred and remain in effect (other than
as a result of any action or inaction by the Offeror or any of its
subsidiaries which constitutes a breach of the Agreement): any order or
preliminary or permanent injunction shall have been entered in any action or
proceeding before any federal or state court or governmental, administrative
or regulatory authority or agency, or any other action shall have been taken,
or statute, rule, regulation, legislation, judgment or order enacted, entered,
enforced, promulgated, amended or issued by any legislative body, court,
government or governmental, administrative or regulatory authority or agency
which has the effect of making illegal or otherwise prohibiting the acceptance
for payment of, or payment for, some of or all the shares of Common Stock
pursuant to the Offer, which, in the reasonable judgment of the Offeror with
respect to each and every matter referred to above and regardless of the
circumstances giving rise to any such condition, makes it inadvisable to
proceed with the Offer or with such acceptance for payment of or payment for
shares of Common Stock.
The foregoing conditions are for the benefit of the Offeror and may be
asserted by the Offeror regardless of the circumstances giving rise to any
such condition or may be waived by the Offeror in whole or in part at any time
and from time to time in its sole discretion (subject to the terms of the
Agreement). The failure by the Offeror at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right, the waiver of
any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances, and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
16. Certain Legal Matters; Required Regulatory Approvals.
Except as set forth in this Offer to Purchase, including under the caption
"State Approvals" below, based on its review of publicly available filings by
the Company with the Commission and other publicly available information
regarding the Company, the Offeror is not aware of any licenses or regulatory
permits that appear to be material to the business of the Company and its
subsidiaries, taken as a whole, and that might be adversely affected by the
Offeror's acquisition of Shares as contemplated herein, or any filings,
approvals or other actions by or with any governmental authority or
administrative or regulatory agency that would be required for the acquisition
or ownership of the Shares by the Offeror pursuant to the Offer as
contemplated herein. Should any such approval or other action be required, it
is presently contemplated that such approval or action would be sought. Should
any such approval or other action be required, there can be no assurance that
any such approval or action, if needed, would be obtained without substantial
conditions or that adverse consequences might not result to the Company's or
its subsidiaries' businesses, or that certain parts of the Company's, the
Offeror's or any of their respective subsidiaries' businesses might not have
to be disposed of or held separate or other substantial conditions complied
with in order to obtain such approval or action or in the event that such
approvals were not obtained or such actions were not taken. The Offeror's
obligation to purchase and pay for Shares is subject to certain conditions,
including conditions with respect to governmental actions. See "Introduction"
and Section 15 for a description thereof.
Antitrust
Under the provisions of the Hart Scott Rodino Antitrust Improvements Act
applicable to the Offer, the acquisition of Shares under the Offer may be
consummated following the expiration of a 15-calendar day waiting period
following the filing by the Offeror of a Notification and Report Form with
respect to the Offer, unless the Offeror receives a request for additional
information or documentary material from the Antitrust Division or the Federal
Trade Commission ("FTC") or unless early termination of the waiting period is
granted. The Offeror is in the process of making such filing. If, within the
initial 15-day waiting period, either the Antitrust Division or the FTC
requests additional information or material from the Offeror concerning the
Offer, the waiting period will be extended and would expire at 11:59 p.m., New
York City time, on the tenth calendar day after the date of substantial
compliance by the Offeror with such request. Only one extension of the waiting
period pursuant to
44
<PAGE>
a request for additional information is authorized by the HSR Act. Thereafter,
such waiting period may be extended only by court order or with the consent of
the Offeror. In practice, complying with a request for additional information
or material can take a significant amount of time. In addition, if the
Antitrust Division or the FTC raises substantive issues in connection with a
proposed transaction, the parties frequently engage in negotiations with the
relevant governmental agency concerning possible means of addressing those
issues and may agree to delay consummation of the transaction while such
negotiations continue. Expiration or termination of the applicable waiting
period under the HSR Act is a condition to the Offeror's obligation to accept
for payment and pay for Shares tendered pursuant to the Offer.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Offeror's proposed acquisition
of the Company. At any time before or after the Offeror's acquisition of
Shares pursuant to the Offer, the Antitrust Division or the FTC could take
such action under the antitrust laws as it deems necessary or desirable in the
public interest, including seeking to enjoin the purchase of Shares pursuant
to the Offer or the consummation of the Merger or seeking the divestiture of
Shares acquired by the Offeror or the divestiture of substantial assets of the
Company or its subsidiaries or the Offeror's or its subsidiaries. Private
parties may also bring legal action under the antitrust laws under certain
circumstances. Based upon a preliminary examination of information provided by
the Company relating to the businesses in which the Offeror and the Company
are engaged, the Offeror believes that the acquisition of Shares by the
Offeror will not violate the antitrust laws. Nevertheless, there can be no
assurance that a challenge to the Offer or antitrust grounds will not be made
or, if such a challenge is made, of the result thereof.
State Takeover Laws
The Offeror has not attempted to comply with any state takeover statutes in
connection with the Offer. The Offeror reserves the right to challenge the
validity or applicability of any state law allegedly applicable to the Offer
and nothing in this Offer to Purchase nor any action taken in connection
herewith is intended as a waiver of that right. In the event that it is
asserted that one or more takeover statutes apply to the Offer and it is not
determined by an appropriate court that such statute or statutes do not apply
or are invalid as applied to the Offer, the Offeror may be required to file
certain documents with, or receive approvals from, the relevant state
authorities, and the Offeror might be unable to accept for payment or purchase
Shares tendered pursuant to the Offer or be delayed in continuing or
consummating the Offer. In such case, the Offeror may not be obligated to
accept for purchase, or pay for, any Shares tendered.
17. Fees and Expenses. Neither the Offeror, nor any officer, director,
shareholder, agent or other representative of the Offeror, will pay any fees
or commissions to any broker, dealer or other person (other than the
Information Agent and the Depositary) for soliciting tenders of Shares
pursuant to the Offer. Brokers, dealers, commercial banks and trust companies
and other nominees will, upon request, be reimbursed by the Offeror for
customary mailing and handling expenses incurred by them in forwarding
materials to their customers.
The Offeror has retained Beacon Hill Partners, Inc., as Information Agent,
The Bank of New York, as Depositary, and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as Dealer Manager, in connection with the Offer. The Information
Agent and the Depositary will receive reasonable and customary compensation
for their services hereunder and reimbursement for their reasonable out-of-
pocket expenses. The Information Agent and the Depositary will also be
indemnified by the Offeror against certain liabilities in connection with the
Offer. Pursuant to the terms of Merrill Lynch's engagement, the Offeror has
agreed to pay Merrill Lynch for its services as financial advisor and Dealer
Manager in connection with the Merger and the Offer, (i) an initial fee of
$100,000 that was payable upon execution of the engagement agreement, (ii) an
additional fee of $5,000,000 contingent and payable upon the Offeror acquiring
10% or less of the Common Stock of the Company, (iii) an additional fee of
$5,000,000 that was payable upon execution of the Merger Agreement, and (iv)
an additional fee of $30,000,000 which will be payable upon the closing of the
mergers, provided that the fee payable pursuant to this clause (iv) will be
reduced by any fees already paid to Merrill Lynch pursuant to clauses (i)
through (iii) of this sentence. Offeror has also agreed to reimburse Merrill
Lynch for its reasonable out-of-pocket expenses and the reasonable fees and
disbursements of its legal counsel (which fees shall not exceed $50,000), and
to
45
<PAGE>
indemnify Merrill Lynch and certain related parties against certain
liabilities, including liabilities under the federal securities laws, arising
out of Merrill Lynch's engagement.
18. Miscellaneous. The Offer is not being made to, nor will tenders be
accepted from or on behalf of, holders of Shares residing in any jurisdiction
in which the making or acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. In any jurisdiction
where the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer will be deemed to be made on behalf of
the Offeror by one or more registered brokers or dealers licensed under the
laws of such jurisdiction.
No person has been authorized to give any information or make any
representation on behalf of the Offeror other than as contained in this Offer
to Purchase or in the Letter of Transmittal, and, if any such information or
representation is given or made, it should not be relied upon as having been
authorized by the Offeror.
The Offeror has filed with the Commission the Schedule 14D-1, pursuant to
Section 14(d)(1) of the Exchange Act and Rule 14d-1 promulgated thereunder,
furnishing certain information with respect to the Offer. Such Schedule 14D-1
and any amendments, including exhibits, may be examined and copies may be
obtained at the same places and in the same manner as set forth with respect
to the Company in Section 8 (except that they will not be available at the
regional offices of the Commission).
U S WEST, Inc.
May 21, 1999
46
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each
shareholder of the Company or his broker, dealer, commercial bank, trust
company or other nominee to the Depositary at one of its addresses set forth
below:
The Depositary for the Offer is:
THE BANK OF NEW YORK
By Mail: Facsimile Transmission: By Hand or Overnight
(for Eligible Courier:
Institutions Only) Tender & Exchange
Tender & Exchange Department
Department (212) 815-6213 101 Barclay Street
P.O. Box 11248
Receive and Deliver Window
Church Street Station For Confirmation New York, New York 10286
New York, New York 10286- Telephone:
1248
(212) 815-6173
Questions and requests for assistance may be directed to the Information
Agent at its address set forth below. Additional copies of this Offer to
Purchase, the Letter of Transmittal and other tender offer materials may be
obtained from the Information Agent as set forth below, and will be furnished
promptly at the Offeror's expense. You may also contact your broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
Offer.
The Information Agent for the Offer is:
BEACON HILL PARTNERS, INC.
90 Broad Street
New York, New York 10004
(800) 755-5001
(toll free)
Bankers and Brokers Please Call:
(212) 843-8500
The Dealer Manager for the Offer is:
Merrill Lynch & Co.
World Financial Center
North Tower
New York, New York 10281-1305
(212) 449-8971 (Call Collect)
<PAGE>
EXHIBIT (a)(2)
Letter of Transmittal
To Tender Shares of Common Stock
of
Global Crossing Ltd.
Pursuant to the Offer to Purchase
Dated May 21, 1999
of
U S WEST, Inc.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON FRIDAY, JUNE 18, 1999, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
THE BANK OF NEW YORK
By Mail: By Facsimile By Hand or Overnight
Transmission: Courier:
Tender & Exchange
Department (212) 815-6213 Tender & Exchange
P.O. Box 11248 (for Eligible Department
Church Street Station Institutions Only) 101 Barclay Street
New York, New York Receive and Deliver
10286-1248 Window
For Confirmation Telephone:
New York, New York 10286
(212) 815-6173
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE TO A NUMBER, OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
THE INSTRUCTIONS CONTAINED WITHIN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
DESCRIPTION OF SHARES TENDERED
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Name(s) and Address(es) of
Registered Holder(s)
(Please fill in, if blank,
exactly as name(s)
appear(s) on Share Shares Tendered
certificate(s)) (Attach additional signed list if necessary)
- ---------------------------------------------------------------------------------
Total Number
of Shares
Share Represented by Number
Certificate Share of Shares
Number(s)(1) Certificate(s)(1) Tendered(2)
--------------------------------------------------
<S> <C> <C> <C>
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
Total Shares
- ---------------------------------------------------------------------------------
</TABLE>
(1) Need not be completed by Book-Entry Stockholders.
(2) Unless otherwise indicated, it will be assumed that all Shares
represented by Share certificates delivered to the Depositary are being
tendered hereby. See Instruction 4.
1
<PAGE>
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE
THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER FACILITY MAY
DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution _________________________________________________
Account Number ________________________________________________________________
Transaction Code Number _______________________________________________________
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s) ________________________________________________
Window Ticket Number (if any) _________________________________________________
Date of Execution of Notice of Guaranteed Delivery ____________________________
Name of Institution which Guaranteed Delivery _________________________________
If delivered by Book-Entry Transfer, check box: [_]
Account Number ________________________________________________________________
Transaction Code Number _______________________________________________________
Shares to be selected for Payment (See Instruction 7): _______________________
This Letter of Transmittal is to be used by stockholders of Global Crossing
Ltd. if certificates for Shares (as such term is defined below) are to be
forwarded herewith or, unless an Agent's message (as defined in Instruction 2
below) is utilized, if delivery of Shares is to be made by book-entry transfer
to an account maintained by the Depositary at the Book-Entry Transfer Facility
(as defined in and pursuant to the procedures set forth in Section 3 of the
Offer to Purchase). Stockholders who deliver Shares by book-entry transfer are
referred to herein as "Book-Entry Stockholders" and other stockholders who
deliver shares are referred to herein as "Certificate Stockholders."
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver either the certificates for, or a Book-Entry Confirmation
(as defined in Section 3 of the Offer to Purchase) with respect to, their
Shares and all other documents required hereby to the Depositary prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase) must tender
their Shares pursuant to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS
TO THE BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW FOR THIS LETTER OF TRANSMITTAL AND FOR
THE SUBSTITUTE FORM W-9 INCLUDED HEREWITH. PLEASE READ THE INSTRUCTIONS
SET FORTH IN THIS LETTER OF TRANSMITTAL CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to U S WEST, Inc. a Delaware corporation
("Purchaser"), the above-described shares of common stock, par value $0.01 per
share (the "Shares"), of Global Crossing Ltd., a company formed under the laws
of Bermuda (the "Company"), pursuant to Purchaser's offer to purchase
39,259,305 of the outstanding Shares at a price of $62.75 per Share, net to
the seller in cash, without interest thereon (the "Offer Price") upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
May 21, 1999, and in this Letter of Transmittal (which, together with any
amendments or supplements thereto or hereto, collectively constitute the
"Offer"). The undersigned understands that Purchaser reserves the right to
transfer or assign, in whole at any time, or in part from time to time, to one
or more of its affiliates, the right to purchase all or any portion of the
Shares tendered pursuant to the Offer, but any such transfer or assignment
will not relieve Purchaser of its obligations under the Offer and will in no
way prejudice the rights of tendering stockholders to receive payment for
Shares validly tendered and accepted for payment pursuant to the Offer.
Receipt of the Offer is hereby acknowledged.
The Offer is being made pursuant to a Tender Offer and Purchase Agreement,
dated as of May 16, 1999 (the "Agreement"), by and between Purchaser and the
Company.
Upon the terms and subject to the conditions of the Offer (and if the Offer
is extended or amended, the terms of any such extension or amendment), subject
to, and effective upon, acceptance for payment of, and payment for, the Shares
tendered herewith in accordance with the terms of the Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, Purchaser all
right, title and interest in and to all the Shares that are being tendered
hereby (and any and all non-cash dividends, distributions, rights, other
Shares or other securities issued or issuable in respect thereof on or after
May 16, 1999 (collectively, "Distributions")) and irrevocably constitutes and
appoints the Depositary the true and lawful Agent and attorney-in-fact of the
undersigned with respect to such Shares (and all Distributions), with full
power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest), to (i) deliver certificates for
such Shares (and any and all Distributions), or transfer ownership of such
Shares (and any and all Distributions) on the account books maintained by the
Book-Entry Transfer Facility, together, in any such case, with all
accompanying evidences of transfer and authenticity, to or upon the order of
Purchaser, (ii) present such Shares (and any and all Distributions) for
transfer on the books of the Company, and (iii) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares (and any
and all Distributions), all in accordance with the terms of the Offer.
By executing this Letter of Transmittal, the undersigned hereby irrevocably
appoints Mark Roellig and Thomas O. McGimpsey in their respective capacities
as officers of Purchaser, and any individual who shall thereafter succeed to
any such office of Purchaser, and each of them, the attorneys-in-fact and
proxies of the undersigned, each with full power of substitution, to vote at
any annual or special meeting of the Company's stockholders or any adjournment
or postponement thereof or otherwise in such manner as each such attorney-in-
fact and proxy or his substitute shall in his sole discretion deem proper with
respect to, to execute any written consent concerning any matter as each such
attorney-in-fact and proxy or his substitute shall in his sole discretion deem
proper with respect to, and to otherwise act as each such attorney-in-fact and
proxy or his substitute shall in his sole discretion deem proper with respect
to, all of the Shares (and any and all Distributions) tendered hereby and
accepted for payment by Purchaser. This appointment will be effective if and
when, and only to the extent that, Purchaser accepts such Shares for payment
pursuant to the Offer. This power of attorney and proxy are irrevocable and
are granted in consideration of the acceptance for payment of such Shares in
accordance with the terms of the Offer. Such acceptance for payment shall,
without further action, revoke any prior powers of attorney and proxies
granted by the undersigned at any time with respect to such Shares (and any
and all Distributions), and no subsequent powers of attorney, proxies,
consents or revocations may be given by the undersigned with respect thereto
(and, if given, will not be deemed effective). Purchaser reserves the right to
require that, in order for Shares or other securities to be deemed validly
tendered, immediately upon Purchaser's acceptance for payment of such Shares,
Purchaser must be able to exercise full voting, consent and other rights with
respect to such Shares (and any and all Distributions), including voting at
any meeting of the Company's stockholders.
3
<PAGE>
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Distributions, that the undersigned owns the Shares tendered
hereby within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), that the tender of the
tendered Shares complies with Rule 14e-4 under the Exchange Act, and that when
the same are accepted for payment by Purchaser, Purchaser will acquire good,
marketable and unencumbered title thereto and to all Distributions, free and
clear of all liens, restrictions, charges and encumbrances and the same will
not be subject to any adverse claims. The undersigned will, upon request,
execute and deliver any additional documents deemed by the Depositary or
Purchaser to be necessary or desirable to complete the sale, assignment and
transfer of the Shares tendered hereby and all Distributions. In addition, the
undersigned shall remit and transfer promptly to the Depositary for the
account of Purchaser all Distributions in respect of the Shares tendered
hereby, accompanied by appropriate documentation of transfer, and, pending
such remittance and transfer or appropriate assurance thereof, Purchaser shall
be entitled to all rights and privileges as owner of each such Distribution
and may withhold the entire purchase price of the Shares tendered hereby or
deduct from such purchase price, the amount or value of such Distribution as
determined by Purchaser in its sole discretion.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, personal
representatives, trustees in bankruptcy, successors and assigns of the
undersigned. Except as stated in the Offer, this tender is irrevocable.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and in
the Instructions hereto will constitute a binding agreement between the
undersigned and Purchaser upon the terms and subject to the conditions of the
Offer (and if the Offer is extended or amended, the terms or conditions of any
such extension or amendment). Without limiting the foregoing, if the price to
be paid in the Offer is amended in accordance with the terms of the Agreement,
the price to be paid to the undersigned will be the amended price
notwithstanding the fact that a different price is stated in this Letter of
Transmittal. The undersigned recognizes that under certain circumstances set
forth in the Offer to Purchase, Purchaser may not be required to accept for
payment any of the Shares tendered hereby.
Unless otherwise indicated under "Special Payment Instructions," please
issue the check for the purchase price of all Shares purchased and/or return
any certificates for Shares not tendered or accepted for payment in the
name(s) of the registered holder(s) appearing above under "Description of
Shares Tendered." Similarly, unless otherwise indicated under "Special
Delivery Instructions," please mail the check for the purchase price of all
Shares purchased and/or return any certificates for Shares not tendered or not
accepted for payment (and any accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing above under "Description of
Shares Tendered." In the event that the boxes entitled "Special Payment
Instructions" and "Special Delivery Instructions" are both completed, please
issue the check for the purchase price of all Shares purchased and/or return
any certificates evidencing Shares not tendered or not accepted for payment
(and any accompanying documents, as appropriate) in the name(s) of, and
deliver such check and/or return any such certificates (and any accompanying
documents, as appropriate) to, the person(s) so indicated. Unless otherwise
indicated herein in the box entitled "Special Payment Instructions," please
credit any Shares tendered herewith by book-entry transfer that are not
accepted for payment by crediting the account at the Book-Entry Transfer
Facility. The undersigned recognizes that Purchaser has no obligation,
pursuant to the "Special Payment Instructions," to transfer any Shares from
the name of the registered holder thereof if Purchaser does not accept for
payment any of the Shares so tendered.
4
<PAGE>
[_]CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST, DESTROYED OR STOLEN AND SEE INSTRUCTION 11.
Number of Shares represented by lost, destroyed or stolen certificates: ____
SPECIAL PAYMENT INSTRUCTIONS (See SPECIAL DELIVERY INSTRUCTIONS
Instructions 1, 5, 6 and 7) (See Instructions 1, 5, 6 and 7)
To be completed ONLY if the To be completed ONLY if certifi-
check for the purchase price of cates for Shares not tendered or
Shares accepted for payment is to not accepted for payment and/or
be issued in name of someone the check for the purchase price
other than the undersigned, if of Shares accepted for payment is
certificates for Shares not ten- to be sent to someone other than
dered or not accepted for payment the undersigned or to the under-
are to be issued in the name of signed at an address other than
someone other than the under- that shown under "Description of
signed or if Shares tendered Shares Tendered."
hereby and delivered by book-en-
try transfer that are not ac- Mail check and/or Share certifi-
cepted for payment are to be re- cates to:
turned by credit to an account
maintained at the Book-Entry Name _____________________________
Transfer Facility other than the (Please Print)
account indicated above.
Address __________________________
Issue: [_] Check [_] Certifi-
cates to: __________________________________
(Include Zip Code)
Name _____________________________
(Please Print) __________________________________
(Taxpayer Identification or
Address __________________________ Social Security Number)
(See Substitute Form W-9)
__________________________________
(Include Zip Code)
__________________________________
(Taxpayer Identification or
Social Security Number)
(See Substitute Form W-9)
Credit Shares delivered by book-
entry transfer and not purchased
to the Book-Entry Transfer
Facility account.
__________________________________
(Account Number)
5
<PAGE>
SIGN HERE
(Also Complete Substitute Form W-9 Below)
............................................................................
............................................................................
(Signature(s) of Stockholder(s))
Dated: ................ 1999
(Must be signed by registered holder(s) exactly as name(s) appear(s) on the
Share certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting
in a fiduciary or representative capacity, please provide the following
information and see Instruction 5.)
Name(s).....................................................................
(Please Print)
Name of Firm................................................................
Capacity (full title).......................................................
(see Instruction 5)
Address.....................................................................
.....................................................................
(Include Zip Code)
Area Code and Telephone Number..............................................
Tax Identification or
Social Security Number......................................................
(See Substitute Form W-9)
GUARANTEE OF SIGNATURE(S) (See Instructions 1 and 5)
Authorized Signature........................................................
Name(s).....................................................................
(Please Print)
Title.......................................................................
Name of Firm................................................................
Address.....................................................................
.....................................................................
(Include Zip Code)
Area Code and Telephone Number..............................................
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Section, includes any
participant in the Book-Entry Transfer Facility's system whose name appears on
a security position listing as the owner of the Shares) of Shares tendered
herewith, unless such registered holder(s) has completed either the box
entitled "Special Payment Instructions" or the box entitled "Special Delivery
Instructions" on the Letter of Transmittal or (b) if such Shares are tendered
for the account of a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a participant in
the Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(each, an "Eligible Institution"). In all other cases, all signatures on this
Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instruction 5.
2. Delivery of Letter of Transmittal and Shares; Guaranteed Delivery
Procedures. This Letter of Transmittal is to be completed by stockholders of
the Company either if Share certificates are to be forwarded herewith or,
unless an Agent's Message is utilized, if delivery of Shares is to be made by
book-entry transfer pursuant to the procedures set forth herein and in Section
3 of the Offer to Purchase. For a stockholder validly to tender Shares
pursuant to the Offer, either (a) a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), together with any required
signature guarantees or an Agent's Message (in connection with book-entry
transfer) and any other required documents, must be received by the Depositary
at one of its addresses set forth herein prior to the Expiration Date and
either (i) certificates for tendered Shares must be received by the Depositary
at one of such addresses prior to the Expiration Date or (ii) Shares must be
delivered pursuant to the procedures for book-entry transfer set forth herein
and in Section 3 of the Offer to Purchase and a Book-Entry Confirmation must
be received by the Depositary prior to the Expiration Date or (b) the
tendering stockholder must comply with the guaranteed delivery procedures set
forth herein and in Section 3 of the Offer to Purchase.
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates and all other required documents to the
Depositary prior to the Expiration Date or who cannot comply with the book-
entry transfer procedures on a timely basis may tender their Shares by
properly completing and duly executing the Notice of Guaranteed Delivery
pursuant to the guaranteed delivery procedure set forth herein and in Section
3 of the Offer to Purchase.
Pursuant to such guaranteed delivery procedures, (i) such tender must be
made by or through an Eligible Institution, (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form provided by
Purchaser, must be received by the Depositary prior to the Expiration Date and
(iii) the certificates for all tendered Shares, in proper form for transfer
(or a Book-Entry Confirmation with respect to all tendered Shares), together
with a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof), with any required signature guarantees, or, in the case of
a book-entry transfer, an Agent's Message, and any other required documents
must be received by the Depositary within three trading days after the date of
execution of such Notice of Guaranteed Delivery. A "trading day" is any day on
which the Nasdaq National Market is open for business.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility
has received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that
Purchaser may enforce such agreement against the participant.
The signatures on this Letter of Transmittal cover the Shares tendered
hereby.
THE METHOD OF DELIVERY OF THE SHARES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. THE SHARES
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
7
<PAGE>
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. All tendering stockholders, by executing
this Letter of Transmittal (or facsimile thereof), waive any right to receive
any notice of acceptance of their Shares for payment.
3. Inadequate Space. If the space provided herein under "Description of
Shares Tendered" is inadequate, the number of Shares tendered and the Share
certificate numbers with respect to such Shares should be listed on a separate
signed schedule attached hereto.
4. Partial Tenders. (Not applicable to stockholders who tender by book-entry
transfer). If fewer than all the Shares evidenced by any Share certificate
delivered to the Depositary herewith are to be tendered hereby, fill in the
number of Shares that are to be tendered in the box entitled "Number of Shares
Tendered." In any such case, new certificate(s) for the remainder of the
Shares that were evidenced by the old certificates will be sent to the
registered holder, unless otherwise provided in the appropriate box on this
Letter of Transmittal, as soon as practicable after the Expiration Date or the
termination of the Offer. All Shares represented by certificates delivered to
the Depositary will be deemed to have been tendered unless otherwise
indicated.
5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written
on the face of the certificate(s) without alteration, enlargement or any
change whatsoever.
If any of the Shares tendered hereby are held of record by two or more joint
owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any Share certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to Purchaser of the authority of such person so
to act must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of Share certificates or
separate stock powers are required unless payment or certificates for Shares
not tendered or not accepted for payment are to be issued in the name of a
person other than the registered holder(s). Signatures on any such Share
certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares evidenced by certificates listed and
transmitted hereby, the Share certificates must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on the Share certificates. Signature(s) on any
such Share certificates or stock powers must be guaranteed by an Eligible
Institution.
6. Stock Transfer Taxes. Except as otherwise provided in this Instruction 6,
Purchaser will pay or cause to be paid all stock transfer taxes with respect
to the transfer and sale of any Shares to it or its order pursuant to the
Offer. If, however, payment of the purchase price of any Shares purchased is
to be made to, or if certificates for Shares not tendered or not accepted for
payment are to be registered in the name of, any person other than the
registered holder(s), or if tendered certificates are registered in the name
of any person other than the person(s) signing this Letter of Transmittal, the
amount of any stock transfer taxes (whether imposed on the registered
holder(s) or such other person) payable on account of the transfer to such
other person will be deducted from the purchase price of such Shares purchased
unless evidence satisfactory to Purchaser of the payment of such taxes, or
exemption therefrom, is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Share certificates evidencing the
Shares tendered hereby.
8
<PAGE>
7. Special Payment and Delivery Instructions; Wire Transfers. If a check for
the purchase price of any Shares accepted for payment is to be issued in the
name of, and/or Share certificates for Shares not accepted for payment or not
tendered are to be issued in the name of and/or returned to, a person other
than the signer of this Letter of Transmittal or if a check is to be sent,
and/or such certificates are to be returned, to a person other than the signer
of this Letter of Transmittal, or to an address other than that shown above,
the appropriate boxes on this Letter of Transmittal should be completed. Book-
Entry Stockholders may request that Shares not purchased be credited to such
account maintained at a Book-Entry Transfer Facility as such stockholder(s)
may designate in the box entitled "Special Payment Instructions." If no such
instructions are given, any such Shares not purchased will be returned by
crediting the account at the Book-Entry Transfer Facility designated above as
the account from which such Shares were delivered.
8. Requests for Assistance or Additional Copies. Questions and requests for
assistance or additional copies of the Offer to Purchase, this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent at its address and phone number set forth
below, or from brokers, dealers, commercial banks or trust companies.
9. Waiver of Conditions. Subject to the Merger Agreement, Purchaser reserves
the absolute right in its sole discretion to waive, at any time or from time
to time, any of the specified conditions of the Offer, in whole or in part, in
the case of any Shares tendered.
10. Backup Withholding. In order to avoid "backup withholding" of federal
income tax on payments of cash pursuant to the Offer, a stockholder
surrendering Shares in the Offer must, unless an exemption applies, provide
the Depositary with such stockholder's correct taxpayer identification number
("TIN") on Substitute Form W-9 in this Letter of Transmittal and certify,
under penalties of perjury, that such TIN is correct and that such stockholder
is not subject to backup withholding.
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding can be credited against the federal income tax
liability of the person subject to the backup withholding, provided that the
required information is given to the IRS. If backup withholding results in an
overpayment of tax, a refund can be obtained by the stockholder upon filing an
income tax return.
The stockholder is required to give the Depositary the TIN (i.e., social
security number or employer identification number) of the record owner of the
Shares. If the Shares are held in more than one name or are not in the name of
the actual owner, consult the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional guidance
on which number to report.
The box in Part 3 of the Substitute Form W-9 may be checked if the tendering
stockholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future. If the box in Part 3 is checked, the
stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN
is provided to the Depositary. However, such amounts will be refunded to such
stockholder if a TIN is provided to the Depositary within 60 days.
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign stockholders should complete and sign the main signature
form and a Form W-8, Certificate of Foreign Status, a copy of which may be
obtained from the Depositary, in order to avoid backup withholding. See the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for more instructions.
11. Lost, Destroyed or Stolen Share Certificates. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary by checking the box immediately preceding the
special payment/special delivery instructions and indicating the number of
Shares lost. The stockholder will then be instructed as to the steps that must
be taken in order to replace the Share certificate(s). This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost, destroyed or stolen Share certificates have been followed.
If shares are not selected for payment, the Depositary will select shares
for payment from the total shares properly tendered and not withdrawn by a
shareholder in accordance with each shareholder's direction as indicated above
in this letter of transmittal.
9
<PAGE>
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF) TOGETHER WITH
ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER,
AN AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR TENDERED
SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED PURSUANT
TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR TO THE
EXPIRATION DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY WITH THE PROCEDURES
FOR GUARANTEED DELIVERY.
IMPORTANT TAX INFORMATION
Under Federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payer) with
such stockholder's correct TIN on Substitute Form W-9 below. If such
stockholder is an individual, the TIN is his social security number. If a
tendering stockholder is subject to backup withholding, such stockholder must
cross out item (2) of the Certification box on the Substitute Form W-9. If the
Depositary is not provided with the correct taxpayer identification number,
the stockholder may be subject to a $50 penalty imposed by the Internal
Revenue Service. In addition, payments that are made to such stockholder with
respect to Shares purchased pursuant to the Offer may be subject to backup
withholding.
Certain stockholders (including, among others, all corporations, and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that stockholder must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. Such statements can be
obtained from the Depositary. Exempt stockholders, other than foreign
individuals, should furnish their TIN, write "Exempt" on the face of the
Substitute Form W-9 below, and sign, date and return the Substitute Form W-9
to the Depositary. See the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will
be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained from the Internal Revenue
Service.
Purpose of Substitute Form W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of such stockholder's correct TIN by
completing the form contained herein certifying that the TIN provided on
Substitute Form W-9 is correct (or that such stockholder is awaiting a TIN.
What Number to Give the Depositary
The stockholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares. If
the Shares are in more than one name or are not in the name of the actual
owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
number to report. If the tendering stockholder has not been issued a TIN and
has applied for a number or intends to apply for a number in the near future,
such stockholder should write "Applied For" in the space provided for in the
TIN in Part 1, and sign and date the Substitute Form W-9. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN within 60
days, the Depositary will withhold 31% on all payments of the purchase price
until a TIN is provided to the Depositary.
10
<PAGE>
PAYER'S NAME: The Bank of New York
- -------------------------------------------------------------------------------
SUBSTITUTE Part 1--PLEASE PROVIDE YOUR ----------------------
Form W-9 TIN IN THE BOX AT RIGHT AND Social Security Number
Department of CERTIFY BY SIGNING AND (If awaiting TIN write
the Treasury DATING BELOW "Applied For")
Internal
Revenue Service
OR
----------------------
Employer Identification
Number
(If awaiting TIN write
"Applied For")
--------------------------------------------------------
Payer's Request for Taxpayer
Identification Number ("TIN")
Part 2--Certificate--Under penalties of perjury, I
certify that:
(1) The number shown on this form is my correct
Taxpayer Identification Number (or I am waiting
for a number to be issued for me), and
--------------------------------------------------------
(2) I am not subject to backup withholding because:
(a) I am exempt from backup withholding, or (b) I
have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report
all interest or dividends, or (c) the IRS has
notified me that I am no longer subject to backup
withholding.
--------------------------------------------------------
CERTIFICATION INSTRUCTIONS--You must cross out item
(2) above if you have been notified by the IRS that
you are currently subject to backup withholding be-
cause of under-reporting interest or dividends on
your tax returns. However, if after being notified by
the IRS that you are subject to backup withholding,
you receive another notification from the IRS that
you are no longer subject to backup withholding, do
not cross out such item (2). (Also see instructions
in the enclosed Guidelines).
SIGNATURE __________________________ DATE ______,1999
--------------------------------------------------------
Part 3--Awaiting TIN [_]
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY CASH PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a Taxpayer Identification Number to the
Depositary by the time of payment, 31% of all reportable payments made to
me thereafter will be withheld, but that such amounts will be refunded to
me if I provide a certified Taxpayer Identification Number to the
Depositary within sixty (60) days.
______________________________________ ____________________________, 1999
Signature Date
11
<PAGE>
Questions and requests for assistance or additional copies of the Offer to
Purchase, this Letter of Transmittal and other tender offer materials may be
directed to the Information Agent or the Dealer Manager at their respective
addresses and telephone numbers set forth below:
The Information Agent for the Offer is:
BEACON HILL PARTNERS, INC.
90 Broad Street
New York, New York 10004
(800) 755-5001
(toll free)
Bankers and Brokers Please Call:
(212) 843-8500
The Dealer Manager for the Offering is:
Merrill Lynch & Co.
World Financial Center
North Tower
New York, New York 10281-1305
(212) 449-8971 (Call Collect)
<PAGE>
EXHIBIT (a)(3)
_____________________________
_____________________________
_____________________________
Offer to Purchase for Cash
39,259,305 Shares of Common Stock
of
Global Crossing Ltd.
at
$62.75 Net Per Share of Common Stock
by
U S WEST, Inc.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON JUNE 18, 1999, UNLESS THE
OFFER IS EXTENDED.
May 21, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by U S WEST, Inc., a Delaware corporation ("Offeror"
or "U S WEST"), to act as Dealer Manager in connection with the Offeror's
offer to purchase 39,259,305 shares of common stock, par value $.01 per share
(the "Common Stock" or the "Shares") of Global Crossing Ltd., a company formed
under the laws of Bermuda (the "Company") at a purchase price of $62.75 per
share of Common Stock net to the seller in cash, without interest thereon,
upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated May 21, 1999 (the "Offer to Purchase"), and in the related
Letter of Transmittal (which, together with any amendments or supplements
thereto, collectively constitute the "Offer") enclosed herewith. Holders of
Shares whose certificates for such Shares (the "Share Certificates") are not
immediately available or who cannot deliver their Share Certificates and all
other required documents to the Depositary on or prior to the Expiration Date,
or who cannot complete the procedures for book-entry transfer on a timely
basis, must tender their Shares according to the guaranteed delivery
procedures set forth in Section 3 of the Offer to Purchase.
Please furnish copies of the enclosed materials to those of your clients for
whose accounts you hold Shares in your name or in the name of your nominee.
The Offer is also subject to other terms and conditions contained in the
Tender Offer and Purchase Agreement. See the Introduction and Sections 1 and
15 of the Offer to Purchase.
Enclosed herewith for your information and forwarding to your clients for
whom you hold Shares registered in your name or in the name of your nominee
are copies of the following documents:
1. The Offer to Purchase, dated May 21, 1999.
2. The related Letter of Transmittal for your use and for the information
of your clients. Facsimile copies of the Letter of Transmittal may be used
to tender Shares.
<PAGE>
3. The Notice of Guaranteed Delivery for Shares to be used to accept the
Offer if certificates for Shares are not immediately available or if such
certificates and all other required documents cannot be delivered to The
Bank of New York (the "Depositary") by the Expiration Date or if, in the
case of the Shares, the procedure for book-entry transfer cannot be
completed by the Expiration Date.
4. A printed form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer.
5. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
6. A return envelope addressed to the Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON JUNE 18, 1999 (THE
"EXPIRATION DATE") UNLESS THE OFFER IS EXTENDED.
In order to accept the Offer, an appropriate duly executed and properly
completed Letter of Transmittal and any required signature guarantees, or an
Agent's Message (as defined in the Offer to Purchase) in connection with a
book-entry delivery of Shares and any other documents required by the Letter
of Transmittal should be sent to the Depositary and either Share Certificates
representing the tendered Shares should be delivered to the Depositary, or, in
the case of Shares, such Shares should be tendered by book-entry transfer into
the Depositary's account maintained at one of the Book Entry Transfer
Facilities (as described in the Offer to Purchase), all in accordance with the
instructions set forth in the Letter of Transmittal and the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their Share Certificates or other required documents on or prior to
the Expiration Date or to comply with the book-entry transfer procedures on a
timely basis, a tender may be effected by following the guaranteed delivery
procedures specified in Section 3 of the Offer to Purchase.
The Offeror will not pay any commissions or fees to any broker, dealer or
other person (other than the Dealer Manager or the Information Agent, as
described in the Offer to Purchase) for soliciting tenders of Shares pursuant
to the Offer. The Offeror will, however, upon request, reimburse you for
customary clerical and mailing expenses incurred by you in forwarding any of
the enclosed materials to your clients. The Offeror will pay or cause to be
paid any stock transfer taxes payable on the transfer of Shares to it, except
as otherwise provided in Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to,
and additional copies of the enclosed material may be obtained from the Dealer
Manager or the Information Agent, at their addresses and telephone numbers set
forth on the back cover of the Offer to Purchase.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF THE OFFEROR, THE DEALER MANAGER, THE COMPANY,
THE DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THEM, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED
DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
<PAGE>
EXHIBIT (a)(4)
Offer to Purchase for Cash
39,259,305 Shares of Common Stock
of
Global Crossing Ltd.
at
$62.75 Net Per Share of Common Stock
by
U S WEST, Inc.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON JUNE 18, 1999, UNLESS
THE OFFER IS EXTENDED
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated May 21, 1999
(the "Offer to Purchase"), and the related Letter of Transmittal (which,
together with any amendments thereto, collectively constitute the "Offer")
relating to the offer by U S WEST, Inc., a Delaware corporation ("Offeror"), to
purchase 39,259,305 shares of common stock, par value $.01 per share (the
"Common Stock" or the "Shares") of Global Crossing Ltd., a company formed under
the laws of Bermuda (the "Company"), at a purchase price of $62.75 per share of
Common Stock net to the seller in cash, without interest thereon and upon the
terms and subject to the conditions set forth in the Offer to Purchase and in
the related Letter of Transmittal enclosed herewith. Holders of Shares whose
certificates for such Shares (the "Share Certificates") are not immediately
available or who cannot deliver their Share Certificates and all other required
documents to the Depositary on or prior to the Expiration Date, or who cannot
complete the procedures for book-entry transfer on a timely basis, must tender
their Shares according to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase.
We are the holder of record of Shares held by us for your account. A tender
of such Shares can be made only by us as the holder of record and pursuant to
your instructions. The related Letter of Transmittal is furnished to you for
your information only and cannot be used by you to tender Shares.
Accordingly, we request instructions as to whether you wish to have us tender
on your behalf any or all Shares held by us for your account pursuant to the
terms and conditions set forth in the Offer.
Please note the following:
1. The tender price is $62.75 per share of Common Stock net to you in
cash without interest thereon, upon the terms and subject to the conditions
set forth in the Offer.
2. The Offer is being made for 39,259,305 Shares.
3. The Offer is conditioned upon the satisfaction of certain terms and
conditions. See the Introduction and Sections 1 and 15 of the Offer to
Purchase.
4. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter
of Transmittal, stock transfer taxes on the purchase of Shares by the
Purchaser pursuant to the Offer.
5. The Offer, proration period and withdrawal rights will expire at 12:00
midnight, New York City time, on June 18, 1999 (the "Expiration Date"),
unless the Offer is extended.
<PAGE>
6. Payment for Shares purchased pursuant to the Offer will in all cases
be made only after timely receipt by The Bank of New York (the
"Depositary") of (a) Share Certificates or, in the case of Shares, timely
confirmation of the book-entry transfer of such Shares into the account
maintained by the Depositary at the Depositary Trust Company (the "Book-
Entry Transfer Facility"), pursuant to the procedures set forth in Section
3 of the Offer to Purchase, (b) the Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, with any required signature
guarantees or an Agent's Message (as defined in the Offer to Purchase), in
connection with a book-entry delivery, and (c) any other documents required
by the Letter of Transmittal. Accordingly, payment may not be made to all
tendering stockholders at the same time depending upon when certificates
for or, in the case of Shares, confirmations of book-entry transfer of such
Shares into the Depositary's account at the Book-Entry Transfer Facility
are actually received by the Depositary.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing, detaching and
returning to us the instruction form set forth on the back page of this
letter. If you authorize the tender of your Shares, all such Shares will be
tendered unless otherwise specified on the back page of this letter. An
envelope to return your instructions to us is enclosed. Your instructions
should be forwarded to us in ample time to permit us to submit a tender on
your behalf prior to the expiration of the Offer.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making
of the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. However, the Offeror
may, in its discretion, take such action as it may deem necessary to make the
Offer in any jurisdiction and extend the Offer to holders of Shares in such
jurisdiction.
In any jurisdiction where the securities, blue sky or other laws require the
Offer to be made by a licensed broker or dealer, the Offer will be deemed to
be made on behalf of the Offeror or one or more registered brokers or dealers
that are licensed under the laws of such jurisdiction.
2
<PAGE>
Instructions With Respect to the Offer to Purchase
for Cash 39,259,305 Shares of Common Stock
of
GLOBAL CROSSING LTD.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated May 21, 1999 (the "Offer to Purchase"), and the related
Letter of Transmittal (which, together with any amendments thereto,
collectively constitute the "Offer") in connection with the offer by U S WEST,
Inc., a Delaware corporation ("Offeror"), to purchase 39,259,305 shares of
common stock, par value $.01 per share (the "Common Stock" or the "Shares"),
of Global Crossing Ltd., a company formed under the laws of Bermuda (the
"Company"), at a purchase price of $62.75 per share of Common Stock, net to
the seller in cash, without interest thereon, upon the terms and subject to
the conditions set forth in the Offer to Purchase.
This will instruct you to tender to the Offeror the number of shares of
Common Stock, indicated below (or if no number is indicated below, all shares
of Common Stock) which are held by you for the account of the undersigned,
upon the terms and subject to the conditions set forth in the Offer.
Number of Common Stock to be Tendered: Shares
Unless otherwise indicated, it will be assumed that you instruct us to
tender all shares of Common Stock held by us for your account.
SIGN HERE
Signature(s) ________________________________________________________________
(Print Name(s)) _____________________________________________________________
(Print Address(es)) _________________________________________________________
(Area Code and Telephone Number(s)) _________________________________________
(Taxpayer Identification or Social Security Number(s)) ______________________
3
<PAGE>
EXHIBIT (a)(5)
Notice of Guaranteed Delivery
for
Tender for 39,259,305 Shares of Common
of
GLOBAL CROSSING LTD.
to
U S WEST, Inc.
This Notice of Guaranteed Delivery, or substantially equivalent hereto, must
be used to accept the Offer (as defined below) if certificates representing
shares of Common Stock, par value $.01 per share (the "Common Stock" or the
"Shares") of Global Crossing Ltd., a company formed under the laws of Bermuda
(the "Company"), are not immediately available or time will not permit all
required documents to reach The Bank of New York (the "Depositary") on or
prior to the Expiration Date (as defined in the Offer to Purchase), or the
procedures for delivery by book-entry transfer cannot be completed on a timely
basis. This Notice of Guaranteed Delivery may be delivered by hand or sent by
facsimile transmission or mail to the Depositary. See Section 3 of the Offer
to Purchase.
The Depositary for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C>
By Mail: Facsimile Transmission: By Hand or Overnight Courier:
(for Eligible Institutions
Only)
(212) 815-6213
Tender & Exchange Department Tender & Exchange Department
P.O. Box 11248 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, New York 10286-1248 New York, New York 10286
For Confirmation Telephone:
(212) 815-6173
</TABLE>
Delivery of this Notice of Guaranteed Delivery to an address other than as
set forth above or transmission of instructions via a facsimile transmission
to a number other than as set forth above will not constitute a valid
delivery.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to U S WEST, Inc., a Delaware corporation,
upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated May 21, 1999 (the "Offer to Purchase"), and in the related
Letter of Transmittal (which, together with any amendments or supplements
thereto, collectively constitute the "Offer"), receipt of each of which is
hereby acknowledged, the number of Shares indicated below pursuant to the
guaranteed delivery procedures set forth in Section 3 of the Offer to
Purchase.
Number of Common Stock:_______ shares
Name(s) of Holder(s):________________
-------------------------------------
Address(es):_________________________
Certificate No(s). (if available):___
-------------------------------------
- -------------------------------------
-------------------------------------
- -------------------------------------
Area Code and Telephone Number(s):___
If shares of Common Stock will be
tendered by book-entry transfer,
check one box:
-------------------------------------
[_] _________________________________
[_] _________________________________
Signature(s):________________________
-------------------------------------
Account No.:_________________________
-------------------------------------
Date:________________________________
2
<PAGE>
THE GUARANTEE BELOW MUST BE COMPLETED
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, hereby (a) represents that the tender of
Shares effected hereby complies with Rule 14e-4 under the Securities Exchange
Act of 1934, as amended, and (b) guarantees to deliver to the Depositary, at
one of its addresses set forth above, the certificates representing all
tendered Shares in proper form for transfer, or, in the case of book-entry
delivery of Shares, a Book-Entry Confirmation (as defined in the Offer to
Purchase), together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees,
or, in the case of book-entry delivery of Shares, an Agent's Message (as
defined in the Offer to Purchase), and any other documents required by the
Letter of Transmittal within, in the case of Shares, trading days
after the date of execution of this Notice of Guaranteed Delivery.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible
Institution.
Name of Firm: _______________________
-------------------------------------
(Authorized Signature)
Address: ____________________________
Title: ______________________________
- -------------------------------------
Name: _______________________________
Area Code and Telephone No.: ________
-------------------------------------
(Please Print or Type)
Date: _______________________________
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES FOR SHARES SHOULD BE SENT WITH YOUR LETTER OF
TRANSMITTAL.
3
<PAGE>
EXHIBIT (a)(6)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase, dated May
21, 1999, and the related Letter of Transmittal and is not being made to, nor
will tenders be accepted from or on behalf of, holders of Shares in any
jurisdiction in which the making of the Offer or acceptance thereof would not be
in compliance with the securities laws of such jurisdiction. In those
jurisdictions where securities, blue sky or other laws require the Offer to be
made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of the Offeror by Merrill Lynch, Pierce, Fenner & Smith Incorporated
or one or more registered brokers or dealers licensed under
the laws of such jurisdictions.
Notice of Offer to Purchase for Cash
39,259,305 of the Outstanding Shares of Common Stock
of
Global Crossing Ltd.
at
$62.75 Net Per Share of Common Stock
by
U S WEST, Inc.
U S WEST, Inc., a Delaware corporation (the "Offeror"), hereby offers to
purchase 39,259,305 of the outstanding shares of Common Stock, par value $.01
per share (the "Common Stock" or the "Shares"), of Global Crossing Ltd., a
company formed under the laws of Bermuda (the "Company"), at a purchase price of
$62.75 per share of Common Stock (the "Offer Price"), net to the seller in cash,
without interest, upon the terms and subject to the conditions set forth in the
Offer to Purchase, dated May 21, 1999 (the "Offer to Purchase") and in the
related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer").
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, FRIDAY, JUNE 18, 1999, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
The Offer is being made pursuant to a Tender Offer and Purchase Agreement, dated
as of May 16, 1999 (the "Agreement"), between the Company and the Offeror. The
Offer is conditioned upon the satisfaction of certain terms and conditions
described in the Offer to Purchase.
If more than 39,259,305 Shares of Common Stock are validly tendered and not
withdrawn prior to the Expiration Date (defined below), Shares so tendered shall
be accepted for payment on a pro rata basis (adjusted to avoid acceptance for
payment of fractional Shares).
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER AND THE
AGREEMENT AND RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY WHO DESIRE TO RECEIVE
CASH AT THIS TIME TENDER THEIR SHARES OF COMMON STOCK PURSUANT TO THE OFFER.
<PAGE>
The purpose of the Offer is to facilitate the terms and conditions and the
transactions contemplated thereby of the Agreement and Plan of Merger, dated as
of May 16, 1999, between the Offeror and the Company. The terms and provisions
of the Offer to Purchase are incorporated herein by reference and the Offeror
urges each holder of Shares to read the Offer to Purchase in its entirety.
For purposes of the Offer, the Offeror will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered to the Offeror and not
withdrawn, if and when the Offeror gives oral or written notice to The Bank of
New York (the "Depositary") of the Offeror's acceptance of such Shares for
payment pursuant to the Offer. In all cases, payment for Shares purchased
pursuant to the Offer will be made by deposit of the purchase price with the
Depositary, which will act as agent for tendering stockholders for the purpose
of receiving payment from the Offeror and transmitting payment to tendering
stockholders. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR
SHARES BE PAID BY THE OFFEROR.
Payment for Shares accepted for payment pursuant to the Offer will in all
cases be made only after timely receipt by the Depositary of (i) certificates
for such Shares or timely confirmation (a "Book-Entry Confirmation") of a book-
entry transfer of such shares into the Depositary's account at the Depositary
Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedures
set forth in the Offer to Purchase, (ii) a properly completed and duly executed
Letter
<PAGE>
of Transmittal (or a manually signed facsimile thereof), with all required
signature guarantees or, in the case of a book-entry transfer, an Agent's
Message (as defined in the Offer to Purchase) in connection with a book-entry
delivery of Shares, and (iii) any other documents required by the Letter of
Transmittal.
If by 12:00 Midnight, New York City time, on June 18, 1999 (or any other date
or time then set as the Expiration Date), any or all conditions to the Offer
have not been satisfied or waived, subject to the terms and conditions of the
Agreement, the Offeror reserves the right (but shall not be obligated), subject
to the applicable rules and regulations of the Securities and Exchange
Commission (the "Commission"), to (i) terminate the Offer and not accept for
payment any Shares and return all tendered Shares to tendering stockholders, and
(ii) extend the Offer and, subject to the right of stockholders to withdraw
Shares until the Expiration Date, retain all tendered Shares until the
expiration of the Offer, as extended. The term "Expiration Date" means 12:00
Midnight, New York City time, on June 18, 1999, unless the Offeror shall have
extended the period of time for which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by the Offeror, shall expire. Subject to the limitations set forth in
the applicable rules and regulations of the Commission and subject to the terms
and conditions of the Agreement, the Offeror expressly reserves the right, in
its sole discretion, at any time and from time to time, (i) to delay payment for
any Shares regardless of whether such Shares were therefore accepted for
payment, or to terminate the Offer and not to accept for payment or pay for any
Shares not therefore accepted for payment or paid for, upon the occurrence of
any of the conditions set forth in Section 15 of the Offer to Purchase and (ii)
at any time and from time to time, to amend the Offer in any respect.
Except as otherwise provided in the Offer to Purchase, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant to
the procedures set forth below at any time prior to the Expiration Date and,
unless accepted for payment pursuant to the Offer, may also be withdrawn at any
time after July 19, 1999. For a withdrawal to be
<PAGE>
effective, a written, telegraphic, telex or facsimile transmission notice of
withdrawal must be timely received by the Depositary at one of its addresses set
forth on the back cover of the Offer to Purchase and must specify the name of
the person having tendered the Shares to be withdrawn, the number of Shares to
be withdrawn and the name in which the certificates representing such Shares are
registered, if different from the name of the person who tendered the Shares. If
certificates for Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such
certificates, the serial numbers shown on such certificates must be submitted to
the Depositary and, unless such Shares have been tendered by an Eligible
Institution, the signatures on the notice of withdrawal must be guaranteed by an
Eligible Institution. If Shares have been tendered pursuant to the procedures
for book-entry transfer set forth in Section 3 of the Offer to Purchase, any
notice of withdrawal must also specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares. Any
Shares properly withdrawn will be deemed not validly tendered for purposes of
the Offer, but may be retendered at any subsequent time prior to the Expiration
Date by following the procedures described in the Offer to Purchase. All
questions as to the form of documents and the validity, eligibility (including
time of receipt) and acceptance for payment of any tender of Shares will be
determined by the Offeror in its sole discretion, which determination will be
final and binding. None of the Offeror, the Depositary, the Dealer Manager, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification.
The information required to be disclosed by Paragraph (e)(1)(vii) of Rule 14d-
6 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended, is contained in the Offer to Purchase and is incorporated
herein by reference.
The Company has provided the Offeror its list of stockholder and security
position listings for the purpose of disseminating the Offer to holders of
Shares. The Offer to Purchase and the related Letter of Transmittal and other
relevant materials will be mailed by the Offeror to record
<PAGE>
holders of Shares and will be furnished by the Offeror to brokers, dealers,
commercial banks, trust companies and similar persons whose names, or the names
of whose nominees, appear on the Company's stockholder lists or, if applicable,
who are listed as participants in a clearing agency's security position listing,
for subsequent transmittal to beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
Requests for copies of the Offer to Purchase and the related Letter of
Transmittal and other tender offer material may be directed to the Information
Agent or the Dealer Manager as set forth below, and copies will be furnished
promptly at the Offeror's expense. No fees or commissions will be payable to
brokers, dealers or other persons other than the Information Agent, the Dealer
Manager, and the Depositary for soliciting tenders of Shares pursuant to the
Offer.
The Information Agent for the Offer is:
BEACON HILL PARTNERS, INC.
90 Broad Street
New York, New York 10004
(800) 755-5001
(toll free)
Bankers and Brokers Please Call:
(212) 843-8500
The Dealer Manager for the Offer is:
MERRILL LYNCH & Co.
World Financial Center
North Tower
New York, New York 10281-1305
(212) 449-8971 (Call Collect)
May 21, 1999
<PAGE>
EXHIBIT (a)(7)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the
Payer. -- Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payer.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Give the
For this type of account: SOCIAL SECURITY
number of --
- --------------------------------------------------------
<C> <S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, any one
of the
individuals(1)
3. Husband and wife (joint The actual owner
account) of the account
or, if joint
funds, either
person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if
account) the minor is the
only
contributor, the
minor(1)
6. Account in the name of The ward, minor,
guardian or committee for a or incompetent
designated ward, minor, or person(3)
incompetent person
7. a. The usual revocable sav-
ings trust account The grantor-
(grantor is also trustee) trustee(1)
b. So-called trust account The actual
that is not a legal or owner(1)
valid trust under State
law
8. Sole proprietorship account The owner(4)
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Give the EMPLOYER
For this type of account: IDENTIFICATION
number of --
- ------------------------------------------------------------------------------
<S> <C>
9. A valid trust, estate, or pension trust Legal entity (Do
not furnish the
identifying
number of the
personal
representative
or trustee
unless the legal
entity itself is
not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or educational organization The organization
account
12. Partnership account held in the name of the business The partnership
13. Association, club, or other tax-exempt organization The organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department of Agriculture in the name The public
of a public entity (such as a State or local government, entity
school district, or prison) that receives agricultural
program payments
</TABLE>
- -------------------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
Note: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Page 2
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to non-resident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments of mortgage interest to you.
Exempt payees described above should file Form W-9 to avoid possible errone-
ous backup withholding.
FILE THIS FORM WITH THE PAYOR, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER,
WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE
PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE
THE FORM.
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
Privacy Act Notice.-- Section 6109 requires most recipients of dividend, in-
terest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are re-
quired to file tax returns. Beginning January 1, 1993, payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer. Cer-
tain penalties may also apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification Number.--If you
fail to furnish your taxpayer identification number to a payer, you are sub-
ject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) Failure to Report Certain Dividend and Interest Payments.--If you fail to
include any portion of an includable payment for interest, dividends, or pat-
ronage dividends in gross income, such failure will be treated as being due to
negligence and will be subject to a penalty of 20% on any portion of an under-
payment attributable to that failure unless there is clear and convincing evi-
dence to the contrary.
(3) Civil Penalty for False Information With Respect to Withholding.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) Criminal Penalty for Falsifying Information.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or im-
prisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
Obtaining a Number
If you don't have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local office
of the Social Security Administration or the Internal Revenue Service and ap-
ply for a number.
Payees Exempt from Backup Withholding
Payees specifically exempted from backup withholding on ALL payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual re-
tirement plan.
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a)
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
. An entity registered at all times under the Investment Company Act of 1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by indi- viduals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not pro-
vided your correct taxpayer identification number to the payer.
<PAGE>
EXHIBIT (b)(1)
CONFORMED COPY
- --------------------------------------------------------------------------------
$1,000,000,000
FIVE-YEAR
CREDIT AGREEMENT
dated as of
May 8, 1998
among
U S WEST Capital Funding, Inc.
U S WEST, Inc.
USW-C, Inc.
The Banks Listed Herein
and
Morgan Guaranty Trust Company of New York,
as Administrative Agent
- --------------------------------------------------------------------------------
J.P. Morgan Securities Inc.
Lead Arranger
Bank of America National Trust and Savings Association,
Chase Securities Inc. and
Mellon Bank, N.A.,
Co-Syndication Agents
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
----
ARTICLE 1
DEFINITIONS
<S> <C> <C>
SECTION 1.01. The Definitions..................................................................1
SECTION 1.02. Accounting Terms and Determinations.............................................12
SECTION 1.03. Types of Borrowings.............................................................12
ARTICLE 2
THE CREDITS
SECTION 2.01. Commitments to Lend.............................................................13
SECTION 2.02. Notice of Committed Borrowing...................................................14
SECTION 2.03. Money Market Borrowings.........................................................15
SECTION 2.04. Notice to Banks; Funding of Loans...............................................19
SECTION 2.05. Notes...........................................................................20
SECTION 2.06. Maturity of Loans...............................................................20
SECTION 2.07. Interest Rates..................................................................21
SECTION 2.08. Facility Fees...................................................................23
SECTION 2.09. Termination or Reduction of Commitments.........................................23
SECTION 2.10. Method of Electing Interest Rates...............................................24
SECTION 2.11. Prepayments....................................................................25
SECTION 2.12. General Provisions as to Payments...............................................26
SECTION 2.13. Funding Losses..................................................................26
SECTION 2.14. Computation of Interest and Fees................................................27
SECTION 2.15. Change of Control...............................................................27
ARTICLE 3
CONDITIONS
SECTION 3.01. Closing.........................................................................28
SECTION 3.02. All Borrowings..................................................................29
SECTION 3.03. Loans after Separation..........................................................29
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and Power...................................................30
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention.........................................................................30
</TABLE>
i
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 4.03. Binding Effect..................................................................30
SECTION 4.04. Financial Information...........................................................31
SECTION 4.05. Litigation......................................................................31
SECTION 4.06. Compliance with ERISA...........................................................31
SECTION 4.07. Environmental Matters...........................................................32
SECTION 4.08. Taxes...........................................................................32
SECTION 4.09. Subsidiaries....................................................................33
SECTION 4.10. Not an Investment Company.......................................................33
SECTION 4.11. Full Disclosure.................................................................33
ARTICLE 5
COVENANTS
SECTION 5.01. Information.....................................................................33
SECTION 5.02. Maintenance of Property; Insurance..............................................35
SECTION 5.03. Maintenance of Existence........................................................36
SECTION 5.04. Compliance with Laws............................................................36
SECTION 5.05. Inspection of Property, Books and Records.......................................36
SECTION 5.06. Subsidiary Debt.................................................................36
SECTION 5.07. Debt Coverage...................................................................37
SECTION 5.08. Negative Pledge.................................................................37
SECTION 5.09. Consolidations, Mergers and Sales of Assets.....................................38
SECTION 5.10. Use of Proceeds.................................................................39
SECTION 5.11. Year 2000 Compatibility.........................................................39
ARTICLE 6
DEFAULTS
SECTION 6.01. Events of Default...............................................................39
SECTION 6.02. Notice of Default...............................................................42
ARTICLE 7
THE AGENT
SECTION 7.01. Appointment and Authorization...................................................42
SECTION 7.02. Agent and Affiliates............................................................42
SECTION 7.03. Action by Agent.................................................................43
SECTION 7.04. Consultation with Experts.......................................................43
SECTION 7.05. Liability of Agent..............................................................43
SECTION 7.06. Indemnification.................................................................43
SECTION 7.07. Credit Decision.................................................................43
SECTION 7.08. Successor Agent.................................................................44
SECTION 7.09. Agent's Fee.....................................................................44
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
ARTICLE 8
CHANGES IN CIRCUMSTANCES
<S> <C> <C> <C>
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair........................44
SECTION 8.02. Illegality......................................................................45
SECTION 8.03. Increased Cost and Reduced Return...............................................46
SECTION 8.04. Taxes...........................................................................47
SECTION 8.05. Domestic Loans Substituted for Affected Euro-Dollar
Loans.................................................................................49
SECTION 8.06. Substitution of Bank............................................................49
ARTICLE 9
GUARANTY
SECTION 9.01. The Guaranty....................................................................49
SECTION 9.02. Guaranty Unconditional..........................................................50
SECTION 9.03. Discharge Only upon Payment in Full; Reinstatement In
Certain Circumstances.................................................................51
SECTION 9.04. Waiver by the Company...........................................................51
SECTION 9.05. Subrogation.....................................................................51
SECTION 9.06. Stay of Acceleration............................................................51
SECTION 9.07. Release upon Separation.........................................................51
ARTICLE 10
MISCELLANEOUS
SECTION 10.01. Notices........................................................................52
SECTION 10.02. No Waivers.....................................................................52
SECTION 10.03. Expenses; Indemnification......................................................52
SECTION 10.04. Sharing of Set-offs............................................................53
SECTION 10.05. Amendments and Waivers.........................................................54
SECTION 10.06. Successors and Assigns........................................................54
SECTION 10.07. Termination of Existing Credit Agreements......................................56
SECTION 10.08. Governing Law; Submission to Jurisdiction......................................56
SECTION 10.09. Counterparts; Integration; Effectiveness.......................................56
SECTION 10.10. WAIVER OF JURY TRIAL...........................................................57
SECTION 10.11. Confidentiality................................................................57
</TABLE>
iii
<PAGE>
Pricing Schedule
Schedule 4.07 - Environmental Matters
Exhibit A - Note
Exhibit B - Money Market Quote Request
Exhibit C - Invitation for Money Market Quotes
Exhibit D - Money Market Quote
Exhibit E - Opinion of Counsel for the Company and the Borrower
Exhibit F - Opinion of Special Counsel for the Administrative Agent
Exhibit G - Assignment and Assumption Agreement
Exhibit H - Extension Agreement
iv
<PAGE>
CREDIT AGREEMENT
AGREEMENT dated as of May 8, 1998 among U S WEST Capital Funding, Inc.,
U S WEST, Inc., USW-C, Inc., the BANKS listed on the signature pages hereof and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent.
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. The Definitions.
The following terms, as used herein, have the following meanings:
"Absolute Rate Auction" means a solicitation of Money Market Quotes
setting forth Money Market Absolute Rates pursuant to Section 2.03.
"Adjusted London Interbank Offered Rate" has the meaning set forth in
Section 2.07.
"Administrative Questionnaire" means, with respect to each Bank, an
administrative questionnaire in the form prepared by the Agent and submitted to
the Agent (with a copy to the Company) duly completed by such Bank.
"Agent" means Morgan Guaranty Trust Company of New York in its capacity
as administrative agent for the Banks hereunder, and its successors in such
capacity.
"Applicable Lending Office" means, with respect to any Bank, (i) in the
case of its Domestic Loans, its Domestic Lending Office, (ii) in the case of its
Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the case of its
Money Market Loans, its Money Market Lending Office.
"Assignee" has the meaning set forth in Section 10.06(c).
<PAGE>
"Bank" means each lender listed on the signature pages hereof, each
Assignee which becomes a Bank pursuant to Section 10.06(c), and their respective
successors.
"Base Rate" means, for any day, a rate per annum equal to the higher of
(i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal
Funds Rate for such day.
"Benefit Arrangement" means at any time an employee benefit plan within
the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan
and which is maintained or otherwise contributed to by any member of the ERISA
Group.
"Borrower" means U S WEST Capital Funding, Inc., a Colorado
corporation, and its successors.
"Borrowing" has the meaning set forth in Section 1.03.
"Closing Date" means the date on or after the Effective Date on which
the Agent shall have received the documents specified in or pursuant to Section
3.01.
"Commitment" means, with respect to each Bank, the amount set forth
opposite the name of such Bank on the signature pages hereof, as such amount may
be reduced from time to time pursuant to Sections 2.09 and 2.11.
"Committed Loan" means a loan to be made by a Bank pursuant to Section
2.01(a); provided that if any such loan or loans are combined or subdivided
pursuant to a Notice of Interest Rate Election, the term "Committed Loan" shall
refer to the combined principal amount resulting from such combination or to
each of the separate principal amounts resulting from such subdivision, as the
case may be.
"Company" means (i) prior to the Separation, U S WEST, Inc., a Delaware
corporation, and its successors and (ii) after the Separation, USW-C, Inc., a
Delaware corporation, which will be renamed U S WEST, Inc., and its successors.
"Company's 1997 Form 10-K" means U S WEST, Inc.'s annual report on Form
10-K for 1997, as amended by Form 10-K/A filed April 13, 1998, in each case as
filed with the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934.
"Consolidated EBITDA" means, for any period, the net income of the
Company and its Consolidated Subsidiaries determined on a consolidated basis
2
<PAGE>
for such period (adjusted to exclude the effect of (x) equity gains or losses in
unconsolidated Persons, (y) any preferred dividend income and any extraordinary
or other non-recurring non-cash gain or loss or (z) any gain or loss on the
disposition of investments), plus, to the extent deducted in determining such
adjusted net income, the aggregate amount of (i) interest expense, (ii) income
tax expense and (iii) depreciation, amortization and other similar non-cash
charges and minus, to the extent included in determining such adjusted net
income, the aggregate amount of (i) interest income and (ii) income tax benefit.
"Consolidated Net Worth" means at any date the consolidated
shareowners' equity of the Company and its Consolidated Subsidiaries determined
as of such date.
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which would be consolidated with those of the Company in
its consolidated financial statements if such statements were prepared as of
such date.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee which are capitalized in
accordance with generally accepted accounting principles, (v) all Debt secured
by a Lien on any asset of such Person, whether or not such Debt is otherwise an
obligation of such Person, and (vi) all Debt of others Guaranteed by such
Person. Notwithstanding the foregoing, for purposes of Sections 5.06 and 5.07
Debt shall in no event include the following:
(x) Debt of Persons which are not Consolidated Subsidiaries
("Joint Ventures") (i) which is secured by a Lien on the assets or
capital stock of a Minor Subsidiary or the equity interests in such
Joint Ventures or is Guaranteed by a Minor Subsidiary, which Lien or
Guaranty is incurred in connection with the international operations of
the Company and its Subsidiaries, and (ii) for the payment of which no
other recourse may be had to the Company or any of its Subsidiaries;
and
(y) Debt of the Company or the Borrower issued in connection
with the issuance of Trust Originated Preferred Securities or
substantially similar securities, so long as such Debt is subordinated
and junior in right of payment to substantially all liabilities of the
Company or the Borrower, as the case may be, including, without
limitation, the Loans.
3
<PAGE>
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized by law to
close.
"Domestic Lending Office" means, as to each Bank, its office located at
its address set forth in its Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Domestic Lending Office) or such other
office as such Bank may hereafter designate as its Domestic Lending Office by
notice to the Company and the Agent.
"Domestic Loan" means (i) a Committed Loan which bears interest at the
Base Rate pursuant to the applicable Notice of Committed Borrowing or Notice of
Interest Rate Election or the provisions of Article 8 or (ii) an overdue amount
which was a Domestic Loan immediately before it became overdue.
"Effective Date" means the date this Agreement becomes effective in
accordance with Section 10.09.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating to
the environment, the effect of the environment on human health or to emissions,
discharges or releases of pollutants, contaminants, Hazardous Substances or
wastes into the environment including, without limitation, ambient air, surface
water, ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, Hazardous Substances or wastes or the
clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA Group" means the Company, any Subsidiary and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Company or any
Subsidiary, are treated as a single employer under Section 414 of the Internal
Revenue Code.
4
<PAGE>
"Euro-Dollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its office, branch
or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice
to the Company and the Agent.
"Euro-Dollar Loan" means (i) a Committed Loan which bears interest at a
Euro-Dollar Rate pursuant to the applicable Notice of Committed Borrowing or
Notice of Interest Rate Election or (ii) an overdue amount which was a Euro-
Dollar Loan before it became overdue.
"Euro-Dollar Margin" has the meaning set forth in Section 2.07.
"Euro-Dollar Rate" means a rate of interest determined pursuant to
Section 2.07 on the basis of an Adjusted London Interbank Offered Rate.
"Euro-Dollar Reference Banks" means the principal London offices of
Bank of America National Trust and Savings Association, Mellon Bank, N.A., and
Morgan Guaranty Trust Company of New York, and "Euro-Dollar Reference Bank"
means any one of the foregoing.
"Euro-Dollar Reserve Percentage" has the meaning set forth in Section
2.07.
"Event of Default" has the meaning set forth in Section 6.01.
"Existing Credit Agreements" means the Amended and Restated Credit
Agreements dated as of October 31, 1997, among the Borrower, the Company, the
banks listed on the signature pages thereof and Morgan Guaranty Trust Company of
New York, as administrative agent.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day, provided that (i) if such day is not a Domestic
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business Day as so published on the
next
5
<PAGE>
succeeding Domestic Business Day, and (ii) if no such rate is so published on
such next succeeding Domestic Business Day, the Federal Funds Rate for such day
shall be the average rate quoted to Morgan Guaranty Trust Company of New York on
such day on such transactions as determined by the Agent.
"Fixed Rate Loans" means Euro-Dollar Loans or Money Market Loans
(excluding Money Market LIBOR Loans bearing interest at the Base Rate pursuant
to Section 8.01(a)) or any combination of the foregoing.
"Group of Loans" means at any time a group of Loans consisting of (i)
all Committed Loans which are Domestic Loans at such time or (ii) all Committed
Loans which are Euro-Dollar Loans having the same Interest Period at such time;
provided that, if a Committed Loan of any particular Bank is converted to or
made as a Domestic Loan pursuant to Section 8.02 or 8.05, such Loan shall be
included in the same Group or Groups of Loans from time to time as it would have
been in if it had not been so converted or made.
"Guaranty" by any Person means any obligation, contingent or otherwise,
of such Person directly or indirectly guaranteeing any Debt or other obligation
of any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation (whether arising by virtue of partnership arrangements,
by agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise) or (ii)
entered into for the purpose of assuring in any other manner the obligee of such
Debt or other obligation of the payment thereof or to protect such obligee
against loss in respect thereof (in whole or in part), provided that the term
Guaranty shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Hazardous Substances" means any toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its derivatives, by-products
and other hydrocarbons, or any substance having any constituent elements
displaying any of the foregoing characteristics.
"Indemnitee" has the meaning set forth in Section 10.03(b).
"Indentures" means the agreements or instruments evidencing the
following Debt of Continental Cablevision, Inc., and its successors: (i) the 11%
Senior Subordinated Debentures Due June 1, 2007; (ii) the 8 5/8% Senior Notes
Due August 15, 2003; (iii) the 9% Senior Debentures Due September 1, 2008; (iv)
the 8 7/8% Senior Debentures Due September 15, 2002; (v) the 9 1/2% Senior
6
<PAGE>
Debentures Due August 1, 2013; (vi) the 8 1/2% Senior Notes Due September 15,
2001; (vii) the 8.3% Senior Notes Due May 15, 2006; and (viii) any other Debt
containing terms and conditions as or more favorable to the holders thereof than
the terms and conditions of any of the foregoing Debt.
"Interest Period" means: (1) with respect to each Euro-Dollar Loan, a
period commencing on the date of borrowing specified in the applicable Notice of
Borrowing or the date specified in the applicable Notice of Interest Rate
Election and ending one, two, three or six months thereafter, as the Borrower
may elect in the applicable notice; provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end
after a Termination Date shall end on such Termination Date.
(2) with respect to each Money Market LIBOR Loan, the period commencing
on the date of borrowing specified in the applicable Notice of Borrowing and
ending such whole number of months thereafter as the Borrower may elect in
accordance with Section 2.03; provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
7
<PAGE>
(c) any Interest Period which would otherwise end after a
Termination Date shall end on such Termination Date.
(3) with respect to each Money Market Absolute Rate Loan, the
period commencing on the date of borrowing specified in the applicable
Notice of Borrowing and ending such number of days thereafter (but not
less than 7 days) as the Borrower may elect in accordance with Section
2.03; provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after a
Termination Date shall end on such Termination Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"LIBOR Auction" means a solicitation of Money Market Quotes setting
forth Money Market Margins based on the London Interbank Offered Rate pursuant
to Section 2.03.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind, or any other type of
preferential arrangement that has the practical effect of creating a security
interest, in respect of such asset. For the purposes of this Agreement, the
Company or any Subsidiary shall be deemed to own subject to a Lien any asset
which it has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title retention
agreement relating to such asset.
"Loan" means a Domestic Loan or a Euro-Dollar Loan or a Money Market
Loan and "Loans" means Domestic Loans or Euro-Dollar Loans or Money Market Loans
or any combination of the foregoing.
"London Interbank Offered Rate" has the meaning set forth in Section
2.07.
"Margin Stock" means "margin stock" as such term is defined in
Regulation U of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
8
<PAGE>
"Material Debt" means Debt (other than the Notes) of the Company and/or
one or more of its Subsidiaries, arising in one or more related or unrelated
transactions, in an aggregate principal amount exceeding $100,000,000.
"Material Plan" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $100,000,000.
"Minor Subsidiary" means, for purposes of the last sentence of the
definition of Debt and of Section 5.08(f) (the "Relevant Provisions"), (i) USW
PCN Inc., and (ii) any other Subsidiary which, at the time of the issuance of a
Guaranty or grant of a Lien referred to in the Relevant Provisions, had assets
which, when taken together with all assets of Subsidiaries at any earlier time
when such Subsidiaries were deemed to be Minor Subsidiaries pursuant to this
clause (ii), did not exceed $250,000,000.
"Money Market Absolute Rate" has the meaning set forth in Section
2.03(d).
"Money Market Absolute Rate Loan" means a loan to be made by a Bank
pursuant to an Absolute Rate Auction.
"Money Market Lending Office" means, as to each Bank, its Domestic
Lending Office or such other office, branch or affiliate of such Bank as it may
hereafter designate as its Money Market Lending Office by notice to the Company
and the Agent; provided that any Bank may from time to time by notice to the
Company and the Agent designate separate Money Market Lending Offices for its
Money Market LIBOR Loans, on the one hand, and its Money Market Absolute Rate
Loans, on the other hand, in which case all references herein to the Money
Market Lending Office of such Bank shall be deemed to refer to either or both of
such offices, as the context may require.
"Money Market LIBOR Loan" means a loan to be made by a Bank pursuant to
a LIBOR Auction (including such a loan bearing interest at the Base Rate
pursuant to Section 8.01(a)).
"Money Market Loan" means a Money Market LIBOR Loan or a Money
Market Absolute Rate Loan.
"Money Market Margin" has the meaning set forth in Section 2.03(d).
"Money Market Quote" means an offer by a Bank to make a Money Market
Loan in accordance with Section 2.03.
9
<PAGE>
"Multiemployer Plan" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA Group during such
five year period.
"Notes" means promissory notes of the Borrower, substantially in the
form of Exhibit A hereto, evidencing the obligation of the Borrower to repay the
Loans made to it, and "Note" means any one of such promissory notes issued
hereunder.
"Notice of Borrowing" means a Notice of Committed Borrowing (as defined
in Section 2.02) or a Notice of Money Market Borrowing (as defined in Section
2.03(f)).
"Parent" means, with respect to any Bank, any Person controlling such
Bank.
"Participant" has the meaning set forth in Section 10.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"Pricing Schedule" means the Schedule attached hereto and identified as
such.
"Prime Rate" means the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York in New York City from time to time as its
Prime Rate.
10
<PAGE>
"Proxy Statement" means the definitive Proxy Statement for 1998 Annual
Meeting of Stockholders of U S WEST, Inc., dated and filed with the Securities
and Exchange Commission on April 20, 1998.
"Required Banks" means at any time Banks having more than 50% of the
aggregate amount of the Commitments or, if the Commitments shall have been
terminated, holding Notes evidencing more than 50% of the aggregate unpaid
principal amount of the Loans.
"Revolving Credit Period" means the period from and including the
Effective Date to but excluding the Termination Date.
"Separation" has the meaning set forth in the Proxy Statement.
"Significant Subsidiary" means any Subsidiary which would meet the
definition of "significant subsidiary" contained as of the date hereof in
Regulation S-X of the Securities and Exchange Commission.
"Subsidiary" means any corporation or other entity of which securities
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at the
time directly or indirectly owned by the Company.
"Super-Majority Banks" means at any time Banks having at least 85% of
the aggregate amount of the Commitments or, if the Commitments shall have been
terminated, holding Notes evidencing at least 85% of the aggregate unpaid
principal amount of the Loans.
"Termination Date" means, with respect to each Bank, May 8, 2003, or
such later date to which the Termination Date for such Bank shall have been
extended pursuant to Section 2.01(b), or, if such day is not a Euro-Dollar
Business Day, the next preceding Euro-Dollar Business Day.
"Unfunded Liabilities" means, with respect to any Plan at any time, the
amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.
11
<PAGE>
"United States" means the United States of America, including the
States and the District of Columbia, but excluding its territories and
possessions.
"Wholly-Owned Consolidated Subsidiary" means any Consolidated
Subsidiary all of the shares of capital stock or other ownership interests of
which (except directors' qualifying shares) are at the time directly or
indirectly owned by the Company.
SECTION 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with
generally accepted accounting principles as in effect from time to time in the
United States, applied on a basis consistent (except for changes concurred in by
the Company's independent public accountants) with the most recent audited
consolidated financial statements of the Company and its Consolidated
Subsidiaries delivered to the Banks; provided that, if the Company notifies the
Agent that the Company wishes to amend any covenant in Article 5 to eliminate
the effect of any change in such generally accepted accounting principles on the
operation of such covenant (or if the Agent notifies the Company that the
Required Banks wish to amend Article 5 for such purpose), then compliance with
such covenant shall be determined on the basis of generally accepted accounting
principles in effect in the United States immediately before the relevant change
in generally accepted accounting principles became effective, until either such
notice is withdrawn or such covenant is amended in a manner satisfactory to the
Company and the Required Banks.
SECTION 1.03. Types of Borrowings. The term "Borrowing" denotes the
aggregation of Loans of one or more Banks to be made to the Borrower pursuant to
Article 2 on a single date, all of which Loans are of the same type (subject to
Article 8) and, except in the case of Domestic Loans, have the same Interest
Period or initial Interest Period. Borrowings are classified for purposes of
this Agreement either by reference to the pricing of Loans comprising such
Borrowing (e.g., a "Euro-Dollar Borrowing" is a Borrowing comprised of
Euro-Dollar Loans) or by reference to the provisions of Article 2 under which
participation therein is determined (i.e., a "Committed Borrowing" is a
Borrowing under Section 2.01(a) in which all Banks participate in proportion to
their Commitments, while a "Money Market Borrowing" is a Borrowing under Section
2.03 in which the Bank participants are determined on the basis of their bids in
accordance therewith).
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<PAGE>
ARTICLE 2
THE CREDITS
SECTION 2.01. Commitments to Lend.
(a) The Commitments. During the Revolving Credit Period each Bank
severally agrees, on the terms and conditions set forth in this Agreement, to
make loans to the Borrower pursuant to this subsection (a) from time to time in
amounts such that the aggregate principal amount of Committed Loans by such Bank
at any one time outstanding to the Borrower shall not exceed the amount of its
Commitment. Each Borrowing under this Section shall be in an aggregate principal
amount of $25,000,000 or any larger multiple of $5,000,000 (except that any such
Borrowing may be in the aggregate amount available in accordance with Section
3.02(c)) and shall be made from the several Banks ratably in proportion to their
respective Commitments. Within the foregoing limits, the Borrower may borrow
under this subsection (a), repay, or to the extent permitted by Section 2.11,
prepay Loans and reborrow at any time during the Revolving Credit Period under
this subsection (a). The Commitments shall terminate at the close of business on
the Termination Date.
(b) Extension of Commitments. The Commitments may be extended in the
manner and amount set forth in this subsection (b), for a period of 364 days
measured from the Termination Date then in effect. If the Company wishes to
request an extension of each Bank's Commitment, it shall give notice to that
effect to the Agent not less than 45 days and not more than 60 days prior to the
Termination Date then in effect, whereupon the Agent shall promptly notify each
of the Banks of such request. Each Bank will use its best efforts to respond to
such request, whether affirmatively or negatively, as it may elect in its
discretion, within 30 days of such notice to the Agent. If any Bank shall not
have responded affirmatively within such 30-day period, such Bank shall be
deemed to have rejected the Company's proposal to extend its Commitment, and
only the Commitments of those Banks which have responded affirmatively shall be
extended, subject to receipt by the Agent of counterparts of an Extension
Agreement in substantially the form of Exhibit H hereto duly completed and
signed by the Borrower, the Company, the Agent and all of the Banks which have
responded affirmatively. The Agent shall provide to the Company, no later than
10 days prior to the Termination Date then in effect, a list of the Banks which
have responded affirmatively. The Extension Agreement shall be executed and
delivered no later than five days prior to the Termination Date then in effect,
and no extension of the Commitments pursuant to this subsection (b) shall be
legally binding on any party hereto unless and until such Extension Agreement is
so
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executed and delivered. The Company and the Borrower may decline to execute
and deliver such Extension Agreement if any Bank has rejected the Company's
proposal to extend its Commitment or has failed to execute and deliver such
Extension Agreement, and will promptly notify the Agent and the Banks if it so
declines.
(c) Additional Commitments. At any time during the Revolving Credit
Period (unless the Commitments shall have been reduced pursuant to Section
2.09(b)), if no Default shall have occurred and be continuing at such time, the
Company may, if it so elects, increase the aggregate amount of the Commitments,
either by designating a Person not theretofore a Bank and acceptable to the
Agent to become a Bank or by agreeing with an existing Bank that such Bank's
Commitment shall be increased. Upon execution and delivery by the Company, the
Borrower and such Bank or other Person of an instrument of assumption in form
and amount satisfactory to the Administrative Agent, such existing Bank shall
have a Commitment as therein set forth or such other Person shall become a Bank
with a Commitment as therein set forth and all the rights and obligations of a
Bank with such a Commitment hereunder; provided that (i) the Company shall
provide prompt notice of such increase to the Agent, which shall promptly notify
the other Banks, (ii) the aggregate amount of each such increase which is
effective on any day shall be at least $50,000,000 and (iii) the aggregate
amount of the Commitments shall at no time exceed $1,250,000,000. Upon any
increase in the aggregate amount of the Commitments pursuant to this subsection
(c), within five Domestic Business Days in the case of each Group of Domestic
Loans outstanding, and at the end of the then current Interest Period with
respect thereto in the case of each Group of Euro-Dollar Loans then outstanding,
the Borrower shall prepay such Group in its entirety, and, to the extent the
Borrower elects to do so and subject to the conditions specified in Article 3,
the Borrower shall reborrow Committed Loans from the Banks in proportion to
their respective Commitments after giving effect to such increase, until such
time as all outstanding Committed Loans are held by the Banks in such
proportion.
SECTION 2.02. Notice of Committed Borrowing. The Borrower shall give
the Agent notice (a "Notice of Committed Borrowing") not later than 10:30 A.M.
(New York City time) on (x) the date of each Domestic Borrowing, and (y) the
third Euro-Dollar Business Day before each Euro-Dollar Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic
Business Day in the case of a Domestic Borrowing or a Euro-Dollar
Business Day in the case of a Euro-Dollar Borrowing,
(ii) the aggregate amount of such Borrowing,
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(iii) whether the Loans comprising such Borrowing bear
interest initially at the Base Rate or at a Euro-Dollar Rate, and
(iv) in the case of a Euro-Dollar Borrowing, the duration of
the initial Interest Period applicable thereto, subject to the
provisions of the definition of Interest Period.
SECTION 2.03. Money Market Borrowings. (a) The Money Market Option. In
addition to Committed Borrowings pursuant to Section 2.01(a), the Borrower may,
as set forth in this Section, request the Banks during the Revolving Credit
Period to make offers to make Money Market Loans to the Borrower. The Banks may,
but shall have no obligation to, make such offers and the Borrower may, but
shall have no obligation to, accept any such offers in the manner set forth in
this Section.
(b) Money Market Quote Request. When the Borrower wishes to request
offers to make Money Market Loans under this Section, it shall transmit to the
Agent by telex or facsimile transmission a Money Market Quote Request
substantially in the form of Exhibit B hereto so as to be received no later than
9:00 A.M. (New York City time) on (x) the fourth Euro-Dollar Business Day prior
to the date of Borrowing proposed therein, in the case of a LIBOR Auction or (y)
the Domestic Business Day prior to the date of Borrowing proposed therein, in
the case of an Absolute Rate Auction (or, in either case, such other time or
date as the Company and the Agent shall have mutually agreed and shall have
notified to the Banks not later than the date of the Money Market Quote Request
for the first LIBOR Auction or Absolute Rate Auction for which such change is to
be effective) specifying:
(i) the proposed date of Borrowing, which shall be a Euro-
Dollar Business Day in the case of a LIBOR Auction or a Domestic
Business Day in the case of an Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing, which shall be
$25,000,000 or a larger multiple of $5,000,000,
(iii) the duration of the Interest Period applicable thereto,
subject to the provisions of the definition of Interest Period, and
(iv) whether the Money Market Quotes requested are to set
forth a Money Market Margin or a Money Market Absolute Rate.
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The Borrower may request offers to make Money Market Loans for more than one
Interest Period in a single Money Market Quote Request. No Money Market
Quote Request shall be given within five Euro-Dollar Business Days (or such
other number of days as the Company and the Agent may agree) of any other Money
Market Quote Request.
(c) Invitation for Money Market Quotes. Promptly upon receipt of a
Money Market Quote Request, the Agent shall send to the Banks by telex or
facsimile transmission an Invitation for Money Market Quotes substantially in
the form of Exhibit C hereto, which shall constitute an invitation by the
Borrower to each Bank to submit Money Market Quotes offering to make the Money
Market Loans to which such Money Market Quote Request relates in accordance with
this Section.
(d) Submission and Contents of Money Market Quotes. (i) Each Bank may
submit a Money Market Quote containing an offer or offers to make Money Market
Loans in response to any Invitation for Money Market Quotes. Each Money Market
Quote must comply with the requirements of this subsection (d) and must be
submitted to the Agent by telex or facsimile transmission at its offices
specified in or pursuant to Section 10.01 not later than (x) 10:30 A.M. (New
York City time) on the third Euro-Dollar Business Day prior to the proposed date
of Borrowing, in the case of a LIBOR Auction or (y) 9:15 A.M. (New York City
time) on the proposed date of Borrowing, in the case of an Absolute Rate Auction
(or, in either case, such other time or date as the Company and the Agent shall
have mutually agreed and shall have notified to the Banks not later than the
date of the Money Market Quote Request for the first LIBOR Auction or Absolute
Rate Auction for which such change is to be effective); provided that Money
Market Quotes submitted by the Agent (or any affiliate of the Agent) in the
capacity of a Bank may be submitted, and may only be submitted, if the Agent or
such affiliate notifies the Borrower of the terms of the offer or offers
contained therein not later than (x) one hour prior to the deadline for the
other Banks, in the case of a LIBOR Auction or (y) 15 minutes prior to the
deadline for the other Banks, in the case of an Absolute Rate Auction. Subject
to Articles 3 and 6, any Money Market Quote so made shall be irrevocable except
with the written consent of the Agent given on the instructions of the Borrower.
(ii) Each Money Market Quote shall be in substantially the form
of Exhibit D hereto and shall in any case specify:
(A) the proposed date of Borrowing,
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(B) the principal amount of the Money Market Loan for
which each such offer is being made, which principal amount
(w) may be greater than or less than the Commitment of the
quoting Bank, (x) must be $5,000,000 or a larger multiple of
$1,000,000, (y) may not exceed the principal amount of Money
Market Loans for which offers were requested, and (z) may be
subject to an aggregate limitation as to the principal amount
of Money Market Loans for which offers being made by such
quoting Bank may be accepted,
(C) in the case of a LIBOR Auction, the margin above or
below the applicable London Interbank Offered Rate (the "Money
Market Margin") offered for each such Money Market Loan,
expressed as a percentage (specified to the nearest 1/10,000th
of 1%) to be added to or subtracted from such base rate,
(D) in the case of an Absolute Rate Auction, the rate of
interest per annum (specified to the nearest 1/10,000th of 1%)
(the "Money Market Absolute Rate") offered for each such Money
Market Loan, and
(E) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate offers by the quoting
Bank with respect to each Interest Period specified in the related Invitation
for Money Market Quotes.
(iii) Any Money Market Quote shall be disregarded if it:
(A) is not substantially in conformity with Exhibit D
hereto or does not specify all of the information required by
subsection (d)(ii);
(B) contains qualifying, conditional or similar language;
(C) proposes terms other than or in addition to those set
forth in the applicable Invitation for Money Market Quotes; or
(D) arrives after the time set forth in subsection
(d)(i).
(e) Notice to Borrower. The Agent shall promptly (and in any event no
later than 11:00 A.M. (New York time) on (i) the third Euro-Dollar Business Day
prior to the proposed date of Borrowing, in the case of a LIBOR Auction or (ii)
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the proposed date of Borrowing, in the case of an Absolute Rate Auction) notify
the Borrower of the terms (x) of any Money Market Quote submitted by a Bank that
is in accordance with subsection (d) and (y) of any Money Market Quote that
amends, modifies or is otherwise inconsistent with a previous Money Market Quote
submitted by such Bank with respect to the same Money Market Quote Request. Any
such subsequent Money Market Quote shall be disregarded by the Agent unless such
subsequent Money Market Quote is submitted solely to correct a manifest error in
such former Money Market Quote. The Agent's notice to the Borrower shall specify
(A) the aggregate principal amount of Money Market Loans for which offers have
been received for each Interest Period specified in the related Money Market
Quote Request, (B) the respective principal amounts and Money Market Margins or
Money Market Absolute Rates, as the case may be, so offered and (C) if
applicable, limitations on the aggregate principal amount of Money Market Loans
for which offers in any single Money Market Quote may be accepted.
(f) Acceptance and Notice by Borrower. Not later than 11:15 A.M. (New
York City time) on (x) the third Euro-Dollar Business Day prior to the proposed
date of Borrowing, in the case of a LIBOR Auction or (y) the proposed date of
Borrowing, in the case of an Absolute Rate Auction (or, in either case, such
other time or date as the Company and the Agent shall have mutually agreed and
shall have notified to the Banks not later than the date of the Money Market
Quote Request for the first LIBOR Auction or Absolute Rate Auction for which
such change is to be effective), the Borrower shall notify the Agent of its
acceptance or non-acceptance of the offers so notified to it pursuant to
subsection (e). In the case of acceptance, such notice (a "Notice of Money
Market Borrowing") shall specify the aggregate principal amount of offers for
each Interest Period that are accepted. The Borrower may accept any Money Market
Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Money Market Borrowing may
not exceed the applicable amount set forth in the related Money Market
Quote Request,
(ii) the principal amount of each Money Market Borrowing must be
$25,000,000 or a larger multiple of $5,000,000,
(iii) acceptance of offers may only be made on the basis of ascending
Money Market Margins or Money Market Absolute Rates, as the case may
be, and
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(iv) the Borrower may not accept any offer that is described in
subsection (d)(iii) or that otherwise fails to comply with the
requirements of this Agreement.
(g) Allocation by Agent. If offers are made by two or more Banks with
the same Money Market Margins or Money Market Absolute Rates, as the case may
be, for a greater aggregate principal amount than the amount in respect of which
such offers are accepted for the related Interest Period, the principal amount
of Money Market Loans in respect of which such offers are accepted shall be
allocated by the Agent among such Banks as nearly as possible (in multiples of
$1,000,000, as the Agent may deem appropriate) in proportion to the aggregate
principal amounts of such offers. Determinations by the Agent of the amounts of
Money Market Loans shall be conclusive in the absence of manifest error.
SECTION 2.04. Notice to Banks; Funding of Loans. (a) Upon receipt of a
Notice of Borrowing, the Agent shall promptly notify each Bank of the contents
thereof and of such Bank's share (if any) of such Borrowing and such Notice of
Borrowing shall not thereafter be revocable by the Borrower.
(b) Not later than 1:00 P.M. (New York City time) on the date of each
Borrowing, each Bank participating therein shall (except as provided in
subsection (c) of this Section) make available its share of such Borrowing, in
Federal or other funds immediately available in New York City, to the Agent at
its address referred to in Section 10.01. Unless any applicable condition
specified in Article 3 has not been satisfied, as determined by the Agent in
accordance with Article 3, the Agent will make the funds so received from the
Banks immediately available to the Borrower at the Agent's aforesaid address.
(c) If any Bank makes a new Loan hereunder to the Borrower on a day on
which the Borrower is to repay all or any part of an outstanding Loan from such
Bank, such Bank shall apply the proceeds of its new Loan to make such repayment
and only an amount equal to the difference (if any) between the amount being
borrowed by the Borrower and the amount being repaid shall be made available by
such Bank to the Agent as provided in subsection (b) of this Section, or
remitted by the Borrower to the Agent as provided in Section 2.12, as the case
may be.
(d) Unless the Agent shall have received notice from a Bank prior to
the date of any Borrowing (or, in the case of a Base Rate Borrowing, prior to
Noon (New York City time) on the date of such Borrowing) that such Bank will not
make available to the Agent such Bank's share of such Borrowing, the Agent may
assume that such Bank has made such share available to the Agent on the date of
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such Borrowing in accordance with subsections (b) and (c) of this Section 2.04
and the Agent may, in reliance upon such assumption, make available to the
Borrower on such date a corresponding amount. If and to the extent that such
Bank shall not have so made such share available to the Agent, such Bank and the
Borrower severally agree to repay to the Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Agent, at (i) in the case of the Borrower, a rate per annum equal
to the higher of the Federal Funds Rate and the interest rate applicable thereto
pursuant to Section 2.07 and (ii) in the case of such Bank, the Federal Funds
Rate. If such Bank shall repay to the Agent such corresponding amount, such
amount so repaid shall constitute such Bank's Loan included in such Borrowing
for purposes of this Agreement. If the Borrower shall have repaid such
corresponding amount of such Bank, such Bank shall reimburse the Borrower for
any loss on account thereof incurred by the Borrower.
SECTION 2.05. Notes. (a) The Loans of each Bank to the Borrower shall
be evidenced by a single Note of the Borrower payable to the order of such Bank
for the account of its Applicable Lending Office, unless such Bank requests
otherwise, in an amount equal to the aggregate unpaid principal amount of such
Bank's Loans to the Borrower.
(b) Each Bank may, by notice to the Borrower and the Agent, request
that its Loans of a particular type to the Borrower be evidenced by a separate
Note of the Borrower in an amount equal to the aggregate unpaid principal amount
of such Loans. Each such Note shall be in substantially the form of Exhibit A
hereto with appropriate modifications to reflect the fact that it evidences
solely Loans of the relevant type. Each reference in this Agreement to a "Note"
or the "Notes" of such Bank shall be deemed to refer to and include any or all
of such Notes, as the context may require.
(c) Upon receipt of each Bank's Note pursuant to Section 3.01, the
Agent shall forward such Note to such Bank. Each Bank shall record the date,
amount and type of each Loan made by it to the Borrower and the date and amount
of each payment of principal made with respect thereto, and may, if such Bank so
elects in connection with any transfer or enforcement of its Note of the
Borrower, endorse on the schedule forming a part thereof appropriate notations
to evidence the foregoing information with respect to each such Loan to the
Borrower then outstanding; provided that the failure of any Bank to make any
such recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Notes. Each Bank is hereby irrevocably authorized by the
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Borrower so to endorse its Notes and to attach to and make a part of any Note a
continuation of any such schedule as and when required.
SECTION 2.06. Maturity of Loans. Each Loan by a Bank included in any
Borrowing made pursuant to Section 2.01(a) shall mature, and the principal
amount thereof shall be due and payable, together with accrued interest thereon,
on the Termination Date for such Bank. Each Loan included in any Borrowing made
pursuant to Section 2.03 shall mature, and the principal amount thereof shall
be due and payable, together with accrued interest thereon, on the last day of
the Interest Period applicable thereto.
SECTION 2.07. Interest Rates. (a) Each Domestic Loan shall bear
interest on the outstanding principal amount thereof, for each day from the date
such Loan is made until it becomes due, at a rate per annum equal to the Base
Rate for such day. Such interest shall be payable quarterly in arrears on the
last day of each calendar quarter and, with respect to the principal amount of
any Domestic Loan converted to a Euro-Dollar Loan, on each date a Domestic Loan
is so converted. Any overdue principal of or interest on any Domestic Loan shall
bear interest, payable on demand, for each day until paid at a rate per annum
equal to the sum of 2% plus the rate otherwise applicable to Domestic Loans for
such day.
(b) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for the Interest Period applicable thereto, at a rate
per annum equal to the sum of the Euro-Dollar Margin plus the applicable
Adjusted London Interbank Offered Rate. Such interest shall be payable for each
Interest Period on the last day thereof and, if such Interest Period is longer
than three months, at intervals of three months after the first day thereof.
The "Adjusted London Interbank Offered Rate" applicable to any Interest
Period means a rate per annum equal to the quotient obtained (rounded upward, if
necessary, to the next higher 1/100 of 1%) by dividing (i) the applicable London
Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar Reserve Percentage.
"Euro-Dollar Margin" means a rate per annum determined in accordance
with the Pricing Schedule.
The "London Interbank Offered Rate" applicable to any Interest Period
means the average (rounded upward, if necessary, to the next higher 1/16 of 1%)
of the respective rates per annum at which deposits in dollars are offered to
each of the Euro-Dollar Reference Banks in the London interbank market at
approximately 11:00 A.M. (London time) two Euro-Dollar Business Days before the
first day of such Interest Period in an amount approximately equal to the
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principal amount of the Euro-Dollar Loan of such Euro-Dollar Reference Bank to
which such Interest Period is to apply and for a period of time comparable to
such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of "Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any Bank to United
States residents). The Adjusted London Interbank Offered Rate shall be adjusted
automatically on and as of the effective date of any change in the Euro-Dollar
Reserve Percentage.
(c) Any overdue principal of or interest on any Euro-Dollar Loan shall
bear interest, payable on demand, for each day from and including the date
payment thereof was due to but excluding the date of actual payment, at a rate
per annum equal to the sum of 2% plus the higher of (i) the Euro-Dollar Margin
plus the quotient obtained (rounded upward, if necessary, to the next higher
1/100 of 1%) by dividing (x) the average (rounded upward, if necessary, to the
next higher 1/16 of 1%) of the respective rates per annum at which one day (or,
if such amount due remains unpaid more than three Euro-Dollar Business Days,
then for such other period of time not longer than six months as the Agent may
select) deposits in dollars in an amount approximately equal to such overdue
payment due to each of the Euro-Dollar Reference Banks are offered to such
Euro-Dollar Reference Bank in the London interbank market for the applicable
period determined as provided above by (y) 1.00 minus the Euro-Dollar Reserve
Percentage (or, if the circumstances described in clause (a) or (b) of Section
8.01 shall exist, at a rate per annum equal to the sum of 2% plus the rate
applicable to Domestic Loans for such day) and (ii) the sum of the Euro-Dollar
Margin plus the Adjusted London Interbank Offered Rate applicable to such Loan
at the date such payment was due.
(d) Subject to Section 8.01, each Money Market LIBOR Loan shall bear
interest on the outstanding principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the sum of the London Interbank
Offered Rate for such Interest Period (determined in accordance with Section
2.07 as if the related Money Market LIBOR Borrowing were a Committed Euro-Dollar
Borrowing) plus (or minus) the Money Market Margin quoted by the Bank
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making such Loan in accordance with Section 2.03. Each Money Market Absolute
Rate Loan shall bear interest on the outstanding principal amount thereof, for
the Interest Period applicable thereto, at a rate per annum equal to the Money
Market Absolute Rate quoted by the Bank making such Loan in accordance with
Section 2.03. Such interest shall be payable for each Interest Period on the
last day thereof and, if such Interest Period is longer than three months, at
intervals of three months after the first day thereof. Any overdue principal of
or interest on any Money Market Loan shall bear interest, payable on demand, for
each day until paid at a rate per annum equal to the sum of 2% plus the Base
Rate for such day.
(e) The Agent shall determine each interest rate applicable to the
Loans hereunder. The Agent shall give prompt notice to the Borrower and the
participating Banks of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.
(f) Each Euro-Dollar Reference Bank agrees to use its best efforts to
furnish quotations to the Agent as contemplated hereby. If any Euro-Dollar
Reference Bank does not furnish a timely quotation, the Agent shall determine
the relevant interest rate on the basis of the quotation or quotations furnished
by the remaining Euro-Dollar Reference Bank or Banks or, if none of such
quotations is available on a timely basis, the provisions of Section 8.01 shall
apply.
SECTION 2.08. Facility Fees. The Company shall pay to the Agent for the
account of the Banks ratably a facility fee at the Facility Fee Rate (determined
daily in accordance with the Pricing Schedule). Such facility fee shall accrue
(i) from and including the Effective Date to but excluding the Termination Date
(or earlier date of termination of the Commitments in their entirety), on the
daily average aggregate amount of the Commitments (whether used or unused) and
(ii) from and including the Termination Date (or earlier date of termination of
the Commitments in their entirety) to but excluding the date the Loans shall be
repaid in their entirety, on the daily average aggregate outstanding principal
amount of the Loans. Accrued facility fees shall be payable quarterly in arrears
on the last day of each calendar quarter and upon the date of termination of the
Commitments in their entirety (and, if later, the date the Loans shall be repaid
in their entirety).
"Facility Fee Rate" means a rate per annum determined in accordance
with the Pricing Schedule.
SECTION 2.09. Termination or Reduction of Commitments. (a) During the
Revolving Credit Period, the Company may, upon at least three Domestic
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Business Days' notice to the Agent, (i) terminate the Commitments at any time,
if no Loans are outstanding at such time or (ii) ratably reduce from time to
time by an aggregate amount of $25,000,000 or any larger multiple of $5,000,000,
the aggregate amount of the Commitments in excess of the aggregate outstanding
principal amount of the Loans.
(b) If the Separation has not been consummated on or before November
8, 1998, the Commitments shall be ratably reduced by 50% on the next succeeding
Domestic Business Day.
SECTION 2.10. Method of Electing Interest Rates. (a) The Loans included
in each Committed Borrowing shall bear interest initially at the type of rate
specified by the Borrower in the applicable Notice of Committed Borrowing.
Thereafter, the Borrower may from time to time elect to change or continue the
type of interest rate borne by each Group of Loans (subject in each case to the
provisions of Article 8), as follows:
(i) if such Loans are Domestic Loans, the Borrower may elect to
convert such Loans to Euro-Dollar Loans as of any Euro-Dollar Business
Day;
(ii) if such Loans are Euro-Dollar Loans, the Borrower may elect
to convert such Loans to Domestic Loans or elect to continue such Loans
as Euro-Dollar Loans for an additional Interest Period, in each case
effective on the last day of the then current Interest Period
applicable to such Loans.
Each such election shall be made by delivering a notice (a "Notice of Interest
Rate Election") to the Agent at least three Euro-Dollar Business Days before the
conversion or continuation selected in such notice is to be effective. A Notice
of Interest Rate Election may, if it so specifies, apply to only a portion of
the aggregate principal amount of the relevant Group of Loans; provided that (i)
such portion is allocated ratably among the Loans comprising such Group and (ii)
the portion to which such Notice applies, and the remaining portion to which it
does not apply, are each $25,000,000 or any larger multiple of $5,000,000.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such
notice applies;
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(ii) the date on which the conversion or continuation selected
in such notice is to be effective, which shall comply with the
applicable clause of subsection (a) above;
(iii) if the Loans comprising such Group are to be converted,
the new type of Loans and, if such new Loans are Euro-Dollar Loans, the
duration of the initial Interest Period applicable thereto; and
(iv) if such Loans are to be continued as Euro-Dollar Loans for
an additional Interest Period, the duration of such additional Interest
Period.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period.
(c) Upon receipt of a Notice of Interest Rate Election from the
Borrower pursuant to subsection (a) above, the Agent shall promptly notify each
Bank of the contents thereof and such notice shall not thereafter be revocable
by such Borrower. If the Borrower fails to deliver a timely Notice of Interest
Rate Election to the Agent for any Group of Euro-Dollar Loans, such Loans shall
be converted into Domestic Loans on the last day of the then current Interest
Period applicable thereto.
SECTION 2.11. Prepayments.
(a) Subject in the case of any Euro-Dollar Loans to Section 2.13, the
Borrower may, upon at least one Domestic Business Day's notice to the Agent,
prepay the Group of Domestic Loans (or any Money Market Borrowing bearing
interest at the Base Rate pursuant to Section 8.01(a)), or, upon three
Euro-Dollar Business Days' notice to the Agent, prepay any Group of Euro-Dollar
Loans, in each case in whole at any time, or from time to time in part in
amounts aggregating $25,000,000 or any larger multiple of $5,000,000, by paying
the principal amount to be prepaid together with accrued interest thereon to the
date of prepayment.
(b) Except as provided in subsection (a) above, the Borrower may not
prepay all or any portion of the principal amount of any Money Market Loan prior
to the maturity thereof.
(c) Upon receipt of a notice of prepayment pursuant to this Section,
the Agent shall promptly notify each Bank of the contents thereof and of such
Bank's ratable share (if any) of such prepayment and such notice shall not
thereafter be revocable by the Borrower. Each such prepayment shall be applied
to prepay
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ratably the Loans of the several Banks included in the relevant Group or
Borrowing.
(d) On the date of any reduction of Commitments pursuant to Section
2.09(b), the Borrower shall repay such principal amount (together with accrued
interest thereon) of outstanding Loans, if any, as may be necessary so that
after such repayment (i) the aggregate outstanding principal amount of each
Bank's Committed Loans does not exceed the amount of such Bank's Commitment as
then reduced, and (ii) the aggregate unpaid principal amount of all outstanding
Loans does not exceed the aggregate amount of the Commitments as then reduced.
Any such prepayment shall be made in accordance with all applicable provisions
of this Agreement (including without limitation subsections (a) (other than as
to amount), (b) and (c) of this Section 2.11).
SECTION 2.12. General Provisions as to Payments. (a) The Borrower shall
make each payment of principal of, and interest on, the Loans and of fees and
other amounts payable hereunder, not later than 12:00 Noon (New York City time)
on the date when due, in Federal or other funds immediately available in New
York City, without off set or counterclaim, to the Agent at its address referred
to in Section 10.01. The Agent will promptly distribute to each Bank its ratable
share of each such payment received by the Agent for the account of the Banks.
Whenever any payment of principal of, or interest on, the Domestic Loans or of
fees or other amounts payable hereunder shall be due on a day which is not a
Domestic Business Day, the date for payment thereof shall be extended to the
next succeeding Domestic Business Day. Whenever any payment of principal of, or
interest on, the Euro-Dollar Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall be extended to the
next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case the date for payment thereof
shall be the next preceding Euro-Dollar Business Day. Whenever any payment of
principal of, or interest on, the Money Market Loans shall be due on a day which
is not a Euro-Dollar Business Day, the date for payment thereof shall be
extended to the next succeeding Euro-Dollar Business Day. If the date for any
payment of principal is extended by operation of law or otherwise, interest
thereon shall be payable for such extended time.
(b) Unless the Agent shall have received notice from the Borrower
prior to the date on which any payment is due from the Borrower to the Banks
hereunder that the Borrower will not make such payment in full, the Agent may
assume that the Borrower has made such payment in full to the Agent on such date
and the Agent may, in reliance upon such assumption, cause to be distributed to
each Bank on such due date an amount equal to the amount then due such
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Bank. If and to the extent that the Borrower shall not have so made such
payment, each Bank shall repay to the Agent forthwith on demand such amount
distributed to such Bank together with interest thereon, for each day from the
date such amount is distributed to such Bank until the date such Bank repays
such amount to the Agent, at the Federal Funds Rate.
SECTION 2.13. Funding Losses. If the Borrower makes any payment of
principal with respect to any Fixed Rate Loan or any Fixed Rate Loan is
converted to a Domestic Loan (pursuant to Article 2, 6 or 8 or otherwise) on any
day other than the last day of an Interest Period applicable thereto, or the
last day of an applicable period fixed pursuant to Section 2.07(c), or if the
Borrower fails to borrow, convert, continue or prepay any Fixed Rate Loans after
notice has been given to any Bank in accordance with Section 2.04(a), 2.10(c) or
2.11(c), the Company shall reimburse each Bank within 15 days after demand for
any resulting loss or expense incurred by it (or by an existing or prospective
Participant in the related Loan), including (without limitation) any loss
incurred in obtaining, liquidating or employing deposits from third parties, but
excluding loss of margin for the period after any such payment or conversion or
failure to borrow or prepay, provided that such Bank shall have delivered to the
Company a certificate as to the amount of such loss or expense, which
certificate shall be conclusive in the absence of manifest error.
SECTION 2.14. Computation of Interest and Fees. Interest based on the
Prime Rate hereunder shall be computed on the basis of a year of 365 days (or
366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All other interest and
fees hereunder shall be computed on the basis of a year of 360 days and paid for
the actual number of days elapsed (including the first day but excluding the
last day).
SECTION 2.15. Change of Control. If a Change of Control shall occur,
the Company will, within ten days after the occurrence thereof, give each Bank
notice thereof, which notice shall describe in reasonable details the facts and
circumstances giving rise thereto and shall specify an Optional Termination Date
for purposes of this Section (the "Optional Termination Date") which date shall
not be less than 30 nor more than 60 days after the date of such notice. Each
Bank may, by notice to the Company and the Agent given not less than three
Domestic Business Days prior to the Optional Termination Date, terminate its
Commitment (if any), which shall thereupon be terminated, and declare the Note
held by it (together with accrued interest thereon) and any other amounts
payable hereunder for its account to be, and such Note and such other amounts
shall thereupon become, due and payable without presentment, demand, protest or
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other notice of any kind, all of which are hereby waived by the Company and the
Borrower, in each case effective on the Optional Termination Date.
A "Change of Control" shall occur if any person or group of persons
(within the meaning of Section 13 or 14 of the Securities Exchange Act of 1934,
as amended) shall have acquired beneficial ownership (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange Commission under said Act) of
30% or more of the outstanding shares of common stock of the Company; or, during
any period of twelve consecutive calendar months, individuals who were directors
of the Company on the first day of such period shall cease to constitute a
majority of the board of directors of the Company. The Separation shall not
constitute a Change of Control.
ARTICLE 3
CONDITIONS
SECTION 3.01. Closing. The closing hereunder shall occur upon receipt
by the Agent of the following (in the case of any document, dated the Closing
Date unless otherwise indicated):
(a) a duly executed Note of the Borrower for the account of each Bank
dated on or before the Closing Date complying with the provisions of Section
2.05;
(b) an opinion of Thomas O. McGimpsey, Esq., counsel for the Company
and the Borrower, substantially in the form of Exhibit E hereto and covering
such additional matters relating to the transactions contemplated hereby as the
Required Banks may reasonably request;
(c) an opinion of Davis Polk & Wardwell, special counsel for the
Agent, substantially in the form of Exhibit F hereto and covering such
additional matters relating to the transactions contemplated hereby as the
Required Banks may reasonably request;
(d) evidence satisfactory to the Agent that the commitments under the
Existing Credit Agreements have been terminated and that the principal and
interest on all loans and accrued fees outstanding thereunder have been paid in
full;
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(e) evidence satisfactory to the Agent of the payment of all fees and
other amounts payable to the Agent for the account of the Banks or the Agent on
or prior to the Closing Date, including, to the extent invoiced, reimbursement
of all out-of-pocket expenses (including, without limitation, legal fees and
expenses) required to be reimbursed or paid by the Borrower or the Company
hereunder; and
(f) all documents the Agent may reasonably request relating to the
existence of the Company and the Borrower, the corporate authority for and the
validity of this Agreement and the Notes, and any other matters relevant hereto,
all in form and substance satisfactory to the Agent.
The Agent shall promptly notify the Company and the Banks of the Closing Date,
and such notice shall be conclusive and binding on all parties hereto.
SECTION 3.02. All Borrowings. The obligation of any Bank to make a
Loan on the occasion of any Borrowing is subject to the satisfaction of the
following conditions:
(a) the fact that the Closing Date shall have occurred on or prior to
May 30, 1998;
(b) receipt by the Agent of a Notice of Borrowing as required by
Section 2.02 or 2.03, as the case may be;
(c) the fact that, immediately before and after such Borrowing, the
aggregate outstanding principal amount of the Loans will not exceed the
aggregate amount of the Commitments;
(d) the fact that, immediately before and after such Borrowing, no
Default shall have occurred and be continuing; and
(e) the fact that the representations and warranties contained in this
Agreement shall be true on and as of the date of such Borrowing
(except, in the case of the representations and warranties contained in
Section 4.04(b), as disclosed by the Borrower to the Banks in writing
in the Notice of Borrowing relating to such Borrowing).
Each Borrowing hereunder shall be deemed to be a representation and
warranty by the Borrower on the date of such Borrowing as to the facts specified
in clauses (c), (d) and (e) of this Section.
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SECTION 3.03. Loans after Separation. The obligation of any Bank to
make or maintain a Loan after the Separation is subject to receipt by the Agent
of the following documents, each dated or effective on the date of consummation
of the Separation:
(a) an instrument, satisfactory in form and substance to the
Agent, and duly executed and delivered by USW-C, Inc. pursuant to which
USW-C, Inc. (to be renamed U S WEST, Inc.) assumes the obligations of
U S WEST, Inc. (to be renamed MediaOne Group, Inc.) under this
Agreement;
(b) evidence satisfactory to it that the Separation has been
consummated substantially on the terms described in the Proxy
Statement;
(c) an opinion of Thomas O. McGimpsey, Esq., counsel for USW-C, Inc.,
substantially in the form of Exhibit E hereto with such
modifications as are acceptable to the Agent and covering such
additional matters relating to the transactions contemplated hereby as
the Required Banks may reasonably request; and
(d) all documents the Agent may reasonably request relating to the
existence of USW-C, Inc., the corporate authority for and the validity
of this Agreement and the Notes, and any other matters relevant hereto,
all in form and substance satisfactory to the Agent.
The Agent shall promptly notify the Company and the Banks of the
satisfaction of the foregoing conditions.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Each of the Company and the Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. Each of the Company and
the Borrower is a corporation duly incorporated, validly existing and in good
standing under the laws of the state of its incorporation, and has all corporate
powers and all material governmental licenses, authorizations, qualifications,
consents and approvals required to carry on its business as now conducted.
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SECTION 4.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Company and the
Borrower of this Agreement and by the Borrower of the Notes are within such
Person's corporate powers, have been duly authorized by all necessary corporate
action, require no action by or in respect of, or filing with, any governmental
body, agency or official and do not contravene, or constitute a default under,
any provision of applicable law or regulation or of the certificate of
incorporation or by-laws of such Person or of any agreement, judgment,
injunction, order, decree or other instrument binding upon such Person or any
Significant Subsidiary or result in the creation or imposition of any Lien on
any material asset of such Person or any Significant Subsidiary.
SECTION 4.03. Binding Effect. This Agreement constitutes a valid and
binding agreement of the Company and the Borrower, and the Notes, when executed
and delivered in accordance with this Agreement, will constitute valid and
binding obligations of the Borrower, in each case enforceable in accordance with
its terms except as the same may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and by general principles of
equity.
SECTION 4.04. Financial Information.
(a) The consolidated balance sheet of the Company and its Consolidated
Subsidiaries as of December 31, 1997 and the related consolidated statements of
income and cash flows for the fiscal year then ended, reported on by Arthur
Andersen L.L.P. and set forth in the Company's 1997 Form 10-K, a copy of which
has been delivered to each of the Banks, fairly present, in conformity with
generally accepted accounting principles, the consolidated financial position of
the Company and its Consolidated Subsidiaries as of such date and their
consolidated results of operations and cash flows for such fiscal year.
(b) Since December 31, 1997 there has been no material adverse change
in the financial position or results of operations of the Company and its
Consolidated Subsidiaries, considered as a whole (it being understood that the
consummation of the Separation shall not be considered such a change).
SECTION 4.05. Litigation. Except as disclosed in the Company's 1997
Form 10-K, there is no action, suit or proceeding pending against, or to the
knowledge of the Company threatened against or affecting, the Company or any of
its Subsidiaries before any court or arbitrator or any governmental body, agency
or official in which there is a reasonable possibility of an adverse decision
which would materially adversely affect the consolidated financial position or
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consolidated results of operations of the Company and its Consolidated
Subsidiaries, considered as a whole, or which in any manner draws into question
the validity of this Agreement or the Notes.
SECTION 4.06. Compliance with ERISA. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and the
Internal Revenue Code with respect to each Plan and is in compliance in all
respects with the presently applicable provisions of ERISA and the Internal
Revenue Code with respect to each Plan, except where failure to comply would not
have a material adverse effect on the consolidated financial position or
consolidated results of operations of the Company and its Consolidated
Subsidiaries, considered as a whole. No member of the ERISA Group has (i) sought
a waiver of the minimum funding standard under Section 412 of the Internal
Revenue Code in respect of any Plan, (ii) failed to make any contribution or
payment to any Plan or Multiemployer Plan or in respect of any Benefit
Arrangement, or made any amendment to any Plan or Benefit Arrangement, which has
resulted or could result in the imposition of a Lien or the posting of a bond or
other security under ERISA or the Internal Revenue Code or (iii) incurred any
liability under Title IV of ERISA other than a liability to the PBGC for
premiums under Section 4007 of ERISA.
SECTION 4.07. Environmental Matters. (a) The operations of the Company
and each of its Subsidiaries comply in all respects with all Environmental Laws
except such non-compliance which would not (if enforced in accordance with
applicable law) reasonably be expected to result, individually or in the
aggregate, in a material adverse effect on the financial position or results of
operations of the Company and its Consolidated Subsidiaries, considered as a
whole.
(b) Except as specifically identified in Schedule 4.07, the Company
and each of its Subsidiaries have obtained all material licenses, permits,
authorizations and registrations required under any Environmental Laws
("Environmental Permits") necessary for their respective operations, and all
such Environmental Permits are in good standing, and the Company and each of its
Subsidiaries is in compliance with all material terms and conditions of such
Environmental Permits.
(c) Except as specifically identified in Schedule 4.07, (i) none of
the Company, any of its Subsidiaries or any of their present property or
operations are subject to any outstanding written order from or settlement or
consent agreement with any governmental authority or other Person, nor is any of
the foregoing subject to any judicial or docketed administrative proceedings,
respecting any Environmental Laws or Hazardous Substances with a potential
liability in excess of $1,000,000 and (ii) there are no other conditions or
circumstances known to the
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Company which may give rise to any claims respecting any Environmental Laws
arising from the operations of the Company or its Subsidiaries (including,
without limitation, off-site liabilities), or any additional costs of compliance
with Environmental Laws, that would reasonably be expected to have a material
adverse effect on the financial position or results of operations of the Company
and its Subsidiaries, considered as a whole.
SECTION 4.08. Taxes. United States Federal income tax returns of the
Company and its Subsidiaries have been examined and closed through the fiscal
year ended December 31, 1987. The Company and its Subsidiaries have filed all
United States Federal income tax returns and all other material tax returns
which are required to be filed by them and have paid all taxes due pursuant to
such returns or pursuant to any assessment received by the Company or any
Subsidiary, except for taxes the amount, applicability or validity of which is
being contested in good faith by appropriate proceedings. The charges, accruals
and reserves on the books of the Company and its Subsidiaries in respect of
taxes or other governmental charges are, in the opinion of the Company,
adequate.
SECTION 4.09. Subsidiaries. Each of the Company's corporate Significant
Subsidiaries (including, but not limited to, the Borrower) is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all corporate powers and all material
governmental licenses, authorizations, qualifications, consents and approvals
required to carry on its business as now conducted.
SECTION 4.10. Not an Investment Company. Neither the Company nor the
Borrower is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
SECTION 4.11. Full Disclosure. All written information heretofore
furnished by the Company or the Borrower to the Agent or any Bank for purposes
of or in connection with this Agreement or any transaction contemplated hereby
is, and all such information hereafter furnished by the Company or the Borrower
to the Agent or any Bank will be, true and accurate in all material respects on
the date as of which such information is stated or certified.
ARTICLE 5
COVENANTS
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The Company agrees that, so long as any Bank has any Commitment
hereunder or any amount payable under any Note remains unpaid:
SECTION 5.01. Information. The Company will deliver to each of the
Banks:
(a) as soon as available and in any event within 95 days after the end
of each fiscal year of the Company, a consolidated balance sheet of the Company
and its Consolidated Subsidiaries as of the end of such fiscal year and the
related consolidated statements of income and cash flows for such fiscal year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all reported on in a manner acceptable to the Securities and
Exchange Commission by Arthur Andersen L.L.P. or other independent public
accountants of nationally recognized standing;
(b) as soon as available and in any event within 50 days after the end
of each of the first three quarters of each fiscal year of the Company, a
consolidated balance sheet of the Company and its Consolidated Subsidiaries as
of the end of such quarter and the related consolidated statements of income and
cash flows for such quarter and for the portion of the Company's fiscal year
ended at the end of such quarter, setting forth in the case of such statements
of income and cash flows in comparative form the figures for the corresponding
quarter and the corresponding portion of the Company's previous fiscal year, all
certified (subject to normal year-end adjustments) as to fairness of
presentation, generally accepted accounting principles and consistency by the
chief financial officer or the chief accounting officer of the Company;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of the chief
financial officer (or such officer's designee, designated in writing by such
officer) or the chief accounting officer of the Company (i) setting forth in
reasonable detail the calculations required to establish whether the Company was
in compliance with the requirements of Sections 5.06 to 5.08, inclusive, on the
date of such financial statements and (ii) stating whether any Default exists on
the date of such certificate and, if any Default then exists, setting forth the
details thereof and the action which the Company is taking or proposes to take
with respect thereto;
(d) within five Domestic Business Days after any officer of the
Company or the Borrower obtains knowledge of any Default, if such Default is
then continuing, a certificate of the chief financial officer or the chief
accounting officer of the Company or the Borrower setting forth the details
thereof and the
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action which the Company or the Borrower is taking or proposes to take with
respect thereto;
(e) promptly upon the mailing thereof to the shareholders of the
Company generally, copies of all financial statements, reports and proxy
statements so mailed;
(f) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements on
Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their
equivalents) (other than any amendment on Form 8-K the sole purpose of which is
to file exhibits relating to existing Debt meeting the requirements of clause
(ii) of the definition of Debt) which the Company shall have filed with the
Securities and Exchange Commission;
(g) if and when any member of the ERISA Group (i) gives or is required
to give notice to the PBGC of any "reportable event" (as defined in Section 4043
of ERISA) with respect to any Plan which might constitute grounds for a
termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any such
reportable event, a copy of the notice of such reportable event given or
required to be given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that any Multiemployer
Plan is in reorganization, is insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent
to terminate, impose liability (other than for premiums under Section 4007 of
ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of
such notice; (iv) applies for a waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code, a copy of such application; (v) gives
notice of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of
such notice and other information filed with the PBGC; (vi) gives notice of
withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such
notice; or (vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which has resulted or could result
in the imposition of a Lien or the posting of a bond or other security, a
certificate of the chief financial officer or the chief accounting officer of
the Company setting forth details as to such occurrence and action, if any,
which the Company or applicable member of the ERISA Group is required or
proposes to take; and
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(h) from time to time such additional information regarding the
financial position or business of the Company and its Subsidiaries and the
Borrower and its Subsidiaries as the Agent, at the request of any Bank, may
reasonably request.
SECTION 5.02. Maintenance of Property; Insurance. (a) The Company will
keep, and will cause each Significant Subsidiary to keep, all property useful
and necessary in its business in good working order and condition, ordinary wear
and tear excepted.
(b) The Company will maintain, and will cause each Significant
Subsidiary to maintain (either in the name of the Borrower or in such
Significant Subsidiary's own name), with financially sound and responsible
insurance companies, insurance on all their respective properties in at least
such amounts and against at least such risks (and with such risk retention) as
are usually insured against in the same general area by companies of established
repute engaged in the same or a similar business; and will furnish to the Banks,
upon request from the Agent, information presented in reasonable detail as to
the insurance so carried; provided that, in lieu of any such insurance, the
Company and any Significant Subsidiary may maintain a system or systems of
self-insurance and reinsurance which will accord with sound practices of
similarly situated corporations maintaining such systems and with respect to
which the Company or such Significant Subsidiary will maintain adequate
insurance reserves, all in accordance with generally accepted accounting
principles and in accordance with sound insurance principles and practice.
SECTION 5.03. Maintenance of Existence. The Company will, and will
cause each Significant Subsidiary to, preserve, renew and keep in full force and
effect their respective corporate existence and their respective rights,
privileges and franchises necessary or desirable in the normal conduct of
business; provided that nothing in this Section 5.03 shall prohibit or interfere
with the Company's publicly announced strategy to discontinue or dispose of in
one or more transactions the financial services businesses of it or of any of
its Subsidiaries.
SECTION 5.04. Compliance with Laws. The Company will comply, and will
cause each Significant Subsidiary to comply, in all material respects with all
applicable laws, ordinances, rules, regulations, and requirements of
governmental authorities (including, without limitation, Environmental Laws and
ERISA and the rules and regulations thereunder), except where the necessity of
compliance therewith is contested in good faith by appropriate proceedings and
for which adequate reserves in conformity with generally accepted accounting
principles have been established.
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SECTION 5.05. Inspection of Property, Books and Records. The Company
will keep, and will cause each Significant Subsidiary to keep, proper books of
record and account in which full, true and correct entries shall be made of all
dealings and transactions in relation to its business and activities; and will
permit, and will cause each Significant Subsidiary to permit, representatives of
any Bank at such Bank's expense to visit and inspect any of their respective
properties, to examine and make abstracts from any of their respective books and
records and to discuss their respective affairs, finances and accounts with
their respective officers, employees and independent public accountants, all at
such reasonable times and as often as may reasonably be desired.
SECTION 5.06. Subsidiary Debt. (a) Prior to the Separation, total
debt of all Consolidated Subsidiaries (excluding Debt of a Consolidated
Subsidiary to the Company or to a Wholly-Owned Consolidated Subsidiary)
("Subsidiary Debt") will at no time exceed 250% of Consolidated Net Worth.
(b) After the Separation, Subsidiary Debt as of the last day of any
fiscal quarter of the Company ending during any period set forth below will not
exceed the percentage of Consolidated EBITDA for the four consecutive fiscal
quarters of the Company ending on such date set forth below opposite such
period; provided that in the case of any four fiscal quarter period ending prior
to the first anniversary of the Separation, Consolidated EBITDA for such period
shall equal Consolidated EBITDA for each fiscal quarter (a "Relevant Quarter")
beginning after the Separation and ending on or prior to the last day of such
period, multiplied by a fraction, the numerator of which is four and the
denominator of which is the number of Relevant Quarters.
Period Percentage
Prior to December 31, 1999 150%
December 31, 1999-
December 30, 2000 140%
December 31, 2000-
December 30, 2001 130%
On or after December 31, 2001 125%
(c) For purposes of this Section, any preferred stock of a
Consolidated Subsidiary other than the Borrower which is held by a Person other
than the Company or a Wholly-Owned Consolidated Subsidiary shall be included, at
the
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higher of its voluntary or involuntary liquidation value, in the Debt of such
Consolidated Subsidiary.
SECTION 5.07. Debt Coverage. (a) Prior to the Separation,
consolidated Debt of the Company and its Consolidated Subsidiaries will at all
times be less than 70% of the sum of consolidated Debt of the Company and its
Consolidated Subsidiaries and consolidated shareowners' equity of the Company
and its Consolidated Subsidiaries.
(b) After the Separation, consolidated Debt of the Company and its
Consolidated Subsidiaries as of the last day of any fiscal quarter of the
Company will not exceed 400% of Consolidated EBITDA for the four consecutive
fiscal quarters of the Company ending on such date; provided that in the case of
any four fiscal quarter period ending prior to the first anniversary of the
Separation, Consolidated EBITDA for such period shall equal Consolidated EBITDA
for each fiscal quarter (a "Relevant Quarter") beginning after the Separation
and ending on or prior to the last day of such period, multiplied by a fraction,
the numerator of which is four and the denominator of which is the number of
Relevant Quarters.
SECTION 5.08. Negative Pledge. Neither the Company nor the Borrower
will, and the Company will not permit any Subsidiary to, create, assume or
suffer to exist any Lien on any asset now owned or hereafter acquired by it,
except:
(a) Liens existing on the date of this Agreement securing Debt
outstanding on the date of this Agreement in an aggregate principal amount not
exceeding $265,000,000;
(b) any Lien existing on any asset of any corporation at the time such
corporation becomes a Subsidiary and not created in contemplation of such event;
(c) any Lien on any asset securing Debt incurred or assumed for the
purpose of financing all or any part of the cost of acquiring such asset,
provided that such Lien attaches to such asset concurrently with or within 180
days after the acquisition thereof.
(d) any Lien on any asset of any corporation existing at the time such
corporation is merged or consolidated with or into the Company or a Subsidiary
and not created in contemplation of such event;
(e) any Lien existing on any asset prior to the acquisition thereof by
the Company or a Subsidiary and not created in contemplation of such
acquisition;
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(f) any Lien on assets or capital stock of Minor Subsidiaries which
secures Debt of Persons which are not Consolidated Subsidiaries in which the
Company or any of its Subsidiaries has made investments ("Joint Ventures"), but
for the payment of which Debt no other recourse may be had to the Company or any
Subsidiaries ("Limited Recourse Debt"), or any Lien on equity interests in a
Joint Venture securing Limited Recourse Debt of such Joint Venture;
(g) any Lien arising out of the refinancing, replacement, extension,
renewal or refunding of any Debt secured by any Lien permitted by any of the
foregoing clauses of this Section, provided that such Debt is not increased and
is not secured by any additional assets;
(h) Liens arising in the ordinary course of business which (i) do not
secure Debt, (ii) do not secure any obligation in an amount exceeding
$50,000,000 and (iii) do not in the aggregate materially detract from the value
of its assets or materially impair the use thereof in the operation of its
business; and
(i) Liens not otherwise permitted by and in addition to the foregoing
clauses of this Section securing Debt in an aggregate principal amount at any
time outstanding not to exceed $750,000,000.
SECTION 5.09. Consolidations, Mergers and Sales of Assets. The
Company will not (i) consolidate with or merge into any other Person or (ii)
sell, lease or otherwise transfer, directly or indirectly, all or substantially
all of the assets of the Company and its Subsidiaries, taken as a whole, to any
other Person. The Company will retain ownership, directly or indirectly, of at
least 80% of the capital stock, and at least 80% of the voting power, of U S
WEST Communications, Inc. ("Communications"), and will cause Communications to
continue to own substantially all of the telecommunications assets it owns on
the date of this Agreement.
SECTION 5.10. Use of Proceeds. The proceeds of the Loans made under
this Agreement will be used by the Borrower for general corporate purposes. None
of such proceeds will be used, directly or indirectly, in violation of any
applicable law or regulation, and no use of such proceeds will include any use
for the purpose, whether immediate, incidental or ultimate, of buying or
carrying any Margin Stock.
SECTION 5.11. Year 2000 Compatibility. The Company shall take all
reasonable action necessary to ensure that the computer based systems of the
Company and its Subsidiaries are able to operate and effectively process data
including dates on or after January 1, 2000, except that such action shall not
be
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required to the extent that the failure to take such action would not have a
material adverse effect on the consolidated financial position or consolidated
results of operations of the Company and its Consolidated Subsidiaries,
considered as a whole. At the request of the Agent, the Company shall provide
assurance reasonably acceptable to the Agent of the year 2000 compatibility of
the Company and its Subsidiaries.
ARTICLE 6
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the following
events shall have occurred and be continuing:
(a) any principal of any Loan shall not be paid when due, or any
interest, any fees or any other amount payable hereunder shall not be
paid within five days of the due date thereof;
(b) the Company or the Borrower shall fail to observe or perform any
covenant contained in Sections 5.06 to 5.10, inclusive;
(c) the Company or the Borrower shall fail to observe or perform any
covenant or agreement contained in this Agreement (other than those
covered by clause (a) or (b) above) for 10 days (or, in the case of
Section 5.11, 30 days) after written notice thereof has been given to
the Company by the Agent at the request of any Bank;
(d) any representation, warranty, certification or statement made by
the Company or the Borrower in this Agreement or in any certificate,
financial statement or other document delivered pursuant to this
Agreement shall prove to have been incorrect in any material respect
when made (or deemed made);
(e) the Company or any Subsidiary shall fail to make any payment or
payments, in the aggregate in excess of $100,000,000, in respect of any
Material Debt when due or within any applicable grace period;
(f) any event or condition shall occur which results in the
acceleration of the maturity of any Material Debt;
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(g) the Company or any Significant Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation, reorganization
or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect
or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the appointment
of or taking possession by any such official in an involuntary case or
other proceeding commenced against it, or shall make a general
assignment for the benefit of creditors, or shall fail generally to pay
its debts as they become due, or shall take any corporate action to
authorize or otherwise acquiesce in any of the foregoing;
(h) an involuntary case or other proceeding shall be commenced against
the Company or any Significant Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under
any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of 60 days; or an order
for relief shall be entered against the Company or any Significant
Subsidiary under the federal bankruptcy laws as now or hereafter in
effect;
(i) any member of the ERISA Group shall fail to pay when due an amount
or amounts aggregating in excess of $100,000,000 which it shall have
become liable to pay under Title IV of ERISA; or notice of intent to
terminate a Material Plan shall be filed under Title IV of ERISA by any
member of the ERISA Group, any plan administrator or any combination of
the foregoing; or the PBGC shall institute proceedings under Title IV
of ERISA to terminate, to impose liability (other than for premiums
under Section 4007 of ERISA) in respect of, or to cause a trustee to be
appointed to administer any Material Plan; or a condition shall exist
by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated; or there shall
occur a complete or partial withdrawal from, or a default, within the
meaning of Section 4219(c)(5) of ERISA, with respect to, one or more
Multiemployer Plans which could cause one or more members of the ERISA
Group to incur a current payment obligation in excess of $100,000,000;
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(j) a judgment or order for the payment of money in excess of
$100,000,000 shall be rendered against the Company or any Subsidiary
and such judgment or order shall continue unsatisfied and unstayed for
a period of 10 days;
(k) the Company shall repudiate in writing any of its obligations
under Article 9 or any such obligation shall be unenforceable against
the Company in accordance with its terms, or the Company shall so
assert in writing;
(l) prior to the Separation, one or more events or conditions shall
occur which result in a default under any agreement or agreements in
respect of any Material Debt that is subject to the Indentures and as a
consequence of such default or defaults the Company or any of its
Subsidiaries shall make any payment or give or agree to give any
consideration or benefit of any kind (including, without limitation,
any increased compensation, prepayment, shortening of maturities,
security or other credit support) to the holders of such Debt and such
payment, consideration or benefit is determined by the Required Banks,
after taking into account any payment, consideration or benefit made,
given or agreed to be given by such holders to the Company or any of
its Subsidiaries (other than a waiver of such default), to be a
material benefit to the holders of such Debt; or
(m) the Separation shall have occurred on terms and conditions which
are not substantially the same as those set forth in the Proxy
Statement;
then, and in every such event, the Agent shall (i) if requested by Banks having
more than 50% in aggregate amount of the Commitments, by notice to the Company
terminate the Commitments and they shall thereupon terminate, and/or (ii) if
requested by Banks holding Notes evidencing more than 50% in aggregate principal
amount of the Loans, by notice to the Company declare the Notes (together with
accrued interest thereon) to be, and the Notes shall thereupon become,
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Company and the Borrower;
provided that in the case of any of the Events of Default specified in clause
(g) or (h) above with respect to the Company or the Borrower, without any notice
to the Company or the Borrower or any other act by the Agent or the Banks, the
Commitments shall thereupon automatically terminate and the Notes (together with
accrued interest thereon) shall become immediately due and payable without
presentment,
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demand, protest or other notice of any kind, all of which are hereby waived by
the Company and the Borrower.
SECTION 6.02. Notice of Default. The Agent shall give notice to the
Company under Section 6.01(c) promptly upon being requested to do so by any Bank
and shall thereupon notify all the Banks thereof.
ARTICLE 7
THE AGENT
SECTION 7.01. Appointment and Authorization. Each Bank irrevocably
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under this Agreement and the Notes as are delegated to
the Agent by the terms hereof or thereof, together with all such powers as are
reasonably incidental thereto.
SECTION 7.02. Agent and Affiliates. Morgan Guaranty Trust Company of
New York shall have the same rights and powers under this Agreement as any other
Bank and may exercise or refrain from exercising the same as though it were not
the Agent, and Morgan Guaranty Trust Company of New York and its affiliates may
accept deposits from, lend money to, and generally engage in any kind of
business with the Company, the Borrower or any Subsidiary or affiliate of the
Company or the Borrower as if it were not the Agent hereunder.
SECTION 7.03. Action by Agent. The obligations of the Agent hereunder
are only those expressly set forth herein. Without limiting the generality of
the foregoing, the Agent shall not be required to take any action with respect
to any Default, except as expressly provided in Article 6.
SECTION 7.04. Consultation with Experts. The Agent may consult with
legal counsel (who may be counsel for the Company or the Borrower), independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken by it in good faith in accordance with
the advice of such counsel, accountants or experts.
SECTION 7.05. Liability of Agent. Neither the Agent nor any of its
affiliates nor any of their respective directors, officers, agents or employees
shall be liable for any action taken or not taken by it in connection herewith
(i) with the consent or at the request of the Required Banks or (ii) in the
absence of its own gross negligence or willful misconduct. Neither the Agent nor
any of its affiliates nor
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any of their respective directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into or verify (i) any
statement, warranty or representation made in connection with this Agreement or
any borrowing hereunder; (ii) the performance or observance of any of the
covenants or agreements of the Company or the Borrower; (iii) the satisfaction
of any condition specified in Article 3, except receipt of items required to be
delivered to the Agent; or (iv) the validity, effectiveness or genuineness of
this Agreement, the Notes or any other instrument or writing furnished in
connection herewith. The Agent shall not incur any liability by acting in
reliance upon any notice, consent, certificate, statement, or other writing
(which may be a bank wire, telex or similar writing) believed by it to be
genuine or to be signed by the proper party or parties.
SECTION 7.06. Indemnification. Each Bank shall, ratably in accordance
with its Commitment, indemnify the Agent, its affiliates and their respective
directors, officers, agents and employees (to the extent not reimbursed by the
Company or the Borrower) against any cost, expense (including counsel fees and
disbursements), claim, demand, action, loss or liability (except such as result
from such indemnitees' gross negligence or willful misconduct) that such
indemnitees may suffer or incur in connection with this Agreement or any action
taken or omitted by such indemnitees hereunder.
SECTION 7.07. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Agreement.
SECTION 7.08. Successor Agent. The Agent may resign at any time by
giving notice thereof to the Banks and the Company. Upon any such resignation,
the Required Banks shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Required Banks, and shall
have accepted such appointment, within 30 days after the retiring Agent gives
notice of resignation, then the retiring Agent may, on behalf of the Banks,
appoint a successor Agent (with the consent of the Company, such consent not to
be unreasonably withheld), which shall be a commercial bank organized or
licensed under the laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least $400,000,000. Upon the
acceptance of its appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the rights
and duties of the
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retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent.
SECTION 7.09. Agent's Fee. The Company shall pay to the Agent for its
own account fees in the amounts and at the times previously agreed upon between
the Company and the Agent.
ARTICLE 8
CHANGES IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or
Unfair. If on or prior to the first day of any Interest Period for any Euro-
Dollar Loan or Money Market LIBOR Loan:
(a) the Agent is advised by the Euro-Dollar Reference Banks that
deposits in dollars (in the applicable amounts) are not being offered to the
Euro- Dollar Reference Banks in the market for such Interest Period, or
(b) in the case of Euro-Dollar Loans, Banks having 50% or more of the
aggregate amount of the Euro-Dollar Loans advise the Agent that the Adjusted
London Interbank Offered Rate as determined by the Agent will not adequately and
fairly reflect the cost to such Banks of funding their Euro-Dollar Loans for
such Interest Period,
the Agent shall forthwith give notice thereof to the Company and the Banks,
whereupon until the Agent notifies the Company that the circumstances giving
rise to such suspension no longer exist, (i) the obligations of the Banks to
make Euro-Dollar Loans or to convert outstanding Loans into Euro-Dollar Loans
shall be suspended and (ii) each outstanding Euro-Dollar Loan shall be converted
into a Domestic Loan on the last day of the then current Interest Period
applicable thereto. Unless the Borrower notifies the Agent at least two Domestic
Business Days before the date of any Fixed Rate Borrowing for which a Notice of
Borrowing has previously been given that it elects not to borrow on such date,
(i) if such Fixed Rate Borrowing is a Committed Borrowing, such Borrowing shall
instead be made as a Domestic Borrowing and (ii) if such Fixed Rate Borrowing is
a Money Market LIBOR Borrowing, the Money Market LIBOR Loans comprising such
Borrowing
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shall bear interest for each day from and including the first day to but
excluding the last day of the Interest Period applicable thereto at the Base
Rate for such day.
SECTION 8.02. Illegality. If, on or after the date of this Agreement,
the adoption of any applicable law, rule or regulation, or any change in any
applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Bank (or its Euro-Dollar Lending Office) with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency shall make it unlawful or impossible for any Bank (or its
Euro-Dollar Lending Office) to make, maintain or fund its Euro-Dollar Loans to
the Borrower and such Bank shall so notify the Agent, the Agent shall forthwith
give notice thereof to the other Banks and the Company, whereupon until such
Bank notifies the Company and the Agent that the circumstances giving rise to
such suspension no longer exist, the obligation of such Bank to make Euro-Dollar
Loans to the Borrower, or to convert outstanding Loans into Euro-Dollar Loans,
shall be suspended. Before giving any notice to the Agent pursuant to this
Section, such Bank shall designate a different Euro-Dollar Lending Office if
such designation will avoid the need for giving such notice and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank. If such notice
is given, each Euro-Dollar Loan of such Bank then outstanding shall be converted
to a Domestic Loan either (a) on the last day of the then current Interest
Period applicable to such Euro-Dollar Loan if such Bank may lawfully continue to
maintain and fund such Loan to such day or (b) immediately if such Bank shall
determine that it may not lawfully continue to maintain and fund such Loan to
such day.
SECTION 8.03. Increased Cost and Reduced Return. (a) If on or after
(x) the date hereof, in the case of any Committed Loan or any obligation to make
Committed Loans or (y) the date of the related Money Market Quote, in the case
of any Money Market Loan, the adoption of any applicable law, rule or
regulation, or any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Applicable Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall impose, modify or
deem applicable any reserve (including, without limitation, any such requirement
imposed by the Board of Governors of the Federal Reserve System with respect to
any Euro-Dollar Loan any such requirement included in an applicable Euro-Dollar
Reserve Percentage), special deposit, insurance assessment or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any
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Bank (or its Applicable Lending Office) or shall impose on any Bank (or its
Applicable Lending Office) or on the United States market for certificates of
deposit or the London interbank market any other condition affecting its Fixed
Rate Loans, its Note or its obligation to make Fixed Rate Loans and the result
of any of the foregoing is to increase the cost to such Bank (or its Applicable
Lending Office) of making or maintaining any Fixed Rate Loan, or to reduce the
amount of any sum received or receivable by such Bank (or its Applicable Lending
Office) under this Agreement or under its Note with respect thereto, by an
amount deemed by such Bank to be material, then, within 15 days after demand by
such Bank (with a copy to the Agent), the Company shall pay to such Bank such
additional amount or amounts as will compensate such Bank for such increased
cost or reduction.
(b) If any Bank shall have determined that, after the date hereof, the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change in any such law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on capital
of such Bank (or its Parent) as a consequence of such Bank's obligations
hereunder to a level below that which such Bank (or its Parent) could have
achieved but for such adoption, change, request or directive (taking into
consideration its policies with respect to capital adequacy) by an amount deemed
by such Bank to be material, then from time to time, within 15 days after demand
by such Bank (with a copy to the Agent), the Company shall pay to such Bank such
additional amount or amounts as will compensate such Bank (or its Parent) for
such reduction.
(c) Each Bank will promptly notify the Company and the Agent of any
event of which it has knowledge, occurring after the date hereof, which will
entitle such Bank to compensation pursuant to this Section and will designate a
different Applicable Lending Office if such designation will avoid the need for,
or reduce the amount of, such compensation and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank. A certificate of any Bank
claiming compensation under this Section and setting forth the additional amount
or amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, such Bank may use any reasonable
averaging and attribution methods.
SECTION 8.04. Taxes. (a) Any and all payments by the Company or the
Borrower to or for the account of any Bank or the Agent hereunder or under any
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Note shall be made free and clear of and without deduction for any and all
present or future taxes, duties, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the case
of each Bank and the Agent, taxes imposed on its income, and franchise taxes
imposed on it, by the jurisdiction under the laws of which such Bank or the
Agent (as the case may be) is organized or any political subdivision thereof
and, in the case of each Bank, taxes imposed on its income, and franchise or
similar taxes imposed on it, by the jurisdiction of such Bank's Applicable
Lending Office or any political subdivision thereof (all such non-excluded
taxes, duties, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Company or the
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder or under any Note to any Bank or the Agent, (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 8.04) such Bank or the Agent (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) such Person shall make such deductions, (iii) such Person shall pay the
full amount deducted to the relevant taxation authority or other authority in
accordance with applicable law and (iv) such Person shall furnish to the Agent,
at its address referred to in Section 10.01, the original or a certified copy of
a receipt evidencing payment thereof.
(b) In addition, the Company agrees to pay any present or future stamp
or documentary taxes and any other excise or property taxes, or charges or
similar levies which arise from any payment made hereunder or under any Note or
from the execution or delivery of, or otherwise with respect to, this Agreement
or any Note (hereinafter referred to as "Other Taxes").
(c) The Company agrees to indemnify each Bank and the Agent for the
full amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this Section 8.04) paid by such Bank or the Agent (as the case may be) and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto. This indemnification shall be made within 15 days from the date
such Bank or the Agent (as the case may be) makes demand therefor.
(d) Each Bank organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Bank listed on the signature pages hereof and on
or prior to the date on which it becomes a Bank in the case of each other Bank,
and from time to time thereafter if requested in writing by the Company (but
only so long as such Bank remains lawfully able to do so), shall provide the
Company
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with Internal Revenue Service form 1001 or 4224, as appropriate, or any
successor form prescribed by the Internal Revenue Service, certifying that such
Bank is entitled to benefits under an income tax treaty to which the United
States is a party which reduces the rate of withholding tax on payments of
interest or certifying that the income receivable pursuant to this Agreement is
effectively connected with the conduct of a trade or business in the United
States. If the form provided by a Bank at the time such Bank first becomes a
party to this Agreement indicates a United States interest withholding tax rate
in excess of zero, withholding tax at such rate shall be considered excluded
from "Taxes" as defined in Section 8.04(a) imposed by the United States.
(e) For any period with respect to which a Bank has failed to provide
the Company with the appropriate form pursuant to Section 8.04(d) (unless such
failure is due to a change in treaty, law or regulation occurring subsequent to
the date on which a form originally was required to be provided), such Bank
shall not be entitled to indemnification under Section 8.04(a) with respect to
Taxes imposed by the United States; provided, however, that should a Bank, which
is otherwise exempt from or subject to a reduced rate of withholding tax, become
subject to Taxes because of its failure to deliver a form required hereunder,
the Company shall take such steps as such Bank shall reasonably request to
assist such Bank to recover such Taxes.
(f) If the Company or the Borrower is required to pay additional
amounts to or for the account of any Bank pursuant to this Section 8.04, then
such Bank will change the jurisdiction of its Applicable Lending Office so as to
eliminate or reduce any such additional payment which may thereafter accrue if
such change, in the judgment of such Bank, is not otherwise disadvantageous to
such Bank.
SECTION 8.05. Domestic Loans Substituted for Affected Euro-Dollar
Loans. If (i) the obligation of any Bank to make Euro-Dollar Loans to the
Borrower has been suspended pursuant to Section 8.02 or (ii) any Bank has
demanded compensation under Section 8.03 or 8.04 with respect to its Euro-
Dollar Loans and the Borrower shall, by at least five Euro-Dollar Business Days'
prior notice to such Bank through the Agent, have elected that the provisions of
this Section shall apply to such Bank, then, unless and until such Bank notifies
the Company that the circumstances giving rise to such suspension or demand for
compensation no longer exist:
(a) all Loans to the Borrower which would otherwise be made by such
Bank as (or continued as or converted into) Euro-Dollar Loans shall instead be
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Domestic Loans (on which interest and principal shall be payable
contemporaneously with the related Euro-Dollar Loans of the other Banks), and
(b) after each of its Euro-Dollar Loans to the Borrower has been
repaid (or converted to a Domestic Loan), all payments of principal which would
otherwise be applied to repay such Euro-Dollar Loans shall be applied to repay
its Domestic Loans instead.
If such Bank notifies the Borrower that the circumstances giving rise to such
notice no longer apply, the principal amount of each such Domestic Loan shall be
converted into a Euro-Dollar Loan on the first day of the next succeeding
Interest Period applicable to the related Euro-Dollar Loans of the other Banks.
SECTION 8.06. Substitution of Bank. If (i) the obligation of any Bank
to make Euro-Dollar Loans has been suspended pursuant to Section 8.02, (ii) any
Bank has demanded compensation under Section 8.03 or (iii) any Bank has not
signed an amendment or waiver which must be signed by all the Banks to become
effective, and such amendment or waiver has been signed by the Super-Majority
Banks, the Company shall have the right, with the assistance of the Agent, to
seek a mutually satisfactory substitute bank or banks (which may be one or more
of the Banks) to purchase the Notes and assume the Commitment of such Bank.
ARTICLE 9
GUARANTY
SECTION 9.01. The Guaranty. The Company hereby unconditionally
guarantees the full and punctual payment (whether at stated maturity, upon
acceleration or otherwise) of the principal of and interest on each Note issued
by the Borrower pursuant to this Agreement, and the full and punctual payment of
all other amounts payable by the Borrower under this Agreement. Upon failure by
the Borrower to pay punctually any such amount, the Company shall forthwith on
demand pay the amount not so paid at the place and in the manner specified in
this Agreement.
SECTION 9.02. Guaranty Unconditional. The obligations of the Company
hereunder shall be unconditional, irrevocable and absolute and, without limiting
the generality of the foregoing, shall not be released, discharged or otherwise
affected by:
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(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Borrower under this
Agreement or any Note, by operation of law or otherwise;
(ii) any modification or amendment of or supplement to this
Agreement or any Note;
(iii) any release, impairment, non-perfection or invalidity of
any direct or indirect security for any obligation of the Borrower
under this Agreement or any Note;
(iv) any change in the corporate existence, structure or
ownership of the Borrower, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting the Borrower or
its assets or any resulting release or discharge of any obligation of
the Borrower contained in this Agreement or any Note;
(v) the existence of any claim, set-off or other rights which
the Company may have at any time against the Borrower, the Agent, any
Bank or any other Person, whether in connection herewith or any
unrelated transactions, provided that nothing herein shall prevent the
assertion of any such claim by separate suit or compulsory
counterclaim;
(vi) any invalidity or unenforceability relating to or against
the Borrower for any reason of this Agreement or any Note, or any
provision of applicable law or regulation purporting to prohibit the
payment by the Borrower of the principal of or interest on any Note or
any other amount payable by it under this Agreement; or
(vii) any other act or omission to act or delay of any kind by
the Borrower, the Agent, any Bank or any other Person or any other
circumstance whatsoever which might, but for the provisions of this
paragraph, constitute a legal or equitable discharge of the Company's
obligations hereunder.
SECTION 9.03. Discharge Only upon Payment in Full; Reinstatement In
Certain Circumstances. The Company's obligations hereunder shall remain in full
force and effect until the Commitments shall have terminated and the principal
of and interest on the Notes and all other amounts payable by the Company and
the Borrower under this Agreement shall have been indefeasibly paid in full. If
at any time any payment of the principal of or interest on any Note or any other
amount payable by the Borrower under this Agreement is rescinded or must be
otherwise restored or returned upon the insolvency, bankruptcy or reorganization
of the Borrower or otherwise, the Company's obligations hereunder with respect
to such payment shall be reinstated at such time as though such payment had been
due but not made at such time.
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SECTION 9.04. Waiver by the Company. The Company irrevocably waives
acceptance hereof, presentment, demand, protest and any notice not provided for
herein, as well as any requirement that at any time any action be taken by any
Person against the Borrower or any other Person.
SECTION 9.05. Subrogation. The Company irrevocably waives any and all
rights to which it may be entitled, by operation of law or otherwise, upon
making any payment hereunder to be subrogated to the rights of the payee against
the Borrower with respect to such payment or against any direct or indirect
security therefor, or otherwise to be reimbursed, indemnified or exonerated by
or for the account of the Borrower in respect thereof.
SECTION 9.06. Stay of Acceleration. In the event that acceleration of
the time for payment of any amount payable by the Borrower under this Agreement
or its Notes is stayed upon insolvency, bankruptcy or reorganization of the
Borrower, all such amounts otherwise subject to acceleration under the terms of
this Agreement shall nonetheless be payable by the Company hereunder forthwith
on demand by the Agent made at the request of the Required Banks.
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SECTION 9.07. Release upon Separation. So long as, immediately before
and after the consummation of the Separation, no Default shall have occurred and
be continuing, simultaneously with such consummation, USW-C, Inc. (to be renamed
U S WEST, Inc.) shall succeed to all of the rights, duties and obligations of U
S WEST, Inc. (to be renamed MediaOne Group, Inc.) ("Old U S WEST") hereunder,
whereupon Old U S WEST shall have no further rights, duties and obligations
hereunder, in each case automatically, without any further action on the part of
any party hereto.
ARTICLE 10
MISCELLANEOUS
SECTION 10.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including bank wire, telex,
facsimile transmission or similar writing) and shall be given to such party: (x)
in the case of the Company, the Borrower or the Agent, at its address or
facsimile number set forth on the signature pages hereof, (y) in the case of any
Bank, at its address or facsimile number set forth in its Administrative
Questionnaire or (z) in the case of any party, such other address or facsimile
number as such party may hereafter specify for the purpose by notice to the
Agent and the Company. Each such notice, request or other communication shall be
effective (i) if given by mail, 72 hours after such communication is deposited
in the mails with first class postage prepaid, addressed as aforesaid, (ii) if
given by facsimile transmission, when such facsimile is transmitted to the
facsimile number specified pursuant to this Section 10.01 and telephonic
confirmation of receipt thereof is received, or (iii) if given by any other
means, when delivered at the address specified in this Section; provided that
notices to the Agent under Article 2 or Article 8 shall not be effective until
received.
SECTION 10.02. No Waivers. No failure or delay by the Agent or any Bank
in exercising any right, power or privilege hereunder or under any Note shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
SECTION 10.03. Expenses; Indemnification. (a) The Company shall pay (i)
all out-of-pocket expenses of the Agent, including fees and disbursements of
special counsel for the Agent, in connection with the preparation and
53
<PAGE>
administration of this Agreement, any waiver or consent hereunder or any
amendment hereof or any Default or alleged Default hereunder and (ii) if an
Event of Default occurs, all out-of-pocket expenses incurred by the Agent and
each Bank, including fees and disbursements of counsel, in connection with such
Event of Default and collection, bankruptcy, insolvency and other enforcement
proceedings resulting therefrom.
(b) The Company agrees to indemnify the Agent and each Bank, their
respective affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "Indemnitee") and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and
expenses of any kind, including, without limitation, the reasonable fees and
disbursements of counsel, which may be incurred by such Indemnitee in connection
with any investigative, administrative or judicial proceeding (whether or not
such Indemnitee shall be designated a party thereto) brought or threatened
relating to or arising out of this Agreement or any actual or proposed use of
proceeds of Loans hereunder; provided that (i) no Indemnitee shall have the
right to be indemnified hereunder for such Indemnitee's own gross negligence or
willful misconduct as determined by a court of competent jurisdiction and (ii)
the Company shall not be liable for any settlement entered into by an Indemnitee
without its consent (which shall not be unreasonably withheld).
(c) Each Indemnitee agrees to give the Company prompt written notice
after it receives any notice of the commencement of any action, suit or
proceeding for which such Indemnitee may wish to claim indemnification pursuant
to subsection (b). The Company shall have the right, exercisable by giving
written notice within fifteen Domestic Business Days after the receipt of notice
from such Indemnitee of such commencement, to assume, at the Company's expense,
the defense of any such action, suit or proceeding; provided, that such
Indemnitee shall have the right to employ separate counsel in any such action,
suit or proceeding and to participate in the defense thereof, but the fees and
expenses of such separate counsel shall be at such Indemnitee's expense unless
(1) the Company shall have agreed to pay such fees and expenses; (2) the Company
shall have failed to assume the defense of such action, suit or proceeding or
shall have failed to employ counsel reasonably satisfactory to such Indemnitee
in any such action, suit or proceeding; or (3) such Indemnitee shall have been
advised by independent counsel in writing (with a copy to the Company) that
there may be one or more defenses available to such Indemnitee which are in
conflict with those available to the Company (in which case, if such Indemnitee
notifies the Company in writing that it elects to employ separate counsel at the
Company's expense, the Company shall be obligated to assume the expense, it
being understood, however, that the Company shall not be liable for the fees or
expenses
54
<PAGE>
of more than one separate firm of attorneys, which firm shall be designated in
writing by such Indemnitee).
SECTION 10.04. Sharing of Set-offs. Each Bank agrees that if it shall,
by exercising any right of set-off or counterclaim or otherwise, receive payment
of a proportion of the aggregate amount of principal and interest due with
respect to any Note held by it which is greater than the proportion received by
any other Bank in respect of the aggregate amount of principal and interest due
with respect to any Note held by such other Bank, the Bank receiving such
proportionately greater payment shall purchase such participations in the Notes
held by the other Banks, and such other adjustments shall be made, as may be
required so that all such payments of principal and interest with respect to the
Notes held by the Banks shall be shared by the Banks pro rata; provided that
nothing in this Section shall impair the right of any Bank to exercise any right
of set-off or counterclaim it may have and to apply the amount subject to such
exercise to the payment of indebtedness of the Borrower other than its
indebtedness hereunder. The Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that any holder of a participation in a
Note, whether or not acquired pursuant to the foregoing arrangements, may
exercise rights of set-off or counterclaim and other rights with respect to such
participation as fully as if such holder of a participation were a direct
creditor of the Borrower in the amount of such participation.
SECTION 10.05. Amendments and Waivers. Any provision of this Agreement
or the Notes may be amended or waived if, but only if, such amendment or waiver
is in writing and is signed by the Company, the Borrower and the Required Banks
(and, if the rights or duties of the Agent are affected thereby, by the Agent);
provided that no such amendment or waiver shall, unless signed by all the Banks,
(i) increase or decrease the Commitment of any Bank (except for a ratable
decrease in the Commitments of all Banks) or subject any Bank to any additional
obligation, (ii) reduce the principal of or rate of interest on any Loan or any
fees hereunder, except as provided below, (iii) postpone the date fixed for any
payment of principal of or interest on any Loan or any fees hereunder or for any
reduction or termination of any Commitment, (iv) amend or waive the provisions
of Article 9 or (v) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Notes, or the number of Banks, which shall be
required for the Banks or any of them to take any action under this Section or
any other provision of this Agreement.
SECTION 10.06. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that neither the Company nor
the
55
<PAGE>
Borrower may assign or otherwise transfer any of its rights under this
Agreement without the prior written consent of all Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Commitment or
any or all of its Loans, with (and subject to) the written consent of the
Company and the Agent, which consents shall not be unreasonably withheld;
provided that if a Participant is an affiliate of such grantor Bank or is
another Bank, no such consent shall be required. In the event of any such grant
by a Bank of a participating interest to a Participant, such Bank shall remain
responsible for the performance of its obligations hereunder, and the Company,
the Borrower and the Agent shall continue to deal solely and directly with such
Bank in connection with such Bank's rights and obligations under this Agreement.
Any agreement pursuant to which any Bank may grant such a participating interest
shall provide that such Bank shall retain the sole right and responsibility to
enforce the obligations of the Company and the Borrower hereunder including,
without limitation, the right to approve any amendment, modification or waiver
of any provision of this Agreement; provided that such participation agreement
may provide that such Bank will not agree to any modification, amendment or
waiver of this Agreement described in clause (i), (ii) or (iii) of Section 10.05
without the consent of the Participant. The Borrower agrees that each
Participant shall, to the extent provided in its participation agreement, be
entitled to the benefits of Article 8 with respect to its participating
interest. An assignment or other transfer which is not permitted by subsection
(c) or (d) below but which is consented to in accordance with this subsection
(b) shall be given effect for purposes of this Agreement only to the extent of a
participating interest granted in accordance with this subsection (b).
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part of all, of its
rights and obligations under this Agreement and the Notes, and such Assignee
shall assume such rights and obligations, pursuant to an Assignment and
Assumption Agreement in substantially the form of Exhibit G hereto executed by
such Assignee and such transferor Bank, with (and subject to) the subscribed
consent of the Company and the Agent, which consents shall not be unreasonably
withheld; provided that (i) if an Assignee is an affiliate of such transferor
Bank or is another Bank, no such consent shall be required; (ii) such assignment
may, but need not, include rights of the transferor Bank in respect of
outstanding Money Market Loans; and (iii) any assignment shall not be less than
$15,000,000, or if less, shall constitute an assignment of all of such Bank's
rights and obligations under this Agreement and the Notes except for any rights
retained in accordance with clause (ii) of this proviso. Upon execution and
delivery of such instrument
56
<PAGE>
and payment by such Assignee to such transferor Bank of an amount equal to the
purchase price agreed between such transferor Bank and such Assignee, such
Assignee shall be a Bank party to this Agreement and shall have all the rights
and obligations of a Bank with a Commitment as set forth in such instrument of
assumption, and the transferor Bank shall be released from its obligations
hereunder to a corresponding extent, and no further consent or action by any
party shall be required. Upon the consummation of any assignment pursuant to
this subsection (c), the transferor Bank, the Agent and the Borrower shall make
appropriate arrangements so that, if required, new Notes are issued to the
Assignee. In connection with any such assignment, the transferor Bank shall pay
to the Agent an administrative fee for processing such assignment in the amount
of $2,500. If the Assignee is not incorporated under the laws of the United
States of America or a state thereof, it shall deliver to the Company and the
Agent certification as to exemption from deduction or withholding of any United
States federal income taxes in accordance with Section 8.04.
(d) Any Bank may at any time assign all or any portion of its rights
under this Agreement and its Notes to a Federal Reserve Bank. No such assignment
shall release the transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Bank's rights
shall be entitled to receive any greater payment under Section 8.03 or 8.04 than
such Bank would have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Company's prior written
consent or by reason of the provisions of Section 8.02, 8.03 or 8.04 requiring
such Bank to designate a different Applicable Lending Office under certain
circumstances or at a time when the circumstances giving rise to such greater
payment did not exist.
SECTION 10.07. Termination of Existing Credit Agreements. The Company
and each of the Banks that is also a "Bank" party to the Existing Credit
Agreements agrees that the "Commitments" as defined in the Existing Credit
Agreements shall be terminated in their entirety on the Effective Date. Each of
such Banks waives (a) any requirement of notice of such termination pursuant to
Section 2.09 of the Existing Credit Agreements and (b) any claim to any facility
fees or other fees under the Existing Credit Agreements for any day on or after
the Effective Date. Each of the Company and the Borrower (i) represents and
warrants that (x) after giving effect to the preceding sentences of this Section
10.07, the commitments under the Existing Credit Agreements will be terminated
effective not later than the Effective Date, (y) no loans are, as of the date
hereof, or will be, as of the Effective Date, outstanding under the Existing
Credit Agreements and (ii) covenants that all accrued and unpaid facility fees
and any
57
<PAGE>
other amounts due and payable under the Existing Credit Agreements shall
have been paid on or prior to the Effective Date.
SECTION 10.08. Governing Law; Submission to Jurisdiction. This
Agreement and each Note shall be governed by and construed in accordance with
the laws of the State of New York. Each of the Company and the Borrower hereby
submits to the nonexclusive jurisdiction of the United States District Court for
the Southern District of New York and of any New York State court sitting in New
York City for purposes of all legal proceedings arising out of or relating to
this Agreement or the transactions contemplated hereby, and irrevocably waives,
to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such proceeding brought in such
a court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum.
SECTION 10.09. Counterparts; Integration; Effectiveness. This
Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument. This Agreement constitutes the entire agreement and
understanding among the parties hereto and supersedes any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof. This Agreement shall become effective upon receipt by the Agent of
counterparts hereof signed by each of the Company, the Borrower, the Banks and
the Agent (or, in the case of any party as to which an executed counterpart
shall not have been received, receipt by the Agent in form satisfactory to it of
telegraphic, telex or other written confirmation from such party of execution of
a counterpart hereof by such party).
SECTION 10.10. WAIVER OF JURY TRIAL. EACH OF THE COMPANY, THE BORROWER,
THE AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 10.11. Confidentiality. Each of the Agent and the Banks agrees
to use its reasonable best efforts to keep confidential any information
delivered or made available by the Company or the Borrower to it which is
clearly stated by the Company or the Borrower to be confidential; provided that
nothing herein shall prevent the Agent or any Bank from disclosing such
information (i) to the Agent or any other Bank in connection with the
transactions contemplated hereby, (ii) to its officers, directors, employees,
agents, attorneys and accountants who have a need to know such information in
accordance with customary banking
58
<PAGE>
practices and who receive such information having been made aware of the
restrictions set forth in this Section, (iii) upon the order of any court or
administrative agency, (iv) upon the request or demand of any regulatory agency
or authority having jurisdiction over such party, (v) which has been publicly
disclosed, (vi) which has been obtained from any Person other than the Company
and its Subsidiaries, provided that such Person is not (x) known to it to be
bound by a confidentiality agreement with the Company or its Subsidiaries or (y)
known to it to be otherwise prohibited from transmitting the information to it
by a contractual, legal or fiduciary obligation, (vii) in connection with the
exercise of any remedy hereunder or under the Notes or (viii) to any actual or
proposed participant or assignee of all or any of its rights hereunder which has
agreed in writing to be bound by the provisions of this Section.
59
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
U S WEST CAPITAL FUNDING, INC.
By /s/ Sean Foley
-------------------------------------
Title: Vice President and Treasurer
7800 East Orchard Road
Englewood, Colorado 80111
Facsimile number: 303-793-6307
Telephone number: 303-793-6250
Attention: Sean Foley
U S WEST, INC.
By /s/ Rahn K. Porter
-------------------------------------
Title: Assistant Treasurer
7800 East Orchard Road
Englewood, Colorado 80111
Facsimile number: 303-793-6307
Telephone number: 303-793-6250
Attention: Rahn Porter
USW-C, INC.
By /s/ Allan R. Spies
-------------------------------------
Title: Chief Financial Officer
7800 East Orchard Road
Englewood, Colorado 80111
Facsimile number: 303-793-6307
Telephone number: 303-793-6250
Attention: Allan R. Spies
60
<PAGE>
Commitments
$55,555,556 REVOLVING COMMITMENT VEHICLE
CORPORATION
By /s/ Andrew D. Brown
-------------------------------------
Title: Vice President
$55,555,556 BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /s/ R. Vernon Howard
-------------------------------------
Title: Managing Director
$55,555,556 THE CHASE MANHATTAN BANK
By /s/ Ann B. Kerns
-------------------------------------
Title: Vice President
$55,555,556 MELLON BANK, N.A.
By /s/ David McGowan
-------------------------------------
Title: Vice President
61
<PAGE>
$53,333,333 ABN AMRO BANK N.V.
By /s/ Thomas M. Toerpe
-------------------------------------
Title: Vice President
By /s/ Roxana Sopala
-------------------------------------
Title: Vice President
$53,333,333 THE BANK OF NEW YORK
By /s/ James W. Whitaker
-------------------------------------
Title: Vice President
$53,333,333 BANK ONE, COLORADO, N.A.
By /s/ David L. Ericson
-------------------------------------
Title: Vice President
$53,333,333 CITIBANK, N.A.
By /s/ Prakash M. Chonkar
-------------------------------------
Title: Attorney In-Fact
$53,333,333 KEYBANK NATIONAL ASSOCIATION
By /s/ Mary K. Young
-------------------------------------
Title: Commercial Banking Office
62
<PAGE>
$53,333,333 NATIONSBANK, N.A.
By /s/ Whitney Busse
-------------------------------------
Title: Vice President
$44,444,444 COMMERZBANK AG LOS ANGELES
BRANCH
By /s/ Christian Jagenberg
-------------------------------------
Title: Senior Vice President &
Manager
By /s/ John Korthuis
-------------------------------------
Title: Vice President
$44,444,444 FLEET NATIONAL BANK
By /s/ Sue Anderson
-------------------------------------
Title: Vice President
$32,222,222 CANADIAN IMPERIAL BANK OF
COMMERCE
By /s/ Matthew S. Hannon
-------------------------------------
Title: Executive Director, CIBC
Oppenheimer acting as Agent
63
<PAGE>
$30,000,000 BANKERS TRUST COMPANY
By /s/ Gregory P. Shefrin
-------------------------------------
Title: Vice President
$30,000,000 THE FIRST NATIONAL BANK OF
CHICAGO
By /s/ Michael J. Harrington
-------------------------------------
Title: Corporate Banking Officer
$30,000,000 KREDIETBANK N.V.
By /s/ Robert Snauffer
-------------------------------------
Title: Vice President
By /s/ Robert M. Surdam, Jr.
-------------------------------------
Title: Vice President
$30,000,000 THE ROYAL BANK OF SCOTLAND PLC
By /s/ K.C. Barclay
-------------------------------------
Title: Manager
64
<PAGE>
$30,000,000 WELLS FARGO BANK, N.A.
By /s/ Donald A. Hartmann
-------------------------------------
Title: Senior Vice President
By /s/ Judy A. Vodhanel
-------------------------------------
Title: Vice President
$16,666,667 BANK OF HAWAII
By /s/ Elizabeth O. MacLean
-------------------------------------
Title: Vice President
$16,666,667 BARCLAYS BANK PLC
By /s/ Les Bek
-------------------------------------
Title: Director
$16,666,667 BAYERISCHE LANDESBANK GIROZENTRALE
CAYMAN ISLANDS BRANCH
By /s/ Peter Obermann
-------------------------------------
Title: Senior Vice President
Manager Lending Division
By /s/ Sean O'Sullivan
-------------------------------------
Title: Vice President
65
<PAGE>
$16,666,667 BAYERISCHE HYPOTHEKEN-UND
WECHSEL-BANK AKTIENGESELLSCHAFT
By /s/ Yoram Dankner
-------------------------------------
Title: Senior Vice President
By /s/ Christian Walter
-------------------------------------
Title: Vice President
$16,666,667 LEHMAN COMMERCIAL PAPER INC.
By /s/ Michele Swenson
-------------------------------------
Title: Authorized Signatory
$16,666,667 MERRILL LYNCH CAPITAL
CORPORATION
By /s/ Robert Stevens
-------------------------------------
Title: Vice President
$16,666,667 NORWEST BANK COLORADO, NATIONAL
ASSOCIATION
By /s/ Carol A. Ward
-------------------------------------
Title: Vice President
$16,666,667 THE TOKAI BANK, LIMITED
By /s/ Masahiko Saito
-------------------------------------
Title: Senior Vice President and
Assistant General Manager
66
<PAGE>
$16,666,667 U.S. BANK NATIONAL ASSOCIATION
By /s/ Scott E. Page
-------------------------------------
Title: Vice President
$11,111,111 BANQUE NATIONALE DE PARIS
By /s/ C. Bettles
-------------------------------------
Title: Senior Vice President &
Manager
By /s/ Stephane Ronze
-------------------------------------
Title: Assistant Vice President
$11,111,111 ROYAL BANK OF CANADA
By /s/ John Page
-------------------------------------
Title: Senior Manager
$11,111,111 ISTITUTO BANCARIO SAN PAOLO DI
TORINO S.P.A.
By /s/ Robert S. Wurster
-------------------------------------
Title: First Vice President
By /s/ Jim Girolamo
-------------------------------------
Title: Vice President
67
<PAGE>
$3,333,333 THE PROVIDENT BANK.
By /s/ Tom B. Scherpenberg
-------------------------------------
Title: Vice President
Total Commitments:
$1,000,000,000
===========
68
<PAGE>
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as
Administrative Agent
By /s/ John M. Mikolay
-------------------------------------
Title: Vice President
500 Stanton Christiana Road
Newark, Delaware 19713
Attention: Mark Connor
Facsimile number: 302-634-1092
Telephone number: 302-634-4218
69
<PAGE>
PRICING SCHEDULE
The "Euro-Dollar Margin" and "Facility Fee Rate" for any day are the
respective percentages set forth below in the applicable row under the column
corresponding to the Status that exists on such day:
<TABLE>
<CAPTION>
Level Level Level Level Level Level
<S> <C> <C> <C> <C> <C> <C>
Status I II III IV V VI
Euro-Dollar
Margin:
Usage less than 50% .1175% .125% .145% .185% .215% .250%
Usage greater
than = 50% .1675% .175% .195% .235% .265% .300%
Facility Fee .070% .075% .080% .090% .110% .150%
Rate
===================== ============ ============= ============= ============ ============= ============
</TABLE>
For purposes of this Schedule, the following terms have the following
meanings:
"Level I Status" exists at any date after the Separation if, at such
date, the Borrower's outstanding senior unsecured long-term debt securities are
rated A+ or higher by S&P or A1 or higher by Moody's.
"Level II Status" exists at any date after the Separation if, at such
date, (i) the Borrower's outstanding senior unsecured long-term debt securities
are rated A or higher by S&P or A2 or higher by Moody's and (ii) Level I Status
does not exist.
"Level III Status" exists (x) at any date prior to the Separation, and
(y) at any date after the Separation if, at such date, (i) the Borrower's
outstanding senior unsecured long-term debt securities are rated A- or higher by
S&P or A3 or higher by Moody's and (ii) neither Level I Status nor Level II
Status exists.
"Level IV Status" exists at any date after the Separation if, at such
date, (i) the Borrower's outstanding senior unsecured long-term debt securities
are rated BBB+ or higher by S&P or Baa1 or higher by Moody's and (ii) none of
Level I Status, Level II Status or Level III Status exists.
<PAGE>
"Level V Status" exists at any date after the Separation if, at such
date, (i) the Borrower's outstanding senior unsecured long-term debt securities
are rated BBB or higher by S&P or Baa2 or higher by Moody's and (ii) none of
Level I Status, Level II Status, Level III Status or Level IV Status exists.
"Level VI Status" exists at any date after the Separation if, at such
date, none of Level I Status, Level II Status, Level III Status, Level IV Status
or Level V Status exists.
"Moody's" means Moody's Investors Service, Inc., a Delaware
corporation, and its successors or, if such corporation shall be dissolved or
liquidated or shall no longer perform the functions of a securities rating
agency, "Moody's" shall be deemed to refer to any other nationally recognized
securities rating agency designated by the Required Banks, with the approval of
the Company, by notice to the Agent and the Company.
"S&P" means Standard & Poor's Ratings Group, a New York corporation,
and its successors or, if such corporation shall be dissolved or liquidated or
shall no longer perform the functions of a securities rating agency, "S&P" shall
be deemed to refer to any other nationally recognized securities rating agency
designated by the Required Banks, with the approval of the Company, by notice to
the Agent and the Company.
"Status" refers to the determination of which of Level I Status, Level
II Status, Level III Status, Level IV Status, Level V Status or Level VI Status
exists at any date.
"Usage" means at any date the percentage equivalent of a fraction (i)
the numerator of which is the sum of the aggregate outstanding principal amount
of the Loans at such date, after giving effect to any borrowing or payment on
such date, and (ii) the denominator of which is the aggregate amount of the
Commitments at such date, after giving effect to any reduction of the
Commitments on such date. For purposes of this Schedule, if for any reason any
Loans remain outstanding after termination of the Commitments, the Usage for
each date on or after the date of such termination shall be deemed to be greater
than 50%.
The credit ratings to be utilized for purposes of this Schedule are those
assigned to the senior unsecured long-term debt securities of the Borrower
guaranteed by the Company, and any rating assigned to any other debt security of
the Borrower shall be disregarded. The rating in effect at any date is that in
effect at the close of business on such date.
2
<PAGE>
SCHEDULE 4.07
Environmental Matters
NONE.
<PAGE>
EXHIBIT A
NOTE
New York, New York
________, 19__
For value received, U S WEST CAPITAL FUNDING, INC., a Colorado
corporation (the "Borrower"), promises to pay to the order of (the "Bank"), for
the account of its Applicable Lending Office, the unpaid principal amount of
each Loan made by the Bank to the Borrower pursuant to the Credit Agreement
referred to below on the maturity date therefor specified in the Credit
Agreement. The Borrower promises to pay interest on the unpaid principal amount
of each such Loan on the dates and at the rate or rates provided for in the
Credit Agreement. All such payments of principal and interest shall be made in
lawful money of the United States in Federal or other immediately available
funds at the office of Morgan Guaranty Trust Company of New York, 60 Wall
Street, New York, New York.
All Loans made by the Bank, the respective types and maturities thereof
and all repayments of the principal thereof shall be recorded by the Bank and,
if the Bank so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with respect to each
such Loan then outstanding may be endorsed by the Bank on the schedule attached
hereto, or on a continuation of such schedule attached to and made a part
hereof; provided that the inaccuracy of, or the failure of the Bank to make, any
such recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Credit Agreement.
This note is one of the Notes referred to in the Five-Year Credit
Agreement dated as of May 8, 1998 among U S WEST Capital Funding, Inc., U S
WEST, Inc., USW-C, Inc., the banks listed on the signature pages thereof, the
other agents named therein and Morgan Guaranty Trust Company of New York, as
Administrative Agent (as the same may be amended from time to time, the "Credit
Agreement"). Terms defined in the Credit Agreement are used herein with the same
meanings.
Reference is made to the Credit Agreement for provisions for the
prepayment hereof and the acceleration of the maturity hereof.
<PAGE>
U S WEST, Inc., has, pursuant to the provisions of the Credit
Agreement, unconditionally guaranteed the payment in full of the principal of
and interest on this Note.
U S WEST CAPITAL FUNDING, INC.
By
--------------------------------
Title:
2
<PAGE>
<TABLE>
<CAPTION>
LOANS AND PAYMENTS OF PRINCIPAL
- -----------------------------------------------------------------------------------------------------------------------------------
Date Amount of Type of Loan Amount of Maturity Date Notation Made
Loan Principal By
Repaid
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
EXHIBIT B
Form of Money Market Quote Request
[Date]
To: Morgan Guaranty Trust Company of New York
(the "Agent")
From: U S WEST Capital Funding, Inc.
Re: Five-Year Credit Agreement (the "Credit Agreement") dated as of May 8,
1998 among U S WEST Capital Funding, Inc., U S WEST, Inc., USW-C, Inc.,
the Banks listed on the signature pages thereof, the other agents named
therein and the Agent
We hereby give notice pursuant to Section 2.03 of the Credit Agreement
that we request Money Market Quotes for the following proposed Money Market
Borrowing(s):
Date of Borrowing: __________________
Principal Amount/1/ Interest Period/2/
$
Such Money Market Quotes should offer a Money Market [Margin] [Absolute
Rate]. [The applicable base rate is the London Interbank Offered Rate.] Terms
used herein have the meanings assigned to them in the Credit Agreement.
- --------
1Amount must be $25,000,000 or a larger multiple of $5,000,000.
2Not less than one month (LIBOR Auction) or not less than 7 days (Absolute
Rate Auction), subject to the provisions of the definition of Interest Period.
<PAGE>
Terms used herein have the meanings assigned to them in the Credit
Agreement.
U S WEST CAPITAL FUNDING, INC.
By________________________
Title:
2
<PAGE>
EXHIBIT C
Form of Invitation for Money Market Quotes
To: [Name of Bank]
Re: Invitation for Money Market Quotes to U S WEST Capital
Funding, Inc. (the "Borrower")
Pursuant to Section 2.03 of the Five-Year Credit Agreement dated as of
May 8, 1998 among U S WEST Capital Funding, Inc., U S WEST, Inc., USW-C, Inc.,
the Banks parties thereto, the other agents named therein and the undersigned,
as Administrative Agent, we are pleased on behalf of the Borrower to invite you
to submit Money Market Quotes to the Borrower for the following proposed Money
Market Borrowing(s):
Date of Borrowing: __________________
Principal Amount Interest Period
$
Such Money Market Quotes should offer a Money Market [Margin] [Absolute
Rate]. [The applicable base rate is the London Interbank Offered Rate.] Please
respond to this invitation by no later than [10:30 A.M.] [9:15 A.M.] (New York
City time) on [date].
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Administrative Agent
By______________________________
Authorized Officer
<PAGE>
EXHIBIT D
Form of Money Market Quote
To: Morgan Guaranty Trust Company of New York,
as Administrative Agent (the "Agent")
Re: Money Market Quote to
U S WEST Capital Funding, Inc. (the "Borrower")
In response to your invitation on behalf of the Borrower dated
_____________, 19__, we hereby make the following Money Market Quote on the
following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank: _____________________________
3. Date of Borrowing: ____________________*
4. We hereby offer to make Money Market Loan(s) in the following principal
amounts, for the following Interest Periods and at the following rates:
Principal Interest Money Market
Amount** Period*** [Margin****] [Absolute Rate*****]
$
$
[Provided, that the aggregate principal amount of Money Market Loans
for which the above offers may be accepted shall not exceed
$____________.]**
- ----------
* As specified in the related Invitation.
<PAGE>
(notes continued on following page)
We understand and agree that the offer(s) set forth above, subject to
the satisfaction of the applicable conditions set forth in the Five-Year Credit
Agreement dated as of May 8, 1998 among U S WEST Capital Funding, Inc., U S
WEST, Inc., USW-C, Inc., the Banks listed on the signature pages thereof, the
other agents named therein and yourselves, as Agent, irrevocably obligates us to
make the Money Market Loan(s) for which any offer(s) are accepted, in whole or
in part.
Very truly yours,
[NAME OF BANK]
Dated:_______________ By:__________________________
Authorized Officer
- ----------
** Principal amount bid for each Interest Period may not exceed principal amount
requested. Specify aggregate limitation if the sum of the individual offers
exceeds the amount the Bank is willing to lend. Bids must be made for $5,000,000
or a larger multiple of $1,000,000. *** Not less than one month or not less than
7 days, as specified in the related Invitation. No more than five bids are
permitted for each Interest Period. **** Margin over or under the London
Interbank Offered Rate determined for the applicable Interest Period. Specify
percentage (to the nearest 1/10,000 of 1%) and specify whether "PLUS" or
"MINUS". ***** Specify rate of interest per annum (to the nearest 1/10,000th of
1%).
<PAGE>
EXHIBIT E
OPINION OF
COUNSEL FOR THE COMPANY AND THE BORROWER
To the Banks and the Administrative
Agent Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Administrative Agent
60 Wall Street
New York, New York 10260
Gentlemen and Ladies:
I have acted as counsel for U S WEST, Inc., USW-C, Inc. and U S WEST
Capital Funding, Inc., in connection with the Five-Year Credit Agreement (the
"Credit Agreement") dated as of May 8, 1998, among them, the banks listed on the
signature pages thereof, the other agents named therein and Morgan Guaranty
Trust Company of New York, as Administrative Agent. Terms defined in the Credit
Agreement are used herein as therein defined. This opinion is being rendered to
you at the instruction of the client pursuant to Section 3.01(b) of the Credit
Agreement.
I am familiar with the proceedings taken by the Company, USW-C, Inc.
and the Borrower in connection with the authorization, execution and delivery of
the Credit Agreement and the Notes, and I have examined such documents,
certificates, and such other matters of fact and questions of law as I have
deemed relevant under the circumstances to express an informed opinion. Upon the
basis of the foregoing, I am of the opinion that:
1. The Company and USW-C, Inc. are each corporations duly incorporated,
validly existing and in good standing under the laws of the State of Delaware,
and each has all corporate powers and all governmental licenses, authorizations,
qualifications, consents and approvals required to carry on its business as now
conducted, except where the absence of any such license, authorization,
qualification, consent or approval would not have a material adverse effect on
the consolidated financial position or consolidated results of operations of the
Company and its Consolidated Subsidiaries considered as one enterprise.
<PAGE>
2. The execution, delivery and performance by the Company, USW-C, Inc.
and the Borrower of the Credit Agreement and by the Borrower of the Notes are
within such Person's corporate powers, have been duly authorized by all
necessary corporate action, and require no action by or in respect of, or filing
with, any governmental body, agency or official.
3. The execution, delivery and performance by the Company, USW-C, Inc.
and the Borrower of the Credit Agreement and by the Borrower of the Notes will
not (i) result in a breach or violation of, conflict with, or constitute a
default under, the articles of incorporation or bylaws of such Person or any
material law or regulation or any material order, judgment, agreement or
instrument to which such Person is a party or by which such Person is bound, or
(ii) result in the creation or imposition of any Lien on any asset of such
Person.
4. The Credit Agreement constitutes a valid and binding agreement of
the Company, USW-C, Inc. and the Borrower and the Notes constitute valid and
binding obligations of the Borrower, in each case enforceable in accordance with
its terms except as the same may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and by general principles of equity.
5. To my knowledge, and except as disclosed in the Company's 1997 Form
10-K (as amended by Form 10-K/A) as filed with the Securities and Exchange
Commission, there is no action, suit or proceeding pending against or threatened
against, or, to the best of my knowledge affecting the Company or any of its
Subsidiaries before any court or arbitrator or any governmental body, agency or
official, in which there is a reasonable possibility of an adverse decision
which could materially adversely affect the business, consolidated financial
position or consolidated results of operations of the Company and its
Consolidated Subsidiaries, considered as a whole, or which in any manner draws
into question the validity of the Credit Agreement or the Notes.
6. The Borrower and each of the Company's other corporate Significant
Subsidiaries are corporations validly existing and in good standing under the
laws of their jurisdictions of incorporation, and have all corporate powers and
all governmental licenses, authorizations, qualifications, consents and
approvals required to carry on its business as now conducted, except where the
absence of any such license, authorization, qualification, consent or approval
would not have a material adverse effect on the consolidated financial position
or consolidated results of operations of the Company and its Consolidated
Subsidiaries considered as one enterprise.
2
<PAGE>
For purposes of my opinion set forth in numbered paragraph 4 above, I
have assumed that the laws of the State of New York, which are stated to govern
the Credit Agreement and the Notes, are the same as the laws of the State of
Colorado.
In rendering the opinions set forth herein, I have assumed that the
Credit Agreement and the Notes will conform to the specimens thereof examined by
me, that the signatures on all documents examined by me were genuine, and the
authenticity of all documents submitted to me as originals or as copies of
originals, assumptions which I have not independently verified.
This opinion is furnished by me as counsel for the Company and the
Borrower and is solely for your benefit and the benefit of any Assignee under
the Credit Agreement. Without my prior written consent, this opinion may not be
relied upon by you or any Assignee in any other context or by any other person.
This opinion may not be quoted, in whole or in part, or copies thereof
furnished, to any other person without my prior written consent, except that you
may furnish copies hereof (a) to your auditors and attorneys, (b) to any state
or federal authority having regulatory jurisdiction over you or the Company or
the Borrower, (c) pursuant to order or legal process of any court or
governmental agency, (d) in connection with any legal action to which you are a
party arising out of the transactions contemplated by the Credit Agreement, and
(e) to any Participant or proposed Participant in the Commitment of any Bank.
This opinion is limited to the present laws of the State of Colorado
and the General Corporation Law of the State of Delaware, to present judicial
interpretations thereof, and to the facts as they presently exist, and I assume
no responsibility as to the applicability or effect of the laws of any other
jurisdiction. In rendering this opinion, I assume no obligation to revise or
supplement this opinion should the present laws of the State of Colorado or the
General Corporation Law of the State of Delaware be changed by legislative
action, judicial decision, or otherwise.
Very truly yours,
Thomas O. McGimpsey
3
<PAGE>
EXHIBIT F
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE ADMINISTRATIVE AGENT
To the Banks and the Administrative Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Administrative Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
We have participated in the preparation of the Five-Year Credit
Agreement (the "Credit Agreement") dated as of May 8, 1998 among U S WEST
Capital Funding, Inc., U S WEST, Inc., USW-C, Inc., the banks listed on the
signature pages thereof (the "Banks"), the other agents named therein and Morgan
Guaranty Trust Company of New York, as Administrative Agent (the "Agent"), and
have acted as special counsel for the Agent for the purpose of rendering this
opinion pursuant to Section 3.01(c) of the Credit Agreement. Terms defined in
the Credit Agreement are used herein as therein defined.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials and other instruments and have conducted such other
investigations of fact and law as we have deemed necessary or advisable for
purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that, assuming
that the execution, delivery and performance by the Company and the Borrower of
the Credit Agreement and by the Borrower of the Notes are within such Person's
corporate powers and have been duly authorized by all necessary corporate
action, the Credit Agreement constitutes a valid and binding agreement of the
Company and the Borrower and the Notes constitute valid and binding obligations
of the Borrower.
<PAGE>
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York. In giving the foregoing
opinion, we express no opinion as to the effect (if any) of any law of any
jurisdiction (except the State of New York) in which any Bank is located which
limits the rate of interest that such Bank may charge or collect.
This opinion is rendered solely to you in connection with the above
matter. This opinion may not be relied upon by you for any other purpose or
relied upon by or furnished to any other person without our prior written
consent.
Very truly yours,
<PAGE>
EXHIBIT G
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of __________, __ 199_ among [ASSIGNOR] (the
"Assignor"), [ASSIGNEE] (the "Assignee"), U S WEST, Inc. (the "Company") and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent (the
"Agent").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the "Agreement")
relates to the Five-Year Credit Agreement dated as of May 8, 1998 among the
Company, USW-C, Inc., the Borrower named therein, the Assignor and the other
Banks party thereto, as Banks, the other agents named therein and the Agent (the
"Credit Agreement");
WHEREAS, as provided under the Credit Agreement, the Assignor has a
Commitment to make Loans in an aggregate principal amount at any time
outstanding not to exceed $__________;
WHEREAS, Committed Loans made by the Assignor under the Credit
Agreement in the aggregate principal amount of $__________ are outstanding at
the date hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee all of the
rights of the Assignor under the Credit Agreement in respect of a portion of its
Commitment thereunder in an amount equal to $__________ (the "Assigned Amount"),
together with a corresponding portion of its outstanding Committed Loans, and
the Assignee proposes to accept assignment of such rights and assume the
corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not otherwise defined
herein shall have the respective meanings set forth in the Credit Agreement.
<PAGE>
SECTION 2. Assignment. The Assignor hereby assigns and sells to the
Assignee all of the rights of the Assignor under the Credit Agreement to the
extent of the Assigned Amount, and the Assignee hereby accepts such assignment
from the Assignor and assumes all of the obligations of the Assignor under the
Credit Agreement to the extent of the Assigned Amount, including the purchase
from the Assignor of the corresponding portion of the principal amount of the
Committed Loans made by the Assignor outstanding at the date hereof. Upon the
execution and delivery hereof by the Assignor, the Assignee, the Company and the
Agent and the payment of the amounts specified in Section 3 required to be paid
on the date hereof (i) the Assignee shall, as of the date hereof, succeed to the
rights and be obligated to perform the obligations of a Bank under the Credit
Agreement with a Commitment in an amount equal to the Assigned Amount, and (ii)
the Commitment of the Assignor shall, as of the date hereof, be reduced by a
like amount and the Assignor released from its obligations under the Credit
Agreement to the extent such obligations have been assumed by the Assignee. The
assignment provided for herein shall be without recourse to the Assignor.
SECTION 3. Payments. As consideration for the assignment and sale
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the
date hereof in Federal funds the amount heretofore agreed between them.3 It is
understood that commitment and/or facility fees accrued to the date hereof are
for the account of the Assignor and such fees accruing from and including the
date hereof are for the account of the Assignee. Each of the Assignor and the
Assignee hereby agrees to that if it receives any amount under the Credit
Agreement which is for the account of the other party hereto, it shall receive
the same for the account of such other party to the extent of such other party's
interest therein and shall promptly pay the same to such other party.
[SECTION 4. Consent of the Company and the Agent. This Agreement is
conditioned upon the consent of the Company and the Agent pursuant to Section
- --------
3 Amount should combine principal together with accrued interest and
breakage compensation, if any, to be paid by the Assignee, net of any portion of
any upfront fee to be paid by the Assignor to the Assignee. It may be preferable
in an appropriate case to specify these amounts generically or by formula rather
than as a fixed sum.
2
<PAGE>
10.06(c) of the Credit Agreement. The execution of this Agreement by the Company
and the Agent is evidence of this consent. Pursuant to Section 10.06(c) the
Company agrees to cause the Borrower to execute and deliver a Note payable to
the order of the Assignee to evidence the assignment and assumption provided for
herein.]
SECTION 5. Non-Reliance on Assignor. The Assignor makes no
representation or warranty in connection with, and shall have no responsibility
with respect to, the solvency, financial condition, or statements of the Company
or the Borrower, or the validity and enforceability of the obligations of the
Company or the Borrower in respect of the Credit Agreement or any Note. The
Assignee acknowledges that it has, independently and without reliance on the
Assignor, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement and will continue to be responsible for making its own independent
appraisal of the business, affairs and financial condition of the Company and
the Borrower.
SECTION 6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 7. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
[ASSIGNOR]
By
--------------------------
Title:
3
<PAGE>
[ASSIGNEE]
By
--------------------------
Title:
[U S WEST, INC.
By
--------------------------
Title:
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as
Administrative Agent
By
--------------------------
Title:]
4
<PAGE>
EXHIBIT H
EXTENSION AGREEMENT
US WEST Capital Funding, Inc.
US WEST, Inc.
7800 East Orchard Road
Englewood, Colorado 80111
Morgan Guaranty Trust Company of
New York, as Administrative Agent
under the Credit Agreement referred
to below
60 Wall Street
New York, NY 10260
Gentlemen:
The undersigned hereby agree to extend the Revolving Credit Period
under the Five-Year Credit Agreement dated as of May 8, 1998 among US WEST
Capital Funding, Inc., US WEST, Inc., USW-C, Inc., the Banks listed therein, the
other agents named therein and Morgan Guaranty Trust Company of New York, as
Administrative Agent (the "Credit Agreement") for 364 days to ____________ __,
____. Terms defined in the Credit Agreement are used herein as therein defined.
This Extension Agreement shall be construed in accordance with and
governed by the law of the State of New York. It may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
[NAME OF BANK]1
By
-------------------------
- --------
1 Insert names of Banks which have responded affirmatively in accordance
with Section 2.01(b) of the Credit Agreement.
<PAGE>
Title:
[NAME OF BANK]1
By
-------------------------
Title:
[NAME OF BANK]*
By
-------------------------
Title:
[NAME OF BANK]*
By
-------------------------
Title:
[NAME OF BANK]*
By
-------------------------
Title:
[NAME OF BANK]*
By
-------------------------
Title:
- --------
1 Insert names of Banks which have responded affirmatively in accordance
with Section 2.01(b) of the Credit Agreement.
<PAGE>
Agreed and accepted:
US WEST CAPITAL FUNDING, INC.
By
-------------------------
Title
US WEST, INC.
By
-------------------------
Title
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Administrative Agent
By
-------------------------
Title
<PAGE>
EXHIBIT (b)(2)
CONFORMED COPY
- --------------------------------------------------------------------------------
$3,500,000,000
364-DAY
CREDIT AGREEMENT
dated as of
May 8, 1998
among
U S WEST Capital Funding, Inc.
U S WEST, Inc.
USW-C, Inc.
The Banks Listed Herein
and
Morgan Guaranty Trust Company of New York,
as Administrative Agent
- --------------------------------------------------------------------------------
J.P. Morgan Securities Inc.
Lead Arranger
Bank of America National Trust and Savings Association,
Chase Securities Inc. and
Mellon Bank, N.A.,
Co-Syndication Agents
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS
SECTION 1.01. The Definitions................................................1
SECTION 1.02. Accounting Terms and Determinations...........................12
SECTION 1.03. Types of Borrowings...........................................12
ARTICLE 2 THE CREDITS
SECTION 2.01. Commitments to Lend...........................................13
SECTION 2.02. Notice of Committed Borrowing.................................15
SECTION 2.03. Money Market Borrowings.......................................15
SECTION 2.04. Notice to Banks; Funding of Loans.............................19
SECTION 2.05. Notes.........................................................20
SECTION 2.06. Maturity of Loans.............................................21
SECTION 2.07. Interest Rates................................................21
SECTION 2.08. Facility Fees.................................................23
SECTION 2.09. Termination or Reduction of Commitments.......................24
SECTION 2.10. Method of Electing Interest Rates.............................24
SECTION 2.11. Prepayments..................................................25
SECTION 2.12. General Provisions as to Payments.............................26
SECTION 2.13. Funding Losses................................................27
SECTION 2.14. Computation of Interest and Fees..............................27
SECTION 2.15. Change of Control.............................................27
ARTICLE 3 CONDITIONS
SECTION 3.01. Closing.......................................................28
SECTION 3.02. All Borrowings................................................29
SECTION 3.03. Loans after Separation........................................30
ARTICLE 4 REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and Power.................................30
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention.......................................................31
i
<PAGE>
PAGE
SECTION 4.03. Binding Effect................................................31
SECTION 4.04. Financial Information.........................................31
SECTION 4.05. Litigation....................................................31
SECTION 4.06. Compliance with ERISA.........................................32
SECTION 4.07. Environmental Matters.........................................32
SECTION 4.08. Taxes.........................................................33
SECTION 4.09. Subsidiaries..................................................33
SECTION 4.10. Not an Investment Company.....................................33
SECTION 4.11. Full Disclosure...............................................33
ARTICLE 5 COVENANTS
SECTION 5.01. Information...................................................34
SECTION 5.02. Maintenance of Property; Insurance............................36
SECTION 5.03. Maintenance of Existence......................................36
SECTION 5.04. Compliance with Laws..........................................36
SECTION 5.05. Inspection of Property, Books and Records.....................37
SECTION 5.06. Subsidiary Debt...............................................37
SECTION 5.07. Debt Coverage.................................................37
SECTION 5.08. Negative Pledge...............................................38
SECTION 5.09. Consolidations, Mergers and Sales of Assets...................39
SECTION 5.10. Use of Proceeds...............................................39
SECTION 5.11. Year 2000 Compatibility.......................................39
ARTICLE 6 DEFAULTS
SECTION 6.01. Events of Default.............................................40
SECTION 6.02. Notice of Default.............................................42
ARTICLE 7 THE AGENT
SECTION 7.01. Appointment and Authorization.................................43
SECTION 7.02. Agent and Affiliates..........................................43
SECTION 7.03. Action by Agent...............................................43
SECTION 7.04. Consultation with Experts.....................................43
SECTION 7.05. Liability of Agent............................................43
SECTION 7.06. Indemnification...............................................44
SECTION 7.07. Credit Decision...............................................44
SECTION 7.08. Successor Agent...............................................44
SECTION 7.09. Agent's Fee...................................................44
ii
<PAGE>
ARTICLE 8 CHANGES IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair......45
SECTION 8.02. Illegality....................................................45
SECTION 8.03. Increased Cost and Reduced Return.............................46
SECTION 8.04. Taxes.........................................................47
SECTION 8.05. Domestic Loans Substituted for Affected Euro-Dollar
Loans...............................................................49
SECTION 8.06. Substitution of Bank..........................................49
ARTICLE 9 GUARANTY
SECTION 9.01. The Guaranty..................................................50
SECTION 9.02. Guaranty Unconditional........................................50
SECTION 9.03. Discharge Only upon Payment in Full; Reinstatement In
Certain Circumstances...............................................51
SECTION 9.04. Waiver by the Company.........................................51
SECTION 9.05. Subrogation...................................................51
SECTION 9.06. Stay of Acceleration..........................................52
SECTION 9.07. Release upon Separation.......................................52
ARTICLE 10 MISCELLANEOUS
SECTION 10.01. Notices......................................................52
SECTION 10.02. No Waivers...................................................52
SECTION 10.03. Expenses; Indemnification....................................53
SECTION 10.04. Sharing of Set-offs..........................................54
SECTION 10.05. Amendments and Waivers.......................................54
SECTION 10.06. Successors and Assigns......................................55
SECTION 10.07. Termination of Existing Credit Agreements....................56
SECTION 10.08. Governing Law; Submission to Jurisdiction....................57
SECTION 10.09. Counterparts; Integration; Effectiveness.....................57
SECTION 10.10. WAIVER OF JURY TRIAL.........................................57
SECTION 10.11. Confidentiality..............................................57
iii
<PAGE>
Pricing Schedule
Schedule 4.07 - Environmental Matters
Exhibit A - Note
Exhibit B - Money Market Quote Request
Exhibit C - Invitation for Money Market Quotes
Exhibit D - Money Market Quote
Exhibit E - Opinion of Counsel for the Company and the Borrower
Exhibit F - Opinion of Special Counsel for the Administrative Agent
Exhibit G - Assignment and Assumption Agreement
Exhibit H - Extension Agreement
iv
<PAGE>
CREDIT AGREEMENT
AGREEMENT dated as of May 8, 1998 among U S WEST Capital Funding, Inc.,
U S WEST, Inc., USW-C, Inc., the BANKS listed on the signature pages hereof and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent.
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. The Definitions.
The following terms, as used herein, have the following meanings:
"Absolute Rate Auction" means a solicitation of Money Market Quotes
setting forth Money Market Absolute Rates pursuant to Section 2.03.
"Adjusted London Interbank Offered Rate" has the meaning set forth in
Section 2.07.
"Administrative Questionnaire" means, with respect to each Bank, an
administrative questionnaire in the form prepared by the Agent and submitted to
the Agent (with a copy to the Company) duly completed by such Bank.
"Agent" means Morgan Guaranty Trust Company of New York in its capacity
as administrative agent for the Banks hereunder, and its successors in such
capacity.
"Applicable Lending Office" means, with respect to any Bank, (i) in the
case of its Domestic Loans, its Domestic Lending Office, (ii) in the case of its
Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the case of its
Money Market Loans, its Money Market Lending Office.
"Assignee" has the meaning set forth in Section 10.06(c).
<PAGE>
"Bank" means each lender listed on the signature pages hereof, each
Assignee which becomes a Bank pursuant to Section 10.06(c), and their respective
successors.
"Base Rate" means, for any day, a rate per annum equal to the higher of
(i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal
Funds Rate for such day.
"Benefit Arrangement" means at any time an employee benefit plan within
the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan
and which is maintained or otherwise contributed to by any member of the ERISA
Group.
"Borrower" means U S WEST Capital Funding, Inc., a Colorado
corporation, and its successors.
"Borrowing" has the meaning set forth in Section 1.03.
"Closing Date" means the date on or after the Effective Date on which
the Agent shall have received the documents specified in or pursuant to Section
3.01.
"Commitment" means, with respect to each Bank, the amount set forth
opposite the name of such Bank on the signature pages hereof, as such amount may
be reduced from time to time pursuant to Sections 2.09 and 2.11.
"Committed Loan" means a loan to be made by a Bank pursuant to Section
2.01(a); provided that if any such loan or loans are combined or subdivided
pursuant to a Notice of Interest Rate Election, the term "Committed Loan" shall
refer to the combined principal amount resulting from such combination or to
each of the separate principal amounts resulting from such subdivision, as the
case may be.
"Company" means (i) prior to the Separation, U S WEST, Inc., a Delaware
corporation, and its successors and (ii) after the Separation, USW-C, Inc., a
Delaware corporation, which will be renamed U S WEST, Inc., and its successors.
"Company's 1997 Form 10-K" means U S WEST, Inc.'s annual report on Form
10-K for 1997, as amended by Form 10-K/A filed April 13, 1998, in each case as
filed with the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934.
"Consolidated EBITDA" means, for any period, the net income of the
Company and its Consolidated Subsidiaries determined on a consolidated basis
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for such period (adjusted to exclude the effect of (x) equity gains or losses in
unconsolidated Persons, (y) any preferred dividend income and any extraordinary
or other non-recurring non-cash gain or loss or (z) any gain or loss on the
disposition of investments), plus, to the extent deducted in determining such
adjusted net income, the aggregate amount of (i) interest expense, (ii) income
tax expense and (iii) depreciation, amortization and other similar non-cash
charges and minus, to the extent included in determining such adjusted net
income, the aggregate amount of (i) interest income and (ii) income tax benefit.
"Consolidated Net Worth" means at any date the consolidated
shareowners' equity of the Company and its Consolidated Subsidiaries determined
as of such date.
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which would be consolidated with those of the Company in
its consolidated financial statements if such statements were prepared as of
such date.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee which are capitalized in
accordance with generally accepted accounting principles, (v) all Debt secured
by a Lien on any asset of such Person, whether or not such Debt is otherwise an
obligation of such Person, and (vi) all Debt of others Guaranteed by such
Person. Notwithstanding the foregoing, for purposes of Sections 5.06 and 5.07
Debt shall in no event include the following:
(x) Debt of Persons which are not Consolidated Subsidiaries
("Joint Ventures") (i) which is secured by a Lien on the assets or
capital stock of a Minor Subsidiary or the equity interests in such
Joint Ventures or is Guaranteed by a Minor Subsidiary, which Lien or
Guaranty is incurred in connection with the international operations of
the Company and its Subsidiaries, and (ii) for the payment of which no
other recourse may be had to the Company or any of its Subsidiaries;
and
(y) Debt of the Company or the Borrower issued in connection
with the issuance of Trust Originated Preferred Securities or
substantially similar securities, so long as such Debt is subordinated
and junior in right of payment to substantially all liabilities of the
Company or the Borrower, as the case may be, including, without
limitation, the Loans.
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"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized by law to
close.
"Domestic Lending Office" means, as to each Bank, its office located at
its address set forth in its Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Domestic Lending Office) or such other
office as such Bank may hereafter designate as its Domestic Lending Office by
notice to the Company and the Agent.
"Domestic Loan" means (i) a Committed Loan which bears interest at the
Base Rate pursuant to the applicable Notice of Committed Borrowing or Notice of
Interest Rate Election or the provisions of Article 8 or (ii) an overdue amount
which was a Domestic Loan immediately before it became overdue.
"Effective Date" means the date this Agreement becomes effective in
accordance with Section 10.09.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating to
the environment, the effect of the environment on human health or to emissions,
discharges or releases of pollutants, contaminants, Hazardous Substances or
wastes into the environment including, without limitation, ambient air, surface
water, ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, Hazardous Substances or wastes or the
clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA Group" means the Company, any Subsidiary and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Company or any
Subsidiary, are treated as a single employer under Section 414 of the Internal
Revenue Code.
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"Euro-Dollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its office, branch
or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice
to the Company and the Agent.
"Euro-Dollar Loan" means (i) a Committed Loan which bears interest at a
Euro-Dollar Rate pursuant to the applicable Notice of Committed Borrowing or
Notice of Interest Rate Election or (ii) an overdue amount which was a Euro-
Dollar Loan before it became overdue.
"Euro-Dollar Margin" has the meaning set forth in Section 2.07.
"Euro-Dollar Rate" means a rate of interest determined pursuant to
Section 2.07 on the basis of an Adjusted London Interbank Offered Rate.
"Euro-Dollar Reference Banks" means the principal London offices of
Bank of America National Trust and Savings Association, Mellon Bank, N.A., and
Morgan Guaranty Trust Company of New York, and "Euro-Dollar Reference Bank"
means any one of the foregoing.
"Euro-Dollar Reserve Percentage" has the meaning set forth in Section
2.07.
"Event of Default" has the meaning set forth in Section 6.01.
"Existing Credit Agreements" means the Amended and Restated Credit
Agreements dated as of October 31, 1997, among the Borrower, the Company, the
banks listed on the signature pages thereof and Morgan Guaranty Trust Company of
New York, as administrative agent.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day, provided that (i) if such day is not a Domestic
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business Day as so published on the
next
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succeeding Domestic Business Day, and (ii) if no such rate is so published on
such next succeeding Domestic Business Day, the Federal Funds Rate for such day
shall be the average rate quoted to Morgan Guaranty Trust Company of New York on
such day on such transactions as determined by the Agent.
"Fixed Rate Loans" means Euro-Dollar Loans or Money Market Loans
(excluding Money Market LIBOR Loans bearing interest at the Base Rate pursuant
to Section 8.01(a)) or any combination of the foregoing.
"Group of Loans" means at any time a group of Loans consisting of (i)
all Committed Loans which are Domestic Loans at such time or (ii) all Committed
Loans which are Euro-Dollar Loans having the same Interest Period at such time;
provided that, if a Committed Loan of any particular Bank is converted to or
made as a Domestic Loan pursuant to Section 8.02 or 8.05, such Loan shall be
included in the same Group or Groups of Loans from time to time as it would have
been in if it had not been so converted or made.
"Guaranty" by any Person means any obligation, contingent or otherwise,
of such Person directly or indirectly guaranteeing any Debt or other obligation
of any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation (whether arising by virtue of partnership arrangements,
by agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise) or (ii)
entered into for the purpose of assuring in any other manner the obligee of such
Debt or other obligation of the payment thereof or to protect such obligee
against loss in respect thereof (in whole or in part), provided that the term
Guaranty shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Hazardous Substances" means any toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its derivatives, by-products
and other hydrocarbons, or any substance having any constituent elements
displaying any of the foregoing characteristics.
"Indemnitee" has the meaning set forth in Section 10.03(b).
"Indentures" means the agreements or instruments evidencing the
following Debt of Continental Cablevision, Inc., and its successors: (i) the 11%
Senior Subordinated Debentures Due June 1, 2007; (ii) the 8 5/8% Senior Notes
Due August 15, 2003; (iii) the 9% Senior Debentures Due September 1, 2008; (iv)
the 8 7/8% Senior Debentures Due September 15, 2002; (v) the 9 1/2% Senior
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Debentures Due August 1, 2013; (vi) the 8 1/2% Senior Notes Due September 15,
2001; (vii) the 8.3% Senior Notes Due May 15, 2006; and (viii) any other Debt
containing terms and conditions as or more favorable to the holders thereof than
the terms and conditions of any of the foregoing Debt.
"Interest Period" means: (1) with respect to each Euro-Dollar Loan, a
period commencing on the date of borrowing specified in the applicable Notice of
Borrowing or the date specified in the applicable Notice of Interest Rate
Election and ending one, two, three or six months thereafter, as the Borrower
may elect in the applicable notice; provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period beginning prior to a Termination Date
which would otherwise end after a Termination Date shall end on such
Termination Date, and any Interest Period beginning on or after a
Termination Date which would otherwise end after the first anniversary
of such Termination Date shall end on the first anniversary of such
Termination Date.
(2) with respect to each Money Market LIBOR Loan, the period commencing
on the date of borrowing specified in the applicable Notice of Borrowing and
ending such whole number of months thereafter as the Borrower may elect in
accordance with Section 2.03; provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
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numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period beginning prior to a Termination Date
which would otherwise end after a Termination Date shall end on such
Termination Date.
(3) with respect to each Money Market Absolute Rate Loan, the period
commencing on the date of borrowing specified in the applicable Notice of
Borrowing and ending such number of days thereafter (but not less than 7 days)
as the Borrower may elect in accordance with Section 2.03; provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day; and
(b) any Interest Period beginning prior to a Termination Date
which would otherwise end after a Termination Date shall end on such
Termination Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"LIBOR Auction" means a solicitation of Money Market Quotes setting
forth Money Market Margins based on the London Interbank Offered Rate pursuant
to Section 2.03.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind, or any other type of
preferential arrangement that has the practical effect of creating a security
interest, in respect of such asset. For the purposes of this Agreement, the
Company or any Subsidiary shall be deemed to own subject to a Lien any asset
which it has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title retention
agreement relating to such asset.
"Loan" means a Domestic Loan or a Euro-Dollar Loan or a Money Market
Loan and "Loans" means Domestic Loans or Euro-Dollar Loans or Money Market Loans
or any combination of the foregoing.
"London Interbank Offered Rate" has the meaning set forth in Section
2.07.
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"Margin Stock" means "margin stock" as such term is defined in
Regulation U of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Material Debt" means Debt (other than the Notes) of the Company and/or
one or more of its Subsidiaries, arising in one or more related or unrelated
transactions, in an aggregate principal amount exceeding $100,000,000.
"Material Plan" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $100,000,000.
"Minor Subsidiary" means, for purposes of the last sentence of the
definition of Debt and of Section 5.08(f) (the "Relevant Provisions"), (i) USW
PCN Inc., and (ii) any other Subsidiary which, at the time of the issuance of a
Guaranty or grant of a Lien referred to in the Relevant Provisions, had assets
which, when taken together with all assets of Subsidiaries at any earlier time
when such Subsidiaries were deemed to be Minor Subsidiaries pursuant to this
clause (ii), did not exceed $250,000,000.
"Money Market Absolute Rate" has the meaning set forth in Section
2.03(d).
"Money Market Absolute Rate Loan" means a loan to be made by a Bank
pursuant to an Absolute Rate Auction.
"Money Market Lending Office" means, as to each Bank, its Domestic
Lending Office or such other office, branch or affiliate of such Bank as it may
hereafter designate as its Money Market Lending Office by notice to the Company
and the Agent; provided that any Bank may from time to time by notice to the
Company and the Agent designate separate Money Market Lending Offices for its
Money Market LIBOR Loans, on the one hand, and its Money Market Absolute Rate
Loans, on the other hand, in which case all references herein to the Money
Market Lending Office of such Bank shall be deemed to refer to either or both of
such offices, as the context may require.
"Money Market LIBOR Loan" means a loan to be made by a Bank pursuant to
a LIBOR Auction (including such a loan bearing interest at the Base Rate
pursuant to Section 8.01(a)).
"Money Market Loan" means a Money Market LIBOR Loan or a Money
Market Absolute Rate Loan.
"Money Market Margin" has the meaning set forth in Section 2.03(d).
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"Money Market Quote" means an offer by a Bank to make a Money Market
Loan in accordance with Section 2.03.
"Multiemployer Plan" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA Group during such
five year period.
"Notes" means promissory notes of the Borrower, substantially in the
form of Exhibit A hereto, evidencing the obligation of the Borrower to repay the
Loans made to it, and "Note" means any one of such promissory notes issued
hereunder.
"Notice of Borrowing" means a Notice of Committed Borrowing (as defined
in Section 2.02) or a Notice of Money Market Borrowing (as defined in Section
2.03(f)).
"Parent" means, with respect to any Bank, any Person controlling such
Bank.
"Participant" has the meaning set forth in Section 10.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"Pricing Schedule" means the Schedule attached hereto and identified as
such.
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"Prime Rate" means the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York in New York City from time to time as its
Prime Rate.
"Proxy Statement" means the definitive Proxy Statement for 1998 Annual
Meeting of Stockholders of U S WEST, Inc., dated and filed with the Securities
and Exchange Commission on April 20, 1998.
"Required Banks" means at any time Banks having more than 50% of the
aggregate amount of the Commitments or, if the Commitments shall have been
terminated, holding Notes evidencing more than 50% of the aggregate unpaid
principal amount of the Loans.
"Revolving Credit Period" means the period from and including the
Effective Date to but excluding the Termination Date.
"Separation" has the meaning set forth in the Proxy Statement.
"Significant Subsidiary" means any Subsidiary which would meet the
definition of "significant subsidiary" contained as of the date hereof in
Regulation S-X of the Securities and Exchange Commission.
"Subsidiary" means any corporation or other entity of which securities
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at the
time directly or indirectly owned by the Company.
"Super-Majority Banks" means at any time Banks having at least 85% of
the aggregate amount of the Commitments or, if the Commitments shall have been
terminated, holding Notes evidencing at least 85% of the aggregate unpaid
principal amount of the Loans.
"Termination Date" means, with respect to each Bank, May 7, 1999, or
such later date to which the Termination Date for such Bank shall have been
extended pursuant to Section 2.01(b), or, if such day is not a Euro-Dollar
Business Day, the next preceding Euro-Dollar Business Day.
"Unfunded Liabilities" means, with respect to any Plan at any time, the
amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most recent
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valuation date for such Plan, but only to the extent that such excess represents
a potential liability of a member of the ERISA Group to the PBGC or any other
Person under Title IV of ERISA.
"United States" means the United States of America, including the
States and the District of Columbia, but excluding its territories and
possessions.
"Wholly-Owned Consolidated Subsidiary" means any Consolidated
Subsidiary all of the shares of capital stock or other ownership interests of
which (except directors' qualifying shares) are at the time directly or
indirectly owned by the Company.
SECTION 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with
generally accepted accounting principles as in effect from time to time in the
United States, applied on a basis consistent (except for changes concurred in by
the Company's independent public accountants) with the most recent audited
consolidated financial statements of the Company and its Consolidated
Subsidiaries delivered to the Banks; provided that, if the Company notifies the
Agent that the Company wishes to amend any covenant in Article 5 to eliminate
the effect of any change in such generally accepted accounting principles on the
operation of such covenant (or if the Agent notifies the Company that the
Required Banks wish to amend Article 5 for such purpose), then compliance with
such covenant shall be determined on the basis of generally accepted accounting
principles in effect in the United States immediately before the relevant change
in generally accepted accounting principles became effective, until either such
notice is withdrawn or such covenant is amended in a manner satisfactory to the
Company and the Required Banks.
SECTION 1.03. Types of Borrowings. The term "Borrowing" denotes the
aggregation of Loans of one or more Banks to be made to the Borrower pursuant to
Article 2 on a single date, all of which Loans are of the same type (subject to
Article 8) and, except in the case of Domestic Loans, have the same Interest
Period or initial Interest Period. Borrowings are classified for purposes of
this Agreement either by reference to the pricing of Loans comprising such
Borrowing (e.g., a "Euro-Dollar Borrowing" is a Borrowing comprised of
Euro-Dollar Loans) or by reference to the provisions of Article 2 under which
participation therein is determined (i.e., a "Committed Borrowing" is a
Borrowing under Section 2.01(a) in which all Banks participate in proportion to
their Commitments, while a "Money Market Borrowing" is a Borrowing under Section
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2.03 in which the Bank participants are determined on the basis of their bids in
accordance therewith).
ARTICLE 2
THE CREDITS
SECTION 2.1. Commitments to Lend.
(a) The Commitments. During the Revolving Credit Period each Bank
severally agrees, on the terms and conditions set forth in this Agreement, to
make loans to the Borrower pursuant to this subsection (a) from time to time in
amounts such that the aggregate principal amount of Committed Loans by such Bank
at any one time outstanding to the Borrower shall not exceed the amount of its
Commitment. Each Borrowing under this Section shall be in an aggregate principal
amount of $25,000,000 or any larger multiple of $5,000,000 (except that any such
Borrowing may be in the aggregate amount available in accordance with Section
3.02(c)) and shall be made from the several Banks ratably in proportion to their
respective Commitments. Within the foregoing limits, the Borrower may borrow
under this subsection (a), repay, or to the extent permitted by Section 2.11,
prepay Loans and reborrow at any time during the Revolving Credit Period under
this subsection (a). The Commitments shall terminate at the close of business on
the Termination Date.
(b) Extension of Commitments. The Commitments may be extended in the
manner and amount set forth in this subsection (b), for a period of 364 days
measured from the Termination Date then in effect. If the Company wishes to
request an extension of each Bank's Commitment, it shall give notice to that
effect to the Agent not less than 45 days and not more than 60 days prior to the
Termination Date then in effect, whereupon the Agent shall promptly notify each
of the Banks of such request. Each Bank will use its best efforts to respond to
such request, whether affirmatively or negatively, as it may elect in its
discretion, within 30 days of such notice to the Agent. If any Bank shall not
have responded affirmatively within such 30-day period, such Bank shall be
deemed to have rejected the Company's proposal to extend its Commitment, and
only the Commitments of those Banks which have responded affirmatively shall be
extended, subject to receipt by the Agent of counterparts of an Extension
Agreement in substantially the form of Exhibit H hereto duly completed and
signed by the Borrower, the Company, the Agent and all of the Banks which have
responded affirmatively. The Agent shall provide to the Company, no later than
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10 days prior to the Termination Date then in effect, a list of the Banks which
have responded affirmatively. The Extension Agreement shall be executed and
delivered no later than five days prior to the Termination Date then in effect,
and no extension of the Commitments pursuant to this subsection (b) shall be
legally binding on any party hereto unless and until such Extension Agreement is
so executed and delivered. The Company and the Borrower may decline to execute
and deliver such Extension Agreement if any Bank has rejected the Company's
proposal to extend its Commitment or has failed to execute and deliver such
Extension Agreement, and will promptly notify the Agent and the Banks if it so
declines.
(c) Additional Commitments. At any time during the Revolving Credit
Period (unless the Commitments shall have been reduced pursuant to Section
2.09(b)), if no Default shall have occurred and be continuing at such time, the
Company may, if it so elects, increase the aggregate amount of the Commitments,
either by designating a Person not theretofore a Bank and acceptable to the
Agent to become a Bank or by agreeing with an existing Bank that such Bank's
Commitment shall be increased. Upon execution and delivery by the Company, the
Borrower and such Bank or other Person of an instrument of assumption in form
and amount satisfactory to the Administrative Agent, such existing Bank shall
have a Commitment as therein set forth or such other Person shall become a Bank
with a Commitment as therein set forth and all the rights and obligations of a
Bank with such a Commitment hereunder; provided that (i) the Company shall
provide prompt notice of such increase to the Agent, which shall promptly notify
the other Banks, (ii) the aggregate amount of each such increase which is
effective on any day shall be at least $50,000,000 and (iii) the aggregate
amount of the Commitments shall at no time exceed $3,750,000,000. Upon any
increase in the aggregate amount of the Commitments pursuant to this subsection
(c), within five Domestic Business Days in the case of each Group of Domestic
Loans outstanding, and at the end of the then current Interest Period with
respect thereto in the case of each Group of Euro-Dollar Loans then outstanding,
the Borrower shall prepay such Group in its entirety, and, to the extent the
Borrower elects to do so and subject to the conditions specified in Article 3,
the Borrower shall reborrow Committed Loans from the Banks in proportion to
their respective Commitments after giving effect to such increase, until such
time as all outstanding Committed Loans are held by the Banks in such
proportion.
(d) Term Loans. Each Bank severally agrees, on the terms and
conditions set forth in this Agreement, to make a loan to the Borrower on the
Termination Date in amounts such that the aggregate principal amount of such
Bank's outstanding Loans to the Borrower at the close of business on the
Termination Date shall not exceed its Commitment. Each Borrowing under this
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subsection (d) shall be made from the several Banks ratably in proportion to
their respective Commitments. Amounts prepaid pursuant to Section 2.11 shall not
be reborrowed. If less than all the Banks shall have agreed to extend the
Termination Date pursuant to subsection (b) above, but the Termination Date for
those Banks which have not so agreed has not yet occurred (the "Earlier Date"),
and the Borrower has requested a Borrowing pursuant to this subsection (d), then
such Borrowing shall be made on the Earlier Date.
SECTION 2.2. Notice of Committed Borrowing. The Borrower shall give
the Agent notice (a "Notice of Committed Borrowing") not later than 10:30 A.M.
(New York City time) on (x) the date of each Domestic Borrowing, and (y) the
third Euro-Dollar Business Day before each Euro-Dollar Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic
Business Day in the case of a Domestic Borrowing or a Euro-Dollar
Business Day in the case of a Euro-Dollar Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii) whether the Loans comprising such Borrowing bear
interest initially at the Base Rate or at a Euro-Dollar Rate, and
(iv) in the case of a Euro-Dollar Borrowing, the duration of
the initial Interest Period applicable thereto, subject to the
provisions of the definition of Interest Period.
SECTION 2.3. Money Market Borrowings. (a) The Money Market Option. In
addition to Committed Borrowings pursuant to Section 2.01(a), the Borrower may,
as set forth in this Section, request the Banks during the Revolving Credit
Period to make offers to make Money Market Loans to the Borrower. The Banks may,
but shall have no obligation to, make such offers and the Borrower may, but
shall have no obligation to, accept any such offers in the manner set forth in
this Section.
(b) Money Market Quote Request. When the Borrower wishes to request
offers to make Money Market Loans under this Section, it shall transmit to the
Agent by telex or facsimile transmission a Money Market Quote Request
substantially in the form of Exhibit B hereto so as to be received no later than
9:00 A.M. (New York City time) on (x) the fourth Euro-Dollar Business Day prior
to the date of Borrowing proposed therein, in the case of a LIBOR Auction or (y)
the Domestic Business Day prior to the date of Borrowing proposed therein, in
the case of an Absolute Rate Auction (or, in either case, such other time or
date as the Company and the Agent shall have mutually agreed and shall have
notified
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to the Banks not later than the date of the Money Market Quote Request for the
first LIBOR Auction or Absolute Rate Auction for which such change is to be
effective) specifying:
(i) the proposed date of Borrowing, which shall be a Euro-Dollar
Business Day in the case of a LIBOR Auction or a Domestic Business Day in the
case of an Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing, which shall be $25,000,000
or a larger multiple of $5,000,000,
(iii) the duration of the Interest Period applicable thereto, subject to
the provisions of the definition of Interest Period, and
(iv) whether the Money Market Quotes requested are to set forth a Money
Market Margin or a Money Market Absolute Rate.
The Borrower may request offers to make Money Market Loans for more than one
Interest Period in a single Money Market Quote Request. No Money Market Quote
Request shall be given within five Euro-Dollar Business Days (or such other
number of days as the Company and the Agent may agree) of any other Money Market
Quote Request.
(c) Invitation for Money Market Quotes. Promptly upon receipt of a
Money Market Quote Request, the Agent shall send to the Banks by telex or
facsimile transmission an Invitation for Money Market Quotes substantially in
the form of Exhibit C hereto, which shall constitute an invitation by the
Borrower to each Bank to submit Money Market Quotes offering to make the Money
Market Loans to which such Money Market Quote Request relates in accordance with
this Section.
(d) Submission and Contents of Money Market Quotes. (i) Each Bank may
submit a Money Market Quote containing an offer or offers to make Money Market
Loans in response to any Invitation for Money Market Quotes. Each Money Market
Quote must comply with the requirements of this subsection (d) and must be
submitted to the Agent by telex or facsimile transmission at its offices
specified in or pursuant to Section 10.01 not later than (x) 10:30 A.M. (New
York City time) on the third Euro-Dollar Business Day prior to the proposed date
of Borrowing, in the case of a LIBOR Auction or (y) 9:15 A.M. (New York City
time) on the proposed date of Borrowing, in the case of an Absolute Rate Auction
(or, in either case, such other time or date as the Company and the Agent shall
have mutually agreed and shall have notified to the Banks not
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later than the date of the Money Market Quote Request for the first LIBOR
Auction or Absolute Rate Auction for which such change is to be effective);
provided that Money Market Quotes submitted by the Agent (or any affiliate of
the Agent) in the capacity of a Bank may be submitted, and may only be
submitted, if the Agent or such affiliate notifies the Borrower of the terms of
the offer or offers contained therein not later than (x) one hour prior to the
deadline for the other Banks, in the case of a LIBOR Auction or (y) 15 minutes
prior to the deadline for the other Banks, in the case of an Absolute Rate
Auction. Subject to Articles 3 and 6, any Money Market Quote so made shall be
irrevocable except with the written consent of the Agent given on the
instructions of the Borrower.
(ii) Each Money Market Quote shall be in substantially the form
of Exhibit D hereto and shall in any case specify:
(A) the proposed date of Borrowing,
(B) the principal amount of the Money Market Loan for
which each such offer is being made, which principal amount
(w) may be greater than or less than the Commitment of the
quoting Bank, (x) must be $5,000,000 or a larger multiple of
$1,000,000, (y) may not exceed the principal amount of Money
Market Loans for which offers were requested, and (z) may be
subject to an aggregate limitation as to the principal amount
of Money Market Loans for which offers being made by such
quoting Bank may be accepted,
(C) in the case of a LIBOR Auction, the margin above or
below the applicable London Interbank Offered Rate (the "Money
Market Margin") offered for each such Money Market Loan,
expressed as a percentage (specified to the nearest 1/10,000th
of 1%) to be added to or subtracted from such base rate,
(D) in the case of an Absolute Rate Auction, the rate of
interest per annum (specified to the nearest 1/10,000th of 1%)
(the "Money Market Absolute Rate") offered for each such Money
Market Loan, and
(E) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate offers by the quoting
Bank with respect to each Interest Period specified in the related Invitation
for Money Market Quotes.
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(iii) Any Money Market Quote shall be disregarded if it:
(A) is not substantially in conformity with Exhibit D
hereto or does not specify all of the information required by
subsection (d)(ii);
(B) contains qualifying, conditional or similar language;
(C) proposes terms other than or in addition to those set
forth in the applicable Invitation for Money Market Quotes; or
(D) arrives after the time set forth in subsection
(d)(i).
(e) Notice to Borrower. The Agent shall promptly (and in any event no
later than 11:00 A.M. (New York time) on (i) the third Euro-Dollar Business Day
prior to the proposed date of Borrowing, in the case of a LIBOR Auction or (ii)
the proposed date of Borrowing, in the case of an Absolute Rate Auction) notify
the Borrower of the terms (x) of any Money Market Quote submitted by a Bank that
is in accordance with subsection (d) and (y) of any Money Market Quote that
amends, modifies or is otherwise inconsistent with a previous Money Market Quote
submitted by such Bank with respect to the same Money Market Quote Request. Any
such subsequent Money Market Quote shall be disregarded by the Agent unless such
subsequent Money Market Quote is submitted solely to correct a manifest error in
such former Money Market Quote. The Agent's notice to the Borrower shall specify
(A) the aggregate principal amount of Money Market Loans for which offers have
been received for each Interest Period specified in the related Money Market
Quote Request, (B) the respective principal amounts and Money Market Margins or
Money Market Absolute Rates, as the case may be, so offered and (C) if
applicable, limitations on the aggregate principal amount of Money Market Loans
for which offers in any single Money Market Quote may be accepted.
(f) Acceptance and Notice by Borrower. Not later than 11:15 A.M. (New
York City time) on (x) the third Euro-Dollar Business Day prior to the proposed
date of Borrowing, in the case of a LIBOR Auction or (y) the proposed date of
Borrowing, in the case of an Absolute Rate Auction (or, in either case, such
other time or date as the Company and the Agent shall have mutually agreed and
shall have notified to the Banks not later than the date of the Money Market
Quote Request for the first LIBOR Auction or Absolute Rate Auction for which
such change is to be effective), the Borrower shall notify the Agent of its
acceptance or non-acceptance of the offers so notified to it pursuant to
subsection (e). In the case of acceptance, such notice (a "Notice of Money
Market Borrowing") shall
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specify the aggregate principal amount of offers for each Interest Period that
are accepted. The Borrower may accept any Money Market Quote in whole or in
part; provided that:
(i) the aggregate principal amount of each Money Market
Borrowing may not exceed the applicable amount set forth in the related
Money Market Quote Request,
(ii) the principal amount of each Money Market Borrowing must be
$25,000,000 or a larger multiple of $5,000,000,
(iii) acceptance of offers may only be made on the basis of
ascending Money Market Margins or Money Market Absolute Rates, as the
case may be, and
(iv) the Borrower may not accept any offer that is described in
subsection (d)(iii) or that otherwise fails to comply with the
requirements of this Agreement.
(g) Allocation by Agent. If offers are made by two or more Banks with
the same Money Market Margins or Money Market Absolute Rates, as the case may
be, for a greater aggregate principal amount than the amount in respect of which
such offers are accepted for the related Interest Period, the principal amount
of Money Market Loans in respect of which such offers are accepted shall be
allocated by the Agent among such Banks as nearly as possible (in multiples of
$1,000,000, as the Agent may deem appropriate) in proportion to the aggregate
principal amounts of such offers. Determinations by the Agent of the amounts of
Money Market Loans shall be conclusive in the absence of manifest error.
SECTION 2.04. Notice to Banks; Funding of Loans. (a) Upon receipt of a
Notice of Borrowing, the Agent shall promptly notify each Bank of the contents
thereof and of such Bank's share (if any) of such Borrowing and such Notice of
Borrowing shall not thereafter be revocable by the Borrower.
(b) Not later than 1:00 P.M. (New York City time) on the date of each
Borrowing, each Bank participating therein shall (except as provided in
subsection (c) of this Section) make available its share of such Borrowing, in
Federal or other funds immediately available in New York City, to the Agent at
its address referred to in Section 10.01. Unless any applicable condition
specified in Article 3 has not been satisfied, as determined by the Agent in
accordance with Article 3, the Agent will make the funds so received from the
Banks immediately available to the Borrower at the Agent's aforesaid address.
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(c) If any Bank makes a new Loan hereunder to the Borrower on a day on
which the Borrower is to repay all or any part of an outstanding Loan from such
Bank, such Bank shall apply the proceeds of its new Loan to make such repayment
and only an amount equal to the difference (if any) between the amount being
borrowed by the Borrower and the amount being repaid shall be made available by
such Bank to the Agent as provided in subsection (b) of this Section, or
remitted by the Borrower to the Agent as provided in Section 2.12, as the case
may be.
(d) Unless the Agent shall have received notice from a Bank prior to
the date of any Borrowing (or, in the case of a Base Rate Borrowing, prior to
Noon (New York City time) on the date of such Borrowing) that such Bank will not
make available to the Agent such Bank's share of such Borrowing, the Agent may
assume that such Bank has made such share available to the Agent on the date of
such Borrowing in accordance with subsections (b) and (c) of this Section 2.04
and the Agent may, in reliance upon such assumption, make available to the
Borrower on such date a corresponding amount. If and to the extent that such
Bank shall not have so made such share available to the Agent, such Bank and the
Borrower severally agree to repay to the Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Agent, at (i) in the case of the Borrower, a rate per annum equal
to the higher of the Federal Funds Rate and the interest rate applicable thereto
pursuant to Section 2.07 and (ii) in the case of such Bank, the Federal Funds
Rate. If such Bank shall repay to the Agent such corresponding amount, such
amount so repaid shall constitute such Bank's Loan included in such Borrowing
for purposes of this Agreement. If the Borrower shall have repaid such
corresponding amount of such Bank, such Bank shall reimburse the Borrower for
any loss on account thereof incurred by the Borrower.
SECTION 2.05. Notes. (a) The Loans of each Bank to the Borrower shall
be evidenced by a single Note of the Borrower payable to the order of such Bank
for the account of its Applicable Lending Office, unless such Bank requests
otherwise, in an amount equal to the aggregate unpaid principal amount of such
Bank's Loans to the Borrower.
(b) Each Bank may, by notice to the Borrower and the Agent, request
that its Loans of a particular type to the Borrower be evidenced by a separate
Note of the Borrower in an amount equal to the aggregate unpaid principal amount
of such Loans. Each such Note shall be in substantially the form of Exhibit A
hereto with appropriate modifications to reflect the fact that it evidences
solely Loans of
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the relevant type. Each reference in this Agreement to a "Note" or the "Notes"
of such Bank shall be deemed to refer to and include any or all of such Notes,
as the context may require.
(c) Upon receipt of each Bank's Note pursuant to Section 3.01, the
Agent shall forward such Note to such Bank. Each Bank shall record the date,
amount and type of each Loan made by it to the Borrower and the date and amount
of each payment of principal made with respect thereto, and may, if such Bank so
elects in connection with any transfer or enforcement of its Note of the
Borrower, endorse on the schedule forming a part thereof appropriate notations
to evidence the foregoing information with respect to each such Loan to the
Borrower then outstanding; provided that the failure of any Bank to make any
such recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Notes. Each Bank is hereby irrevocably authorized by the
Borrower so to endorse its Notes and to attach to and make a part of any Note a
continuation of any such schedule as and when required.
SECTION 2.6. Maturity of Loans. Each Loan by a Bank included in any
Borrowing made pursuant to Section 2.01(a) shall mature, and the principal
amount thereof shall be due and payable, together with accrued interest thereon,
on the Termination Date for such Bank. Each Loan included in any Borrowing made
pursuant to Section 2.01(d) shall mature, and the principal amount thereof shall
be due and payable, together with accrued interest thereon, on the first
anniversary of the Termination Date on which such Borrowing is made. Each Loan
included in any Borrowing made pursuant to Section 2.03 shall mature, and the
principal amount thereof shall be due and payable, together with accrued
interest thereon, on the last day of the Interest Period applicable thereto.
SECTION 2.7. Interest Rates. (a) Each Domestic Loan shall bear
interest on the outstanding principal amount thereof, for each day from the date
such Loan is made until it becomes due, at a rate per annum equal to the Base
Rate for such day. Such interest shall be payable quarterly in arrears on the
last day of each calendar quarter and, with respect to the principal amount of
any Domestic Loan converted to a Euro-Dollar Loan, on each date a Domestic Loan
is so converted. Any overdue principal of or interest on any Domestic Loan shall
bear interest, payable on demand, for each day until paid at a rate per annum
equal to the sum of 2% plus the rate otherwise applicable to Domestic Loans for
such day.
(b) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for the Interest Period applicable thereto, at a rate
per annum equal to the sum of the Euro-Dollar Margin plus the applicable
Adjusted London Interbank Offered Rate. Such interest shall be payable for each
Interest
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Period on the last day thereof and, if such Interest Period is longer than three
months, at intervals of three months after the first day thereof.
The "Adjusted London Interbank Offered Rate" applicable to any Interest
Period means a rate per annum equal to the quotient obtained (rounded upward, if
necessary, to the next higher 1/100 of 1%) by dividing (i) the applicable London
Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar Reserve Percentage.
"Euro-Dollar Margin" means a rate per annum determined in accordance
with the Pricing Schedule.
The "London Interbank Offered Rate" applicable to any Interest Period
means the average (rounded upward, if necessary, to the next higher 1/16 of 1%)
of the respective rates per annum at which deposits in dollars are offered to
each of the Euro-Dollar Reference Banks in the London interbank market at
approximately 11:00 A.M. (London time) two Euro-Dollar Business Days before the
first day of such Interest Period in an amount approximately equal to the
principal amount of the Euro-Dollar Loan of such Euro-Dollar Reference Bank to
which such Interest Period is to apply and for a period of time comparable to
such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of "Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any Bank to United
States residents). The Adjusted London Interbank Offered Rate shall be adjusted
automatically on and as of the effective date of any change in the Euro-Dollar
Reserve Percentage.
(c) Any overdue principal of or interest on any Euro-Dollar Loan shall
bear interest, payable on demand, for each day from and including the date
payment thereof was due to but excluding the date of actual payment, at a rate
per annum equal to the sum of 2% plus the higher of (i) the Euro-Dollar Margin
plus the quotient obtained (rounded upward, if necessary, to the next higher
1/100 of 1%) by dividing (x) the average (rounded upward, if necessary, to the
next higher 1/16 of 1%) of the respective rates per annum at which one day (or,
if such amount due remains unpaid more than three Euro-Dollar Business Days,
then for
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such other period of time not longer than six months as the Agent may select)
deposits in dollars in an amount approximately equal to such overdue payment due
to each of the Euro-Dollar Reference Banks are offered to such Euro-Dollar
Reference Bank in the London interbank market for the applicable period
determined as provided above by (y) 1.00 minus the Euro-Dollar Reserve
Percentage (or, if the circumstances described in clause (a) or (b) of Section
8.01 shall exist, at a rate per annum equal to the sum of 2% plus the rate
applicable to Domestic Loans for such day) and (ii) the sum of the Euro-Dollar
Margin plus the Adjusted London Interbank Offered Rate applicable to such Loan
at the date such payment was due.
(d) Subject to Section 8.01, each Money Market LIBOR Loan shall bear
interest on the outstanding principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the sum of the London Interbank
Offered Rate for such Interest Period (determined in accordance with Section
2.07 as if the related Money Market LIBOR Borrowing were a Committed Euro-Dollar
Borrowing) plus (or minus) the Money Market Margin quoted by the Bank making
such Loan in accordance with Section 2.03. Each Money Market Absolute Rate Loan
shall bear interest on the outstanding principal amount thereof, for the
Interest Period applicable thereto, at a rate per annum equal to the Money
Market Absolute Rate quoted by the Bank making such Loan in accordance with
Section 2.03. Such interest shall be payable for each Interest Period on the
last day thereof and, if such Interest Period is longer than three months, at
intervals of three months after the first day thereof. Any overdue principal of
or interest on any Money Market Loan shall bear interest, payable on demand, for
each day until paid at a rate per annum equal to the sum of 2% plus the Base
Rate for such day.
(e) The Agent shall determine each interest rate applicable to the
Loans hereunder. The Agent shall give prompt notice to the Borrower and the
participating Banks of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.
(f) Each Euro-Dollar Reference Bank agrees to use its best efforts to
furnish quotations to the Agent as contemplated hereby. If any Euro-Dollar
Reference Bank does not furnish a timely quotation, the Agent shall determine
the relevant interest rate on the basis of the quotation or quotations furnished
by the remaining Euro-Dollar Reference Bank or Banks or, if none of such
quotations is available on a timely basis, the provisions of Section 8.01 shall
apply.
SECTION 2.08. Facility Fees. The Company shall pay to the Agent for the
account of the Banks ratably a facility fee at the Facility Fee Rate (determined
daily in accordance with the Pricing Schedule). Such facility fee shall accrue
(i)
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from and including the Effective Date to but excluding the Termination Date
(or earlier date of termination of the Commitments in their entirety), on the
daily average aggregate amount of the Commitments (whether used or unused) and
(ii) from and including the Termination Date (or earlier date of termination of
the Commitments in their entirety) to but excluding the date the Loans shall be
repaid in their entirety, on the daily average aggregate outstanding principal
amount of the Loans. Accrued facility fees shall be payable quarterly in arrears
on the last day of each calendar quarter and upon the date of termination of the
Commitments in their entirety (and, if later, the date the Loans shall be repaid
in their entirety).
"Facility Fee Rate" means a rate per annum determined in accordance
with the Pricing Schedule.
SECTION 2.9. Termination or Reduction of Commitments. (a) During the
Revolving Credit Period, the Company may, upon at least three Domestic Business
Days' notice to the Agent, (i) terminate the Commitments at any time, if no
Loans are outstanding at such time or (ii) ratably reduce from time to time by
an aggregate amount of $25,000,000 or any larger multiple of $5,000,000, the
aggregate amount of the Commitments in excess of the aggregate outstanding
principal amount of the Loans.
(b) If the Separation has not been consummated on or before November
8, 1998, the Commitments shall be ratably reduced by 50% on the next succeeding
Domestic Business Day.
SECTION 2.10. Method of Electing Interest Rates. (a) The Loans included
in each Committed Borrowing shall bear interest initially at the type of rate
specified by the Borrower in the applicable Notice of Committed Borrowing.
Thereafter, the Borrower may from time to time elect to change or continue the
type of interest rate borne by each Group of Loans (subject in each case to the
provisions of Article 8), as follows:
(i) if such Loans are Domestic Loans, the Borrower may elect to
convert such Loans to Euro-Dollar Loans as of any Euro-Dollar Business
Day;
(ii) if such Loans are Euro-Dollar Loans, the Borrower may elect
to convert such Loans to Domestic Loans or elect to continue such Loans
as Euro-Dollar Loans for an additional Interest Period, in each case
effective on the last day of the then current Interest Period
applicable to such Loans.
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Each such election shall be made by delivering a notice (a "Notice of Interest
Rate Election") to the Agent at least three Euro-Dollar Business Days before the
conversion or continuation selected in such notice is to be effective. A Notice
of Interest Rate Election may, if it so specifies, apply to only a portion of
the aggregate principal amount of the relevant Group of Loans; provided that (i)
such portion is allocated ratably among the Loans comprising such Group and (ii)
the portion to which such Notice applies, and the remaining portion to which it
does not apply, are each $25,000,000 or any larger multiple of $5,000,000.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such
notice applies;
(ii) the date on which the conversion or continuation selected
in such notice is to be effective, which shall comply with the
applicable clause of subsection (a) above;
(iii) if the Loans comprising such Group are to be converted,
the new type of Loans and, if such new Loans are Euro-Dollar Loans, the
duration of the initial Interest Period applicable thereto; and
(iv) if such Loans are to be continued as Euro-Dollar Loans for
an additional Interest Period, the duration of such additional Interest
Period.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period.
(c) Upon receipt of a Notice of Interest Rate Election from the
Borrower pursuant to subsection (a) above, the Agent shall promptly notify each
Bank of the contents thereof and such notice shall not thereafter be revocable
by such Borrower. If the Borrower fails to deliver a timely Notice of Interest
Rate Election to the Agent for any Group of Euro-Dollar Loans, such Loans shall
be converted into Domestic Loans on the last day of the then current Interest
Period applicable thereto.
SECTION 2.11. Prepayments.
(a) Subject in the case of any Euro-Dollar Loans to Section 2.13, the
Borrower may, upon at least one Domestic Business Day's notice to the Agent,
prepay the Group of Domestic Loans (or any Money Market Borrowing bearing
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interest at the Base Rate pursuant to Section 8.01(a)), or, upon three
Euro-Dollar Business Days' notice to the Agent, prepay any Group of Euro-Dollar
Loans, in each case in whole at any time, or from time to time in part in
amounts aggregating $25,000,000 or any larger multiple of $5,000,000, by paying
the principal amount to be prepaid together with accrued interest thereon to the
date of prepayment.
(b) Except as provided in subsection (a) above, the Borrower may not
prepay all or any portion of the principal amount of any Money Market Loan prior
to the maturity thereof.
(c) Upon receipt of a notice of prepayment pursuant to this Section,
the Agent shall promptly notify each Bank of the contents thereof and of such
Bank's ratable share (if any) of such prepayment and such notice shall not
thereafter be revocable by the Borrower. Each such prepayment shall be applied
to prepay ratably the Loans of the several Banks included in the relevant Group
or Borrowing.
(d) On the date of any reduction of Commitments pursuant to Section
2.09(b), the Borrower shall repay such principal amount (together with accrued
interest thereon) of outstanding Loans, if any, as may be necessary so that
after such repayment (i) the aggregate outstanding principal amount of each
Bank's Committed Loans does not exceed the amount of such Bank's Commitment as
then reduced, and (ii) the aggregate unpaid principal amount of all outstanding
Loans does not exceed the aggregate amount of the Commitments as then reduced.
Any such prepayment shall be made in accordance with all applicable provisions
of this Agreement (including without limitation subsections (a) (other than as
to amount), (b) and (c) of this Section 2.11).
SECTION 2.12. General Provisions as to Payments. (a) The Borrower shall
make each payment of principal of, and interest on, the Loans and of fees and
other amounts payable hereunder, not later than 12:00 Noon (New York City time)
on the date when due, in Federal or other funds immediately available in New
York City, without off set or counterclaim, to the Agent at its address referred
to in Section 10.01. The Agent will promptly distribute to each Bank its ratable
share of each such payment received by the Agent for the account of the Banks.
Whenever any payment of principal of, or interest on, the Domestic Loans or of
fees or other amounts payable hereunder shall be due on a day which is not a
Domestic Business Day, the date for payment thereof shall be extended to the
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next succeeding Domestic Business Day. Whenever any payment of principal of, or
interest on, the Euro-Dollar Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall be extended to the
next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case the date for payment thereof
shall be the next preceding Euro-Dollar Business Day. Whenever any payment of
principal of, or interest on, the Money Market Loans shall be due on a day which
is not a Euro-Dollar Business Day, the date for payment thereof shall be
extended to the next succeeding Euro-Dollar Business Day. If the date for any
payment of principal is extended by operation of law or otherwise, interest
thereon shall be payable for such extended time.
(b) Unless the Agent shall have received notice from the Borrower
prior to the date on which any payment is due from the Borrower to the Banks
hereunder that the Borrower will not make such payment in full, the Agent may
assume that the Borrower has made such payment in full to the Agent on such date
and the Agent may, in reliance upon such assumption, cause to be distributed to
each Bank on such due date an amount equal to the amount then due such Bank. If
and to the extent that the Borrower shall not have so made such payment, each
Bank shall repay to the Agent forthwith on demand such amount distributed to
such Bank together with interest thereon, for each day from the date such amount
is distributed to such Bank until the date such Bank repays such amount to the
Agent, at the Federal Funds Rate.
SECTION 2.13. Funding Losses. If the Borrower makes any payment of
principal with respect to any Fixed Rate Loan or any Fixed Rate Loan is
converted to a Domestic Loan (pursuant to Article 2, 6 or 8 or otherwise) on any
day other than the last day of an Interest Period applicable thereto, or the
last day of an applicable period fixed pursuant to Section 2.07(c), or if the
Borrower fails to borrow, convert, continue or prepay any Fixed Rate Loans after
notice has been given to any Bank in accordance with Section 2.04(a), 2.10(c) or
2.11(c), the Company shall reimburse each Bank within 15 days after demand for
any resulting loss or expense incurred by it (or by an existing or prospective
Participant in the related Loan), including (without limitation) any loss
incurred in obtaining, liquidating or employing deposits from third parties, but
excluding loss of margin for the period after any such payment or conversion or
failure to borrow or prepay, provided that such Bank shall have delivered to the
Company a certificate as to the amount of such loss or expense, which
certificate shall be conclusive in the absence of manifest error.
SECTION 2.14. Computation of Interest and Fees. Interest based on the
Prime Rate hereunder shall be computed on the basis of a year of 365 days (or
366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All other interest and
fees hereunder shall be
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computed on the basis of a year of 360 days and paid for the actual number of
days elapsed (including the first day but excluding the last day).
SECTION 2.15. Change of Control. If a Change of Control shall occur,
the Company will, within ten days after the occurrence thereof, give each Bank
notice thereof, which notice shall describe in reasonable details the facts and
circumstances giving rise thereto and shall specify an Optional Termination Date
for purposes of this Section (the "Optional Termination Date") which date shall
not be less than 30 nor more than 60 days after the date of such notice. Each
Bank may, by notice to the Company and the Agent given not less than three
Domestic Business Days prior to the Optional Termination Date, terminate its
Commitment (if any), which shall thereupon be terminated, and declare the Note
held by it (together with accrued interest thereon) and any other amounts
payable hereunder for its account to be, and such Note and such other amounts
shall thereupon become, due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Company and the
Borrower, in each case effective on the Optional Termination Date.
A "Change of Control" shall occur if any person or group of persons
(within the meaning of Section 13 or 14 of the Securities Exchange Act of 1934,
as amended) shall have acquired beneficial ownership (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange Commission under said Act) of
30% or more of the outstanding shares of common stock of the Company; or, during
any period of twelve consecutive calendar months, individuals who were directors
of the Company on the first day of such period shall cease to constitute a
majority of the board of directors of the Company. The Separation shall not
constitute a Change of Control.
ARTICLE 3
CONDITIONS
SECTION 3.01. Closing. The closing hereunder shall occur upon receipt
by the Agent of the following (in the case of any document, dated the Closing
Date unless otherwise indicated):
(a) a duly executed Note of the Borrower for the account of each Bank
dated on or before the Closing Date complying with the provisions of Section
2.05;
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(b) an opinion of Thomas O. McGimpsey, Esq., counsel for the Company
and the Borrower, substantially in the form of Exhibit E hereto and covering
such additional matters relating to the transactions contemplated hereby as the
Required Banks may reasonably request;
(c) an opinion of Davis Polk & Wardwell, special counsel for the
Agent, substantially in the form of Exhibit F hereto and covering such
additional matters relating to the transactions contemplated hereby as the
Required Banks may reasonably request;
(d) evidence satisfactory to the Agent that the commitments under the
Existing Credit Agreements have been terminated and that the principal and
interest on all loans and accrued fees outstanding thereunder have been paid in
full;
(e) evidence satisfactory to the Agent of the payment of all fees and
other amounts payable to the Agent for the account of the Banks or the Agent on
or prior to the Closing Date, including, to the extent invoiced, reimbursement
of all out-of-pocket expenses (including, without limitation, legal fees and
expenses) required to be reimbursed or paid by the Borrower or the Company
hereunder; and
(f) all documents the Agent may reasonably request relating to the
existence of the Company and the Borrower, the corporate authority for and the
validity of this Agreement and the Notes, and any other matters relevant hereto,
all in form and substance satisfactory to the Agent.
The Agent shall promptly notify the Company and the Banks of the Closing Date,
and such notice shall be conclusive and binding on all parties hereto.
SECTION 3.2. All Borrowings. The obligation of any Bank to make a
Loan on the occasion of any Borrowing is subject to the satisfaction of the
following conditions:
(a) the fact that the Closing Date shall have occurred on or prior to
May 30, 1998;
(b) receipt by the Agent of a Notice of Borrowing as required by
Section 2.02 or 2.03, as the case may be;
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(c) the fact that, immediately before and after such Borrowing, the
aggregate outstanding principal amount of the Loans will not exceed the
aggregate amount of the Commitments;
(d) the fact that, immediately before and after such Borrowing, no
Default shall have occurred and be continuing; and
(e) the fact that the representations and warranties contained in this
Agreement shall be true on and as of the date of such Borrowing
(except, in the case of the representations and warranties contained in
Section 4.04(b), as disclosed by the Borrower to the Banks in writing
in the Notice of Borrowing relating to such Borrowing).
Each Borrowing hereunder shall be deemed to be a representation and
warranty by the Borrower on the date of such Borrowing as to the facts specified
in clauses (c), (d) and (e) of this Section.
SECTION 3.3. Loans after Separation. The obligation of any Bank to
make or maintain a Loan after the Separation is subject to receipt by the Agent
of the following documents, each dated or effective on the date of consummation
of the Separation:
(a) an instrument, satisfactory in form and substance to the
Agent, and duly executed and delivered by USW-C, Inc. pursuant to which
USW-C, Inc. (to be renamed U S WEST, Inc.) assumes the obligations of
U S WEST, Inc. (to be renamed MediaOne Group, Inc.) under this
Agreement;
(b) evidence satisfactory to it that the Separation has been
consummated substantially on the terms described in the Proxy
Statement;
(c) an opinion of Thomas O. McGimpsey, Esq., counsel for USW-C, Inc.,
substantially in the form of Exhibit E hereto with such modifications
as are acceptable to the Agent and covering such additional matters
relating to the transactions contemplated hereby as the Required Banks
may reasonably request; and
(d) all documents the Agent may reasonably request relating to the
existence of USW-C, Inc., the corporate authority for and the validity
of this Agreement and the Notes, and any other matters relevant hereto,
all in form and substance satisfactory to the Agent.
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The Agent shall promptly notify the Company and the Banks of the
satisfaction of the foregoing conditions.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Each of the Company and the Borrower represents and warrants that:
SECTION 4.1. Corporate Existence and Power. Each of the Company and
the Borrower is a corporation duly incorporated, validly existing and in good
standing under the laws of the state of its incorporation, and has all corporate
powers and all material governmental licenses, authorizations, qualifications,
consents and approvals required to carry on its business as now conducted.
SECTION 4.2. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Company and the
Borrower of this Agreement and by the Borrower of the Notes are within such
Person's corporate powers, have been duly authorized by all necessary corporate
action, require no action by or in respect of, or filing with, any governmental
body, agency or official and do not contravene, or constitute a default under,
any provision of applicable law or regulation or of the certificate of
incorporation or by-laws of such Person or of any agreement, judgment,
injunction, order, decree or other instrument binding upon such Person or any
Significant Subsidiary or result in the creation or imposition of any Lien on
any material asset of such Person or any Significant Subsidiary.
SECTION 4.3. Binding Effect. This Agreement constitutes a valid and
binding agreement of the Company and the Borrower, and the Notes, when executed
and delivered in accordance with this Agreement, will constitute valid and
binding obligations of the Borrower, in each case enforceable in accordance with
its terms except as the same may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and by general principles of equity.
SECTION 4.4. Financial Information.
(a) The consolidated balance sheet of the Company and its Consolidated
Subsidiaries as of December 31, 1997 and the related consolidated statements of
income and cash flows for the fiscal year then ended, reported on by Arthur
Andersen L.L.P. and set forth in the Company's 1997 Form 10-K, a copy
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of which has been delivered to each of the Banks, fairly present, in conformity
with generally accepted accounting principles, the consolidated financial
position of the Company and its Consolidated Subsidiaries as of such date and
their consolidated results of operations and cash flows for such fiscal year.
(b) Since December 31, 1997 there has been no material adverse change
in the financial position or results of operations of the Company and its
Consolidated Subsidiaries, considered as a whole (it being understood that the
consummation of the Separation shall not be considered such a change).
SECTION 4.5. Litigation. Except as disclosed in the Company's 1997
Form 10-K, there is no action, suit or proceeding pending against, or to the
knowledge of the Company threatened against or affecting, the Company or any of
its Subsidiaries before any court or arbitrator or any governmental body, agency
or official in which there is a reasonable possibility of an adverse decision
which would materially adversely affect the consolidated financial position or
consolidated results of operations of the Company and its Consolidated
Subsidiaries, considered as a whole, or which in any manner draws into question
the validity of this Agreement or the Notes.
SECTION 4.6. Compliance with ERISA. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and the
Internal Revenue Code with respect to each Plan and is in compliance in all
respects with the presently applicable provisions of ERISA and the Internal
Revenue Code with respect to each Plan, except where failure to comply would not
have a material adverse effect on the consolidated financial position or
consolidated results of operations of the Company and its Consolidated
Subsidiaries, considered as a whole. No member of the ERISA Group has (i) sought
a waiver of the minimum funding standard under Section 412 of the Internal
Revenue Code in respect of any Plan, (ii) failed to make any contribution or
payment to any Plan or Multiemployer Plan or in respect of any Benefit
Arrangement, or made any amendment to any Plan or Benefit Arrangement, which has
resulted or could result in the imposition of a Lien or the posting of a bond or
other security under ERISA or the Internal Revenue Code or (iii) incurred any
liability under Title IV of ERISA other than a liability to the PBGC for
premiums under Section 4007 of ERISA.
SECTION 4.7. Environmental Matters. (a) The operations of the Company
and each of its Subsidiaries comply in all respects with all Environmental Laws
except such non-compliance which would not (if enforced in accordance with
applicable law) reasonably be expected to result, individually or in the
aggregate,
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in a material adverse effect on the financial position or results of operations
of the Company and its Consolidated Subsidiaries, considered as a whole.
(b) Except as specifically identified in Schedule 4.07, the Company
and each of its Subsidiaries have obtained all material licenses, permits,
authorizations and registrations required under any Environmental Laws
("Environmental Permits") necessary for their respective operations, and all
such Environmental Permits are in good standing, and the Company and each of its
Subsidiaries is in compliance with all material terms and conditions of such
Environmental Permits.
(c) Except as specifically identified in Schedule 4.07, (i) none of
the Company, any of its Subsidiaries or any of their present property or
operations are subject to any outstanding written order from or settlement or
consent agreement with any governmental authority or other Person, nor is any of
the foregoing subject to any judicial or docketed administrative proceedings,
respecting any Environmental Laws or Hazardous Substances with a potential
liability in excess of $1,000,000 and (ii) there are no other conditions or
circumstances known to the Company which may give rise to any claims respecting
any Environmental Laws arising from the operations of the Company or its
Subsidiaries (including, without limitation, off-site liabilities), or any
additional costs of compliance with Environmental Laws, that would reasonably be
expected to have a material adverse effect on the financial position or results
of operations of the Company and its Subsidiaries, considered as a whole.
SECTION 4.8. Taxes. United States Federal income tax returns of the
Company and its Subsidiaries have been examined and closed through the fiscal
year ended December 31, 1987. The Company and its Subsidiaries have filed all
United States Federal income tax returns and all other material tax returns
which are required to be filed by them and have paid all taxes due pursuant to
such returns or pursuant to any assessment received by the Company or any
Subsidiary, except for taxes the amount, applicability or validity of which is
being contested in good faith by appropriate proceedings. The charges, accruals
and reserves on the books of the Company and its Subsidiaries in respect of
taxes or other governmental charges are, in the opinion of the Company,
adequate.
SECTION 4.9. Subsidiaries. Each of the Company's corporate Significant
Subsidiaries (including, but not limited to, the Borrower) is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all corporate powers and all material
governmental licenses, authorizations, qualifications, consents and approvals
required to carry on its business as now conducted.
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SECTION 4.10. Not an Investment Company. Neither the Company nor the
Borrower is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
SECTION 4.11. Full Disclosure. All written information heretofore
furnished by the Company or the Borrower to the Agent or any Bank for purposes
of or in connection with this Agreement or any transaction contemplated hereby
is, and all such information hereafter furnished by the Company or the Borrower
to the Agent or any Bank will be, true and accurate in all material respects on
the date as of which such information is stated or certified.
ARTICLE 5
COVENANTS
The Company agrees that, so long as any Bank has any Commitment
hereunder or any amount payable under any Note remains unpaid:
SECTION 5.1. Information. The Company will deliver to each of the
Banks:
(a) as soon as available and in any event within 95 days after the end
of each fiscal year of the Company, a consolidated balance sheet of the Company
and its Consolidated Subsidiaries as of the end of such fiscal year and the
related consolidated statements of income and cash flows for such fiscal year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all reported on in a manner acceptable to the Securities and
Exchange Commission by Arthur Andersen L.L.P. or other independent public
accountants of nationally recognized standing;
(b) as soon as available and in any event within 50 days after the end
of each of the first three quarters of each fiscal year of the Company, a
consolidated balance sheet of the Company and its Consolidated Subsidiaries as
of the end of such quarter and the related consolidated statements of income and
cash flows for such quarter and for the portion of the Company's fiscal year
ended at the end of such quarter, setting forth in the case of such statements
of income and cash flows in comparative form the figures for the corresponding
quarter and the corresponding portion of the Company's previous fiscal year, all
certified (subject to normal year-end adjustments) as to fairness of
presentation, generally accepted accounting principles and consistency by the
chief financial officer or the chief accounting officer of the Company;
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(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of the chief
financial officer (or such officer's designee, designated in writing by such
officer) or the chief accounting officer of the Company (i) setting forth in
reasonable detail the calculations required to establish whether the Company was
in compliance with the requirements of Sections 5.06 to 5.08, inclusive, on the
date of such financial statements and (ii) stating whether any Default exists on
the date of such certificate and, if any Default then exists, setting forth the
details thereof and the action which the Company is taking or proposes to take
with respect thereto;
(d) within five Domestic Business Days after any officer of the
Company or the Borrower obtains knowledge of any Default, if such Default is
then continuing, a certificate of the chief financial officer or the chief
accounting officer of the Company or the Borrower setting forth the details
thereof and the action which the Company or the Borrower is taking or proposes
to take with respect thereto;
(e) promptly upon the mailing thereof to the shareholders of the
Company generally, copies of all financial statements, reports and proxy
statements so mailed;
(f) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements on
Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their
equivalents) (other than any amendment on Form 8-K the sole purpose of which is
to file exhibits relating to existing Debt meeting the requirements of clause
(ii) of the definition of Debt) which the Company shall have filed with the
Securities and Exchange Commission;
(g) if and when any member of the ERISA Group (i) gives or is required
to give notice to the PBGC of any "reportable event" (as defined in Section 4043
of ERISA) with respect to any Plan which might constitute grounds for a
termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any such
reportable event, a copy of the notice of such reportable event given or
required to be given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that any Multiemployer
Plan is in reorganization, is insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent
to terminate, impose liability (other than for premiums under Section 4007 of
ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of
such notice; (iv)
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applies for a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code, a copy of such application; (v) gives notice of intent to
terminate any Plan under Section 4041(c) of ERISA, a copy of such notice and
other information filed with the PBGC; (vi) gives notice of withdrawal from any
Plan pursuant to Section 4063 of ERISA, a copy of such notice; or (vii) fails to
make any payment or contribution to any Plan or Multiemployer Plan or in respect
of any Benefit Arrangement or makes any amendment to any Plan or Benefit
Arrangement which has resulted or could result in the imposition of a Lien or
the posting of a bond or other security, a certificate of the chief financial
officer or the chief accounting officer of the Company setting forth details as
to such occurrence and action, if any, which the Company or applicable member of
the ERISA Group is required or proposes to take; and
(h) from time to time such additional information regarding the
financial position or business of the Company and its Subsidiaries and the
Borrower and its Subsidiaries as the Agent, at the request of any Bank, may
reasonably request.
SECTION 5.2. Maintenance of Property; Insurance. (a) The Company will
keep, and will cause each Significant Subsidiary to keep, all property useful
and necessary in its business in good working order and condition, ordinary wear
and tear excepted.
(b) The Company will maintain, and will cause each Significant
Subsidiary to maintain (either in the name of the Borrower or in such
Significant Subsidiary's own name), with financially sound and responsible
insurance companies, insurance on all their respective properties in at least
such amounts and against at least such risks (and with such risk retention) as
are usually insured against in the same general area by companies of established
repute engaged in the same or a similar business; and will furnish to the Banks,
upon request from the Agent, information presented in reasonable detail as to
the insurance so carried; provided that, in lieu of any such insurance, the
Company and any Significant Subsidiary may maintain a system or systems of
self-insurance and reinsurance which will accord with sound practices of
similarly situated corporations maintaining such systems and with respect to
which the Company or such Significant Subsidiary will maintain adequate
insurance reserves, all in accordance with generally accepted accounting
principles and in accordance with sound insurance principles and practice.
SECTION 5.3. Maintenance of Existence. The Company will, and will
cause each Significant Subsidiary to, preserve, renew and keep in full force and
effect their respective corporate existence and their respective rights,
privileges and franchises necessary or desirable in the normal conduct of
business; provided
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that nothing in this Section 5.03 shall prohibit or interfere with the Company's
publicly announced strategy to discontinue or dispose of in one or more
transactions the financial services businesses of it or of any of its
Subsidiaries.
SECTION 5.4. Compliance with Laws. The Company will comply, and will
cause each Significant Subsidiary to comply, in all material respects with all
applicable laws, ordinances, rules, regulations, and requirements of
governmental authorities (including, without limitation, Environmental Laws and
ERISA and the rules and regulations thereunder), except where the necessity of
compliance therewith is contested in good faith by appropriate proceedings and
for which adequate reserves in conformity with generally accepted accounting
principles have been established.
SECTION 5.5. Inspection of Property, Books and Records. The Company
will keep, and will cause each Significant Subsidiary to keep, proper books of
record and account in which full, true and correct entries shall be made of all
dealings and transactions in relation to its business and activities; and will
permit, and will cause each Significant Subsidiary to permit, representatives of
any Bank at such Bank's expense to visit and inspect any of their respective
properties, to examine and make abstracts from any of their respective books and
records and to discuss their respective affairs, finances and accounts with
their respective officers, employees and independent public accountants, all at
such reasonable times and as often as may reasonably be desired.
SECTION 5.6. Subsidiary Debt. (a) Prior to the Separation, total debt
of all Consolidated Subsidiaries (excluding Debt of a Consolidated Subsidiary to
the Company or to a Wholly-Owned Consolidated Subsidiary) ("Subsidiary Debt")
will at no time exceed 250% of Consolidated Net Worth.
(b) After the Separation, Subsidiary Debt as of the last day of any
fiscal quarter of the Company will not exceed 150% of Consolidated EBITDA for
the four consecutive fiscal quarters of the Company ending on such date;
provided that in the case of any four fiscal quarter period ending prior to the
first anniversary of the Separation, Consolidated EBITDA for such period shall
equal Consolidated EBITDA for each fiscal quarter (a "Relevant Quarter")
beginning after the Separation and ending on or prior to the last day of such
period, multiplied by a fraction, the numerator of which is four and the
denominator of which is the number of Relevant Quarters.
(c) For purposes of this Section, any preferred stock of a
Consolidated Subsidiary other than the Borrower which is held by a Person other
than the Company or a Wholly-Owned Consolidated Subsidiary shall be included, at
the
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higher of its voluntary or involuntary liquidation value, in the Debt of such
Consolidated Subsidiary.
SECTION 5.7. Debt Coverage. (a) Prior to the Separation,
consolidated Debt of the Company and its Consolidated Subsidiaries will at all
times be less than 70% of the sum of consolidated Debt of the Company and its
Consolidated Subsidiaries and consolidated shareowners' equity of the Company
and its Consolidated Subsidiaries.
(b) After the Separation, consolidated Debt of the Company and its
Consolidated Subsidiaries as of the last day of any fiscal quarter of the
Company will not exceed 400% of Consolidated EBITDA for the four consecutive
fiscal quarters of the Company ending on such date; provided that in the case of
any four fiscal quarter period ending prior to the first anniversary of the
Separation, Consolidated EBITDA for such period shall equal Consolidated EBITDA
for each fiscal quarter (a "Relevant Quarter") beginning after the Separation
and ending on or prior to the last day of such period, multiplied by a fraction,
the numerator of which is four and the denominator of which is the number of
Relevant Quarters.
SECTION 5.8. Negative Pledge. Neither the Company nor the Borrower
will, and the Company will not permit any Subsidiary to, create, assume or
suffer to exist any Lien on any asset now owned or hereafter acquired by it,
except:
(a) Liens existing on the date of this Agreement securing Debt
outstanding on the date of this Agreement in an aggregate principal amount not
exceeding $265,000,000;
(b) any Lien existing on any asset of any corporation at the time such
corporation becomes a Subsidiary and not created in contemplation of such event;
(c) any Lien on any asset securing Debt incurred or assumed for the
purpose of financing all or any part of the cost of acquiring such asset,
provided that such Lien attaches to such asset concurrently with or within 180
days after the acquisition thereof.
(d) any Lien on any asset of any corporation existing at the time such
corporation is merged or consolidated with or into the Company or a Subsidiary
and not created in contemplation of such event;
(e) any Lien existing on any asset prior to the acquisition thereof by
the Company or a Subsidiary and not created in contemplation of such
acquisition;
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(f) any Lien on assets or capital stock of Minor Subsidiaries which
secures Debt of Persons which are not Consolidated Subsidiaries in which the
Company or any of its Subsidiaries has made investments ("Joint Ventures"), but
for the payment of which Debt no other recourse may be had to the Company or any
Subsidiaries ("Limited Recourse Debt"), or any Lien on equity interests in a
Joint Venture securing Limited Recourse Debt of such Joint Venture;
(g) any Lien arising out of the refinancing, replacement, extension,
renewal or refunding of any Debt secured by any Lien permitted by any of the
foregoing clauses of this Section, provided that such Debt is not increased and
is not secured by any additional assets;
(h) Liens arising in the ordinary course of business which (i) do not
secure Debt, (ii) do not secure any obligation in an amount exceeding
$50,000,000 and (iii) do not in the aggregate materially detract from the value
of its assets or materially impair the use thereof in the operation of its
business; and
(i) Liens not otherwise permitted by and in addition to the foregoing
clauses of this Section securing Debt in an aggregate principal amount at any
time outstanding not to exceed $750,000,000.
SECTION 5.9. Consolidations, Mergers and Sales of Assets. The Company
will not (i) consolidate with or merge into any other Person or (ii) sell, lease
or otherwise transfer, directly or indirectly, all or substantially all of the
assets of the Company and its Subsidiaries, taken as a whole, to any other
Person. The Company will retain ownership, directly or indirectly, of at least
80% of the capital stock, and at least 80% of the voting power, of U S WEST
Communications, Inc. ("Communications"), and will cause Communications to
continue to own substantially all of the telecommunications assets it owns on
the date of this Agreement.
SECTION 5.10. Use of Proceeds. The proceeds of the Loans made under
this Agreement will be used by the Borrower for general corporate purposes. None
of such proceeds will be used, directly or indirectly, in violation of any
applicable law or regulation, and no use of such proceeds will include any use
for the purpose, whether immediate, incidental or ultimate, of buying or
carrying any Margin Stock.
SECTION 5.11. Year 2000 Compatibility. The Company shall take all
reasonable action necessary to ensure that the computer based systems of the
Company and its Subsidiaries are able to operate and effectively process data
including dates on or after January 1, 2000, except that such action shall not
be required to the extent that the failure to take such action would not have a
material
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adverse effect on the consolidated financial position or consolidated results of
operations of the Company and its Consolidated Subsidiaries, considered as a
whole. At the request of the Agent, the Company shall provide assurance
reasonably acceptable to the Agent of the year 2000 compatibility of the Company
and its Subsidiaries.
ARTICLE 6
DEFAULTS
SECTION 6.1. Events of Default. If one or more of the following events
shall have occurred and be continuing:
(a) any principal of any Loan shall not be paid when due, or any
interest, any fees or any other amount payable hereunder shall not be
paid within five days of the due date thereof;
(b) the Company or the Borrower shall fail to observe or perform any
covenant contained in Sections 5.06 to 5.10, inclusive;
(c) the Company or the Borrower shall fail to observe or perform any
covenant or agreement contained in this Agreement (other than those
covered by clause (a) or (b) above) for 10 days (or, in the case of
Section 5.11, 30 days) after written notice thereof has been given to
the Company by the Agent at the request of any Bank;
(d) any representation, warranty, certification or statement made by
the Company or the Borrower in this Agreement or in any certificate,
financial statement or other document delivered pursuant to this
Agreement shall prove to have been incorrect in any material respect
when made (or deemed made);
(e) the Company or any Subsidiary shall fail to make any payment or
payments, in the aggregate in excess of $100,000,000, in respect of any
Material Debt when due or within any applicable grace period;
(f) any event or condition shall occur which results in the
acceleration of the maturity of any Material Debt;
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(g) the Company or any Significant Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation, reorganization
or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect
or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the appointment
of or taking possession by any such official in an involuntary case or
other proceeding commenced against it, or shall make a general
assignment for the benefit of creditors, or shall fail generally to pay
its debts as they become due, or shall take any corporate action to
authorize or otherwise acquiesce in any of the foregoing;
(h) an involuntary case or other proceeding shall be commenced against
the Company or any Significant Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under
any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of 60 days; or an order
for relief shall be entered against the Company or any Significant
Subsidiary under the federal bankruptcy laws as now or hereafter in
effect;
(i) any member of the ERISA Group shall fail to pay when due an amount
or amounts aggregating in excess of $100,000,000 which it shall have
become liable to pay under Title IV of ERISA; or notice of intent to
terminate a Material Plan shall be filed under Title IV of ERISA by any
member of the ERISA Group, any plan administrator or any combination of
the foregoing; or the PBGC shall institute proceedings under Title IV
of ERISA to terminate, to impose liability (other than for premiums
under Section 4007 of ERISA) in respect of, or to cause a trustee to be
appointed to administer any Material Plan; or a condition shall exist
by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated; or there shall
occur a complete or partial withdrawal from, or a default, within the
meaning of Section 4219(c)(5) of ERISA, with respect to, one or more
Multiemployer Plans which could cause one or more members of the ERISA
Group to incur a current payment obligation in excess of $100,000,000;
(j) a judgment or order for the payment of money in excess of
$100,000,000 shall be rendered against the Company or any Subsidiary
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and such judgment or order shall continue unsatisfied and unstayed for
a period of 10 days;
(k) the Company shall repudiate in writing any of its obligations
under Article 9 or any such obligation shall be unenforceable against
the Company in accordance with its terms, or the Company shall so
assert in writing;
(l) prior to the Separation, one or more events or conditions shall
occur which result in a default under any agreement or agreements in
respect of any Material Debt that is subject to the Indentures and as a
consequence of such default or defaults the Company or any of its
Subsidiaries shall make any payment or give or agree to give any
consideration or benefit of any kind (including, without limitation,
any increased compensation, prepayment, shortening of maturities,
security or other credit support) to the holders of such Debt and such
payment, consideration or benefit is determined by the Required Banks,
after taking into account any payment, consideration or benefit made,
given or agreed to be given by such holders to the Company or any of
its Subsidiaries (other than a waiver of such default), to be a
material benefit to the holders of such Debt; or
(m) the Separation shall have occurred on terms and conditions which
are not substantially the same as those set forth in the Proxy
Statement;
then, and in every such event, the Agent shall (i) if requested by Banks having
more than 50% in aggregate amount of the Commitments, by notice to the Company
terminate the Commitments and they shall thereupon terminate, and/or (ii) if
requested by Banks holding Notes evidencing more than 50% in aggregate principal
amount of the Loans, by notice to the Company declare the Notes (together with
accrued interest thereon) to be, and the Notes shall thereupon become,
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Company and the Borrower;
provided that in the case of any of the Events of Default specified in clause
(g) or (h) above with respect to the Company or the Borrower, without any notice
to the Company or the Borrower or any other act by the Agent or the Banks, the
Commitments shall thereupon automatically terminate and the Notes (together with
accrued interest thereon) shall become immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Company and the Borrower.
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SECTION 6.2. Notice of Default. The Agent shall give notice to the
Company under Section 6.01(c) promptly upon being requested to do so by any Bank
and shall thereupon notify all the Banks thereof.
ARTICLE 7
THE AGENT
SECTION 7.1. Appointment and Authorization. Each Bank irrevocably
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under this Agreement and the Notes as are delegated to
the Agent by the terms hereof or thereof, together with all such powers as are
reasonably incidental thereto.
SECTION 7.2. Agent and Affiliates. Morgan Guaranty Trust Company of
New York shall have the same rights and powers under this Agreement as any other
Bank and may exercise or refrain from exercising the same as though it were not
the Agent, and Morgan Guaranty Trust Company of New York and its affiliates may
accept deposits from, lend money to, and generally engage in any kind of
business with the Company, the Borrower or any Subsidiary or affiliate of the
Company or the Borrower as if it were not the Agent hereunder.
SECTION 7.3. Action by Agent. The obligations of the Agent hereunder
are only those expressly set forth herein. Without limiting the generality of
the foregoing, the Agent shall not be required to take any action with respect
to any Default, except as expressly provided in Article 6.
SECTION 7.4. Consultation with Experts. The Agent may consult with
legal counsel (who may be counsel for the Company or the Borrower), independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken by it in good faith in accordance with
the advice of such counsel, accountants or experts.
SECTION 7.5. Liability of Agent. Neither the Agent nor any of its
affiliates nor any of their respective directors, officers, agents or employees
shall be liable for any action taken or not taken by it in connection herewith
(i) with the consent or at the request of the Required Banks or (ii) in the
absence of its own gross negligence or willful misconduct. Neither the Agent nor
any of its affiliates nor any of their respective directors, officers, agents or
employees shall be responsible for or have any duty to ascertain, inquire into
or verify (i) any statement, warranty or representation made in connection with
this Agreement or any borrowing
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hereunder; (ii) the performance or observance of any of the covenants or
agreements of the Company or the Borrower; (iii) the satisfaction of any
condition specified in Article 3, except receipt of items required to be
delivered to the Agent; or (iv) the validity, effectiveness or genuineness of
this Agreement, the Notes or any other instrument or writing furnished in
connection herewith. The Agent shall not incur any liability by acting in
reliance upon any notice, consent, certificate, statement, or other writing
(which may be a bank wire, telex or similar writing) believed by it to be
genuine or to be signed by the proper party or parties.
SECTION 7.6. Indemnification. Each Bank shall, ratably in accordance
with its Commitment, indemnify the Agent, its affiliates and their respective
directors, officers, agents and employees (to the extent not reimbursed by the
Company or the Borrower) against any cost, expense (including counsel fees and
disbursements), claim, demand, action, loss or liability (except such as result
from such indemnitees' gross negligence or willful misconduct) that such
indemnitees may suffer or incur in connection with this Agreement or any action
taken or omitted by such indemnitees hereunder.
SECTION 7.7. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Agreement.
SECTION 7.8. Successor Agent. The Agent may resign at any time by
giving notice thereof to the Banks and the Company. Upon any such resignation,
the Required Banks shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Required Banks, and shall
have accepted such appointment, within 30 days after the retiring Agent gives
notice of resignation, then the retiring Agent may, on behalf of the Banks,
appoint a successor Agent (with the consent of the Company, such consent not to
be unreasonably withheld), which shall be a commercial bank organized or
licensed under the laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least $400,000,000. Upon the
acceptance of its appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the rights
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations hereunder. After any retiring Agent's
resignation hereunder as Agent,
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the provisions of this Article shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent.
SECTION 7.9. Agent's Fee. The Company shall pay to the Agent for its
own account fees in the amounts and at the times previously agreed upon between
the Company and the Agent.
ARTICLE 8
CHANGES IN CIRCUMSTANCES
SECTION 8.1. Basis for Determining Interest Rate Inadequate or Unfair.
If on or prior to the first day of any Interest Period for any Euro-Dollar Loan
or Money Market LIBOR Loan:
(a) the Agent is advised by the Euro-Dollar Reference Banks that
deposits in dollars (in the applicable amounts) are not being offered to the
Euro- Dollar Reference Banks in the market for such Interest Period, or
(b) in the case of Euro-Dollar Loans, Banks having 50% or more of the
aggregate amount of the Euro-Dollar Loans advise the Agent that the Adjusted
London Interbank Offered Rate as determined by the Agent will not adequately and
fairly reflect the cost to such Banks of funding their Euro-Dollar Loans for
such Interest Period, the Agent shall forthwith give notice thereof to the
Company and the Banks, whereupon until the Agent notifies the Company that the
circumstances giving rise to such suspension no longer exist, (i) the
obligations of the Banks to make Euro-Dollar Loans or to convert outstanding
Loans into Euro-Dollar Loans shall be suspended and (ii) each outstanding Euro-
Dollar Loan shall be converted into a Domestic Loan on the last day of the then
current Interest Period applicable thereto. Unless the Borrower notifies the
Agent at least two Domestic Business Days before the date of any Fixed Rate
Borrowing for which a Notice of Borrowing has previously been given that it
elects not to borrow on such date, (i) if such Fixed Rate Borrowing is a
Committed Borrowing, such Borrowing shall instead be made as a Domestic
Borrowing and (ii) if such Fixed Rate Borrowing is a Money Market LIBOR
Borrowing, the Money Market LIBOR Loans comprising such Borrowing shall bear
interest for each day from and including the first day to but excluding the last
day of the Interest Period applicable thereto at the Base Rate for such day.
SECTION 8.2. Illegality. If, on or after the date of this Agreement,
the adoption of any applicable law, rule or regulation, or any change in any
applicable
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law, rule or regulation, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Bank (or
its Euro-Dollar Lending Office) with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency shall make it unlawful or impossible for any Bank (or its Euro-Dollar
Lending Office) to make, maintain or fund its Euro-Dollar Loans to the Borrower
and such Bank shall so notify the Agent, the Agent shall forthwith give notice
thereof to the other Banks and the Company, whereupon until such Bank notifies
the Company and the Agent that the circumstances giving rise to such suspension
no longer exist, the obligation of such Bank to make Euro-Dollar Loans to the
Borrower, or to convert outstanding Loans into Euro-Dollar Loans, shall be
suspended. Before giving any notice to the Agent pursuant to this Section, such
Bank shall designate a different Euro-Dollar Lending Office if such designation
will avoid the need for giving such notice and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank. If such notice is given, each
Euro-Dollar Loan of such Bank then outstanding shall be converted to a Domestic
Loan either (a) on the last day of the then current Interest Period applicable
to such Euro-Dollar Loan if such Bank may lawfully continue to maintain and fund
such Loan to such day or (b) immediately if such Bank shall determine that it
may not lawfully continue to maintain and fund such Loan to such day.
SECTION 8.3. Increased Cost and Reduced Return. (a) If on or after (x)
the date hereof, in the case of any Committed Loan or any obligation to make
Committed Loans or (y) the date of the related Money Market Quote, in the case
of any Money Market Loan, the adoption of any applicable law, rule or
regulation, or any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Applicable Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall impose, modify or
deem applicable any reserve (including, without limitation, any such requirement
imposed by the Board of Governors of the Federal Reserve System with respect to
any Euro-Dollar Loan any such requirement included in an applicable Euro-Dollar
Reserve Percentage), special deposit, insurance assessment or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any Bank (or its Applicable Lending Office) or shall impose on any
Bank (or its Applicable Lending Office) or on the United States market for
certificates of deposit or the London interbank market any other condition
affecting its Fixed Rate Loans, its Note or its obligation to make Fixed Rate
Loans and the result of any of the foregoing is to increase the cost to such
Bank (or its Applicable Lending Office) of making or maintaining any Fixed Rate
Loan, or to reduce the amount of any sum received or receivable by such Bank (or
its Applicable
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Lending Office) under this Agreement or under its Note with respect thereto, by
an amount deemed by such Bank to be material, then, within 15 days after demand
by such Bank (with a copy to the Agent), the Company shall pay to such Bank such
additional amount or amounts as will compensate such Bank for such increased
cost or reduction.
(b) If any Bank shall have determined that, after the date hereof, the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change in any such law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on capital
of such Bank (or its Parent) as a consequence of such Bank's obligations
hereunder to a level below that which such Bank (or its Parent) could have
achieved but for such adoption, change, request or directive (taking into
consideration its policies with respect to capital adequacy) by an amount deemed
by such Bank to be material, then from time to time, within 15 days after demand
by such Bank (with a copy to the Agent), the Company shall pay to such Bank such
additional amount or amounts as will compensate such Bank (or its Parent) for
such reduction.
(c) Each Bank will promptly notify the Company and the Agent of any
event of which it has knowledge, occurring after the date hereof, which will
entitle such Bank to compensation pursuant to this Section and will designate a
different Applicable Lending Office if such designation will avoid the need for,
or reduce the amount of, such compensation and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank. A certificate of any Bank
claiming compensation under this Section and setting forth the additional amount
or amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, such Bank may use any reasonable
averaging and attribution methods.
SECTION 8.4. Taxes. (a) Any and all payments by the Company or the
Borrower to or for the account of any Bank or the Agent hereunder or under any
Note shall be made free and clear of and without deduction for any and all
present or future taxes, duties, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the case
of each Bank and the Agent, taxes imposed on its income, and franchise taxes
imposed on it, by the jurisdiction under the laws of which such Bank or the
Agent (as the case may be)
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is organized or any political subdivision thereof and, in the case of each Bank,
taxes imposed on its income, and franchise or similar taxes imposed on it, by
the jurisdiction of such Bank's Applicable Lending Office or any political
subdivision thereof (all such non-excluded taxes, duties, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). If the Company or the Borrower shall be required by law to deduct
any Taxes from or in respect of any sum payable hereunder or under any Note to
any Bank or the Agent, (i) the sum payable shall be increased as necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section 8.04) such Bank or the Agent (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made, (ii) such Person shall make such deductions, (iii)
such Person shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law and (iv) such
Person shall furnish to the Agent, at its address referred to in Section 10.01,
the original or a certified copy of a receipt evidencing payment thereof.
(b) In addition, the Company agrees to pay any present or future stamp
or documentary taxes and any other excise or property taxes, or charges or
similar levies which arise from any payment made hereunder or under any Note or
from the execution or delivery of, or otherwise with respect to, this Agreement
or any Note (hereinafter referred to as "Other Taxes").
(c) The Company agrees to indemnify each Bank and the Agent for the
full amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this Section 8.04) paid by such Bank or the Agent (as the case may be) and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto. This indemnification shall be made within 15 days from the date
such Bank or the Agent (as the case may be) makes demand therefor.
(d) Each Bank organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Bank listed on the signature pages hereof and on
or prior to the date on which it becomes a Bank in the case of each other Bank,
and from time to time thereafter if requested in writing by the Company (but
only so long as such Bank remains lawfully able to do so), shall provide the
Company with Internal Revenue Service form 1001 or 4224, as appropriate, or any
successor form prescribed by the Internal Revenue Service, certifying that such
Bank is entitled to benefits under an income tax treaty to which the United
States is a party which reduces the rate of withholding tax on payments of
interest or certifying that the income receivable pursuant to this Agreement is
effectively
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connected with the conduct of a trade or business in the United States. If the
form provided by a Bank at the time such Bank first becomes a party to this
Agreement indicates a United States interest withholding tax rate in excess of
zero, withholding tax at such rate shall be considered excluded from "Taxes" as
defined in Section 8.04(a) imposed by the United States.
(e) For any period with respect to which a Bank has failed to provide
the Company with the appropriate form pursuant to Section 8.04(d) (unless such
failure is due to a change in treaty, law or regulation occurring subsequent to
the date on which a form originally was required to be provided), such Bank
shall not be entitled to indemnification under Section 8.04(a) with respect to
Taxes imposed by the United States; provided, however, that should a Bank, which
is otherwise exempt from or subject to a reduced rate of withholding tax, become
subject to Taxes because of its failure to deliver a form required hereunder,
the Company shall take such steps as such Bank shall reasonably request to
assist such Bank to recover such Taxes.
(f) If the Company or the Borrower is required to pay additional
amounts to or for the account of any Bank pursuant to this Section 8.04, then
such Bank will change the jurisdiction of its Applicable Lending Office so as to
eliminate or reduce any such additional payment which may thereafter accrue if
such change, in the judgment of such Bank, is not otherwise disadvantageous to
such Bank.
SECTION 8.5. Domestic Loans Substituted for Affected Euro-Dollar
Loans. If (i) the obligation of any Bank to make Euro-Dollar Loans to the
Borrower has been suspended pursuant to Section 8.02 or (ii) any Bank has
demanded compensation under Section 8.03 or 8.04 with respect to its Euro-
Dollar Loans and the Borrower shall, by at least five Euro-Dollar Business Days'
prior notice to such Bank through the Agent, have elected that the provisions of
this Section shall apply to such Bank, then, unless and until such Bank notifies
the Company that the circumstances giving rise to such suspension or demand for
compensation no longer exist:
(a) all Loans to the Borrower which would otherwise be made by such
Bank as (or continued as or converted into) Euro-Dollar Loans shall instead be
Domestic Loans (on which interest and principal shall be payable
contemporaneously with the related Euro-Dollar Loans of the other Banks), and
(b) after each of its Euro-Dollar Loans to the Borrower has been
repaid (or converted to a Domestic Loan), all payments of principal which would
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otherwise be applied to repay such Euro-Dollar Loans shall be applied to repay
its Domestic Loans instead.
If such Bank notifies the Borrower that the circumstances giving rise to such
notice no longer apply, the principal amount of each such Domestic Loan shall be
converted into a Euro-Dollar Loan on the first day of the next succeeding
Interest Period applicable to the related Euro-Dollar Loans of the other Banks.
SECTION 8.6. Substitution of Bank. If (i) the obligation of any Bank
to make Euro-Dollar Loans has been suspended pursuant to Section 8.02, (ii) any
Bank has demanded compensation under Section 8.03 or (iii) any Bank has not
signed an amendment or waiver which must be signed by all the Banks to become
effective, and such amendment or waiver has been signed by the Super-Majority
Banks, the Company shall have the right, with the assistance of the Agent, to
seek a mutually satisfactory substitute bank or banks (which may be one or more
of the Banks) to purchase the Notes and assume the Commitment of such Bank.
ARTICLE 9
GUARANTY
SECTION 9.1. The Guaranty. The Company hereby unconditionally
guarantees the full and punctual payment (whether at stated maturity, upon
acceleration or otherwise) of the principal of and interest on each Note issued
by the Borrower pursuant to this Agreement, and the full and punctual payment of
all other amounts payable by the Borrower under this Agreement. Upon failure by
the Borrower to pay punctually any such amount, the Company shall forthwith on
demand pay the amount not so paid at the place and in the manner specified in
this Agreement.
SECTION 9.2. Guaranty Unconditional. The obligations of the Company
hereunder shall be unconditional, irrevocable and absolute and, without limiting
the generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Borrower under this
Agreement or any Note, by operation of law or otherwise;
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(ii) any modification or amendment of or supplement to this
Agreement or any Note;
(iii) any release, impairment, non-perfection or invalidity of
any direct or indirect security for any obligation of the Borrower
under this Agreement or any Note;
(iv) any change in the corporate existence, structure or
ownership of the Borrower, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting the Borrower or
its assets or any resulting release or discharge of any obligation of
the Borrower contained in this Agreement or any Note;
(v) the existence of any claim, set-off or other rights which
the Company may have at any time against the Borrower, the Agent, any
Bank or any other Person, whether in connection herewith or any
unrelated transactions, provided that nothing herein shall prevent the
assertion of any such claim by separate suit or compulsory
counterclaim;
(vi) any invalidity or unenforceability relating to or against
the Borrower for any reason of this Agreement or any Note, or any
provision of applicable law or regulation purporting to prohibit the
payment by the Borrower of the principal of or interest on any Note or
any other amount payable by it under this Agreement; or
(vii) any other act or omission to act or delay of any kind by
the Borrower, the Agent, any Bank or any other Person or any other
circumstance whatsoever which might, but for the provisions of this
paragraph, constitute a legal or equitable discharge of the Company's
obligations hereunder.
SECTION 9.3. Discharge Only upon Payment in Full; Reinstatement In
Certain Circumstances. The Company's obligations hereunder shall remain in full
force and effect until the Commitments shall have terminated and the principal
of and interest on the Notes and all other amounts payable by the Company and
the Borrower under this Agreement shall have been indefeasibly paid in full. If
at any time any payment of the principal of or interest on any Note or any other
amount payable by the Borrower under this Agreement is rescinded or must be
otherwise restored or returned upon the insolvency, bankruptcy or reorganization
of the
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Borrower or otherwise, the Company's obligations hereunder with respect to such
payment shall be reinstated at such time as though such payment had been due but
not made at such time.
SECTION 9.4. Waiver by the Company. The Company irrevocably waives
acceptance hereof, presentment, demand, protest and any notice not provided for
herein, as well as any requirement that at any time any action be taken by any
Person against the Borrower or any other Person.
SECTION 9.5. Subrogation. The Company irrevocably waives any and all
rights to which it may be entitled, by operation of law or otherwise, upon
making any payment hereunder to be subrogated to the rights of the payee against
the Borrower with respect to such payment or against any direct or indirect
security therefor, or otherwise to be reimbursed, indemnified or exonerated by
or for the account of the Borrower in respect thereof.
SECTION 9.6. Stay of Acceleration. In the event that acceleration of
the time for payment of any amount payable by the Borrower under this Agreement
or its Notes is stayed upon insolvency, bankruptcy or reorganization of the
Borrower, all such amounts otherwise subject to acceleration under the terms of
this Agreement shall nonetheless be payable by the Company hereunder forthwith
on demand by the Agent made at the request of the Required Banks.
SECTION 9.7. Release upon Separation. So long as, immediately before
and after the consummation of the Separation, no Default shall have occurred and
be continuing, simultaneously with such consummation, USW-C, Inc. (to be renamed
U S WEST, Inc.) shall succeed to all of the rights, duties and obligations of U
S WEST, Inc. (to be renamed MediaOne Group, Inc.) ("Old U S WEST") hereunder,
whereupon Old U S WEST shall have no further rights, duties and obligations
hereunder, in each case automatically, without any further action on the part of
any party hereto.
ARTICLE 10
MISCELLANEOUS
SECTION 10.1. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including bank wire, telex,
facsimile transmission or similar writing) and shall be given to such party: (x)
in the case of the Company, the Borrower or the Agent, at its address or
facsimile number set forth on the signature pages hereof, (y) in the case of any
Bank, at its address or
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facsimile number set forth in its Administrative Questionnaire or (z) in the
case of any party, such other address or facsimile number as such party may
hereafter specify for the purpose by notice to the Agent and the Company. Each
such notice, request or other communication shall be effective (i) if given by
mail, 72 hours after such communication is deposited in the mails with first
class postage prepaid, addressed as aforesaid, (ii) if given by facsimile
transmission, when such facsimile is transmitted to the facsimile number
specified pursuant to this Section 10.01 and telephonic confirmation of receipt
thereof is received, or (iii) if given by any other means, when delivered at the
address specified in this Section; provided that notices to the Agent under
Article 2 or Article 8 shall not be effective until received.
SECTION 10.2. No Waivers. No failure or delay by the Agent or any Bank
in exercising any right, power or privilege hereunder or under any Note shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
SECTION 10.3. Expenses; Indemnification. (a) The Company shall pay (i)
all out-of-pocket expenses of the Agent, including fees and disbursements of
special counsel for the Agent, in connection with the preparation and
administration of this Agreement, any waiver or consent hereunder or any
amendment hereof or any Default or alleged Default hereunder and (ii) if an
Event of Default occurs, all out-of-pocket expenses incurred by the Agent and
each Bank, including fees and disbursements of counsel, in connection with such
Event of Default and collection, bankruptcy, insolvency and other enforcement
proceedings resulting therefrom.
(b) The Company agrees to indemnify the Agent and each Bank, their
respective affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "Indemnitee") and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and
expenses of any kind, including, without limitation, the reasonable fees and
disbursements of counsel, which may be incurred by such Indemnitee in connection
with any investigative, administrative or judicial proceeding (whether or not
such Indemnitee shall be designated a party thereto) brought or threatened
relating to or arising out of this Agreement or any actual or proposed use of
proceeds of Loans hereunder; provided that (i) no Indemnitee shall have the
right to be indemnified hereunder for such Indemnitee's own gross negligence or
willful misconduct as determined by a court of competent jurisdiction and (ii)
the Company shall not be
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liable for any settlement entered into by an Indemnitee without its consent
(which shall not be unreasonably withheld).
(c) Each Indemnitee agrees to give the Company prompt written notice
after it receives any notice of the commencement of any action, suit or
proceeding for which such Indemnitee may wish to claim indemnification pursuant
to subsection (b). The Company shall have the right, exercisable by giving
written notice within fifteen Domestic Business Days after the receipt of notice
from such Indemnitee of such commencement, to assume, at the Company's expense,
the defense of any such action, suit or proceeding; provided, that such
Indemnitee shall have the right to employ separate counsel in any such action,
suit or proceeding and to participate in the defense thereof, but the fees and
expenses of such separate counsel shall be at such Indemnitee's expense unless
(1) the Company shall have agreed to pay such fees and expenses; (2) the Company
shall have failed to assume the defense of such action, suit or proceeding or
shall have failed to employ counsel reasonably satisfactory to such Indemnitee
in any such action, suit or proceeding; or (3) such Indemnitee shall have been
advised by independent counsel in writing (with a copy to the Company) that
there may be one or more defenses available to such Indemnitee which are in
conflict with those available to the Company (in which case, if such Indemnitee
notifies the Company in writing that it elects to employ separate counsel at the
Company's expense, the Company shall be obligated to assume the expense, it
being understood, however, that the Company shall not be liable for the fees or
expenses of more than one separate firm of attorneys, which firm shall be
designated in writing by such Indemnitee).
SECTION 10.4. Sharing of Set-offs. Each Bank agrees that if it shall,
by exercising any right of set-off or counterclaim or otherwise, receive payment
of a proportion of the aggregate amount of principal and interest due with
respect to any Note held by it which is greater than the proportion received by
any other Bank in respect of the aggregate amount of principal and interest due
with respect to any Note held by such other Bank, the Bank receiving such
proportionately greater payment shall purchase such participations in the Notes
held by the other Banks, and such other adjustments shall be made, as may be
required so that all such payments of principal and interest with respect to the
Notes held by the Banks shall be shared by the Banks pro rata; provided that
nothing in this Section shall impair the right of any Bank to exercise any right
of set-off or counterclaim it may have and to apply the amount subject to such
exercise to the payment of indebtedness of the Borrower other than its
indebtedness hereunder. The Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that any holder of a participation in a
Note, whether or not acquired pursuant to the foregoing arrangements, may
exercise rights of set-off or counterclaim and
54
<PAGE>
other rights with respect to such participation as fully as if such holder of a
participation were a direct creditor of the Borrower in the amount of such
participation.
SECTION 10.5. Amendments and Waivers. Any provision of this Agreement
or the Notes may be amended or waived if, but only if, such amendment or waiver
is in writing and is signed by the Company, the Borrower and the Required Banks
(and, if the rights or duties of the Agent are affected thereby, by the Agent);
provided that no such amendment or waiver shall, unless signed by all the Banks,
(i) increase or decrease the Commitment of any Bank (except for a ratable
decrease in the Commitments of all Banks) or subject any Bank to any additional
obligation, (ii) reduce the principal of or rate of interest on any Loan or any
fees hereunder, except as provided below, (iii) postpone the date fixed for any
payment of principal of or interest on any Loan or any fees hereunder or for any
reduction or termination of any Commitment, (iv) amend or waive the provisions
of Article 9 or (v) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Notes, or the number of Banks, which shall be
required for the Banks or any of them to take any action under this Section or
any other provision of this Agreement.
SECTION 10.6. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that neither the Company nor
the Borrower may assign or otherwise transfer any of its rights under this
Agreement without the prior written consent of all Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Commitment or
any or all of its Loans, with (and subject to) the written consent of the
Company and the Agent, which consents shall not be unreasonably withheld;
provided that if a Participant is an affiliate of such grantor Bank or is
another Bank, no such consent shall be required. In the event of any such grant
by a Bank of a participating interest to a Participant, such Bank shall remain
responsible for the performance of its obligations hereunder, and the Company,
the Borrower and the Agent shall continue to deal solely and directly with such
Bank in connection with such Bank's rights and obligations under this Agreement.
Any agreement pursuant to which any Bank may grant such a participating interest
shall provide that such Bank shall retain the sole right and responsibility to
enforce the obligations of the Company and the Borrower hereunder including,
without limitation, the right to approve any amendment, modification or waiver
of any provision of this Agreement; provided that such participation agreement
may provide that such Bank will not agree to any modification, amendment or
waiver of this Agreement
55
<PAGE>
described in clause (i), (ii) or (iii) of Section 10.05 without the consent of
the Participant. The Borrower agrees that each Participant shall, to the extent
provided in its participation agreement, be entitled to the benefits of Article
8 with respect to its participating interest. An assignment or other transfer
which is not permitted by subsection (c) or (d) below but which is consented to
in accordance with this subsection (b) shall be given effect for purposes of
this Agreement only to the extent of a participating interest granted in
accordance with this subsection (b).
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part of all, of its
rights and obligations under this Agreement and the Notes, and such Assignee
shall assume such rights and obligations, pursuant to an Assignment and
Assumption Agreement in substantially the form of Exhibit G hereto executed by
such Assignee and such transferor Bank, with (and subject to) the subscribed
consent of the Company and the Agent, which consents shall not be unreasonably
withheld; provided that (i) if an Assignee is an affiliate of such transferor
Bank or is another Bank, no such consent shall be required; (ii) such assignment
may, but need not, include rights of the transferor Bank in respect of
outstanding Money Market Loans; and (iii) any assignment shall not be less than
$15,000,000, or if less, shall constitute an assignment of all of such Bank's
rights and obligations under this Agreement and the Notes except for any rights
retained in accordance with clause (ii) of this proviso. Upon execution and
delivery of such instrument and payment by such Assignee to such transferor Bank
of an amount equal to the purchase price agreed between such transferor Bank and
such Assignee, such Assignee shall be a Bank party to this Agreement and shall
have all the rights and obligations of a Bank with a Commitment as set forth in
such instrument of assumption, and the transferor Bank shall be released from
its obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Upon the consummation of any assignment
pursuant to this subsection (c), the transferor Bank, the Agent and the Borrower
shall make appropriate arrangements so that, if required, new Notes are issued
to the Assignee. In connection with any such assignment, the transferor Bank
shall pay to the Agent an administrative fee for processing such assignment in
the amount of $2,500. If the Assignee is not incorporated under the laws of the
United States of America or a state thereof, it shall deliver to the Company and
the Agent certification as to exemption from deduction or withholding of any
United States federal income taxes in accordance with Section 8.04.
(d) Any Bank may at any time assign all or any portion of its rights
under this Agreement and its Notes to a Federal Reserve Bank. No such assignment
shall release the transferor Bank from its obligations hereunder.
56
<PAGE>
(e) No Assignee, Participant or other transferee of any Bank's rights
shall be entitled to receive any greater payment under Section 8.03 or 8.04 than
such Bank would have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Company's prior written
consent or by reason of the provisions of Section 8.02, 8.03 or 8.04 requiring
such Bank to designate a different Applicable Lending Office under certain
circumstances or at a time when the circumstances giving rise to such greater
payment did not exist.
SECTION 10.7. Termination of Existing Credit Agreements. The Company
and each of the Banks that is also a "Bank" party to the Existing Credit
Agreements agrees that the "Commitments" as defined in the Existing Credit
Agreements shall be terminated in their entirety on the Effective Date. Each of
such Banks waives (a) any requirement of notice of such termination pursuant to
Section 2.09 of the Existing Credit Agreements and (b) any claim to any facility
fees or other fees under the Existing Credit Agreements for any day on or after
the Effective Date. Each of the Company and the Borrower (i) represents and
warrants that (x) after giving effect to the preceding sentences of this Section
10.07, the commitments under the Existing Credit Agreements will be terminated
effective not later than the Effective Date, (y) no loans are, as of the date
hereof, or will be, as of the Effective Date, outstanding under the Existing
Credit Agreements and (ii) covenants that all accrued and unpaid facility fees
and any other amounts due and payable under the Existing Credit Agreements shall
have been paid on or prior to the Effective Date.
SECTION 10.8. Governing Law; Submission to Jurisdiction. This
Agreement and each Note shall be governed by and construed in accordance with
the laws of the State of New York. Each of the Company and the Borrower hereby
submits to the nonexclusive jurisdiction of the United States District Court for
the Southern District of New York and of any New York State court sitting in New
York City for purposes of all legal proceedings arising out of or relating to
this Agreement or the transactions contemplated hereby, and irrevocably waives,
to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such proceeding brought in such
a court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum.
SECTION 10.9. Counterparts; Integration; Effectiveness. This Agreement
may be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement constitutes the entire agreement and understanding
among the parties hereto and supersedes any and all prior agreements and
57
<PAGE>
understandings, oral or written, relating to the subject matter hereof. This
Agreement shall become effective upon receipt by the Agent of counterparts
hereof signed by each of the Company, the Borrower, the Banks and the Agent (or,
in the case of any party as to which an executed counterpart shall not have been
received, receipt by the Agent in form satisfactory to it of telegraphic, telex
or other written confirmation from such party of execution of a counterpart
hereof by such party).
SECTION 10.10. WAIVER OF JURY TRIAL. EACH OF THE COMPANY, THE BORROWER,
THE AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 10.11. Confidentiality. Each of the Agent and the Banks agrees
to use its reasonable best efforts to keep confidential any information
delivered or made available by the Company or the Borrower to it which is
clearly stated by the Company or the Borrower to be confidential; provided that
nothing herein shall prevent the Agent or any Bank from disclosing such
information (i) to the Agent or any other Bank in connection with the
transactions contemplated hereby, (ii) to its officers, directors, employees,
agents, attorneys and accountants who have a need to know such information in
accordance with customary banking practices and who receive such information
having been made aware of the restrictions set forth in this Section, (iii) upon
the order of any court or administrative agency, (iv) upon the request or demand
of any regulatory agency or authority having jurisdiction over such party, (v)
which has been publicly disclosed, (vi) which has been obtained from any Person
other than the Company and its Subsidiaries, provided that such Person is not
(x) known to it to be bound by a confidentiality agreement with the Company or
its Subsidiaries or (y) known to it to be otherwise prohibited from transmitting
the information to it by a contractual, legal or fiduciary obligation, (vii) in
connection with the exercise of any remedy hereunder or under the Notes or
(viii) to any actual or proposed participant or assignee of all or any of its
rights hereunder which has agreed in writing to be bound by the provisions of
this Section.
58
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
U S WEST CAPITAL FUNDING, INC.
By /s/ Sean Foley
----------------------------------
Title: Vice President & Treasurer
7800 East Orchard Road
Englewood, Colorado 80111
Facsimile number: 303-793-6307
Telephone number: 303-793-6250
Attention: Sean Foley
U S WEST, INC.
By /s/ Rahn K. Porter
----------------------------------
Title: Assistant Treasurer
7800 East Orchard Road
Englewood, Colorado 80111
Facsimile number: 303-793-6307
Telephone number: 303-793-6250
Attention: Rahn Porter
USW-C, INC.
By /s/ Allan R. Spies
----------------------------------
Title: Chief Financial Officer
7800 East Orchard Road
Englewood, Colorado 80111
Facsimile number: 303-793-6307
Telephone number: 303-793-6250
Attention: Allan R. Spies
59
<PAGE>
Commitments
$194,444,444 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ John M. Mikolay
----------------------------------
Title: Vice President
$194,444,444 BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /s/ R. Vernon Howard
----------------------------------
Title: Managing Director
$194,444,444 THE CHASE MANHATTAN BANK
By /s/ Ann B. Kerns
----------------------------------
Title: Vice President
$194,444,444 MELLON BANK, N.A.
By /s/ David McGowan
----------------------------------
Title: Vice President
60
<PAGE>
$186,666,667 ABN AMRO BANK N.V.
By /s/ Thomas M. Toerpe
----------------------------------
Title: Vice President
By /s/ Roxana Sopala
----------------------------------
Title: Vice President
$186,666,667 THE BANK OF NEW YORK
By /s/ James W. Whitaker
----------------------------------
Title: Vice President
$186,666,667 BANK ONE, COLORADO, N.A.
By /s/ David L. Ericson
----------------------------------
Title: Vice President
$186,666,667 CITIBANK, N.A.
By /s/ Prakash M. Chonkar
----------------------------------
Title: Attorney In-Fact
$186,666,667 KEYBANK NATIONAL ASSOCIATION
By /s/ Mary K. Young
----------------------------------
Title: Commercial Banking Officer
61
<PAGE>
$186,666,667 NATIONSBANK, N.A.
By /s/ Whitney Busse
----------------------------------
Title: Vice President
$155,555,556 COMMERZBANK AG LOS ANGELES
BRANCH
By /s/ Christian Jagenberg
----------------------------------
Title: Senior Vice President and
Manager
By /s/ John Korthius
----------------------------------
Title: Vice President
$155,555,556 FLEET NATIONAL BANK
By /s/ Sue Anderson
----------------------------------
Title: Vice President
$112,777,778 CANADIAN IMPERIAL BANK OF
COMMERCE
By /s/ Matthew S. Hannon
----------------------------------
Title: Executive Director, CIBC
Oppenheimer acting as Agent
62
<PAGE>
$105,000,000 BANKERS TRUST COMPANY
By /s/ Gregory Shefrin
----------------------------------
Title: Vice President
$105,000,000 THE FIRST NATIONAL BANK OF
CHICAGO
By /s/ Michael J. Harrington
----------------------------------
Title: Corporate Banking Officer
$105,000,000 KREDIETBANK N.V.
By /s/ Robert Snauffer
----------------------------------
Title: Vice President
By /s/ Robert M. Surdam, Jr.
----------------------------------
Title: Vice President
$105,000,000 THE ROYAL BANK OF SCOTLAND PLC
By /s/ K.C. Barclay
----------------------------------
Title: Manager
63
<PAGE>
$105,000,000 WELLS FARGO BANK, N.A.
By /s/ Donald A. Hartmann
----------------------------------
Title: Senior Vice President
By /s/ Judy A. Vodhanel
----------------------------------
Title: Vice President
$58,333,333 BANK OF HAWAII
By /s/ Elizabeth O. MacLean
----------------------------------
Title: Vice President
$58,333,333 BARCLAYS BANK PLC
By /s/ Les Bek
----------------------------------
Title: Director
$58,333,333 BAYERISCHE LANDESBANK GIROZENTRALE
CAYMAN ISLANDS BRANCH
By /s/ Peter Obermann
----------------------------------
Title: Senior Vice President
Manager Lending Division
By /s/ Sean O'Sullivan
----------------------------------
Title: Vice President
64
<PAGE>
$58,333,333 BAYERISCHE HYPOTHEKEN-UND
WECHSEL-BANK AKTIENGESELLSCHAFT
By /s/ Yoram Dankner
----------------------------------
Title: Senior Vice President
By /s/ Christian Walter
----------------------------------
Title: Vice President
$58,333,333 LEHMAN COMMERCIAL PAPER INC.
By /s/ Michele Swenson
----------------------------------
Title: Authorized Signatory
$58,333,333 MERRILL LYNCH CAPITAL
CORPORATION
By /s/ Robert Stevens
----------------------------------
Title: Vice President
$58,333,333 NORWEST BANK COLORADO, NATIONAL
ASSOCIATION
By /s/ Carol A. Ward
----------------------------------
Title: Vice President
$58,333,333 THE TOKAI BANK, LIMITED
By /s/ Masahiko Saito
----------------------------------
Title: Senior Vice President and
Assistant General Manager
65
<PAGE>
$58,333,333 U.S. BANK NATIONAL ASSOCIATION
By /s/ Scott E. Page
----------------------------------
Title: Vice President
$38,888,889 BANQUE NATIONALE DE PARIS
By /s/ C. Bettles
----------------------------------
Title: Senior Vice President &
Manager
By /s/ Stephane Ronze
----------------------------------
Title: Assistant Vice President
$38,888,889 ROYAL BANK OF CANADA
By /s/ John Page
----------------------------------
Title: Senior Manager
$38,888,889 ISTITUTO BANCARIO SAN PAOLO DI
TORINO S.P.A.
By /s/ Robert S. Wurster
----------------------------------
Title: First Vice President
By /s/ Jim Girolamo
----------------------------------
Title: Vice President
66
<PAGE>
$11,666,667 THE PROVIDENT BANK.
By /s/ Tom B. Scherpenberg
----------------------------------
Title: Vice President
Total Commitments:
$3,500,000,000
==============
67
<PAGE>
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as
Administrative Agent
By /s/ John M. Mikolay
----------------------------------
Title: Vice President
500 Stanton Christiana Road
Newark, Delaware 19713
Attention: Mark Connor
Facsimile number: 302-634-1092
Telephone number: 302-634-4218
68
<PAGE>
PRICING SCHEDULE
The "Euro-Dollar Margin" and "Facility Fee Rate" for any day are the
respective percentages set forth below in the applicable row under the column
corresponding to the Status that exists on such day:
<TABLE>
<CAPTION>
===================================================================================================================
Level Level Level Level Level Level
Status I II III IV V VI
===================================================================================================================
Euro-Dollar
<S> <C> <C> <C> <C> <C> <C>
Margin: .1475% .155% .175% .215% .245% .300%
Usage less than 50%
Usage greater than or
equal to 50% .1975% .205% .225% .265% .295% .350%
Facility Fee .040% .045% .050% .060% .080% .100%
Rate
===================================================================================================================
</TABLE>
For purposes of this Schedule, the following terms have the following
meanings:
"Level I Status" exists at any date after the Separation if, at such
date, the Borrower's outstanding senior unsecured long-term debt securities are
rated A+ or higher by S&P or A1 or higher by Moody's.
"Level II Status" exists at any date after the Separation if, at such
date, (i) the Borrower's outstanding senior unsecured long-term debt securities
are rated A or higher by S&P or A2 or higher by Moody's and (ii) Level I Status
does not exist.
"Level III Status" exists (x) at any date prior to the Separation, and
(y) at any date after the Separation if, at such date, (i) the Borrower's
outstanding senior unsecured long-term debt securities are rated A- or higher by
S&P or A3 or higher by Moody's and (ii) neither Level I Status nor Level II
Status exists.
"Level IV Status" exists at any date after the Separation if, at such
date, (i) the Borrower's outstanding senior unsecured long-term debt securities
are rated BBB+ or higher by S&P or Baa1 or higher by Moody's and (ii) none of
Level I Status, Level II Status or Level III Status exists.
<PAGE>
"Level V Status" exists at any date after the Separation if, at such
date, (i) the Borrower's outstanding senior unsecured long-term debt securities
are rated BBB or higher by S&P or Baa2 or higher by Moody's and (ii) none of
Level I Status, Level II Status, Level III Status or Level IV Status exists.
"Level VI Status" exists at any date after the Separation if, at such
date, none of Level I Status, Level II Status, Level III Status, Level IV Status
or Level V Status exists.
"Moody's" means Moody's Investors Service, Inc., a Delaware
corporation, and its successors or, if such corporation shall be dissolved or
liquidated or shall no longer perform the functions of a securities rating
agency, "Moody's" shall be deemed to refer to any other nationally recognized
securities rating agency designated by the Required Banks, with the approval of
the Company, by notice to the Agent and the Company.
"S&P" means Standard & Poor's Ratings Group, a New York corporation,
and its successors or, if such corporation shall be dissolved or liquidated or
shall no longer perform the functions of a securities rating agency, "S&P" shall
be deemed to refer to any other nationally recognized securities rating agency
designated by the Required Banks, with the approval of the Company, by notice to
the Agent and the Company.
"Status" refers to the determination of which of Level I Status, Level
II Status, Level III Status, Level IV Status, Level V Status or Level VI Status
exists at any date.
"Usage" means at any date the percentage equivalent of a fraction (i)
the numerator of which is the sum of the aggregate outstanding principal amount
of the Loans at such date, after giving effect to any borrowing or payment on
such date, and (ii) the denominator of which is the aggregate amount of the
Commitments at such date, after giving effect to any reduction of the
Commitments on such date. For purposes of this Schedule, if for any reason any
Loans remain outstanding after termination of the Commitments, the Usage for
each date on or after the date of such termination shall be deemed to be greater
than 50%.
The credit ratings to be utilized for purposes of this Schedule are those
assigned to the senior unsecured long-term debt securities of the Borrower
guaranteed by the Company, and any rating assigned to any other debt security of
the Borrower shall be disregarded. The rating in effect at any date is that in
effect at the close of business on such date.
2
<PAGE>
SCHEDULE 4.07
Environmental Matters
NONE.
<PAGE>
EXHIBIT A
NOTE
New York, New York
________, 19__
For value received, U S WEST CAPITAL FUNDING, INC., a Colorado
corporation (the "Borrower"), promises to pay to the order of (the "Bank"), for
the account of its Applicable Lending Office, the unpaid principal amount of
each Loan made by the Bank to the Borrower pursuant to the Credit Agreement
referred to below on the maturity date therefor specified in the Credit
Agreement. The Borrower promises to pay interest on the unpaid principal amount
of each such Loan on the dates and at the rate or rates provided for in the
Credit Agreement. All such payments of principal and interest shall be made in
lawful money of the United States in Federal or other immediately available
funds at the office of Morgan Guaranty Trust Company of New York, 60 Wall
Street, New York, New York.
All Loans made by the Bank, the respective types and maturities thereof
and all repayments of the principal thereof shall be recorded by the Bank and,
if the Bank so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with respect to each
such Loan then outstanding may be endorsed by the Bank on the schedule attached
hereto, or on a continuation of such schedule attached to and made a part
hereof; provided that the inaccuracy of, or the failure of the Bank to make, any
such recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Credit Agreement.
This note is one of the Notes referred to in the 364-Day Credit
Agreement dated as of May 8, 1998 among U S WEST Capital Funding, Inc., U S
WEST, Inc., USW-C, Inc., the banks listed on the signature pages thereof, the
other agents named therein and Morgan Guaranty Trust Company of New York, as
Administrative Agent (as the same may be amended from time to time, the "Credit
Agreement"). Terms defined in the Credit Agreement are used herein with the same
meanings.
Reference is made to the Credit Agreement for provisions for the
prepayment hereof and the acceleration of the maturity hereof.
<PAGE>
U S WEST, Inc., has, pursuant to the provisions of the Credit
Agreement, unconditionally guaranteed the payment in full of the principal of
and interest on this Note.
U S WEST CAPITAL FUNDING, INC.
By
-------------------------------
Title:
2
<PAGE>
LOANS AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Date Amount of Type of Loan Amount of Maturity Date Notation Made
Loan Principal By
Repaid
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
EXHIBIT B
Form of Money Market Quote Request
[Date]
To: Morgan Guaranty Trust Company of New York
(the "Agent")
From: U S WEST Capital Funding, Inc.
Re: 364-Day Credit Agreement (the "Credit Agreement") dated as of May 8,
1998 among U S WEST Capital Funding, Inc., U S WEST, Inc., USW-C, Inc.,
the Banks listed on the signature pages thereof, the other agents named
therein and the Agent
We hereby give notice pursuant to Section 2.03 of the Credit Agreement
that we request Money Market Quotes for the following proposed Money Market
Borrowing(s):
Date of Borrowing: __________________
Principal Amount/1/ Interest Period/2/
$
Such Money Market Quotes should offer a Money Market [Margin] [Absolute
Rate]. [The applicable base rate is the London Interbank Offered Rate.] Terms
used herein have the meanings assigned to them in the Credit Agreement.
- --------------
/1/ Amount must be $25,000,000 or a larger multiple of $5,000,000.
/2/ Not less than one month (LIBOR Auction) or not less than 7 days
(Absolute Rate Auction), subject to the provisions of the definition of Interest
Period.
<PAGE>
Terms used herein have the meanings assigned to them in the Credit
Agreement.
U S WEST CAPITAL FUNDING, INC.
By________________________
Title:
<PAGE>
EXHIBIT C
Form of Invitation for Money Market Quotes
To: [Name of Bank]
Re: Invitation for Money Market Quotes to U S WEST Capital
Funding, Inc. (the "Borrower")
Pursuant to Section 2.03 of the 364-Day Credit Agreement dated as of
May 8, 1998 among U S WEST Capital Funding, Inc., U S WEST, Inc., USW-C, Inc.,
the Banks parties thereto, the other agents named therein and the undersigned,
as Administrative Agent, we are pleased on behalf of the Borrower to invite you
to submit Money Market Quotes to the Borrower for the following proposed Money
Market Borrowing(s):
Date of Borrowing: __________________
Principal Amount Interest Period
- ---------------- ---------------
$
Such Money Market Quotes should offer a Money Market [Margin] [Absolute
Rate]. [The applicable base rate is the London Interbank Offered Rate.] Please
respond to this invitation by no later than [10:30 A.M.] [9:15 A.M.] (New York
City time) on [date].
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Administrative Agent
By______________________________
Authorized Officer
<PAGE>
EXHIBIT D
Form of Money Market Quote
To: Morgan Guaranty Trust Company of New York,
as Administrative Agent (the "Agent")
Re: Money Market Quote to
U S WEST Capital Funding, Inc. (the "Borrower")
In response to your invitation on behalf of the Borrower dated
_____________, 19__, we hereby make the following Money Market Quote on the
following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank: __________________________
3. Date of Borrowing: ____________________*
4. We hereby offer to make Money Market Loan(s) in the following principal
amounts, for the following Interest Periods and at the following rates:
Principal Interest Money Market
Amount** Period*** [Margin****] [Absolute Rate*****]
$
$
[Provided, that the aggregate principal amount of Money Market Loans
for which the above offers may be accepted shall not exceed
$____________.]**
- ----------
* As specified in the related Invitation.
(notes continued on following page)
<PAGE>
We understand and agree that the offer(s) set forth above, subject to
the satisfaction of the applicable conditions set forth in the 364-Day Credit
Agreement dated as of May 8, 1998 among U S WEST Capital Funding, Inc., U S
WEST, Inc., USW-C, Inc., the Banks listed on the signature pages thereof, the
other agents named therein and yourselves, as Agent, irrevocably obligates us to
make the Money Market Loan(s) for which any offer(s) are accepted, in whole or
in part.
Very truly yours,
[NAME OF BANK]
Dated:_______________ By:__________________________
Authorized Officer
- ----------
** Principal amount bid for each Interest Period may not exceed principal amount
requested. Specify aggregate limitation if the sum of the individual offers
exceeds the amount the Bank is willing to lend. Bids must be made for $5,000,000
or a larger multiple of $1,000,000.
*** Not less than one month or not less than
7 days, as specified in the related Invitation. No more than five bids are
permitted for each Interest Period.
**** Margin over or under the London
Interbank Offered Rate determined for the applicable Interest Period. Specify
percentage (to the nearest 1/10,000 of 1%) and specify whether "PLUS" or
"MINUS".
***** Specify rate of interest per annum (to the nearest 1/10,000th of
1%).
<PAGE>
EXHIBIT E
OPINION OF
COUNSEL FOR THE COMPANY AND THE BORROWER
To the Banks and the Administrative
Agent Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Administrative Agent
60 Wall Street
New York, New York 10260
Gentlemen and Ladies:
I have acted as counsel for U S WEST, Inc., USW-C, Inc. and U S WEST
Capital Funding, Inc., in connection with the 364-Day Credit Agreement (the
"Credit Agreement") dated as of May 8, 1998, among them, the banks listed on the
signature pages thereof, the other agents named therein and Morgan Guaranty
Trust Company of New York, as Administrative Agent. Terms defined in the Credit
Agreement are used herein as therein defined. This opinion is being rendered to
you at the instruction of the client pursuant to Section 3.01(b) of the Credit
Agreement.
I am familiar with the proceedings taken by the Company, USW-C, Inc.
and the Borrower in connection with the authorization, execution and delivery of
the Credit Agreement and the Notes, and I have examined such documents,
certificates, and such other matters of fact and questions of law as I have
deemed relevant under the circumstances to express an informed opinion. Upon the
basis of the foregoing, I am of the opinion that:
1. The Company and USW-C, Inc. are each corporations validly existing
and in good standing under the laws of the State of Delaware, and each has all
corporate powers and all governmental licenses, authorizations, qualifications,
consents and approvals required to carry on its business as now conducted,
except where the absence of any such license, authorization, qualification,
consent or approval would not have a material adverse effect on the consolidated
financial position or consolidated results of operations of the Company and its
Consolidated Subsidiaries considered as one enterprise.
<PAGE>
2. The execution, delivery and performance by the Company, USW-C, Inc.
and the Borrower of the Credit Agreement and by the Borrower of the Notes are
within such Person's corporate powers, have been duly authorized by all
necessary corporate action, and require no action by or in respect of, or filing
with, any governmental body, agency or official.
3. The execution, delivery and performance by the Company, USW-C, Inc.
and the Borrower of the Credit Agreement and by the Borrower of the Notes will
not (i) result in a breach or violation of, conflict with, or constitute a
default under, the articles of incorporation or bylaws of such Person or any
material law or regulation or any material order, judgment, agreement or
instrument to which such Person is a party or by which such Person is bound, or
(ii) result in the creation or imposition of any Lien on any asset of such
Person.
4. The Credit Agreement constitutes a valid and binding agreement of
the Company USW-C, Inc. and the Borrower and the Notes constitute valid and
binding obligations of the Borrower, in each case enforceable in accordance with
its terms except as the same may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and by general principles of equity.
5. To my knowledge, and except as disclosed in the Company's 1997 Form
10-K (as amended by Form 10-K/A) as filed with the Securities and Exchange
Commission, there is no action, suit or proceeding pending against, or to the
best of my knowledge threatened against or affecting the Company or any of its
Subsidiaries before any court or arbitrator or any governmental body, agency or
official, in which there is a reasonable possibility of an adverse decision
which could materially adversely affect the business, consolidated financial
position or consolidated results of operations of the Company and its
Consolidated Subsidiaries, considered as a whole, or which in any manner draws
into question the validity of the Credit Agreement or the Notes.
6. The Borrower and each of the Company's other corporate Significant
Subsidiaries are corporations validly existing and in good standing under the
laws of their jurisdictions of incorporation, and have all corporate powers and
all governmental licenses, authorizations, qualifications, consents and
approvals required to carry on its business as now conducted, except where the
absence of any such license, authorization, qualification, consent or approval
would not have a material adverse effect on the consolidated financial position
or consolidated results of operations of the Company and its Consolidated
Subsidiaries considered as one enterprise.
<PAGE>
For purposes of my opinion set forth in numbered paragraph 4 above, I
have assumed that the laws of the State of New York, which are stated to govern
the Credit Agreement and the Notes, are the same as the laws of the State of
Colorado.
In rendering the opinions set forth herein, I have assumed that the
Credit Agreement and the Notes will conform to the specimens thereof examined by
me, that the signatures on all documents examined by me were genuine, and the
authenticity of all documents submitted to me as originals or as copies of
originals, assumptions which I have not independently verified.
This opinion is furnished by me as counsel for the Company and the
Borrower and is solely for your benefit and the benefit of any Assignee under
the Credit Agreement. Without my prior written consent, this opinion may not be
relied upon by you or any Assignee in any other context or by any other person.
This opinion may not be quoted, in whole or in part, or copies thereof
furnished, to any other person without my prior written consent, except that you
may furnish copies hereof (a) to your auditors and attorneys, (b) to any state
or federal authority having regulatory jurisdiction over you or the Company or
the Borrower, (c) pursuant to order or legal process of any court or
governmental agency, (d) in connection with any legal action to which you are a
party arising out of the transactions contemplated by the Credit Agreement, and
(e) to any Participant or proposed Participant in the Commitment of any Bank.
This opinion is limited to the present laws of the State of Colorado
and the General Corporation Law of the State of Delaware, to present judicial
interpretations thereof, and to the facts as they presently exist, and I assume
no responsibility as to the applicability or effect of the laws of any other
jurisdiction. In rendering this opinion, I assume no obligation to revise or
supplement this opinion should the present laws of the State of Colorado or the
General Corporation Law of the State of Delaware be changed by legislative
action, judicial decision, or otherwise.
Very truly yours,
Thomas O. McGimpsey
3
<PAGE>
EXHIBIT F
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE ADMINISTRATIVE AGENT
To the Banks and the Administrative Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Administrative Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
We have participated in the preparation of the 364-Day Credit Agreement
(the "Credit Agreement") dated as of May 8, 1998 among U S WEST Capital Funding,
Inc., U S WEST, Inc., USW-C, Inc., the banks listed on the signature pages
thereof (the "Banks"), the other agents named therein and Morgan Guaranty Trust
Company of New York, as Administrative Agent (the "Agent"), and have acted as
special counsel for the Agent for the purpose of rendering this opinion pursuant
to Section 3.01(c) of the Credit Agreement. Terms defined in the Credit
Agreement are used herein as therein defined.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials and other instruments and have conducted such other
investigations of fact and law as we have deemed necessary or advisable for
purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that, assuming
that the execution, delivery and performance by the Company and the Borrower of
the Credit Agreement and by the Borrower of the Notes are within such Person's
corporate powers and have been duly authorized by all necessary corporate
action, the Credit Agreement constitutes a valid and binding agreement of the
Company and the Borrower and the Notes constitute valid and binding obligations
of the Borrower.
<PAGE>
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York. In giving the foregoing
opinion, we express no opinion as to the effect (if any) of any law of any
jurisdiction (except the State of New York) in which any Bank is located which
limits the rate of interest that such Bank may charge or collect.
This opinion is rendered solely to you in connection with the above
matter. This opinion may not be relied upon by you for any other purpose or
relied upon by or furnished to any other person without our prior written
consent.
Very truly yours,
2
<PAGE>
EXHIBIT G
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of __________, __ 199_ among [ASSIGNOR] (the
"Assignor"), [ASSIGNEE] (the "Assignee"), U S WEST, Inc. (the "Company") and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent (the
"Agent").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the "Agreement")
relates to the 364-Day Credit Agreement dated as of May 8, 1998 among the
Company, USW-C, Inc., the Borrower named therein, the Assignor and the other
Banks party thereto, as Banks, the other agents named therein and the Agent (the
"Credit Agreement");
WHEREAS, as provided under the Credit Agreement, the Assignor has a
Commitment to make Loans in an aggregate principal amount at any time
outstanding not to exceed $__________;
WHEREAS, Committed Loans made by the Assignor under the Credit
Agreement in the aggregate principal amount of $__________ are outstanding at
the date hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee all of the
rights of the Assignor under the Credit Agreement in respect of a portion of its
Commitment thereunder in an amount equal to $__________ (the "Assigned Amount"),
together with a corresponding portion of its outstanding Committed Loans, and
the Assignee proposes to accept assignment of such rights and assume the
corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not otherwise defined
herein shall have the respective meanings set forth in the Credit Agreement.
<PAGE>
SECTION 2. Assignment. The Assignor hereby assigns and sells to the
Assignee all of the rights of the Assignor under the Credit Agreement to the
extent of the Assigned Amount, and the Assignee hereby accepts such assignment
from the Assignor and assumes all of the obligations of the Assignor under the
Credit Agreement to the extent of the Assigned Amount, including the purchase
from the Assignor of the corresponding portion of the principal amount of the
Committed Loans made by the Assignor outstanding at the date hereof. Upon the
execution and delivery hereof by the Assignor, the Assignee, the Company and the
Agent and the payment of the amounts specified in Section 3 required to be paid
on the date hereof (i) the Assignee shall, as of the date hereof, succeed to the
rights and be obligated to perform the obligations of a Bank under the Credit
Agreement with a Commitment in an amount equal to the Assigned Amount, and (ii)
the Commitment of the Assignor shall, as of the date hereof, be reduced by a
like amount and the Assignor released from its obligations under the Credit
Agreement to the extent such obligations have been assumed by the Assignee. The
assignment provided for herein shall be without recourse to the Assignor.
SECTION 3. Payments. As consideration for the assignment and sale
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the
date hereof in Federal funds the amount heretofore agreed between them.3 It is
understood that commitment and/or facility fees accrued to the date hereof are
for the account of the Assignor and such fees accruing from and including the
date hereof are for the account of the Assignee. Each of the Assignor and the
Assignee hereby agrees to that if it receives any amount under the Credit
Agreement which is for the account of the other party hereto, it shall receive
the same for the account of such other party to the extent of such other party's
interest therein and shall promptly pay the same to such other party.
[SECTION 4. Consent of the Company and the Agent. This Agreement is
conditioned upon the consent of the Company and the Agent pursuant to Section
- --------
/3/ Amount should combine principal together with accrued interest and
breakage compensation, if any, to be paid by the Assignee, net of any portion of
any upfront fee to be paid by the Assignor to the Assignee. It may be preferable
in an appropriate case to specify these amounts generically or by formula rather
than as a fixed sum.
<PAGE>
10.06(c) of the Credit Agreement. The execution of this Agreement by the Company
and the Agent is evidence of this consent. Pursuant to Section 10.06(c) the
Company agrees to cause the Borrower to execute and deliver a Note payable to
the order of the Assignee to evidence the assignment and assumption provided for
herein.]
SECTION 5. Non-Reliance on Assignor. The Assignor makes no
representation or warranty in connection with, and shall have no responsibility
with respect to, the solvency, financial condition, or statements of the Company
or the Borrower, or the validity and enforceability of the obligations of the
Company or the Borrower in respect of the Credit Agreement or any Note. The
Assignee acknowledges that it has, independently and without reliance on the
Assignor, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement and will continue to be responsible for making its own independent
appraisal of the business, affairs and financial condition of the Company and
the Borrower.
SECTION 6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 7. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
[ASSIGNOR]
By
----------------------------
Title:
3
<PAGE>
[ASSIGNEE]
By
----------------------------
Title:
[U S WEST, INC.
By
----------------------------
Title:
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as
Administrative Agent
By
----------------------------
Title:]
4
<PAGE>
EXHIBIT H
EXTENSION AGREEMENT
US WEST Capital Funding, Inc.
US WEST, Inc.
7800 East Orchard Road
Englewood, Colorado 80111
Morgan Guaranty Trust Company of
New York, as Administrative Agent
under the Credit Agreement referred
to below
60 Wall Street
New York, NY 10260
Gentlemen:
The undersigned hereby agree to extend the Revolving Credit Period
under the 364-Day Credit Agreement dated as of May 8, 1998 among US WEST Capital
Funding, Inc., US WEST, Inc., USW-C, Inc., the Banks listed therein, the other
agents named therein and Morgan Guaranty Trust Company of New York, as
Administrative Agent (the "Credit Agreement") for 364 days to ____________ __,
____. Terms defined in the Credit Agreement are used herein as therein defined.
This Extension Agreement shall be construed in accordance with and
governed by the law of the State of New York. It may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
[NAME OF BANK]/1/
By
----------------------------
- --------------------------
/1/ Insert names of Banks which have responded affirmatively in accordance
with Section 2.01(b) of the Credit Agreement.
<PAGE>
Title:
[NAME OF BANK]/1/
By
-----------------------------
Title:
[NAME OF BANK]*
By
-----------------------------
Title:
[NAME OF BANK]*
By
-----------------------------
Title:
[NAME OF BANK]*
By
-----------------------------
Title:
[NAME OF BANK]*
By
-----------------------------
Title:
- -------------------------
/1/ Insert names of Banks which have responded affirmatively in accordance
with Section 2.01(b) of the Credit Agreement.
<PAGE>
Agreed and accepted:
US WEST CAPITAL FUNDING, INC.
By
------------------------------
Title
US WEST, INC.
By
------------------------------
Title
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Administrative Agent
By
------------------------------
Title
<PAGE>
CROSS-REFERENCE TARGET LIST
===========================
<TABLE>
<CAPTION>
NOTE: Due to the number of targets some target names may not appear in the target pull-down list.
(This list is for the use of the wordprocessor only, is not a part of this document and may be discarded.)
<S> <C>
ARTICLE/SECTION TARGET NAME
======================================
</TABLE>
1.03.............................types
2..............................CREDITS
2.01.......................commit.lend
2.01(a).....................the.commit
2.01(b)......................extension
2.03......................money.market
2.03(d).....................submission
2.03(f)..................accept.notice
2.04.........................not.banks
2.04(a).................upon.not .borr
2.05.............................notes
2.07....................interest.rates
2.07(c).....................anyoverdue
2.09.......................termination
2.09(b).........................if.sep
2.10(c)................notice.int.rate
2.11.......................prepayments
2.11(c)...................upon.receipt
2.12......................general.prof
2.13....................funding.losses
3.01...........................closing
3.01(b).....................opin.brilz
3.01(c).......................opin.dpw
3.02(c)......................fact.that
4.04(b)......................since.dec
5.01.......................information
5.02.......................maintenance
5.03.......................maint.exist
5.04...................compliance.laws
5.06..........................sub.debt
5.07.....................debt.coverage
5.08........................neg.pledge
5.08(f)........................anylien
5.11..........................year2000
6.............................DEFAULTS
6.01....................events.default
6.01(c).....................cobor.fail
8..............................CHANGES
8.01.......................basis.deter
8.01(a)..................agent.advised
8.02........................illegality
8.03....................increased cost
8.04.............................taxes
8.04(a)...................taxes.anyand
8.04(d).....................taxes.each
8.05....................domestic.loans
10.01..........................notices
10.03(b).....................exp.indem
10.05....................amend.waivers
10.06(b)..................succ.ass.any
10.06(c)..............succ.assign.bank
10.07...............terminate.existing
10.09.....................counterparts
1
<PAGE>
EXHIBIT (b)(3)
[CONFORMED COPY]
AMENDMENT NO. 1 TO CREDIT AGREEMENTS
AMENDMENT dated as of June 30, 1998 to the 364-Day Credit Agreement dated
as of May 8, 1998 and the Five-Year Credit Agreement dated as of May 8, 1998
(individually a "Credit Agreement" and together, the "Credit Agreements") among
U S WEST CAPITAL FUNDING, INC. (the "Borrower"), U S WEST, INC. (formerly named
USW-C, Inc.), the BANKS listed on the signature pages thereto (the "Banks") and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent (the
"Agent").
W I T N E S S E T H :
WHEREAS, the parties hereto desire to amend the Credit Agreements to modify
a condition to borrowing;
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. Defined Terms; References. Unless otherwise specifically
defined herein, each term used herein which is defined in a Credit Agreement has
the meaning assigned to such term in such Credit Agreement. Each reference to
"hereof", "hereunder", "herein" and "hereby" and each other similar reference
and each reference to "this Agreement" and each other similar reference
contained in a Credit Agreement shall, after this Amendment becomes effective,
refer to such Credit Agreement as amended hereby.
Section 2. Amendment of Section 5.06(a). Section 5.06(a) of each of the
Credit Agreements is amended and restated in its entirety to read as follows:
(a) Prior to the Separation, total Debt of all Consolidated Subsidiaries
(excluding Debt of (i) the Borrower and (ii) a Consolidated Subsidiary to
the Company or to a Wholly-Owned Consolidated Subsidiary) ("Subsidiary
Debt") will at no time exceed 250% of Consolidated Net Worth.
Section 3. Representations of Borrower. The Borrower represents and
warrants that (i) the representations and warranties of the Borrower set forth
in Article 4 of each Credit Agreement will be true on and as of the Amendment
Effective Date and (ii) no Default will have occurred and be continuing on such
date.
Section 4. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
<PAGE>
Section 5. Counterparts. This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
Section 6. Effectiveness. This Amendment shall become effective as of the
date hereof on the date (the "Amendment Effective Date") when the Agent shall
have received from each of the Borrower and the Required Banks (as defined in
each Credit Agreement) a counterpart hereof signed by such party or facsimile or
other written confirmation (in form satisfactory to the Agent) that such party
has signed a counterpart hereof;
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed as of the date first above written.
U S WEST CAPITAL FUNDING, INC.
By /s/ Thomas. O McGimpsey
------------------------
Title: Assistant Secretary
U S WEST, INC.
(FORMERLY NAMED USW-C, INC.)
By /s/ Thomas O. McGimpsey
------------------------
Title: Assistant Secretary
3
<PAGE>
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By /s/ John M. Mikolay
--------------------
Title: Vice President
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By /s/ Doug Meckelnburg
---------------------
Title: Vice President
THE CHASE MANHATTAN BANK
By /s/ Ann B. Kerns
-----------------
Title: Vice President
MELLON BANK, N.A.
By /s/ David McGowan
------------------
Title: Vice President
4
<PAGE>
ABN AMRO BANK N.V.
By /s/ Thomas M. Toerpe
---------------------
Title: Vice President
By /s/ Roxana Sopala
------------------
Title: Vice President
THE BANK OF NEW YORK
By /s/ James W. Whitaker
----------------------
Title: Vice President
BANK ONE, COLORADO, N.A.
By /s/ David L. Ericson
---------------------
Title: Vice President
CITIBANK, N.A.
By /s/ P. M. Chonkar
------------------
Title: Attorney-In-Fact
KEYBANK NATIONAL ASSOCIATION
By /s/ Mary Young
---------------
Title: Commercial Banking Officer
5
<PAGE>
NATIONSBANK, N.A.
By /s/ Anthony M. Cacheria
------------------------
Title: Senior Vice President
COMMERZBANK AG LOS ANGELES
BRANCH
By /s/ Christian Jagenberg
------------------------
Title: Senior Vice President and Manager
By /s/ John Korthuis
------------------
Title: Vice President
FLEET NATIONAL BANK
By /s/ Sue Anderson
-----------------
Title: Vice President
CANADIAN IMPERIAL BANK OF
COMMERCE
By /s/ Gerald Girardi
-------------------
Title: Executive Director
CIBC Oppenheimer Corp.,
As Agent
6
<PAGE>
BANKERS TRUST COMPANY
By /s/ Gina S. Thompson
---------------------
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Michael J. Harrington
--------------------------
Title: Corporate Banking Officer
KBC BANK N.V.
By /s/ Robert Snauffer
--------------------
Title: First Vice President
By /s/ Marcel Claes
-----------------
Title: Deputy General Manager
THE ROYAL BANK OF SCOTLAND PLC
By /s/ R.A. Green
---------------
Title: Senior Relationship Manager
7
<PAGE>
WELLS FARGO BANK, N.A.
By /s/ Catherine M. Wallace
-------------------------
Title: Vice President
By /s/ Donald A. Hartmann
-----------------------
Title: Senior Vice President
BANK OF HAWAII
By /s/ Eric N. Pelletier
----------------------
Title: Vice President
BARCLAYS BANK PLC
By /s/ Les Bek
------------
Title: Director
BAYERISCHE LANDESBANK
GIROZENTRALE CAYMAN ISLANDS
BRANCH
By /s/ Alexander Kohnert
----------------------
Title: Vice President
By /s/ James H. Boyle
-------------------
Title: Second Vice President
8
<PAGE>
BAYERISCHE HYPO-UND
VEREINSBANK AG
By /s/ P.M. Tresnan
-----------------
Title: Vice President
By /s/ Steve Atwell
-----------------
Title: Vice President
LEHMAN COMMERCIAL PAPER INC.
By /s/ Michele Swanson
--------------------
Title: Authorized Signatory
MERRILL LYNCH CAPITAL
CORPORATION
By /s/ Robert Stevens
-------------------
Title: Vice President
NORWEST BANK COLORADO,
NATIONAL
ASSOCIATION
By /s/ Carol A. Ward
------------------
Title: Vice President
THE TOKAI BANK, LIMITED
By /s/ Masahiko Saito
-------------------
Title: Senior Vice President and
Assistant General Manager
9
<PAGE>
U.S. BANK NATIONAL ASSOCIATION
By /s/ Scott E. Page
------------------
Title: Vice President
BANQUE NATIONALE DE PARIS
By /s/ Mitchell M. Ozawa
----------------------
Title: Vice President
By /s/ Marc T. Schaefer
---------------------
Title: Assistant Vice President
ROYAL BANK OF CANADA
By /s/ John P. Page
-----------------
Title: Senior Manager
ISTITUTO BANCARIO SAN PAOLO DI
TORINO S.P.A.
By
-------------------------------
Name:
Title:
By
-------------------------------
Name:
Title:
10
<PAGE>
THE PROVIDENT BANK.
By /s/ Tom B. Scherpenberg
------------------------
Title: Vice President
11
<PAGE>
EXHIBIT (b)(4)
[EXECUTION COPY]
AMENDED AND RESTATED CREDIT AGREEMENT
AMENDED AND RESTATED 364-DAY CREDIT AGREEMENT dated as of May 7, 1999 among
U S WEST Capital Funding, Inc., U S WEST, Inc. and the Banks listed on the
signature pages hereof (the "Amendment and Restatement").
W I T N E S S E T H :
WHEREAS, the parties hereto and Morgan Guaranty Trust Company of New York,
as Administrative Agent (the "Administrative Agent"), have heretofore entered
into a 364-Day Credit Agreement dated as of May 8, 1998, as amended by Amendment
No. 1 dated as of June 30, 1998 (the "Agreement"); and
WHEREAS, the parties hereto desire to amend the Agreement to provide for
the extension of the termination date for an additional 364 days and changes in
interest rates and facility fees and additional commitment amounts, and to
restate the Agreement in its entirety to read as set forth in the Agreement with
the amendments specified below;
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. Definitions; References. Unless otherwise specifically defined
herein, each term used herein which is defined in the Agreement shall have the
meaning assigned to such term in the Agreement. Each reference to "hereof",
"hereunder", "herein" and "hereby" and each other similar reference and each
reference to "this Agreement" and each other similar reference contained in the
Agreement shall from and after the date hereof refer to the Agreement as amended
and restated hereby.
Section 2. Amendment of Section 1.01. The definition of "Termination
Date" in Section 1.01 of the Agreement is amended to replace "May 7, 1999" with
"May 5, 2000".
Section 3. Amendment of Section 2.01(c). Section 2.01(c) of the Agreement
is amended to replace "$3,750,000,000" with "$1,000,000,000".
<PAGE>
Section 4. Amendment of Pricing Schedule. The Pricing Schedule is amended
and restated to read in its entirety as set forth in the attached Pricing
Schedule.
Section 5. Additional and Departing Banks; Total Commitments. The Northern
Trust Company hereby becomes, and each of Bank of Hawaii, Bank One, Colorado,
N.A., Barclays Bank Plc, Canadian Imperial Bank of Commerce, Merrill Lynch
Capital Corporation, Norwest Bank of Colorado National Association, Royal Bank
of Canada, The Provident Bank and The Tokai Bank, Limited hereby ceases to be, a
party to the Agreement as amended by this Amendment and Restatement and a "Bank"
for all purposes thereof, entitled to all rights and subject to all duties of a
"Bank" thereunder. The aggregate amount of the Commitments as of the date
hereof is $750,000,000, and each Bank's Commitment is the amount set forth
opposite its name on the signature pages hereof.
Section 6. Governing Law. This Amendment and Restatement shall be
governed by and construed in accordance with the laws of the State of New York.
Section 7. Counterparts; Effectiveness. This Amendment and Restatement
may be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Amendment and Restatement shall become effective as of the
date hereof when the Administrative Agent shall have received:
(a) duly executed counterparts hereof signed by the parties hereto (or, in
the case of any party as to which an executed counterpart shall not have been
received, the Administrative Agent shall have received telegraphic, telex or
other written confirmation from such party of execution of a counterpart hereof
by such party);
(b) an opinion of Thomas O. McGimpsey, Esq., Counsel for the Company and
the Borrower, substantially in the form of Exhibit A hereto and covering such
additional matters relating to the transactions contemplated hereby as the
Required Banks may reasonably request; and
(c) all documents the Administrative Agent may reasonably request relating
to the existence of the Borrower, the corporate authority for and the validity
of the Agreement as amended by this Amendment and Restatement, and any other
matters relevant hereto, all in form and substance satisfactory to the
Administrative Agent.
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Restatement to be duly executed as of the date first above written.
U S WEST CAPITAL FUNDING, INC.
By
-----------------------------
Title:
Name:
U S WEST, INC.
By
-----------------------------
Title:
Name:
3
<PAGE>
Commitment
$48,000,000 MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By
-----------------------------
Title:
Name:
$48,000,000 BANK OF AMERICA NATIONAL
TRUST AND SAVINGS
ASSOCIATION
By
-----------------------------
Name:
Title:
$48,000,000 CITIBANK, N.A.
By
-----------------------------
Name:
Title:
$48,000,000 THE CHASE MANHATTAN BANK
By
-----------------------------
Name:
Title:
$48,000,000 THE FIRST NATIONAL BANK
OF CHICAGO
By
-----------------------------
4
<PAGE>
Commitment
Name:
Title:
$45,000,000 ABN AMRO BANK N.V.
By-----------------------------
Name:
Title:
By-----------------------------
Name:
Title:
$45,000,000 COMMERZBANK AG LOS ANGELES
BRANCH
By-----------------------------
Name:
Title:
By-----------------------------
Name:
Title:
$45,000,000 MELLON BANK, N.A.
By-----------------------------
Name:
Title:
$45,000,000 WELLS FARGO BANK, NATIONAL
ASSOCIATION
5
<PAGE>
Commitment
By-----------------------------
Name:
Title:
$34,000,000 FLEET NATIONAL BANK
By-----------------------------
Name:
Title:
$34,000,000 ISTITUTO BANCARIO SAN PAOLO DI
TORINO S.P.A.
By-----------------------------
Name:
Title:
By-----------------------------
Name:
Title:
$34,000,000 KBC BANK N.V.
By-----------------------------
Name:
Title:
By-----------------------------
Name:
Title:
6
<PAGE>
Commitment
$34,000,000 THE BANK OF NEW YORK
By
-----------------------------
Name:
Title:
$25,000,000 BAYERISCHE LANDESBANK
GIROZENTRALE CAYMAN ISLANDS
BRANCH
By
-----------------------------
Name:
Title:
By
-----------------------------
Name:
Title:
$25,000,000 THE NORTHERN TRUST COMPANY
By
-----------------------------
Name:
Title:
$25,000,000 THE ROYAL BANK OF SCOTLAND PLC
By
-----------------------------
Name:
Title:
7
<PAGE>
Commitment
$25,000,000 U.S. BANK NATIONAL ASSOCIATION
By
-----------------------------
Name:
Title:
$24,000,000 KEYBANK NATIONAL ASSOCIATION
By
-----------------------------
Name:
Title:
$20,000,000 BANKERS TRUST COMPANY
By
-----------------------------
Name:
Title:
$20,000,000 BAYERISCHE HYPO- UND
VEREINSBANK, AG, NEW YORK
BRANCH
By
-----------------------------
Name:
Title:
$15,000,000 BANQUE NATIONALE DE PARIS
By
-----------------------------
Name:
Title:
By
-----------------------------
Name:
Title:
8
<PAGE>
Commitment
By
-----------------------------
Name:
Title:
$15,000,000 LEHMAN COMMERCIAL PAPER INC.
By
------------------------------
Name:
Title:
$ 0 BANK OF HAWAII
By
------------------------------
Name:
Title:
$ 0 BARCLAYS BANK PLC
By
-------------------------------
Name:
Title:
$ 0 CANADIAN IMPERIAL BANK OF
COMMERCE
By
-------------------------------
Name:
Title:
$ 0 MERRILL LYNCH CAPITAL
CORPORATION
9
<PAGE>
Commitment
By
-------------------------------
Name
Title
$ 0 NORWEST BANK COLORADO,
NATIONAL ASSOCIATION
By
-------------------------------
Name:
Title:
$ 0 THE FIRST NATIONAL BANK OF
CHICAGO
By
-------------------------------
Name:
Title:
$ 0 THE PROVIDENT BANK
By
-------------------------------
Name:
Title:
$ 0 ROYAL BANK OF CANADA
By
-------------------------------
Name:
Title:
10
<PAGE>
Commitment
$ 0 THE TOKAI BANK, LIMITED
By-------------------------------
Name:
Title:
Total Commitments:
$ 750,000,000
=============
11
<PAGE>
PRICING SCHEDULE
The "Euro-Dollar Margin" and "Facility Fee Rate" for any day are the
respective percentages set forth below in the applicable row under the column
corresponding to the Status that exists on such day:
<TABLE>
<CAPTION>
===============================================================================
Level Level Level Level Level
Status I II III IV V
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Euro-Dollar Margin .365% .430% .545% .650% .750%
- -------------------------------------------------------------------------------
Facility Fee Rate .060% .070% .080% .100% .125%
===============================================================================
</TABLE>
For purposes of this Schedule, the following terms have the following
meanings:
"Level I Status" exists at any date if, at such date, the Borrower's
outstanding senior unsecured long-term debt securities guaranteed by the Company
are rated A+ or higher by S&P or A1 or higher by Moody's.
"Level II Status" exists at any date if, at such date, (i) the Borrower's
outstanding senior unsecured long-term debt securities guaranteed by the Company
are rated A or higher by S&P or A2 or higher by Moody's and (ii) Level I Status
does not exist.
"Level III Status" exists at any date if, such date, the Borrower's
outstanding senior unsecured long-term debt securities guaranteed by the Company
are rated A- or higher by S&P or A3 or higher by Moody's and (ii) neither Level
I Status nor Level II Status exists.
"Level IV Status" exists at any date if, at such date, (i) the Borrower's
outstanding senior unsecured long-term debt securities guaranteed by the Company
are rated BBB+ or higher by S&P or Baa1 or higher by Moody's and (ii) none of
Level I Status, Level II Status or Level III Status exists.
"Level V Status" exists at any date if, at such date, none of Level I
Status, Level II Status, Level III Status or Level IV Status exists.
<PAGE>
"Moody's" means Moody's Investors Service, Inc., a Delaware corporation,
and its successors or, if such corporation shall be dissolved or liquidated or
shall no longer perform the functions of a securities rating agency, "Moody's"
shall be deemed to refer to any other nationally recognized securities rating
agency designated by the Required Banks, with the approval of the Company, by
notice to the Agent and the Company.
"S&P" means Standard & Poor's Ratings Group, a New York corporation, and
its successors or, if such corporation shall be dissolved or liquidated or shall
no longer perform the functions of a securities rating agency, "S&P" shall be
deemed to refer to any other nationally recognized securities rating agency
designated by the Required Banks, with the approval of the Company, by notice to
the Agent and the Company.
"Status" refers to the determination of which of Level I Status, Level II
Status, Level III Status, Level IV Status or Level V Status exists at any date.
The credit ratings to be utilized for purposes of this Schedule are those
assigned to the senior unsecured long-term debt securities of the Borrower
guaranteed by the Company and any rating assigned to any other debt security of
the Borrower shall be disregarded. The rating in effect at any date is that in
effect at the close of business on such date.
2
<PAGE>
EXHIBIT A
OPINION OF
COUNSEL FOR THE COMPANY AND THE BORROWER
May 7, 1999
To the Banks and the Administrative Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Administrative Agent
60 Wall Street
New York, New York 10260
Gentleman and Ladies:
I have acted as counsel for U S WEST, Inc. (the "Company") and U S WEST
Capital Funding, Inc. (the "Borrower") in connection with the Amended and
Restated 364-Day Credit Agreement dated as of May 7, 1999 (the "Amendment and
Restatement"), which amends and restates the 364-Day Credit Agreement dated as
of May 8, 1998 among them, the banks listed on the signature pages thereof and
Morgan Guaranty Trust Company of New York, as Administrative Agent, as amended
by Amendment No. 1 dated as of June 30, 1998 (the "Credit Agreement"). Such
Credit Agreement as in effect prior to the effectiveness of the Amendment and
Restatement is referred to herein as the "Existing Agreement", and the Existing
Credit Agreement as amended by the Amendment and Restatement is referred to
herein as the "Amended Credit Agreement". Terms defined in the Existing Credit
Agreement and not otherwise defined are used herein as therein defined. This
opinion is being rendered to you at the request of my clients pursuant to
Section 7(b) of the Amendment and Restatement.
I am familiar with the proceedings taken by each of the Company and the
Borrower in connection with the authorization, execution and delivery of the
Amendment and Restatement, and I have examined such documents, certificates, and
such other matters of fact and questions of law as I have deemed relevant
<PAGE>
under the circumstances to express an informed opinion. Upon the basis of the
foregoing, I am of the opinion that:
1. The Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, and has all corporate
powers and all governmental licenses, authorizations, qualifications, consents
and approvals required to carry on its business as now conducted, except where
the absence of any such license, authorization, qualification, consent or
approval would not have a material adverse effect on the consolidated financial
position or consolidated results of operations of the Company and its
Consolidated Subsidiaries considered as one enterprise.
2. The execution, delivery and performance by each of the Company and the
Borrower of the Amendment and Restatement are within such Person's corporate
powers, have been duly authorized by all necessary corporate action, and require
no action by or in respect of, or filing with, any governmental agency or
official.
3. The execution, delivery and performance by each of the Company and the
Borrower of the Amendment and Restatement will not (i) result in a breach or
violation of, conflict with or constitute a default under, the articles or
certificate of incorporation or bylaws of such Person or any material law or
regulation or any material order, judgment, agreement or instrument to which
such Person is a party or by which such Person is bound, or (ii) result in the
creation or imposition of any Lien on any asset of such Person.
4. Each of the Amendment and Restatement and the Amended Credit Agreement
constitutes a valid and binding agreement of the Company and the Borrower, in
each case enforceable in accordance with its terms except as the same may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and by general principles of equity.
5. To my knowledge, and except as disclosed in the Company's 1998 Form 10-
K/A and the Company's Form 10-Q for the quarter ended March 31, 1999, as filed
with the Securities and Exchange Commission, there is no action, suit or
proceeding pending against or threatened against or affecting the Company or any
of its Subsidiaries before any court or arbitrator or any governmental body,
agency or official, in which there is a reasonable possibility of an adverse
decision which could materially adversely affect the consolidated financial
position or consolidated results of operations of the Company and its
Consolidated Subsidiaries, considered as a whole, or which in any manner draws
into question the validity of the Amendment and Restatement or the Amended
Credit Agreement.
<PAGE>
6. Each of the Borrower and the Company's other corporate Significant
Subsidiaries is a corporation validly existing and in good standing under the
laws of its jurisdiction of incorporation, and has all corporate powers and all
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted, except where the absence thereof would not
have a material adverse effect on the consolidated financial position or
consolidated results of operations of the Company and its Consolidated
Subsidiaries considered as one enterprise.
For purposes of my opinion set forth in numbered paragraph 4, I have
assumed that the laws of the State of New York, which are stated to govern the
Amendment and Restatement and the Amended Credit Agreement, are the same as the
laws of the State of Colorado.
In rendering the opinions set forth herein, I have assumed that the
Amendment and Restatement will conform to the specimen thereof examined by me,
that the signatures on all documents examined by me were genuine, and the
authenticity of all documents submitted to me as originals or as copies of
originals, assumptions which I have not independently verified. Further, this
opinion is governed by, and shall be interpreted in accordance with, the Legal
Opinion Accord (the "Accord") of the ABA Section of Business Law (1991). This
opinion is subject to a number of qualifications (including the General
Qualification, as defined in the Accord), exceptions, definitions and
limitations on coverage, all as more particularly described in the Accord.
This opinion is furnished by me as counsel for the Company and the Borrower
and is solely for your benefit and the benefit of any Assignee under the Amended
Credit Agreement. Without my prior written consent, the opinion may not be
relied upon by you or any Assignee in any other context or by any other person.
This opinion may not be quoted, in whole or in part, or copies thereof
furnished, to any other person without my prior written consent, except that you
may furnish copies hereof (a) to your auditors and attorneys, (b) to any state
or federal authority having regulatory jurisdiction over you or the Company or
the Borrower, (c) pursuant to any order or legal process of any court or
governmental agency, (d) in connection with any legal action to which you are a
party arising out of the transactions contemplated by the Amended Credit
Agreement, and (e) to any Participant or proposed Participant in the Commitment
of any Bank.
This opinion is limited to the present laws of the State of Colorado and
the General Corporation Law of the State of Delaware, to present judicial
interpretations thereof, and to the facts as they presently exist, and I assume
no
3
<PAGE>
responsibility as to the applicability or effect of the laws of any other
jurisdiction. In rendering this opinion, I assume no obligation to revise or
supplement this opinion should the present laws of the State of Colorado or the
General Corporation Law of the State of Delaware be changed by legislative
action, judicial decision, or otherwise.
Very truly yours,
Thomas O. McGimpsey
4
<PAGE>
EXHIBIT (c)(1)
================================================================================
AGREEMENT AND PLAN OF MERGER
----------------------------
Dated as of May 16, 1999
Between
U S WEST, INC.
and
GLOBAL CROSSING LTD.
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
THE MERGERS
Section 1.1 Formation of Subsidiaries; The Mergers........................1
Section 1.2 Effective Time................................................3
Section 1.3 Effect of the Mergers.........................................3
Section 1.4 Subsequent Actions............................................3
Section 1.5 Certificates of Incorporation; Bylaws; Directors and
Officers of the Surviving Corporations.......................4
Section 1.6 Alternative Structure.........................................4
Section 1.7 Location of Headquarters......................................5
Section 1.8 Corporate Identity............................................5
ARTICLE II
EFFECT OF MERGERS ON STOCK AND OPTIONS
Section 2.1 Conversion of Securities......................................5
Section 2.2 Conversion....................................................5
Section 2.3 Common Stock of Merged Corporations...........................9
Section 2.4 Election Procedures; Exchange of Shares.......................9
Section 2.5 Transfer Books...............................................14
Section 2.6 No Fractional Share Certificates.............................14
Section 2.7 Certain Adjustments..........................................16
ARTICLE III
[INTENTIONALLY OMITTED]
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF GLOBAL
Section 4.1 Organization and Qualification; Subsidiaries.................17
Section 4.2 Certificate of Incorporation and Byelaws.....................17
Section 4.3 Capitalization...............................................17
Section 4.4 Authority Relative to this Agreement.........................18
Section 4.5 No Conflict; Required Filings and Consents...................19
Section 4.6 SEC Filings; Financial Statements............................19
-i-
<PAGE>
Section 4.7 Absence of Certain Changes or Events.........................20
Section 4.8 Litigation...................................................20
Section 4.9 No Violation of Law; Permits.................................20
Section 4.10 Joint Proxy Statement........................................21
Section 4.11 Employee Matters; ERISA......................................21
Section 4.12 Labor Matters................................................24
Section 4.13 Environmental Matters........................................24
Section 4.14 Board Action; Vote Required..................................25
Section 4.15 Opinions of Financial Advisors...............................25
Section 4.16 Brokers......................................................25
Section 4.17 Tax Matters..................................................25
Section 4.18 Intellectual Property........................................26
Section 4.19 Insurance....................................................26
Section 4.20 Ownership of Securities......................................26
Section 4.21 Certain Contracts............................................27
Section 4.22 Licenses.....................................................27
Section 4.23 Year 2000....................................................27
Section 4.24 Foreign Corrupt Practices and International
Trade Sanctions.............................................27
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF U S WEST
Section 5.1 Organization and Qualification; Subsidiaries.................28
Section 5.2 Certificate of Incorporation and Bylaws......................28
Section 5.3 Capitalization...............................................28
Section 5.4 Authority Relative to this Agreement.........................30
Section 5.5 No Conflict; Required Filings and Consents...................30
Section 5.6 SEC Filings; Financial Statements............................30
Section 5.7 Absence of Certain Changes or Events.........................31
Section 5.8 Litigation...................................................31
Section 5.9 No Violation of Law; Permits.................................31
Section 5.10 Joint Proxy Statement........................................32
Section 5.11 Employee Matters; ERISA......................................32
Section 5.12 Labor Matters................................................32
Section 5.13 Environmental Matters........................................35
Section 5.14 Board Action; Vote Required; U S WEST Rights Plan;
Applicability of Section 203................................35
Section 5.15 Opinion of Financial Advisor.................................36
Section 5.16 Brokers......................................................36
Section 5.17 Tax Matters..................................................36
Section 5.18 Intellectual Property........................................37
Section 5.19 Insurance....................................................37
Section 5.20 Ownership of Securities......................................37
Section 5.21 Certain Contracts............................................37
Section 5.22 Licenses.....................................................38
-ii-
<PAGE>
Section 5.23 Year 2000....................................................38
Section 5.24 Foreign Corrupt Practices and International
Trade Sanctions.............................................38
ARTICLE VI
CONDUCT OF INDEPENDENT BUSINESSES PENDING THE MERGERS
Section 6.1 Transition Planning..........................................39
Section 6.2 Conduct of Business in the Ordinary Course...................39
Section 6.3 No Solicitation..............................................42
Section 6.4 Subsequent Financial Statements..............................44
Section 6.5 Control of Operations........................................44
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Joint Proxy Statement and the Registration Statement.........45
Section 7.2 Global and U S WEST Stockholders'Meetings and Consummation
of the Mergers..............................................45
Section 7.3 Additional Agreements........................................47
Section 7.4 Notification of Certain Matters..............................48
Section 7.5 Access to Information........................................49
Section 7.6 Public Announcements.........................................49
Section 7.7 Cooperation..................................................49
Section 7.8 Indemnification, Directors'and Officers'Insurance............49
Section 7.9 Employee Benefit Plans.......................................50
Section 7.10 Officers of Parent...........................................50
Section 7.11 Stock Exchange Listing.......................................51
Section 7.12 Post-Mergers Parent Board of Directors;
Executive Committee.........................................51
Section 7.13 No Shelf Registration........................................51
Section 7.14 Affiliates...................................................51
Section 7.15 Blue Sky.....................................................52
Section 7.16 Tax-Free Exchange............................................52
Section 7.17 Determination of Class B to Class A Value Ratio..............52
Section 7.18 Permitted Acquisitions.......................................53
Section 7.19 Certain Transactions.........................................53
Section 7.20 Interim Dividend Policy......................................54
Section 7.21 Subsidiary Definition........................................54
Section 7.22 Exchange Procedures..........................................54
Section 7.23 Services Agreement...........................................54
Section 7.24 Certain Definitions..........................................54
-iii-
<PAGE>
ARTICLE VIII
CONDITIONS TO THE MERGERS
Section 8.1 Conditions to Obligations of Each Party to
Effect the Mergers..........................................55
Section 8.2 Additional Conditions to Obligations of Global...............57
Section 8.3 Additional Conditions to Obligations of U S WEST.............58
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination..................................................59
Section 9.2 Effect of Termination........................................61
Section 9.3 Amendment....................................................62
Section 9.4 Waiver.......................................................62
ARTICLE X
DEFINITIONS
Section 10.1 Certain Definitions..........................................63
ARTICLE XI
GENERAL PROVISIONS
Section 11.1 Non-Survival of Representations, Warranties and Agreements...65
Section 11.2 Notices......................................................65
Section 11.3 Expenses.....................................................66
Section 11.4 Headings.....................................................66
Section 11.5 Severability.................................................67
Section 11.6 Entire Agreement; No Third-Party Beneficiaries...............67
Section 11.7 Assignment...................................................67
Section 11.8 Governing Law................................................67
Section 11.9 Submission to Jurisdiction; Waivers..........................67
Section 11.10 Counterparts.................................................68
-iv-
<PAGE>
Schedules
---------
<TABLE>
<S> <C> <C>
Schedule 4.1 = Subsidiaries of Global
Schedule 4.3 = Option Plans and Equity Rights of Global
Schedule 4.5 = Required Filings and Consents of Global
Schedule 4.7 = Certain Changes or Events of Global
Schedule 4.9 = Violations of Laws, Permits, Regulations, etc. of Global
Schedule 4.11 = Global Employee Benefit Plans
Schedule 4.17 = Tax Liens or Liabilities of Global
Schedule 4.18 = Global Intellectual Property Losses and Claims
Schedule 4.20 = Global's Ownership of U S WEST's Common Stock
Schedule 4.22 = Proceedings against, or Violations of Global Licenses or permits
Schedule 5.1 = Subsidiaries of U S WEST
Schedule 5.3 = Option Plans and Equity Rights of U S WEST
Schedule 5.5 = Required Filings and Consents of U S WEST
Schedule 5.7 = Certain Changes or Events of U S WEST
Schedule 5.8 = Pending or Threatened Litigation against U S WEST
Schedule 5.9 = Violations of Laws, Permits, Regulations, etc. of U S WEST
Schedule 5.11 = U S WEST Employee Benefit Plans
Schedule 5.12 = Collective Bargaining or Labor Agreements of U S WEST
Schedule 5.13 = Environmental Claims Against U S WEST
Schedule 5.17 = Tax Liens or Liabilities of U S WEST
Schedule 5.18 = U S WEST Intellectual Property Losses and Claims
Schedule 5.19 = Termination or Cancellation of Insurance Coverage of U S WEST
Schedule 5.20 = U S WEST's Ownership of Global's Common Stock
Schedule 5.21 = U S WEST Contracts
Schedule 5.22 = Proceedings against, or Violations of U S WEST Licenses or Permits
Schedule 6.1 = Transition Committee
Schedule 6.2 = Conduct of Business
Schedule 7.14 = Securities Act Affiliates
Schedule 7.18 = Permitted Acquisitions
</TABLE>
Exhibits
--------
Exhibit A = Terms of Parent Class A Common Stock and Parent Class B Common
Stock
-v-
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 16, 1999,
between U S WEST, Inc., a Delaware corporation ("U S WEST"), and Global Crossing
Ltd., a Bermuda company ("Global").
W I T N E S S E T H
WHEREAS, the Boards of Directors of U S WEST and Global have
each determined that it is in the best interests of their respective
stockholders that U S WEST and Global combine their businesses and enter into
this Agreement.
WHEREAS, the Boards of Directors of U S WEST and Global have
each determined that the mergers and the other transactions contemplated hereby
are consistent with, and in furtherance of, their respective business strategies
and goals and have each approved the mergers contemplated hereby.
WHEREAS, for U.S. federal income tax purposes, it is intended
that the transactions to be effected pursuant to this Agreement shall constitute
a tax-free exchange or series of exchanges.
WHEREAS, U S WEST has entered into a Tender Offer and Purchase
Agreement dated as of the date hereof pursuant to which U S WEST will commence a
tender offer (the "U S WEST Tender Offer") for up to 39,259,305 shares of common
stock, par value $0.01 per share of Global ("Global Common Stock"), at a net
price per share in cash of $62.75, subject to the terms and conditions thereof.
WHEREAS, the parties hereto intend that the transactions
contemplated hereby shall be accounted for using the purchase method of
accounting with U S WEST as the acquiror.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, the parties hereto hereby agree as follows:
ARTICLE I
THE MERGERS
Section 1.1 Formation of Subsidiaries; The Mergers. (a) Promptly
following the date hereof, U S WEST and Global will form a corporation under
Delaware Law ("Parent"). Parent will initially be owned equally by U S WEST and
Global. The Certificate of Incorporation of Parent will provide that Parent will
have authority to issue two classes of common stock as follows: subject to
Section 7.24, (i) one class of common stock that will reflect the local service
provider business of Parent, including all of U S WEST's assets, liabilities and
business operations (other than its data, wireless and internet yellow pages
directory assets and liabilities) plus the local exchange assets, liabilities
and
<PAGE>
business operations of Frontier Corporation, a New York corporation ("Frontier")
(the "Parent Class A Common Stock"), and (ii) a second class of common stock
that will reflect the global service provider business of Parent, including all
of the assets, liabilities, and business operations of Global and Frontier
(other than Frontier's local exchange assets, liabilities and business
operations) plus U S WEST's data, wireless and internet yellow pages assets,
liabilities and business operations (the "Parent Class B Common Stock"). The
terms of the Parent Class A Common Stock and Parent Class B Common Stock will be
as set forth in Exhibit A. The Certificate of Incorporation of Parent will
contain such other provisions as are customary for public companies including a
classified Board of Directors. Parent will also adopt an appropriate shareholder
rights agreement. Promptly following the incorporation of Parent, U S WEST and
Global will cause Parent to form (i) a wholly-owned subsidiary under Delaware
Law ("U S WEST Merger Sub"), and (ii) if necessary to consummate the transaction
contemplated by the Election, as defined herein, a wholly-owned subsidiary under
Delaware Law or under the laws of such other jurisdiction as necessary to
consummate the transaction contemplated by the Election ("Global Merger Sub").
Parent, U S WEST Merger Sub and Global Merger Sub will be formed solely to
facilitate the Mergers (as defined below) and will conduct no business or
activity prior to the Effective Time other than in connection with the Mergers.
U S WEST and Global will (i) cause Parent, U S WEST Merger Sub and Global Merger
Sub to execute and deliver a joinder to this Agreement pursuant to Section 251
of Delaware Law, (ii) execute a formal written consent under Section 228 of
Delaware Law as all of the stockholders of Parent, approving the execution,
delivery and performance of this Agreement by Parent, (iii) cause Parent to
execute a formal written consent under Section 228 of Delaware Law as the sole
stockholder of U S WEST Merger Sub, approving the execution, delivery and
performance of this Agreement by U S WEST Merger Sub, and (iv) cause Parent to
execute a formal written consent under Bermuda Law (or similar required
documentation under the relevant jurisdiction) as the sole stockholder of Global
Merger Sub, approving the execution, delivery and performance of this Agreement
by Global Merger Sub.
(b) At the Effective Time, (i) U S WEST Merger Sub shall be
merged with and into U S WEST in accordance with Delaware Law, whereupon the
separate existence of U S WEST Merger Sub shall cease, and U S WEST shall be the
surviving corporation (the "U S WEST Merger"), and (ii) at Global's reasonable
election (the "Election") either (A) Global shall "discontinue" under the laws
of Bermuda and continue in, and be subject to, the laws of the United States or
any other jurisdiction and Global Merger Sub shall immediately thereafter be
merged into Global with Global as the surviving corporation, (B) Global shall
enter into a scheme of arrangement under the laws of Bermuda pursuant to which
the shares of Global shall be exchanged for shares of Parent, or (C) Global
Merger Sub shall be amalgamated with and into Global in accordance with Bermuda
Law, whereupon the separate existence of Global Merger Sub shall cease, and
Global shall continue in the form of the amalgamated company (any of the
transactions described in the immediately preceding clauses (A), (B) or (C), the
"Global Merger" and together with the U S WEST Merger, the "Mergers"); provided
in any case that the Election shall not cause a failure to satisfy the
conditions contained in Sections 8.2(d) or 8.3(d), and provided further that if
the Election would cause a failure to satisfy the conditions contained in
Section 8.2(d) or 8.3(d), the parties agree to use commercially reasonable
efforts to restructure the Mergers or take other steps in accordance with this
Section 1.1(b) to the extent such
-2-
<PAGE>
restructuring or other steps would allow the conditions contained in Sections
8.2(d) and 8.3(d) to be satisfied. U S WEST and Global are sometimes
collectively referred to herein as the "Surviving Corporations". U S WEST Merger
Sub and Global Merger Sub are sometimes collectively referred to herein as the
"Merged Corporations". U S WEST and Global, as well as Parent, U S WEST Merger
Sub, Global Merger Sub and any other Person which may become a party to this
Agreement after the date of this Agreement, are herein referred to collectively
as the "Parties" and each individually as a "Party."
Section 1.2 Effective Time. As promptly as practicable after the
satisfaction or waiver of the conditions set forth in Article VIII hereof and
the consummation of the Closing referred to in Section 7.3(a) hereof, the
Parties shall cause the Mergers to be consummated by (i) filing a Certificate of
Merger (the "Delaware Certificate") with the Secretary of State of the State of
Delaware with respect to the U S WEST Merger, in such form as is required by,
and executed in accordance with, the relevant provisions of Delaware Law, and
(ii) taking such actions as may be necessary to consummate the transaction
contemplated by the Election (the "Election Transaction Filings"). The effective
time of the U S WEST Merger specified in the Delaware Certificate shall also be
the effective time of the Global Merger specified in the applicable Election
Transaction Filing. The term "Effective Time" shall mean the effective time of
the U S WEST Merger and the Global Merger.
Section 1.3 Effect of the Mergers. At the Effective Time, the effect
of the U S WEST Merger and the Global Merger shall be as provided in the
applicable provisions of Delaware Law and the laws of the relevant jurisdiction
or jurisdictions of Global, respectively. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time (i) all the property,
rights, privileges, powers and franchises of U S WEST and U S WEST Merger Sub
shall continue with, or vest in, as the case may be, U S WEST as the Surviving
Corporation in the U S WEST Merger, and all debts, liabilities and duties of U S
WEST and U S WEST Merger Sub shall continue to be, or become, as the case may
be, the debts, liabilities and duties of U S WEST as the Surviving Corporation
in the U S WEST Merger and (ii) all the property, rights, privileges, powers and
franchises of Global and Global Merger Sub shall continue with, or vest in, as
the case may be, Global as the Surviving Corporation in the Global Merger, and
all debts, liabilities and duties of Global and Global Merger Sub shall continue
to be, or become, as the case may be, the debts, liabilities and duties of
Global as the Surviving Corporation in the Global Merger. As of the Effective
Time, the Surviving Corporations shall be direct wholly-owned subsidiaries of
Parent.
Section 1.4 Subsequent Actions. If, at any time after the Effective
Time, any Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to continue in, vest, perfect or confirm of record or
otherwise in such Surviving Corporation their respective right, title or
interest in, to or under any of the rights, properties, privileges, franchises
or assets of either of its constituent corporations acquired or to be acquired
by such Surviving Corporation as a result of, or in connection with, the Mergers
or otherwise to carry out this Agreement, then the officers and directors of
such Surviving Corporation shall be directed and authorized to execute and
deliver, in the name and on behalf of either of such constituent corporations,
all such deeds, bills of sale, assignments and assurances and to take and do, in
the name and on behalf of each of such corporations or otherwise, all such other
actions and things as may be necessary or desirable to
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vest, perfect or confirm any and all right, title and interest in, to and under
such rights, properties, privileges, franchises or assets in such Surviving
Corporation or otherwise to carry out this Agreement.
Section 1.5 Certificates of Incorporation; Bylaws; Directors and
Officers of the Surviving Corporations. Unless
otherwise agreed by Global and U S WEST before the Effective Time, at the
Effective Time:
(a) the Certificate of Incorporation of U S WEST as the
Surviving Corporation of the U S WEST Merger shall be the Certificate of
Incorporation of U S WEST as in effect immediately prior to the Effective Time,
until thereafter amended as provided by law and such Certificate of
Incorporation;
(b) the Memorandum of Association or similar
documentation of Global as the Surviving Corporation of the Global Merger shall
be the Memorandum of Association or similar documentation of Global as in effect
immediately prior to the Effective Time, until thereafter amended as provided by
law;
(c) the Bylaws of U S WEST as the Surviving Corporation
of the U S WEST Merger shall be the Bylaws of U S WEST as in effect immediately
prior to the Effective Time, until thereafter amended as provided by law and the
Certificate of Incorporation and the Bylaws of such Surviving Corporation;
(d) the Byelaws of Global as the Surviving Corporation of
the Global Merger shall be the Byelaws of Global as in effect immediately prior
to the Effective Time, until thereafter amended as provided by law and the
Certificate of Incorporation and the Byelaws of such Surviving Corporation; and
(e) the directors and officers of U S WEST immediately prior
to the Effective Time shall continue to serve in their respective offices of U S
WEST as the Surviving Corporation of the U S WEST Merger from and after the
Effective Time, in each case until their successors are elected or appointed and
qualified or until their resignation or removal. The directors and officers of
Global immediately prior to the Effective Time shall continue to serve in their
respective offices of Global as the Surviving Corporation of the Global Merger
from and after the Effective Time, in each case until their successors are
elected or appointed and qualified or until their resignation or removal. If, at
the Effective Time, a vacancy shall exist on the Board of Directors or in any
office of either Surviving Corporation, then such vacancy may thereafter be
filled in the manner provided by law and the Bylaws of such Surviving
Corporation.
Section 1.6 Alternative Structure. In the event the Frontier
Acquisition is consummated pursuant to the alternative merger provisions of
Section 1.10 of the Agreement and Plan of Merger dated as of March 16, 1999
among Global, GCF Acquisition Corp. and Frontier, as amended (the "Frontier
Merger Agreement") (the "Frontier Alternative Merger"), then U S WEST and Global
shall use commercially reasonable efforts to restructure the Mergers and other
transactions to be effected hereunder or take such other steps to allow the
Mergers and other transactions to be effected hereunder to qualify as tax-free
transactions for U.S. federal income tax purposes.
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Section 1.7 Location of Headquarters. Global and U S WEST agree
that commencing at the Effective Time the headquarters of Parent shall be
located in New York, New York.
Section 1.8 Corporate Identity. Global and U S WEST agree that at
the Effective Time, the corporate name of Parent shall be "Global Crossing,
Inc."
ARTICLE II
EFFECT OF MERGERS ON STOCK AND OPTIONS
Section 2.1 Conversion of Securities. The manner and basis of
converting the shares of common stock of Global and Global Merger Sub and U S
WEST and U S WEST Merger Sub, as well as options, warrants and other rights to
purchase or otherwise acquire shares of common stock of Global or shares of
common stock of U S WEST, at the Effective Time, by virtue of the Mergers and
without any action on the part of any of the Parties or the holder of any of
such securities, shall be as hereinafter set forth in this Article II.
Section 2.2 Conversion. (a) Each share of Global Common Stock and each
share of common stock, par value $.01 per share, of U S WEST ("U S WEST Common
Stock") issued and outstanding immediately prior to the Effective Time
(excluding shares of Global Common Stock held in the treasury of Global or owned
by U S WEST or any of its Subsidiaries and shares of U S WEST Common Stock held
in the treasury of U S WEST or owned by Global or any of its Subsidiaries
(collectively, the " Disqualified Shares")), and all rights in respect thereof,
shall at the Effective Time forthwith cease to exist and be converted into and
become exchangeable for a number of shares of Parent Class A Common Stock and a
number of shares of Parent Class B Common Stock determined as provided in this
Section 2.2.
(b) Each option, warrant and other right issued and outstanding
immediately prior to the Effective Time to purchase or otherwise acquire Global
Common Stock (each a "Global Right") or U S WEST Common Stock (each a "U S WEST
Right") (other than Global Rights owned by U S WEST or any of its Subsidiaries
and U S WEST Rights owned by Global or any of its Subsidiaries (collectively,
the "Disqualified Rights")) shall at the Effective Time no longer be options,
warrants or rights to purchase or otherwise acquire Global Common Stock or U S
WEST Common Stock, as applicable, and shall become options, warrants or rights,
as applicable, to purchase or otherwise acquire a number of shares of Parent
Class A Common Stock and Parent Class B Common Stock, determined as provided in
this Section 2.2 on the same terms and conditions that would have applied to the
purchase or other acquisition of Global Common Stock or U S WEST Common Stock,
as applicable; provided, that the exercise price of any such option, warrant or
right shall be adjusted as provided in Section 2.2(g). Prior to the Effective
Time, the compensation committee of both U S WEST and Global will review the
Global Rights and U S WEST Rights, as applicable, with a view to providing
incentives for and retaining employees for Parent. U S WEST and Global shall
take all such steps as may be required to cause consummation of the transactions
contemplated by this Section 2.2(b) and any other disposition of U S WEST and
Global equity securities (including derivative securities) or acquisitions of
Parent equity securities (including derivative securities) in connection with
this Agreement by each individual who (x) is a director or officer of U S WEST
or Global or (y) at
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the Effective Time, will become a director or officer of Parent, to be exempt
under Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as
amended, such steps to be taken in accordance with the No-Action Letter dated
January 12, 1999, issued by the SEC to Skadden, Arps, Slate, Meagher & Flom LLP.
(c) Each holder of record of Global Common Stock and/or Global
Rights (other than Global Common Stock which is Disqualified Stock and Global
Rights which are Disqualified Rights) immediately prior to the Effective Time
shall be entitled to make a number of elections for shares of Parent Class B
Common Stock and/or Parent Class A Common Stock equal to the sum of the number
of shares of Global Common Stock held by such holder at the Effective Time and
the number of shares of Global Common Stock issuable pursuant to Global Rights
held by such holders at the Effective Time. Each holder of record of U S WEST
Common Stock and/or U S WEST Rights (other than U S WEST Common Stock which is
Disqualified Stock and U S WEST Rights which are Disqualified Rights)
immediately prior to the Effective Time shall be entitled to make a number of
elections for shares of Parent Class B Common Stock and/or Parent Class A Common
Stock equal to the product of the Conversion Ratio (as defined below) multiplied
by the number of shares of U S WEST Common Stock held by such holder at the
Effective Time and the number of shares of U S WEST Common Stock issuable
pursuant to U S WEST Rights held by such holders at the Effective Time. The
"Conversion Ratio" shall be equal to the quotient (rounded to the nearest
1/10,000) of (A) the sum of (i) the fully diluted number of shares of Global
Common Stock outstanding on the date hereof (based on the treasury method of
accounting assuming the price of Global Common Stock at the close of trading on
May 13, 1999), plus (ii) the product of the fully diluted number of shares of
Frontier common stock outstanding (based on the treasury method of accounting
assuming the price of Frontier common stock as of the close of trading on the
day prior to consummation of the transactions contemplated by the Frontier
Merger Agreement) on the date of the closing pursuant to the Frontier Merger
Agreement multiplied by the Exchange Ratio (as defined in the Frontier Merger
Agreement) determined as of the date of such closing, less (iii) 39,259,305
divided by (B) the fully diluted number of shares of U S WEST Common Stock
outstanding on the date hereof (based on the treasury method of accounting
assuming the price of U S WEST Common Stock at the close of trading on May 13,
1999). Each election may be made for Parent Class B Common Stock or Parent Class
A Common Stock. A holder holding both Global Common Stock and Global Rights
and/or U S WEST Common Stock and U S WEST Rights shall have the right to
separately elect with respect to such common stock and rights. Each election
made (or, pursuant to Section 2.4, deemed to be made) for Parent Class B Common
Stock shall be an election for a number of shares of Parent Class B Common Stock
equal to a quotient the numerator of which is the sum of 1 plus the Class B to
Class A Value Ratio (as defined in Section 7.17) and the denominator of which is
the Class B to Class A Value Ratio. Each election made (or, pursuant to Section
2.4 deemed to be made) for Parent Class A Common Stock shall be an election for
a number of shares of Parent Class A Common Stock equal to the sum of 1 plus the
Class B to Class A Value Ratio.
(d) If the aggregate number of shares of Parent Class B Common
Stock elected (or deemed to be elected) pursuant to Sections 2.2(c) and 2.4
equals the aggregate number of elections that may be made pursuant to Section
2.2(c) by all holders of Global Common Stock and Global Rights and U S WEST
Common Stock and U S WEST Rights (the "Number of Group Shares") and the
aggregate number of shares of Parent Class A Common
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Stock elected (or deemed to be elected) pursuant to Sections 2.2(c) an 2.4
equals the Number of Group Shares, then (i) the shares of Global Common Stock as
to which each holder of record of Global Common Stock is entitled to make an
election pursuant to Section 2.2(c) shall be converted into and exchangeable
for, and the Global Rights as to which each holder of record of Global Rights is
entitled to make an election pursuant to Section 2.2(c) shall become options,
warrants or rights, as applicable, to purchase or otherwise acquire, the number
of shares of Parent Class B Common Stock and the number of shares of Parent
Class A Common Stock elected (or deemed to be elected) by such holder pursuant
to Sections 2.2(c) and 2.4 and (ii) the shares of U S WEST Common Stock as to
which each holder of record of U S WEST Common Stock is entitled to make an
election pursuant to Section 2.2(c) shall be converted into and exchangeable
for, and the U S WEST Rights as to which each holder of record of U S WEST
Rights is entitled to make an election pursuant to Section 2.2(c) shall become
options, warrants or rights, as applicable, to purchase or otherwise acquire,
the number of shares of Parent Class B Common Stock and the number of shares of
Parent Class A Common Stock elected (or deemed to be elected) by such holder
pursuant to Sections 2.2(c) and 2.4.
(e) If the aggregate number of shares of Parent Class B Common
Stock elected (or deemed to be elected) pursuant to Sections 2.2(c) and 2.4
exceeds the Number of Group Shares, then (A) the shares of Global Common Stock
as to which each holder of record of Global Common Stock is entitled to make an
election pursuant to Section 2.2(c) shall be converted into and exchangeable
for, (B) the shares of U S WEST Common Stock as to which each holder of record
of U S WEST Common Stock is entitled to make an election pursuant to Section
2.2(c) shall be converted into and exchangeable for, (C) the Global Rights as to
which each holder of record of Global Rights is entitled to make an election
pursuant to Section 2.2(c) shall become options, warrants or rights, as
applicable, to purchase or otherwise acquire, and (D) the U S WEST Rights as to
which each holder of record of U S WEST Rights is entitled to make an election
pursuant to Section 2.2(c) shall become options, warrants or rights, as
applicable, to purchase or otherwise acquire:
(i) a number of shares of Parent Class B Common Stock
equal to the product of the number of shares of Parent Class B Common Stock
elected (or deemed to be elected) by such holder pursuant to Sections 2.2(c) and
2.4, multiplied by the quotient of the Number of Group Shares divided by the
aggregate number of shares of Parent Class B Common Stock elected (or deemed to
be elected) pursuant to Sections 2.2(c) and 2.4,
(ii) the number of shares of Parent Class A Common Stock
elected (or deemed to be elected) by such holder pursuant to Sections 2.2(c) and
2.4, and
(iii) a number of shares of Parent Class A Common Stock
equal to the product of the Class B to Class A Value Ratio multiplied by the
difference between the number of shares of Parent Class B Common Stock elected
(or deemed to be elected) by such holder pursuant to Sections 2.2(c) and 2.4 and
the number of shares of Parent Class B Common Stock allocated to such holder
pursuant to clause (i) of this sentence.
(f) If the aggregate number of shares of Parent Class A Common
Stock elected (or deemed to be elected) pursuant to Sections 2.2(c) and 2.4
exceeds the Number of
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Group Shares, then (A) the shares of Global Common Stock as to which each holder
of record of Global Common Stock is entitled to make an election pursuant to
Section 2.2(c) shall be converted into and exchangeable for, (B) the shares of U
S WEST Common Stock as to which each holder of record of U S WEST Common Stock
is entitled to make an election pursuant to Section 2.2(c) shall be converted
into and exchangeable for, (C) the Global Rights as to which each holder of
record of Global Rights is entitled to make an election pursuant to Section
2.2(c) shall become options, warrants or rights, as applicable, to purchase or
otherwise acquire, and (D) the U S WEST Rights as to which each holder of record
of U S WEST Rights is entitled to make an election pursuant to Section 2.2(c)
shall become options, warrants or rights, as applicable, to purchase or
otherwise acquire:
(i) a number of shares of Parent Class A Common Stock equal
to the product of the number of shares of Parent Class A Common Stock elected
(or deemed to be elected) by such holder pursuant to Sections 2.2(c) and 2.4,
multiplied by the quotient of the Number of Group Shares divided by the
aggregate number of shares of Parent Class A Common Stock elected (or deemed to
be elected) pursuant to Sections 2.2(c) and 2.4,
(ii) the number of shares of Parent Class B Common Stock
elected (or deemed to be elected) by such holder pursuant to Sections 2.2(c) and
2.4, and
(iii) a number of shares of Parent Class B Common Stock
equal to the product of the quotient of 1 divided by the Class B to Class A
Value Ratio multiplied by the difference between the number of shares of Parent
Class A Common Stock elected (or deemed to be elected) by such holder pursuant
to Sections 2.2(c) and 2.4, and the number of shares of Parent Class A Common
Stock allocated to such holder pursuant to clause (i) of this sentence.
(g) Commencing immediately after the Effective Time, each
certificate which, immediately prior to the Effective Time, represented issued
and outstanding shares of Global Common Stock or U S WEST Common Stock shall
evidence ownership of Parent Class A Common Stock and Parent Class B Common
Stock on the basis hereinbefore set forth. Commencing immediately after the
Effective Time, each option, warrant or other right which, immediately prior to
the Effective Time, represented the right to purchase or otherwise acquire
shares of Global Common Stock or U S WEST Common Stock shall evidence the right
to purchase or otherwise acquire shares of Parent Class A Common Stock and
Parent Class B Common Stock on the basis hereinabove set forth and otherwise,
subject to Section 2.6, on the same terms and conditions that would have applied
to the purchase or other acquisition of Global Common Stock or U S WEST Common
Stock, as applicable; provided that the exercise price shall be allocated to the
purchase of Parent Class B Common Stock and Parent Class A Common Stock in
proportion to the Class B to Class A Value Ratio.
(h) For all purposes of this Agreement, unless otherwise
specified, all shares held by employee stock ownership plans or other pension or
deferred compensation plans of Global or U S WEST (i) shall be deemed to be
issued and outstanding, (ii) shall not be deemed to be held in the treasury of
Global or U S WEST respectively, and (iii) shall be subject to the election
rights and procedures described in Sections 2.2(c) and 2.4.
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(i) Under Bermuda law (or the law of the relevant
jurisdiction) within one month of receiving notice of the meeting of the Global
stockholders which is to consider the Global Merger, a Global stockholder is
entitled to apply to the Bermuda Court (or may be entitled under the laws of the
relevant jurisdiction) for an appraisal of the fair value of his shares. Prior
to the Effective Time, and within one month of the Bermuda Court (or the court
of the relevant jurisdiction) appraising the fair value of such shares, Global
shall cause Frontier to pay to the dissenting stockholder an amount equal to the
value of his shares as appraised by the Bermuda Court (or the court of the
relevant jurisdiction) or alternatively may terminate this Agreement as provided
in Section 9.1(f) hereof. After the Effective Time, where the Bermuda Court (or
the court of the relevant jurisdiction) has appraised the shares of a dissenting
stockholder of Global and the amount paid to such dissenting stockholder in the
Global Merger was less than the amount appraised by the Bermuda Court (or the
court of the relevant jurisdiction), Global, as the Surviving Corporation in the
Global Merger, shall cause Frontier to pay to such stockholder the difference in
value. If any former shareholder of Frontier seeks appraisal of his Global
shares and becomes entitled to be paid the value of his shares, Global shall
cause such cash payment to be made by Frontier.
Section 2.3 Common Stock of Merged Corporations. (a) At the Effective
Time, each share of common stock, par value $.01 per share, of Global Merger Sub
issued and outstanding immediately prior to the Effective Time, and all rights
in respect thereof, shall, without any action on the part of Parent, be
automatically converted into one share of common stock, par value $.01 per
share, of Global as the Surviving Corporation of the Global Merger.
(b) At the Effective Time, each share of common stock, par
value $.01 per share, of U S WEST Merger Sub issued and outstanding immediately
prior to the Effective Time, and all rights in respect thereof, shall, without
any action on the part of Parent, be automatically converted into one share of
common stock, par value $.01 per share, of U S WEST as the Surviving Corporation
of the U S WEST Merger.
Section 2.4 Election Procedures; Exchange of Shares. (a) Not later
than thirty (30) days prior to the anticipated Effective Time or such other date
as the Parties may agree in writing, Global shall fix a record date (which may
be the record date for the stockholders meeting contemplated by Section 7.2 if
such meeting date is anticipated to be within ten (10) days of the Effective
Time) for determining which of its stockholders and holders of Global Rights
shall be entitled to elect to make the election contemplated by Section 2.2(c)
and shall cause a Notice and Form of Election (the "Form of Election") together
with a letter of transmittal to be mailed to the holders of record of shares of
Global Common Stock as of such record date and holders of record of Global
Rights as of such record date. Holders of record of both Global Common Stock and
Global Rights shall receive a Form of Election relating to such Global Common
Stock and a separate Form of Election relating to such Global Rights. Global
shall also cause the Form of Election together with a letter of transmittal to
be mailed to each person to whom a share of Global Common Stock or a Global
Right is issued subsequent to such record date. The election contemplated by
Section 2.2(c) shall be made by holders of shares of Global Common Stock and
Global Rights by delivering the Form of Election to the exchange agent mutually
chosen by Global and U S WEST to act as exchange agent hereunder (the "Exchange
Agent"). Such election shall be made in terms of the percentage (in increments
of one percent (1%)) of each holder's elections that such holder seeks to make
for shares of Parent
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Class B Common Stock and/or shares of Parent Class A Common Stock. To be
effective, a Form of Election must be properly completed, signed and submitted
to the Exchange Agent by 5:00 p.m. (New York City time) on the last business day
prior to the Effective Time or such other time and date as the Parties may agree
(the "Election Deadline"), and accompanied by (1) other than in the case of
Global Rights, (x) the certificates as to which the election is being made, or
(y) an appropriate guarantee of delivery of such certificates as set forth in
such Form of Election from a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
or a commercial bank or trust company having an office or correspondent in the
United States; provided, however, that such certificates are in fact delivered
to the Exchange Agent within three (3) NYSE trading days after the date of
execution of such guarantee of delivery (a "Guarantee of Delivery"), and (2) a
properly completed and signed letter of transmittal. Failure to deliver
certificates covered by a Guarantee of Delivery within three (3) New York Stock
Exchange ("NYSE") trading days after the date of execution of such Guarantee of
Delivery shall be deemed to invalidate any otherwise properly made election.
Parent will have the discretion, which it may delegate in whole or in part to
the Exchange Agent, to determine whether Forms of Election have been properly
completed, signed and submitted or revoked and to disregard immaterial defects
in Forms of Election. The good faith decision of Parent (or the Exchange Agent)
in such matters shall be conclusive and binding. Neither Parent nor the Exchange
Agent will be under any obligation to notify any Person of any defect in a Form
of Election submitted to the Exchange Agent. Any Form of Election may be changed
or revoked prior to the Election Deadline. In the event a Form of Election is
revoked prior to the Election Deadline, Parent shall, or shall cause the
Exchange Agent to, if applicable, cause the certificates representing the shares
of the Global Common Stock or Global Rights covered by such Form of Election to
be promptly returned without charge to the Person submitting the Form of
Election upon written request to that effect from such Person. For purposes
hereof, if a holder of Global Common Stock or Global Rights does not submit a
Form of Election which is received by the Exchange Agent prior to the Election
Deadline (including a holder who submits and then revokes his or her Form of
Election and does not resubmit a Form of Election which is timely received by
the Exchange Agent), if a holder of Global Common Stock submits a Form of
Election without the corresponding certificates or a Guarantee of Delivery or if
the Exchange Agent cannot reasonably determine the election preference of a
holder of Global Common Stock or Global Rights submitting a Form of Election,
then such holder shall be deemed to have elected shares of Parent Class B Common
Stock and shares of Parent Class A Common Stock in the same proportion as the
holders of Global Common Stock who actually made (and were not merely deemed to
have made) elections pursuant to Section 2.2(c) and this Section 2.4.
(b) Subject to the terms and conditions hereof, Parent shall
cause the Exchange Agent to effect the exchange of Global Common Stock for the
Parent Class B Common Stock and/or Parent Class A Common Stock in accordance
with the provisions of this Article II. From time to time after the Effective
Time, Parent shall deposit, or cause to be deposited, with the Exchange Agent
certificates representing Parent Class A Common Stock and Parent Class B Common
Stock for conversion of Global Common Stock in accordance with the provisions of
Section 2.2 hereof (such certificates, together with any dividends or
distributions with respect thereto, being herein referred to as the "Global
Exchange Fund"). Commencing immediately after the Effective Time and until the
appointment of the Exchange Agent shall be terminated, each holder of a
certificate or certificates theretofore representing Global Common
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Stock may surrender the same to the Exchange Agent, and, after the appointment
of the Exchange Agent shall be terminated, any such holder may surrender any
such certificate to Parent. Such holder shall be entitled upon such surrender to
receive in exchange therefor a certificate or certificates representing the
number of full shares of Parent Class A Common Stock and Parent Class B Common
Stock into which the Global Common Stock theretofore represented by the
certificate or certificates so surrendered shall have been converted in
accordance with the provisions of Sections 2.2 and 2.4 hereof, together with a
cash payment in lieu of fractional shares, if any, in accordance with Section
2.6 hereof, and all such shares of Parent Class A Common Stock and Parent Class
B Common Stock so issued shall be deemed to have been issued at the Effective
Time. Until so surrendered and exchanged, each outstanding certificate which,
prior to the Effective Time, represented issued and outstanding Global Common
Stock shall be deemed for all corporate purposes of Parent, other than the
payment of dividends and other distributions, if any, to evidence ownership of
the number of full shares of Parent Class A Common Stock and Parent Class B
Common Stock into which the Global Common Stock theretofore represented thereby
shall have been converted at the Effective Time. Unless and until any such
certificate theretofore representing Global Common Stock is so surrendered, no
dividend or other distribution, if any, payable to the holders of record of
Parent Class A Common Stock and Parent Class B Common Stock as of any date
subsequent to the Effective Time shall be paid to the holder of such certificate
in respect thereof. Upon the surrender of any such certificate theretofore
representing Global Common Stock, however, the record holder of the certificate
or certificates representing shares of Parent Class A Common Stock and Parent
Class B Common Stock issued in exchange therefor shall receive from the Exchange
Agent, or from Parent, as the case may be, payment of the amount of dividends
and other distributions, if any, which as of any date subsequent to the
Effective Time and until such surrender shall have become payable with respect
to such number of shares of Parent Class A Common Stock and Parent Class B
Common Stock ("Pre-Surrender Global Dividends"). No interest shall be payable
with respect to the payment of Pre-Surrender Global Dividends upon the surrender
of certificates theretofore representing Global Common Stock. After the
appointment of the Exchange Agent shall have been terminated, any holders of
certificates representing Global Common Stock which have not received payment of
Pre-Surrender Global Dividends shall look only to Parent for payment thereof.
Notwithstanding the foregoing provisions of this Section 2.4(b), neither the
Exchange Agent nor any Party shall be liable to a holder of Global Common Stock
for any Parent Class A Common Stock and Parent Class B Common Stock, any
dividends or distributions thereon or any cash payment for fractional shares as
contemplated by Section 2.6 delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(c) Not later than thirty (30) days prior to the anticipated
Effective Time or such other date as the Parties may agree in writing, U S WEST
shall fix a record date (which may be the record date for the stockholders'
meeting contemplated by Section 7.2 if such meeting date is anticipated to be
within ten (10) days of the Effective Time) for determining which of its
stockholders and holders of U S WEST Rights shall be entitled to elect to make
the election contemplated by Section 2.2(c) and shall cause a Form of Election
together with a letter of transmittal to be mailed to the holders of record of
shares of U S WEST Common Stock as of such record date and holders of record of
U S WEST Rights as of such record date. Holders of record of both U S WEST
Common Stock and U S WEST Rights shall receive a form of Election relating to
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such U S WEST Common Stock and a separate form of Election relating to such U S
WEST Rights. U S WEST shall also cause the Form of Election together with a
letter of transmittal to be mailed to each person to whom a share of U S WEST
Common Stock or a U S WEST Right is issued subsequent to such record date. The
election contemplated by Section 2.2(c) shall be made by holders of shares of U
S WEST Common Stock and U S WEST Rights by delivering the Form of Election to
the Exchange Agent. Such election shall be made in terms of the percentage (in
increments of one percent (1%)) of each holder's elections that such holder
seeks to make for shares of Parent Class B Common Stock and/or shares of Parent
Class A Common Stock. To be effective, a Form of Election must be properly
completed, signed and submitted to the Exchange Agent by 5:00 p.m. (New York
City time) on the Election Deadline, and accompanied by (1) other than in the
case of U S WEST Rights, (x) the certificates as to which the election is being
made, or (y) an appropriate Guarantee of Delivery of such certificates as set
forth in such Form of Election, and (2) a properly completed and signed letter
of transmittal. Failure to deliver certificates covered by a Guarantee of
Delivery within three (3) NYSE trading days after the date of execution of such
Guarantee of Delivery shall be deemed to invalidate any otherwise properly made
election. Parent will have the discretion, which it may delegate in whole or in
part to the Exchange Agent, to determine whether Forms of Election have been
properly completed, signed and submitted or revoked and to disregard immaterial
defects in Forms of Election. The good faith decision of Parent (or the Exchange
Agent) in such matters shall be conclusive and binding. Neither Parent nor the
Exchange Agent will be under any obligation to notify any Person of any defect
in a Form of Election submitted to the Exchange Agent. Any Form of Election may
be changed or revoked prior to the Election Deadline. In the event a Form of
Election is revoked prior to the Election Deadline, Parent shall, or shall cause
the Exchange Agent to, if applicable, cause the certificates representing the
shares of the U S WEST Common Stock or U S WEST Rights covered by such Form of
Election to be promptly returned without charge to the Person submitting the
Form of Election upon written request to that effect from such Person. For
purposes hereof, if a holder of U S WEST Common Stock or U S WEST Rights does
not submit a Form of Election which is received by the Exchange Agent prior to
the Election Deadline (including a holder who submits and then revokes his or
her Form of Election and does not resubmit a Form of Election which is timely
received by the Exchange Agent), if a holder of U S WEST Common Stock submits a
Form of Election without the corresponding certificates or a Guarantee of
Delivery or if the Exchange Agent cannot reasonably determine the election
preference of a holder of U S WEST Common Stock or U S WEST Rights submitting a
Form of Election, then such holder shall be deemed to have elected shares of
Parent Class A Common Stock and shares of Parent Class B Common Stock in the
same proportion as the holders of U S WEST Common Stock who actually made (and
were not merely deemed to have made) elections pursuant to Section 2.2(c), and
this Section 2.4.
(d) Subject to the terms and conditions hereof, Parent shall
cause the Exchange Agent to effect the exchange of U S WEST Common Stock for the
Parent Class B Common Stock and Parent Class A Common Stock in accordance with
the provisions of this Article II. From time to time after the Effective Time,
Parent shall deposit, or cause to be deposited, with the Exchange Agent
certificates representing Parent Class A Common Stock and Parent Class B Common
Stock for conversion of U S WEST Common Stock in accordance with the provisions
of Section 2.2 hereof (such certificates, together with any dividends or
distributions with respect thereto, being herein referred to as the "U S WEST
Exchange Fund"). Commencing immediately after the Effective Time and until the
appointment of the Exchange Agent shall be terminated, each holder of a
certificate or certificates theretofore representing
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U S WEST Common Stock may surrender the same to the Exchange Agent, and, after
the appointment of the Exchange Agent shall be terminated, any such holder may
surrender any such certificate to Parent. Such holder shall be entitled upon
such surrender to receive in exchange therefor a certificate or certificates
representing the number of full shares of Parent Class A Common Stock and Parent
Class B Common Stock into which the U S WEST Common Stock theretofore
represented by the certificate or certificates so surrendered shall have been
converted in accordance with the provisions of Sections 2.2 and 2.4 hereof,
together with a cash payment in lieu of fractional shares, if any, in accordance
with Section 2.6 hereof, and all such shares of Parent Class A Common Stock and
Parent Class B Common Stock so issued shall be deemed to have been issued at the
Effective Time. Until so surrendered and exchanged, each outstanding certificate
which, prior to the Effective Time, represented issued and outstanding U S WEST
Common Stock shall be deemed for all corporate purposes of Parent, other than
the payment of dividends and other distributions, if any, to evidence ownership
of the number of full shares of Parent Class A Common Stock and Parent Class B
Common Stock into which the U S WEST Common Stock theretofore represented
thereby shall have been converted at the Effective Time. Unless and until any
such certificate theretofore representing U S WEST Common Stock is so
surrendered, no dividend or other distribution, if any, payable to the holders
of record of Parent Class A Common Stock and Parent Class B Common Stock as of
any date subsequent to the Effective Time shall be paid to the holder of such
certificate in respect thereof. Upon the surrender of any such certificate
theretofore representing U S WEST Common Stock, however, the record holder of
the certificate or certificates representing shares of Parent Class A Common
Stock and Parent Class B Common Stock issued in exchange therefor shall receive
from the Exchange Agent, or from Parent, as the case may be, payment of the
amount of dividends and other distributions, if any, which as of any date
subsequent to the Effective Time and until such surrender shall have become
payable with respect to such number of shares of Parent Class A Common Stock and
Parent Class B Common Stock ("Pre-Surrender U S WEST Dividends"). No interest
shall be payable with respect to the payment of Pre-Surrender U S WEST Dividends
upon the surrender of certificates theretofore representing U S WEST Common
Stock. After the appointment of the Exchange Agent shall have been terminated,
any holders of certificates representing U S WEST Common Stock which have not
received payment of Pre-Surrender Dividends shall look only to Parent for
payment thereof. Notwithstanding the foregoing provisions of this Section
2.4(d), neither the Exchange Agent nor any Party shall be liable to a holder of
U S WEST Common Stock for any Parent Class A Common Stock and Parent Class B
Common Stock, any dividends or distributions thereon or any cash payment for
fractional shares as contemplated by Section 2.6 delivered to a public official
pursuant to any applicable abandoned property, or escheat or similar law.
(e) Notwithstanding anything herein to the contrary,
certificates surrendered for exchange by any affiliate of Global or U S WEST
shall not be exchanged until Parent shall have received a signed agreement from
such affiliate as provided in Section 7.14 hereof.
(f) Any portion of the Global Exchange Fund and U S WEST
Exchange Fund which remains undistributed for six (6) months after the Effective
Time shall be delivered to Parent, upon demand, and any holders of Global Common
Stock and U S WEST Common Stock who have not theretofore complied with the
provisions of this Article II shall thereafter look only to Parent for
satisfaction of their claims for Parent Class A Common Stock or Parent Class B
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Common Stock and any Pre-Surrender Global Dividends or Pre-Surrender U S WEST
Dividends.
Section 2.5 Transfer Books. (a) The stock transfer books of Global
shall be closed at the Effective Time and no transfer of any Global Common Stock
will thereafter be recorded on any of such stock transfer books. In the event of
a transfer of ownership of Global Common Stock that is not registered in the
stock transfer records of Global at the Effective Time, a certificate or
certificates representing the number of full shares of Parent Class A Common
Stock and Parent Class B Common Stock into which such Global Common Stock shall
have been converted shall be issued to the transferee and a cash payment in the
amount of Pre-Surrender Global Dividends, if any, in accordance with Section
2.4(b) hereof, if the certificate or certificates representing such Global
Common Stock is or are surrendered as provided in Section 2.4 hereof,
accompanied by all documents required to evidence and effect such transfer and
by evidence of payment of any applicable stock transfer tax.
(b) The stock transfer books of U S WEST shall be closed at
the Effective Time and no transfer of any U S WEST Common Stock will thereafter
be recorded on any of such stock transfer books. In the event of a transfer of
ownership of U S WEST Common Stock that is not registered in the stock transfer
records of U S WEST at the Effective Time, a certificate or certificates
representing the number of full shares of Parent Class A Common Stock and Parent
Class B Common Stock into which such U S WEST Common Stock shall have been
converted shall be issued to the transferee and a cash payment in the amount of
Pre-Surrender U S WEST Dividends, if any, in accordance with Section 2.4(d)
hereof, if the certificate or certificates representing such U S WEST Common
Stock is or are surrendered as provided in Section 2.4 hereof, accompanied by
all documents required to evidence and effect such transfer and by evidence of
payment of any applicable stock transfer tax.
Section 2.6 No Fractional Share Certificates. (a) No scrip or
fractional share certificate for Parent Class A Common Stock or Parent Class B
Common Stock will be issued upon the surrender for exchange of certificates
evidencing Global Common Stock or U S West Common Stock or upon exercise of
Global Rights or U S WEST Rights, and an outstanding fractional share interest
will not entitle the owner thereof to vote, to receive dividends or to any
rights of a stockholder of Parent or of a Surviving Corporation with respect to
such fractional share interest.
(b) As promptly as practicable following the Effective Time,
the Exchange Agent shall determine the excess of (i) the number of full shares
of Parent Class A Common Stock and Parent Class B Common Stock to be issued and
delivered to the Exchange Agent pursuant to Section 2.4 hereof, over (ii) the
aggregate number of full shares of Parent Class A Common Stock and Parent Class
B Common Stock to be distributed to holders of Global Common Stock and U S WEST
Common Stock pursuant to Section 2.4 hereof (such excess being herein called the
"Excess Shares"). Following the Effective Time, the Exchange Agent, as agent for
the holders of Global Common Stock and U S WEST Common Stock, shall sell the
Excess Shares at then prevailing prices on the NYSE or the Nasdaq National
Market ("Nasdaq"), all in the manner provided in Section 2.6(c).
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(c) The sale of the Excess Shares by the Exchange Agent shall
be executed on the NYSE or Nasdaq and shall be executed in round lots to the
extent practicable. The Exchange Agent shall use all reasonable efforts to
complete the sale of the Excess Shares as promptly following the Effective Time
as, in the Exchange Agent's reasonable judgment, is practicable consistent with
obtaining the best execution of such sales in light of prevailing market
conditions. Until the net proceeds of such sale or sales have been distributed
to the holders of Global Common Stock and U S WEST Common Stock, the Exchange
Agent will hold such proceeds in trust for the holders of Global Common Stock
and U S WEST Common Stock (the "Common Shares Trust"). The Exchange Agent shall
determine the portion of the Common Shares Trust to which each holder of Global
Common Stock and U S West Common Stock shall be entitled, if any, by multiplying
(i) the amount of the aggregate net proceeds comprising the Common Shares Trust
resulting from the sale of shares of Parent Class B Common Stock by a fraction
the numerator of which is the amount of fractional Parent Class B Common Stock
interests to which such holder of Global Common Stock or U S WEST Common Stock
is entitled (after taking into account all shares of Global Common Stock and/or
U S West Stock, as applicable, held at the Effective Time by such holder) and
the denominator of which is the aggregate amount of fractional Parent Class B
Common Shares interests to which all holders of Global Common Stock and U S West
Common Stock are entitled and (ii) the amount of the aggregate net proceeds
comprising the Common Shares Trust resulting from the sale of shares of Parent
Class A Common Stock by a fraction the numerator of which is the amount of
fractional Parent Class A Common Stock interests to which such holder of Global
Common Stock or U S WEST Common Stock is entitled (after taking into account all
shares of Global Common Stock and/or U S West Stock, as applicable, held at the
Effective Time by such holder) and the denominator of which is the aggregate
amount of fractional Parent Class A Common Shares interests to which all holders
of Global Common Stock and U S West Common Stock are entitled.
(d) Notwithstanding the provisions of subsections (b) and (c)
of this Section 2.6, Parent may decide, at its option, exercised prior to the
Effective Time, in lieu of the issuance and sale of Excess Shares and the making
of the payments contemplated in such subsections, that Parent shall pay to the
Exchange Agent an amount sufficient for the Exchange Agent to pay each holder of
Global Common Stock and U S WEST Common Stock the amount such holder would have
received pursuant to Section 2.6(c) assuming that the sales of Parent Class A
Common Stock and Parent Class B Common Stock were made at a price equal to the
average of the closing prices of the Parent Class A Common Stock or Parent Class
B Common Stock, as applicable, on the New York Stock Exchange or on Nasdaq, as
applicable, for the ten consecutive trading days immediately following the
Effective Time and, in such case, all references herein to the cash proceeds of
the sale of the Excess Shares and similar references shall be deemed to mean and
refer to the payments calculated as set forth in this subsection (d). In such
event, Excess Shares shall not be issued or otherwise transferred to the
Exchange Agent pursuant to Section 2.4(b) or 2.4(d) hereof.
(e) As soon as practicable after the determination of the
amount of cash, if any, to be paid to holders of Global Common Stock and U S
WEST Common Stock with respect to any fractional share interests, the Exchange
Agent shall make available such amounts, net of any required withholding and net
of fees and expenses, to such holders of Global Common Stock and U S WEST Common
Stock, subject to and in accordance with the terms of Section 2.4 hereof.
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(f) Following the Effective Time, upon the exercise of any
Global Right or U S WEST Right entitling the holder thereof to purchase a
fractional share of Parent Class A Common Stock or Parent Class B Common Stock,
Parent will, in lieu of issuing a fractional share Certificate therefor, pay to
such holder the value of such fractional interest as determined based on the
closing price on the trading day immediately preceding the date of exercise of a
share of Parent Class B Common Stock or Parent Class A Common Stock, as
applicable, on the New York Stock Exchange, Nasdaq or such other principal
security exchange on which the Parent Class A Common Stock and Parent Class B
Common Stock shall then be trading, or, if not so traded, based on such price as
shall be determined by, or pursuant to authority delegated by, the Board of
Directors of Parent.
Section 2.7 Certain Adjustments. (a) If between the date hereof and
the Effective Time, the outstanding shares of Global Common Stock shall be
changed into a different number of shares by reason of any reclassification,
recapitalization, split-up, combination or exchange of shares, or any dividend
payable in stock or other securities shall be declared thereon with a record
date within such period, then the Conversion Ratio shall be adjusted accordingly
to provide to the holders of Global Common Stock the same economic effect as
contemplated by this Agreement prior to such reclassification, recapitalization,
split-up, combination, exchange or dividend.
(b) If between the date hereof and the Effective Time, the
outstanding shares of U S WEST Common Stock shall be changed into a different
number of shares by reason of any reclassification, recapitalization, split-up,
combination or exchange of shares, or any dividend payable in stock or other
securities shall be declared thereon with a record date within such period, then
the Conversion Ratio shall be adjusted accordingly to provide to the holders of
U S WEST Common Stock the same economic effect as contemplated by this Agreement
prior to such reclassification, recapitalization, split-up, combination,
exchange or dividend.
ARTICLE III
[INTENTIONALLY OMITTED]
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF GLOBAL
Global hereby represents and warrants as of the date hereof to
U S WEST as follows:
Section 4.1 Organization and Qualification; Subsidiaries. Global and
each of its Significant Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization. Each of the Global Subsidiaries which is not a
Significant Subsidiary is duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation or organization, except for
such failure which, when taken together with all other such failures, would not
reasonably be expected to have a Material Adverse Effect on Global. Each of
Global and its Subsidiaries has the requisite corporate power and authority and
any necessary Permit to own, operate or lease the properties that it purports to
own, operate or lease and to carry on its business as it is now being
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conducted, and is duly qualified as a foreign corporation to do business, and is
in good standing, in each jurisdiction where the character of its properties
owned, operated or leased or the nature of its activities makes such
qualification necessary, except for such failure which, when taken together with
all other such failures, would not reasonably be expected to have a Material
Adverse Effect on Global.
Section 4.2 Certificate of Incorporation and Byelaws. Global has
heretofore furnished, or otherwise made available, to U S WEST a complete and
correct copy of the Certificate of Incorporation and the Byelaws, each as
amended to the date hereof, of Global and each of its Significant Subsidiaries.
Such Certificates of Incorporation and Byelaws are in full force and effect.
Neither Global nor any of its Significant Subsidiaries is in violation of any of
the provisions of its respective Certificate of Incorporation or, in any
material respect, its Byelaws.
Section 4.3 Capitalization. (a) The authorized capital stock of
Global consists solely of 600,000,000 shares of Global Common Stock, of which,
as of May 13, 1999, (i) 413,901,537 shares were issued and outstanding, (ii)
22,033,758 shares were held in the treasury of Global, (iii) 33,382,907 shares
were issuable upon the exercise of options outstanding under the Global option
plans listed on Schedule 4.3 hereto, and (iv) (A) 12,500,012 shares were
issuable upon the exercise of warrants expiring August 13, 2003, exercisable at
$9.50 per share of Global Common Stock, and (B) 5,108,358 shares were issuable
upon the exercise of warrants expiring August 13, 2008, exercisable at $9.50 per
share of Global Common Stock (collectively, the "Global Warrants"). Except as
set forth on Schedule 4.3 or in connection with the transactions contemplated by
the Frontier Merger Agreement or, after the date hereof, as permitted by Section
6.2 hereof, (i) since May 13, 1999, no shares of Global Common Stock have been
issued, except upon the exercise of options and warrants described in the
immediately preceding sentence, and (ii) there are no outstanding Global Equity
Rights. For purposes of this Agreement, Global Equity Rights shall mean
subscriptions, options, warrants, calls, commitments, agreements, conversion
rights or other rights of any character (contingent or otherwise) to purchase or
otherwise acquire from Global or any of Global's Subsidiaries at any time, or
upon the happening of any stated event, any shares of the capital stock or other
voting or non-voting securities of Global ("Global Equity Rights"). Schedule 4.3
hereto sets forth a complete and accurate list of all outstanding Global Equity
Rights as of May 13, 1999. Since May 13, 1999, no Global Equity Rights have been
issued except as set forth on Schedule 4.3 or in connection with the
transactions contemplated by the Frontier Merger Agreement or, after the date
hereof, as permitted by Section 6.2 hereof.
(b) Except as set forth on Schedule 4.3, or, after the date hereof,
as permitted by Section 6.2 hereof, there are no outstanding obligations of
Global or any of Global's Subsidiaries to repurchase, redeem or otherwise
acquire any shares of capital stock of Global.
(c) All of the issued and outstanding shares of Global Common Stock
are validly issued, fully paid and nonassessable.
(d) Except as disclosed on Schedule 4.1 hereto, all the outstanding
capital stock of each of Global's Significant Subsidiaries which is owned by
Global is duly authorized, validly issued, fully paid and nonassessable, and is
owned by Global free and clear of any liens, security
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interest, pledges, agreements, claims, charges or encumbrances except for any
liens, security interest, pledges, agreements, claims, charges or encumbrances
which are granted to secure indebtedness permitted by Section 6.2. Except as
hereafter issued or entered into in accordance with Section 6.2 hereof, there
are no existing subscriptions, options, warrants, calls, commitments,
agreements, conversion rights or other rights of any character (contingent or
otherwise) to purchase or otherwise acquire from Global or any of Global's
Subsidiaries at any time, or upon the happening of any stated event, any shares
of the capital stock or other voting or non-voting securities of any Global
Subsidiary, whether or not presently issued or outstanding (except for rights of
first refusal to purchase interests in Subsidiaries which are not wholly-owned
by Global), and there are no outstanding obligations of Global or any of
Global's Subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock or other voting or non-voting securities of any of Global's
Subsidiaries, other than such as would not, individually or in the aggregate,
have a Material Adverse Effect on Global. Except for (i) its Subsidiaries, (ii)
immaterial amounts of equity securities, (iii) investments of Persons in which
Global has less than a five percent (5%) interest, and (iv) equity interests
disclosed on Schedule 4.3 hereto or hereafter acquired as permitted under
Section 6.2 hereof, Global does not directly or indirectly own any equity
interest in any other Person.
(e) No bonds, debentures, notes or other indebtedness of Global
having the right to vote on any matters on which shareholders may vote are
issued or outstanding except for any securities issued after the date hereof in
accordance with Section 6.2.
Section 4.4 Authority Relative to this Agreement. Global has the
necessary corporate power and authority to enter into this Agreement and,
subject to obtaining any necessary stockholder approval of the Global Merger and
this Agreement, to carry out its obligations hereunder. The execution and
delivery of this Agreement by Global and the consummation by Global of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Global, subject to the approval of this
Agreement by Global's stockholders required by Bermuda Law. This Agreement has
been duly executed and delivered by Global and, assuming the due authorization,
execution and delivery thereof by the other Parties, constitutes a legal, valid
and binding obligation of Global, enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other laws relating to or affecting the rights and remedies of creditors
generally and to general principles of equity (regardless of whether considered
in a proceeding in equity or at law).
Section 4.5 No Conflict; Required Filings and Consents. (a) Except as
described in subsection (b) below, the execution and delivery of this Agreement
by Global does not, and the performance of this Agreement by Global will not,
(i) violate or conflict with the Certificate of Incorporation or Byelaws of
Global, (ii) conflict with or violate any law, regulation, court order, judgment
or decree applicable to Global or any of its Significant Subsidiaries or by
which any of their respective property is bound or affected, (iii) violate or
conflict with the Certificate of Incorporation or Byelaws of any of Global's
Subsidiaries, or (iv) result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of Global
or any of its Subsidiaries pursuant to, result in the loss of any material
benefit under, or require
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the consent of any other party to, any contract, instrument, Permit, license or
franchise to which Global or any of its Significant Subsidiaries is a party or
by which Global, any of such Subsidiaries or any of their respective property is
bound or affected, except, in the case of clauses (ii), (iii), and (iv) above,
for conflicts, violations, breaches, defaults, rights, results or consents
which, individually or in the aggregate, would not have a Material Adverse
Effect on Global.
(b) Except for applicable requirements, if any, of state, District of
Columbia, or foreign regulatory laws and commissions, the Federal Communications
Commission, the Exchange Act, the premerger notification requirements of the HSR
Act, filing and recordation of appropriate Mergers or other documents as
required by Delaware Law and Bermuda Law and any filings required pursuant to
any state securities or "blue sky" laws or the rules of any applicable stock
exchanges, neither Global nor any of its Significant Subsidiaries is required to
submit any notice, report or other filing with any Governmental or Regulatory
Authority in connection with the execution, delivery or performance of this
Agreement. Except as set forth in the immediately preceding sentence, no waiver,
consent, approval or authorization of any Governmental or Regulatory Authority
is required to be obtained by Global or any of its Significant Subsidiaries in
connection with its execution, delivery or performance of this Agreement.
Section 4.6 SEC Filings; Financial Statements. (a) Global has filed
all forms, reports and documents required to be filed with the Securities and
Exchange Commission (the "SEC") since January 1, 1998, and has heretofore
delivered or made available to U S WEST, in the form filed with the SEC,
together with any amendments thereto, its (i) Annual Report on Form 10-K for the
fiscal year ended December 31, 1998, (ii) all proxy statements relating to
Global's meetings of stockholders (whether annual or special) held since January
1, 1998, (iii) Quarterly Reports on Form 10-Q for the fiscal quarters ended
March 31, June 30 and September 30, 1998, and (iv) all other reports or
registration statements filed by Global with the SEC since January 1, 1998
(collectively, the "Global SEC Reports"). The Global SEC Reports (i) were
prepared substantially in accordance with the requirements of the Securities Act
or the Exchange Act (as defined in Article X hereof), as the case may be, and
the rules and regulations promulgated under each of such respective acts, and
(ii) did not at the time they were filed contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) The financial statements, including all related notes and
schedules, contained in the Global SEC Reports (or incorporated by reference
therein) fairly present the consolidated financial position of Global and its
Subsidiaries as at the respective dates thereof and the consolidated results of
operations and cash flows of Global and its Subsidiaries for the periods
indicated in accordance with GAAP applied on a consistent basis throughout the
periods involved (except for changes in accounting principles disclosed in the
notes thereto) and subject in the case of interim financial statements to normal
year-end adjustments.
Section 4.7 Absence of Certain Changes or Events. Except as disclosed
in the Global SEC Reports filed prior to the date hereof and on Schedule 4.7,
since December 31, 1998, and except as permitted by this Agreement or consented
to hereunder, Global and its
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Subsidiaries have not incurred any material liability, except in the ordinary
course of their businesses consistent with their past practices, and there has
not been any change, or any event involving a prospective change, in the
business, financial condition or results of operations of Global or any of its
Subsidiaries which has had, or is reasonably likely to have, a Material Adverse
Effect on Global, and Global and its Subsidiaries have conducted their
respective businesses in the ordinary course consistent with their past
practices.
Section 4.8 Litigation. 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 or Regulatory Authority as
to which there is a reasonable likelihood of an adverse judgment or
determination against Global or any of its Subsidiaries, except for those that
are not, individually or in the aggregate, reasonably likely to have a Material
Adverse Effect on Global or prevent, or materially delay the ability of Global
to consummate the transactions contemplated by this Agreement. With respect to
tax matters, litigation shall not be deemed threatened unless a tax authority
has delivered a written notice of deficiency to Global or any of its
Subsidiaries.
Section 4.9 No Violation of Law; Permits. 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 or
Regulatory Authority (including, without limitation, any stock exchange or other
self-regulatory body) ("Legal Requirements"), or in violation of any permits,
franchises, licenses, privileges, immunities, approvals, certificates, orders,
authorizations or consents that are granted by any Governmental or Regulatory
Authority (including, without limitation, any stock exchange or other
self-regulatory body) ("Permits"), except for possible violations none of which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on Global. Except as disclosed in Global SEC Reports and
as set forth on Schedule 4.9 hereto, no investigation, review or proceeding by
any Governmental or Regulatory Authority (including, without limitation, 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 or
Regulatory Authority (including, without limitation, any stock exchange or other
self-regulatory body) indicated an intention to conduct the same, except for
such investigations which, if they resulted in adverse findings, would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Global. Except as set forth in the Global SEC Reports and on
Schedule 4.9 hereto, 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 or Regulatory Authority
that materially restricts the conduct of its business or which would reasonably
be expected to have a Material Adverse Effect on Global, nor has Global or any
of its Subsidiaries been advised that any Governmental or Regulatory Authority
is considering issuing or requesting any of the foregoing. None of the
representations and warranties made in this Section 4.9 are being made with
respect to Environmental Laws.
Section 4.10 Joint Proxy Statement. None of the information supplied
or to be supplied by or on behalf of Global for inclusion or incorporation by
reference in the registration
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statement to be filed with the SEC by Parent in connection with the issuance of
shares of Parent Class A Common Stock and Parent Class B Common Stock in the
Mergers (the "Registration Statement") will, at the time the Registration
Statement 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, in light of the
circumstances under which they were made, not misleading. None of the
information supplied or to be supplied by or on behalf of Global for inclusion
or incorporation by reference in the joint proxy statement, in definitive form,
relating to the meetings of Global and U S WEST stockholders to be held in
connection with the Mergers, or in the related proxy and notice of meeting, or
soliciting material used in connection therewith (referred to herein
collectively as the "Joint Proxy Statement") will, at the dates mailed to
stockholders and at the times of the Global stockholders' meeting and the U S
WEST stockholders' 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 are made, not misleading. The Registration Statement and the Joint Proxy
Statement (except for information relating solely to U S WEST) will comply as to
form in all material respects with the provisions of the Securities Act and the
Exchange Act and the rules and regulations promulgated thereunder.
Section 4.11 Employee Matters; ERISA. Except as set forth on Schedule
4.11:
(a) Schedule 4.11 contains a true and complete list of all employee
benefit plans covering present or former employees or directors of Global and of
each of its Subsidiaries or their beneficiaries, or providing benefits to such
persons in respect of services provided to any such entity, or with respect to
which Global or any of its Subsidiaries has, or has had, an obligation to
contribute or any other liability, including, but not limited to, any employee
benefit plans within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), any deferred compensation,
bonus, stock option, restricted stock, incentive, profit sharing, retirement,
savings, medical, health, life insurance, disability, sick leave, cafeteria or
flexible spending, vacation, unemployment compensation, severance or change in
control agreements, arrangements, programs, policies or plans and any other
benefit arrangements or payroll practice (collectively, the "Global Benefit
Plans"), whether funded or unfunded, insured or uninsured, written or unwritten.
(b) All contributions and other payments required to be made by Global
or any of its Subsidiaries to or under any Global Benefit Plan (or to any person
pursuant to the terms thereof) have been made or the amount of such payment or
contribution obligation has been reflected in the Global Financial Statements.
(c) Each of the Global Benefit Plans intended to be "qualified" within
the meaning of Section 401(a) of the Code has been determined by the Internal
Revenue Service (the "IRS") to be so qualified, and, to Global's Knowledge, no
circumstances exist that could reasonably be expected by Global to adversely
affect such qualification. Global is in compliance in all material respects
with, and each of the Global Benefit Plans complies in form with, and is and has
been operated in all material respects in compliance with, all applicable Legal
Requirements, including, without limitation, ERISA and the Code. No assets of
Global or any of its Subsidiaries are subject to liens arising under ERISA or
the Code on account of any Global
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Benefit Plan, neither Global nor any of its Subsidiaries has been required to
provide any security under Sections 401(a)(29) or 412(f) of the Code, or under
Section 307 of ERISA, and no event has occurred that could give rise to any such
lien or a requirement to provide such security.
(d) With respect to the Global Benefit Plans, individually and in the
aggregate, no event has occurred and, to Global's Knowledge, there does not now
exist any condition or set of circumstances, that could subject Global or any of
its Subsidiaries to any material liability arising under the Code, ERISA or any
other applicable Legal Requirements (including, without limitation, any
liability to any such plan or the Pension Benefit Guaranty Corporation (the
"PBGC")), or under any indemnity agreement to which Global or any of its
Subsidiaries is a party, excluding liability for benefit claims and funding
obligations payable in the ordinary course. No Global Benefit Plan subject to
Title IV of ERISA has terminated, nor has a "reportable event" (within the
meaning of Section 4043 of ERISA) occurred with respect to any such plan (other
than such events with respect to which the reporting requirement has been waived
by regulation).
(e) None of the Global Benefit Plans that are "welfare plans" within
the meaning of Section 3(1) of ERISA (i) provide for any post-employment or
retiree benefits other than continuation coverage required to be provided under
Section 4980B of the Code, Part 6 of Title I of ERISA, or applicable state law,
or (ii) has provided any disqualified benefit, within the meaning of Section
4976 of the Code, with respect to which an excise tax has been, or could be,
imposed.
(f) Global has made available to U S WEST a true and correct copy of
each current or last, in the case where there is no current, expired, collective
bargaining agreement to which Global or any of its Subsidiaries is a party or
under which Global or any of its Subsidiaries has obligations and copies of the
following documents with respect to each Global Benefit Plan, where applicable;
(i) all plan documents governing such plan and the most recent summary plan
description furnished to employees, (ii) the three (3) most recent annual
reports filed with the IRS, (Form 5500-series), including all schedules and
attachments thereto, (iii) each related trust agreement or other funding
arrangement (including all amendments to each such agreement), (iv) the most
recent determination of the IRS with respect to the qualified status of such
Global Benefit Plan, and any currently-pending application for such a letter,
(v) the most recent actuarial report or valuation, and (vi) written descriptions
of unwritten Global Benefit Plans.
(g) Except as set forth on Schedule 4.11 hereto as made available to U
S WEST prior to the date hereof, (i) the consummation or announcement of any
transaction contemplated by this Agreement will not (either alone or upon the
occurrence of any additional or further acts or events) result in any (A)
payment (whether of severance pay or otherwise) becoming due from Global or any
of its Subsidiaries to any officer, employee, former employee or director
thereof or to the trustee under any "rabbi trust" or similar arrangement, (B)
benefit under any Global Benefit Plan being established or becoming accelerated,
vested or payable, or (C) "reportable event" (as defined in Section 4043 of
ERISA) with respect to a Global Benefit Plan subject to Title IV of ERISA, and
(ii) neither Global nor any of its Subsidiaries is a party to (A) any
management, employment, deferred compensation, severance (including any payment,
right or benefit resulting from a change in control), bonus or other contract
for personal services with any current or former officer, director or employee
(whether or not characterized as a plan for
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purposes of ERISA), (B) any consulting contract with any person who prior to
entering into such contract was a director or officer of Global or any of its
Subsidiaries, or (C) any plan, agreement, arrangement or understanding similar
to any of the items described in clause (ii)(A) or (B) of this sentence.
(h) The consummation or announcement of any transaction contemplated
by this Agreement will not (either alone or upon the occurrence of any
additional or further acts or events) result in the disqualification of any of
the Global Benefit Plans intended to be qualified under, result in a prohibited
transaction or breach of fiduciary duty under, or otherwise violate, ERISA or
the Code.
(i) Neither Global nor any of its Subsidiaries nor any of their
directors, officers, employees or agents, nor any "party in interest" or
"disqualified person", as such terms are defined in Section 3 of ERISA and
Section 4975 of the Code, with respect to any Global Benefit Plan, has engaged
in or been a party to any "prohibited transaction", as such term is defined in
Section 4975 of the Code or Section 406 of ERISA which is not otherwise exempt,
which could result in the imposition of either a penalty assessed pursuant to
Section 502(i) of ERISA or a tax imposed by Section 4975 of the Code upon Global
or its Subsidiaries, or which could constitute a breach of fiduciary duty which
could result in liability on the part of Global or any of its Subsidiaries.
(j) No Global Benefit Plan has incurred any "accumulated funding
deficiency" (as defined in Section 412 of the Code or Part 3 of Title I of
ERISA), whether or not waived. Neither Global nor any of its Subsidiaries has
incurred, and none of such entities reasonably expects to incur, any material
liability to the PBGC with respect to any Global Benefit Plan. Neither Global
nor any of its Subsidiaries is a party to, contributes to, or is required to
contribute to, and neither has incurred or reasonably expects to incur, any
withdrawal liability with respect to, any "multiemployer plan" (as defined in
Section 3(37) of ERISA). No Global Benefit Plan is a "multiple employer plan",
within the meaning of the Code or ERISA.
Section 4.12 Labor Matters. Neither Global nor any of its
Subsidiaries is the subject of nor is there pending or threatened, to Global's
Knowledge, any material proceeding asserting that it or any of its Subsidiaries
has committed an unfair labor practice or seeking to compel it to bargain with
any labor union or labor organization, except in each case as would not,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect on Global.
Section 4.13 Environmental Matters. Except for such matters that,
individually or in the aggregate, are not reasonably likely to have a Material
Adverse Effect on Global, or would not otherwise require disclosure pursuant to
the Securities Act, (i) each of Global and its Subsidiaries has complied and is
in compliance with all applicable Environmental Laws (as defined below); (ii)
the properties currently owned or operated by it or any of its Subsidiaries
(including soils, groundwater, surface water, buildings or other structures) are
not contaminated with any Hazardous Substances (as defined below); (iii)
Hazardous Substances were not present, disposed, released or otherwise deposited
on, under, at or from the properties formerly owned or operated by it or any of
its Subsidiaries during the period of ownership or operation by it or any of its
Subsidiaries; (iv) neither it nor any of its Subsidiaries is subject to
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liability for any Hazardous Substance disposal or contamination on any third
party property; (v) neither it nor any of its Subsidiaries has been associated
with any release or threat of release of any Hazardous Substance; (vi) neither
it nor any of its Subsidiaries has received any notice, demand, threat, letter,
claim or request for information alleging that it or any of its Subsidiaries may
be in violation of or liable under any Environmental Law (including any claims
relating to electromagnetic fields or microwave transmissions); (vii) neither it
nor any of its Subsidiaries is subject to any orders, decrees, injunctions or
other arrangements with any Governmental or Regulatory Entity or is subject to
any indemnity or other agreement with any third party relating to liability
under any Environmental Law or relating to Hazardous Substances; and (viii)
there are no circumstances or conditions involving it or any of its Subsidiaries
that could reasonably be expected to result in any claims, liability,
investigations, costs or restrictions on the ownership, use, or transfer of any
of its properties pursuant to any Environmental Law.
As used herein and in Section 5.13, the term "Environmental Law"
means any federal, state, local, foreign or other law (including common law),
statutes, ordinances or codes relating to: (A) the protection, investigation or
restoration of the environment, health, safety or natural resources, (B) the
handling, use, presence, disposal, release or threatened release of any
Hazardous Substance, or (C) noise, odor, wetlands, pollution, contamination or
any injury or threat of injury to person or property in connection with any
Hazardous Substance.
As used herein and in Section 5.13, the term "Hazardous
Substances " means any substance that is: listed, classified or regulated
pursuant to any Environmental Law, including any petroleum product or by-
product, asbestos-containing material, lead-containing paint or plumbing,
polychlorinated biphenyls, radioactive materials or radon.
Section 4.14 Board Action; Vote Required. (a) The Board of
Directors of Global has unanimously determined that the transactions
contemplated by this Agreement are in the best interests of Global and its
stockholders and has resolved to recommend to such stockholders that they vote
in favor thereof.
(b) The approval of the this Agreement by a majority of the votes
entitled to be cast by all holders of Global Common Stock is the only vote of
the holders of any class or series of the capital stock of Global required to
approve this Agreement, the Mergers and the other transactions contemplated
hereby.
Section 4.15 Opinions of Financial Advisors. Global has received
the opinions of Salomon Smith Barney Inc. and Chase Securities, Inc. dated the
date hereof, to the effect that, as of such date, the Conversion Ratio is fair
from a financial point of view to the holders of Global Common Stock.
Section 4.16 Brokers. Except for Salomon Smith Barney Inc. and
Chase Securities, Inc., the arrangements with which have been disclosed to U S
WEST prior to the date hereof, who have been engaged by Global, no broker,
finder or investment banker is entitled to any brokerage, finder's, investment
banking or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Global or any of its Subsidiaries.
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Section 4.17 Tax Matters. Except as set forth on Schedule 4.17
attached hereto and except to the extent that the failure of the following
representations to be true would not have a Material Adverse Effect on Global:
(a) All Tax Returns required to be filed by Global or its
Subsidiaries on or prior to the Effective Time have been or will be timely filed
with the appropriate Governmental or Regulatory Authorities and are or will be
correct in all material respects, and all material taxes due by Global or its
Subsidiaries on or prior to the Effective Time have been or will be timely paid;
(b) All unpaid Taxes in respect of Global or its Subsidiaries with
respect to taxable periods ending on or prior to the Effective Time or with
respect to taxable periods that begin before the Effective Time and end after
the Effective Time, to the extent such Taxes are attributable to the portion of
such period ending at the Effective Time, have been or will be adequately
reflected as a liability on the books of Global or its Subsidiaries on or prior
to the Effective Time;
(c) There are no liens (except for statutory liens for current
Taxes not yet due and payable) against any domestic or foreign assets of Global
or any of its Subsidiaries resulting from any unpaid Taxes;
(d) No audit or other proceeding with respect to Taxes due from
Global or any of its Subsidiaries, or any Tax Return of Global or any of its
Subsidiaries is pending, threatened in writing, or being conducted by any
Governmental or Regulatory Authority; and
(e) No extension of the statute of limitations on the assessment of
any Taxes has been granted by Global or any of its Subsidiaries and is currently
in effect.
Section 4.18 Intellectual Property. Global and its Subsidiaries have
all right, title and interest in, or a valid and binding license to use, all
Intellectual Property (as defined below) that is individually or in the
aggregate material to the conduct of the businesses of Global and its
Subsidiaries taken as a whole ("Global Intellectual Property"). Neither Global
nor any Subsidiary of Global is or is alleged to be in default (or with the
giving of notice or lapse of time or both, would be in default) in any material
respect under any license to use Global Intellectual Property, such Intellectual
Property is not being infringed by any third party, and neither Global nor any
Subsidiary of Global is infringing any Intellectual Property of any third party,
except for such defaults and infringements which, individually or in the
aggregate, are not having and could not be reasonably expected to have a
Material Adverse Effect on Global and its Subsidiaries, taken as a whole. Except
as disclosed on Schedule 4.18, there are no (i) circumstances which, with the
giving of notice or the lapse of time, or both, or the failure of Global to act
in a timely fashion, would cause the loss or materially impair the value or
validity of any Global Intellectual Property, or (ii) notices of any material
claim of infringement with respect to any item of Global Intellectual Property,
or notices of any contested patent or other contested item of Global
Intellectual Property except for such circumstances or notices which would not
have a Material Adverse Effect on Global. Global and its Subsidiaries have taken
all reasonable actions necessary to protect, maintain and safeguard the Global
Intellectual Property, including without limitation the Global Intellectual
Property that is confidential in nature, and have executed all
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necessary agreements in connection therewith except where failure to take such
actions or execute such agreements would not have a Material Adverse Effect on
Global. For purposes of this Agreement, "Intellectual Property" means patents
and patent rights, trademarks and trademark rights, trade names and trade name
rights, service marks and service mark rights, copyrights and copyright rights,
trade secret and related non-disclosure rights, and all other proprietary
intellectual property, and all pending applications for and registrations of any
of the foregoing.
Section 4.19 Insurance. Each of Global and each of its Significant
Subsidiaries is insured with financially responsible insurers in such amounts
and against such risks and losses as are customary for companies conducting the
business as conducted by Global and its Subsidiaries during such time period.
Since January 1, 1998, neither Global nor any of its Subsidiaries has received
notice of cancellation or termination with respect to any material insurance
policy of Global or its Subsidiaries which has not been cured. The insurance
policies of Global and its Subsidiaries are valid and enforceable policies.
Section 4.20 Ownership of Securities. As of the date hereof, neither
Global nor, to Global's Knowledge, any of its affiliates or associates (as such
terms are defined under the Exchange Act), (a)(i) beneficially owns, directly or
indirectly, or (ii) is party to any agreement, arrangement or understanding for
the purpose of acquiring, holding, voting or disposing of, in each case, shares
of capital stock of U S WEST, which in the aggregate represent ten percent (10%)
or more of the outstanding shares of U S WEST Common Stock (other than shares
held by Global Benefit Plans), nor (b) is an "interested stockholder" of U S
WEST within the meaning of Section 203 of Delaware Law. Except as set forth on
Schedule 4.20 hereto, Global owns no shares of U S WEST Common Stock described
in the parenthetical clause of Section 2.2(b) hereof which would be canceled and
retired without consideration pursuant to Section 2.3(a) hereof.
Section 4.21 Certain Contracts. All material contracts required to be
described in Item 601(b)(10) of Regulation S-K to which Global or its
Subsidiaries is a party or may be bound have been filed as exhibits to, or
incorporated by reference in, Global's Annual Report on Form 10-K for the year
ended December 31, 1998. All contracts, licenses, consents, royalty or other
agreements which are material to Global and its Subsidiaries, taken as a whole,
to which Global or any of its Subsidiaries is a party (the "Global Contracts")
are valid and in full force and effect on the date hereof except to the extent
they have previously expired in accordance with their terms or to the extent
that such invalidity would not have a Material Adverse Effect on Global, and, to
Global's Knowledge, neither Global nor any of its Subsidiaries has violated any
provision of, or committed or failed to perform any act which with or without
notice, lapse of time or both would constitute a default under the provisions
of, any Global Contract, except for defaults which, individually and in the
aggregate, would not reasonably be expected to result in a Material Adverse
Effect on Global.
Section 4.22 Licenses. Global and each of its Subsidiaries are the
authorized legal holders or otherwise have rights to all material Permits and
licenses and operating rights necessary for the operation of their businesses as
presently operated (collectively, the "Global Licenses"). All Global Licenses
were duly obtained and are validly issued and in full force and effect. Global
is in compliance in all respects with the Communications Act of 1934, as
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amended, and the rules, regulations and policies of the FCC and all applicable
Governmental or Regulatory Authorities, except where such failure to comply
would not have a Material Adverse Effect on Global. There is not now pending
and, to Global's Knowledge, there is not threatened in each case as of the date
hereof, any action by or before the FCC or any Governmental or Regulatory
Authority to revoke, suspend, cancel, rescind or modify in any material respect
any of the Global Licenses.
Section 4.23 Year 2000. Global has (i) initiated a review and
assessment of all areas within its and each of its existing Subsidiaries'
business and operations that could be adversely affected by a failure of any of
its Systems to be Year 2000 Compliant (as defined below), (ii) developed a plan
and timeline for addressing Year 2000 compliance on a timely basis, and (iii) to
date, implemented that plan in accordance with that timetable. Subject to the
qualification contained in the Global SEC Reports, based on the foregoing, to
Global's Knowledge, all Systems that are material to its or any of its
Subsidiaries' business or operations are reasonably expected on a timely basis
to be Year 2000 Compliant.
Section 4.24 Foreign Corrupt Practices and International Trade
Sanctions. To Global's Knowledge, neither Global, nor any of its Subsidiaries,
nor any of their respective directors, officers, agents, employees or any other
Persons acting on their behalf has, in connection with the operation of their
respective businesses, (i) used any corporate or other funds for unlawful
contributions, payments, gifts or entertainment, or made any unlawful
expenditures relating to political activity to government officials, candidates
or members of political parties or organizations, or established or maintained
any unlawful or unrecorded funds in violation of Section 104 of the Foreign
Corrupt Practices Act of 1977, as amended, or any other similar applicable
foreign, federal or state law, (ii) paid, accepted or received any unlawful
contributions, payments, expenditures or gifts, or (iii) violated or operated in
non-compliance with any export restrictions, anti-boycott regulations, embargo
regulations or other applicable domestic or foreign laws and regulations, except
in each case where there would be no Material Adverse Effect on Global.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF U S WEST
U S WEST hereby represents and warrants as of the date hereof
to Global as follows:
Section 5.1 Organization and Qualification; Subsidiaries. U S WEST and
each of its Significant Subsidiaries, as listed on Schedule 5.1 hereto, is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization. Each of the U S WEST
Subsidiaries which is not a Significant Subsidiary is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization, except for such failure which, when taken
together with all other such failures, would not reasonably be expected to have
a Material Adverse Effect on U S WEST Each of U S WEST and its Subsidiaries has
the requisite corporate power and authority and any necessary Permit to own,
operate or lease the properties that it purports to own, operate or lease and to
carry on its business as it is now being conducted, and is duly qualified as
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a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned, operated or leased or
the nature of its activities makes such qualification necessary, except for such
failure which, when taken together with all other such failures, would not
reasonably be expected to have a Material Adverse Effect on U S WEST.
Section 5.2 Certificate of Incorporation and Bylaws. U S WEST has
heretofore furnished, or otherwise made available, to Global a complete and
correct copy of the Certificate of Incorporation and the Bylaws, each as amended
to the date hereof, of U S WEST and each of its Significant Subsidiaries. Such
Certificates of Incorporation and Bylaws are in full force and effect. Neither U
S WEST nor any of its Significant Subsidiaries is in violation of any of the
provisions of its respective Certificate of Incorporation or, in any material
respect, its Bylaws.
Section 5.3 Capitalization. (a) The authorized capital stock of U S
WEST consists solely of (i) 10,000,000 shares of Series A Junior Preferred
Stock, par value $1.00 per share, none of which are outstanding and none of
which are reserved for issuance, (ii) 190,000,000 shares of Preferred Stock, par
value $1.00 per share, none of which are outstanding and none of which are
reserved for issuance, and (iii) 2,000,000,000 shares of U S WEST Common Stock,
of which, as of May 14, 1999, 503,861,953 shares were issued and outstanding,
304,003 shares were held in the treasury of U S WEST and 25,532,355 shares were
issuable upon the exercise of options outstanding under the U S WEST option
plans listed on Schedule 5.3 hereto. Except as set forth on Schedule 5.3 or as
permitted by Section 6.2 hereof, (x) since May 14, 1999, no shares of U S WEST
Common Stock have been issued, except upon the exercise of options and rights
described in the immediately preceding sentence, and (y) there are no
outstanding U S WEST Equity Rights. For purposes of this Agreement, U S WEST
Equity Rights shall mean subscriptions, options, warrants, calls, commitments,
agreements, conversion rights or other rights of any character (contingent or
otherwise) to purchase or otherwise acquire from U S WEST or any of U S WEST's
Subsidiaries at any time, or upon the happening of any stated event, any shares
of the capital stock or other voting or non-voting securities of U S WEST ("U S
WEST Equity Rights"). Schedule 5.3 hereto sets forth a complete and accurate
list of all outstanding U S WEST Equity Rights as of May 14, 1999. Since May 14,
1999, no U S WEST Equity Rights have been issued except as set forth on Schedule
5.3 or, after the date hereof, as permitted by Section 6.2 hereof.
(b) Except as set forth on Schedule 5.3, or, after the date hereof, as
permitted by Section 6.2 hereof, there are no outstanding obligations of U S
WEST or any of U S WEST's Subsidiaries to repurchase, redeem or otherwise
acquire any shares of capital stock of U S WEST.
(c) All of the issued and outstanding shares of U S WEST Common Stock
are validly issued, fully paid and nonassessable.
(d) Except as disclosed on Schedule 5.1 hereto, all the outstanding
capital stock of each of U S WEST's Significant Subsidiaries which is owned by U
S WEST is duly authorized, validly issued, fully paid and nonassessable, and is
owned by U S WEST free and clear of any liens, security interests, pledges,
agreements, claims, charges or encumbrances except for liens, security
interests, pledges, agreements, claims, charges or encumbrances which
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are granted to secure indebtedness permitted by Section 6.2. Except as set
forth on Schedule 5.3, or hereafter issued or entered into in accordance with
Section 6.2 hereof, there are no existing subscriptions, options, warrants,
calls, commitments, agreements, conversion rights or other rights of any
character (contingent or otherwise) to purchase or otherwise acquire from U S
WEST or any of U S WEST's Subsidiaries at any time, or upon the happening of any
stated event, any shares of the capital stock or other voting or non-voting
securities of any U S WEST Subsidiary, whether or not presently issued or
outstanding (except for rights of first refusal to purchase interests in
Subsidiaries which are not wholly-owned by U S WEST), and there are no
outstanding obligations of U S WEST or any of U S WEST's Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock or other
voting or non-voting securities of any of U S WEST's Subsidiaries, other than
such as would not, individually or in the aggregate, have a Material Adverse
Effect on U S WEST Except for (i) its Subsidiaries, (ii) immaterial amounts of
equity securities, (iii) investments of Persons in which U S WEST has less than
a five percent (5%) interest, and (iv) equity interests disclosed on Schedule
5.3 hereto or hereafter acquired as permitted under Section 6.2 hereof, U S WEST
does not directly or indirectly own any equity interest in any other Person.
(e) No bonds, debentures, notes or other indebtedness of U S WEST
having the right to vote on any matters on which shareholders may vote are
issued or outstanding except for any securities issued after the date hereof in
accordance with Section 6.2.
Section 5.4 Authority Relative to this Agreement. U S WEST has the
necessary corporate power and authority to enter into this Agreement and,
subject to obtaining any necessary stockholder approval of the U S WEST Merger
and this Agreement, to carry out its obligations hereunder. The execution and
delivery of this Agreement by U S WEST and the consummation by U S WEST of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of U S WEST, subject to the approval of this
Agreement by U S WEST's stockholders required by the rules of the NYSE and by
Delaware Law. This Agreement has been duly executed and delivered by U S WEST
and, assuming the due authorization, execution and delivery thereof by the other
Parties, constitutes a legal, valid and binding obligation of U S WEST,
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting the rights and remedies of creditors generally and to general
principles of equity (regardless of whether considered in a proceeding in equity
or at law).
Section 5.5 No Conflict; Required Filings and Consents. (a) Except as
listed on Schedule 5.5 hereto or as described in subsection (b) below, the
execution and delivery of this Agreement by U S WEST does not, and the
performance of this Agreement by U S WEST will not, (i) violate or conflict with
the Certificate of Incorporation or Bylaws of U S WEST, (ii) conflict with or
violate any law, regulation, court order, judgment or decree applicable to U S
WEST or any of its Significant Subsidiaries or by which any of their respective
property is bound or affected, (iii) violate or conflict with the Certificate of
Incorporation or Bylaws of any of U S WEST's Subsidiaries, or (iv) result in any
breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination or cancellation of, or result in the creation of a lien or
encumbrance on any of the properties or assets of U S WEST or any of its
Subsidiaries pursuant to, result in the loss of any material benefit under, or
require the consent of any other party to,
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any contract or instrument, relating to financing to which U S WEST or any of
its Significant Subsidiaries is a party or by which U S WEST, any of such
Subsidiaries or any of their respective property is bound or affected, except,
in the case of clauses (ii), (iii), and (iv) above, for conflicts, violations,
breaches, defaults, rights, results or consents which, individually or in the
aggregate, would not have a Material Adverse Effect on U S WEST.
(b) Except for applicable requirements, if any, of state, District of
Columbia, or foreign regulatory laws and commissions, the Federal Communications
Commission, the Exchange Act, the premerger notification requirements of the HSR
Act, filing and recordation of appropriate Mergers or other documents as
required by Delaware Law and any filings required pursuant to any state
securities or "blue sky" laws or the rules of any applicable stock exchanges,
neither U S WEST nor any of its Significant Subsidiaries is required to submit
any notice, report or other filing with any Governmental or Regulatory Authority
in connection with the execution, delivery or performance of this Agreement.
Except as set forth in the immediately preceding sentence, no waiver, consent,
approval or authorization of any Governmental or Regulatory Authority is
required to be obtained by U S WEST or any of its Significant Subsidiaries in
connection with its execution, delivery or performance of this Agreement.
Section 5.6 SEC Filings; Financial Statements. (a) U S WEST has filed
all forms, reports and documents required to be filed with the SEC since June
12, 1998, and has heretofore delivered or made available to Global, in the form
filed with the SEC, together with any amendments thereto, its (i) Annual Reports
on Form 10-K for the fiscal years ended December 31, 1996, 1997 and 1998, (ii)
all proxy statements relating to U S WEST's meetings of stockholders (whether
annual or special) held since January 1, 1996, (iii) Quarterly Reports on Form
10-Q for the fiscal quarters ended March 31, June 30, September 30, 1998, and
March 31, 1999 and (iv) all other reports or registration statements filed by U
S WEST with the SEC since January 1, 1996 (collectively, the "U S WEST SEC
Reports"). The U S WEST SEC Reports (i) were prepared substantially in
accordance with the requirements of the Securities Act or the Exchange Act, as
the case may be, and the rules and regulations promulgated under each of such
respective acts, and (ii) did not at the time they were filed contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(b) The financial statements, including all related notes and
schedules, contained in the U S WEST SEC Reports (or incorporated by reference
therein) fairly present the consolidated financial position of U S WEST and its
Subsidiaries as at the respective dates thereof and the consolidated results of
operations and cash flows of U S WEST and its Subsidiaries for the periods
indicated in accordance with GAAP applied on a consistent basis throughout the
periods involved (except for changes in accounting principles disclosed in the
notes thereto) and subject in the case of interim financial statements to normal
year-end adjustments.
Section 5.7 Absence of Certain Changes or Events. Except as disclosed
in the U S WEST SEC Reports filed prior to the date hereof and on Schedule 5.7,
since December 31, 1998, and except as permitted by this Agreement or consented
to hereunder, U S WEST and its Subsidiaries have not incurred any material
liability, except in the ordinary
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course of their businesses consistent with their past practices, and there has
not been any change, or any event involving a prospective change, in the
business, financial condition or results of operations of U S WEST or any of its
Subsidiaries which has had, or is reasonably likely to have, a Material Adverse
Effect on U S WEST, and U S WEST and its Subsidiaries have conducted their
respective businesses in the ordinary course consistent with their past
practices.
Section 5.8 Litigation. There are no claims, actions, suits,
proceedings or investigations pending or, to U S WEST's Knowledge, threatened
against U S WEST or any of its Subsidiaries, or any properties or rights of U S
WEST or any of its Subsidiaries, before any Governmental or Regulatory Authority
as to which there is a reasonable likelihood of an adverse judgment or
determination against U S WEST or any of its Subsidiaries, except for those that
are not, individually or in the aggregate, reasonably likely to have a Material
Adverse Effect on U S WEST, or prevent or materially delay the ability of U S
WEST to consummate the transactions contemplated by this Agreement, except as
set forth on Schedule 5.8 hereto. With respect to tax matters, litigation shall
not be deemed threatened unless a tax authority has delivered a written notice
of deficiency to U S WEST or any of its Subsidiaries.
Section 5.9 No Violation of Law; Permits. The business of U S WEST and
its Subsidiaries is not being conducted in violation of any Legal Requirements
or in violation of any Permits, except for possible violations none of which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on U S WEST. Except as disclosed in U S WEST SEC Reports
and as set forth in the U S WEST SEC Reports and on Schedule 5.9 hereto, no
investigation, review or proceeding by any Governmental or Regulatory Authority
(including, without limitation, any stock exchange or other self-regulatory
body) with respect to U S WEST or its Subsidiaries in relation to any alleged
violation of law or regulation is pending or, to U S WEST's Knowledge,
threatened, nor has any Governmental or Regulatory Authority (including, without
limitation, any stock exchange or other self-regulatory body) indicated an
intention to conduct the same, except for such investigations which, if they
resulted in adverse findings, would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on U S WEST Except
as set forth in the U S WEST SEC Reports and on Schedule 5.9 hereto, neither U S
WEST 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 or Regulatory Authority that materially restricts the conduct of
its business or which would reasonably be expected to have a Material Adverse
Effect on U S WEST, nor has U S WEST or any of its Subsidiaries been advised
that any Governmental or Regulatory Authority is considering issuing or
requesting any of the foregoing. None of the representations and warranties made
in this Section 5.9 are being made with respect to Environmental Laws.
Section 5.10 Joint Proxy Statement. None of the information supplied
or to be supplied by or on behalf of U S WEST for inclusion or incorporation by
reference in the Registration Statement will, at the time the Registration
Statement 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, in light of the
circumstances under which they were made, not misleading. None of the
information supplied
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or to be supplied by or on behalf of U S WEST for inclusion or incorporation by
reference in the Joint Proxy Statement will, at the dates mailed to stockholders
and at the times of the Global stockholders' meeting and the U S WEST
stockholders' 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
are made, not misleading. The Registration Statement and the Joint Proxy
Statement (except for information relating solely to Global) will comply as to
form in all material respects with the provisions of the Securities Act and the
Exchange Act and the rules and regulations promulgated thereunder.
Section 5.11 Employee Matters; ERISA. Except as set forth on Schedule
5.11:
(a) Schedule 5.11 contains a true and complete list of all
employee benefit plans covering present or former employees or directors of U S
WEST and of each of its Subsidiaries or their beneficiaries, or providing
benefits to such persons in respect of services provided to any such entity, or
with respect to which U S WEST or any of its Subsidiaries has, or has had, an
obligation to contribute or any other liability, including, but not limited to,
any employee benefit plans within the meaning of Section 3(3) of ERISA, any
deferred compensation, bonus, stock option, restricted stock, incentive, profit
sharing, retirement, savings, medical, health, life insurance, disability, sick
leave, cafeteria or flexible spending, vacation, unemployment compensation,
severance or change in control agreements, arrangements, programs, policies or
plans and any other benefit arrangements or payroll practice (collectively, the
"U S WEST Benefit Plans"), whether funded or unfunded, insured or uninsured,
written or unwritten.
(b) All contributions and other payments required to be
made by U S WEST or any of its Subsidiaries to or under any U S WEST Benefit
Plan (or to any person pursuant to the terms thereof) have been made or the
amount of such payment or contribution obligation has been reflected in the U S
WEST Financial Statements.
(c) Each of the U S WEST Benefit Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code has been determined
by the IRS to be so qualified, and, to U S WEST's Knowledge, no circumstances
exist that could reasonably be expected by U S WEST to adversely affect such
qualification. U S WEST is in compliance in all material respects with, and each
of the U S WEST Benefit Plans complies in form with, and is and has been
operated in all material respects in compliance with, all applicable Legal
Requirements, including, without limitation, ERISA and the Code. No assets of U
S WEST or any of its Subsidiaries are subject to liens arising under ERISA or
the Code on account of any U S WEST Benefit Plan, neither U S WEST nor any of
its Subsidiaries has been required to provide any security under Sections
401(a)(29) or 412(f) of the Code, or under Section 307 of ERISA, and no event
has occurred that could give rise to any such lien or a requirement to provide
such security.
(d) With respect to the U S WEST Benefit Plans, individually
and in the aggregate, no event has occurred and, to U S WEST's Knowledge, there
does not now exist any condition or set of circumstances, that could subject U S
WEST or any of its Subsidiaries to any material liability arising under the
Code, ERISA or any other applicable Legal Requirements (including, without
limitation, any liability to any such plan or the PBGC), or under any
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indemnity agreement to which U S WEST or any of its Subsidiaries is a party,
excluding liability for benefit claims and funding obligations payable in the
ordinary course. No U S WEST Benefit Plan subject to Title IV of ERISA has
terminated, nor has a "reportable event" (within the meaning of Section 4043 of
ERISA) occurred with respect to any such plan (other than such events with
respect to which the reporting requirement has been waived by regulation).
(e) None of the U S WEST Benefit Plans that are "welfare
plans" within the meaning of Section 3(1) of ERISA (i) provides for any post-
employment or retiree benefits other than continuation coverage required to be
provided under Section 4980B of the Code, Part 6 of Title I of ERISA or
applicable state law, or (ii) has provided any disqualified benefit, within the
meaning of Section 4976 of the Code, with respect to which an excise tax has
been, or could be, imposed.
(f) U S WEST has made available to Global a true and correct
copy of each current or last, in the case where there is no current, expired
collective bargaining agreement to which U S WEST or any of its Subsidiaries is
a party or under which U S WEST or any of its Subsidiaries has obligations and
copies of the following documents with respect to each U S WEST Benefit Plan,
where applicable, (i) all plan documents governing such plan and the most recent
summary plan description furnished to employees, (ii) the three (3) most recent
annual reports filed with the IRS, (Form 5500-series), including all schedules
and attachments thereto, (iii) each related trust agreement or other funding
arrangement (including all amendments to each such agreement), (iv) the most
recent determination of the IRS with respect to the qualified status of such U S
WEST Benefit Plan, and any currently-pending application for such a letter, (v)
the most recent actuarial report or valuation, and (vi) written description of
unwritten U S WEST Benefit Plans.
(g) Except as set forth on Schedule 5.11 hereto as made
available to Global prior to the date hereof, (i) the consummation or
announcement of any transaction contemplated by this Agreement will not (either
alone or upon the occurrence of any additional or further acts or events) result
in any (A) payment (whether of severance pay or otherwise) becoming due from U S
WEST or any of its Subsidiaries to any officer, employee, former employee or
director thereof or to the trustee under any "rabbi trust" or similar
arrangement, (B) benefit under any U S WEST Benefit Plan being established or
becoming accelerated, vested or payable, or (C) "reportable event" (as defined
in Section 4043 of ERISA) with respect to a U S WEST Benefit Plan subject to
Title IV of ERISA, and (ii) neither U S WEST nor any of its Subsidiaries is a
party to (A) any management, employment, deferred compensation, severance
(including any payment, right or benefit resulting from a change in control),
bonus or other contract for personal services with any current or former
officer, director or employee (whether or not characterized as a plan for
purposes of ERISA), (B) any consulting contract with any person who prior to
entering into such contract was a director or officer of U S WEST or any of its
Subsidiaries, or (C) any plan, agreement, arrangement or understanding similar
to any of the items described in clause (ii)(A) or (B) of this sentence.
(h) The consummation or announcement of any transaction
contemplated by this Agreement will not (either alone or upon the occurrence of
any additional or further acts or events) result in the disqualification of any
of the U S WEST Benefit Plans intended to be
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qualified under, result in a prohibited transaction or breach of fiduciary duty
under, or otherwise violate, ERISA or the Code.
(i) Neither U S WEST nor any of its Subsidiaries nor any of their
directors, officers, employees or agents, nor any "party in interest" or
"disqualified person", as such terms are defined in Section 3 of ERISA and
Section 4975 of the Code, with respect to any U S WEST Benefit Plan, has engaged
in or been a party to any "prohibited transaction", as such term is defined in
Section 4975 of the Code or Section 406 of ERISA, which is not otherwise exempt,
which could result in the imposition of either a penalty assessed pursuant to
Section 502(i) of ERISA or a tax imposed by Section 4975 of the Code upon U S
WEST or its Subsidiaries, or which could constitute a breach of fiduciary duty
which could result in liability on the part of U S WEST or any of its
Subsidiaries.
(j) No U S WEST Benefit Plan has incurred any "accumulated funding
deficiency" (as defined in Section 412 of the Code or Part 3 of Title I of
ERISA), whether or not waived. Neither U S WEST nor any of its Subsidiaries has
incurred, and none of such entities reasonably expects to incur, any material
liability to the PBGC with respect to any U S WEST Benefit Plan. Neither U S
WEST nor any of its Subsidiaries is a party to, contributes to, or is required
to contribute to, and neither has incurred or reasonably expects to incur, any
withdrawal liability with respect to, any "multiemployer plan" (as defined in
Section 3(37) of ERISA). No U S WEST Benefit Plan is a "multiple employer plan",
within the meaning of the Code or ERISA.
Section 5.12 Labor Matters. Except as set forth on Schedule 5.12,
neither U S WEST nor any of its Subsidiaries is the subject of any material
proceeding asserting that it or any of its Subsidiaries has committed an unfair
labor practice or seeking to compel it to bargain with any labor union or labor
organization, nor is any such proceeding pending or, to U S WEST's Knowledge,
threatened, except in each case as would not, individually or in the aggregate,
be reasonably likely to have a Material Adverse Effect on U S WEST.
Section 5.13 Environmental Matters. Except for such matters that,
individually or in the aggregate, are not reasonably likely to have a Material
Adverse Effect on U S WEST, or would not otherwise require disclosure pursuant
to the Securities Act, or are listed on Schedule 5.13 hereto, (i) each of U S
WEST and its Subsidiaries has complied and is in compliance with all applicable
Environmental Laws (as defined below); (ii) the properties currently owned or
operated by it or any of its Subsidiaries (including soils, groundwater, surface
water, buildings or other structures) are not contaminated with any Hazardous
Substances (as defined below); (iii) Hazardous Substances were not present,
disposed, released or otherwise deposited on, under, at or from the properties
formerly owned or operated by it or any of its Subsidiaries during the period of
ownership or operation by it or any of its Subsidiaries; (iv) neither it nor any
of its Subsidiaries is subject to liability for any Hazardous Substance disposal
or contamination on any third party property; (v) neither it nor any of its
Subsidiaries has been associated with any release or threat of release of any
Hazardous Substance; (vi) neither it nor any of its Subsidiaries has received
any notice, demand, threat, letter, claim or request for information alleging
that it or any of its Subsidiaries may be in violation of or liable under any
Environmental Law (including any claims relating to electromagnetic fields or
microwave transmissions); (vii) neither it nor any of its Subsidiaries is
subject to any orders, decrees,
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injunctions or other arrangements with any Governmental or Regulatory Entity or
is subject to any indemnity or other agreement with any third party relating to
liability under any Environmental Law or relating to Hazardous Substances; and
(viii) there are no circumstances or conditions involving it or any of its
Subsidiaries that could reasonably be expected to result in any claims,
liability, investigations, costs or restrictions on the ownership, use, or
transfer of any of its properties pursuant to any Environmental Law.
Section 5.14 Board Action; Vote Required; U S WEST Rights Plan;
Applicability of Section 203. (a) The Board of Directors of U S WEST has
unanimously determined that the transactions contemplated by this Agreement are
in the best interests of U S WEST and its stockholders and has resolved to
recommend to such stockholders that they vote in favor thereof.
(b) The approval of this Agreement by a majority of the votes
entitled to be cast by all holders of U S WEST Common Stock is the only vote of
the holders of any class or series of the capital stock of U S WEST required to
approve this Agreement, the Mergers and the other transactions contemplated
hereby.
(c) The provisions of Section 203 of Delaware Law will not, assuming
the accuracy of the representations contained in Section 4.20 hereof (without
giving effect to the knowledge qualification therein), apply to this Agreement
or any of the transactions contemplated hereby.
(d) The Board of Directors of U S WEST have taken all actions
necessary to render Article IX of the U S WEST Certificate of Incorporation
inapplicable to the transactions contemplated hereby.
(e) The Rights Agreement dated as of June 1, 1998 between U S WEST and
State Street Bank and Trust Company has been amended so as to provide that none
or Global or any of its Subsidiaries will be an "Acquiring Person" thereunder.
Section 5.15 Opinion of Financial Advisor. U S WEST has received
the opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
Lynch"), dated the date hereof, to the effect that, as of such date, the
Conversion Ratio is fair from a financial point of view to the holders of U S
WEST Common Stock.
Section 5.16 Brokers. Except for Merrill Lynch, the arrangements
with which have been disclosed to Global prior to the date hereof, who has been
engaged by U S WEST, no broker, finder or investment banker is entitled to any
brokerage, finder's, investment banking or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of U S WEST or any of its Subsidiaries.
Section 5.17 Tax Matters. Except as set forth on Schedule 5.17
attached hereto and except to the extent that the failure of the following
representations to be true would not have a Material Adverse Effect on U S WEST:
(a) All Tax Returns required to be filed by U S WEST or
its Subsidiaries on or prior to the Effective Time have been or will be timely
filed with the appropriate
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Governmental or Regulatory Authorities and are or will be correct in all
material respects, and all material taxes due by U S WEST or its Subsidiaries on
or prior to the Effective Time have been, or will be, timely paid;
(b) All unpaid Taxes in respect of U S WEST or its
Subsidiaries with respect to taxable periods ending on or prior to the Effective
Time or with respect to taxable periods that begin before the Effective Time and
end after the Effective Time, to the extent such Taxes are attributable to the
portion of such period ending at the Effective Time, have been or will be
adequately reflected as a liability on the books of U S WEST or its Subsidiaries
on or prior to the Effective Time;
(c) There are no liens (except for statutory liens for
current Taxes not yet due and payable) against any domestic or foreign assets of
U S WEST or any of its Subsidiaries resulting from any unpaid Taxes;
(d) No audit or other proceeding with respect to Taxes
due from U S WEST or any of its Subsidiaries, or any Tax Return of U S WEST or
any of its Subsidiaries is pending, threatened in writing, or being conducted by
any Governmental or Regulatory Authority.
(e) No extension of the statute of limitations on the
assessment of any Taxes has been granted by U S WEST or any of its Subsidiaries
and is currently in effect.
Section 5.18 Intellectual Property. U S WEST and its Subsidiaries have
all right, title and interest in, or a valid and binding license to use, all
Intellectual Property that is individually or in the aggregate material to the
conduct of the businesses of U S WEST and its Subsidiaries taken as a whole ("U
S WEST Intellectual Property"). Neither U S WEST nor any Subsidiary of U S WEST
is or is alleged to be in default (or with the giving of notice or lapse of time
or both, would be in default) in any material respect under any license to use U
S WEST Intellectual Property, such Intellectual Property is not being infringed
by any third party, and neither U S WEST nor any Subsidiary of U S WEST is
infringing any Intellectual Property of any third party, except for such
defaults and infringements which, individually or in the aggregate, are not
having and could not be reasonably expected to have a Material Adverse Effect on
U S WEST. Except as disclosed in Schedule 5.18, there are no (i) circumstances
which, with the giving of notice or the lapse of time, or both, or the failure
of U S WEST to act in a timely fashion, would cause the loss or materially
impair the value or validity of any U S WEST Intellectual Property, or (ii)
notices of any material claim of infringement with respect to any item of U S
WEST Intellectual Property, or notices of any contested patent or other
contested item of Intellectual Property except for such circumstances or notices
which would not have a Material Adverse Effect on U S WEST. U S WEST and its
Subsidiaries have taken all reasonable actions necessary to protect, maintain
and safeguard the U S WEST Intellectual Property, including without limitation
the U S WEST Intellectual Property that is confidential in nature, and have
executed all necessary agreements in connection therewith except where the
failure to take such actions or execute such agreements would not have a
Material Adverse Effect on U S WEST.
Section 5.19 Insurance. Except as set forth on Schedule 5.19 hereto,
each of U S WEST and each of its Significant Subsidiaries is insured with
financially responsible
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insurers in such amounts and against such risks and losses as are customary for
companies conducting the business as conducted by U S WEST and its Subsidiaries
during such time period. Except as set forth on such Schedule 5.19, since
January 1, 1998, neither U S WEST nor any of its Subsidiaries has received
notice of cancellation or termination with respect to any material insurance
policy of U S WEST or its Subsidiaries which has not been cured. The insurance
policies of U S WEST and its Subsidiaries are valid and enforceable policies.
Section 5.20 Ownership of Securities. Except as set forth on Schedule
5.20, as of the date hereof, neither U S WEST nor, to U S WEST's Knowledge, any
of its affiliates or associates (as such terms are defined under the Exchange
Act), beneficially owns, directly or indirectly, or is party to any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of, in each case, shares of capital stock of Global, which in the
aggregate represent ten percent (10%) or more of the outstanding shares of
Global Common Stock (other than shares held by U S WEST Benefit Plans). Except
as set forth on Schedule 5.20 hereto, U S WEST owns no shares of Global Common
Stock described in the parenthetical clause of Section 2.2(a) hereof which would
be canceled and retired without consideration pursuant to Section 2.3(a) hereof.
Section 5.21 Certain Contracts. All material contracts required to be
described in Item 601(b)(10) of Regulation S-K to which U S WEST or its
Subsidiaries is a party or may be bound have been filed as exhibits to, or
incorporated by reference in, U S WEST's Annual Report on Form 10-K for the year
ended December 31, 1998. All contracts, licenses, consents, royalty or other
agreements which are material to U S WEST and its Subsidiaries, taken as a
whole, to which U S WEST or any of its Subsidiaries is a party (the "U S WEST
Contracts") are valid and in full force and effect on the date hereof except to
the extent they have previously expired in accordance with their terms or to the
extent such invalidity would not have a Material Adverse Effect on U S WEST,
and, to U S WEST's Knowledge, neither U S WEST nor any of its Subsidiaries has
violated any provision of, or committed or failed to perform any act which with
or without notice, lapse of time or both would constitute a default under the
provisions of, any U S WEST Contract, except for defaults which, individually
and in the aggregate, would not reasonably be expected to result in a Material
Adverse Effect on U S WEST.
Section 5.22 Licenses. U S WEST and each of its Subsidiaries are the
authorized legal holders or otherwise has rights to all material Permits and
licenses and operating rights necessary for the operation of their businesses as
presently operated (collectively, the "U S WEST Licenses"). All U S WEST
Licenses were duly obtained and are validly issued and in full force and effect.
U S WEST is in compliance in all respects with the Communications Act of 1934,
as amended, and the rules, regulations and policies of the FCC and all
applicable Governmental or Regulatory Authorities except for such failure to
comply which would not have a Material Adverse Effect on U S WEST. There is not
now pending and, to U S WEST's Knowledge, there is not threatened, in each case
as of the date hereof, any action by or before the FCC or any Governmental or
Regulatory Authority to revoke, suspend, cancel, rescind or modify in any
material respect any of the U S WEST Licenses.
Section 5.23 Year 2000. U S WEST has (i) initiated a review and
assessment of all areas within its and each of its existing Subsidiaries'
business and operations that could be
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adversely affected by a failure of any of its Systems to be Year 2000 Compliant
(as defined below), (ii) developed a plan and timeline for addressing Year 2000
compliance on a timely basis, and (iii) to date, implemented that plan in
accordance with that timetable. Subject to the qualification contained in the U
S WEST SEC Reports, based on the foregoing, to U S WEST's Knowledge, all Systems
that are material to its or any of its Subsidiaries' business or operations are
reasonably expected on a timely basis to be Year 2000 Compliant.
Section 5.24 Foreign Corrupt Practices and International Trade
Sanctions. To U S WEST's Knowledge, neither U S WEST, nor any of its
Subsidiaries, nor any of their respective directors, officers, agents, employees
or any other Persons acting on their behalf has, in connection with the
operation of their respective businesses, (i) used any corporate or other funds
for unlawful contributions, payments, gifts or entertainment, or made any
unlawful expenditures relating to political activity to government officials,
candidates or members of political parties or organizations, or established or
maintained any unlawful or unrecorded funds in violation of Section 104 of the
Foreign Corrupt Practices Act of 1977, as amended, or any other similar
applicable foreign, federal or state law, (ii) paid, accepted or received any
unlawful contributions, payments, expenditures or gifts, or (iii) violated or
operated in noncompliance with any export restrictions, anti-boycott
regulations, embargo regulations or other applicable domestic or foreign laws
and regulations except in each case which would not have a Material Adverse
Effect on U S WEST.
ARTICLE VI
CONDUCT OF INDEPENDENT BUSINESSES PENDING THE MERGERS
Section 6.1 Transition Planning. A four-person committee (the
"Transition Committee") comprised of the persons set forth on Schedule 6.1
attached hereto shall be established promptly following the date hereof. If any
of such persons is unable to serve on the Transition Committee for any reason,
then Global and U S WEST shall take such action as may be required so that the
Transition Committee consists of two (2) persons designated by each of Global
and U S WEST The Transition Committee shall be responsible for coordinating all
aspects of transition planning and implementation relating to the Mergers and
the other transactions contemplated hereby. During the period between the date
hereof and the Effective Time, the Transition Committee shall (i) examine
various alternatives regarding the manner in which to best organize and manage
the businesses of U S WEST and Global after the Effective Time, and (ii)
coordinate policies and strategies with respect to regulatory authorities and
bodies, in all cases subject to all Legal Requirements and Permits. The
affirmative vote of three (3) members of the Transition Committee shall be
required for such committee to take action.
Section 6.2 Conduct of Business in the Ordinary Course. Each of Global
and U S WEST covenants and agrees that, between the date hereof and the
Effective Time, unless the Transition Committee shall otherwise consent in
writing, and except as described on Schedule 6.2 hereto or as otherwise
expressly contemplated hereby, the business of such Party and its Subsidiaries
shall be conducted only in, and such entities shall not take any action except
in, the ordinary course of business and in a manner consistent with past
practice and all Legal Requirements and Permits; and each of Global and U S WEST
and their respective Subsidiaries will use their commercially reasonable efforts
to preserve substantially intact their business
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organizations, to keep available the services of those of their present
officers, employees and consultants who are integral to the operation of their
businesses as presently conducted and to preserve their present relationships
with significant customers and suppliers and with other persons with whom they
have significant business relations; provided, however, that no action by Global
or U S WEST or its Subsidiaries with respect to matters specifically addressed
by any other provision of this Section 6.2 shall be deemed a breach of this
sentence unless such action would constitute a breach of one or more of such
other provisions. By way of amplification and not limitation, unless the
Transition Committee shall otherwise consent in writing, and except as set forth
on Schedule 6.2 hereto or as otherwise expressly contemplated by this Agreement,
each of Global and U S WEST agrees on behalf of itself and its Subsidiaries that
they will not, between the date hereof and the Effective Time, directly or
indirectly, do any of the following without the prior written consent of the
other:
(a) (i) except for (A) the issuance of shares of Global Common
Stock and U S WEST Common Stock in the ordinary course of business and in a
manner consistent with past practice in amounts not exceeding the amounts set
forth in Schedule 6.2 in order to satisfy obligations under employee benefit
plans disclosed in Schedule 4.3 or 5.3 and U S WEST Equity Rights or Global
Equity Rights issued thereunder and under existing dividend reinvestment plans;
(B) grants of stock options with respect to Global Common Stock or U S WEST
Common Stock to employees as set forth on Schedule 6.2 hereto in the ordinary
course of business and in a manner consistent with past practice; (C) the
issuance of shares of Global Common Stock pursuant to the transaction
contemplated by the Frontier Merger Agreement; (D) issuances made to newly hired
employees of Global or its Subsidiaries in amounts not exceeding the amounts set
forth in Schedule 6.2; (E) issuances in respect of or in connection with any
acquisitions, mergers, share exchanges, consolidations, business combinations or
similar transactions by Global or its Subsidiaries permitted by Section 7.18
hereof; (F) sales of securities in connection with a secondary offering by
shareholders of Global; and (G) issuances of equity securities as set forth on
Schedule 6.2; (H) the issuance of securities by a Subsidiary to any Person which
is directly or indirectly wholly-owned by Global or U S WEST (as the case may
be); and (I) liens granted to secure indebtedness permitted by Schedule 6.2:
issue, sell, pledge, dispose of, encumber, authorize, or propose the issuance,
sale, pledge, disposition, encumbrance or authorization of any shares of capital
stock of any class, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of capital stock of, or any other
ownership interest in, such Party or any of its Subsidiaries; (ii) amend or
propose to amend the Certificate of Incorporation or Bylaws (or other comparable
organizational document) of such Party or any of its Subsidiaries, except as
disclosed in the draft joint proxy statement of Global and Frontier to be filed
in connection with the Frontier Merger, or adopt, amend or propose to amend any
shareholder rights plan or related rights agreement; provided, however, Global
shall be permitted to (A) achieve a "discontinuance" under the laws of Bermuda
and (B) continue in, and be subject to; the laws of the State of Delaware (or
any other State of the United States of America) or, subject to the consent of U
S WEST, which consent shall not be unreasonably withheld or delayed, the laws of
any other jurisdiction; (iii) split, combine or reclassify any outstanding
shares of Global Common Stock or U S WEST Common Stock, or declare, set aside or
pay any dividend or distribution payable in cash, stock, property or otherwise
with respect to shares of Global Common Stock or U S WEST Common Stock, except
pursuant to Section 7.20; (iv) redeem, purchase or otherwise acquire or offer to
redeem, purchase or otherwise acquire any shares of its capital stock, except
that Global shall be permitted to acquire shares of Global
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Common Stock and U S WEST shall be permitted to acquire shares of U S WEST
Common Stock from time to time in open market transactions, consistent with past
practice and in compliance with applicable law and the provisions of any
applicable employee benefit plan, program or arrangement, for issuance upon the
exercise of options and other rights granted, and the lapsing of restrictions,
under such Party's respective employee benefit plans, programs and arrangements
and dividend reinvestment plans; or (v) authorize or propose or enter into any
contract, agreement, commitment or arrangement with respect to any of the
matters prohibited by this Section 6.2(a);
(b) (i) except with respect to acquisition transactions which
are subject to Section 7.18 hereof, acquire (by merger, consolidation, or
acquisition of stock or assets) any corporation, partnership or other business
organization or division thereof or make or increase any investment in another
entity (other than an entity which is a wholly-owned Subsidiary of such Party as
of the date hereof and other than incorporation of a wholly-owned Subsidiary) or
joint ventures in connection with network buildouts, and investments in
customers in the ordinary course of business and investments permitted by
Schedule 6.2; (ii) except in the ordinary course of business and in a manner
consistent with past practice or as may be required by, or in accordance with,
law or any Governmental or Regulatory Authority in order to permit or facilitate
the consummation of the transactions contemplated hereby, sell, pledge, dispose
of, or encumber or authorize or propose the sale, pledge, disposition or
encumbrance of any assets of such Party or any of its Subsidiaries, except for
transactions which do not exceed $2,000,000 individually or $10,000,000 in the
aggregate in any twelve (12) month period; (iii) except in the ordinary course
of business and in a manner consistent with past practice and all Legal
Requirements and Permits, authorize or make capital expenditures; (iv) except
with respect to acquisition transactions which are subject to Section 7.18
hereof, enter into any other agreement, contract or commitment except (1) in the
ordinary course of business of operating the existing businesses of Global or U
S WEST, as the case may be, or (2) in accordance with the then current business
plan for any of the other existing businesses of Global or U S WEST, as the case
may be; or (v) authorize or enter into any contract, agreement, commitment or
arrangement with respect to any of the matters prohibited by this Section
6.2(b);
(c) incur indebtedness (from that shown on its balance
sheet as of December 31, 1998) except as permitted by Schedule 6.2 hereto;
(d) enter into (i) leveraged derivative contracts
(defined as contracts that use a factor to multiply the underlying index
exposure), or (ii) other derivative contracts except for the purpose of hedging
known interest rate and foreign exchange exposures or otherwise reducing such
Party's cost of financing;
(e) take any action with respect to the grant of any severance
or termination pay, or stay, bonus, or other incentive arrangements (otherwise
than pursuant to Benefit Plans and policies of such Party in effect on the date
hereof or in the ordinary course of such Party's business) or with respect to
any increase in benefits payable under its severance or termination pay
policies, or stay, bonus or other incentive arrangements in effect on the date
hereof, if all such actions taken were to result, in the payment, or the
obligation to pay, of an amount, in any particular case, in excess of
$2,000,000;
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(f) make any payments (except in the ordinary course of
business and in amounts and in a manner consistent with past practice or as
otherwise required by Legal Requirements or the provisions of any Global Benefit
Plan or U S WEST Benefit Plan, as the case may be) under any Global Benefit Plan
or any U S WEST Benefit Plan, as the case may be, to any director or employee
of, or independent contractor or consultant to, such Party or any of its
Subsidiaries, adopt or otherwise materially amend (except for amendments
required or made advisable by Legal Requirements) any Global Benefit Plan or U S
WEST Benefit Plan, as the case may be, or enter into or amend any employment or
consulting agreement of the type which would be required to be disclosed
hereunder pursuant to Section 4.11 hereof with respect to Global or Section 5.11
hereof with respect to U S WEST, or grant or establish any new awards under any
such existing Global Benefit Plan or U S WEST Benefit Plan or agreement (except
in the ordinary course of business and in amounts and in a manner consistent
with past practice);
(g) file any material amended Tax Returns, settle any
material tax audits, or change in any material respect (i) its method of tax
accounting or tax practice or (ii) its accounting policies, methods or
procedures, except as required by GAAP, or, in the case of Global, as previously
disclosed to U S WEST;
(h) take any action which could reasonably be expected to
materially adversely affect or delay the ability of any of the Parties to obtain
any approval of any Governmental or Regulatory Authority required to consummate
the transactions contemplated hereby;
(i) take any action that would prevent or impede the
transactions to be effected pursuant to this Agreement from qualifying for U.S.
federal income tax purposes as a tax-free exchange or series of exchanges;
(j) other than pursuant to this Agreement, take any
action to cause the shares of their respective Common Stock to cease to be
quoted on any of the stock exchanges on which such shares are now quoted, other
than in the case of Global, the Bermuda Stock Exchange or Nasdaq, provided the
Global Common Stock is then listed on the NYSE;
(k) (i) issue SARs, new performance shares, restricted stock,
or similar equity based rights, except as set forth in Section 6.2(a) and except
in the ordinary course of business and in a manner consistent with past practice
and as set forth on Schedule 6.2; (ii) materially modify any actuarial cost
method, assumption or practice used in determining benefit obligations, annual
expense and funding for any Benefit Plan, except to the extent required by GAAP;
(iii) materially modify the investment philosophy of the Benefit Plan trusts or
maintain an asset allocation which is not consistent with such philosophy,
subject to any ERISA fiduciary obligation; (iv) subject to any ERISA fiduciary
obligation, enter into any outsourcing agreement, or any other material contract
relating to the Benefit Plans or management of the Benefit Plan trusts, provided
that U S WEST and Global may enter into any such contracts that may be
terminated within two years; (v) offer any new or extend any existing retirement
incentive, "window" or similar benefit program; (vi) grant any ad hoc pension
increase; (vii) establish any new or fund any existing "rabbi" or similar trust
(except in accordance with the current terms of such trust), or enter into any
other arrangement for the purpose of securing non-qualified benefits or deferred
compensation; (viii) adopt or implement any corporate owned life insurance; or
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(ix) adopt, implement or maintain any "split dollar" life insurance program;
provided, howeve , that the foregoing shall not restrict Global from increasing
the number of shares subject to its Incentive Stock Option Plan as set forth in
the Joint Proxy of Global and Frontier to be filed in connection with the
Frontier Merger;
(l) Global and U S WEST agree that any written approval
obtained under this Section 6.2 may be relied upon by the other Party if signed
by a member of the Transition Committee on behalf of the Transition Committee;
(m) agree to enter into any merger, reorganization, share
exchange, business combination or similar transaction pursuant to which the
shareholders of U S WEST or Global, as applicable, will receive any
consideration (whether payable in cash, securities, property or other
consideration) in exchange for their shares of Global Common Stock or U S WEST
Common Stock, as applicable; or
(n) authorize or enter into any contract, agreement,
commitment or arrangement with respect to any of the matters prohibited by this
Section 6.2(b).
Section 6.3 No Solicitation.
(a) From and after the date hereof, Global and U S WEST shall
not nor shall they permit any of their respective Subsidiaries to, nor shall
they authorize or permit any of their respective officers, directors or
employees or any investment banker, financial advisor, attorney, accountants or
other representatives retained by them or any of their respective Subsidiaries
to, directly or indirectly through another person, (i) solicit, initiate or
encourage (including by way of furnishing information), or knowingly take any
other action designed to facilitate, any Alternative Transaction (as hereinafter
defined), or (ii) participate in any discussions regarding any Alternative
Transaction; provided, however, that if, at any time prior to the time the
Global Stockholders' Approval or the U S WEST Stockholders' Approval, as the
case may be, is obtained, the Board of Directors of Global or U S WEST, as the
case may be, determines in good faith, after receipt of advice from outside
counsel, that the failure to provide such information or to participate in such
negotiations or discussions would result in a reasonable likelihood that such
Board of Directors would breach their fiduciary duties to stockholders under
applicable law, Global or U S WEST, as the case may be, may, in response to a
proposal that has been determined by it to be a Global Superior Proposal (as
defined in Section 7.2 hereof) or a U S WEST Superior Proposal (as defined in
Section 7.2 hereof), as the case may be, that was not solicited by it and that
did not otherwise result from a breach of this Section 6.3, and subject to the
Party receiving such proposal giving the other Party at least two business days
written notice of its intention to do so, (x) furnish information with respect
to Global or U S WEST, as the case may be, to any person pursuant to a customary
confidentiality agreement containing terms no less restrictive than the terms of
the Confidentiality Agreement (as defined in Section 7.5(b) hereof), provided
that a copy of all such information is delivered simultaneously to the other
Party, and (y) engage in negotiations regarding such proposal. Each of Global
and U S WEST shall promptly notify the other orally and in writing of any
request for information or of any proposal in connection with an Alternative
Transaction, the material terms and conditions of such request or proposal
(including a copy thereof, if in writing, and all other documentation and any
related correspondence) and the identity of the person making such request or
proposal.
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Each of Global and U S WEST will keep the other Party reasonably
informed of the status and details (including amendments or proposed amendments)
of such request or proposal on a current basis. Each of Global and U S WEST each
immediately cease and terminate any existing solicitation, initiation,
encouragement activity, discussion or negotiation with any persons conducted
heretofore by them or their representatives with respect to the foregoing.
(b) Each of Global and U S WEST (i) agrees not to release any
Third Party (as defined in Section 6.3(c)) from, or waive any provision of, or
fail to enforce, any standstill agreement or similar agreement to which it is a
party related to, or which could affect, an Alternative Transaction and agrees
that either Party shall be entitled to enforce the other Party's rights and
remedies under and in connection with such agreements and (ii) acknowledges that
the provisions of clause (i) are an important and integral part of this
Agreement. Nothing contained in this Section 6.3 or in Section 7.2 shall
prohibit either Party (i) from taking and disclosing to its stockholders a
position contemplated by Rule 14e-9 or Rule 14e-2(a) promulgated under the
Exchange Act, or (ii) from making any disclosure to its stockholders if, in the
good faith judgment of the Board of Directors of such Party, after receipt of
advice from outside counsel, failure to disclose would result in a reasonable
likelihood that such Board of Directors would breach its duties to such Party's
stockholders under applicable law.
(c) For purposes of this Agreement, "Alternative Transaction"
means a proposal or intended proposal, regarding any of (i) a transaction or
series of transactions pursuant to which any person (or group of persons) other
than a Party and its Subsidiaries (a "Third Party") acquires or would acquire,
directly or indirectly, beneficial ownership (as defined in Rule 13d-3 under the
Exchange Act) of more than twenty percent (20%) of the outstanding shares of
Global or U S WEST, as the case may be, whether from Global or U S WEST or
pursuant to a tender offer or exchange offer or otherwise, (ii) any acquisition
or proposed acquisition of, or business combination with, Global or any of its
Significant Subsidiaries or U S WEST or any of its Significant Subsidiaries, as
the case may be, by a merger or other business combination (including any
so-called "merger-of-equals" and whether or not Global or any of its Significant
Subsidiaries or U S WEST or any of its Significant Subsidiaries, as the case may
be, is the entity surviving any such merger or business combination), or (iii)
any other transaction pursuant to which any third party acquires or would
acquire, directly or indirectly, control of assets (including for this purpose
the outstanding equity securities of Subsidiaries of Global or U S WEST, as the
case may be, and any entity surviving the merger or business combination
including any of them) of Global or any of its Subsidiaries or U S WEST or any
of its Subsidiaries, as the case may be, for consideration equal to twenty
percent (20%) or more of the fair market value of all of the outstanding shares
of Global Common Stock or all of the outstanding shares of U S WEST Common
Stock, as the case may be, on the date of this Agreement.
Section 6.4 Subsequent Financial Statements. Prior to the Effective
Time, each of Global and U S WEST (a) will consult with the other prior to
making publicly available its financial results for any period and (b) will
consult with the other prior to the filing of, and will timely file with the
SEC, each Annual Report on Form 10-K, Quarterly Report on Form 10-Q and Current
Report on Form 8-K required to be filed by such Party under the Exchange Act and
the rules and regulations promulgated thereunder and will promptly deliver to
the other copies of each such report filed with the SEC. As of their respective
dates, none of such reports
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shall contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The respective audited financial statements and unaudited interim
financial statements of each of Global and U S WEST, as the case may be,
included in such reports will fairly present the financial position of such
Party and its Subsidiaries as at the dates thereof and the results of their
operations and cash flows for the periods then ended in accordance with GAAP
applied on a consistent basis and, subject, in the case of unaudited interim
financial statements, to normal year-end adjustments and any other adjustments
described therein.
Section 6.5 Control of Operations. Nothing contained in this
Agreement shall give U S WEST, 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 U S WEST's operations prior to the Effective Time. Prior to the
Effective Time, each of U S WEST and Global shall exercise, consistent with the
terms and conditions of this Agreement, complete control and supervision over
their respective operations.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Joint Proxy Statement and the Registration Statement. (a)
As promptly as practicable after the execution and delivery of this Agreement
but in no event later than August 31, 1999, U S WEST and Global shall cause
Parent to, and Parent shall, prepare and file with the SEC the Registration
Statement, provided that such Registration Statement shall in no event be filed
prior to the mailing of the joint proxy statement in connection with the
Frontier Merger, and they shall use all reasonable efforts to have the
Registration Statement declared effective by the SEC under the Securities Act,
and the Parties shall prepare and file with the SEC, and shall use all
reasonable efforts to have cleared by the SEC, and promptly thereafter shall
mail to the holders of record of shares of U S WEST Common Stock and Global
Common Stock, the Joint Proxy Statement; provided, however, that Global and U S
WEST shall not mail or otherwise furnish the Joint Proxy Statement to their
respective stockholders unless and until:
(i) they have received notice from the SEC that the
Registration Statement is effective under the Securities Act;
(ii) Global shall have received a letter of its independent
accountants, dated a date within two (2) business days prior to the
date of the first mailing of the Joint Proxy Statement, and addressed
to Global, in form and substance reasonably satisfactory to Global and
customary in scope and substance for "cold comfort" letters delivered
by independent public accountants in connection with registration
statements on Form S-4 with respect to the financial statements of U S
WES included in the Joint Proxy Statement and the Registration
Statement; and
(iii) U S WEST shall have received a letter of its
independent accountants, dated a date within two (2) business days
prior to the date of the first mailing of the Joint
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Proxy Statement, and addressed to U S WEST, in form and substance
reasonably satisfactory to U S WEST and customary in scope and
substance for "cold comfort" letters delivered by independent public
accountants in connection with registration statements on Form S-4 with
respect to the financial statements of Global included in the Joint
Proxy Statement and the Registration Statement.
(b) The Parties will cooperate in the preparation of the
Joint Proxy Statement and the Registration Statement and in having the
Registration Statement declared effective as soon as practicable.
Section 7.2 Global and U S WEST Stockholders' Meetings and
Consummation of the Mergers. (a) As promptly as practicable after the
Registration Statement is declared effective under the Securities Act (but in
any event not prior to consummation of the Frontier Merger), Global shall duly
give notice of, convene and hold a meeting of its stockholders (the "Global
Stockholders' Meeting") in accordance with Bermuda Law for the purpose of
obtaining the approval of Global stockholders required to approve this Agreement
and the transactions contemplated hereby (the "Global Stockholder Approval") and
shall, subject to the provisions of Section 7.2(b) hereof, through its Board of
Directors, recommend to its stockholders the approval of this Agreement and the
transactions contemplated hereby and shall use its best efforts to obtain the
Global Stockholder Approval.
(b) Neither the Board of Directors of Global nor any committee
thereof shall (i) except as expressly permitted by this Section 7.2(b),
withdraw, qualify or modify, or propose publicly to withdraw, qualify or modify,
in a manner adverse to U S WEST, the approval or recommendations of such Board
of Directors or such committee of the approval of this Agreement and the
transactions contemplated hereby, (ii) approve or recommend, or propose publicly
to approve or recommend, any Alternative Transaction, or (iii) cause Global to
enter into any letter of intent, agreement in principle, acquisition agreement
or other similar agreement (each a "Global Acquisition Agreement") related to
any Alternative Transaction. Notwithstanding the foregoing, in the event that
prior to the time the Global Stockholder Approval is obtained, the Board of
Directors of Global determines in good faith, after it has received a Global
Superior Proposal (as defined below) and after receipt of advice from outside
counsel, that the failure to do so would result in a reasonable likelihood that
the Board of Directors of Global would breach its fiduciary duties to Global
stockholders under applicable law, then the Board of Directors of Global may
(subject to this and the following sentences) inform Global stockholders that it
no longer believes that the transactions contemplated by this Agreement are
advisable and no longer recommends approval of this Agreement and the
transactions contemplated hereby (a " Global Subsequent Determination"), but
only at a time that is after the fifth business day following U S WEST's receipt
of written notice advising U S WEST that the Board of Directors of Global has
received a Global Superior Proposal specifying the material terms and conditions
of such Global Superior Proposal (and including a copy thereof with all
accompanying documentation, if in writing), identifying the person making such
Global Superior Proposal and stating that it intends to make a Global Subsequent
Determination. After providing such notice, Global shall provide a reasonable
opportunity to U S WEST to make such adjustments in the terms and conditions of
this Agreement as would enable Global to proceed with its recommendation to its
stockholders without a Global Subsequent Determination; provided, however, that
any such adjustment shall be at the
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discretion of the Parties at the time. For purposes of this Agreement, a "Global
Superior Proposal" means any proposal (on its most recently amended or modified
terms, if amended or modified) made by a Third Party to enter into an
Alternative Transaction which the Board of Directors of Global determines in its
good faith judgment (based on, among other things, the advice of a financial
advisor of nationally recognized reputation) to be more favorable to Global's
stockholders than the transactions contemplated by this Agreement taking into
account all relevant factors (including whether, in the good faith judgment of
the Board of Directors of Global, after obtaining the advice of a financial
advisor of nationally recognized reputation, the Third Party is reasonably able
to finance the transaction, and any proposed changes to this Agreement that may
be proposed by U S WEST in response to such Alternative Transaction).
(c) As promptly as practicable after the Registration
Statement is declared effective under the Securities Act, U S WEST shall duly
give notice of, convene and hold a meeting of its stockholders (the "U S WEST
Stockholders' Meeting") in accordance with Delaware Law for the purposes of
obtaining the approval of U S WEST Stockholders required to approve this
Agreement and the transactions contemplated hereby (the "U S WEST Stockholder
Approval") and shall, subject to the provisions of Section 7.2(d) hereof,
through its Board of Directors, recommend to its stockholders the approval and
adoption of this Agreement and the transactions contemplated hereby and shall
use its best efforts to obtain the U S WEST Stockholder Approval.
(d) Neither the Board of Directors of U S WEST nor any
committee thereof shall (i) except as expressly permitted by this Section
7.2(d), withdraw, qualify or modify, or propose publicly to withdraw, qualify or
modify, in a manner adverse to Global, the approval or recommendation of such
Board of Directors or such committee of this Agreement or the transactions
contemplated hereby, (ii) approve or recommend, or propose publicly to approve
or recommend, any Alternative Transaction, or (iii) cause U S WEST to enter into
any letter of intent, agreement in principle, acquisition agreement or other
similar agreement (each, a "U S WEST Acquisition Agreement") related to any
Alternative Transaction. Notwithstanding the foregoing, in the event that prior
to the time U S WEST Stockholder Approval is obtained, the Board of Directors of
U S WEST determines in good faith, after it has received a U S WEST Superior
Proposal (as defined below) and after receipt of advice from outside counsel,
that the failure to do so would result in a reasonable possibility that the
Board of Directors of U S WEST would breach its fiduciary duties to U S WEST
stockholders under applicable law, then the Board of Directors of U S WEST may
(subject to this and the following sentences) inform U S WEST stockholders that
it no longer believes that the transactions contemplated by this Agreement are
advisable and no longer recommends approval of this Agreement and the
transactions contemplated hereby (a "U S WEST Subsequent Determination"), but
only at a time that is after the fifth business day following Global's receipt
of written notice advising Global that the Board of Directors of U S WEST has
received a U S WEST Superior Proposal specifying the material terms and
conditions of such U S WEST Superior Proposal (and including a copy thereof with
all accompanying documentation, if in writing), identifying the person making
such U S WEST Superior Proposal and stating that it intends to make a U S WEST
Subsequent Determination. After providing such notice, U S WEST shall provide a
reasonable opportunity to Global to make such adjustments in the terms and
conditions of this Agreement as would enable U S WEST to proceed with its
recommendation to its stockholders without a U S WEST Subsequent Determination;
provided, however, that any such adjustment
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shall be at the discretion of the Parties at the time. For purposes of this
Agreement a "U S WEST Superior Proposal" means any proposal (on its most
recently amended or modified terms, if amended or modified) made by a Third
Party to enter into an Alternative Transaction which the Board of Directors of U
S WEST determines in its good faith judgment (based on, among other things, the
advice of a financial advisor of nationally recognized reputation) to be more
favorable to U S WEST's stockholders than the transactions contemplated by this
Agreement, taking into account all relevant factors (including whether, in the
good faith judgment of the Board of Directors of U S WEST, after obtaining the
advice of a financial advisor of nationally recognized reputation, the Third
Party is reasonably able to finance the transaction, and any proposed changes to
this Agreement that may be proposed by Global in response to such Alternative
Transaction).
Section 7.3 Additional Agreements. (a) Upon the terms and subject to
the conditions hereof and as soon as practicable after the conditions set forth
in Article VIII hereof have been fulfilled or waived, each of the Parties,
including, without limitation, Parent, U S WEST Merger Sub and Global Merger Sub
when they become parties hereto, shall execute in the manner required by
Delaware Law and Bermuda Law and deliver to and file with the Secretary of State
of the State of Delaware and with the Registrar of Companies in Bermuda such
instruments and agreements as may be required by Delaware Law and Bermuda Law
and the Parties shall take all such other and further actions as may be required
by law to make the Mergers effective. Prior to the filings referred to in this
Section 7.3(b), a closing (the "Closing") will be held at the offices of
Cadwalader, Wickersham & Taft (or such other place as the Parties may agree) for
the purpose of confirming all the foregoing. The Closing will take place upon
the fulfillment or waiver of all of the conditions to closing set forth in
Article VIII of this Agreement, or as soon thereafter as practicable (the date
of the Closing being herein referred to as the "Closing Date").
(b) Each of the Parties will comply in all material respects with all
applicable laws and with all applicable rules and regulations of any
Governmental or Regulatory Authority, in connection with its execution, delivery
and performance of this Agreement and the transactions contemplated hereby. Each
of the Parties agrees to use all commercially reasonable efforts to obtain in a
timely manner all necessary waivers, consents and approvals and to effect all
necessary registrations and filings, and to use all commercially reasonable
efforts to take, or cause to be taken, all other actions and to do, or cause to
be done, all other things necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions contemplated by this
Agreement. Without limiting the generality of the foregoing, each of Global and
U S WEST shall promptly prepare and file a Premerger Notification in accordance
with the HSR Act, shall promptly comply with any requests for additional
information, and shall use its commercially reasonable efforts to obtain
termination of the waiting period thereunder as promptly as practicable.
Section 7.4 Notification of Certain Matters. Each of Global and U S
WEST shall give prompt notice to the other of the following:
(a) the occurrence or nonoccurrence of any event (including, without
limitation, with respect to Global, the transactions contemplated by the
Frontier Merger Agreement) whose occurrence or nonoccurrence would be likely to
cause either (i) any
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representation or warranty contained in this Agreement to be untrue, inaccurate
or incomplete in any material respect at any time from the date hereof to the
Effective Time, in which case such Party shall promptly update and deliver to
the other Party any Schedules hereto which require an update to remain true,
accurate and complete, or (ii) directly or indirectly, any Material Adverse
Effect on such Party;
(b) any material failure of such Party, or any officer,
director, employee or agent of any thereof, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder;
(c) any facts relating to such Party which would make it
necessary or advisable to amend the Joint Proxy Statement or the Registration
Statement in order to make the statements therein not misleading or to comply
with applicable law; provided, however, that the delivery of any notice pursuant
to this Section 7.4 shall not limit or otherwise affect the remedies available
hereunder to the Party receiving such notice; and
(d) its becoming aware of any fact, event or other
information which reveals or indicates that the consummation of the Mergers
would or may result in any illegality, forfeiture or loss on the part of either
Parent, U S WEST or any of its Subsidiaries, or Global or any of its
Subsidiaries.
Section 7.5 Access to Information. (a) From the date hereof to the
Effective Time, each of Global and U S WEST shall, and shall cause its
respective Subsidiaries, and its and their officers, directors, employees,
auditors, counsel and agents to afford the officers, employees, auditors,
counsel and agents of the other Party reasonable access during regular business
hours to such Party's and its Subsidiaries' officers, employees, auditors,
counsel, agents, properties, offices and other facilities and to all of their
respective books and records, and shall furnish the other with all financial,
operating and other data and information as such other Party may reasonably
request.
(b) Each of Global and U S WEST agrees that all non-public,
confidential information so received from the other Party shall be deemed
received pursuant to the confidentiality agreement, dated as of May 3, 1999,
between Global and U S WEST (the "Confidentiality Agreement") and such Party
shall, and shall cause its Subsidiaries and each of its and their respective
officers, directors, employees, financial advisors, attorneys, accountants,
consultants and agents ("Party Representatives ), to comply with the provisions
of the Confidentiality Agreement with respect to such information, and the
provisions of the Confidentiality Agreement are hereby incorporated herein by
reference with the same effect as if fully set forth herein.
(c) Global shall use its commercially reasonable efforts to
allow U S WEST and its Party Representatives such access to Frontier and its
Party Representatives and Frontier's books and records and facilities as is
allowed Global in connection with the Frontier Acquisition, subject to the
execution of a confidentiality agreement acceptable to Frontier.
Section 7.6 Public Announcements. Global and U S WEST shall develop
a joint communications plan and each Party shall use all reasonable efforts to
ensure that all press
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releases and other public statements with respect to the transactions
contemplated hereby shall be consistent with such joint communications plan or,
to the extent inconsistent therewith, shall have received the prior written
approval of the other Parties.
Section 7.7 Cooperation. (a) Upon the terms and subject to the
conditions hereof, each of the Parties agrees to use its commercially reasonable
efforts to take or cause to be taken all actions and to do or cause to be done
all things necessary, proper or advisable to consummate the transactions
contemplated by this Agreement and shall use its commercially reasonable efforts
to obtain all necessary waivers, consents and approvals from any Governmental or
Regulatory Authority or other Person, and to effect all necessary filings under
the Securities Act, the Exchange Act and the HSR Act. Global and U S WEST agree
to abide by and comply with any conditions that may be imposed by any
Governmental or Regulatory Authority as a condition of its waiver, consent or
approval, including, without limitation, any conditions which are necessary in
order to be in compliance with Section 271 of the Telecommunications Act of 1996
("Section 271 Compliance"). The Parties shall (i) cooperate in responding to
inquiries from, and making presentations to, Governmental or Regulatory
Authorities; (ii) promptly inform the other Party of any material oral or
written communication received by such Party from, or given by such party to any
Governmental or Regulatory Authority 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) consult with
each other in advance of any meeting or conference with, or of making any filing
or other written submission to, any such Governmental or Regulatory Authority
or, in connection with any proceeding by a private party, with any other Person,
and to the extent permitted by the applicable Governmental or Regulatory
Authority or other Person, give the other Party the opportunity to attend and
participate in such meetings and conferences, or to review and approve any such
filing or other written submission, in each case regarding the Mergers. U S WEST
and Global shall cooperate with each other, and use their respective
commercially reasonable efforts to take or cause to be taken and to do or cause
to be done all things necessary, proper or advisable to ensure compliance with
the Telecommunications Act of 1996, including, without limitation, the amendment
of this Agreement as may be necessary, proper or advisable in order to ensure
such compliance.
(b) Notwithstanding subsection (a), U S WEST and Global shall
use their reasonable best efforts to secure or obtain any Required Regulatory
Approvals, including, without limitation, certificates for operating rights and
licenses for use of spectrum.
(c) Each of U S WEST and Global shall cooperate with each
other to eliminate or reduce to the extent possible any illegality, forfeiture
or loss of which one may have notified the other pursuant to Section 7.4(d) in
order to permit the consummation of the Mergers.
Section 7.8 Indemnification, Directors' and Officers' Insurance. For a
period of six (6) years after the Effective Time, (a) U S WEST and Global shall
maintain in effect the current provisions regarding indemnification of officers
and directors contained in the charter and bylaws of U S WEST and Global and
each of their respective Subsidiaries and any directors, officers or employees
indemnification agreements of U S WEST and Global and their respective
Subsidiaries, (b) U WEST and Global shall maintain in effect the current
policies of directors' and officers' liability insurance and fiduciary
liability insurance maintained by
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U S WEST and Global, respectively, (provided that U S WEST 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
in any material respect) with respect to claims arising from facts or events
which occurred on or before the Effective Time, and (c) U S WEST and Global
shall indemnify the directors and officers of U S WEST and Global,
respectively, to the fullest extent to which U S WEST and Global are permitted
to indemnify such officers and directors under their respective charters and
bylaws and applicable law.
Section 7.9 Employee Benefit Plans. Except as otherwise provided
herein or set forth on Schedule 6.2, Global and U S WEST agree that, unless
otherwise mutually agreed, they (or their Subsidiaries, as applicable) may, but
shall have no obligation to, maintain the U S WEST Benefit Plans and the Global
Benefit Plans as separate plans after the Effective Time with respect to
employees covered by such plans immediately prior to the Effective Time.
Section 7.10 Officers of Parent. Solomon D. Trujillo and Robert
Annunziata shall hold the position of Co-Chairmen of Parent, and they each shall
also hold the position of Co-Chief Executive Officers of Parent. The Co-Chief
Executive Officers of Parent shall appoint the senior management of Parent
following the Effective Time.
Section 7.11 Stock Exchange Listing. Each of the Parties shall use
its reasonable best efforts to obtain, prior to the Effective Time, the approval
for listing on the NYSE or Nasdaq, effective upon official notice of issuance,
of the shares of Parent Class A Common Stock and Parent Class B Common Stock.
Section 7.12 Post-Mergers Parent Board of Directors; Executive
Committee. (a) At the Effective Time, the total number of persons serving on the
Board of Directors of Parent shall be twenty two (22) (unless otherwise agreed
in writing by Global and U S WEST prior to the Effective Time). The persons to
serve initially on the Board of Directors of Parent at the Effective Time shall
be selected as follows: ten (10) directors shall be designated by each of U S
WEST and Global, and the remaining two (2) directors shall be designated by U S
WEST and shall be independent directors not affiliated with U S WEST or Global
in any manner; provided, however, that the additional two (2) directors shall be
reasonably satisfactory to Global. Each such person shall serve as a director
until their successor is elected or appointed in accordance with the Bylaws of
Parent and qualified.
(b) The Board of Directors of Parent shall have at the Effective Time
an Executive Committee, which shall be comprised of three (3) directors
designated by U S WEST and three (3) directors designated by Global, and which
shall exercise the authority granted to it by the Bylaws of Parent. Each of
Global and U S WEST shall take such action as shall reasonably be deemed by
either thereof to be advisable to give effect to the provisions set forth in
this section, including but not limited, to incorporating such provisions in the
Bylaws of Parent in effect at the Effective Time. The Bylaws of Parent shall
provide that the executive committee will have the full powers which may be
granted to it by the Board of Directors under Delaware Law, except as otherwise
provided by resolutions of the Board of Directors.
Section 7.13 No Shelf Registration. Parent shall not be required to
amend or maintain the effectiveness of the Registration Statement for the
purpose of permitting resale of
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the shares of Parent Class A Common Stock or Parent Class B Common Stock
received pursuant hereto by the Persons who may be deemed to be "affiliates" of
Global or U S WEST within the meaning of Rule 145 promulgated under the
Securities Act. The shares of Parent Class A Common Stock or Parent Class B
Common Stock issuable upon exercise of options pursuant to Section 2.8 or
Section 3.8 hereof shall be registered under the Securities Act and such
registration shall be effective at the time of issuance.
Section 7.14 Affiliates. Each of Global and U S WEST (i) has disclosed
to the other on Schedule 7.14 hereof all persons who are, or may be, as of the
date hereof its Affiliates for purposes of Rule 145 under the Securities Act,
and (ii) shall use all reasonable efforts to cause each person who is identified
as an "affiliate" of it on Schedule 7.14 to deliver to the other as promptly as
practicable but in no event later than the Closing Date, a signed agreement
substantially in the form previously agreed to by Global and U S WEST. Global
and U S WEST shall notify each other from time to time of any other persons who
then are, or may be, such an "affiliate" and use all reasonable efforts to cause
each additional person who is identified as an "affiliate" to execute a signed
agreement as set forth in this Section 7.14.
Section 7.15 Blue Sky. Global and U S WEST will use their best
efforts to obtain prior to the Effective Time all necessary state securities or
"blue sky" Permits and approvals required to permit the distribution of the
shares of Parent Class A Common Stock or Parent Class B Common Stock to be
issued in accordance with the provisions of this Agreement.
Section 7.16 Tax-Free Exchange. Each of the Parties will use its
reasonable efforts, and each agrees to cooperate with the other and provide each
other with such documentation, information and materials, as may be reasonably
necessary, proper or advisable, to cause the transactions to be effected
pursuant to this Agreement to qualify for U.S. federal income tax purposes as a
tax-free exchange or a series of exchanges.
Section 7.17 Determination of Class B to Class A Value Ratio. At such
time as may be agreed by U S WEST and Global, but in no event later than sixty
(60) days prior to the anticipated Effective Time, U S WEST and Global will each
retain, and provide relevant information to, a nationally recognized investment
banking firm (each, an "appraiser") to determine the "Class B to Class A Value
Ratio". The Class B to Class A Value Ratio shall be determined by dividing the
"Global Value" by the "Local Value" (rounded to the nearest 1/10,000). The
Global Value shall represent the fully distributed equity value of the Global
Group (as such term is defined for the purposes of such determination pursuant
to Section 7.24), and the Local Value shall represent the fully distributed
equity value of the Local Group (as such term is defined for the purposes of
such determination pursuant to Section 7.24), in each case, calculated as if
each such group were an independent, publicly traded and widely held company.
Global and U S WEST shall instruct the appraisers to meet and work together for
a period of two weeks to resolve their differences, if any, as to the
calculation of such ratios. If the appraisers are able to resolve their
difference as to such calculations during such period, then the joint decision
of the appraisers will be the Class B to Class A Value Ratio. If the difference
between the determinations submitted by each appraiser is less than 10.0 percent
of the lowest of such determinations, then the
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appraisers will in turn select a third nationally recognized banking firm to
make such determination. The average of the determinations submitted by the
appraisers shall be the Class B to Class A Value Ratio. If the difference
between the determinations submitted by each appraiser equals or exceeds 10.0
percent of the lowest of such determinations, then the appraisers will in turn
select a third nationally recognized investment banking firm to make such
determination. The average of the determinations provided by such third firm and
the determination submitted by the appraiser retained by Global or U S WEST that
is closest to the determination provided by such third firm shall be the Class B
to Class A Value Ratio; provided, however, that the Class B to Class A Value
Ratio shall not be less than the lower of the proposed Class B to Class A Value
Ratios submitted by the appraisers nor greater than the higher of the proposed
Class B to Class A Value Ratios submitted by the appraisers.
In determining the Class B to Class A Value Ratio, each
appraiser (including any third investment banking firm engaged as provided above
in this Section 7.17) will employ methodologies and analyses consistent with
those traditionally utilized by investment banking firms in performing public
company valuations including:
(i) reviewing publicly available information concerning the
proposed businesses, assets and liabilities of such groups,
(ii) reviewing other financial information concerning the
proposed businesses, assets and liabilities of such groups, including financial
forecasts to be provided by Global and U S WEST management relating to the
proposed businesses, assets and liabilities of such groups, respectively,
including any costs or benefits accruing to such groups as a result of the
Mergers as well as the intercompany relationships between the Global Group and
the Local Group,
(iii) performing reasonable due diligence, including
discussing the proposed businesses, assets and liabilities of such groups with
officers of Global and U S WEST, and
(iv) considering such other information, financial studies,
analyses, investigations and financial, economic and market criteria that the
appraiser deems relevant.
Such valuations will not give effect to any tracking stock, initial public
offering, shareholder concentration or other similar factors that may adversely
impact the Global Value or Local Value. Global and U S WEST shall each use
reasonable best efforts to supply to the appraisers such information, analyses
and access to books, records and personnel as the appraisers may reasonably
request. The fees and expenses of the third appraiser will be split evenly
between U S WEST and Global.
Section 7.18 Permitted Acquisitions. During the period from the date
of this Agreement through the Closing Date, each of Global and U S WEST may
engage in acquisition transactions taking the form of a stock acquisition, asset
acquisition, merger or similar type form of transaction ("Acquisitions");
provided, however, that such transactions comply with this Section 7.18. Each of
Global and U S WEST may engage in Acquisitions having an aggregate consideration
value of $3 billion (including assumptions of debt) and in the case of Global
except as set forth on Schedule 7.18. Any Acquisition in excess of such amount
shall require the prior written consent of the other party.
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Section 7.19 Certain Transactions. (a) Global will (i) use its
reasonable best efforts to close the transactions contemplated by the Frontier
Merger Agreement (the "Frontier Acquisition") in accordance with the terms
thereof, (ii) not take any action which would materially adversely impact the
timing of the closing of the transactions contemplated by the Frontier Merger
Agreement or the ability of Global to satisfy the conditions precedent to the
closing of the transactions contemplated by the Frontier Merger Agreement, and
(iii) not waive or amend any material economic provision of the Frontier Merger
Agreement without the prior written approval of U S WEST; provided, however,
that, without U S WEST's consent, Global may increase the merger consideration
in the Frontier Merger in the event an Acquisition Proposal (as defined in the
Frontier Merger Agreement) is made to Frontier, but, if the increase is in cash,
not in excess of the amount then available for acquisitions set forth in Section
7.18 hereof which shall thereafter reduce the amounts available for acquisition.
(b) Global will use its reasonable efforts to close the
transactions contemplated by the agreement governing Global's acquisition (the
"C&W Acquisition Agreement") of Cable & Wireless Global Marine ("C&W") in
accordance with the terms thereof, and (ii) not take any action which would
materially adversely impact the timing of the closing of the transactions
contemplated by the C&W Acquisition Agreement or the ability of Global to
satisfy the conditions precedent to the closing of the transactions contemplated
by the C&W Acquisition Agreement.
Section 7.20 Interim Dividend Policy. Global shall not, without the
prior written consent of U S WEST, declare, set aside or pay any dividend or
distribution payable in cash, stock, property or otherwise (a "Dividend") with
respect to shares of Global Common Stock. U S WEST shall be permitted, without
the prior written consent of Global, to declare and pay Dividends with respect
to shares of U S WEST Common Stock in the ordinary course of business and in a
manner consistent with past practice not in excess of $0.75 per quarter. In
addition, U S WEST may declare and pay to stockholders of record on the date
immediately prior to the Effective Time (i) a special dividend of $1.00 per
share and (ii) the pro rata portion of the then regular quarterly dividend
through such date.
Section 7.21 Subsidiary Definition. Upon consummation of the Frontier
Acquisition and the C&W Acquisition, Frontier and C&W shall each be a Subsidiary
of Global for all purposes of this Agreement; provided that (i) in no event
shall Global be required to make or be deemed to be required to make any
representation and warranty pursuant to Article V or Section 9.3 regarding
Frontier, C&W or any of their respective subsidiaries if such representation and
warranty was not made or given to Global in connection with the consummation of
the Frontier Acquisition, in the case of Frontier and its Subsidiaries, and the
acquisition of C&W, in the case of C&W and its Subsidiaries, and (ii) no breach
of a representation and warranty shall be deemed to exist by reason of the
failure of any Schedule referred to in Article V which requires disclosure of
specified information concerning Global Subsidiaries to include responsive
disclosure concerning Frontier, C&W or any of their respective subsidiaries.
Section 7.22 Exchange Procedures. If, in consultation with Nasdaq and
the NYSE, the parties determine that the procedures contemplated by Section 2.4
may interfere with the orderly market trading of the Global Common Stock and/or
U S WEST Common Stock or
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may otherwise be inadvisable, then the parties shall negotiate in good faith to
provide for alternative procedures.
Section 7.23 Services Agreement. U S WEST and Global will use
reasonable best efforts to enter into a retail marketing and services agreement
within thirty (30) days of the date of this Agreement covering the marketing of
U S WEST's services and the purchase by U S WEST of Global's services. U S WEST
and Global further agree to use reasonable best efforts to enter into an arms-
length agreement to form and operate outside of U S WEST's service territory a
data-focused competitive local exchange carrier.
Section 7.24 Certain Definitions. No later than the time the Parties
engage the appraisers pursuant to Section 7.17, U S WEST and Global will agree
on the definitions of Global Group and Local Group (as such terms are
contemplated to be used for purposes of Parent's Certificate of Incorporation)
to be used for purposes of the determination of the Class B to Class A Value
Ratio and for purposes of Parent's Certificate of Incorporation, which
determination shall, to the extent practicable, be made consistent with the
present intent of the parties as set forth in Section 1.1.
ARTICLE VIII
CONDITIONS TO THE MERGERS
Section 8.1 Conditions to Obligations of Each Party to Effect the
Mergers. The respective obligations of each Party to effect the Mergers shall be
subject to the following conditions:
(a) Stockholder Approval. The Mergers and this Agreement
shall have been approved and adopted by the requisite vote of the stockholders
of each of Global and U S WEST and the issuance of Parent Class A Common Stock
and Parent Class B Common Stock pursuant to the Mergers shall have been approved
by the requisite vote of the stockholders of Parent, in each case in accordance
with Delaware Law and Bermuda Law and the rules of the Nasdaq and the NYSE, as
applicable;
(b) Legality. No federal, state or foreign statute,
rule, regulation, executive order, decree or injunction shall have been enacted,
entered, promulgated or enforced by any Governmental or Regulatory Authority
which is in effect and has the effect of (i) making either of the Mergers
illegal or otherwise prohibiting the consummation of either of the Mergers, or
(ii) creating a Material Adverse Effect on Global, or on U S WEST;
(c) HSR Act. Any waiting period applicable to the consummation
of the Mergers under the HSR Act shall have expired or been terminated;
(d) Regulatory Matters. All Permits from, approvals of, or
declarations or filings with, and all expirations of waiting periods imposed by,
any Governmental or Regulatory Authority (all of the foregoing, "Consents")
which are necessary for the consummation of the transactions contemplated
hereby, other than Consents the failure to obtain which would have no Material
Adverse Effect on the consummation of the transactions contemplated hereby and
no
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Material Adverse Effect on Parent, S WEST or Global, shall have been filed, have
occurred or have been obtained in form and under terms and conditions acceptable
to U S WEST and Global (all such Permits, approvals, declarations, filings and
expiration or lapse of all such waiting periods being referred to as the
"Required Regulatory Approvals") and all such Required Regulatory Approvals
shall be in full force and effect; provided, however, that a Required Regulatory
Approval shall not be deemed to have been obtained if the period for review or
reconsideration thereof has not expired or if in connection with the grant
thereof there shall have been an imposition by any Governmental or Regulatory
Authority of any condition, requirement, restriction or change of regulation, or
any other action directly or indirectly related to such grant taken by such
Governmental or Regulatory Authority, which would reasonably be expected to
prevent or materially delay the consummation of the transactions contemplated
hereby or have a material adverse effect on the consummation of the transaction
contemplated hereby or a Material Adverse Effect on Parent, Global and its
Subsidiaries, taken as a whole, or U S WEST; and provided further, however, that
(A) the imposition of conditions by any Governmental or Regulatory Authority
relating to Section 271 Compliance, such as a restriction on the provision of
certain services by any Party, or (B) the withholding of approval by any
Governmental or Regulatory Authority pending the completion of actions required
of any Party to eliminate or resolve any regulatory problems (including, without
limitation, any problems regarding Section 271 Compliance), shall not in and of
itself be deemed to result in the failure to satisfy the condition set forth in
this subsection (d);
(e) Registration Statement Effective. The Registration
Statement shall have become effective prior to the mailing by each of Global and
U S WEST of the Joint Proxy Statement to its respective stockholders, no stop
order suspending the effectiveness of the Registration Statement shall then be
in effect, and no proceedings for that purpose shall then be threatened by the
SEC or shall have been initiated by the SEC and not concluded or withdrawn;
(f) Blue Sky. All state securities or "blue sky" Permits or
approvals required to carry out the transactions contemplated hereby shall have
been received;
(g) Stock Exchange Listing. The shares of Parent Class A
Common Stock and the shares of Parent Class B Common Stock shall have been duly
approved for listing on the NYSE or Nasdaq, subject to official notice of
issuance;
(h) Consents Under Global Agreements. Global shall have
obtained the consent or approval of any Person whose consent or approval shall
be required under any agreement or instrument in order to permit the
consummation of the transactions contemplated hereby except those which the
failure to obtain would not, individually or in the aggregate, have a Material
Adverse Effect on Parent, U S WEST, or Global;
(i) Consents Under U S WEST Agreements. U S WEST shall
have obtained the consent or approval of any Person whose consent or approval
shall be required under any agreement or instrument in order to permit the
consummation of the transactions contemplated hereby except those which the
failure to obtain would not, individually or in the aggregate, have a Material
Adverse Effect on Parent, U S WEST, or Global;
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(j) Frontier Acquisition. Global shall have consummated its
acquisition of Frontier (the "Frontier Acquisition") in accordance with the
terms and provisions of that certain Agreement and Plan of Merger dated as of
March 16, 1999, among Global, a wholly-owned subsidiary of Global, and Frontier
(the "Frontier Merger Agreement"); and
(k) Bermuda Approval. Global shall have either filed (i) a
notice of discontinuance with the Registrar of Companies of Bermuda under
Section 132H of the Companies Act 1981 of Bermuda (the "Companies Act"), (ii) an
application to the Supreme Court of Bermuda under Section 99 of the Companies
Act for the sanctioning of a proposed arrangement between Global and persons
permitted under such statute, or (iii) filed an application with the Registrar
of Companies of Bermuda for a Certificate of Amalgamation under Sections 104 and
108 of the Companies Act in connection with the Global Merger.
Section 8.2 Additional Conditions to Obligations of Global. The
obligations of Global to effect the Mergers are also subject to the fulfillment
of the following conditions:
(a) Representations and Warranties. The representations and
warranties of U S WEST set forth in this Agreement shall have been true and
correct on the date hereof and, without giving effect to any materiality
qualifications or limitations therein, on and as of the Closing Date as though
made on the Closing Date (except to the extent that any representation or
warranty expressly speaks as of an earlier date, in which case it shall be true
and correct as of such date) except (i) for changes permitted under Section 6.2
hereof or otherwise contemplated by this Agreement, and (ii) for such failures
to be true and correct which in the aggregate would not reasonably be expected
to result in a Material Adverse Effect on U S WEST.
(b) Agreements and Covenants. U S WEST shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or before the Effective
Time; provided, however, that for purposes of this Section 8.2(b) only, such
agreements and covenants shall be deemed to have been complied with unless the
failure or failures of such agreements and convenants to have been complied with
(without regard to materiality qualifiers contained therein), individually or in
the aggregate, results or which would reasonably be expected to result in a
Material Adverse Effect on Global, or Parent (after the Effective Time), or a
material adverse effect on the consummation of the transactions contemplated
hereby;
(c) Certificates. Global shall have received a
certificate of an executive officer of U S WEST to the effect set forth in
paragraphs (a) and (b) above;
(d) Tax Opinion. Global shall have received an opinion of
Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to Global, dated as of
the Closing Date, in form and substance reasonably satisfactory to Global,
substantially to the effect that, on the basis of the facts, representations and
assumptions set forth or referred to in such opinion, the consummation of the
transactions to be effected pursuant to this Agreement (including the Mergers)
will for U.S. federal income tax purposes (i) constitute a tax-free exchange of
shares of Global Common Stock for shares of Parent Common Stock (ii) be a
non-recognition transaction for both Global and Parent. In rendering such
opinion, Skadden, Arps, Slate, Meagher & Flom LLP may require and rely upon
representations and covenants including those contained in
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certificates of officers of Parent, Global and U S WEST and others.
Additionally, in the event the opinion referred to in Section 8.3(d) (iii) is
not rendered to U S WEST, then Global shall not be obligated to effect the
Mergers, notwithstanding a waiver of the condition referred to in such clause by
U S WEST, provided that Global has received an opinion of Skadden, Arps, Slate,
Meagher & Flom LLP, dated prior to the Effective Time, that there exists a
substantial likelihood of a Tax liability that would result in a Material
Adverse Effect on U S WEST or Parent, as the case may be.
(e) Affiliate Agreements. Global shall have received the
agreements required by Section 7.14 hereof to be delivered by the U S WEST
"affiliates," duly executed by each "affiliate" of U S WEST.
(f) Board of Directors. U S WEST shall have taken all such
actions as shall be necessary so that at the Effective Time, the composition of
Parent's Board shall comply with Section 7.12 hereof.
Section 8.3 Additional Conditions to Obligations of U S WEST. The
obligations of U S WEST to effect the Mergers are also subject to the
fulfillment of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Global set forth in this Agreement shall have been true and
correct on the date hereof and, without giving effect to any materiality
qualifications or limitations therein, on and as of the Closing Date as though
made on the Closing Date (except to the extent that any representation or
warranty expressly speaks as of an earlier date, in which case it shall be true
and correct as of such date) except (i) for changes permitted under Section 6.2
hereof or otherwise contemplated by this Agreement, and (ii) for such failures
to be true and correct which in the aggregate would not reasonably be expected
to result in a Material Adverse Effect on Global.
(b) Agreements, Covenants. Global shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or before the Effective
Time; provided, however, that for purposes of this Section 8.3(b) only, such
agreements and covenants shall be deemed to have been complied with unless the
failure or failures of such agreements and covenants to have been complied with
(without regard to materiality qualifiers contained therein), individually or in
the aggregate, results or would reasonably be expected to result in a Material
Adverse Effect on U S WEST, either with or without including its ownership of
Global and its Subsidiaries after the Merger, or a material adverse effect on
the consummation of the transactions contemplated hereby.
(c) Certificates. U S WEST shall have received a certificate
of an executive officer of Global to the effect set forth in paragraphs (a) and
(b) above.
(d) Tax Opinion. U S WEST shall have received an opinion of
Cadwalader, Wickersham & Taft, special counsel to U S WEST, dated as of the
Effective Time, in form and substance reasonably satisfactory to U S WEST,
substantially to the effect that, on the basis of the facts, representations and
assumptions set forth or referred to in such opinion, the consummation of the
transactions to be effected pursuant to this Agreement (including the
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Mergers) will for U.S. federal income tax purposes (i) not cause the spinoff of
U S WEST completed on June 12, 1998, to become taxable, including taxability
pursuant to Section 355(e) of the Code, (ii) constitute for U.S. federal income
tax purposes a tax-free exchange of shares of U S WEST Common stock for shares
of Parent Common Stock, and (iii) be a non-recognition transaction as to U S
WEST and Parent. Additionally, in the event the opinion referred to in Section
8.2(d)(ii) is not rendered with respect to Global or Parent, then U S WEST shall
not be obligated to effect the Mergers, notwithstanding a waiver of the
condition referred to in such clause by Global, provided that U S WEST has
received an opinion of Cadwalader, Wickersham & Taft, dated prior to the
Effective Time, that there exists a substantial likelihood of a Tax liability
that would represent a Material Adverse Effect to Global or Parent, as the case
may be. In rendering the opinion referred to in the first sentence of this
subsection (d), Cadwalader, Wickersham & Taft may require and rely upon
representations and covenants including those contained in certificates of
officers of Parent, U S WEST and Global and others.
(e) Affiliate Agreements. U S WEST shall have received
the agreements required by Section 7.14 hereof to be delivered by the Global
"affiliates," duly executed by each "affiliate" of Global.
(f) Board of Directors. Global shall have taken all such
actions as shall be necessary so that at the Effective Time, the composition of
Parent's Board shall comply with Section 7.12 hereof.
(g) Accounting Treatment. The Mergers shall have been
accounted for under the purchase method of accounting with U S WEST as the
acquiror.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination. This Agreement may be terminated at any
time before the Effective Time, in each case as authorized by the respective
Board of Directors of Global or U S WEST:
(a) By mutual written consent of each of Global and U S WEST;
(b) By either Global or U S WEST if the Mergers shall not have been
consummated on or before May 16, 2000 (the "Termination Date"); provided,
however, that the right to terminate this Agreement under this Section 9.1(b)
shall not be available to any Party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the failure of the
Effective Time to occur on or before the Termination Date; and provided further,
however, that if on the Termination Date the conditions to the Closing set forth
in Sections 8.1(c) or (d) shall not have been fulfilled, but all other
conditions to the Closing shall be fulfilled or shall be capable of being
fulfilled, then the Termination Date shall be extended to November 30, 2000;
(c) By either Global or U S WEST if any Governmental or Regulatory
Authority shall have issued an order, decree or ruling or taken any other action
(which order,
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decree or ruling the Parties shall use their commercially reasonable efforts to
lift), in each case 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;
(d) (i) by Global, (A) if U S WEST shall have breached or failed to
perform in any material respect any of its representations, warranties, covenant
or other agreement contained in this Agreement, which breach or failure to
perform (1) is incapable of being cured by U S WEST prior to the Termination
Date, and (2) renders any condition under Sections 8.1 or 8.2 incapable of being
satisfied prior to the Termination Date, or (B) if a condition under Sections
8.1 or 8.2 to Global's obligations hereunder cannot be satisfied prior to the
Termination Date;
(ii) by U S WEST, (A) if Global shall have breached or
failed to perform in any material respect any of its representations,
warranties, covenants or other agreements contained in this Agreement, which
breach or failure to perform (1) is incapable of being cured by Global prior to
the Termination Date, and (2) renders any condition under Sections 8.1 and 8.3
incapable of being satisfied prior to the Termination Date, or (B) if a
condition under Sections 8.1 or 8.3 to U S WEST's
obligation hereunder cannot be satisfied prior to the Termination Date;
(e) By either Global or U S WEST if the Board of Directors of the
other or any committee of the Board of Directors of the other (i) shall fail to
include in the Joint Proxy Statement its recommendation without modification or
qualification that its stockholders approve this Agreement and the applicable
Merger, (ii) shall withdraw or modify in any adverse manner its approval or
recommendation of this Agreement or the applicable Merger, (iii) shall fail to
reaffirm such approval or recommendation upon such Party's request, (iv) shall
approve or recommend any Alternative Transaction, or (v) shall resolve to take
any of the actions specified in this Section 9.1(e);
(f) By either Global or U S WEST if the Global Stockholder Approval or
the U S WEST Stockholder Approval shall fail to have been obtained at a duly
held stockholders meeting of either of such companies, including any
adjournments thereof, or by Global if Global determines that the appraisal of
the fair value of Global Common Stock, as determined by the Bermuda Court, is
excessive;
(g) By Global, if U S WEST shall have failed to consummate, purchase
and pay for shares of Global Common Stock pursuant to the U S WEST Tender Offer
by July 31, 1999; provided, however, that such date shall be extended to August
30, 1999, if the waiting period under the HSR Act applicable to the U S WEST
Tender Offer shall not have expired or been terminated by July 31, 1999; or
(h) (i) by Global, in the event that prior to the time the Global
Stockholder Approval is obtained, (A) the Board of Directors of Global
determines in good faith, in response to a Global Superior Proposal and after
receipt of advice from outside counsel, that the failure to terminate this
Agreement in order to accept such Global Superior Proposal would result in a
reasonable likelihood that the Board of Directors of Global would breach its
fiduciary duties to
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Global stockholders under applicable law, and (B) Global has
complied with the requirements of Section 7.2(b) with respect to such Global
Superior Proposal; provided that termination pursuant to this Section shall not
be effective until payment of the U S WEST Termination Fee pursuant to Section
9.2(c);
(ii) by U S WEST, in the event that prior to the time the U S
WEST Stockholder Approval is obtained, (A) the Board of Directors of U
S WEST determines in good faith, in response to a U S WEST Superior
Proposal and after receipt of advice from outside counsel, that the
failure to terminate this Agreement in order to accept such U S WEST
Superior Proposal would result in a reasonable likelihood that the
Board of Directors of U S WEST would breach its fiduciary duties to U S
WEST stockholders under applicable law, and (B) U S WEST has complied
with the requirements of Section 7.2(b) with respect to such U S WEST
Superior Proposal; provided that termination pursuant to this Section
shall not be effective until payment of the Global Termination Fee
pursuant to Section 9.2(b); or
(iii) by Global or U S WEST if the Frontier Merger Agreement
shall have been terminated in accordance with its terms.
Section 9.2 Effect of Termination. (a) In the event of termination
of this Agreement as provided in Section 9.1 hereof, and subject to the
provisions of Section 11.1 hereof, this Agreement shall forthwith become void
and there shall be no liability on the part of any of the Parties, except (i) as
set forth in this Section 9.2 and in Sections 4.16, 5.16, 7.5, and 11.3 hereof,
and (ii) nothing herein shall relieve any Party from liability for any willful
breach hereof.
(b) If this Agreement (i) is terminated by Global pursuant to
Section 9.1(e) hereof, (ii) could have been (but was not) terminated by Global
pursuant to Section 9.1(e) hereof and is subsequently terminated by U S WEST or
Global pursuant to Section 9.1(e) because of the failure to obtain the U S WEST
Stockholder Approval, (iii)(A) could not have been terminated by Global pursuant
to Section 9.1(e) hereof but is subsequently terminated by U S WEST or Global
pursuant to Section 9.1(f) because of the failure to obtain the U S WEST
Stockholder Approval, (B) prior to the U S WEST Stockholders' Meeting there
shall have been an offer or proposal for, an announcement of any intention with
respect to (including the filing of a statement of beneficial ownership on
Schedule 13D discussing the possibility of or reserving the right to engage in),
or any agreement with respect to, a transaction that would constitute an
Alternative Transaction (as defined in Section 6.3(c) hereof, except that for
the purposes of this Section 9.2(b), the applicable percentage in clause (i) of
such definition shall be forty percent (40%) involving U S WEST or any of U S
WEST's Subsidiaries, and (C) within twelve (12) months after the termination of
this Agreement, U S WEST enters into a definitive agreement with any Third Party
with respect to an Alternative Transaction, (iv) is terminated by Global as a
result of U S WEST's material beach of Section 7.1, 7.2(a) or Section 7.2(b)
hereof which in the case of Section 7.1 and Section 7.2(a) only, is not cured
within thirty (30) days after notice thereof to U S WEST or (v) is terminated by
U S WEST pursuant to Section 9.1(h)(ii), U S WEST shall pay to Global a
termination fee of $850,000,000 (the "Global Termination Fee").
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(c) If this Agreement (i) is terminated by U S WEST pursuant
to Section 9.1(e) hereof, (ii) could have been (but was not) terminated by U S
WEST pursuant to Section 9.1(e) hereof and is subsequently terminated by Global
or U S WEST pursuant to Section 9.1(f) because of the failure to obtain the
Global Stockholder Approval, (iii)(A) could not have been terminated by U S WEST
pursuant to Section 9.1(e) hereof but is subsequently terminated by Global or U
S WEST pursuant to Section 9.1(f) because of the failure to obtain the Global
Stockholder Approval, (B) prior to the Global Stockholders' Meeting there shall
have been an offer or proposal for, an announcement of any intention with
respect to (including the filing of a statement of beneficial ownership on
Schedule 13D discussing the possibility of or reserving the right to engage in),
or any agreement with respect to, a transaction that would constitute an
Alternative Transaction (as defined in Section 6.3(c) hereof, except that for
the purposes of this Section 9.2(c), the applicable percentage in clause (i) of
such definition shall be forty percent (40%) involving Global or any of Global's
Subsidiaries, and (C) within twelve (12) months after the termination of this
Agreement, Global enters into a definitive agreement with any Third Party with
respect to an Alternative Transaction, (iv) is terminated by U S WEST as a
result of Global's material breach of Section 7.1, Section 7.2(c) or Section
7.2(d) hereof which, in the case of Section 7.1 and Section 7.2(c) only, or (v)
is terminated by Global pursuant to Section 9.1(h)(i), Global shall pay to U S
WEST a termination fee of $850,000,000 (the "U S WEST Termination Fee").
(d) Each termination fee payable under Section 9.2(b) and (c)
above shall be payable in cash, payable no later than one business day following
the delivery of notice of termination to the other Party, or, if such fee shall
be payable pursuant to clause (iii) of either Section 9.2(b) or (c), such fee
shall be payable no later than one business day following the day such Party
enters into the definitive agreement referenced in such clause (iii).
(e) Global and U S WEST agree that the agreements contained in
Sections 9.2(b) and (c) above are an integral part of the transactions
contemplated by this Agreement and constitute liquidated damages and not a
penalty. If one Party fails to promptly pay to the other any fee due under such
Sections 9.2(b) and (c), then the defaulting Party shall pay the costs and
expenses (including legal fees and expenses) in connection with any action,
including the filing of any lawsuit or other legal action, taken to collect
payment, together with interest on the amount of any unpaid fee at the publicly
announced prime rate of Citibank, N.A., from the date such fee was required to
be paid.
Section 9.3 Amendment. This Agreement may be amended by the Parties
pursuant to a writing adopted by action taken by all of the Parties at any time
before the Effective Time; provided, however, that, after approval of this
Agreement by the stockholders of Global or U S WEST, whichever shall occur
first, no amendment may be made which would (a) alter or change the amount or
kinds of consideration to be received by the holders of U S WEST Common Stock or
Global Common Stock upon consummation of the Mergers, (b) alter or change any
term of the Certificate of Incorporation of Global or the Certificate of
Incorporation of U S WEST, or (c) alter or change any of the terms and
conditions of this Agreement if such alteration or change would adversely affect
the holders of any class or series of securities of Global or U S WEST. This
Agreement may not be amended except by an instrument in writing signed by the
Parties.
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Section 9.4 Waiver. At any time before the Effective Time, any Party
may (a) extend the time for the performance of any of the obligations or other
acts of the other Parties, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto, and
(c) waive compliance with any of the agreements or conditions contained herein.
Any agreement on the part of a Party to any such extension or waiver shall be
valid only as against such Party and only if set forth in an instrument in
writing signed by such Party.
ARTICLE X
DEFINITIONS
Section 10.1 Certain Definitions. For purposes of this Agreement,
the following terms shall have the following meanings:
"Affiliate" of a Person means a Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first mentioned Person.
"Agreement" means this Agreement and Plan of Merger, together
with all of its schedules and exhibits.
"Bermuda Law" means the Bermuda Companies Act 1981.
"Code" means the Internal Revenue Code of 1986, as amended,
and the Treasury regulations promulgated thereunder.
"Control" (including the terms "controlled by" and "under
common control with") means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of stock, as trustee or executor, by contract or
credit arrangement or otherwise.
"Delaware Law" means the Delaware General Corporation Law, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
the same may be amended from time to time.
"FCC" means the United States Federal Communications Commission.
"GAAP" means United States generally accepted accounting principles.
"Governmental or Regulatory Authority" means any domestic or
foreign, national, federal, state, county, city, local or other administrative,
legislative, regulatory or other governmental authority, commission, agency,
court of competent jurisdiction or other judicial entity, tribunal, arbitrator,
office, principality, registry (including, but not limited to, with respect to
patents, trademarks, designs, or copyrights), legislative or regulatory body,
instrumentality, or non-governmental, quasi-governmental, or private agency,
commission or authority or any arbitral tribunal exercising any regulatory or
taxing authority.
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"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as the same may be amended from time to time.
"Knowledge" of any Party means the actual knowledge of the
executive officers of such Party.
"Material Adverse Effect" means any change in or effect on the
business of the referenced Person or any of its Subsidiaries that is or will be
materially adverse to the business, operations (including the income statement),
management, properties (including intangible properties), condition (financial
or otherwise), assets, liabilities or regulatory status of such referenced
corporation and its Subsidiaries taken as a whole, but shall not include the
effects of changes that are generally applicable in (i) the telecommunications
industry, (ii) the United States economy, or (iii) the United States securities
markets.
"Person" means an individual, corporation, partnership,
limited liability company, joint venture, association, joint stock company,
trust, unincorporated organization, entity or group (as defined in the Exchange
Act) or a Governmental or Regulatory Authority.
"Securities Act" means the Securities Act of 1933, as the same
may be amended from time to time.
"Significant Subsidiary" means any Subsidiary which on the
date of determination is a "significant subsidiary" within the meaning of Rule
1-02(w) of Regulation S-X promulgated under the Exchange Act.
"Subsidiary", "Global Subsidiary", or "U S WEST Subsidiary"
means any Person on the date of determination of which Global or U S WEST, as
the case may be (either alone or through or together with any other Subsidiary
or Subsidiaries), owns, directly or indirectly, more than fifty percent (50%) of
the stock or other equity interests the holders of which are generally entitled
to vote for the election of the board of directors or other governing body of
such Person which, in the case of Global, shall pursuant to Section 7.21 include
Frontier as of the closing of the Frontier Acquisition, C&W as of the closing of
the acquisition of C&W, and with respect to any other Person which Global may
acquire after the date of this Agreement, such Person, as of the date of such
acquisition.
"Tax" or "Taxes" means any U.S. federal, state, local or
foreign taxes of any kind, including, without limitation, those on or measured
by or referred to as income, gross receipts, capital, sales, use, ad valorem,
franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, value added, property or windfall profits
taxes, customs, duties, or similar fees, assessments, or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax, or
additional amounts imposed by any Governmental or Regulatory Authority.
"Tax Returns" means any U.S. federal, state, local or foreign
return, report, or statement required to be filed with any Governmental or
Regulatory Authority with respect to Taxes.
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"Year 2000 Compliant" means, with respect to any computer
hardware, software, databases, automated systems or other computer and
telecommunications equipment owned or used by a Person, or included or
incorporated in such Person's products ("Systems"), that such Systems are
designed to be used prior to, during and after the calendar year 2000 A.D. and
will (i) operate normally, (ii) record, process, calculate, compare, sequence,
or use dates properly, (iii) accurately determine intervals between and time
elapsed among dates before, within and after such year, and (iv) otherwise
operate without error relating to date data, specifically including any error
relating to, or the product of, date data which represents or references
different centuries or more than one century. Without limiting the generality of
the foregoing, "Year 2000 Compliant" means that such Person's Systems:
(i) will not abnormally terminate, malfunction or stop
processing upon encountering date data either from before, within or
after such year;
(ii) will properly identify leap years and process related
date data;
(iii) have been designed to ensure Year 2000 Compliance,
including, but not limited to, recognizing and recording the proper century
associated with date data and properly calculating same century and multi-
century formulas and date values;
(iv) include user interfaces that properly display, record
and accept date data in single century and multi-century cases; and
(v) properly send date data to, receive date data from, any
other hardware, software and systems with which such Systems normally operate
and interact, including on-site backup, hot-site companion and disaster recovery
systems, as well as properly recording, retaining and manipulating such date
data; provided, however, that such other hardware, software and Systems are
themselves Year 2000 Compliant.
ARTICLE XI
GENERAL PROVISIONS
Section 11.1 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 9.1 hereof, as the case may be, except that (a) the
agreements set forth in Article I and Sections 2.4, 2.5, 2.6, 2.7, 7.8, and 7.12
hereof shall survive the Effective Time indefinitely, (b) the agreements and
representations set forth in Sections 4.16, 5.10, 5.16, 7.5(b), 9.2 and 11.3
hereof shall survive termination indefinitely, and (c) nothing contained herein
shall limit any covenant or agreement of the Parties which by its terms
contemplates performance after the Effective Time.
Section 11.2 Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made as of the date of receipt and shall be delivered personally or
mailed by registered or certified mail (postage prepaid, return receipt
requested), sent by overnight courier or sent by telecopy, to the
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Parties at the following addresses or telecopy numbers (or at such other address
or telecopy number for a Party as shall be specified by like notice):
(a) if to Global:
Global Crossing Ltd.
45 Reid Street
Wessex House
Hamilton HM 12, Bermuda
Attention: James C. Gorton, Esq
Facsimile: (441) 296-8606
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue
Los Angeles, California 90071
Attention: Brian J. McCarthy, Esq
Facsimile: (213) 687-5600
(b) if to U S WEST:
U S WEST, Inc.
1801 California Street
Denver, Colorado 80202
Attention: Mark Roellig, Esq.
Facsimile: (303) 298-8763
with copy to:
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038-4892
Attention: Dennis J. Block, Esq.
Facsimile: (212) 504-6666
Section 11.3 Expenses. Except as otherwise provided herein, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the Party incurring such costs and
expenses, except that those expenses incurred in connection with the printing of
the Joint Proxy Statement and the Registration Statement, as well as the filing
fees related thereto and any filing fee required in connection with the filing
of Premerger Notifications under the HSR Act, shall be shared equally by Global
and U S WEST.
Section 11.4 Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
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Section 11.5 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, then all other conditions 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 adverse to any Party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the Parties 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 to the end
that the transactions contemplated hereby are fulfilled to the maximum extent
possible.
Section 11.6 Entire Agreement; No Third-Party Beneficiaries. This
Agreement, the Tender Offer Agreement, the Standstill Agreement, the Voting
Agreement and the Confidentiality Agreement constitute the entire agreement and,
except as expressly set forth herein, supersedes any and all other prior
agreements and undertakings, both written and oral, among the Parties, or any of
them, with respect to the subject matter hereof and, except for Section 7.8
(Indemnification, Directors' and Officers' Insurance) and Section 7.12
(Post-Merger Parent Board of Directors), is not intended to confer upon any
person other than Global, U S WEST, and, after the Effective Time, their
respective stockholders, any rights or remedies hereunder.
Section 11.7 Assignment. This Agreement shall not be assigned by
operation of law or otherwise.
Section 11.8 Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware
applicable to contracts executed in and to be performed entirely within that
State, without regard to the conflicts of laws provisions thereof.
Section 11.9 Submission to Jurisdiction; Waivers. Each of the parties
hereof 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 Delaware, and each of the
parties hereto hereby irrevocable submits with regard to any such action or
proceeding for itself and in respect to its property, generally and
unconditionally, to the nonexclusive jurisdiction of the aforesaid courts. Each
of the parties hereto hereby irrevocably waives, and agrees not to assert, by
way of motion, as a defense, counterclaim 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 in accordance with this Section 11.9, (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 the applicable law, that (i) the suit, action or proceeding in such
court is brought in an inconvenient forum, (ii) the venue of such suit, action
or proceeding is improper and (iii) this Agreement, or the subject mater hereof,
may not be enforced in or by such courts.
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Section 11.10 Counterparts. This Agreement may be executed in one or
more counterparts, and by the different Parties in separate counterparts, each
of which when executed shall be deemed to be an original, but all of which shall
constitute one and the same agreement.
(Remainder of Page Intentionally Left Blank - Signature Page Follows)
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IN WITNESS WHEREOF, U S WEST and Global have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
U S WEST, INC.
By: /s/ Solomon D. Trujillo
----------------------------
Name:
Title:
GLOBAL CROSSING LTD.
By: /s/ Robert Annunziata
---------------------------
Name:
Title:
<PAGE>
<TABLE>
<CAPTION>
INDEX OF DEFINED TERMS
DEFINED TERM PAGE NO.
- ------------ -------
<S> <C>
Acquisitions.....................................................................................................53
Affiliate........................................................................................................63
Agreement........................................................................................................63
appraiser........................................................................................................52
Bermuda Law......................................................................................................63
Closing..........................................................................................................48
Closing Date.....................................................................................................48
Code.............................................................................................................63
Common Shares Trust..............................................................................................15
Confidentiality Agreement........................................................................................49
Consents.........................................................................................................55
Control..........................................................................................................63
Conversion Ratios.................................................................................................6
Delaware Certificate..............................................................................................3
Delaware Law.....................................................................................................63
Disqualified Rights...............................................................................................5
Disqualified Shares...............................................................................................5
Dividend.........................................................................................................54
Effective Time....................................................................................................3
Election..........................................................................................................2
Election Deadline................................................................................................10
Election Transaction Filings......................................................................................3
Environmental Law................................................................................................24
ERISA............................................................................................................22
Excess Shares....................................................................................................15
Exchange Act.....................................................................................................63
Exchange Agent...................................................................................................10
FCC..............................................................................................................63
Form of Election..................................................................................................9
Frontier Acquisition.............................................................................................56
Frontier Alternative Merger.......................................................................................4
Frontier Merger Agreement.....................................................................................5, 56
GAAP.............................................................................................................63
Global Common Stock...............................................................................................5
Global Crossing, Ltd..............................................................................................1
Global Crossing, Ltd. Benefit Plans..............................................................................22
Global Crossing, Ltd. Common Stock................................................................................1
Global Crossing, Ltd. Contracts..................................................................................27
Global Crossing, Ltd. Intellectual Property......................................................................26
Global Crossing, Ltd. Licenses...................................................................................27
Global Crossing, Ltd. SEC Reports................................................................................20
Global Crossing, Ltd. Stockholder Approval.......................................................................45
Global Crossing, Ltd. Subsidiary.................................................................................64
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Global Crossing, Ltd. Superior Proposal..........................................................................46
Global Crossing, Ltd. Termination Fee............................................................................61
Global Equity Rights.............................................................................................18
Global Exchange Fund.............................................................................................11
Global Merger.....................................................................................................2
Global Merger Sub.................................................................................................2
Global Rights.....................................................................................................5
Global Warrants..................................................................................................17
Governmental or Regulatory Authority.............................................................................63
Guarantee of Delivery............................................................................................10
Hazardous Substance..............................................................................................24
HSR Act..........................................................................................................63
Intellectual Property............................................................................................26
IRS..............................................................................................................22
Joint Proxy Statement............................................................................................21
Knowledge........................................................................................................64
Legal Requirements...............................................................................................20
Material Adverse Effect..........................................................................................64
Merged Corporations...............................................................................................3
Mergers...........................................................................................................2
Merrill Lynch....................................................................................................36
NYSE.............................................................................................................15
Parent............................................................................................................1
Parent Class A Common Stock.......................................................................................2
Parent Class B Common Stock.......................................................................................2
Parties...........................................................................................................3
Party.............................................................................................................3
Party Representatives............................................................................................49
PBGC.............................................................................................................22
Permits..........................................................................................................20
Person...........................................................................................................64
Pre-Surrender Global Dividends...................................................................................11
Pre-Surrender U S WEST Dividends.................................................................................13
Registration Statement...........................................................................................21
Required Regulatory Approvals....................................................................................55
SEC..............................................................................................................19
Section 271 Compliance...........................................................................................50
Securities Act...................................................................................................64
Significant Subsidiary...........................................................................................64
Subsidiary.......................................................................................................64
Surviving Corporations............................................................................................3
Systems..........................................................................................................65
Tax or Taxes.....................................................................................................64
Tax Returns......................................................................................................64
Termination Date.................................................................................................59
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Third Party......................................................................................................44
Transition Committee.............................................................................................39
U S WEST..........................................................................................................1
U S WEST Benefit Plans...........................................................................................33
U S WEST Common Stock.............................................................................................5
U S WEST Contracts...............................................................................................38
U S WEST Equity Rights...........................................................................................29
U S WEST Exchange Fund...........................................................................................123
U S WEST Intellectual Property...................................................................................37
U S WEST Licenses................................................................................................38
U S WEST Merger...................................................................................................2
U S WEST Merger Sub...............................................................................................2
U S WEST Rights...................................................................................................5
U S WEST SEC Reports.............................................................................................31
U S WEST Stockholder Approval....................................................................................47
U S WEST Stockholders' Meeting...................................................................................46
U S WEST Subsequent Determination................................................................................47
U S WEST Subsidiary..............................................................................................64
U S WEST Superior Proposal.......................................................................................47
U S WEST Tender Offer.............................................................................................1
U S WEST Termination Fee.........................................................................................62
Year 2000 Compliant..............................................................................................65
</TABLE>
<PAGE>
Exhibit A
Terms of Parent Class A Common Stock and Parent Class B Common Stock
Definition of Global Group and Local Group
Parent Class A Common Stock is intended to reflect the performance of the Local
Group.
Parent Class B Common Stock is intended to reflect the performance of the Global
Group.
The definition of the Global Group and the Local Group shall be determined as
provided in Section 7.24 of the Merger Agreement.
Dividend Policy
At the discretion of the Board of Directors.
Funds available for dividends on the stock of each group shall be the lesser of
(i) legally available funds under Delaware law and (ii) an amount which is the
amount that could be paid as dividends if the relevant group were a separate
corporation under Delaware law.
Voting
Global Group: Fixed at one vote per share.
Local Group: Variable based on the average market values over a
20-day period ending 10 days prior to the record
date.
Class Vote: None, except as provided by law, the terms of any
preferred stock or the Certificate of Incorporation
or at the discretion of the Board of Directors.
Liquidation
Global Group: Fixed at the Class B to Class A Value Ratio.
Local Group: Fixed at one liquidation unit per share.
Conversion at the Option of the Board of Directors
Conversion at no premium at any time following a tax event.
No other optional conversion from the Effective Time of the Merger until the
second anniversary of the Effective Time of the Merger.
After the second anniversary of the Effective Time of the Merger, conversion at
such conversion ratio, with or without premium, as the Board of Directors
determines to be fair to the holders of the Parent Class A Common Stock, taken
as a separate class, and the holders of Parent Class B Common Stock, taken as a
separate class.
A-1
<PAGE>
Sale of Substantially all of the Assets of a Group
Board of Directors elects between:
(i) shareholders of the relevant group receive, by dividend or
redemption, cash and/or securities or other property with a
value equal to their proportionate interest in the net
proceeds or
(ii) shares of the relevant group are converted into shares of the
other group at a 10% premium over the ratio of post-
transaction average market values over a 10-day period.
Provision does not apply to a sale of substantially all of the assets of a group
in exchange for equity securities in any entity which will engage in a similar
or complementary business.
"Substantially all" means properties or assets that represent at least 80% of
either the then-current market value of, or the aggregate revenues for the
preceding 12 fiscal quarters derived from, the properties and assets of the
relevant group.
Redemption in Exchange for Stock of Subsidiary
Global Group: Yes.
Local Group: Yes.
A-2
<PAGE>
EXHIBIT (c)(2)
CONFORMED COPY
--------------
TENDER OFFER AND PURCHASE AGREEMENT
TENDER OFFER AND PURCHASE AGREEMENT, dated as of May 16, 1999 (this
"Agreement"), between Global Crossing Ltd., a company formed under the laws of
- ----------
Bermuda ("Global"), and U S West, Inc., a Delaware corporation ("USW").
------ ---
WHEREAS, Global and USW are parties to that certain Agreement and Plan
of Merger dated as of the date hereof (the "Merger Agreement"; capitalized terms
----------------
used and not otherwise defined herein having the meaning set forth in the Merger
Agreement);
WHEREAS , in connection with the transactions contemplated by this
Agreement and the Merger Agreement, certain holders of shares of Global Common
Stock have entered into an agreement with USW to tender such shares as set forth
in such agreement;
WHEREAS, in connection with this Agreement and the Merger Agreement,
USW and Global are entering into a Voting Agreement (the "Voting Agreement"), a
----------------
Standstill Agreement (the "Standstill Agreement") and an Agreement (the
--------------------
"Agreement"), all of which agreements are dated as of the date hereof; and
- ----------
WHEREAS, as a condition of its entering into the Merger Agreement and
the agreements and transactions pursuant thereto, USW requires that Global enter
into, and Global has agreed to enter into, this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the parties hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1 The Offer. (a) Provided that this Agreement shall not have
---------
been terminated in accordance with Section 5.1 hereof and subject to the
satisfaction of the conditions set forth in Exhibit A hereto (the "Offer
-----
Conditions"), USW shall or shall cause a direct or indirect wholly-owned
- ----------
subsidiary of USW (the entity making the Offer, the "Offeror"), as soon as
-------
reasonably practicable after the date hereof (and in any event within five
business days from the date of public announcement of the execution hereof),
commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")), an offer (the "Offer") to purchase for
------------ -----
cash up to a number of the issued and outstanding shares of Global Common Stock
equal to the Maximum Offer Number (as defined below) at a price of
<PAGE>
2
$62.75 per share of Global Common Stock, net to the seller in cash. The
obligation of the Offeror to accept for payment shares of Global Common Stock
tendered pursuant to the Offer shall be subject only to the satisfaction or
waiver by the Offeror of the Offer Conditions. Subject to the last sentence of
this Section 1.1(a), USW expressly reserves the right to waive, or to cause the
Offeror to waive, any such condition and make any other changes in the terms and
conditions of the Offer; provided that, unless previously approved by Global in
--------
writing, no change may be made which decreases the price per share of Global
Common Stock payable in the Offer, changes the form of consideration payable in
the Offer, increases or reduces the maximum number of 39,259,305 shares of
Global Common Stock (the "Maximum Offer Number"), amends the Offer Conditions or
---------------------
imposes conditions to the Offer in addition to the Offer Conditions, or makes
other changes to the terms or conditions to the Offer which may be adverse to
Global or any holder (each, a "Stockholder") of shares of Global Common Stock or
-----------
which may result in a delay of the consummation of the Offer. USW covenants and
agrees that, subject to the terms and conditions of this Agreement, including
but not limited to the Offer Conditions, it will, or will cause the Offeror to,
accept for payment and pay for shares of Global Common Stock as soon as it is
permitted to do so under applicable law (the time of such payment being referred
to herein as the "Offer Closing"). The Offer shall initially be scheduled to
-------------
expire 20 business days following the commencement thereof, provided that,
--------
unless this Agreement has been terminated pursuant to Section 5.1, USW shall
extend the Offer from time to time in the event that, at a then-scheduled
expiration date, all of the Offer Conditions have not been satisfied or waived
as permitted pursuant to this Agreement, each such extension not to exceed
(unless otherwise consented to in writing by Global) the lesser of 10 additional
business days or such fewer number of days that USW and Global reasonably
believe are necessary to cause the Offer Conditions to be satisfied; provided
--------
that, under no circumstances shall any such extension be less than the minimum
number of days required by the Exchange Act or the rules and regulations
promulgated thereunder or by other applicable law. It is agreed that the Offer
Conditions are for the benefit of USW and the Offeror and may be asserted by USW
and the Offeror regardless of the circumstances giving rise to any such
condition (except for any action or inaction by USW or the Offeror constituting
a breach of this Agreement). Except as provided in Section 1.1(c), USW shall
not, and shall not permit the Offeror to, terminate the Offer without purchasing
shares of Global Common Stock pursuant to the Offer. In addition,
notwithstanding anything in this Agreement or the Offer Conditions to the
contrary, USW or the Offeror may waive any of the Offer Conditions only after
giving 5 business days prior written notice of its intention to do so to Global.
(b) As soon as reasonably practicable on the date the Offer is
commenced, USW and/or the Offeror shall file a Tender Offer Statement on
Schedule 14D-1 (the "Schedule 14D-1") with respect to the Offer with the
--------------
Securities and Exchange Commission (the "SEC"). The Schedule 14D-1 shall
---
contain an Offer to Purchase and forms of the related letter of transmittal
(which Schedule 14D-1, Offer to Purchase and other documents, together with any
supplements or amendments thereto, are referred to herein collectively as the
"Offer Documents"). The Offer Documents and all amendments thereto will comply
- ----------------
in all material respects with the Exchange Act and the rules and regulations
promulgated thereunder. USW agrees that Global and its counsel shall be given
an opportunity to review the Schedule 14D-1 before it is filed with the SEC.
USW and Global each agree promptly to correct any information provided by it for
use in
<PAGE>
3
the Offer Documents that shall have become false or misleading in any
material respect, and USW further agrees to take all steps necessary to cause
the Schedule 14D-1 as so corrected to be filed with the SEC and the other Offer
Documents as so corrected to be disseminated to holders of shares of Global
Common Stock, in each case as and to the extent required by applicable federal
securities laws.
(c) In the event that this Agreement has been terminated pursuant to
Section 5.1, USW shall, or shall cause the Offeror to, promptly terminate the
Offer without accepting any shares of Global Common Stock for payment. USW will
provide Global with a copy of any comments USW or the Offeror may receive from
the SEC or its staff with respect to the Offer Documents as soon as possible
following receipt thereof.
(d) If, at the expiration of the Offer, a number of shares of Global
Common Stock in excess of the Maximum Offer Number have been validly tendered
and not withdrawn, USW will purchase such shares on a pro rata basis, based on
the number of shares of Global Common Stock tendered by each Stockholder
(provided, that, to the extent permitted by the Exchange Act, the rules and
- ---------
regulations promulgated thereunder and any other applicable law or regulation,
USW and Global will cooperate to make such adjustments to the proration
mechanism and/or take all other reasonable actions as may be necessary to allow
holders of exercisable options for shares of Global Common Stock issued by
Global to tender shares issuable upon exercise of such options without
exercising such options until such time as it is determined that such shares
will be purchased by USW pursuant to the Offer), with appropriate adjustments to
avoid purchase of fractional shares of Global Common Stock.
SECTION 1.2 Company Action. (a) Global shall file with the SEC,
--------------
contemporaneously with the commencement of the Offer pursuant to Section 1.1, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9"), containing the
--------------
recommendation of Global's Board of Directors that the stockholders of Global
accept the Offer and tender their shares of Global Common Stock pursuant to the
Offer, and shall promptly mail the Schedule 14D-9 to the stockholders of Global.
The Schedule 14D-9 and all amendments thereto will comply in all material
respects with the Exchange Act and the rules and regulations promulgated
thereunder. Global and USW each agree promptly to correct any information
provided by it for use in the Schedule 14D-9 that shall have become false or
misleading in any material respect, and Global further agrees to take all steps
necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC
and disseminated to holders of shares of Global Common Stock, in each case as
and to the extent required by applicable federal securities laws.
(b) In connection with the Offer, Global shall promptly furnish USW
with mailing labels, security position listings, any non-objecting beneficial
owner lists and any available listings or computer files containing the names
and addresses of the record holders of shares of Global Common Stock, each as of
a recent date, and shall promptly furnish USW with such additional information
(including but not limited to updated lists of stockholders, mailing labels,
security position listings and non-objecting beneficial owner lists) and such
other assistance as USW or its agents may reasonably require in communicating
the Offer to the record
<PAGE>
4
and beneficial holders of shares of Global Common Stock. Subject to the
requirements of applicable law, and except for such steps as are appropriate to
disseminate the Offer Documents and any other documents necessary to consummate
the Offer, USW and its affiliates, associates, agents and advisors shall use the
information contained in any such labels, listings and files only in connection
with the Offer, and, if this Agreement shall be terminated, will deliver to
Global all copies of such information then in their possession.
SECTION 1.3 Adjustments to Number of Shares of Global Common Stock.
------------------------------------------------------
If, prior to the Offer Closing, Global should split, combine or otherwise
reclassify the Global Common Stock, or pay (or set a record date that is prior
to the Offer Closing with respect to) a stock dividend or other stock
distribution in Global Common Stock, or otherwise change Global Common Stock
into any other securities, or make any other such stock dividend or distribution
with respect to the Global Common Stock in capital stock of Global or its
subsidiaries in respect of the Global Common Stock, then the Maximum Offer
Number will be appropriately adjusted to reflect such split, combination,
dividend or other distribution or change to provide USW and the Stockholders the
same economic effect as contemplated by this Agreement prior to such event.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF GLOBAL
Global hereby represents and warrants to USW that:
SECTION 2.1 Corporate Organization. Global is duly organized,
----------------------
validly existing and in good standing under the laws of Bermuda and has the
requisite power and authority to own, operate or lease its properties and to
carry on its business as it is now being conducted.
SECTION 2.2 Authority Relative to This Agreement. Global has all
------------------------------------
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Global and
the consummation by Global of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action, and no other
corporate proceedings on the part of Global are necessary to authorize this
Agreement or to consummate the transactions so contemplated. This Agreement has
been duly and validly executed and delivered by Global and, assuming the due
authorization, execution and delivery hereof by USW constitutes a legal, valid
and binding obligation of Global enforceable against Global in accordance with
its terms.
SECTION 2.3 No Conflict; Required Filings and Consents. (a) The
------------------------------------------
execution and delivery of this Agreement by Global and the consummation by
Global of the transactions contemplated hereby and the consummation of the Offer
as contemplated hereby do not and will not (i) conflict with or violate the
Memorandum of Association or by-laws of Global, (ii assuming that all consents,
approvals and authorizations contemplated by subsection (b) below have been
obtained and all filings described in such subsection have been made, conflict
<PAGE>
5
with or violate any law, rule, regulation, order, judgment or decree applicable
to Global or any of its subsidiaries or by which its or any of their respective
properties are bound, (ii conflict with or violate any provision of the
Registration Rights Agreement (as defined in Section 4.1 hereof) or (iv result
in any breach or violation of or constitute a default (or an event which with
notice or lapse of time or both would become a default) or result in the loss of
a material benefit under, or give rise to any right of termination,
cancellation, material amendment or material acceleration of, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit or other
instrument or obligation to which Global or any of its subsidiaries is a party
or by which Global or any of its subsidiaries or its or any of their respective
properties are bound, except, in the case of clauses (ii), (iii) and (iv), for
any such conflict, violation, breach, default or other occurrence which,
individually or in the aggregate, would not reasonably be likely to have a
Material Adverse Effect on Global or have a material adverse effect on the
ability of the Offeror to consummate the Offer in accordance with the terms
hereof.
(b) The execution and delivery of this Agreement by Global and the
consummation by Global of the transactions contemplated hereby do not and will
not require any consent, approval, authorization or permit of, action by, filing
with or notification to, any Federal, state, local or foreign court of competent
jurisdiction, administrative agency or commission or other governmental
authority or instrumentality ("Governmental Entity"), except for (i) compliance
-------------------
with and filings under, to the extent required, the Exchange Act and the rules
and regulations promulgated thereunder, the HSR Act, and state securities,
takeover and blue sky laws, and (ii any such consent, approval, authorization,
permit, action, filing or notification the failure of which to make or obtain,
individually or in the aggregate, would not reasonably be likely to have a
Material Adverse Effect on Global or have a material adverse effect on the
ability of the Offeror to consummate the Offer in accordance with the terms
hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF USW
USW hereby represents and warrants to Global that:
SECTION 3.1 Corporate Organization. USW is duly organized, validly
----------------------
existing and in good standing under the laws of the state of Delaware and has
the requisite power and authority to own, operate or lease its properties and to
carry on its business as it is now being conducted.
SECTION 3.2 Authority Relative to This Agreement. USW has all
------------------------------------
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by USW and
the consummation by USW of the transactions contemplated hereby have been duly
and validly authorized by all necessary corporate action, and no other
<PAGE>
6
corporate proceedings on the part of USW is necessary to authorize this
Agreement or to consummate the transactions so contemplated. This Agreement has
been duly and validly executed and delivered by USW and, assuming the due
authorization, execution and delivery hereof by Global, constitutes a legal,
valid and binding obligation of USW, enforceable against USW in accordance with
its terms.
SECTION 3.3 No Conflict; Required Filings and Consents. (a) The
------------------------------------------
execution and delivery of this Agreement by USW and the consummation by USW of
the transactions contemplated hereby and the consummation of the Offer as
contemplated hereby do not and will not (i) conflict with or violate the
certificate of incorporation or by-laws of USW, (ii assuming that all consents,
approvals and authorizations contemplated by subsection (b) below have been
obtained and all filings described in such subsection have been made, conflict
with or violate any law, rule, regulation, order, judgment or decree applicable
to USW or any of its subsidiaries including, without limitation, Purchaser) or
by which its or any of their respective properties are bound or (ii result in
any breach or violation of or constitute a default (or an event which with
notice or lapse of time or both would become a default) or result in the loss of
a material benefit under, or give rise to any right of termination,
cancellation, material amendment or material acceleration of, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit or other
instrument or obligation to which USW or any of its subsidiaries is a party or
by which USW or any of its subsidiaries or its or any of their respective
properties are bound, except, in the case of clauses (ii) and (iii), for any
such conflict, violation, breach, default or other occurrence which,
individually or in the aggregate, would not reasonably be likely to have a
Material Adverse Effect on USW.
(b) The execution and delivery of this Agreement by USW and the
consummation by USW of the transactions contemplated hereby do not and will not
require any consent, approval, authorization or permit of, action by, filing
with or notification to, any Governmental Entity, except for (i) compliance with
and filings under, to the extent required, the Exchange Act and the rules and
regulations promulgated thereunder, the HSR Act, and state securities, takeover
and blue sky laws, and (ii any such consent, approval, authorization, permit,
action, filing or notification the failure of which to make or obtain,
individually or in the aggregate, would not reasonably be likely to have a
Material Adverse Effect on USW.
SECTION 3.4 Purchase for Investment. USW acknowledges that certain of
-----------------------
the shares of Global Common Stock which may be tendered in the Offer have not
been registered under the Securities Act of 1933, as amended (the "Securities
----------
Act"), or under any state securities laws. USW (i) is not an underwriter as
- ---
such term is defined under the Securities Act and the rules and regulations
promulgated thereunder, (ii) is purchasing the shares of Global Common Stock
solely for investment with no present intention to distribute any of such shares
to any person and (iii) will not sell or otherwise transfer or dispose of any of
such shares, except in compliance with the registration requirements or
exemption provisions of the Securities Act and the rules and regulations
promulgated thereunder, and any other applicable securities laws.
<PAGE>
7
SECTION 3.5 Financing. USW has on the date hereof, and will have at
---------
the time of the Offer Closing, the funds necessary to consummate the Offer in
accordance with this Agreement.
ARTICLE IV
CERTAIN ADDITIONAL AGREEMENTS
SECTION 4.1 Registration Rights. (a) Subject to the provisions of
-------------------
this Section 4.1, with respect to shares of Global Common Stock purchased by USW
in the Offer (collectively, "Purchased Securities"), USW shall have all the
--------------------
rights and obligations of a Holder (as such term is defined in that certain
Registration Rights Agreement dated as of August 12, 1998 by and among Global
and the other persons named on the signature pages thereto (the "Registration
------------
Rights Agreement")) under the Registration Rights Agreement (other than any
- ----------------
rights a Holder may have under or with respect to Section 2(f) of the
Registration Rights Agreement).
(b) The Purchased Securities shall be deemed to be Registrable
Securities within the meaning of the Registration Rights Agreement until
distributed or sold in the manner contemplated in the second sentence of the
definition of Registrable Securities in the Registration Rights Agreement.
(c) With respect to demand registration rights, USW shall have the
same rights (including number of demand registrations) as the BCLP Holders (as
such term is defined in the Registration Rights Agreement) as set forth in
Section 2 of the Registration Rights Agreement (other than any rights a Holder
may have under or with respect to Section 2(f) of the Registration Rights
Agreement); provided, that USW shall have two demand registration rights, and
---------
provided, further, that the last proviso set forth in Section 2(a)(v) of the
- -------- -------
Registration Rights Agreement shall not apply to USW.
(d) USW agrees to be subject to the obligations set forth in Section
4 of the Registration Rights Agreement as if named as a holder therein.
(e) None of the rights of USW provided in this Section 4.1 shall be
exercised by USW until the later of (i) the termination of the Frontier Merger
Agreement (or consummation of the transactions pursuant thereto) and (ii) the
termination of the Merger Agreement.
(f) Global shall not amend the Registration Rights Agreement in a
manner which would adversely affect USW's registration rights provided in this
Section 4.1.
SECTION 4.2 Standstill Agreement and Voting Agreement. USW agrees
-----------------------------------------
that simultaneously with the purchase by USW of shares of Global Common Stock
pursuant to the Offer or otherwise, such shares shall become subject to each of
the Standstill Agreement and the Voting Agreement between USW and Global.
<PAGE>
8
SECTION 4.3 Tag-Along Rights. (a) Global agrees that USW shall have
----------------
the right, in connection with any CoC Tag-Along Sale (as defined in the
Stockholders Agreement (as such term is defined in the Agreement)) to
participate in such sale on the same basis as any other CoC Other Holder (as
defined in the Stockholders Agreement) pursuant to Section 4(b) of the
Stockholders Agreement.
(b) Global shall not amend the Stockholders Agreement in a manner
which would adversely affect USW's tag-along rights provided in this Section
4.3.
SECTION 4.4 Board Representation. From and after the date of the
--------------------
termination of the Merger Agreement and so long as USW beneficially owns the
Threshold Amount (as defined below) of Global Common Stock, Global agrees to use
its reasonable best efforts to cause to be nominated to stand for election to
serve on the Board of Directors of Global, together with Global's slate of
nominees, one individual designated by USW (a "USW Designee"), and Global agrees
------------
to solicit proxies for such individual to the same extent as for other members
of its slate of nominees; provided, however, that Global shall not be obligated
-------- -------
to nominate a USW Designee if an individual previously so designated by USW
continues to serve on the Board of Directors of Global following the applicable
election unless USW requested in writing to Global that such person not be
renominated at least 90 days prior to such election. The term "Threshold
---------
Amount" shall mean Global Common Stock representing 5% or more of the
- ------
outstanding shares of Global Common Stock; provided, however, that if USW's
-------- -------
ownership of Global Common Stock is reduced from its level to less than 5% of
Global Common Stock as a result of issuances of Global Common Stock, USW shall
be deemed to beneficially own the Threshold Amount until such time as it
transfers one or more shares of Global Common Stock, at which time USW shall no
longer beneficially own the Threshold Amount of Global Common Stock. At such
time as USW no longer beneficially owns the Threshold Amount of Global Common
Stock, at the request of Global, USW shall cause any USW Designee to resign from
the Board of Directors of Global.
SECTION 4.5 HSR Act. As promptly as practicable, Global and USW shall
-------
make all filings and submissions under the HSR Act as may be required to be made
in connection with this Agreement and the transactions contemplated hereby.
Global will furnish to USW, and USW will furnish to Global, such information and
assistance as the other may reasonably request in connection with the
preparation of any such filings or submissions. Global will provide to USW, and
USW will provide to Global, copies of all correspondence, filings or
communications between such party or any of its representatives, on the one
hand, and any Governmental Authority or members of their respective staffs, on
the other hand, with respect to this Agreement and the transactions contemplated
hereby.
SECTION 4.6 Public Announcements. USW and Global agree that they will
--------------------
not issue any press release or otherwise make any public statement or respond to
any press inquiry with respect to this Agreement or the transactions
contemplated hereby without the prior approval of the other party (which
approval shall not be unreasonably withheld), except as may be required by law.
<PAGE>
9
SECTION 4.7 Legend. Promptly following consummation of the Offer,
------
the parties shall cooperate to legend the certificates representing the Global
Common Stock purchased pursuant to the Offer to refer to the applicable
restrictions on the transfer of such certificates under the Voting Agreement,
the Standstill Agreement, this Agreement and applicable law.
ARTICLE V
TERMINATION, AMENDMENT AND WAIVER
SECTION 5.1 Termination. This Agreement may be terminated and the
-----------
transactions contemplated hereby may be abandoned at any time prior to the Offer
Closing:
(a) by the mutual written consent of USW and Global; or
(b) by USW or Global on or after May 16, 2000, but only if the Merger
Agreement has been terminated prior to such termination; or
(c) by USW at any time after the termination of the Merger Agreement
by USW pursuant to Section 9.1(d)(ii)(A) or Section 9.1(e) of the Merger
Agreement or by Global pursuant to Section 9.1(h)(i) of the Merger Agreement; or
(d) by Global at any time commencing on the first business day prior
to the mailing of the Frontier Proxy Statement in connection with the Frontier
Merger Agreement; or
(e) by USW at any time commencing on the first business day following
the termination of the Frontier Merger Agreement in accordance with its terms.
SECTION 5.2 Effect of Termination. In the event of the termination
---------------------
of this Agreement pursuant to Section 5.1, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto; provided
--------
that the obligation of USW set forth in the first sentence of Section 1.1(c)
hereof shall survive any such termination and provided, further, that nothing
-------- -------
herein shall relieve any party from liability for any breach hereof.
SECTION 5.3 Amendment. This Agreement may be amended by the parties
---------
hereto at any time only by an instrument in writing signed by the parties
hereto.
<PAGE>
10
ARTICLE VI
GENERAL PROVISIONS
SECTION 6.1 Notices. All notices, requests, claims, demands and
-------
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by cable,
facsimile, telegram or telex or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
If to USW or
the Offeror:
U S West, Inc.
1801 California Street
Denver, Colorado
Attention: Mark Roellig
Facsimile: (303) 840-0381
with a copy to:
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York
Attention: Dennis J. Block
Facsimile: (212) 504-6666
If to Global:
Global Crossing Ltd.
Wessex House
45 Reid Street
Hamilton HM12, Bermuda
Attention: K. Eugene Shutler
Facsimile No.: (441) 296-8606
and
Global Crossing Ltd.
150 South El Camino Drive
Suite 204
Attention: General Counsel
Facsimile No.: (310) 281-4942
<PAGE>
11
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3954
Attention: Charles I. Cogut, Esq.
Facsimile No.: (212) 455-2502
and Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue
Los Angeles, California 90071
Attention: Brian J. McCarthy
Facsimile: (213) 687-5600
SECTION 6.2 Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions 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
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 to the end
that the transactions contemplated hereby are fulfilled to the fullest extent
possible.
SECTION 6.3 Entire Agreement; Assignment. Except as may otherwise be
----------------------------
agreed by the parties, this Agreement, the Voting Agreement, the Standstill
Agreement, the Merger Agreement and the Agreement constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and undertakings, both written and oral, among
the parties, or any of them, with respect to the subject matter hereof. Neither
this Agreement nor any of the rights, interests or obligations under this
Agreement shall be assigned, in whole or in part, by operation of law or
otherwise by any of the parties without the prior written consent of the other
parties.
SECTION 6.4 Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the internal laws of the State of New York.
SECTION 6.5 Headings. The descriptive headings contained in this
--------
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 6.6 Counterparts. This Agreement may be executed in two or
------------
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
<PAGE>
12
SECTION 6.7 Specific Performance; Jurisdiction. 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 or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in any
court of the United States located in the State of New York or in any New York
state court, this being in addition to any other remedy to which such party is
entitled at law or in equity. In addition, each of the parties hereto (i)
consents to submit itself to the personal jurisdiction of any Federal court
located in the State of New York or any New York state court in the event any
dispute arises out of this Agreement or any of the transactions contemplated by
this Agreement, (ii agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
(ii agrees that it will not bring any action relating to this Agreement or any
of the transactions contemplated by this Agreement in any court other than a
Federal or state court sitting in the State of New York and (iv consents to
service being made through the notice procedures set forth in Section 6.1.
<PAGE>
13
IN WITNESS WHEREOF, USW and Global have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
U S WEST, INC.
By: /s/ Solomon D. Trujilllo
--------------------------------------
Title: President and Chief Executive Officer
GLOBAL CROSSING LTD.
By: /s/ Robert Annunziata
--------------------------------------
Title: Chief Executive Officer
<PAGE>
Exhibit A
Offer Conditions
----------------
Notwithstanding any other provision of the Offer or this Agreement,
USW shall not accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to USW's obligation to pay for or return tendered shares of Global Common Stock
promptly after termination or withdrawal of the Offer), pay for any shares of
Global Common Stock tendered pursuant to the Offer unless any waiting periods
applicable to the Offer under the HSR Act shall have expired or been terminated
and this Agreement shall not have been terminated in accordance with its terms.
Furthermore, notwithstanding any other provision of the Offer or this Agreement,
USW shall not be required to accept for payment or, subject to the restriction
referred to above, pay for any shares of Global Common Stock tendered pursuant
to the Offer, and may, subject to the terms of this Agreement, terminate the
Offer if, prior to the expiration of the Offer, any of the following conditions
occurs or has occurred and continues to exist (other than as a result of any
action or inaction by USW or any of its subsidiaries which constitutes a breach
of this Agreement): any order or preliminary or permanent injunction shall have
been entered in any action or proceeding before any federal or state court or
governmental, administrative or regulatory authority or agency, or any other
action shall have been taken, or statute, rule, regulation, legislation,
judgment or order enacted, entered, enforced, promulgated, amended or issued by
any legislative body, court, government or governmental, administrative or
regulatory authority or agency which has the effect of making illegal or
otherwise prohibiting the acceptance for payment of, or payment for, some of or
all the shares of Global Common Stock pursuant to the Offer, which, in the
reasonable judgment of USW with respect to each and every matter referred to
above and regardless of the circumstances giving rise to any such condition,
makes it inadvisable to proceed with the Offer or with such acceptance for
payment of or payment for shares of Global Common Stock.
The foregoing conditions are for the benefit of USW and may be
asserted by USW regardless of the circumstances giving rise to any such
condition or may be waived by USW in whole or in part at any time and from time
to time in its sole discretion (subject to the terms of this Agreement). The
failure by USW at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right, the waiver of any such right with respect to
particular facts and other circumstances shall not be deemed a waiver with
respect to any other facts and circumstances, and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
<PAGE>
EXHIBIT (c)(3)
CONFORMED COPY
--------------
VOTING AGREEMENT
VOTING AGREEMENT, dated as of May 16, 1999 (this "Agreement"), between
---------
Global Crossing Ltd., a company formed under the laws of Bermuda ("Global") and
------
U S West, Inc., a Delaware corporation ("USW").
---
WHEREAS, Global, and USW are parties to that certain Agreement and Plan
of Merger dated as of the date hereof (the "Merger Agreement"; capitalized
----------------
terms used and not otherwise defined herein having the meaning set forth in the
Merger Agreement);
WHEREAS, Global, GCF Acquisition Corp. and Frontier Corporation
("Frontier") are parties to that certain Agreement and Plan of Merger, dated
- ----------
March 16, 1999 (as amended, the "Frontier Merger Agreement"; the transactions
-------------------------
contemplated by the Frontier Merger Agreement being referred to herein as the
"Frontier Merger");
- ----------------
WHEREAS, certain shareholders of Global and Frontier are parties to
that certain Voting Agreement dated as of March 16, 1999 which was entered into
in connection with the Frontier Merger Agreement ( "Frontier Voting Agreement");
-------------------------
and
WHEREAS, in connection with the Merger Agreement, Global and USW have
entered into a Tender Offer and Purchase Agreement dated the date hereof (the
"TOP Agreement") pursuant to which USW will acquire up to 39,259,305 shares of
- --------------
the common stock, par value $0.01 per share, of Global ("Global Common Stock"),
-------------------
upon the terms and subject to the conditions set forth in the TOP Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the parties hereby agree as follows:
1. Representations and Warranties of USW. USW represents and
-------------------------------------
warrants to Global as follows:
(a) Ownership of Securities. USW is the record and beneficial owner of
-----------------------
the number of shares of Global Common Stock (the "Existing Securities")
-------------------
(together with any shares of Global Common Stock or other securities hereafter
acquired by USW (including by USW or the Offeror (as such term is defined in the
TOP Agreement) pursuant to the TOP Agreement), the "Subject Securities") set
------------------
forth on the signature page to this Agreement. USW does not own any shares of
Global Common Stock on the date hereof other than the Existing Securities. USW
has or will have sole voting power and sole power to issue instructions with
respect to the voting of
<PAGE>
2
the Subject Securities, sole power of disposition, sole power of exercise or
conversion and the sole power to demand appraisal rights, in each case with
respect to all of the Subject Securities.
(b) Power; Binding Agreement. USW has all necessary corporate power and
------------------------
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by USW and the consummation by USW of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action, and no other corporate proceedings on the part of
USW are necessary to authorize this Agreement or to consummate the transactions
so contemplated. This Agreement has been duly and validly executed and
delivered by USW and, assuming the due authorization, execution and delivery
hereof by Global, constitutes a legal, valid and binding obligation of USW,
enforceable against USW in accordance with its terms.
(c) No Conflicts. (i) The execution and delivery of this Agreement by
------------
USW and the consummation by USW of the transactions contemplated hereby does not
and will not (1) conflict with or violate the certificate of incorporation or
by-laws of USW, (2) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to USW or any of its subsidiaries or by which its
or any of their respective properties are bound or (3) result in any breach or
violation of or constitute a default (or an event which with notice or lapse of
time or both would become a default) or result in the loss of a material benefit
under, or give rise to any right of termination, cancellation, material
amendment or material acceleration of, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit or other instrument or obligation to
which USW or any of its subsidiaries is a party or by which USW or any of its
subsidiaries or its or any of their respective properties are bound.
(ii) The execution and delivery of this Agreement by USW and the
consummation by USW of the transactions contemplated hereby does not and will
not require any consent, approval, authorization or permit of, action by, filing
with or notification to, any Governmental Entity other than filings, if any,
which may be required under the Exchange Act.
(d) No Liens. The Existing Securities (if any) are now and, at all
--------
times during the term hereof, the Subject Securities will be held by USW, or by
a nominee or custodian for the benefit of USW, free and clear of all liens,
claims, security interests, proxies, voting trusts or agreements, understandings
or arrangements or any other encumbrances whatsoever, except for any
encumbrances arising hereunder.
2. Agreement to Vote Shares. At every meeting of the stockholders
------------------------
of Global called with respect to any of the following, and at every adjournment
thereof, and on every action or approval by written consent of the stockholders
of Global with respect to any of the following, USW agrees that it shall vote
(or cause to be voted), or deliver a written consent (or cause a consent to be
delivered) covering all the Subject Securities (to the extent such securities
have voting rights) that it or any of its subsidiaries beneficially owns on the
record date of any such vote: (i) (x) in favor of the Global Merger and any
action required in furtherance thereof and (y) in favor of the Frontier Merger
and any action required in furtherance thereof and (ii) unless otherwise agreed
to in writing by Global, against any action which would reasonably
<PAGE>
3
be expected to result in a failure of the conditions described in Article VIII
of the Merger Agreement to be satisfied.
3. Representations and Warranties of Global.
----------------------------------------
(a) Power; Binding Agreement. Global has all necessary corporate power
------------------------
and authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by Global and the consummation by Global of the
transactions contemplated hereby has been duly and validly authorized by all
necessary corporate action, and no other corporate proceedings on the part of
Global is necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Global and, assuming the due authorization, execution and
delivery hereof by Global, constitutes a legal, valid and binding obligation of
Global, enforceable against Global in accordance with its terms.
(b) No Conflicts. (i) The execution and delivery of this Agreement
------------
by Global and the consummation by Global of the transactions contemplated hereby
does not and will not (1) conflict with or violate the Memorandum of Association
or by-laws of Global, (2) conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to Global or any of its subsidiaries or by
which its or any of their respective properties are bound or (3) result in any
breach or violation of or constitute a default (or an event which with notice or
lapse of time or both would become a default) or result in the loss of a
material benefit under, or give rise to any right of termination, cancellation,
material amendment or material acceleration of, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit or other instrument or
obligation to which Global or any of its subsidiaries is a party or by which
Global or any of its subsidiaries or its or any of their respective properties
are bound.
(ii) The execution and delivery of this Agreement by Global and
the consummation by Global of the transactions contemplated hereby does not and
will not require any consent, approval, authorization or permit of, action by,
filing with or notification to, any Governmental Entity.
4. Covenants of the Holders. USW agrees and covenants that:
------------------------
(a) Restriction on Transfer, Proxies and Noninterference. USW shall
----------------------------------------------------
not, and shall cause each of its affiliates not to, directly or indirectly: (i)
offer for sale, sell, transfer, tender, pledge, encumber, assign or otherwise
dispose of, or enter into any contract, option or other arrangement or
understanding with respect to or consent to the offer for sale, sale, transfer,
tender, pledge, encumbrance, assignment or other disposition of, any or all of
the Subject Securities; (ii) except as contemplated hereby, grant any proxies or
powers of attorney, deposit any such Subject Securities into a voting trust or
enter into a voting agreement with respect to any of the Subject Securities; or
(iii) take any action that would make any representation or warranty contained
herein untrue or incorrect or have the effect of preventing or disabling USW
from performing its obligations under this Agreement.
<PAGE>
4
(b) Further Actions. USW shall use reasonable efforts to take all
---------------
actions and to do all things necessary, proper or advisable to consummate the
transactions contemplated by the Merger Agreement and this Agreement.
5. Entire Agreement; Assignment. Except as may otherwise be agreed
----------------------------
by the parties, this Agreement, the TOP Agreement, the Standstill Agreement (as
defined in the TOP Agreement), and the Merger Agreement constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and undertakings, both written and oral, among
the parties, or any of them, with respect to the subject matter hereof. Neither
this Agreement nor any of the rights, interests or obligations under this
Agreement shall be assigned, in whole or in part, by operation of law or
otherwise by any of the parties without the prior written consent of the other
parties.
6. Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
facsimile, telegram or telex or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
If to USW:
U S West, Inc.
1801 California Street
Denver, Colorado
Attention: Mark Roellig
Facsimile: (303) 840-0381
with a copy to:
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York
Attention: Dennis J. Block
Facsimile: (212) 504-6666
If to Global:
Global Crossing Ltd.
Wessex House
45 Reid Street
Hamilton HM12, Bermuda
Attention: K. Eugene Shutler
Facsimile No.: (441) 296-8606
and
<PAGE>
5
Global Crossing Ltd.
150 South El Camino Drive
Suite 204
Attention: General Counsel
Facsimile No.: (310) 281-4942
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3954
Attention: Charles I. Cogut, Esq.
Facsimile No.: (212) 455-2502
and Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue
Los Angeles, California 90071
Attention: Brian J. McCarthy
Facsimile: (213) 687-5600
7. Specific Performance; Jurisdiction. 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 or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any court of
the United States located in the State of New York or in any New York state
court, this being in addition to any other remedy to which such party is
entitled at law or in equity. In addition, each of the parties hereto (1)
consents to submit itself to the personal jurisdiction of any Federal court
located in the State of New York or any New York state court in the event any
dispute arises out of this Agreement or any of the transactions contemplated by
this Agreement, (2) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
(3) agrees that it will not bring any action relating to this Agreement or any
of the transactions contemplated by this Agreement in any court other than a
Federal or state court sitting in the State of New York and (4) consents to
service being made through the notice procedures set forth in Section 6.
8. Amendment. This Agreement may be amended by the parties hereto at
---------
any time only by an instrument in writing signed by the parties hereto.
9. Governing Law. This Agreement shall be governed by, and construed
-------------
in accordance with, the internal laws of the State of New York.
10. Counterparts. This Agreement may be executed in two or more
------------
counterparts, and by the different parties hereto in separate counterparts, each
of which when
<PAGE>
6
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
11. Termination. This Agreement shall terminate upon the later of
-----------
(x) the earlier of (i) the consummation of the Global Merger and (ii) the
termination of the Merger Agreement pursuant to its terms and (y) the earlier of
(i) the consummation of the Frontier Merger and (ii) the termination of the
Frontier Merger Agreement pursuant to its terms. The date and time at which
this Agreement is terminated in accordance with this Section 11 is referred to
herein as the "Termination Date." Upon any termination of this Agreement, this
Agreement shall thereupon become void and of no further force and effect, and
there shall be no liability in respect of this Agreement or of any transactions
contemplated hereby on the part of any party hereto or any of its directors,
officers, partners, stockholders, employees, agents, advisors, representatives
or affiliates; provided, however, that nothing herein shall relieve any party
-------- -------
from any liability for such party's breach of this Agreement; and provided
--------
further that nothing herein shall limit, restrict, impair, amend or otherwise
- -------
modify the rights, remedies, obligations or liabilities of any person under any
other contract or agreement, including, without limitation, the Merger
Agreement.
<PAGE>
7
IN WITNESS WHEREOF, this Agreement has been executed by or on behalf
of each of the parties hereto, all as of the date first above written.
GLOBAL CROSSING LTD.
By: /s/ Robert Annunziata
-------------------------------------------
Title: Chief Executive Officer
U S WEST, INC.
By: /s/ Solomon D. Trujillo
--------------------------------------------
Title: President and Chief Executive
Officer
Existing Securities: NONE
---------------
<PAGE>
EXHIBIT (c)(4)
--------------
CONFORMED COPY
--------------
STANDSTILL AGREEMENT
STANDSTILL AGREEMENT, dated as of May 16, 1999 (this "Agreement"),
---------
between Global Crossing Ltd., a company formed under the laws of Bermuda
("Global") and U S West, Inc., a Delaware corporation ("USW")
------ ---
WHEREAS, Global and USW are parties to that certain Agreement and Plan
of Merger dated as of the date hereof (the "Merger Agreement"; capitalized
----------------
terms used and not otherwise defined herein having the meaning set forth in the
Merger Agreement);
WHEREAS, in connection with the Merger Agreement, Global and USW have
entered into (i) a Tender Offer and Purchase Agreement dated the date hereof
(the "Tender Offer and Purchase Agreement") pursuant to which USW (or a direct
-----------------------------------
or indirect subsidiary of USW) will acquire up to 39,259,305 shares of the
common stock, par value $0.01 per share, of Global ("Global Common Stock"), upon
-------------------
the terms and subject to the conditions set forth in the Tender Offer and
Purchase Agreement and (ii) a Voting Agreement (the "Voting Agreement"); and
----------------
WHEREAS, USW and Global are entering into this Agreement to establish
certain arrangements with respect to the shares of Global Voting Securities to
be purchased by USW pursuant to the Tender Offer and Purchase Agreement, as well
as certain restrictions in respect of the capital stock of Global, corporate
governance and other related corporate matters;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
Section 1. Defined Terms. Unless otherwise defined herein:
-------------
"Global Board of Directors" shall mean the board of directors of
-------------------------
Global or any successor thereof.
"Global Combined Voting Power" at any measurement date shall mean the
----------------------------
total number of votes which could have been cast in an election of members
of the Global Board of Directors had a meeting of the stockholders of
Global (or any successor thereof) been duly held based upon a record date
as of the measurement date if all Global Voting Securities then outstanding
and entitled to vote at such meeting were present and voted to the fullest
extent possible at such meeting.
"Global Voting Securities" shall mean, collectively, (i) Global Common
------------------------
Stock, (ii) any other securities entitled, or that may be entitled, to vote
generally for the election of members of the Global Board of Directors and
(iii) any other securities, warrants or options or rights of any nature
(whether or not issued by Global) that are convertible into, exchangeable
for, or exercisable for, or otherwise give the holder thereof any rights in
respect of (whether or not subject to the passage of time, contingencies or
contractual
<PAGE>
2
restrictions or any combination thereof), any security described in clause
(i) or (ii) of this definition (including, without limitation, Frontier
Corporation common stock).
"Group" means two or more persons acquiring, holding, voting or
-----
disposing of securities which would constitute a "person" within the
meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended.
"person" means an individual, partnership, corporation, business
------
trust, joint stock company, trust, unincorporated association, joint
venture or other entity of whatever nature.
"Reorganization Transaction" means (i) any merger, consolidation,
--------------------------
recapitalization, liquidation or other business combination transaction
involving Global or any of its subsidiaries (or any successors to any of
such entities), (ii) any tender offer or exchange offer for any securities
of Global or any of its subsidiaries (or any successors to any of such
entities) or (iii) any sale or other disposition of assets of Global or any
of its subsidiaries (or any successors to any of such entities) in a single
transaction or in a series of related transactions in each of the foregoing
cases constituting individually or in the aggregate 5% or more of the
assets of Global (or any successor), or 5% or more of the then outstanding
Global Voting Securities.
"Standstill Period" shall mean the period commencing on the date
-----------------
hereof and continuing until the earlier of (a) the tenth anniversary of the
date hereof and (b) the Effective Time (as defined in the Merger
Agreement); provided, that if the Merger Agreement is terminated by Global
---------
pursuant to Section 9.1(b) or 9.1(h)(i) or by USW pursuant to Section
9.1(e), 9.1(d)(ii)(A) or 9.1(h)(iii), the Standstill Period shall expire on
the fifth anniversary of the date hereof.
Section 2. Covenants with Respect to Global Voting Securities and
------------------------------------------------------
Other Matters.
- -------------
2.1 Acquisition of Global Voting Securities. During the Standstill
---------------------------------------
Period, except for shares of Global Common Stock acquired pursuant to the Tender
Offer and Purchase Agreement, USW will not, and will cause its affiliates (other
than Global) not to, directly or indirectly, acquire, offer to acquire, agree to
acquire, become the beneficial owner of or obtain any rights in respect of any
Global Voting Securities; provided, that neither USW nor any of its affiliates
--------
shall be prohibited from buying Global Voting Securities directly from Global.
2.2 Disposition of Global Voting Securities. Until the later of the
---------------------------------------
termination of the Merger Agreement and the termination of the Frontier Merger
Agreement (as defined in the Voting Agreement) (or the consummation of the
transactions pursuant thereto), USW will not, and will cause its affiliates not
to, directly or indirectly, sell, transfer any beneficial interest in, pledge,
lend, hypothecate or otherwise dispose of any Global Voting Securities (each
transaction described above, a "Transfer"). Subject in all respects to the
--------
preceding sentence, during the Standstill Period, USW will not, and will cause
its affiliates not to, directly or indirectly, Transfer
<PAGE>
3
any Global Voting Securities in any transaction that to the knowledge of USW
would result in any person or Group having, upon consummation of such Transfer
transaction, directly or indirectly, beneficial ownership of or the right to
acquire beneficial ownership of such number of Global Voting Securities as
represent more than 5% of the Global Combined Voting Power; provided that USW
--------
shall be permitted to Transfer Global Voting Securities in any transaction that
to the knowledge of USW would result in a Transfer to any person or Group that
would have, upon consummation of such Transfer transaction, directly or
indirectly, beneficial ownership of or the right to acquire beneficial ownership
of such number of Global Voting Securities as represent more than 5% but less
than 9.5% of the Global Combined Voting Power so long as such person or Group
agrees in writing to be bound by the terms of this Agreement. Notwithstanding
the preceding sentence, USW shall be permitted to sell, transfer or otherwise
dispose of Global Voting Securities (a) to one or more of its affiliates that is
directly or indirectly controlled by it (each, a "Permitted Transferee"), (b)
--------------------
pursuant to a tender or exchange offer for Global Voting Securities which is not
opposed by the Global Board of Directors, (c) in a merger, recapitalization,
business combination or other similar transaction or (d) as expressly provided
in Section 4.1 of the Tender Offer and Purchase Agreement; provided, that in the
--------
case of clause (a) the Permitted Transferee shall agree in writing to be bound
by the terms of this Agreement. USW shall not directly or indirectly transfer
all or any substantial part of the capital stock of any subsidiary which
purchases shares of Global Common Stock in accordance with the Tender Offer and
Purchase Agreement or any Permitted Transferee without first transferring to USW
or a Permitted Transferee of USW any Global Voting Securities held by such
subsidiary or Permitted Transferee.
2.3 Proxy Solicitations, Voting, etc. (a) During the Standstill
---------------------------------
Period, USW will not, and will cause its affiliates not to, directly or
indirectly, solicit proxies, assist any other person in any way, directly or
indirectly, in the solicitation of proxies, or otherwise become a "participant"
in a "solicitation," or assist any "participant" in a "solicitation" (as such
terms are defined in Rule 14a-1 of Regulation 14A under the Exchange Act as in
effect on the date of this Agreement) in opposition to the recommendation or
proposal of the Global Board of Directors, or submit any proposal for the vote
of stockholders of Global or any successor thereof or recommend or request or
induce or attempt to induce any other person to take any such actions, or seek
to advise, encourage or influence any other Person with respect to the voting of
Global Voting Securities, unless in each case it obtains the prior approval of
the Global Board of Directors to do so as evidenced by a formal resolution
adopted by the Global Board of Directors and recorded in its minutes.
(b) In furtherance of USW's obligations pursuant to Section 2.3(a),
during the Standstill Period USW shall, and shall cause its affiliates to, at
any annual or special meeting of stockholders at which members of the Global
Board of Directors are to be elected or in connection with a solicitation of
consents through which members of the Global Board of Directors are to be
elected, vote or cause to be voted (or give or cause to be given a written
consent or proxy with respect to) all Global Voting Securities beneficially
owned by it in favor of the election to the Global Board of Directors of the
individuals recommended by the Global Board of Directors.
<PAGE>
4
2.4 No Voting Trusts, Pooling Agreements, or Formation of Groups.
------------------------------------------------------------
Except as contemplated by the Voting Agreement, during the Standstill Period,
USW will not, and will cause its affiliates not to, directly or indirectly, join
in or in any other way participate in a pooling agreement, syndicate, voting
trust or other Group with respect to Global Voting Securities or otherwise act
in concert with any other person, for the purpose of acquiring, holding, voting
or disposing of Global Voting Securities.
2.5 Limitation on Various Other Actions. During the Standstill
-----------------------------------
Period, USW will not, and will cause its affiliates not to, take any action,
alone or in concert with any other person, (a) to seek to effect a change in
control of Global, its successors or any of its affiliates, (b) to seek to
effect a Reorganization Transaction with respect to Global, its successors or
any of its affiliates, (c) to seek to effect any control or influence over the
management of Global, its successors or any of its affiliates, the Global Board
of Directors or the policies of Global, its successors or any of its affiliates,
(d) to advise, assist or encourage or finance (or assist or arrange financing to
or for) any other person in connection with any of the matters restricted by, or
to otherwise seek to circumvent the limitations of the provisions of, Section 2
of this Agreement (any such action described in clause (a), (b), (c) or (d) of
this Section 2.5, a "Global Transaction Proposal"), (e) to present to Global,
---------------------------
its stockholders or any third party any proposal that can reasonably be expected
to result in a Global Transaction Proposal or in an increase in the Global
Combined Voting Power represented by Global Voting Securities beneficially owned
in the aggregate by USW and its successors or any of their affiliates that would
be prohibited by Section 2.1, (f) to publicly suggest or announce its
willingness or desire to engage in a transaction or group of transactions or
have another person engage in a transaction or group of transactions that would
result in (i) a Global Transaction Proposal or (ii) an increase in the Global
Combined Voting Power represented by Global Voting Securities beneficially owned
in the aggregate by USW and its respective successors or any of their affiliates
that would be restricted by Section 2.1, (g) to initiate, request, induce,
encourage or attempt to induce or give encouragement to any other person to
initiate, or otherwise provide assistance to any person who has made or is
contemplating making, any proposal that can reasonably be expected to result in
(i) a Global Transaction Proposal or (ii) an increase in the Global Combined
Voting Power represented by Global Voting Securities beneficially owned in the
aggregate by USW and its successors or any of their affiliates that would be
restricted by Section 2.1, or (h) to request a waiver, modification or amendment
of any of the provisions of Section 2 of this Agreement.
2.6 Representation. During the Standstill Period, if requested by
--------------
Global, USW shall and shall cause each of its Permitted Transferees to be
present, in person or represented by proxy, at all meetings of stockholders of
Global at which members of the Global Board of Directors are to be elected so
that all Global Voting Securities beneficially owned by USW and each such
Permitted Transferee shall be counted for the purpose of determining the
presence of a quorum at such meetings and for voting such securities.
Section 3. Term of Agreement. This Agreement shall terminate on the
-----------------
last day of the Standstill Period.
<PAGE>
5
Section 4. Remedies. Each of the parties hereto acknowledges and
--------
agrees that (i) the provisions of this Agreement are reasonable and necessary to
protect the proper and legitimate interests of Global, and (ii) Global would be
irreparably damaged in the event any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that Global shall be entitled to preliminary
and permanent injunctive relief to prevent breaches of the provisions of this
Agreement by USW or any of its Permitted Transferees without the necessity of
proving actual damages or of posting any bond, and to enforce specifically the
terms and provisions hereof and thereof, which rights shall be cumulative and in
addition to any other remedy to which Global may be entitled hereunder or at law
or equity.
Section 5. General Provisions.
------------------
5.1 Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
facsimile, telegram or telex or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
If to USW:
U S West, Inc.
1801 California Street
Denver, Colorado
Attention: Mark Roellig
Facsimile: (303) 840-0381
with a copy to:
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York
Attention: Dennis J. Block
Facsimile: (212) 504-6666
If to Global:
Global Crossing Ltd.
Wessex House
45 Reid Street
Hamilton HM12, Bermuda
Attention: K. Eugene Shutler
Facsimile No.: (441) 296-8606
<PAGE>
6
and
Global Crossing Ltd.
150 South El Camino Drive
Suite 204
Attention: General Counsel
Facsimile No.: (310) 281-4942
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3954
Attention: Charles I. Cogut, Esq.
Facsimile No.: (212) 455-2502
and Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue
Los Angeles, California 90071
Attention: Brian J. McCarthy
Facsimile: (213) 687-5600
5.2 Severability. If any term or other provision of this Agreement
------------
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions 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 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 to the end that the
transactions contemplated hereby are fulfilled to the fullest extent possible.
5.3 Entire Agreement; Assignment. Except as may otherwise be agreed
----------------------------
by the parties, this Agreement, the Voting Agreement, the Tender Offer and
Purchase Agreement and the Merger Agreement constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all
prior agreements and undertakings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof. Neither this Agreement
nor any of the rights, interests or obligations under this Agreement shall be
assigned, in whole or in part, by operation of law or otherwise by any of the
parties without the prior written consent of the other parties.
5.4 Parties in Interest. 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
rights, benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
<PAGE>
7
5.5 Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the internal laws of the State of New York.
5.6 Headings. The descriptive headings contained in this Agreement
--------
are included for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
5.7 Counterparts. This Agreement may be executed in two or more
------------
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
5.8. Submission to Jurisdiction. Each of the parties hereto (i)
--------------------------
consents to submit itself to the personal jurisdiction of any Federal court
located in the State of New York or any New York state court in the event any
dispute arises out of this Agreement or any of the transactions contemplated by
this Agreement, (ii agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
(ii agrees that it will not bring any action relating to this Agreement or any
of the transactions contemplated by this Agreement in any court other than a
Federal or state court sitting in the State of New York and (iv consents to
service being made through the notice procedures set forth in Section 5.1.
<PAGE>
8
IN WITNESS WHEREOF, USW and Global have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
U S WEST, INC.
By: /s/ Solomon D. Trujillo
---------------------------------------------
Title: President and Chief Executive Officer
GLOBAL CROSSING LTD.
By: /s/ Robert Annunziata
------------------------------------------------
Title: Chief Executive Officer
<PAGE>
EXHIBIT (c)(5)
CONFORMED COPY
TENDER AND VOTING AGREEMENT
TENDER AND VOTING AGREEMENT (this "Agreement"), dated as of May 16,
---------
1999, by and among U S West, Inc., a company organized under the laws of
Delaware ("Purchaser"), Global Crossing Ltd., a company formed under the laws of
---------
Bermuda ("Global") and each of the parties listed on the signature page hereto
------
(individually, a "Shareholder" and collectively, the "Shareholders").
----------- ------------
WHEREAS, Global and Purchaser are parties to that certain Agreement
and Plan of Merger dated as of the date hereof (the "Merger Agreement";
----------------
capitalized terms used and not otherwise defined herein having the meaning set
forth in the Merger Agreement);
WHEREAS, Global, GCF Acquisition Corp. and Frontier Corporation
("Frontier") are parties to that certain Agreement and Plan of Merger, dated
- ----------
March 16, 1999 (the "Frontier Merger Agreement"; the transactions contemplated
-------------------------
by the Frontier Merger Agreement being referred to herein as the "Frontier
--------
Merger");
- ------
WHEREAS, Frontier and certain shareholders of Global are parties to
that certain Voting Agreement dated as of March 16, 1999 which was entered into
in connection with the Frontier Merger Agreement ( "Frontier Voting Agreement");
-------------------------
WHEREAS, in connection with the Merger Agreement, Global and Purchaser
have entered into a Tender Offer and Purchase Agreement dated the date hereof
(the "Tender Offer and Purchase Agreement") pursuant to which Purchaser has
-----------------------------------
agreed to make a tender offer (the "Offer") to acquire shares of the outstanding
-----
common stock, par value $0.01 per share, of Global ("Global Common Stock"), upon
-------------------
the terms and subject to the conditions set forth in the Tender Offer and
Purchase Agreement; and
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement and make the Offer, Purchaser has required that each of the
Shareholders enter into this Agreement and that Global enter into the Tender
Offer and Purchase Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the parties hereby agree as follows:
<PAGE>
2
SECTION 1. COVENANTS OF THE SHAREHOLDERS
(a) AGREEMENT TO TENDER. Until the termination of the Tender Offer
and Purchase Agreement, each Shareholder hereby agrees to validly tender
pursuant to the Offer and not to withdraw at least 12.3045% of the total number
of shares of Global Common Stock owned by each Shareholder as of the date hereof
(the "Subject Shares").
--------------
(b) VOTING. Subject to the receipt of proper notice and the absence
of a preliminary or permanent injunction or other final order by any United
States federal court or state court or Bermuda court barring such action, each
Shareholder shall do the following:
(1) be present, in person or represented by proxy, at each meeting
(whether annual or special, and whether or not an adjourned or postponed
meeting) of the shareholders of Global, however called, or in connection
with any written consent of the shareholders of Global, so that all Subject
Shares then held by such Shareholder and entitled to vote may be counted
for the purposes of determining the presence of a quorum at such meetings;
and
(2) at each such meeting held before the Effective Time and with
respect to each such written consent, vote (or cause to be voted), or
deliver a written consent (or cause a consent to be delivered) covering,
all the Subject Shares then held by such Shareholder to approve the Global
Merger and the Global Merger Agreement and any action required in
furtherance thereof and against any action which would reasonably be
expected to result in a failure of the conditions described in Article VIII
of the Merger Agreement to be satisfied.
(c) NO INCONSISTENT AGREEMENTS. Each Shareholder shall not enter
into any voting agreement or grant a proxy or power of attorney with respect to
the Subject Shares which is inconsistent with this Agreement.
(d) WAIVER OF APPRAISAL RIGHTS. To the extent permitted by
applicable law, each Shareholder hereby agrees to waive any appraisal,
dissenters' or similar rights that such Shareholder may have under Bermuda law
with respect to the Global Merger.
(e) TRANSFER OF SUBJECT SHARES--GLOBAL MERGER. From the date hereof
until the earlier of the termination of the Global Merger Agreement and the
consummation of the Global Merger, the Shareholders shall not transfer record
ownership or beneficial ownership, or both, of any Subject Shares (other than
pursuant to the Offer) representing 15% of the issued and outstanding shares of
Global Common Stock in any one transaction or series of related transactions to
any single person or "group" (as determined pursuant to Rule 13d-5 under the
Exchange Act) (other than transfers to agents for purposes of distribution)
unless such transferee agrees to comply with the voting requirements of this
Section 1(b) with respect to the transferred shares of Global Common Stock.
<PAGE>
3
SECTION 2. TRANSFER OF SUBJECT SHARES--FRONTIER MERGER. From the
date hereof until the earlier of the termination of the Frontier Merger
Agreement and the consummation of the Frontier Merger, each Shareholder (other
than Excluded Shareholders (as defined below)) shall not transfer record
ownership or beneficial ownership, or both, of any Subject Shares (other than
pursuant to the Offer); provided, that each Shareholder shall be permitted to
transfer ownership of Subject Shares if consented to by Global (such consent not
to be unreasonably withheld). For the purposes of this Agreement, the term
"transfer" means a sale, an assignment, a grant, a transfer, a pledge, the
creation of a lien or other disposition of any Subject Shares or any interest of
any nature in any Subject Shares, including, without limitation, the "beneficial
ownership" of such Subject Shares (as determined pursuant to Regulation 13D-G
under the Exchange Act). "Excluded Shareholders" means the Shareholders
identified as such on Exhibit A.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS. Each
Shareholder severally represents and warrants to Purchaser as follows:
(a) EXISTENCE AND POWER. Each Shareholder that is a corporation (1)
is a corporation duly incorporated, validly existing and in good standing
under the laws of the State of its incorporation and (2) has all requisite
corporate power and authority to execute and deliver this Agreement.
(b) AUTHORIZATION; CONTRAVENTION. The execution and delivery by each
Shareholder of this Agreement and the performance by it of its obligation
under this Agreement have, (1) in the case of each Shareholder that is a
corporation, been duly authorized by all necessary corporate action and (2)
do not and will not conflict with or result in a violation pursuant to, (A)
in the case of each Shareholder that is a corporation, any provision of its
certificate of incorporation or bylaws, or similar organizational document,
or (B) 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 such Shareholder, the Subject
Shares or any of such Shareholder's other properties or assets.
(c) BINDING EFFECT. This Agreement constitutes a valid and binding
obligation of such Shareholder, enforceable against such Shareholder, 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' rights 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.
<PAGE>
4
(d) OWNERSHIP. As of the date hereof, each Shareholder is the record
owner or beneficial owner of the Subject Shares listed beside its name in
Exhibit A, free and clear of liens except with respect to pledges or other
liens that such Shareholder would be entitled to effect or create as of the
date of this Agreement pursuant to the second sentence of Section 2 of the
Frontier Voting Agreement and in accordance with the terms thereof and
hereof. As of the date of this Agreement, each Shareholder does not own
beneficially or of record any equity securities of Global other than the
Subject Shares. Except pursuant to the Frontier Voting Agreement no
Shareholder has appointed or granted any proxy which is still effective
with respect to its Subject Shares. As of the date hereof, each
Shareholder has sole voting power or power to direct the vote of the Global
Common Stock set forth beside its name on Exhibit A and on the record date
and the date of the Global Stockholders' Meeting at which the Global Merger
shall be presented for approval, each Shareholder will have sole voting
power or power to direct the vote of such Shareholder's Subject Shares then
held by such Shareholder.
(e) LITIGATION. There is no action, suit, investigation, complaint
or other proceeding pending against any Shareholder or, to the knowledge of
any Shareholder, threatened against any Shareholder or any other Person
that restricts in any material respect or prohibits (or, if successful,
would restrict or prohibit) the exercise by any party or beneficiary of its
rights under this Agreement or the performance by any party of its
obligations under this Agreement.
SECTION 4. MISCELLANEOUS PROVISIONS.
(a) NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed duly given (1) on the date of delivery if
delivered personally, or by telecopy or telefacsimile, upon confirmation of
receipt, (2) on the first business day following the date of dispatch if
delivered by a recognized next-day courier service, or (3) 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 given
to Global and Purchaser at its address stated in Section 11.2 of the Merger
Agreement and all notices to the Shareholders shall be given at its address in
the records of Global or, in each case, at any other address as the party may
specify for this purpose by notice to the other parties.
(b) NO WAIVERS; REMEDIES; SPECIFIC PERFORMANCE.
(1) No failure or delay by Purchaser in exercising any right, power
or privilege under this Agreement shall operate as a waiver of the right,
power or privilege. A single or partial exercise of any right, power or
privilege shall not preclude any other further exercise of the right, power
or privilege or the exercise of any other right, power or privilege. The
rights and remedies provided in this Agreement shall be cumulative and not
exclusive of any rights or remedies provided by law.
<PAGE>
5
(2) In view of the uniqueness of the agreements contained in this
Agreement and the transactions contemplated hereby and thereby and the fact
that Purchaser would not have an adequate remedy at law for money damages
in the event that any obligation under this Agreement is not performed in
accordance with its terms, each of the Shareholders therefore agrees that
Global shall be entitled to specific enforcement of the terms of this
Agreement in addition to any other remedy to which Global may be entitled,
at law or in equity.
(c) AMENDMENTS, ETC. No amendment, modification, termination, or
waiver of any provision of this Agreement, and no consent to any departure by
any of the Shareholders or Purchaser from any provision of this Agreement, shall
be effective unless it shall be in writing and signed and delivered by all the
Shareholders and Purchaser, and then it shall be effective only in the specific
instance and for the specific purpose for which it is given.
(d) SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARIES.
(1) No party shall assign any of its rights or delegate any of its
obligations under this Agreement. Any assignment or delegation in
contravention of this Section 4(d) shall be void AB INITIO and shall not
relieve the assigning or delegating party of any obligation under this
Agreement.
(2) The provisions of this Agreement shall be binding upon and inure
solely to the benefit of the parties hereto, the express beneficiaries
thereof (to the extent provided therein) and their respective permitted
heirs, executors, legal representatives, successors and assigns, and no
other person.
(e) GOVERNING LAW. This Agreement and all rights, remedies,
liabilities, powers and duties of the parties hereto and thereto, shall be
governed in accordance with the laws of the State of New York.
(f) SEVERABILITY OF PROVISION. 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 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.
(g) ENTIRE AGREEMENT. This Agreement embodies the entire agreement
and understanding of the Shareholders and Purchaser, and supersedes all prior
agreements or understandings, with respect to the subject matters of this
Agreement.
<PAGE>
6
(h) SURVIVAL. Except as otherwise specifically provided in this
Agreement, each representation, warranty or covenant of a party contained in
this Agreement shall remain in full force and effect, notwithstanding any
investigation or notice to the contrary or any waiver by any other party or
beneficiary of a related condition precedent to the performance by the other
party or beneficiary of an obligation under this Agreement.
(i) SUBMISSION TO JURISDICTION; WAIVERS. Each Shareholder and
Purchaser irrevocably agrees that any legal action or proceeding with respect to
any voting document or for recognition and enforcement of any judgment in
respect hereto or thereof 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 Shareholder and Purchaser hereby irrevocably submit with regard to any
such action or proceeding for itself and in respect to its property, generally
and unconditionally, to the non-exclusive jurisdiction of the aforesaid courts.
Each Shareholder and Purchaser hereby irrevocably waives, and agrees not to
assert, by way of motion, as a defense, counterclaim 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
4(i), (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 improper and (iii) this Agreement, or the subject matter
hereof, may not be enforced in or by such courts.
(j) TERMINATION. Unless terminated by mutual agreement of the
parties, the obligations of the Shareholders under Sections 1(b), 1(c), 1(d) and
1(e) of this Agreement shall terminate upon the first to occur of (i)
consummation of the Global Merger, (ii) the termination of the Merger Agreement,
(iii) the full and irrevocable satisfaction of the condition set forth in
Section 8.1(a) of the Merger Agreement with respect to the Global Merger and
(iv) termination of the Tender Offer and Purchase Agreement without the purchase
of shares of Global Common Stock pursuant thereto. This Agreement shall
automatically terminate at such time as all of the obligations of the
Shareholders pursuant to Sections 1 and 2 shall have terminated in accordance
with their terms.
(k) COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if all
signatures were on the same instrument.
(l) FRONTIER VOTING AGREEMENT. Nothing herein is intended to modify
the obligations of the parties set forth in the Frontier Voting Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first written above.
GLOBAL CROSSING LTD.
By: /s/ Robert Annunziata
--------------------------------------------
Title: Chief Executive Officer
U S WEST, INC.
By: /s/ Solomon D. Trujillo
-------------------------------------------
Title: President and Chief Executive Officer
CIBC WOOD GUNDY CAPITAL (SFC) INC.
By: /s/ Jay R. Levine
--------------------------------------------
Title: Agent
CIBC WG ARGOSY MERCHANT FUND 3, L.P.
By: /s/ Jay R. Levine
--------------------------------------------
Title: Managing Director
<PAGE>
CO-INVESTMENT MERCHANT FUND, LLC
By: /s/ Jay R. Levine
-------------------------------------------
Title: Agent
CONTINENTAL CASUALTY CORPORATION
CONTINENTAL CASUALTY CORP.
DESIGNATED HIGH YIELD FUND
By: /s/ Hillel Weinberger
-------------------------------------------
Title: Authorized Signatory
MRCO, INC.
By: /s/ Michael R. Steed
-------------------------------------------
Title: President
/s/ Gary Winnick
--------------------------------------------
GARY WINNICK
PACIFIC CAPITAL GROUP, INC.
By: /s/ Gary Winnick
-------------------------------------------
Title: Chairman and Chief Executive Officer
GKW UNIFIED HOLDINGS, LLC
By: /s/ Gary Winnick
-------------------------------------------
Title: Authorized Signatory
<PAGE>
/s/ Abbott L. Brown
--------------------------------------------
ABBOTT L. BROWN
BROWN LIVING TRUST
RIDGESTONE CORP.
By: /s/ Abbott L. Brown
-------------------------------------------
Title: President
/s/ Barry Porter
-------------------------------------------
BARRY PORTER
GALENIGHT CORP.
By: /s/ Barry Porter
-------------------------------------------
Title: President
/s/ David Lee
--------------------------------------------
DAVID LEE
SAN PASQUAL CORP.
By: /s/ David Lee
-------------------------------------------
Title: President
DAVID AND ELLEN LEE FAMILY TRUST
By: /s/ David Lee
-------------------------------------------
Title: Trustee
<PAGE>
/s/ Lodwrick Cook
--------------------------------------------
LODWRICK COOK
GLOBAL CROSSING LTD., LDC
By: /s/ Jay R. Levine
-------------------------------------------
Title: Agent
GLOBAL CROSSING TRUST 1998
By: /s/ Hillel Weinberger
-------------------------------------------
Title: Settlor
GLOBAL CROSSING PARTNERS
By: /s/ Hillel Weinberger
-------------------------------------------
Title: General Partner
CANADIAN IMPERIAL BANK OF COMMERCE
By: /s/ Jay R. Levine
-------------------------------------------
Title: Agent
<PAGE>
EXHIBIT A
Brown Living Trust 3,435,922
Ridgestone Corp. 7,765,418
----------
Total Abbott L. Brown 11,201,340
Barry Porter 6,335,780
Galenight Corp. 11,883,968
----------
Total Barry Porter 18,219,748
Continental Casualty Corp. 16,795,500
Continental Casualty Corp. Designated High Yield 23,279,670
Global Crossing Partners (Hillel Weinberger) 486,630
Global Crossing Trust 1998 (Hillel Weinberger) 2,100,000
----------
Total Continental Casualty 42,661,800
CIBC WG Argosy Merchant Fund 3, LP* 17,223,628
CIBC Wood Gundy Capital (SFC) Inc.* 1,340,000
Co-Investment Merchant Fund, LLC* 9,568,684
Global Crossing Ltd., LDC* 68,894,488
----------
Total CIBC 97,026,800
David and Ellen Lee Family Trust 5,233,234
David L. Lee 4,869,964
San Pasqual Corp. 9,900,822
----------
Total David Lee 20,004,020
GKW Unified Holdings, LLC 77,195,744
Pacific Capital Group, Inc. 15,993,406
----------
Total Gary Winnick 93,189,150
Lodwrick Cook 3,580,452
MRCo, Inc. 33,180,260
__________________
* Excluded Shareholder.
<PAGE>
EXHIBIT (c)(6)
CONFORMED COPY
AGREEMENT
AGREEMENT (this "Agreement"), dated as of May 16, 1999, is entered
---------
into by Global Crossing Ltd. ("Global") and those other persons whose names
------
appear on the signature pages hereto (each, a "Stockholder" and collectively,
-----------
the "Stockholders").
------------
Reference is hereby made to (i) the Stockholders Agreement dated as of
August 12, 1998 (the "Stockholders Agreement") by and among Global and the
----------------------
Stockholders, (ii) the Registration Rights Agreement dated as of August 12, 1998
(the "Registration Rights Agreement") by and among Global and the Stockholders,
-----------------------------
(iii) the Agreement and Plan of Merger dated the date hereof (the "Merger
------
Agreement") between Global and U S West, Inc. ("USW") and (iv) the Tender Offer
- ---------
and Purchase Agreement dated the date hereof (the "TOP Agreement") between
-------------
Global and USW.
In connection with the transactions pursuant to the Merger Agreement
and the TOP Agreement, the undersigned hereby agree as follows:
1. Clause (d) of Section 1 of the Stockholders Agreement shall be
amended to read in its entirety as follows: "(d) in a public offering
pursuant to a registration statement under the Securities Act or a Transfer
pursuant to Rule 144 under the Securities Act or pursuant to the tender
offer under the Tender Offer and Purchase Agreement dated May 16, 1999
between the Company and U S West, Inc."
2. Each Stockholder and Global agrees that USW shall have the right,
in connection with any CoC Tag-Along Sale (as defined in the Stockholders
Agreement) to participate in such sale on the same basis as any CoC Other
Holder (as defined in the Stockholders Agreement) pursuant to Section 4(b)
of the Stockholders Agreement.
3. Each Stockholder and Global agrees that, to give effect to the
registration rights granted to USW by Global pursuant to Section 4.1 of the
TOP Agreement, USW shall be treated as a Holder (as defined in the
Registration Rights Agreement) for purposes of Sections 2(e) and 3(b) of
the Registration Rights Agreement.
4. Global hereby agrees that it shall not unreasonably withhold its
consent referenced in Section 2 of the Tender and Voting Agreement between
USW and the Stockholders dated the date hereof.
5. This Agreement may be executed in counterparts, each of which when
so executed shall be deemed to be an original, and such counterparts
shall together constitute one and the same instrument. This Agreement
shall be governed by and construed in accordance with the internal laws
of the State of New York.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
GLOBAL CROSSING LTD.
By: /s/ Robert Annunziata
-----------------------------------------
Title: Chief Executive Officer
CIBC WOOD GUNDY CAPITAL (SFC) INC.
By: /s/ Jay R. Levine
-----------------------------------------
Title: Agent
CIBC WG ARGOSY MERCHANT FUND 3, L.P.
By: /s/ Jay R. Levine
-----------------------------------------
Title: Managing Director
<PAGE>
CO-INVESTMENT MERCHANT FUND, LLC
By: /s/ Jay R. Levine
------------------------------------------
Title: Agent
CONTINENTAL CASUALTY CORPORATION
CONTINENTAL CASUALTY CORP.
DESIGNATED HIGH YIELD FUND
By: /s/ Hillel Weinberger
------------------------------------------
Title: Authorized Signatory
MRCO, INC.
By: /s/ Michael R. Steed
------------------------------------------
Title: President
/s/ Gary Winnick
-------------------------------------------
GARY WINNICK
PACIFIC CAPITAL GROUP, INC.
By: /s/ Gary Winnick
------------------------------------------
Title: Chairman and Chief Executive Officer
GKW UNIFIED HOLDINGS, LLC
By: /s/ Gary Winnick
------------------------------------------
Title: Authorized Signatory
<PAGE>
/s/ Abbott L. Brown
-------------------------------------------
ABBOTT L. BROWN
BROWN LIVING TRUST
RIDGESTONE CORP.
By: /s/ Abbott L. Brown
------------------------------------------
Title: President
/s/ Barry Porter
------------------------------------------
BARRY PORTER
GALENIGHT CORP.
By: /s/ Barry Porter
------------------------------------------
Title: President
/s/ David Lee
-------------------------------------------
DAVID LEE
SAN PASQUAL CORP.
By: /s/ David Lee
------------------------------------------
Title: President
DAVID AND ELLEN LEE FAMILY TRUST
By: /s/ David Lee
------------------------------------------
Title: Trustee
<PAGE>
/s/ Lodwrick Cook
-------------------------------------------
LODWRICK COOK
GLOBAL CROSSING LTD., LDC
By: /s/ Jay R. Levine
------------------------------------------
Title: Agent
GLOBAL CROSSING TRUST 1998
By: /s/ Hillel Weinberger
------------------------------------------
Title: Settlor
GLOBAL CROSSING PARTNERS
By: /s/ Hillel Weinberger
------------------------------------------
Title: General Partner
CANADIAN IMPERIAL BANK OF COMMERCE
By: /s/ Jay R. Levine
-------------------------------------------
Title: Agent
<PAGE>
EXHIBIT A
Brown Living Trust 3,435,922
Ridgestone Corp. 7,765,418
----------
Total Abbott L. Brown 11,201,340
Barry Porter 6,335,780
Galenight Corp. 11,883,968
----------
Total Barry Porter 18,219,748
Continental Casualty Corp. 16,795,500
Continental Casualty Corp. Designated High Yield 23,279,670
Global Crossing Partners (Hillel Weinberger) 486,630
Global Crossing Trust 1998 (Hillel Weinberger) 2,100,000
----------
Total Continental Casualty 42,661,800
CIBC WG Argosy Merchant Fund 3, LP 17,223,628
CIBC Wood Gundy Capital (SFC) Inc. 1,340,000
Co-Investment Merchant Fund, LLC 9,568,684
Global Crossing Ltd., LDC 68,894,488
----------
Total CIBC 97,026,800
David and Ellen Lee Family Trust 5,233,234
David L. Lee 4,869,964
San Pasqual Corp. 9,900,822
----------
Total David Lee 20,004,020
GKW Unified Holdings, LLC 77,195,744
Pacific Capital Group, Inc. 15,993,406
----------
Total Gary Winnick 93,189,150
Lodwrick Cook 3,580,452
MRCo, Inc. 33,180,260
<PAGE>
Exhibit (c)(7)
Dated as of May 16, 1999
Global Crossing Ltd.
150 El Camino Drive
Beverly Hills, California 90212
Attention: Tom Casey
Reference is made to the Merger Agreement, dated as of May 16, 1999 (as
amended, supplemented or otherwise modified from time to time, the "Merger
Agreement") between Global Crossing Ltd. ("Global Crossing") and U S WEST, Inc.
("U S WEST").
If the Merger Agreement is terminated under Section 9.2 thereof and
results in a fee payable by U S West, U S West shall be permitted to reduce the
fee payable thereunder by no more than $250 million (any such reduction, the
"Reduced Amount"), so long as U S West purchases and pays in full for capacity
on Global Crossing's systems in an aggregate amount equal to the Reduced Amount.
The purchase price for any capacity to be acquired by U S West in accordance
with this paragraph (i) shall be at the market price then available for such
capacity from Global Crossing and/or its affiliates and (ii) shall be payable in
dollars on the date the fee payable in Section 9.2 is otherwise due. U S West
shall execute, deliver and comply with a Global Crossing Capacity Purchase
Agreement (containing standard terms and conditions) in respect of all purchases
of capacity under this paragraph.
Very truly yours,
U S WEST, INC.
By: /s/ Solomon D. Trujillo
-------------------------------
Name: Solomon D. Trujillo
Title: Chairman
AGREED AND ACCEPTED:
GLOBAL CROSSING LTD.
By: /s/ Thomas J. Casey
------------------------------
Name: Thomas J. Casey
Title: Vice Chairman
<PAGE>
EXHIBIT (C)(8)
CONFORMED COPY
--------------
TRANSFER AGREEMENT
TRANSFER AGREEMENT (this "Agreement"), dated as of May 16, 1999, by
---------
and between Global Crossing Ltd., a company organized under the laws of Bermuda
("Global"), and each of the parties listed on the signature page hereto
------
(individually, a "Shareholder" and collectively, the "Shareholders"); and
----------- ------------
WHEREAS, Global, the Shareholders and each of the other parties listed
on the signature page thereto are parties to that certain Tender and Voting
Agreement dated as of the date hereof (the "Tender and Voting Agreement";
---------------------------
capitalized terms used and not otherwise defined herein having the meaning set
forth in the Tender and Voting Agreement);
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the parties hereby agree as follows:
SECTION 1. TRANSFER OF SUBJECT SHARES--FRONTIER MERGER. From the date
hereof until the earlier of the termination of the Frontier Merger Agreement and
the consummation of the Frontier Merger, each Shareholder shall not transfer
record ownership or beneficial ownership, or both, of any Subject Shares (other
than pursuant to the Offer); provided, that each Shareholder shall be permitted
to transfer ownership of Subject Shares if consented to by Global (such consent
not to be unreasonably withheld). For the purposes of this Agreement, the term
"transfer" means a sale, an assignment, a grant, a transfer, a pledge, the
creation of a lien or other disposition of any Subject Shares or any interest of
any nature in any Subject Shares, including, without limitation, the "beneficial
ownership" of such Subject Shares (as determined pursuant to Regulation 13D-G
under the Exchange Act).
SECTION 2. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS. Each
Shareholder severally represents and warrants to Global as follows:
(a) EXISTENCE AND POWER. Each Shareholder that is a corporation (1)
is a corporation duly incorporated, validly existing and in good standing
under the laws of the State of its incorporation and (2) has all requisite
corporate power and authority to execute and deliver this Agreement.
(b) AUTHORIZATION; CONTRAVENTION. The execution and delivery by each
Shareholder of this Agreement and the performance by it of its obligation
under this Agreement have, (1) in the case of each Shareholder that is a
corporation, been duly authorized by all necessary corporate action and (2)
do not and will not conflict with or result in a violation pursuant to, (A)
in the case of each Shareholder that is a corporation, any provision of its
certificate of incorporation or bylaws, or similar organizational
<PAGE>
2
document, or (B) 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 such Shareholder, the
Subject Shares or any of such Shareholder's other properties or assets.
(c) BINDING EFFECT. This Agreement constitutes a valid and binding
obligation of such Shareholder, enforceable against such Shareholder, 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' rights 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.
(d) OWNERSHIP. As of the date hereof, each Shareholder is the record
owner or beneficial owner of the Subject Shares listed beside its name in
Exhibit A, free and clear of liens except with respect to pledges or other
liens that such Shareholder would be entitled to effect or create as of the
date of this Agreement pursuant to the second sentence of Section 2 of the
Frontier Voting Agreement and in accordance with the terms thereof and
hereof. As of the date of this Agreement, each Shareholder does not own
beneficially or of record any equity securities of Global other than the
Subject Shares.
(e) LITIGATION. There is no action, suit, investigation, complaint
or other proceeding pending against any Shareholder or, to the knowledge of
any Shareholder, threatened against any Shareholder or any other Person
that restricts in any material respect or prohibits (or, if successful,
would restrict or prohibit) the exercise by any party or beneficiary of its
rights under this Agreement or the performance by any party of its
obligations under this Agreement.
SECTION 3. MISCELLANEOUS PROVISIONS.
(a) NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed duly given (1) on the date of delivery if
delivered personally, or by telecopy or telefacsimile, upon confirmation of
receipt, (2) on the first business day following the date of dispatch if
delivered by a recognized next-day courier service, or (3) 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 given
to Global at its address stated in Section 11.2 of the Merger Agreement and all
notices to the Shareholders shall be given at its address in the records of
Global or, in each case, at any other address as the party may specify for this
purpose by notice to the other parties.
(b) NO WAIVERS; REMEDIES; SPECIFIC PERFORMANCE.
(1) No failure or delay by Global in exercising any right, power or
privilege under this Agreement shall operate as a waiver of the right,
power or
<PAGE>
3
privilege. A single or partial exercise of any right, power or privilege
shall not preclude any other further exercise of the right, power or
privilege or the exercise of any other right, power or privilege. The
rights and remedies provided in this Agreement shall be cumulative and not
exclusive of any rights or remedies provided by law.
(2) In view of the uniqueness of the agreements contained in this
Agreement and the transactions contemplated hereby and thereby and the fact
that Global would not have an adequate remedy at law for money damages in
the event that any obligation under this Agreement is not performed in
accordance with its terms, each of the Shareholders therefore agrees that
Global shall be entitled to specific enforcement of the terms of this
Agreement in addition to any other remedy to which Global may be entitled,
at law or in equity.
(c) AMENDMENTS, ETC. No amendment, modification, termination, or
waiver of any provision of this Agreement, and no consent to any departure by
any of the Shareholders or Global from any provision of this Agreement, shall be
effective unless it shall be in writing and signed and delivered by all the
Shareholders and Global, and then it shall be effective only in the specific
instance and for the specific purpose for which it is given.
(d) SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARIES.
(1) No party shall assign any of its rights or delegate any of its
obligations under this Agreement. Any assignment or delegation in
contravention of this Section 4(d) shall be void AB INITIO and shall not
relieve the assigning or delegating party of any obligation under this
Agreement.
(2) The provisions of this Agreement shall be binding upon and inure
solely to the benefit of the parties hereto, the express beneficiaries
thereof (to the extent provided therein) and their respective permitted
heirs, executors, legal representatives, successors and assigns, and no
other person.
(e) GOVERNING LAW. This Agreement and all rights, remedies,
liabilities, powers and duties of the parties hereto and thereto, shall be
governed in accordance with the laws of the State of New York.
(f) SEVERABILITY OF PROVISION. 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 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.
<PAGE>
4
(g) ENTIRE AGREEMENT. This Agreement embodies the entire agreement
and understanding of the Shareholders and Global, and supersedes all prior
agreements or understandings, with respect to the subject matters of this
Agreement.
(h) SURVIVAL. Except as otherwise specifically provided in this
Agreement, each representation, warranty or covenant of a party contained in
this Agreement shall remain in full force and effect, notwithstanding any
investigation or notice to the contrary or any waiver by any other party or
beneficiary of a related condition precedent to the performance by the other
party or beneficiary of an obligation under this Agreement.
(i) SUBMISSION TO JURISDICTION; WAIVERS. Each Shareholder and Global
irrevocably agrees that any legal action or proceeding with respect to any
voting document or for recognition and enforcement of any judgment in respect
hereto or thereof 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
Shareholder and Global hereby irrevocably submit with regard to any such action
or proceeding for itself and in respect to its property, generally and
unconditionally, to the non-exclusive jurisdiction of the aforesaid courts.
Each Shareholder and Global hereby irrevocably waives, and agrees not to assert,
by way of motion, as a defense, counterclaim 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 4(i),
(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 improper and (iii) this Agreement, or the subject matter
hereof, may not be enforced in or by such courts.
(j) TERMINATION. Unless terminated by mutual agreement of the
parties, this Agreement shall automatically terminate at such time as all of the
obligations of the Shareholders pursuant to Sections 1 shall have terminated in
accordance with thier terms.
(k) COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if all
signatures were on the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
GLOBAL CROSSING LTD.
/s/ Thomas J. Casey
By:_______________________________________
Title: Vice Chairman
CIBC WOOD GUNDY CAPITAL (SFC) INC.
/s/ Jay R. Levine
By:_______________________________________
Title: Agent
CIBC WG ARGOSY MERCHANT FUND 3, L.P.
/s/ Jay R. Levine
By:_______________________________________
Title: Agent
CO-INVESTMENT MERCHANT FUND, LLC
/s/ Jay R. Levine
By:_______________________________________
Title: Agent
GLOBAL CROSSING LTD., LDC
/s/ Jay R. Levine
By:_______________________________________
Title: Agent
<PAGE>
EXHIBIT A
CIBC WG Argosy Merchant Fund 3, LP 17,223,628
CIBC Wood Gundy Capital (SFC) Inc. 1,340,000
Co-Investment Merchant Fund, LLC 9,568,684
Global Crossing Ltd., LDC 68,894,488
----------
Total CIBC 97,026,800
