<PAGE>
As filed with the Securities and Exchange Commission on January 11, 2000
Registration No. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
GLOBAL CROSSING LTD. GLOBAL CROSSING HOLDINGS LTD.
(Exact name of Registrants as specified in their charters)
Bermuda 4813 Bermuda
(State or other (Primary Standard Industrial (State or other
jurisdiction of Classification Code Number) jurisdiction of
incorporation or incorporation or
organization) organization)
98-0186828
(I.R.S. Employer
98-0189783 Identification No.)
(I.R.S. Employer
Identification No.)
---------------
Wessex House
45 Reid Street
Hamilton HM12 Bermuda
(441) 296-8600
(Address and telephone number of Registrants' principal executive offices)
CT Corporation System
1633 Broadway
New York, New York 10019
(212) 479-8200
(Name, address, including zip code, and telephone number of agent for service)
---------------
with copies to:
D. Rhett Brandon, Esq. James C. Gorton, Esq.
Simpson Thacher & Bartlett Global Crossing Holdings Ltd.
425 Lexington Avenue 360 N. Crescent Drive
New York, New York 10017 Beverly Hills, California 90210
(212) 455-2000 (310) 385-5200
---------------
Approximate date of commencement of proposed sale to public: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
---------------
CALCULATION OF REGISTRATION FEE
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- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Proposed Maximum Proposed Maximum
Title of Each Class of Amount to Offering Price Aggregate Offering Amount of
Securities to be Registered be Registered Per Note(1) Price Registration Fee
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
9 1/8% Senior Notes due
2006...................... $900,000,000 100% $900,000,000 $237,600
- -----------------------------------------------------------------------------------------------------
9 1/2% Senior Notes due
2009...................... $1,100,000,000 100% $1,100,000,000 $290,400
- -----------------------------------------------------------------------------------------------------
Guarantee of the 9 1/8%
Senior Notes due 2006..... $900,000,000 None(2)
- -----------------------------------------------------------------------------------------------------
Guarantee of the 9 1/2%
Senior Notes due 2009..... $1,100,000,000 None(2)
- -----------------------------------------------------------------------------------------------------
Total....................... $2,000,000,000 $2,000,000,000 $528,000
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for purposes of computing the registration fee pursuant
to Rule 457(f).
(2) Pursuant to Rule 457(n), no separate filing fee is required for the
guarantees.
The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which shall specifically state that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933, as amended, or until the
Registration Statement shall become effective on such date as the Securities
and Exchange Commission, acting pursuant to said Section 8(a), may determine.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to completion, dated January 11, 2000
PROSPECTUS
$2,000,000,000
[LOGO] Global Crossing Ltd.
Offer to exchange all outstanding
$900,000,000 9 1/8% Senior Notes due 2006
for
$900,000,000 9 1/8% Senior Notes due 2006
which have been registered under the Securities Act of 1933
and
Offer to exchange all outstanding
$1,100,000,000 9 1/2% Senior Notes due 2009
for
$1,100,000,000 9 1/2% Senior Notes due 2009
which have been registered under the Securities Act of 1933
The exchange offer
We are offering to exchange both series of our outstanding notes for new
notes with substantially identical terms that have been registered under the
Securities Act and are freely tradeable. In this document, we refer to those
new notes as the "exchange notes".
The exchange offer expires at 5:00 p.m., New York City time, on , unless
extended. We do not currently intend to extend the expiration date.
In the exchange offer:
. we will exchange all outstanding notes that you validly tender and do not
validly withdraw before the exchange offer expires for an equal principal
amount of exchange notes; and
. you may withdraw tenders of outstanding notes at any time before the
exchange offer expires.
Resales of the exchange notes
You may sell the exchange notes in the over-the-counter market, in negotiated
transactions or through a combination of those methods.
------------------------------------
Investing in the exchange notes involves risks, which we describe in the
"Risk Factors" section beginning on page 29 of this prospectus.
------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
------------------------------------
The date of this prospectus is .
<PAGE>
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
different information. We are not making an offer to sell these securities in
any state where the offer is not permitted. You should not assume that the
information contained in this prospectus is accurate as of any date other than
the date on the front cover of this prospectus.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Where You Can Find More
Information........................ i
Incorporation by Reference.......... ii
Summary............................. 1
Risk Factors........................ 29
Cautionary Statement Regarding
Forward-Looking Statements......... 38
Use of Proceeds..................... 38
Ratio of Earnings to Fixed Charges
and Preferred Dividends............ 38
Pro Forma Ratio of Earnings to Fixed
Charges and Preferred Dividends.... 38
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Capitalization........................................................ 40
The Exchange Offer.................................................... 41
Description of the Exchange Notes..................................... 51
Book-Entry Procedures and Settlement.................................. 88
Certain Income Tax Consequences....................................... 90
Plan of Distribution.................................................. 94
Legal Matters......................................................... 94
Experts............................................................... 94
Service of Process and Enforcement of Liabilities..................... 95
</TABLE>
----------------
WHERE YOU CAN FIND MORE INFORMATION
The SEC allows us to incorporate by reference the information we file with
them, which means that we can disclose important information to you by
referring you to those documents, without including that information or
delivering it with this prospectus. We provide a list of all documents we
incorporate by reference in this prospectus under "Incorporation by Reference"
on page ii.
You may read and copy the information that we incorporate in this prospectus
by reference as well as other reports, proxy statements and other information
that we and our parent company, Global Crossing Ltd., file with the SEC at the
public reference facilities maintained by the SEC at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the SEC's regional offices located
at 7 World Trade Center, 13th floor, New York, New York 10048 and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. You may also obtain copies
of those materials at prescribed rates from the public reference section of the
SEC at 450 Fifth Street, Washington, D.C. 20549. You may obtain copies from the
public reference room by calling the SEC at (800) 732-0330. In addition, we are
required to file electronic versions of those materials with the SEC through
the SEC's EDGAR system. The SEC maintains a web site at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the SEC. You may also
review reports and other information concerning Global Crossing Ltd. at the
offices of the National Association of Securities Dealers, Inc. at 1735 K
Street, N.W., Washington, D.C. 20001-1500.
You may also request a copy of those materials, free of cost, by writing or
telephoning us at the following address:
Investor Relations
Global Crossing Holdings Ltd.
360 N. Crescent Drive
Beverly Hills, CA 90210
310-385-5200
To obtain timely delivery of those materials, you must request the
information no later than five business days before the expiration date of the
exchange offer.
i
<PAGE>
INCORPORATION BY REFERENCE
We incorporate by reference in this prospectus the information contained in
the following documents:
. our annual report on Form 10-K for the fiscal year ended December 31,
1998, as amended by Form 10-K/A;
. the annual report on Form 10-K for the fiscal year ended December 31,
1998 of our parent company, Global Crossing Ltd.;
. our quarterly reports on Form 10-Q for the quarters ending March 31,
1999, as amended by Form 10-Q/A, June 30, 1999 and September 30, 1999;
. the quarterly reports on Form 10-Q for the quarters ending March 31,
1999, June 30, 1999 and September 30, 1999 of Global Crossing Ltd.;
. our current reports on Form 8-K filed on February 1, 1999; March 19,
1999; May 18, 1999; May 21, 1999; May 26, 1999; July 20, 1999; September
3, 1999; September 10, 1999; September 30, 1999; December 3, 1999;
December 8, 1999; and January 11, 2000;
. the current reports on Form 8-K of Global Crossing Ltd. filed on
February 2, 1999; February 3, 1999; February 24, 1999; March 19, 1999;
April 26, 1999; May 18, 1999; May 21, 1999; May 26, 1999; July 16, 1999;
July 20, 1999; September 3, 1999; September 10, 1999; September 30,
1999; October 12, 1999; October 21, 1999; December 3, 1999; December 8,
1999; and January 11, 2000;
. the registration statement on Form S-4 (File No. 333-86693), filed with
the SEC on September 8, 1999, of Global Crossing Ltd., including those
filings with the SEC made by Frontier Corporation which are incorporated
by reference into that registration statement on page 172;
. the quarterly report on Form 10-Q for the quarter ending September 30,
1999 of Frontier;
. the current reports on From 8-K of Frontier filed on September 30, 1999;
October 7, 1999; and October 12, 1999; and
. all documents that we and Global Crossing Ltd. file with the SEC under
Sections 13(a), 13(c), 14 or 15 of the Securities Exchange Act of 1934
until we complete the exchange offer.
You may obtain copies of those documents from us, free of cost, by
contacting us at the address or telephone number provided in "Where You Can
Find More Information" on page i.
Information that we and Global Crossing Ltd. file later with the SEC and
that is incorporated by reference in this prospectus will automatically update
and supersede information contained in this prospectus. You will be deemed to
have notice of all information incorporated by reference in this prospectus as
if that information were included in this prospectus.
----------------
The Bermuda Monetary Authority has given its consent to the issue and the
transfer of the exchange notes. Approvals or permissions received from the
Bermuda Monetary Authority do not constitute a guaranty by the Bermuda Monetary
Authority as to our performance or our credit worthiness. Accordingly, in
giving those approvals or permissions, the Bermuda Monetary Authority will not
be liable for our performance or default or for the correctness of any opinions
or statements expressed in this document.
ii
<PAGE>
The Bermuda Monetary Authority has classified us as non-resident in Bermuda
for exchange control purposes. Accordingly, we may convert currency, other than
Bermuda currency, held for our account to any other currency without
restriction. Persons, firms or companies regarded as residents of Bermuda for
exchange control purposes require specific consent under the Exchange Control
Act, 1972 of Bermuda, and regulations promulgated under that Act, to purchase
any shares in our capital stock or any debt securities that we may issue. Under
the terms of the consent given to us by the Bermuda Monetary Authority, the
issuance and transfer of the exchange notes between persons, firms or companies
regarded as non-resident in Bermuda for exchange control purposes may be
effected without further permission from the Bermuda Monetary Authority.
----------------
NOTICE TO NEW HAMPSHIRE RESIDENTS
Neither the fact that a registration statement or an application for a
license has been filed under Chapter 421-B of the New Hampshire Uniform
Securities Act with the State of New Hampshire nor the fact that a security is
effectively registered or a person is licensed in the State of New Hampshire
constitutes a finding by the Secretary of State that any document filed under
RSA 421-B is true, complete and not misleading. Neither any such fact nor the
fact that an exemption or exception is available for a security or a
transaction means that the Secretary of State has passed in any way upon the
merits or qualifications of, or recommended or given approval to, any person,
security or transaction. It is unlawful to make, or cause to be made, to any
prospective purchaser, customer or client any representation inconsistent with
the provisions of this paragraph.
iii
<PAGE>
SUMMARY
This section contains a general summary of the information contained in this
prospectus. It may not include all the information that is important to you. To
understand this exchange offer, you should read the entire prospectus and the
documents incorporated by reference before making an investment decision.
Global Crossing Ltd.
Global Crossing Ltd., our parent company, is building and offering services
over the world's first global fiber optic network, consisting of 97,200
announced route miles and serving five continents, 24 countries and more than
200 major cities. Upon completion of its currently announced systems, the
Global Crossing network and its telecommunications and Internet product
offerings will be available to over 80% of the world's international
communications traffic.
Global Crossing Ltd. is included in both the S&P 500 index and the Nasdaq
100 index. Its operations are headquartered in Hamilton, Bermuda, with
executive offices in Los Angeles, California; Morristown, New Jersey; and
Rochester, New York.
Global Crossing Holdings Ltd.
We are a wholly-owned subsidiary of Global Crossing Ltd. We are incorporated
in Bermuda, and the address of our principal executive offices is Wessex House,
45 Reid Street, Hamilton HM12, Bermuda. Our telephone number is 441-296-8600.
You may visit us at our web site located at www.globalcrossing.com.
The Exchange Offer
On November 19, 1999, we completed the private offering of the outstanding
notes. In connection with that offering, we and Global Crossing Ltd. entered
into a registration rights agreement with the initial purchasers in the private
offering. In that agreement, we and Global Crossing Ltd. agreed to deliver to
you this prospectus, and we agreed to complete the exchange offer in 180 days
after the date of the original issuance of the outstanding notes. You are
entitled to exchange in the exchange offer your outstanding notes for exchange
notes which have substantially identical terms with the outstanding notes,
except that:
. the exchange notes have been registered under the Securities Act and are
freely tradeable; and
. the special interest which would be payable on the outstanding notes in
specified circumstances relating to our failure to complete the exchange
offer within 180 days after the original issuance of the outstanding
notes is no longer applicable.
The following section summarizes the terms of the exchange offer:
The exchange offer...... We are offering to exchange both series of the
outstanding notes. We are offering to exchange up to:
. $900,000,000 aggregate principal amount of
exchange notes due 2006 for up to the same
amount of outstanding notes due 2006; and
. $1,100,000,000 aggregate principal amount of
exchange notes due 2009 for up to the same
amount of outstanding notes due 2009.
1
<PAGE>
You may exchange outstanding notes only in amounts
which are multiples of $1,000.
Resales................. Based on an interpretation by the staff of the SEC
outlined in a series of no-action letters issued to
third parties, including Exxon Capital Holdings
Corporation and Morgan Stanley & Co. Incorporated, we
believe that you may offer the exchange notes for
resale and resell or otherwise transfer the exchange
notes without compliance with the registration and
prospectus delivery provisions of the Securities Act,
as long as you:
. are acquiring the exchange notes in the
ordinary course of your business; and
. have not engaged in, do not intend to engage
in and have no arrangement or understanding
with any person to participate in a
distribution of the exchange notes.
However, you may not rely on the previous paragraph
and must comply with the registration and prospectus
delivery provisions of the Securities Act if you:
. are an affiliate of ours within the meaning of
Rule 405 under the Securities Act;
. do not acquire exchange notes in the ordinary
course of your business; or
. tender in the exchange offer with the
intention to participate or for the purpose of
participating in a distribution of exchange
notes.
Expiration.............. The exchange offer will expire at 5:00 p.m., New York
City time, on , or on a later date and time
if we decide to extend the exchange offer. We refer
to the date on which the exchange offer will expire
as the "expiration date".
Withdrawal of tenders... You may withdraw any outstanding notes that you
tender in the exchange offer at any time before the
expiration date. We will return without expense to
you any outstanding notes not accepted for exchange
for any reason promptly after the expiration or
termination of the exchange offer.
Certain conditions to
the exchange offer.....
The exchange offer is subject to customary
conditions, which we may waive. Please read the
section "The Exchange Offer--Certain Conditions to
the Exchange Offer" on page 43.
Procedures for
tendering outstanding
notes.................. If you wish to accept the exchange offer, you must:
. complete, sign and date the accompanying
letter of transmittal or a facsimile of that
letter according to the instructions contained
in this prospectus and that letter;
. mail or otherwise deliver the letter of
transmittal or a facsimile of that letter,
together with the outstanding notes and any
other required documents, to the exchange
agent at the address indicated on the cover
page of the letter of transmittal; or
2
<PAGE>
. if you hold outstanding notes through the DTC
and wish to participate in the exchange offer,
you must comply with the Automated Tender
Offer Program procedures of the DTC, by which
you will agree to be bound by the letter of
transmittal.
By signing or agreeing to be bound by the letter of
transmittal, you will represent to us that, among
other things:
. any exchange notes that you receive will be
acquired in the ordinary course of your
business;
. you have no arrangement or understanding with
any person or entity to participate in a
distribution of the exchange notes;
. if you are a broker-dealer that will receive
exchange notes for your own account in
exchange for outstanding notes that you
acquired as a result of market-making or other
trading activities, you will deliver a
prospectus, as required by law, in connection
with any resale of those exchange notes; and
. you are not an affiliate of ours within the
meaning of Rule 405 under the Securities Act
or, if you are an affiliate, you will comply
with any applicable registration and
prospectus delivery requirements of the
Securities Act.
Special procedures for
beneficial owners......
If you are a beneficial owner of outstanding notes
which are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee and
you wish to tender your outstanding notes in the
exchange offer, you should contact the registered
holder promptly and instruct the registered holder to
tender on your behalf. If you wish to tender on your
own behalf, before completing and executing the
letter of transmittal, you must either make
appropriate arrangements to register ownership of the
outstanding notes in your name or obtain a properly
completed bond power from the registered owner.
However, the transfer of registered ownership may
take considerable time, and you may not be able to
complete it before the expiration date.
Guaranteed delivery If you wish to tender your outstanding notes and (1)
procedures............. your outstanding notes are not immediately available
or (2) you cannot deliver your outstanding notes, the
letter of transmittal or any other document required
by the letter of transmittal or (3) you are unable to
comply with the applicable procedures under the DTC's
Automated Tender Offer Program before the expiration
date, you must tender your outstanding notes under
the guaranteed delivery procedures outlined in this
prospectus under "The Exchange Offer--Guaranteed
Delivery Procedures" on page 47.
Effect on some terms of
the outstanding
notes.................. Once we complete the exchange of all validly tendered
outstanding notes in the exchange offer, we will have
satisfied our obligation under the registration
rights agreement to effect the exchange offer, and we
will not be liable to pay special interest on the
outstanding notes as described in
3
<PAGE>
that agreement. If you fail to tender your
outstanding notes in the exchange offer, you will
continue to hold outstanding notes and you will be
entitled to all the rights and limitations applicable
to the outstanding notes in the indenture, except for
the rights under the registration rights agreement
that by their terms terminate when the exchange offer
is completed.
Some adverse
consequences of
failure to exchange....
We expect that a substantial portion of the
outstanding notes will be tendered and accepted in
the exchange offer. In that case, the trading market
for the outstanding notes will be adversely affected.
If you fail to tender your outstanding notes in the
exchange offer, your notes will continue to be
subject to the transfer restrictions outlined in the
outstanding notes and in the indenture. In general,
the outstanding notes may not be offered or sold,
unless registered under the Securities Act or in a
transaction not subject to the registration
requirements of the Securities Act and applicable
state securities laws.
We do not intend to register any outstanding notes
under the Securities Act other than in the exchange
offer.
Certain income tax
considerations.........
The exchange of outstanding notes for exchange notes
in the exchange offer will not be a taxable event for
(1) United States federal income tax purposes or (2)
Bermuda income tax purposes.
Use of proceeds......... We will not receive any cash proceeds from the
issuance of the exchange notes in the exchange offer.
Exchange agent.......... The exchange agent for the exchange offer will be
United States Trust Company of New York. You may find
the exchange agent's address and telephone number in
"The Exchange Offer--Exchange Agent" on page 48.
The Exchange Notes
Issuer.................. Global Crossing Holdings Ltd., a Bermuda company
Securities offered...... $2,000,000,000 aggregate principal amount of exchange
notes, which we will issue in two series:
. $900,000,000 9 1/8% senior notes due 2006; and
. $1,100,000,000 9 1/2% senior notes due 2009
Guarantor............... Global Crossing Ltd., our parent company
Maturity................ The 2006 exchange notes will mature on November 15,
2006. The 2009 exchange notes will mature on November
15, 2009.
4
<PAGE>
Interest................ The 2006 exchange notes will bear interest at the
rate of 9 1/8% per year. The 2009 exchange notes will
bear interest at the rate of 9 1/2% per year. We will
pay interest on the exchange notes on May 15 and
November 15 of each year, beginning on May 15, 2000.
Ranking................. The exchange notes are unsecured and rank equally
with all our other senior unsecured debt. We are a
holding company, and therefore the exchange notes
will be effectively subordinated to all indebtedness
and other liabilities of our subsidiaries.
Redemption.............. We may redeem the 2006 exchange notes before maturity
only in the case of a change of control redemption or
a tax redemption described below. We may redeem the
2009 exchange notes in each of the following
circumstances:
1. Optional redemption:
We may redeem some or all of the 2009 exchange
notes at any time on or after November 15, 2004.
The redemption price equals 104.750% of the
principal amount of the exchange notes if we
redeem them in 2004, plus accrued and unpaid
interest to the redemption date. Thereafter, this
percentage gradually declines to 100% on and after
November 15, 2007.
2. Equity offering redemption:
On or before November 15, 2002, we may redeem up
to 25% of the original principal amount of the
2009 exchange notes using the net proceeds of some
equity offerings described under "Description of
the Exchange Notes--Equity Offering Redemption" on
page 53. The redemption price equals 109.50% of
the principal amount of the 2009 exchange notes
that we will redeem, plus accrued and unpaid
interest to the redemption date.
3. Change of control redemption:
We may redeem all but not part of the exchange
notes of each series if we become subject to a
change of control at a redemption price of 100% of
the principal amount plus an applicable premium,
described in "Description of the Exchange Notes--
Change of Control Redemption" on page 53, and any
accrued and unpaid interest to the redemption
date. We may redeem the 2006 exchange notes on
these terms at any time. We may redeem the 2009
exchange notes on these terms at any time before
November 15, 2004.
4. Tax redemption:
We may redeem all but not part of the exchange
notes of each series at a redemption price equal
to 100% of the principal amount of the exchange
notes, plus any accrued and unpaid interest to the
redemption date, if there is a change in tax law
requiring us to pay additional amounts. See
"Description of the Exchange Notes--Optional Tax
Redemption" on page 54.
5
<PAGE>
Change of control put If we become subject to a change of control, and we
right................... do not redeem the exchange notes as discussed above,
each holder of exchange notes will have the right to
require us to purchase all or part of his or her
exchange notes at 101% of the principal amount, plus
any accrued and unpaid interest to the date of
repurchase.
Covenants............... The terms of the exchange notes limit our ability and
the ability of some of our subsidiaries, Global
Crossing Ltd. and Frontier, but not its subsidiaries,
to, among other things:
. sell assets;
. make restricted payments;
. incur additional indebtedness;
. create liens;
. place restrictions on distributions and other
payments;
. issue or sell equity interests of restricted
subsidiaries;
. merge or consolidate with or transfer
substantial assets to another entity;
. engage in transactions with related persons;
and
. engage in any business other than permitted
businesses.
These limitations are subject to important exceptions
and qualifications discussed in "Description of the
Exchange Notes--Repurchase at the Option of Holders"
on page 57 and "--Covenants" on page 59.
6
<PAGE>
Selected historical financial information
Global Crossing Holdings acquired the Global Marine Systems business of
Cable & Wireless Plc on July 2, 1999. Global Crossing Ltd. acquired Frontier on
September 28, 1999.
On November 15, 1999, Global Crossing Ltd. announced an agreement to form a
joint venture with Hutchison Whampoa Limited, to be called Hutchison Global
Crossing, and the related issuance of $400 million aggregate liquidation
preference of the 6 3/8% cumulative convertible preferred stock, series B, of
Global Crossing Ltd. to Hutchison. On November 24, 1999, Global Crossing
Holdings acquired Racal Telecom, a group of wholly-owned subsidiaries of Racal
Electronics plc.
Also on November 24, 1999, Global Crossing Ltd. formed, together with
Softbank Corp. and Microsoft Corporation, a new joint venture company called
Asia Global Crossing. Global Crossing Ltd. has contributed to Asia Global
Crossing its 57.75% ownership interest in Pacific Crossing and its development
rights in East Asia Crossing. Among other things, each of Softbank and
Microsoft contributed $175 million in cash to Asia Global Crossing.
In the following tables, we provide selected historical financial
information for (1) Global Crossing Ltd., (2) Global Crossing Holdings, (3)
Global Marine Systems, (4) Frontier, (5) Racal Telecom and (6) HCL Holdings
Limited, a group of wholly-owned subsidiaries of Hutchison Whampoa Limited
which will be contributed into the Hutchison Global Crossing joint venture. We
do not provide any separate historical financial information relating to the
Asia Global Crossing joint venture, as all relevant historical financial
information is reflected in the historical financial information of Global
Crossing Ltd. and Global Crossing Holdings.
The selected historical financial information presented in the following
tables has been derived from the audited and unaudited financial statements of
Global Crossing Ltd., Global Crossing Holdings, Global Marine Systems,
Frontier, Racal Telecom and HCL Holdings for the periods presented. This
information is only a summary, and you should read it together with the more
detailed historical financial information included or incorporated by reference
in this document. For instructions on how to obtain information incorporated by
reference, see "Where You Can Find More Information" on page i.
Global Crossing Ltd. selected historical financial information
The table below shows the selected historical financial information for
Global Crossing Ltd. This information has been prepared using the consolidated
financial statements of Global Crossing Ltd. as of the dates indicated and for
each of the fiscal years in the period from inception, March 19, 1997, to
December 31, 1998 and for the nine months ended September 30, 1999 and 1998.
The consolidated income statement data below for each of the fiscal years in
the period from inception, March 19, 1997, to December 31, 1998 and the
consolidated balance sheet data as of December 31, 1998 and 1997 have been
derived from financial statements audited by Arthur Andersen & Co., independent
public accountants, which are incorporated by reference in this document. We
derived the remaining data from unaudited condensed consolidated financial
statements.
In reading the following selected historical financial information, please
note the following:
. The statement of operations data for the nine months ended September 30,
1999 includes the results of Global Marine Systems for the period from
July 2, 1999, date of acquisition, through September 30, 1999. The
Consolidated Balance Sheet as of September 30, 1999 includes amounts
related to Global Marine Systems and Frontier.
. On September 28, 1999, Global Crossing Ltd. announced the consummation
of the merger with Frontier resulting in Frontier becoming a wholly-
owned subsidiary of Global Crossing Ltd.
7
<PAGE>
Under the terms of the amended merger agreement for the Frontier
transaction, Frontier shareholders received 2.05 Global Crossing common
shares for each outstanding common share of Frontier for a total of
approximately 355 million shares. Upon the effectiveness of the merger,
the then outstanding and unexercised options exercisable for shares of
Frontier common stock were converted into options exercisable for an
aggregate of approximately 25 million shares of Global Crossing common
stock, having the same terms and conditions as the Frontier options,
except that the exercise price and the number of shares issuable upon
exercise were divided and multiplied, respectively, by 2.05. The
purchase price of $10.3 billion reflects a Global Crossing stock price
of $22 15/16 per share, the average closing price of Global Crossing
common stock from September 1, 1999 through September 3, 1999, and
includes long term debt, accrued interest and Frontier options assumed
by Global Crossing Ltd. For accounting purposes, the merger with Global
Crossing Ltd. is deemed to have occurred as of the close of business on
September 30, 1999.
. On July 2, 1999, Global Crossing Ltd. acquired the Global Marine Systems
business of Cable & Wireless Plc in a transaction valued at
approximately $870 million, consisting of a combination of cash and
assumed indebtedness. Global Crossing Ltd. initially financed the
acquisition with committed bank financing in the amount of $600 million
and the remainder with cash on hand.
. On May 16, 1999, Global Crossing Ltd. entered into a definitive
agreement to merge with U S WEST, Inc. The new company would have been
50% owned by Global Crossing Ltd./Frontier shareholders and 50% owned by
U S WEST shareholders. As part of the transaction, U S WEST made a cash
tender offer for approximately 9.49% of Global Crossing common stock.
The tender offer was completed, with U S WEST acquiring 39,259,305
shares, on June 21, 1999. On July 18, 1999, Global Crossing Ltd. and U S
WEST agreed to terminate their merger agreement, and U S WEST agreed to
merge with Qwest Communications International Inc. As a result, U S WEST
paid Global Crossing Ltd. a termination fee of $140 million in cash and
returned 2,231,076 shares of Global Crossing common stock purchased in
the tender offer, and Qwest committed to purchase capacity on the Global
Crossing network at established market unit prices for delivery over the
next four years and committed to make purchase price payments to Global
Crossing Ltd. for this capacity of $140 million over the next two years.
During the nine-months ended September 30, 1999, Global Crossing Ltd.
recognized $210 million, net of merger related expenses, of other income
in connection with the termination of the U S WEST merger agreement.
. During the nine-month period ended September 30, 1999, Global Crossing
Ltd. recorded a $15 million expense, net of tax benefit, due to the
adoption of Statement of Position 98-5, "Reporting on the Cost of Start-
Up Activities". See the "Cumulative effect of change in accounting
principles" item in the Statement of Operations Data.
. During the nine months ended September 30, 1999 and 1998 and the year
ended December 31, 1998, Global Crossing Ltd. recognized $39 million,
$33 million and $39 million, respectively, of stock-related expense
relating to stock options and rights to purchase stock issued during
that period which entitle the holders to purchase common stock. See the
"Stock-related expense" item in the Statement of Operations Data.
. The "Termination of advisory services agreement" item in the Statement
of Operations Data includes a charge for the termination of the advisory
services agreement as of June 30, 1998. Global Crossing Ltd. acquired
the rights from those entitled to fees payable under the advisory
services agreement in consideration for the issuance of common stock
having an aggregate value of $135 million and the cancellation of
approximately $3 million owed to Global Crossing Ltd. under a related
advance agreement. As a result of this transaction, Global Crossing Ltd.
recorded a non-recurring charge in the approximate amount of $138
million during the nine-month period ended September 30, 1998 and the
year ended December 31, 1998. In addition, Global Crossing Ltd.
recognized as an expense approximately $2 million of advisory fees
incurred prior to termination of the contract.
8
<PAGE>
. The "Provision for income taxes" item in the Statement of Operations
Data reflects income taxes on profits earned during the periods
presented in jurisdictions where Global Crossing Ltd. has a taxable
presence. A significant portion of Global Crossing Ltd.'s operating
losses have been incurred in non-taxable jurisdictions, and, therefore,
these operating losses cannot be applied to offset Global Crossing
Ltd.'s future taxable earnings.
. In July 1999, Global Crossing Ltd. recognized an extraordinary loss
resulting from the payoff of existing debt in connection with the
commencement of its $3 billion senior secured credit facility, comprised
of a write-off of $15 million of unamortized deferred financing costs.
. On May 18, 1998, a portion of the proceeds from the issuance of the 9
5/8% Senior Notes due 2008 of Global Crossing Holdings was used to
repurchase the 12% Senior Notes Due 2004 of Global Telesystems Holdings
Ltd. Global Crossing Ltd. recognized an extraordinary loss of
approximately $20 million in connection with this repurchase, comprised
of a repurchase premium of approximately $10 million and a write-off of
approximately $10 million of unamortized deferred financing costs. See
the "Extraordinary loss on retirement of senior notes" item in the
Statement of Operations Data.
. The preferred stock dividends for the year ended December 31, 1998
include dividends from both the 10 1/2% Senior Exchangeable Preferred
Stock due 2008 of Global Crossing Holdings and the 14% Senior Increasing
Rate Redeemable Exchangeable Preferred Stock of Global Telesystems
Holdings. The Global Crossing Holdings preferred stock is mandatorily
redeemable on December 1, 2008 and exchangeable at any time by Global
Crossing Holdings into notes. The Global Crossing Holdings preferred
stock entitles the holders to receive cumulative compounding dividends
at an annual rate of 10 1/2%. The dividends can be paid in cash on or
prior to June 1, 2002 with the issuance of additional Global Crossing
Holdings preferred stock at the option of Global Crossing Holdings.
The holders of the Global Telesystems Holdings preferred stock were
entitled to receive cumulative, compounding dividends at an initial
annual rate of 14%. Preferred stock dividends include cumulative 14%
dividends and amortization of the discount and issuance costs. Global
Crossing Ltd. used proceeds from the Global Crossing Holdings Senior
Notes to redeem all outstanding Global Telesystems Holdings preferred
stock effective as of June 17, 1998. All dividends before the redemption
had been paid through the issuance of additional preferred stock and
charged against additional paid-in capital. See the "Preferred stock
dividends" item in the Statement of Operations Data.
. As a result of the redemption of the Global Telesystems Holdings
preferred stock, Global Crossing Ltd. incurred a one-time $34 million
charge against additional paid-in capital. The charge consisted of:
(1) a $16 million charge for redemption premium and (2) a write-off of
$18 million of unamortized discount and unamortized deferred financing
costs. See the "Redemption of preferred stock" item in the Statement of
Operations Data.
. Global Crossing Ltd. granted warrants to Pacific Capital Group, Inc., a
shareholder, and some of its affiliates for the Pacific Crossing, Mid-
Atlantic Crossing and Pan American Crossing systems and related rights.
The $275 million value of the common stock was allocated to
"Construction in progress" in the amount of $112 million and as
"Investment in affiliates" in the amount of $163 million. See the
"Construction in progress, property, plant and equipment and capacity
available for sale" item in the Balance Sheet Data.
. The "Investment in affiliates" item in the Balance Sheet Data includes
$163 million as of December 31, 1998 and September 30, 1999,
respectively, representing the value of the warrants described in the
bullet point immediately above applicable to the Pacific Crossing
system.
. The September 30, 1999 amount in the "Mandatorily redeemable preferred
stock" item in the Balance Sheet Data includes (1) $500 million of
Global Crossing Holdings preferred stock, less
9
<PAGE>
(2) $14 million reflecting the unamortized issuance costs. The December
31, 1998 amount includes (1) $500 million of Global Crossing Holdings
preferred stock, less (2) $17 million reflecting the unamortized
issuance costs. The December 31, 1997 amount includes (1) $100 million
of the Global Telesystems Holdings preferred stock originally issued,
plus (2) $10 million of Global Telesystems Holdings preferred stock
issued as dividends on the originally issued Global Telesystems Holdings
preferred stock, less (3) $19 million reflecting the unamortized
discount and issue costs, plus $1 million of accrued dividends. Global
Crossing Ltd. redeemed all outstanding Global Telesystems Holdings
preferred stock effective as of June 17, 1998.
10
<PAGE>
Global Crossing Ltd. and Subsidiaries
(in thousands, except share and per share information)
<TABLE>
<CAPTION>
Period from
For the Nine For the Nine For the March 19, 1997
Months Ended Months Ended Year Ended (Date of Inception) to
September 30, 1999 September 30, 1998 December 31, 1998 December 31, 1997
------------------ ------------------ ----------------- ----------------------
(unaudited)
<S> <C> <C> <C> <C>
Statement of Operations
Data:
Revenues................ $ 623,573 $ 218,949 $ 424,099 $ --
----------- ----------- ----------- -----------
Expenses:
Cost of sales........... 279,307 90,438 178,492 --
Operations,
administration and
maintenance............ 41,885 10,652 18,056 --
General and
administrative......... 73,344 16,936 26,844 1,657
Sales and marketing..... 36,462 13,655 26,194 1,366
Network development..... 15,572 7,234 10,962 78
Stock-related expense... 38,609 33,058 39,374 --
Depreciation and
amortization........... 16,370 545 -- --
Goodwill amortization... 3,758 -- -- --
Provision for doubtful
accounts............... 24,211 2,211 4,233 --
Termination of advisory
services agreement..... -- 139,669 139,669 --
----------- ----------- ----------- -----------
529,518 314,398 443,824 3,101
----------- ----------- ----------- -----------
Operating income
(loss)................. 94,055 (95,449) (19,725) (3,101)
Equity in loss of
affiliates............. (5,471) (1,037) (2,508) --
Other income (expense):
Interest income........ 45,663 14,260 29,986 2,941
Interest expense....... (81,538) (25,660) (42,880) --
Other income, net...... 215,982 -- -- --
Provision for income
taxes.................. (110,055) (16,332) (33,067) --
----------- ----------- ----------- -----------
Income (loss) before
cumulative effect of
change in accounting
principle and
extraordinary item..... 158,636 (124,218) (68,194) (160)
Cumulative effect of
change in accounting
principle.............. (14,711) -- -- --
Extraordinary loss on
retirement of senior
notes.................. (14,865) (19,709) (19,709) --
----------- ----------- ----------- -----------
Net income (loss)....... 129,060 (143,927) (87,903) (160)
Preferred stock
dividends.............. (41,313) (8,306) (12,681) (12,690)
Redemption of preferred
stock.................. -- (34,140) (34,140) --
----------- ----------- ----------- -----------
Net income (loss)
applicable to common
shareholders........... $ 87,747 $ (186,373) $ (134,724) $ (12,850)
=========== =========== =========== ===========
Net Income (Loss) per
Common Share:
Income (loss) applicable
to common shareholders
before cumulative item
and extraordinary
effect of change in
accounting principle
Basic.................. $ 0.28 $ (0.49) $ (0.32) $ (0.04)
=========== =========== =========== ===========
Diluted................ $ 0.28 $ (0.49) $ (0.32) $ (0.04)
=========== =========== =========== ===========
Shares used in computing
basic and diluted loss
per share:
Basic.................. 412,224,517 341,371,856 358,735,340 325,773,934
=========== =========== =========== ===========
Diluted................ 423,967,291 341,371,856 358,735,340 325,773,934
=========== =========== =========== ===========
</TABLE>
11
<PAGE>
Global Crossing Ltd. and Subsidiaries
(in thousands)
<TABLE>
<CAPTION>
December 31,
September 30, --------------------
1999 1998 1997
------------- ---------- --------
(unaudited)
Balance Sheet Data:
<S> <C> <C> <C>
Current assets including cash and
investments and restricted cash and
investments.............................. $ 1,108,936 $ 976,615 $ 27,744
Long-term restricted cash and
investments.............................. 297,088 367,600 --
Long-term accounts receivable............. 56,520 43,315 --
Construction in progress, property, plant
and equipment and capacity available for
sale..................................... 4,614,652 1,008,556 518,519
Goodwill, net............................. 8,439,758 -- --
Investment in affiliates.................. 224,960 177,334 --
Other assets.............................. 593,812 65,757 25,934
----------- ---------- --------
Total assets.......................... $15,335,726 $2,639,177 $572,197
=========== ========== ========
Current liabilities....................... $ 1,363,225 $ 256,265 $ 90,817
Long-term debt............................ 3,854,255 1,066,093 312,325
Deferred revenue.......................... 112,681 25,325 --
Obligations under inland service
agreements and capital leases............ 139,588 24,520 3,009
Deferred credits and other................ 147,729 9,654 --
----------- ---------- --------
Total liabilities..................... 5,617,478 1,381,857 406,151
Mandatorily redeemable preferred stock.... 485,647 483,000 91,925
Shareholders' equity
Common stock............................ 7,899 4,328 3,258
Treasury stock.......................... (209,415) (209,415) --
Other shareholders' equity.............. 9,393,120 1,067,470 71,023
Accumulated deficit..................... 40,997 (88,063) (160)
----------- ---------- --------
Total shareholders' equity............ 9,232,601 774,320 74,121
----------- ---------- --------
Total liabilities and shareholders'
equity............................... $15,335,726 $2,639,177 $572,197
=========== ========== ========
</TABLE>
12
<PAGE>
Global Crossing Holdings selected historical financial information
The table below shows selected historical financial information for Global
Crossing Holdings. This information has been prepared using the consolidated
financial statements of Global Crossing Holdings as of the dates indicated and
for each of the fiscal years in the period from inception, March 19, 1997, to
December 31, 1998 and for the nine months ended September 30, 1999 and 1998.
The consolidated income statement data below for each of the fiscal years in
the period from inception, March 19, 1997, to December 31, 1998 and the
consolidated balance sheet data as of December 31, 1998 and 1997 have been
derived from financial statements audited by Arthur Andersen & Co., independent
public accountants, which are incorporated by reference in this document. We
derived the remaining data from unaudited condensed consolidated financial
statements.
<TABLE>
<CAPTION>
For the Nine For the Nine For the Year For the period from
Months Ended Months Ended Ended March 19, 1997 to
September 30, 1999 September 30, 1998 December 31, 1998 December 31, 1997
------------------ ------------------ ----------------- -------------------
(unaudited)
(in thousands)
<S> <C> <C> <C> <C>
Revenue................. $ 623,573 $218,949 $ 424,099 $ --
Income (loss) from
continuing operations.. 72,773 $(94,009) (29,406) (160)
Total assets ........... 4,207,194 2,644,900 572,197
Long-term obligations,
including capital
leases and redeemable
preferred stock ....... $2,678,840 $1,573,613 $315,334
</TABLE>
Global Marine Systems selected historical financial information
The table below shows selected historical financial information for Global
Marine Systems presented in United States GAAP. This information has been
prepared using the combined financial statements of Global Marine Systems as of
the dates indicated and for each of the fiscal years in the five-year period
ended March 31, 1999. The combined income statement data below for each of the
three fiscal years ended March 31, 1999 and the combined balance sheet data at
March 31, 1999 and 1998 were derived from financial statements audited by KPMG
Audit Plc, chartered accountants, which are incorporated by reference in this
document. The combined income statement data below for each of the fiscal years
ended March 31, 1996 and 1995 and the combined balance sheet data as of
March 31, 1997, 1996 and 1995 were derived from management accounts.
The unaudited translations of Global Marine Systems' sterling amounts into
United States dollars have been translated using convenience translation rates
for the fiscal year ended March 31, 1999. The convenience translations should
not be construed as representations that the sterling amounts have been, could
have been or could in the future be converted into United States dollars at
this rate or any other rate of exchange.
<TABLE>
<CAPTION>
For the Years Ended March 31,
----------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
------------------------ --------------- --------------- --------------- ---------------
(unaudited)
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Operating revenues...... $347,335 (Pounds)209,997 (Pounds)170,953 (Pounds)181,987 (Pounds)147,996 (Pounds) 79,778
Income from continuing
operations............. 47,051 28,447 13,843 18,992 26,923 10,829
Total assets............ 753,333 466,749 441,899 380,635 359,148 235,459
Long-term obligations... $261,923 (Pounds)162,282 (Pounds)198,055 (Pounds)163,209 (Pounds)167,454 (Pounds) 54,900
</TABLE>
13
<PAGE>
Frontier selected historical financial information
The table below shows selected historical financial information for
Frontier. This information has been prepared using the consolidated financial
statements of Frontier as of the dates indicated and for each of the fiscal
years in the five-year period ended December 31, 1998 and for the nine months
ended September 30, 1999 and 1998. The consolidated income statement data below
for each of the fiscal years in the five-year period ending December 31, 1998
and the consolidated balance sheet data as of December 31, 1994 through
December 31, 1998 have been derived from financial statements audited by
PricewaterhouseCoopers LLP, independent accountants, of which the financial
statements for the three-year period ending December 31, 1998 are incorporated
by reference in this document. Global Crossing Ltd. derived the remaining data
from unaudited consolidated financial statements, which are incorporated by
reference in this document.
Revenues have been impacted by the following acquisitions for the periods
presented:
. On February 27, 1998, Frontier acquired GlobalCenter Inc., a leading
provider in digital distribution, Internet and data services
headquartered in Sunnyvale, California. Frontier acquired all of the
outstanding shares of GlobalCenter and issued 6.4 million shares to
effect this merger. At the time of the merger, GlobalCenter had 1.1
million stock options and warrants outstanding as converted into
Frontier equivalents. This transaction was accounted for using the
pooling of interests method of accounting and, accordingly, historical
information has been restated to include GlobalCenter.
. In August 1995, Frontier merged with ALC Communications Corporation.
Frontier exchanged two shares of its common stock for each ALC common
share. The total shares issued by Frontier to effect the merger were
69.2 million. In March 1995, Frontier acquired American Sharecom Inc.
Frontier acquired all of the outstanding shares of American Sharecom for
approximately 8.7 million shares of Frontier common stock. These
transactions were accounted for as poolings of interests and,
accordingly, historical information has been restated to include ALC and
American Sharecom.
. In 1995, Frontier paid $318.4 million in cash for several acquisitions
that were accounted for as purchases. These purchase acquisitions were
Minnesota Southern Cellular Telephone Company, ConferTech International,
Inc., WCT Communications, Inc., Enhanced Telemanagement, Schneider
Communications, Inc. and Schneider Communications' 80.8 percent interest
in LinkUSA Corporation and Link-VTC, Inc. In February 1996, Frontier
acquired the remaining 19.2 percent interest in LinkUSA Corporation for
$2.3 million in cash, and in June 1996 made a payment of $4.3 million to
Link-VTC, Inc. in settlement of the original earnout agreement.
The following extraordinary, unusual or infrequently occurring items have
impacted net income for the periods presented:
. During the nine-month period ended September 30, 1999, Frontier recorded
a $74.5 million charge for costs related to the merger with Global
Crossing Ltd. These charges primarily include investment banker fees,
legal fees, accelerated restricted stock compensation and other direct
costs.
. In the first quarter of 1998, Frontier recorded a pre-tax charge of $6.5
million associated with the acquisition of GlobalCenter. These charges
included investment banker fees, legal fees and other direct costs.
. In October 1997, Frontier recorded a pre-tax charge of $86.8 million
consisting of a restructuring charge of $43.0 million and a provision
for asset and lease impairments of $43.8 million. The restructuring
charge was primarily associated with a workforce reduction, program
cancellations and discontinuing some product lines. The provision for
asset and lease impairments primarily relates to long term assets and
some lease obligations Frontier was in the process of disposing of or
exiting.
14
<PAGE>
. In March 1997, Frontier recorded a $96.6 million pre-tax charge
primarily related to the write-off of certain leased network facilities
no longer required as a result of the migration of Frontier's major
carrier customer's one-plus traffic volume to other networks and
Frontier's overall network integration efforts.
. In November 1996, Frontier recorded a $48.8 million pre-tax charge. This
charge included $28.0 million for the curtailment of specified Frontier
pension plans and a $20.8 million charge primarily to the write-off of
unrecoverable product development costs for its conference calling
product line.
. In December 1996, Frontier, through GlobalCenter, recorded a pre-tax
charge of $18.9 million related to the write-off of in-process product
development costs associated with the 1996 merger with GCIS, an Internet
management services company.
. Frontier's 1995 operating results reflect pre-tax acquisition related
charges of $114.2 million associated with the integration of a number of
long distance companies acquired during the year, including the August
1995 merger with ALC Communications.
. Frontier determined in 1995 that Statement of Financial Accounting
Standards No. 71, "Accounting for the Effects of Certain Types of
Regulation", was no longer applicable based upon changes in regulation,
increasingly rapid advancements in telecommunications technology and
other factors creating competitive markets. As a result of the
discontinuance of FAS 71, Frontier recorded a non-cash extraordinary
charge of $112.1 million, net of an income tax benefit of $68.4 million,
as of September 30, 1995. Frontier also recorded a $9.0 million loss on
the early extinguishment of debt in 1995.
15
<PAGE>
Frontier Corporation and Subsidiaries
(in thousands, except per share information)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended Year Ended December 31,
September 30, September 30, ----------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
------------- ------------- ---------- ---------- ---------- ---------- ----------
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Statements
of Income:
Revenues................ $ 1,995,556 $1,938,522 $2,593,558 $2,374,809 $2,588,519 $2,150,328 $1,667,545
Costs and expenses...... 1,835,514 1,708,518 2,276,162 2,288,651 2,220,296 1,865,492 1,341,919
----------- ---------- ---------- ---------- ---------- ---------- ----------
Operating income........ 160,042 230,004 317,396 86,158 368,223 284,836 325,626
Interest expense........ 48,739 39,516 55,318 48,239 43,312 53,572 50,216
Other income, net of
other expense.......... 19,643 33,480 45,025 38,070 15,850 14,991 20,922
Income taxes............ 77,181 96,634 129,560 44,188 142,556 101,126 109,078
----------- ---------- ---------- ---------- ---------- ---------- ----------
Income before
extraordinary items and
cumulative effect of
changes in accounting
principles............. 53,765 127,334 177,543 31,801 198,205 145,129 187,254
Extraordinary items..... -- -- -- -- -- (121,208) --
Cumulative effect of
changes in accounting
principles............. -- (1,755) (1,755) -- (8,018) (1,477) (7,197)
----------- ---------- ---------- ---------- ---------- ---------- ----------
Consolidated net
income................. 53,765 125,579 175,788 31,801 190,187 22,444 180,057
Dividends on preferred
stock.................. (510) (754) (1,005) (1,019) (1,182) (1,191) (1,187)
----------- ---------- ---------- ---------- ---------- ---------- ----------
Income applicable to
common stock........... $ 53,255 $ 124,825 $ 174,783 $ 30,782 $ 189,005 $ 21,253 $ 178,870
=========== ========== ========== ========== ========== ========== ==========
Earnings per common
share:
Income before
extraordinary item and
cumulative effect of
changes in accounting
principles
Basic.................. $ 1.03 $ .18 $ 1.19 $ .94 $ 1.26
Diluted................ 1.02 .18 1.18 .88 1.16
Cash dividends declared
per common share....... $ .100 $ .668 $ .89 $ .875 $ .855 $ .835 $ .815
Consolidated Balance
Sheets (at period end):
Current assets.......... $ 644,023 $ 566,674 $ 490,305 $ 477,761 $ 524,200 $ 673,826
Property, plant and
equipment, net......... 2,189,138 1,677,559 1,046,884 975,982 883,046 1,034,442
Goodwill and customer
base, net.............. 7,794,241 484,015 517,754 538,296 550,081 222,442
Deferred and other
assets................. 431,614 330,495 432,977 237,353 154,088 130,084
----------- ---------- ---------- ---------- ---------- ----------
Total assets........... $11,059,016 $3,058,743 $2,487,920 $2,229,392 $2,111,415 $2,060,794
=========== ========== ========== ========== ========== ==========
Current liabilities..... $ 750,974 $ 567,697 $ 492,978 $ 424,397 $ 506,073 $ 305,698
Long-term debt.......... 1,800,651 1,350,821 934,681 677,570 618,867 661,549
Other long-term
liabilities............ 31,928 -- -- -- -- --
Deferred income taxes... -- 40,046 10,927 2,542 15,644 98,217
Deferred employee
benefits obligation.... 89,596 81,925 74,965 57,573 58,385 46,001
Shareholder's equity.... 8,385,867 1,018,254 974,369 1,067,310 912,446 949,329
----------- ---------- ---------- ---------- ---------- ----------
Total liabilities and
shareholders' equity.. $11,059,016 $3,058,743 $2,487,920 $2,229,392 $2,111,415 $2,060,794
=========== ========== ========== ========== ========== ==========
</TABLE>
16
<PAGE>
Racal Telecom selected historical financial information
The table below shows selected historical financial information for Racal
Telecom prepared in United States GAAP. This information has been prepared
using the combined financial statements of Racal Telecom as of the dates
indicated and for each of the fiscal years in the three-year period ended March
31, 1999. The combined income statement data below for each of the two years
ended March 31, 1999 and the combined balance sheet data at March 31, 1999 and
1998 were derived from financial statements audited by Deloitte & Touche,
chartered accountants, which are incorporated by reference in this document. We
derived the remaining data from unaudited combined financial statements.
The unaudited translations of Racal Telecom's sterling amounts into United
States dollars have been translated using convenience translation rates for the
fiscal year ended March 31, 1999. The convenience translations should not be
construed as representations that the sterling amounts have been, could have
been or could in the future be converted into United States dollars at this
rate or any other rate of exchange.
<TABLE>
<CAPTION>
For the Years Ended March 31,
------------------------------------------------------------
1999 1998 1997
--------------------------- --------------- ---------------
(unaudited) (in thousands)
<S> <C> <C> <C> <C>
Revenues................ $492,130 (Pounds)295,800 (Pounds)273,000 (Pounds)260,000
Income (loss) from
continuing operations.. (30,450) (18,300) 12,100 16,000
Total assets............ 656,250 401,200 355,900 311,700
Long-term obligations... $118,920 (Pounds) 72,700 (Pounds) 86,400 (Pounds)101,200
</TABLE>
HCL Holdings selected historical financial information
The table below shows selected historical financial information for HCL
Holdings prepared in United States GAAP. This information has been prepared
using the combined financial statements of HCL Holdings as of the dates
indicated and for each of the years in the three-year period ended December 31,
1998 and for the nine months ended September 30, 1999 and 1998. The combined
financial information below as of and for each of the three years ended
December 31, 1998 were derived from financial statements audited by
PricewaterhouseCoopers, certified public accountants, which are incorporated by
reference in this document. The combined financial information below as of and
for the nine months ended September 30, 1999 and 1998 were derived from
unaudited combined financial statements.
<TABLE>
<CAPTION>
For the Nine For the Nine
Months Ended Months Ended For the Years Ended December 31,
September 30, September 30, --------------------------------------
1999 1998 1998 1997 1996
------------- ------------- ------------ ------------ ----------
(unaudited)
(in thousands)
<S> <C> <C> <C> <C> <C>
Revenues................ HK$ 615,940 HK$ 735,933 HK$ 950,120 HK$1,262,106 HK$790,995
Income (loss) from
continuing operations.. (190,748) HK$(177,318) (279,526) (356,847) (153,626)
Total assets............ 2,364,497 1,857,539 1,369,610 705,687
Long-term obligations... HK$3,022,594 HK$2,306,024 HK$1,403,847 HK$704,586
</TABLE>
17
<PAGE>
The unaudited translations of HCL Holdings' Hong Kong dollar amounts into
United States dollars have been translated using convenience translation rates
for the fiscal year ended December 31, 1998 and for the nine months ended
September 30, 1999. The convenience translations should not be construed as
representations that the Hong Kong dollar amounts have been, could have been or
could in the future be converted into United States dollars at this rate or any
other rate of exchange.
<TABLE>
<CAPTION>
For the Nine For the Year
Months Ended Ended
September 30, December 31,
1999 1998
------------- ------------
(unaudited)
(in thousands)
<S> <C> <C>
Revenues...................................... $ 79,429 $122,664
Income (loss) from continuing operations...... (24,598) (36,088)
Total assets.................................. 304,401 239,794
Long-term obligations......................... $389,123 $297,690
</TABLE>
18
<PAGE>
Recent Financial Development
As a result of Financial Accounting Standards Board (FASB) Interpretation
No. 43, "Real Estate Sales, an interpretation of FASB Statement No. 66" (FIN
43), which became effective July 1, 1999, certain sales of capacity may no
longer be recognized as revenue at the time the circuits are activated. We
believe that our sales of subsea capacity will continue to be recognized as
revenue upon activation of those circuits, because we believe that subsea
capacity contracts meet the conditions for sales type lease accounting.
Beginning July 1, 1999, revenues from the sale of terrestrial backhaul circuits
are being amortized over the terms of the contracts. The result was a deferral
of $16 million of revenue related to terrestrial backhaul circuits activated
during the third quarter. Previously, these circuits would have been recognized
as current revenue. This deferral in revenue recognition has no impact on cash
flow. We note that accounting practice and authoritative guidance on this
subject are still evolving, with resolution expected within the next several
months.
With the acquisition of Frontier completed, we now expect services to be a
significant source of revenue on each of the Global Crossing systems.
Therefore, beginning October 1, 1999, we initiated service contract accounting
for our subsea systems. Under service contract accounting, the investment in
both subsea and terrestrial systems will be depreciated over their economic
lives, and revenues related to service contracts will be recognized over the
terms of the contracts. However, revenues and costs related to the sale of
indefeasible rights of use for subsea circuits will continue to be recognized
upon activation when appropriate. If we had adopted service contract accounting
effective January 1, 1999, there would not have been a material impact on our
results of operations during the year.
19
<PAGE>
Global Crossing Ltd.
Selected unaudited pro forma financial information
The following unaudited pro forma condensed combined financial information
of Global Crossing Ltd., Global Marine Systems, Frontier, Racal Telecom and the
Hutchison Global Crossing joint venture, which we refer to as "Pro Forma Global
Crossing Ltd.", has been prepared to demonstrate how these companies or
businesses might have looked if (1) the Global Marine Systems acquisition and
related financing, (2) the Frontier acquisition, (3) the Racal Telecom
acquisition and related financing, (4) the Hutchison Global Crossing joint
venture, including the related issuance of the 6 3/8% cumulative convertible
preferred stock, series B, of Global Crossing Ltd., (5) the offering of the 6
3/8% cumulative convertible preferred stock of Global Crossing Ltd. completed
on November 5, 1999, (6) the offering of the outstanding notes of Global
Crossing Holdings completed on November 19, 1999 and the application of the net
proceeds of that offering and (7) the offering of the 7% cumulative convertible
preferred stock of Global Crossing Ltd. completed on December 15, 1999 had been
completed as of the dates or at the beginning of the periods presented. This
pro forma information does not give effect to the $350 million cash received in
connection with the formation of the Asia Global Crossing joint venture.
Global Crossing Ltd. has prepared the pro forma financial information using
the purchase method of accounting. Global Crossing Ltd. expects that it will
have reorganization and restructuring expenses and potential synergies relating
to the acquisitions of Global Marine Systems and Racal Telecom, the Hutchison
Global Crossing joint venture and the acquisition of Frontier's long distance
business and increased opportunities to earn more revenue as a result of those
transactions. The unaudited pro forma information does not reflect these
expenses and synergies.
The pro forma information, while helpful in illustrating the financial
characteristics of the combined company under one set of assumptions, does not
attempt to predict or suggest future results. The pro forma information also
does not attempt to show how the combined company would actually have performed
had the companies been combined throughout these periods. If the companies had
actually been combined in prior periods, these companies and businesses might
have performed differently. You should not rely on pro forma financial
information as an indication of the results that would have been achieved if
the Global Marine Systems, Frontier and Racal Telecom acquisitions and the
Hutchison Global Crossing joint venture had taken place earlier or the future
results that the companies will experience after completion of these
transactions.
These unaudited pro forma condensed combined financial statements should be
read in conjunction with the historical financial statements of Global Crossing
Ltd., Global Marine Systems, Frontier, Racal Telecom and HCL Holdings, which
are incorporated by reference in this document.
Global Crossing Ltd. has tentatively considered the carrying value of the
acquired assets to approximate their fair value, with all of the excess of
those acquisition costs being attributable to goodwill. Global Crossing Ltd. is
in the process of fully evaluating the assets acquired and, as a result, the
purchase price allocation among the tangible and intangible assets acquired,
and their related useful lives, including goodwill, may change. The initial
evaluation of goodwill anticipates a useful life of 25 years.
20
<PAGE>
Pro Forma Global Crossing Ltd.
Unaudited Pro Forma Condensed Combined Balance Sheet
as of September 30, 1999
(in thousands)
<TABLE>
<CAPTION>
Global Racal Racal Hutchison Global
Crossing Financing Telecom Telecom Global Crossing Crossing
Historical(1) Adjustments(2) Pro Forma(3) Adjustments(4) Adjustments(5) Pro Forma
------------- -------------- ------------ -------------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash, restricted cash
and investments....... $ 319,169 $ 3,571,800 $ 28,872 $(1,650,000) $(50,000) $ 1,839,243
(1,480,598) 1,100,000
Accounts receivable,
net................... 623,170 -- 107,933 -- -- 731,103
Prepaid and other...... 166,597 -- 47,813 -- -- 214,410
----------- ----------- -------- ----------- -------- -----------
Total current
assets.............. 1,108,936 2,091,202 184,618 (550,000) (50,000) 2,784,756
Restricted cash and cash
equivalents............ 297,088 -- -- -- -- 297,088
Accounts receivable..... 56,520 -- -- -- -- 56,520
Property, plant and
equipment, net......... 2,541,883 -- 416,176 -- (83,800) 2,874,259
Construction in
process................ 2,072,769 -- -- -- -- 2,072,769
Goodwill and other
intangibles, net....... 8,439,758 -- -- 1,562,857 -- 10,002,615
Other assets, net....... 593,812 29,700 54,887 29,787 -- 677,371
(30,815)
Investment in
affiliates............. 224,960 -- 5,013 -- 538,800 768,773
----------- ----------- -------- ----------- -------- -----------
Total Assets......... $15,335,726 $ 2,090,087 $660,694 $ 1,042,644 $405,000 $19,534,151
=========== =========== ======== =========== ======== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term debt........ $ -- $ -- $249,861 $ -- $ -- $ 249,861
Accrued construction
costs................. 181,353 -- -- -- -- 181,353
Accounts payable and
accrued expenses...... 818,265 2,750 141,615 48,287 5,000 1,015,917
Other current
liabilities........... 363,607 -- 14,975 -- -- 378,582
----------- ----------- -------- ----------- -------- -----------
Total current
liabilities......... 1,363,225 2,750 406,451 48,287 5,000 1,825,713
Long-term debt.......... 3,088,913 (1,480,598) 102,223 1,100,000 -- 2,810,538
Senior notes............ 765,342 2,000,000 -- -- -- 2,765,342
Deferred credits and
other.................. 399,998 -- 46,377 -- -- 446,375
----------- ----------- -------- ----------- -------- -----------
Total Liabilities.... 5,617,478 522,152 555,051 1,148,287 5,000 7,847,968
----------- ----------- -------- ----------- -------- -----------
Mandatorily Redeemable
Preferred Stock........ 485,647 -- -- -- -- 485,647
Shareholders' equity:
6 3/8% Cumulative
Convertible Preferred
Stock................. -- 969,000 -- -- 400,000 1,369,000
7% Cumulative
Convertible Preferred
Stock................. -- 629,750 -- -- -- 629,750
Common stock........... 7,899 -- 32,728 (32,728) -- 7,899
Other shareholders'
equity................ 9,448,147 -- 5,818 (5,818) -- 9,448,147
Unearned compensation.. (72,799) -- -- -- -- (72,799)
Treasury stock......... (209,415) -- -- -- -- (209,415)
Retained earnings
(accumulated
deficit).............. 40,997 (30,815) 67,097 (67,097) -- 10,182
Accumulated other
comprehensive income.. 17,772 -- -- -- -- 17,772
----------- ----------- -------- ----------- -------- -----------
Total shareholders'
equity.............. 9,232,601 1,567,935 105,643 (105,643) 400,000 11,200,536
----------- ----------- -------- ----------- -------- -----------
Total liabilities and
shareholders'
equity.............. $15,335,726 $ 2,090,087 $660,694 $ 1,042,644 $405,000 $19,534,151
=========== =========== ======== =========== ======== ===========
</TABLE>
21
<PAGE>
Pro Forma Global Crossing Ltd.
Unaudited Pro Forma Condensed Combined Statements of Operations
For the Nine Months Ended September 30, 1999
(in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
Global
Global Global Marine Racal
Crossing Marine Systems Frontier Frontier Financing Telecom
Historical (6) Systems (7) Adjustments Historical Adjustments Adjustments Pro Forma(3)
-------------- ----------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating
Revenues........... $ 623,573 $173,498 $ -- $1,995,556 $ -- $ -- $258,082
----------- -------- -------- ---------- --------- --------- --------
Operating Expenses:
Operating,
selling, general
and
administrative.... 470,781 127,165 -- 1,551,234 -- -- 257,498
Stock-related
expense........... 38,609 -- -- 10,412 (10,412)(11) -- --
Merger Expenses... -- -- -- 74,519 -- -- --
Depreciation and
amortization...... 16,370 13,090 -- 173,600 -- -- 46,451
Goodwill
Amortization...... 3,758 539 (539)(8) 25,749 (25,749)(12) -- --
14,126 (8) 292,284 (12)
----------- -------- -------- ---------- --------- --------- --------
529,518 140,794 13,587 1,835,514 256,123 -- 303,949
----------- -------- -------- ---------- --------- --------- --------
Operating income
(loss)............. 94,055 32,704 (13,587) 160,042 (256,123) -- (45,867)
Equity in income
(loss) of
affiliates......... (5,471) 4,539 -- 17,235 -- -- (560)
Other income
(expense):
Interest
expense........... (81,538) (6,869) (36,000)(9) (48,739) -- 52,183 (16) (30,908)
36,000 (16)
(182,487)(16)
Interest income... 45,663 511 -- 4,754 -- -- 3,089
Other income
(expenses)........ 215,982 143 -- (2,346) -- -- 369
----------- -------- -------- ---------- --------- --------- --------
Income (loss)
before taxes and
cumulative effect
of changes in
accounting
principle.......... 268,691 31,028 (49,587) 130,946 (256,123) (94,304) (73,877)
(Provision)
benefit for
income taxes...... (110,055) (11,885) 15,200 (10) (77,181) -- (15,200)(16) 22,411
----------- -------- -------- ---------- --------- --------- --------
Income (loss)
before cumulative
effect of changes
in accounting
principle.......... 158,636 19,143 (34,387) 53,765 (256,123) (109,504) (51,466)
Preferred stock
dividends......... (41,313) -- -- (510) 510 (13) (81,702)(17) --
Redemption of
preferred stock... -- -- -- -- (183)(14) -- --
----------- -------- -------- ---------- --------- --------- --------
Income (loss)
applicable to
common shareholders
before cumulative
changes in
accounting
principle (Basic).. 117,323 19,143 (34,387) 53,255 (255,796) (191,206) (51,466)
Diluted earnings
adjustment........ -- -- -- -- (180)(15) -- --
----------- -------- -------- ---------- --------- --------- --------
Income (loss)
applicable to
common shareholders
before cumulative
changes in
accounting
principle
(Diluted).......... $ 117,323 $ 19,143 $(34,387) $ 53,255 $(255,976) $(191,206) $(51,466)
=========== ======== ======== ========== ========= ========= ========
Income (loss) per
common share:
Income (loss)
applicable to
common
shareholders
before cumulative
effect of changes
in accounting
principle
Basic........... $ 0.28
===========
Diluted......... $ 0.28
===========
Shares used in
computing
information
applicable to
common
shareholders
Basic........... 412,224,517
===========
Diluted......... 423,967,291
===========
<CAPTION>
Hutchison
Racal Global Global
Telecom Crossing Crossing
Adjustments Adjustments(5) Pro Forma
---------------- -------------- ----------------
<S> <C> <C> <C>
Operating
Revenues........... $ -- $ -- $ 3,050,709
---------------- -------------- ----------------
Operating Expenses:
Operating,
selling, general
and
administrative.... -- -- 2,406,678
Stock-related
expense........... -- -- 38,609
Merger Expenses... -- -- 74,519
Depreciation and
amortization...... -- -- 249,511
Goodwill
Amortization...... 46,886 (4) 357,054
---------------- -------------- ----------------
46,886 -- 3,126,371
---------------- -------------- ----------------
Operating income
(loss)............. (46,886) -- (75,662)
Equity in income
(loss) of
affiliates......... -- (16,383) (12,939)
(12,299)
Other income
(expense):
Interest
expense........... (77,043)(18) -- (375,401)
Interest income... -- -- 54,017
Other income
(expenses)........ -- -- 214,148
---------------- -------------- ----------------
Income (loss)
before taxes and
cumulative effect
of changes in
accounting
principle.......... (123,929) (28,682) (195,837)
(Provision)
benefit for
income taxes...... 23,883 (19) -- (152,827)
---------------- -------------- ----------------
Income (loss)
before cumulative
effect of changes
in accounting
principle.......... (100,046) (28,682) (348,664)
Preferred stock
dividends......... -- (19,125) (142,140)
Redemption of
preferred stock... -- -- (183)
---------------- -------------- ----------------
Income (loss)
applicable to
common shareholders
before cumulative
changes in
accounting
principle (Basic).. (100,046) (47,807) (490,987)
Diluted earnings
adjustment........ -- -- (180)
---------------- -------------- ----------------
Income (loss)
applicable to
common shareholders
before cumulative
changes in
accounting
principle
(Diluted).......... $(100,046) $(47,807) $ (491,167)
================ ============== ================
Income (loss) per
common share:
Income (loss)
applicable to
common
shareholders
before cumulative
effect of changes
in accounting
principle
Basic........... $ (0.64)
================
Diluted......... $ (0.64)
================
Shares used in
computing
information
applicable to
common
shareholders
Basic........... 767,484,627 (20)
================
Diluted......... 767,484,627 (20)
================
</TABLE>
22
<PAGE>
Pro Forma Global Crossing Ltd.
Unaudited Pro Forma Condensed Combined Statements of Operations
For the year ended December 31, 1998
(in thousands, except share and per share data)
<TABLE>
<CAPTION>
Racal
Global Global Global Marine Telecom
Crossing Marine Systems Frontier Frontier Financing Pro
Historical Systems(7) Adjustments Historical Adjustments Adjustments Forma(3)
----------- ---------- ------------- ---------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Revenues $ 424,099 $347,335 $ -- $2,593,558 $ -- $ -- $327,199
----------- -------- -------- ---------- --------- --------- --------
Operating Expenses:
Operating,
selling, general
and
administrative ... 264,781 233,209 -- 2,043,740 -- -- 296,723
Termination of
Advisory Services
Agreement......... 139,669 -- -- -- -- -- --
Stock-related
expense........... 39,374 -- -- 6,616 (6,616)(11) -- --
Depreciation and
amortization...... -- 37,412 -- 189,804 -- 54,999
Goodwill
amortization...... -- 1,318 (1,318)(8) 36,002 (36,002)(12) -- --
28,253 (8) 389,712 (12)
----------- -------- -------- ---------- --------- --------- --------
443,824 271,939 26,935 2,276,162 347,094 -- 351,722
----------- -------- -------- ---------- --------- --------- --------
Operating income
(loss)............. (19,725) 75,396 (26,935) 317,396 (347,094) -- (24,523)
Equity in income
(loss) of
affiliates......... (2,508) 4,732 -- 16,711 -- -- (253)
Other income
(expense):
Interest
expense........... (42,880) (11,176) (48,000)(9) (55,318) -- 41,278 (16) (35,957)
48,000 (16)
(243,316)(16)
Interest income... 29,986 3,793 -- 5,084 -- -- 5,353
Other income
(expense)......... -- -- -- 23,230 -- -- 369
----------- -------- -------- ---------- --------- --------- --------
Income (loss)
before taxes,
extraordinary item
and cumulative
effect of changes
in accounting
principle.......... (35,127) 72,745 (74,935) 307,103 (347,094) (154,038) (55,011)
(Provision)
benefit for
income taxes...... (33,067) (25,693) 20,256 (10) (129,560) -- (20,256)(16) 16,954
----------- -------- -------- ---------- --------- --------- --------
Income (loss)
before
extraordinary item
and cumulative
effect of changes
in accounting
principle.......... (68,194) 47,052 (54,679) 177,543 (347,094) (174,294) (38,057)
Preferred stock
dividends......... (12,681) -- -- (1,005) 1,005 (13) (108,935)(17) --
Redemption of
preferred stock... (34,140) -- -- -- (183)(14) -- --
----------- -------- -------- ---------- --------- --------- --------
Income (loss)
applicable to
common shareholders
before
extraordinary item
and cumulative
changes in
accounting
principle (Basic).. (115,015) 47,052 (54,679) 176,538 (346,272) (283,229) (38,057)
Diluted earnings
adjustment........ -- -- -- 360 (360)(15) -- --
----------- -------- -------- ---------- --------- --------- --------
Income (loss)
applicable to
common shareholders
before
extraordinary item
and cumulative
changes in
accounting
principle
(Diluted).......... $ (115,015) $ 47,052 $(54,679) $ 176,898 $(346,632) $(283,229) $(38,057)
=========== ======== ======== ========== ========= ========= ========
Income (loss) per
common share:
Income (loss)
applicable to
common
shareholders
before
extraordinary
item and
cumulative effect
of changes in
accounting
principle
Basic........... $ (0.32)
===========
Diluted......... $ (0.32)
===========
Shares used in
computing
information
applicable to
common
shareholders
Basic........... 358,735,340
===========
Diluted......... 358,735,340
===========
<CAPTION>
Racal Hutchison Global
Telecom Global Crossing Crossing
Adjustments Adjustments(5) Pro Forma
--------------- --------------- -----------------
<S> <C> <C> <C>
Operating Revenues $ -- $ -- $ 3,692,191
--------------- --------------- -----------------
Operating Expenses:
Operating,
selling, general
and
administrative ... -- -- 2,838,453
Termination of
Advisory Services
Agreement......... -- -- 139,669
Stock-related
expense........... -- -- 39,374
Depreciation and
amortization...... -- -- 282,215
Goodwill
amortization...... 62,514 (4) -- 480,479
--------------- --------------- -----------------
62,514 -- 3,780,190
--------------- --------------- -----------------
Operating income
(loss)............. (62,514) -- (87,999)
Equity in income
(loss) of
affiliates......... -- (21,844) (21,206)
(18,044)
Other income
(expense):
Interest
expense........... (102,723)(18) -- (450,092)
Interest income... -- -- 44,216
Other income
(expense)......... -- -- 23,599
--------------- --------------- -----------------
Income (loss)
before taxes,
extraordinary item
and cumulative
effect of changes
in accounting
principle.......... (165,237) (39,888) (491,482)
(Provision)
benefit for
income taxes...... 31,844 (19) -- (139,522)
--------------- --------------- -----------------
Income (loss)
before
extraordinary item
and cumulative
effect of changes
in accounting
principle.......... (133,393) (39,888) (631,004)
Preferred stock
dividends......... -- (25,500) (147,116)
Redemption of
preferred stock... -- -- (34,323)
--------------- --------------- -----------------
Income (loss)
applicable to
common shareholders
before
extraordinary item
and cumulative
changes in
accounting
principle (Basic).. (133,393) (65,388) (812,443)
Diluted earnings
adjustment........ -- -- --
--------------- --------------- -----------------
Income (loss)
applicable to
common shareholders
before
extraordinary item
and cumulative
changes in
accounting
principle
(Diluted).......... $(133,393) $(65,388) $ (812,443)
=============== =============== =================
Income (loss) per
common share:
Income (loss)
applicable to
common
shareholders
before
extraordinary
item and
cumulative effect
of changes in
accounting
principle
Basic........... $ (1.15)
=================
Diluted......... $ (1.15)
=================
Shares used in
computing
information
applicable to
common
shareholders
Basic........... 708,518,093 (20)
=================
Diluted......... 708,518,093 (20)
=================
</TABLE>
23
<PAGE>
Pro Forma Global Crossing Ltd.
Notes to Unaudited Pro Forma Condensed Combined Financial
Statements
(1) This column represents the historical financial position of Global
Crossing Ltd. as of September 30, 1999, including the assets acquired in
the Frontier merger and the Global Marine Systems acquisition.
(2) These adjustments represent the proceeds, financing fees and assumed
repayment of existing debt related to the issuance of the outstanding
notes and the 6 3/8% cumulative convertible preferred stock and 7%
cumulative convertible preferred stock, including the over-allotment, of
Global Crossing Ltd. In connection with the issuance of the outstanding
notes, Global Crossing Ltd. incurred approximately $29.7 million in
financing fees. The financing fees will be amortized over the life of the
debt. As a result of Global Crossing Ltd.'s decision to repay certain
existing debt, Global Crossing Ltd. recorded an extraordinary charge of
approximately $30.8 million during the fourth quarter of 1999.
(3) These adjustments reflect the restatement of Racal Telecom's results from
operations and balance sheet to United States GAAP, the disposal of the
Racal Translink and Racal Fieldforce divisions of Racal Telecommunications
Limited which were not acquired by Global Crossing Ltd., pro forma
adjustments to reflect the likely effect of the trading among Racal
Translink, Racal Fieldforce and Racal Telecom based on contractual
obligations among the divisions. These adjustments are summarised in the
tables below:
Racal Telecom Pro Forma
as of October 15, 1999
(in thousands)
<TABLE>
<CAPTION>
BV Acquisition US GAAP
and and Accounting
Carve-Out Policy Racal Telecom
Historical(a) Adjustments(b) Adjustments(d) Pro Forma
------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash, restricted cash
and investments....... $ 28,872 $ -- $ -- $ 28,872
Accounts receivable,
net................... 107,760 173 -- 107,933
Prepaid and other...... 64,661 293 (17,141) 47,813
--------- ----- -------- --------
Total current
assets.............. 201,293 466 (17,141) 184,618
Property, plant and
equipment, net......... 442,835 8 (26,667) 416,176
Other assets, net....... 42,077 -- 12,810 54,887
Investment in
affiliates............. 5,013 -- -- 5,013
--------- ----- -------- --------
Total Assets......... $ 691,218 $ 474 $(30,998) $660,694
========= ===== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term debt........ $ 249,568 $ 293 $ -- $249,861
Accounts payable and
accrued expenses...... 151,187 76 (9,648) 141,615
Other current
liabilities........... 14,333 -- 642 14,975
--------- ----- -------- --------
Total current
liabilities......... 415,088 369 (9,006) 406,451
Long-term debt.......... 102,223 -- -- 102,223
Deferred credits and
other.................. 24,929 -- 21,448 46,377
--------- ----- -------- --------
Total Liabilities.... 542,240 369 12,442 555,051
--------- ----- -------- --------
Shareholders' equity:
Common stock........... 32,692 36 -- 32,728
Other shareholders'
equity................ 5,818 -- -- 5,818
Retained earnings
(accumulated
deficit).............. 110,468 69 (43,440) 67,097
--------- ----- -------- --------
Total shareholders'
equity.............. 148,978 105 (43,440) 105,643
--------- ----- -------- --------
Total liabilities and
shareholders'
equity.............. $ 691,218 $ 474 $(30,998) $660,694
========= ===== ======== ========
</TABLE>
24
<PAGE>
Racal Telecom Pro Forma
Unaudited Pro Forma Condensed Combined Statements of Operations
For the Forty-one Weeks Ended October 15, 1999
(in thousands)
<TABLE>
<CAPTION>
US GAAP and
BV Acquisition Accounting Racal
and Carve-Out Policy Telecom
Historical(a) Adjustments Adjustments(d) Pro Forma
------------ -------------- -------------- ---------
<S> <C> <C> <C> <C>
Operating Revenues...... $390,578 $(110,354)(c) $(22,447) $258,082
305 (b)
-------- --------- -------- --------
Operating Expenses:
Operating, selling,
general and
administrative........ 355,110 (99,595)(c) 1,737 257,498
246 (b)
Depreciation and
amortization.......... 61,774 (11,978)(c) (3,340) 46,451
(5)(b)
-------- --------- -------- --------
416,884 (111,332) (1,603) 303,949
-------- --------- -------- --------
Operating income
(loss)................. (26,306) 1,283 (20,844) (45,867)
Equity in income (loss)
of affiliates.......... (560) -- -- (560)
Other income (expense):
Interest expense....... (30,905) (3)(b) -- (30,908)
Interest income........ -- 3,089 (c) -- 3,089
Other income
(expense)............. 76,390 (76,021)(c) -- 369
-------- --------- -------- --------
Income (loss) before
taxes and cumulative
effect of changes in
accounting principle... 18,619 (71,652) (20,844) (73,877)
(Provision) benefit for
income taxes.......... 3,563 (70)(b) 18,918 22,411
-------- --------- -------- --------
Income (loss) before
cumulative effect of
changes in accounting
principle.............. $ 22,182 $ (71,722) $ (1,926) $(51,466)
======== ========= ======== ========
</TABLE>
Racal Telecom Pro Forma
Unaudited Pro Forma Condensed Combined Statement of Operations
For the year ended December 31, 1998
(in thousands)
<TABLE>
<CAPTION>
US GAAP and
BV Acquisition Accounting Racal
and Carve-Out Policy Telecom
Historical(a) Adjustments Adjustments(d) Pro Forma
------------- -------------- -------------- ---------
<S> <C> <C> <C> <C>
Operating Revenues $489,299 $(162,277)(c) $ (496) $327,199
673 (b)
-------- --------- ------- --------
Operating Expenses:
Operating, selling,
general and
administrative ....... 413,617 (124,687)(c) 7,298 296,723
495 (b)
Depreciation and
amortization.......... 73,376 (14,541)(c) (3,869) 54,999
33 (b)
-------- --------- ------- --------
486,993 (138,700) 3,429 351,722
-------- --------- ------- --------
Operating income
(loss)................. 2,306 (22,904) (3,925) (24,523)
Equity in income (loss)
of affiliates.......... (253) -- -- (253)
Other income (expense):
Interest expense....... (35,983) (14)(b) 40 (35,957)
Interest income........ 291 5,062 (c) -- 5,353
Other income
(expense)............. 369 -- -- 369
-------- --------- ------- --------
Income (loss) before
taxes, extraordinary
item and cumulative
effect of changes in
accounting principle... (33,270) (17,856) (3,885) (55,011)
(Provision) benefit for
income taxes.......... 3,946 6,053 (c) 7,025 16,954
(70)(b)
-------- --------- ------- --------
Income (loss) before
extraordinary item and
cumulative effect of
changes in accounting
principle.............. $(29,324) $ (11,873) $ 3,140 $(38,057)
======== ========= ======= ========
</TABLE>
(a) This column represents the combined historical results of operations
and financial position of Racal Telecommunications Limited, Racal
Telecommunications Networks Limited, Racal Internet Services Limited
and Racal Telecommunications Inc., which we refer to as "Racal
Telecom", in accordance with United Kingdom GAAP translated into
United States dollars. With
25
<PAGE>
respect to the information included in the Unaudited Pro Forma Condensed
Combined Balance Sheet as of September 30, 1999, the Racal Telecom
information is as of October 15, 1999. With respect to the information
included in the Unaudited Pro Forma Condensed Combined Statement of
Operations for the year ended December 31, 1998, the Racal Telecom
information is for the year ended March 31, 1999. With respect to the
information included in the Unaudited Pro Forma Condensed Combined
Statement of Operations for the nine months ended September 30, 1999,
the Racal Telecom information is for the 41 weeks ended October 15,
1999.
(b) During 1999, Racal Network Services BV was acquired by Racal
Telecommunications Networks Limited. These adjustments reflect the
financial position and results of operations of Racal Network Services
BV as if this transaction had been completed as of the dates or at the
beginning of the periods presented.
(c) In July 1999, the Racal Telecom business was separated into three
divisions: Racal Telecom, Racal Translink and Racal Fieldforce. On
October 1, 1999, the Racal Translink and Racal Fieldforce businesses
were sold to another company within the Racal Electronics plc group.
This adjustment eliminates the results of operations of Racal
Translink and Racal Fieldforce, reflects the likely effect of the
trading among Racal Translink, Racal Fieldforce and Racal Telecom
based on contractual obligations among the divisions and adjusts the
profit on disposal of these operations. No taxation liabilities were
incurred on the disposal as this disposal was to another Racal
Electronics plc group company.
(d) The Racal Telecom combined financial statements are prepared in
accordance with United Kingdom GAAP which differ in certain material
respects from United States GAAP. The differences that are material
are disclosed in the notes to the combined financial statements,
incorporated by reference. In addition, an adjustment has been made to
treat sales of dark fiber made by Racal Telecom after July 1, 1999 as
operating leases, recognizing income over the period of the service
provision in accordance with the provision of FASB Interpretation No
43.
(4) These adjustments reflect the elimination of Racal Telecom's shareholders'
equity accounts, the excess consideration over the net assets acquired
(goodwill) and the related amortization expense. The preliminary goodwill
has been calculated as follows (in thousands):
<TABLE>
<S> <C> <C>
Total purchase price........................................ $1,650,000
Global Crossing Ltd. transaction costs...................... 18,500
----------
Total consideration......................................... 1,668,500
Less: Historical Racal Telecom net assets at October 15,
1999....................................................... 105,643
----------
Preliminary goodwill........................................ $1,562,857
==========
</TABLE>
Global Crossing Ltd. paid (Pounds)1 billion, approximately $1.65 billion,
in connection with the transaction. Global Crossing Ltd. partially financed
the acquisition of Racal Telecom through the incurrence of debt in the
amount of (Pounds)675 million, approximately $1.1 billion, with an interest
rate of approximately 9%. In connection with the issuance of this debt,
Racal incurred $29.8 million in financing fees. Global Crossing Ltd. has
tentatively considered the carrying value of the acquired assets to
approximate fair value, with all excess of those acquisition costs being
attributable to goodwill. Global Crossing Ltd. is in the process of fully
evaluating the assets to be acquired and, as a result, the purchase price
allocation among the tangible and intangible assets acquired, and their
related useful lives, may change. Global Crossing Ltd. currently
anticipates that goodwill associated with the transaction will be amortized
over a 25-year life.
(5) On November 15, 1999, Global Crossing Ltd. entered into an agreement with
Hutchison Whampoa Limited to form a joint venture to be called Hutchison
Global Crossing. This joint venture will be owned in equal parts by Global
Crossing Ltd. and Hutchison. In exchange for its 50% interest, Hutchison
agreed to contribute to the joint venture its existing building-to-
building fixed-line telecommunications network in Hong Kong and certain
Internet-related assets currently held by Hutchison Telecommunications
Limited. In exchange for Global Crossing Ltd.'s 50% interest, Global
Crossing Ltd. will contribute to the joint venture international
telecommunications capacity rights on its network and know-how related to
Internet data centers valued at $350 million and $50 million in cash. In
addition, Global Crossing Ltd. will issue to Hutchison $400 million
aggregate liquidation preference of its 6 3/8% cumulative convertible
preferred stock, series B, convertible into its common stock. The
Hutchison Global Crossing joint venture is anticipated to be accounted for
as an unconsolidated joint venture under the equity method of accounting.
26
<PAGE>
<TABLE>
<S> <C> <C>
Total Consideration
Cash contributed................................... $ 50,000
6 3/8% Cumulative Convertible Preferred Stock,
Series B.......................................... 400,000
Estimated cost of capacity contributed............. 83,800
Global Crossing Ltd. transaction costs............. 5,000
--------
Total consideration.................................. 538,800
Less:Historical net tangible book value of HCL
Holdings:
Historical HCL Holdings net liabilities at
September 30, 1999................................. $(148,395)
Cash contributed................................... 50,000
Cost of capacity contributed....................... 83,800
---------
Adjusted net tangible book value................... (14,595)
50% ownership interest............................. 7,297
---------
(7,298)
--------
Total Goodwill....................................... $546,098
========
</TABLE>
Global Crossing Ltd. has tentatively considered the carrying value of the
acquired assets to approximate their fair value, with all of the excess of
those acquisition costs being attributable to goodwill. Global Crossing
Ltd. is in the process of fully evaluating the assets to be acquired and,
as a result, the purchase price allocation among the tangible and
intangible assets acquired and their useful lives may change. Global
Crossing Ltd. currently anticipates that goodwill associated with the
merger will be amortized over a 25-year life.
These adjustments also include the assumed equity in the results of
operations of Hutchison Global Crossing for the nine months ended September
30, 1999 and the twelve months ended December 31, 1998.
(6) This column represents the historical results of operations for the nine
months ended September 30, 1999 including the results of Global Marine
Systems operations for the three months ended September 30, 1999.
(7) These columns represent the historical results of operations. With
respect to the information included in the Unaudited Pro Forma Condensed
Combined Statement of Operations for the year ended December 31, 1998,
the Global Marine Systems information is for the fiscal year ended March
31, 1999. For the nine months ended September 30, 1999, the results of
operations include Global Marine Systems for the six months ended June
30, 1999.
(8) These adjustments reflect the amortization expense of the excess
consideration over the net assets acquired (goodwill). The preliminary
goodwill has been estimated to be approximately $622 million. Global
Crossing Ltd. has tentatively considered the carrying value of the
acquired assets to approximate fair value, with all excess of those
acquisition costs being attributable to goodwill. Global Crossing Ltd. is
in the process of fully evaluating the assets acquired and, as a result,
the purchase price allocation among the tangible and intangible assets
acquired and their useful lives may change. Global Crossing Ltd.
currently anticipates that goodwill associated with the transaction will
be amortized over a 25-year life. Based upon a preliminary valuation,
Global Crossing Ltd. estimates that the purchase price allocation among
the tangible and intangible assets will result in a composite useful life
of approximately 22 years.
(9) This amount reflects the assumed interest expense, at an 8% interest
rate, incurred on the $600 million debt assumed issued as of the earliest
date presented in connection with the acquisition of Global Marine
Systems.
(10) These adjustments represent the tax benefit resulting from the interest
expense assumed in connection with the debt issued for the acquisition of
Global Marine Systems.
(11) These adjustments assume Frontier's stock related expenses would not have
been incurred had the merger occurred at the earliest date presented.
(12) These adjustments reflect the amortization expense of the excess
consideration over the net assets acquired (goodwill). The preliminary
goodwill has been estimated to be approximately $7.8 billion.
27
<PAGE>
Global Crossing Ltd. has tentatively considered the carrying value of the
acquired assets to approximate their fair value, with all of the excess of
those acquisition costs being attributable to goodwill. Global Crossing Ltd.
is in the process of fully evaluating the assets to be acquired and, as a
result, the purchase price allocation among the tangible and intangible
assets acquired and their related useful lives may change. Global Crossing
Ltd. currently anticipates that goodwill associated with the merger will be
amortized over a 25-year life. Based upon a preliminary valuation, Global
Crossing Ltd. estimates that the purchase price allocation among the tangible
and intangible assets will result in a composite useful life of approximately
20 years.
(13) This adjustment assumes that Frontier's preferred stock dividends would
not have been incurred, as Frontier's preferred stock would have been
redeemed as of the earliest date presented.
(14) These adjustments represent the redemption of Frontier's 5.00%, second
5.00%, 5.65%, 4.60% and the Ausable 5 1/2% Series redeemable preferred
stock before completion of the merger at their respective premiums of the
total amount outstanding. The preferred stock was redeemed on July 1,
1999.
(15) To eliminate diluted earnings adjustment due to the combined net loss
position.
(16) These adjustments reflect (1) the reversal of historical interest expense
incurred on debt replaced by the senior credit facility and the
outstanding notes; (2) the reversal of the pro forma interest expense and
related tax benefit incurred on the $600 million debt assumed issued in
connection with the acquisition of Global Marine Systems; and (3) the
assumed interest expense incurred on the outstanding notes and the senior
credit facility, including the amortization of deferred financing fees
each assumed issued at the earliest date presented.
(17) These adjustments represent the assumed preferred stock dividends
incurred relating to the 6 3/8% cumulative convertible preferred stock
and 7% cumulative convertible preferred stock assumed issued as of the
earliest date presented.
(18) This amount reflects the assumed interest expense, at a 9% interest rate,
including the amortization of deferred financing fees incurred on the
$1.1 billion debt assumed issued as of the earliest date presented in
connection with the acquisition of Racal Telecom.
(19) These adjustments represent the tax benefit resulting from the interest
expense assumed in connection with the debt issued for the acquisition of
Racal Telecom.
(20) Pro forma per share data are based on the number of Global Crossing
common shares that would have been outstanding had the merger occurred at
the earliest date presented. Global Crossing Ltd. issued 355,181,000
shares in connection with the Frontier merger.
28
<PAGE>
RISK FACTORS
Before you participate in the exchange offer, you should carefully consider
the risks described below and the other information included or incorporated
by reference in this prospectus.
Risk Factors Relating to the Exchange Offer
If you fail to tender your outstanding notes in the exchange offer, then
the liquidity of the market for your notes may be substantially limited.
We expect that a substantial portion of the outstanding notes will be
tendered and accepted in the exchange offer and exchanged for exchange notes.
When the exchange offer is completed, the amount of outstanding notes will be
reduced by the amount of exchange notes that we will issue. Accordingly, we
expect that the liquidity of the market for the outstanding notes after the
exchange offer is completed will be substantially limited.
If you fail to exchange your outstanding notes in the exchange offer, your
outstanding notes will continue to be subject to transfer restrictions.
If you do not exchange your outstanding notes for exchange notes in the
exchange offer, your outstanding notes will continue to be subject to the
transfer restrictions outlined in the offering memorandum distributed in
connection with the offering of the outstanding notes. In general, the
outstanding notes may not be offered or sold unless they are registered or
exempt from registration under the Securities Act and applicable state
securities laws. Except as required by the registration rights agreement, we
do not intend to register resales of the outstanding notes under the
Securities Act.
Risk Factors Relating to the Exchange Notes
The exchange notes will be effectively subordinated to our secured
obligations and to all indebtedness of our subsidiaries.
The exchange notes will be effectively subordinated in right of payment to
all of our secured debt to the extent of the value of the assets securing that
debt. As of September 30, 1999, after giving effect to (1) the offering of the
outstanding notes and the use of proceeds of that offering, (2) the offering
of the 6 3/8% cumulative convertible preferred stock of Global Crossing Ltd.
completed on November 5, 1999, (3) the offering of the 7% cumulative
convertible preferred stock of Global Crossing Ltd. completed on December 15,
1999, (4) the offering of the 6 3/8% cumulative convertible preferred stock,
series B, of Global Crossing Ltd. in connection with the Hutchison Global
Crossing joint venture and (5) the Racal Telecom acquisition and the related
issuance of $1.1 billion of long-term indebtedness, we had $5,474 million of
long-term debt outstanding, of which $603 million would have been secured.
We are a holding company, and our subsidiaries conduct all of our
operations and own all of our operating assets. We have no significant assets
other than the stock in our subsidiaries. As a result, the exchange notes will
be effectively subordinated to all indebtedness and other liabilities of our
subsidiaries, including trade payables and lease obligations. Our ability to
make required payments on the exchange notes depends on the performance of our
subsidiaries and their ability to distribute funds to us. The ability of our
subsidiaries to make distributions to us may be restricted by, among other
things, credit facilities and other laws and regulations. Under credit
facilities, we may be required to establish cash reserves for the future
payment of principal and interest on the amounts outstanding under the credit
facilities. If we are unable to obtain the funds necessary to pay the
principal amount at maturity of the exchange notes, to redeem the exchange
notes or to repurchase the exchange notes upon the occurrence of a change of
control, we may be required to adopt one or more alternatives, such as a
refinancing of the exchange notes. We cannot assure you that we would be able
to refinance the exchange notes.
We are subject to restrictive covenants.
Covenants in the exchange notes and our other debt limit our ability, among
other things:
. to incur debt;
29
<PAGE>
. to pay dividends and make distributions on capital stock;
. to make investments;
. to enter into new businesses;
. to merge, consolidate or dispose of assets; and
. to enter into transactions with affiliates.
Complying with these covenants may cause us to take actions that we
otherwise would not take or not take actions that we otherwise would take. For
example, these covenants may restrict us from financing capital expenditures
with debt. Our failure to comply with these covenants, including with respect
to the exchange notes, would cause a default, which, if not waived, could
result in the debt, including the exchange notes, becoming immediately due and
payable. In this event, we may not be able to repay or refinance the debt on
terms that are acceptable to us or at all.
We may not be able to fund a change of control offer.
If we become subject to a change of control, we will be required, subject
to a number of conditions, to offer to purchase all outstanding exchange notes
at a price equal to 101% of the principal amount of the exchange notes, plus
any accrued and unpaid interest to the date of purchase. If a change of
control were to occur today, we would not have sufficient funds available to
purchase all of the outstanding exchange notes were they tendered in response
to an offer made as a result of a change of control. We cannot assure you that
we will have sufficient funds available or that we will be permitted by our
other debt instruments to fulfill these obligations upon a change of control
in the future.
Our other debt contains cross-defaults that could hinder our ability to
repay the exchange notes.
Substantially all of our debt, including the exchange notes, contains
cross-defaults that permit the acceleration of our debt upon the acceleration
of, or in some cases upon the occurrence of an event that would permit the
acceleration of, debt in excess of specified amounts. If any cross-defaults
occurred, substantially all of our debt could be subject to acceleration, in
which case we almost certainly would be unable to repay the exchange notes. To
the extent any other debt is secured, that other debt would be effectively
senior to the exchange notes.
Your ability to transfer the exchange notes may be limited by the absence
of a trading market.
The exchange notes will be new securities for which currently there is no
trading market. We do not currently intend to apply for listing of the
exchange notes on any securities exchange or stock market. The liquidity of
any market for the exchange notes will depend on the number of holders of
those exchange notes, the interest of securities dealers in making a market in
those exchange notes and other factors. Accordingly, we cannot assure you as
to the development or liquidity of any market for the exchange notes.
Historically, the market for noninvestment grade debt has been subject to
disruptions that have caused substantial volatility in the prices of
securities similar to the exchange notes. We cannot assure you that the
market, if any, for the exchange notes will be free from similar disruptions.
Any market disruptions may adversely affect the holders of the exchange notes.
Fraudulent conveyance considerations may cause the exchange notes to be
voided or subordinated to all our other debts.
Under applicable provisions of United States federal bankruptcy law or
comparable provisions of state fraudulent transfer law, if, among other
things, we, at the time we incurred the indebtedness evidenced by the exchange
notes,
. (a) were or were rendered insolvent by reason of the incurrence of that
indebtedness, (b) were engaged in a business or transaction for which
the assets remaining with us constituted unreasonably small capital or
(c) intended to incur, or believed that we could incur, debts beyond our
ability to pay those debts as they mature; and
30
<PAGE>
. received less than reasonably equivalent value or fair consideration for
the incurrence of that indebtedness,
then the exchange notes and any pledge or other security interest securing that
indebtedness could be voided or claims in respect of the exchange notes could
be subordinated to all our other debts.
Similarly, under applicable provisions of the Companies Act 1981 of Bermuda,
if at any time within six months after we incurred the indebtedness evidenced
by the exchange notes, a winding up of us begins in circumstances in which the
issue of the exchange notes would be deemed to be a fraudulent preference
within the meaning of that Companies Act, then the exchange notes and any
pledge or other security interest securing that indebtedness could be voided or
claims in respect of the exchange notes could be subordinated to all our other
debts.
Similar provisions as outlined in the paragraphs above may also apply to our
parent company's obligation to guarantee the exchange notes. In addition, the
payment of interest and principal by us under the exchange notes or the payment
of amounts by our parent company under the guarantee of the exchange notes
could be voided and required to be returned to the person making those payments
or to a fund for the benefit of our creditors or the creditors of our parent
company.
The 2006 exchange notes will be treated as having been issued with original
issue discount.
The 2006 exchange notes will be treated as having been issued with original
issue discount for United States federal income tax purposes. Consequently, if
you hold these exchange notes, you generally will be required to include
amounts in gross income for United States federal income tax purposes in
advance of the receipt of cash attributable to that income. See "Certain Income
Tax Consequences--Taxation of Noteholders --United States Federal Income Tax
Considerations" on page 90 for a more detailed discussion of the United States
federal income tax consequences to you resulting from the purchase, ownership
and disposition of the exchange notes.
Risk Factors Relating to Our Business
You should consider carefully the risk factors described below and in all
the documents that we incorporate by reference in this prospectus and are
listed under "Incorporation by Reference" on page ii. In particular, you should
consider carefully the risk factors described on pages 20-21 of Item I of
Frontier's annual report on Form 10-K for the year ended December 31, 1998.
We cannot assure you of the successful integration of the business of
Frontier, Racal Telecom or other newly acquired businesses. We cannot assure
you that the expected benefits will be achieved.
Achieving the benefits of the acquisition of Frontier, Racal Telecom or any
other businesses by Global Crossing Ltd. will depend in part on the integration
of those businesses with our business in an efficient manner. We cannot assure
you that this will happen or that it will happen in a timely manner. Global
Crossing Ltd. has not previously had significant experience integrating the
operations of acquired companies. The consolidation of operations will require
substantial attention from management. The diversion of management attention
and any difficulties encountered in the transition and integration process
could have a material adverse effect on the revenues, levels of expenses and
operating results of the combined company. We cannot assure you that the
combined company will realize any of the anticipated benefits of any such
acquisition.
Because Global Crossing Ltd. has a limited operating history, it may be
difficult to evaluate its business.
Although Frontier and Global Marine Systems, which are part of the
restricted group with respect to the exchange notes, and Racal Telecom have a
long operating history, our parent company, Global Crossing Ltd., was organized
in March 1997 and has a limited operating history. Its financial information
relates principally to
31
<PAGE>
a period in which we were constructing and developing the Atlantic Crossing
system and, until May 1998, had minimal revenues and operating costs. Despite
recognizing approximately $1,048 million in revenues, Global Crossing Ltd. has
incurred a net loss applicable to common shareholders of approximately $59.8
million for the period from March 19, 1997, its date of inception, through
September 30, 1999, due primarily to the termination of some advisory services
agreements, the incurrence of stock-related expense, the extraordinary loss on
the retirement of some senior notes, preferred stock dividends and the
redemption of some preferred stock, as partially offset by the U S WEST
termination fee. Global Crossing Ltd. has financed its net losses, debt
service, capital expenditures and other cash needs to date through operations,
the proceeds of sales of common stock, mandatorily redeemable preferred stock
and cumulative convertible preferred stock and the issuance of debt. Global
Crossing Ltd. will require substantial additional capital in order to carry
out its business plan.
We have substantial leverage which may limit our ability to comply with the
terms of our indebtedness and may restrict our ability to operate.
Our significant indebtedness could adversely affect us by leaving us with
insufficient cash to fund operations and impairing our ability to obtain
additional financing. The amount of our debt could have important consequences
for our future, including, among other things:
. cash from operations may be insufficient to meet the principal and interest
on our indebtedness as it becomes due;
. payments of principal and interest on borrowings may leave us with
insufficient cash resources for our operations; and
. restrictive debt covenants may impair our ability to obtain additional
financing.
We have incurred a high level of debt. As of September 30, 1999, on a pro
forma basis giving effect to (1) the offering of the outstanding notes and the
application of the proceeds from that offering, (2) the offering of the 6 3/8%
cumulative convertible preferred stock of Global Crossing Ltd. completed on
November 5, 1999, (3) the offering of the 7% cumulative convertible preferred
stock of Global Crossing Ltd. completed on December 15, 1999, (4) the offering
of the 6 3/8% cumulative convertible preferred stock, series B, of Global
Crossing Ltd. in connection with the Hutchison Global Crossing joint venture
and (5) the Racal Telecom acquisition and the related issuance of $1.1 billion
of long-term indebtedness, we and our consolidated subsidiaries had a total of
$7,848 million of total liabilities, including approximately $3,368 million in
senior indebtedness, of which $603 million was secured. We also have
mandatorily redeemable preferred stock outstanding with a face value of $500
million. In addition, our Pacific Crossing joint venture entered into an $850
million non-recourse credit facility, under which it had incurred $657 million
of indebtedness as of September 30, 1999.
Our ability to repay our debt depends upon a number of factors, many of which
are beyond our control. In addition, we rely on dividends, loan repayments and
other intercompany cash flows from our subsidiaries to repay our obligations.
Our operating subsidiaries have entered into a senior secured corporate credit
facility. Accordingly, the payment of dividends from these operating
subsidiaries and the making and repayments of loans and advances are subject
to statutory, contractual and other restrictions.
In addition, if we are unable to generate sufficient cash flow to meet our
debt service requirements, we may have to renegotiate the terms of our long-
term debt. We cannot assure you that we would be able to renegotiate
successfully those terms or refinance our indebtedness when required or that
satisfactory terms of any refinancing would be available. If we were not able
to refinance our indebtedness or obtain new financing under these
circumstances, we would have to consider other options, such as:
. sales of some assets to meet our debt service obligations;
. sales of equity;
. negotiations with our lenders to restructure applicable indebtedness; or
. other options available to us under applicable law.
32
<PAGE>
We may encounter difficulties in completing our cable systems.
We may encounter difficulties in completing our cable systems. Our ability
to achieve our strategic objectives will depend in large part upon the
successful, timely and cost-effective completion of our planned cable systems
as well as on achieving substantial capacity sales on these systems once they
become operational. The construction of our systems will be affected by a
variety of factors, uncertainties and contingencies, many of which are beyond
our control including:
. our ability to manage the construction of our systems effectively;
. our ability to obtain all construction and operating permits and
licenses;
. third-party contractors performing their obligations on schedule; and
. our ability to enter into favorable construction contracts with a
limited number of suppliers.
These factors may significantly delay or prevent completion of one or more
of our systems, which could have a material adverse effect on our business,
financial condition and results of operations.
We cannot assure you that each of our systems will be completed at the cost
and in the time frame currently estimated by us, or even at all. Although we
award contracts for construction of our systems to suppliers who in most cases
are expected to be bound by a fixed-price construction cost schedule and to
provide guarantees in respect of completion dates and system design
specifications, we cannot assure you that the actual construction costs or the
time required to complete these systems will not exceed our current estimates.
These circumstances could have a material adverse effect on our results of
operations or financial condition.
We depend upon the continued success of our sales and marketing
capabilities. If we are unable to effectively sell capacity on our cable
systems, our results of operations will be materially adversely affected.
Our success will depend substantially on sales of capacity on our systems.
Although our sales and marketing efforts have resulted to date in substantial
sales of undersea and terrestrial capacity on our systems, we cannot be certain
that we will continue to be successful in selling capacity or that we will be
able to realize our business plan. Furthermore, even if we realize our plan, we
still may not be able to sustain operating profitability or generate sufficient
cash flow to service our indebtedness.
If we are unable to effectively sell capacity on our cable systems, our
results of operations will be materially adversely affected. Our ability to
achieve our business objectives depends in large part upon our sales and
marketing capabilities. We have assembled a dedicated sales and marketing
force. We depend upon the ability of these employees to effectively market and
sell capacity. We cannot be certain that we will be able to effectively sell
capacity on our cable systems.
Our revenue growth plan depends on product and service expansion.
We intend to grow revenues and profits by:
. upgrading capacity on our planned systems;
. developing additional undersea cable projects;
. developing or purchasing additional terrestrial fiber capacity; and
. introducing new services.
If we are unable to effect these upgrades, develop additional cable
projects, develop or obtain additional terrestrial capacity or introduce new
services, our business, financial condition and results of operations could be
adversely affected.
33
<PAGE>
Some of our capacity purchase contracts require us to obtain governmental
permits. If we fail to obtain those permits, these capacity purchase
contracts may be terminated.
Some of our capacity purchase contracts are terminable under specified
circumstances. Under some capacity purchase agreements for the Atlantic
Crossing system, the customer may terminate the agreement if, among other
things, we do not obtain and hold specified governmental authorizations,
approvals, consents, licenses and permits. Purchase agreements for our other
systems may contain similar provisions. If a substantial number of purchase
agreements are terminated for these or other reasons, our business, financial
condition and results of operations could be materially adversely affected.
We face competition along our routes which may reduce demand for our
systems.
The international telecommunications industry is highly competitive. We
face competition from existing and planned systems along each of our planned
routes. We also compete with satellite providers, including existing
geosynchronous satellites and low- and medium-earth orbit systems now under
construction. We compete primarily on the basis of price, availability,
transmission quality and reliability, customer service and the location of our
systems. Traditionally, carriers have made substantial long-term investments
in ownership of cable capacity. We cannot assure you that we will be able to
compete successfully against systems to which prospective customers have made
long-term commitments. In addition, much of our planned growth is predicated
upon the growth in demand for international telecommunications capacity. We
cannot assure you that this anticipated demand growth will occur.
Our principal shareholders may be able to influence materially the outcome
of shareholder votes.
As of December 31, 1999, Pacific Capital Group had a 11.8% beneficial
ownership interest in our parent company, Global Crossing Ltd. We and our
parent company have entered into various transactions with Pacific Capital
Group and assumed the on-going development of some of its systems from an
affiliate of Pacific Capital Group. Mr. Gary Winnick, chairman of the board of
directors of our parent company, controls Pacific Capital Group and its
subsidiaries. In addition, several of the other officers and directors of
Global Crossing Ltd. are affiliated with Pacific Capital Group. Furthermore,
as of December 31, 1999, Canadian Imperial Bank of Commerce had a 10.9%
beneficial ownership interest in our parent company. Canadian Imperial Bank of
Commerce and its affiliates have acted as underwriter, lender or initial
purchaser in several of our financial transactions in connection with the
development and construction of our systems. Several members of the board of
directors of Global Crossing Ltd. are employees of an affiliate of Canadian
Imperial Bank of Commerce.
As of December 31, 1999, Pacific Capital Group and Canadian Imperial Bank
of Commerce collectively beneficially owned 22.7% of the outstanding shares of
the common stock of our parent company. Accordingly, Pacific Capital Group and
Canadian Imperial Bank of Commerce may be able to influence materially the
outcome of matters submitted to a vote of shareholders of our parent company,
including the election of directors.
Officers and directors own a substantial portion of our parent company and
may have conflicts of interest.
Executive officers and directors of Global Crossing Ltd., our parent
company, have substantial equity interests in Global Crossing Ltd. As of
December 31, 1999, all the directors and executive officers of Global Crossing
Ltd. as a group collectively beneficially owned 40.7% of the outstanding
common stock of Global Crossing Ltd., including shares beneficially owned by
Pacific Capital Group and Canadian Imperial Bank of Commerce. Some of these
individuals have also received amounts from Global Crossing Ltd. due to
advisory services fees paid to Pacific Capital Group and its affiliates.
Some of the directors and executive officers of Global Crossing Ltd. also
serve as officers and directors of other companies. Additionally, some of the
officers and directors of Global Crossing Ltd. are active investors in the
telecommunications industry. Service as a director or officer of Global
Crossing Ltd. and as a director or
34
<PAGE>
officer of another company could create conflicts of interest when the director
or officer is faced with decisions that could have different implications for
Global Crossing Ltd. and the other company. A conflict of interest could also
exist with respect to allocation of time and attention of persons who are
directors or officers of Global Crossing Ltd. and another company. The pursuit
of these other business interests could distract these officers from pursuing
opportunities on behalf of Global Crossing Ltd. These conflicts of interest
could have a material adverse effect on our financial condition.
We may not be successful in completing the transition to an operating
company.
The transition from a development stage company to an operating company
places significant demands on our management and operations. We are in the
process of expanding the management and operational capabilities necessary for
this transition.
Our ability to manage this transition successfully will depend on, among
other things:
. expanding, training and managing our employee base, including
attracting, retaining and motivating highly skilled personnel;
. taking over or outsourcing our customer interface and operations,
administrative and maintenance systems;
. procuring terrestrial capacity to provide connectivity to inland cities;
and
. controlling expenses.
We cannot assure you that we will succeed in developing all or any of these
capabilities, and any failure to do so could have a material adverse effect on
our results of operations. We are growing rapidly in a changing industry. Part
of our strategy is to construct several cable systems in a short time frame in
order to take advantage of the supply and demand imbalance that currently
exists and is projected to exist in the global marketplace. We expect each of
our currently announced systems to be operational between now and 2001. As a
result of this aggressive strategy, we are experiencing rapid expansion and
expect it to continue for the foreseeable future. This growth has increased our
operating complexity. At the same time, the international telecommunications
industry is changing rapidly due to, among other things:
. the easing of regulatory constraints;
. the privatization of established carriers;
. the expansion of telecommunications infrastructure;
. the globalization of the world's economies; and
. the changing technology for wired, wireless and satellite communication.
We cannot assure you that we will succeed in adapting to the rapid changes
in the international telecommunications industry.
We face price declines that could adversely affect our business.
Advances in fiber optic technology have resulted in significant per circuit
price declines in the fiber optic cable transmission industry. Recent changes
in technology caused prices for circuits to go down even further. If there is
less demand than we project or a bigger drop in prices per circuit than we
project, there could be a material adverse effect on our business, financial
condition and results of operations. We cannot assure you, even if our
projections with respect to those factors are realized, that we will be able to
implement our strategy or that our strategy will be successful in the rapidly
evolving telecommunications market.
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<PAGE>
We confront several system operational risks that could affect our
operations.
Each of our systems will be subject to the risks inherent in a large-scale,
complex fiber optic telecommunications system. The operation, administration,
maintenance and repair of these systems requires the coordination and
integration of sophisticated and highly specialized hardware and software
technologies and equipment located throughout the world. We cannot assure you
that, even if built to specifications, our systems will function as expected
in a cost-effective manner. The failure of the hardware or software to
function as required could render a cable system unable to perform at design
specifications.
Each of our systems either has or is expected to have a design life of
generally 25 years; however, we cannot assure you of the actual useful life of
any of these systems. A number of factors will affect the useful life of each
of our systems, including, among other things:
. quality of construction;
. unexpected damage or deterioration; and
. technological or economic obsolescence.
Failure of any of our systems to operate for its full design life could
have a material adverse effect on our business, financial condition and
results of operations.
Our success depends on our ability to maintain, hire and successfully
integrate key personnel.
Our future success depends on the skills, experience and efforts of our
officers and key technical and sales employees. In particular, our senior
management has significant experience in the telecommunications and Internet
industries, and the loss of any of them could negatively affect our ability to
execute our business strategy. In addition, we cannot assure you that we will
be able to integrate new management into our existing operations. Competition
for these individuals is intense, and we may not be able to attract, motivate
and retain highly skilled qualified personnel. We do not have "key person"
life insurance policies covering any of our employees.
We face risks associated with international operations.
Because we will derive substantial revenues from international operations
and intend to have substantial physical assets in several jurisdictions along
the routes of our planned systems, our business is subject to risks inherent
in international operations, including:
. political and economic conditions;
. unexpected changes in regulatory environments;
. exposure to different legal standards; and
. difficulties in staffing and managing operations.
We have not experienced any material adverse effects with respect to our
foreign operations arising from these factors. However, problems associated
with these risks could arise in the future. Finally, managing operations in
multiple jurisdictions may place further strain on our ability to manage our
overall growth.
We depend on a number of governmental licenses and permits. If we fail to
obtain or maintain those licenses and permits, we may not be able to
conduct our business.
We will, in the ordinary course of development, construction and operation
of our fiber optic cable systems, be required to obtain and maintain various
permits, licenses and other authorizations in both the United States and in
international jurisdictions where our cables land and exist.
. Undersea cable landing or similar licenses will be required in many of
the jurisdictions where our systems will land and exist. These licenses
are typically issued for a term of years, subject to renewal.
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<PAGE>
Moreover, the licenses may subject our business and operations to
varying forms of regulation, which could change over time. If we fail to
obtain or renew a license or if there is a material change in the nature
of the regulation to which we are subject, there could be a material
adverse effect on our business, financial condition and results of
operations.
. We must obtain construction and operating licenses during the
construction phase of each of our cable systems. Although we intend that
the construction contracts for each of our undersea cable systems impose
the burden of acquiring and maintaining construction licenses and
permits on the contractor for each of these systems, we cannot assure
you that the contractors will successfully obtain all permits and
licenses. If we or any contractor fail to obtain or maintain any
construction or operating permit or license, there could be a material
adverse effect on our business, financial condition and results of
operations.
We depend on third parties for many functions. If the services of those
third parties are not available to us, we may not be able to conduct our
business.
We depend and will continue to depend upon third parties to:
. construct some of our systems and provide equipment and maintenance;
. provide access to a number of origination and termination points of our
systems in various jurisdictions;
. construct and operate landing stations in a number of those
jurisdictions;
. acquire rights of way;
. provide terrestrial capacity to our customers through contractual
arrangements; and
. act as joint venture participants with regard to some of our current and
potential future systems.
We cannot assure you that third parties will perform their contractual
obligations or that they will not be subject to political or economic events
which may have a material adverse effect on our business, financial condition
and results of operations. If they fail to perform their obligations, we may
not be able to conduct our business.
We cannot predict our future tax liabilities.
We believe that a significant portion of the income derived from our
undersea systems will not be subject to tax by any of (1) Bermuda, which
currently does not have a corporate income tax, or (2) some other countries in
which we conduct activities or in which our customers are located. However, we
base this belief upon:
. the anticipated nature and conduct of our business, which may change;
and
. our understanding of our position under the tax laws of the various
countries in which we have assets or conduct activities, which position
is subject to review and possible challenge by taxing authorities and to
possible changes in law, which may have retroactive effect.
We cannot predict the amount of tax to which we may become subject and
cannot be certain that any of these factors would not have a material adverse
effect on our business, financial condition and results of operations.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
We have included or incorporated by reference in this prospectus forward-
looking statements that state our own or our management's intentions, beliefs,
expectations or predictions for the future. Forward-looking statements are
subject to a number of risks, assumptions and uncertainties which could cause
our actual results to differ materially from those projected in the forward-
looking statements. These risks, assumptions and uncertainties include:
. the ability to complete systems within the currently estimated time
frames and budgets;
. the ability to compete effectively in a rapidly evolving and price
competitive marketplace;
. changes in the nature of telecommunications regulation in the United
States and other countries;
. changes in business strategy;
. the successful integration of newly acquired businesses;
. the impact of technological change; and
. other risks referenced from time to time in our filings with the SEC.
USE OF PROCEEDS
We will not receive any proceeds from the exchange offer.
38
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS
The following table presents Global Crossing Ltd.'s historical ratios of
earnings to fixed charges and preferred dividends for the periods indicated:
<TABLE>
<CAPTION>
Period From
Nine Months Ended Year Ended March 19, 1997
September 30, December 31, (Date of Inception)
1999 1998 to December 31, 1997
----------------- ------------ --------------------
<S> <C> <C> <C>
Ratio................ 1.94x -- --
Deficiency........... -- $(95,371) $(12,850)
</TABLE>
For the purposes of this computation, earnings are defined as income (loss)
before income taxes plus fixed charges and preferred dividends. Fixed charges
consist of interest expense, including amortization of deferred debt issuance
costs and the interest portion of capital lease obligations, and the portion of
rental expense that is representative of the interest factor, deemed to be one-
third of minimum operating lease rentals.
PRO FORMA RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS
We prepared the following table presenting the pro forma ratios of earnings
to fixed charges and preferred dividends to demonstrate how these ratios of
earnings to fixed charges and preferred dividends might have looked if (1) the
Global Marine Systems acquisition and related financing, (2) the Frontier
acquisition, (3) the Racal Telecom acquisition and related financing, (4) the
Hutchison Global Crossing joint venture, including, the related issuance of the
6 3/8% cumulative convertible preferred stock, series B, of Global Crossing
Ltd., (5) the offering of the 6 3/8% cumulative convertible preferred stock of
Global Crossing Ltd. completed on November 5, 1999, (6) the offering of the
outstanding notes of Global Crossing Holdings completed on November 19, 1999
and the application of the net proceeds of that offering and (7) the offering
of the 7% cumulative convertible preferred stock of Global Crossing Ltd.
completed on December 15, 1999 had been completed at the beginning of the
periods presented.
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, December 31,
1999 1998
----------------- ------------
<S> <C> <C>
Ratio...................................... -- --
Deficiency................................. $(378,153) $(676,349)
</TABLE>
For the purposes of this pro-forma computation, earnings are defined as
income (loss) before income taxes plus fixed charges and preferred dividends.
Fixed charges consist of interest expense, including amortization of deferred
debt issuance costs and the interest portion of capital lease obligations, and
the portion of rental expense that is representative of the interest factor,
deemed to be one-third of minimum operating lease rentals.
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<PAGE>
CAPITALIZATION
The following table presents as of September 30, 1999 (1) Global Crossing
Ltd.'s actual consolidated capitalization and (2) Global Crossing Ltd.'s
capitalization as adjusted to reflect (a) its 6 3/8% cumulative convertible
preferred stock issued on November 5, 1999, (b) the offering of the outstanding
notes and the application of the net proceeds from that offering, (c) its 7%
cumulative convertible preferred stock issued on December 15, 1999, (d) its 6
3/8% cumulative convertible preferred stock, series B, which Global Crossing
Ltd. will issue to Hutchison when the Hutchison Global Crossing joint venture
transaction is completed and (e) the $1.1 billion of long-term indebtedness
issued in connection with the acquisition of Racal Telecom.
You should read this table in conjunction with the "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the
Consolidated Financial Statements and the accompanying notes incorporated by
reference in this prospectus.
<TABLE>
<CAPTION>
As of September 30,
1999
------------------------
Actual As Adjusted
----------- -----------
(in thousands)
<S> <C> <C>
Long-Term Debt:
Senior secured corporate credit facility(1)..... $ 2,083,598 $ 603,000
9 5/8% Senior Notes due 2008.................... 765,342 765,342
9 1/8% Senior Notes due 2006.................... -- 900,000
9 1/2% Senior Notes due 2009.................... -- 1,100,000
Other long-term debt............................ 1,005,315 2,105,315
----------- -----------
Total long-term debt.......................... 3,854,255 5,473,657
----------- -----------
Mandatorily redeemable preferred stock............ 485,647 485,647
----------- -----------
Shareholders' Equity:
6 3/8% Cumulative Convertible Preferred Stock... -- 1,369,000
7% Cumulative Convertible Preferred Stock....... -- 629,750
Common Stock.................................... 7,899 7,899
Treasury Stock.................................. (209,415) (209,415)
Other Shareholders' Equity...................... 9,393,120 9,393,120
Retained Earnings............................... 40,997 10,182
----------- -----------
Total Shareholders' Equity.................... 9,232,601 11,200,536
----------- -----------
Total Capitalization.......................... $13,572,503 $17,159,840
=========== ===========
</TABLE>
- --------
(1) The senior secured corporate credit facility as adjusted for the use of
proceeds of the offering of the outstanding notes will consist of a $1.0
billion revolving credit facility.
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<PAGE>
THE EXCHANGE OFFER
Background of the Exchange Offer
Our parent, Global Crossing Ltd., and we have entered into a registration
rights agreement with the initial purchasers of the outstanding notes. In that
agreement we agreed, under specified circumstances, to file a registration
statement relating to an offer to exchange the outstanding notes for exchange
notes. We also agreed to use our reasonable best efforts to cause the offer to
be consummated within 180 days following the original issue of the outstanding
notes on November 19, 1999. The exchange notes will have terms substantially
identical to the outstanding notes, except that the exchange notes will not
contain terms with respect to transfer restrictions, registration rights and
liquidated damages for failure to observe certain obligations in the
registration rights agreement.
In addition, in the registration rights agreement we agreed that, under the
circumstances outlined below, we will use our reasonable best efforts to cause
the SEC to declare effective a shelf registration statement with respect to the
resale of the outstanding notes and keep the shelf registration statement
effective for up to two years after its effective date. These circumstances
include:
. if applicable law, SEC rules or regulations or any interpretations of
those rules or regulations by the staff of the SEC do not permit us to
effect the exchange offer as contemplated by the registration rights
agreement;
. if any holder of the outstanding notes notifies us within 20 business
days following the consummation of the exchange offer that (1) that
holder is prohibited by law or SEC policy from participating in the
exchange offer or (2) that holder may not resell the exchange notes it
acquires in the exchange offer to the public without delivering a
prospectus and that this prospectus is not appropriate or available for
resales by that holder; or
. that holder is a broker-dealer and holds outstanding notes acquired
directly from us or any of our affiliates.
If we fail to comply with certain obligations under the registration rights
agreement, we will be required to pay special interest to holders of the
outstanding notes. Please read the section captioned "Description of the
Exchange Notes--Exchange Offer; Registration Rights" on page 86 for more
details regarding the registration rights agreement.
Resale of Exchange Notes
Based on interpretations of the SEC staff outlined in no action letters
issued to unrelated third parties, we believe that you may offer to resell,
resell or otherwise transfer exchange notes issued in the exchange offer in
exchange for outstanding notes without compliance with the registration and
prospectus delivery provisions of the Securities Act, if:
. you are not an affiliate of ours within the meaning of Rule 405 under
the Securities Act;
. you acquire the exchange notes in the ordinary course of your business;
and
. you do not intend to participate in the distribution of the exchange
notes.
If you tender outstanding notes in the exchange offer with the intention of
participating in any manner in a distribution of the exchange notes, you:
. cannot rely on the position of the staff of the SEC enunciated in "Exxon
Capital Holdings Corporation" or similar interpretive letters; and
. must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with a secondary resale transaction.
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<PAGE>
You may use this prospectus for an offer to resell, for the resale or for
other transfer of exchange notes only as specifically provided in this
prospectus. With regard to broker-dealers, only broker-dealers that acquired
the outstanding notes as a result of market-making activities or other trading
activities may participate in the exchange offer. Each broker-dealer that
receives exchange notes for its own account in exchange for outstanding notes
that the broker-dealer acquired as a result of market-making activities or
other trading activities must acknowledge that it will deliver a prospectus in
connection with any resale of the exchange notes. Please read the section
captioned "Plan of Distribution" on page 94 for more details regarding the
transfer of exchange notes.
Terms of the Exchange Offer
If you wish to exchange outstanding notes for exchange notes in the exchange
offer, you will be required to make the following representations:
. any exchange notes will be acquired in the ordinary course of your
business;
. you have no arrangement with any person to participate in the
distribution of the exchange notes; and
. you are not an affiliate of ours within the meaning of Rule 405 of the
Securities Act or, if you are an affiliate, you will comply with
applicable registration and prospectus delivery requirements of the
Securities Act.
On the terms and subject to the conditions contained in this prospectus and
in the letter of transmittal, we will accept for exchange any outstanding notes
properly tendered and not withdrawn before the expiration date. We will issue
$1,000 principal amount of exchange notes in exchange for each $1,000 principal
amount of outstanding notes you surrender in the exchange offer. You may tender
outstanding notes only in integral multiples of $1,000.
The form and terms of the exchange notes will be substantially identical to
the form and terms of the outstanding notes, except that the exchange notes
will be registered under the Securities Act, will not bear legends restricting
their transfer and will not provide for any special interest if we fail to
fulfill our obligations under the registration rights agreement to file, and
cause to be effective, a registration statement. The exchange notes will
evidence the same debt as the outstanding notes. We will issue the exchange
notes under the same indenture that authorized the issuance of the outstanding
notes, and the exchange notes will be entitled to the benefits of that
indenture. Consequently, the outstanding notes and the exchange notes with
substantially identical terms will be treated as a single class of debt
securities under that indenture. For a description of the indenture, see
"Description of the Exchange Notes" on page 51.
The exchange offer is not conditioned upon any minimum aggregate principal
amount of outstanding notes being tendered for exchange.
As of the date of this prospectus, $900,000,000 aggregate principal amount
of the outstanding notes due 2006 are outstanding and $1,100,000,000 aggregate
principal amount of the outstanding notes due 2009 are outstanding. This
prospectus and the letter of transmittal are being sent to all registered
holders of outstanding notes. There will be no fixed record date for
determining registered holders of outstanding notes entitled to participate in
the exchange offer.
We intend to conduct the exchange offer in accordance with the provisions of
the registration rights agreement, the applicable requirements of the
Securities Act and the Exchange Act and the rules and regulations of the SEC.
Outstanding notes that are not tendered for exchange in the exchange offer will
remain outstanding and continue to accrue interest and will be entitled to the
rights and benefits their holders have under the indenture relating to the
outstanding notes.
We will be deemed to have accepted for exchange properly tendered
outstanding notes when we have given oral or written notice of the acceptance
to the exchange agent. The exchange agent will act as agent for the tendering
holders for the purposes of receiving the exchange notes from us and delivering
exchange notes to
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<PAGE>
those holders. Subject to the terms of the registration rights agreement, we
expressly reserve the right to amend or terminate the exchange offer, and not
to accept for exchange any outstanding notes not previously accepted for
exchange, upon the occurrence of any of the conditions specified below under
the caption "--Certain Conditions to the Exchange Offer".
Holders who tender outstanding notes in the exchange offer will not be
required to pay brokerage commissions or fees or, subject to the instructions
in the letter of transmittal, transfer taxes with respect to the exchange of
outstanding notes. We will pay all charges and expenses, other than some
applicable taxes described below, in connection with the exchange offer. It is
important that you read the section labeled "--Fees and Expenses" on page 48
for more details regarding fees and expenses incurred in the exchange offer.
Expiration Date; Extensions; Amendments
The exchange offer will expire at 5:00 p.m., New York City time on
, unless we, in our sole discretion, extend it.
In order to extend the exchange offer, we will notify the exchange agent
orally or in writing of any extension. We will notify the registered holders of
outstanding notes of the extension no later than 9:00 a.m., New York City time,
on the business day immediately after the previously scheduled expiration date.
We reserve the right, in our sole discretion:
. to delay accepting for exchange any outstanding notes;
. to extend the exchange offer or to terminate the exchange offer and to
refuse to accept outstanding notes not previously accepted if any of the
conditions outlined below under "--Certain Conditions to the Exchange
Offer" have not been satisfied, by giving oral or written notice of the
delay, extension or termination to the exchange agent; or
. subject to the terms of the registration rights agreement, to amend the
terms of the exchange offer in any manner.
We will follow any delay in acceptance, extension, termination or amendment
of the exchange offer as promptly as practicable by oral or written notice to
the registered holders of outstanding notes. If we amend the exchange offer in
a manner that we determine to constitute a material change, we will promptly
disclose that amendment in a manner reasonably calculated to inform the holders
of outstanding notes of that amendment.
Without limiting the manner in which we may choose to make public
announcements of any delay in acceptance, extension, termination or amendment
of the exchange offer, we will have no obligation to publish, advertise or
otherwise communicate any such public announcement, other than by making a
timely release to a financial news service.
During any extensions, all outstanding notes previously tendered will remain
subject to the exchange offer, and we may accept them for exchange. We will
return any outstanding notes that we do not accept for exchange for any reason
without expense to their tendering holder as promptly as practicable after the
expiration or termination of the exchange offer.
Certain Conditions to the Exchange Offer
Despite any other term of the exchange offer, we will not be required to
accept for exchange, or exchange any exchange notes for, any outstanding notes,
and we may terminate the exchange offer as provided in this prospectus before
accepting any outstanding notes for exchange if, in our reasonable judgment:
. the exchange notes to be received will not be tradable by the holder
without restriction under the Securities Act, the Exchange Act and
without material restrictions under the blue sky or securities laws of
substantially all of the states of the United States;
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<PAGE>
. the exchange offer, or the making of any exchange by a holder of
outstanding notes, would violate applicable law or any applicable
interpretation of the staff of the SEC; or
. any action or proceeding has been instituted or threatened in any court
or by or before any governmental agency with respect to the exchange
offer that, in our judgment, would reasonably be expected to impair our
ability to proceed with the exchange offer.
In addition, we will not be obligated to accept for exchange the outstanding
notes of any holder that has not made to us:
. the representations described in the first paragraph under "--Terms of
the Exchange Offer" on page 42 and "--Procedures for Tendering" below;
and
. other representations as may be reasonably necessary under applicable
SEC rules, regulations or interpretations to make available to that
holder an appropriate form for registration of the exchange notes under
the Securities Act.
These conditions are for our sole benefit, and we may assert them regardless
of the circumstances that may give rise to them or waive them in whole or in
part at any or at various times in our sole discretion. If we fail at any time
to exercise any of the foregoing rights, this failure will not constitute a
waiver of any of those rights. Each of those rights will be deemed an ongoing
right that we may assert at any time or at various times.
In addition, we will not accept for exchange any outstanding notes tendered,
and will not issue exchange notes in exchange for any outstanding notes that
have been tendered, if at that time any stop order will be threatened or in
effect with respect to the registration statement of which this prospectus
constitutes a part or the qualification of the indenture under the Trust
Indenture Act of 1939.
Procedures for Tendering
Only a holder of outstanding notes may tender outstanding notes in the
exchange offer. To tender in the exchange offer, you must:
. complete, sign and date the letter of transmittal, or a facsimile of the
letter of transmittal; have the signature on the letter of transmittal
guaranteed if the letter of transmittal so requires; and mail or deliver
the letter of transmittal or facsimile to the exchange agent before the
expiration date; or
. comply with the DTC's Automated Tender Offer Program procedures
described below.
In addition:
. the exchange agent must receive your outstanding notes along with the
letter of transmittal; or
. the exchange agent must receive, before the expiration date, a timely
confirmation of book-entry transfer of your outstanding notes into the
exchange agent's account at the DTC according to the procedures for
book-entry transfer described below or a properly transmitted agent's
message; or
. you must comply with the guaranteed delivery procedures described on
page 47.
The exchange agent must receive physical delivery of your letter of
transmittal and other required documents at the address indicated under "--
Exchange Agent" on page 48 before the expiration date.
Your tender that is not withdrawn before the expiration date will constitute
an agreement between you and us in accordance with the terms and subject to the
conditions specified in this prospectus and in the letter of transmittal.
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<PAGE>
The method of delivery of outstanding notes, the letter of transmittal and
all other documents required by the exchange agent are at your election and
risk. Rather than mail these items, we recommend that you use an overnight or
hand delivery service. In all cases, you should allow sufficient time to assure
delivery to the exchange agent before the expiration date. You should not send
the letter of transmittal or outstanding notes to us. You may request your
broker, dealer, commercial bank, trust company or other nominee to effect the
above transactions for you.
If you are a beneficial owner whose outstanding notes are registered in the
name of a broker, dealer, commercial bank, trust company or other nominee and
wish to tender, you should contact the registered holder promptly and instruct
it to tender on your behalf. If you wish to tender on your own behalf, you
must, before completing and executing the letter of transmittal and delivering
your outstanding notes, either:
. make appropriate arrangements to register ownership of the outstanding
notes in your name; or
. obtain a properly completed bond power from the registered holder of the
outstanding notes.
The transfer of registered ownership may take considerable time and may not
be completed before the expiration date.
A member firm of a registered national securities exchange or of the
National Association of Securities Dealers, Inc., a commercial bank or trust
company having an office or correspondent in the United States or another
"eligible institution" within the meaning of Rule 17Ad-15 under the Exchange
Act must guarantee signatures on a letter of transmittal or a notice of
withdrawal described below, unless the outstanding notes are tendered:
. by a registered holder who has not completed the box entitled "Special
Issuance Instructions" or "Special Delivery Instructions" on the letter
of transmittal; or
. for the account of an eligible institution.
If the letter of transmittal is signed by a person other than the registered
holder of any outstanding notes listed on the outstanding notes, the
outstanding notes must be endorsed or accompanied by a properly completed bond
power. The bond power must be signed by the registered holder as the registered
holder's name appears on the outstanding notes and an eligible institution must
guarantee the signature on the bond power.
If the letter of transmittal or any outstanding notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, those persons should so indicate when signing. Unless we waive this
condition, those persons should also submit evidence satisfactory to us of
their authority to deliver the letter of transmittal.
The exchange agent and the DTC have confirmed that any financial institution
that is a participant in the DTC's system may use the DTC's Automated Tender
Offer Program to tender. Participants in the program may, instead of physically
completing and signing the letter of transmittal and delivering it to the
exchange agent, transmit their acceptance of the exchange offer electronically.
They may do so by causing the DTC to transfer the outstanding notes to the
exchange agent in accordance with its procedures for transfer. The DTC will
then send an agent's message to the exchange agent. The term "agent's message"
means a message transmitted by the DTC, received by the exchange agent and
forming part of the book-entry confirmation, to the effect that:
. the DTC has received an express acknowledgment from a participant in its
Automated Tender Offer Program that is tendering outstanding notes that
are the subject of the book-entry confirmation;
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. the participant has received and agrees to be bound by the terms of the
letter of transmittal or, in the case of an agent's message relating to
guaranteed delivery, that the participant has received and agrees to be
bound by the applicable notice of guaranteed delivery; and
. the agreement may be enforced against the participant.
We will determine in our sole discretion all questions as to the validity,
form, eligibility, including time of receipt, acceptance of tendered
outstanding notes and withdrawal of tendered outstanding notes. Our
determination will be final and binding. We reserve the absolute right to
reject any outstanding notes not properly tendered or any outstanding notes the
acceptance of which would, in the opinion of our counsel, be unlawful. We also
reserve the right to waive any defects, irregularities or conditions of tender
as to particular outstanding notes. Our interpretation of the terms and
conditions of the exchange offer, including the instructions in the letter of
transmittal, will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of outstanding notes must
be cured within the time that we will determine. Although we intend to notify
you of defects or irregularities with respect to tenders of outstanding notes,
neither we, the exchange agent nor any other person will incur any liability
for failure to give notification. Tenders of outstanding notes will not be
deemed made until any defects or irregularities have been cured or waived.
Any outstanding notes that have been tendered for exchange but that are not
exchanged for any reason will be returned to their holder without cost to the
holder or, in the case of outstanding notes tendered by book-entry transfer
into the exchange agent's account at the DTC according to the procedures
described above, the outstanding notes will be credited to an account
maintained with the DTC for outstanding notes as soon as practicable after
withdrawal, rejection of tender or termination of the exchange offer. Properly
withdrawn outstanding notes may be retendered by following one of the
procedures described under "--Procedures for Tendering" on page 44 at any time
on or before the expiration date.
By signing the letter of transmittal, you, as a tendering holder of
outstanding notes, will represent to us that, among other things:
. any exchange notes that you receive will be acquired in the ordinary
course of your business;
. you have no arrangement or understanding with any person or entity to
participate in the distribution of the exchange notes;
. if you are not a broker-dealer, that you are not engaged in and do not
intend to engage in the distribution of the exchange notes;
. if you are a broker-dealer that will receive exchange notes for your own
account in exchange for outstanding notes that were acquired as a result
of market-making or other trading activities, that you will deliver a
prospectus, as required by law, in connection with any resale of those
exchange notes; and
. you are not an "affiliate" of ours within the meaning of Rule 405 of the
Securities Act or, if you are an affiliate, you will comply with any
applicable registration and prospectus delivery requirements of the
Securities Act.
Book-Entry Transfer
The exchange agent will make a request to establish an account with respect
to the outstanding notes at the DTC for purposes of the exchange offer promptly
after the date of this prospectus; and any financial institution participating
in the DTC's system may make book-entry delivery of outstanding notes by
causing the DTC to transfer the outstanding notes into the exchange agent's
account at the DTC in accordance with the DTC's procedures for transfer.
Holders of outstanding notes who are unable to deliver confirmation of the
book-entry
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<PAGE>
tender of their outstanding notes into the exchange agent's account at the DTC
or all other documents required by the letter of transmittal to the exchange
agent on or before the expiration date must tender their outstanding notes
according to the guaranteed delivery procedures described below.
Guaranteed Delivery Procedures
If you wish to tender your outstanding notes, but your outstanding notes are
not immediately available or you cannot deliver your outstanding notes, the
letter of transmittal or any other required documents to the exchange agent or
comply with the applicable procedures under the DTC's Automated Tender Offer
Program before the expiration date, you may tender if:
. you make the tender through an eligible institution;
. before the expiration date, the exchange agent receives from the
eligible institution either a properly completed and duly executed
notice of guaranteed delivery, by facsimile transmission, mail or hand
delivery, or a properly transmitted agent's message and notice of
guaranteed delivery:
. indicating your name and address, the registered number(s) of the
outstanding notes and the principal amount of outstanding notes
tendered:
. stating that the tender is being made by those documents; and
. guaranteeing that, within three New York Stock Exchange trading days
after the expiration date, the letter of transmittal or facsimile of
that letter together with the outstanding notes or a book-entry
confirmation and any other documents required by the letter of
transmittal will be deposited by the eligible institution with the
exchange agent; and
. the exchange agent receives the properly completed and executed letter
of transmittal or facsimile of that letter as well as all tendered
outstanding notes in proper form for transfer or a book-entry
confirmation, and all other documents required by the letter of
transmittal, within three New York Stock Exchange trading days after the
expiration date.
Upon request to the exchange agent, a notice of guaranteed delivery will be
sent to holders who wish to tender their outstanding notes according to the
guaranteed delivery procedures outlined above.
Withdrawal of Tenders
Except as otherwise provided in this prospectus, you may withdraw your
tender of outstanding notes at any time before the expiration date.
For a withdrawal to be effective:
. the exchange agent must receive a written note -- which may be by
telegram, telex, facsimile transmission or letter -- of withdrawal at
one of the addresses indicated under "--Exchange Agent" on page 48; or
. you must comply with the appropriate procedures of the DTC's Automated
Tender Offer Program system.
Any notice of withdrawal must:
. specify the name of the person who tendered the outstanding notes to be
withdrawn;
. identify the outstanding notes to be withdrawn, including the principal
amount of the outstanding notes; and
. where certificates for outstanding notes have been transmitted, specify
the name in which the outstanding notes were registered, if different
from that of the withdrawing holder.
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If certificates for outstanding notes have been delivered or otherwise
identified to the exchange agent, then, before the release of those
certificates, the withdrawing holder must also submit;
. the serial numbers of the particular certificates to be withdrawn; and
. a signed notice of withdrawal with signatures guaranteed by an eligible
institution unless the holder is an eligible institution.
If you have tendered outstanding notes under the procedure for book-entry
transfer described above, any notice of withdrawal must specify the name and
number of the account at the DTC to be credited with the withdrawn outstanding
notes and otherwise comply with the procedures of that facility. We will
determine all questions as to the validity, form and eligibility, including
time of receipt, of notices, and our determination will be final and binding on
all parties. We will deem any outstanding notes so withdrawn not to have been
validly tendered for exchange for purposes of the exchange offer.
Exchange Agent
We have appointed United States Trust Company of New York as exchange agent
for the exchange offer. You should direct questions and requests for
assistance, requests for additional copies of this prospectus or of the letter
of transmittal and requests for the notice of guaranteed delivery to the
exchange agent addressed as follows:
For delivery by registered/certified For delivery by hand before 4:30
mail: p.m.:
United States Trust Company of New
York United States Trust Company of
P.O. Box 843 Cooper Station New York
New York, NY 10276 111 Broadway
Attn: Corporate Trust Services New York, NY 10006
For delivery by overnight courier/ Attn: Lower Level Corporate
Trust Window
By facsimile transmission
by hand after 4:30 p.m. on the (for eligible institutions
expiration date: only):
(212) 420-6211
United States Trust Company of New Attn: Customer Service
York Facsimile confirmation: (800)
770 Broadway, 13th Floor 548-6565
New York, NY 10003
Attn: Corporate Trust Operations
Delivery of the letter of transmittal to an address other than as provided
above or transmission via facsimile other than as provided above does not
constitute a valid delivery of the letter of transmittal.
Fees and Expenses
We will bear the expenses of soliciting tenders. The principal solicitation
is being made by mail; however, we may make additional solicitations by
telegraph, telephone or in person by our officers and regular employees and
those of our affiliates.
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to broker-dealers or others soliciting
acceptances of the exchange offer. We will, however, pay the exchange agent
reasonable and customary fees for its services and reimburse it for its related
reasonable out-of-pocket expenses.
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We will pay the cash expenses to be incurred in connection with the exchange
offer. The expenses are estimated in the aggregate to be approximately
$1,500,000. They include:
. SEC registration fees;
. fees and expenses of the exchange agent and trustee;
. accounting and legal fees and printing costs; and
. related fees and expenses.
Transfer Taxes
We will pay all transfer taxes, if any, applicable to the exchange of
outstanding notes under the exchange offer. You, as the tendering holder,
however, will be required to pay any transfer taxes, whether imposed on the
registered holder or any other person, if:
. certificates representing outstanding notes for principal amounts not
tendered or accepted for exchange are to be delivered to, or are to be
issued in the name of, any person other than the registered holder of
outstanding notes tendered;
. tendered outstanding notes are registered in the name of any person
other than the person signing the letter of transmittal; or
. a transfer tax is imposed for any reason other than the exchange of
outstanding notes under the exchange offer.
If you do not submit satisfactory evidence of payment of those taxes with
the letter of transmittal, the amount of those transfer taxes will be billed to
the tendering holder.
Holders who tender their outstanding notes for exchange will not be required
to pay any transfer taxes. However, holders who instruct us to register
exchange notes in the name of, or request that outstanding notes not tendered
or not accepted in the exchange offer be returned to, a person other than the
registered tendering holder will be required to pay any applicable transfer
tax.
Some Adverse Consequences of Failure to Exchange
If you fail to exchange your outstanding notes for exchange notes under the
exchange offer, you will remain subject to the restrictions on transfer of your
outstanding notes. In general, you may not offer or sell the outstanding notes
unless they are registered under the Securities Act, or if the offer or sale is
exempt from registration under the Securities Act and applicable state
securities laws. Except as required by the registration rights agreement, we do
not intend to register resales of the outstanding notes under the Securities
Act. Based on interpretations of the SEC staff, exchange notes issued in the
exchange offer may be offered for resale, resold or otherwise transferred by
their holders, other than any holder that is our "affiliate" within the meaning
of Rule 405 under the Securities Act, without compliance with the registration
and prospectus delivery provisions of the Securities Act, so long as the
holders acquired the exchange notes in the ordinary course of the holders'
business and the holders have no arrangement or understanding with respect to
the distribution of the exchange notes to be acquired in the exchange offer.
Any holder who tenders in the exchange offer for the purpose of participating
in a distribution of the exchange notes:
. could not rely on the applicable interpretations of the SEC; and
. must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with a secondary resale transaction.
The amount of outstanding notes after the exchange offer is complete will be
reduced by the amount of outstanding notes that will be tendered and exchanged
for exchange notes in the exchange offer. We expect that a substantial portion
of the outstanding notes will be tendered and accepted in the exchange offer.
In that case, the trading market for the outstanding notes will be adversely
affected.
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Accounting Treatment
We will record the exchange notes in our accounting records at the same
carrying value as the outstanding notes, which is the aggregate principal
amount, as reflected in our accounting records on the date of exchange.
Accordingly, we will not recognize any gain or loss for accounting purposes in
connection with the exchange offer. We will record the expenses of the exchange
offer as incurred.
Other
Participation in the exchange offer is voluntary, and you should carefully
consider whether to accept. We urge you to consult your financial and tax
advisors in making your own decision on what action to take.
We may in the future seek to acquire untendered outstanding notes in open
market or privately negotiated transactions, through subsequent exchange offers
or otherwise. We have no present plans to acquire any outstanding notes that
are not tendered in the exchange offer or to file a registration statement to
permit resales of any untendered outstanding notes.
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DESCRIPTION OF THE EXCHANGE NOTES
The following is a summary description of the exchange notes, which we refer
to in this section as the "Exchange Notes". This section summarizes all of the
material terms of the Exchange Notes, but it is not complete and is qualified
by reference to all the provisions of the indenture. However, it does provide
an accurate summary of the material terms of the Exchange Notes.
For purposes of this section, the term "Company" refers only to Global
Crossing Holdings Ltd. and not to any of its Subsidiaries or GCL or any of its
Subsidiaries other than Global Crossings Holdings Ltd. In addition, for
purposes of this section, the term "GCL" refers only to Global Crossing Ltd.
and not to any of its Subsidiaries. In this section, we refer to the
outstanding notes as the "Notes". We define other capitalized terms under "--
Certain Definitions" beginning on page 73.
General
The Exchange Notes will be issued under an Indenture, dated as of November
19, 1999 (the "Indenture"), between the Company and United States Trust Company
of New York, as trustee (the "Trustee"). A copy of the Indenture is filed as an
exhibit to the registration statement of which this prospectus is a part. The
terms of the Exchange Notes will include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act. The
Exchange Notes will be subject to all those terms, and we refer Holders of
Exchange Notes to the Indenture and the Trust Indenture Act for a statement of
those terms.
The following summary of the material provisions of the Indenture does not
purport to be complete and is qualified in its entirety by reference to the
Indenture, including the definitions in the Indenture of certain terms used
below. Copies of the form of Indenture and Registration Rights Agreement are
available as provided below under "--Additional Information" on page 73.
As of the date of the Indenture, all of the Company's Subsidiaries will be
Restricted Subsidiaries, except for the PC-1 Subsidiaries, which will be
Unrestricted Subsidiaries. GCL and Frontier are also Restricted Subsidiaries.
Under certain circumstances, the Company will be able to designate existing or
future Subsidiaries as Unrestricted Subsidiaries. Unrestricted Subsidiaries
will not be subject to many of the restrictive covenants contained in the
Indenture. The Company at its election may also designate any other Subsidiary
of GCL or any Subsidiary of Frontier as a Restricted Subsidiary.
Terms of Notes
The Exchange Notes will be general unsecured obligations of the Company and
will rank pari passu in right of payment with all existing and future unsecured
senior Indebtedness of the Company. The Exchange Notes will rank senior in
right of payment to all subordinated Indebtedness of the Company that may be
issued in the future, if any.
The Company conducts substantially all of its operations through its
Subsidiaries and, therefore, the Company is dependent on the cash flow of its
Subsidiaries to meet its obligations, including its obligations with respect to
the Exchange Notes. The Exchange Notes will be effectively subordinated to all
Indebtedness and other liabilities and commitments, including trade payables
and lease obligations, of the Company's Subsidiaries. Any right of the Company
to receive assets of any of its Subsidiaries upon the Subsidiary's liquidation
or reorganization, and the consequent right of the Holders of the Exchange
Notes to participate in those assets, will be effectively subordinated to the
claims of that Subsidiary's creditors, except to the extent that the Company is
itself recognized as a creditor of that Subsidiary, in which case the claims of
the Company would still be subordinate to any security in the assets of that
Subsidiary and any indebtedness of that Subsidiary that is senior to that held
by the Company. As of September 30, 1999, on a pro forma basis after giving
effect to (1) the offering of the outstanding notes and the application of the
net proceeds from that offering, (2) the offering of the 6 3/8% cumulative
convertible preferred stock of Global Crossing Ltd. completed on November 5,
1999, (3) the offering of the 7% cumulative convertible preferred stock of
Global Crossing Ltd. completed on December 15, 1999, (4) the offering of the 6
3/8% cumulative convertible preferred stock, series B, of Global Crossing Ltd.
in connection with the Hutchison Global Crossing joint venture and (5) the
Racal Telecom acquisition, the Company's Subsidiaries would have had
approximately $4,980 million of
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Indebtedness and other liabilities, including trade payables and lease
obligations, outstanding, to which the Exchange Notes would have been
effectively subordinated. See "Risk Factors Relating to the Exchange Notes--The
exchange notes will be effectively subordinated to our secured obligations and
to all indebtedness of our subsidiaries" on page 29.
Principal, Maturity and Interest
The Exchange Notes will be limited in aggregate principal amount to $2.0
billion, consisting of $900.0 million principal amount of 9 1/8% Senior Notes
due 2006 (the "Exchange Notes Due 2006") and $1.1 billion principal amount of 9
1/2% Senior Notes due 2009 (the "Exchange Notes Due 2009").
The Exchange Notes Due 2006 will mature on November 15, 2006. Interest on
the Exchange Notes Due 2006 will accrue at the rate of 9 1/8% per annum and
will be payable semi-annually in arrears on May 15 and November 15, commencing
on May 15, 2000, to Holders of record on the immediately preceding May 1 and
November 1. Interest on the Exchange Notes Due 2006 will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from the date of original issuance. Interest will be computed on the basis of a
360-day year comprised of twelve 30-day months.
The Exchange Notes Due 2009 will mature on November 15, 2009. Interest on
the Exchange Notes Due 2009 will accrue at the rate of 9 1/2% per annum and
will be payable semi-annually in arrears on May 15 and November 15, commencing
on May 15, 2000, to Holders of record on the immediately preceding May 1 and
November 1. Interest on the Exchange Notes Due 2009 will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from the date of original issuance. Interest will be computed on the basis of a
360-day year comprised of twelve 30-day months.
Principal, premium, if any, and interest on the Exchange Notes will be
payable at the office or agency of the Company maintained for that purpose
within the City and State of New York or, at the option of the Company, payment
of interest on the Exchange Notes may be made by check mailed to the Holders of
the Exchange Notes at their respective addresses included in the register of
Holders of Exchange Notes; provided that all payments of principal, premium, if
any, and interest on Exchange Notes the Holders of which have given wire
transfer instructions to the Company will be required to be made by wire
transfer of immediately available funds to the accounts specified by the
Holders of those Exchange Notes. Until otherwise designated by the Company, the
Company's office or agency in New York will be the office of the Trustee
maintained for that purpose. The Exchange Notes will be issued in denominations
of $1,000 and integral multiples of $1,000. The Trustee initially will be
Paying Agent and Registrar under the Indenture, and the Company may act as
Paying Agent or Registrar under the Indenture.
Guarantees
The Company's payment obligations with respect to the Exchange Notes will be
jointly and severally guaranteed (the "Guarantees") by GCL and each other
Person from time to time required to be a Guarantor. See "--Covenants--Future
Guarantees" on page 67. Each of the Guarantors will receive a fee from the
Company as consideration for its Guarantee, and the obligations of each
Guarantor under its Guarantee will be limited so as not to constitute a
fraudulent conveyance under applicable law. See "Risk Factors Relating to the
Exchange Notes--Fraudulent conveyance considerations may cause the exchange
notes to be voided or subordinated to all our other debts" on page 30.
The Indenture will provide that no Guarantor may consolidate with or merge
with or into, whether or not the Guarantor is the surviving Person, another
Person, whether or not affiliated with the Guarantor, unless:
(1) subject to the provisions of the following paragraph, the Person
formed by or surviving any such consolidation or merger, if other than the
Guarantor, assumes all of the obligations of the Guarantor, under a
supplemental indenture in form and substance reasonably satisfactory to the
Trustee, under the Exchange Notes, the Indenture and the registration
rights agreement described in "The Exchange Offer--Background of the
Exchange Offer" on page 41 (the "Registration Rights Agreement"); and
(2) immediately after giving effect to that transaction, no Default or
Event of Default exists.
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The provisions of this covenant will not be applicable to a sale, assignment,
transfer, conveyance or other disposition of assets between or among the
Guarantor and any other Guarantor or the Company or any of its Restricted
Subsidiaries.
The Indenture will provide that, in the event of a sale or other disposition
of all of the assets of any Guarantor, except for GCL, by way of merger,
consolidation or otherwise, or a sale or other disposition of all of the
capital stock of any Guarantor, except for GCL, then that Guarantor, in the
event of a sale or other disposition, by way of such a merger, consolidation or
otherwise, of all of the capital stock of that Guarantor, or the Person
acquiring the property, in the event of a sale or other disposition of all of
the assets of that Guarantor, will be released and relieved of any obligations
under its Guarantee; provided that the Net Proceeds of that sale or other
disposition are applied in accordance with the applicable provisions of the
Indenture. See "--Repurchase at the Option of Holders--Asset Sales" on page 58.
Optional Redemption
Except as provided below and under "--Change of Control Redemption" and "--
Optional Tax Redemption", the Exchange Notes Due 2006 are not redeemable at the
Company's option at any time and the Exchange Notes Due 2009 are not redeemable
at the Company's option before November 15, 2004. Thereafter, the Exchange
Notes Due 2009 are subject to redemption at any time at the option of the
Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices, expressed as percentages of principal amount,
provided below, plus accrued and unpaid interest on the Exchange Notes Due 2009
to the applicable redemption date, if redeemed during the twelve-month period
beginning on November 15 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2004.............................. 104.750%
2005.............................. 103.167%
2006.............................. 101.583%
2007 and thereafter............... 100.000%
</TABLE>
Equity Offering Redemption
Notwithstanding the above, at any time before November 15, 2002, the Company
may, on any one or more occasions, redeem up to 25% of the aggregate principal
amount of the Exchange Notes Due 2009 originally issued under the Indenture at
a redemption price of 109.50% of the principal amount of the Exchange Notes Due
2009, plus accrued and unpaid interest on the Exchange Notes Due 2009 to the
redemption date, with the net cash proceeds received from one or more Equity
Offerings made by the Company or GCL, to the extent the net cash proceeds
received by GCL were contributed to the Company as common equity capital;
provided that at least 75% of the aggregate principal amount of Exchange Notes
Due 2009 originally issued under the Indenture remain outstanding immediately
after the occurrence of the redemption. The Company may make the redemption
upon not less than 30 nor more than 60 days' notice, but in no event more than
90 days after the closing of the related Equity Offering. Notice may be given
before the completion of the related Equity Offering and the redemption may, at
the Company's discretion, be subject to the satisfaction of one or more
conditions precedent, including the completion of the related Equity Offering.
Change of Control Redemption
In addition, (1) at any time before November 15, 2004, the Exchange Notes
Due 2009 may be redeemed at the option of the Company and (2) at any time
before their maturity, the Exchange Notes Due 2006 may be redeemed at the
option of the Company, in each case, in whole but not in part, upon the
occurrence of a Change of Control, upon not less than 30 nor more than 60 days'
prior notice, but in no event may the redemption occur more than 90 days after
the occurrence of the Change of Control, mailed by first-class mail to each
Holder's registered address, at a redemption price equal to 100% of the
principal amount of the Exchange Notes being redeemed plus the relevant
Applicable Premium as of, and accrued and unpaid interest, if any, to the date
of redemption (the "Redemption Date").
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"Applicable Premium" means:
(1) with respect to any Exchange Note Due 2009 on any Redemption Date,
the greater of (a) 1.0% of the principal amount of that Exchange Note or
(b) the excess of (A) the present value at the Redemption Date of the
redemption price of that Exchange Note at November 15, 2004, which
redemption price is provided in the table above, plus all required interest
payments due on that Exchange Note through November 15, 2004, excluding
accrued but unpaid interest, computed using a discount rate equal to the
relevant Treasury Rate plus 50 basis points over (B) the principal amount
of that Exchange Note, if greater; and
(2) with respect to any Exchange Note Due 2006 on any Redemption Date,
the greater of (a) 1.0% of the principal amount of that Exchange Note or
(b) the excess of (A) the present value at the Redemption Date of 100.000%
of the principal amount of that Exchange Note plus all required interest
payments due on that Exchange Note through November 15, 2006, excluding
accrued but unpaid interest, computed using a discount rate equal to the
relevant Treasury Rate plus 50 basis points over (B) the principal amount
of that Exchange Note, if greater.
"Treasury Rate" means:
(1) with respect to the calculation of the Applicable Premium for any
Exchange Note Due 2009 as of any Redemption Date, the yield to maturity as
of the Redemption Date of United States Treasury securities with a constant
maturity -- as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) that has become publicly available at least
two Business Days before the Redemption Date or, if that Statistical
Release is no longer published, any publicly available source of similar
market data -- most nearly equal to the period from the Redemption Date to
November 15, 2004; provided, however, that if the period from the
Redemption Date to November 15, 2004 is less than one year, the weekly
average yield on actually traded United States Treasury securities adjusted
to a constant maturity of one year will be used; and
(2) with respect to the calculation of the Applicable Premium for any
Exchange Note Due 2006 as of any Redemption Date, the yield to maturity as
of the Redemption Date of United States Treasury securities with a constant
maturity -- as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) that has become publicly available at least
two Business Days before the Redemption Date or, if that Statistical
Release is no longer published, any publicly available source of similar
market data -- most nearly equal to the period from the Redemption Date to
November 15, 2006; provided, however, that if the period from the
Redemption Date to November 15, 2006 is less than one year, the weekly
average yield on actually traded United States Treasury securities adjusted
to a constant maturity of one year will be used.
Optional Tax Redemption
The Exchange Notes are subject to redemption at the option of the Company or
a successor corporation at any time, in whole but not in part, upon not less
than 30 nor more than 60 days' notice, at a redemption price equal to the
principal amount of the Exchange Notes, plus accrued and unpaid interest on the
Exchange Notes to the redemption date if, as a result of any change in or
amendment to the laws or any regulations or ruling promulgated under the laws
of:
(1) Bermuda or any political subdivision or governmental authority of
Bermuda or having the power to tax in Bermuda;
(2) any jurisdiction, other than the United States, from or through
which payment on the Exchange Notes is made by the Company or a successor
corporation, or its paying agent in its capacity as such or any political
subdivision or governmental authority of that jurisdiction or having the
power to tax in that jurisdiction; or
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(3) any other jurisdiction, other than the United States, in which the
Company or a successor corporation is organized, or any political
subdivision or governmental authority of that jurisdiction or having the
power to tax in that jurisdiction,
or any change in the official application or interpretation of those laws,
regulations or rulings, or any change in the official application or
interpretation of, or any execution of or amendment to, any treaty or treaties
affecting taxation to which that jurisdiction, or that political subdivision or
taxing authority, is a party (a "Change in Tax Law"), which becomes effective
on or after the date of this prospectus, the Company or a successor corporation
is or would be required on the next succeeding interest payment date to pay
Additional Amounts with respect to the Exchange Notes, as described below under
"--Payment of Additional Amounts", and the payment of the Additional Amounts
cannot be avoided by the use of any reasonable measures available to the
Company or a successor corporation.
In addition, the Exchange Notes are subject to redemption at the option of
the Company at any time, in whole but not in part, upon not less than 30 nor
more than 60 days' notice, at a redemption price equal to the principal amount
of the Exchange Notes, plus accrued and unpaid interest on the Exchange Notes
to the redemption date, if the Person formed by a consolidation or amalgamation
of the Company or into which the Company is merged or to which the Company
conveys, transfers or leases its properties and assets substantially as an
entirety is required, as a consequence of the consolidation, amalgamation,
merger, conveyance, transfer or lease and as a consequence of a Change in Tax
Law occurring after the date of the consolidation, amalgamation, merger,
conveyance, transfer or lease, to pay Additional Amounts in respect of any tax,
assessment or governmental charge imposed on any Holder of Exchange Notes.
Payment of Additional Amounts
If any deduction or withholding for any present or future taxes, assessments
or other governmental charges of:
(1) Bermuda or any political subdivision or governmental authority of
Bermuda or having power to tax in Bermuda;
(2) any jurisdiction, other than the United States, from or through
which payment on the Exchange Notes is made by the Company or a successor
corporation, or its paying agent in its capacity as such or any political
subdivision or governmental authority of that jurisdiction or having the
power to tax in that jurisdiction; or
(3) any other jurisdiction, other than the United States, in which the
Company or a successor corporation is organized, or any political
subdivision or governmental authority of that jurisdiction or having the
power to tax in that jurisdiction
will at any time be required by that jurisdiction, or any such political
subdivision or taxing authority, in respect of any amounts to be paid by the
Company or a successor corporation under the Exchange Notes, the Company or a
successor corporation will pay to each Holder of Exchange Notes as additional
interest, those additional amounts ("Additional Amounts") as may be necessary
in order that the net amounts paid to that holder of those Exchange Notes who,
with respect to any such tax, assessment or other governmental charge, is not
resident in, or a citizen of, that jurisdiction, after that deduction or
withholding, will be not less than the amount specified in those Exchange Notes
to which that Holder is entitled; provided, however, that the Company or a
successor corporation will not be required to make any payment of Additional
Amounts for or on account of:
(a) any tax, assessment or other governmental charge that would not have
been imposed but for (A) the existence of any present or former connection
between that Holder or between a fiduciary, settlor, beneficiary, member or
shareholder of, or possessor of a power over, that Holder, if that Holder
is an estate, trust, partnership, limited liability company or corporation,
and the taxing jurisdiction or any
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political subdivision or territory or possession of the taxing jurisdiction
or area subject to its jurisdiction, including that Holder or the
fiduciary, settlor, beneficiary, member, shareholder or possessor being or
having been a citizen or resident of the taxing jurisdiction or being or
having been present or engaged in a trade or business in the taxing
jurisdiction or having or having had a permanent establishment in the
taxing jurisdiction, (B) the presentation of an Exchange Note, where
presentation is required, for payment on a date more than 30 days after (x)
the date on which that payment became due and payable or (y) the date on
which payment thereof is duly provided for, whichever occurs later, or (C)
the presentation of an Exchange Note for payment in Bermuda or any
political subdivision of Bermuda, unless that Exchange Note could not have
been presented for payment elsewhere;
(b) any estate, inheritance, gift, sales, transfer, personal property or
similar tax, assessment or other governmental charge;
(c) any tax, assessment or other governmental charge that is payable
otherwise than by withholding from payment of principal of, premium, if
any, or any interest on the Exchange Notes;
(d) any tax, assessment or other governmental charge that is imposed or
withheld by reason of the failure by the Holder or the beneficial owner of
the Exchange Note to comply with a request of the Company addressed to the
Holder (A) to provide information, documents or other evidence concerning
the nationality, residence or identity of the Holder or the beneficial
owner or (B) to make and deliver any declaration or other similar claim --
other than a claim for refund of a tax, assessment or other governmental
charge withheld by the Company -- or satisfy any information or reporting
requirements, which, in the case of (A) or (B), is required or imposed by a
statute, treaty, regulation or administrative practice of the taxing
jurisdiction as a precondition to exemption from all or part of that tax,
assessment or other governmental charge; or
(e) any combination of items (a), (b), (c) and (d) above;
nor will Additional Amounts be paid with respect to any payment of the
principal of, or any premium or interest on, any Exchange Note to any Holder
who is a fiduciary or partnership or limited liability company or other than
the sole beneficial owner of that payment to the extent that the payment would
be required by the laws of:
(A) Bermuda or any political subdivision or governmental authority of
Bermuda or having the power to tax in Bermuda;
(B) any jurisdiction, other than the United States, from or through
which payment on the Exchange Notes is made by the Company or a successor
corporation, or its paying agent in its capacity as such or any political
subdivision or governmental authority of that jurisdiction or having the
power to tax in that jurisdiction; or
(C) any other jurisdiction, other than the United States, in which the
Company or a successor corporation is organized, or any political
subdivision or governmental authority of that jurisdiction or having the
power to tax in that jurisdiction
to be included in the income for tax purposes of a beneficiary or settlor with
respect to that fiduciary or a member of that partnership, limited liability
company or beneficial owner who would not have been entitled to those
Additional Amounts had it been the Holder of that Exchange Note.
The Company will provide the Trustee with the official acknowledgment of the
relevant taxing authority or, if the acknowledgment is not available, a
certified copy of the acknowledgement evidencing the payment of the withholding
taxes, if any, by the Company. Copies of the documentation will be made
available to the Holders of the Exchange Notes or the Paying Agent, as
applicable, upon request.
All references in this prospectus to principal of, premium, if any, and
interest on the Exchange Notes will include any Additional Amounts payable by
the Company in respect of the principal, premium, if any, and interest on the
Exchange Notes.
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Selection and Notice
If less than all of the Exchange Notes are to be redeemed at any time,
selection of Exchange Notes for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the Exchange Notes are then listed, or, if the Exchange Notes
are not so then listed, on a pro rata basis, by lot or by the method that the
Trustee will deem fair and appropriate; provided that no Exchange Notes of
$1,000 or less will be redeemed in part. Notices of redemption will be mailed
by first class mail at least 30 but not more than 60 days before the redemption
date to each Holder of Exchange Notes to be redeemed at its registered address.
Notices of redemption may not be conditional. If any Exchange Note is to be
redeemed in part only, the notice of redemption that relates to the Exchange
Note will state the portion of the principal amount of the Exchange Note to be
redeemed. A new Exchange Note in principal amount equal to the unredeemed
portion of the Exchange Note will be issued in the name of the Holder upon
cancellation of the original Exchange Note. Exchange Notes called for
redemption will become due on the date fixed for redemption. On and after the
redemption date, interest will cease to accrue on Exchange Notes or portions of
Exchange Notes called for redemption.
Mandatory Redemption
Except as provided below under "--Repurchase at the Option of Holders", the
Company will not be required to make mandatory redemption or sinking fund
payments with respect to the Exchange Notes.
Repurchase at the Option of Holders
Change of Control
Upon the occurrence of a Change of Control, each Holder of Exchange Notes
will have the right to require the Company to purchase all or any part, equal
to $1,000 or an integral multiple of $1,000, of the Holder's Exchange Notes in
the offer described below (the "Change of Control Offer") at a purchase price
in cash (the "Change of Control Payment") equal to 101% of the aggregate
principal amount of the Exchange Notes, plus accrued and unpaid interest on the
Exchange Notes to the date of purchase, subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date; provided, however, that the Company will not be
obligated to repurchase Exchange Notes as provided in this covenant in the
event that it has exercised its rights to redeem all of the Exchange Notes as
described above under "--Optional Redemption". Within 30 days following any
Change of Control, the Company will mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and offering
to purchase Exchange Notes on the date specified in the notice, which date will
be no earlier than 30 and no later than 60 days from the date the notice is
mailed (the "Change of Control Payment Date"), in accordance with the
procedures required by the Indenture and described in the notice.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations to the extent those
laws and regulations are applicable in connection with the purchase of Exchange
Notes as a result of a Change of Control. To the extent that the provisions of
any securities laws or regulations conflict with any of the provisions of this
covenant, the Company will comply with the applicable securities laws and
regulations and will be deemed not to have breached its obligations under this
covenant by virtue of that compliance.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (1) accept for payment all Exchange Notes or portions of Exchange Notes
properly tendered pursuant to the Change of Control Offer, (2) deposit with the
Paying Agent an amount equal to the Change of Control Payment in respect of all
Exchange Notes or portions of Exchange Notes so tendered and (3) deliver or
cause to be delivered to the Trustee Exchange Notes so accepted together with
an Officers' Certificate stating the aggregate principal amount of Exchange
Notes or portions of Exchange Notes being purchased by the Company. The Paying
Agent will promptly mail or deliver to each Holder of Exchange Notes so
tendered the Change of Control Payment for
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the Exchange Notes, and the Trustee will promptly authenticate and mail or
deliver, or cause to be transferred by book entry, to each Holder a new
Exchange Note equal in principal amount to any unpurchased portion of Exchange
Notes surrendered, if any; provided that that new Exchange Note will be in a
principal amount of $1,000 or an integral multiple of $1,000. The Company will
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
The Change of Control provisions described above will be applicable whether
or not any other provisions of the Indenture are applicable. Except as
described above with respect to a Change of Control, the Indenture will not
contain provisions that permit the Holders of the Exchange Notes to require
that the Company purchase or redeem the Exchange Notes in the event of a
takeover, recapitalization or similar transaction. The Company's ability to
purchase Exchange Notes upon a Change of Control may be limited by the
Company's then existing financial resources. There can be no assurance that
sufficient funds will be available when necessary to make any such required
purchases. See "Risk Factors Relating to the Exchange Notes--We may not be able
to fund a change of control offer" on page 30.
The Company will not be required to make a Change of Control Offer upon the
occurrence of a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements included in the Indenture applicable to a Change of Control Offer
made by the Company, and purchases all Exchange Notes validly tendered and not
withdrawn under the Change of Control Offer.
Asset Sales
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, consummate any Asset Sale, unless:
(1) the Company, or the Restricted Subsidiary, as the case may be,
receives consideration at the time of the Asset Sale at least equal to the
fair market value -- as determined in good faith by the Board of Directors,
including as to the value of all noncash consideration, and included in an
Officers' Certificate delivered to the Trustee -- of the assets or Equity
Interests issued or sold or otherwise disposed of; and
(2) at least 75% of the consideration for the Asset Sale is in the form
of cash and/or Cash Equivalents; and
(3) the Net Proceeds received by the Company or the Restricted
Subsidiary, as the case may be, from the Asset Sale are applied within 360
days following the receipt of the Net Proceeds (a) first, to the extent the
Company or that Restricted Subsidiary, as the case may be, elects, to the
redemption or repurchase of outstanding pari passu Indebtedness of the
Company or Purchase Money Indebtedness of any Restricted Subsidiary;
provided that in the event that that Restricted Subsidiary is a Guarantor,
the Purchase Money Indebtedness to be redeemed or repurchased ranks at
least pari passu to the Guarantee given by that Restricted Subsidiary and
(b) second, to the extent of the balance of the Net Proceeds after
application as described in (a) above and to the extent the Company or that
Restricted Subsidiary, as the case may be, elects to reinvest or enter into
a legally binding agreement to reinvest the Net Proceeds, or any portion of
the Net Proceeds, in assets that are used or useful in a Permitted
Business. The balance of the Net Proceeds, after the application of the Net
Proceeds as described in the immediately preceding clauses (a) and (b) will
constitute "Excess Proceeds".
When the aggregate amount of Excess Proceeds equals or exceeds $15.0
million, taking into account income earned on the Excess Proceeds, the Company
will be required to make an offer to all Holders of Exchange Notes and pari
passu Indebtedness (an "Asset Sale Offer") to purchase the maximum principal
amount of Exchange Notes and pari passu Indebtedness that may be purchased out
of the Excess Proceeds, at a purchase price in cash in an amount equal to 100%
of the principal amount of those Exchange Notes, plus accrued and unpaid
interest on those Exchange Notes to the date of purchase, in accordance with
the procedures provided in the Indenture and the agreements governing the pari
passu Indebtedness. To the extent
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that any Excess Proceeds remain after consummation of an Asset Sale Offer, the
Company may use the Excess Proceeds for any purpose not otherwise prohibited by
the Indenture. If the aggregate principal amount of Exchange Notes and pari
passu Indebtedness tendered into the Asset Sale Offer surrendered by Holders of
Exchange Notes exceeds the amount of Excess Proceeds, the Trustee will select
the Exchange Notes and pari passu Indebtedness to be purchased on a pro rata
basis. Upon completion of the Asset Sale Offer, the amount of Excess Proceeds
will be reset at zero for purposes of the first sentence of this paragraph.
The amount of (a) any liabilities, as shown on the Company's or any
Restricted Subsidiary's, as the case may be, most recent balance sheet, of the
Company or any Restricted Subsidiary, other than contingent liabilities and
liabilities that are by their terms subordinated to the Exchange Notes or any
guarantee of the Exchange Notes, that are assumed by the transferee of any
assets under an agreement that releases the Company or any Restricted
Subsidiary from all liability in respect of those assets, (b) Indebtedness of
any Restricted Subsidiary that is no longer a Restricted Subsidiary as a result
of the Asset Sale, to the extent that the Company and each other Restricted
Subsidiary are released from any guarantee of payment of the principal amount
of that Indebtedness in connection with that Asset Sale and (c) any securities,
notes or other obligations received by the Company or that Restricted
Subsidiary, as the case may be, from that transferee that are
contemporaneously, subject to ordinary settlement periods, converted by the
Company or that Restricted Subsidiary, as the case may be, into cash and/or
Cash Equivalents, to the extent of the cash and/or Cash Equivalents received,
will be deemed to be cash and/or Cash Equivalents for purposes of this
provision.
Covenants
Restricted Payments
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly:
(1) declare or pay any dividend or make any other payment or
distribution on account of the Company's or any of its Restricted
Subsidiaries' Equity Interests, including any payment in connection with
any merger or consolidation involving the Company or any of its Restricted
Subsidiaries, or to the direct or indirect holders of the Company's or any
of its Restricted Subsidiaries' Equity Interests, other than dividends or
distributions payable in Equity Interests, other than Disqualified Stock,
of the Company or to the Company or a Restricted Subsidiary of the Company;
(2) purchase, redeem or otherwise acquire or retire for value, including
in connection with any merger or consolidation involving the Company, any
Equity Interests of the Company or any direct or indirect parent of the
Company, other than the Equity Interests owned by the Company or any
Wholly-Owned Restricted Subsidiary of the Company;
(3) make any payment on or with respect to, or purchase, redeem, defease
or otherwise acquire or retire for value any Indebtedness that is
subordinated to the Exchange Notes, except a payment of interest or
principal at Stated Maturity; or
(4) make any Restricted Investment;
all the payments and other actions set forth in clauses (1) through (4) above
being collectively referred to as "Restricted Payments", unless:
(a) at the time of and after giving effect to that Restricted Payment,
no Default or Event of Default will have occurred and be continuing or
would occur as a consequence of that Restricted Payment;
(b) in the case of clauses (1), (2) and (3) above, and, in the case of
any Restricted Investment that is not an Investment in a Permitted
Business, the Company would, at the time of that Restricted Payment and
after giving pro forma effect to that Restricted Payment as if that
Restricted Payment had been made at the beginning of the applicable four-
quarter period, have been permitted to incur at least $1.00 of additional
Indebtedness pursuant to either clause (1) or (2) of the first paragraph of
the covenant described below under the caption "--Incurrence of
Indebtedness and Issuance of Preferred Stock"; and
(c) the Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted
Subsidiaries and any Permitted Investments made pursuant to clause (8)
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of the definition of Permitted Investments after May 18, 1998 -- excluding
Restricted Payments permitted by clauses (2), (3), (4), (6) and (7), but,
in the case of clause (7), only to the extent that those Restricted
Payments are reflected as an expense on the income statements of GCL, of
the next succeeding paragraph -- is less than the sum, without duplication,
of:
(A) the remainder of (x) 100% of the cumulative Consolidated Cash
Flow or, in the case Consolidated Cash Flow will be negative, less 100%
of that deficit for the period, taken as one accounting period,
beginning on March 31, 1998 and ending on the last day of the last full
fiscal quarter immediately preceding the date of that Restricted
Payment minus (y) the product of 1.5 times the cumulative Consolidated
Interest Expense from May 18, 1998 through the last day of the last
full fiscal quarter immediately preceding the date of that Restricted
Payment, plus
(B) 100% of the aggregate net cash proceeds and the fair market
value, as determined in good faith by the Board of Directors, of
property or assets received by the Company since May 18, 1998 as a
contribution to its common equity capital or from the issue or sale of
Equity Interests of the Company, other than Disqualified Stock, or from
the issue or sale of Disqualified Stock or debt securities of the
Company that have been converted into those Equity Interests, other
than Equity Interests or Disqualified Stock or convertible debt
securities sold to a Subsidiary of the Company, plus the amount of cash
or the fair market value, as determined above, of property or assets
received by the Company or any Restricted Subsidiary upon the
conversion or exchange, plus
(C) the aggregate amount equal to the net reduction in Investments
in Unrestricted Subsidiaries resulting from (x) dividends,
distributions, interest payments, return of capital, repayments of
Investments or other transfers of assets to the Company or any
Restricted Subsidiary from any Unrestricted Subsidiary, (y) proceeds
realized by the Company or any Restricted Subsidiary upon the sale of
any Investments to a Person other than GCL, the Company or any
Subsidiary of the Company or (z) the redesignation of any Unrestricted
Subsidiary as a Restricted Subsidiary, not to exceed in the case of any
of the immediately preceding clauses (x), (y) or (z) the aggregate
amount of Restricted Investments made by the Company or any Restricted
Subsidiary in any Unrestricted Subsidiary after the date of the
Indenture, plus
(D) to the extent that any Restricted Investment that was made after
the date of the Indenture is sold for cash or otherwise liquidated or
repaid for cash, the amount of proceeds, net of any cost of
disposition, equal to the initial amount of that Restricted Investment.
The above provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration of that dividend, if at the date of declaration that payment
would have complied with the foregoing provisions;
(2) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of the
Company in exchange for or out of the net cash proceeds of the
substantially concurrent sale, other than to a Subsidiary of the Company,
of other Equity Interests of the Company, other than any Disqualified
Stock; provided that the amount of any net cash proceeds that are utilized
for any redemption, repurchase, retirement, defeasance or other acquisition
will be excluded from clause (c)(B) of the preceding paragraph;
(3) the defeasance, redemption, retirement, repurchase or other
acquisition of Indebtedness with the net cash proceeds from an incurrence
of Permitted Refinancing Indebtedness;
(4) the payment of any dividend by a Restricted Subsidiary of the
Company to the holders of its Equity Interests on a pro rata basis;
(5) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of the Company or any of its Restricted
Subsidiaries held by any member of the Company's or any Restricted
Subsidiary's management; provided that the aggregate price paid for all the
repurchased, redeemed,
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acquired or retired Equity Interests will not exceed $10.0 million in any
twelve-month period, with unused amounts being carried over to succeeding
twelve-month periods, subject to a maximum of $15.0 million in any twelve-
month period;
(6) Investments made with the net cash proceeds received from an Equity
Offering made by the Company or GCL, but only to the extent those net cash
proceeds received by GCL were contributed to the Company as common equity
capital, provided that the amount of those net cash proceeds received by
GCL that are utilized for that Investment be excluded from clause (c)(B) of
the preceding paragraph plus 50% of the net gain realized and not otherwise
included in Consolidated Cash Flow from the sale of Restricted Investments;
(7) the payment of any dividend or the making of any distribution to GCL
by the Company or any Restricted Subsidiary to pay or permit GCL to pay any
GCL Expenses or any Related Taxes; and
(8) other Restricted Payments in an aggregate amount not to exceed $25.0
million.
The Board of Directors may not designate any Subsidiary of the Company --
other than a newly-created Subsidiary in which no Investment has previously
been made, other than the amount required to capitalize that Subsidiary in
connection with its organization -- as an Unrestricted Subsidiary (a
"Designation") unless:
(1) no Default or Event of Default will have occurred and be continuing
at the time of or after giving effect to that Designation;
(2) the Company would, immediately after giving effect to that
Designation, have been permitted to incur at least $1.00 of additional
Indebtedness under either clause (1) or (2) of the first paragraph of the
covenant described below under the caption "--Incurrence of Indebtedness
and Issuance of Preferred Stock"; and
(3) the Company would not be prohibited under this Indenture from making
an Investment at the time of that Designation, assuming the effectiveness
of that Designation for purposes of clauses (a) and (b) of the first
paragraph of this covenant, in an amount equal to the fair market value of
the net Investment of the Company or any other Restricted Subsidiary in the
Subsidiary on that date.
In the event of any Designation, all outstanding Investments owned by the
Company and its Restricted Subsidiaries in the Subsidiary so designated will be
deemed to be an Investment made as of the time of that Designation and will
reduce the amount available for Restricted Payments under the first paragraph
of this covenant or Permitted Investments, as applicable. All those outstanding
Investments will be deemed to constitute Restricted Payments in an amount equal
to the fair market value of those Investments at the time of that Designation.
The Indenture will further provide that a Designation may be revoked (a
"Revocation") by a resolution of the Board of Directors delivered to the
Trustee, provided that the Company will not make any Revocation unless:
(1) no Default or Event of Default will have occurred and be continuing
at the time of or after giving effect to that Designation; and
(2) all Liens and Indebtedness of the Unrestricted Subsidiary
outstanding immediately following that Revocation would, if incurred at
that time, have been permitted to be incurred at such time for all purposes
under the Indenture.
The amount of all Restricted Payments, other than cash, will be the fair
market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or the
Restricted Subsidiary, as the case may be regarding the Restricted Payment. The
fair market value of any asset(s) or securities that are required to be valued
by this covenant will be determined in good faith by the Board of Directors,
that determination to be based upon an opinion or appraisal issued by an
accounting, appraisal or investment banking firm of national standing if the
fair market value exceeds $15.0 million.
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Incurrence of Indebtedness and Issuance of Preferred Stock
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness, including
Acquired Debt, and the Company will not issue any Disqualified Stock and will
not permit any of its Restricted Subsidiaries to issue any shares of preferred
stock; provided, however, that the Company may incur Indebtedness, including
Acquired Debt, or issue shares of Disqualified Stock and its Restricted
Subsidiaries may incur Indebtedness or issue Disqualified Stock or preferred
stock if either:
(1) the Consolidated Leverage Ratio is less than 5.5 to 1.0 before May
15, 2001, or 5.0 to 1.0 after May 15, 2001; or
(2) the Consolidated Capital Ratio is less than 2.5 to 1.0.
Notwithstanding the above, the provisions of the paragraph outlined above
will not apply to the incurrence of any of the following items of Indebtedness
(collectively, "Permitted Indebtedness"):
(a) the incurrence by the Company of Indebtedness represented by the
Notes and the Exchange Notes;
(b) the incurrence by the Company or any of its Restricted Subsidiaries
of Existing Indebtedness;
(c) the incurrence of Indebtedness by the Company to any Restricted
Subsidiary or Indebtedness of any Restricted Subsidiary to the Company or
any other Restricted Subsidiary, but only for so long as that Indebtedness
is held by the Company or the Restricted Subsidiary;
(d) the incurrence by the Company or any of its Restricted Subsidiaries
of Capital Lease Obligations, other than leases of backhaul services,
mortgage financings or purchase money obligations, in each case incurred
for the purpose of financing all or any part of the purchase price or cost
of construction or improvement of property, plant or equipment used in the
business of the Company or the Restricted Subsidiary, in an aggregate
principal amount not to exceed $25.0 million at any time outstanding;
(e) the incurrence by the Company or any of its Restricted Subsidiaries
of Indebtedness pursuant to acquisitions of capacity made in the ordinary
course of business;
(f) the incurrence by the Company or any of its Restricted Subsidiaries
of Hedging Obligations that are incurred for the purpose of fixing or
hedging interest or foreign currency exchange rate risk with respect to any
floating rate Indebtedness that is permitted by the terms of this Indenture
to be outstanding;
(g) the incurrence by the Company or any of its Restricted Subsidiaries
of Indebtedness of a Restricted Subsidiary incurred and outstanding on the
date on which the Restricted Subsidiary was acquired by the Company;
provided, however, that at the time the Restricted Subsidiary is acquired
by the Company, giving effect to that acquisition, the Company would have
been able to incur $1.00 of additional Indebtedness under the immediately
preceding paragraph;
(h) the incurrence by the Company or any of its Restricted Subsidiaries
of Permitted Refinancing Indebtedness in exchange for, or the net proceeds
of which are used to refund, refinance or replace Indebtedness, other than
intercompany Indebtedness, that was permitted by the Indenture to be
incurred under the immediately preceding paragraph or clauses (a), (b),
(d), (g), (h), (i), (k), (n) or (o) of this paragraph;
(i) the incurrence by the Company or any of its Restricted Subsidiaries
of additional Indebtedness not otherwise permitted to be incurred under
this paragraph in an aggregate principal amount, or accreted value, as
applicable, at any time outstanding, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any Indebtedness
incurred under to this clause (i), not to exceed $50.0 million;
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(j) the incurrence of Indebtedness by a Receivables Entity in a
Qualified Receivables Transaction, provided that the proceeds of that
Indebtedness are applied in accordance with the covenant described above
under the caption "--Repurchase at the Option of Holders--Asset Sales";
(k) the incurrence by the Company or any Restricted Subsidiary of
Purchase Money Indebtedness, provided that the amount of that Purchase
Money Indebtedness does not exceed 100% of the cost of construction,
installation, acquisition, lease, development, design, engineering,
financing, testing, start-up, upgrade, completion or improvement of assets,
together with related costs and expenses, used in the business of the
Company or the Restricted Subsidiary;
(l) letters of Credit that are cash collateralized;
(m) letters of Credit in an aggregate principal amount equal to $200.0
million less the amount of outstanding Indebtedness under clause (n) of
this paragraph;
(n) the incurrence by the Company or any of its Restricted Subsidiaries
of revolving credit Indebtedness in an aggregate amount not to exceed
$200.0 million at any time outstanding, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any Indebtedness
incurred under this clause (n); and
(o) the guarantee by the Company or any Restricted Subsidiary of
Indebtedness of the Company or any Restricted Subsidiary of the Company
that was permitted to be incurred by another provision of this covenant.
The Company will not, and will not permit any of its Restricted Subsidiaries
to, incur any Indebtedness, including Permitted Indebtedness, that is
contractually subordinated in right of payment to any other Indebtedness of the
Company or the Restricted Subsidiary unless that Indebtedness is also
contractually subordinated in right of payment to the Exchange Notes on
substantially identical terms; provided, however, that no Indebtedness of the
Company will be deemed to be contractually subordinated in right of payment to
any other Indebtedness of the Company solely by virtue of being unsecured.
Liens
The Company will not, and will not permit any of its Restricted Subsidiaries
to, create, incur, assume or otherwise cause or suffer to exist or become
effective any Lien of any kind, other than Permitted Liens, upon any of their
property or assets, now owned or acquired in the future, unless all payments
due under the Indenture and the Exchange Notes are secured on an equal and
ratable basis with the obligations so secured until the time when those
obligations are no longer secured by a Lien.
Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to:
(1) (a) pay dividends or make any other distributions to the Company or
any of its Restricted Subsidiaries (A) on its Capital Stock or (B) with
respect to any other interest or participation in, or measured by, its
profits or (b) pay any indebtedness owed to the Company or any of its
Restricted Subsidiaries;
(2) make loans or advances to the Company or any of its Restricted
Subsidiaries; or
(3) transfer any of its properties or assets to the Company or any of
its Restricted Subsidiaries.
However, the above restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(a) Existing Indebtedness as in effect on the date of the Indenture;
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(b) agreements as in effect as of the date of the Indenture;
(c) Indebtedness incurred in accordance with clause (g), (h), (i), (k)
or (n) of the second paragraph of the covenant described above under the
caption "--Incurrence of Indebtedness and Issuance of Preferred Stock",
provided that those encumbrances or restrictions are customary with respect
to those types of Indebtedness, as determined in good faith by the Chief
Financial Officer of the Company, and provided further that the provisions
of that Indebtedness do not prohibit payments by the Company of principal,
premium, interest and Additional Amounts under the terms of the Exchange
Notes and the Indenture;
(d) the Indenture, the Notes and the Exchange Notes;
(e) applicable law;
(f) any instrument governing Indebtedness or Capital Stock of a Person
acquired by the Company or any of its Restricted Subsidiaries as in effect
at the time of the acquisition, except to the extent the Indebtedness was
incurred in connection with or in contemplation of the acquisition, which
encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person, or the property
or assets of the Person, so acquired, provided that, in the case of
Indebtedness, that Indebtedness was permitted by the terms of the Indenture
to be incurred;
(g) customary non-assignment provisions in leases entered into in the
ordinary course of business and consistent with past practices;
(h) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in
clause (3) above on the property so acquired;
(i) any agreement for the sale or other disposition of a Restricted
Subsidiary that restricts distributions by that Restricted Subsidiary
pending its sale or other disposition;
(j) Permitted Refinancing Indebtedness, provided that the restrictions
contained in the agreements governing the Permitted Refinancing
Indebtedness are no more restrictive, taken as a whole, than those
contained in the agreements governing the Indebtedness being refinanced;
(k) Liens securing Indebtedness otherwise permitted to be incurred
pursuant to the provisions of the covenant described above under the
caption "--Liens" that limit the right of the Company or any of its
Restricted Subsidiaries to dispose of the assets subject to those Liens;
(l) provisions with respect to the disposition or distribution of assets
or property in joint venture agreements and other similar agreements
entered into in the ordinary course of business; and
(m) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business.
Sale and Leaseback Transactions
The Company will not, and will not permit any of its Restricted Subsidiaries
to, enter into any sale and leaseback transaction; provided that the Company or
any of its Restricted Subsidiaries may enter into a sale and leaseback
transaction if:
(1) the Company or the Restricted Subsidiary, as the case may be, could
have (a) incurred Indebtedness in an amount equal to the Attributable Debt
relating to that sale and leaseback transaction pursuant to either of the
Consolidated Leverage Ratio or Consolidated Capital Ratio tests included in
the first paragraph of the covenant described above under the caption "--
Incurrence of Indebtedness and Issuance of Preferred Stock" and (b)
incurred a Lien to secure that Indebtedness pursuant to the covenant
described above under the caption "--Liens";
(2) the gross cash proceeds of that sale and leaseback transaction are
at least equal to the fair market value, as determined in good faith by the
Board of Directors and included in an Officers' Certificate delivered to
the Trustee, of the property that is the subject of that sale and leaseback
transaction; and
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(3) the transfer of assets in that sale and leaseback transaction is
treated as an Asset Sale, and the Company applies the proceeds of that
transaction in compliance with, the covenant described above under the
caption "--Repurchase at the Option of Holders--Asset Sales".
Merger, Consolidation or Sale of Assets
The Company may not, directly or indirectly, consolidate or merge with or
into, whether or not the Company is the surviving corporation, or sell, assign,
transfer, convey or otherwise dispose of all or substantially all of its
properties or assets, in one or more related transactions, to another Person
unless:
(1) the Company is the surviving corporation or the Person formed by or
surviving the consolidation or merger, if other than the Company, or to
which that sale, assignment, transfer, conveyance or other disposition will
have been made is a corporation organized or existing under the laws of the
United States, any state of the United States or the District of Columbia
or Bermuda;
(2) the Person formed by or surviving the consolidation or merger, if
other than the Company, or the Person to which that sale, assignment,
transfer, conveyance or other disposition will have been made assumes all
the obligations of the Company under the Registration Rights Agreement, the
Notes, the Exchange Notes and the Indenture under a supplemental indenture
in a form reasonably satisfactory to the Trustee;
(3) immediately after that transaction no Default or Event of Default
exists; and
(4) except in the case of a merger of the Company with or into a
Restricted Subsidiary of the Company, the Company or the Person formed by
or surviving the consolidation or merger, if other than the Company, or to
which the sale, assignment, transfer, conveyance or other disposition will
have been made (a) will have a Consolidated Net Worth immediately after the
transaction equal to or greater than the Consolidated Net Worth of the
Company immediately preceding the transaction and (b) will, immediately
after the transaction and after giving pro forma effect to the transaction
and any related financing transactions as if the same had occurred at the
beginning of the applicable four-quarter period, be permitted to incur at
least $1.00 of additional Indebtedness under either clause (1) or (2) of
the first paragraph of the covenant described above under the caption "--
Incurrence of Indebtedness and Issuance of Preferred Stock".
The Indenture will also provide that the Company may not, directly or
indirectly, lease all or substantially all of its properties or assets, in
one or more related transactions, to any other Person. The provisions of
this covenant will not be applicable to a sale, assignment, transfer,
conveyance or other disposition of assets between or among the Company and
its Restricted Subsidiaries and any of the Guarantors.
Transactions with Affiliates
The Company will not, and will not permit any of its Restricted Subsidiaries
to, make any payment to, or sell, lease, transfer or otherwise dispose of any
of its properties or assets to, or purchase any property or assets from, or
enter into or make or amend any transaction, contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate (each of the foregoing, an "Affiliate Transaction"), unless:
(1) the Affiliate Transaction is on terms that are not materially less
favorable to the Company or the relevant Restricted Subsidiary than those
that would have been obtained in a comparable transaction by the Company or
the Restricted Subsidiary with an unrelated Person; and
(2) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $25.0
million, the Company delivers to the Trustee a resolution of the Board of
Directors included in an Officers' Certificate certifying that the
Affiliate Transaction complies with clause (1) above and that the Affiliate
Transaction is approved by a majority of the disinterested members of the
Board of Directors and an opinion as to the fairness to the Holders of the
Affiliate Transaction from a financial point of view is obtained from an
accounting, appraisal or investment banking firm of national standing.
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Notwithstanding the above, the following items will not be deemed to be
Affiliate Transactions:
(1) (a) the entering into, maintaining or performance of any employment
contract, collective bargaining agreement, benefit plan, program or
arrangement, related trust agreement or any other similar arrangement for
or with any employee, officer or director that have been or will be entered
into in the ordinary course of business, including vacation, health,
insurance, deferred compensation, retirement, savings or other similar
plans, (b) the payment of compensation, performance of indemnification or
contribution obligations, or an issuance, grant or award of stock, options,
or other equity-related interests or other securities to employees,
officers or directors in the ordinary course of business, (c) any
transaction with an officer or director in the ordinary course of business
not involving more than $250,000 in any one case or (d) Management Advances
and payments in respect of Management Advances;
(2) transactions between or among the Company and/or its Restricted
Subsidiaries or any Receivables Entity;
(3) payment of reasonable directors' fees;
(4) any sale or other issuance of Equity Interests, other than
Disqualified Stock, of the Company;
(5) Affiliate Transactions in effect or approved by the Board of
Directors on the date of the Indenture, including any amendments to the
indenture, provided that the terms of those amendments are not materially
less favorable to the Company or the relevant Restricted Subsidiary than
the terms of the agreement before those amendments;
(6) transactions with respect to capacity or dark fiber between the
Company or any Restricted Subsidiary and any Unrestricted Subsidiary or
other Affiliate and joint sales and marketing under an agreement or
agreements between the Company or any Restricted Subsidiary and any
Unrestricted Subsidiary or other Affiliate, provided that in the case of
this clause (6), those agreements are on terms that are no less favorable
to the Company or the relevant Restricted Subsidiary than those that could
have been obtained at the time of the transaction in an arm's-length
transaction with an unrelated third party or, in the case of a transaction
with an Unrestricted Subsidiary, are either (a) entered into in connection
with a transaction involving the selection by a customer of cable system
capacity entered into in the ordinary course of business or (b) involve the
provision by the Company or a Restricted Subsidiary to an Unrestricted
Subsidiary of sales and marketing services, operations, administration and
maintenance services or development services for which the Company or the
Restricted Subsidiary receives a fair rate of return, as determined by the
Board of Directors and included in an Officers' Certificate delivered to
the Trustee, above its expenses of providing those services;
(7) any transaction entered into in the ordinary course of business
between the Company or any Restricted Subsidiary and any Unrestricted
Subsidiary or any Affiliate, provided that in the case of this clause (7),
those agreements are on terms that are no less favorable to the Company or
the relevant Restricted Subsidiary than those that could have been obtained
at the time of the transaction in an arm's-length transaction with an
unrelated third party; and
(8) Restricted Payments that are permitted by the covenant described
above under the caption "--Restricted Payments".
Issuances and Sales of Equity Interests in Wholly-Owned Restricted
Subsidiaries
The Company:
(1) will not, and will not permit any of its Restricted Subsidiaries to,
transfer, convey, sell, lease or otherwise dispose of any Equity Interests
in any Wholly-Owned Restricted Subsidiary of the Company to any Person,
other than the Company or a Wholly-Owned Restricted Subsidiary of the
Company, unless (a) that transfer, conveyance, sale, lease or other
disposition is of all the Equity Interests in that Wholly-Owned Restricted
Subsidiary and (b) the cash Net Proceeds from that transfer, conveyance,
sale, lease or other disposition are applied in accordance with the
covenant described above under the caption "--Repurchase at the Option of
Holders--Asset Sales"; and
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(2) will not permit any Wholly-Owned Restricted Subsidiary of the
Company to issue any of its Equity Interests, other than, if necessary,
shares of its Capital Stock constituting directors' qualifying shares, to
any Person other than to the Company or a Wholly-Owned Restricted
Subsidiary of the Company.
Future Guarantees
If any Restricted Subsidiary guarantees any Debt Securities issued by the
Company, then:
(1) the Company will promptly notify the Trustee of that guarantee;
(2) the Trustee will, in turn, notify each Holder; and
(3) the Company will cause the Indenture to be amended to make that
Restricted Subsidiary a Guarantor under the Indenture.
Before the execution of the amendment, each Restricted Subsidiary required
to become a Guarantor pursuant to the provisions of this covenant will be
deemed a Guarantor under the Indenture for purposes of determining the rights
and obligations under the Indenture.
Business Activities
The Company will not, and will not permit any of its Restricted Subsidiaries
to, engage in any business other than a Permitted Business.
Payments for Consent
Neither the Company nor any of its Restricted Subsidiaries will, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Exchange Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or
provisions of the Indenture or the Exchange Notes unless that consideration is
offered to be paid or is paid to all Holders of the Exchange Notes that
consent, waive or agree to amend the terms or provisions of the Indenture or
the Exchange Notes in the time frame provided in the solicitation documents
relating to the consent, waiver or agreement.
Reports
Whether or not required by the rules and regulations of the SEC, so long as
any Exchange Notes are outstanding, the Company will furnish to the Trustee and
the Holders of the Exchange Notes:
(1) all quarterly and annual financial information that would be
required to be contained in a filing with the SEC on Forms 10-Q and 10-K if
the Company was required to file those Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
that describes the financial condition and results of operations of the
Company and its consolidated Subsidiaries and, with respect to the annual
information only, a report on that annual information by the Company's
certified independent accountants; and
(2) all current reports that would be required to be filed with the SEC
on Form 8-K if the Company were required to file those reports, in each
case within the time periods specified in the SEC's rules and regulations.
In addition, whether or not required by the rules and regulations of the
SEC, the Company will file a copy of all the information and reports with the
SEC for public availability within the time periods specified in the SEC's
rules and regulations, unless the SEC will not accept such a filing, and make
the information available to securities analysts and prospective investors upon
request.
The Company will be deemed to have satisfied those requirements if GCL files
and provides reports, documents and information of the types otherwise so
required by the SEC, in each case within the applicable
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time periods, and the Company is not required by the SEC to file such reports,
documents and information separately under the applicable rules and regulations
of the SEC, after giving effect to any exemptive relief, because of the filings
by GCL. Furthermore, the Company will agree that, for so long as any Exchange
Notes remain outstanding and regardless of the immediately preceding sentence,
it will furnish to the Holders of the Exchange Notes and to securities analysts
and prospective investors, upon their request, the information required to be
delivered under Rule 144A(d)(4) under the Securities Act.
Events of Default and Remedies
The Indenture will provide that each of the following will constitute an
Event of Default with respect to the Exchange Notes of each series:
(1) default for 30 days in the payment when due of interest on the
Exchange Notes;
(2) default in the payment when due of the principal of, or premium, if
any, on, the Exchange Notes;
(3) failure by the Company or any of its Restricted Subsidiaries to
comply with the provisions described above under the captions "--Change of
Control", "--Asset Sales", "--Restricted Payments" or "--Incurrence of
Indebtedness and Issuance of Preferred Stock";
(4) failure by the Company or any of its Restricted Subsidiaries for 60
days after notice to comply with any of its other agreements in the
Indenture or the Exchange Notes;
(5) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries, or the payment of which is guaranteed by the Company or any
of its Restricted Subsidiaries, whether that Indebtedness or guarantee now
exists, or is created after the date of the Indenture, which default
results in the acceleration of that Indebtedness before its express
maturity and, in each case, the principal amount of that Indebtedness,
together with the principal amount of any other Indebtedness the maturity
of which has been so accelerated, aggregates $25.0 million or more;
(6) failure by the Company or any of its Restricted Subsidiaries to pay
final judgments not subject to appeal aggregating in excess of $25.0
million, net of applicable insurance coverage which is acknowledged in
writing by the insurer, which judgments are not paid, discharged or stayed
for a period of 60 days;
(7) except as provided by the Indenture, any Guarantee shall be held in
any judicial proceeding to be unenforceable or invalid or will cease for
any reason to be in full force and effect or any Guarantor, or any Person
acting on behalf of any Guarantor, will deny or disaffirm its obligations
under its Guarantee; and
(8) certain events of bankruptcy or insolvency with respect to the
Company or any of its Restricted Subsidiaries.
If any Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in principal amount of the then outstanding Exchange Notes of
any series may declare all the Exchange Notes of that series to be due and
payable immediately. Notwithstanding the foregoing, in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, with respect
to the Company, any Restricted Subsidiary that is a Significant Subsidiary or
any group of Restricted Subsidiaries that, taken together, would constitute a
Significant Subsidiary, all outstanding Exchange Notes will become due and
payable without further action or notice. Holders of the Exchange Notes may not
enforce the Indenture or the Exchange Notes except as provided in the
Indenture. Subject to certain limitations, Holders of a majority in principal
amount of the then outstanding Exchange Notes of any series may direct the
Trustee in its exercise of any trust or power affecting that series of Exchange
Notes. The Trustee may withhold from Holders of the Exchange Notes notice of
any continuing Default or Event of Default -- except a Default or Event of
Default relating to the payment of principal of, premium, if any, or interest
on, the Exchange Notes -- if it determines that withholding notice is in their
interest.
In the case of any Event of Default occurring by reason of any willful
action or inaction taken or not taken by or on behalf of the Company with the
intention of avoiding payment of the premium that the Company
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would have had to pay if the Company then had elected to redeem the Exchange
Notes Due 2009 pursuant to the optional redemption provisions of the Indenture,
an equivalent premium also will become immediately due and payable, to the
extent permitted by law, upon the acceleration of the Exchange Notes Due 2009.
If an Event of Default occurs before November 15, 2004 by reason of any wilful
action or inaction taken or not taken by or on behalf of the Company with the
intention of avoiding the prohibition on redemption of the Exchange Notes Due
2009 before November 15, 2004, then the premium specified in the Indenture also
will become immediately due and payable, to the extent permitted by law, upon
the acceleration of the Exchange Notes Due 2009.
The Holders of a majority in aggregate principal amount of the then
outstanding Exchange Notes of any series by notice to the Trustee may on behalf
of the Holders of all of the Exchange Notes in that series waive any existing
Default or Event of Default and its consequences under the Indenture, except a
continuing Default or Event of Default in the payment of principal of, premium,
if any, or interest on, the Exchange Notes.
The Company will be required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company will be required upon
becoming aware of any Default or Event of Default to deliver to the Trustee a
statement specifying that Default or Event of Default.
No Personal Liability of Directors, Officers, Employees, Incorporators or
Shareholders
Subject to the Companies Act 1981 of Bermuda, no director, officer,
employee, incorporator or shareholder of the Company, as such, will have any
liability for any obligations of the Company with respect to the Exchange Notes
or the Indenture, or for any claim based on, or in respect or by reason of,
those obligations or their creation. Each Holder of Exchange Notes by accepting
an Exchange Note will waive and release any and all liability of that nature.
That waiver and release are part of the consideration for issuance of the
Exchange Notes. That waiver may not be effective to waive liabilities under
federal securities laws, and it is the view of the SEC that a waiver of that
type is against public policy.
Legal Defeasance and Covenant Defeasance
The obligations of the Company in the Indenture as they relate to any series
of Exchange Notes will be discharged and cancelled upon the delivery by the
Company to the Trustee for cancellation of all the Exchange Notes of that
series or upon irrevocable deposit with the Trustee, within not more than one
year before the redemption of the Exchange Notes of that series, or when the
Exchange Notes of that series are to be called for redemption within one year
under arrangements satisfactory to the Trustee, of funds sufficient for the
payment or redemption of all the Exchange Notes of that series. In addition,
the Indenture will provide that the Company may, at its option and at any time,
elect to have all of its obligations discharged with respect to the outstanding
Exchange Notes of any series ("Legal Defeasance"), except for:
(1) the rights of Holders of outstanding Exchange Notes of that series
to receive payments in respect of the principal of, premium, if any, and
interest on those Exchange Notes when those payments are due from the trust
referred to below;
(2) the Company's obligations with respect to the Exchange Notes of that
series concerning issuing temporary Exchange Notes, registration of
Exchange Notes, mutilated, destroyed, lost or stolen Exchange Notes and the
maintenance of an office or agency for payment and money for security
payments held in trust;
(3) the rights, powers, trusts, duties and immunities of the Trustee and
the Company's obligations in connection with those rights, powers, trusts,
duties and immunities; and
(4) the Legal Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time, elect to have
its obligations released with respect to certain covenants that are contained
in the Indenture ("Covenant Defeasance") and, thereafter, any
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omission to comply with those obligations will not constitute a Default or
Event of Default. In the event Covenant Defeasance occurs, certain events --
but not including non-payment, bankruptcy, receivership, rehabilitation or
insolvency events -- described under "--Events of Default" will no longer
constitute an Event of Default.
In order to exercise either Legal Defeasance or Covenant Defeasance in
respect of any series of Exchange Notes:
(1) the Company must irrevocably deposit, or cause to be deposited, with
the Trustee, in trust, for the benefit of the Holders of that series of
Exchange Notes, cash in United States dollars, non-callable Government
Securities, or a combination of cash and non-callable Government
Securities, in those amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on the outstanding series of
Exchange Notes on the stated maturity of those Exchange Notes or on the
applicable redemption date, as the case may be, and the Company must
specify whether those Exchange Notes are being defeased to maturity or to a
particular redemption date;
(2) in the case of Legal Defeasance, the Company must deliver to the
Trustee an opinion of counsel in the United States reasonably acceptable to
the Trustee confirming that the Company has received from, or there has
been published by, the Internal Revenue Service a ruling, or since the date
of the Indenture, there has been a change in the applicable federal income
tax law, in either case to the effect that, and an opinion of counsel based
on that information will confirm that, the Holders of the outstanding Notes
will not recognize income, gain or loss for federal income tax purposes as
a result of the Legal Defeasance, and will be subject to federal income tax
on the same amounts, in the same manner and at the same times as would have
been the case if that Legal Defeasance had not occurred;
(3) in the case of Covenant Defeasance, the Company must deliver to the
Trustee an opinion of counsel in the United States reasonably acceptable to
the Trustee confirming that the Holders of the outstanding Exchange Notes
will not recognize income, gain or loss for federal income tax purposes as
a result of the Covenant Defeasance, and of those Holders will be subject
to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if that Covenant Defeasance had not
occurred;
(4) no Default or Event of Default will have occurred and be continuing
on the date of the deposit, other than a Default or Event of Default
resulting from the borrowing of funds to be applied to the deposit, or
insofar as Events of Default from bankruptcy or insolvency events are
concerned, at any time in the period ending on the 91st day after the date
of deposit;
(5) the Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under, any material
agreement or instrument, other than the Indenture, to which the Company or
any of its Restricted Subsidiaries is a party or by which the Company or
any of its Restricted Subsidiaries is bound;
(6) the Company must deliver to the Trustee an opinion of counsel in the
United States reasonably acceptable to the Trustee to the effect that after
the 91st day following the deposit, the trust funds will not be subject to
the effect of any applicable bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights and remedies generally;
(7) the Company must deliver to the Trustee an Officers' Certificate
stating that the deposit was not made by the Company with the intent of
preferring the Holders of the Exchange Notes over other creditors of the
Company, or with the intent of defeating, hindering, delaying or defrauding
creditors of the Company or others;
(8) the Company must deliver to the Trustee an opinion of counsel in
Bermuda reasonably acceptable to the Trustee to the effect that the Holders
of the outstanding Exchange Notes will not be adversely affected under
Bermuda law; and
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(9) the Company must deliver to the Trustee an Officers' Certificate and
an opinion of counsel in the United States reasonably acceptable to the
Trustee, each stating that all conditions precedent provided for or
relating to Legal Defeasance or Covenant Defeasance, as applicable, have
been complied with.
Transfer and Exchange
A Holder may transfer or exchange the Exchange Notes in accordance with the
procedures provided in the Indenture. The Registrar and the Trustee may require
a Holder, among other things, to furnish appropriate endorsements and transfer
documents, and the Company may require a Holder to pay any taxes and fees
required by law or permitted by the Indenture. The Company will not be required
to transfer or exchange any Exchange Note selected for redemption. Also, the
Company will not be required to transfer or exchange any Exchange Note for a
period of 15 days before (1) a selection of Exchange Notes to be redeemed, (2)
an interest payment date or (3) the mailing of notice of a Change of Control
Offer or Asset Sale Offer. The registered Holder of an Exchange Note will be
treated as the owner of it for all purposes under the Indenture.
Amendment, Supplement and Waiver
Except as provided in the next two succeeding paragraphs, the Indenture or
the Exchange Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the then outstanding
Exchange Notes of any series affected by the amendment or supplement --
including consents obtained in connection with a purchase of, or tender offer
or exchange offer for, Exchange Notes -- and any existing default or compliance
with any provision of the Indenture or the Exchange Notes may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding Exchange Notes of any series affected by default or compliance --
including consents obtained in connection with a purchase of, or tender offer
or exchange offer for, Exchange Notes.
Without the consent of each Holder affected, this amendment or waiver may
not, with respect to any Exchange Notes held by a non-consenting Holder:
(1) reduce the principal amount of Exchange Notes whose Holders must
consent to an amendment, supplement or waiver;
(2) reduce the principal or change the fixed maturity of any Exchange
Note, or alter the redemption provisions of the Exchange Notes, other than
redemption provisions relating to the covenants described above under the
caption "--Repurchase at the Option of Holders";
(3) reduce the rate of, or change the time for, payment of interest on
any Exchange Note;
(4) waive a Default or Event of Default in the payment of principal of,
premium, if any, or interest on the Exchange Notes, except a rescission of
acceleration of the Exchange Notes by the Holders of at least a majority in
aggregate principal amount of the Exchange Notes and a waiver of the
payment default that resulted from that acceleration;
(5) make any Exchange Note payable in money other than that stated in
the Exchange Notes;
(6) make any change in the provisions of the Indenture relating to
waivers of past Defaults or the rights of Holders of the Exchange Notes to
receive payments of principal of, premium, if any, or interest on the
Exchange Notes;
(7) waive a redemption payment with respect to any Exchange Note, other
than a payment required by one of the covenants described above under the
caption "--Repurchase at the Option of Holders"; or
(8) make any change in the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any Holder of Exchange
Notes, the Company and the Trustee may amend or supplement the Indenture or the
Exchange Notes to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Exchange Notes in addition to or in place of certificated
Exchange Notes, to provide for the assumption of the Company's obligations to
Holders of Exchange Notes in the case of
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a merger or consolidation or sale of all or substantially all of the Company's
assets, to make any change that would provide any additional rights or benefits
to the Holders of Exchange Notes or that does not adversely affect the legal
rights under the Indenture of any Holder of Exchange Notes, or to comply with
the requirements of the SEC in order to effect or maintain the qualification of
the Indenture under the Trust Indenture Act.
Concerning the Trustee
The Indenture will contain certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage in
other transactions; however, if it acquires any conflicting interest, it must
eliminate the conflict within 90 days, apply to the SEC for permission to
continue, or resign.
The Holders of a majority in principal amount of the then outstanding
Exchange Notes of any series will have the right to direct the time, method and
place of conducting any proceeding for exercising any remedy available to the
Trustee regarding that series of Exchange Notes, subject to certain exceptions.
In case an Event of Default occurs which is not cured, the Trustee will be
required, in the exercise of its power, to use the degree of care of a prudent
person in the conduct of his or her own affairs. Subject to those provisions,
the Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request of any Holder of Exchange Notes, unless the
Holder of Exchange Notes will have offered to the Trustee security and
indemnity satisfactory to it against any loss, liability or expense.
Governing Law
The Indenture will provide that it and the Exchange Notes will be governed
by and construed in accordance with the laws of the State of New York.
The Company and the Guarantors will submit to the jurisdiction of the United
States federal and New York state courts located in the Borough of Manhattan,
City and State of New York for purposes of all legal actions and proceedings
instituted in connection with the Exchange Notes and the Indenture. The Company
has appointed CT Corporation System as its authorized agent upon which process
may be served in any such action. See "Service of Process and Enforcement of
Liabilities" on page 95.
Currency Indemnity
United States dollars are the sole currency of account and payment for all
sums payable by the Company and the Guarantors under or in connection with the
Exchange Notes, including damages. Any account received or recovered in a
currency other than dollars, whether as a result of, or the enforcement of, a
judgment or order of a court of any jurisdiction, in the liquidation,
dissolution or other winding-up of the affairs of the Company or the Guarantors
or otherwise, by any Holder of an Exchange Note in respect of any sum expressed
to be due to it from the Company or the Guarantors will only constitute a
discharge to the Company and the Guarantors to the extent of the dollar amount
which the recipient is able to purchase with the amount so received or
recovered in that other currency on the date of that receipt or recovery or, if
it is not practicable to make that purchase on that date, on the first date on
which it is practicable to do so. If that dollar amount is less than the dollar
amount expressed to be due to the recipient under any Exchange Note, the
Company and the Guarantors will indemnify it against any loss sustained by it
as a result. In any event, the Company and the Guarantors will indemnify the
recipient against the cost of making the purchase. For the purposes of this
paragraph, it will be sufficient for the Holder of an Exchange Note to certify
in a satisfactory manner, indicating the sources of information used, that it
would have suffered a loss had an actual purchase of dollars been made with the
amount so received in that other currency on the date of receipt or recovery
or, if a purchase of dollars on that date had not been practicable, on the
first date on which it would have been practicable, it being required that the
need for a change of date be certified in the manner mentioned above. These
indemnities constitute a separate and independent obligation from the Company's
and the Guarantors' other obligations, will give rise to
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a separate and independent cause of action, will apply irrespective of any
indulgence granted by any Holder of an Exchange Note and will remain in full
force and effect despite any other judgment, order, claim or proof for a
liquidated amount in respect of any sum due under any Exchange Note.
Additional Information
Anyone who receives this prospectus may obtain a copy of the Indenture and
Registration Rights Agreement, without charge, by writing to the Company at the
address provided under "Where You Can Find More Information" on page i.
Certain Definitions
Provided below are certain defined terms used in the Indenture. Reference is
made to the Indenture for a full disclosure of all those terms, as well as any
other capitalized terms used in this section for which no definition is
provided.
"Acquired Debt" means, with respect to any specified Person, (1)
Indebtedness of any other Person existing at the time that other Person is
merged with or into or became a Subsidiary of the specified Person, including
Indebtedness incurred in connection with, or in contemplation of, that other
Person merging with or into or becoming a Subsidiary of the specified Person,
and (2) Indebtedness secured by a Lien encumbering any asset acquired by the
specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling, controlled by or under direct or indirect common
control with the specified Person. For purposes of this definition, "control",
including, with correlative meanings, the terms "controlling", "controlled by"
and "under common control with", as used with respect to any Person, will mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of the Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the Voting Stock of a Person will be
deemed to be control.
"Asset Sale" means:
(1) the sale, lease, transfer, conveyance or other disposition of any
assets or rights, including by way of a sale and leaseback, other than
sales of inventory in the ordinary course of business and other than any
sale, lease, transfer, conveyance or other disposition of capacity on any
cable system owned, controlled or operated by the Company or any Restricted
Subsidiary or of telecommunications capacity or transmission rights
acquired by the Company or any Restricted Subsidiary for use in a Permitted
Business, provided that the sale, lease, transfer, conveyance or other
disposition of all or substantially all of the assets of the Company and
its Restricted Subsidiaries taken as a whole will be governed by the
provisions of the Indenture described above under the caption "--Repurchase
at the Option of Holders--Change of Control" and/or the provisions
described above under the caption "--Covenants--Merger, Consolidation or
Sale of Assets" and not by the provisions of the Asset Sale covenant; and
(2) the issue or sale by the Company or any of its Restricted
Subsidiaries of Equity Interests of its Subsidiaries,
in the case of either clause (1) or (2), whether in a single transaction or a
series of related transactions (a) that have a fair market value in excess of
$25.0 million or (b) for net proceeds in excess of $25.0 million.
Notwithstanding the foregoing, the following items will not be deemed to be
Asset Sales: (1) a transfer of assets by the Company to a Restricted Subsidiary
or by a Restricted Subsidiary to the Company or to another Restricted
Subsidiary, (2) an issuance of Equity Interests by a Restricted Subsidiary to
the Company or to another Restricted Subsidiary, (3) a Restricted Payment that
is permitted by the covenant described above under the caption "--Covenants--
Restricted Payments", (4) a transfer of assets by the Company or a Restricted
Subsidiary in connection with a Qualified Receivables Transaction and (5) a
disposition of obsolete or worn out equipment or equipment that is no longer
useful in the conduct of a Permitted Business and that is disposed of in the
ordinary course of business.
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"Attributable Debt" in respect of a sale and leaseback transaction means, at
the time of determination, the present value discounted at the rate of interest
implicit in that transaction, determined in accordance with GAAP, of the
obligation of the lessee for net rental payments during the remaining term of
the lease included in the sale and leaseback transaction, including any period
for which the lease has been extended or may, at the option of the lessor, be
extended.
"Board of Directors" means the board of directors or other governing body of
the Company or, if the Company is owned or managed by a single entity, the
board of directors or other governing body of that entity, or, in either case,
any committee of the board of directors or other governing body duly authorized
to act on behalf of the board or governing body.
"Board Resolution" means a duly authorized resolution of the Board of
Directors.
"Capital Lease Obligation" means, at the time any determination is to be
made, the amount of the liability in respect of a capital lease that would at
that time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means (1) in the case of a corporation, corporate stock, (2)
in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents, however designated, of
corporate stock, (3) in the case of a partnership or limited liability company,
partnership or membership interests, whether general or limited, and (4) any
other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing
Person.
"Cash Equivalents" means (1) United States dollars, (2) securities issued or
directly and fully guaranteed or insured by the United States government or any
agency or instrumentality of the United States government, provided that the
full faith and credit of the United States is pledged in support of those
securities or guarantees having maturities of not more than six months from the
date of acquisition, (3) certificates of deposit and eurodollar time deposits
with maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any domestic commercial bank having capital and
surplus in excess of $500 million and a Thompson Bank Watch Rating of "B" or
better, (4) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (2) and (3) above
entered into with any financial institution meeting the qualifications
specified in clause (3) above, (5) commercial paper having the highest rating
obtainable from Moody's Investors Service, Inc. or Standard & Poor's
Corporation and in each case maturing within six months after the date of
acquisition and (6) money market funds at least 95% of the assets of which
constitute Cash Equivalents of the kinds described in clauses (1)-(5) of this
definition.
"Change of Control" means the occurrence of any of the following:
(1) any "person", as the term is used in Section 13(d)(3) of the
Exchange Act, other than a Permitted Holder, is or becomes the beneficial
owner, directly or indirectly, of 35% or more of the Voting Stock, measured
by voting power rather than number of shares, of the Company or GCL, and
the Permitted Holders own, in the aggregate, a lesser percentage of the
total Voting Stock, measured by voting power rather than by number of
shares, of the Company or GCL than that person and do not have the right or
ability by voting power, contract or otherwise to elect or designate for
election a majority of the board of directors of the Company or GCL; for
the purposes of this clause, the other person will be deemed to
"beneficially own" any Voting Stock of a specified corporation held by a
parent corporation if the other person beneficially owns, directly or
indirectly, more than 35% of the Voting Stock, measured by voting power
rather than by number of shares, of the parent corporation and the
Permitted Holders beneficially own, directly or indirectly, in the
aggregate a lesser percentage of Voting Stock, measured by voting power
rather than by number of shares, of the parent corporation and do not have
the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the board of directors of the parent
corporation;
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(2) during any period of two consecutive years, Continuing Directors
cease for any reason to constitute a majority of the Board of Directors of
the Company or GCL;
(3) the Company or GCL consolidates or merges with or into any other
Person, other than a consolidation or merger (a) of the Company into GCL or
GCL into the Company, or the Company or GCL into a Restricted Subsidiary of
the Company or (b) in a transaction in which the outstanding Voting Stock
of the Company or GCL is changed into or exchanged for cash, securities or
other property with the effect that the beneficial owners of the
outstanding Voting Stock of the Company or GCL, respectively, immediately
before the transaction, beneficially own, directly or indirectly, more than
35% of the Voting Stock, measured by voting power rather than number of
shares, of the surviving corporation immediately following the transaction;
or
(4) the sale, transfer, conveyance or other disposition, other than by
way of merger or consolidation, in one or a series of related transactions,
of all or substantially all of the assets of GCL or the Company and its
Restricted Subsidiaries taken as a whole to any person other than a
Restricted Subsidiary of the Company or a Permitted Holder or a person more
than 50% of the Voting Stock, measured by voting power rather than by
number of shares, of which is owned, directly or indirectly, following the
transaction or transactions by the Permitted Holders; provided, however,
that sales, transfers, conveyances or other dispositions in the ordinary
course of business of capacity on cable systems owned, controlled or
operated by the Company or any Restricted Subsidiary or of
telecommunications capacity or transmission rights acquired by the Company
or any Restricted Subsidiary for use in its business, including, without
limitation, for sale, lease, transfer, conveyance or other disposition to
any customer of the Company or any Restricted Subsidiary will not be deemed
a disposition of assets for purposes of this clause (4).
The definition of a Change of Control includes a phrase relating to the
sale, lease, transfer, conveyance or other disposition of "all or substantially
all" of the assets of GCL or the Company and its Restricted Subsidiaries taken
as a whole, as that phrase is used in the Revised Model Business Corporation
Act. Although there is a developing body of case law interpreting the phrase
"substantially all", there is no precise established definition of that phrase
under applicable law. Accordingly, the ability of a Holder of Exchange Notes to
require the Company to purchase the Exchange Notes as a result of a sale,
lease, transfer, conveyance or other disposition of less than all of the assets
of GCL or the Company and its Restricted Subsidiaries taken as a whole to
another Person or group may be uncertain.
"Consolidated Capital Ratio" means, with respect to the Company or any of
its Restricted Subsidiaries, as of the date of any incurrence of Indebtedness
or issuance of Disqualified Stock, the ratio of (1) the aggregate consolidated
principal amount of Indebtedness outstanding and the liquidation preference of
Disqualified Stock as of the most recent quarterly or annual balance sheet
date, after giving pro forma effect to the incurrence of the Indebtedness or
the issuance of the Disqualified Stock and any other Indebtedness incurred and
Disqualified Stock issued since the balance sheet date, and the receipt and
application of the proceeds from that issuance to (2) Consolidated Net Worth as
of that balance sheet date after giving pro forma effect to the issuance of
Equity Interests, other than Disqualified Stock, issued since the balance sheet
date and the receipt and application of the proceeds from that issuance.
"Consolidated Cash Flow" means, with respect to the Company for any period,
the Consolidated Net Income of the Company and its Restricted Subsidiaries for
that period plus, to the extent that any of the following items were deducted
or added, without duplication, in computing the Consolidated Net Income:
(1) an amount equal to any extraordinary loss, less any gain, plus any
net loss, less any gain, realized in connection with any Asset Sale, plus
(2) provision for taxes based on income or profits of the Company and
its Restricted Subsidiaries for the period, plus
(3) Consolidated Interest Expense of the Company and its Restricted
Subsidiaries for the period, whether paid or accrued and whether or not
capitalized, plus
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(4) depreciation, amortization, including amortization of goodwill and
other intangibles and the amount of capacity available for sale charged to
cost of sales, but excluding amortization of prepaid cash expenses that
were paid in a prior period, and other non-cash expenses, excluding any
non-cash expense to the extent that it represents an accrual of or reserve
for cash expenses in any future period or amortization of a prepaid cash
expense that was paid in a prior period, of the Company and its Restricted
Subsidiaries for that period, minus
(5) non-cash items increasing such Consolidated Net Income for that
period, other than items that were accrued in the ordinary course of
business, plus
(6) any change in Deferred Revenue, in each case, on a consolidated
basis and determined in accordance with GAAP.
Notwithstanding the foregoing, the provision for taxes on the income or
profits of, and the depreciation and amortization and other non-cash expenses
of, a Restricted Subsidiary of the Company will be added to Consolidated Net
Income to compute Consolidated Cash Flow of the Company only to the extent that
a corresponding amount would be permitted at the date of determination to be
dividended to the Company by the Restricted Subsidiary without prior
governmental approval that has not been obtained, and without direct or
indirect restriction pursuant to the terms of its charter and all agreements,
excluding agreements evidencing Indebtedness incurred in accordance with clause
(k) of the covenant described above under the caption "--Covenants--Incurrence
of Indebtedness and Issuance of Preferred Stock", to which this provision will
not apply, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Restricted Subsidiary or its
shareholders.
"Consolidated Interest Expense" for any Person means for any period the
consolidated interest expense included in a consolidated income statement,
without deduction of interest income, of that Person and its consolidated
Subsidiaries for that period, including without limitation or duplication or,
to the extent not so included, with the addition of, (1) amortization of debt
issuance costs and original issue discount, (2) non-cash interest payments, (3)
the interest component of any deferred payment obligations, (4) the interest
component of all payments associated with Capital Lease Obligations, (5)
commissions, discounts and other fees and charges incurred in respect of Letter
of Credit or bankers' acceptance financings and (6) net payments, if any,
pursuant to Hedging Obligations.
"Consolidated Leverage Ratio" means, with respect to the Company or any of
its Restricted Subsidiaries, as of the date of any incurrence of Indebtedness
or issuance of Disqualified Stock, the ratio of (1) the aggregate consolidated
principal amount of Indebtedness outstanding and the liquidation preference of
Disqualified Stock as of the most recent quarterly or annual balance sheet
date, after giving pro forma effect to the incurrence of the Indebtedness or
the issuance of the Disqualified Stock and any other Indebtedness incurred and
Disqualified Stock issued since the balance sheet date, and the receipt and
application of the proceeds from that issuance to (2) Consolidated Cash Flow
for the four full fiscal quarters ending on or prior to the date of incurrence
of the Indebtedness or issuance of the Disqualified Stock for which
consolidated financial statements are available.
"Consolidated Net Income" means, with respect to the Company for any period,
the aggregate of the net income of the Company and its Restricted Subsidiaries
for that period, on a consolidated basis, determined in accordance with GAAP,
plus, to the extent that any of the following items were deducted in computing
the Consolidated Net Income, (a) non-recurring, non-cash charges, other than
charges arising from write-downs of assets, and (b) non-cash compensation
charges arising from stock options or other similar employee benefit or
compensation plans; provided that:
(1) the net income, but not loss, of any Restricted Subsidiary that is
accounted for by the equity method of accounting will be included only to
the extent of the amount of dividends or distributions paid in cash to the
Company or a Wholly-Owned Restricted Subsidiary of the Company by that
Restricted Subsidiary;
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(2) the net income, or loss, of any Person that is not a Restricted
Subsidiary will be included only to the extent of the amount of dividends
or other distributions actually paid to the Company or a Restricted
Subsidiary by that Person during that period;
(3) for purposes of clause (c) of the covenant described above under the
caption "--Covenants --Restricted Payments", the net income of any
Restricted Subsidiary will be excluded to the extent that the declaration
or payment of dividends or similar distributions by that Restricted
Subsidiary of that net income is not at the date of determination permitted
without any prior governmental approval that has not been obtained or,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Restricted Subsidiary or its
shareholders, except that the Company's equity in the net income of any
Restricted Subsidiary for that period will be included in Consolidated Net
Income up to the aggregate amount of cash that could have been distributed
by that Restricted Subsidiary during that period to the Company or another
Restricted Subsidiary as a dividend;
(4) the net income of any Person acquired in a pooling of interests
transaction for any period before the date of the acquisition will be
excluded;
(5) the equity of the Company or any Restricted Subsidiary in the net
income of any Unrestricted Subsidiary will be included in the Consolidated
Net Income up to the aggregate amount of cash actually distributed by that
Unrestricted Subsidiary during that period to the Company or a Restricted
Subsidiary as a dividend or other distribution, but not in excess of the
amount of the net income of that Unrestricted Subsidiary for that period;
and
(6) the cumulative effect of a change in accounting principles will be
excluded.
"Consolidated Net Worth" means, with respect to the Company as of any date,
without duplication, the sum of (1) the consolidated equity of the common
shareholders of the Company and its consolidated Restricted Subsidiaries as of
that date plus (2) the respective amounts reported on the Company's balance
sheet as of that date with respect to any series of preferred stock, other than
Disqualified Stock, that by its terms is not entitled to the payment of
dividends unless those dividends may be declared and paid only out of net
earnings in respect of the year of that declaration and payment, but only to
the extent of any cash received by the Company upon issuance of that preferred
stock, less (a) all write-ups, other than write-ups resulting from foreign
currency translations and write-ups of tangible assets of a going concern
business made within 12 months after the acquisition of that business and other
than write-ups attributable to the warrants issued under the Warrant Agreement,
dated as of January 21, 1998, as amended, after the date of the Indenture in
the book value of any asset owned by the Company or a consolidated Restricted
Subsidiary of the Company, (b) all investments as of that date in
unconsolidated Restricted Subsidiaries and in Persons that are not Restricted
Subsidiaries except, in each case, Permitted Investments, and (c) all
unamortized debt discount and expense and unamortized deferred charges as of
that date, all of the foregoing determined in accordance with GAAP.
"Consolidated Tangible Assets" means the total amount of assets, less
applicable reserves and other properly deductible items, which under generally
accepted accounting principles would be included on a consolidated balance
sheet of the Company and its Restricted Subsidiaries after deducting from the
consolidated balance sheet all goodwill, trade names, trademarks, patents,
unamortized debt discount and expense and other like intangibles, which in each
case under generally accepted accounting principles would be included on the
consolidated balance sheet.
"Continuing Directors" means individuals who at the beginning of the period
of determination constituted the Board of Directors of the Company or GCL, as
the case may be, together with any new directors whose election by the Board of
Directors or whose nomination for election by the shareholders of the Company
or GCL, as the case may be, was approved by a vote of at least a majority of
the directors of the Company or GCL, as the case may be, then still in office
who were either directors at the beginning of that period or whose election or
nomination for election was previously so approved or is designee of any one of
the Permitted Holders or any combination of the Permitted Holders or was
nominated or elected by the Permitted Holder(s) or any of their designees.
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"Currency Agreement" means, with respect to any Person, any foreign exchange
contract, currency swap agreement or other similar agreement as to which that
Person is a party or beneficiary.
"Debt Securities" means any bonds, notes, debentures or other similar
instruments, excluding, in any event, (1) any Capital Lease Obligations and (2)
any notes, bankers' acceptances or other instruments evidencing commercial
loans or equipment financing made by, and bills of exchange drawn on, banks,
other financial lending institutions or equipment vendors, issued by the
Company or by any Restricted Subsidiary, including by means of any Guarantee of
the Company or of any Restricted Subsidiary of securities of another Person,
whether in a public offering or private placement; provided, however, that in
no event will "Debt Securities" mean Indebtedness in the form of a bank credit
facility.
"Default" means any event that is, or with the passage of time or the giving
of notice or both would be, an Event of Default.
"Deferred Revenue" means amounts appearing as a liability on the financial
statements of the Company as prepared according to GAAP classified as deferred
revenue to the extent of cash received in connection with those amounts.
"Disqualified Stock" means any Capital Stock, other than the Company's 10
1/2% Senior Exchangeable Preferred Stock due 2008, that, by its terms, or by
the terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder of that Capital Stock,
or upon the happening of any event, matures or is mandatorily redeemable, under
a sinking fund obligation or otherwise, or redeemable at the option of the
Holder of that Capital Stock, in whole or in part, on or before the date that
is 91 days after the date on which the Exchange Notes mature; provided,
however, that any Capital Stock which would not constitute Disqualified Stock
but for provisions of that Capital Stock giving holders of that Capital Stock
the right to require the Company to repurchase or redeem the Capital Stock upon
the occurrence of a Change of Control or an Asset Sale occurring before the
final Stated Maturity of the Exchange Notes will not constitute Disqualified
Stock if the change of control and asset sale provisions applicable to the
Capital Stock are no more favorable to the holders of the Capital Stock than
the provisions applicable to the Exchange Notes contained in the covenants
described above under the caption "--Repurchase at the Option of Holders--Asset
Sales" and "--Repurchase at the Option of Holders--Change of Control",
respectively, and the Capital Stock specifically provides that the Company will
not repurchase or redeem any of the stock pursuant to those provisions before
the Company's repurchase of the Exchange Notes as are required to be
repurchased under those covenants.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock, but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock.
"Equity Offering" means an offering for cash by GCL or the Company of its
common stock, or options, warrants or rights to acquire the common stock.
"Existing Indebtedness" means Indebtedness of the Company and its Restricted
Subsidiaries, other than Indebtedness under the Credit Agreement, in existence
on the date of the Indenture, until those amounts are repaid; provided that
"Existing Indebtedness" will be deemed to include the senior subordinated notes
that may be issued, at the option of the Company, in exchange for its existing
10 1/2% Senior Exchangeable Preferred Stock due 2008.
"Frontier" means Frontier Corporation, a New York corporation.
"GAAP" means generally accepted accounting principles included in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in other statements by any other
entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of the Indenture.
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"GCL" means Global Crossing Ltd., a Bermuda company.
"GCL Expenses" means:
(1) costs, including all professional fees and expenses, incurred by GCL
to comply with its reporting obligations under federal or state laws or
under the Indenture, including any reports filed with respect to the
Securities Act, the Exchange Act or the respective rules and regulations
promulgated under those acts;
(2) indemnification obligations of GCL owing to directors, officers,
employees or other Persons under its charter or bye-laws or under written
agreements with those Persons;
(3) fees and expenses payable by GCL in connection with the issuance of
the Notes and the Exchange Notes;
(4) other operational expenses of GCL incurred in the ordinary course of
business; and
(5) expenses incurred by GCL in connection with any public offering of
Capital Stock or Indebtedness (a) where the net proceeds of the offering
are intended to be received by or contributed or loaned to the Company or a
Restricted Subsidiary, (b) in a prorated amount of expenses in proportion
to the amount of net proceeds intended to be so received, contributed or
loaned or (c) otherwise on an interim basis before completion of the
offering so long as GCL will cause the amount of expenses to be repaid to
the Company or the relevant Restricted Subsidiary out of the proceeds of
the offering promptly if completed.
"Government Securities" means securities that are:
(1) direct obligations or certificates representing an ownership
interest in those obligations of the United States of America, including
any agency or instrumentality of the United States of America of the
payment of which the full faith and credit of the United States of America
is pledged;
(2) obligations of a Person controlled or supervised by and acting as an
agency or instrumentality of the United States of America the payment of
which is unconditionally guaranteed as a full faith and credit obligation
by the United States of America; or
(3) obligations of a Person the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America,
which, in each case, are not callable or redeemable at the issuer's option.
"Guarantee" means a guarantee, other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner, including by way of a pledge of assets or through
letters of credit or reimbursement agreements, of all or any part of any
Indebtedness.
"Guarantors" means GCL and each other person that from time to time executes
a Guarantee in accordance with the provisions of the Indenture, and their
respective successors and assigns.
"Hedging Obligations" means, with respect to any Person, the obligations of
that Person under any Interest Rate Agreement or Currency Agreement.
"Indebtedness" means, with respect to any Person, any indebtedness of that
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit, or
reimbursement agreements in respect of those, or bankers' acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any balance that constitutes an accrued expense or trade payable, if and
to the extent any of the foregoing, other than letters of credit and Hedging
Obligations, would appear as a liability upon a balance sheet of that Person
prepared in accordance with GAAP, as well as all Indebtedness of others secured
by a Lien on any asset of that Person, whether or not the Indebtedness is
assumed by that Person, and, to the extent not otherwise included, the
guarantee by the Person of any indebtedness of any other
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Person. The amount of any Indebtedness outstanding as of any date will be (1)
the accreted value of that Indebtedness, in the case of any Indebtedness issued
with original issue discount, and (2) the principal amount of that
Indebtedness, together with any interest on that Indebtedness that is more than
30 days past due, in the case of any other Indebtedness.
"Interest Rate Agreement" means, with respect to any Person, any interest
rate protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement to which that Person is a party or beneficiary.
"Investments" means, with respect to any Person, all investments by that
Person in other Persons, including Affiliates, in the forms of direct or
indirect loans -- including guarantees of Indebtedness or other obligations --
advances or capital contributions -- excluding commission, travel and similar
advances to directors, officers and employees made in the ordinary course of
business -- purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities, together with all items that are or would
be classified as investments on a balance sheet prepared in accordance with
GAAP. If the Company or any of its Restricted Subsidiaries sells or otherwise
disposes of any Equity Interests of any direct or indirect Subsidiary so that,
after giving effect to that sale or disposition, that Person is no longer a
Subsidiary of the Company or of the Restricted Subsidiary, the Company will be
deemed to have made an Investment on the date of that sale or disposition equal
to the fair market value of the Equity Interests of the Subsidiary not sold or
disposed of in an amount determined as provided in the final paragraph of the
covenant described above under the caption "--Covenants--Restricted Payments".
"Letters of Credit" means one or more irrevocable direct pay letters of
credit issued by a bank or other financial institution to support the payment
of equity obligations of the Company to its Project Subsidiaries.
"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of that asset, whether
or not filed, recorded or otherwise perfected under applicable law, including
any conditional sale or other title retention agreement, any lease in that
nature, any option or other agreement to sell or give a security interest in,
and any filing of or agreement to give any financing statement under the
Uniform Commercial Code or equivalent statutes of any jurisdiction.
"Management Advances" means loans or advances made to directors, officers or
employees of GCL, the Company or any Restricted Subsidiary (1) in respect of
travel, entertainment or moving-related expenses incurred in the ordinary
course of business, (2) in respect of moving-related expenses incurred in
connection with any closing or consolidation of any facility or (3) in the
ordinary course of business not exceeding $2.5 million in the aggregate at any
time outstanding.
"Net Income" means, with respect to any Person, the net income (loss) of
that Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (1) any gain, but not
loss, together with any related provision for taxes on the gain, but not loss,
realized in connection with (a) any Asset Sale, including dispositions made
pursuant to sale and leaseback transactions, or (b) the disposition of any
securities by that Person or any of its Restricted Subsidiaries or the
extinguishment of any Indebtedness of that Person or any of its Restricted
Subsidiaries and (2) any extraordinary gain or loss, together with any related
provision for taxes on that extraordinary gain or loss.
"Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Restricted Subsidiaries in respect of any Asset Sale--including any
cash received upon the sale or other disposition of any non-cash consideration
received in any Asset Sale--net of the direct costs relating to the Asset
Sale--including legal, accounting and investment banking fees, and sales
commissions--and any relocation expenses incurred as a result of the Asset
Sale, taxes paid or payable as a result of the Asset Sale, after taking into
account any available tax credits or deductions and any tax sharing
arrangements, and any reserve for adjustment in respect of the sale price of
that asset or assets established in accordance with GAAP.
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"Non-Recourse Debt" means Indebtedness (1) as to which neither the Company
nor any Restricted Subsidiary (a) provides any guarantee or credit support of
any kind, including any undertaking, guarantee, indemnity, agreement or
instrument that would constitute Indebtedness, or (b) is directly or indirectly
liable as a guarantor or otherwise and (2) no default with respect to which,
including any rights that the holders of that Indebtedness may have to take
enforcement action against an Unrestricted Subsidiary, would permit, upon
notice, lapse of time or both, any holder of any other Indebtedness of the
Company or any Restricted Subsidiary to declare a default under the other
Indebtedness or cause the payment of the other Indebtedness to be accelerated
or payable before its Stated Maturity.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officer" means any Co-Chairman of the Board, the President, the Chief
Executive Officer, the Chief Operating Officer, the Chief Financial Officer,
any Senior Vice President, any Vice President, the Treasurer or the Secretary
of the Company.
"Officers' Certificate" means a certificate signed by two Officers.
"Pari Passu Debt Securities" means any Debt Securities of the Company or of
any Guarantor, other than GCL, which ranks pari passu in right of payment with
the Exchange Notes and any Guarantees, as applicable.
"PC-1 Subsidiaries" means Pacific Crossing Holdings Ltd., a Bermuda company,
and all of its direct and indirect Subsidiaries.
"Permitted Business" means any business that is the same as or related,
ancillary or complementary to any of the businesses of the Company or any of
its Restricted Subsidiaries on the date of the Indenture.
"Permitted Holder" means Pacific Capital Group, Inc. and CIBC World Markets
Corp., and their respective Affiliates.
"Permitted Investments" means:
(1) any Investment in the Company or in Restricted Subsidiaries of the
Company that are engaged in a Permitted Business;
(2) any Investment in Cash Equivalents;
(3) any Investment by the Company or any of its Restricted Subsidiaries
in a Person, if as a result of that Investment (a) that Person becomes a
Restricted Subsidiary of the Company that is engaged in a Permitted
Business or (b) that Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Restricted Subsidiary of the Company that
is engaged in a Permitted Business;
(4) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made under and in compliance with
the covenant included above under "--Repurchase at the Option of Holders--
Asset Sales";
(5) any acquisition of assets solely in exchange for the issuance of
Equity Interests, other than Disqualified Stock, of the Company;
(6) other Investments having an aggregate fair market value, measured on
the date each Investment was made and without giving effect to subsequent
changes in value, when taken together with all other Investments made under
this clause (6) that are at the time outstanding, not to exceed $25.0
million;
(7) any Investment made in a Receivables Entity in a Qualified
Receivables Transaction; and
(8) any investment by the Company or a Restricted Subsidiary in any
Person engaged in a Permitted Business with the Company or the Restricted
Subsidiary, provided that the investment is necessary or
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integral to the Company's or the Restricted Subsidiary's Permitted Business
and provided, further that the investment is the minimum amount reasonably
necessary for the Permitted Business and to comply with local law.
"Permitted Liens" means:
(1) Liens to secure Indebtedness, other than Pari Passu Debt Securities
or Subordinated Indebtedness, permitted to be incurred under the Indenture;
(2) Liens in favor of the Company or any Restricted Subsidiary;
(3) Liens on property of a Person existing at the time that Person is
merged with or into or consolidated with the Company or any of its
Restricted Subsidiaries; provided that those Liens were in existence before
the contemplation of the merger or consolidation and do not extend to any
assets other than those of the Person merged into or consolidated with the
Company or the Restricted Subsidiary;
(4) Liens on property existing at the time of acquisition of the
property by the Company or any of its Restricted Subsidiaries, provided
that those Liens were in existence before the contemplation of the
acquisition;
(5) Liens to secure the performance of statutory obligations, surety or
appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business;
(6) Liens existing on the date of the Indenture;
(7) Liens for taxes, assessments or governmental charges or claims that
are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded,
provided that any reserve or other appropriate provision as will be
required in conformity with GAAP will have been made for them;
(8) Liens incurred in the ordinary course of business of the Company or
any of its Restricted Subsidiaries with respect to obligations that do not
exceed $5.0 million at any one time outstanding and that (a) are not
incurred in connection with the borrowing of money or the obtaining of
advances or credit, other than trade credit in the ordinary course of
business, and (b) do not in the aggregate materially detract from the value
of the property or materially impair the use of the property in the
operation of business by the Company or the Restricted Subsidiary;
(9) Liens with respect to assets of a Restricted Subsidiary granted by
the Restricted Subsidiary to the Company or a Restricted Subsidiary to
secure Indebtedness owing to the Company or the Restricted Subsidiary;
(10) Liens, pledges and deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other
types of statutory obligations;
(11) Liens, pledges or deposits made to secure the performance of
tenders, bids, leases, public or statutory obligations, sureties, stays
appeals, indemnities, performance or other similar bonds and other
obligations of like nature incurred in the ordinary course of business,
exclusive of obligations for the payment of borrowed money;
(12) zoning restrictions, servitudes, easements, rights-of-way,
restrictions and other similar charges or encumbrances incurred in the
ordinary course of business which, in the aggregate, do not materially
detract from the value of the property subject thereto or materially
interfere with the ordinary conduct of the business of the Company or its
Restricted Subsidiaries;
(13) Liens arising out of judgments or awards against or other court
proceedings concerning the Company or any Restricted Subsidiary with
respect to which the Company or the Restricted Subsidiary is prosecuting an
appeal or proceeding for review and the Company or the Restricted
Subsidiary is maintaining adequate reserves in accordance with generally
accepted accounting principles; and
(14) any interest or title of a lessor in the property subject to any
lease other than a capital lease.
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"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries,
other than intercompany Indebtedness; provided that:
(1) the principal amount or accreted value, if applicable, of the
Permitted Refinancing Indebtedness does not exceed the principal amount of
or accreted value, if applicable, plus accrued interest on, the
Indebtedness so extended, refinanced, renewed, replaced, defeased or
refunded, plus the amount of reasonable expenses incurred in connection
with the extension, refinancing, renewal, replacement, defeasance or
refund;
(2) the Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of,
the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded;
(3) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the Exchange
Notes, the Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and is expressly subordinated in
right of payment to, the Exchange Notes on terms at least as favorable to
the Holders of the Exchange Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and
(4) the Indebtedness is incurred either by the Company or the Restricted
Subsidiary who is the obligor on the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, incorporated or unincorporated association, joint-
stock company, trust, unincorporated organization or government or other agency
or political subdivision of government or other entity of any kind.
"Project Subsidiary" means any Subsidiary of the Company formed to develop,
own and operate undersea fiber optic telecommunications cable systems.
"Purchase Money Indebtedness" means Indebtedness, including Acquired Debt
and Capital Lease Obligations, mortgage financings and purchase money
obligations, incurred for the purpose of financing all or any part of the cost
of construction, financing, installation, acquisition, lease, development,
design, engineering, financing, testing, start-up, upgrade, completion or
improvement of any assets used or useful in a Permitted Business, including any
related notes, guarantees, collateral documents, instruments and agreements
executed in connection with those, as the same may be amended, supplemented,
modified or restated from time to time.
"Qualified Receivables Transaction" means any transaction or series of
transactions that may be entered into by the Company or any of its Subsidiaries
pursuant to which the Company or any of its Subsidiaries may sell, convey or
otherwise transfer to (1) a Receivables Entity, in the case of a transfer by
the Company or any of its Subsidiaries, and (2) any other Person, in the case
of a transfer by a Receivables Entity, or may grant a security interest in, any
receivables, whether now existing or arising in the future, of the Company or
any of its Subsidiaries, and any assets related to those receivables including
all collateral securing those receivables, all contracts and all guarantees or
other obligations in respect of those receivables, and the proceeds of those
receivables.
"Receivables Entity" means a Wholly-Owned Subsidiary of the Company, or
another Person in which the Company or any Subsidiary of the Company may make
an Investment and to which the Company or any Subsidiary of the Company
transfers receivables and related assets, which engages in no activities other
than in connection with the financing of receivables and which is designated by
the Board of Directors, as provided below, as a Receivables Entity, (1) no
portion of the Indebtedness or any other Obligations, contingent or
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otherwise, of which (a) is guaranteed by the Company or any Subsidiary of the
Company, excluding guarantees of Obligations, other than the principal of, and
interest on, Indebtedness, under Standard Securitization Undertakings, (b) is
recourse to or obligates the Company or any Subsidiary of the Company in any
way other than pursuant to Standard Securitization Undertakings or (c) subjects
any property or asset of the Company or any Subsidiary of the Company, directly
or indirectly, contingently or otherwise, to the satisfaction of that portion
of Indebtedness or other Obligations, other than pursuant to Standard
Securitization Undertakings, (2) with which neither the Company nor any
Subsidiary of the Company has any material contract, agreement, arrangement or
understanding other than on terms no less favorable to the Company or the
Subsidiary than those that might be obtained at the time from Persons that are
not Affiliates of the Company, other than fees payable in the ordinary course
of business in connection with servicing receivables, and (3) to which neither
the Company nor any Subsidiary of the Company has any obligation to maintain or
preserve that entity's financial condition or cause that entity to achieve
certain levels of operating results. Any designation by the Board of Directors
will be evidenced to the Trustee by filing with the Trustee a certified copy of
the resolution of the Board of Directors giving effect to the designation and
an Officers' Certificate certifying that designation complied with the
foregoing conditions.
"Related Taxes" means any taxes, charges or assessments, including, but not
limited to, sales, use, transfer, rental, ad valorem, value-added, stamp,
property, consumption, franchise, license, capital, net worth, gross receipts,
excise, occupancy, intangibles or similar taxes, charges or assessments, other
than taxes measured by income and withholding imposed on payments made by GCL
required to be paid by GCL by virtue of its being incorporated or having
Capital Stock outstanding, but not by virtue of owning stock or other equity
interests of any corporation or other entity other than the Company or any of
its Subsidiaries), or being a holding company parent of the Company of
receiving dividends from or other distributions in respect of the Capital Stock
of the Company, or having guaranteed any obligations of the Company of any
Subsidiary of the Company, or having made any payment in respect of any of the
items for which the Company is permitted to make payments to GCL under the
covenant described above under "--Covenants--Restricted Payments".
"Restricted Investment" means any Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary and, with respect to Pacific
Crossing Ltd. and all of its direct and indirect Subsidiaries (the "PC-1
Companies"), upon designation of the PC-1 Companies by the Board of Directors
as "Restricted Subsidiaries", whether or not the PC-1 Companies meet the 50%
test specified in the definition of "Subsidiary"; provided, however, that GCL
and Frontier will be Restricted Subsidiaries of the Company and provided
further, however, that the Company at its election may also designate any other
Subsidiary of GCL and any Subsidiary of Frontier as a Restricted Subsidiary.
"Significant Subsidiary" means any Restricted Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Act, as that Regulation is in effect on the date of
the Indenture.
"Standard Securitization Undertakings" means representations, warranties,
covenants and indemnities entered into by the Company or any Subsidiary of the
Company which are reasonably customary in the securitization of receivables
transactions.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which the payment of
interest or principal was scheduled to be paid in the original documentation
governing the Indebtedness, and will not include any contingent obligations to
repay, redeem or repurchase any such interest or principal before the date
originally scheduled for the payment of the interest or principal.
"Subsidiary" means, with respect to any Person, (1) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled, without regard to the
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occurrence of any contingency, to vote in the election of directors, managers
or trustees of that corporation, association or other business entity is at the
time owned or controlled, directly or indirectly, by that Person or one or more
of the other Subsidiaries of that Person or a combination of that Person and
one or more of its Subsidiaries and (2) any partnership (a) the sole general
partner or the managing general partner of which is that Person or a Subsidiary
of that Person or (b) the only general partners of which are that Person or of
one or more Subsidiaries of that Person or any combination of that Person and
one or more of its Subsidiaries.
"Unrestricted Subsidiary" means any Subsidiary of the Company that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to
a Board Resolution; but only to the extent that the Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is a Person with respect to which neither the Company nor any of its
Restricted Subsidiaries has any direct or indirect obligation to maintain
or preserve that Person's financial condition or to cause such Person to
achieve any specified levels of operating results; and
(3) has not guaranteed or otherwise directly or indirectly provided
credit support for any Indebtedness of the Company or any of its Restricted
Subsidiaries.
Any designation by the Board of Directors will be evidenced by filing
with the Trustee a certified copy of the Board Resolution giving effect to
that designation and an Officers' Certificate certifying that that
designation complied with the foregoing conditions and was permitted by the
covenant described above under the caption "--Covenants--Restricted
Payments". If, at any time, any Unrestricted Subsidiary would fail to meet
the foregoing requirements as an Unrestricted Subsidiary, it will
thereafter cease to be an Unrestricted Subsidiary for purposes of the
Indenture and any Indebtedness of that Subsidiary will be deemed to be
incurred by a Restricted Subsidiary of the Company as of that date and, if
that Indebtedness is not permitted to be incurred as of that date under the
covenant described under the caption "--Covenants--Incurrence of
Indebtedness and Issuance of Preferred Stock", the Company will be in
default of that covenant. The Board of Directors of the Company may at any
time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that that designation will be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of that Unrestricted Subsidiary and the designation will only
be permitted if (1) that Indebtedness is permitted under the covenant
described under the caption "--Covenants--Incurrence of Indebtedness and
Issuance of Preferred Stock", calculated on a pro forma basis as if the
designation had occurred at the beginning of the four-quarter reference
period, and (2) no Default or Event of Default would be in existence
following the designation.
"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of that Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (1) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years, calculated to the nearest one-twelfth, that will elapse
between that date and the making of the payment, by (2) the then outstanding
principal amount of that Indebtedness.
"Wholly-Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of that Person all of the outstanding Capital Stock or other
ownership interests of which, other than directors' qualifying shares, will at
the time be owned by that Person or by one or more Wholly-Owned Restricted
Subsidiaries of that Person and one or more Wholly-Owned Restricted
Subsidiaries of that Person.
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Book-Entry, Delivery and Form
All Exchange Notes will be represented by permanent Global Notes in fully
registered form without coupons (the "Global Notes"), which will be deposited
with the Trustee as custodian for the DTC and registered in the name of the DTC
or of a nominee of the DTC. See "Book-Entry Procedures and Settlement" on page
88.
Certificated Notes
If (1) the Company notifies the Trustee in writing that the DTC is no longer
willing or able to act as a depositary or the DTC ceases to be registered as a
clearing agency under the Exchange Act and a successor depositary is not
appointed within 90 days of that notice or cessation, (2) the Company, at its
option, notifies the Trustee in writing that it elects to cause the issuance of
Exchange Notes in definitive form under the Indenture or (3) upon the
occurrence of certain other events as provided in the Indenture, then, upon
surrender by the DTC of the Global Notes, certificated Exchange Notes will be
issued to each person that the DTC identifies as the beneficial owner of the
Exchange Notes represented by the Global Notes. Upon this issuance, the Trustee
is required to register the certificated Exchange Notes in the name of that
person or persons, or their nominee, and cause the same to be delivered to
them.
Neither the Company nor the Trustee will be liable for any delay by the DTC
or any Participant or Indirect Participant in identifying the beneficial owners
of the related Exchange Notes, and each person may conclusively rely on, and
will be protected in relying on, instructions from the DTC for all purposes,
including with respect to the registration and delivery, and the respective
principal amounts, of the Exchange Notes to be issued.
Exchange Offer; Registration Rights
On November 19, 1999, the Company, GCL and the Initial Purchasers entered
into the Registration Rights Agreement. Under the Registration Rights
Agreement, the Company agreed, for the benefit of the holders of the Restricted
Notes, that the Company will, at its cost, (1) cause to be filed, on or before
90 days after the Closing Date, the Exchange Offer Registration Statement with
the SEC under the Securities Act concerning the Exchange Offer, and (2) (a) use
its reasonable best efforts to cause the Exchange Offer Registration Statement
to be declared effective by the SEC on or before 150 days after the Closing
Date and (b) cause the Exchange Offer to remain open for the minimum period
required by applicable federal and state securities laws, provided, however,
that in no event will that period be less than 20 business days. For each
Restricted Note surrendered to the Company and accepted for exchange in the
Exchange Offer, the holder of that Restricted Note will receive an Exchange
Note having a principal amount equal to that of the surrendered Restricted
Note.
Based upon no-action letters issued by the staff of the SEC to third
parties, the Company believes that the Exchange Notes issued in the Exchange
Offer in exchange for Restricted Notes would in general be freely transferable
after the Exchange Offer without further registration under the Securities Act
if the holder of the Exchange Notes represents (1) that it is not an
"affiliate," as defined in Rule 405 under the Securities Act, of the Company,
(2) that it is acquiring the Exchange Notes in the ordinary course of its
business and (3) that it has no arrangement or understanding with any person to
participate in the distribution, within the meaning of the Securities Act, of
the Exchange Notes; provided that, in the case of broker-dealers, a prospectus
meeting the requirements of the Securities Act be delivered as required.
However, the SEC has not considered the Exchange Offer in the context of a no-
action letter and there can be no assurance that the staff of the SEC would
make a similar determination with respect to the Exchange Offer as in those
other circumstances. Holders of Restricted Notes wishing to accept the Exchange
Offer must represent to the Company that those conditions have been met. Each
broker-dealer that receives Exchange Notes for its own account in the Exchange
Offer, where it acquired the Restricted Notes exchanged for the Exchange Notes
for its own account as a result of market-making or other trading activities,
must acknowledge that it will deliver a prospectus in connection with the
resale of the Exchange Notes. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
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A holder of Restricted Notes, other than certain specified holders, who
wishes to exchange those Restricted Notes for Exchange Notes in the Exchange
Offer will be required to represent that any Exchange Notes to be received by
it will be acquired in the ordinary course of its business, and that at the
time of the commencement of the Exchange Offer it has no arrangement or
understanding with any person to participate in the distribution, within the
meaning of the Securities Act, of the Exchange Notes and that it is not an
"affiliate" of the Company, as defined in Rule 405 under the Securities Act, or
if it is an affiliate, that it will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent applicable.
If (1) the Exchange Offer is not permitted by applicable law or SEC policy
or (2) if any Holder of Restricted Securities will notify the Company within 20
business days following the consummation of the Exchange Offer that (a) the
holder was prohibited by law or SEC policy from participating in the Exchange
Offer or (b) the holder may not resell the Exchange Notes acquired by it in the
Exchange Offer to the public without delivering a prospectus and the Prospectus
contained in the Exchange Offer Registration Statement is not appropriate or
available for the resales by the holders or (c) the holder is a broker-dealer
and holds Notes acquired directly from the Company or any of its affiliates,
then the Company and the Guarantor will, at their cost, (A) use their
reasonable best efforts to cause to be filed a shelf registration statement
(the "Shelf Registration Statement") covering resales of the Restricted Notes
or the Exchange Notes, as the case may be, (B) use their reasonable best
efforts to cause the Shelf Registration Statement to be declared effective
under the Securities Act and (C) use their reasonable best efforts to keep the
Shelf Registration Statement effective until two years after its effective date
or any shorter period ending when all resales of Restricted Notes or Exchange
Notes covered by the Shelf Registration Statement have been made. A holder
selling those Restricted Notes or Exchange Notes under the Shelf Registration
Statement generally would be required to be named as a selling security holder
in the related prospectus and to deliver a prospectus to purchasers, will be
subject to certain of the civil liability provisions under the Securities Act
in connection with those sales and will be bound by the provisions of the
Registration Agreement which are applicable to that holder, including certain
indemnification obligations.
If (1) the Company and the Guarantors fail to file any of the Registration
Statements required by the Registration Rights Agreement on or before the date
specified for such filing, (2) any of the Registration Statements is not
declared effective by the SEC on or before the date specified for the
effectiveness, (3) the Company and the Guarantors fail to consummate the
Registered Exchange Offer within 180 days of the Closing Date with respect to
the Exchange Offer Registration Statement or (4) any Registration Statement
required by the Registration Rights Agreement is declared effective but
thereafter ceases to be effective or usable in connection with its intended
purpose (each event referred to in clause (1) through (4) above a "Registration
Default"), then the Company and the Guarantors will pay to each holder of the
Restricted Notes affected thereby Special Interest which will accrue and be
payable semi-annually on the Notes and the Exchange Notes, in addition to the
stated interest on the Notes and the Exchange Notes, from and including the
date the Registration Default occurs to, but excluding the date on which the
applicable Registration Statement is filed or is declared effective, the
Registered Exchange Offer is consummated, or the applicable Registration
Statement is again declare effective or made usable. During the time that
Special Interest is accruing continuously, the rate of that Special Interest
will be 0.50% per annum during the first 90-day period and shall increase by
0.25% per annum for each subsequent 90-day period, but in no event will the
rate exceed 1.0% per annum in the aggregate regardless of the number of
Registration Defaults. If, after the cure of all Registration Defaults then in
effect, there is a subsequent Registration Default, the rate of Special
Interest for the subsequent Registration Default will initially be 0.50%
regardless of the Special Interest rate in effect with respect to any prior
Registration Default a the time of the cure of that Registration Default.
The summary in this section of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, all the provisions of the Registration Rights
Agreement, a copy of which may be obtained from the Company as provided under
"Where You Can Find More Information" on page i.
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BOOK-ENTRY PROCEDURES AND SETTLEMENT
Upon issuance, all book-entry exchange notes will be represented by one or
more fully registered global notes, without coupons. Each global note will be
deposited with, or on behalf of, the DTC, a securities depositary, and will be
registered in the name of the DTC or a nominee of the DTC. The DTC will thus be
the only registered holder of the notes.
Purchasers of the exchange notes may only hold interests in the global notes
through the DTC if they are participants in the DTC system. Purchasers may also
hold interests through a securities intermediary--banks, brokerage houses and
other institutions that maintain securities accounts for customers--that has an
account with the DTC or its nominee. The DTC will maintain accounts showing the
security holdings of its participants, and these participants will in turn
maintain accounts showing the security holdings of their customers. Some of
these customers may themselves be securities intermediaries holding securities
for their customers. Thus, each beneficial owner of a book-entry exchange note
will hold that note indirectly through a hierarchy of intermediaries, with the
DTC at the "top" and the beneficial owner's own securities intermediary at the
"bottom".
The exchange notes of each beneficial owner of a book-entry exchange note
will be evidenced solely by entries on the books of the beneficial owner's
securities intermediary. The actual purchaser of exchange notes will generally
not be entitled to have the exchange notes represented by the global notes
registered in its name and will not be considered the owner under our charter
or bye-laws. In most cases, a beneficial owner will also not be able to obtain
a paper certificate evidencing the holder's ownership of exchange notes. The
book-entry system for holding securities eliminates the need for physical
movement of certificates and is the system through which most publicly traded
stock is held in the United States. However, the laws of some jurisdictions
require some purchasers of securities to take physical delivery of their
securities in definitive form. These laws may impair the ability of a
beneficial owner to transfer book-entry exchange notes.
A beneficial owner of book-entry exchange notes represented by a global note
may exchange the exchange notes for definitive (paper) exchange notes only if:
. the DTC is unwilling or unable to continue as depositary for that global
note and we do not appoint a qualified replacement for the DTC within 90
days; or
. we, in our sole discretion, decide to allow some or all book-entry notes
to be exchangeable for definitive exchange notes in registered form.
Any global note that is so exchanged will be exchanged in whole for
definitive exchange notes in registered form, with the same terms and of an
equal aggregate principal amount. Definitive exchange notes will be registered
in the name or names of the person or persons specified by the DTC in a written
instruction to the registrar of the exchange notes. The DTC may base its
written instruction upon directions that it receives from its participants.
In this prospectus, references to actions taken by holders of exchange notes
will mean actions taken by the DTC upon instructions from its participants, and
references to payments and notices of redemption to holders of exchange notes
will mean payments and notices of redemption to the DTC as the registered
holder of the exchange notes for distribution to participants in accordance
with the DTC's procedures.
The DTC is a limited purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered under section 17A of the Exchange Act. The rules
applicable to the DTC and its participants are on file with the SEC.
The DTC's management is aware that some computer applications, systems, and
the like for processing dates that are dependent upon calendar dates, including
dates before, on, and after January 1, 2000, may encounter "Year 2000
problems". The DTC has informed its participants and other members of the
financial
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community that it has developed and is implementing a program so that its
systems, as they relate to the timely payment of distributions to shareholders,
book-entry deliveries, and settlement of trades within the DTC, continue to
function appropriately. This program includes a technical assessment and a
remediation plan, each of which is complete. Additionally, the DTC's plan
includes a testing phase, which is expected to be completed within appropriate
time frames.
We will not have any responsibility or liability for any aspect of the
records relating to, or payments made on account of, beneficial ownership
interests in the book-entry securities or for maintaining, supervising or
reviewing any records relating to beneficial ownership interests.
The DTC may discontinue providing its services as securities depositary at
any time by giving reasonable notice. Under those circumstances, in the event
that a successor securities depositary is not appointed, securities
certificates are required to be printed and delivered. Additionally, we may
decide to discontinue use of the system of book-entry transfers through the DTC
or any successor depositary with respect to the exchange notes. In that event,
certificates for the exchange notes will be printed and delivered.
The information in this section concerning the DTC and the DTC's book-entry
system has been obtained from sources that we believe to be reliable, but we do
not take responsibility for the accuracy of that information.
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CERTAIN INCOME TAX CONSEQUENCES
Taxation of Global Crossing Holdings
We believe that a significant portion of the income derived from our subsea
systems will not be subject to tax in Bermuda, which currently has no corporate
income tax, or other countries in which we or our affiliates conduct activities
or in which our customers are located, including the United States. However,
this belief is based upon the anticipated nature and conduct of our business,
which may change, and upon our understanding of our position under the tax laws
of the various countries in which we have assets or conduct activities, which
position is subject to review and possible challenge by taxing authorities and
to possible changes in law, which may have retroactive effect. The extent to
which certain taxing jurisdictions may require us to pay tax or to make
payments in lieu of tax cannot be determined in advance. In addition, our
operations and payments due to us may be affected by changes in taxation,
including retroactive tax claims or assessments of withholding on amounts
payable to us or other taxes assessed at the source, in excess of the taxation
we anticipate based on business contacts and practices and the current tax
regimes. We cannot assure you that these factors will not have a material
adverse effect on us.
Bermuda Tax Considerations
Under current Bermuda law, we are not subject to tax in Bermuda on income or
capital gains. Furthermore, we have obtained from the Minister of Finance of
Bermuda under the Exempted Undertakings Tax Protection Act 1966, an undertaking
that, in the event that Bermuda enacts any legislation imposing tax computed on
profits, income, any capital asset, gain or appreciation, then the imposition
of that tax will not be applicable to us or to any of our operations, neither
will that tax, or any tax in the nature of estate duty or inheritance tax,
become applicable to us or our shares, debentures or other obligations, until
March 28, 2016. This undertaking does not, however, prevent the imposition of
any tax or duty on persons ordinarily resident in Bermuda or any property tax
on any company, including ourselves, owning real property or leasehold
interests in Bermuda.
United States Federal Income Tax Considerations
We and our non-United States subsidiaries will be subject to United States
federal income tax at regular corporate rates, and to United States branch
profits tax, on our income, if any, that is effectively connected with the
conduct of a trade or business within the United States, and will be required
to file federal income tax returns reflecting that income. We intend to conduct
our operations so as to reduce the amount of our effectively connected income.
However, we cannot assure you that the Internal Revenue Service will agree with
the positions we take in this regard. Moreover, our United States subsidiaries
will be subject to United States federal income tax on their worldwide income
regardless of its source, subject to reduction by allowable foreign tax
credits, and distributions by our United States subsidiaries to us or to our
non-United States subsidiaries generally will be subject to United States
withholding tax.
Taxation of Noteholders
Bermuda Tax Considerations
Under current Bermuda law, no income, withholding or other taxes or stamp or
other duties are imposed upon the issue, transfer or sale of the exchange notes
or on any payments thereunder. See "Taxation of Global Crossing Holdings--
Bermuda Tax Considerations" above for a description of the undertaking on taxes
obtained by us from the Minister of Finance of Bermuda.
United States Federal Income Tax Considerations
The following is a summary of certain United States federal income tax
consequences for beneficial owners of exchange notes that receive their
exchange notes in connection with this exchange offer, that hold the
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exchange notes as capital assets and that are "United States persons" under the
Internal Revenue Code. Under the Internal Revenue Code, you are a "United
States person" if you are:
. a citizen or resident of the United States;
. a corporation or partnership created or organized in or under the laws
of the United States or any political subdivision of the United States;
. an estate the income of which is subject to United States federal income
taxation regardless of its source;
. a trust that is subject to the supervision of a court within the United
States and the control of one or more United States persons; or
. a trust that has a valid election in effect under applicable United
States Treasury regulations to be treated as a United States person.
This summary is based on current law, which is subject to change, perhaps
retroactively, is for general purposes only and should not be considered tax
advice. This summary does not represent a detailed description of the federal
income tax consequences to you in light of your particular circumstances. In
addition, it does not present a description of the United States federal income
tax consequences applicable to you if you are subject to special treatment
under the United States federal income tax laws, including if you are:
. a dealer in securities or currencies;
. a trader in securities if you elect to use a mark-to-market method of
accounting for your securities holdings;
. a financial institution;
. an insurance company;
. a tax-exempt organization;
. a person liable for alternative minimum tax;
. a person holding exchange notes as part of a hedging, integrated or
conversion transaction, constructive sale or straddle; or
. a United States person whose "functional currency" is not the United
States dollar.
We cannot assure you that a later change in law will not alter significantly
the tax considerations that we describe in this summary.
If a partnership holds our exchange notes, the tax treatment of a partner
will generally depend upon the status of the partner and the activities of the
partnership. If you are a partner of a partnership holding our exchange notes,
you should consult your tax advisor.
You should consult your own tax advisor concerning the particular United
States federal income tax consequences to you of the ownership and disposition
of the exchange notes, as well as the consequences to you arising under the
laws of any other taxing jurisdiction.
Consequences of the Exchange
The exchange of the outstanding notes for the exchange notes in the Exchange
Offer, see "Description of the Exchange Notes--Exchange Offer; Registration
Rights" on page 86, will not constitute a taxable event to you. Consequently,
(1) you will not realize any gain or loss upon receipt of an exchange note; (2)
the holding period of the exchange note will include the holding period of the
outstanding note exchanged for the exchange note; and (3) the adjusted tax
basis of the exchange note will be the same as the adjusted tax basis of the
outstanding note exchanged for the exchange note immediately before the
exchange.
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2009 Exchange Notes
Payment of Interest
Stated interest on a 2009 exchange note will be taxable to you as ordinary
income at the time that such interest accrues or is received, in accordance
with your regular method of accounting for United States federal income tax
purposes.
Sale, Exchange or Retirement of the 2009 Exchange Notes
When you sell, exchange or retire a 2009 exchange note, you will recognize
gain or loss equal to the difference between the amount you receive, less any
accrued interest you have not previously included in income, which will be
taxable as such, and your adjusted tax basis in the 2009 exchange note. Your
tax basis in a 2009 exchange note will generally be your cost of obtaining the
outstanding 2009 note exchanged for the 2009 exchange note. Gain or loss
realized on the sale, exchange or retirement of a 2009 exchange note will
generally be treated as capital gain or loss. Generally, capital gains of
individuals derived in respect of capital assets held for more than one year
are eligible for reduced rates of taxation. The deductibility of capital losses
is subject to limitations.
Information Reporting and Backup Withholding
In general, unless you are an exempt recipient such as a corporation,
information reporting will apply to principal and interest payments that we
make to you and to the proceeds from the sale of your 2009 exchange notes.
Backup withholding at a 31% rate will apply to such payments if you fail to
provide your taxpayer identification number or certification of foreign or
other exempt status or fail to report in full dividend and interest income.
Any amounts withheld under the backup withholding rules will be allowed as a
credit against your U.S. federal income tax liability and may entitle you to a
refund, provided that the required information is furnished to the Internal
Revenue Service.
2006 Exchange Notes
Payment of Interest
Except as provided below, interest on a 2006 exchange note will be taxable
to you as ordinary income at the time that that interest accrues or is
received, in accordance with your regular method of accounting for United
States federal income tax purposes.
Original Issue Discount
Because the outstanding 2006 notes were issued with original issue discount,
which we refer to as "OID", in an amount equal to the difference between their
stated redemption price at maturity, the sum of all payments to be made on the
outstanding 2006 notes other than "qualified stated interest", and their "issue
price", the 2006 exchange notes will be treated as having been issued with an
equivalent amount of OID. You should be aware that you generally must include
OID in gross income in advance of the receipt of cash attributable to that
income.
The "issue price" of each 2006 exchange note is equal to the issue price of
the outstanding 2006 note exchanged for the exchange note, which is $981.18 for
each $1,000 of notes held. The term "qualified stated interest" means stated
interest that is unconditionally payable in cash or in property, other than
debt instruments of the issuer, at least annually at a single fixed rate or,
subject to certain conditions, based on one or more interest indices. Interest
is payable at a single fixed rate only if the rate appropriately takes into
account the length of the interval between payments. The stated interest
payments on the 2006 exchange notes are qualified stated interest.
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The amount of OID includible in income by you, if you are the initial holder
of a 2006 exchange note, is the sum of the "daily portions" of OID with respect
to the 2006 exchange note for each day during the taxable year or portion of
the taxable year in which you held that 2006 exchange note, which we refer to
as "accrued OID". The daily portion is determined by allocating to each day in
any "accrual period" a pro rata portion of the OID allocable to that accrual
period. The "accrual period" for a 2006 exchange note may be of any length and
may vary in length over the term of the 2006 exchange note, provided that each
accrual period is no longer than one year and each scheduled payment of
principal or interest occurs on the first day or the final day of an accrual
period.
The amount of OID allocable to any accrual period is an amount equal to the
excess, if any, of (1) the product of the 2006 exchange note's adjusted issue
price at the beginning of that accrual period and its yield to maturity,
determined on the basis of compounding at the close of each accrual period and
properly adjusted for the length of the accrual period, over (2) the sum of any
qualified stated interest allocable to the accrual period. OID allocable to a
final accrual period is the difference between the amount payable at maturity,
other than a payment of qualified stated interest, and the adjusted issue price
at the beginning of the final accrual period. Special rules will apply for
calculating OID for an initial short accrual period.
The "adjusted issue price" of a 2006 exchange note at the beginning of any
accrual period is equal to its issue price increased by the accrued OID for
each prior accrual period and reduced by any payments made on such 2006
exchange note, other than qualified stated interest, on or before the first day
of the accrual period. Under these rules, you will have to include in income
increasingly greater amounts of OID in successive accrual periods. We are
required to provide information returns stating the amount of OID accrued on
2006 exchange notes held of record by persons other than corporations and other
exempt holders.
You may elect to treat all interest on any 2006 exchange note as OID and
calculate the amount includible in gross income under the constant yield method
described above. For the purposes of this election, interest includes stated
interest, acquisition discount, OID, de minimis OID and unstated interest. The
election is to be made for the taxable year in which you acquired the
outstanding 2006 note, and may not be revoked without the consent of the
Internal Revenue Service. You should consult with your own tax advisors about
this election.
Sale, Exchange or Retirement of the 2006 Exchange Notes
When you sell, exchange or retire a 2006 exchange note, you will recognize
gain or loss equal to the difference between the amount you receive, less any
accrued qualified stated interest you have not previously included in income,
which will be taxable as such, and your adjusted tax basis in the 2006 exchange
note. Your tax basis in a 2006 exchange note will, in general, be the adjusted
tax basis of the outstanding 2006 note exchanged for the exchange note
immediately before the exchange, increased by OID and reduced by any cash
payments on the 2006 exchange note other than qualified stated interest. Gain
or loss realized on the sale, exchange or retirement of a 2006 exchange note
will generally be treated as capital gain or loss. Generally, capital gains of
individuals derived in respect of capital assets held for more than one year
are eligible for reduced rates of taxation. The deductibility of capital losses
is subject to limitations.
Information Reporting and Backup Withholding
In general, unless you are an exempt recipient such as a corporation,
information reporting will apply to principal and interest, including OID,
payments that we make to you and to the proceeds from the sale of your 2006
exchange notes. Backup withholding at a 31% rate will apply to such payments if
you fail to provide your taxpayer identification number or certification of
foreign or other exempt status or fail to report in full dividend and interest
income.
Any amounts withheld under the backup withholding rules will be allowed as a
credit against your U.S. federal income tax liability and may entitle you to a
refund, provided that the required information is furnished to the Internal
Revenue Service.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange notes for its own account in the
exchange offer must acknowledge that it will deliver a prospectus in connection
with any resale of those exchange notes. This prospectus, as it may be amended
or supplemented from time to time, may be used by a broker-dealer in connection
with resales of exchange notes received in exchange for outstanding notes only
where the outstanding notes were acquired as a result of market-making
activities or other trading activities. We have agreed that we will make this
prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale for a period of 180 days from the date on
which the exchange offer is consummated, or the shorter period which will
terminate when all outstanding notes acquired by broker-dealers for their own
accounts as a result of market-making activities or other trading activities
have been exchanged for exchange notes and those exchange notes have been
resold by the broker-dealers.
We will not receive any proceeds from any sales of exchange notes by broker-
dealers. Exchange notes received by broker-dealers for their own account in the
exchange offer may be sold from time to time in one or more transactions in the
over-the-counter market, in negotiated transactions, through the writing of
options on the exchange notes or a combination of those methods of resale, at
market prices prevailing at the time of resale, at prices related to those
prevailing market prices or at negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any broker-dealer
or the purchasers of any exchange notes. Any broker-dealer that resells
exchange notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any resale of exchange notes, and any
commissions or concessions received by any of those persons, may be deemed to
be underwriting compensation under the Securities Act. The letter of
transmittal states that by acknowledging that it will deliver and by delivering
a prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
LEGAL MATTERS
Certain Bermuda legal matters with respect to the exchange notes will be
passed upon for us by Appleby, Spurling & Kempe. Certain legal matters will be
passed upon for us by Simpson Thacher & Bartlett as to matters of United States
and New York law. As of [ ], 1999, lawyers of Simpson Thacher & Bartlett who
have participated in the preparation of this document beneficially owned
approximately [ ] shares of the common stock of our parent, Global Crossing
Ltd. As of [ ], 1999, lawyers of Appleby, Spurling & Kempe who have
participated in the preparation of this document beneficially owned
approximately [ ] shares of the common stock of Global Crossing Ltd.
EXPERTS
The consolidated financial statements of Global Crossing Ltd. and its
subsidiaries and Global Crossing Holdings Ltd. and its subsidiaries
incorporated by reference in this prospectus and elsewhere in the registration
statement have been audited by Arthur Andersen & Co., independent public
accountants, as indicated in their reports with respect thereto, and are
incorporated by reference in reliance upon the authority of said firm as
experts in giving said reports.
The consolidated financial statements incorporated by reference in this
Registration Statement of which this prospectus is a part to the Annual Report
on Form 10-K of Frontier Corporation for the year ended December 31, 1998 and
audited historical financial statements included on pages 22-42 of Frontier
Corporation's Form 8-K dated January 26, 1999, have been so incorporated in
reliance on the reports of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
The combined financial statements of Global Marine Systems incorporated by
reference in this prospectus have been audited by KPMG Audit Plc, chartered
accountants, as stated in their report incorporated by reference in this
prospectus, in reliance upon the authority of said firm of experts in
accounting and auditing.
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The financial statements of Racal Telecom and its subsidiaries incorporated
by reference in this registration statement of which this prospectus is a part
have been audited by Deloitte & Touche, independent auditors, as stated in
their report incorporated by reference in this registration statement of which
this prospectus is a part.
The consolidated financial statements incorporated by reference in this
registration statement of which this prospectus is a part of HCL Holdings
Limited and subsidiaries have been so incorporated in reliance on the reports
of PricewaterhouseCoopers, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
SERVICE OF PROCESS AND ENFORCEMENT OF LIABILITIES
We are organized under the laws of Bermuda. In addition, a number of our
directors and officers reside outside of the United States and a substantial
portion of our assets are located outside of the United States. As a result, it
may be difficult for you to effect service of process within the United States
upon those persons or to realize against them in courts of the United States
upon judgments of courts of the United States predicated upon civil liabilities
under the United States federal securities laws. Furthermore, our Bermuda
counsel, Appleby Spurling & Kempe, has advised us that there is doubt as to the
enforcement in Bermuda, in original actions or in actions of enforcement of
judgments of United States courts, of liabilities predicated upon United States
federal securities laws, although Bermuda courts will enforce foreign judgments
for liquidated amounts in civil matters subject to some conditions and
exceptions.
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- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$2,000,000,000
[LOGO OF GLOBAL CROSSING LTD.]
Offer to exchange all outstanding
$900,000,000 9 1/8% Senior Notes due 2006
for
$900,000,000 9 1/8% Senior Notes due 2006
which have been registered under the Securities Act of 1933
and
Offer to exchange all outstanding
$1,100,000,000 9 1/2% Senior Notes due 2009
for
$1,100,000,000 9 1/2% Senior Notes due 2009
which have been registered under the Securities Act of 1933
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 20. Indemnification of Directors and Officers.
The Bye-laws of the Registrants provide for indemnification of the
Registrants' officers and directors against all liabilities, loss, damage or
expense incurred or suffered by such party as an officer or director of the
Registrants; provided that such indemnification shall not extend to any matter
which would render it void pursuant to the Companies Act of 1981 as in effect
from time to time in Bermuda.
The Companies Act provides that a Bermuda company may indemnify its
directors in respect of any loss arising or liability attaching to them as a
result of any negligence, default, breach of duty or breach of trust of which
they may be guilty. However, the Companies Act also provides that any
provision, whether contained in the company's bye-laws or in a contract or
arrangement between the company and the director, indemnifying a director
against any liability which would attach to him in respect of his fraud or
dishonesty will be void.
The directors and officers of the Registrants are covered by directors' and
officers' insurance policies maintained by the Registrants.
Item 21. Exhibits and Financial Statement Schedules.
The following is a complete list of Exhibits filed as part of this
Registration Statement, which are incorporated herein:
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of March 16, 1999 (the
"Frontier Merger Agreement"), among Global Crossing Ltd., Frontier
Corporation and GCF Acquisition Corp. (incorporated by reference to
Exhibit 2 to Global Crossing Ltd.'s Current Report on Form 8-K filed
on March 19, 1999 (the "March 19, 1999 8-K")).
2.2 Consent and Amendment No. 1 to the Frontier Merger Agreement, dated as
of May 16, 1999, among Global Crossing Ltd., GCF Acquisition Corp. and
Frontier Corporation (incorporated by reference to Exhibit 2 to Global
Crossing Ltd.'s Current Report on Form 8-K filed on May 18, 1999 (the
"May 18, 1999 8-K")).
2.3 Amendment No. 2 to the Frontier Merger Agreement, dated as of
September 2, 1999, among Global Crossing Ltd., GCF Acquisition Corp.
and Frontier Corporation (incorporated by reference to Exhibit 2 to
Global Crossing Ltd.'s Current Report on Form 8-K filed on September
3, 1999 (the "September 3, 1999 8-K")).
2.4 Sale and Purchase Agreement, dated as of April 26, 1999, between Cable
& Wireless plc and Global Crossing Ltd. (incorporated by reference to
Exhibit 2.1 to Global Crossing Ltd.'s Current Report on Form 8-K filed
on July 16, 1999 (the "July 16, 1999 8-K")).
2.5 Amendment to the Sale and Purchase Agreement, dated as of June 25,
1999, between Cable & Wireless plc and Global Crossing Ltd.
(incorporated by reference to Exhibit 2.2 to the July 16, 1999 8-K).
2.6 Agreement and Plan of Merger, dated as of May 16, 1999, between Global
Crossing Ltd. and U S WEST, Inc. (incorporated by reference to Exhibit
2 to Global Crossing Ltd.'s Current Report on Form 8-K filed on May
21, 1999 (the "May 21, 1999 8-K")).
2.7 Letter Agreement, dated as of May 16, 1999, between Global Crossing
Ltd. and U S WEST, Inc. (incorporated by reference to Exhibit 99 to
the May 21, 1999 8-K).
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
2.8 Termination Agreement, dated as of July 18, 1999, between Global
Crossing Ltd. and U S WEST, Inc. (incorporated by reference to Exhibit
10.1 to Global Crossing Ltd.'s Current Report on Form 8-K filed on
July 20, 1999 (the "July 20, 1999 8-K")).
3.1 Memorandum of Association of Global Crossing Ltd. (incorporated by
reference to Exhibit 3.1 to Global Crossing Ltd.'s Registration
Statement on Form S-1/A filed on July 2, 1998 (the "July 2, 1998 S-
1/A")).
3.2 Certificate of Incorporation of Change of Name of Global Crossing Ltd.
dated April 30, 1998 (incorporated by reference to Exhibit 3.3 to
Global Crossing Ltd.'s Registration Statement on Form S-1/A filed on
July 23, 1998 (the "July 23, 1998 S-1/A")).
3.3 Memorandum of Increase of Share Capital of Global Crossing Ltd. dated
July 9, 1998 (incorporated by reference to Exhibit 3.4 to the July 23,
1998 S-1/A).
3.4 Memorandum of Increase of Share Capital of Global Crossing Ltd. dated
September 27, 1999 (incorporated by reference to Exhibit 3.1 to Global
Crossing Ltd.'s Quarterly Report on Form 10-Q filed on November 15,
1999 (the "November 15, 1999 10-Q")).
3.5 Bye-laws of Global Crossing Ltd. as in effect on October 14, 1999
(incorporated by reference to Exhibit 3.2 to the November 15, 1999 10-
Q).
3.6 Certificate of Designations of 6 3/8% Cumulative Convertible Preferred
Stock of Global Crossing Ltd. dated November 5, 1999 (incorporated by
reference to Exhibit 3.3 to the November 15, 1999 10-Q).
3.7 Memorandum of Association of Global Crossing Holdings Ltd.
(incorporated by reference to Exhibit 3.1 of Global Crossing Holdings
Ltd.'s Registration Statement on Form S-4 (File No. 333-61457)).
3.8 Bye-laws of Global Crossing Holdings Ltd. (incorporated by reference
to Exhibit 3.2 of Global Crossing Holdings Ltd.'s Registration
Statement on Form S-4 (File No. 333-61457)).
3.9 Certificate of Designations of 7% Cumulative Convertible Preferred
Stock of Global Crossing Ltd., dated December 15, 1999 (filed
herewith).
4.1 Certificate of Designations of 10 1/2% Senior Exchangeable Preferred
Stock Due 2008 of Global Crossing Holdings Ltd. dated December 1, 1998
(incorporated by reference to Schedule A to Exhibit 3.2 to the Global
Crossing Holdings Ltd. Registration Statement on Form S-4 filed on
December 22, 1998.)
4.2 Indenture, dated as of May 18, 1998, between Global Crossing Holdings
Ltd. and United States Trust Company of New York, as Trustee
(incorporated by reference to Exhibit 4.2 to the Global Crossing
Holdings Ltd. Registration Statement on Form S-4 filed on December 22,
1998).
4.3 Supplemental Indenture, dated as of June 25, 1999, between Global
Crossing Holdings Ltd. and United States Trust Company of New York, to
the Indenture dated as of May 18, 1998 (incorporated by reference to
Exhibit 4.4 to Global Crossing Ltd.'s Registration Statement on Form
S-4 filed on July 12, 1999).
4.4 Credit Agreement, dated as of July 2, 1999, among Global Crossing
Ltd., Global Crossing Holdings Ltd., the Lenders party thereto and The
Chase Manhattan Bank as Administrative Agent (incorporated by
reference to Exhibit 10.7 to Global Crossing Ltd.'s Registration
Statement on Form S-4/A filed on August 5, 1999).
4.5 Indenture, dated as of November 19, 1999, among Global Crossing Ltd.,
Global Crossing Holdings Ltd. and United States Trust Company of New
York (filed herewith).
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
Except as hereinabove provided, there is no instrument with respect to
long-term debt of Global Crossing Ltd. and its consolidated
subsidiaries under which the total authorized amount exceeds
10 percent of the total consolidated assets of Global Crossing Ltd.
Global Crossing Ltd. agrees to furnish to the SEC upon its request a
copy of any instrument relating to long-term debt.
5.1 Opinion of Appleby, Spurling & Kempe as to the legality of the Debt
Securities, the Preferred Stock and the Common Stock (filed herewith).
5.2 Opinion of Simpson, Thacher & Bartlett (filed herewith).
10.1 Project Development and Construction Contract, dated as of March 18,
1997, among AT&T Submarine Systems, Inc. and Atlantic Crossing Ltd.
(formerly Global Telesystems Ltd.) (incorporated by reference to
Exhibit 10.2 to the July 23, 1998 S-1/A).
10.2 Project Development and Construction Contract, dated as of April 21,
1998, among Tyco Submarine Systems, Ltd. and Pacific Crossing Ltd.
(incorporated by reference to Exhibit 10.3 to the July 23, 1998 S-
1/A).
10.3 Project Development and Construction Contract, dated as of June 2,
1998, among Alcatel Submarine Networks and Mid-Atlantic Crossing Ltd.
(incorporated by reference to Exhibit 10.4 to the July 23, 1998 S-
1/A).
10.4 Project Development and Construction Contract, dated as of July 21,
1998, among Tyco Submarine Systems, Ltd. and Pan American Crossing
Ltd. (incorporated by reference to Exhibit 10.5 to Global Crossing
Ltd.'s Quarterly Report on Form 10-Q filed on November 16, 1998).
10.5 Project Development and Construction Contract, dated as of July 30,
1999, among Alcatel Submarine Networks and South American Crossing
Ltd. (filed herewith).
10.6 Lease made as of October 1, 1999 between North Crescent Realty V, LLC
and Global Crossing Development Company (incorporated by reference to
Exhibit 10.1 to the November 15, 1999 10-Q).
10.7 Form of Stockholders Agreement dated as of August 12, 1998 among
Global Crossing Ltd. and the investors named therein (incorporated by
reference to Exhibit 9.1 to the July 23, 1998 S-1/A).
10.8 Form of Registration Rights Agreement dated as of August 12, 1998
among Global Crossing Ltd. and the investors named therein
(incorporated by reference to Exhibit 4.4 to the July 23, 1998 S-1/A).
10.9 Voting Agreement, dated as of March 16, 1999, among certain
shareholders of Global Crossing Ltd. parties thereto, Frontier
Corporation and, for certain purposes only, Global Crossing Ltd.
(incorporated by reference to Exhibit 10.2 to the March 19, 1999 8-K).
10.10 Second Reaffirmation of Voting Agreement and Share Transfer
Restriction Agreement, dated as of September 2, 1999 (incorporated by
reference to Annex S-B to the joint proxy statement/prospectus
supplement included in Global Crossing Ltd.'s Registration Statement
on Form S-4 filed on September 8, 1999 (the "September 8, 1999 S-4").
10.11 Share Transfer Restriction Agreement, dated as of September 2, 1999,
among certain shareholders of Global Crossing Ltd., certain
shareholders of Frontier Corporation and Global Crossing Ltd.
(incorporated by reference to Annex S-C to the joint proxy
statement/prospectus supplement included in the September 8, 1999 S-
4).
10.12 Tender Offer and Purchase Agreement, dated as of May 16, 1999, between
Global Crossing Ltd. and U S WEST, Inc. (incorporated by reference to
Exhibit (c)(2) to U S WEST, Inc.'s Schedule 14D-1 filed on May 21,
1999).
10.13 Standstill Agreement dated as of May 16, 1999 between U S WEST, Inc.
and Global Crossing Ltd. (incorporated by reference to Exhibit (c)(4)
to U S WEST, Inc.'s Schedule 14D-1 filed on May 21, 1999).
10.14 Voting Agreement dated as of May 16, 1999 between U S WEST, Inc. and
Global Crossing Ltd. (incorporated by reference to Exhibit (c)(3) to U
S WEST, Inc.'s Schedule 14D-1 filed on May 21, 1999).
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
10.15 Tender and Voting Agreement dated as of May 16, 1999 among U S WEST,
Inc., Global Crossing Ltd. and the shareholders party thereto
(incorporated by reference to Exhibit (c)(5) to U S WEST, Inc.'s
Schedule 14D-1 filed on May 21, 1999).
10.16 Agreement dated as of May 16, 1999 among Global Crossing Ltd. and the
shareholders party thereto (incorporated by reference to Exhibit
(c)(6) to U S WEST, Inc.'s Schedule 14D-1 filed on May 21, 1999).
10.17 Transfer Agreement dated as of May 16, 1999 among Global Crossing Ltd.
and the shareholders party thereto (incorporated by reference to
Exhibit (c)(8) to U S WEST, Inc.'s Schedule 14D-1 filed on May 21,
1999).
10.18 Amendment No. 1 dated as of July 18, 1999 to Tender Offer and Purchase
Agreement dated as of May 16 1999 between Global Crossing Ltd. and U S
WEST, Inc. (incorporated by reference to Exhibit 10.2 to the July 20,
1999 8-K).
10.19 Agreement, dated as of July 18, 1999, between Qwest Communications
International Inc. and Global Crossing Ltd. (incorporated by reference
to Exhibit 10.3 to the July 20, 1999 8-K).
10.20 Agreement, dated as of July 18, 1999, between Global Crossing Holdings
Ltd. and Qwest Communications International Inc. (incorporated by
reference to Exhibit 10.4 to the July 20, 1999 8-K).
10.21 1998 Global Crossing Ltd. Stock Incentive Plan, as amended and
restated effective December 7, 1999 (filed herewith).
10.22 Form of Non-Qualified Stock Option Agreement as in effect on September
30, 1999 (incorporated by reference to Exhibit 10.2 to the November
15, 1999 10-Q).
10.23 Frontier Corporation Supplemental Retirement Savings Plan as amended
and restated effective January 1, 1996 (incorporated by reference to
Exhibit 10.13 to Frontier Corporation's Annual Report on Form 10-K
filed March 28, 1997).
10.24 Amendment No. 1, effective March 16, 1999, to Frontier Corporation
Supplemental Retirement Savings Plan (incorporated by reference to
Exhibit 10.2 to Frontier Corporation's Quarterly Report on Form 10-Q
filed August 3, 1999).
10.25 Amendment No. 2, dated September 21, 1999, to Frontier Corporation
Supplemental Retirement Savings Plan (incorporated by reference to
Exhibit 10.5 to the November 15, 1999 10-Q).
10.26 Employment Agreement dated as of February 19, 1999 between Global
Crossing Ltd. and Robert Annunziata (incorporated by reference to
Exhibit 10.8 to Global Crossing Ltd.'s Quarterly Report on Form 10-Q
filed on May 10, 1999).
10.27 Executive Contract dated March 25, 1996 between Robert L. Barrett and
Frontier Corporation (incorporated by reference to Exhibit 10.25 to
Frontier Corporation's Quarterly Report on Form 10-Q filed May 14,
1996).
10.28 Amendment dated May 1, 1999 to Executive Contract between Robert L.
Barrett and Frontier Corporation (incorporated by reference to Exhibit
10.7 to the November 15, 1999 10-Q).
10.29 Executive Contract dated January 1, 1998 between Joseph P. Clayton and
Frontier Corporation (incorporated by reference to Exhibit 10.22 to
Frontier Corporation's Annual Report on Form 10-K filed March 26,
1998).
10.30 Amendment dated May 1, 1999 to Executive Contract between Joseph P.
Clayton and Frontier Corporation (incorporated by reference to Exhibit
10.9 to the November 15, 1999 10-Q).
10.31 Sale Agreement, dated October 10, 1999, among Controls and
Communications Limited, The Racal Corporation, Racal Electronics plc
and Global Crossing Ltd. (incorporated by reference to Exhibit 2.1 to
Global Crossing Ltd.'s Current Report on Form 8-K filed on October 21,
1999).
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
10.32 Registration Rights Agreement, dated as of November 19, 1999, among
Global Crossing Ltd., Global Crossing Holdings Ltd., Chase Securities
Inc. and CIBC World Markets Corp. (filed herewith).
10.33 Subscription and Sale and Purchase Agreement, dated November 15, 1999,
among Hutchison Whampoa Limited, Hutchison Telecommunications Limited,
Global Crossing Ltd. and HCL Holdings Limited (filed herewith).
Statement of Computation to Earnings to Fixed Charges (filed
12.1 herewith).
21.1 Subsidiaries of Global Crossing Ltd. (filed herewith).
23.1 Consent of Arthur Andersen & Co. (filed herewith).
23.2 Consent of PricewaterhouseCoopers LLP (filed herewith).
23.3 Consent of KPMG Audit Plc (filed herewith).
23.4 Consent of Deloitte & Touche (filed herewith).
23.5 Consent of PricewaterhouseCoopers (filed herewith).
23.6 Consent of Appleby, Spurling & Kempe (included in Exhibit 5.1).
23.7 Consent of Simpson Thacher & Bartlett (included in Exhibit 5.2).
24.1 Power of Attorney of Global Crossing Holdings Ltd. (included on
signature page II-7 of this Registration Statement).
24.2 Power of Attorney of Global Crossing Ltd. (included on signature page
II-8 of this
Registration Statement).
25.1 Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939, as amended, of United States Trust Company of
New York, as Trustee (filed herewith).
99.1 Form of Letter of Transmittal (filed herewith).
99.2 Form of Notice of Guaranteed Delivery (filed herewith).
</TABLE>
Item 22. Undertakings.
(a) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrants pursuant to the foregoing provisions, or otherwise, the registrants
have been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrants of expenses incurred or
paid by a director, officer or controlling person of the registrants in the
successful defense of any action, suit or proceedings) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrants will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether indemnification by them is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of that issue.
(b) The undersigned registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through
the date of responding to the request.
(c) The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made,
a post-effective Amendment to this registration statement:
II-5
<PAGE>
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering; and
(4) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective.
(5) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrants' annual reports pursuant to
section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Hamilton,
Country of Bermuda, on January 11, 2000.
Global Crossing Holdings Ltd.
/s/ S. Wallace Dawson, Jr.
By: _________________________________
Name: S. Wallace Dawson,
Jr.
Title: Chief Executive
Officer
POWER OF ATTORNEY
Each person whose signature appears below appoints each of S. Wallace
Dawson, Jr. and Rob Klug, severally, as his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto and all other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents full power and authority to do
and perform each and every act and anything appropriate or necessary to be
done, as fully and for all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or his substitute or substitutes may lawfully do or cause to be done by
virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
/s/ S. Wallace Dawson, Jr. Chief Executive Officer January 11, 2000
___________________________________________ and Director
S. Wallace Dawson, Jr.
/s/ K. Eugene Shutler President and Director January 11, 2000
___________________________________________
K. Eugene Shutler
/s/ Rob Klug Controller and Director January 11, 2000
___________________________________________
Rob Klug
/s/ Ian McLean Senior Vice President, January 11, 2000
___________________________________________ Chief Operating Officer
</TABLE> Ian McLean and Director
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Los
Angeles, State of California, on January 11, 2000.
Global Crossing Ltd.
/s/ Robert Annunziata
By:
----------------------------------
Name: Robert Annunziata
Title: Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below appoints each of Robert Annunziata
and Dan Cohrs, severally, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto and all other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each
and every act and anything appropriate or necessary to be done, as fully and
for all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or his
substitute or substitutes may lawfully do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
/s/ Gary Winnick Chairman of the Board and January 11, 2000
___________________________________________ Director
Gary Winnick
/s/ Lodwrick M. Cook Co-Chairman of the Board January 11, 2000
___________________________________________ and Director
Lodwrick M. Cook
/s/ Thomas J. Casey Managing Director, Vice January 11, 2000
___________________________________________ Chairman of the Board and
Thomas J. Casey Director
/s/ Jack M. Scanlon Vice Chairman of the Board January 11, 2000
___________________________________________ and Director
Jack M. Scanlon
/s/ Robert Annunziata Chief Executive Officer January 11, 2000
___________________________________________ and Director
Robert Annunziata
/s/ David L. Lee President, Chief Operating January 11, 2000
___________________________________________ Officer and Director
David L. Lee
</TABLE>
II-8
<PAGE>
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
/s/ Barry Porter Senior Vice President and January 11, 2000
___________________________________________ Director
Barry Porter
/s/ Abbott L. Brown Senior Vice President and January 11, 2000
___________________________________________ Director
Abbott L. Brown
/s/ Dan J. Cohrs Senior Vice President and January 11, 2000
___________________________________________ Chief Financial Officer
Dan J. Cohrs (principal financial
officer and principal
accounting officer)
/s/ Jay R. Bloom Director January 11, 2000
___________________________________________
Jay R. Bloom
/s/ William E. Conway Director January 11, 2000
___________________________________________
William E. Conway
/s/ Dean C. Kehler Director January 11, 2000
___________________________________________
Dean C. Kehler
/s/ Geoffrey J.W. Kent Director January 11, 2000
___________________________________________
Geoffrey J.W. Kent
/s/ Bruce Raben Director January 11, 2000
___________________________________________
Bruce Raben
/s/ Michael R. Steed Director January 11, 2000
___________________________________________
Michael R. Steed
/s/ Hillel Weinberger Director January 11, 2000
___________________________________________
Hillel Weinberger
/s/ James F. McDonald Director January 11, 2000
___________________________________________
James F. McDonald
/s/ Eric Hippeau Director January 11, 2000
___________________________________________
Eric Hippeau
/s/ Joseph P. Clayton Director January 11, 2000
___________________________________________
Joseph P. Clayton
/s/ Douglas H. McCorkindale Director January 11, 2000
___________________________________________
Douglas H. McCorkindale
</TABLE>
II-9
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of March 16, 1999 (the
"Frontier Merger Agreement"), among Global Crossing Ltd., Frontier
Corporation and GCF Acquisition Corp. (incorporated by reference to
Exhibit 2 to Global Crossing Ltd.'s Current Report on Form 8-K filed
on March 19, 1999 (the "March 19, 1999 8-K")).
2.2 Consent and Amendment No. 1 to the Frontier Merger Agreement, dated as
of May 16, 1999, among Global Crossing Ltd., GCF Acquisition Corp. and
Frontier Corporation (incorporated by reference to Exhibit 2 to Global
Crossing Ltd.'s Current Report on Form 8-K filed on May 18, 1999 (the
"May 18, 1999 8-K")).
2.3 Amendment No. 2 to the Frontier Merger Agreement, dated as of
September 2, 1999, among Global Crossing Ltd., GCF Acquisition Corp.
and Frontier Corporation (incorporated by reference to Exhibit 2 to
Global Crossing Ltd.'s Current Report on Form 8-K filed on September
3, 1999 (the "September 3, 1999 8-K")).
2.4 Sale and Purchase Agreement, dated as of April 26, 1999, between Cable
& Wireless plc and Global Crossing Ltd. (incorporated by reference to
Exhibit 2.1 to Global Crossing Ltd.'s Current Report on Form 8-K filed
on July 16, 1999 (the "July 16, 1999 8-K")).
2.5 Amendment to the Sale and Purchase Agreement, dated as of June 25,
1999, between Cable & Wireless plc and Global Crossing Ltd.
(incorporated by reference to Exhibit 2.2 to the July 16, 1999 8-K).
2.6 Agreement and Plan of Merger, dated as of May 16, 1999, between Global
Crossing Ltd. and U S West, Inc. (incorporated by reference to Exhibit
2 to Global Crossing Ltd.'s Current Report on Form 8-K filed on May
21, 1999 (the "May 21, 1999 8-K")).
2.7 Letter Agreement, dated as of May 16, 1999, between Global Crossing
Ltd. and U S West, Inc. (incorporated by reference to Exhibit 99 to
the May 21, 1999 8-K).
2.8 Termination Agreement, dated as of July 18, 1999, between Global
Crossing Ltd. and U S West, Inc. (incorporated by reference to Exhibit
10.1 to Global Crossing Ltd.'s Current Report on Form 8-K filed on
July 20, 1999 (the "July 20, 1999 8-K")).
3.1 Memorandum of Association of Global Crossing Ltd. (incorporated by
reference to Exhibit 3.1 to Global Crossing Ltd.'s Registration
Statement on Form S-1/A filed on July 2, 1998 (the "July 2, 1998 S-
1/A")).
3.2 Certificate of Incorporation of Change of Name of Global Crossing Ltd.
dated April 30, 1998 (incorporated by reference to Exhibit 3.3 to
Global Crossing Ltd.'s Registration Statement on Form S-1/A filed on
July 23, 1998 (the "July 23, 1998 S-1/A")).
3.3 Memorandum of Increase of Share Capital of Global Crossing Ltd. dated
July 9, 1998 (incorporated by reference to Exhibit 3.4 to the July 23,
1998 S-1/A).
3.4 Memorandum of Increase of Share Capital of Global Crossing Ltd. dated
September 27, 1999 (incorporated by reference to Exhibit 3.1 to Global
Crossing Ltd.'s Quarterly Report on Form 10-Q filed on November 15,
1999 (the "November 15, 1999 10-Q")).
3.5 Bye-laws of Global Crossing Ltd. as in effect on October 14, 1999
(incorporated by reference to Exhibit 3.2 to the November 15, 1999 10-
Q).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
3.6 Certificate of Designations of 6 3/8% Cumulative Convertible Preferred
Stock of Global Crossing Ltd. dated November 5, 1999 (incorporated by
reference to Exhibit 3.3 to the November 15, 1999 10-Q).
3.7 Memorandum of Association of Global Crossing Holdings Ltd.
(incorporated by reference to Exhibit 3.1 of Global Crossing Holdings
Ltd.'s Registration Statement on Form S-4 (File No. 333-61457)).
3.8 Bye-laws of Global Crossing Holdings Ltd. (incorporated by reference
to Exhibit 3.2 of Global Crossing Holdings Ltd.'s Registration
Statement on Form S-4 (File No. 333-61457)).
3.9 Certificate of Designations of 7% Cumulative Convertible Preferred
Stock of Global Crossing Ltd., dated December 15, 1999 (filed
herewith).
4.1 Certificate of Designations of 10 1/2% Senior Exchangeable Preferred
Stock Due 2008 of Global Crossing Holdings Ltd. dated December 1, 1998
(incorporated by reference to Schedule A to Exhibit 3.2 to the Global
Crossing Holdings Ltd. Registration Statement on Form S-4 filed on
December 22, 1998.)
4.2 Indenture, dated as of May 18, 1998, between Global Crossing Holdings
Ltd. and United States Trust Company of New York, as Trustee
(incorporated by reference to Exhibit 4.2 to the Global Crossing
Holdings Ltd. Registration Statement on Form S-4 filed on December 22,
1998).
4.3 Supplemental Indenture, dated as of June 25, 1999, between Global
Crossing Holdings Ltd. and United States Trust Company of New York, to
the Indenture dated as of May 18, 1998 (incorporated by reference to
Exhibit 4.4 to Global Crossing Ltd.'s Registration Statement on Form
S-4 filed on July 12, 1999).
4.4 Credit Agreement, dated as of July 2, 1999, among Global Crossing
Ltd., Global Crossing Holdings Ltd., the Lenders party thereto and The
Chase Manhattan Bank as Administrative Agent (incorporated by
reference to Exhibit 10.7 to Global Crossing Ltd.'s Registration
Statement on Form S-4/A filed on August 5, 1999).
4.5 Indenture, dated as of November 19, 1999, among Global Crossing Ltd.,
Global Crossing Holdings Ltd. and United States Trust Company of New
York (filed herewith).
Except as hereinabove provided, there is no instrument with respect to
long-term debt of Global Crossing Ltd. and its consolidated
subsidiaries under which the total authorized amount exceeds 10
percent of the total consolidated assets of Global Crossing Ltd..
Global Crossing Ltd. agrees to furnish to the SEC upon its request a
copy of any instrument relating to long-term debt.
5.1 Opinion of Appleby, Spurling & Kempe as to the legality of the Debt
Securities, the Preferred Stock and the Common Stock (filed herewith).
5.2 Opinion of Simpson, Thacher & Bartlett (filed herewith).
10.1 Project Development and Construction Contract, dated as of March 18,
1997, among AT&T Submarine Systems, Inc. and Atlantic Crossing Ltd.
(formerly Global Telesystems Ltd.) (incorporated by reference to
Exhibit 10.2 to the July 23, 1998 S-1/A).
10.2 Project Development and Construction Contract, dated as of April 21,
1998, among Tyco Submarine Systems, Ltd. and Pacific Crossing Ltd.
(incorporated by reference to Exhibit 10.3 to the July 23, 1998 S-
1/A).
10.3 Project Development and Construction Contract, dated as of June 2,
1998, among Alcatel Submarine Networks and Mid-Atlantic Crossing Ltd.
(incorporated by reference to Exhibit 10.4 to the July 23, 1998 S-
1/A).
10.4 Project Development and Construction Contract, dated as of July 21,
1998, among Tyco Submarine Systems, Ltd. and Pan American Crossing
Ltd. (incorporated by reference to Exhibit 10.5 to the Registrant's
Quarterly Report on Form 10-Q filed on November 16, 1998).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
10.5 Project Development and Construction Contract, dated as of July 30,
1999, among Alcatel Submarine Networks and South American Crossing
Ltd. (filed herewith).
10.6 Lease made as of October 1, 1999 between North Crescent Realty V, LLC
and Global Crossing Development Company (incorporated by reference to
Exhibit 10.1 to the November 15, 1999 10-Q).
10.7 Form of Stockholders Agreement dated as of August 12, 1998 among
Global Crossing Ltd. and the investors named therein (incorporated by
reference to Exhibit 9.1 to the July 23, 1998 S-1/A).
10.8 Form of Registration Rights Agreement dated as of August 12, 1998
among Global Crossing Ltd. and the investors named therein
(incorporated by reference to Exhibit 4.4 to the July 23, 1998 S-1/A).
10.9 Voting Agreement, dated as of March 16, 1999, among certain
shareholders of Global Crossing Ltd. parties thereto, Frontier
Corporation and, for certain purposes only, Global Crossing Ltd.
(incorporated by reference to Exhibit 10.2 to the March 19, 1999 8-K).
10.10 Second Reaffirmation of Voting Agreement and Share Transfer
Restriction Agreement, dated as of September 2, 1999 (incorporated by
reference to Annex S-B to the joint proxy statement/prospectus
supplement included in Global Crossing Ltd. Registration Statement on
Form S-4 filed on September 8, 1999 (the "September 8, 1999 S-4").
10.11 Share Transfer Restriction Agreement, dated as of September 2, 1999,
among certain shareholders of Global Crossing Ltd., certain
shareholders of Frontier Corporation and Global Crossing Ltd.
(incorporated by reference to Annex S-C to the joint proxy
statement/prospectus supplement included in the September 8, 1999 S-
4).
10.12 Tender Offer and Purchase Agreement, dated as of May 16, 1999, between
Global Crossing Ltd. and U S WEST, Inc. (incorporated by reference to
Exhibit (c)(2) to U S WEST, Inc.'s Schedule 14D-1 filed on May 21,
1999).
10.13 Standstill Agreement dated as of May 16, 1999 between U S WEST, Inc.
and Global Crossing Ltd. (incorporated by reference to Exhibit (c)(4)
to U S WEST, Inc.'s Schedule 14D-1 filed on May 21, 1999).
10.14 Voting Agreement dated as of May 16, 1999 between U S WEST, Inc. and
Global Crossing Ltd. (incorporated by reference to Exhibit (c)(3) to U
S WEST, Inc.'s Schedule 14D-1 filed on May 21, 1999).
10.15 Tender and Voting Agreement dated as of May 16, 1999 among U S WEST,
Inc., Global Crossing Ltd. and the shareholders party thereto
(incorporated by reference to Exhibit (c)(5) to U S WEST, Inc.'s
Schedule 14D-1 filed on May 21, 1999).
10.16 Agreement dated as of May 16, 1999 among Global Crossing Ltd. and the
shareholders party thereto (incorporated by reference to Exhibit
(c)(6) to U S WEST, Inc.'s Schedule 14D-1 filed on May 21, 1999).
10.17 Transfer Agreement dated as of May 16, 1999 among Global Crossing Ltd.
and the shareholders party thereto (incorporated by reference to
Exhibit (c)(8) to U S WEST, Inc.'s Schedule 14D-1 filed on May 21,
1999).
10.18 Amendment No. 1 dated as of July 18, 1999 to Tender Offer and Purchase
Agreement dated as of May 16 1999 between Global Crossing Ltd. and U S
WEST, Inc. (incorporated by reference to Exhibit 10.2 to the July 20,
1999 8-K).
10.19 Agreement, dated as of July 18, 1999, between Qwest Communications
International Inc. and Global Crossing Ltd. (incorporated by reference
to Exhibit 10.3 to the July 20, 1999 8-K).
10.20 Agreement, dated as of July 18, 1999, between Global Crossing Holdings
Ltd. and Qwest Communications International Inc. (incorporated by
reference to Exhibit 10.4 to the July 20, 1999 8-K).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
10.21 1998 Global Crossing Ltd. Stock Incentive Plan, as amended and
restated effective December 7, 1999 (filed herewith).
10.22 Form of Non-Qualified Stock Option Agreement as in effect on September
30, 1999 (incorporated by reference to Exhibit 10.2 to the November
15, 1999 10-Q).
10.23 Frontier Corporation Supplemental Retirement Savings Plan as amended
and restated effective January 1, 1996 (incorporated by reference to
Exhibit 10.13 to Frontier Corporation's Annual Report on Form 10-K
filed March 28, 1997).
10.24 Amendment No. 1, effective March 16, 1999, to Frontier Corporation
Supplemental Retirement Savings Plan (incorporated by reference to
Exhibit 10.2 to Frontier Corporation's Quarterly Report on Form 10-Q
filed August 3, 1999).
10.25 Amendment No. 2, dated September 21, 1999, to Frontier Corporation
Supplemental Retirement Savings Plan (incorporated by reference to
Exhibit 10.5 to the November 15, 1999 10-Q).
10.26 Employment Agreement dated as of February 19, 1999 between Global
Crossing Ltd. and Robert Annunziata (incorporated by reference to
Exhibit 10.8 to Global Crossing Ltd.'s Quarterly Report on Form 10-Q
filed on May 10, 1999).
10.27 Executive Contract dated March 25, 1996 between Robert L. Barrett and
Frontier Corporation (incorporated by reference to Exhibit 10.25 to
Frontier Corporation's Quarterly Report on Form 10-Q filed May 14,
1996).
10.28 Amendment dated May 1, 1999 to Executive Contract between Robert L.
Barrett and Frontier Corporation (incorporated by reference to Exhibit
10.7 to the November 15, 1999 10-Q).
10.29 Executive Contract dated January 1, 1998 between Joseph P. Clayton and
Frontier Corporation (incorporated by reference to Exhibit 10.22 to
Frontier Corporation's Annual Report on Form 10-K filed March 26,
1998).
10.30 Amendment dated May 1, 1999 to Executive Contract between Joseph P.
Clayton and Frontier Corporation (incorporated by reference to Exhibit
10.9 to the November 15, 1999 10-Q).
10.31 Sale Agreement, dated October 10, 1999, among Controls and
Communications Limited, The Racal Corporation, Racal Electronics plc
and Global Crossing Ltd. (incorporated by reference to Exhibit 2.1 to
Global Crossing Ltd.'s Current Report on Form 8-K filed on October 21,
1999).
10.32 Registration Rights Agreement, dated as of November 19, 1999, among
Global Crossing Ltd., Global Crossing Holdings Ltd., Chase Securities
Inc. and CIBC World Markets Corp. (filed herewith).
10.33 Subscription and Sale and Purchase Agreement, dated November 15, 1999,
among Hutchison Whampoa Limited, Hutchison Telecommunications Limited,
Global Crossing Ltd. and HCL Holdings Limited (filed herewith).
12.1 Statement of Computation of Ratio of Earnings to Fixed Charges (filed
herewith).
21.1 Subsidiaries of the Registrant (filed herewith).
23.1 Consent of Arthur Andersen & Co. (filed herewith).
23.2 Consent of PricewaterhouseCoopers LLP (filed herewith).
23.3 Consent of KPMG Audit Plc (filed herewith).
23.4 Consent of Deloitte & Touche (filed herewith).
23.5 Consent of PricewaterhouseCoopers (filed herewith).
23.6 Consent of Appleby, Spurling & Kempe (included in Exhibit 5.1).
</TABLE>
<PAGE>
<TABLE>
<C> <S>
23.7 Consent of Simpson Thacher & Bartlett (included in Exhibit 5.2).
24.1 Power of Attorney of Global Crossing Holdings Ltd. (included on signature
page II-7 of this
Registration Statement).
24.2 Power of Attorney of Global Crossing Ltd. (included on signature page II-
8 of this
Registration Statement).
25.1 Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939, as amended, of United States Trust Company of New
York, as Trustee (filed herewith).
99.1 Form of Letter of Transmittal (filed herewith).
99.2 Form of Notice of Guaranteed Delivery (filed herewith).
</TABLE>
<PAGE>
EXHIBIT 3.9
Schedule to the Bye-Laws
of Global Crossing Ltd.
CERTIFICATE OF DESIGNATIONS
OF
7% CUMULATIVE CONVERTIBLE PREFERRED STOCK
The terms of the authorized 7% Cumulative Convertible Preferred Stock
(the "Preferred Stock") of Global Crossing Ltd., a company incorporated under
the laws of Bermuda (the "Company"), shall be as set forth below in this
Schedule to the Bye-Laws of the Company (this "Schedule").
(a) Designation. (i) There are hereby authorized 2,600,000 shares of
-----------
Preferred Stock as designated by the Board of Directors of the Company. Each
share of Preferred Stock will have a liquidation preference of $250 (the
"Liquidation Preference").
(ii) All shares of Preferred Stock redeemed, purchased, exchanged,
converted or otherwise acquired by the Company shall be retired and canceled
and, upon the taking of any action required by applicable law, shall be restored
to the status of authorized but unissued shares of preferred stock of the
Company, without designation as to series, and may thereafter be reissued.
(b) Currency. All shares of Preferred Stock shall be denominated in
--------
United States currency, and all payments and distributions thereon or with
respect thereto shall be made in United States currency. All references herein
to "$" or "dollars" refer to United States currency.
(c) Ranking. The Preferred Stock shall, with respect to dividend
-------
rights and rights upon liquidation, winding up or dissolution, rank junior to
(i) each other class or series of capital stock of the Company, other than (A)
the Common Stock of the Company and any other class or series of capital stock
of the Company which by its terms ranks junior to the Preferred Stock, as to
which the Preferred Stock shall rank prior and (B) any other class or series of
capital stock of the Company which by its terms ranks on a parity with the
Preferred Stock, as to which the Preferred Stock shall rank on a parity or (ii)
other equity interests in the Company, in each case, including, without
limitation, warrants, rights, calls or options exercisable for or convertible
into such capital stock or equity interests, except as provided in the last
sentence of this paragraph (c). All equity securities of the Company to which
the Preferred Stock ranks prior (whether with respect to dividends or upon
liquidation, winding up, dissolution or otherwise), including the Common Stock
of the Company, are collectively referred to herein as the "Junior Stock". All
equity securities of the Company to which the Preferred Stock ranks on a parity
(whether with respect to dividends or upon liquidation, winding up, dissolution
or otherwise) are collectively referred to herein as the "Parity Stock". All
equity securities of the Company to which the Preferred Stock ranks junior
(whether with respect to
<PAGE>
2
dividends or upon liquidation, winding up, dissolution or otherwise) are
collectively referred to herein as the "Senior Stock". The respective
definitions of Junior Stock, Parity Stock and Senior Stock shall also include
any warrants, rights, calls or options exercisable for or convertible into any
Junior Stock, Parity Stock or Senior Stock, as the case may be. The Preferred
Stock shall, with respect to dividend rights and upon liquidation, winding up or
dissolution, rank on a parity with the Company's 6_% Cumulative Convertible
Preferred Stock.
(d) Dividends. (i) The holders of shares of Preferred Stock shall be
---------
entitled to receive, when, as and if declared by the Board of Directors of the
Company out of funds legally available therefor, dividends on the shares of
Preferred Stock, cumulative from the first date of issuance of any such shares
(the "Initial Issuance Date"), at a rate per annum of 7% of the Liquidation
Preference per share, payable in cash, subject to paragraph (d)(vi). Dividends
on the shares of Preferred Stock shall be payable quarterly in equal amounts
(subject to paragraph (d)(v) hereunder with respect to shorter periods,
including the first such period with respect to newly issued shares of Preferred
Stock) in arrears on February 1, May 1, August 1 and November 1 of each year, or
if any such date is not a Business Day, on the next succeeding Business Day
(each such date, a "Dividend Payment Date", and each such quarterly period, a
"Dividend Period"), in preference to and in priority over dividends on any
Junior Stock. Such dividends shall be paid to the holders of record of the
shares of Preferred Stock as they appear on the applicable Record Date. As used
herein, the term "Record Date" means, with respect to the dividends payable on
February 1, May 1, August 1 and November 1 of each year, January 15, April 15,
July 15 and October 15, of each year, respectively, or such other record date,
not more than 60 days and not less than 10 days preceding the applicable
Dividend Payment Date, as shall be fixed by the Board of Directors of the
Company. Dividends on the shares of Preferred Stock shall be fully cumulative
and shall accrue (whether or not declared and whether or not there are funds of
the Company legally available for the payment of dividends) from the Issuance
Date (or the last Dividend Payment Date for which dividends were paid, as the
case may be) based on a 360-day year comprised of twelve 30-day months. Accrued
and unpaid dividends for any past Dividend Period and dividends in connection
with any optional redemption may be declared and paid at any time, without
reference to any Dividend Payment Date, to holders of record on such date, not
more than 45 days prior to the payment thereof, as may be fixed by the Board of
Directors of the Company.
(ii) No dividend shall be declared or paid or set apart for payment or
other distribution declared or made, whether in cash, obligations or shares of
capital stock of the Company or other property, directly or indirectly, upon any
shares of Junior Stock or Parity Stock, nor shall any shares of Junior Stock or
Parity Stock be redeemed, repurchased or otherwise acquired for consideration by
the Company through a sinking fund or otherwise, unless all accrued and unpaid
dividends through the most recent Dividend Payment Date (whether or not such
dividends have been declared and whether or not there are funds of the Company
legally available for the payment of dividends) on the shares of Preferred Stock
and any Parity Stock have been or contemporaneously are declared and paid in
full; provided, however, that, notwithstanding any provisions in this
-------- -------
subparagraph (ii) to the contrary, the Company shall be entitled to (a) declare
and pay dividends on shares of Junior Stock payable solely in shares of Junior
Stock and on shares of Parity Stock payable solely in shares of Parity
<PAGE>
3
Stock or Junior Stock, or in each case by an increase in the liquidation
preference of the Junior Stock or Parity Stock and (b) redeem, repurchase or
otherwise acquire Junior Stock or Parity Stock in exchange for consideration
consisting of Parity Stock or Junior Stock, in the case of Parity Stock, or of
Junior Stock, in the case of Junior Stock. When dividends are not paid in full,
as aforesaid, upon the shares of Preferred Stock, all dividends declared on the
Preferred Stock and any other Parity Stock shall be declared and paid either (A)
pro rata so that the amount of dividends so declared on the shares of Preferred
Stock and each such other class or series of Parity Stock shall in all cases
bear to each other the same ratio as accrued dividends on the shares of
Preferred Stock and such class or series of Parity Stock bear to each other or
(B) on another basis that is at least as favorable to the holders of the
Preferred Stock entitled to receive such dividends.
(iii) Any dividend payment made on the Preferred Stock shall first be
credited against the dividends accrued with respect to the earliest Dividend
Period for which dividends have not been paid.
(iv) All dividends paid with respect to shares of Preferred Stock
pursuant to this paragraph (d) shall be paid pro rata to the holders entitled
thereto.
(v) Dividends (or cash amounts equal to accrued and unpaid
dividends) payable on the Preferred Stock for any period shorter than six months
shall be computed on the basis of the actual number of days elapsed (in a 30-day
month) since the applicable Dividend Payment Date or from the Issuance Date with
respect to newly issued shares, as applicable, and based on a 360-day year of
twelve 30-day months. No interest shall accrue or be payable in respect of
unpaid dividends.
(vi) The Company shall have the option to pay all or any part of a
dividend by delivering shares of Common Stock, par value $0.01 per share, of the
Company (the "Common Stock"), to the transfer agent for the Preferred Stock (the
"Transfer Agent"). In such case, the Company shall be obligated to deliver to
the Transfer Agent a number of shares of Common Stock which, when resold by the
Transfer Agent, shall result in net cash proceeds sufficient to pay the
applicable dividend in cash to the holders of shares of Preferred Stock. If the
proceeds of any resale of shares of Common Stock do not result in sufficient
cash proceeds to pay a dividend, the Company shall promptly provide cash to the
Transfer Agent in an amount equal to the difference between the amount of the
applicable dividend and the proceeds of such sale. All shares of Common Stock
that the Company may deliver to the Transfer Agent as provided in this
subparagraph (vi) shall be registered under the Securities Act of 1933, as
amended.
(e) Liquidation Preference. (i) Upon any voluntary or involuntary
----------------------
liquidation, dissolution or winding up of the Company or a reduction or decrease
in the Company's capital stock resulting in a distribution of assets to the
holders of any class or series of the Company's capital stock, each holder of
shares of Preferred Stock shall be entitled to payment out of the assets of the
Company available for distribution of an amount equal to the then effective
Liquidation Preference per share of Preferred Stock held by such holder, plus
all accumulated and unpaid dividends therein to the date of
<PAGE>
4
such liquidation, dissolution, winding up or reduction or decrease in capital
stock, before any distribution is made on any Junior Stock, including, without
limitation, Common Stock of the Company. After payment in full of the then
effective Liquidation Preference and all accumulated and unpaid dividends to
which holders of shares of Preferred Stock are entitled, such holders shall not
be entitled to any further participation in any distribution of assets of the
Company. If, upon any voluntary or involuntary liquidation, dissolution or
winding up of the Company or a reduction or decrease in the Company's capital
stock, the amounts payable with respect to shares of Preferred Stock and all
other Parity Stock are not paid in full, the holders of shares of Preferred
Stock and the holders of the Parity Stock shall share equally and ratably in any
distribution of assets of the Company in proportion to the full liquidation
preference and all accumulated and unpaid dividends to which each such holder is
entitled.
(ii) Neither the voluntary sale, conveyance, exchange or transfer
(for cash, shares of stock, securities or other consideration) of all or
substantially all of the property or assets of the Company nor the
consolidation, merger or amalgamation of the Company with or into any
corporation or the consolidation, merger or amalgamation of any corporation with
or into the Company shall be deemed to be a voluntary or involuntary
liquidation, dissolution or winding up of the Company or a reduction or decrease
in the capital stock of the Company.
(iii) No funds are required to be set aside to protect the
Liquidation Preference of the shares of Preferred Stock, although such
Liquidation Preference will be substantially in excess of the par value of the
shares of the Preferred Stock.
(f) Redemption. Shares of Preferred Stock shall be redeemable by the
----------
Company as provided below.
(i) Optional Redemption After the Initial Redemption Date. The
-----------------------------------------------------
shares of Preferred Stock shall not be redeemable prior to December 15, 2004
(the "Initial Redemption Date"). After the Initial Redemption Date, the shares
of Preferred Stock shall be subject to redemption at any time at the option of
the Company, in whole or in part, at a price (the "Redemption Price"), payable
in cash, equal to the percentage set forth below of the Liquidation Preference
per share for redemption during the 12-month periods beginning on the Initial
Redemption Date or the annual anniversaries thereof indicated below, plus in
each case an amount equal to accrued and unpaid dividends thereon (whether or
not declared and whether or not there are funds of the Company legally available
for the payment of dividends) to the date fixed for redemption.
Period Redemption Price
- ------ ----------------
2004.............................................. 103.5%
2005.............................................. 102.8%
2006.............................................. 102.1%
<PAGE>
5
Period Redemption Price
- ------ ----------------
2007.............................................. 101.4%
2008.............................................. 100.7%
2009 and thereafter............................... 100.0%
(ii) Optional Tax Redemption. The shares of Preferred Stock shall be
-----------------------
subject to redemption at the option of the Company or a successor corporation at
any time, in whole or in part, at a Redemption Price equal to 100% of the then
effective Liquidation Preference thereof, plus all accumulated and unpaid
dividends thereon to the redemption date if, as a result of any change in or
amendment to any laws, regulations or rulings promulgated thereunder of (A)
Bermuda or any political subdivision or governmental authority thereof or
therein having the power to tax, (B) any jurisdiction, other than the United
States, from or through which payment on the shares of Preferred Stock is made
by the Company or a successor corporation or its paying agent in its capacity as
such or any political subdivision or governmental authority thereof or therein
having the power to tax or (C) any other jurisdiction, other than the United
States, in which the Company or a successor corporation is organized or any
political subdivision or governmental authority thereof or therein having the
power to tax or any change in the official application or interpretation of such
laws, regulations or rulings or any change in the official application or
interpretation of, or any execution of or amendment to, any treaty or treaties
affecting taxation to which such jurisdiction (or such political subdivision or
taxing authority) is party (each, a "Change in Tax Law"), which becomes
effective on or after the date hereof, the Company or a successor corporation is
or would be required on the next succeeding Dividend Payment Date to pay
Additional Amounts (as defined below) with respect to the shares of Preferred
Stock, and the payment of such Additional Amounts cannot be avoided by the use
of any reasonable measures available to the Company or a successor corporation.
In addition, the shares of Preferred Stock shall be subject to
redemption at the option of the Company at any time, in whole or in part, at a
Redemption Price equal to 100% of the then effective Liquidation Preference
thereof, plus all accumulated and unpaid dividends thereon to the redemption
date, if the person formed by a consolidation, merger or amalgamation of the
Company or into which the Company is consolidated, merged or amalgamated or to
which the Company conveys, transfers or leases its properties and assets
substantially as an entirety is required, as a consequence of such
consolidation, merger, amalgamation, conveyance, transfer or lease and as a
consequence of a Change in Tax Law occurring after the date of such
consolidation, merger, amalgamation, conveyance, transfer or lease, to pay
Additional Amounts in respect of any tax, assessment or governmental charge
imposed on any holder of shares of Preferred Stock.
(iii) Payment of Additional Amounts. If any deduction or withholding
-----------------------------
for any present or future taxes, assessments or other governmental charges of
(x) Bermuda or any political subdivision or governmental authority thereof or
therein having power to tax, (y) any jurisdiction, other than the United States,
from or through which payment on the shares of Preferred Stock is made by the
<PAGE>
6
Company or a successor corporation, or its paying agent in its capacity as such
or any political subdivision or governmental authority thereof or therein having
the power to tax or (z) any other jurisdiction, other than the United States, in
which the Company or a successor corporation is organized, or any political
subdivision or governmental authority thereof or therein having the power to tax
shall at any time be required by such jurisdiction (or any such political
subdivision or taxing authority) in respect of any amounts to be paid by the
Company or a successor corporation with respect to the shares of Preferred
Stock, the Company or a successor corporation will pay to each holder of shares
of Preferred Stock as additional dividends, such additional amounts
(collectively, the "Additional Amounts") as may be necessary in order that the
net amounts paid to such holder of such shares of Preferred Stock who, with
respect to any such tax, assessment or other governmental charge, is not
resident in, or a citizen of, such jurisdiction, after such deduction or
withholding, shall be not less than the amount specified in such shares of
Preferred Stock to which such holder is entitled; provided, however, that the
-------- -------
Company or a successor corporation shall not be required to make any payment of
Additional Amounts for or on account of:
(A) any tax, assessment or other governmental charge that would not
have been imposed but for (a) the existence of any present or former
connection between such holder (or between a fiduciary, settlor,
beneficiary, member or shareholder of, or possessor of a power over, such
holder, if such holder is an estate, trust, partnership, limited liability
company or corporation) and the taxing jurisdiction or any political
subdivision or territory or possession thereof or area subject to its
jurisdiction, including, without limitation, such holder (or such
fiduciary, settlor, beneficiary, member, shareholder or possessor) being or
having been a citizen or resident thereof or being or having been present
or engaged in a trade or business therein or having or having had a
permanent establishment therein, (b) the presentation of shares of
Preferred Stock (where presentation is required) for payment on a date more
than 30 days after (x) the date on which such payment became due and
payable or (y) the date on which payment thereof is duly provided for,
whichever occurs later, or (c) the presentation of shares of Preferred
Stock for payment in Bermuda or any political subdivision thereof or
therein, unless such shares of Preferred Stock could not have been
presented for payment elsewhere;
(B) any estate, inheritance, gift, sales, transfer, personal property
or similar tax, assessment or other governmental charge;
(C) any tax, assessment or other governmental charge that is payable
otherwise than by withholding from payment of the Liquidation Preference of
or any dividends on the shares of Preferred Stock;
(D) any tax, assessment or other governmental charge that is imposed
or withheld by reason of the failure by the holder or the beneficial owner
of the shares of Preferred Stock to comply with a request of the Company
addressed to the holder (a) to provide information, documents or other
evidence concerning the nationality, residence or identity of the holder or
such beneficial owner or (b) to make and deliver any declaration or other
similar claim (other
<PAGE>
7
than a claim for refund of a tax, assessment or other governmental charge
withheld by the Company) or satisfy any information or reporting
requirements, which, in the case of (a) or (b), is required or imposed by a
statute, treaty, regulation or administrative practice of the taxing
jurisdiction as a precondition to exemption from all or part of such tax,
assessment or other governmental charge; or
(E) any combination of items (A), (B), (C) and (D) above;
nor shall Additional Amounts be paid with respect to any payment of the
Liquidation Preference of or dividends on any shares of Preferred Stock to any
holder who is a fiduciary or partnership or limited liability company or other
beneficial owner of shares of Preferred Stock to the extent such payment would
be required by the laws of (x) Bermuda or any political subdivision or
governmental authority thereof or therein having the power to tax, (y) any
jurisdiction, other than the United States, from or through which payment on the
shares of Preferred Stock is made by the Company or a successor corporation, or
its paying agent in its capacity as such or any political subdivision or
governmental authority thereof or therein having the power to tax or (z) any
other jurisdiction, other than the United States, in which the Company or a
successor corporation is organized, or any political subdivision or governmental
authority thereof or therein having the power to tax to be included in the
income for tax purposes of a beneficiary or settlor with respect to such
fiduciary or a member of such partnership, limited liability company or
beneficial owner who would not have been entitled to such Additional Amounts had
it been the holder of such shares of Preferred Stock.
The Company shall provide the Transfer Agent with the official
acknowledgment of the relevant taxing authority (or, if such acknowledgment is
not available, a certified copy thereof) evidencing the payment of the
withholding taxes, if any, by the Company. Copies of such documentation shall be
made available to the holders of the shares of Preferred Stock or the Transfer
Agent, as applicable, upon request therefor.
All references herein to dividends on the shares of Preferred Stock
shall include any Additional Amounts payable by the Company in respect of such
shares of Preferred Stock.
(iv) Whenever shares of Preferred Stock are to be redeemed pursuant
to this paragraph (f), a notice of such redemption shall be mailed, addressed to
each holder, by overnight mail, postage prepaid, or delivered to each holder of
the shares to be redeemed at such holder's address as the same appears on the
stock transfer books of the company. Such notice shall be mailed to be
delivered not less than 30 days and nor more than 60 days prior to the date
fixed for redemption. Each such notice shall state: (A) the date fixed for
redemption; (B) the number of shares of Preferred Stock to be redeemed; (C) the
Redemption Price and the amount of dividends accrued and unpaid through the date
fixed for redemption; (D) the place or places where such shares of Preferred
Stock are to be surrendered for payment of the Redemption Price; and (E) that
dividends on the shares to be redeemed will cease to accrue on such date fixed
for redemption unless the Company shall default in the payment of the Redemption
Price. If fewer than all shares of Preferred Stock held by a holder are to be
<PAGE>
8
redeemed, the notice mailed to such holder shall specify the number of shares to
be redeemed from such holder.
Notice having been given as provided in the preceding paragraph, and
if on or before the redemption date specified in such notice, an amount in cash
sufficient to redeem in full on the redemption date and at the applicable
Redemption Price (together with an amount equal to accrued and unpaid dividends
thereon (whether or not declared and whether or not there are funds of the
Company legally available for the payment of dividends) to such redemption date)
and all shares of Preferred Stock called for redemption shall have been set
apart and deposited in trust so as to be available for such purpose and only for
such purpose, or shall have been paid to the holders thereof then effective as
of the close of business on such redemption date, and unless there shall be a
subsequent default in the payment of the Redemption Price plus accrued and
unpaid dividends, the shares of Preferred Stock so called for redemption shall
cease to accrue dividends, and such shares shall no longer be deemed to be
outstanding and shall have the status of authorized but unissued shares of
preferred stock of the Company, undesignated as to series, and all rights of the
holders thereof, as such, as shareholders of the Company (except the right to
receive from the Company the Redemption Price and an amount equal to any accrued
and unpaid dividends (whether or not declared and whether or not there are funds
of the Company legally available for the payment of dividends) to such
redemption date) shall cease. Upon surrender in accordance with such notice of
the certificates for any shares so redeemed (properly endorsed or assigned for
transfer, if the notice shall so state), such shares shall be redeemed by the
Company at the Redemption Price as set forth above. In case fewer than all of
the shares represented by any such certificate are redeemed, a new certificate
of like terms and having the same date of original issuance shall be issued
representing the unredeemed shares without cost to the holder thereof.
(v) In the event that fewer than all of the shares of Preferred Stock
are to be redeemed pursuant to this paragraph (f), the Company shall call for
redemption shares of Preferred Stock pro rata among the holders, based on the
number of shares of Preferred Stock held by each holder (with adjustments to
avoid fractional shares), except that the Company may redeem all of the shares
of Preferred Stock held by any holders of fewer than 100 shares of Preferred
Stock (or all the shares of Preferred Stock held by holders who would hold less
than 100 shares of Preferred Stock as a result of such redemption). Any
redemption for which shares are called for redemption on a pro rata basis shall
comply with this subparagraph (v).
(g) Voting Rights. Except as required by applicable Bermuda law and
-------------
as may otherwise be provided herein or in any amendment hereto, the holders of
shares of Preferred Stock shall not be entitled to any voting rights as
shareholders of the Company except as follows:
(i) The affirmative vote of the holders of at least a majority of the
outstanding shares of Preferred Stock, voting with holders of shares of all
other series of preferred stock affected in the same way as a single class,
in person or by proxy, at a special or annual meeting called for the
purpose, or by written consent in lieu of a meeting, shall be required to
amend, repeal
<PAGE>
9
or change any provisions of this Schedule in any manner which would
adversely affect, alter or change the powers, preferences or special rights
of the Preferred Stock and any such securities affected in the same way;
provided, however, that the creation, authorization or issuance of any
-------- -------
other class or series of capital stock or the increase or decrease in the
amount of authorized capital stock of any such class or series or of the
Preferred Stock, or any increase, decrease or change in the par value of
any class or series of capital stock (including the Preferred Stock), shall
not require the consent of the holders of the Preferred Stock and shall not
be deemed to affect adversely, alter or change the powers, preferences and
special rights of the shares of Preferred Stock. With respect to any matter
on which the holders are entitled to vote as a separate class, each share
of Preferred Stock shall be entitled to one vote.
(ii) If at any time the equivalent of six quarterly dividends payable
on the shares of Preferred Stock are accrued and unpaid (whether or not
consecutive and whether or not declared), the holders of all outstanding
shares of Preferred Stock and any Parity Stock or Senior Stock having
similar voting rights then exercisable, voting separately as a single class
without regard to series, shall be entitled to elect at the next annual
meeting of the shareholders of the Company two directors to serve until all
dividends accumulated and unpaid on any such voting shares have been paid
or declared and funds set aside to provide for payment in full. In
exercising any such vote, each outstanding share of Preferred Stock shall
be entitled to one vote, excluding shares held by the Company or any entity
controlled by the Company, which shares shall have no vote.
(h) Conversion. (i) Each share of Preferred Stock shall be
----------
convertible at any time and from time to time at the option of the holder
thereof into fully paid and nonassessable shares of Common Stock. The number of
shares of Common Stock deliverable upon conversion of a share of Preferred
Stock, adjusted as hereinafter provided, is referred to herein as the
"Conversion Ratio". The Conversion Ratio as of the Issuance Date shall be
4.6948 and shall equal the ratio the nominator of which shall be the Liquidation
Preference and the denominator of which shall be the Conversion Price. The
Conversion Price shall be $53.25, subject to adjustment from time to time as
provided in paragraph (i).
(ii) Conversion of shares of Preferred Stock may be effected by any
holder upon the surrender to the Company at the principal office of the Company
or at the office of the Transfer Agent, as may be designated by the Board of
Directors of the Company, of the certificate or certificates for such shares of
Preferred Stock to be converted accompanied by a written notice stating that
such holder elects to convert all or a specified whole number of such shares in
accordance with the provisions of this paragraph (h) and specifying the name or
names in which such holder wishes the certificate or certificates for shares of
Common Stock to be issued. In case such notice shall specify a name or names
other than that of such holder, such notice shall be accompanied by payment of
all transfer taxes payable upon the issuance of shares of Common Stock in such
name or names. Other than such taxes, the Company shall pay any documentary,
stamp or similar issue or transfer taxes that may be payable in respect of any
issuance or delivery of shares of Common Stock upon conversion
<PAGE>
10
of shares of Preferred Stock pursuant hereto. As promptly as practicable after
the surrender of such certificate or certificates and the receipt of such notice
relating thereto and, if applicable, payment of all required transfer taxes (or
the demonstration to the satisfaction of the Company that such taxes have been
paid), the Company shall deliver or cause to be delivered (x) certificates
representing the number of validly issued, fully paid and nonassessable full
shares of Common Stock to which the holder (or the holder's transferee) of
shares of Preferred Stock being converted shall be entitled and (y) if less than
the full number of shares of Preferred Stock evidenced by the surrendered
certificate or certificates is being converted, a new certificate or
certificates, of like tenor, for the number of shares evidenced by such
surrendered certificate or certificates less the number of shares being
converted. Such conversion shall be deemed to have been made at the close of
business on the date of giving such notice and of such surrender of the
certificate or certificates representing the shares of Preferred Stock to be
converted so that the rights of the holder thereof as to the shares being
converted shall cease except for the right to receive shares of Common Stock and
accrued and unpaid dividends with respect to the shares of Preferred Stock being
converted, in each case in accordance herewith, and the person entitled to
receive the shares of Common Stock shall be treated for all purposes as having
become the record holder of such shares of Common Stock at such time.
(iii) If a holder of shares of Preferred Stock exercises conversion
rights under paragraph (h)(i), upon delivery of the shares for conversion, such
shares shall cease to accrue dividends pursuant to paragraph (d) as of the end
of the day immediately preceding the date of such delivery, but such shares
shall continue to be entitled to receive all accrued dividends which such holder
is entitled to receive through the last preceding Dividend Payment Date unless
such conversion follows a call for redemption by the Company in which case pro
rata dividends shall also be payable through the date immediately preceding such
delivery, in each case as if such holder continued to hold such shares of
Preferred Stock. Any such accrued and unpaid dividends shall be payable by the
Company as and when such dividends are paid to any remaining holders or, if
none, on the date which would have been the next succeeding Dividend Payment
Date had there been remaining holders or such later time at which the Company
believes it has adequate available capital under applicable law to make such a
payment. Notwithstanding the foregoing, shares of Preferred Stock surrendered
for conversion (other than after notice of redemption has been given with
respect to such shares) after the close of business on any record date for the
payment of dividends declared and prior to the opening of business on the
Dividend Payment Date relating thereto must be accompanied by a payment in cash
of an amount equal to the dividend declared in respect of such shares.
(iv) In case any shares of Preferred Stock are to be redeemed
pursuant to paragraph (f), such right of conversion shall cease and terminate,
as to the shares of Preferred Stock to be redeemed, at the close of business on
the Business Day immediately preceding the date fixed for redemption unless the
Company shall default in the payment of the Redemption Price therefor, as
provided herein.
(v) Notwithstanding anything herein to the contrary, but subject to
the provisions of paragraph (h)(iii) and to paragraph (i), and except as
provided for in the following sentence, the
<PAGE>
11
Company shall make no payment or adjustment to any holder of shares of Preferred
Stock surrendered for conversion in respect of any accrued and unpaid dividends
on the shares of Preferred Stock surrendered for conversion. If the Company
redeems the Preferred Stock between December 15, 2004 through and including
January 14, 2005, any holder of shares of Preferred Stock, electing to convert
the shares of Preferred Stock between December 15, 2004 through and including
January 14, 2005, shall be entitled to receive dividends accrued between
November 1, 2004 and December 15, 2004 on the converted shares of Preferred
Stock.
(vi) In connection with the conversion of any shares of Preferred
Stock, no fractions of shares of Common Stock shall be issued, but in lieu
thereof, the Company shall pay a cash adjustment in respect of such fractional
interest in an amount equal to (x) such fractional interest multiplied by the
Liquidation Preference per share, divided by (y) the Conversion Price. If more
than one share of Preferred Stock shall be surrendered for conversion by the
same holder at the same time, the number of full shares of Common Stock
issuable on conversion thereof shall be computed on the basis of the total
number of shares of Preferred Stock so surrendered.
(vii) The Company shall at all times reserve and keep available, free
from preemptive rights, for issuance upon the conversion of shares of Preferred
Stock such number of its authorized but unissued shares of Common Stock as will
from time to time be sufficient to permit the conversion of all outstanding
shares of Common Stock if necessary to permit the conversion of all outstanding
shares of Preferred Stock. Prior to the delivery of any securities which the
Company shall be obligated to deliver upon conversion of the Preferred Stock,
the Company shall comply with all applicable federal and state laws and
regulations which require action to be taken by the Company. All shares of
Common Stock delivered upon conversion of the Preferred Stock will upon delivery
be duly and validly issued and fully paid and nonassessable, free of all liens
and charges and not subject to any preemptive rights.
(i)(i) The Conversion Price shall be subject to adjustment from time
to time as follows:
(A) Stock Splits and Combinations. In case the Company shall at any
-----------------------------
time or from time to time after the Issuance Date (a) subdivide or split the
outstanding shares of Common Stock, (b) combine or reclassify the outstanding
shares of Common Stock into a smaller number of shares or (c) issue by
reclassification of the shares of Common Stock any shares of capital stock of
the Company, then, and in each such case, the Conversion Price in effect
immediately prior to such event or the record date therefor, whichever is
earlier, shall be adjusted so that the holder of any shares of Preferred Stock
thereafter surrendered for conversion shall be entitled to receive the number of
shares of Common Stock or other securities of the Company which such holder
would have owned or have been entitled to receive after the occurrence of any of
the events described above, had such shares of Preferred Stock been surrendered
for conversion immediately prior to the occurrence of such event or the record
date therefor, whichever is earlier. An adjustment made pursuant to this
subparagraph (A) shall become effective at the close of business on the day upon
which such corporate action becomes effective. Such adjustment shall be made
successively whenever any event listed above shall
<PAGE>
12
occur.
(B) Stock Dividends in Common Stock. In case the Company shall at
-------------------------------
any time or from time to time after the Issuance Date pay a dividend or make a
distribution in shares of Common Stock on any class of capital stock of the
Company other than dividends or distributions of shares of Common Stock or other
securities with respect to which adjustments are provided in paragraph (i)(A)
above, and the total number of shares constituting such dividend or distribution
shall exceed 25% of the total number of shares of Common Stock outstanding at
the close of business on the record date fixed for determination of shareholders
entitled to receive such dividend or distribution, the Conversion Price shall be
adjusted so that the holder of each share of Preferred Stock shall be entitled
to receive upon conversion thereof, the number of shares of Common Stock
determined by multiplying (1) the applicable Conversion Price by (2) a fraction,
the numerator of which shall be the number of shares of Common Stock theretofore
outstanding and the denominator of which shall be the sum of such number of
shares and the total number of shares issued in such dividend or distribution.
In case the total number of shares constituting such dividend or distribution
shall not exceed 25% of the total number of shares of Common Stock outstanding
at the close of business on the record date fixed for such dividend or
distribution, such shares of Common Stock shall be considered to be issued at
the time of any such next succeeding dividend or other distribution in which the
number of shares of Common Stock issued, together with the number of shares
issued in all previous such dividends and distributions, shall exceed such 25%.
(C) Issuance of Rights or Warrants. In case the Company shall issue
------------------------------
to all holders of Common Stock rights or warrants expiring within 45 days
entitling such holders to subscribe for or purchase Common Stock at a price per
share less than the Current Market Price (as defined below), the Conversion
Price in effect immediately prior to the close of business on the record date
fixed for determination of shareholders entitled to receive such rights or
warrants shall be reduced by multiplying such Conversion Price by a fraction,
the numerator of which is the sum of the number of shares of Common Stock
outstanding at the close of business on such record date and the number of
shares of Common Stock that the aggregate offering price of the total number of
shares of Common Stock so offered for subscription or purchase would purchase at
such Current Market Price and the denominator of which is the sum of the number
of shares of Common Stock outstanding at the close of business on such record
date and the number of additional shares of Common Stock so offered for
subscription or purchase. For purposes of this subparagraph (C), the issuance
of rights or warrants to subscribe for or purchase securities convertible into
Common Stock shall be deemed to be the issuance of rights or warrants to
purchase the Common Stock into which such securities are convertible at an
aggregate offering price equal to the sum of the aggregate offering price of
such securities and the minimum aggregate amount (if any) payable upon
conversion of such securities into Common Stock. Such adjustment shall be made
successively whenever any such event shall occur.
(D) Distribution of Indebtedness, Securities or Assets. In case the
--------------------------------------------------
Company shall distribute to all holders of Common Stock (whether by dividend or
in a merger, amalgamation or consolidation or otherwise) evidences of
indebtedness, shares of capital stock of any class or series,
<PAGE>
13
other securities, cash or assets (other than Common Stock, rights or warrants
referred to in subparagraph (C) above or a dividend payable exclusively in cash
and other than as a result of a Fundamental Change (as defined below)), the
Conversion Price in effect immediately prior to the close of business on the
record date fixed for determination of shareholders entitled to receive such
distribution shall be reduced by multiplying such Conversion Price by a
fraction, the numerator of which is the Current Market Price on such record date
less the fair market value (as determined by the Board of Directors of the
Company, whose determination in good faith shall be conclusive) of the portion
of such evidences of indebtedness, shares of capital stock, other securities,
cash and assets so distributed applicable to one share of Common Stock and the
denominator of which is the Current Market Price. Such adjustment shall be made
successively whenever any such event shall occur.
(E) Fundamental Changes. In case any transaction or event
-------------------
(including, without limitation, any merger, consolidation, sale of assets,
tender or exchange offer, reclassification, compulsory share exchange or
liquidation) shall occur in which all or substantially all outstanding Common
Stock is converted into or exchanged for stock, other securities, cash or assets
(each, a "Fundamental Change"), the holder of each share of Preferred Stock
outstanding immediately prior to the occurrence of such Fundamental Change shall
have the right upon any subsequent conversion to receive (but only out of
legally available funds, to the extent required by applicable law) the kind and
amount of stock, other securities, cash and assets that such holder would have
received if such share had been converted immediately prior thereto.
(ii) Anything in this section (i) to the contrary notwithstanding,
the Company shall not be required to give effect to any adjustment in the
Conversion Price unless and until the net effect of one or more adjustments
(each of which shall be carried forward until counted toward adjustment),
determined as above provided, shall have resulted in a change of the Conversion
Price by at least 1%, and when the cumulative net effect of more than one
adjustment so determined shall be to change the Conversion Price by at least 1%,
such change in the Conversion Price shall thereupon be given effect. In the
event that, at any time as a result of the provisions of this paragraph (i), the
holder of shares of Preferred Stock upon subsequent conversion shall become
entitled to receive any shares of capital stock of the Company other than Common
Stock, the number of such other shares so receivable upon conversion of shares
of Preferred Stock shall thereafter be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to the provisions
contained herein.
(iii) There shall be no adjustment of the Conversion Price in case of
the issuance of any stock of the Company in a merger, reorganization,
acquisition, reclassification, recapitalization or other similar transaction
except as set forth in this paragraph (i).
(iv) In any case in which this paragraph (i) requires that an
adjustment as a result of any event become effective from and after a record
date, the Company may elect to defer until after the occurrence of such event
(A) issuing to the holder of any shares of Preferred Stock converted after such
record date and before the occurrence of such event the additional shares of
Common Stock issuable upon such conversion over and above the shares issuable on
the basis of the conversion price
<PAGE>
14
in effect immediately prior to adjustment and (B) paying to such holder any
amount in cash in lieu of a fractional share of Common Stock.
(v) If the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution, and shall thereafter and before the distribution to shareholders
thereof legally abandon its plan to pay or deliver such dividend or
distribution, then thereafter no adjustment in the number of shares of Common
Stock issuable upon exercise of the right of conversion granted by this
paragraph (i) or in the Conversion Price then in effect shall be required by
reason of the taking of such record.
(vi) The Board of Directors of the Company shall have the power to
resolve any ambiguity or correct any error in this paragraph (i), and its action
in so doing shall be final and conclusive.
(j) Notwithstanding anything herein to the contrary, if the Company
is reorganized such that the Common Stock is exchanged for the Common Stock of a
new entity ("Newco"), the Common Stock of which is traded on the National
Association of Securities Dealers, Inc. Automated Quotation System or another
recognized securities exchange, then the Company, by notice to the holders of
the Preferred Stock but without any required consent on their part, shall have
the option to cause the exchange of the shares of Preferred Stock for preferred
stock of Newco having the same terms and conditions as set forth herein,
provided that, in the event that Newco is not solely incorporated as a Bermuda
- --------
company or in the event the Newco share structure is not identical to that of
the Company, the rights attaching to the preferred stock of Newco may be
adjusted so as to comply with the local law of the country of incorporation of
Newco or the new share structure of Newco. If the Company exercises such
option, the Company shall indemnify each holder of shares of Preferred Stock if
an exchange described in this paragraph (j) would, under then applicable United
States Federal income tax law, result in the recognition of tax by such holder;
provided, however, that the Company shall not be obligated to indemnify any
- -------- -------
holder for any payments described under subparagraphs (f)(ii) and (f)(iii),
unless and to the extent provided in such subparagraphs.
(k) Change in Control Put Right. (i) If a Change in Control occurs
---------------------------
with respect to the Company, each holder of shares of Preferred Stock shall have
the right to require the Company to purchase all or any part of such holder's
shares of Preferred Stock at a purchase price in cash equal to 100% of the
Liquidation Preference of such shares, plus all accumulated and unpaid dividends
on such shares to the date of purchase. Within 30 days following such Change in
Control, the Company shall mail a notice to each holder of shares of preferred
stock describing the transaction or transactions that constitute such Change in
Control and offering to purchase such holder's shares of Preferred Stock on the
date specified in such notice, which date shall be no earlier than 30 days and
no later than 60 days from the date such notice is mailed.
(ii) The Company shall comply with the requirements of Rule 14e-1
under the Securities Exchange Act of 1934, as amended, and any other securities
laws and regulations to the
<PAGE>
15
extent such laws and regulations are applicable in connection with the purchase
of Preferred Stock as a result of a Change in Control with respect to the
Company. To the extent that the provisions of any securities laws or regulations
conflict with any of the provisions of this paragraph (k), the Company shall
comply with the applicable securities laws and regulations and shall be deemed
not to have breached its obligations under this paragraph (k).
(iii) On the date scheduled for payment of shares of Preferred Stock
tendered to the Company for repurchase as provided in this paragraph (k), the
Company shall, to the extent lawful, (a) accept for payment all shares of
Preferred Stock properly tendered, (b) deposit with the Transfer Agent an amount
equal to the purchase price of the shares of Preferred Stock so tendered and (c)
deliver or cause to be delivered to the Transfer Agent shares of Preferred Stock
so accepted together with an officers' certificate stating the aggregate
Liquidation Preference of the shares of Preferred Stock being purchased by the
Company. The Transfer Agent shall promptly mail or deliver to each holder of
shares of Preferred Stock so tendered the applicable payment for such shares of
Preferred Stock, and the Transfer Agent shall promptly countersign and mail or
deliver, or cause to be transferred by book-entry, to each holder new shares of
Preferred Stock equal in Liquidation Preference to any unpurchased portion of
the shares of Preferred Stock surrendered, if any. The Company shall publicly
announce the results of its offer on or as soon as practicable after the payment
date for the purchase of shares of Preferred Stock in connection with a Change
in Control of the Company.
(iv) The Company shall not be required to make an offer to purchase
any shares of Preferred Stock upon the occurrence of a Change in Control of the
Company if a third party makes such offer in the manner, at the times and
otherwise in compliance with the requirements described in this paragraph (k)
and purchases all shares of Preferred Stock validly tendered and not withdrawn.
(v) The right of the holders of shares of Preferred Stock described
in this paragraph (k) shall be subject to the obligation of Global Crossing
Holdings Ltd., a company incorporated under the laws of Bermuda ("Global
Crossing Holdings"), to:
(a) repay its debt obligations in full under the Credit Agreement, dated
as of July 2, 1999, among the Company, Global Crossing Holdings, The Chase
Manhattan Bank and the other parties named therein, as amended or supplemented
from time to time; and
(b) offer to purchase and purchase all of its outstanding 9e% Senior
Notes Due 2008 that have been tendered for purchase in connection with a
Change in Control of the Company.
In addition, the right of the holders of shares of Preferred Stock
described in this paragraph (k) shall be subject to the repurchase or repayment
of the Company's future indebtedness, which the Company shall be required to
repurchase or repay in connection with a Change in Control of the Company.
<PAGE>
16
When the Company shall have satisfied the obligations set forth above
in this subparagraph (v) and, subject to the legal availability of funds for
such purpose, the Company shall purchase all shares of Preferred Stock tendered
for purchase by the Company upon a Change in Control of the Company pursuant to
this paragraph (k).
(l) The shares of Preferred Stock and the shares of Common Stock into
which the shares of Preferred Stock shall be convertible shall have the
registration rights set forth in the Registration Rights Agreement, dated
December 15, 1999, among the Company and the Initial Purchasers (as defined
therein).
(m) Transfer Restrictions. (i) The shares of Preferred Stock shall
---------------------
bear the following legend:
"THE SHARES OF PREFERRED STOCK, WITH LIQUIDATION PREFERENCE $250 PER
SHARE, OF THE COMPANY REPRESENTED BY THIS CERTIFICATE MAY NOT BE
OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND ANY APPLICABLE
STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS UNDER THE ACT."
(ii) The shares of Common Stock issuable upon conversion of the
shares of Preferred Stock shall bear the following legend:
"THE SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE, OF THE COMPANY
REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED OR SOLD IN THE
UNITED STATES ABSENT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND ANY APPLICABLE STATE SECURITIES LAWS OR AN
APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE
ACT."
(n) Certain Definitions. As used in this Schedule, the following
-------------------
terms shall have the following meanings, unless the context otherwise requires:
"Affiliate" of any person means any other person who, directly or
---------
indirectly, Controls, is under common Control or is Controlled by such other
person. For purposes of this definition, "Control" (including, with correlative
meanings, the terms "controlling," "controlled by" and "under common control
with"), as used with respect to any person, shall mean the power, directly or
indirectly, to direct or cause the direction of the management or policies of
such person, whether through the ownership of voting securities, by contract or
otherwise; provided that beneficial ownership of 10% or more of the Voting Stock
--------
of a person shall be deemed to be Control.
<PAGE>
17
"Business Day" means any day other than a Saturday, Sunday or a United
------------
States federal or Bermuda holiday.
"Change in Control" means, with respect to the Company, the occurrence
-----------------
of any of the following: (i) any "person" (as such term is unused in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), other than a Permitted Holder, is or becomes the beneficial owner,
directly or indirectly, of 35% or more of the Voting Stock (measured by voting
power rather than number of shares) of the Company, and the Permitted Holders
own, in the aggregate, a lesser percentage of the total Voting Stock (measured
by voting power rather than by number of shares) of the Company than such person
and do not have the right or ability by voting power, contract or otherwise to
elect or designate for election a majority of the board of directors of the
Company (for the purposes of this clause, such other person shall be deemed to
"beneficially own" any Voting Stock of a specified corporation held by a parent
corporation if such other person beneficially owns, directly or indirectly, more
than 35% of the Voting Stock (measured by voting power rather than by number of
shares) of such parent corporation and the Permitted Holders beneficially own,
directly or indirectly, in the aggregate a lesser percentage of Voting Stock
(measured by voting power rather than by number of shares) of such parent
corporation and do not have the right or ability by voting power, contract or
otherwise to elect or designate for election a majority of the board of
directors of such parent corporation), (ii) during any period of two consecutive
years, Continuing Directors cease for any reason to constitute a majority of the
Board of Directors of the Company, (iii) the Company consolidates or merges with
or into any other person, other than a consolidation or merger (a) of the
Company into Global Crossing Holdings or Global Crossing Holdings into the
Company, or the Company with or into a Subsidiary of the Company or (b) pursuant
to a transaction in which the outstanding Voting Stock of the Company is changed
into or exchanged for cash, securities or other property with the effect that
the beneficial owners of the outstanding Voting Stock of the Company immediately
prior to such transaction, beneficially own, directly or indirectly, more than
35% of the Voting Stock (measured by voting power rather than number of shares)
of the surviving corporation immediately following such transaction or (iv) the
sale, transfer, conveyance or other disposition (other than by way of merger or
consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Subsidiaries, taken as a
whole, to any person other than a Subsidiary of the Company or a Permitted
Holder or a person more than 50% of the Voting Stock (measured by voting power
rather than by number of shares) of which is owned, directly or indirectly,
following such transaction or transactions by the Permitted Holders; provided,
--------
however, that sales, transfers, conveyances or other dispositions in the
- -------
ordinary course of business of capacity on cable systems owned, controlled or
operated by the Company or any Subsidiary or of telecommunications capacity or
transmission rights acquired by the Company or any Subsidiary for use in its
business, including, without limitation, for sale, lease, transfer, conveyance
or other disposition to any customer of the Company or any Subsidiary shall not
be deemed a disposition of assets for purposes of this clause (iv).
"Continuing Directors" means individuals who at the beginning of the
--------------------
period of determination constituted the Board of Directors of the Company,
together with any new directors whose election by such Board of Directors or
whose nomination for election by the shareholders of
<PAGE>
18
the Company was approved by a vote of at least a majority of the directors of
the Company then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved or is designee of any one of the Permitted Holders or any combination
thereof or was nominated or elected by any such Permitted Holder(s) or any of
their designees.
"Current Market Price" means, with respect to any event set forth in
--------------------
paragraph (i) herein, as applicable, the average of the daily closing prices for
the five consecutive trading days selected by the Board of Directors of the
Company commencing not more than 20 trading days before, and ending not later
than the date of such event and the date immediately preceding the record date
fixed in connection with such event.
"Permitted Holder" means Pacific Capital Group, Inc. and CIBC
----------------
Oppenheimer Corp., and their respective Affiliates.
"Subsidiary" means, with respect to any person, (i) any corporation,
----------
association or other business entity of which more than 50% of the total voting
power of shares of capital stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
person or one or more of the other Subsidiaries of that person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such person or a Subsidiary of such person or (b)
the only general partners of which are such person or of one or more
Subsidiaries of such person (or any combination thereof).
"Voting Stock" of any person as of any date means the capital stock of
------------
such person that is at the time entitled to vote in the election of the Board of
Directors of such person.
(o) Headings. The headings of the paragraphs of this Schedule are
--------
for convenience of reference only and hall not define, limit or affect any of
the provisions hereof.
(p) Bye-Laws. This Schedule shall be attached to the Bye-Laws of the
--------
Company and shall become incorporated in such Bye-Laws.
<PAGE>
Exhibit 4.5
- --------------------------------------------------------------------------------
GLOBAL CROSSING HOLDINGS LTD.,
as Company,
THE GUARANTORS PARTY HERETO FROM TIME TO TIME,
as Guarantors
and
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
------------------
INDENTURE
Dated as of November 19, 1999
Relating to
$900,000,000 9 1/8% Senior Notes due 2006
$1,100,000,000 9 1/2% Senior Notes due 2009
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE..........................1
Section 1.01. Definitions...................................................1
Section 1.02. Other Definitions............................................19
Section 1.03. Trust Indenture Act Definitions..............................20
Section 1.04. Rules of Construction........................................21
ARTICLE 2. THE NOTES..........................................................21
Section 2.01. Form and Dating..............................................21
Section 2.02. Execution and Authentication.................................23
Section 2.03. Registrar and Paying Agent...................................23
Section 2.04. Paying Agent to Hold Money in Trust..........................24
Section 2.05. Holder Lists.................................................24
Section 2.06. Transfer and Exchange........................................24
Section 2.07. Replacement Notes............................................37
Section 2.08. Outstanding Notes............................................37
Section 2.09. Treasury Notes...............................................38
Section 2.10. Temporary Notes..............................................38
Section 2.11. Cancellation.................................................38
Section 2.12. Defaulted Interest...........................................38
Section 2.13. CUSIP Numbers................................................39
ARTICLE 3. REDEMPTION AND PREPAYMENT.........................................39
Section 3.01. Notices to Trustee...........................................39
Section 3.02. Selection of Notes to Be Redeemed............................39
Section 3.03. Notice of Redemption.........................................40
Section 3.04. Effect of Notice of Redemption...............................40
Section 3.05. Deposit of Redemption Price..................................40
Section 3.06. Notes Redeemed in Part.......................................41
Section 3.07. Optional Redemption..........................................41
Section 3.08. Optional Tax Redemption......................................42
Section 3.09. Payment of Additional Amounts................................43
Section 3.10. Mandatory Redemption.........................................44
Section 3.11. Offer to Purchase by Application of Excess Proceeds..........44
ARTICLE 4. COVENANTS.........................................................46
Section 4.01. Payment of Notes.............................................46
Section 4.02. Maintenance of Office or Agency..............................47
Section 4.03. Reports......................................................47
Section 4.04. Compliance Certificate.......................................47
Section 4.05. Taxes........................................................48
Section 4.06. Stay, Extension and Usury Laws...............................48
-i-
<PAGE>
Section 4.07. Restricted Payments..........................................49
Section 4.08. Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries.............................................51
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock...52
Section 4.10. Asset Sales..................................................54
Section 4.11. Transactions with Affiliates.................................55
Section 4.12. Liens........................................................56
Section 4.13. Sale and Leaseback Transactions.............................56
Section 4.14. Corporate Existence..........................................57
Section 4.15. Offer to Repurchase Upon Change of Control...................57
Section 4.16. Business Activities..........................................58
Section 4.17. [Reserved]...................................................58
Section 4.18. [Reserved]...................................................58
Section 4.19. Issuances and Sales of Equity Interests in Wholly Owned
Restricted Subsidiaries.............................................58
Section 4.20. Payments For Consent.........................................58
Section 4.21. Money for Payments to Be Held In Trust.......................59
Section 4.22. Future Guarantees............................................60
ARTICLE 5. SUCCESSORS........................................................60
Section 5.01. Merger, Consolidation, or Sale of Assets.....................60
Section 5.02. Successor Corporation Substituted............................61
ARTICLE 6. DEFAULTS AND REMEDIES.............................................61
Section 6.01. Events of Default............................................61
Section 6.02. Acceleration.................................................62
Section 6.03. Other Remedies...............................................63
Section 6.04. Waiver of Past Defaults......................................63
Section 6.05. Control by Majority..........................................64
Section 6.06. Limitation on Suits..........................................64
Section 6.07. Rights of Holders of Notes to Receive Payment................64
Section 6.08. Collection Suit by Trustee...................................65
Section 6.09. Trustee May File Proofs of Claim.............................65
Section 6.10. Priorities...................................................65
Section 6.11. Undertaking for Costs........................................66
ARTICLE 7. TRUSTEE............................................................66
Section 7.01. Duties of Trustee............................................66
Section 7.02. Rights of Trustee............................................67
Section 7.03. Individual Rights of Trustee.................................68
Section 7.04. Trustee's Disclaimer.........................................68
Section 7.05. Notice of Defaults...........................................68
Section 7.06. Reports by Trustee to Holders of the Notes...................68
Section 7.07. Compensation and Indemnity...................................69
Section 7.08. Replacement of Trustee.......................................70
Section 7.09. Successor Trustee by Merger, etc.............................71
Section 7.10. Eligibility; Disqualification................................71
Section 7.11. Preferential Collection of Claims Against Company............72
-ii-
<PAGE>
ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE..........................72
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.....72
Section 8.02. Legal Defeasance and Discharge...............................72
Section 8.03. Covenant Defeasance..........................................72
Section 8.04. Conditions to Legal or Covenant Defeasance...................73
Section 8.05. Deposited Money and Government Securities to be Held in
Trust; Other Miscellaneous Provisions...............................74
Section 8.06. Repayment to Company.........................................75
Section 8.07. Reinstatement................................................75
Section 8.08. Survival.....................................................75
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER..................................76
Section 9.01. Without Consent of Holders of Notes..........................76
Section 9.02. With Consent of Holders of Notes.............................76
Section 9.03. Compliance with Trust Indenture Act..........................78
Section 9.04. Revocation and Effect of Consents............................78
Section 9.05. Notation on or Exchange of Notes.............................78
Section 9.06. Trustee to Sign Amendments, etc..............................78
ARTICLE 10. GUARANTEES.......................................................79
Section 10.01. Guarantee...................................................79
Section 10.02. Limitation on Guarantor Liability...........................80
Section 10.03. Execution and Delivery of Guarantee.........................80
Section 10.04. Guarantors May Consolidate, etc., on Certain Terms..........80
Section 10.05. Releases Following Sale of Assets...........................81
ARTICLE 11. SATISFACTION AND DISCHARGE.......................................82
Section 11.01. Satisfaction and Discharge of Indenture.....................82
Section 11.02. Application of Trust Money..................................82
ARTICLE 12. MISCELLANEOUS....................................................83
Section 12.01. Trust Indenture Act Controls................................83
Section 12.02. Notices.....................................................83
Section 12.03. Communication by Holders of Notes with Other Holders
of Notes............................................................84
Section 12.04. Certificate and Opinion as to Conditions Precedent..........85
Section 12.05. Statements Required in Certificate or Opinion...............85
Section 12.06. Rules by Trustee and Agents.................................85
Section 12.07. No Personal Liability of Directors, Officers, Employees
and Shareholders....................................................85
Section 12.08. Governing Law...............................................86
Section 12.09. Currency Indemnity..........................................86
Section 12.10. Consent to Jurisdiction and Service.........................86
Section 12.11. No Adverse Interpretation of Other Agreements...............87
Section 12.12. Successors..................................................87
Section 12.13. Severability................................................87
Section 12.14. Counterpart Originals.......................................88
Section 12.15. Table of Contents, Headings, etc............................88
-iii-
<PAGE>
CROSS-REFERENCE TABLE*
Trust Indenture Act Section Indenture Section
310(a)(1)............................................................7.10
(a)(2)...............................................................7.10
(a)(3)...............................................................N.A.
(a)(4)...............................................................N.A.
(a)(5)...............................................................7.10
(b)..................................................................7.10
(c)..................................................................N.A.
311(a)...............................................................7.11
(b)..................................................................7.11
(i)(c)...............................................................N.A.
312(a)...............................................................2.05
(b).................................................................12.03
(c).................................................................12.03
313(a)...............................................................7.06
(b)(2)...............................................................7.07
(c)..................................................................7.06; 12.02
(d)..................................................................7.06
314(a)...............................................................4.03; 12.02
(c)(1)..............................................................12.04
(c)(2)..............................................................12.04
(c)(3)...............................................................N.A.
(e).................................................................12.05
(f)..................................................................N.A.
315(a)...............................................................7.01
(b)..................................................................7.05; 12.02
(A)(c)...............................................................7.01
(d)..................................................................7.01
(e)..................................................................6.11
316(a)(last sentence)................................................2.09
(a)(1)(A)............................................................6.05
(a)(1)(B)............................................................6.04
(a)(2)...............................................................N.A.
(b)..................................................................6.07
(c)..................................................................2.12
317(a)(1)............................................................6.08
(a)(2)...............................................................6.09
(b)..................................................................2.04
318(a)..............................................................12.01
(b)..................................................................N.A.
(c).................................................................12.01
N.A. means not applicable.
-iv-
<PAGE>
* This Cross-Reference Table is not part of the Indenture.
-v-
<PAGE>
INDENTURE dated as of November 19, 1999 by and among Global Crossing
Holdings Ltd., a Bermuda company (the "Company"), the Guarantors (as herein
defined) and United States Trust Company of New York, as trustee (the
"Trustee").
The Company, the Guarantors and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the Holders of
the 9 1/8% Series A Senior Notes due 2006 (the "Notes Due 2006") and the Holders
of the 9 1/2% Series A Senior Notes due 2009 (the "Notes Due 2009" and, together
with the Notes Due 2006, the "Series A Notes") and the Holders of the 9 1/8%
Series B Senior Notes due 2006 and the 9 1/2% Series B Senior Notes due 2009
(together, the "Series B Notes" and, together with the Series A Notes, the
"Notes"):
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions
"144A Global Note" means a global note in the form of Exhibit A-1 or
-----------
A-3 hereto bearing the Global Note Legend and the Private Placement Legend and
- ---
deposited with or on behalf of, and registered in the name of, the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold in reliance on Rule 144A.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling, controlled by or under direct or indirect common control
with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the Voting Stock of a Person shall be
deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"all or substantially all" shall have the meaning given such phrase in
the Revised Model Business Corporation Act.
"Applicable Premium" means, (x) with respect to any Note Due 2009 on
any Redemption Date, the greater of (i) 1.0% of the principal amount of such
Note or (ii) the excess of (A) the present value at such Redemption Date of (1)
the redemption price of such Note at November 15, 2004 (such redemption price
being set forth in the table in Section 3.07 hereof) plus (2) all required
interest payments due on such Note through November 15, 2004 (excluding accrued
but unpaid interest), computed using a discount
<PAGE>
2
rate equal to the relevant Treasury Rate plus 50 basis points over (B) the
principal amount of such Note, if greater; and (y) with respect to any Note Due
2006 on any Redemption Date, the greater of (i) 1.0% of the principal amount of
such Note or (ii) the excess of (A) the present value at such Redemption Date of
(1) 100.000% of the principal amount of such Note plus (2) all required interest
payments due on such Note through November 15, 2006 (excluding accrued but
unpaid interest), computed using a discount rate equal to the relevant Treasury
Rate plus 50 basis points over (B) the principal amount of such Note, if
greater.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear and CEDEL that apply to such transfer or
exchange.
"Asset Sale" means (i) the sale, lease, transfer, conveyance or other
disposition of any assets or rights (including, without limitation, by way of a
sale and leaseback) other than sales of inventory in the ordinary course of
business and other than any sale, lease, transfer, conveyance or other
disposition of capacity on any cable system owned, controlled or operated by the
Company or any Restricted Subsidiary or of telecommunications capacity or
transmission rights acquired by the Company or any Restricted Subsidiary for use
in a Permitted Business (provided that the sale, lease, transfer, conveyance or
other disposition of all or substantially all of the assets of the Company and
its Restricted Subsidiaries taken as a whole will be governed by the provisions
of Sections 4.15 and/or the provisions of Section 5.01 hereof and not by the
provisions of Section 4.10 hereof), and (ii) the issue or sale by the Company or
any of its Restricted Subsidiaries of Equity Interests of its Subsidiaries, in
the case of either clause (i) or (ii), whether in a single transaction or a
series of related transactions (a) that have a fair market value in excess of
$25.0 million or (b) for net proceeds in excess of $25.0 million.
Notwithstanding the foregoing, the following items shall not be deemed to be
Asset Sales: (i) a transfer of assets by the Company to a Restricted Subsidiary
or by a Restricted Subsidiary to the Company or to another Restricted
Subsidiary, (ii) an issuance of Equity Interests by a Restricted Subsidiary to
the Company or to another Restricted Subsidiary, (iii) a Restricted Payment that
is permitted by Section 4.07 hereof, (iv) a transfer of assets by the Company or
a Restricted Subsidiary in connection with a Qualified Receivables Transaction,
and (v) a disposition of obsolete or worn out equipment or equipment that is no
longer useful in the conduct of a Permitted Business and that is disposed of in
the ordinary course of business.
"Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value (discounted at the rate
of interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law or any similar provisions of Bermuda law for the relief of debtors.
<PAGE>
3
"Board of Directors" means the board of directors or other governing
body of the Company or, if the Company is owned or managed by a single entity,
the board of directors or other governing body of such entity, or, in either
case, any committee thereof duly authorized to act on behalf of such board or
governing body.
"Board Resolution" means a duly authorized resolution of the Board of
Directors.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof (provided that the full
faith and credit of the United States is pledged in support thereof) having
maturities of not more than six months from the date of acquisition, (iii)
certificates of deposit and eurodollar time deposits with maturities of six
months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding six months and overnight bank deposits, in each case
with any domestic commercial bank having capital and surplus in excess of $500
million and a Thompson Bank Watch Rating of AB" or better, (iv) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clauses (ii) and (iii) above entered into with any
financial institution meeting the qualifications specified in clause (iii)
above, (v) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Corporation and in each case
maturing within six months after the date of acquisition and (vi) money market
funds at least 95% of the assets of which constitute Cash Equivalents of the
kinds described in clauses (i)-(v) of this definition.
"CEDEL" means Cedelbank, a limited liability company (societe anonyme)
organized under Luxembourg law.
"Change of Control" means the occurrence of any of the following: (i)
any "person" (as such term is used in Section 13(d)(3) of the Exchange Act),
other than a Permitted Holder, is or becomes the beneficial owner, directly or
indirectly, of 35% or more of the Voting Stock (measured by voting power rather
than number of shares) of the Company or GCL, and the Permitted Holders own, in
the aggregate, a lesser percentage of the total Voting Stock (measured by voting
power rather than by number of
<PAGE>
4
shares) of the Company or GCL than such person and do not have the right or
ability by voting power, contract or otherwise to elect or designate for
election a majority of the board of directors of the Company or GCL (for the
purposes of this clause, such other person shall be deemed to "beneficially own"
any Voting Stock of a specified corporation held by a parent corporation if such
other person beneficially owns, directly or indirectly, more than 35% of the
Voting Stock (measured by voting power rather than by number of shares) of such
parent corporation and the Permitted Holders beneficially own, directly or
indirectly, in the aggregate a lesser percentage of Voting Stock (measured by
voting power rather than by number of shares) of such parent corporation and do
not have the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the board of directors of such parent
corporation), (ii) during any period of two consecutive years, Continuing
Directors cease for any reason to constitute a majority of the Board of
Directors of the Company or GCL, (iii) the Company or GCL consolidates or merges
with or into any other Person, other than a consolidation or merger (a) of the
Company into GCL or GCL into the Company, or the Company or GCL into a
Restricted Subsidiary of the Company or (b) pursuant to a transaction in which
the outstanding Voting Stock of the Company or GCL is changed into or exchanged
for cash, securities or other property with the effect that the beneficial
owners of the outstanding Voting Stock of the Company or GCL, respectively,
immediately prior to such transaction, beneficially own, directly or indirectly,
more than 35% of the Voting Stock (measured by voting power rather than number
of shares) of the surviving corporation immediately following such transaction
or (iv) the sale, transfer, conveyance or other disposition (other than by way
of merger or consolidation), in one or a series of related transactions, of all
or substantially all of the assets of GCL or the Company and its Restricted
Subsidiaries taken as a whole to any person other than a Restricted Subsidiary
of the Company or a Permitted Holder or a person more than 50% of the Voting
Stock (measured by voting power rather than by number of shares) of which is
owned, directly or indirectly, following such transaction or transactions by the
Permitted Holders; provided, however, that sales, transfers, conveyances or
other dispositions in the ordinary course of business of capacity on cable
systems owned, controlled or operated by the Company or any Restricted
Subsidiary or of telecommunications capacity or transmission rights acquired by
the Company or any Restricted Subsidiary for use in its business, including,
without limitation, for sale, lease, transfer, conveyance or other disposition
to any customer of the Company or any Restricted Subsidiary shall not be deemed
a disposition of assets for purposes of this clause (iv). The definition of a
Change of Control includes a phrase relating to the sale, lease, transfer,
conveyance or other disposition of "all or substantially all" of the assets of
GCL or the Company and its Restricted Subsidiaries taken as a whole, as such
phrase is used in the Revised Model Business Corporation Act. Although there is
a developing body of case law interpreting the phrase "substantially all," there
is no precise established definition of such phrase under applicable law.
Accordingly, the ability of a Holder of Notes to require the Company to purchase
such Notes as a result of a sale, lease, transfer, conveyance or other
disposition of less than all of the assets of GCL or the Company and its
Restricted Subsidiaries taken as a whole to another Person or group may be
uncertain.
"Company" means Global Crossing Holdings Ltd., and any and all
successors thereto.
"Consolidated Capital Ratio" means, with respect to the Company or any
of its Restricted Subsidiaries, as of the date of any incurrence of Indebtedness
or issuance of Disqualified Stock, the ratio
<PAGE>
5
of (i) the aggregate consolidated principal amount of Indebtedness outstanding
and the liquidation preference of Disqualified Stock as of the most recent
quarterly or annual balance sheet date, after giving pro forma effect to the
incurrence of such Indebtedness or the issuance of such Disqualified Stock and
any other Indebtedness incurred and Disqualified Stock issued since such balance
sheet date, and the receipt and application of the proceeds therefrom to (ii)
Consolidated Net Worth as of such balance sheet date after giving pro forma
effect to the issuance of Equity Interests (other than Disqualified Stock)
issued since the balance sheet date and the receipt and application of the
proceeds therefrom.
"Consolidated Cash Flow" means, with respect to the Company for any
period, the Consolidated Net Income of the Company and its Restricted
Subsidiaries for such period plus, to the extent that any of the following items
were deducted or added (without duplication) in computing such Consolidated Net
Income, (i) an amount equal to any extraordinary loss (less any gain) plus any
net loss (less any gain) realized in connection with any Asset Sale, plus (ii)
provision for taxes based on income or profits of the Company and its
Restricted Subsidiaries for such period, plus (iii) Consolidated Interest
Expense of the Company and its Restricted Subsidiaries for such period, whether
paid or accrued and whether or not capitalized, plus (iv) depreciation,
amortization (including amortization of goodwill and other intangibles and the
amount of capacity available for sale charged to cost of sales), but excluding
amortization of prepaid cash expenses that were paid in a prior period) and
other non-cash expenses (excluding any such non-cash expense to the extent that
it represents an accrual of or reserve for cash expenses in any future period or
amortization of a prepaid cash expense that was paid in a prior period) of the
Company and its Restricted Subsidiaries for such period, minus (v) non-cash
items increasing such Consolidated Net Income for such period (other than items
that were accrued in the ordinary course of business), plus (vi) any change in
Deferred Revenue, in each case, on a consolidated basis and determined in
accordance with GAAP. Notwithstanding the foregoing, the provision for taxes on
the income or profits of, and the depreciation and amortization and other non-
cash expenses of, a Restricted Subsidiary of the Company shall be added to
Consolidated Net Income to compute Consolidated Cash Flow of the Company only to
the extent that a corresponding amount would be permitted at the date of
determination to be dividended to the Company by such Restricted Subsidiary
without prior governmental approval (that has not been obtained), and without
direct or indirect restriction pursuant to the terms of its charter and all
agreements (excluding agreements evidencing Indebtedness incurred in accordance
with clause (k) of Section 4.09 hereof, to which this provision shall not
apply), instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Restricted Subsidiary or its
shareholders.
"Consolidated Interest Expense" for any Person means for any period
the consolidated interest expense included in a consolidated income statement
(without deduction of interest income) of such Person and its consolidated
Subsidiaries for such period, including without limitation or duplication (or,
to the extent not so included, with the addition of), (i) amortization of debt
issuance costs and original issue discount, (ii) non-cash interest payments,
(iii) the interest component of any deferred payment obligations, (iv) the
interest component of all payments associated with Capital Lease Obligations,
(v) commissions, discounts and other fees and charges incurred in respect of
Letter of Credit or bankers' acceptance financings and (vi) net payments (if
any) pursuant to Hedging Obligations.
<PAGE>
6
"Consolidated Leverage Ratio" means, with respect to the Company or
any of its Restricted Subsidiaries, as of the date of any incurrence of
Indebtedness or issuance of Disqualified Stock, the ratio of (i) the aggregate
consolidated principal amount of Indebtedness outstanding and the liquidation
preference of Disqualified Stock as of the most recent quarterly or annual
balance sheet date, after giving pro forma effect to the incurrence of such
Indebtedness or the issuance of such Disqualified Stock and any other
Indebtedness incurred and Disqualified Stock issued since such balance sheet
date, and the receipt and application of the proceeds therefrom to (ii)
Consolidated Cash Flow for the four full fiscal quarters ending on or prior to
the date of incurrence of such Indebtedness or issuance of such Disqualified
Stock for which consolidated financial statements are available.
"Consolidated Net Income" means, with respect to the Company for any
period, the aggregate of the net income of the Company and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP, plus, to the extent that any of the following items were deducted in
computing such Consolidated Net Income, (a) non-recurring, non-cash charges
(other than charges arising from write-downs of assets) and (b) non-cash
compensation charges arising from stock options or other similar employee
benefit or compensation plans; provided that (i) the net income (but not loss)
of any Restricted Subsidiary that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the Company or a Wholly Owned Restricted
Subsidiary thereof by such Restricted Subsidiary, (ii) the net income (or loss)
of any Person that is not a Restricted Subsidiary shall be included only to the
extent of the amount of dividends or other distributions actually paid to the
Company or a Restricted Subsidiary by such Person during such period, (iii) for
purposes of clause (c) of Section 4.07 hereof, the net income of any Restricted
Subsidiary shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary of that net
income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Restricted Subsidiary or its shareholders, except that the Company's equity in
the net income of any such Restricted Subsidiary for such period shall be
included in such Consolidated Net Income up to the aggregate amount of cash that
could have been distributed by such Restricted Subsidiary during such period to
the Company or another Restricted Subsidiary as a dividend, (iv) the net income
of any Person acquired in a pooling of interests transaction for any period
prior to the date of such acquisition shall be excluded, (v) the equity of the
Company or any Restricted Subsidiary in the net income of any Unrestricted
Subsidiary shall be included in such Consolidated Net Income up to the aggregate
amount of cash actually distributed by such Unrestricted Subsidiary during such
period to the Company or a Restricted Subsidiary as a dividend or other
distribution (but not in excess of the amount of the net income of such
Unrestricted Subsidiary for such period) and (vi) the cumulative effect of a
change in accounting principles shall be excluded.
"Consolidated Net Worth" means, with respect to the Company as of any
date, the sum of (i) the consolidated equity of the common shareholders of the
Company and, without duplication, its consolidated Restricted Subsidiaries as of
such date plus (ii) the respective amounts reported on the Company's balance
sheet as of such date with respect to any series of preferred stock (other than
Disqualified Stock) that by its terms is not entitled to the payment of
dividends unless such dividends
<PAGE>
7
may be declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by the
Company upon issuance of such preferred stock, less (x) all write-ups (other
than write-ups resulting from foreign currency translations and write-ups of
tangible assets of a going concern business made within 12 months after the
acquisition of such business and other than write-ups attributable to the
warrants issued pursuant to the Warrant Agreement, dated as of January 21, 1998,
as amended) subsequent to the date of the Indenture in the book value of any
asset owned by the Company or a consolidated Restricted Subsidiary of the
Company, (y) all investments as of such date in unconsolidated Restricted
Subsidiaries and in Persons that are not Restricted Subsidiaries (except, in
each case, Permitted Investments), and (z) all unamortized debt discount and
expense and unamortized deferred charges as of such date, all of the foregoing
determined in accordance with GAAP.
"Consolidated Tangible Assets" means the total amount of assets (less
applicable reserves and other properly deductible items) which under generally
accepted accounting principles would be included on a consolidated balance sheet
of the Company and its Restricted Subsidiaries after deducting therefrom all
goodwill, trade names, trademarks, patents, unamortized debt discount and
expense and other like intangibles, which in each case under generally accepted
accounting principles would be included on such consolidated balance sheet.
"Continuing Directors" means individuals who at the beginning of the
period of determination constituted the Board of Directors of the Company or
GCL, as the case may be, together with any new directors whose election by such
Board of Directors or whose nomination for election by the shareholders of the
Company or GCL, as the case may be, was approved by a vote of at least a
majority of the directors of the Company or GCL, as the case may be, then still
in office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved or its designee
of any one of the Permitted Holders or any combination thereof or was nominated
or elected by any such Permitted Holder(s) or any of their designees.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 12.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Currency Agreement" means, with respect to any Person, any foreign
exchange contract, currency swap agreement or other similar agreement as to
which such Person is a party or beneficiary.
"Debt Securities" means any bonds, notes, debentures or other similar
instruments (excluding, in any event, (i) any Capital Lease Obligations and (ii)
any notes, bankers' acceptances or other instruments evidencing commercial loans
or equipment financing made by, and bills of exchange drawn on, banks, other
financial lending institutions or equipment vendors) issued by the Company or by
any Restricted Subsidiary (including by means of any Guarantee of the Company or
of any Restricted Subsidiary of securities of another Person), whether in a
public offering or private placement; provided, however, that in no event shall
"Debt Securities" mean Indebtedness in the form of a bank credit facility.
<PAGE>
8
"Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"Deferred Revenue" means amounts appearing as a liability on the
financial statements of the Company as prepared according to GAAP classified as
deferred revenue to the extent of cash received in connection therewith.
"Definitive Note" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with Section 2.06 hereof, in the
form of Exhibit A-1 or A-3 hereto except that such Note shall not bear the
----------- ---
Global Note Legend and shall not have the "Schedule of Exchanges of Interests in
the Global Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Disqualified Stock" means any Capital Stock (other than the Company's
102% Senior Exchangeable Preferred Stock due 2008) that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the Holder
thereof, in whole or in part, on or prior to the date that is 91 days after the
date on which the Notes mature; provided, however, that any Capital Stock which
would not constitute Disqualified Stock but for provisions thereof giving
holders thereof the right to require the Company to repurchase or redeem such
Capital Stock upon the occurrence of a Change of Control or an Asset Sale
occurring prior to the final Stated Maturity of the Notes shall not constitute
Disqualified Stock if the change of control and asset sale provisions applicable
to such Capital Stock are no more favorable to the holders of such Capital Stock
than the provisions applicable to the Notes contained in Sections 4.15 and 4.10
hereof, respectively, and such Capital Stock specifically provides that the
Company will not repurchase or redeem any such stock pursuant to such provisions
prior to the Company's repurchase of such Notes as are required to be
repurchased pursuant to Sections 4.15 and 4.10 hereof, respectively.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Equity Offering" means an offering for cash by GCL or the Company of
its common stock, or options, warrants or rights to acquire such common stock.
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
<PAGE>
9
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means the Series B Notes issued in the Exchange Offer
pursuant to Section 2.06(f) hereof.
"Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in
the Registration Rights Agreement.
"Existing Indebtedness" means Indebtedness of the Company and its
Restricted Subsidiaries (other than Indebtedness under the Credit Agreement) in
existence on the date hereof, until such amounts are repaid; provided, that
"Existing Indebtedness" shall be deemed to include the senior subordinated notes
that may be issued, at the option of the Company, in exchange for its existing
10 1/2% Senior Exchangeable Preferred Stock due 2008.
"Frontier" means Frontier Corporation, a New York corporation.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date hereof.
"GCL" means Global Crossing Ltd., a Bermuda company.
"GCL Expenses" means (i) costs (including all professional fees and
expenses) incurred by GCL to comply with its reporting obligations under federal
or state laws or under the Indenture, including any reports filed with respect
to the Securities Act, the Exchange Act or the respective rules and regulations
promulgated thereunder, (ii) indemnification obligations of GCL owing to
directors, officers, employees or other Persons under its charter or by-laws or
pursuant to written agreements with any such Person, (iii) fees and expenses
payable by GCL in connection with the issuance of the Notes and the Exchange
Notes, (iv) other operational expenses of GCL incurred in the ordinary course of
business and (v) expenses incurred by GCL in connection with any public offering
of Capital Stock or Indebtedness (x) where the net proceeds of such offering are
intended to be received by or contributed or loaned to the Company or a
Restricted Subsidiary, or (y) in a prorated amount of such expenses in
proportion to the amount of such net proceeds intended to be so received,
contributed or loaned, or (z) otherwise on an interim basis prior to completion
of such offering so long as GCL shall cause the amount of such expenses to be
repaid to the Company or the relevant Restricted Subsidiary out of the proceeds
of such offering promptly if completed.
"GTH" means Global Telesystems Holdings Ltd., a Bermuda company.
<PAGE>
10
"GTH Preference Shares" means the Senior Increasing Rate Redeemable
Exchangeable Preference Shares of GTH.
"Global Note Legend" means the legend set forth in Section
2.06(g)(ii), which is required to be placed on all Global Notes issued under
this Indenture.
"Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, in the form of
Exhibit A-1, A-2, A-3 or A-4 hereto issued in accordance with Section 2.01,
- ----------- --- --- ---
2.06(b)(iv), 2.06(d)(ii) or 2.06(f) hereof.
"Government Securities" means securities that are (a) direct
obligations (or certificates representing an ownership interest in such
obligations) of the United States of America (including any agency or
instrumentally thereof) of the payment of which the full faith and credit of the
United States of America is pledged, (b) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America or (c) obligations of a Person
the payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in each case, are not
callable or redeemable at the issuer's option.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof), of all or any part of any Indebtedness.
"Guarantors" means GCL and each other Person that from time to time
executes a Guarantee in accordance with the provisions of the Indenture, and
their respective successors and assigns.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under any Interest Rate Agreement or Currency
Agreement.
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or bankers' acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, as well as all Indebtedness of others secured
by a Lien on any asset of such Person (whether or not such Indebtedness is
assumed by such Person) and, to the extent not otherwise included, the guarantee
by such Person of any indebtedness of any other Person. The amount
<PAGE>
11
of any Indebtedness outstanding as of any date shall be (i) the accreted value
thereof, in the case of any Indebtedness issued with original issue discount,
and (ii) the principal amount thereof, together with any interest thereon that
is more than 30 days past due, in the case of any other Indebtedness.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Indirect Participant" means a Person who holds a beneficial interest
in a Global Note through a Participant.
"Initial Purchaser" shall have the meaning assigned to such term in
the Offering Memorandum.
"Interest Rate Agreement" means, with respect to any Person, any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement to which such Person is a party or
beneficiary.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to directors, officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities, together with all items that are or would
be classified as investments on a balance sheet prepared in accordance with
GAAP. If the Company or any of its Restricted Subsidiaries sells or otherwise
disposes of any Equity Interests of any direct or indirect Subsidiary such that,
after giving effect to any such sale or disposition, such Person is no longer a
Subsidiary of the Company or such Restricted Subsidiary, the Company shall be
deemed to have made an Investment on the date of any such sale or disposition
equal to the fair market value of the Equity Interests of such Subsidiary not
sold or disposed of in an amount determined as provided in the final paragraph
of Section 4.07 hereof.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be prepared
by the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.
"Letters of Credit" means one or more irrevocable direct pay letters
of credit issued by a bank or other financial institution to support the payment
of equity obligations of the Company to its Project Subsidiaries.
<PAGE>
12
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in, and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"MAC Subsidiaries" means Mid-Atlantic Crossing Holdings Ltd., a
Bermuda company, and all of its direct and indirect Subsidiaries.
"Management Advances" means loans or advances made to directors,
officers or employees of GCL, the Company or any Restricted Subsidiary (i) in
respect of travel, entertainment or moving-related expenses incurred in the
ordinary course of business, (ii) in respect of moving-related expenses incurred
in connection with any closing or consolidation of any facility, or (iii) in the
ordinary course of business not exceeding $2.5 million in the aggregate at any
time outstanding.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions made pursuant to sale and leaseback transactions) or
(b) the disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary gain or loss, together
with any related provision for taxes on such extraordinary gain or loss.
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), and any reserve for adjustment in
respect of the sale price of such asset or assets established in accordance with
GAAP.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the
Company nor any Restricted Subsidiary (a) provides any guarantee or credit
support of any kind (including any undertaking, guarantee, indemnity, agreement
or instrument that would constitute Indebtedness) or (b) is directly or
indirectly liable (as a guarantor or otherwise) and (ii) no default with respect
to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any Restricted Subsidiary to declare a default under such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its Stated Maturity.
<PAGE>
13
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Note Custodian" means the Trustee, as custodian with respect to the
Notes in global form, or any successor entity thereto.
"Notes" has the meaning assigned to it in the preamble to this
Indenture.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering Memorandum" means the Offering Memorandum, dated
November 12, 1999, pursuant to which the Series A Notes were offered and sold.
"Officer" means any Co-Chairman of the Board, the President, the Chief
Executive Officer, the Chief Operating Officer, the Chief Financial Officer, any
Senior Vice President, any Vice President, the Treasurer or the Secretary of the
Company.
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
11.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Pari Passu Debt Securities" means any Debt Securities of the Company
or of any Guarantor (other than GCL) which ranks pari passu in right of payment
with the Notes and any Guarantees, as applicable.
"Participant" means, with respect to the Depositary, Euroclear or
CEDEL, a Person who has an account with the Depositary, Euroclear or CEDEL,
respectively (and, with respect to The Depository Trust Company, shall include
Euroclear and CEDEL).
"PC-1 Subsidiaries" means Pacific Crossing Holdings Ltd., a Bermuda
company, and all of its direct and indirect Subsidiaries.
"Permitted Business" means any business that is the same as or
related, ancillary or complementary to any of the businesses of the Company or
any of its Restricted Subsidiaries on the date hereof.
"Permitted Holder" means Pacific Capital Group, Inc. and CIBC World
Markets Corp., and their respective Affiliates.
<PAGE>
14
"Permitted Investments" means (a) any Investment in the Company or in
Restricted Subsidiaries of the Company that are engaged in a Permitted Business;
(b) any Investment in Cash Equivalents; (c) any Investment by the Company or any
of its Restricted Subsidiaries in a Person, if as a result of such Investment
(i) such Person becomes a Restricted Subsidiary of the Company that is engaged
in a Permitted Business or (ii) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Restricted Subsidiary of the
Company that is engaged in a Permitted Business; (d) any Investment made as a
result of the receipt of non-cash consideration from an Asset Sale that was made
pursuant to and in compliance with Section 4.10 hereof; (e) any acquisition of
assets solely in exchange for the issuance of Equity Interests (other than
Disqualified Stock) of the Company; (f) other Investments having an aggregate
fair market value (measured on the date each such Investment was made and
without giving effect to subsequent changes in value), when taken together with
all other Investments made pursuant to this clause (f) that are at the time
outstanding, not to exceed $25.0 million; (g) any Investment made in a
Receivables Entity in a Qualified Receivables Transaction; and (h) any
investment by the Company or a Restricted Subsidiary in any Person engaged in a
Permitted Business with the Company or such Restricted Subsidiary, provided that
such investment is necessary or integral to the Company's or such Restricted
Subsidiary's Permitted Business and provided, further that any such investment
is the minimum amount reasonably necessary for such Permitted Business and to
comply with local law.
"Permitted Liens" means (i) Liens to secure Indebtedness (other than
Pari Passu Debt Securities or Subordinated Indebtedness) permitted to be
incurred under this Indenture; (ii) Liens in favor of the Company or any
Restricted Subsidiary; (iii) Liens on property of a Person existing at the time
such Person is merged with or into or consolidated with the Company or any of
its Restricted Subsidiaries; provided that such Liens were in existence prior to
the contemplation of such merger or consolidation and do not extend to any
assets other than those of the Person merged into or consolidated with the
Company or such Restricted Subsidiary; (iv) Liens on property existing at the
time of acquisition thereof by the Company or any of its Restricted
Subsidiaries, provided that such Liens were in existence prior to the
contemplation of such acquisition; (v) Liens to secure the performance of
statutory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business; (vi)
Liens existing on the date of the Indenture; (vii) Liens for taxes, assessments
or governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly instituted and
diligently concluded, provided that any reserve or other appropriate provision
as shall be required in conformity with GAAP shall have been made therefor;
(viii) Liens incurred in the ordinary course of business of the Company or any
of its Restricted Subsidiaries with respect to obligations that do not exceed
$5.0 million at any one time outstanding and that (a) are not incurred in
connection with the borrowing of money or the obtaining of advances or credit
(other than trade credit in the ordinary course of business) and (b) do not in
the aggregate materially detract from the value of the property or materially
impair the use thereof in the operation of business by the Company or such
Restricted Subsidiary; (ix) Liens with respect to assets of a Restricted
Subsidiary granted by such Restricted Subsidiary to the Company or a Restricted
Subsidiary to secure Indebtedness owing to the Company or such Restricted
Subsidiary; (x) Liens, pledges and deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of statutory obligations; (xi) Liens, pledges or
<PAGE>
15
deposits made to secure the performance of tenders, bids, leases, public or
statutory obligations, sureties, stays appeals, indemnities, performance or
other similar bonds and other obligations of like nature incurred in the
ordinary course of business (exclusive of obligations for the payment of
borrowed money); (xii) zoning restrictions, servitudes, easements,
rights-of-way, restrictions and other similar charges or encumbrances incurred
in the ordinary course of business which, in the aggregate, do not materially
detract from the value of the property subject thereto or materially interfere
with the ordinary conduct of the business of the Company or its Restricted
Subsidiaries; (xiii) Liens arising out of judgments or awards against or other
court proceedings concerning the Company or any Restricted Subsidiary with
respect to which the Company or such Restricted Subsidiary is prosecuting an
appeal or proceeding for review and the Company or such Restricted Subsidiary is
maintaining adequate reserves in accordance with generally accepted accounting
principles; and (xiv) any interest or title of a lessor in the property subject
to any lease other than a capital lease.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that: (i) the principal amount
(or accreted value, if applicable) of such Permitted Refinancing Indebtedness
does not exceed the principal amount of (or accreted value, if applicable), plus
accrued interest on, the Indebtedness so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of reasonable expenses incurred
in connection therewith); (ii) such Permitted Refinancing Indebtedness has a
final maturity date later than the final maturity date of, and has a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; (iii) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right of payment to
the Notes, such Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and is expressly subordinated in right of
payment to, the Notes on terms at least as favorable to the Holders of the Notes
as those contained in the documentation governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; and (iv) such
Indebtedness is incurred either by the Company or the Restricted Subsidiary who
is the obligor on the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint
venture, limited liability company, incorporated or unincorporated association,
joint-stock company, trust, unincorporated organization or government or other
agency or political subdivision thereof or other entity of any kind.
"Project Subsidiary" means any Subsidiary of the Company formed to
develop, own and operate undersea fiber optic telecommunications cable systems.
"Preferred Stock," of any person, means Capital Stock of such Person
of any class or series (however designated) that ranks prior, as to payment of
dividends or as to the distribution of assets
<PAGE>
16
upon any voluntary or involuntary liquidation, dissolution or winding up of such
Person, to shares of Capital Stock of any other class or series of such Person.
"Private Placement Legend" means the legend set forth in Section
2.06(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"Purchase Money Indebtedness" means Indebtedness (including Acquired
Debt and Capital Lease Obligations, mortgage financings and purchase money
obligations) incurred for the purpose of financing all or any part of the cost
of construction, financing, installation, acquisition, lease, development,
design, engineering, financing, testing, start-up, upgrade, completion or
improvement of any assets used or useful in a Permitted Business, including any
related notes, guarantees, collateral documents, instruments and agreements
executed in connection therewith, as the same may be amended, supplemented,
modified or restated from time to time.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Qualified Receivables Transaction" means any transaction or series of
transactions that may be entered into by the Company or any of its Subsidiaries
pursuant to which the Company or any of its Subsidiaries may sell, convey or
otherwise transfer to (a) a Receivables Entity (in the case of a transfer by the
Company or any of its Subsidiaries) and (b) any other Person (in the case of a
transfer by a Receivables Entity), or may grant a security interest in, any
receivables (whether now existing or arising in the future) of the Company or
any of its Subsidiaries, and any assets related thereto including, without
limitation, all collateral securing such receivables, all contracts and all
guarantees or other obligations in respect of such receivables, and the proceeds
of such receivables.
"Receivables Entity" means a Wholly Owned Subsidiary of the Company
(or another Person in which the Company or any Subsidiary of the Company may
make an Investment and to which the Company or any Subsidiary of the Company
transfers receivables and related assets) which engages in no activities other
than in connection with the financing of receivables and which is designated by
the Board of Directors (as provided below) as a Receivables Entity, (a) no
portion of the Indebtedness or any other Obligations (contingent or otherwise)
of which (i) is guaranteed by the Company or any Subsidiary of the Company
(excluding guarantees of Obligations (other than the principal of, and interest
on, Indebtedness) pursuant to Standard Securitization Undertakings), (ii) is
recourse to or obligates the Company or any Subsidiary of the Company in any way
other than pursuant to Standard Securitization Undertakings or (iii) subjects
any property or asset of the Company or any Subsidiary of the Company, directly
or indirectly, contingently or otherwise, to the satisfaction thereof, other
than pursuant to Standard Securitization Undertakings, (b) with which neither
the Company nor any Subsidiary of the Company has any material contract,
agreement, arrangement or understanding other than on terms no less favorable to
the Company or such Subsidiary than those that might be obtained at the time
from Persons that are not Affiliates of the Company, other than fees payable in
the ordinary course of business in connection with servicing receivables, and
(c) to which neither the Company nor any Subsidiary of the Company has any
obligation to maintain or preserve such entity's financial
<PAGE>
17
condition or cause such entity to achieve certain levels of operating results.
Any such designation by the Board of Directors shall be evidenced to the Trustee
by filing with the Trustee a certified copy of the resolution of the Board of
Directors giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions.
"Related Taxes" means any taxes, charges or assessments, including,
but not limited to, sales, use, transfer, rental, ad valorem, value-added,
stamp, property, consumption, franchise, license, capital, net worth, gross
receipts, excise, occupancy, intangibles or similar taxes, charges or
assessments (other than taxes measured by income and withholding imposed on
payments made by GCL required to be paid by GCL by virtue of its being
incorporated or having Capital Stock outstanding (but not by virtue of owning
stock or other equity interests of any corporation or other entity other than
the Company or any of its Subsidiaries), or being a holding company parent of
the Company or receiving dividends from or other distributions in respect of the
Capital Stock of the Company, or having guaranteed any obligations of the
Company of any Subsidiary thereof, or having made any payment in respect of any
of the items for which the Company is permitted to make payments to GCL pursuant
to the covenant described under Section 4.07 hereof.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date hereof, by and among the Company and the other
parties named on the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time.
"Regulation S" means Regulation S promulgated under the Securities
Act.
"Regulation S Global Note" means a Regulation S Temporary Global Note
or Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent global Note in
the form of Exhibit A-1 or A-3 hereto bearing the Global Note Legend and the
----------- ---
Private Placement Legend and deposited with or on behalf of and registered in
the name of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Regulation S Temporary Global Note upon
expiration of the Restricted Period.
"Regulation S Temporary Global Note" means a temporary global Note in
the form of Exhibit A-2 or A-4 hereto bearing the Private Placement Legend and
----------- ---
deposited with or on behalf of and registered in the name of the Depositary or
its nominee, issued in a denomination equal to the outstanding principal amount
of the Notes initially sold in reliance on Rule 903 of Regulation S.
"Responsible Officer," when used with respect to the Trustee, means
any officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
<PAGE>
18
"Restricted Broker-Dealer" has the meaning set forth in the
Registration Rights Agreement.
"Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private
Placement Legend.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Period" means the 40-day restricted period as defined in
Regulation S.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary and, with respect to
Pacific Crossing Ltd. and all of its direct and indirect Subsidiaries (the "PC-1
Companies"), upon designation thereof by the Board of Directors as "Restricted
Subsidiaries," whether or not the PC-1 Companies meet the 50% test specified in
the definition of "Subsidiary"; provided, however, that GCL and Frontier shall
be Restricted Subsidiaries of the Company and provided further, however, that
the Company at its election may also designate any other Subsidiary of GCL and
any Subsidiary of Frontier as a Restricted Subsidiary hereunder.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Notes" has the meaning assigned to it in the preamble to
this Indenture.
"Shelf Registration Statement" means the Shelf Registration Statement
as defined in the Registration Rights Agreement.
"Significant Subsidiary" means any Restricted Subsidiary that would be
a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of this Indenture.
<PAGE>
19
"Special Interest" means all special interest then owing pursuant to
Section 5 of the Registration Rights Agreement.
"Standard Securitization Undertakings" means representations,
warranties, covenants and indemnities entered into by the Company or any
Subsidiary of the Company which are reasonably customary in securitization of
receivables transactions.
"Stated Maturity" means, with respect to any installment of interest
or principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-
77bbbb) as in effect on the date on which this Indenture is qualified under the
TIA.
"Treasury Rate" means, (x) with respect to the calculation of the
Applicable Premium for any Note Due 2009 as of any Redemption Date, the yield to
maturity as of such Redemption Date of United States Treasury securities with a
constant maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) that has become publicly available at least two
Business Days prior to the Redemption Date (or, if such Statistical Release is
no longer published, any publicly available source of similar market data)) most
nearly equal to the period from the Redemption Date to November 15, 2004;
provided, however, that if the period from the Redemption Date to November 15,
2004 is less than one year, the weekly average yield on actually traded United
States Treasury securities adjusted to a constant maturity of one year shall be
used; and (y) with respect to the calculation of the Applicable Premium for any
Note Due 2006 as of any Redemption Date, the yield to maturity as of such
Redemption Date of United States Treasury securities with a constant maturity
(as compiled and published in the most recent Federal Reserve Statistical
Release H.15 (519) that has become publicly available at least two Business Days
prior to the Redemption Date (or, if such Statistical Release is no longer
published, any publicly available source of similar market data)) most nearly
equal to the period from the Redemption Date to November 15, 2006; provided,
however, that if the period from the Redemption Date to November 15, 2006 is
less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
<PAGE>
20
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder
"Unrestricted Definitive Note" means one or more Definitive Notes that
do not bear and are not required to bear the Private Placement Legend.
"Unrestricted Global Note" means a permanent global Note in the form
of Exhibit A-1 or A-3 attached hereto that bears the Global Note Legend and that
----------- ---
has the "Schedule of Exchanges of Interests in the Global Note" attached
thereto, and that is deposited with or on behalf of and registered in the name
of the Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that
is designated by the Board of Directors as an Unrestricted Subsidiary pursuant
to a Board Resolution; but only to the extent that such Subsidiary: (a) has no
Indebtedness other than Non-Recourse Debt; (b) is a Person with respect to which
neither the Company nor any of its Restricted Subsidiaries has any direct or
indirect obligation to maintain or preserve such Person's financial condition or
to cause such Person to achieve any specified levels of operating results; and
(c) has not guaranteed or otherwise directly or indirectly provided credit
support for any Indebtedness of the Company or any of its Restricted
Subsidiaries. Any such designation by the Board of Directors shall be evidenced
by filing with the Trustee a certified copy of the Board Resolution giving
effect to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions and was permitted under
Section 4.07 hereof. If, at any time, any Unrestricted Subsidiary would fail to
meet the foregoing requirements as an Unrestricted Subsidiary, it shall
thereafter cease to be an Unrestricted Subsidiary for purposes of the Indenture
and any Indebtedness of such Subsidiary shall be deemed to be incurred by a
Restricted Subsidiary of the Company as of such date (and, if such Indebtedness
is not permitted to be incurred as of such date under Section 4.09 hereof, the
Company shall be in default of such covenant). The Board of Directors of the
Company may at any time designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided that such designation shall be deemed to be an incurrence
of Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (i) such Indebtedness is permitted under Section 4.09 hereof,
calculated on a pro forma basis as if such designation had occurred at the
beginning of the four-quarter reference period, and (ii) no Default or Event of
Default would be in existence following such designation. As of the date hereof,
all of the PC-1 Subsidiaries are Unrestricted Subsidiaries.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
<PAGE>
21
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person and one or more Wholly Owned Restricted Subsidiaries
of such Person.
Section 1.02. Other Definitions.
Defined in
Term Section
---- ----------
"Additional Amounts" 3.09
"Affiliate Transaction" 4.11
"Asset Sale Offer" 4.10
"Authentication Order" 2.02
"Change in Tax Law" 3.08
"Change of Control Offer" 4.15
"Change of Control Payment" 4.15
"Change of Control Payment Date" 4.15
"Covenant Defeasance" 8.03
"Designation" 4.07
"Event of Default" 6.01
"Excess Proceeds" 4.10
"incur" 4.09
<PAGE>
22
"Legal Defeasance" 8.02
"Offer Amount" 3.11
"Offer Period" 3.11
"Paying Agent" 2.03
"Permitted Indebtedness" 4.09
"Purchase Date" 3.11
"Redemption Date" 3.07
"Registrar" 2.03
"Restricted Payments" 4.07
"Revocation" 4.07
Section 1.03. Trust Indenture Act Definitions
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
and
"obligor" on the Notes means the Company and any successor
obligor upon the Notes.
All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule under
the TIA have the meanings so assigned to them.
Section 1.04. Rules of Construction.
<PAGE>
23
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act shall
be deemed to include substitute, replacement of successor sections or rules
adopted by the SEC from time to time.
ARTICLE 2. THE NOTES
Section 2.01. Form and Dating.
(a) General.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibits A-1, A-2, A-3 and A-4 hereto. The Notes
------------ --- --- ---
may have notations, legends or endorsements required by law, stock exchange rule
or usage or agreements to which the Company is subject. Each Note shall be
dated the date of its authentication. The Notes shall be in denominations of
$1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Company, the
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Note conflicts with the express provisions of
this Indenture, the provisions of this Indenture shall govern and be
controlling.
(b) Global Notes.
Notes issued in global form shall be substantially in the form of
Exhibits A-1, A-2, A-3 or A-4 attached hereto (including the Global Note Legend
- ------------ --- --- ---
thereon and the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Notes issued in definitive form shall be substantially in the form of
Exhibit A-1 or A-3 attached hereto (but without the Global Note Legend thereon
- ----------- ---
and without the ASchedule of Exchanges of Interests in the Global Note" attached
thereto). Each Global Note
<PAGE>
24
shall represent such of the outstanding Notes as shall be specified therein and
each shall provide that it shall represent the aggregate principal amount of
outstanding Notes from time to time endorsed thereon and that the aggregate
principal amount of outstanding Notes represented thereby may from time to time
be reduced or increased, as appropriate, to reflect exchanges and redemptions.
Any endorsement of a Global Note to reflect the amount of any increase or
decrease in the aggregate principal amount of outstanding Notes represented
thereby shall be made by the Trustee or the Note Custodian, at the direction of
the Trustee, in accordance with instructions given by the Holder thereof as
required by Section 2.06 hereof.
(c) Temporary Global Notes.
Notes offered and sold in reliance on Regulation S shall be issued
initially in the form of the Regulation S Temporary Global Note, which shall be
deposited on behalf of the purchasers of the Notes represented thereby with the
Trustee, at its New York office, as custodian for the Depositary, and registered
in the name of the Depositary or the nominee of the Depositary for the accounts
of designated agents holding on behalf of Euroclear or CEDEL, duly executed by
the Company and authenticated by the Trustee as hereinafter provided. The
Restricted Period shall be terminated upon the receipt by the Trustee of (i) a
written certificate from the Depositary, together with copies of certificates
from Euroclear and CEDEL certifying that they have received certification of
non-United States beneficial ownership of 100% of the aggregate principal amount
of the Regulation S Temporary Global Note (except to the extent of any
beneficial owners thereof who acquired an interest therein during the Restricted
Period pursuant to another exemption from registration under the Securities Act
and who will take delivery of a beneficial ownership interest in a 144A Global
Note bearing a Private Placement Legend, all as contemplated by Section
2.06(a)(ii) hereof), and (ii) an Officers= Certificate from the Company.
Following the termination of the Restricted Period, beneficial interests in the
Regulation S Temporary Global Note shall be exchanged for beneficial interests
in Regulation S Permanent Global Notes pursuant to the Applicable Procedures.
Simultaneously with the authentication of Regulation S Permanent Global Notes,
the Trustee shall cancel the Regulation S Temporary Global Note. The aggregate
principal amount of the Regulation S Temporary Global Note and the Regulation S
Permanent Global Notes may from time to time be increased or decreased by
adjustments made on the records of the Trustee and the Depositary or its
nominee, as the case may be, in connection with transfers of interest as
hereinafter provided.
(d) Euroclear and CEDEL Procedures Applicable.
The provisions of the "Operating Procedures of the Euroclear System"
and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and
Conditions of CEDEL" and "Customer Handbook" of CEDEL shall be applicable to
transfers of beneficial interests in the Regulation S Temporary Global Note and
the Regulation S Permanent Global Notes that are held by Participants through
Euroclear or CEDEL.
<PAGE>
25
Section 2.02. Execution and Authentication.
Two Officers shall sign the Notes for the Company by manual or
facsimile signature. It is not necessary for the Company=s seal to be impressed,
affixed, imprinted or reproduced on the Notes.
If an Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers (an "Authentication Order"), authenticate Notes for original issue up
to the aggregate principal amount stated in paragraph 4 of the Notes. The
aggregate principal amount of Notes outstanding at any time may not exceed such
amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
Section 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency where Notes of each
tranche may be presented for registration of transfer or for exchange
("Registrar") and an office or agency where Notes of each tranche may be
presented for payment ("Paying Agent"). The Registrar for each tranche of Notes
shall keep a register of the Notes of such tranche and of their transfer and
exchange. The Company may appoint one or more co-Registrars and one or more
additional paying agents for each tranche of Notes. The term ARegistrar"
includes any co-registrar and the term APaying Agent" includes any additional
paying agent. The Company may change any Paying Agent or Registrar without
notice to any Holder. The Company shall notify the Trustee in writing of the
name and address of any Agent not a party to this Indenture. If the Company
fails to appoint or maintain another entity as Registrar or Paying Agent, the
Trustee shall act as such. The Company or any of its Subsidiaries may act as
Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes.
The Trustee is authorized to enter into a letter of representations
with DTC in the form provided to the Trustee by the Company and to act in
accordance with such letter.
<PAGE>
26
Section 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Special Interest, if any, or interest on the Notes, and
will notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.
Section 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders, separately by tranche, and shall otherwise comply with TIA '
312(a). If the Trustee is not the Registrar, the Company shall furnish to the
Trustee at least seven Business Days before each interest payment date and at
such other times as the Trustee may request in writing, a list in such form and
as of such date as the Trustee may reasonably require of the names and addresses
of the Holders of Notes, separately by tranche, and the Company shall otherwise
comply with TIA ' 312(a).
Section 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Global Notes.
A Global Note may not be transferred as a whole except by the
Depositary to a nominee of the Depositary, by a nominee of the Depositary to the
Depositary or to another nominee of the Depositary, the Depositary or any such
nominee to a successor Depositary or a nominee of such successor Depositary.
All Global Notes of a tranche will be exchanged by the Company for Definitive
Notes of the same tranche if (i) the Company delivers to the Trustee notice from
the Depositary that it is unwilling or unable to continue to act as Depositary
or that it is no longer a clearing agency registered under the Exchange Act and,
in either case, a successor Depositary is not appointed by the Company within
120 days after the date of such notice from the Depositary or (ii) the Company
in its sole discretion determines that the Global Notes of such tranche (in
whole but not in part) should be exchanged for Definitive Notes and delivers a
written notice to such effect to the Trustee; provided that in no event shall a
Regulation S Temporary Global Note be exchanged by the Company for Definitive
Notes prior to (x) the expiration of the Restricted Period and (y) the receipt
by the Registrar of any certificates determined by the Company to be required
pursuant to Rule 903(c)(3)(ii)(B) under the Securities Act. Upon the occurrence
of either of the preceding events in (i) or (ii) above, Definitive Notes shall
be issued in such names as the Depositary shall instruct the Trustee. Global
Notes also may be
<PAGE>
27
exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu
of, a Global Note of the same tranche or any portion thereof, pursuant to this
Section 2.06 or Section 2.07 or 2.10 hereof, shall be authenticated and
delivered in the form of, and shall be, a Global Note. A Global Note may not be
exchanged for another Note other than as provided in this Section 2.06(a),
however, beneficial interests in a Global Note may be transferred and exchanged
as provided in Section 2.06(b),(c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global
Notes.
The transfer and exchange of beneficial interests in the Global Notes
shall be effected through the Depositary, in accordance with the provisions of
this Indenture and the Applicable Procedures. Beneficial interests in the
Restricted Global Notes shall be subject to restrictions on transfer comparable
to those set forth herein to the extent required by the Securities Act.
Transfers of beneficial interests in the Global Notes also shall require
compliance with either subparagraph (i) or (ii) below, as applicable, as well as
one or more of the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in
the same Restricted Global Note in accordance with the transfer
restrictions set forth in the Private Placement Legend; provided, however,
that prior to the expiration of the Restricted Period, transfers of
beneficial interests in the Temporary Regulation S Global Notes may not be
made to a U.S. Person or for the account or benefit of a U.S. Person (other
than an Initial Purchaser). Beneficial interests in any Unrestricted
Global Note may be transferred to Persons who take delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note of the same
tranche. No written orders or instructions shall be required to be
delivered to the Registrar to effect the transfers described in this
Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Notes. In connection with all transfers and exchanges of beneficial
interests that are not subject to Section 2.06(b)(i) above, the transferor
of such beneficial interest must deliver to the Depositary either (A) (1) a
written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the
Depositary to credit or cause to be credited a beneficial interest in
another Global Note of the same tranche in an amount equal to the
beneficial interest to be transferred or exchanged and (2) instructions
given in accordance with the Applicable Procedures containing information
regarding the Participant account to be credited with such increase or (B)
(1) a written order from a Participant or an Indirect Participant given to
the Depositary in accordance with the Applicable Procedures directing the
Depositary to cause to be issued a Definitive Note of the same tranche in
an amount equal to the beneficial interest to be transferred or exchanged
and (2) instructions given by the Depositary to the Registrar containing
information regarding the Person in whose name such Definitive Note shall
be registered to effect the transfer or exchange referred to in (1) above,
provided that in no event shall Definitive Notes be issued upon the
transfer or
<PAGE>
28
exchange of beneficial interests in a Regulation S Temporary
Global Note prior to (x) the expiration of the Restricted Period and (y)
the receipt by the Registrar of any certificates determined by the Company
to be required pursuant to Rule 903 under the Securities Act. Upon
consummation of an Exchange Offer by the Company in accordance with Section
2.06(f) hereof, the requirements of this Section 2.06(b)(ii) shall be
deemed to have been satisfied upon receipt by the Registrar of the
instructions contained in the Letter of Transmittal delivered by the Holder
of such beneficial interests in the Restricted Global Notes. Upon
satisfaction of all of the requirements for transfer or exchange of
beneficial interests in Global Notes contained in this Indenture and the
Notes or otherwise applicable under the Securities Act, the Trustee shall
adjust the principal amount of the relevant Global Note(s) pursuant to
Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global
Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note of the same tranche
if the transfer complies with the requirements of Section 2.06(b)(ii) above
and the Registrar receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in a 144A Global Note of the same tranche, then
the transferor must deliver a certificate in the form of Exhibit B
---------
hereto, including the certifications in item (1) thereof; and
(B) if the transferee will take delivery in the form of a
beneficial interest in a Regulation S Temporary Global Note of the
same tranche or a Regulation S Global Note of the same tranche, then
the transferor must deliver a certificate in the form of Exhibit B
---------
hereto, including the certifications in item (2) thereof.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted
Global Note for Beneficial Interests in the Unrestricted Global Note. A
beneficial interest in any Restricted Global Note may be exchanged by any
holder thereof for a beneficial interest in an Unrestricted Global Note of
the same tranche or transferred to a Person who takes delivery thereof in
the form of a beneficial interest in an Unrestricted Global Note of the
same tranche if the exchange or transfer complies with the requirements of
Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of the beneficial interest to be transferred, in the
case of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal or via the
Depositary's book-entry system that it is not (1) a broker-dealer, (2)
a Person participating in the distribution of the Exchange Notes or
(3) a Person who is an affiliate (as defined in Rule 144) of the
Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
<PAGE>
29
(C) such transfer is effected by a Restricted Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance
with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest
for a beneficial interest in an Unrestricted Global Note of the same
tranche, a certificate from such holder in the form of Exhibit C
---------
hereto, including the certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial interest
to a Person who shall take delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note of the same
tranche, a certificate from such holder in the form of Exhibit B
---------
hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Registrar
so requests or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Registrar to the effect that
such exchange or transfer is in compliance with the Securities Act and that
the restrictions on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance with the
Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an Authentication Order in accordance
with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes of the same tranche in an aggregate principal amount
equal to the aggregate principal amount of beneficial interests transferred
pursuant to subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive
Notes.
(i) Beneficial Interests in Restricted Global Notes to Restricted
Definitive Notes. If any holder of a beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a Restricted
Definitive Note of the same tranche or to transfer such beneficial interest
to a Person who takes delivery thereof in the form of a Restricted
Definitive Note of the same tranche, then, upon receipt by the Registrar of
the following documentation:
(A) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note of the
<PAGE>
30
same tranche, a certificate from such holder in the form of Exhibit C
---------
hereto, including the certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (1) thereof;
---------
(C) if such beneficial interest is being transferred to a Non-
U.S. Person in an offshore transaction in accordance with Rule 903 or
Rule 904, a certificate to the effect set forth in Exhibit B hereto,
---------
including the certifications in item (2) thereof;
(D) if such beneficial interest is being transferred pursuant to
an exemption from the registration requirements of the Securities Act
in accordance with Rule 144, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(a) thereof;
---------
(E) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (3)(b)
---------
thereof; or
(F) if such beneficial interest is being transferred pursuant to
an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
---------
certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Company shall execute and the Trustee shall authenticate and
deliver to the Person designated in the instructions a Definitive Note of
the same tranche in the appropriate principal amount. Any Definitive Note
issued in exchange for a beneficial interest in a Restricted Global Note
pursuant to this Section 2.06(c) shall be registered in such name or names
and in such authorized denomination or denominations as the holder of such
beneficial interest shall instruct the Registrar through instructions from
the Depositary and the Participant or Indirect Participant. The Trustee
shall make available for delivery such Definitive Notes to the Persons in
whose names such Notes are so registered. Any Definitive Note issued in
exchange for a beneficial interest in a Restricted Global Note of the same
tranche pursuant to this Section 2.06(c)(i) shall bear the Private
Placement Legend and shall be subject to all restrictions on transfer
contained therein.
(ii) Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a
beneficial interest in a Regulation S Temporary Global Note may not be
exchanged for a Definitive Note or transferred to a Person who takes
delivery thereof in the form of a Definitive Note prior to (x) the
expiration of the Restricted Period and (y) the receipt by the Registrar of
any certificates determined by the Company to be required pursuant to Rule
903(c)(3)(ii)(B) under the Securities
<PAGE>
31
Act, except in the case of a transfer pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 903 or Rule
904.
(iii) Beneficial Interests in Restricted Global Notes to Unrestricted
Definitive Notes. A holder of a beneficial interest in a Restricted Global
Note may exchange such beneficial interest for an Unrestricted Definitive
Note of the same tranche or may transfer such beneficial interest to a
Person who takes delivery thereof in the form of an Unrestricted Definitive
Note of the same tranche only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of such beneficial interest, in the case of an
exchange, or the transferee, in the case of a transfer, certifies in
the applicable Letter of Transmittal that it is not (1) a broker-
dealer, (2) a Person participating in the distribution of the Exchange
Notes or (3) a Person who is an affiliate (as defined in Rule 144) of
the Company;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Restricted Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance
with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest
for a Definitive Note of the same tranche that does not bear the
Private Placement Legend, a certificate from such holder in the form
of Exhibit C hereto, including the certifications in item (1)(b)
---------
thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial interest
to a Person who shall take delivery thereof in the form of a
Definitive Note of the same tranche that does not bear the Private
Placement Legend, a certificate from such holder in the form of
Exhibit B hereto, including the certifications in item (4) thereof;
---------
and, in each such case set forth in this subparagraph (D), if the Registrar
so requests or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Registrar to the effect that
such exchange or transfer is in compliance with the Securities Act and that
the restrictions on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance with the
Securities Act.
<PAGE>
32
(iv) Beneficial Interests in Unrestricted Global Notes to Unrestricted
Definitive Notes. If any holder of a beneficial interest in an Unrestricted
Global Note proposes to exchange such beneficial interest for a Definitive
Note of the same tranche or to transfer such beneficial interest to a Person
who takes delivery thereof in the form of a Definitive Note of the same
tranche, then, upon satisfaction of the conditions set forth in Section
2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal amount of
the applicable Global Note to be reduced accordingly pursuant to Section
2.06(h) hereof, and the Company shall execute and the Trustee shall
authenticate and make available for delivery to the Person designated in the
instructions a Definitive Note of the same tranche in the appropriate
principal amount. Any Definitive Note issued in exchange for a beneficial
interest pursuant to this Section 2.06(c)(iii) shall be registered in such
name or names and in such authorized denomination or denominations as the
holder of such beneficial interest shall instruct the Registrar through
instructions from the Depositary and the Participant or Indirect Participant.
The Trustee shall make available for delivery such Definitive Notes to the
Persons in whose names such Notes are so registered. Any Definitive Note
issued in exchange for a beneficial interest pursuant to this Section
2.06(c)(iii) shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.
(i) Restricted Definitive Notes to Beneficial Interests in Restricted
Global Notes. If any Holder of a Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global Note of
the same tranche or to transfer such Restricted Definitive Notes to a Person
who takes delivery thereof in the form of a beneficial interest in a
Restricted Global Note of the same tranche, then, upon receipt by the
Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global Note
of the same tranche, a certificate from such Holder in the form of
Exhibit C hereto, including the certifications in item (2)(b) thereof;
---------
(B) if such Restricted Definitive Note is being transferred to a
QIB in accordance with Rule 144A, a certificate to the effect set forth
in Exhibit B hereto, including the certifications in item (1) thereof;
---------
(C) if such Restricted Definitive Note is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule 903 or
Rule 904, a certificate to the effect set forth in Exhibit B hereto,
---------
including the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in item
---------
(3)(a) thereof;
<PAGE>
33
(E) if such Restricted Definitive Note is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set forth
in Exhibit B hereto, including the certifications in item (3)(b) thereof;
---------
or
(F) if such Restricted Definitive Note is being transferred
pursuant to an effective registration statement under the Securities Act,
a certificate to the effect set forth in Exhibit B hereto, including the
---------
certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or cause to
be increased the aggregate principal amount of, in the case of clause (A)
above, the appropriate Restricted Global Note of the same tranche, in the case
of clause (B) above, the 144A Global Note of the same tranche, and in the case
of clause (C) above, the Regulation S Global Note of the same tranche.
(ii) Restricted Definitive Notes to Beneficial Interests in Unrestricted
Global Notes. A Holder of a Restricted Definitive Note may exchange such Note
for a beneficial interest in an Unrestricted Global Note of the same tranche
or transfer such Restricted Definitive Note to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global Note of
the same tranche only if:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the
Holder, in the case of an exchange, or the transferee, in the case of a
transfer, certifies in the applicable Letter of Transmittal that it is
not (1) a broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as defined in
Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Restricted Broker-Dealer pursuant
to the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes to exchange
such Notes for a beneficial interest in the Unrestricted Global Note of
the same tranche, a certificate from such Holder in the form of Exhibit C
---------
hereto, including the certifications in item (1)(c) thereof; or
(2) if the Holder of such Definitive Notes proposes to transfer
such Notes to a Person who shall take delivery thereof in the form of a
beneficial interest in the Unrestricted Global Note of the same tranche,
a certificate from such Holder in the form of Exhibit B hereto, including
---------
the certifications in item (4) thereof;
<PAGE>
34
and, in each such case set forth in this subparagraph (D), if the Registrar so
requests or if the Applicable Procedures so require, an Opinion of Counsel in
form reasonably acceptable to the Registrar to the effect that such exchange
or transfer is in compliance with the Securities Act and that the restrictions
on transfer contained herein and in the Private Placement Legend are no longer
required in order to maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Note of the same tranche.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global Note of
the same tranche or transfer such Definitive Notes to a Person who takes
delivery thereof in the form of a beneficial interest in an Unrestricted
Global Note of the same tranche at any time. Upon receipt of a request for
such an exchange or transfer, the Trustee shall cancel the applicable
Unrestricted Definitive Note and increase or cause to be increased the
aggregate principal amount of one of the Unrestricted Global Notes of the same
tranche.
If any such exchange or transfer from a Definitive Note to a beneficial
interest in a Global Note of the same tranche is effected pursuant to
subparagraphs (ii)(B), (ii)(D) or (iii) above at a time when an Unrestricted
Global Note has not yet been issued, the Company shall issue and, upon receipt
of an Authentication Order in accordance with Section 2.02 hereof, the Trustee
shall authenticate one or more Unrestricted Global Notes of the same tranche in
an aggregate principal amount equal to the principal amount of Definitive Notes
so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder's compliance
with the provisions of this Section 2.06(e), the Registrar shall register the
transfer or exchange of Definitive Notes. Prior to such registration of
transfer or exchange, the requesting Holder shall present or surrender to the
Registrar the Definitive Notes duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar duly executed by
such Holder or by his attorney, duly authorized in writing. In addition, the
requesting Holder shall provide any additional certifications, documents and
information, as applicable, required pursuant to the following provisions of
this Section 2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes. Any
Restricted Definitive Note may be transferred to and registered in the name of
Persons who take delivery thereof in the form of a Restricted Definitive Note
of the same tranche if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A, then the
transferor must deliver a certificate in the form of Exhibit B hereto,
---------
including the certifications in item (1) thereof;
<PAGE>
35
(B) if the transfer will be made pursuant to Rule 903 or Rule 904,
then the transferor must deliver a certificate in the form of Exhibit B
---------
hereto, including the certifications in item (2) thereof; and
(C) if the transfer will be made pursuant to any other exemption
from the registration requirements of the Securities Act, then the
transferor must deliver a certificate in the form of Exhibit B hereto,
---------
including the certifications, certificates and Opinion of Counsel
required by item (3) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive Notes. Any
Restricted Definitive Note may be exchanged by the Holder thereof for an
Unrestricted Definitive Note of the same tranche or transferred to a Person or
Persons who take delivery thereof in the form of an Unrestricted Definitive
Note of the same tranche if:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the
Holder, in the case of an exchange, or the transferee, in the case of a
transfer, certifies in the applicable Letter of Transmittal that it is
not (1) a broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as defined in
Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) any such transfer is effected by a Restricted Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes proposes
to exchange such Notes for an Unrestricted Definitive Note of the same
tranche, a certificate from such Holder in the form of Exhibit C hereto,
---------
including the certifications in item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive Notes proposes
to transfer such Notes to a Person who shall take delivery thereof in the
form of an Unrestricted Definitive Note of the same tranche, a
certificate from such Holder in the form of Exhibit B hereto, including
---------
the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such exchange or transfer is
in compliance with the Securities Act and that the restrictions on
<PAGE>
36
transfer contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A
Holder of Unrestricted Definitive Notes may transfer such Notes to a Person
who takes delivery thereof in the form of an Unrestricted Definitive Note of
the same tranche. Upon receipt of a request to register such a transfer, the
Registrar shall register the Unrestricted Definitive Notes pursuant to the
instructions from the Holder thereof.
(f) Exchange Offer.
Upon the occurrence of the Exchange Offer in accordance with the
Registration Rights Agreement, the Company shall issue and, upon receipt of an
Authentication Order in accordance with Section 2.02 hereof, the Trustee shall
authenticate (i) one or more Unrestricted Global Notes in an aggregate principal
amount equal to the principal amount of the beneficial interests in the
Restricted Global Notes of the same tranche tendered for acceptance by Persons
that certify in the applicable Letters of Transmittal or via the Depositary's
book-entry system that (x) they are not broker-dealers, (y) they are not
participating in a distribution of the Exchange Notes and (z) they are not
affiliates (as defined in Rule 144) of the Company, and accepted for exchange in
the Exchange Offer and (ii) Definitive Notes in an aggregate principal amount
equal to the principal amount of the Restricted Definitive Notes of the same
tranche accepted for exchange in the Exchange Offer. Concurrently with the
issuance of such Notes, the Trustee shall cause the aggregate principal amount
of the applicable Restricted Global Notes to be reduced accordingly, and the
Company shall execute and the Trustee shall authenticate and make available for
delivery to the Persons designated by the Holders of Definitive Notes so
accepted Definitive Notes in the appropriate principal amount.
(g) Legends.
The following legends shall appear on the face of all Global Notes and
Definitive Notes issued under this Indenture unless specifically stated
otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each Global Note
and each Definitive Note (and all Notes issued in exchange therefor or
substitution thereof) shall bear the legend in substantially the
following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY
OF THE ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER
THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS
PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE
<PAGE>
37
COMPANY, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE
144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF
TRANSFER ON THE REVERSE OF THIS SECURITY), (3) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE)
UNDER THE SECURITIES ACT, (4) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE
THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT
OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A."
(B) Notwithstanding the foregoing, any Global Note or Definitive
Note issued pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii),
(d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.06 (and all
Notes issued in exchange therefor or substitution thereof) shall not bear
the Private Placement Legend.
(ii) Global Note Legends. Each Global Note shall bear legends in
substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS
MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL
NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF
THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL
NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
CONSENT OF THE COMPANY.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO
A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE
DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK) ("DTC") TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER
ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN."
<PAGE>
38
(iii) Regulation S Temporary Global Note Legend. The Regulation S
Temporary Global Note shall bear a legend in substantially the following form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE
AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON."
(iv) Original Issue Discount Legend. Each Global Note or Definitive
Note issued in respect of the Notes Due 2006 shall bear a legend in the
following form:
"FOR THE PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED, THIS SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE
DISCOUNT; FOR EACH $1,000 PRINCIPAL AMOUNT OF THIS SECURITY, THE ISSUE PRICE
IS $981.18, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT IS $18.82, THE ISSUE DATE IS
NOVEMBER 19, 1999, AND THE YIELD TO MATURITY ON THE ISSUE DATE IS 9.500% PER
ANNUM."
(h) Cancellation and/or Adjustment of Global Notes.
At such time as all beneficial interests in a particular Global Note have
been exchanged for Definitive Notes of the same tranche or a particular Global
Note has been redeemed, repurchased or canceled in whole and not in part, each
such Global Note shall be returned to or retained and canceled by the Trustee in
accordance with Section 2.11 hereof. At any time prior to such cancellation, if
any beneficial interest in a Global Note is exchanged for or transferred to a
Person who will take delivery thereof in the form of a beneficial interest in
another Global Note of the same tranche or for Definitive Notes of the same
tranche, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note of the same tranche, such other Global Note shall be
increased accordingly and an endorsement shall be made on such Global Note by
the Trustee or by the Depositary at the direction of the Trustee to reflect such
increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Global Notes and Definitive
Notes upon the Company's order or at the Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Note or to a Holder of a Definitive Note for any
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any transfer tax or similar governmental charge
payable in connection therewith (other than any such transfer taxes or similar
governmental charge
<PAGE>
39
payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 3.11, 4.10,
4.15 and 9.05 hereof).
(iii) The Registrar shall not be required to register the transfer of
or exchange any Note selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive Notes shall
be the valid obligations of the Company, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Global Notes or
Definitive Notes surrendered upon such registration of transfer or exchange.
(v) The Company shall not be required (A) to issue, to register the
transfer of or to exchange any Notes during a period beginning at the opening
of business 15 days before the day of the mailing of notice of redemption
under Section 3.02 hereof and ending at the close of business on such day, (B)
to register the transfer of or to exchange any Note so selected for redemption
in whole or in part, except the unredeemed portion of any Note being redeemed
in part or (c) to register the transfer of or to exchange a Note between a
record date and the next succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a transfer of
any Note, the Trustee, any Agent and the Company may deem and treat the Person
in whose name any Note is registered as the absolute owner of such Note for
the purpose of receiving payment of principal of and interest on such Notes
and for all other purposes, and none of the Trustee, any Agent or the Company
shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and Definitive Notes
in accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel required
to be submitted to the Registrar pursuant to this Section 2.06 to effect a
registration of transfer or exchange may be submitted by facsimile.
(ix) Each Holder of a Note agrees to indemnify the Trustee and the
Registrar against any liability that may result from the transfer, exchange or
assignment of such Holder's Note in violation of any provision of this
Indenture and/or applicable United States federal or state securities law.
(x) Neither the Trustee nor the Registrar shall have any obligation
or duty to monitor, determine or inquire as to compliance with any
restrictions on transfer imposed under this Indenture or under applicable law
with respect to any transfer of any interest in any Note (including any
transfers between or among Participants or beneficial owners of interests in
any Global Note) other than to require delivery of such certificates and other
documentation or evidence as are
<PAGE>
40
expressly required by, and to do so if and when expressly required by the
terms of, this Indenture, and to examine the same to determine substantial
compliance as to form with the express requirements hereof.
Section 2.07. Replacement Notes.
If any mutilated Note is surrendered to the Trustee or the Company and
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and the Trustee, upon receipt of an
Authentication Order, shall authenticate a replacement Note of the same tranche
if the Trustee's requirements are met. If required by the Trustee or the
Company, an indemnity bond must be supplied by the Holder that is sufficient in
the judgment of the Trustee and the Company to protect the Company, the Trustee,
any Agent and any authenticating agent from any loss that any of them may suffer
if a Note is replaced. The Company may charge for its expenses in replacing a
Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes of the same tranche duly issued hereunder.
Section 2.08. Outstanding Notes.
The Notes of any tranche outstanding at any time are all the Notes of
such tranche authenticated by the Trustee except for those canceled by it, those
delivered to it for cancellation, those reductions in the interest in a Global
Note effected by the Trustee in accordance with the provisions hereof, and those
described in this Section as not outstanding. Except as set forth in Section
2.09 hereof, a Note does not cease to be outstanding because the Company or an
Affiliate of the Company holds the Note; however, Notes held by the Company or a
Subsidiary of the Company shall not be deemed to be outstanding for purposes of
Section 3.07(b) hereof.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser or protected purchaser.
If the principal amount of any Note is considered paid under Section 4.01
hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an Affiliate
of any thereof) holds, on a redemption date or maturity date, money sufficient
to pay Notes payable on that date, then on and after that date such Notes shall
be deemed to be no longer outstanding and shall cease to accrue interest.
Section 2.09. Treasury Notes.
<PAGE>
41
In determining whether the Holders of the required principal amount of
Notes of any tranche have concurred in any direction, waiver or consent, Notes
owned by the Company, or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company, shall
be considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes that the Trustee knows are so owned
shall be so disregarded.
Section 2.10. Temporary Notes.
Until certificates representing Notes are ready for delivery, the Company
may prepare and the Trustee, upon receipt of an Authentication Order, shall
authenticate temporary Notes. Temporary Notes shall be substantially in the
form of certificated Notes of the same tranche but may have variations that the
Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall prepare
and the Trustee shall authenticate definitive Notes in exchange for temporary
Notes of the same tranche.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
Section 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee and no one else shall cancel all Notes surrendered for registration
of transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirements of the Exchange
Act). Certification of the destruction of all canceled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it
has paid or that have been delivered to the Trustee for cancellation.
Section 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on any tranche of Notes,
it shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders of such Notes on which interest is due on a subsequent special record
date, in each case at the rate provided in the Notes and in Section 4.01 hereof.
The Company shall notify the Trustee in writing of the amount of defaulted
interest proposed to be paid on each Note and the date of the proposed payment.
The Company shall fix or cause to be fixed each such special record date and
payment date, provided that no such special record date shall be less than 10
days prior to the related payment date for such defaulted interest. At least 15
days before the special record date, the Company (or, upon the written request
of the Company, the Trustee in the name and at the expense of the Company) shall
mail or cause to be mailed to Holders a notice that states the special record
date, the related payment date and the amount of such interest to be paid.
Section 2.13. CUSIP Numbers.
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The Company in issuing the Notes may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use CUSIP numbers in notices of
redemption as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness of such numbers either as
printed on the Notes or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Notes, and any such redemption shall not be affected by any defect in or the
omission of such numbers. The Company will promptly notify the Trustee of any
change in the CUSIP numbers.
ARTICLE 3. REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.
If the Company elects to redeem Notes of any tranche pursuant to the
optional redemption provisions of Section 3.07 hereof, it shall furnish to the
Trustee, at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes of such tranche to be redeemed, (iv) the redemption price and
(v) the CUSIP numbers of the Notes of such tranche to be redeemed.
Section 3.02. Selection of Notes to Be Redeemed.
If less than all of the Notes of any tranche are to be redeemed or
purchased in an offer to purchase at any time, the Trustee shall select the
Notes of such tranche to be redeemed or purchased among the Holders of the Notes
of such tranche in compliance with the requirements of the principal national
securities exchange, if any, on which the Notes of such tranche are listed or,
if the Notes of such tranche are not so listed, on a pro rata basis, by lot or
in accordance with any other method the Trustee considers fair and appropriate.
In the event of partial redemption by lot, the particular Notes of such tranche
to be redeemed shall be selected, unless otherwise provided herein, not less
than 30 nor more than 60 days prior to the redemption date by the Trustee from
the outstanding Notes of such tranche not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.03. Notice of Redemption.
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Subject to the provisions of Section 3.11 hereof, at least 30 days but
not more than 60 days before a redemption date, the Company shall mail or cause
to be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture pursuant
to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of redemption
in the Company's name and at its expense; provided, however, that the Company
shall have delivered to the Trustee, at least 45 days prior to the redemption
date, an Officers' Certificate requesting that the Trustee give such notice and
setting forth the information to be stated in such notice as provided in the
preceding paragraph.
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
Section 3.05. Deposit of Redemption Price
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Prior to 10 a.m. on the redemption date, the Company shall deposit with
the Trustee or with the Paying Agent money sufficient to pay the redemption
price of and accrued interest on all Notes to be redeemed on that date. The
Trustee or the Paying Agent shall promptly return to the Company any money
deposited with the Trustee or the Paying Agent by the Company in excess of the
amounts necessary to pay the redemption price of, and accrued interest on, all
Notes to be redeemed.
If the Company complies with the provisions of the preceding paragraph,
on and after the redemption date, interest shall cease to accrue on the Notes or
the portions of Notes called for redemption. If a Note is redeemed on or after
an interest record date but on or prior to the related interest payment date,
then any accrued and unpaid interest shall be paid to the Person in whose name
such Note was registered at the close of business on such record date. If any
Note called for redemption shall not be so paid upon surrender for redemption
because of the failure of the Company to comply with the preceding paragraph,
interest shall be paid on the unpaid principal, from the redemption date until
such principal is paid, and to the extent lawful on any interest not paid on
such unpaid principal, in each case at the rate provided in the Notes and in
Section 4.01 hereof.
Section 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note of the same tranche
equal in principal amount to the unredeemed portion of the Note surrendered.
Section 3.07. Optional Redemption.
(a) Except as set forth in Sections 3.07(b) and (c) below and in Section
3.08 hereof, the Notes Due 2006 shall not be redeemable at the Company's option
at any time and the Notes Due 2009 shall not be redeemable at the Company's
option prior to November 15, 2004. Thereafter, the Notes Due 2009, but not the
Notes Due 2006, shall be subject to redemption at any time or from time to time
at the option of the Company, in whole or in part, upon not less than 30 nor
more than 60 days' notice, at the redemption prices (expressed as percentages of
principal amount) set forth below, plus accrued and unpaid interest and Special
Interest, if any, thereon to the applicable redemption date, if redeemed during
the twelve-month period beginning on November 15 of the years indicated below:
Percentage of
Year Principal Amount
---- ----------------
2004 104.750%
2005 103.167%
2006 101.583%
2007 and thereafter 100.000%
(b) Notwithstanding the foregoing, at any time prior to November 15,
2002, the Company may, on any one or more occasions, redeem up to 25% of the
aggregate principal amount of Notes Due
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45
2009 originally issued pursuant to this Indenture at a redemption price of
109.500% of the principal amount thereof, plus accrued and unpaid interest
thereon to the redemption date, with the net cash proceeds received from one or
more Equity Offerings made by the Company or GCL (to the extent such net cash
proceeds received by GCL were contributed to the Company as common equity
capital); provided that at least 75% of the aggregate principal amount of Notes
Due 2009 originally issued pursuant to this Indenture remain outstanding
immediately after the occurrence of any such redemption. The Company may make
any such redemption upon not less than 30 nor more than 60 days' notice (but in
no event more than 90 days after the closing of the related Equity Offering).
Any such notice may be given prior to the completion of the related Equity
Offering and any such redemption may, at the Company's discretion, be subject to
the satisfaction of one or more conditions precedent, including, but not limited
to, the completion of the related Equity Offering.
(c) In addition, (x) at any time prior to November 15, 2004, the Notes
Due 2009 may be redeemed at the option of the Company, and (y) at any time prior
to their maturity the Notes Due 2006 may be redeemed at the option of the
Company, in each case in whole but not in part, upon the occurrence of a Change
of Control, upon not less than 30 nor more than 60 days' prior notice (but in no
event may any such redemption occur more than 90 days after the occurrence of
such Change of Control) mailed by first-class mail to each Holder's registered
address, at a redemption price equal to 100% of the principal amount thereof
plus the relevant Applicable Premium as of, and accrued and unpaid interest, if
any, to, the date of redemption (the "Redemption Date").
(d) Any redemption pursuant to this Section 3.07 shall be made pursuant
to the provisions of Section 3.01 through 3.06 hereof.
Section 3.08. Optional Tax Redemption.
Each tranche of Notes will be subject to redemption at the option of the
Company or a successor corporation at any time, in whole but not in part, upon
not less than 30 nor more than 60 days' notice, at a redemption price equal to
the principal amount thereof, plus accrued and unpaid interest thereon to the
redemption date if, as a result of any change in or amendment to the laws or any
regulations or ruling promulgated thereunder of (x) Bermuda or any political
subdivision or governmental authority thereof or therein having the power to
tax, (y) any jurisdiction, other than the United States, from or through which
payment on the Notes is made by the Company or a successor corporation, or its
paying agent in its capacity as such or any political subdivision or
governmental authority thereof or therein having the power to tax or (z) any
other jurisdiction, other than the United States, in which the Company or a
successor corporation is organized, or any political subdivision or governmental
authority thereof or therein having the power to tax, or any change in the
official application or interpretation of such laws, regulations or rulings, or
any change in the official application or interpretation of, or any execution of
or amendment to, any treaty or treaties affecting taxation to which such
jurisdiction (or such political subdivision or taxing authority) is a party (a
"Change in Tax Law"), which becomes effective on or after the date of the
Offering Memorandum, the Company or a successor corporation is or would be
required on the next succeeding interest payment date to pay Additional Amounts
with respect to such tranche of Notes (as described under Section 3.09 hereof),
and
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46
the payment of such Additional Amounts cannot be avoided by the use of any
reasonable measures available to the Company or a successor corporation.
In addition, each tranche of Notes will be subject to redemption at the
option of the Company at any time, in whole but not in part, upon not less than
30 nor more than 60 days' notice, at a redemption price equal to the principal
amount thereof, plus accrued and unpaid interest thereon to the redemption date,
if the Person formed by a consolidation or amalgamation of the Company or into
which the Company is merged or to which the Company conveys, transfers or leases
its properties and assets substantially as an entirety is required, as a
consequence of such consolidation, amalgamation, merger, conveyance, transfer or
lease and as a consequence of a Change in Tax Law occurring after the date of
such consolidation, amalgamation, merger, conveyance, transfer or lease, to pay
Additional Amounts in respect of any tax, assessment or governmental charge
imposed on any Holder of such tranche of Notes.
Section 3.09. Payment of Additional Amounts.
If any deduction or withholding for any present or future taxes,
assessments or other governmental charges of (x) Bermuda or any political
subdivision or governmental authority thereof or therein having power to tax,
(y) any jurisdiction, other than the United States, from or through which
payment on any tranche of Notes is made by the Company or a successor
corporation, or its paying agent in its capacity as such or any political
subdivision or governmental authority thereof or therein having the power to tax
or (z) any other jurisdiction, other than the United States, in which the
Company or a successor corporation is organized, or any political subdivision or
governmental authority thereof or therein having the power to tax shall at any
time be required by such jurisdiction (or any such political subdivision or
taxing authority) in respect of any amounts to be paid by the Company or a
successor corporation under any tranche of Notes, the Company or a successor
corporation will pay to each Holder of such tranche of Notes as additional
interest, such additional amounts ("Additional Amounts") as may be necessary in
order that the net amounts paid to such holder of such Notes who, with respect
to any such tax, assessment or other governmental charge, is not resident in, or
a citizen of, such jurisdiction, after such deduction or withholding, shall be
not less than the amount specified in such Notes to which such Holder is
entitled; provided, however, that the Company or a successor corporation shall
not be required to make any payment of Additional Amounts for or on account of:
(a) Any tax, assessment or other governmental charge that would not have
been imposed but for (i) the existence of any present or former connection
between such Holder (or between a fiduciary, settlor, beneficiary, member or
shareholder of, or possessor of a power over, such Holder, if such Holder is
an estate, trust, partnership, limited liability company or corporation) and
the taxing jurisdiction or any political subdivision or territory or
possession thereof or area subject to its jurisdiction, including, without
limitation, such Holder (or such fiduciary, settlor, beneficiary, member,
shareholder or possessor) being or having been a citizen or resident thereof
or being or having been present or engaged in a trade or business therein or
having or having had a permanent establishment therein, (ii) the presentation
of a Note (where presentation is required)
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for payment on a date more than 30 days after (x) the date on which such payment
became due and payable or (y) the date on which payment thereof is duly provided
for, whichever occurs later, or (iii) the presentation of a Note for payment in
Bermuda or any political subdivision thereof or therein, unless such Note could
not have been presented for payment elsewhere;
(b) Any estate, inheritance, gift, sales, transfer, personal property or
similar tax, assessment or other governmental charge;
(c) Any tax, assessment or other governmental charge that is payable
otherwise than by withholding from payment of principal of, premium, if any,
or any interest on the Notes;
(d) Any tax, assessment or other governmental charge that is imposed or
withheld by reason of the failure by the Holder or the beneficial owner of the
Note to comply with a request of the Company addressed to the Holder (i) to
provide information, documents or other evidence concerning the nationality,
residence or identity of the Holder or such beneficial owner or (ii) to make
and deliver any declaration or other similar claim (other than a claim for
refund of a tax, assessment or other governmental charge withheld by the
Company) or satisfy any information or reporting requirements, which, in the
case of (i) or (ii), is required or imposed by a statute, treaty, regulation
or administrative practice of the taxing jurisdiction as a precondition to
exemption from all or part of such tax, assessment or other governmental
charge; or
(e) Any combination of items (a), (b), (c) and (d) above;
nor shall Additional Amounts be paid with respect to any payment of the
principal of, or any premium or interest on, any Note to any Holder who is a
fiduciary or partnership or limited liability company or other than the sole
beneficial owner of such payment to the extent such payment would be required by
the laws of (x) Bermuda or any political subdivision or governmental authority
thereof or therein having the power to tax, (y) any jurisdiction, other than the
United States, from or through which payment on the Notes is made by the Company
or a successor corporation, or its paying agent in its capacity as such or any
political subdivision or governmental authority thereof or therein having the
power to tax or (z) any other jurisdiction, other than the United States, in
which the Company or a successor corporation is organized, or any political
subdivision or governmental authority thereof or therein having the power to tax
to be included in the income for tax purposes of a beneficiary or settlor with
respect to such fiduciary or a member of such partnership, limited liability
company or beneficial owner who would not have been entitled to such Additional
Amounts had it been the Holder of such Note.
The Company shall provide the Trustee with the official acknowledgment of
the relevant taxing authority (or, if such acknowledgment is not available, a
certified copy thereof) evidencing the payment of the withholding taxes, if any,
by the Company. Copies of such documentation shall be made available to the
Holders of the Notes or the Paying Agent, as applicable, upon request therefor.
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All references in this Indenture to principal of, premium, if any, and
interest on the Notes shall include any Additional Amounts payable by the
Company in respect of such principal, such premium, if any, and such interest.
Section 3.10. Mandatory Redemption.
The Company shall not be required to make mandatory redemption payments
with respect to the Notes.
Section 3.11. Offer to Purchase by Application of Excess Proceeds.
In the event that, pursuant to Section 4.10 hereof, the Company shall be
required to commence an Asset Sale Offer, it shall follow the procedures
specified below.
The Asset Sale Offer shall remain open for a period of 20 Business Days
following its commencement and no longer, except to the extent that a longer
period is required by applicable law (the "Offer Period"). No later than five
Business Days after the termination of the Offer Period (the "Purchase Date"),
the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall send, by
first class mail, a notice to the Trustee and each of the Holders, with a copy
to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section 3.11
and Section 4.10 hereof and the length of time the Asset Sale Offer shall
remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue to
accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to accrue
interest after the Purchase Date;
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49
(e) that Holders electing to have a Note purchased pursuant to an Asset
Sale Offer may only elect to have all of such Note purchased and may not elect
to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any Asset
Sale Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the Company, a depositary, if appointed by
the Company, or a Paying Agent at the address specified in the notice at least
three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be issued
new Notes equal in principal amount to the unpurchased portion of the Notes
surrendered (or transferred by book-entry transfer).
On or before 10:00 a.m. on the Purchase Date, the Company shall, to the
extent lawful, accept for payment, on a pro rata basis to the extent necessary,
the Offer Amount or portions thereof tendered pursuant to the Asset Sale Offer,
or if less than the Offer Amount has been tendered, all Notes tendered, and
shall deliver to the Trustee an Officers' Certificate stating that such Notes or
portions thereof were accepted for payment by the Company in accordance with the
terms of this Section 3.11. The Company, the Depositary or the Paying Agent, as
the case may be, shall promptly (but in any case not later than five days after
the Purchase Date) mail or deliver to each tendering Holder an amount equal to
the purchase price of the Notes tendered by such Holder and accepted by the
Company for purchase, and the Company shall promptly issue a new Note, and the
Trustee, upon written request from the Company shall authenticate and mail or
deliver such new Note to such Holder, in a principal amount equal to any
unpurchased portion of the Note surrendered. Any Note not so accepted shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company
shall publicly announce the results of the Asset Sale Offer on the Purchase
Date.
Other than as specifically provided in this Section 3.11, any purchase
pursuant to this Section 3.11 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
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ARTICLE 4. COVENANTS
Section 4.01. Payment of Notes.
The Company shall pay or cause to be paid the principal of, premium, if
any, and interest and Special Interest, if any, on the Notes on the dates and in
the manner provided in the Notes. Principal, premium, if any, and interest and
Special Interest, if any, shall be considered paid on the date due if the Paying
Agent, if other than the Company or a Subsidiary thereof, holds as of 10:00 a.m.
Eastern Time on the due date money deposited by the Company in immediately
available funds and designated for and sufficient to pay all principal, premium,
if any, and interest and Special Interest, if any, then due. The Company shall
pay all Special Interest, if any, in the same manner on the dates and in the
amounts set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Special Interest (without regard to any applicable grace period) at the same
rate to the extent lawful.
Section 4.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Company in respect of the Notes and this Indenture may be served. The
Company shall give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company shall give
prompt written notice to the Trustee of any such designation or rescission and
of any change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee
as one such office or agency of the Company in accordance with Section 2.03
hereof.
Section 4.03. Reports.
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Whether or not required by the rules and regulations of the SEC, so long
as any Notes are outstanding, the Company will furnish to the Trustee and the
Holders of the Notes (i) all quarterly and annual financial information that
would be required to be contained in a filing with the SEC on Forms 10-Q and 10-
K if the Company was required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" that
describes the financial condition and results of operations of the Company and
its consolidated Subsidiaries and, with respect to the annual information only,
a report thereon by the Company's certified independent accountants, and (ii)
all current reports that would be required to be filed with the SEC on Form 8-K
if the Company were required to file such reports, in each case within the time
periods specified in the SEC's rules and regulations. In addition, whether or
not required by the rules and regulations of the SEC, the Company will file a
copy of all such information and reports with the SEC for public availability
within the time periods specified in the SEC's rules and regulations (unless the
SEC will not accept such a filing) and make such information available to
securities analysts and prospective investors upon request. The Company will be
deemed to have satisfied such requirements if GCL files and provides reports,
documents and information of the types otherwise so required by the SEC, in each
case within the applicable time periods, and the Company is not required by the
SEC to file such reports, documents and information separately under the
applicable rules and regulations of the SEC (after giving effect to any
exemptive relief) because of the filings by GCL. Furthermore, the Company will
agree that, for so long as any Notes remain outstanding (and regardless of the
immediately preceding sentence), it will furnish to the Holders of the Notes and
to securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.
Section 4.04. Compliance Certificate.
(a) The Company and each Guarantor shall deliver to the Trustee (to the
extent that such Guarantor is so required under the TIA), within 90 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view
to determining whether the Company has kept, observed, performed and fulfilled
its obligations under this Indenture, and further stating, as to each such
Officer signing such certificate, that to the best of his or her knowledge the
Company has kept, observed, performed and fulfilled each and every covenant
contained in this Indenture and is not in default in the performance or
observance of any of the terms, provisions and conditions of this Indenture
(or, if a Default or Event of Default shall have occurred, describing all such
Defaults or Events of Default of which he or she may have knowledge and what
action the Company is taking or proposes to take with respect thereto) and
that to the best of his or her knowledge no event has occurred and remains in
existence by reason of which payments on account of the principal of or
interest, if any, on the Notes is prohibited or if such event has occurred, a
description of the event and what action the Company is taking or proposes to
take with respect thereto. For purposes of this paragraph, such compliance
shall be determined without regard to any period of grace or requirement of
notice provided under this Indenture.
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(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) hereof shall be accompanied
by a written statement of the Company's independent public accountants (who
shall be a firm of established national reputation) that in making the
examination necessary for certification of such financial statements, nothing
has come to their attention that would lead them to believe that the Company
has violated any provisions of Article 4 or Article 5 hereof or, if any such
violation has occurred, specifying the nature and period of existence thereof,
it being understood that such accountants shall not be liable directly or
indirectly to any Person for any failure to obtain knowledge of any such
violation.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any
Default or Event of Default, an Officers' Certificate specifying such Default
or Event of Default and what action the Company is taking or proposes to take
with respect thereto.
Section 4.05. Taxes.
The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the Holders of the Notes.
Section 4.06. Stay, Extension and Usury Laws.
The Company and each of the Guarantors covenants (to the extent that it
may lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay, extension
or usury law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Indenture; and the Company and
each of the Guarantors (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
shall not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law has been enacted.
Section 4.07. Restricted Payments.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or
make any other payment or distribution on account of the Company's or any of its
Restricted Subsidiaries' Equity Interests (including, without limitation, any
payment in connection with any merger or consolidation involving the Company or
any of its Restricted Subsidiaries) or to the direct or indirect holders of the
Company's or any of its Restricted Subsidiaries' Equity Interests (other than
dividends or distributions payable in Equity Interests (other than Disqualified
Stock) of the Company or to the Company or a Restricted Subsidiary of the
Company); (ii) purchase, redeem or otherwise acquire or retire for value
(including, without limitation, in connection
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53
with any merger or consolidation involving the Company) any Equity Interests of
the Company or any direct or indirect parent of the Company (other than any such
Equity Interests owned by the Company or any Wholly Owned Restricted Subsidiary
of the Company); (iii) make any payment on or with respect to, or purchase,
redeem, defease or otherwise acquire or retire for value any Indebtedness that
is subordinated to the Notes, except a payment of interest or principal at
Stated Maturity; or (iv) make any Restricted Investment (all such payments and
other actions set forth in clauses (i) through (iv) above being collectively
referred to as "Restricted Payments"), unless
(a) at the time of and after giving effect to such Restricted Payment, no
Default or Event of Default shall have occurred and be continuing or would occur
as a consequence thereof;
(b) in the case of clauses (i), (ii) and (iii) above, and, in the case of
any Restricted Investment that is not an Investment in a Permitted Business, the
Company would, at the time of such Restricted Payment and after giving pro forma
effect thereto as if such Restricted Payment had been made at the beginning of
the applicable four-quarter period, have been permitted to incur at least $1.00
of additional Indebtedness pursuant to either clause (i) or (ii) of the first
paragraph of Section 4.09 hereof; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted Subsidiaries
and any Permitted Investments made pursuant to clause (h) of the definition of
Permitted Investments after May 18, 1998 (excluding Restricted Payments
permitted by clauses (ii), (iii), (iv), (vi) and (vii) (but, in the case of
clause (vii), only to the extent that such Restricted Payments are reflected as
an expense on the income statements of GCL) of the next succeeding paragraph),
is less than the sum, without duplication, of (i) the remainder of (x) 100% of
the cumulative Consolidated Cash Flow (or, in the case Consolidated Cash Flow
shall be negative, less 100% of such deficit) for the period (taken as one
accounting period) beginning on March 31, 1998 and ending on the last day of the
last full fiscal quarter immediately preceding the date of such Restricted
Payment minus (y) the product of 1.5 times the cumulative Consolidated Interest
Expense from May 18, 1998 through the last day of the last full fiscal quarter
immediately preceding the date of such Restricted Payment, plus (ii) 100% of the
aggregate net cash proceeds and the fair market value (as determined in good
faith by the Board of Directors) of property or assets received by the Company
since May 18, 1998 as a contribution to its common equity capital or from the
issue or sale of Equity Interests of the Company (other than Disqualified Stock)
or from the issue or sale of Disqualified Stock or debt securities of the
Company that have been converted into such Equity Interests (other than Equity
Interests (or Disqualified Stock or convertible debt securities) sold to a
Subsidiary of the Company), plus the amount of cash or the fair market value (as
determined above) of property or assets received by the Company or any
Restricted Subsidiary upon such conversion or exchange, plus (iii) the aggregate
amount equal to the net reduction in Investments in Unrestricted Subsidiaries
resulting from (x) dividends, distributions, interest payments, return of
capital, repayments of Investments or other transfers of assets to the Company
or any Restricted Subsidiary from any Unrestricted Subsidiary, (y) proceeds
realized by the Company or any Restricted Subsidiary upon the sale of such
Investment to a Person other than GCL, the Company or any Subsidiary of the
Company, or (z) the redesignation of any Unrestricted Subsidiary as a Restricted
Subsidiary, not to exceed in the case of any of the immediately
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54
preceding clauses (x), (y) or (z) the aggregate amount of Restricted Investments
made by the Company or any Restricted Subsidiary in such Unrestricted Subsidiary
after the date of this Indenture, plus (iv) to the extent that any Restricted
Investment that was made after the date of this Indenture is sold for cash or
otherwise liquidated or repaid for cash, the amount of proceeds (net of any cost
of disposition) equal to the initial amount of such Restricted Investment.
The foregoing provisions will not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the foregoing provisions;
(ii) the redemption, repurchase, retirement, defeasance or other acquisition of
any subordinated Indebtedness or Equity Interests of the Company in exchange
for, or out of the net cash proceeds of the substantially concurrent sale (other
than to a Subsidiary of the Company) of, other Equity Interests of the Company
(other than any Disqualified Stock); provided that the amount of any such net
cash proceeds that are utilized for any such redemption, repurchase, retirement,
defeasance or other acquisition shall be excluded from clause (c)(ii) of the
preceding paragraph; (iii) the defeasance, redemption, retirement, repurchase or
other acquisition of Indebtedness with the net cash proceeds from an incurrence
of Permitted Refinancing Indebtedness; (iv) the payment of any dividend by a
Restricted Subsidiary of the Company to the holders of its Equity Interests on a
pro rata basis; (v) the repurchase, redemption or other acquisition or
retirement for value of any Equity Interests of the Company or any of its
Restricted Subsidiaries held by any member of the Company's or such Restricted
Subsidiary's management; provided that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests shall not exceed
$10.0 million in any twelve-month period (with unused amounts being carried over
to succeeding twelve-month periods, subject to a maximum of $15.0 million in any
twelve-month period); (vi) Investments made with the net cash proceeds received
from an Equity Offering made by the Company or GCL (but only to the extent such
net cash proceeds received by GCL were contributed to the Company as common
equity capital) (provided that the amount of any such net cash proceeds that are
utilized for any such Investment shall be excluded from clause (c)(ii) of the
preceding paragraph) plus 50% of the net gain realized and not otherwise
included in Consolidated Cash Flow from the sale of Restricted Investments;
(vii) the payment of any dividend or the making of any distribution to GCL by
the Company or any Restricted Subsidiary to pay or permit GCL to pay any GCL
Expenses or any Related Taxes; and (viii) other Restricted Payments in an
aggregate amount not to exceed $25.0 million.
The Board of Directors may not designate any Subsidiary of the Company
(other than a newly created Subsidiary in which no Investment has previously
been made (other than the amount required to capitalize such Subsidiary in
connection with its organization)) as an Unrestricted Subsidiary (a
"Designation") unless: (i) no Default or Event of Default shall have occurred
and be continuing at the time of or after giving effect to such Designation;
(ii) the Company would, immediately after giving effect to such Designation,
have been permitted to incur at least $1.00 of additional Indebtedness pursuant
to either clause (i) or (ii) of the first paragraph of Section 4.09; and (iii)
the Company would not be prohibited under this Indenture from making an
Investment at the time of such Designation (assuming the effectiveness of such
Designation for purposes of clauses (a) and (b) of this Section 4.07) in an
amount equal to the fair market value of the net Investment of the Company or
any other Restricted Subsidiary in such Subsidiary on such date.
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55
In the event of any such Designation, all outstanding Investments owned
by the Company and its Restricted Subsidiaries in the Subsidiary so designated
will be deemed to be an Investment made as of the time of such Designation and
will reduce the amount available for Restricted Payments under the first
paragraph of this Section 4.07 or Permitted Investments, as applicable. All
such outstanding Investments will be deemed to constitute Restricted Payments in
an amount equal to the fair market value of such Investments at the time of such
Designation.
A Designation may be revoked (a "Revocation") by a resolution of the
Board of Directors delivered to the Trustee, provided that the Company will not
make any Revocation unless: (i) no Default or Event of Default shall have
occurred and be continuing at the time of or after giving effect to such
Designation; and (ii) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if incurred at such
time, have been permitted to be incurred at such time for all purposes under
this Indenture.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company (or such Restricted
Subsidiary, as the case may be) pursuant to the Restricted Payment. The fair
market value of any asset(s) or securities that are required to be valued by
this covenant shall be determined in good faith by the Board of Directors (such
determination to be based upon an opinion or appraisal issued by an accounting,
appraisal or investment banking firm of national standing if such fair market
value exceeds $15.0 million).
Section 4.08. Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to
the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or
(2) with respect to any other interest or participation in, or measured by, its
profits, or (b) pay any indebtedness owed to the Company or any of its
Restricted Subsidiaries, (ii) make loans or advances to the Company or any of
its Restricted Subsidiaries or (iii) transfer any of its properties or assets to
the Company or any of its Restricted Subsidiaries. However, the foregoing
restrictions will not apply to encumbrances or restrictions existing under or by
reason of (a) Existing Indebtedness as in effect on the date of this Indenture,
(b) agreements as in effect as of the date of this Indenture, (c) Indebtedness
incurred in accordance with clause (g), (h), (i), (k) or (n) of the second
paragraph of Section 4.09 hereof, provided that such encumbrances or
restrictions are customary with respect to such types of Indebtedness (as
determined in good faith by the Chief Financial Officer of the Company) and
provided further that the provisions of such Indebtedness do not prohibit
payments by the Company of principal, premium, interest and Additional Amounts
pursuant to the terms of the Notes and this Indenture, (d) this Indenture, the
Notes and the Exchange Notes, (e) applicable law, (f) any instrument governing
Indebtedness or Capital Stock of a Person acquired by the Company or any of its
Restricted Subsidiaries as in effect at the time of such acquisition (except to
the extent such Indebtedness was incurred in connection with or in contemplation
of such acquisition), which encumbrance or restriction is not
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56
applicable to any Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so acquired, provided, that
in the case of Indebtedness, such Indebtedness was permitted by the terms of
this Indenture to be incurred, (g) customary non-assignment provisions in leases
entered into in the ordinary course of business and consistent with past
practices, (h) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in clause
(iii) above on the property so acquired, (i) any agreement for the sale or other
disposition of a Restricted Subsidiary that restricts distributions by that
Restricted Subsidiary pending its sale or other disposition, (j) Permitted
Refinancing Indebtedness, provided that the restrictions contained in the
agreements governing such Permitted Refinancing Indebtedness are no more
restrictive, taken as a whole, than those contained in the agreements governing
the Indebtedness being refinanced, (k) Liens securing Indebtedness otherwise
permitted to be incurred pursuant to the provisions of Section 4.12 hereof that
limit the right of the Company or any of its Restricted Subsidiaries to dispose
of the assets subject to such Lien, (l) provisions with respect to the
disposition or distribution of assets or property in joint venture agreements
and other similar agreements entered into in the ordinary course of business and
(m) restrictions on cash or other deposits or net worth imposed by customers
under contracts entered into in the ordinary course of business.
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt) and the Company will not issue any Disqualified Stock and will not permit
any of its Restricted Subsidiaries to issue any shares of preferred stock;
provided, however, that the Company may incur Indebtedness (including Acquired
Debt) or issue shares of Disqualified Stock and its Restricted Subsidiaries may
incur Indebtedness or issue Disqualified Stock or preferred stock if either:
(i) the Consolidated Leverage Ratio is less than 5.5 to 1.0 (prior to
May 15, 2001) or 5.0 to 1.0 (subsequent to May 15, 2001); or
(ii) the Consolidated Capital Ratio is less than 2.5 to 1.0.
Notwithstanding the foregoing, the provisions of the paragraph set forth
above will not apply to the incurrence of any of the following items of
Indebtedness (collectively, "Permitted Indebtedness"):
(a) The incurrence by the Company of Indebtedness represented by the
Notes and the Exchange Notes;
(b) The incurrence by the Company or any of its Restricted Subsidiaries
of Existing Indebtedness;
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57
(c) The incurrence of Indebtedness by the Company to any Restricted
Subsidiary or Indebtedness of any Restricted Subsidiary to the Company or any
other Restricted Subsidiary (but only for so long as such Indebtedness is held
by the Company or such Restricted Subsidiary);
(d) The incurrence by the Company or any of its Restricted Subsidiaries
of Capital Lease Obligations (other than leases of backhaul services),
mortgage financings or purchase money obligations, in each case incurred for
the purpose of financing all or any part of the purchase price or cost of
construction or improvement of property, plant or equipment used in the
business of the Company or such Restricted Subsidiary, in an aggregate
principal amount not to exceed $25.0 million at any time outstanding;
(e) The incurrence by the Company or any of its Restricted Subsidiaries
of Indebtedness pursuant to acquisitions of capacity made in the ordinary
course of business;
(f) The incurrence by the Company or any of its Restricted Subsidiaries
of Hedging Obligations that are incurred for the purpose of fixing or hedging
interest or foreign currency exchange rate risk with respect to any floating
rate Indebtedness that is permitted by the terms of this Indenture to be
outstanding;
(g) The incurrence by the Company or any of its Restricted Subsidiaries
of Indebtedness of a Restricted Subsidiary incurred and outstanding on the
date on which such Restricted Subsidiary was acquired by the Company;
provided, however, that at the time such Restricted Subsidiary is acquired by
the Company (giving effect to such acquisition), the Company would have been
able to incur $1.00 of additional Indebtedness pursuant to the immediately
preceding paragraph;
(h) The incurrence by the Company or any of its Restricted Subsidiaries
of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to refund, refinance or replace Indebtedness (other than
intercompany Indebtedness) that was permitted by the Indenture to be incurred
pursuant to the immediately preceding paragraph hereof or clauses (a), (b),
(d), (g), (h), (i), (k), (n) or (o) of this paragraph;
(i) The incurrence by the Company or any of its Restricted Subsidiaries
of additional Indebtedness not otherwise permitted to be incurred pursuant to
this paragraph in an aggregate principal amount (or accreted value, as
applicable) at any time outstanding, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any Indebtedness
incurred pursuant to this clause (i), not to exceed $50.0 million;
(j) The incurrence of Indebtedness by a Receivables Entity in a Qualified
Receivables Transaction, provided that the proceeds thereof are applied in
accordance with Section 4.10 hereof;
(k) The incurrence by the Company or any Restricted Subsidiary of
Purchase Money Indebtedness, provided that the amount of such Purchase Money
Indebtedness does not exceed 100% of the cost of construction, installation,
acquisition, lease, development, design, engineering,
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58
financing, testing, start-up, upgrade, completion or improvement of assets
(together with related costs and expenses) used in the business of the Company
or such Restricted Subsidiary;
(l) Letters of Credit that are cash collateralized;
(m) Letters of Credit in an aggregate principal amount equal to $200.0
million less the amount of outstanding Indebtedness under clause (n) of this
paragraph;
(n) The incurrence by the Company or any of its Restricted Subsidiaries
of revolving credit Indebtedness in an aggregate amount not to exceed $200.0
million at any time outstanding, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any Indebtedness
incurred pursuant to this clause (n); and
(o) The guarantee by the Company or any Restricted Subsidiary of
Indebtedness of the Company or any Restricted Subsidiary of the Company that
was permitted to be incurred by another provision of this Section 4.09.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, incur any Indebtedness (including Permitted Indebtedness) that
is contractually subordinated in right of payment to any other Indebtedness of
the Company or such Restricted Subsidiary unless such Indebtedness is also
contractually subordinated in right of payment to the Notes on substantially
identical terms; provided, however, that no Indebtedness of the Company shall be
deemed to be contractually subordinated in right of payment to any other
Indebtedness of the Company solely by virtue of being unsecured.
Section 4.10. Asset Sales
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, consummate any Asset Sale unless, (i)
the Company (or such Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (as determined in good faith by the Board of Directors (including as to
the value of all noncash consideration) and set forth in an Officer's
Certificate delivered to the Trustee) of the assets or Equity Interests issued
or sold or otherwise disposed of and (ii) at least 75% of the consideration
therefor is in the form of cash and/or Cash Equivalents, and (iii) the Net
Proceeds received by the Company (or such Restricted Subsidiary, as the case may
be) from such Asset Sale are applied within 360 days following the receipt of
such Net Proceeds (a) first, to the extent the Company (or such Restricted
Subsidiary, as the case may be) elects, to the redemption or repurchase of
outstanding pari passu Indebtedness of the Company or Purchase Money
Indebtedness of any Restricted Subsidiary; provided that in the event that such
Restricted Subsidiary is a Guarantor, the Purchase Money Indebtedness to be
redeemed or repurchased ranks at least pari passu to the Guarantee given by such
Restricted Subsidiary, and (b) second, to the extent of the balance of such Net
Proceeds after application as described in (a) above and to the extent the
Company (or such Restricted Subsidiary, as the case may be) elects, to reinvest,
or enter into a legally binding agreement to reinvest, such Net Proceeds (or any
portion thereof) in assets that
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59
are used or useful in a Permitted Business. The balance of such Net Proceeds,
after the application of such Net Proceeds as described in the immediately
preceding clauses (a) and (b), shall constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds equals or exceeds $15.0
million (taking into account income earned on such Excess Proceeds), the Company
will be required to make an offer to all Holders of Notes and pari passu
Indebtedness (an "Asset Sale Offer") to purchase the maximum principal amount of
Notes and pari passu Indebtedness that may be purchased out of the Excess
Proceeds, at a purchase price in cash in an amount equal to 100% of the
principal amount thereof, plus accrued and unpaid interest thereon to the date
of purchase, in accordance with the procedures set forth in Article 3 of this
Indenture and the agreements governing such pari passu Indebtedness. To the
extent that any Excess Proceeds remain after consummation of an Asset Sale
Offer, the Company may use such Excess Proceeds for any purpose not otherwise
prohibited by this Indenture. If the aggregate principal amount of Notes and
pari passu Indebtedness tendered into such Asset Sale Offer surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Notes and pari passu Indebtedness to be purchased on a pro rata basis. Upon
completion of such Asset Sale Offer, the amount of Excess Proceeds shall be
reset at zero for purposes of the first sentence of this paragraph.
The amount of (x) any liabilities (as shown on the Company's (or such
Restricted Subsidiary's, as the case may be) most recent balance sheet) of the
Company or any Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Notes or any guarantee
thereof) that are assumed by the transferee of any such assets pursuant to an
agreement that releases the Company or any Restricted Subsidiary from all
liability in respect thereof, (y) Indebtedness of any Restricted Subsidiary that
is no longer a Restricted Subsidiary as a result of such Asset Sale, to the
extent that the Company and each other Restricted Subsidiary are released from
any guarantee of payment of the principal amount of such Indebtedness in
connection with such Asset Sale and (z) any securities, notes or other
obligations received by the Company (or such Restricted Subsidiary, as the case
may be) from such transferee that are contemporaneously (subject to ordinary
settlement periods) converted by the Company (or such Restricted Subsidiary, as
the case may be) into cash and/or Cash Equivalents (to the extent of the cash
and/or Cash Equivalents received), will be deemed to be cash and/or Cash
Equivalents for purposes of this provision.
To the extent that the provisions of any securities laws or regulations
conflict with the Asset Sale provisions of this Indenture, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under the Asset Sale provisions of this
Indenture by virtue thereof.
Section 4.11. Transactions with Affiliates.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing,
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an "Affiliate Transaction"), unless (i) such Affiliate Transaction is on terms
that are not materially less favorable to the Company or the relevant Restricted
Subsidiary than those that would have been obtained in a comparable transaction
by the Company or such Restricted Subsidiary with an unrelated Person and (ii)
with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $25.0 million, the
Company delivers to the Trustee a resolution of the Board of Directors set forth
in an Officers' Certificate certifying that such Affiliate Transaction complies
with clause (i) above and that such Affiliate Transaction is approved by a
majority of the disinterested members of the Board of Directors and an opinion
as to the fairness to the Holders of such Affiliate Transaction from a financial
point of view is obtained from an accounting, appraisal or investment banking
firm of national standing. Notwithstanding the foregoing, the following items
shall not be deemed to be Affiliate Transactions: (i) (a) the entering into,
maintaining or performance of any employment contract, collective bargaining
agreement, benefit plan, program or arrangement, related trust agreement or any
other similar arrangement for or with any employee, officer or director
heretofore or hereafter entered into in the ordinary course of business,
including vacation, health, insurance, deferred compensation, retirement,
savings or other similar plans, (b) the payment of compensation, performance of
indemnification or contribution obligations, or an issuance, grant or award of
stock, options, or other equity-related interests or other securities to
employees, officers or directors in the ordinary course of business, (c) any
transaction with an officer or director in the ordinary course of business not
involving more than $250,000 in any one case, or (d) Management Advances and
payments in respect thereof, (ii) transactions between or among the Company
and/or its Restricted Subsidiaries or any Receivables Entity, (iii) payment of
reasonable directors fees, (iv) any sale or other issuance of Equity Interests
(other than Disqualified Stock) of the Company, (v) Affiliate Transactions in
effect or approved by the Board of Directors on the date of this Indenture,
including any amendments thereto (provided that the terms of such amendments are
not materially less favorable to the Company or the relevant Restricted
Subsidiary than the terms of such agreement prior to such amendment), (vi)
transactions with respect to capacity or dark fiber between the Company or any
Restricted Subsidiary and any Unrestricted Subsidiary or other Affiliate and
joint sales and marketing pursuant to an agreement or agreements between the
Company or any Restricted Subsidiary and any Unrestricted Subsidiary or other
Affiliate (provided that in the case of this clause (vi), such agreements are on
terms that are no less favorable to the Company or the relevant Restricted
Subsidiary than those that could have been obtained at the time of such
transaction in an arm's-length transaction with an unrelated third party or, in
the case of a transaction with an Unrestricted Subsidiary, are either (x)
entered into in connection with a transaction involving the selection by a
customer of cable system capacity entered into in the ordinary course of
business or (y) involve the provision by the Company or a Restricted Subsidiary
to an Unrestricted Subsidiary of sales and marketing services, operations,
administration and maintenance services or development services for which the
Company or such Restricted Subsidiary receives a fair rate of return (as
determined by the Board of Directors and set forth in an Officers' Certificate
delivered to the Trustee) above its expenses of providing such services; (vii)
any transaction entered into in the ordinary course of business between the
Company or any Restricted Subsidiary and any Unrestricted Subsidiary or any
Affiliate (provided that in the case of this clause (vii), such agreements are
on terms that are no less favorable to the Company or the relevant Restricted
Subsidiary than those that could have been obtained at the time of such
transaction in an
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61
arm's-length transaction with an unrelated third party) and (viii) Restricted
Payments that are permitted by Section 4.07 hereof.
Section 4.12. Liens.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or
become effective any Lien of any kind (other than Permitted Liens) upon any of
their property or assets, now owned or hereafter acquired, unless all payments
due under this Indenture and the Notes are secured on an equal and ratable basis
with the obligations so secured until such time as such obligations are no
longer secured by a Lien.
Section 4.13. Sale and Leaseback Transactions.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided that
the Company or any of its Restricted Subsidiaries may enter into a sale and
leaseback transaction if (i) the Company (or such Restricted Subsidiary, as the
case may be) could have (a) incurred Indebtedness in an amount equal to the
Attributable Debt relating to such sale and leaseback transaction pursuant to
either of the Consolidated Leverage Ratio or Consolidated Capital Ratio tests
set forth in the first paragraph of section 4.09 hereof and (b) incurred a Lien
to secure such Indebtedness pursuant to Section 4.12 hereof, (ii) the gross cash
proceeds of such sale and leaseback transaction are at least equal to the fair
market value (as determined in good faith by the Board of Directors and set
forth in an Officers' Certificate delivered to the Trustee) of the property that
is the subject of such sale and leaseback transaction and (iii) the transfer of
assets in such sale and leaseback transaction is treated as an Asset Sale, and
the Company applies the proceeds of such transaction in compliance with, Section
4.10 hereof.
Section 4.14. Corporate Existence.
Subject to Article 5 hereof, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect (i) its corporate
existence, and the corporate, partnership or other existence of each of its
Subsidiaries, in accordance with the respective organizational documents (as the
same may be amended from time to time) of the Company or any such Subsidiary and
(ii) the rights (charter and statutory), licenses and franchises of the Company
and its Subsidiaries; provided, however, that the Company shall not be required
to preserve any such right, license or franchise, or the corporate, partnership
or other existence of any of its Subsidiaries, if the Board of Directors shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company and its Subsidiaries, taken as a whole, and that the
loss thereof is not adverse in any material respect to the Holders of the Notes.
Section 4.15. Offer to Repurchase Upon Change of Control.
(a) Upon the occurrence of a Change of Control, each Holder of Notes will
have the right to require the Company to purchase all or any part (equal to
$1,000 or an integral multiple thereof) of
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such Holder's Notes pursuant to the offer described below (the "Change of
Control Offer") at a purchase price in cash (the "Change of Control Payment")
equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid
interest and Special Interest thereon to the date of purchase (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date); provided, however, that the Company
shall not be obligated to repurchase Notes pursuant to this covenant in the
event that it has exercised its rights to redeem all of the Notes as described
in Section 3.07 hereof. Within 30 days following any Change of Control, the
Company will mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control and offering to purchase
Notes on the date specified in such notice, which date shall be no earlier than
30 and no later than 60 days from the date such notice is mailed (the "Change of
Control Payment Date"), in accordance with the procedures required by this
Indenture and described in such notice. The Company will comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations to the extent such laws and regulations are applicable in
connection with the purchase of Notes as a result of a Change of Control. To the
extent that the provisions of any securities laws or regulations conflict with
any of the provisions of this Section 4.15, the Company will comply with the
applicable securities laws and regulations and will be deemed not to have
breached its obligations under this covenant by virtue thereof.
(b) On the Change of Control Payment Date, the Company will, to the
extent lawful, (1) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent will promptly mail or deliver to each Holder of Notes
so tendered the Change of Control Payment for such Notes, and the Trustee will
promptly authenticate and mail or deliver (or cause to be transferred by book
entry) to each Holder a new Note equal in principal amount to any unpurchased
portion of Notes surrendered, if any; provided that each such new Note will be
in a principal amount of $1,000 or an integral multiple thereof. The Company
will publicly announce the results of the Change of Control Offer on or as soon
as practicable after the Change of Control Payment Date.
(c) Notwithstanding anything to the contrary in this Section 4.15, the
Company shall not be required to make a Change of Control Offer upon the
occurrence of a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Section 4.15, and purchases all Notes validly
tendered and not withdrawn under such Change of Control Offer.
Section 4.16. Business Activities.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, engage in any business other than a Permitted Business.
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Section 4.17.
[Reserved]
Section 4.18.
[Reserved]
Section 4.19. Issuances and Sales of Equity Interests in Wholly Owned
Restricted Subsidiaries.
The Company (i) shall not, and shall not permit any of its Restricted
Subsidiaries to, transfer, convey, sell, lease or otherwise dispose of any
Equity Interests in any Wholly Owned Restricted Subsidiary of the Company to any
Person (other than the Company or a Wholly Owned Restricted Subsidiary of the
Company), unless (a) such transfer, conveyance, sale, lease or other disposition
is of all the Equity Interests in such Wholly Owned Restricted Subsidiary and
(b) the cash Net Proceeds from such transfer, conveyance, sale, lease or other
disposition are applied in accordance with Section 4.10 hereof, and (ii) shall
not permit any Wholly Owned Restricted Subsidiary of the Company to issue any of
its Equity Interests (other than, if necessary, shares of its Capital Stock
constituting directors' qualifying shares) to any Person other than to the
Company or a Wholly Owned Restricted Subsidiary of the Company.
Section 4.20. Payments For Consent.
Neither the Company nor any of its Restricted Subsidiaries shall,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any Holder of any Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or the Notes unless such consideration is offered to be paid
or is paid to all Holders of the Notes that consent, waive or agree to amend
such terms or provisions of this Indenture or the Notes in the time frame set
forth in the solicitation documents relating to such consent, waiver or
agreement.
Section 4.21. Money for Payments to Be Held In Trust.
If the Company shall at any time act as its own Paying Agent, it will, on
or before each due date of the principal, premium, interest or Special Interest,
if any, with respect to the Notes, segregate and hold in trust for the benefit
of the Persons entitled thereto a sum sufficient to pay the principal, premium,
interest or Special Interest, if any, so becoming due until such sums shall be
paid to such Persons or otherwise disposed of as herein provided, and will
promptly notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for the Notes,
it will, on or before each due date of the principal, premium, interest or
Special Interest, if any, with respect to the Notes, deposit with a Paying Agent
a sum in same day funds (or New York Clearing House funds if such
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64
deposit is made prior to the date on which such deposit is required to be made)
sufficient to pay the principal, premium, interest or Special Interest, if any,
so becoming due (or at the option of the Company, payment of interest may be
mailed by check to the Holders of the Notes at their respective addresses set
forth in the register of Holders of Notes; provided that all payments with
respect to Notes represented by one or more permanent global Notes will be paid
by wire transfer of immediately available funds to the account of the Depository
Trust Company or any successor thereto) such sum to be held in trust for the
benefit of the Persons entitled to such principal, premium, interest or Special
Interest, if any, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of such action or any failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(a) hold all sums held by it for the payment of the principal of,
premium, if any, or interest on Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided;
(b) give the Trustee notice of any default by the Company (or any other
obligor upon the Notes) in the making of any payment of principal, premium,
interest or Special Interest, if any;
(c) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held
in trust by such Paying Agent; and
(d) acknowledge, accept and agree to comply in all respects with the
provisions of this Indenture relating to the duties, rights and obligations of
such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
direct any Paying Agent to pay, to the Trustee all sums held in trust by the
Company or such Paying Agent, such sums to be held by the Trustee upon the same
trusts as those upon which such sums were held by the Company or such Paying
Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal, premium, interest or
Special Interest, if any, with respect to a Note and remaining unclaimed for two
years after such principal, premium, if any, or interest has become due and
payable shall be paid to the Company at the request of the Company or (if then
held by the Company) shall be discharged from such trust; and the Holder of such
Note shall thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; provided, however, that the Trustee or
such Paying Agent, before being required to make any such repayment, shall at
the expense of the Company cause notice to be
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65
promptly sent to each Holder that such money remains unclaimed and that, after a
date specified therein, which shall not be less than 30 days from the date of
such notification any unclaimed balance of such money then remaining will be
repaid to the Company.
Section 4.22. Future Guarantees.
If any Restricted Subsidiary guarantees any Debt Securities issued by the
Company, then (i) the Company shall promptly notify the Trustee of such
guarantee, (ii) the Trustee shall, in turn, notify each Holder and (iii) the
Company shall cause this Indenture to be amended to make such Restricted
Subsidiary a Guarantor hereunder. Prior to the execution of such amendment,
each such Restricted Subsidiary required to become a Guarantor pursuant to the
provisions of this Section 4.22 shall be deemed a Guarantor hereunder for
purposes of determining the rights and obligations hereunder.
ARTICLE 5. SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets.
The Company shall not, directly or indirectly, consolidate or merge with
or into (whether or not the Company is the surviving corporation), or sell,
assign, transfer, convey or otherwise dispose of all or substantially all of its
properties or assets, in one or more related transactions, to another Person
unless: (i) the Company is the surviving corporation or the Person formed by or
surviving any such consolidation or merger (if other than the Company) or to
which such sale, assignment, transfer, conveyance or other disposition shall
have been made is a corporation organized or existing under the laws of the
United States, any state thereof or the District of Columbia, or Bermuda; (ii)
the Person formed by or surviving any such consolidation or merger (if other
than the Company) or the Person to which such sale, assignment, transfer,
conveyance or other disposition shall have been made assumes all the obligations
of the Company under the Registration Rights Agreement, the Notes and this
Indenture pursuant to a supplemental indenture in a form and substance
reasonably satisfactory to the Trustee; (iii) immediately after such transaction
no Default or Event of Default exists; and (iv) except in the case of a merger
of the Company with or into a Restricted Subsidiary of the Company, the Company
or the Person formed by or surviving any such consolidation or merger (if other
than the Company), or to which such sale, assignment, transfer, conveyance or
other disposition shall have been made (A) will have Consolidated Net Worth
immediately after the transaction equal to or greater than the Consolidated Net
Worth of the Company immediately preceding the transaction and (B) will,
immediately after such transaction and after giving pro forma effect thereto and
any related financing transactions as if the same had occurred at the beginning
of the applicable four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to either clause (i) or (ii) of the first
paragraph Section 4.09 hereof. The Company shall not, directly or indirectly,
lease all or substantially all of its properties or assets, in one or more
related transactions, to any other Person. The provisions of this covenant will
not be applicable to a sale, assignment, transfer, conveyance or other
disposition of assets between or among the Company and its Restricted
Subsidiaries and any of the Guarantors.
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Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and may exercise every right
and power of the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; provided, however, that
the predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale of all of
the Company's assets that meets the requirements of Section 5.01 hereof.
ARTICLE 6. DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
"Events of Default" with respect to any tranche of Notes are:
(i) default for 30 days in the payment when due of interest on the
Notes of such tranche;
(ii) default in the payment when due of the principal of, or premium,
if any, on, the Notes of such tranche;
(iii) failure by the Company or any of its Restricted Subsidiaries to
comply with Sections 4.07, 4.09, 4.10 or 4.15;
(iv) failure by the Company or any of its Restricted Subsidiaries for
60 days after notice to comply with any of its other agreements in this
Indenture with respect to the Notes of such tranche, or the Notes of such
tranche;
(v) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any of
its Restricted Subsidiaries) whether such Indebtedness or guarantee now
exists, or is created after the date of this Indenture, which default results
in the acceleration of such Indebtedness prior to its express maturity and, in
each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness the maturity of which has been
so accelerated, aggregates $25.0 million or more;
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(vi) failure by the Company or any of its Restricted Subsidiaries to
pay final judgments not subject to appeal aggregating in excess of $25.0
million (net of applicable insurance coverage which is acknowledged in writing
by the insurer), which judgments are not paid, discharged or stayed for a
period of 60 days;
(vii) except as provided by this Indenture, any Guarantee of the Notes
of such tranche shall be held in any judicial proceeding to be unenforceable
or invalid or shall cease for any reason to be in full force and effect or any
Guarantor, or any Person acting on behalf of any Guarantor, shall deny or
disaffirm its obligations under its Guarantee of the Notes of such tranche;
(viii) the Company or any of its Restricted Subsidiaries:
(a) commences a voluntary case,
(b) consents to the entry of an order for relief against it in an
involuntary case,
(c) consents to the appointment of a custodian of it or for all or
substantially all of its property,
(d) makes a general assignment for the benefit of its creditors,
or
(e) generally is not paying its debts as they become due; and
(ix) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(a) is for relief against the Company or any of its Restricted
Subsidiaries,
(b) appoints a custodian of the Company or any of its Restricted
Subsidiaries or for all or substantially all of the property of the
Company or any of its Restricted Subsidiaries; or
(c) orders the liquidation of the Company or any of its Restricted
Subsidiaries; and the order or decree remains unstayed and in effect for
60 consecutive days.
Section 6.02. Acceleration.
If any Event of Default with respect to outstanding Notes of any tranche
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes of such tranche may declare all
the Notes of such tranche to be due and payable immediately. Notwithstanding
the foregoing, if an Event of Default specified in clause (viii) or (ix) of
Section 6.01 hereof with respect to outstanding Notes of any tranche occurs with
respect to the Company, any Restricted Subsidiary that constitutes a Significant
Subsidiary or any group of Restricted Subsidiaries that, taken
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together, would constitute a Significant Subsidiary, all outstanding Notes of
such tranche shall be due and payable immediately without further action or
notice. The Holders of a majority in aggregate principal amount of the then
outstanding Notes of such tranche by written notice to the Trustee may on behalf
of all of the Holders of Notes of such tranche rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default (except nonpayment of principal, interest
or premium that has become due solely because of the acceleration) have been
cured or waived.
If an Event of Default with respect to outstanding Notes Due 2009, but
not Notes Due 2006, occurs by reason of any willful action (or inaction) taken
(or not taken) by or on behalf of the Company with the intention of avoiding
payment of the premium that the Company would have had to pay if the Company
then had elected to redeem the Notes Due 2009 pursuant to Section 3.07 hereof,
then, upon acceleration of the Notes, an equivalent premium shall also become
and be immediately due and payable to Holders of Notes Due 2009, to the extent
permitted by law, anything in this Indenture or in the Notes to the contrary
notwithstanding. If an Event of Default occurs prior to November 15, 2004 by
reason of any willful action (or inaction) taken (or not taken) by or on behalf
of the Company with the intention of avoiding the prohibition on redemption of
the Notes Due 2009 prior to such date, then, upon acceleration of the Notes Due
2009, an additional premium shall also become and be immediately due and payable
in an amount, for each of the years beginning on November 15 of the years set
forth below, as set forth below (expressed as a percentage of the aggregate
principal amount to the date of payment that would otherwise be due but for the
provisions of this sentence):
Year Percentage
---- ----------
1999 ...................................... 109.500%
2000 ...................................... 108.550%
2001 ...................................... 107.600%
2002 ...................................... 106.650%
2003 ...................................... 105.700%
Section 6.03. Other Remedies.
If an Event of Default with respect to outstanding Notes of any tranche
occurs and is continuing, the Trustee may pursue any available remedy to collect
the payment of principal, premium, if any, and interest and Special Interest, if
any, on the Notes of such tranche or to enforce the performance of any provision
of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes of such tranche or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder of a Note of such tranche in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. All remedies are cumulative to the extent permitted by law.
Section 6.4. Waiver of Past Defaults.
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Holders of not less than a majority in aggregate principal amount of the
then outstanding Notes of any tranche by notice to the Trustee may on behalf of
the Holders of all of the Notes of such tranche waive an existing Default or
Event of Default with respect to such tranche and its consequences hereunder,
except a continuing Default or Event of Default in the payment of the principal
of, premium and Special Interest, if any, or interest on, the Notes of such
tranche (including in connection with an offer to purchase). Upon any such
waiver, such Default shall cease to exist with respect to such tranche, and any
Event of Default with respect to such tranche arising therefrom shall be deemed
to have been cured for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereon.
Section 6.05. Control by Majority.
Holders of a majority in principal amount of the then outstanding Notes
of any tranche may direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee or exercising any
trust or power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture that the Trustee determines
may be unduly prejudicial to the rights of other Holders of Notes or that may
involve the Trustee in personal liability.
Section 6.06. Limitation on Suits.
A Holder of a Note of any tranche may pursue a remedy with respect to
this Indenture to the extent it relates to the Notes of such tranche, or the
Notes of such tranche only if:
(a) the Holder gives to the Trustee written notice of a continuing Event
of Default with respect to such tranche;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes of such tranche make a written request to the Trustee to
pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes of such tranche do not give the Trustee a
direction inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of
another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
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Section 6.07. Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium and Special Interest,
if any, and interest on the Note, on or after the respective due dates expressed
in the Note (including in connection with an offer to purchase), or to bring
suit for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of such Holder.
Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(i) or (ii) hereof occurs
and is continuing with respect to the Notes of any tranche, the Trustee is
authorized to recover judgment in its own name and as trustee of an express
trust against the Company for the whole amount of principal of, premium and
Special Interest, if any, and interest remaining unpaid on the Notes of such
tranche and interest on overdue principal and, to the extent lawful, interest
and such further amount as shall be sufficient to cover the costs and expenses
of collection, including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to participate as a member, voting or otherwise, of
any official committee of creditors appointed in such matter and shall be
entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall
be deemed to authorize the Trustee to authorize or consent to or accept or adopt
on behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
Section 6.10. Priorities.
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If the Trustee collects any money with respect to a tranche of Notes
pursuant to this Article 6, it shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Notes of such tranche for amounts due and unpaid
on the Notes of such tranche for principal, premium and Special Interest, if
any, and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes of such tranche for
principal, premium and Special Interest, if any, and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder of
a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes of any tranche.
ARTICLE 7. TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default with respect to any tranche of Notes has
occurred and is continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture, and use the same degree of care and skill
in its exercise, as a prudent man would exercise or use under the circumstances
in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only those
duties that are specifically set forth in this
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Indenture and no others, and no implied covenants or obligations shall be read
into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture. However, the
Trustee shall examine the certificates and opinions to determine whether or
not they conform to the requirements of this Indenture (but need not confirm
or investigate the accuracy of mathematical calculations or other facts stated
therein or otherwise verify the contents thereof).
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section 7.01;
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction received
by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section 7.01.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee shall be under
no obligation to exercise any of its rights and powers under this Indenture at
the request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or expense
including reasonable attorneys' fees that might be incurred by it in compliance
with such request or direction.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
Section 7.02. Rights of Trustee.
(a) The Trustee may conclusively rely upon any document believed by
it to be genuine and to have been signed or presented by the proper Person.
The Trustee need not investigate any fact or matter stated in the document.
The Trustee shall receive and retain financial reports and statements of the
Company as provided herein, but it shall have no duty to review or analyze
such reports or statements to determine compliance with covenants or other
obligations of the Company.
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(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall
not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may
consult with counsel of its selection and the advice of such counsel or any
Opinion of Counsel shall be full and complete authorization and protection
from liability in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed
with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights
or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner
or pledgee of Notes and may otherwise deal with the Company or any Affiliate of
the Company with the same rights it would have if it were not Trustee. However,
in the event that the Trustee acquires any conflicting interest it must
eliminate such conflict within 90 days, apply to the SEC for permission to
continue as trustee or resign. Any Agent may do the same with like rights and
duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
Section 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
Section 7.05. Notice of Defaults.
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(a) The Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a
default is received by the Trustee at the Corporate Trust Office of the Trustee,
and such notice references the Notes and this Indenture.
(b) If a Default or Event of Default with respect to a tranche of
Notes occurs and is continuing and if it is known to the Trustee, the Trustee
shall mail to Holders of such tranche of Notes a notice of the Default or Event
of Default within 90 days after it occurs. Except in the case of a Default or
Event of Default in payment of principal of, premium, if any, or interest on any
Note, the Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is in
the interests of the Holders of such tranche of Notes.
Section 7.06. Reports by Trustee to Holders of the Notes.
Within 60 days after each May 15 beginning with the May 15 following the
date of this Indenture, and for so long as Notes remain outstanding, the Trustee
shall mail to the Holders of the Notes a brief report dated as of such reporting
date that complies with TIA (S) 313(a) (but if no event described in TIA (S)
313(a) has occurred within the twelve months preceding the reporting date, no
report need be transmitted). The Trustee also shall comply with TIA (S)
313(b)(2). The Trustee shall also transmit by mail all reports as required by
TIA (S) 313(c).
A copy of each report at the time of its mailing to the Holders of Notes
shall be mailed to the Company and filed with the SEC and each stock exchange on
which the Notes are listed in accordance with TIA (S) 313(d). The Company shall
promptly notify the Trustee when the Notes are listed on any stock exchange.
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time such compensation
for its acceptance of this Indenture and services hereunder as the parties shall
agree from time to time. The Trustee's compensation shall not be limited by any
law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee promptly upon request for all reasonable disbursements,
advances and expenses incurred or made by it in addition to the compensation for
its services. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company (including
this Section 7.07) and defending itself against any claim (whether asserted by
the Company or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. The Trustee shall notify the Company promptly of any
claim
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for which it may seek indemnity. Failure by the Trustee to so notify the Company
shall not relieve the Company of its obligations hereunder. The Company shall
defend the claim and the Trustee shall cooperate in the defense. The Trustee may
have separate counsel and the Company shall pay the reasonable fees and expenses
of such counsel. The Company need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld or delayed.
The obligations of the Company under this Section 7.07 shall survive the
satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the Trustee
shall have a Lien prior to the Notes on all money or property held or collected
by the Trustee, except that held in trust to pay principal and interest on
particular Notes. Such Lien shall survive the satisfaction and discharge of
this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(viii) or (ix) hereof occurs, the expenses and
the compensation for the services (including the fees and expenses of its agents
and counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA (S) 313(b)(2) to the
extent applicable.
Section 7.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.08.
The Trustee may resign in writing at any time and be discharged from the
trust hereby created with respect to one or both tranches of Notes by so
notifying the Company. The Holders of a majority in principal amount of the
then outstanding Notes of any tranche may remove the Trustee with respect to
such tranche by so notifying the Trustee and the Company in writing. The
Company may remove the Trustee with respect to one or both tranches of Notes if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
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If, as to any tranche of Notes, the Trustee resigns or is removed or if a
vacancy exists in the office of Trustee for any reason, the Company shall
promptly appoint a successor Trustee for such tranche of Notes. Within one year
after the successor Trustee takes office, the Holders of a majority in principal
amount of the then outstanding Notes of such tranche may appoint a successor
Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes of such tranche may petition any court of competent jurisdiction for the
appointment of a successor Trustee for such tranche of Notes.
If the Trustee, after written request by any Holder of a Note of any
tranche who has been a Holder of a Note of such tranche for at least six months,
fails to comply with Section 7.10 hereof, such Holder of a Note may petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee for such tranche of Notes.
In case of the appointment hereunder of a successor Trustee with respect
to the Notes of one but not both tranches, the Company, the retiring Trustee and
each successor Trustee with respect to the Notes of one tranche shall execute
and deliver an indenture supplemental hereto wherein each successor Trustee
shall accept such appointment and which shall:
(a) contain such provisions as shall be necessary of desirable to
transfer and confirm to, and to vest in, each successor Trustee all the rights,
powers, trusts and duties of the retiring Trustee with respect to the Notes of
the tranche to which the appointment of such successor Trustee relates;
(b) contain such provisions as shall be necessary or desirable to
confirm that all the rights, powers, trusts and duties of the retiring Trustee
with respect to the Notes of the tranche as to which the retiring Trustee is not
retiring shall continue to be vested in the retiring Trustee; and
(c) add to or change any of the provisions of this Indenture as shall
be necessary or desirable to provide for or facilitate the administration of the
trusts hereunder by two Trustees; provided, however, that nothing contained
herein or in such supplemental Indenture shall constitute such Trustee to be co-
trustees of the same trust and that each such Trustee shall be trustee of a
trust hereunder separate and apart from any trust hereunder administered by the
other such Trustee.
Upon the execution and delivery of such supplemental Indenture, the
resignation or removal of the retiring Trustee shall become effective to the
extent provided therein and such successor Trustee, without any further act,
deed or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee with respect to the Notes of that tranche to
which the appointment of such successor Trustee relates. The successor Trustee
shall mail a notice of its succession to Holders of the Notes of such tranche.
The retiring Trustee shall promptly transfer all property held by it as Trustee
to the successor Trustee, provided all sums owing to the Trustee hereunder have
been paid and subject to the Lien provided for in Section 7.07 hereof.
Notwithstanding replacement of the Trustee pursuant
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to this Section 7.08, the Company's obligations under Section 7.07 hereof shall
continue for the benefit of the retiring Trustee.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee as to any tranche of Notes consolidates, merges or
converts into, or transfers all or substantially all of its corporate trust
business to, another corporation, the successor corporation without any further
act shall be the successor Trustee as to such tranche of Notes.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder with respect to each
tranche of Notes that is a corporation organized and doing business under the
laws of the United States of America or of any state thereof that is authorized
under such laws to exercise corporate trustee power, that is subject to
supervision or examination by federal or state authorities and that has a
combined capital and surplus of at least $100.0 million as set forth in its most
recent published annual report of condition.
This Indenture shall always have a Trustee with respect to each tranche
of Notes who satisfies the requirements of TIA (S) 310(a)(1), (2) and (5). The
Trustee is subject to TIA (S) 310(b).
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee is subject to TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.
ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.
The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof applied to all outstanding Notes of any
tranche upon compliance with the conditions set forth below in this Article 8.
Section 8.02. Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes of any
tranche on the date the conditions set forth below are satisfied (hereinafter,
"Legal Defeasance"). For this purpose, Legal Defeasance means that the Company
shall be deemed to have paid and
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discharged the entire Indebtedness represented by the outstanding Notes of such
tranche, which shall thereafter be deemed to be "outstanding" only for the
purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all of its obligations
under such Notes and this Indenture (and the Trustee, on demand of and at the
expense of the Company, shall execute proper instruments acknowledging the
same), except for the following provisions which shall survive until otherwise
terminated or discharged hereunder: (a) the rights of Holders of outstanding
Notes of such tranche to receive payments in respect of the principal of,
premium, if any, and interest on such Notes when such payments are due from the
trust referred to below; (b) the Company's obligations with respect to the Notes
of such tranche concerning issuing temporary Notes, registration of Notes,
mutilated, destroyed, lost or stolen Notes and the maintenance of an office or
agency for payment and money for security payments held in trust; (c) the
rights, powers, trusts, duties and immunities of the Trustee, and the Company's
obligations in connection therewith; and (d) the Legal Defeasance provisions of
this Indenture. Subject to compliance with this Article 8, the Company may
exercise its option under this Section 8.02 notwithstanding the prior exercise
of its option under Section 8.03 hereof.
Section 8.03. Covenant Defeasance.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company and each Guarantor shall, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, be
released from their respective obligations under the covenants contained in
Article 5 and in Sections 4.03, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15,
4.16, 4.17, 4.18, 4.19 and 4.20 hereof with respect to the outstanding Notes of
any tranche on and after the date the conditions set forth in Section 8.04 are
satisfied (hereinafter, "Covenant Defeasance"), and the Notes of such tranche
shall thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Notes shall not be deemed outstanding for accounting purposes). For this
purpose, Covenant Defeasance means that, with respect to the outstanding Notes
of such tranche, the Company may omit to comply with and shall have no liability
in respect of any term, condition or limitation set forth in any such covenant,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such covenant or by reason of any reference in any such covenant to any
other provision herein or in any other document and such omission to comply
shall not constitute a Default or an Event of Default under Section 6.01 hereof,
but, except as specified above, the remainder of this Indenture and such Notes
shall be unaffected thereby. In addition, upon the Company's exercise under
Section 8.01 hereof of the option applicable to this Section 8.03, subject to
the satisfaction of the conditions set forth in Section 8.04 hereof, Sections
6.01(iii) through 6.01(vii) hereof and 6.01(x) hereof shall not constitute
Events of Default.
Section 8.04. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes of any tranche:
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In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit, or cause to be deposited,
with the Trustee, in trust, for the benefit of the Holders of the Notes of such
tranche, cash in U.S. dollars, non-callable Government Securities, or a
combination thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on the outstanding Notes of such
tranche on the stated maturity thereof or on the applicable redemption date, as
the case may be, and the Company must specify whether the Notes of such tranche
are being defeased to maturity or to a particular redemption date;
(b) in the case of Legal Defeasance, the Company must deliver to the
Trustee an Opinion of Counsel in the United States reasonably acceptable to the
Trustee confirming that the Company has received from, or there has been
published by, the Internal Revenue Service a ruling, or since the date of this
Indenture, there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such Opinion of Counsel shall
confirm that, the Holders of the outstanding Notes of such tranche will not
recognize income, gain or loss for federal income tax purposes as a result of
such Legal Defeasance, and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Legal Defeasance had not occurred;
(c) in the case of Covenant Defeasance, the Company must deliver to
the Trustee an Opinion of Counsel in the United States reasonably acceptable to
the Trustee confirming that the Holders of the outstanding Notes of such tranche
will not recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance, and such Holders will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default with respect to such tranche shall
have occurred and be continuing on the date of such deposit (other than a
Default or Event of Default resulting from the borrowing of funds to be applied
to such deposit) or insofar as Events of Default from bankruptcy or insolvency
events are concerned, at any time in the period ending on the 91st day after the
date of deposit;
(e) such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under, any material agreement or
instrument (other than this Indenture) to which the Company or any of its
Restricted Subsidiaries is a party or by which the Company or any of its
Restricted Subsidiaries is bound;
(f) the Company must deliver to the Trustee an opinion of counsel in
the United States reasonably acceptable to the Trustee to the effect that after
the 91st day following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights and remedies generally;
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(g) the Company must deliver to the Trustee an Officers' Certificate
stating that the deposit was not made by the Company with the intent of
preferring the Holders of the Notes of such tranche over other creditors of the
Company, or with the intent of defeating, hindering, delaying or defrauding
creditors of the Company or others;
(h) the Company must deliver to the Trustee an Opinion of Counsel in
Bermuda reasonably acceptable to the Trustee to the effect that the Holders of
the outstanding Notes will not be adversely affected under Bermuda law; and
(i) the Company must deliver to the Trustee an Officers' Certificate
and an Opinion of Counsel in the United States reasonably acceptable to the
Trustee, each stating that all conditions precedent provided for or relating to
Legal Defeasance or Covenant Defeasance, as applicable, have been complied with.
Section 8.05. Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent required
by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon the request of the
Company any money or non-callable Government Securities held by it as provided
in Section 8.04 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
8.04(a) hereof), are in excess of the amount thereof that would then be required
to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
Section 8.06. Repayment to Company.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of, premium, interest or
Special Interest, if any, on any Note and
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remaining unclaimed for two years after such principal, and premium, if any, or
interest has become due and payable shall be paid to the Company on its request
or (if then held by the Company) shall be discharged from such trust; and the
Holder of such Note shall thereafter, as a secured creditor, look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; provided, however, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in the New York Times and The
Wall Street Journal (national edition), notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such notification or publication, any unclaimed balance of such
money then remaining will be repaid to the Company.
Section 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
Section 8.08. Survival.
The Trustee's rights under this Article 8 shall survive termination of
this Indenture.
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes.
Notwithstanding Section 9.02 hereof, the Company, the Guarantors and the
Trustee may amend or supplement this Indenture, the Guarantees or the Notes
without the consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes or to alter the provisions of Article 2 hereof (including the
related definitions) in a manner that does not materially adversely affect any
Holder;
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(c) to provide for the assumption of the Company's or any Guarantor's
obligations to the Holders of the Notes by a successor to the Company or a
Guarantor pursuant to Article 5 or Article 10 hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights hereunder of any Holder of the Note;
(e) to comply with requirements of the SEC in order to effect or maintain
the qualification of this Indenture under the TIA; or
(f) to allow any Guarantor to execute a supplemental indenture and/or a
Guarantee with respect to the Notes.
Upon the request of the Company accompanied by a resolution of its Board
of Directors authorizing the execution of any such amended or supplemental
indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company and the Guarantors in the
execution of any amended or supplemental indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.
Section 9.02. With Consent of Holders of Notes.
Except as provided below in this Section 9.02, the Company, a Guarantor
(with respect to a Guarantee or the Indenture to which it is a party) and the
Trustee may amend or supplement this Indenture (including Section 3.11, 4.10 and
4.15 hereof), the Notes and the Guarantees with the consent of the Holders of at
least a majority in principal amount of the then outstanding Notes of each
tranche affected thereby voting as a single class (including consents obtained
in connection with a tender offer or exchange offer for, or purchase of, the
Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or
Event of Default with respect to any tranche of Notes (other than a Default or
Event of Default in the payment of the principal of, premium, if any, or
interest on the Notes, except a payment default resulting from an acceleration
that has been rescinded) or compliance with any provision of this Indenture, the
Notes or the Guarantees may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes of each tranche
affected thereby voting as a single class (including consents obtained in
connection with a tender offer or exchange offer for, or purchase of, the
Notes).
Upon the request of the Company accompanied by a resolution of its Board
of Directors authorizing the execution of any such amended or supplemental
indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes of each tranche affected thereby
as aforesaid, and upon receipt by the Trustee of the documents described in
Section
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7.02 hereof, the Trustee shall join with the Company in the execution of such
amended or supplemental indenture unless such amended or supplemental indenture
directly affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such amended or supplemental indenture.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.02 becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the then outstanding Notes of each
tranche affected thereby voting as a single class may waive compliance in a
particular instance by the Company with any provision of this Indenture or the
Notes. However, without the consent of each Holder affected, an amendment or
waiver under this Section 9.02 may not (with respect to any Notes held by a non-
consenting Holder):
(a) reduce the principal amount of Notes of each tranche whose Holders
must consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note or
alter or waive any of the provisions with respect to the redemption of the Notes
of either tranche, other than provisions relating to Sections 3.11 or 4.15
hereof;
(c) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of principal of or
premium or Special Interest, if any, or interest on the Notes of either tranche
(except a rescission of acceleration of the Notes by the Holders of at least a
majority in aggregate principal amount of the then outstanding Notes of each
tranche and a waiver of the payment default that resulted from such
acceleration;
(e) make any Note payable in money other than that stated in the Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of or premium, interest or Special Interest, if any, on the Notes;
(g) waive a redemption payment with respect to any Note, other than a
payment required by Section 3.11 or 4.15 hereof;
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(h) make any change in the foregoing amendment and waiver provisions.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes shall be set
forth in a amended or supplemental indenture that complies with the TIA as then
in effect.
Section 9.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent to
it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
Section 9.05. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes of the same tranche that reflect
the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
Section 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The
Company may not sign an amendment or supplemental indenture until the Board of
Directors approves it. In executing any amended or supplemental indenture, the
Trustee shall be entitled to receive and (subject to Section 7.01 hereof) shall
be fully protected in relying upon an Officer's Certificate and an Opinion of
Counsel stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture and that such amendment is the legal,
valid and binding obligation of the Company and any Guarantors, enforceable
against them in accordance with their terms, subject to customary exceptions,
and complies with the provisions hereof (including Section 9.03).
ARTICLE 10. GUARANTEES
<PAGE>
85
Section 10.01. Guarantee.
Subject to this Article 10, each of the Guarantors hereby, jointly and
severally, unconditionally guarantees to each Holder of a Note authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the Notes or
the obligations of the Company hereunder or thereunder, that: (a) the principal
of and interest on the Notes will be promptly paid in full when due, whether at
maturity, by acceleration, redemption or otherwise, and interest on the overdue
principal of and interest on the Notes, if any, if lawful, and all other
obligations of the Company to the Holders or the Trustee hereunder or thereunder
will be promptly paid in full or performed, all in accordance with the terms
hereof and thereof; and (b) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, that same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed or any performance so
guaranteed for whatever reason, the Guarantors shall be jointly and severally
obligated to pay the same immediately. Each Guarantor agrees that this is a
guarantee of payment and not a guarantee of collection.
The Guarantors hereby agree that their obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any action
to enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor. Each Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenant that this Guarantee shall not be discharged except by complete
performance of the obligations contained in the Notes and this Indenture.
If any Holder or the Trustee is required by any court or otherwise to
return to the Company, the Guarantors or any custodian, trustee, liquidator or
other similar official acting in relation to either the Company or the
Guarantors, any amount paid by either to the Trustee or such Holder, this
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect.
Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. Each
Guarantor further agrees that, as between the Guarantors, on the one hand, and
the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6 hereof
for the purposes of this Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article 6 hereof, such obligations (whether or
not due and payable) shall forthwith become due and payable by the Guarantors
for the purpose of this Guarantee. The Guarantors shall
<PAGE>
86
have the right to seek contribution from any non-paying Guarantor so long as the
exercise of such right does not impair the rights of the Holders under the
Guarantee.
Section 10.02. Limitation on Guarantor Liability.
Each Guarantor, and by its acceptance of Notes, each Holder, hereby
confirms that it is the intention of all such parties that the Guarantee of such
Guarantor not constitute a fraudulent transfer or conveyance for purposes of
Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law to the extent applicable to any
Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and
the Guarantors hereby irrevocably agree that the obligations of such Guarantor
under its Guarantee and this Article 10 shall be limited to the maximum amount
as will, after giving effect to such maximum amount and all other contingent and
fixed liabilities of such Guarantor that are relevant under such laws, and after
giving effect to any collections from, rights to receive contribution from or
payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under this Article 10, result in the
obligations of such Guarantor under its Guarantee not constituting a fraudulent
transfer or conveyance.
Section 10.03. Execution and Delivery of Guarantee.
To evidence its Guarantee set forth in Section 10.01, each Guarantor
hereby agrees that a notation of such Guarantee substantially in the form
included in Exhibit D shall be endorsed by an Officer of such Guarantor on each
---------
Note authenticated and delivered by the Trustee and that this Indenture shall be
executed on behalf of such Guarantor by an Officer thereof.
Each Guarantor hereby agrees that its Guarantee set forth in Section
10.01 shall remain in full force and effect notwithstanding any failure to
endorse on each Note a notation of such Guarantee.
If an Officer whose signature is on this Indenture or on the Guarantee no
longer holds that office at the time the Trustee authenticates the Note on which
a Guarantee is endorsed, the Guarantee shall be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of the Guarantee set forth in this
Indenture on behalf of the Guarantors.
In the event that any Restricted Subsidiary guarantees any Debt
Securities issued by the Company subsequent to the date of this Indenture, if
required by Section 4.22 hereof, the Company shall cause such Restricted
Subsidiary to execute supplemental indentures to this Indenture and Guarantees
in accordance with Section 4.22 hereof, and this Article 10, to the extent
applicable.
Section 10.04. Guarantors May Consolidate, etc., on Certain Terms.
No Guarantor may consolidate with or merge with or into (whether or not
such Guarantor is the surviving Person) another Person whether or not affiliated
with such Guarantor unless:
<PAGE>
87
(a) subject to Section 10.05 hereof, the Person formed by or surviving
any such consolidation or merger (if other than a Guarantor or the Company)
unconditionally assumes all the obligations of such Guarantor, pursuant to a
supplemental indenture in form and substance reasonably satisfactory to the
Trustee, under the Notes, this Indenture, the Registration Rights Agreement and
the Guarantee on the terms set forth herein or therein; and
(b) immediately after giving effect to such transaction, no Default or
Event of Default exists.
In case of any such consolidation, merger, sale or conveyance and upon
the assumption by the successor Person, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the
Guarantee endorsed upon the Notes and the due and punctual performance of all of
the covenants and conditions of this Indenture to be performed by the Guarantor,
such successor Person shall succeed to and be substituted for the Guarantor with
the same effect as if it had been named herein as a Guarantor. Such successor
Person thereupon may cause to be signed any or all of the Guarantees to be
endorsed upon all of the Notes issuable hereunder which theretofore shall not
have been signed by the Company and delivered to the Trustee. All the
Guarantees so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Guarantees theretofore and thereafter issued in
accordance with the terms of this Indenture as though all of such Guarantees had
been issued at the date of the execution hereof.
Notwithstanding clauses (a) and (b) above, nothing contained in this
Indenture or in any of the Notes shall prevent any consolidation or merger of a
Guarantor with or into the Company or another Guarantor, or shall prevent any
sale or conveyance of the property of a Guarantor as an entirety or
substantially as an entirety to the Company, another Guarantor or a Restricted
Subsidiary.
Section 10.05. Releases Following Sale of Assets.
In the event of a sale or other disposition of all of the assets of any
Guarantor (other than GCL), by way of merger, consolidation or otherwise, or a
sale or other disposition of all of the capital stock of any Guarantor (other
than GCL), then such Guarantor (in the event of a sale or other disposition, by
way of such a merger, consolidation or otherwise, of all of the capital stock of
such Guarantor) or the Person acquiring the property (in the event of a sale or
other disposition of all or substantially all of the assets of such Guarantor)
will be released and relieved of any obligations under its Guarantee; provided
that the Net Proceeds of such sale or other disposition are applied in
accordance with the applicable provisions of this Indenture, including without
limitation Section 4.10 hereof. Upon delivery by the Company to the Trustee of
an Officers' Certificate and an Opinion of Counsel to the effect that such sale
or other disposition was made by the Company in accordance with the applicable
provisions of this Indenture, including without limitation Section 4.10 hereof,
the Trustee shall execute any documents reasonably required in order to evidence
the release of any Guarantor from its obligations under its Guarantee.
<PAGE>
88
Any Guarantor not released from its obligations under its Guarantee shall
remain liable for the full amount of principal of and interest on the Notes and
for the other obligations of any Guarantor under this Indenture as provided in
this Article 10.
ARTICLE 11. SATISFACTION AND DISCHARGE
Section 11.01. Satisfaction and Discharge of Indenture.
This Indenture shall be discharged and will cease to be of further effect
as to all Notes of any tranche issued hereunder, when either
(a) all such Notes theretofore authenticated and delivered (except
lost, stolen or destroyed Notes which have been replaced or paid and Notes for
whose payment money has theretofore been deposited in trust and thereafter
repaid to the Company) have been delivered to the Trustee for cancellation; or
(b)
(i) all Notes of such tranche not theretofore delivered to such Trustee
for cancellation have become due and payable by reason of the
making of a notice of redemption or otherwise or will become due
and payable within one year and the Company or a Guarantor, has
irrevocably deposited or caused to be deposited with such Trustee
as trust funds in trust an amount of money sufficient to pay and
discharge the entire Indebtedness on such Notes not theretofore
delivered to the Trustee for cancellation for principal, premium,
accrued interest and Special Interest, if any, to the date of
maturity or redemption;
(ii) no Default or Event of Default with respect to this Indenture, so
far as it relates to the Notes of such tranche, or the Notes of
such tranche shall have occurred and be continuing on the date of
such deposit or shall occur as a result of such deposit and such
deposit will not result in a breach or violation of, or constitute
a default under, any other instrument to which the Company or a
Guarantor, is a party or by which the Company or a Guarantor is
bound;
(iii) the Company or a Guarantor has paid or caused to be paid all sums
payable by it under this Indenture in respect of the Notes such
tranche; and
(iv) the Company has delivered irrevocable instructions to the Trustee
under this Indenture to apply the deposited money toward the
payment of the Notes of such tranche at maturity or the redemption
date, as the case may be.
<PAGE>
89
In addition, the Company must deliver an Officers Certificate and an
Opinion of Counsel to the Trustee stating that all conditions precedent to
satisfaction and discharge with respect to the Notes of such tranche have been
satisfied.
Section 11.02. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 4.19 hereof,
all money deposited with the Trustee pursuant to Section 11.01 hereof shall be
held in trust and applied by it, in accordance with the provisions of the Notes
and this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as Paying Agent) as the Trustee may determine, to
Persons entitled thereto, of the principal (and premium, if any), interest and
Special Interest, if any, for whose payment such money has been deposited with
the Trustee.
If the Trustee or Paying Agent is unable to apply any money or Government
Securities in accordance with Section 11.01 hereof by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Notes shall be revived and
reinstated as though such deposit had occurred pursuant to Section 11.01 hereof;
provided that if the Company has made any payment of principal of, premium, if
any, or interest on any Notes because of the reinstatement of its obligations,
the Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money or Government Securities held by the Trustee
or Paying Agent.
ARTICLE 12. MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA (S) 318(c), the imposed duties shall control.
Section 12.02. Notices.
Any notice or communication by the Company, any Guarantor or the Trustee
to the others is duly given if in writing and delivered in Person or mailed by
first class mail (registered or certified, return receipt requested), telecopier
or overnight air courier guaranteeing next day delivery, to the others address:
If to the Company and/or any Guarantor:
Global Crossing Holdings Ltd.
Wessex House
45 Reid Street
<PAGE>
90
Hamilton HM 12
Telecopier No.: (441) 296-8606
Attention: Secretary of the Company
With a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Telecopier No.: (212) 455-2502
Attention: D. Rhett Brandon, Esq.
If to the Trustee:
United States Trust Company of New York
114 West 47th Street - 25th Floor
New York, New York 10036
Telecopier No.:(212) 852-1626
Attention: Cynthia Chaney
With a copy to:
Winston & Strawn
200 Park Avenue
New York, NY 10166
Telecopier No.:(212) 294-4700
Attention: Jeffrey H. Elkin, Esq.
The Company, any Guarantor or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders) shall
be deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when receipt acknowledged, if telecopied; and the next
Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA ' 313(c), to the extent required by the TIA. Failure to
mail a notice or communication to a Holder or any defect in it shall not affect
its sufficiency with respect to other Holders.
<PAGE>
91
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it except that any notice or communication to the Trustee shall be
deemed to have been duly given to the Trustee when received at the Corporate
Trust Office of the Trustee.
If the Company mails a notice or communication to Holders, it shall mail
a copy to the Trustee and each Agent at the same time.
Section 12.03. Communication by Holders of Notes with Other Holders of Notes.
Holders may communicate pursuant to TIA (S) 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA (S)
312(c).
Section 12.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, except with respect to the initial authentication
of Notes on the date of this Indenture, the Company shall furnish to the
Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 12.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 12.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
Section 12.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA (S) 314(a)(4)) shall comply with the provisions of TIA (S)
314(e) and shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
<PAGE>
92
(c) a statement that, in the opinion of such Person, he or she has or
they have made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or condition
has been satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
Section 12.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 12.07. No Personal Liability of Directors, Officers, Employees and
Shareholders.
No past, present or future director, officer, employee, incorporator or
shareholder of the Company or any Guarantor, as such, shall have any liability
for any obligations of the Company or such Guarantor under the Notes, the
Subsidiary Guarantees, this Indenture or for any claim based on, in respect of,
or by reason of, such obligations or their creation. Each Holder by accepting a
Note waives and releases all such liability. The waiver and release are part of
the consideration for issuance of the Notes.
Section 12.08. Governing Law.
THIS INDENTURE, THE NOTES AND THE GUARANTEES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Section 12.09. Currency Indemnity.
U.S. dollars are the sole currency of account and payment for all sums
payable by the Company and the Guarantors under or in connection with the Notes,
including damages. Any account received or recovered in a currency other than
dollars (whether as a result of, or the enforcement of, a judgment or order of a
court of any jurisdiction, in the liquidation, dissolution or other winding-up
of the affairs of the Company or the Guarantors or otherwise) by any Holder of a
Note in respect of any sum expressed to be due to it from the Company or the
Guarantors shall only constitute a discharge to the Company and the Guarantors
to the extent of the dollar amount which the recipient is able to purchase with
the amount so received or recovered in that other currency on the date of that
receipt or recovery (or, if it is not practicable to make that purchase on that
date, on the first date on which it is practicable to do so). If that dollar
amount is less than the dollar amount expressed to be due to the recipient under
any Note, the Company and the Guarantors shall indemnify it against any loss
sustained by it as a result. In any event, the Company and the Guarantors shall
indemnify the recipient against the cost of making any such purchase. For the
purposes of this paragraph, it will be sufficient for the Holder of a Note to
certify in a satisfactory manner (indicating the sources of information used)
that it would have suffered a loss had an actual purchase of dollars been made
with the amount so received in that
<PAGE>
93
other currency on the date of receipt or recovery (or, if a purchase of dollars
on such date had not been practicable, on the first date on which it would have
been practicable, it being required that the need for a change of date be
certified in the manner mentioned above). These indemnities constitute a
separate and independent obligation from the Company's and the Guarantors' other
obligations, shall give rise to a separate and independent cause of action,
shall apply irrespective of any indulgence granted by any Holder of a Note and
shall constitute in full force and effect despite any other judgment, order,
claim or proof for a liquidated amount in respect of any sum due under any Note.
Section 12.10. Consent to Jurisdiction and Service.
To the fullest extent permitted by applicable law, the Company and each
of the Guarantors hereby irrevocably submit to the jurisdiction of any Federal
or State court located in the Borough of Manhattan in The City of New York, New
York in any suit, action or proceeding based on or arising out of or relating to
this Agreement or any Notes or Exchange Notes, and irrevocably agree that all
claims in respect of such suit or proceeding may be determined in any such
court. The Company and each of the Guarantors irrevocably waive, to the fullest
extent permitted by law, any objection which they may have to the laying of the
venue of any such suit, action or proceeding brought in such a court and any
claim that any suit, action or proceeding brought in such a court has been
brought in an inconvenient forum. The Company and each of the Guarantors agree
that final judgment in any such suit, action or proceeding brought in such a
court shall be conclusive and binding upon the Company and each such Guarantor
and may be enforced in the courts of Bermuda (or any other courts to the
jurisdiction of which the Company or such Guarantor is subject) by a suit upon
such judgment, provided that service of process is effected upon the Company or
--------
such Guarantor in the manner specified herein or as otherwise permitted by law.
The Company and each of the Guarantors hereby irrevocably designate and appoint
CT Corporation System, 1633 Broadway - 23rd Floor, New York, New York (the
"Process Agent"), as the authorized agent of the Company and each such Guarantor
upon whom process may be served in any such suit or proceeding, it being
understood that the designation and appointment of the Process Agent as such
authorized agent shall become effective immediately without any further action
on the part of the Company or any Guarantor. The Company and each of the
Guarantors hereby represent to each Initial Purchaser that they have notified
the Process Agent of such designation and appointment and that the Process Agent
has accepted the same in writing. The Company and each of the Guarantors hereby
irrevocably authorize and direct the Process Agent to accept such service. The
Company and each of the Guarantors further agree that service of process upon
the Process Agent and written notice of said service to the Company mailed by
prepaid registered first class mail or delivered to the Process Agent at its
principal office, shall be deemed in every respect effective service of process
upon the Company and each Guarantor in any such suit or proceeding. Nothing
herein shall affect the right of any Initial Purchaser or any person controlling
any Initial Purchaser to serve process in any other matter permitted by law.
The Company and each of the Guarantors further agree to take any and all action,
including the execution and filing of any and all such documents and instruments
as may be necessary to continue such designation and appointment of the Process
Agent in full force and effect so long as the Company or any Guarantor has any
outstanding obligations under this Agreement, the Notes, the Exchange Notes or
the Indenture. To the extent that the Company or any Guarantor has or hereafter
may acquire any immunity from jurisdiction of any court or from any legal
process (whether through
<PAGE>
94
service of note, attachment prior to judgment, attachment in aid of execution,
executor or otherwise) with respect to itself or its property, the Company and
each such Guarantor hereby irrevocably waive such immunity in respect of their
respective obligations under this Agreement, to the extent permitted by law.
Section 12.11. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
Section 12.12. Successors.
All agreements of the Company in this Indenture and the Notes shall bind
its successors. All agreements of the Trustee in this Indenture shall bind its
successors.
Section 12.13. Severability.
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
Section 12.14. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
Section 12.15. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part of this Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
[Indenture signature page follows]
<PAGE>
95
[Indenture signature page]
Dated as of November 19, 1999
Global Crossing Holdings Ltd.
By:___________________________________
Name:
Title:
Guarantor:
Global Crossing Ltd.
By:___________________________________
Name:
Title:
United States Trust Company of New York, as Trustee
By:___________________________________
Name:
Title:
<PAGE>
EXHIBIT A-1
(Face of Note)
[Insert the Global Note Legends, if applicable pursuant to the provisions of the
Indenture]
[Insert the Private Placement Legend, if applicable pursuant to the provisions
of the Indenture]
[Insert Original Issue Discount Legend]
CUSIP
9 1/8% [Series A] [Series B] Senior Notes due 2006
No. $
Global Crossing Holdings Ltd.
promises to pay to Cede & Co.
or registered assigns, the principal sum of
Dollars on November 15, 2006.
Interest Payment Dates: May 15 and November 15.
Record Dates: May 1 and November 1.
Global Crossing Holdings Ltd.
By:
Name:
Title:
By:
Name:
Title:
This is one of the
Notes referred to in the
within-mentioned Indenture:
A-1-1
<PAGE>
United States Trust Company of New York,
as Trustee
By: Dated: November 19, 1999
Name:
Title:
A-1-2
<PAGE>
(Back of Note)
9 1/8% Series A Senior Notes due 2006
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated. For the purposes of
this Note, the term "Notes" shall refer only to the Company's 9 1/8% Senior
Notes due 2006.
1. Interest.
Global Crossing Holdings Ltd., a Bermuda company (the "Company"),
promises to pay interest on the principal amount of this Note at 9 1/8% per
annum from November 19, 1999 until maturity and shall pay the Special Interest
payable pursuant to Section 5 of the Registration Rights Agreement referred to
below. The Company shall pay interest and Special Interest semi-annually on
November 15 and May 15 of each year, or if any such day is not a Business Day,
on the next succeeding Business Day (each an "Interest Payment Date"). Interest
on the Notes shall accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from the date of issuance; provided that
if there is no existing Default in the payment of interest, and if this Note is
authenticated between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided, further, that the first Interest
Payment Date shall be May 15, 2000. The Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal and premium, if any, from time to time on demand at a rate that is
1.0% per annum in excess of the rate then in effect; it shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest and Special Interest (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest shall be computed on the basis of a 360-day year of
twelve 30-day months.
2. Method of Payment.
The Company shall pay interest on the Notes (except defaulted interest)
and Special Interest to the Persons who are registered Holders of Notes at the
close of business on the November 1 or May 1 next preceding the Interest Payment
Date, even if such Notes are canceled after such record date and on or before
such Interest Payment Date, except as provided in Section 2.12 of the Indenture
with respect to defaulted interest. The Notes shall be payable as to principal,
premium and Special Interest, if any, and interest at the office or agency of
the Company maintained for such purpose within or without the City and State of
New York, or, at the option of the Company, payment of interest and Special
Interest may be made by check mailed to the Holders at their addresses set forth
in the register of Holders, and provided that payment by wire transfer of
immediately available funds shall be required with respect to principal of and
interest, premium and Special Interest on, all Global Notes and all other Notes
the Holders of which shall have provided wire transfer instructions to the
Company or the Paying Agent. Such payment shall be in such coin or currency of
the United States of America as at the time of payment is legal tender for
payment of public and private debts.
3. Paying Agent and Registrar.
A-1-3
<PAGE>
Initially, United States Trust Company of New York, the Trustee under the
Indenture, shall act as Paying Agent and Registrar. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company or any of
its Restricted Subsidiaries may act in any such capacity.
4. Indenture.
The Company issued the Notes under an Indenture dated as of November 19,
1999 ("Indenture") among the Company, the Guarantors and the Trustee. The terms
of the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Code (S)(S) 77aaa-77bbbb) (the "TIA"). The Notes are subject to all such terms,
and Holders are referred to the Indenture and the TIA for a statement of such
terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and be
controlling. The Notes are obligations of the Company limited to $900.0 million
in aggregate principal amount.
5. Optional Redemption.
(a) Except as set forth in subparagraph (b) below and in Section 6
hereof, the Notes shall not be redeemable at the Company's option at any time.
(b) At any time prior to their maturity, the Notes may be redeemed at the
option of the Company, in whole but not in part, upon the occurrence of a Change
of Control, upon not less than 30 nor more than 60 days' prior notice (but in no
event may any such redemption occur more than 90 days after the occurrence of
such Change of Control) mailed by first-class mail to each Holder's registered
address, at a redemption price equal to 100% of the principal amount thereof
plus the relevant Applicable Premium as of, and accrued and unpaid interest, if
any, to, the date of redemption.
(c) Any redemption pursuant to this Section 5 shall be made pursuant to
the provisions of Sections 3.01 through 3.06 of the Indenture.
6. Optional Tax Redemption.
The Notes shall be subject to redemption at the option of the Company or
a successor corporation at any time, in whole but not in part, upon not less
than 30 nor more than 60 days' notice, at a redemption price equal to the
principal amount thereof, plus accrued and unpaid interest thereon to the
redemption date if, as a result of any change in or amendment to the laws or any
regulations or ruling promulgated thereunder of (x) Bermuda or any political
subdivision or governmental authority thereof or therein having the power to
tax, (y) any jurisdiction, other than the United States, from or through which
payment on the Notes is made by the Company or a successor corporation, or its
paying agent in its capacity as such or any political subdivision or
governmental authority thereof or therein having the power to tax or (z) any
other jurisdiction, other than the United States, in which the Company or a
successor corporation is organized, or any political subdivision or governmental
authority thereof or therein having the power to tax, or any change in the
official application or interpretation of such laws, regulations or rulings, or
any change in the official application or interpretation of, or any execution of
or amendment to, any treaty or treaties affecting taxation to which such
jurisdiction (or such political subdivision or taxing authority) is a party (a
"Change in Tax Law"), which becomes effective on or after November 12, 1999, the
Company or a successor corporation
A-1-4
<PAGE>
is or would be required on the next succeeding interest payment date to pay
Additional Amounts with respect to the Notes (as described under Section 7
hereof), and the payment of such Additional Amounts cannot be avoided by the use
of any reasonable measures available to the Company or a successor corporation.
In addition, the Notes shall be subject to redemption at the option of
the Company at any time, in whole but not in part, upon not less than 30 nor
more than 60 days' notice, at a redemption price equal to the principal amount
thereof, plus accrued and unpaid interest thereon to the redemption date, if the
Person formed by a consolidation or amalgamation of the Company or into which
the Company is merged or to which the Company conveys, transfers or leases its
properties and assets substantially as an entirety is required, as a consequence
of such consolidation, amalgamation, merger, conveyance, transfer or lease and
as a consequence of a Change in Tax Law occurring after the date of such
consolidation, amalgamation, merger, conveyance, transfer or lease, to pay
Additional Amounts in respect of any tax, assessment or governmental charge
imposed on any Holder of Notes.
7. Payment of Additional Amounts.
If any deduction or withholding for any present or future taxes,
assessments or other governmental charges of (x) Bermuda or any political
subdivision or governmental authority thereof or therein having power to tax,
(y) any jurisdiction, other than the United States, from or through which
payment on the Notes is made by the Company or a successor corporation, or its
paying agent in its capacity as such or any political subdivision or
governmental authority thereof or therein having the power to tax or (z) any
other jurisdiction, other than the United States, in which the Company or a
successor corporation is organized, or any political subdivision or governmental
authority thereof or therein having the power to tax shall at any time be
required by such jurisdiction (or any such political subdivision or taxing
authority) in respect of any amounts to be paid by the Company or a successor
corporation under the Notes, the Company or a successor corporation shall pay to
each Holder of Notes as additional interest, such additional amounts
("Additional Amounts") as may be necessary in order that the net amounts paid to
such holder of such Notes who, with respect to any such tax, assessment or other
governmental charge, is not resident in, or a citizen of, such jurisdiction,
after such deduction or withholding, shall be not less than the amount specified
in such Notes to which such Holder is entitled; provided, however, that the
Company or a successor corporation shall not be required to make any payment of
Additional Amounts for or on account of:
(a) Any tax, assessment or other governmental charge that would not have
been imposed but for (i) the existence of any present or former connection
between such Holder (or between a fiduciary, settlor, beneficiary, member or
shareholder of, or possessor of a power over, such Holder, if such Holder is an
estate, trust, partnership, limited liability company or corporation) and the
taxing jurisdiction or any political subdivision or territory or possession
thereof or area subject to its jurisdiction, including, without limitation, such
Holder (or such fiduciary, settlor, beneficiary, member, shareholder or
possessor) being or having been a citizen or resident thereof or being or having
been present or engaged in a trade or business therein or having or having had a
permanent establishment therein, (ii) the presentation of a Note (where
presentation is required) for payment on a date more than 30 days after (x) the
date on which such payment became due and payable or (y) the date on which
payment thereof is duly provided for, whichever occurs later, or (iii) the
presentation of a Note for payment in Bermuda or any political subdivision
thereof or therein, unless such Note could not have been presented for payment
elsewhere;
A-1-5
<PAGE>
(b) Any estate, inheritance, gift, sales, transfer, personal property or
similar tax, assessment or other governmental charge;
(c) Any tax, assessment or other governmental charge that is payable
otherwise than by withholding from payment of principal of, premium, if any, or
any interest on the Notes;
(d) Any tax, assessment or other governmental charge that is imposed or
withheld by reason of the failure by the Holder or the beneficial owner of the
Note to comply with a request of the Company addressed to the Holder (i) to
provide information, documents or other evidence concerning the nationality,
residence or identity of the Holder or such beneficial owner or (ii) to make and
deliver any declaration or other similar claim (other than a claim for refund of
a tax, assessment or other governmental charge withheld by the Company) or
satisfy any information or reporting requirements, which, in the case of (i) or
(ii), is required or imposed by a statute, treaty, regulation or administrative
practice of the taxing jurisdiction as a precondition to exemption from all or
part of such tax, assessment or other governmental charge; or
(e) Any combination of items (a), (b), (c) and (d) above;
nor shall Additional Amounts be paid with respect to any payment of the
principal of, or any premium or interest on, any Note to any Holder who is a
fiduciary or partnership or limited liability company or other than the sole
beneficial owner of such payment to the extent such payment would be required by
the laws of (x) Bermuda or any political subdivision or governmental authority
thereof or therein having the power to tax, (y) any jurisdiction, other than the
United States, from or through which payment on the Notes is made by the Company
or a successor corporation, or its paying agent in its capacity as such or any
political subdivision or governmental authority thereof or therein having the
power to tax or (z) any other jurisdiction, other than the United States, in
which the Company or a successor corporation is organized, or any political
subdivision or governmental authority thereof or therein having the power to tax
to be included in the income for tax purposes of a beneficiary or settlor with
respect to such fiduciary or a member of such partnership, limited liability
company or beneficial owner who would not have been entitled to such Additional
Amounts had it been the Holder of such Note.
The Company shall provide the Trustee with the official acknowledgment of
the relevant taxing authority (or, if such acknowledgment is not available, a
certified copy thereof) evidencing the payment of the withholding taxes, if any,
by the Company. Copies of such documentation shall be made available to the
Holders of the Notes or the Paying Agent, as applicable, upon request therefor.
All references in the Indenture to principal of, premium, if any, and
interest on the Notes shall include any Additional Amounts payable by the
Company in respect of such principal, such premium, if any, and such interest.
8. Mandatory Redemption.
Except as set forth in Section 9 below, the Company shall not be required
to make mandatory redemption or sinking fund payments with respect to the Notes.
9. Repurchase at Option of Holder.
A-1-6
<PAGE>
(a) Upon the occurrence of a Change of Control, the Company shall make an
offer (a "Change of Control Offer") to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of each Holder's Notes at a purchase
price equal to 101% of the aggregate principal amount thereof, plus accrued and
unpaid interest and Special Interest thereon, if any, to the date of repurchase
(the "Change of Control Payment"); provided, however, that the Company shall not
be obligated to repurchase Notes pursuant to this subparagraph in the event that
it has exercised its rights to redeem all of the Notes as described in Section
5(c) hereof. Within 30 days following any Change of Control, the Company shall
mail a notice to each Holder setting forth the procedures governing the Change
of Control Offer as required by the Indenture.
(b) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, consummate any Asset Sale unless, (i)
the Company (or such Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (as determined in good faith by the Board of Directors (including as to
the value of all noncash consideration) and set forth in an Officer's
Certificate delivered to the Trustee) of the assets or Equity Interests issued
or sold or otherwise disposed of and (ii) at least 75% of the consideration
therefor is in the form of cash and/or Cash Equivalents, and (iii) the Net
Proceeds received by the Company (or such Restricted Subsidiary, as the case may
be) from such Asset Sale are applied within 360 days following the receipt of
such Net Proceeds (a) first, to the extent the Company (or such Restricted
Subsidiary, as the case may be) elects, to the redemption or repurchase of
outstanding pari passu Indebtedness of the Company or Purchase Money
Indebtedness of any Restricted Subsidiary; provided that in the event that such
Restricted Subsidiary is a Guarantor, the Purchase Money Indebtedness to be
redeemed or repurchased ranks at least pari passu to the Guarantee given by such
Restricted Subsidiary and (b) second, to the extent of the balance of such Net
Proceeds after application as described in (a) above and to the extent the
Company (or such Restricted Subsidiary, as the case may be) elects, to reinvest,
or enter into a legally binding agreement to reinvest, such Net Proceeds (or any
portion thereof) in assets that are used or useful in a Permitted Business. The
balance of such Net Proceeds, after the application of such Net Proceeds as
described in the immediately preceding clauses (a) and (b), shall constitute
"Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds equals or exceeds $15.0
million (taking into account income earned on such Excess Proceeds), the Company
shall be required to make an offer to all Holders of Notes and pari passu
Indebtedness (an "Asset Sale Offer") to purchase the maximum principal amount of
Notes and pari passu Indebtedness that may be purchased out of the Excess
Proceeds, at a purchase price in cash in an amount equal to 100% of the
principal amount thereof, plus accrued and unpaid interest thereon to the date
of purchase, in accordance with the procedures set forth in Article 3 of the
Indenture and the agreements governing such pari passu Indebtedness. To the
extent that any Excess Proceeds remain after consummation of an Asset Sale
Offer, the Company may use such Excess Proceeds for any purpose not otherwise
prohibited by the Indenture. If the aggregate principal amount of Notes and pari
passu Indebtedness tendered into such Asset Sale Offer surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes and pari passu Indebtedness to be purchased on a pro rata basis. Upon
completion of such Asset Sale Offer, the amount of Excess Proceeds shall be
reset at zero for purposes of the first sentence of this paragraph.
10. Notice of Redemption.
A-1-7
<PAGE>
Notice of redemption shall be mailed at least 30 days but not more than
60 days before the redemption date to each Holder whose Notes are to be redeemed
at its registered address. Notes in denominations larger than $1,000 may be
redeemed in part but only in whole multiples of $1,000, unless all of the Notes
held by a Holder are to be redeemed. On and after the redemption date interest
shall cease to accrue on Notes or portions thereof called for redemption.
11. Denominations, Transfer, Exchange.
The Notes are in registered form without coupons in denominations of
$1,000 and integral multiples of $1,000. The transfer of Notes may be
registered and Notes may be exchanged as provided in the Indenture. The
Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Company may require a
Holder to pay any taxes and fees required by law or permitted by the Indenture.
The Company need not exchange or register the transfer of any Note or portion of
a Note selected for redemption, except for the unredeemed portion of any Note
being redeemed in part. Also, the Company need not exchange or register the
transfer of any Notes for a period of 15 days before a selection of Notes to be
redeemed or during the period between a record date and the corresponding
Interest Payment Date.
12. Persons Deemed Owners.
The registered Holder of a Note may be treated as its owner for all
purposes under the Indenture.
13. Amendment, Supplement and Waiver.
Subject to certain exceptions, the Indenture, the Notes or any Guarantee
may be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the then outstanding Notes voting as a single
class, and any existing default or compliance with any provision of the
Indenture, the Notes or any Guarantee may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Notes voting
as a single class. Without the consent of any Holder of a Note, the Indenture,
the Notes or any Guarantee may be amended or supplemented to cure any ambiguity,
defect or inconsistency, to provide for uncertificated Notes in addition to or
in place of certificated Notes, to provide for the assumption of the Company's
or any Guarantor's obligations to Holders of the Notes in case of a merger or
consolidation, to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights under the Indenture of any such Holder, to comply with the requirements
of the SEC in order to effect or maintain the qualification of the Indenture
under the TIA, or to allow any Guarantor to execute a supplemental indenture to
the Indenture.
14. Defaults and Remedies.
(a) Events of Default under the Indenture include: (i) the failure to
pay interest on, or Special Interest, if any, with respect to the Notes, when
the same becomes due and payable if such default continues for a period of 30
days, (ii) the failure to pay principal of any Notes when such principal becomes
due and payable, at maturity, upon redemption or otherwise; (iii) failure by the
Company or any Restricted Subsidiary to comply with Sections 4.07, 4.09, 4.10,
4.15 or 5.01 of the Indenture; (iv) failure by the Company or any Restricted
Subsidiary for 60 days after notice to comply with any of its other
A-1-8
<PAGE>
agreements in the Indenture or this Note; (v) default under any mortgage,
indenture or instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the Company or any
of its Restricted Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Restricted Subsidiaries) whether such Indebtedness or
guarantee now exists, or is created after the date of the Indenture, which
default results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness or the
maturity of which has been so accelerated, aggregates $25.0 million or more;
(vi) failure by the Company or any of its Restricted Subsidiaries to pay final
judgments not subject to appeal aggregating in excess of $25.0 million (net of
applicable insurance coverage which is acknowledged in writing by the insurer),
which judgments are not paid, discharged or stayed for a period of 60 days;
(vii) except as permitted by the Indenture, any Guarantee shall be held in any
judicial proceeding to be unenforceable or invalid or shall cease for any reason
to be in full force and effect or any Guarantor, or any Person acting on behalf
of any Guarantor, shall deny or disaffirm its obligations under its Guarantee;
and (viii) certain events of bankruptcy or insolvency with respect to the
Company or any of the Company's Restricted Subsidiaries.
(b) If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable. Notwithstanding the foregoing, in
the case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Notes shall become due and payable without further
action or notice. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of the Notes notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their interest. The
Holders of a majority in principal amount of the then outstanding Notes by
notice to the Trustee may on behalf of the Holders of all of the Notes waive any
existing Default or Event of Default and its consequences under the Indenture,
except a continuing Default or Event of Default in the payment of interest on,
or principal of, the Notes. The Company shall deliver to the Trustee annually a
statement regarding compliance with the Indenture, and the Company, upon
becoming aware of any Default or Event of Default, deliver to the Trustee a
statement specifying such Default or Event of Default.
15. Additional Restricted Subsidiary Guarantees.
If any Restricted Subsidiary guarantees any Debt Securities issued by the
Company after November 19, 1999, then such Restricted Subsidiary shall become a
Guarantor and execute a supplemental indenture and deliver an Opinion of
Counsel, in accordance with the terms of the Indenture.
16. Trustee Dealings with Company.
The Trustee, in its individual or any other capacity, may make loans to,
accept deposits from, and perform services for the Company or its Affiliates,
and may otherwise deal with the Company or its Affiliates, as if it were not the
Trustee.
A-1-9
<PAGE>
17. No Recourse Against Others.
A director, officer, employee, incorporator or shareholder, of the
Company or any Guarantor, as such, shall not have any liability for any
obligations of the Company or any Guarantor under the Notes, any Guarantee or
the Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
18. Authentication.
This Note shall not be valid until authenticated by the manual signature
of the Trustee or an authenticating agent.
19. Abbreviations.
Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entirety), JT TEN (= joint tenants with right of survivorship and not as tenants
in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
20. Additional Rights of Holders of Restricted Global Notes and
Restricted Definitive Notes.
In addition to the rights provided to Holders of Notes under the
Indenture, Holders of Notes shall have all the rights set forth in the
Registration Rights Agreement.
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes and the Trustee may use CUSIP numbers in notices of
redemption as a convenience to Holders. No representation is made as to the
accuracy of such numbers either as printed on the Notes or as contained in any
notice of redemption and reliance may be placed only on the other identification
numbers placed thereon.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Global Crossing Holdings Ltd.
Wessex House
45 Reid Street
Hamilton HM 12, Bermuda
Attention: Secretary of the Company
A-1-10
<PAGE>
Assignment Form
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
Date:
Your Signature:
(Sign exactly as your name appears on the face of
this Note)
Tax Identification No:
SIGNATURE GUARANTEE:
_________________________________
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements of
the Registrar, which requirements include membership
or participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other "signature
guarantee program" as may be determined by the
Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
A-1-11
<PAGE>
Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Company pursuant
to Section 4.10 or 4.15 of the Indenture, check the box below:
Section 4.10 Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $________
Date:
Your Signature:
(Sign exactly as your name appears on the face of
this Note)
Tax Identification No:
SIGNATURE GUARANTEE:
_________________________________
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements of
the Registrar, which requirements include membership
or participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other "signature
guarantee program" as may be determined by the
Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
A-1-12
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE/1/
The following exchanges of a part of this Global Note for an interest in
another Global Note or for a Definitive Note, or exchanges of a part of another
Global Note or Definitive Note for an interest in this Global Note, have been
made:
<TABLE>
<CAPTION>
Principal Amount Signature of
Amount of decrease Amount of increase of this Global Note authorized
in Principal in Principal following such officer of
Amount of this Amount of this decrease Trustee or
Date of Exchange Global Note Global Note (or increase) Note Custodian
- ----------------- ------------------ ------------------ ------------------- -----------------
<S> <C> <C> <C> <C>
</TABLE>
- -------------------------
/1/ This should be included only if the Note is issued in global form.
A-1-13
<PAGE>
EXHIBIT A-2
(Face of Regulation S Temporary Global Note)
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK) ("DTC") TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF
THE ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT
WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING
THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE COMPANY, (2) SO
LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE
OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE
BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF
THIS SECURITY), (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT,
(4) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT OR (5) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH
ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER
HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND AGREES FOR THE BENEFIT OF
THE COMPANY THAT IT IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A.
A-2-1
<PAGE>
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON.
FOR THE PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED, THIS SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE
DISCOUNT; FOR EACH $1,000 PRINCIPAL AMOUNT OF THIS SECURITY, THE ISSUE PRICE IS
$981.18, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT IS $18.82, THE ISSUE DATE IS
NOVEMBER 19, 1999, AND THE YIELD TO MATURITY ON THE ISSUE DATE IS 9.500% PER
ANNUM.
A-2-2
<PAGE>
CUSIP
9 1/8% [Series A] [Series B] Senior Notes due 2006
No. $
Global Crossing Holdings Ltd.
promises to pay to Cede & Co.
or registered assigns, the principal sum of
Dollars on November 15, 2006.
Interest Payment Dates: May 15 and November 15.
Record Dates: May 1 and November 1.
Global Crossing Holdings Ltd.
By:
Name:
Title:
By:
Name:
Title:
This is one of the
Notes referred to in the
within-mentioned Indenture:
United States Trust Company of New York,
as Trustee
By: Dated: November 19, 1999
Name:
Title:
A-2-3
<PAGE>
(Back of Regulation S Temporary Global Note)
9 1/8% Series A Senior Notes due 2006
Capitalized terms used herein shall have the meanings assigned to them in the
Indenture referred to below unless otherwise indicated. For the purposes of this
Note, the term "Notes" shall refer only to the Company's 9c% Senior Notes due
2006.
1. Interest.
Global Crossing Holdings Ltd., a Bermuda company (the "Company"),
promises to pay interest on the principal amount of this Note at 9c% per annum
from November 19, 1999 until maturity and shall pay the Special Interest payable
pursuant to Section 5 of the Registration Rights Agreement referred to below.
The Company shall pay interest and Special Interest semi-annually on November 15
and May 15 of each year, or if any such day is not a Business Day, on the next
succeeding Business Day (each an "Interest Payment Date"). Interest on the
Notes shall accrue from the most recent date to which interest has been paid or,
if no interest has been paid, from the date of issuance; provided that if there
is no existing Default in the payment of interest, and if this Note is
authenticated between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided, further, that the first Interest
Payment Date shall be May 15, 2000. The Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal and premium, if any, from time to time on demand at a rate that is
1.0% per annum in excess of the rate then in effect; it shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest and Special Interest (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest shall be computed on the basis of a 360-day year of
twelve 30-day months.
Until this Regulation S Temporary Global Note is exchanged for one or
more Regulation S Permanent Global Notes, the Holder hereof shall not be
entitled to receive payments of interest hereon; until so exchanged in full,
this Regulation S Temporary Global Note shall in all other respects be entitled
to the same benefits as other Notes under the Indenture.
2. Method of Payment.
The Company shall pay interest on the Notes (except defaulted interest)
and Special Interest to the Persons who are registered Holders of Notes at the
close of business on the November 1 or May 1 next preceding the Interest Payment
Date, even if such Notes are canceled after such record date and on or before
such Interest Payment Date, except as provided in Section 2.12 of the Indenture
with respect to defaulted interest. The Notes shall be payable as to principal,
premium and Special Interest, if any, and interest at the office or agency of
the Company maintained for such purpose within or without the City and State of
New York, or, at the option of the Company, payment of interest and Special
Interest may be made by check mailed to the Holders at their addresses set forth
in the register of Holders, and provided that payment by wire transfer of
immediately available funds shall be required with respect to principal of and
interest, premium and Special Interest on, all Global Notes and all other Notes
the Holders of which shall have provided wire transfer instructions to the
Company or the Paying Agent.
A-2-4
<PAGE>
Such payment shall be in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts.
3. Paying Agent and Registrar.
Initially, United States Trust Company of New York, the Trustee under the
Indenture, shall act as Paying Agent and Registrar. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company or any of
its Restricted Subsidiaries may act in any such capacity.
4. Indenture.
The Company issued the Notes under an Indenture dated as of November 19,
1999 ("Indenture") among the Company, the Guarantors and the Trustee. The terms
of the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Code (S)(S) 77aaa-77bbbb) (the "TIA"). The Notes are subject to all such terms,
and Holders are referred to the Indenture and the TIA for a statement of such
terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and be
controlling. The Notes are obligations of the Company limited to $900.0 million
in aggregate principal amount.
5. Optional Redemption.
(a) Except as set forth in subparagraph (b) below and in Section 6
hereof, the Notes shall not be redeemable at the Company's option at any time.
(b) At any time prior to their maturity, the Notes may be redeemed at the
option of the Company, in whole but not in part, upon the occurrence of a Change
of Control, upon not less than 30 nor more than 60 days' prior notice (but in no
event may any such redemption occur more than 90 days after the occurrence of
such Change of Control) mailed by first-class mail to each Holder's registered
address, at a redemption price equal to 100% of the principal amount thereof
plus the relevant Applicable Premium as of, and accrued and unpaid interest, if
any, to, the date of redemption.
(c) Any redemption pursuant to this Section 5 shall be made pursuant to
the provisions of Sections 3.01 through 3.06 of the Indenture.
6. Optional Tax Redemption.
The Notes shall be subject to redemption at the option of the Company or
a successor corporation at any time, in whole but not in part, upon not less
than 30 nor more than 60 days= notice, at a redemption price equal to the
principal amount thereof, plus accrued and unpaid interest thereon to the
redemption date if, as a result of any change in or amendment to the laws or any
regulations or ruling promulgated thereunder of (x) Bermuda or any political
subdivision or governmental authority thereof or therein having the power to
tax, (y) any jurisdiction, other than the United States, from or through which
payment on the Notes is made by the Company or a successor corporation, or its
paying agent in its capacity as such or any political subdivision or
governmental authority thereof or therein
A-2-5
<PAGE>
having the power to tax or (z) any other jurisdiction, other than the United
States, in which the Company or a successor corporation is organized, or any
political subdivision or governmental authority thereof or therein having the
power to tax, or any change in the official application or interpretation of
such laws, regulations or rulings, or any change in the official application or
interpretation of, or any execution of or amendment to, any treaty or treaties
affecting taxation to which such jurisdiction (or such political subdivision or
taxing authority) is a party (a "Change in Tax Law"), which becomes effective on
or after November 12, 1999, the Company or a successor corporation is or would
be required on the next succeeding interest payment date to pay Additional
Amounts with respect to the Notes (as described under Section 7 hereof), and the
payment of such Additional Amounts cannot be avoided by the use of any
reasonable measures available to the Company or a successor corporation.
In addition, the Notes shall be subject to redemption at the option of
the Company at any time, in whole but not in part, upon not less than 30 nor
more than 60 days' notice, at a redemption price equal to the principal amount
thereof, plus accrued and unpaid interest thereon to the redemption date, if the
Person formed by a consolidation or amalgamation of the Company or into which
the Company is merged or to which the Company conveys, transfers or leases its
properties and assets substantially as an entirety is required, as a consequence
of such consolidation, amalgamation, merger, conveyance, transfer or lease and
as a consequence of a Change in Tax Law occurring after the date of such
consolidation, amalgamation, merger, conveyance, transfer or lease, to pay
Additional Amounts in respect of any tax, assessment or governmental charge
imposed on any Holder of Notes.
7. Payment of Additional Amounts.
If any deduction or withholding for any present or future taxes,
assessments or other governmental charges of (x) Bermuda or any political
subdivision or governmental authority thereof or therein having power to tax,
(y) any jurisdiction, other than the United States, from or through which
payment on the Notes is made by the Company or a successor corporation, or its
paying agent in its capacity as such or any political subdivision or
governmental authority thereof or therein having the power to tax or (z) any
other jurisdiction, other than the United States, in which the Company or a
successor corporation is organized, or any political subdivision or governmental
authority thereof or therein having the power to tax shall at any time be
required by such jurisdiction (or any such political subdivision or taxing
authority) in respect of any amounts to be paid by the Company or a successor
corporation under the Notes, the Company or a successor corporation shall pay to
each Holder of Notes as additional interest, such additional amounts
("Additional Amounts") as may be necessary in order that the net amounts paid to
such holder of such Notes who, with respect to any such tax, assessment or other
governmental charge, is not resident in, or a citizen of, such jurisdiction,
after such deduction or withholding, shall be not less than the amount specified
in such Notes to which such Holder is entitled; provided, however, that the
Company or a successor corporation shall not be required to make any payment of
Additional Amounts for or on account of:
(a) Any tax, assessment or other governmental charge that would not have
been imposed but for (i) the existence of any present or former connection
between such Holder (or between a fiduciary, settlor, beneficiary, member or
shareholder of, or possessor of a power over, such Holder, if such Holder is an
estate, trust, partnership, limited liability company or corporation) and the
taxing jurisdiction or any political subdivision or territory or possession
thereof or area subject to its
A-2-6
<PAGE>
jurisdiction, including, without limitation, such Holder (or such fiduciary,
settlor, beneficiary, member, shareholder or possessor) being or having been a
citizen or resident thereof or being or having been present or engaged in a
trade or business therein or having or having had a permanent establishment
therein, (ii) the presentation of a Note (where presentation is required) for
payment on a date more than 30 days after (x) the date on which such payment
became due and payable or (y) the date on which payment thereof is duly provided
for, whichever occurs later, or (iii) the presentation of a Note for payment in
Bermuda or any political subdivision thereof or therein, unless such Note could
not have been presented for payment elsewhere;
(b) Any estate, inheritance, gift, sales, transfer, personal property or
similar tax, assessment or other governmental charge;
(c) Any tax, assessment or other governmental charge that is payable
otherwise than by withholding from payment of principal of, premium, if any, or
any interest on the Notes;
(d) Any tax, assessment or other governmental charge that is imposed or
withheld by reason of the failure by the Holder or the beneficial owner of the
Note to comply with a request of the Company addressed to the Holder (i) to
provide information, documents or other evidence concerning the nationality,
residence or identity of the Holder or such beneficial owner or (ii) to make and
deliver any declaration or other similar claim (other than a claim for refund of
a tax, assessment or other governmental charge withheld by the Company) or
satisfy any information or reporting requirements, which, in the case of (i) or
(ii), is required or imposed by a statute, treaty, regulation or administrative
practice of the taxing jurisdiction as a precondition to exemption from all or
part of such tax, assessment or other governmental charge; or
(e) Any combination of items (a), (b), (c) and (d) above;
nor shall Additional Amounts be paid with respect to any payment of the
principal of, or any premium or interest on, any Note to any Holder who is a
fiduciary or partnership or limited liability company or other than the sole
beneficial owner of such payment to the extent such payment would be required by
the laws of (x) Bermuda or any political subdivision or governmental authority
thereof or therein having the power to tax, (y) any jurisdiction, other than the
United States, from or through which payment on the Notes is made by the Company
or a successor corporation, or its paying agent in its capacity as such or any
political subdivision or governmental authority thereof or therein having the
power to tax or (z) any other jurisdiction, other than the United States, in
which the Company or a successor corporation is organized, or any political
subdivision or governmental authority thereof or therein having the power to tax
to be included in the income for tax purposes of a beneficiary or settlor with
respect to such fiduciary or a member of such partnership, limited liability
company or beneficial owner who would not have been entitled to such Additional
Amounts had it been the Holder of such Note.
The Company shall provide the Trustee with the official acknowledgment of
the relevant taxing authority (or, if such acknowledgment is not available, a
certified copy thereof) evidencing the payment of the withholding taxes, if any,
by the Company. Copies of such documentation shall be made available to the
Holders of the Notes or the Paying Agent, as applicable, upon request therefor.
A-2-7
<PAGE>
All references in the Indenture to principal of, premium, if any, and
interest on the Notes shall include any Additional Amounts payable by the
Company in respect of such principal, such premium, if any, and such interest.
8. Mandatory Redemption.
Except as set forth in Section 9 below, the Company shall not be required
to make mandatory redemption or sinking fund payments with respect to the Notes.
9. Repurchase at Option of Holder.
(a) Upon the occurrence of a Change of Control, the Company shall make an
offer (a "Change of Control Offer") to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of each Holder's Notes at a purchase
price equal to 101% of the aggregate principal amount thereof, plus accrued and
unpaid interest and Special Interest thereon, if any, to the date of repurchase
(the "Change of Control Payment"); provided, however, that the Company shall not
be obligated to repurchase Notes pursuant to this subparagraph in the event that
it has exercised its rights to redeem all of the Notes as described in Section
5(c) hereof. Within 30 days following any Change of Control, the Company shall
mail a notice to each Holder setting forth the procedures governing the Change
of Control Offer as required by the Indenture.
(b) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, consummate any Asset Sale unless, (i)
the Company (or such Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (as determined in good faith by the Board of Directors (including as to
the value of all noncash consideration) and set forth in an Officer's
Certificate delivered to the Trustee) of the assets or Equity Interests issued
or sold or otherwise disposed of and (ii) at least 75% of the consideration
therefor is in the form of cash and/or Cash Equivalents, and (iii) the Net
Proceeds received by the Company (or such Restricted Subsidiary, as the case may
be) from such Asset Sale are applied within 360 days following the receipt of
such Net Proceeds (a) first, to the extent the Company (or such Restricted
Subsidiary, as the case may be) elects, to the redemption or repurchase of
outstanding pari passu Indebtedness of the Company or Purchase Money
Indebtedness of any Restricted Subsidiary; provided that in the event that such
Restricted Subsidiary is a Guarantor, the Purchase Money Indebtedness to be
redeemed or repurchased ranks at least pari passu to the Guarantee given by such
Restricted Subsidiary and (b) second, to the extent of the balance of such Net
Proceeds after application as described in (a) above and to the extent the
Company (or such Restricted Subsidiary, as the case may be) elects, to reinvest,
or enter into a legally binding agreement to reinvest, such Net Proceeds (or any
portion thereof) in assets that are used or useful in a Permitted Business. The
balance of such Net Proceeds, after the application of such Net Proceeds as
described in the immediately preceding clauses (a) and (b), shall constitute
"Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds equals or exceeds $15.0
million (taking into account income earned on such Excess Proceeds), the Company
shall be required to make an offer to all Holders of Notes and pari passu
Indebtedness (an "Asset Sale Offer") to purchase the maximum principal amount of
Notes and pari passu Indebtedness that may be purchased out of the Excess
Proceeds, at a purchase price in cash in an amount equal to 100% of the
principal amount thereof,
A-2-8
<PAGE>
plus accrued and unpaid interest thereon to the date of purchase, in accordance
with the procedures set forth in Article 3 of the Indenture and the agreements
governing such pari passu Indebtedness. To the extent that any Excess Proceeds
remain after consummation of an Asset Sale Offer, the Company may use such
Excess Proceeds for any purpose not otherwise prohibited by the Indenture. If
the aggregate principal amount of Notes and pari passu Indebtedness tendered
into such Asset Sale Offer surrendered by Holders thereof exceeds the amount of
Excess Proceeds, the Trustee shall select the Notes and pari passu Indebtedness
to be purchased on a pro rata basis. Upon completion of such Asset Sale Offer,
the amount of Excess Proceeds shall be reset at zero for purposes of the first
sentence of this paragraph.
10. Notice of Redemption.
Notice of redemption shall be mailed at least 30 days but not more than
60 days before the redemption date to each Holder whose Notes are to be redeemed
at its registered address. Notes in denominations larger than $1,000 may be
redeemed in part but only in whole multiples of $1,000, unless all of the Notes
held by a Holder are to be redeemed. On and after the redemption date interest
shall cease to accrue on Notes or portions thereof called for redemption.
11. Denominations, Transfer, Exchange.
The Notes are in registered form without coupons in denominations of
$1,000 and integral multiples of $1,000. The transfer of Notes may be
registered and Notes may be exchanged as provided in the Indenture. The
Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Company may require a
Holder to pay any taxes and fees required by law or permitted by the Indenture.
The Company need not exchange or register the transfer of any Note or portion of
a Note selected for redemption, except for the unredeemed portion of any Note
being redeemed in part. Also, the Company need not exchange or register the
transfer of any Notes for a period of 15 days before a selection of Notes to be
redeemed or during the period between a record date and the corresponding
Interest Payment Date.
This Regulation S Temporary Global Note is exchangeable in whole or in
part for one or more Global Notes only (i) on or after the termination of the
40-day restricted period (as defined in Regulation S) and (ii) upon presentation
of certificates (accompanied by an Opinion of Counsel, if applicable) required
by Article 2 of the Indenture. Upon exchange of this Regulation S Temporary
Global Note for one or more Global Notes, the Trustee shall cancel this
Regulation S Temporary Global Note.
12. Persons Deemed Owners.
The registered Holder of a Note may be treated as its owner for all
purposes under the Indenture.
13. Amendment, Supplement and Waiver.
Subject to certain exceptions, the Indenture, the Notes or any Guarantee
may be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the then outstanding Notes voting as a single
class, and any existing default or compliance with any provision of
A-2-9
<PAGE>
the Indenture, the Notes or any Guarantee may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Notes voting
as a single class. Without the consent of any Holder of a Note, the Indenture,
the Notes or any Guarantee may be amended or supplemented to cure any ambiguity,
defect or inconsistency, to provide for uncertificated Notes in addition to or
in place of certificated Notes, to provide for the assumption of the Company's
or any Guarantor's obligations to Holders of the Notes in case of a merger or
consolidation, to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights under the Indenture of any such Holder, to comply with the requirements
of the SEC in order to effect or maintain the qualification of the Indenture
under the TIA, or to allow any Guarantor to execute a supplemental indenture to
the Indenture.
14. Defaults and Remedies.
(a) Events of Default under the Indenture include: (i) the failure to
pay interest on, or Special Interest, if any, with respect to the Notes, when
the same becomes due and payable if such default continues for a period of 30
days, (ii) the failure to pay principal of any Notes when such principal becomes
due and payable, at maturity, upon redemption or otherwise; (iii) failure by the
Company or any Restricted Subsidiary to comply with Sections 4.07, 4.09, 4.10,
4.15 or 5.01 of the Indenture; (iv) failure by the Company or any Restricted
Subsidiary for 60 days after notice to comply with any of its other agreements
in the Indenture or this Note; (v) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Restricted Subsidiaries (or the payment of which is guaranteed by the Company or
any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now
exists, or is created after the date of the Indenture, which default results in
the acceleration of such Indebtedness prior to its express maturity and, in each
case, the principal amount of any such Indebtedness, together with the principal
amount of any other such Indebtedness or the maturity of which has been so
accelerated, aggregates $25.0 million or more; (vi) failure by the Company or
any of its Restricted Subsidiaries to pay final judgments not subject to appeal
aggregating in excess of $25.0 million (net of applicable insurance coverage
which is acknowledged in writing by the insurer), which judgments are not paid,
discharged or stayed for a period of 60 days; (vii) except as permitted by the
Indenture, any Guarantee shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force and
effect or any Guarantor, or any Person acting on behalf of any Guarantor, shall
deny or disaffirm its obligations under its Guarantee; and (viii) certain events
of bankruptcy or insolvency with respect to the Company or any of the Company's
Restricted Subsidiaries.
(b) If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable. Notwithstanding the foregoing, in
the case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Notes shall become due and payable without further
action or notice. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of the Notes notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their interest. The
Holders of a majority in principal amount of the then outstanding Notes by
notice to the
A-2-10
<PAGE>
Trustee may on behalf of the Holders of all of the Notes waive any existing
Default or Event of Default and its consequences under the Indenture, except a
continuing Default or Event of Default in the payment of interest on, or
principal of, the Notes. The Company shall deliver to the Trustee annually a
statement regarding compliance with the Indenture, and the Company, upon
becoming aware of any Default or Event of Default, deliver to the Trustee a
statement specifying such Default or Event of Default.
15. Additional Restricted Subsidiary Guarantees.
If any Restricted Subsidiary guarantees any Debt Securities issued by the
Company after November 19, 1999, then such Restricted Subsidiary shall become a
Guarantor and execute a supplemental indenture and deliver an Opinion of
Counsel, in accordance with the terms of the Indenture.
16. Trustee Dealings with Company.
The Trustee, in its individual or any other capacity, may make loans to,
accept deposits from, and perform services for the Company or its Affiliates,
and may otherwise deal with the Company or its Affiliates, as if it were not the
Trustee.
17. No Recourse Against Others.
A director, officer, employee, incorporator or shareholder, of the
Company or any Guarantor, as such, shall not have any liability for any
obligations of the Company or any Guarantor under the Notes, any Guarantee or
the Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
18. Authentication.
This Note shall not be valid until authenticated by the manual signature
of the Trustee or an authenticating agent.
19. Abbreviations.
Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entirety), JT TEN (= joint tenants with right of survivorship and not as tenants
in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
20. Additional Rights of Holders of Restricted Global Notes and
Restricted Definitive Notes.
In addition to the rights provided to Holders of Notes under the
Indenture, Holders of Notes shall have all the rights set forth in the
Registration Rights Agreement.
A-2-11
<PAGE>
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes and the Trustee may use CUSIP numbers in notices of
redemption as a convenience to Holders. No representation is made as to the
accuracy of such numbers either as printed on the Notes or as contained in any
notice of redemption and reliance may be placed only on the other identification
numbers placed thereon.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Global Crossing Holdings Ltd.
Wessex House
45 Reid Street
Hamilton HM 12, Bermuda
Attention: Secretary of the Company
A-2-12
<PAGE>
Assignment Form
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
Date:
Your Signature:
(Sign exactly as your name appears on the face of
this Note)
Tax Identification No:
SIGNATURE GUARANTEE:
_________________________________
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements of
the Registrar, which requirements include membership
or participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other "signature
guarantee program" as may be determined by the
Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
A-2-13
<PAGE>
Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Company pursuant
to Section 4.10 or 4.15 of the Indenture, check the appropriate box below:
Section 4.10 Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $___________
- --------------------------------------------------------------------------------
Date:
Your Signature:
(Sign exactly as your name appears on the face of
this Note)
Tax Identification No:
SIGNATURE GUARANTEE:
_________________________________
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements of
the Registrar, which requirements include membership
or participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other "signature
guarantee program" as may be determined by the
Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
A-2-14
<PAGE>
SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE
The following exchanges of a part of this Regulation S Temporary Global
Note for an interest in another Global Note, or of other Restricted Global Notes
for an interest in this Regulation S Temporary Global Note, have been made:
<TABLE>
<CAPTION>
Principal Amount Signature of
Amount of decrease Amount of increase of this Global Note authorized
in Principal in Principal following such officer of
Amount of this Amount of this decrease Trustee or
Date of Exchange Global Note Global Note (or increase) Note Custodian
- ----------------- ------------------ ------------------ ------------------- -----------------
<S> <C> <C> <C> <C>
</TABLE>
A-2-15
<PAGE>
EXHIBIT A-3
(Face of Note)
[Insert the Global Note Legends, if applicable pursuant to the provisions of
the Indenture]
[Insert the Private Placement Legend, if applicable pursuant to the
provisions of the Indenture]
CUSIP
9 1/2% [Series A] [Series B] Senior Notes due 2009
No. $
Global Crossing Holdings Ltd.
promises to pay to Cede & Co.
or registered assigns, the principal sum of
Dollars on November 15, 2009.
Interest Payment Dates: May 15 and November 15.
Record Dates: May 1 and November 1.
Global Crossing Holdings Ltd.
By:
Name:
Title:
By:
Name:
Title:
This is one of the
Notes referred to in the
within-mentioned Indenture:
A-3-1
<PAGE>
United States Trust Company of New York,
as Trustee
By: Dated: November 19, 1999
Name:
Title:
A-3-2
<PAGE>
(Back of Note)
9 1/2% Series A Senior Notes due 2009
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated. For the purposes of
this Note, the term "Notes" shall refer only to the Company's 9 1/2% Senior
Notes due 2009.
1. Interest.
Global Crossing Holdings Ltd., a Bermuda company (the "Company"),
promises to pay interest on the principal amount of this Note at 9 1/2% per
annum from November 19, 1999 until maturity and shall pay the Special Interest
payable pursuant to Section 5 of the Registration Rights Agreement referred to
below. The Company shall pay interest and Special Interest semi-annually on
November 15 and May 15 of each year, or if any such day is not a Business Day,
on the next succeeding Business Day (each an "Interest Payment Date"). Interest
on the Notes shall accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from the date of issuance; provided that
if there is no existing Default in the payment of interest, and if this Note is
authenticated between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided, further, that the first Interest
Payment Date shall be May 15, 2000. The Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal and premium, if any, from time to time on demand at a rate that is
1.0% per annum in excess of the rate then in effect; it shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest and Special Interest (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest shall be computed on the basis of a 360-day year of
twelve 30-day months.
2. Method of Payment.
The Company shall pay interest on the Notes (except defaulted interest)
and Special Interest to the Persons who are registered Holders of Notes at the
close of business on the November 1 or May 1 next preceding the Interest Payment
Date, even if such Notes are canceled after such record date and on or before
such Interest Payment Date, except as provided in Section 2.12 of the Indenture
with respect to defaulted interest. The Notes shall be payable as to principal,
premium and Special Interest, if any, and interest at the office or agency of
the Company maintained for such purpose within or without the City and State of
New York, or, at the option of the Company, payment of interest and Special
Interest may be made by check mailed to the Holders at their addresses set forth
in the register of Holders, and provided that payment by wire transfer of
immediately available funds shall be required with respect to principal of and
interest, premium and Special Interest on, all Global Notes and all other Notes
the Holders of which shall have provided wire transfer instructions to the
Company or the Paying Agent. Such payment shall be in such coin or currency of
the United States of America as at the time of payment is legal tender for
payment of public and private debts.
A-3-3
<PAGE>
3. Paying Agent and Registrar.
Initially, United States Trust Company of New York, the Trustee under the
Indenture, shall act as Paying Agent and Registrar. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company or any of
its Restricted Subsidiaries may act in any such capacity.
4. Indenture.
The Company issued the Notes under an Indenture dated as of November 19,
1999 ("Indenture") among the Company, the Guarantors and the Trustee. The terms
of the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Code (S)(S) 77aaa-77bbbb) (the "TIA"). The Notes are subject to all such terms,
and Holders are referred to the Indenture and the TIA for a statement of such
terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and be
controlling. The Notes are obligations of the Company limited to $1,100.0
million in aggregate principal amount.
5. Optional Redemption.
(a) Except as set forth in subparagraphs (b) and (c) below and in Section
6 hereof, the Notes shall not be redeemable at the Company's option prior to
November 15, 2004. Thereafter, the Notes shall be subject to redemption at any
time or from time to time at the option of the Company, in whole or in part,
upon not less than 30 nor more than 60 days' notice, at the redemption prices
(expressed as percentages of principal amount) set forth below, plus accrued and
unpaid interest and Special Interest, if any, thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on
November 15 of the years indicated below:
Percentage of
Principal
Year Amount
---- --------------
2004................................................ 104.750%
2005................................................ 103.167%
2006................................................ 101.583%
2007 and thereafter 100.000%
(b) Notwithstanding the foregoing, at any time prior to November 15,
2002, the Company may, on any one or more occasions, redeem up to 25% of the
aggregate principal amount of Notes originally issued pursuant to this Indenture
at a redemption price of 109.500% of the principal amount thereof, plus accrued
and unpaid interest thereon to the redemption date, with the net cash proceeds
received from one or more Equity Offerings made by the Company or GCL (to the
extent such net cash proceeds received by GCL were contributed to the Company as
common equity capital); provided that at least 75% of the aggregate principal
amount of Notes originally issued pursuant to this Indenture remain outstanding
immediately after the occurrence of any such redemption. The Company may make
any such redemption upon not less than 30 nor more than 60 days= notice (but in
no event more than 90 days after the closing of the related Equity Offering).
Any such notice may be given prior to the
A-3-4
<PAGE>
completion of the related Equity Offering and any such redemption may, at the
Company's discretion, be subject to the satisfaction of one or more conditions
precedent, including, but not limited to, the completion of the related Equity
Offering.
(c) In addition, at any time prior to November 15, 2004, the Notes may
also be redeemed at the option of the Company, in whole but not in part, upon
the occurrence of a Change of Control, upon not less than 30 nor more than 60
days' prior notice (but in no event may any such redemption occur more than 90
days after the occurrence of such Change of Control) mailed by first-class mail
to each Holder's registered address, at a redemption price equal to 100% of the
principal amount thereof plus the relevant Applicable Premium as of, and accrued
and unpaid interest, if any, to, the date of redemption.
(d) Any redemption pursuant to this Section 5 shall be made pursuant to
the provisions of Sections 3.01 through 3.06 of the Indenture.
6. Optional Tax Redemption.
The Notes shall be subject to redemption at the option of the Company or
a successor corporation at any time, in whole but not in part, upon not less
than 30 nor more than 60 days' notice, at a redemption price equal to the
principal amount thereof, plus accrued and unpaid interest thereon to the
redemption date if, as a result of any change in or amendment to the laws or any
regulations or ruling promulgated thereunder of (x) Bermuda or any political
subdivision or governmental authority thereof or therein having the power to
tax, (y) any jurisdiction, other than the United States, from or through which
payment on the Notes is made by the Company or a successor corporation, or its
paying agent in its capacity as such or any political subdivision or
governmental authority thereof or therein having the power to tax or (z) any
other jurisdiction, other than the United States, in which the Company or a
successor corporation is organized, or any political subdivision or governmental
authority thereof or therein having the power to tax, or any change in the
official application or interpretation of such laws, regulations or rulings, or
any change in the official application or interpretation of, or any execution of
or amendment to, any treaty or treaties affecting taxation to which such
jurisdiction (or such political subdivision or taxing authority) is a party (a
"Change in Tax Law"), which becomes effective on or after November 12, 1999, the
Company or a successor corporation is or would be required on the next
succeeding interest payment date to pay Additional Amounts with respect to the
Notes (as described under Section 7 hereof), and the payment of such Additional
Amounts cannot be avoided by the use of any reasonable measures available to the
Company or a successor corporation.
In addition, the Notes shall be subject to redemption at the option of
the Company at any time, in whole but not in part, upon not less than 30 nor
more than 60 days' notice, at a redemption price equal to the principal amount
thereof, plus accrued and unpaid interest thereon to the redemption date, if the
Person formed by a consolidation or amalgamation of the Company or into which
the Company is merged or to which the Company conveys, transfers or leases its
properties and assets substantially as an entirety is required, as a consequence
of such consolidation, amalgamation, merger, conveyance, transfer or lease and
as a consequence of a Change in Tax Law occurring after the date of
A-3-5
<PAGE>
such consolidation, amalgamation, merger, conveyance, transfer or lease, to pay
Additional Amounts in respect of any tax, assessment or governmental charge
imposed on any Holder of Notes.
7. Payment of Additional Amounts.
If any deduction or withholding for any present or future taxes,
assessments or other governmental charges of (x) Bermuda or any political
subdivision or governmental authority thereof or therein having power to tax,
(y) any jurisdiction, other than the United States, from or through which
payment on the Notes is made by the Company or a successor corporation, or its
paying agent in its capacity as such or any political subdivision or
governmental authority thereof or therein having the power to tax or (z) any
other jurisdiction, other than the United States, in which the Company or a
successor corporation is organized, or any political subdivision or governmental
authority thereof or therein having the power to tax shall at any time be
required by such jurisdiction (or any such political subdivision or taxing
authority) in respect of any amounts to be paid by the Company or a successor
corporation under the Notes, the Company or a successor corporation shall pay to
each Holder of Notes as additional interest, such additional amounts
("Additional Amounts") as may be necessary in order that the net amounts paid to
such holder of such Notes who, with respect to any such tax, assessment or other
governmental charge, is not resident in, or a citizen of, such jurisdiction,
after such deduction or withholding, shall be not less than the amount specified
in such Notes to which such Holder is entitled; provided, however, that the
Company or a successor corporation shall not be required to make any payment of
Additional Amounts for or on account of:
(a) Any tax, assessment or other governmental charge that would not have
been imposed but for (i) the existence of any present or former connection
between such Holder (or between a fiduciary, settlor, beneficiary, member or
shareholder of, or possessor of a power over, such Holder, if such Holder is an
estate, trust, partnership, limited liability company or corporation) and the
taxing jurisdiction or any political subdivision or territory or possession
thereof or area subject to its jurisdiction, including, without limitation, such
Holder (or such fiduciary, settlor, beneficiary, member, shareholder or
possessor) being or having been a citizen or resident thereof or being or having
been present or engaged in a trade or business therein or having or having had a
permanent establishment therein, (ii) the presentation of a Note (where
presentation is required) for payment on a date more than 30 days after (x) the
date on which such payment became due and payable or (y) the date on which
payment thereof is duly provided for, whichever occurs later, or (iii) the
presentation of a Note for payment in Bermuda or any political subdivision
thereof or therein, unless such Note could not have been presented for payment
elsewhere;
(b) Any estate, inheritance, gift, sales, transfer, personal property or
similar tax, assessment or other governmental charge;
(c) Any tax, assessment or other governmental charge that is payable
otherwise than by withholding from payment of principal of, premium, if any, or
any interest on the Notes;
(d) Any tax, assessment or other governmental charge that is imposed or
withheld by reason of the failure by the Holder or the beneficial owner of the
Note to comply with a request of the Company addressed to the Holder (i) to
provide information, documents or other evidence concerning
A-3-6
<PAGE>
the nationality, residence or identity of the Holder or such beneficial owner or
(ii) to make and deliver any declaration or other similar claim (other than a
claim for refund of a tax, assessment or other governmental charge withheld by
the Company) or satisfy any information or reporting requirements, which, in the
case of (i) or (ii), is required or imposed by a statute, treaty, regulation or
administrative practice of the taxing jurisdiction as a precondition to
exemption from all or part of such tax, assessment or other governmental charge;
or
(e) Any combination of items (a), (b), (c) and (d) above;
nor shall Additional Amounts be paid with respect to any payment of the
principal of, or any premium or interest on, any Note to any Holder who is a
fiduciary or partnership or limited liability company or other than the sole
beneficial owner of such payment to the extent such payment would be required by
the laws of (x) Bermuda or any political subdivision or governmental authority
thereof or therein having the power to tax, (y) any jurisdiction, other than the
United States, from or through which payment on the Notes is made by the Company
or a successor corporation, or its paying agent in its capacity as such or any
political subdivision or governmental authority thereof or therein having the
power to tax or (z) any other jurisdiction, other than the United States, in
which the Company or a successor corporation is organized, or any political
subdivision or governmental authority thereof or therein having the power to tax
to be included in the income for tax purposes of a beneficiary or settlor with
respect to such fiduciary or a member of such partnership, limited liability
company or beneficial owner who would not have been entitled to such Additional
Amounts had it been the Holder of such Note.
The Company shall provide the Trustee with the official acknowledgment of
the relevant taxing authority (or, if such acknowledgment is not available, a
certified copy thereof) evidencing the payment of the withholding taxes, if any,
by the Company. Copies of such documentation shall be made available to the
Holders of the Notes or the Paying Agent, as applicable, upon request therefor.
All references in the Indenture to principal of, premium, if any, and
interest on the Notes shall include any Additional Amounts payable by the
Company in respect of such principal, such premium, if any, and such interest.
8. Mandatory Redemption.
Except as set forth in Section 9 below, the Company shall not be required
to make mandatory redemption or sinking fund payments with respect to the Notes.
9. Repurchase at Option of Holder.
(a) Upon the occurrence of a Change of Control, the Company shall make an
offer (a "Change of Control Offer") to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of each Holder's Notes at a purchase
price equal to 101% of the aggregate principal amount thereof, plus accrued and
unpaid interest and Special Interest thereon, if any, to the date of repurchase
(the "Change of Control Payment"); provided, however, that the Company shall not
be obligated to repurchase Notes pursuant to this subparagraph in the event that
it has exercised its rights to redeem all of the Notes as
A-3-7
<PAGE>
described in Section 5(c) hereof. Within 30 days following any Change of
Control, the Company shall mail a notice to each Holder setting forth the
procedures governing the Change of Control Offer as required by the Indenture.
(b) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, consummate any Asset Sale unless, (i)
the Company (or such Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (as determined in good faith by the Board of Directors (including as to
the value of all noncash consideration) and set forth in an Officer's
Certificate delivered to the Trustee) of the assets or Equity Interests issued
or sold or otherwise disposed of and (ii) at least 75% of the consideration
therefor is in the form of cash and/or Cash Equivalents, and (iii) the Net
Proceeds received by the Company (or such Restricted Subsidiary, as the case may
be) from such Asset Sale are applied within 360 days following the receipt of
such Net Proceeds (a) first, to the extent the Company (or such Restricted
Subsidiary, as the case may be) elects, to the redemption or repurchase of
outstanding pari passu Indebtedness of the Company or Purchase Money
Indebtedness of any Restricted Subsidiary; provided that in the event that such
Restricted Subsidiary is a Guarantor, the Purchase Money Indebtedness to be
redeemed or repurchased ranks at least pari passu to the Guarantee given by such
Restricted Subsidiary and (b) second, to the extent of the balance of such Net
Proceeds after application as described in (a) above and to the extent the
Company (or such Restricted Subsidiary, as the case may be) elects, to reinvest,
or enter into a legally binding agreement to reinvest, such Net Proceeds (or any
portion thereof) in assets that are used or useful in a Permitted Business. The
balance of such Net Proceeds, after the application of such Net Proceeds as
described in the immediately preceding clauses (a) and (b), shall constitute
"Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds equals or exceeds $15.0
million (taking into account income earned on such Excess Proceeds), the Company
shall be required to make an offer to all Holders of Notes and pari passu
Indebtedness (an "Asset Sale Offer") to purchase the maximum principal amount of
Notes and pari passu Indebtedness that may be purchased out of the Excess
Proceeds, at a purchase price in cash in an amount equal to 100% of the
principal amount thereof, plus accrued and unpaid interest thereon to the date
of purchase, in accordance with the procedures set forth in Article 3 of the
Indenture and the agreements governing such pari passu Indebtedness. To the
extent that any Excess Proceeds remain after consummation of an Asset Sale
Offer, the Company may use such Excess Proceeds for any purpose not otherwise
prohibited by the Indenture. If the aggregate principal amount of Notes and pari
passu Indebtedness tendered into such Asset Sale Offer surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes and pari passu Indebtedness to be purchased on a pro rata basis. Upon
completion of such Asset Sale Offer, the amount of Excess Proceeds shall be
reset at zero for purposes of the first sentence of this paragraph.
10. Notice of Redemption.
Notice of redemption shall be mailed at least 30 days but not more than
60 days before the redemption date to each Holder whose Notes are to be redeemed
at its registered address. Notes in denominations larger than $1,000 may be
redeemed in part but only in whole multiples of $1,000, unless
A-3-8
<PAGE>
all of the Notes held by a Holder are to be redeemed. On and after the
redemption date interest shall cease to accrue on Notes or portions thereof
called for redemption.
11. Denominations, Transfer, Exchange.
The Notes are in registered form without coupons in denominations of
$1,000 and integral multiples of $1,000. The transfer of Notes may be
registered and Notes may be exchanged as provided in the Indenture. The
Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Company may require a
Holder to pay any taxes and fees required by law or permitted by the Indenture.
The Company need not exchange or register the transfer of any Note or portion of
a Note selected for redemption, except for the unredeemed portion of any Note
being redeemed in part. Also, the Company need not exchange or register the
transfer of any Notes for a period of 15 days before a selection of Notes to be
redeemed or during the period between a record date and the corresponding
Interest Payment Date.
12. Persons Deemed Owners.
The registered Holder of a Note may be treated as its owner for all
purposes under the Indenture.
13. Amendment, Supplement and Waiver.
Subject to certain exceptions, the Indenture, the Notes or any Guarantee
may be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the then outstanding Notes voting as a single
class, and any existing default or compliance with any provision of the
Indenture, the Notes or any Guarantee may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Notes voting
as a single class. Without the consent of any Holder of a Note, the Indenture,
the Notes or any Guarantee may be amended or supplemented to cure any ambiguity,
defect or inconsistency, to provide for uncertificated Notes in addition to or
in place of certificated Notes, to provide for the assumption of the Company's
or any Guarantor's obligations to Holders of the Notes in case of a merger or
consolidation, to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights under the Indenture of any such Holder, to comply with the requirements
of the SEC in order to effect or maintain the qualification of the Indenture
under the TIA, or to allow any Guarantor to execute a supplemental indenture to
the Indenture.
14. Defaults and Remedies.
(a) Events of Default under the Indenture include: (i) the failure to
pay interest on, or Special Interest, if any, with respect to the Notes, when
the same becomes due and payable if such default continues for a period of 30
days, (ii) the failure to pay principal of any Notes when such principal becomes
due and payable, at maturity, upon redemption or otherwise; (iii) failure by the
Company or any Restricted Subsidiary to comply with Sections 4.07, 4.09, 4.10,
4.15 or 5.01 of the Indenture; (iv) failure by the Company or any Restricted
Subsidiary for 60 days after notice to comply with any of its other agreements
in the Indenture or this Note; (v) default under any mortgage, indenture or
instrument
A-3-9
<PAGE>
under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Restricted Subsidiaries (or the payment of which is guaranteed by the Company or
any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now
exists, or is created after the date of the Indenture, which default results in
the acceleration of such Indebtedness prior to its express maturity and, in each
case, the principal amount of any such Indebtedness, together with the principal
amount of any other such Indebtedness or the maturity of which has been so
accelerated, aggregates $25.0 million or more; (vi) failure by the Company or
any of its Restricted Subsidiaries to pay final judgments not subject to appeal
aggregating in excess of $25.0 million (net of applicable insurance coverage
which is acknowledged in writing by the insurer), which judgments are not paid,
discharged or stayed for a period of 60 days; (vii) except as permitted by the
Indenture, any Guarantee shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force and
effect or any Guarantor, or any Person acting on behalf of any Guarantor, shall
deny or disaffirm its obligations under its Guarantee; and (viii) certain events
of bankruptcy or insolvency with respect to the Company or any of the Company's
Restricted Subsidiaries.
(b) If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable. Notwithstanding the foregoing, in
the case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Notes shall become due and payable without further
action or notice. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of the Notes notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their interest. The
Holders of a majority in principal amount of the then outstanding Notes by
notice to the Trustee may on behalf of the Holders of all of the Notes waive any
existing Default or Event of Default and its consequences under the Indenture,
except a continuing Default or Event of Default in the payment of interest on,
or principal of, the Notes. The Company shall deliver to the Trustee annually a
statement regarding compliance with the Indenture, and the Company, upon
becoming aware of any Default or Event of Default, deliver to the Trustee a
statement specifying such Default or Event of Default.
15. Additional Restricted Subsidiary Guarantees.
If any Restricted Subsidiary guarantees any Debt Securities issued by the
Company after November 19, 1999, then such Restricted Subsidiary shall become a
Guarantor and execute a supplemental indenture and deliver an Opinion of
Counsel, in accordance with the terms of the Indenture.
16. Trustee Dealings with Company.
The Trustee, in its individual or any other capacity, may make loans to,
accept deposits from, and perform services for the Company or its Affiliates,
and may otherwise deal with the Company or its Affiliates, as if it were not the
Trustee.
A-3-10
<PAGE>
17. No Recourse Against Others.
A director, officer, employee, incorporator or shareholder, of the
Company or any Guarantor, as such, shall not have any liability for any
obligations of the Company or any Guarantor under the Notes, any Guarantee or
the Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
18. Authentication.
This Note shall not be valid until authenticated by the manual signature
of the Trustee or an authenticating agent.
19. Abbreviations.
Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entirety), JT TEN (= joint tenants with right of survivorship and not as tenants
in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
20. Additional Rights of Holders of Restricted Global Notes and
Restricted Definitive Notes.
In addition to the rights provided to Holders of Notes under the
Indenture, Holders of Notes shall have all the rights set forth in the
Registration Rights Agreement.
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes and the Trustee may use CUSIP numbers in notices of
redemption as a convenience to Holders. No representation is made as to the
accuracy of such numbers either as printed on the Notes or as contained in any
notice of redemption and reliance may be placed only on the other identification
numbers placed thereon.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Global Crossing Holdings Ltd.
Wessex House
45 Reid Street
Hamilton HM 12, Bermuda
Attention: Secretary of the Company
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<PAGE>
Assignment Form
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
Date:
Your Signature:
(Sign exactly as your name appears on the face of
this Note)
Tax Identification No:
SIGNATURE GUARANTEE:
_________________________________
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements of
the Registrar, which requirements include membership
or participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other "signature
guarantee program" as may be determined by the
Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
A-3-12
<PAGE>
Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Company pursuant
to Section 4.10 or 4.15 of the Indenture, check the box below:
Section 4.10 Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $________
Date:
Your Signature:
(Sign exactly as your name appears on the face of
this Note)
Tax Identification No:
SIGNATURE GUARANTEE:
_________________________________
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements of
the Registrar, which requirements include membership
or participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other "signature
guarantee program" as may be determined by the
Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
A-3-13
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE1
The following exchanges of a part of this Global Note for an interest in
another Global Note or for a Definitive Note, or exchanges of a part of another
Global Note or Definitive Note for an interest in this Global Note, have been
made:
<TABLE>
<CAPTION>
Principal Amount Signature of
Amount of decrease Amount of increase of this Global Note authorized
in Principal in Principal following such officer of
Amount of this Amount of this decrease Trustee or
Date of Exchange Global Note Global Note (or increase) Note Custodian
- ----------------- ------------------ ------------------ ------------------- -----------------
<S> <C> <C> <C> <C>
</TABLE>
- -------------------------
1 This should be included only if the Note is issued in global form.
A-3-14
<PAGE>
EXHIBIT A-4
(Face of Regulation S Temporary Global Note)
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK) ("DTC") TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF
THE ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT
WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING
THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE COMPANY, (2) SO
LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE
OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE
BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF
THIS SECURITY), (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT,
(4) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT OR (5) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH
ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER
HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND AGREES FOR THE BENEFIT OF
THE COMPANY THAT IT IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A.
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THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON.
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<PAGE>
CUSIP
92% [Series A] [Series B] Senior Notes due 2009
No. $
Global Crossing Holdings Ltd.
promises to pay to Cede & Co.
or registered assigns, the principal sum of
Dollars on November 15, 2009.
Interest Payment Dates: May 15 and November 15.
Record Dates: May 1 and November 1.
Global Crossing Holdings Ltd.
By:
Name:
Title:
By:
Name:
Title:
This is one of the
Notes referred to in the
within-mentioned Indenture:
United States Trust Company of New York,
as Trustee
By: Dated: November 19, 1998
Name:
Title:
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<PAGE>
(Back of Regulation S Temporary Global Note)
92% Series A Senior Notes due 2009
Capitalized terms used herein shall have the meanings assigned to them in the
Indenture referred to below unless otherwise indicated. For the purposes of this
Note, the term "Notes" shall refer only to the Company's 92% Senior Notes due
2009.
1. Interest.
Global Crossing Holdings Ltd., a Bermuda company (the "Company"),
promises to pay interest on the principal amount of this Note at 92% per annum
from November 19, 1999 until maturity and shall pay the Special Interest payable
pursuant to Section 5 of the Registration Rights Agreement referred to below.
The Company shall pay interest and Special Interest semi-annually on November 15
and May 15 of each year, or if any such day is not a Business Day, on the next
succeeding Business Day (each an "Interest Payment Date"). Interest on the
Notes shall accrue from the most recent date to which interest has been paid or,
if no interest has been paid, from the date of issuance; provided that if there
is no existing Default in the payment of interest, and if this Note is
authenticated between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided, further, that the first Interest
Payment Date shall be May 15, 2000. The Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal and premium, if any, from time to time on demand at a rate that is
1.0% per annum in excess of the rate then in effect; it shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest and Special Interest (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest shall be computed on the basis of a 360-day year of
twelve 30-day months.
Until this Regulation S Temporary Global Note is exchanged for one or
more Regulation S Permanent Global Notes, the Holder hereof shall not be
entitled to receive payments of interest hereon; until so exchanged in full,
this Regulation S Temporary Global Note shall in all other respects be entitled
to the same benefits as other Notes under the Indenture.
2. Method of Payment.
The Company shall pay interest on the Notes (except defaulted interest)
and Special Interest to the Persons who are registered Holders of Notes at the
close of business on the November 1 or May 1 next preceding the Interest Payment
Date, even if such Notes are canceled after such record date and on or before
such Interest Payment Date, except as provided in Section 2.12 of the Indenture
with respect to defaulted interest. The Notes shall be payable as to principal,
premium and Special Interest, if any, and interest at the office or agency of
the Company maintained for such purpose within or without the City and State of
New York, or, at the option of the Company, payment of interest and Special
Interest may be made by check mailed to the Holders at their addresses set forth
in the register of Holders, and provided that payment by wire transfer of
immediately available funds shall be required with respect to principal of and
interest, premium and Special Interest on, all Global Notes and all other Notes
the
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<PAGE>
Holders of which shall have provided wire transfer instructions to the Company
or the Paying Agent. Such payment shall be in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts.
3. Paying Agent and Registrar.
Initially, United States Trust Company of New York, the Trustee under the
Indenture, shall act as Paying Agent and Registrar. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company or any of
its Restricted Subsidiaries may act in any such capacity.
4. Indenture.
The Company issued the Notes under an Indenture dated as of November 19,
1999 ("Indenture") among the Company, the Guarantors and the Trustee. The terms
of the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Code (S)(S) 77aaa-77bbbb) (the "TIA"). The Notes are subject to all such terms,
and Holders are referred to the Indenture and the TIA for a statement of such
terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and be
controlling. The Notes are obligations of the Company limited to $1,100.0
million in aggregate principal amount.
5. Optional Redemption.
(a) Except as set forth in subparagraphs (b) and (c) below and in Section
6 hereof, the Notes shall not be redeemable at the Company's option prior to
November 15, 2004. Thereafter, the Notes shall be subject to redemption at any
time or from time to time at the option of the Company, in whole or in part,
upon not less than 30 nor more than 60 days) notice, at the redemption prices
(expressed as percentages of principal amount) set forth below, plus accrued and
unpaid interest and Special Interest, if any, thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on
November 15 of the years indicated below:
Percentage of
Principal
Year Amount
---- -------------
2004................................................ 104.750%
2005................................................ 103.167%
2006................................................ 101.583%
2007 and thereafter 100.000%
(b) Notwithstanding the foregoing, at any time prior to November 15,
2002, the Company may, on any one or more occasions, redeem up to 25% of the
aggregate principal amount of Notes originally issued pursuant to this Indenture
at a redemption price of 109.500% of the principal amount thereof, plus accrued
and unpaid interest thereon to the redemption date, with the net cash proceeds
received from one or more Equity Offerings made by the Company or GCL (to the
extent such net cash
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<PAGE>
proceeds received by GCL were contributed to the Company as common equity
capital); provided that at least 75% of the aggregate principal amount of Notes
originally issued pursuant to this Indenture remain outstanding immediately
after the occurrence of any such redemption. The Company may make any such
redemption upon not less than 30 nor more than 60 days) notice (but in no event
more than 90 days after the closing of the related Equity Offering). Any such
notice may be given prior to the completion of the related Equity Offering and
any such redemption may, at the Company's discretion, be subject to the
satisfaction of one or more conditions precedent, including, but not limited to,
the completion of the related Equity Offering.
(c) In addition, at any time prior to November 15, 2004, the Notes may
also be redeemed at the option of the Company, in whole but not in part, upon
the occurrence of a Change of Control, upon not less than 30 nor more than 60
days) prior notice (but in no event may any such redemption occur more than 90
days after the occurrence of such Change of Control) mailed by first-class mail
to each Holder's registered address, at a redemption price equal to 100% of the
principal amount thereof plus the relevant Applicable Premium as of, and accrued
and unpaid interest, if any, to, the date of redemption.
(d) Any redemption pursuant to this Section 5 shall be made pursuant to
the provisions of Sections 3.01 through 3.06 of the Indenture.
6. Optional Tax Redemption.
The Notes shall be subject to redemption at the option of the Company or
a successor corporation at any time, in whole but not in part, upon not less
than 30 nor more than 60 days) notice, at a redemption price equal to the
principal amount thereof, plus accrued and unpaid interest thereon to the
redemption date if, as a result of any change in or amendment to the laws or any
regulations or ruling promulgated thereunder of (x) Bermuda or any political
subdivision or governmental authority thereof or therein having the power to
tax, (y) any jurisdiction, other than the United States, from or through which
payment on the Notes is made by the Company or a successor corporation, or its
paying agent in its capacity as such or any political subdivision or
governmental authority thereof or therein having the power to tax or (z) any
other jurisdiction, other than the United States, in which the Company or a
successor corporation is organized, or any political subdivision or governmental
authority thereof or therein having the power to tax, or any change in the
official application or interpretation of such laws, regulations or rulings, or
any change in the official application or interpretation of, or any execution of
or amendment to, any treaty or treaties affecting taxation to which such
jurisdiction (or such political subdivision or taxing authority) is a party (a
"Change in Tax Law"), which becomes effective on or after November 12, 1999, the
Company or a successor corporation is or would be required on the next
succeeding interest payment date to pay Additional Amounts with respect to the
Notes (as described under Section 7 hereof), and the payment of such Additional
Amounts cannot be avoided by the use of any reasonable measures available to the
Company or a successor corporation.
In addition, the Notes shall be subject to redemption at the option of
the Company at any time, in whole but not in part, upon not less than 30 nor
more than 60 days) notice, at a redemption price equal to the principal amount
thereof, plus accrued and unpaid interest thereon to the redemption
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<PAGE>
date, if the Person formed by a consolidation or amalgamation of the Company or
into which the Company is merged or to which the Company conveys, transfers or
leases its properties and assets substantially as an entirety is required, as a
consequence of such consolidation, amalgamation, merger, conveyance, transfer or
lease and as a consequence of a Change in Tax Law occurring after the date of
such consolidation, amalgamation, merger, conveyance, transfer or lease, to pay
Additional Amounts in respect of any tax, assessment or governmental charge
imposed on any Holder of Notes.
7. Payment of Additional Amounts.
If any deduction or withholding for any present or future taxes,
assessments or other governmental charges of (x) Bermuda or any political
subdivision or governmental authority thereof or therein having power to tax,
(y) any jurisdiction, other than the United States, from or through which
payment on the Notes is made by the Company or a successor corporation, or its
paying agent in its capacity as such or any political subdivision or
governmental authority thereof or therein having the power to tax or (z) any
other jurisdiction, other than the United States, in which the Company or a
successor corporation is organized, or any political subdivision or governmental
authority thereof or therein having the power to tax shall at any time be
required by such jurisdiction (or any such political subdivision or taxing
authority) in respect of any amounts to be paid by the Company or a successor
corporation under the Notes, the Company or a successor corporation shall pay to
each Holder of Notes as additional interest, such additional amounts
("Additional Amounts") as may be necessary in order that the net amounts paid to
such holder of such Notes who, with respect to any such tax, assessment or other
governmental charge, is not resident in, or a citizen of, such jurisdiction,
after such deduction or withholding, shall be not less than the amount specified
in such Notes to which such Holder is entitled; provided, however, that the
Company or a successor corporation shall not be required to make any payment of
Additional Amounts for or on account of:
(a) Any tax, assessment or other governmental charge that would not have
been imposed but for (i) the existence of any present or former connection
between such Holder (or between a fiduciary, settlor, beneficiary, member or
shareholder of, or possessor of a power over, such Holder, if such Holder is an
estate, trust, partnership, limited liability company or corporation) and the
taxing jurisdiction or any political subdivision or territory or possession
thereof or area subject to its jurisdiction, including, without limitation, such
Holder (or such fiduciary, settlor, beneficiary, member, shareholder or
possessor) being or having been a citizen or resident thereof or being or having
been present or engaged in a trade or business therein or having or having had a
permanent establishment therein, (ii) the presentation of a Note (where
presentation is required) for payment on a date more than 30 days after (x) the
date on which such payment became due and payable or (y) the date on which
payment thereof is duly provided for, whichever occurs later, or (iii) the
presentation of a Note for payment in Bermuda or any political subdivision
thereof or therein, unless such Note could not have been presented for payment
elsewhere;
(b) Any estate, inheritance, gift, sales, transfer, personal property or
similar tax, assessment or other governmental charge;
(c) Any tax, assessment or other governmental charge that is payable
otherwise than by withholding from payment of principal of, premium, if any, or
any interest on the Notes;
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<PAGE>
(d) Any tax, assessment or other governmental charge that is imposed or
withheld by reason of the failure by the Holder or the beneficial owner of the
Note to comply with a request of the Company addressed to the Holder (i) to
provide information, documents or other evidence concerning the nationality,
residence or identity of the Holder or such beneficial owner or (ii) to make and
deliver any declaration or other similar claim (other than a claim for refund of
a tax, assessment or other governmental charge withheld by the Company) or
satisfy any information or reporting requirements, which, in the case of (i) or
(ii), is required or imposed by a statute, treaty, regulation or administrative
practice of the taxing jurisdiction as a precondition to exemption from all or
part of such tax, assessment or other governmental charge; or
(e) Any combination of items (a), (b), (c) and (d) above;
nor shall Additional Amounts be paid with respect to any payment of the
principal of, or any premium or interest on, any Note to any Holder who is a
fiduciary or partnership or limited liability company or other than the sole
beneficial owner of such payment to the extent such payment would be required by
the laws of (x) Bermuda or any political subdivision or governmental authority
thereof or therein having the power to tax, (y) any jurisdiction, other than the
United States, from or through which payment on the Notes is made by the Company
or a successor corporation, or its paying agent in its capacity as such or any
political subdivision or governmental authority thereof or therein having the
power to tax or (z) any other jurisdiction, other than the United States, in
which the Company or a successor corporation is organized, or any political
subdivision or governmental authority thereof or therein having the power to tax
to be included in the income for tax purposes of a beneficiary or settlor with
respect to such fiduciary or a member of such partnership, limited liability
company or beneficial owner who would not have been entitled to such Additional
Amounts had it been the Holder of such Note.
The Company shall provide the Trustee with the official acknowledgment of
the relevant taxing authority (or, if such acknowledgment is not available, a
certified copy thereof) evidencing the payment of the withholding taxes, if any,
by the Company. Copies of such documentation shall be made available to the
Holders of the Notes or the Paying Agent, as applicable, upon request therefor.
All references in the Indenture to principal of, premium, if any, and
interest on the Notes shall include any Additional Amounts payable by the
Company in respect of such principal, such premium, if any, and such interest.
8. Mandatory Redemption.
Except as set forth in Section 9 below, the Company shall not be required
to make mandatory redemption or sinking fund payments with respect to the Notes.
9. Repurchase at Option of Holder.
(a) Upon the occurrence of a Change of Control, the Company shall make an
offer (a "Change of Control Offer") to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of each Holder's Notes at a purchase
price equal to 101% of the aggregate principal amount thereof, plus
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<PAGE>
accrued and unpaid interest and Special Interest thereon, if any, to the date of
repurchase (the "Change of Control Payment"); provided, however, that the
Company shall not be obligated to repurchase Notes pursuant to this subparagraph
in the event that it has exercised its rights to redeem all of the Notes as
described in Section 5(c) hereof. Within 30 days following any Change of
Control, the Company shall mail a notice to each Holder setting forth the
procedures governing the Change of Control Offer as required by the Indenture.
(b) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, consummate any Asset Sale unless, (i)
the Company (or such Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (as determined in good faith by the Board of Directors (including as to
the value of all noncash consideration) and set forth in an Officer's
Certificate delivered to the Trustee) of the assets or Equity Interests issued
or sold or otherwise disposed of and (ii) at least 75% of the consideration
therefor is in the form of cash and/or Cash Equivalents, and (iii) the Net
Proceeds received by the Company (or such Restricted Subsidiary, as the case may
be) from such Asset Sale are applied within 360 days following the receipt of
such Net Proceeds (a) first, to the extent the Company (or such Restricted
Subsidiary, as the case may be) elects, to the redemption or repurchase of
outstanding pari passu Indebtedness of the Company or Purchase Money
Indebtedness of any Restricted Subsidiary; provided that in the event that such
Restricted Subsidiary is a Guarantor, the Purchase Money Indebtedness to be
redeemed or repurchased ranks at least pari passu to the Guarantee given by such
Restricted Subsidiary and (b) second, to the extent of the balance of such Net
Proceeds after application as described in (a) above and to the extent the
Company (or such Restricted Subsidiary, as the case may be) elects, to reinvest,
or enter into a legally binding agreement to reinvest, such Net Proceeds (or any
portion thereof) in assets that are used or useful in a Permitted Business. The
balance of such Net Proceeds, after the application of such Net Proceeds as
described in the immediately preceding clauses (a) and (b), shall constitute
"Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds equals or exceeds $15.0
million (taking into account income earned on such Excess Proceeds), the Company
shall be required to make an offer to all Holders of Notes and pari passu
Indebtedness (an "Asset Sale Offer") to purchase the maximum principal amount of
Notes and pari passu Indebtedness that may be purchased out of the Excess
Proceeds, at a purchase price in cash in an amount equal to 100% of the
principal amount thereof, plus accrued and unpaid interest thereon to the date
of purchase, in accordance with the procedures set forth in Article 3 of the
Indenture and the agreements governing such pari passu Indebtedness. To the
extent that any Excess Proceeds remain after consummation of an Asset Sale
Offer, the Company may use such Excess Proceeds for any purpose not otherwise
prohibited by the Indenture. If the aggregate principal amount of Notes and pari
passu Indebtedness tendered into such Asset Sale Offer surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes and pari passu Indebtedness to be purchased on a pro rata basis. Upon
completion of such Asset Sale Offer, the amount of Excess Proceeds shall be
reset at zero for purposes of the first sentence of this paragraph.
10. Notice of Redemption.
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<PAGE>
Notice of redemption shall be mailed at least 30 days but not more than
60 days before the redemption date to each Holder whose Notes are to be redeemed
at its registered address. Notes in denominations larger than $1,000 may be
redeemed in part but only in whole multiples of $1,000, unless all of the Notes
held by a Holder are to be redeemed. On and after the redemption date interest
shall cease to accrue on Notes or portions thereof called for redemption.
11. Denominations, Transfer, Exchange.
The Notes are in registered form without coupons in denominations of
$1,000 and integral multiples of $1,000. The transfer of Notes may be
registered and Notes may be exchanged as provided in the Indenture. The
Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Company may require a
Holder to pay any taxes and fees required by law or permitted by the Indenture.
The Company need not exchange or register the transfer of any Note or portion of
a Note selected for redemption, except for the unredeemed portion of any Note
being redeemed in part. Also, the Company need not exchange or register the
transfer of any Notes for a period of 15 days before a selection of Notes to be
redeemed or during the period between a record date and the corresponding
Interest Payment Date.
This Regulation S Temporary Global Note is exchangeable in whole or in
part for one or more Global Notes only (i) on or after the termination of the
40-day restricted period (as defined in Regulation S) and (ii) upon presentation
of certificates (accompanied by an Opinion of Counsel, if applicable) required
by Article 2 of the Indenture. Upon exchange of this Regulation S Temporary
Global Note for one or more Global Notes, the Trustee shall cancel this
Regulation S Temporary Global Note.
12. Persons Deemed Owners.
The registered Holder of a Note may be treated as its owner for all
purposes under the Indenture.
13. Amendment, Supplement and Waiver.
Subject to certain exceptions, the Indenture, the Notes or any Guarantee
may be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the then outstanding Notes voting as a single
class, and any existing default or compliance with any provision of the
Indenture, the Notes or any Guarantee may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Notes voting
as a single class. Without the consent of any Holder of a Note, the Indenture,
the Notes or any Guarantee may be amended or supplemented to cure any ambiguity,
defect or inconsistency, to provide for uncertificated Notes in addition to or
in place of certificated Notes, to provide for the assumption of the Company's
or any Guarantor's obligations to Holders of the Notes in case of a merger or
consolidation, to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights under the Indenture of any such Holder, to comply with the requirements
of the SEC in order to effect or maintain the qualification of the Indenture
under the TIA, or to allow any Guarantor to execute a supplemental indenture to
the Indenture.
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<PAGE>
14. Defaults and Remedies.
(a) Events of Default under the Indenture include: (i) the failure to
pay interest on, or Special Interest, if any, with respect to the Notes, when
the same becomes due and payable if such default continues for a period of 30
days, (ii) the failure to pay principal of any Notes when such principal becomes
due and payable, at maturity, upon redemption or otherwise; (iii) failure by the
Company or any Restricted Subsidiary to comply with Sections 4.07, 4.09, 4.10,
4.15 or 5.01 of the Indenture; (iv) failure by the Company or any Restricted
Subsidiary for 60 days after notice to comply with any of its other agreements
in the Indenture or this Note; (v) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Restricted Subsidiaries (or the payment of which is guaranteed by the Company or
any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now
exists, or is created after the date of the Indenture, which default results in
the acceleration of such Indebtedness prior to its express maturity and, in each
case, the principal amount of any such Indebtedness, together with the principal
amount of any other such Indebtedness or the maturity of which has been so
accelerated, aggregates $25.0 million or more; (vi) failure by the Company or
any of its Restricted Subsidiaries to pay final judgments not subject to appeal
aggregating in excess of $25.0 million (net of applicable insurance coverage
which is acknowledged in writing by the insurer), which judgments are not paid,
discharged or stayed for a period of 60 days; (vii) except as permitted by the
Indenture, any Guarantee shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force and
effect or any Guarantor, or any Person acting on behalf of any Guarantor, shall
deny or disaffirm its obligations under its Guarantee; and (viii) certain events
of bankruptcy or insolvency with respect to the Company or any of the Company's
Restricted Subsidiaries.
(b) If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable. Notwithstanding the foregoing, in
the case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Notes shall become due and payable without further
action or notice. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of the Notes notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their interest. The
Holders of a majority in principal amount of the then outstanding Notes by
notice to the Trustee may on behalf of the Holders of all of the Notes waive any
existing Default or Event of Default and its consequences under the Indenture,
except a continuing Default or Event of Default in the payment of interest on,
or principal of, the Notes. The Company shall deliver to the Trustee annually a
statement regarding compliance with the Indenture, and the Company, upon
becoming aware of any Default or Event of Default, deliver to the Trustee a
statement specifying such Default or Event of Default.
15. Additional Restricted Subsidiary Guarantees.
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If any Restricted Subsidiary guarantees any Debt Securities issued by the
Company after November 19, 1999, then such Restricted Subsidiary shall become a
Guarantor and execute a supplemental indenture and deliver an Opinion of
Counsel, in accordance with the terms of the Indenture.
16. Trustee Dealings with Company.
The Trustee, in its individual or any other capacity, may make loans to,
accept deposits from, and perform services for the Company or its Affiliates,
and may otherwise deal with the Company or its Affiliates, as if it were not the
Trustee.
17. No Recourse Against Others.
A director, officer, employee, incorporator or shareholder, of the
Company or any Guarantor, as such, shall not have any liability for any
obligations of the Company or any Guarantor under the Notes, any Guarantee or
the Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
18. Authentication.
This Note shall not be valid until authenticated by the manual signature
of the Trustee or an authenticating agent.
19. Abbreviations.
Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entirety), JT TEN (= joint tenants with right of survivorship and not as tenants
in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
20. Additional Rights of Holders of Restricted Global Notes and
Restricted Definitive Notes.
In addition to the rights provided to Holders of Notes under the
Indenture, Holders of Notes shall have all the rights set forth in the
Registration Rights Agreement.
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes and the Trustee may use CUSIP numbers in notices of
redemption as a convenience to Holders. No representation is made as to the
accuracy of such numbers either as printed on the Notes or as
A-4-12
<PAGE>
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Global Crossing Holdings Ltd.
Wessex House
45 Reid Street
Hamilton HM 12, Bermuda
Attention: Secretary of the Company
A-4-13
<PAGE>
Assignment Form
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
Date:
Your Signature:
(Sign exactly as your name appears on the face of
this Note)
Tax Identification No:
SIGNATURE GUARANTEE:
_________________________________
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements of
the Registrar, which requirements include membership
or participation in the Security Transfer Agent
Medallion Program ("Stamp") or such other "signature
guarantee program" as may be determined by the
Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
A-4-14
<PAGE>
Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Company pursuant
to Section 4.10 or 4.15 of the Indenture, check the appropriate box below:
Section 4.10 Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $___________
- --------------------------------------------------------------------------------
Date:
Your Signature:
(Sign exactly as your name appears on the face of
this Note)
Tax Identification No:
SIGNATURE GUARANTEE:
_________________________________
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements of
the Registrar, which requirements include membership
or participation in the Security Transfer Agent
Medallion Program ("Stamp") or such other "signature
guarantee program" as may be determined by the
Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
A-4-15
<PAGE>
SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE
The following exchanges of a part of this Regulation S Temporary Global
Note for an interest in another Global Note, or of other Restricted Global Notes
for an interest in this Regulation S Temporary Global Note, have been made:
<TABLE>
<CAPTION>
Principal Amount Signature of
Amount of decrease Amount of increase of this Global Note authorized
in Principal in Principal following such officer of
Amount of this Amount of this decrease Trustee or
Date of Exchange Global Note Global Note (or increase) Note Custodian
- ----------------- ------------------ ------------------ ------------------- -----------------
<S> <C> <C> <C> <C>
</TABLE>
A-4-16
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Global Crossing Holdings Ltd.
45 Reid Street
Hamilton HM 12, Bermuda
Attention: Secretary of the Company
United States Trust Company of New York
114 West 47th Street - 25th Floor
New York, New York 10036
Attention: Corporate Trust Division
Re: [9 1/8% Senior Notes due 2006] [92% Senior Notes due 2009]
------------------------------ ---------------------------
Reference is hereby made to the Indenture, dated as of November 19, 1999
(the "Indenture"), among Global Crossing Holdings Ltd., as issuer (the
"Company"), the Guarantors and United States Trust Company of New York, as
trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.
______________, (the "Transferor") owns and proposes to transfer the
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
to __________ (the "Transferee"), as further specified in Annex A hereto. In
connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. Check if Transferee will take delivery of a beneficial interest in the
----------------------------------------------------------------------
144A Global Note or a Definitive Note Pursuant to Rule 144A. The Transfer is
-----------------------------------------------------------
being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the
Transferor reasonably believed and believes is purchasing the beneficial
interest or Definitive Note for its own account, or for one or more accounts
with respect to which such Person exercises sole investment discretion, and
such Person and each such account is a "qualified institutional buyer" within
the meaning of Rule 144A in a transaction meeting the requirements of Rule
144A and such Transfer is in compliance with any applicable blue sky
securities laws of any state of the United States. Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed
on the 144A Global Note and/or the Definitive Note and in the Indenture and
the Securities Act.
B-1
<PAGE>
2. Check if Transferee will take delivery of a beneficial interest in the
----------------------------------------------------------------------
Temporary Regulation S Global Note, the Regulation S Global Note or a
---------------------------------------------------------------------
Definitive Note pursuant to Regulation S. The Transfer is being effected
----------------------------------------
pursuant to and in accordance with Rule 903 or Rule 904 under the Securities
Act and, accordingly, the Transferor hereby further certifies that (i) the
Transfer is not being made to a person in the United States and (x) at the
time the buy order was originated, the Transferee was outside the United
States or such Transferor and any Person acting on its behalf reasonably
believed and believes that the Transferee was outside the United States or
(y) the transaction was executed in, on or through the facilities of a
designated offshore securities market and neither such Transferor nor any
Person acting on its behalf knows that the transaction was prearranged with a
buyer in the United States, (ii) no directed selling efforts have been made
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S under the Securities Act, (iii) the transaction is not part of a
plan or scheme to evade the registration requirements of the Securities Act
and (iv) if the proposed transfer is being made prior to the expiration of
the Restricted Period, the transfer is not being made to a U.S. Person or for
the account or benefit of a U.S. Person (other than an Initial Purchaser).
Upon consummation of the proposed transfer in accordance with the terms of
the Indenture, the transferred beneficial interest or Definitive Note will be
subject to the restrictions on Transfer enumerated in the Private Placement
Legend printed on the Regulation S Global Note, the Temporary Regulation S
Global Note and/or the Definitive Note and in the Indenture and the
Securities Act.
3. Check and complete if Transferee will take delivery of a beneficial
-------------------------------------------------------------------
interest in a Definitive Note pursuant to any provision of the Securities Act
-----------------------------------------------------------------------------
other than Rule 144A or Regulation S. The Transfer is being effected in
------------------------------------
compliance with the transfer restrictions applicable to beneficial interests
in Restricted Global Notes and Restricted Definitive Notes and pursuant to
and in accordance with the Securities Act and any applicable blue sky
securities laws of any state of the United States, and accordingly the
Transferor hereby further certifies that (check one):
(a) such Transfer is being effected pursuant to and in accordance with
Rule 144 under the Securities Act;
or
(b) such Transfer is being effected to the Company or a subsidiary
thereof;
or
(c) such Transfer is being effected pursuant to an effective registration
statement under the Securities Act and in compliance with the prospectus
delivery requirements of the Securities Act.
4. Check if Transferee will take delivery of a beneficial interest in an
---------------------------------------------------------------------
Unrestricted Global Note or of an Unrestricted Definitive Note.
--------------------------------------------------------------
(a) Check if Transfer is pursuant to Rule 144. (i) The Transfer is being
effected pursuant to and in accordance with Rule 144 under the Securities Act
and in compliance with the transfer
B-2
<PAGE>
restrictions contained in the Indenture and any applicable blue sky securities
laws of any state of the United States and (ii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required
in order to maintain compliance with the Securities Act. Upon consummation of
the proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will no longer be subject
to the restrictions on transfer enumerated in the Private Placement Legend
printed on the Restricted Global Notes, on Restricted Definitive Notes and in
the Indenture.
(b) Check if Transfer is Pursuant to Regulation S. (i) The Transfer is
being effected pursuant to and in accordance with Rule 903 or Rule 904 under
the Securities Act and in compliance with the transfer restrictions contained
in the Indenture and any applicable blue sky securities laws of any state of
the United States and (ii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will no longer be subject
to the restrictions on transfer enumerated in the Private Placement Legend
printed on the Restricted Global Notes, on Restricted Definitive Notes and in
the Indenture.
(c) Check if Transfer is Pursuant to Other Exemption. (i) The Transfer
is being effected pursuant to and in compliance with an exemption from the
registration requirements of the Securities Act other than Rule 144, Rule 903
or Rule 904 and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will not be subject to the restrictions
on transfer enumerated in the Private Placement Legend printed on the
Restricted Global Notes or Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
---------------------------------------
[Insert Name of Transferor]
By:
------------------------------------
Name:
Title:
Dated:
----------, ------
B-3
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) a beneficial interest in the:
(i) 144A Global Note (CUSIP ________), or
(ii) Regulation S Global Note (CUSIP ________): or
(b) a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) a beneficial interest in the:
(i) 144A Global Note (CUSIP _______), or
(ii) Regulation S Global Note (CUSIP _______), or
(iii) Unrestricted Global Note (CUSIP _______); or
(b) a Restricted Definitive Note; or
(c) an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-4
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Global Crossing Holdings Ltd.
45 Reid Street
Hamilton HM 12, Bermuda
Attention: Secretary of the Company
United States Trust Company of New York
114 West 47th Street - 25th Floor
New York, New York 10036
Attention: Corporate Trust Division
Re: [9 1/8% Senior Notes due 2006] [92% Senior Notes due 2009]
------------------------------ ---------------------------
(CUSIP ______________)
Reference is hereby made to the Indenture, dated as of November 19, 1999
(the "Indenture"), among Global Crossing Holdings Ltd., as issuer (the
"Company"), the Guarantors and United States Trust Company of New York, as
trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.
____________, (the "Owner") owns and proposes to exchange the Note[s] or
interest in such Note[s] specified herein, in the principal amount of
$____________ in such Note[s] or interests (the "Exchange"). In connection with
the Exchange, the Owner hereby certifies that:
1. Exchange of Restricted Definitive Notes or Beneficial Interests in a
--------------------------------------------------------------------
Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests
- --------------------------------------------------------------------------------
in an Unrestricted Global Note.
- ------------------------------
(a) Check if Exchange is from beneficial interest in a Restricted Global
Note to beneficial interest in an Unrestricted Global Note. In connection with
the Exchange of the Owner's beneficial interest in a Restricted Global Note for
a beneficial interest in an Unrestricted Global Note in an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner's own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the Global
Notes and pursuant to and in accordance with the United States Securities Act of
1933, as amended (the "Securities Act"), (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the beneficial
interest in an Unrestricted Global Note is being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.
C-1
<PAGE>
(b) Check if Exchange is from beneficial interest in a Restricted Global
Note to Unrestricted Definitive Note. In connection with the Exchange of the
Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the Definitive Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.
(c) Check if Exchange is from Restricted Definitive Note to beneficial
interest in an Unrestricted Global Note. In connection with the Owner's
Exchange of a Restricted Definitive Note for a beneficial interest in an
Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(d) Check if Exchange is from Restricted Definitive Note to Unrestricted
Definitive Note. In connection with the Owner's Exchange of a Restricted
Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies
(i) the Unrestricted Definitive Note is being acquired for the Owner's own
account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. Exchange of Restricted Definitive Notes or Beneficial Interests in
------------------------------------------------------------------
Restricted Global Notes for Restricted Definitive Notes or Beneficial Interests
- -------------------------------------------------------------------------------
in Restricted Global Notes.
- --------------------------
(a) Check if Exchange is from beneficial interest in a Restricted Global
Note to Restricted Definitive Note. In connection with the Exchange of the
Owner's beneficial interest in a Restricted Global Note for a Restricted
Definitive Note with an equal principal amount, the Owner hereby certifies that
the Restricted Definitive Note is being acquired for the Owner's own account
without transfer. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the Restricted Definitive Note issued will continue
to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Note and in the Indenture
and the Securities Act.
(b) Check if Exchange is from Restricted Definitive Note to beneficial
interest in a Restricted Global Note. In connection with the Exchange of the
Owner's Restricted Definitive Note for a beneficial interest in the [CHECK ONE]
144A Global Note, Regulation S Global Note, the Owner
C-2
<PAGE>
hereby certifies (i) the beneficial interest is being acquired for the Owner's
own account without transfer and (ii) such Exchange has been effected in
compliance with the transfer restrictions applicable to the Restricted Global
Notes and pursuant to and in accordance with the Securities Act, and in
compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Exchange in accordance with the
terms of the Indenture, the beneficial interest issued will be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the relevant Restricted Global Note and in the Indenture and the Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
-----------------------------------
[Insert Name of Owner]
By:
-------------------------------
Name:
Title:
Dated:
----------, ----
C-3
<PAGE>
EXHIBIT D
FORM OF NOTATION OF GUARANTEE
For value received, each Guarantor (which term includes any successor
Person under the Indenture) has, jointly and severally, unconditionally
guaranteed, to the extent set forth in the Indenture and subject to the
provisions in the Indenture dated as of November 19, 1999 (the "Indenture")
among Global Crossing Holdings Ltd., the Guarantors signatories thereto and
United States Trust Company of New York, as trustee (the "Trustee"), (a) the due
and punctual payment of the principal of, premium, if any, and interest on the
Notes (as defined in the Indenture), whether at maturity, by acceleration,
redemption or otherwise, the due and punctual payment of interest on overdue
principal and premium, and, to the extent permitted by law, interest, and the
due and punctual performance of all other obligations of the Company to the
Holders or the Trustee all in accordance with the terms of the Indenture and (b)
in case of any extension of time of payment or renewal of any Notes or any of
such other obligations, that the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise. The obligations of the
Guarantors to the Holders of Notes and to the Trustee pursuant to the Guarantee
and the Indenture are expressly set forth in Article 10 of the Indenture and
reference is hereby made to the Indenture for the precise terms of the
Guarantee. Each Holder of a Note, by accepting the same, (a) agrees to and
shall be bound by such provisions and (b) appoints the Trustee attorney-in-fact
for such purpose.
[GUARANTOR(S)]
By:
----------------------------
Name:
Title:
D-1
<PAGE>
EXHIBIT E
FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT GUARANTORS
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture") dated as of
____________________, among _____________________ (the "Guarantor"), a
subsidiary of Global Crossing Holdings Ltd. (or its successor), a company
organized under the laws of Bermuda (the "Company"), and United States Trust
Company of New York, as trustee under the indenture referred to below (the
"Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the Trustee
an indenture (the "Indenture"), dated as of November 19, 1999, providing for the
issuance of an aggregate principal amount at maturity of $900,000,000 of 9 1/8%
Senior Notes due 2006 and an aggregate principal amount at maturity of
$1,100,000,000 of 92% Senior Notes due 2009 (together, the "Notes");
WHEREAS, Section 4.22 of the Indenture provides that, under certain
circumstances, the Company is required to cause the Guarantor to execute and
deliver to the Trustee a Subsidiary Guarantee on the terms and conditions set
forth herein; and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Guarantor and the Trustee mutually covenant and agree for the equal and ratable
benefit of the Holders of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. INDENTURE PROVISION PURSUANT TO WHICH SUBSIDIARY GUARANTEE IS GIVEN.
This Supplemental Indenture is being executed and delivered pursuant to Section
4.22 of the Indenture.
3. AGREEMENTS TO SUBSIDIARY GUARANTEE. The Guarantor hereby agrees as
follows:
(a) The Guarantor, jointly and severally with all other Guarantors, if
any, unconditionally guarantees to each Holder of a Note authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
regardless of the validity and enforceability of the Indenture, the Notes and
the obligations of the Company under the Indenture and the Notes, that:
(i) the principal of, premium and Special Interest, if any, and
interest on the Notes shall be promptly paid in full when due, whether at
maturity, by acceleration, redemption or
E-1
<PAGE>
otherwise, and interest on the overdue principal of, premium, interest and
Special Interest, if any, on the Notes, to the extent lawful, and all other
obligations of the Company to the Holders or the Trustee thereunder shall be
promptly paid in full, all in accordance with the terms thereof; and
(ii) in case of any extension of time for payment or renewal of any
Notes or any of such other obligations, that the same shall be promptly paid in
full when due in accordance with the terms of the extension or renewal, whether
at stated maturity, by acceleration or otherwise.
Notwithstanding the foregoing, in the event that this Subsidiary
Guarantee would constitute or result in a violation of any applicable fraudulent
conveyance or similar law of any relevant jurisdiction, the liability of the
Guarantor under this Supplemental Indenture and its Subsidiary Guarantee shall
be limited to such amount as will not, after giving effect thereto, and to all
other liabilities of the Guarantor, result in such amount constituting a
fraudulent transfer or conveyance.
4. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEES
(a) To evidence its Subsidiary Guarantee set forth in this Supplemental
Indenture, the Guarantor hereby agrees that a notation of such Subsidiary
Guarantee substantially in the form of Annex A hereto shall be endorsed by an
officer of such Guarantor on each Note authenticated and delivered by the
Trustee after the date hereof.
(b) Notwithstanding the foregoing, the Guarantor hereby agrees that its
Subsidiary Guarantee set forth herein shall remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of such
Subsidiary Guarantee.
(c) If an officer whose signature is on this Supplemental Indenture or on
the Subsidiary Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which a Subsidiary Guarantee is endorsed, the
Subsidiary Guarantee shall be valid nevertheless.
(d) The delivery of the Note by the Trustee, after the authentication
thereof under the Indenture, shall constitute due delivery of the Subsidiary
Guarantee set forth in this Supplemental Indenture on behalf of the Guarantor.
(e) The Guarantor hereby agrees that its obligations hereunder shall be
unconditional, regardless of the validity, regularity or enforceability of the
Notes or the Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any action
to enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor.
(f) The Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Company, any right to require a proceeding first against the Company,
protest, notice and all demands whatsoever and covenants that its Subsidiary
Guarantee made pursuant to this Supplemental Indenture will not be discharged
except
E-2
<PAGE>
by complete performance of the obligations contained in the Notes and the
Indenture or pursuant to Section 5(b) of this Supplemental Indenture.
(g) If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Supplemental Indenture and such proceeding has
been discontinued or abandoned for any reason, or has been determined adversely
to the Trustee or to such Holder, then, and in every such case, subject to any
determination in such proceeding, the Guarantor, the Trustee and the Holders
shall be restored severally and respectively to their former positions hereof
and thereafter all rights and remedies of the Guarantor, the Trustee and the
Holders shall continue as though no such proceeding had been instituted.
(h) The Guarantor hereby waives and will not in any manner whatsoever
claim or take the benefit or advantage of, any rights of reimbursement,
indemnity or subrogation or any other rights against the Company or any other
Guarantor as a result of any payment by such Guarantor under its Subsidiary
Guarantee. The Guarantor further agrees that, as between the Guarantors, on the
one hand, and the Holders and the Trustee, on the other hand:
(i) the maturity of the obligations guaranteed hereby may be
accelerated as provided in Article 6 of the Indenture for the purposes of the
Subsidiary Guarantee made pursuant to this Supplemental Indenture,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby; and
(ii) in the event of any declaration of acceleration of such
obligations as provided in Article 6, such obligations (whether or not due and
payable) shall forthwith become due and payable by the Guarantor for the purpose
of the Subsidiary Guarantee made pursuant to this Supplemental Indenture.
(i) The Guarantor shall have the right to seek contribution from any
other non-paying Guarantor, if any, so long as the exercise of such right does
not impair the rights of the Holders under the Subsidiary Guarantee made
pursuant to this Supplemental Indenture.
(j) The Guarantor covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay, extension or usury law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of the Indenture or this Subsidiary Guarantee; and
the Guarantor (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
5. GUARANTOR MAY CONSOLIDATE, ETC. ON CERTAIN TERMS
(a) Except as set forth in Articles 4 and 5 of the Indenture, nothing
contained in the Indenture, this Supplemental Indenture or in the Notes shall
prevent any consolidation or merger of the Guarantor with or into the Company or
any other Guarantor or shall prevent any transfer, sale or
E-3
<PAGE>
conveyance of the property of the Guarantor as an entirety or substantially as
an entirety, to the Company or any other Guarantor.
(b) Except as set forth in Article 5 of the Indenture, upon the sale or
disposition of all of the Capital Stock of the Guarantor by the Company or the
Subsidiary of the Company, or upon the consolidation or merger of the Guarantor
with or into any Person, or the sale of all or substantially all of the assets
of the Guarantor (in each case, other than to an Affiliate of the Company), such
Guarantor shall be deemed automatically and unconditionally released and
discharged from all obligations under this Subsidiary Guarantee without any
further action required on the part of the Trustee or any Holder if no Default
shall have occurred and be continuing; provided, that in the event of an Asset
Sale (including a sale of the Capital Stock of the Guarantor), the Net Cash
Proceeds therefrom are treated in accordance with Section 4.10 of the Indenture.
Except with respect to transactions set forth in the preceding sentence, the
Company and the Guarantor covenant and agree that upon any such consolidation,
merger or transfer of assets, the performance of all covenants and conditions of
this Supplemental Indenture to be performed by such Guarantor shall be expressly
assumed by supplemental indenture satisfactory in form and substance to the
Trustee, by the corporation formed by such consolidation, or into which the
Guarantor shall have merged, or by the corporation which shall have acquired
such property. Upon receipt of an Officers' Certificate of the Company or the
Guarantor, as the case may be, to the effect that the Company or such Guarantor
has complied with the first sentence of this Section 5(b), the Trustee shall
execute any documents reasonably requested by the Company or the Guarantor, at
the cost of the Company or such Guarantor, as the case may be, in order to
evidence the release of such Guarantor from its obligations under its Subsidiary
Guarantee endorsed on the Notes and under the Indenture and this Supplemental
Indenture.
6. RELEASES UPON RELEASE OF SUBSIDIARY GUARANTEE OF GUARANTEED
INDEBTEDNESS.
Concurrently with the release or discharge of the Guarantor's guarantee
of the payment of [describe indebtedness the guarantee of which gave rise to the
delivery of this Supplemental Indenture] ("Guaranteed Debt") (other than a
release or discharge by or as a result of payment under such guarantee of
Guaranteed Indebtedness), the Guarantor shall be automatically and
unconditionally released and relieved of its obligations under this Supplemental
Indenture and its Subsidiary Guarantee made pursuant to Section 4 of this
Supplemental Indenture. Upon delivery by the Company to the Trustee of an
Officer's Certificate to the effect that such release or discharge has occurred,
the Trustee shall execute any documents reasonably required in order to evidence
the release of the Guarantor from its obligations under this Supplemental
Indenture and its Subsidiary Guarantee made pursuant hereto; provided such
documents shall not affect or impair the rights of the Trustee and Paying Agent
under Section 7.07 of the Indenture.
7. NEW YORK LAW TO GOVERN.
The internal law of the State of New York shall govern and be used to
construe this Supplemental Indenture.
8. COUNTERPARTS.
E-4
<PAGE>
The parties may sign any number of copies of this Supplemental Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
9. EFFECT OF HEADINGS.
The Section headings herein are for convenience only and shall not effect
the construction hereof.
[Signatures on following page]
E-5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated:_________,______ [Guarantor]
By:______________________
Name:
Title:
Dated:_________,______ as Trustee
By:______________________
Name:
Title:
E-6
<PAGE>
ANNEX A TO SUPPLEMENTAL INDENTURE
FORM OF NOTATION OF SUBSIDIARY GUARANTEE ON NOTE
For value received, each Guarantor (which term includes any successor
Person under the Indenture) has, jointly and severally, unconditionally
guaranteed, to the extent set forth in the Indenture and subject to the
provisions in the Indenture dated as of November 19, 1999 (the "Indenture")
among Global Crossing Holdings Ltd., the Guarantors signatories thereto and
United States Trust Company of New York, as trustee (the "Trustee"), (a) the due
and punctual payment of the principal of, premium, if any, and interest on the
Notes (as defined in the Indenture), whether at maturity, by acceleration,
redemption or otherwise, the due and punctual payment of interest on overdue
principal and premium, and, to the extent permitted by law, interest, and the
due and punctual performance of all other obligations of the Company to the
Holders or the Trustee all in accordance with the terms of the Indenture and (b)
in case of any extension of time of payment or renewal of any Notes or any of
such other obligations, that the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise. The obligations of the
Guarantors to the Holders of Notes and to the Trustee pursuant to the Subsidiary
Guarantee and the Indenture are expressly set forth in Article 10 of the
Indenture and reference is hereby made to the Indenture for the precise terms of
the Note Guarantee. Each Holder of a Note, by accepting the same, (a) agrees to
and shall be bound by such provisions and (b) appoints the Trustee attorney-in-
fact of such Holder for such purpose.
[Guarantor]
By:______________________
Name:
Title:
E-7
<PAGE>
Exhibit 5.1
[Letterhead of Appleby, Spurling & Kempe]
11 January 2000
Global Crossing Holdings Ltd.
Wessex House
45 Reid Street
Hamilton HM12 Bermuda
Dear Sirs
Global Crossing Ltd. ("GCL") and
Global Crossing Holdings Limited ("the Company")
We have acted as legal counsel in Bermuda to GCL and the Company and this
opinion as to Bermuda law is addressed to you in connection with the filing by
GCL and the Company with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Securities Act"), of a Registration
Statement on Form S-4 and related documents in relation to an offer by the
Company to exchange all outstanding US$900,000,000 9 1/8% Senior Notes due 2006
for US$900,000,000 9 1/8% Senior Notes due 2006 which have been registered under
the Securities Act and to exchange all outstanding US$1,100,000,000 9 1/2%
Senior Notes due 2009 (together hereinafter referred to as the "Exchange
Securities"), for US$1,100,000,000 9 1/2% Senior Notes due 2009 which
have been registered under the Securities Act (the "Exchange Offer").
Unless otherwise defined in this opinion or the Schedules to it, capitalized
terms have the meanings assigned to them in the Purchase Agreement.
<PAGE>
2
For the purposes of this opinion we have examined and relied upon the documents
listed (which, in some cases, are also defined) in Schedule 1 to this opinion
(the "Documents").
Assumptions
- -----------
In stating our opinion we have assumed:
(a) the authenticity, accuracy and completeness of all Documents (including,
without limitation, public records) submitted to us as originals and the
conformity to authentic original Documents of all Documents submitted to
us as certified, conformed, notarized or photostatic copies;
(b) the genuineness of all signatures on the Documents;
(c) the authority, capacity and power of each of the persons signing the
Documents (other than the Company and GCL);
(d) that any factual statements made in any of the Documents are true,
accurate and complete;
(e) that the Operative Documents constitute the legal, valid and binding
obligations of each of the parties thereto, other than the Company and
GCL, under the laws of its jurisdiction of incorporation or its
jurisdiction of formation;
(f) that the Operative Documents have been validly authorized, executed and
delivered by each of the parties thereto, other than the Company and
GCL, and the performance thereof is within the capacity and powers of
each such party thereto, and that each such party to which the Company
and GCL purportedly delivered the Operative Documents has actually
received and accepted delivery of such Operative Documents;
(g) that the Operative Documents will effect, and will constitute legal,
valid and binding obligations of each of the parties thereto,
enforceable in accordance with their terms, under the laws of the State
of New York by which they are governed;
(h) that the Operative Documents are in the proper legal form to be
admissible in evidence and enforced in the courts of the State of New
York and in accordance with the laws of the State of New York;
(i) that there are no provisions of the laws or regulations of any
jurisdiction other than Bermuda which would be contravened by the
execution or delivery of the Operative Documents or which would have any
implication in relation to the opinions expressed herein and that, in so
far as any obligation under, or action to be taken under, the Operative
Documents, the Bye-laws of the Company and the Bye-laws of
<PAGE>
3
GCL is required to be performed or taken in any jurisdiction outside
Bermuda, the performance of such obligation or the taking of such action
will constitute a valid and binding obligation of each of the parties
thereto under the laws of that jurisdiction and will not be illegal by
virtue of the laws of that jurisdiction;
(j) that the Searches were complete and accurate at the time that they were
made and disclosed all information which is material for the purposes of
this opinion and such information has not since such date been
materially altered;
(k) that the Resolutions are in full force and effect and have not been
rescinded, either in whole or in part and accurately record the
resolutions passed by the Board of Directors or the Shareholders of the
Company or GCL, as the case may be, at meetings which were duly convened
and at which duly constituted quorums were present and voting throughout
and accurately record the resolutions adopted by the Directors and
Shareholders of the Company and of GCL;
(l) that each of the Company and GCL has entered into its obligations under
the Operative Documents in good faith for the purpose of carrying on its
business and that, at the time it did so, there were reasonable grounds
for believing that the transactions contemplated by the Operative
Documents would benefit the Company and GCL as the case may be;
(m) that the approval of the Exchange Offer is given at duly convened and
quorate meetings of the Board of Directors of the Company in a manner
complying with the terms of the Resolutions and the Constitutive
Documents; and
(n) that when executed any document presented to us in draft form will not
differ in any material way from the draft, which we have examined.
Opinion
- -------
Based upon and subject to the foregoing and subject to the reservations set out
below and to any matters not disclosed to us, we are of the opinion that:
(1) Each of the Company and GCL has taken all necessary corporate action to
authorize the execution and delivery of the Registration Statement and
the Operative Documents to which each is a party and to authorize the
performance of the transactions contemplated therein.
(2) The Company has taken all necessary corporate action to authorize the
issuance and delivery of the Exchange Securities and the performance by
it of the transactions contemplated therein.
(3) GCL has taken all necessary corporate action to authorize the giving of
the Guarantee set forth in the Indenture and the execution and delivery
of the notation of such Guarantee on the Exchange Securities in
accordance with the terms of the Indenture.
(4) The Exchange Securities, when issued in accordance with the terms of the
Indenture, duly executed by the Company, duly authenticated by the
Trustee, and issued and delivered against exchange of the Restricted
Notes in accordance with the terms set forth in the Prospectus that
forms a part of the Registration Statement, will constitute the legal
and binding obligations of the Company under the laws of Bermuda.
Reservations
- ------------
We have the following reservations:
(a) We express no opinion as to the availability of equitable remedies such
as specific performance or injunctive relief, or as to any matters which
are within the discretion of the courts of Bermuda in respect of any
obligations of the Company and GCL as set out in the Operative
Documents, the Exchange Securities and in the Bye-laws of the Company
and GCL. Further, we express no opinion as to the validity or binding
effect of any waiver of or obligation to waive either any provision of
law (whether substantive or procedural) or any right or remedy.
(b) Enforcement of the obligations of the Company and GCL under the Bye-laws
of the Company and under the Bye-laws of GCL and under the Operative
Documents may be limited or affected by applicable laws from time to
time in effect relating to bankruptcy, insolvency or liquidation or any
other laws or other legal procedures affecting generally the enforcement
of creditors' rights.
(c) Enforcement of the obligations of the Company and GCL may be the subject
of a statutory limitation of the time within which such proceedings may
be brought.
(d) We express no opinion as to any law other than Bermuda law and none of
the opinions expressed herein relates to compliance with or matters
governed by the laws of any jurisdiction except Bermuda. This opinion is
limited to Bermuda law as applied by the Courts of Bermuda at the date
hereof.
(e) Where an obligation is to be performed in a jurisdiction other than
Bermuda, the courts of Bermuda may refuse to enforce it to the extent
that such performance would be illegal under the laws of, or contrary to
public policy of, such other jurisdiction.
(f) We express no opinion as to the validity, binding effect or
enforceability of any provision incorporated into the Bye-laws of the
Company or any of the Operative Documents by reference to a law other
than that of Bermuda, or as to the availability in Bermuda of remedies
which are available in other jurisdictions.
(g) Where a person is vested with a discretion or may determine a matter in
his or its opinion, such discretion may have to be exercised reasonably
or such an opinion may have to be based on reasonable grounds.
(h) We express no opinion as to the validity or binding effect of any
provision of the Operative Documents which provides for the severance of
illegal, invalid or unenforceable provisions.
(i) A Bermuda court may refuse to give effect to any provisions of the
Operative Documents and the Bye-laws of the Company in respect of costs
of unsuccessful litigation brought before the Bermuda court or where
that court has itself made an order for costs.
(j) Searches of the Register of Companies at the office of the Registrar of
Companies and of the Supreme Court Causes Book at the Registry of the
Supreme Court are not conclusive and it should be noted that the
Register of Companies and the Supreme Court Causes Book do not reveal:
(i) whether an application to the Supreme Court for a winding up
petition or for the appointment of a receiver or manager has
been prepared but not yet been presented or has been presented
but does not appear in the Causes Book at the date and time the
Search is concluded;
(ii) whether any arbitration or administrative proceedings are
pending or whether any proceedings are threatened, or whether
any arbitrator has been appointed;
(iii) details of matters which have been lodged for filing or
registration which as a matter of general practice of the
Registrar of Companies would have or should have been disclosed
on the public file but have not actually been registered or to
the extent that they have been registered have not been
disclosed or appear in the public records at the date and time
the search is concluded;
(iv) whether a receiver or manager has been appointed privately
pursuant to the provisions of a debenture or other security,
unless notice of the fact has been entered in the register of
charges in accordance with the provisions of the Act.
Furthermore, in the absence of a statutorily defined system for the
registration of charges created by companies incorporated outside
Bermuda ("overseas companies") over their assets located in Bermuda, it
is not possible to determine definitively from searches of the register
of charges maintained by the Registrar of Companies in respect of such
overseas companies what charges have been registered over any of their
assets located in Bermuda or whether any one charge has priority over
any other charge over such assets.
(k) We express no opinion as to the validity or binding effect of any
provision in the Operative Documents or the Exchange Securities for the
payment of interest at a higher rate on overdue amounts than on amounts
which are current, or that liquidated damages or a penalty are or may be
payable. Such a provision may not be enforceable if it could be
established that the amount expressed as being payable was in the nature
of a penalty; that is to say a requirement for a stipulated sum to be
paid irrespective of, or necessarily greater than, the loss likely to be
sustained or if it is expressed as a penalty. If it cannot be
demonstrated to the Bermuda court that the higher payment was a
reasonable pre-estimate of the loss suffered, the court will determine
and award what it considers to be reasonable damages. Section 9 of The
Interest and Credit Charges (Regulations) Act 1975 provides that the
Bermuda courts have discretion as to the amount of interest, if any,
payable on the amount of a judgment after date of judgment. If the Court
does not exercise that discretion, then interest will accrue at the
statutory rate which is currently 7% per annum.
Disclosure
- ----------
This opinion is addressed to you solely for your benefit and is neither to be
transmitted to any other person, nor relied upon by any other person or for
any other purpose nor quoted or referred to in any public document nor filed
with any governmental agency or person, without our prior written consent,
except as may be required by law or regulatory authority. Further, this
opinion speaks as of its date and is strictly limited to the matters stated
herein. We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and we further consent to the reference to our firm
under the caption "Service of Process and Enforcement of Liabilities" and
"Legal Matters" in the Prospectus that forms part of the Registration
Statement.
This opinion is addressed to you in connection with the issue of the Exchange
Securities and is not to be made available to, or relied on by any other
person or entity, or for any other purpose, without our prior written consent
except that the law firm Simpson Thacher & Bartlett may rely on this opinion
as if it were addressed to them for the purposes of rendering their opinion to
the Company dated the date hereof in connection with the Registration
Statement.
This opinion is governed by and is to be construed in accordance with Bermuda
law. It is given on the basis that it will not give rise to any legal
proceedings with respect thereto in any jurisdiction other than Bermuda.
Yours faithfully,
/s/ Appleby, Spurling & Kempe
Appleby, Spurling & Kempe
<PAGE>
1
SCHEDULE 1
----------
1. A copy of the Offering Memorandum dated November 12, 1999 relating to
the offering and sale of US$900,000,000 9-1/8% Senior Notes due 2006
and US$1,100,000,000 9-1/2% Senior Notes due 2009 (excluding Exhibits)
(the "Offering Memorandum").
2. An electronic copy of an original Registration Statement on form S-4
with respect to the Exchange Securities excluding Exhibits and the
documents incorporated by reference (the "Registration Statement").
3. An electronic copy of an original document describing itself as part
of a prospectus, covering securities that have been registered under the
Securities Act of 1933, as amended (the "Prospectus").
4. A copy of the executed Purchase Agreement dated as of November 12, 1999
(excluding Exhibits) and made between the Company and the Initial
Purchasers (the "Purchase Agreement").
5. A copy of the executed Indenture dated as of November 19, 1999 and made
between the Company, the Guarantors and United States Trust Company of
New York (the "Indenture").
6. A copy of the executed Registration Rights Agreement (the "Registration
Agreement") dated as of November 19, 1999 among the Company, the
Guarantors and the Initial Purchasers.
7. A certified copy of excerpts from the Minutes of the Meetings of the
Board of Directors of the GCL and of the Company held on November 11
and 17, 1999, respectively.
8. The entries and filings shown in respect of the Company and GCL and each
Bermuda Subsidiary on the files of the Company and GCL and each Bermuda
Subsidiary maintained at the office of the Registrar of Companies in
Hamilton, Bermuda, as revealed by searches completed between 11:52 a.m.
and 4:00 p.m., (Bermuda time) on 7 January 2000.
9. The entries and filings shown in the Supreme Court Causes Book
maintained at the Registry of the Supreme Court in Hamilton, Bermuda,
as revealed by searches completed between 11:52 a.m. and 4:00 p.m.,
(Bermuda time) on 7 January 2000, in respect of the Company, GCL and
each Bermuda Subsidiary.
<PAGE>
2
(The searches referred to in items 8 and 9 above are together referred to as the
"Searches").
10. The Share Registers of each of the Bermuda Subsidiaries.
11. The Certificate of Incorporation, Memorandum of Association and Bye-laws of
the Company and GCL, (the "Constitutive Documents") and the Certificate of
Incorporation, Memorandum of Association and Bye-laws of each Bermuda
Subsidiary.
12. The Register of Directors and Officers in respect of the Company and GCL.
13. A copy of a letter, dated 15 November 1999 evidencing the consent of the
Bermuda Monetary Authority to the issue by the Company of the Exchange
Securities.
(The documents referred to in 4, 5 and 6 above are together referred to as the
"Operative Documents".)
<PAGE>
3
SCHEDULE 2
Bermuda Subsidiaries
- --------------------
Global Crossing Network Center Ltd.
Atlantic Crossing Holdings Ltd.
Pan American Crossing Holdings Ltd.
Mid-Atlantic Crossing Holdings Ltd.
Pacific Crossing Holdings Ltd.
Global Crossing Landing Holdings Ltd.
Global Crossing International, Ltd.
South American Crossing Holdings Ltd.
South American Crossing Holdings (Backhaul) Ltd.
<PAGE>
EXHIBIT 5.2
January 11, 2000
[Letterhead of Simpson Thacher & Bartlett]
Global Crossing Holdings Ltd.
Wessex House
45 Reid Street
Hamilton HM12, Bermuda
Ladies and Gentlemen:
We have acted as counsel for Global Crossing Holdings Ltd., a corporation
organized under the laws of Bermuda (the "Company"), in connection with the
Registration Statement on Form S-4 (the "Registration Statement") filed by the
Company with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Securities Act"), relating to the
issuance by the Company of U.S.$900,000,000 aggregate principal amount of its
9 1/8 Senior Notes due 2006 (the "2006 Exchange Notes") and U.S.$1,100,000,000
aggregate principal amount of its 9-1/2% Senior Notes due 2009 (the "2009
Exchange Notes" and, together with the 2006 Exchange Notes, the "Exchange
Notes"), guaranteed (the "Guarantees") by Global Crossing Ltd. (the
"Guarantor"). The Exchange Notes are to be offered by the Company in exchange
for (the "Exchange Offer") U.S.$900,000,000 aggregate principal amount of its
outstanding 9 1/8% Senior Notes due 2006 (the "2006 Notes") and
U.S.$1,100,000,000 aggregate principal amount of its outstanding 9-1/2% Senior
Notes due 2009 (the "2009 Notes" and, together with the 2006 Notes, the
"Notes"). The Notes have been, and the Exchange Notes will be, issued under an
Indenture, dated as of November 19, 1999 (the "Indenture"), among the Company,
the Guarantor and United States Trust Company of New York, as Trustee.
We have examined the Registration Statement and the Indenture which has
been filed with the Commission as an exhibit to the Registration Statement. In
addition, we have examined, and have relied as to matters of fact upon, the
originals or copies, certified or otherwise identified to our satisfaction, of
such corporate records, agreements, documents and other instruments and such
certificates or comparable documents of public officials and of officers and
representatives of the Company, and have made such other and further
investigations, as we have deemed relevant and necessary as a basis for the
opinions hereinafter set forth.
In such examination, we have assumed the genuineness of all signatures, the
legal capacity of natural persons, the authenticity of all documents submitted
to us as originals, the conformity to original documents of all documents
submitted to us as certified or photostatic copies, and the authenticity of the
originals of such latter documents.
We have further assumed, with your consent and without independent
investigation or inquiry, that, with respect to each of the parties to the
Indenture, the Exchange Notes and the Guarantees, as the case may be, (i) such
person was duly organized and is validly
<PAGE>
Global Crossing Holdings Ltd. -2- January 11, 2000
existing under the laws of the jurisdiction in which it was organized, (ii) such
person has the power and authority to execute the Indenture, the Exchange Notes
and the Guarantees, as the case may be, to which it is a party and to take all
actions contemplated to be taken by it thereunder and (iii) such person has duly
authorized, executed and delivered the Indenture, the Exchange Notes and the
Guarantees, as the case may be, to which it is a party in accordance with the
charter or other organizational documents of such person.
Based upon the foregoing, and subject to the qualifications and
limitations stated herein, we are of the opinion that:
1. When (1) the Indenture has been duly qualified under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), (2) the
Board of Directors of the Company, a duly constituted and acting committee
thereof or duly authorized officers thereof have taken all necessary
corporate action to approve the issuance and terms of the Exchange Notes
and related matters, and (3) the Exchange Notes have been duly executed,
authenticated, issued and delivered in accordance with the provisions of
the Indenture upon the Exchange Offer, the Exchange Notes will constitute
valid and legally binding obligations of the Company enforceable against
the Company in accordance with their terms and entitled to the benefits of
the Indenture.
2. When (1) the Indenture has been duly qualified under the Trust
Indenture Act, (2) the Board of Directors of the Company, a duly
constituted and acting committee thereof or duly authorized officers
thereof have taken all necessary corporate action to approve the issuance
and terms of the Exchange Notes, the terms of the Exchange Offer and
related matters, (3) the Board of Directors of the Guarantor, a duly
constituted and acting committee thereof or duly authorized officers
thereof have taken all necessary corporate action to approve the issuance
and terms of the Guarantor's Guarantees and (4) the Exchange Notes and the
Guarantees endorsed thereon have been duly executed, authenticated, issued
and delivered in accordance with the provisions of the Indenture upon the
Exchange Offer, the Guarantor's Guarantees will constitute valid and
legally binding obligations of the Guarantor enforceable against the
Guarantor in accordance with their terms and entitled to the benefits of
the Indenture.
Our opinions set forth in paragraphs 1 and 2 above are subject to (i)
the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, (ii) general equitable principles (whether considered in a proceeding
in equity or at law), (iii) an implied covenant of good faith and fair dealing
and (iv) the effects of the possible judicial application of foreign laws or
foreign governmental or judicial action affecting creditors' rights.
We are members of the Bar of the State of New York, and we do not
express any opinion herein concerning any law other than the laws of the State
of New York and the federal laws of the United States. Insofar as the opinions
set forth herein relate to issues governed by the
<PAGE>
laws of Bermuda, we have assumed the correctness of the opinion of Appleby,
Spurling & Kempe, which is also filed as an exhibit to the Registration
Statement.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the Prospectus included therein.
Very Truly yours,
/s/ Simpson Thacher & Bartlett
SIMPSON THACHER & BARTLETT
<PAGE>
EXHIBIT 10.5
EXECUTION COPY
_____________________________________
SOUTH AMERICAN CROSSING
_____________________________________
PROJECT DEVELOPMENT
AND
CONSTRUCTION CONTRACT
BETWEEN
ALCATEL SUBMARINE NETWORKS
AND
SOUTH AMERICAN CROSSING LTD.
_____________________________________
Dated as of July 30, 1999
_____________________________________
<PAGE>
TABLE OF CONTENTS
GENERAL TERMS AND CONDITIONS
<TABLE>
<CAPTION>
Article PAGE
- ------- ----
<S> <C> <C>
1 Provision of System.......................................................... 1
2 Documents Forming the Entire Contract........................................ 1
3 Definitions.................................................................. 2
4 Contract Price............................................................... 17
5 Terms of Payment by Purchaser................................................ 21
6 Contract Variations.......................................................... 24
6A Optional Upgrades............................................................ 25
6B *............................................................................ 29
6C *............................................................................ 30
7 Responsibilities for Permits; Compliance with Laws; Purchaser Access Rights.. 30
8 Route Survey................................................................. 32
9 Acceptance................................................................... 33
10 Warranty..................................................................... 37
11 Contractor Support; Use of Segment for Restoration Protection................ 42
12 Purchaser's Obligations...................................................... 43
13 Termination for Default...................................................... 44
14 Termination for Convenience.................................................. 46
15 Suspension................................................................... 48
16 Title and Risk of Loss....................................................... 49
17 Force Majeure................................................................ 49
18 Intellectual Property........................................................ 50
19 Infringement................................................................. 56
20 Safeguarding of Information and Technology................................... 57
21 Export Control............................................................... 58
22 Liquidated Damages........................................................... 58
23 Limitation of Liability/Indemnification...................................... 60
24 Counterparts................................................................. 61
25 Design and Performance Responsibility; Subcontractors........................ 61
26 Product Changes.............................................................. 63
27 Risk and Insurance........................................................... 63
28 Plant and Work Rules......................................................... 66
29 Right of Access and Review................................................... 66
30 Quality Assurance; First Application......................................... 67
31 Documentation................................................................ 68
32 Training..................................................................... 68
33 Settlement of Disputes/Arbitration........................................... 68
34 Applicable Law............................................................... 70
35 Notices...................................................................... 71
36 Publicity and Confidentiality................................................ 71
</TABLE>
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
-i-
<PAGE>
<TABLE>
<S> <C> <C>
37 Assignment................................................................... 72
38 Relationship of the Parties.................................................. 73
39 Successors Bound............................................................. 73
40 Article Captions; Joint Drafting............................................. 73
41 Severability................................................................. 73
42 *............................................................................ 74
43 Survival of Obligations...................................................... 74
44 Non-Waiver................................................................... 74
45 Language..................................................................... 74
46 Entire Agreement............................................................. 74
</TABLE>
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
-ii-
<PAGE>
Exhibit A Route Segments
Exhibit B *
Exhibit C *
Exhibit D Forms of Opinion for Contractor and *
Exhibit E Form of Payment Escrow Agreement
Exhibit F First Use System Elements and Subsystems and Deliverable Software
Exhibit G Subcontractors
Exhibit H Intellectual Property
Exhibit I Landing Licenses
Exhibit J Examples of Contractor Permits
Exhibit K Examples of Owner Permits
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
-iii-
<PAGE>
PROJECT DEVELOPMENT AND
CONSTRUCTION CONTRACT
This Project Development and Construction Contract "Contract") is
made as of the 30th day of July, 1999 between Alcatel Submarine Networks, a
corporation organized and existing under the laws of France, and having its
principal office in Clichy Cedex, France, (hereinafter "Contractor") and (ii)
----------
South American Crossing Ltd., a corporation organized and existing under the
laws of Bermuda, and having its principal office in Hamilton, Bermuda
(hereinafter "Purchaser").
---------
WHEREAS, Purchaser desires to establish a fiber optic cable system, to
be known as the South American Crossing Cable System (hereinafter, and as more
fully defined herein, the "System"), which will be used to provide service among
the Segments as described in Exhibit A hereto;
WHEREAS, Contractor is in the business of designing, constructing,
installing, supplying, delivering and manufacturing fiber optic cable systems
and is familiar with the general business of the fiber optic cable system
industry;
WHEREAS, Purchaser seeks to purchase and own the System and wishes to
engage Contractor to perform the Work and Upgrade Work; and
WHEREAS, Contractor is willing to perform the Work and Upgrade Work on
a turn-key, fixed-price basis in accordance with and subject to the terms
hereof.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable considerations, receipt of which is hereby acknowledged, it has
been agreed as follows:
Article 1 Provision of System
- ------------------------------
In consideration of the Contract Price and the Upgrade Prices, the
Contractor hereby agrees to perform the Work and the Upgrade Work, on a turn-
key, fixed price basis, and to provide the Purchaser with the System meeting the
System Performance Requirements on or before the Scheduled RFS Date(s) and the
System Upgrades meeting the requirements of Article 6A, all in accordance with
the terms hereof.
Contractor understands that a part of the System comprising portions
of the Trans-Andean Crossing is intended to be installed by another
contractor(s). The Contractor agrees to reasonably cooperate with Purchaser and
such other contractor(s), as necessary, including with respect to (i)
formulating and carrying out installation and (ii) Contractor's and each such
other contractor's obligation to formulate testing procedures.
Article 2 Documents Forming the Entire Contract
- ------------------------------------------------
This Contract consists of these commercial Terms and Conditions,
Exhibits A through K, and the following documents (in the form of attachments,
including appendices, attached hereto), which shall be read and construed as
part of the Contract:
<PAGE>
2
Commercial Volume
. Provisioning Schedule, Section 2
. Upgrade Provisioning Schedule, Section 3
. Billing Schedule, Section 4
. Upgrade Billing Schedule, Section 5
. Plan of Work, Section 6
. Upgrade Plan of Work, Section 7
. Invoice Format, Section 8
. Form of Contractor's certificate, Section 9
. Progress Schedule, Section 10
. Upgrade Progress Schedule, Section 11
Technical Volume (includes Route Information)
In the event of any inconsistency between the Terms and Conditions and
the above listed documents, the Terms and Conditions shall prevail. The
documents listed above have no order of precedence.
Article 3 Definitions
- ----------------------
Terms used herein which are not defined herein, but which have common
meanings when used in the telecommunications industry, shall have such common
meanings when used herein. Definitions are as described in the specific
Articles. Except as otherwise defined the following definitions shall apply
throughout the Contract:
AAA has the meaning set forth in Sub-Article 33(B).
Acceptance Testing means (i) with respect to a Segment, a Phase or the
System, the tests described in the System Commissioning and Acceptance section
of the Technical Volume or developed pursuant to such section by mutual
agreement of the Parties and designed to verify that such Segment, such Phase or
the System meets the applicable Performance Requirements and (ii) with respect
to any System Upgrade, the tests described in the System Commissioning and
Acceptance section of the Technical Volume or developed pursuant to such section
by mutual agreement of the Parties and designed to verify that the System
Upgrade meets the applicable Performance Requirements.
Access Rights means all ownership, easement, wayleaves and/or other
property rights, from both private and governmental entities, both on land and
below the surface of the water (including, without limitation, agreements to use
borepipes, conduits and ducts, install manholes and to lease space in cable
stations) necessary to access, use and occupy cable stations and the sites for
cable stations (including, without limitation, to land and install the submarine
cable and related equipment and to bring such cable from the ocean to the cable
stations) in order for the Purchaser to own, operate and maintain the System.
<PAGE>
3
Actual Knowledge means the actual knowledge of any executives with
management responsibility for the Contract.
Assignment has the meaning set forth in Sub-Article 37(A).
Bank Escrow Agent means The Chase Manhattan Bank, in its capacity as
escrow agent under the Payment Escrow Agreement, and its successors in such
capacity.
Bankruptcy Event means an event specified in Sub-Article 13(A)(3) or
13(A)(4) with Contractor as the "other Party".
Billing Milestones means the billing milestones set forth in the
Technical Volume.
Billing Schedule means a billing schedule attached hereto as Section 4
to the Commercial Volume.
Buenos Aires Telehouse means a telehouse located in Buenos Aires,
Argentina in which Purchaser has obtained Purchaser Access Rights.
Certificate of Commercial Acceptance means a certificate issued by
Purchaser in accordance with Sub-Article 9(D) to Contractor certifying that a
Segment, the System or a System Upgrade is Ready for Commercial Acceptance.
Certificate of Final Acceptance means a certificate issued by
Purchaser in accordance with Sub-Article 9(E) to Contractor certifying that a
Phase; the System or a System Upgrade is Ready for Final Acceptance.
Certificate of Provisional Acceptance means a certificate issued by
Purchaser in accordance with Sub-Article 9(C) to Contractor certifying that a
Segment, the System or a System Upgrade is Ready for Provisional Acceptance.
CIF means cost, insurance and freight, as defined in Incoterms.
*
Code means the Internal Revenue Code of 1986, as amended from time to
time.
Commissioning Report means a written report from Contractor
demonstrating that the System (or a Segment, if Purchaser agrees to accept it)
is Ready for Commercial Acceptance or Provisional Acceptance, as the case may
be, and has passed all Acceptance Testing and all other acceptance and
performance requirements set forth in the System Commissioning and Acceptance
section of the Technical Volume.
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
<PAGE>
4
Confidential Information has the meaning set forth in Sub-Article
36(B).
Contract means this agreement, specifically consisting of the
documents described in Article 2, and shall be deemed to include any amendments
thereto or Contract Variations pursuant to Article 6 (Contract Variations).
Contract Countries means U.S. Virgin Islands, Brazil, Argentina,
Chile, Peru, Colombia, Panama and Uruguay or any political subdivision thereof
or taxing authority therein.
Contract Price means the Initial Contract Price, plus any variations
pursuant to Article 6 (Contract Variations), Article 6B *, Article 6C *, Taxes
as set forth in Sub-Article 4(B) and other adjustments to the Contract Price
provided for in this Contract.
Contract Taxes has the meaning set forth in Sub-Article 4(B)(1).
Contract Variation has the meaning set forth in Sub-Article 6(A).
Contractor means the entity that executed this Contract as the
Contractor and that will be responsible for the performance of the Work (and if
applicable, Upgrade Work) under this Contract and shall include its permitted
successors and/or assigns.
Contractor Permits means (i) all permits that the Contractor needs to
conduct its business, (ii) all Permits which the Contractor must obtain in order
to carry out its operations to perform the Work and (iii) minor and routine
construction and building Permits such as licenses to install electricity and
plumbing. Exhibit J hereto contains a list of sample Contractor Permits;
provided that such list is not meant to be complete or exclusive.
- --------
Cook's Crossing means (i) the Supplies contained in the Ft. Amador
(PAC) Cable Station, and the St. Croix (SAC) Cable Station, and (ii) the
transmission facility (owned by an affiliate of purchaser) connecting the Ft.
Amador (PAC) Cable Station, the St. Croix (PAC) Cable Station, and the Venezuela
(PAC) Cable Station; designed and constructed by TSSL for an affiliate of
Purchaser as a fully integrated and working Segment of the System.
Cook's Crossing Upgrade shall have the meaning set forth in Sub-
Article 6A(A).
Dark Fiber shall mean fiber optic cable meeting the criteria of ITU
G.655 and having the ability to connect to associated repeaters, regeneration
equipment, transmission equipment, terminal equipment or other Supplies,
consisting of four fiber pairs, installed in all or any portion designated by
Purchaser (with notice to Contractor) of the Purchaser Access Rights, which
cable shall not come with any associated repeaters,
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
<PAGE>
5
regeneration equipment, transmission equipment, terminal equipment or other
supplies, all as more fully described in the Technical Volume.
Date of Commercial Acceptance, Provisional Acceptance or Final
Acceptance means the date set forth in the Certificate of Commercial Acceptance,
Certificate of Provisional Acceptance or Certificate of Final Acceptance, as the
case may be; provided, that for purposes of Article 21 (Liquidated Damages)
only, such date shall be deemed to be the date that Purchaser receives a
complete Commissioning Report or an Upgrade Commissioning Report, as the case
may be, demonstrating that a Segment, a Phase, the System or a System Upgrade,
as the case may be, is Ready for Commercial Acceptance, Ready for Provisional
Acceptance or Ready for Final Acceptance in accordance with Article 9
"cceptance).
Default means an Event of Default or any event, condition or
occurrence which with the giving of notice or passage of time or both would be
an Event of Default.
Deliverable Software has the meaning set forth in Sub-Article 18(C).
Deliverable Software Escrow has the meaning set forth in Sub-Article
18(H).
Deliverable Technical Material has the meaning set forth in Sub-
Article 18(B).
Dispute Account means the Dispute Account to be created under the
Payment Escrow Agreement.
Event of Default has the meaning set forth in Sub-Article 13(A).
Excluded Tax means a Tax described in any of the following clauses:
(i) any franchise, excess profits, net worth, capital or capital gains
Tax, as well as any Tax on doing business or imposed on net or gross income or
receipts (including minimum and alternative minimum Taxes measured by any items
of Tax preference), but in each case excluding Taxes that are or are in the
nature of sales, use, excise, license, stamp, rental, ad valorem, value added or
property Taxes (other than property taxes on property owned by the Contractor
and not intended to be incorporated into the System);
(ii) any Taxes imposed by a jurisdiction other than one in which (a)
the Contractor is or is treated as engaged in activities contemplated by or in
fulfillment of the Contract or (b) the Purchaser or its affiliates has a nexus
to such jurisdiction and the Tax imposed is attributable to that nexus;
(iii) Taxes imposed on the Contractor as a result of Contractor's
gross negligence or willful misconduct; or
(iv) any import duty, other import related charges, sales or use tax,
VAT or property tax imposed by any Non-Contract Country in respect of Supplies
brought into
<PAGE>
6
such Non-Contract Country for testing, modification or other similar purposes
prior to being installed or used outside such Non-Contract Country.
Expedited Upgrade has the meaning set forth in Sub-Article 6A(L).
Final Commissioning Report and Final Upgrade Commissioning Report
means a written report from Contractor demonstrating that the System (or a
Segment) is Ready for Final Acceptance and has passed all Acceptance Testing and
all other acceptance and performance requirements set forth in the System
Commissioning and Acceptance section of the Technical Volume.
Final Survey Report means the final survey report described in the
Technical Volume.
FOB means free on board as defined in the International Chamber of
Commerce, Guide to Incoterms (1990).
Ft. Amador (PAC) Cable Station (or the Panama (PAC) Cable Station)
means the cable station located in Ft. Amador, Panama which is part of the Pan
American Crossing submarine cable system, which is owned by an affiliate of
Purchaser.
Force Majeure has the meaning set forth in Sub-Article 17(A).
*
Incoterms means the International Chamber of Commerce, Guide to
Incoterms (1990).
Information has the meaning set forth in Sub-Article 20(A).
Initial Contract Price has the meaning set forth in Sub-Article
4(A)(1).
Initial Upgrade Price has the meaning set forth in Sub-Article
4(A)(2).
Intellectual Property has the meaning set forth in Sub-Article 18(A).
Landing Country(ies) means each country in which the System connects
to a cable station.
Landing Licenses means, in the United States, a License to Land and
Operate a Submarine Cable System pursuant to the Submarine Cable Landing Act, 47
U.S.C. 34-39
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
<PAGE>
7
and in the other Landing Countries, the comparable licenses, which licenses are
specifically described in Exhibit I hereto.
Las Toninas Cable Station means the System cable station to be located
in Las Toninas, Argentina.
Laws means any laws, ordinances, regulations, rules, orders,
proclamations, requirements of governmental authorities or treaties.
Manufacturing Materials has the meaning set forth in Sub-Article
13(B).
Non-Contract Countries means all countries, or any political
subdivision thereof or taxing authority therein, other than the Contract
Countries.
Non-Ship Costs has the meaning set forth in Sub-Article 10(A)(2).
Notice of Termination has the meaning set forth in Sub-Article 14(A).
*
Owner Permits means all Permits required to be obtained from
governmental authorities pursuant to Laws that the Purchaser needs to own and
operate the System and which the Purchaser would have had to obtain if it were
constructing the System itself. Exhibit K contains a sample list of Owner
Permits; provided that such list is not meant to be complete or exclusive.
Party(ies) means either of the Purchaser and/or the Contractor, as
appropriate.
Payment Escrow Agreement means that escrow agreement to be entered
into among the Contractor, Purchaser, and the Bank Escrow Agent, substantially
in the form of Exhibit E hereto, with such changes therein as are reasonably
requested by the Bank Escrow Agent, as amended modified or supplemented from
time to time.
Performance Requirements means (i) with respect to a Segment, a Phase
or the System, the applicable System Performance Requirements set forth or to be
developed by mutual agreement pursuant to the Transmission Performance section
of the System Description section of the Technical Volume, (ii) with respect to
any System Upgrade, the System Performance Requirements set forth in or to be
developed by mutual agreement pursuant to the Technical Volume or (iii) in each
case, such other Segment,
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
<PAGE>
8
Phase, System or System Upgrade performance levels as mutually agreed by the
Parties, including the System acceptance limits included in the impairment
budgets.
Permits means all Access Rights, permits, pipeline and cable crossing
agreements, approvals, "no objections", permissions-in-principle,
authorizations, consents, customs clearances, registrations, certificates,
rights-of-way, certificates of occupancy, licenses, including without
limitation, export and import licenses and similar authorizations, landing
permits, orders, vessel and crew authorizations/visas, permission for the
operation of navigational aids and radio systems and similar authorizations
necessary to complete the Work and operate and maintain the System (other than
any of the foregoing (i) relating to the ownership, operation and maintenance by
Purchaser of the System and not necessary until after the System is Ready for
Final Acceptance, (ii) which is or would be needed by Purchaser to engage in any
business outside the business of developing, owning and operating a submarine
cable system or (iii) which is or would be needed at any time by any purchaser
or lessee of capacity on the System). Permits include all of the foregoing
whether required to be obtained from governmental entities or private parties.
The term Permits includes all Contractor Permits and all Owner Permits.
Phase 1 means Segments C and D * all as more fully described in the
Technical Volume hereto.
*
Phase 2 means Segments A, B and Cook's Crossing* as more fully
described in the Technical Volume hereto.
*
Phase 3 means Segments E-1, E-2, E-3, F, G and H, * as more fully
described in the Technical Volume.
Plan of Work means the Plan of Work attached as Section 6 to the
Commercial Volume.
Provisioning Schedule means the price schedule attached hereto in
Section 2 to the Commercial Volume.
Purchaser means South American Crossing Ltd. and shall include its
permitted successors and assigns.
Purchaser Access Rights means, with respect to the Trans-Andes
Crossing, the rights of way, duct space, and space and infrastructure in both
equipment huts and telehouses obtained by Purchaser or its affiliates necessary
for Contractor to install the Supplies, all as more fully described in the
Technical Volume.
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
<PAGE>
9
Purchaser Hindrance has the meaning set forth in Article 12 hereof.
Purchaser Permits means, collectively, all Landing Licenses.
Ready for Commercial Acceptance means
(i) for any Segment, that
(a) if the Phase including such Segment is not at the same time
also Ready for Commercial Acceptance, the Purchaser has
consented, in its sole discretion, to accept such Segment as
Ready for Commercial Acceptance,
(b) such Segment has been substantially completed and has the
ability to carry commercial traffic between the two landing
points of such Segment meeting performance criteria of ITU-T
G.826 as defined in the System Performance section of the
Technical Volume and has line monitoring and protection
switching capability,
(c) Contractor has tested and provided for STM-1
interconnectivity capability to the Segment terminal
equipment according to ITU-T G.826 or, if a different
interface rate is used, an equivalent standard,
(d) Contractor has substantially performed its obligations under
Article 18 (Intellectual Property) then required to be
performed by it, and
(e) all Permits are obtained for such Segment, and
(ii) for any Phase, that
(a) such Phase has been substantially completed and has the
ability to carry commercial traffic operating at 20 Gb/s per
fiber pair on two fiber pair between the various landing
points of such Phase meeting performance criteria of ITU-T
G.826 as defined in the System Performance section of the
Technical Volume, has line monitoring and per Segment
protection switching capability and has network management
capability,
(b) Contractor has tested and provided for STM-1
interconnectivity capability to the System terminal
equipment according to ITU-T G.826 or if a different
interface rate is used, an equivalent standard,
(c) Contractor has substantially performed its obligations under
Article 18 (Intellectual Property) then required to be
performed by it;
<PAGE>
10
(d) all Permits are obtained for such Phase; and
(e) in the case of Phase 3, the System is also ready for
Commercial Acceptance; and
(iii) for the System, that
(a) the System has been substantially completed and has the
ability to carry commercial traffic throughout the System
(operating at 20 Gb/s per fiber pair on two fiber pair)
meeting performance criteria of ITU-T G.826 as defined in
the System Performance section of the Technical Volume, has
line monitoring and per Segment protection switching
capability and has network management capability,
(b) Contractor has tested and provided for STM-1
interconnectivity capability to the System terminal
equipment according to ITU-T G.826, or, if a different
interface rate is used, an equivalent standard,
(c) Contractor has substantially performed its obligations under
Article 18 (Intellectual Property) then required to be
performed by it,
(d) all Permits are obtained for such Phase, and
(e) in the case of Phase 3, the System is also ready for
Commercial Acceptance, and
(iv) for any System Upgrade, the System is Ready for Commercial
Acceptance at the capacity specified for such System Upgrade.
<PAGE>
11
Ready for Final Acceptance means
(i) for any Phase, that
(a)(I) such Phase has successfully and continuously (other than
by reason of Force Majeure in which case the test period
shall be extended for a time period agreed between the
Parties) functioned in compliance with the System
Performance Requirements during the period of ninety (90)
consecutive days after the Date of Provisional Acceptance,
or
(II) if such Phase shall have failed to meet the System
Performance Requirements at any time during such period
(other than by reason of Force Majeure), the Contractor has
corrected such failure and such Phase has successfully and
continuously (other than by reason of Force Majeure in which
case the test period shall be extended for a time period
agreed between the Parties) functioned in compliance with
the System Performance Requirements for such additional
period of time not to exceed ninety (90) days (and not to
end prior to the date ninety (90) days after the Date of
Provisional Acceptance) as reasonably determined by the
Purchaser as being sufficient to confirm that such failure
has been corrected and that no other failures are likely to
appear, and
(b) all deficiencies noted in the Certificate of Provisional
Acceptance have been corrected (other than minor
deficiencies which will not affect the operation of such
Phase, in respect of which an equitable adjustment to the
Contract Price will be made),
(c) Contractor has complied in all material respects with
Article 18 (Intellectual Property), and
(d) in the case of Phase 3 the System is also Ready for Final
Acceptance and meets the criteria of clause (ii) below, and
(ii) for the System, that
(a)(I) the System has successfully and continuously (other than
by reason of Force Majeure in which case the test period
shall be extended for a time period agreed between the
Parties) functioned in compliance with the System
Performance Requirements during the period of ninety (90)
consecutive days after the Date of Provisional Acceptance,
or
<PAGE>
12
(II) if the System shall have failed to meet the System
Performance Requirements at any time during such period
(other than by reason of Force Majeure), the Contractor has
corrected such failure and the System has successfully and
continuously (other than by reason of Force Majeure in which
case the test period shall be extended for a time period
agreed between the Parties) functioned in compliance with
the System Performance Requirements for such additional
period of time not to exceed ninety (90) days (and not to
end prior to the date ninety (90) days after the Date of
Provisional Acceptance) as reasonably determined by the
Purchaser as being sufficient to confirm that such failure
has been corrected and that no other failures are likely to
appear,
(b) all deficiencies noted in the Certificate of Provisional
Acceptance have been corrected (other than minor
deficiencies which will not affect the operation of the
System, in respect of which an equitable adjustment to the
Contract Price will be made), and
(c) Contractor has complied in all material respects with
Article 18 (Intellectual Property), and
(iii) for any System Upgrade, that
(a)(I) the System Upgrade has successfully functioned in
compliance with the System Performance Requirements during
the period of ninety (90) days after the Date of Provisional
Acceptance of the System Upgrade, or
(II) if the System Upgrade shall have failed to meet the System
Performance Requirements during such period, the Contractor
has corrected such failure and the System Upgrade has
successfully functioned in compliance with the System
Performance Requirements for such additional period of time
not to exceed ninety (90) days as reasonably determined by
the Purchaser as sufficient to confirm that such failure has
been corrected, and
(b) all deficiencies noted in the Certificate of Provisional
Acceptance have been corrected (other than minor
deficiencies which will not affect the operation of the
System, in respect of which an equitable adjustment of the
Contract Price will be made), and
(c) Contractor has complied in all material respects with
Article 18 (Intellectual Property).
Ready for Provisional Acceptance means
<PAGE>
13
(i) with respect to any Segment,
(a) if the Phase including such Segment is not, at the same
time, also Ready for Provisional Acceptance, the Purchaser
has consented, in its sole discretion, to accept such
Segment as Ready for Provisional Acceptance,
(b) such Segment is complete in all material respects (and in
any event is Ready for Commercial Acceptance),
(c) the results of Acceptance Testing of such Segment
demonstrate that such Segment has satisfied the System
Performance Requirements,
(d) Contractor has substantially performed its obligations under
Article 18 (Intellectual Property) then required to be
performed by it,
(e) all Permits are obtained for such Segment, and
(ii) with respect to any Phase, such Phase is complete in all
material respects (and in any event is Ready for Commercial
Acceptance), all Segments of such Phase are Ready for Provisional
Acceptance with per Segment protection capability, line
monitoring and network management capability, and, in the case of
Phase 3, the System is also Ready for Provisional Acceptance,
(iii) with respect to the System, the System is complete in all
material respects (and in any event is Ready for Commercial
Acceptance), all Segments are Ready for Provisional Acceptance
with per Segment protection capability, line monitoring and
network management capability and self-healing ring protection
capability, and
(iv) with respect to any System Upgrade, the results of Acceptance
Testing of such System Upgrade demonstrate that such System
Upgrade is complete in all material respects and is sufficient to
realize the Performance Requirements.
Representatives has the meaning set forth in Article 36(B).
Retainage means (a) in the case of the System, an amount equal to *
of the Initial Contract Price and (b) in the case of each System Upgrade, an
amount equal to * of the Initial Upgrade Price.
Retesting has the meaning set forth in Sub-Article 9(B)(3).
Route Survey means the route survey described in the Technical Volume.
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
<PAGE>
14
Santiago Telehouse means a telehouse located in Santiago, Chile in
which Purchaser has obtained Purchaser Access Rights.
Scheduled Phase 1 RFS Date has the meaning set forth in Sub-Article
9(A).
Scheduled Phase 2 RFS Date has the meaning set forth in Sub-Article
9(A).
Scheduled Phase 3 RFS Date has the meaning set forth in Sub-Article
9(A).
Scheduled RFS Date(s) means any of the Scheduled Phase 1 RFS Date,
Phase 2 RFS Date and/or Scheduled System RFS Date.
Scheduled System RFS Date has the meaning set forth in Sub-Article
9(A).
Scheduled Upgrade Date means for any System Upgrade, the date by which
the Contractor agrees such System Upgrade will be Ready for Provisional
Acceptance or Commercial Acceptance.
Segment means any of Segments A through I and Cook's Crossing.
Segment A means the four fiber pair Segment of the System from the St.
Croix (SAC) Cable Station to Fortaleza, Brazil and landing in Fortaleza in a
location capable of interconnecting with major telecommunications carriers.
Segment B means the four fiber pair Segment of the System from
Fortaleza, Brazil to Rio de Janeiro, Brazil and landing in Rio de Janeiro in a
location capable of interconnecting with major telecommunications carriers.
Segment C means the four fiber pair Segment of the System from Rio de
Janeiro, Brazil to Santos, Brazil and landing in Santos in a location capable of
interconnecting with major telecommunications carriers.
Segment D means the four fiber pair Segment of the System from Santos,
Brazil to the Las Toninas Cable Station and, if elected, the Optional Branching
Unit.
*
Segment E-1 means the four fiber pair Segment from the Las Toninos
Cable Station connecting to the Buenos Aires Telehouse.
Segment E-2 means the four fiber pair Segment from the Buenos Aires
Telehouse connecting to the Santiago Telehouse.
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
<PAGE>
15
Segment E-3 means the four fiber pair Segment connecting the Santiago
Telehouse to the Valparaiso Cable Station.
Segment F means the four fiber pair Segment of the System from the
Valparaiso Cable Station to Lurin, Peru and landing in Lurin in locations
capable of interconnecting with major telecommunications carriers.
Segment G means the four fiber pair Segment of the System from Lurin,
Peru to the Colombia Branching Unit.
Segment H means the four fiber pair Segment of the System from the
Colombia Branching Unit to Buenaventura, Columbia and landing in Buenaventura in
a location capable of interconnecting with major telecommunications carriers.
Segment I means the four fiber pair Segment of the System from the
Colombia Branching Unit to the Ft. Amador (PAC) Cable Station.
Ship Costs has the meaning set forth in Sub-Article 10(A)(2).
Ship Period has the meaning set forth in Sub-Article 10(A).
Software Escrow Agreement has the meaning set forth in Sub-Article
18(H).
St. Croix (PAC) Cable Station means the cable station located in St.
Croix, Virgin Islands which is connected to the Pan American Crossing submarine
cable system, which is owned by an affiliate of Purchaser.
St. Croix (SAC) Cable Station means the cable station to be
provisioned in St. Croix, Virgin Islands by the Contractor and which will be
located adjacent to the St. Croix (PAC) Cable Station and interconnected to it.
Subcontractor means a contractor, vendor, supplier, licensor or other
person having a direct or indirect contract with the Contractor or with any
other Subcontractor of the Contractor who has been hired specifically to assist
the Contractor in certain specified areas of its performance of its obligations
under this Contract including, without limitation, performance of any part of
the Work.
Supplies means any and all materials, plant, machinery, equipment,
hardware and items supplied by the Contractor under this Contract.
Suspension means a suspension in all or part of the Work pursuant to
Sub-Article 15(A) or 15(B).
System means the fiber optic cable system as described in Exhibit A
and the Technical Volume.
<PAGE>
16
System Performance Requirements has the meaning set forth in the
Technical Volume.
System Upgrade has the meaning set forth in Sub-Article 6A(A).
*
TAC Segments means Segments * E-1, E-2 and E-3, as the case may be.
Tax means any tax, duty, levy, charge or custom (including, without
limitation, any sales or use tax, VAT or octroi duty relating to the Contract
items and fiscal stamps connected with Contract legalization) imposed or
collected by any taxing authority or agency (domestic or foreign).
Technical Volume means the Technical Volume attached hereto.
Trans-Andes Crossing means that portion of the System that connects
the Las Toninas Cable Station, the Buenos Aires Telehouse, the Santiago
Telehouse and the Valparaiso Cable Station, as more fully described in the
Technical Volume.
Transferee means any entity to which purchaser assigns rights
hereunder pursuant to Sub-Article 37(C) hereof.
TSSL means Tyco Submarine Systems Ltd., a Delaware corporation.
Upgrade Billing Schedule means the billing schedule attached hereto as
Section 5 to the Commercial Volume.
Upgrade Commissioning Report means a written report from Contractor
demonstrating that a System Upgrade is Ready for Commercial Acceptance or
Provisional Acceptance, as the case may be, and has passed all Acceptance
Testing and all other acceptance and performance requirements set forth in the
System Commissioning and Acceptance section of the Technical Volume.
Upgrade Option Period has the meaning set forth in Sub-Article 6A(B).
Upgrade Period has the meaning set forth in Sub-Article 6A(E).
Upgrade Plan of Work means the plan of work attached hereto as Section
7 to the Commercial Volume.
Upgrade Price means, for any System Upgrade, the Initial Upgrade Price
for such System Upgrade, plus any variations pursuant to Article 6 (Contract
Variations),
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
<PAGE>
17
Taxes as set forth in Sub-Article 4(B) and other adjustments to such Upgrade
Price provided for in this Contract.
Upgrade Provisioning Schedule means the provisioning schedule attached
hereto as Section 3 to the Commercial Volume.
Upgrade Warranty Period has the meaning set forth in Sub-Article
10(A).
Upgrade Work means the activities and services to be performed or
provided by Contractor under Article 6A (Optional Upgrades).
*
Valparaiso Cable Station means the System cable station located in
Valparaiso, Chile.
Venezuela (PAC) Cable Station means the cable station located in
Venezuela which is part of the Pan American Crossing submarine cable system,
which is owned by an affiliate of Purchaser.
Warranty Period has the meaning set forth in Sub-Article 10(A).
Work means all activities and services (other than the activities and
services specified in this Contract to be provided by Purchaser) necessary to be
performed or provided in developing, planning, engineering, designing,
manufacturing, constructing, delivering, installing and testing the System until
the System is Ready for Final Acceptance, including without limitation,
designating, coordinating and obtaining all Permits, except for the Purchaser
Permits, provided that Work shall not include obtaining Purchaser Access Rights.
Whether or not used in conjunction with the term ASupplies", the term AWork"
shall always be deemed to include the provision of the relevant Supplies, unless
the context requires otherwise.
Year 2000 Compliant means, when used with respect to any software or
materials, that such software or materials will operate accurately and, without
interruption, accept, possess and in all manner retain full functionality when
referring to, or involving, any year or date in the twentieth or twenty first
centuries.
Article 4 Contract Price
- -------------------------
A. Contract Price
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
<PAGE>
18
1. The initial Contract Price for the Work, in United States Dollars
(US$) is a fee of * (the "Initial Contract Price") which is
composed of the Phase 1 price of * the Phase 2 price of * and the
Phase 3 price of * The Initial Contract price may also be reduced
pursuant to the provisions of paragraph C of Article 6B. The
Initial Contract Price does not include the cost of optional
upgrades which are described in Article 6A (Optional Upgrades),
Article 6B *, Article 6C *, any contract variations as provided
for in Article 6 (Contract Variations) or any Taxes. The Initial
Contract Price includes all charges for CIF and all costs and
expenses incurred in obtaining all Permits (including Access
Rights but not including Purchaser Access Rights).
2. The initial Upgrade Price for any Upgrade Work, in United States
Dollars (US$) is the fixed fee set forth in Sub-Article 6A(G),
payable as set forth in Section 5 of the Commercial Volume (the
"Initial Upgrade Price"). No Initial Upgrade Price includes the
cost of any contract variations as provided for in Article 6
(Contract Variations) or any Taxes.
3. (a) The Provisioning Schedule sets forth the Contractor's
breakdown of the Initial Contract Price among various
aspects of the Work. If the actual cost of any aspect of
the Work is greater or less than that set forth in the
Provisioning Schedule, such fact shall not cause any change
in the Initial Contract Price.
(b) At its discretion, the Purchaser may direct the
Contractor to deliver either Universal Joints conforming to
qualified Universal Jointing Consortium Technology or
Contractor proprietary joints as spares, in such quantities
as provided in the Provisioning Schedule; such direction may
be given during the course of the Work, but not later than
such date as the Parties shall mutually agree, and such
direction, whichever spare joint type is selected, shall not
cause any change in the Initial Contract Price.
4. Without the prior written consent of the Purchaser, which consent
shall not be unreasonably withheld or delayed, the Contractor
shall not arrange for any
(a) Access Right which requires payments to be made by the
Purchaser or made after the System is Ready for Provisional
Acceptance, or
(b) Permit which requires aggregate payments in excess of
$250,000 to be made by Purchaser or made after the System
is Ready for Provisional Acceptance.
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
<PAGE>
19
5. The Contractor and the Purchaser will share equally the costs and
expenses of the Payment Escrow Agent.
B. Taxes, Levies and Duties
1. The Initial Contract Price and each Initial Upgrade Price, as
stated in Sub-Article 4(A) above, excludes any Tax. The Contract
Price and each Upgrade Price shall without duplication be
adjusted for any Tax imposed on or in connection with this
Contract (including, without limitation, the execution and
delivery of this Contract, the Work, the Upgrade Work and the
Supplies, but excluding any Excluded Taxes) (any such Taxes,
other than Excluded Taxes, are hereinafter referred to as
"Contract Taxes"). Contractor has provided a good faith estimate
of the Contract Taxes payable by the Purchaser; it being
understood that the Contractor shall have no liability under this
Contract or otherwise to the Purchaser for any errors or
omissions in such estimate or any losses arising therefrom. The
Contractor shall be responsible for any Excluded Tax that might
be incurred by the Contractor as well as any Tax described in
clause (iv) of the definition of Excluded Tax.
2. The Purchaser will be ultimately responsible for the payment of
all Contract Taxes (including, without limitation, Contract Taxes
that are VAT, octroi duties relating to Contract items and fiscal
stamps, etc. connected with Contract legalizations to the
authorities in their countries). In the case of any Contract
Taxes paid by the Contractor, the Contractor shall submit payment
on the Purchaser's behalf and Contractor will be reimbursed by
the Purchaser in accordance with Article 5 (Terms of Payment by
Purchaser).
3. The Contractor agrees to use reasonable efforts, including,
without limitation, by registering for VAT and any applicable
sales Taxes in any country, state or other jurisdiction where
legally required, to cooperate with and assist Purchaser in its
efforts (i) to have Supplies which are the subject of this
Contract made exempt from Contract Taxes, whether in the
manufacture of the Supplies or related to the importation or
location or installation of the Supplies, (ii) to request
revisions, drawbacks, remissions, reclassifications or the like
to the jurisdictions identified by the Purchaser; or (iii) to
reduce or eliminate Contract Taxes (including the provision of
applicable certifications and forms) and to obtain any available
refunds of Contract Taxes, provided that the Contractor shall not
---------
be required to act other than in accordance with the relevant
Laws then in force. The Purchaser shall reimburse the Contractor,
in accordance with Article 5, for any reasonable costs (including
the reasonable fees and expenses of legal counsel, accountants
and other advisors) incurred by the Contractor under this Sub-
Article 4(B)(3), provided that Purchaser was
--------
<PAGE>
20
notified and has consented to the incurrence of such costs, fees
and expenses. Contractor shall not be required to cooperate with
and assist Purchaser in its efforts under this Sub-Article
4(B)(3) or to take any action hereunder which in the Contractor's
good faith judgment would incur any costs or if in Contractor's
good faith judgment it would be advisable to obtain the advice of
counsel, accountants or other advisors prior to cooperating with
or assisting purchaser or taking any action, unless in each case,
Purchaser has agreed to reimburse Contractor under the foregoing
proviso.
4. Prior to the Date of Provisional Acceptance with respect to a
Phase, the System or any System Upgrade, the Contractor shall
provide evidence of having made all payments for Taxes included
in the Contract Price or Upgrade Price or described in clause
(iv) of the definition of Excluded Taxes, other than VAT due on
payments of the Contract Price or Upgrade Price made on or after
the Date of Provisional Acceptance of the System or System
Upgrade, which evidence shall be provided within sixty (60) days
of the date of each such payment.
5. As part of Work or any Upgrade Work, the Contractor shall obtain
at its expense, on Purchaser's behalf, any import license or
other official authorization and carry out all customs
formalities necessary for the importation or exportation of goods
in connection with such Work or Upgrade Work. With respect to
each Contract Country, the Purchaser agrees to be the Importer or
Exporter of Record or designate an Importer or Exporter of
Record/Consignee on its behalf, unless, in either case, in the
Purchaser's reasonable opinion such action could expose the
Purchaser to a possible material burden or risk. Purchaser must
provide a Letter of Authorization from any third party designate
stating it agrees to be the Importer or Exporter of Record on
Purchaser's behalf and identify the name and address of the
designated Importer or Exporter of Record.
6. The Supplies to be installed or held on land shall be delivered
to the agreed point at the named place of destination and shall
be consigned to the Purchaser.
C. Withholding Tax
1. If withholding for any Tax is required in respect of any payment
to the Contractor, the Purchaser shall (i) withhold the
appropriate amount from such payment, (ii) pay such amount to the
relevant authorities in accordance with the applicable Laws and
(iii) in the case of any such withholding in respect of a
Contract Tax (other than any withholding that would not have been
required if the Contractor had satisfied its other Tax payment
obligations) and subject to the Contractor's satisfying the
obligations set forth in the last sentence of this Sub-Article
4(C)(1), pay
<PAGE>
21
the Contractor an additional amount such that the net amount
received by the Contractor is the amount the Contractor would
have received in the absence of such withholding. In such a case,
the Purchaser shall provide to the Contractor, as soon as
reasonably practicable, a certified copy of an official tax
receipt for any Tax which is retained from any payment due to the
Contractor or for any Tax which is paid on behalf of the
Contractor. All such receipts shall be in the name of the
Contractor. The Contractor agrees to complete accurately and
timely provide to the Purchaser or, if required, to the
applicable Taxing authority, such forms, certifications or other
documents as may be requested in timely manner by Purchaser, in
order to allow it to make payments to the Contractor without any
deduction or withholding on account of withholding Taxes (or at a
reduced rate thereof) or to receive a refund of any amounts
deducted or withheld on account of withholding Taxes.
2. If the Contractor shall become aware that it is entitled to
receive a refund or credit from a relevant taxing or governmental
authority in respect of a Contract Tax as to which the Purchaser
has paid an additional amount pursuant to Sub-Article 4(C)(1)
above, the Contractor shall promptly notify the Purchaser of the
availability of such refund or credit and shall, within 30 days
after receipt of a request by the Purchaser (whether as a result
of notification that it has made to the Purchaser or otherwise),
make a claim to such taxing or governmental authority for such
refund or credit at the Purchaser's expense. If the Contractor
receives a refund or credit in respect of a Contract Tax as to
which the Purchaser has paid an additional amount pursuant to
Sub-Article 4(C)(1) above, or if, as a result of the Purchaser's
payment of such additional amounts, the Contractor or any other
member of an affiliated group, as defined in section 1504(a) of
the Code, of which the Contractor is a member, receives a credit
against Taxes imposed on its income or franchise taxes imposed on
it by the country under the laws of which it is organized or any
political subdivision thereof, the Contractor shall promptly
notify the Purchaser of such refund or credit and shall within 30
days from the date of receipt of such refund or benefit of such
credit pay over the amount of such refund or benefit of such
credit (including any interest paid or credited by the relevant
taxing or governmental authority with respect to such refund or
credit) to the Purchaser (but only to the extent of the
additional payments made by the Purchaser under Sub-Article
4(C)(1) above with respect to the Contract Tax giving rise to
such refund or credit), net of all out-of-pocket expenses of the
Contractor which it would not have incurred but for the
application of this paragraph; provided, however, that the
-------- -------
Purchaser, upon the request of the Contractor agrees to repay the
amount paid over to the Purchaser (plus penalties, interest or
other charges due to the appropriate authorities in connection
therewith) to the Contractor in the event the Contractor is
required to repay such refund or credit to such relevant
authority.
<PAGE>
22
Article 5 Terms of Payment by Purchaser
- --------------------------------------
A. General Conditions of Payment
1. All payments shall be made and all invoices shall be rendered in
US Dollars (US$). The Purchaser shall be responsible for and
shall pay all costs and fees for payment, as well as the banking
and wiring costs. All banking documents and correspondence must
be in English.
B. Invoice Procedures
1. All invoices for Work shall be submitted according to the Billing
Schedule, provided, that the appropriate Billing Milestones have
--------
been achieved. All invoices for Work shall have a certificate in
the form of Section 9 of the Commercial Volume attached.
2. Any Contract Variations shall be invoiced and paid in accordance
with the terms of the Contract Variation as specified in Article
6 (Contract Variations).
3. Invoices for Upgrade Work shall be submitted according to the
Upgrade Billing Schedule and shall be paid in accordance with
this Article 5.
4. Invoices for amounts not described in Sub-Sections 1 through 3
above, which may become payable hereunder, shall be submitted
after applicable costs have been incurred or such other time as
may be specified in this Contract, and shall be accompanied by a
certificate of the Contractor explaining such amount and
certifying that it is payable.
5. The Contractor shall render all invoices to the following address
or facsimile number:
South American Crossing Ltd.
Wessex House
45 Reid Street
Hamilton HM12, Bermuda
Facsimile: 441-296-6749/8606
Attn: Robert Klug
C. Payment Procedures
<PAGE>
23
1. The Purchaser shall pay the Contractor, and the Contractor shall
accept payment, in accordance with this Article 5 (Terms of
Payment by Purchaser). Purchaser agrees to pay an initial payment
to Contractor in the amount of * Within three business days of
the time the conditions set forth in Article 42 hereof are
fulfilled by all Parties, the first portion of the initial
payment, in the amount of *, shall be paid by Purchaser to
Contractor. Failure to receive this payment shall entitle
Contractor, upon 5 business days' notice to Purchaser of intent
to suspend, to immediately suspend Work hereunder. The second
portion of the initial payment, in the amount of *, shall be paid
by Purchaser within 30 days. The third portion of the initial
payment in the amount of *, shall be paid by Purchaser within 56
days.
2. Invoices given to the Purchaser on or before the last day of any
month shall, subject to Sub-Article 5(C)(5) below, be due and
payable on the last day of the next month or such other time as
may be specified in this Contract.
3. Invoices not paid when due shall accrue late payment charges from
the day, following the day, on which payment was due until the
day on which it is paid. Invoices for such extended payment
charges shall not be issued for an amount less than U.S. $1,000.
Extended payment charges shall be computed at the rate of one
percent (1%) per month.
4. In the event that the Purchaser has an objection to any invoice
or other payment obligation or any amount owing by Contractor to
Purchaser shall not have been paid when due, the Purchaser shall
promptly notify the Contractor of such objection and such amount,
and the Purchaser and Contractor shall make every reasonable
effort to settle promptly the dispute concerning the payment(s)
in question. In the event such dispute cannot be settled within
60 days, the Contractor and the Purchaser will promptly execute
and deliver a Payment Escrow Agreement substantially in the form
of Exhibit E hereto, with such changes therein as the Bank Escrow
Agent may reasonably request, and the Purchaser will have the
right to withhold payment of the disputed amount(s) (or withhold
from the invoice amount a sum equal to the amount purportedly
owing by Contractor) so long as it deposits, in full, such
disputed amount(s) into the Dispute Account.
(a) Provided such disputed amount is placed into the Dispute
Account in a timely manner, the Purchaser shall not be
deemed to be in breach of or in default for failing to pay
Contractor and the Contractor shall continue to perform all
of its obligations hereunder.
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
<PAGE>
24
(b) The Bank Escrow Agent will distribute the disputed amount in
accordance with the terms of the Payment Escrow Agreement.
(c) In addition, the prevailing Party shall be entitled to
receive from the Dispute Account an amount equal to the
interest earned by the Bank Escrow Agent on the distributed,
disputed amount, which shall be distributed by the Bank
Escrow Agent under clause (b) above.
The Contractor and the Purchaser will share equally the costs and
expenses of the Bank Escrow Agent.
5. The Purchaser shall make timely payments for that portion of the
invoice not in dispute in accordance with Sub-Article 5(C) or
such payments will be assessed extended payment charges as set
forth in Sub-Article 5(C)(4). Pending resolution of the dispute,
the Purchaser may not withhold payment (unless also subject to
dispute) on any other invoice concerning different goods and/or
services submitted by Contractor.
6. The Retainage for the System, or any System Upgrade shall be
invoiced on the Date of Final Acceptance of the System, or such
System Upgrade, as the case may be and shall be payable as set
forth in Sub-Article 5(C)(2).
Article 6 Contract Variations
- ------------------------------
A. Either Party may request, during construction of the System or any
System Upgrade, by written order, a contract variation "Contract Variation")
requiring additions or alterations to, deviations or deductions from the System
or System Upgrade. If the other Party consents, in its sole discretion, this
change will be formalized as an amendment to this Contract by a Contract
Variation; provided, that the Contractor will not unreasonably withhold its
--------
consent to a Contract Variation requested by the Purchaser; and provided
--------
further, that Purchaser will not unreasonably withhold its consent to a Contract
- -------
Variation requested by the Contractor so long as such Contract Variation does
not affect the Contract Price, any Upgrade Price, the Scheduled System RFS Date,
the Scheduled Phase 1 RFS Date, the Scheduled Phase 2 RFS Date, any Scheduled
Upgrade Date, any warranties or the Performance Standards.
B. A Contract Variation shall not become effective unless and until the
price adjustment, the terms and schedule of payment and the extension of time
and all other terms have been mutually agreed upon by the Parties (and the
Parties shall act reasonably and in good faith in connection with all such
terms) and such Contract Variation is signed by an authorized representative of
each Party. Each Contract Variation shall be incorporated as an amendment to the
Contract.
C. Contractor may seek a Contract Variation for any change, after the
date hereof, of any Law (except those, and to the extent, affecting only Taxes
or wages) which requires a change in the Work or the Upgrade Work or affects the
costs (other than wages) incurred or to be incurred by the Contractor or any
<PAGE>
25
combination of the foregoing and Purchaser shall agree to any such change in
Work or Upgrade Work as may be required and to an equitable adjustment to the
Contract Price or the applicable Upgrade Price; provided, that the Contractor
--------
shall not be entitled to any increase in the Contract Price for any change of
Law resulting from any act or omission of Contractor. As of the date hereof,
neither Party has Actual Knowledge of any proposed change in any Law that would
require a change in the Work or the Upgrade Work.
D. The Initial Contract Price is based on the assumption that the SDH low
speed interconnect configuration shall be as set forth in the System Description
section of the Technical Volume. Purchaser may elect to change such
configuration by eliminating, replacing or adding optical interfaces and SDH
equipment each with respect to one or more Segments, where all such elections
(i.e. eliminations, replacements or additions of optical interfaces) to such
interconnect configuration shall be implemented using equipment as listed in the
Provisioning Schedule or as otherwise mutually agreed by the Parties. If
Purchaser makes any such election, both Parties shall agree to an equitable
adjustment, up or down, based on the prices set forth in the Provisioning
Schedule, to the Contract Price and/or one or more of the Scheduled RFS Dates,
as necessary for each such election. The equitable adjustment shall take into
account the actual costs incurred by Contractor, including but not limited to,
costs associated with canceling firm commitments.
Article 6A Optional Upgrades
- -----------------------------
A. This Article includes the terms and conditions governing options for
future upgrades to the System (each a "System Upgrade") that may be exercised by
Purchaser during the Upgrade Option Period. *
B. *
C. *
D. *
E. *
F. *
G. *
H. *
I. *
J. *
K. *
L. *
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
<PAGE>
26
*
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
<PAGE>
27
*
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
<PAGE>
28
*
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
<PAGE>
29
Article 6B *
A. *
B. *
C. *
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
<PAGE>
30
Article 6C *
Article 7 Responsibilities for Permits; Compliance with Laws; Purchaser
- ---------------------------------------------------------------------------
Access Rights
- -------------
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
<PAGE>
31
A. Upon written request of the Contractor, the Purchaser shall reasonably
cooperate with and assist the Contractor to obtain all Permits (except those
specified in paragraph C below), to the extent that Purchaser's cooperation and
assistance are necessary for Contractor to expeditiously and cost-efficiently
obtain such Permits. The Purchaser agrees to respond reasonably promptly to any
such request from Contractor; provided, that, the failure of Purchaser to comply
--------
with such request shall not give rise to a Purchaser Hindrance unless (i) the
requested cooperation was required by Law and (ii) Purchaser failure is due to
gross negligence or willful misconduct. Contractor shall reimburse reasonable
outside counsel fees, reasonable independent consultant fees and other
reasonable out-of-pocket expenses incurred by Purchaser in connection with such
cooperation. Further, the Purchaser agrees that it will not impede or interfere
with Contractor's abilities to perform its obligations under paragraph B of this
Article 7. Upon notice from Contractor with respect to a Permit or receipt by
Purchaser of a copy of a Permit, Purchaser shall fulfill all conditions of such
Permit and perform all responsibilities thereunder, except to the extent that
such conditions or responsibilities are those of the Contractor under the Work.
Contractor will inform Purchaser as to any such conditions or responsibilities
that are not ordinary and routine (based on industry standards) and obtain
Purchaser's consent thereto prior to arranging for any such Permit. Purchaser
(and its representatives and lawyers, whose services shall be paid by Purchaser)
may, at its sole option and cost, participate with Contractor in the process of
obtaining any Permits to the extent it deems reasonably necessary; provided,
--------
that any such participation shall not relieve or alter any of Contractor's
obligations under this Contract with respect to obtaining all Permits and shall
not, by itself, be deemed to impede or interfere with Contractor.
B. Subject to paragraph C below, the Contractor shall have the
responsibility for obtaining, at the Contractor's sole cost and expense, all
Permits on Purchaser's behalf. The Contractor will cause all Permits ultimately
required to be held by Purchaser but not initially issued in the name of
Purchaser to be assignable to Purchaser, and to be assigned to Purchaser at the
time title to the System (or a Phase or any Segment) is transferred to Purchaser
pursuant to this Contract. Contractor shall be responsible to pay any transfer
fees in connection with any such assignment. Subject to Sub-Article 4(A)(4),
Purchaser shall be responsible for payment of all Permit fees and other costs
and expenses due with respect to any Permit after the Date of Provisional
Acceptance of the System.
C. The Contractor shall not be responsible for obtaining Purchaser Permits
or Purchaser Access Rights, but the Contractor will cooperate with the Purchaser
in connection therewith. Purchaser shall reimburse reasonable outside counsel
fees, reasonable independent consultant fees and other reasonable out-of-pocket
expenses incurred by Contractor in connection with such cooperation.
D. Any delay in obtaining or failure to obtain any Owner Permit shall
constitute a Force Majeure and be treated as described in Article 17 (Force
Majeure), except to the extent such delay is a result of Contractor's negligence
or willful misconduct. No Force Majeure shall be granted with respect to
Contractor Permits, except for Force Majeure events which are unrelated to the
process by which such Contractor Permits are obtained. For example, a delay in
<PAGE>
32
issuance of a Contractor Permit because of a change in administration or rules
is not a Force Majeure, but such a delay caused by a war or an earthquake may be
a Force Majeure.
E. Except with respect to variations necessitated by complying with any
changes, enacted after the date hereof, in any Laws (the costs with respect to
which shall be borne by the Purchaser unless such change is a result of any act
or omission by Contractor), the Contractor shall be responsible for the payment
of any and all costs incurred as a result of the need to vary design, drawings,
plans or procedures to comply with any of the circumstances set forth in this
Article. The Contractor shall, before making any variations from the designs,
drawings, plans or procedures that may be necessitated by so complying with any
Laws and that would represent a material change to the overall design of the
System, give to the Purchaser written notice, specifying the variations proposed
to be made, and the reasons for making them. As of the date hereof, neither
Party has Actual Knowledge of any proposed changes in the Laws which would
necessitate any such variation.
F. The Contractor shall (i) comply with all applicable Laws in performing
the Work, (ii) give all notices required by any Laws to be given to any
authority and (iii) perform or permit the performance by authorized persons of
any inspection required by the said Laws. All Work and the Project, upon
completion, will comply with all applicable Laws.
G. As part of the Initial Contract Price, the Contractor shall obtain, at
its own risk and expense, any export and import license and other official
authorization and carry out all customs formalities for the exportation and
importation of goods and, where necessary, for their transit through another
country.
H. Within 30 days after the date of execution of this Contract, the
Contractor will prepare and deliver to the Purchaser a detailed list of Permits
that to its knowledge are required to be obtained under current law in order to
complete the Work and shall update such list from time to time if it becomes
aware of changes in Permit requirements. Such list, as updated from time to
time, shall set forth the projected dates of filing for such Permits and an
estimate of when such Permits are expected to be obtained. Without limiting
Contractor's liabilities in respect of Sub-Articles 7(B), Contractor shall have
no liability in respect of the accuracy of the information furnished under this
Sub-Article, except in the case of gross negligence or willful misconduct.
Article 8 Route Survey
- -----------------------
A. The Contractor shall conduct a Desk Top Study, the Route Survey and,
where prudent, a Burial Assessment Survey, and select the cable route for the
System in accordance with the information in the Final Route Survey Report and
such Burial Assessment Survey. Contractor shall be permitted to make changes, at
its discretion, to the route selection, if necessary for operational reasons,
without additional cost to Purchaser. The Contractor shall review with the
Purchaser the route for the System, and the results of the Burial Assessment
Survey, within 20 business days of the presentation of the Final Route Survey
Report, which Report must include the results of such Burial Assessment Survey.
<PAGE>
33
B. Any changes to the route selection requested by Purchaser shall be
treated as a Contract Variation in accordance with Article 6 (Contract
Variations).
C. Any changes to any aspect of the Work due to any Desk Top Study, Route
Survey, Burial Assessment Survey or Final Route Survey Report will not result in
any change to the Initial Contract Price.
D. The Contractor will perform the Desktop Study, Route Survey and Burial
Assessment Survey, and engineer and design the cable route, using generally
accepted practices in the industry. In the engineering and design of the cable
route the Contractor will give due consideration to the interests of the
Purchaser and shall in good faith try to satisfy such interests, particularly
(but without limitation) regarding survivability, maintainability and tax
consequences, in each case arising from the location of the cable.
Article 9 Acceptance
- ---------------------
A. General
1. The Acceptance Testing shall be performed by the Contractor. The
Purchaser and its designated representatives may observe, at
their own expense, the Contractor's tests and review the test
results. Purchaser may request the Contractor to conduct and/or
may itself conduct any additional tests to demonstrate compliance
with the provisions of this Agreement and the specifications in
the Technical Volume. If such additional tests do demonstrate
that the provisions of this Agreement and the specifications in
the Technical Volume have been complied with, then the Purchaser
shall be responsible for paying the costs of such additional
tests, and any delay beyond the Contractor's schedule for
completion of its tests caused by such process shall be a
Purchaser Hindrance. If, however, such additional tests
demonstrate that the provisions of this Agreement or the
specifications in the Technical Volume have not been complied
with, then it shall be the Contractor's responsibility to pay the
costs of such additional tests, and any delay caused by such
process shall not be a Force Majeure.
2. Until the Date of Final Acceptance of the System or if a System
Upgrade is requested by Purchaser, the Date of Final Acceptance
of such System Upgrade, the Purchaser agrees to allow Contractor
access to all Segments of the System.
3. The Purchaser shall issue a Certificate of Commercial Acceptance
in accordance with the provisions of Sub-Article 9(D)(1).
4. Once a Segment of the System, a Phase of the System, or a System
Upgrade is Ready for Provisional Acceptance, the Purchaser shall
issue a Certificate of Provisional Acceptance, provided, that it
is within the
<PAGE>
34
Purchaser's sole discretion as to whether to accept a Segment
instead of a Phase of the System.
5. Once a Phase of the System or a System Upgrade is Ready for Final
Acceptance, the Purchaser shall issue a Certificate of Final
Acceptance.
6. The Purchaser shall not unreasonably withhold or delay issuance
of a Certificate of Commercial Acceptance, a Certificate of
Provisional Acceptance or a Certificate of Final Acceptance.
7. The Contractor agrees that the Date of Provisional Acceptance or
Commercial Acceptance of Phase 1 of the System will occur by
August 15, 2000 (as such date may be extended under Article 6
(Contract Variations), Article 17 (Force Majeure) or otherwise
under this Contract or by agreement of the Parties, the
"Scheduled Phase 1 RFS Date").
8. The Contractor agrees that the Date of Provisional Acceptance or
Commercial Acceptance of Phase 2 of the System will occur by
September 30, 2000 (as such date may be extended under Article 6
(Contract Variations), Article 17 (Force Majeure) or otherwise
under this Contract or by agreement of the Parties, the
"Scheduled Phase 2 RFS Date").
9. The Contractor agrees that the Date of Provisional Acceptance or
Commercial Acceptance of Phase 3 of the System and of the System
will occur by March 31, 2001 (as such date may be extended under
Article 6 (Contract Variations), Article 17 (Force Majeure) or
otherwise under this Contract or by agreement of the Parties, the
AScheduled Phase 3 RFS Date" and the "Scheduled System RFS
Date").
10. The Date of Commercial Acceptance, Provisional Acceptance and
Final Acceptance, as the case may be, shall be deemed to have
occurred with respect to a Segment, the System or a System
Upgrade if a Certificate of Commercial Acceptance, a Certificate
of Provisional Acceptance or a Certificate of Final Acceptance,
as the case may be, is issued with respect thereto.
B. Notice of Acceptance or Rejection
1. Within thirty (30) days of receipt by Purchaser of a complete
Commissioning Report or Upgrade Commissioning Report, as the case
may be, the Purchaser must issue notification to the Contractor
of the following:
(a) issuance of a Certificate of Provisional Acceptance in
accordance with Sub-Article 9(C); or
<PAGE>
35
(b) rejection of a Certificate of Provisional Acceptance, but
instead issuance of a Certificate of Commercial Acceptance
in accordance with Sub-Article 9(D) below; or
(c) rejection of the Segment, the Phase; the System or the
System Upgrade in its existing condition and issuance of
neither a Certificate of Provisional Acceptance nor a
Certificate of Commercial Acceptance, and in the case of the
Phase; the System or the System Upgrade, a written
explanation of reasons for rejection (it being understood
that acceptance of a Segment instead of a Phase or the
System is at the sole discretion of the Purchaser).
If the Purchaser fails to respond with such notification within
thirty (30) days, then the Date of Provisional Acceptance of the
Segment (subject to Purchaser's consent), the Phase; the System
or System Upgrade shall be deemed to be the date occurring thirty
(30) days after such Commissioning Report or Upgrade
Commissioning Report, as the case may be, was received by the
Purchaser.
2. On receipt of a notice from the Purchaser pursuant to Sub-
Articles 9(B)(1)(b) or (c) above, the Contractor shall be
entitled to address any disputes and explain any discrepancies to
the Purchaser. Unless Purchaser, for good cause, rejects such
explanation, it shall issue a new notice pursuant to Sub-Article
9(B)(1) above, which shall be deemed to have been issued on the
date of the original notice.
3. In case of rejection, and if the explanation by the Contractor as
in Sub-Article 9(B)(2) above is not accepted, for good cause, by
the Purchaser, the Contractor shall carry out the necessary
corrective actions and will effect a new series of Acceptance
Testing "Retesting"). After receipt by Purchaser of the new
Commissioning Report or Upgrade Commissioning Report, as the case
may be, describing the corrective action and the results of
Retesting, the Purchaser will be granted a new period of thirty
(30) days to analyze the new Report according to the provisions
of Sub-Article 9(B)(1) and any new notice of the Purchaser shall
apply from the date the Purchaser receives such new Commissioning
Report or Upgrade Commissioning Report, as the case may be.
C. Provisional Acceptance
1. The Certificate of Provisional Acceptance may have annexed to it
a list of any outstanding deficiencies to be corrected by the
Contractor.
2. The Contractor shall, as soon as reasonably practicable, correct,
at its sole cost and expense, such deficiencies and complete the
Work or Upgrade Work indicated on all such listed items so as to
comply in all material
<PAGE>
36
respects with the requirements of this Contract, provided that
the Purchaser allows Contractor the necessary access to the
Segment(s) as the Contractor needs to correct such deficiencies
and complete the Work or Upgrade Work. The Contractor shall give
the Purchaser reasonable notice of its requirement for such
access.
D. Commercial Acceptance
1. A Certificate of Commercial Acceptance shall be issued by
Purchaser with respect to a Segment, a Phase, the System or a
System Upgrade if the results of the Acceptance Testing
demonstrate that such Segment, such Phase, the System or such
System Upgrade does not justify the issuance of a Certificate of
Provisional Acceptance, but nevertheless, such Segment, such
Phase, the System or such System Upgrade is Ready for Commercial
Acceptance; provided, that acceptance of a Segment instead of a
--------
Phase or the System shall be in the sole discretion of the
Purchaser.
2. Each Certificate of Commercial Acceptance shall have annexed to
it a list of all outstanding items to be completed by the
Contractor.
3. The Contractor shall, as soon as reasonably practicable, remedy,
at its sole cost and expense, the outstanding items, provided
that the Purchaser allows Contractor the necessary access to the
Segment(s) as the Contractor needs to remedy such outstanding
items. The Contractor shall give the Purchaser reasonable notice
of its requirement for such access. Notwithstanding the above,
provided that Contractor has been allowed access to the
Segment(s) as required in Sub-Article 9(A)(2), the Contractor
shall continue to carry the risk of loss for any outstanding item
until such item is no longer outstanding.
4. When the outstanding items referenced in Sub-Article 9(D)(3)
above have been remedied, and the Segment(s), the Phase, the
System or the System Upgrade is otherwise Ready for Provisional
Acceptance, the Purchaser will promptly issue a Certificate of
Provisional Acceptance; provided, that acceptance of a Segment
--------
instead of the System shall be in the sole discretion of the
Purchaser.
5. The issuance of a Certificate of Commercial Acceptance with
respect to a Segment, a Phase, the System or a System Upgrade
shall in no way relieve the Contractor from its obligation to
provide a Segment, a Phase, the System or System Upgrade
conforming with the Performance Requirements at the time of the
issuance of a Certificate of Commercial Acceptance.
E. Final Acceptance
<PAGE>
37
1. Within thirty (30) days of the date of receipt by Purchaser of
the Final Commissioning Report, the Purchaser shall issue a
Certificate of Final Acceptance or reject such Report. If the
Purchaser neither issues a Certificate of Final Acceptance nor
rejects such Report within such thirty (30) day period, then the
Date of Final Acceptance of the System shall be deemed to be the
date occurring thirty (30) days after such Final Commissioning
Report was received by the Purchaser.
F. Title and Risk of Loss
1. If the Purchaser, in its sole discretion, chooses to accept a
Segment prior to accepting the System, then upon the issuance of
a Certificate of Commercial Acceptance or a Certificate of
Provisional Acceptance with respect to such Segment by the
Purchaser in accordance with this Contract, title (free and clear
of all liens other than those deriving through or from the
Purchaser) to such Segment shall vest in the Purchaser. A
statement of the time of passage of title in such Certificate
shall be final and conclusive.
2. Upon the issuance of a Certificate of Commercial Acceptance or a
Certificate of Provisional Acceptance with respect to a Phase or
the System by the Purchaser in accordance with this Contract,
title (free and clear of all liens other than those deriving
through or from the Purchaser) to such Phase or the System shall
vest in the Purchaser. A statement of the time of passage of
title in such Certificate shall be final and conclusive.
3. Upon the issuance of a Certificate of Commercial Acceptance or a
Certificate of Provisional Acceptance with respect to a System
Upgrade by the Purchaser in accordance with this Contract, title
to such System Upgrade shall vest in the Purchaser. A statement
of the time of passage of title in such Certificate shall be
final and conclusive.
4. As from the date of vesting of title in a Segment, a Phase, the
System or a System Upgrade, the Purchaser shall, except as set
forth in the following sentence, assume the risk of loss in
respect of all parts of such Segment, such Phase, the System or
System Upgrade and responsibility for its maintenance. As stated
in Sub-Article 9(A)(2), the Contractor will be allowed access to
such Segment, and, so long as the Contractor has been allowed
access to such Segment as may be required, the Contractor shall
continue to carry the risk of loss with respect of each item
outstanding under Sub-Article 9(C)(1) and 9(D)(2) until such item
is no longer outstanding.
<PAGE>
38
Article 10 Warranty
- --------------------
A. The Contractor warrants that the System and each System Upgrade,
including its spares, shall be free from defects in supplies, workmanship and
design for a period of * years commencing from the Date of Provisional
Acceptance of the System or such System Upgrade, as the case may be,
(hereinafter "Warranty Period" and "Upgrade Warranty Period"), with Ship Costs
being covered for the first * years of the Warranty Period (the "Ship
Period") and the Purchaser being responsible for all Ship Costs thereafter.
1. During the Warranty Period for the System or the Upgrade Warranty
Period for a System Upgrade, the Contractor shall make good, by
repair or replacement, at its sole option, any defects in the
System or such System Upgrade, as the case may be, including any
spares, which may become apparent or be discovered due to
imperfect workmanship, faulty design or faulty material supplied
by the Contractor, or any act, neglect or omission on the
Contractor's part.
(a) If at any time within the Warranty Period or the Upgrade
Warranty Period for a System Upgrade any defect occurs which
causes the System or such System Upgrade, as the case may
be, to fail to meet its overall Performance Requirements,
the Contractor shall repair or replace such part or parts.
In making such repairs, Contractor may make changes to the
System or such System Upgrade, as the case may be, or
substitute equipment of later or comparable design, provided
the changes, modifications, or substitutions under normal
and proper use do not cause the System or such System
Upgrade as the case may be to fail to meet the Performance
Requirements.
(b) The Contractor shall use reasonable efforts to minimize the
period of time that any Segment or the System is out of
service for testing and repair. The Purchaser agrees to
cooperate with the Contractor to facilitate the Contractor's
repair activity.
(c) It is understood that if there is a problem on the System,
the Purchaser may immediately dispatch the maintenance
authority to effect repairs. If and to the extent that such
problem is determined to be caused by a defect in the System
covered by this warranty, the Contractor shall reimburse the
Purchaser for its actual Non-Ship Costs incurred and, with
respect to any such repair relating to a defect identified
in good faith by Purchaser in writing prior to the end of
the Ship Period, actual Ship Costs incurred. If the
Purchaser has entered into arrangements whereby maintenance
is all or partially covered by a Alump sum" payment covering
a specific period (e.g., an annual fixed fee operations and
maintenance contract), then Contractor understands that
Purchaser may not actually incur costs with respect to any
particular warranty
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
<PAGE>
39
repair. In such a case, Contractor agrees that the Purchaser
is still entitled to a payment from Contractor in connection
with such warranty repair. The Contractor and Purchaser will
agree in good faith to an equitable method of determining
the industry standard typical costs for such a repair based
upon what the repair would have actually cost had it been
paid under a specific maintenance agreement and such typical
costs shall be reimbursed to Purchaser. The Purchaser will
provide the Contractor with all reasonably requested
information, data or invoices available with respect to such
warranty repair to enable the Contractor to recover its
costs from its insurers. The unavailability or denial of any
such insurance shall in no way relieve the Contractor of its
obligations under this clause (c).
(i) The Contractor shall be given advance notice and be
entitled to have a representative on board ship to
observe at sea repairs and shall be given the earliest
possible notice of any such repair.
(ii) Subject to the foregoing and to Sub-Article 10(D), any
repair by the Purchaser shall not in any way diminish
the Contractor's obligation under the warranty. Any
equipment discovered to be defective or faulty and
recovered during a warranty repair shall be returned to
the Contractor at its request.
(d) In the event that the Contractor fails to make the repair or
to make reasonable efforts to minimize the period of time
that the System is out of service for repair, the Purchaser
may repair the System or the System Upgrade and the
Contractor shall reimburse the Purchaser for Non-Ship Costs
and, with respect to any such repair relating to a defect
identified in good faith by Purchaser in writing prior to
the end of the Ship Period, Ship Costs.
(i) The Contractor shall be given advance notice and be
entitled to have a representative on board ship to
observe at sea repairs and shall be given the earliest
possible notice of any such repair.
(ii) Subject to the foregoing, any repair by the Purchaser
shall not in any way diminish the Contractor's
obligation under the warranty. Any equipment discovered
to be defective or faulty and recovered during a
warranty repair shall be returned to the Contractor at
its request.
<PAGE>
40
2. Contractor shall bear the Ship Costs of only those repairs of the
defects identified in good faith by Purchaser in writing prior to
the end of the Ship Period. However, the Contractor shall bear
the Non-Ship Costs of each repair, replacement or improvement
required during the Warranty Period.
As used herein, "Ship Cost" means the costs of operating a
vessel, including but not limited to running and standing charges
for the vessel (including but not limited to labor charges for
the vessel's crew, at sea insurance, port charges, fuel and lube
oils, consumables, cable loading, cable unloading, navigation and
maritime communications) as well as the costs associated with the
use and operation of a remotely operated vehicle and the tracked
self propelled burial tool and ANon-Ship Costs" means the costs
of making a repair, including the cost of components, equipment
or materials requiring replacement, the cost of any additional
equipment necessary to effect the repair, the cost of making the
repair, including the cost of reburying any previously buried
portion, the cost of labor and engineering assistance or
development required to make the repair and all necessary
associated costs, such as, but not limited to, shipping and
customs and services that may be required to make the repair, but
excluding any of the foregoing which are Ship Costs.
3. The Contractor shall effect all warranty repairs of the System
and shall supply all necessary repair materials. However, the
Contractor may use, with the consent of the Purchaser, which
shall not be unreasonably withheld, the materials needed to
effect a repair from the Purchaser's available spare materials.
The Contractor shall promptly replace in kind such materials
supplied from the Purchaser's spare materials or at the option of
the Purchaser, reimburse the Purchaser for such materials at its
original purchase price. The replacement of or reimbursement for
such materials shall be made at a time mutually agreed to by the
Purchaser and the Contractor.
4. The Contractor warrants that services furnished hereunder will be
performed in a workmanlike manner using materials free from
defects except when such materials are provided by the Purchaser
(it being understood that all materials arranged for directly by
Contractor, whether or not purchased in the name of Purchaser,
are not materials provided by the Purchaser). If such services
prove to be not so performed and Purchaser notifies the
Contractor within six (6) months from the completion of the
service or before the end of the Warranty Period, whichever is
later, the Contractor will promptly correct the defect.
5. Any part which replaces a defective part during the applicable
Warranty Period or Upgrade Warranty Period, shall be covered by
these warranties for the remaining Warranty Period and Ship
Period, if any, or Upgrade Warranty Period, as the case may be,
of the part which was replaced or, if
<PAGE>
41
longer, six months from the date of replacement. The foregoing is
not meant to limit any separate warranty that may apply to the
replacement part. However, the Warranty Period shall never exceed
* years from the Date of Provisional Acceptance of the System and
the Upgrade Warranty Period for any System Upgrade shall never
exceed * years from the Date of Provisional Acceptance of such
System Upgrade. Further, Ship Costs shall be included only with
respect to defects identified by Purchaser in writing during the
first * years from the Date of Provisional Acceptance of the
System, and shall be included with respect to such defect until
it is repaired.
B. *
C. The warranties provided above in Sub-Articles 10(A) and (B) by the
Contractor shall not apply to defects or failures of performance, which result
from damage caused by acts or omissions of the Purchaser or its agents,
employees or representatives or third parties (other than the Contractor or its
Subcontractors), or which result from modifications, misuse, neglect, accident
or abuse, repair, storage or maintenance by other than the Contractor or its
Subcontractors or, use in a manner not in accordance with the System Description
or other causes set forth in Article 17 (Force Majeure).
D. THE FOREGOING WARRANTY IS EXCLUSIVE AND IS IN LIEU OF ALL OTHER EXPRESS
AND IMPLIED WARRANTIES INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE WHICH ARE SPECIFICALLY
DISCLAIMED.
E. The Contractor shall, in accordance with its normal operating
practices, investigate any defective part or parts repaired or replaced pursuant
to this Article 10 to determine the type of defect and the cause of failure of
the part or parts. The Contractor shall provide a written report to the
Purchaser on the results of the investigation, if any.
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
<PAGE>
42
F. Contractor warrants that the System and the Optional Branching Unit, as
applicable, shall be designed in a manner (i) adequate to support, without
modification to the System, any extension constructed by Contractor from such
branching unit and (ii) such that any extension will have performance equal to
or better than the System, provided that (i) and (ii) are contingent upon each
such extension falling within the applicable distance parameters set forth in
the Technical Volume.
G. The Contractor agrees that the foregoing provisions of this Article 10
may be enforced, on behalf of Purchaser, by the entity or entities performing
operation, administration or maintenance services for the System.
Article 11 Contractor Support; Use of Segment for Restoration Protection
- -------------------------------------------------------------------------
A. For a period of ten (10) years from the applicable Date of Provisional
Acceptance or Date of Commercial Acceptance of the System whichever is earlier,
the Contractor will make available to the Purchaser replacement parts and repair
service for the System as may be reasonably necessary for its operation,
maintenance or repair. Where identical parts cannot be supplied, the Contractor
shall provide fully compatible parts with characteristics equal or superior to
those originally provided by the Contractor. Such parts and services shall be
provided under commercially reasonable conditions of price and delivery.
B. Notwithstanding Sub-Article 11(A), if for any reason the Contractor or
Contractor's suppliers intend to cease or ceases manufacturing or having
manufactured identical or fully compatible replacement parts, the Contractor
shall use reasonable efforts to give one year's prior written notice to the
Purchaser to allow the Purchaser to order from the Contractor any required
replacement parts and shall provide full details of the arrangements to provide
equivalents.
C. Once the Purchaser has accepted a Segment of the System, the Purchaser
shall be entitled to use, without charge, any other unaccepted Segment or
Segments of the System solely for purposes of instituting restoration protection
in the System (a "Restoration Segment"); provided that:
--------
1. Contractor shall be relieved from its obligations pursuant to
Article 22, to pay liquidated damages with respect to any
Restoration Segment for any delays in the Contractor's Work
directly resulting from, and only to the extent of, Purchaser's
usage of such Restoration Segment or Segments for restoration
protection purposes;
2. Contractor shall be compensated for any payment milestones
delayed or made unachievable arising out of or as a result of
Purchaser's use of such Restoration Segment or Segments for
restoration protection purposes; and
3. Purchaser shall be responsible for all maintenance costs that
would not have been incurred but for Purchaser's use of such
Restoration Segment or Segments for restoration protection
purposes.
<PAGE>
43
4. At the time Purchaser makes a request for a Restoration Segment,
for such Restoration Segment and, as a result, cause the
Contractor to incur additional insurance premium costs, which
notice shall set forth the amount of such premiums. Upon receipt
of such notice, Purchaser shall determine, in its sole
discretion, whether it will utilize the Restoration Segment and
therefore compensate Contractor for such additional insurance
premium costs.
The Purchaser's use of any unaccepted Segment or Segments for
restoration protection purposes shall in no way obligate the Purchaser to accept
such other Segment or Segments, nor shall it be deemed to constitute an
acceptance by the Purchaser of any such other Segment or Segments, and the title
and any risk of loss associated with the any such other Segment or Segments
shall remain with the Contractor.
Article 12 Purchaser's Obligations
- -----------------------------------
A. If the Purchaser's failure to perform any of its express obligations
under this Contract directly results in an increase in the costs of performance
or the time required for performance of any of the Contractor's duties or
obligations under this Contract, such failure shall be deemed a APurchaser
Hindrance." In the event of a Purchaser Hindrance, the Contractor shall be
entitled, as appropriate, to (i) an equitable extension of time for completion
of its Work or the Upgrade Work if the Purchaser Hindrance meets the
requirements for a Force Majeure delay, (ii) reimbursement for all such
additional costs incurred, and (iii) to the extent necessary in light of
Purchaser's failure and the adjustments made in accordance with clauses (i) and
(ii) above, an equitable adjustment of the Work and/or Upgrade Work. The
Contractor shall not be entitled to any other right or remedy with respect to a
Purchaser Hindrance.
1. The Contractor's remedies described in clauses (i), (ii) and
(iii) above are conditioned upon the Contractor informing the
Purchaser promptly of any potential Purchaser Hindrance, and
using reasonable efforts to minimize any such additional costs or
delay.
2. The Contractor shall promptly provide to the Purchaser an
estimate of the anticipated additional costs and time required to
complete the Work or Upgrade Work and request relief from
contractual obligations or duties, as appropriate. Purchaser
shall, upon notification, make advance payment to Contractor for
the estimated amount of anticipated additional costs; provided
--------
that Purchaser may deposit such amount into the Dispute Account
and Sub-Article 5(C)(4) shall apply. Contractor shall without
limiting Purchaser's obligations in the foregoing sentence,
discuss such costs with Purchaser upon Purchaser's request.
<PAGE>
44
3. As soon as reasonably practicable after the actual costs become
known to the Contractor, the Contractor shall provide a statement
of such actual costs to the Purchaser.
4. If the estimated amount is greater than the amount of actual
costs, then the Contractor shall reimburse the Purchaser. If the
amount of actual costs incurred is greater than the estimated
amount, then the Purchaser shall reimburse the Contractor for any
shortfall in accordance with Article 5 (Terms of Payment of
Purchaser).
Article 13 Termination for Default
- -----------------------------------
A. Either Party may, by written Notice of Termination for Default,
effective fifteen (15) days after receipt or such later date as specified in the
notice, terminate the whole or any part of this Contract if any one of the
following circumstances continues after such notice (each an "Event of
Default"):
1. In the case of the Purchaser, (a) if Contractor fails to comply
in any material respect with any of the terms and conditions of
this Contract and such failure shall continue for thirty (30)
days after written notice from Purchaser to Contractor specifying
the failure and demanding that the same be remedied; provided
--------
that, if such default cannot be reasonably corrected within such
thirty (30) day period, an Event of Default with respect to
Contractor shall not be deemed to occur until the expiration of
such further period, not to exceed ninety (90) days, as
reasonably required to correct such failure, if the Contractor
commences, within such thirty (30) day period, and continues
diligently at all times thereafter, to take reasonable steps to
correct the failure as soon as possible, or (b) any
representation or warranty made by Contractor herein or in any
certificate, statement or document given pursuant to the terms
hereof shall prove to be false, incorrect or misleading in any
material respect as of the date on which it was made and any
material adverse consequences to Purchaser caused thereby shall
not have been remedied within thirty (30) days after written
notice thereof shall have been given to Contractor by Purchaser;
or (c) the Contractor fails to cause the System to be Ready for
Provisional Acceptance within 200 days after the Scheduled System
RFS Date;
2. If the other Party defaults on any of its payment obligations and
does not cure such default within a period of thirty (30) days
(or such longer period as the non-breaching Party may authorize
in writing) after receipt of written notice demanding cure
(subject to dispute provisions);
3. If the other Party 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,
<PAGE>
45
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 any
of the foregoing;
4. If an involuntary case or other proceeding shall be commenced
against the other Party 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 other Party;
5. The * shall for any reason cease to be in full force and
effect or the * shall repudiate any of its obligations
thereunder.
B. If this Contract is terminated by the Purchaser as provided in Sub-
Article 13(A), the Purchaser, in addition to any other rights provided in this
Article, and upon payment to Contractor of all monies due and owing as set forth
in Sub-Article 13(C) below, may require the Contractor to transfer title and
deliver to the Purchaser in the manner and to the extent directed by the
Purchaser any completed equipment, material or supplies, and such partially
completed cable and materials, parts, tools, dies, jigs, fixtures, plans,
drawings, information, and contract rights (hereinafter collectively
"Manufacturing Materials") as the Contractor has had specifically produced or
specifically acquired for the performance of such part of this Contract as has
been terminated and which, if this Contract had been completed, would have been
required to be furnished to the Purchaser; and the Contractor shall, upon the
direction of the Purchaser, protect and preserve property in the Contractor's
possession in which the Purchaser has an interest.
C. If the Contract is terminated by Contractor as provided in Sub-Article
13(A), the Purchaser shall pay, in addition to any other damages payable
pursuant to Sub-Article 13(E) below, the total of:
1. the cost of settling and paying claims arising out of the
termination of Work under the contracts and orders, as provided
in Sub-Article 14(B)(3) below which are properly chargeable to
the terminated portion of this Contract; and
2. the reasonable costs of settlement including accounting, legal,
clerical and other expenses necessary for the preparation of
settlement claims and supporting data with respect to the
terminated portion of this Contract and for termination and
settlement of contracts thereunder, together with reasonable
storage, transportation and other costs incurred in connection
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
<PAGE>
46
with the protection, preservation and disposition of property
proper to this Contract.
D. Force Majeure or Purchaser Hindrance events shall not constitute a
default or provide a basis for termination under this Article.
E. Regardless of any termination of this Contract as provided in Sub-
Article 13(A), neither Party shall be relieved from any liability for damages or
otherwise which may have been incurred by reason of any breach of this Contract.
F. Without limitation to the foregoing, in the event that Purchaser
terminates this Contract pursuant to Sub-Article 13(A), the Contractor shall be
liable to Purchaser (without duplication) for the total of all costs and
expenses reasonably incurred by Purchaser in completing the Work or in
correcting deficiencies in the Work to the extent that the payments made to
Contractor pursuant to this Contract, together with such costs and expenses,
exceed the Contract Price.
Article 14 Termination for Convenience
- ---------------------------------------
A. The performance of Work under this Contract may be terminated by the
Purchaser in whole, or in part, at its discretion. The Purchaser shall deliver
to the Contractor a written notice specifying the extent to which performance of
Work under this Contract is terminated, and the date upon which such termination
becomes effective (a "Notice of Termination"). Upon termination, the Purchaser
will make payment to Contractor of all monies due and owing as set forth in Sub-
Article 14(D) below.
B. After receipt of such Notice of Termination, and except as otherwise
directed by the Purchaser, the Contractor shall:
1. Stop Work under this Contract on the date and to the extent
specified in the Notice of Termination;
2. Place no further orders or contracts for materials, services or
facilities except as may be necessary for completion of such
portion of Work under this Contract as is not terminated;
3. Use reasonable efforts to terminate all orders and contracts to
the extent that they relate to the performance of Work terminated
by the Notice of Termination;
4. Assign to the Purchaser, in the manner, at the time, and to the
extent directed by the Purchaser, all of the Contractor's rights,
title and interest under the orders and contracts so terminated;
<PAGE>
47
5. Use reasonable efforts to settle all outstanding liabilities and
all claims arising out of such termination of orders and
contracts, with the Purchaser's approval or ratification to the
extent required;
6. Transfer title and deliver to the Purchaser in the manner, at the
time and to the extent (if any) directed for the fabricated or
unfabricated parts, work in process, completed work, supplies and
other material produced as a part of, or acquired in connection
with, the performance of the Work terminated by the Notice of
Termination;
7. Use reasonable efforts to sell, in the manner, at the time, to
the extent and at the price or prices directed or authorized by
the Purchaser, any property of the types referred to in Sub-
Article 14(B)(6) above provided, however, that the Contractor:
-------- -------
(a) shall not be required to extend credit to any buyer; and
(b) may acquire any such property under the conditions
prescribed by and at a price approved by the Purchaser;
and provided further that the net proceeds of any such transfer
-------- -------
or disposition shall be applied in reduction of any payments to
be made by the Purchaser to the Contractor under this Contract
or, if no such payments are due, paid in such other manner as the
Purchaser may direct;
8. Complete performance of such part of the Work which was not
terminated by the Notice of Termination; and
9. Take such action as may be necessary, or as the Purchaser may
reasonably direct, for the protection and preservation of the
property related to this Contract which is in the Contractor's
possession and in which the Purchaser has acquired or may acquire
an interest.
C. After such Notice of Termination, the Contractor shall submit to the
Purchaser a written termination claim. Such claim shall be submitted promptly,
but, unless otherwise extended, in no event later than six months from the
effective date of termination.
D. In the settlement of any such partial or total termination claim, the
Purchaser shall pay to the Contractor the total of:
1. all amounts invoiced in accordance with the Contract plus, for
Work or Supplies which have been done or is in progress or
provided but which have not been invoiced, an amount calculated
by reference to the prices set forth in the Provisioning Schedule
and to the amount of such Work or Supplies done or provided;
<PAGE>
48
2. the cost of settling and paying claims arising out of the
termination of Work under the contracts in orders, as provided in
Sub-Article 14(D)(4) below which are properly chargeable to the
terminated portion of this Contract; and
3. the reasonable costs of settlement including accounting, legal,
clerical and other expenses necessary for the preparation of
settlement claims and supporting data with respect to the
terminated portion of this Contract and for termination and
settlement of contracts thereunder, together with reasonable
storage, transportation and other costs incurred in connection
with the protection and disposition of property proper to this
Contract.
E. In arriving at the amount due to the Contractor under this Article 14,
all unliquidated payments made to the Contractor, any liability which the
Contractor may have to the Purchaser, and the agreed price for, or the proceeds
of sale of any materials, supplies or other things acquired by the Contractor or
sold, pursuant to the provisions of this Article 14, and not otherwise recovered
by or credited to the Purchaser shall be deducted.
F. The Purchaser may, from time to time, under such terms and conditions
as they prescribe approve partial payments and payments on account against costs
incurred by the Contractor in connection with the terminated portion of this
Contract. If such payments total in excess of the amount finally agreed or
determined to be due under this Article 14, such excess shall be refunded, upon
demand, by the Contractor to the Purchaser.
G. For a period of one year after final settlement under this Contract,
the Contractor shall preserve and make available to the Purchaser at reasonable
times at the Contractor's office, but without direct charge to the Purchaser,
all supporting books, records and documents required to be kept relating to the
terminated Work.
Article 15 Suspension
- ----------------------
A. The Purchaser may, at its convenience, order the Contractor to suspend
all or part of the Work for such period of time as the Purchaser determines to
be appropriate. If, as a result of such Suspension, the Contractor incurs
additional costs or losses in the discharge of its responsibilities under this
Contract, and where such suspension, losses or costs are not caused by the
Contractor's act or omission and could not have been reasonably prevented by the
Contractor, the Contractor shall be allowed an equitable adjustment to the
Contract Price or the Provisioning Schedule and an equitable extension in the
time required for performance.
B. Upon the occurrence of:
(i) an Event of Default by the Purchaser;
(ii) any transfer prior to the Date of Final Acceptance of any
portion of the System except in accordance with Article 37; or
<PAGE>
49
(iii) any supplement executed by a Transferee shall not be in full
force and effect;
the Contractor, in addition to any other rights provided in Article 14, may
suspend performance of its obligations and all Work and (in the case of clause
(i)) Upgrade Work.
C. Every forty-five (45) days, during the period of Suspension, the
Parties shall meet formally and review the circumstances surrounding the
Suspension including without limitation, the anticipated date of re-commencing
Work.
D. Thereafter, if the Suspension continues for a total of one hundred and
eighty (180) days, the Contractor may terminate the Contract by notice to the
Purchaser and the Contract shall be deemed to have been terminated by Purchaser,
effective on the date of Contractor's notice, in accordance with Sub-Article
14(A) and the remaining provisions of Article 14 shall apply.
Article 16 Title and Risk of Loss
- ----------------------------------
A. Except as provided in Article 18 (Intellectual Property), Article 20
(Safeguarding of Information and Technology) and Article 21 (Export Control),
title to all Supplies provided by the Contractor hereunder for incorporation in
or attachment to a Segment shall pass to and vest in the Purchaser in accordance
with Article 9 (Acceptance). Risk of loss or damage to all Supplies provided by
the Contractor for incorporation in or attachment to such Segment shall pass to
and vest in the Purchaser in accordance with Article 9. Upon termination of this
Contract pursuant to Article 13 (Termination for Default) or 14 (Termination for
Convenience), the Purchaser may require, upon full payment of all amounts due
thereunder (provided that, without limiting Purchaser's obligation to make any
--------
such payment, if this Contract is terminated by Purchaser because of a
Bankruptcy Event full payment shall not be required prior to the transfer of
title), that title to the equipment, materials and supplies, which has not
previously passed to the Purchaser, pass to the Purchaser, free and clear of all
liens, claims, charges and other encumbrances other than those deriving through
Purchaser.
B. Upon the passage of title in accordance with the terms of Article 13
(except a transfer described in the proviso of the last sentence of Sub-Article
16(A)), the Contractor warrants that all parts, materials, and equipment to
which title has passed will be free and clear of all liens, claims, charges and
other encumbrances other than those deriving through the Purchaser.
Article 17 Force Majeure
- -------------------------
A. The Contractor shall not be responsible for any loss, damage, delay or
failure of performance resulting directly or indirectly from any cause which is
beyond its reasonable control "Force Majeure"), including but not limited to:
delay in obtaining or failure to obtain any Owner Permits (subject to the
provisions of Sub-Article 7(D)); acts of God or of the public enemy; acts or
failures to act (other than with respect to Permits) of any governmental
authority unless resulting from any act or omission of Contractor; war or
warlike operations, civil war or commotion, mobilizations or military call-up,
and acts of similar nature; revolution, rebellions,
<PAGE>
50
sabotage, and insurrections or riots; fires, floods, epidemics quarantine
restrictions; strikes, and other labor actions; freight embargoes; unworkable
weather (so long as Contractor shall have taken reasonably foreseeable
unworkable weather into account when planning its Work schedule; trawler or
anchor damage caused by other marine activity such as fishing, marine research
and marine development; acts or omissions of transporters; or a Purchaser
Hindrance, but only to the extent that the obligation underlying such Hindrance
is not performed at the time contemplated by the Plan of Work, provided that the
--------
following shall not constitute Force Majeures: (i) a loss by Contractor of
employees (other than by reason of Force Majeure), (ii) strikes and other labor
actions involving the Contractor's own work force, (iii) the first 5 days of
unworkable weather (unless any such day occurs during the 30 days immediately
preceding the then Scheduled RFS Date), (iv) the failure (other than by reason
of Force Majeure) of any subcontractor, supplier or transporter to perform its
obligations to Contractor (including on account of insolvency), (v) the
unavailability of any raw materials or components, unless such raw materials or
components are generally unavailable in the marketplace at the time Contractor
would customarily have placed orders therefore or are unavailable by reason of
force majeure or (vi) any increase in Contractor's costs.
B. If any such Force Majeure causes an increase in the time or costs
required for performance of any of its duties or obligations, the Contractor
shall be entitled to an equitable extension of time for completion of the Work
or the Upgrade Work, as the case may be, but not any adjustment in the Contract
Price nor any reimbursement for any such additional costs incurred.
C. Increase in cost due to Purchaser Hindrance will be as provided for in
Article 12 (Purchaser's Obligations).
D. The Contractor shall inform the Purchaser promptly with written
notification, and in all cases within fourteen (14) days of discovery and
knowledge, of any occurrence covered under this Article and shall use its
reasonable efforts to minimize such additional delays. The Contractor shall
promptly provide an estimate of the anticipated time required to complete the
Work or the Upgrade Work. Contractor shall be entitled to an equitable
extension of time resulting from the Force Majeure condition, but only to the
extent that such Force Majeure actually causes a delay in the timely completion
of the Work or Upgrade Work after all reasonable efforts to minimize such a
delay have been made.
E. Within thirty (30) days of receipt of such a notice from Contractor,
the Purchaser may provide a written response. The absence of a response shall
not be deemed as acceptance of Contractor's notice and request for additional
time.
F. If a Force Majeure continues for a total of two hundred (200) days,
either Party may terminate the Contract by notice to the other and the Contract
shall be deemed to have been terminated by Purchaser, effective on the date of
the terminating Party's notice, in accordance with Sub-Article 14(A) and the
remaining provisions of Article 14 shall apply to such termination.
<PAGE>
51
G. Every 45 days during the period of Force Majeure, the Parties shall
meet and review the circumstances surrounding the Force Majeure, including,
without limitation, the anticipated date of recommencing work.
Article 18 Intellectual Property
- ---------------------------------
A. Ownership
Subject to the provisions of the next two sentences, all right, title,
and interest in and to all Intellectual Property (excluding Project Patent
Rights) created or developed by Contractor in the course of its performance
under this Contract that is (a) specifically and exclusively applicable to the
System or a System Upgrade; and (b) either (i) embodied in Deliverable Technical
Material (as that term is defined in Sub-Article 18(B) below) or (ii) embodied
in the System or a System Upgrade (the "Project Intellectual Property"), is and
shall remain the sole property of Purchaser. Contractor represents that as of
the date of this Contract, no software is planned to be developed that would be
included as Project Intellectual Property. * All right, title and interest in
and to all Intellectual Property created or developed by Contractor before
commencing its performance under this Contract, or created or developed by
Contractor exclusively in connection with activities other than its performance
under this Contract, or created or developed by Contractor in the course of its
performance under this Contract that is not Project Intellectual Property, and
all Project Patent Rights (collectively, the "Contractor Intellectual
Property"), is and shall remain the sole property of Contractor. Unless
otherwise expressed in this Contract, no license is implied or granted herein to
Purchaser to any Contractor Intellectual Property by virtue of this Contract,
nor by the transmittal or disclosure of any such Contractor Intellectual
Property to Purchaser. Any Contractor Intellectual Property disclosed,
furnished, or conveyed to Purchaser that is marked as "Proprietary" or
"Confidential" (or if transmitted orally is identified as being proprietary or
confidential in a subsequent writing) shall be treated in accordance with the
provisions of Article 20 (Safeguarding of Information and Technology). As used
herein, "Intellectual Property" means any information, computer or other
apparatus programs, software, specifications, drawings, designs, sketches,
tools, market research or operating data, prototypes, records, documentation,
works of authorship or other creative works, ideas, concepts, methods,
inventions, discoveries, improvements, or other business, financial and/or
technical information (whether or not protectable or registrable under any
applicable intellectual property law). As used herein, "Project Patent Rights"
means all inventions, discoveries, methods and improvements of a patentable
nature created or developed by Contractor in the course of its performance under
this Contract. Project Intellectual Property will include the materials to be
listed in a Schedule (to be attached as Exhibit H hereto) to be created mutually
by the Parties within thirty (30) days of execution of this Contract, as it may
be amended from time to time by mutual agreement of the Parties.
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
<PAGE>
52
B. Licenses
Contractor shall furnish to Purchaser, upon the transfer of title to
any portion of the System or a System Upgrade pursuant to Article 9, copies of
all technical information, specifications, drawings, designs, sketches, tools,
operating data, records, documentation and/or other types of engineering or
technical data or information reasonably relating to the operation, maintenance
or repair of each component of such portion of the System or System Upgrade as
delivered by Contractor (the "Deliverable Technical Material"). Contractor
grants to Purchaser a perpetual, royalty-free, non-transferable (except under
the circumstances specified in Sub-Article 18(F) below) license to use and
reproduce those Deliverable Technical Materials owned, controlled, or developed
by Contractor and all Contractor Intellectual Property included in or necessary
to use all the Deliverable Technical Materials for purposes of fulfilling
Purchaser's obligations under this Contract and using and operating the System
(as upgraded by any System Upgrades) supplied by Contractor with the right to
employ third parties (under appropriate written obligations respecting
confidentiality) to assist Purchaser in fulfilling its obligations under this
Contract and in using and operating the System (as upgraded by any System
Upgrades), but with no right to sublicense. Contractor grants to Purchaser a
perpetual, royalty-free, non-transferable (except under the circumstances
specified in Sub-Article 18(F) below) license to use and reproduce those
portions of Deliverable Technical Materials owned or controlled by third parties
(but only to the extent of any rights which may have been granted to Contractor
by such third parties) for the purpose of fulfilling Purchaser's obligations
under this Contract and using and operating the System supplied by Contractor
with the right to employ third parties (under appropriate written obligations
respecting confidentiality) to assist Purchaser in fulfilling its obligations
under this Contract and in using and operating the System (as upgraded by any
System Upgrades), but with no right to sublicense. Except as set forth in this
provision, no license under Contractor's patents, copyrights, trade or service
marks, trade secrets or other intellectual property rights protectable under law
in the United States or any foreign country is granted to Purchaser. It is
expressly understood that it shall not be a violation of this license for
Purchaser, on its own behalf or through third parties (under appropriate written
obligations respecting confidentiality) specifically employed for the purpose,
to use and reproduce Deliverable Technical Material that is not Project
Intellectual Property to modify the System (as upgraded by any System Upgrades)
or connect the System (as upgraded by any System Upgrades) to other systems,
provided that Purchaser may not use the Deliverable Technical Materials that is
not Project Intellectual Property in achieving such modification or
interconnection for any purpose other than determining the technical
configuration, systems interface and/or interoperability requirements of the
System (as upgraded by any System Upgrades) as delivered by Contractor (subject
to the rights of third parties therein and thereto), and subject to the
limitations on Contractor's obligations as set forth in Articles 10(D) and 19(A)
concerning any such modification or interconnection.
C. Deliverable Software
Contractor shall furnish to the Purchaser, upon transfer of title to
any portion of the System or System Upgrade pursuant to Article 9, copies of all
computer or other apparatus programs and software, in executable form, and
related documentation relating to the operation, maintenance, or repair of the
computer systems of such portion of the System or System
<PAGE>
53
Upgrade, as the case may be, as delivered by Contractor (the "Deliverable
Software"). In the case of Contractor Intellectual Property, such copies of
programs and software shall consist solely of executable code provided in
offline media (e.g., tapes, or diskettes) for restoration purposes, sufficient
to operate, maintain or repair the computer systems of such portion of the
System or System Upgrade, as the case may be, as delivered by Contractor, and in
the case of Project Intellectual Property, such programs and software shall be
delivered in both source and object code forms. Contractor shall furnish to
Purchaser, from time to time during the Warranty Period or any Upgrade Warranty
Period, copies of all computer or other apparatus programs and software, in
executable form (and in the case of Project Intellectual Property, in source
code form), and related documentation that Contractor may develop to correct
errors or to maintain Deliverable Software previously furnished to Purchaser,
which shall also be treated as Deliverable Software for purposes of this
Contract upon delivery thereof to Purchaser. Contractor grants to Purchaser a
perpetual, royalty-free, non-transferable (except under the circumstances
specified in Sub-Article 18(F) below) license to use and reproduce the
Deliverable Software owned, controlled, or developed by Contractor for the
purpose of fulfilling Purchaser's obligations under this Contract and using and
operating the System (as upgraded by any System Upgrades) supplied by Contractor
with the right to employ third parties (under appropriate written obligations
respecting confidentiality) to assist Purchaser in fulfilling its obligations
under this Contract and in using and operating the System (as upgraded by any
System Upgrades), but with no right to sublicense. Contractor grants to
Purchaser a perpetual, royalty-free, non-transferable (except under the
circumstances specified in Sub-Article 18(F) below) license to use and reproduce
those portions of Deliverable Software owned or controlled by third parties (but
only to the extent of any rights which may have been granted to Contractor by
such third parties) for the purpose of fulfilling Purchaser's obligations under
this Contract and using and operating the System (as upgraded by any System
Upgrades) supplied by Contractor with the right to employ third parties (under
appropriate written obligations respecting confidentiality) to assist Purchaser
in fulfilling its obligations under this Contract and in using and operating the
System (as upgraded by any System Upgrades), but with no right to sublicense.
These licenses shall be limited to the right to use Deliverable Software that is
not Project Intellectual Property only with the particular type of computer
equipment or substantially similar replacement equipment for which such
Deliverable Software was provided in the System (as upgraded by any System
Upgrades) as supplied by Contractor.
1. Confidentiality
Purchaser shall keep the Deliverable Software that is not Project
Intellectual Property confidential in accordance with Article 20
(Safeguarding of Information and Technology) and Article 21
(Export Control) to the extent that such Deliverable Software is
designated as Confidential Information by its owner and agrees to
use its best efforts to see that its employees, consultants, and
agents, and other users of such software, comply with the
provisions of this Contract. Purchaser also agrees to refrain
from taking any steps, such as reverse assembly or decompilation,
to derive a source code equivalent of any object code that is
furnished by Contractor, provided that Contractor continues to
maintain the Deliverable Software that is not Project
Intellectual Property in accordance with the terms of a support
and maintenance agreement to be
<PAGE>
54
entered into on such terms to be agreed upon by the Parties,
which terms shall in all events contain assurances of support and
maintenance similar to those otherwise available to Purchaser at
such time through any other third party operations and
maintenance service provider or is willing and able to enter into
an agreement to maintain the Deliverable Software upon terms
reasonably comparable to the pertinent terms of the initial
agreement to be entered into by the Parties with regard to
support and maintenance after the expiration or termination
thereof or does not go insolvent or bankrupt to thereby *
In the case of insolvency or bankruptcy of Contractor, Purchaser
shall limit any derivation of a source code equivalent to that
portion of the Deliverable Software that is Contractor
Intellectual Property. Purchaser shall not under any
circumstances take any steps to derive a source code equivalent
from that portion of the Deliverable Software comprising
commercial, off-the-shelf software developed or provided by third
parties.
2. Backup Copies
Purchaser may make and retain two archive copies in executable
form of the Deliverable Software that is not Project Intellectual
Property. Any copy will contain the same copyright notice and
proprietary markings as are on the original software and shall be
subject to the same restrictions as the originals.
3. Termination of Software Licenses
In the event of (i) use by the Purchaser of Deliverable Software
that is not Project Intellectual Property in a manner other than
that permitted in Sub-Article 18(C) or (ii) any other material
breach of this Article 18 by Purchaser that in either event is
not cured within sixty (60) days from receipt by Purchaser of
written notice of such impermissible use or breach, Contractor,
at its option, may terminate the rights granted to Purchaser
pursuant to this Article, upon written notice to Purchaser, which
termination shall take effect no sooner than sixty (60) days
following receipt by Purchaser of a subsequent written notice of
termination. Upon termination, Purchaser shall either return or
destroy, at Contractor's option, all copies of Deliverable
Software that is not Project Intellectual Property furnished
under this Contract.
4. Indemnification
In the event of (i) use by Purchaser of Deliverable Software that
is not Project Intellectual Property furnished hereunder other
than that permitted in Sub-Article 18(C) or (ii) any other
material breach of this Article 18 by Purchaser, the Purchaser
shall indemnify and hold Contractor harmless from any and all
third party claims resulting therefrom whether arising from a
defect in the software or otherwise.
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
<PAGE>
55
D. Trademarks, Tradenames, etc.
No rights are granted herein to either Party to use any identification
(such as, but not limited to tradenames, trademarks, service marks or symbols,
and abbreviations, contractions, or simulations thereof) owned or used by the
other Party or its parent company or its affiliates to identify itself or its
affiliates or any of its products or services. Each Party agrees that it will
not, without the prior written permission of the other Party, use such
identification in advertising, publicity, packaging, labeling, or in any other
manner to identify itself or any of its products, services, or organizations, or
represent directly or indirectly that any product, service, or organization of
it is a product, service, or organization of the other Party or its affiliates,
or that any product or service of a Party is made in accordance with or utilizes
any intellectual property of the other Party or its affiliates.
E. DISCLAIMER, LIMITATION OF LIABILITY
CONTRACTOR REPRESENTS THAT ANY INFORMATION OR INTELLECTUAL PROPERTY
FURNISHED IN CONNECTION WITH THIS CONTRACT SHALL BE TRUE AND ACCURATE TO THE
BEST OF ITS KNOWLEDGE AND BELIEF, BUT CONTRACTOR SHALL NOT BE HELD TO ANY
LIABILITY FOR UNINTENTIONAL ERRORS OR OMISSIONS THEREIN. EXCEPT AS EXPRESSLY
PROVIDED, CONTRACTOR MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESSLY OR
IMPLIEDLY. BY WAY OF EXAMPLE, BUT NOT OF LIMITATION, CONTRACTOR AND ITS PARENT
COMPANY AND AFFILIATES MAKES NO REPRESENTATIONS OR WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE USE OF INFORMATION OR
INTELLECTUAL PROPERTY DISCLOSED OR PROVIDED HEREUNDER WILL NOT INFRINGE ANY
PATENT OR OTHER INTELLECTUAL PROPERTY RIGHT OF A THIRD PARTY. EXCEPT AS
OTHERWISE PROVIDED IN THIS CONTRACT, CONTRACTOR AND ITS PARENT AND AFFILIATES
SHALL NOT BE HELD TO ANY LIABILITY WITH RESPECT TO ANY CLAIM BY PURCHASER OR ANY
THIRD PARTY CLAIM AGAINST PURCHASER ON ACCOUNT OF, OR ARISING FROM, PURCHASER'S
USE OF INFORMATION OR INTELLECTUAL PROPERTY DISCLOSED OR PROVIDED BY CONTRACTOR.
F. Transferability
The licenses granted to Purchaser by Contractor in the Deliverable
Technical Materials and Deliverable Software are personal and non-transferable,
except that Purchaser may assign or transfer such licenses to an affiliated
entity under common control with the Purchaser or to any entity succeeding to
Purchaser's entire interest in the System (as upgraded by any System Upgrades)
as a result of reorganization or restructuring of the Purchaser or in the event
of a change of control of the Purchaser.
G. *
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
<PAGE>
56
Article 19 Infringement
- ------------------------
A. The Contractor agrees to defend or settle at its own expense all suits
for infringement of any patent, copyright, trademark or other form of
intellectual property right in any country of the world, for the use and
operation of the System (as upgraded by any System Upgrades) as supplied by
Contractor and for any component part thereof or material or equipment used
therein (or the manufacture of any material or the normal use thereof) provided
by the Contractor or on its behalf pursuant to this Contract and will hold the
Purchaser harmless from all expense of defending any such suit and all payments
for final judgment assessed on account of such infringement, except such
infringement or claim arising from:
1. The Contractor's adherence to the Purchaser's directions in the
design and configuration of the System (as upgraded by any System
Upgrades) or to use materials, parts or equipment of the
Purchaser's selection; or
2. Such material, parts or equipment furnished to the Contractor by
the Purchaser, other than in each case, items of the Contractor's
design or selection or the same as any of the Contractor's
commercial merchandise or in processes or machines of the
Contractor's design or selection used in the manufacture of such
standard products or parts; or
3. Use of the System (as upgraded by any System Upgrades) or the
materials, parts or equipment furnished by Contractor other than
for the purposes
<PAGE>
57
indicated in, or reasonably to be inferred from, this Contract or
in conjunction with other products; or
4. Modification of the System (as upgraded by any System Upgrades)
or the materials, parts or equipment furnished by the Contractor,
or connection of the System to another system by any person or
entity other than Contractor, without prior expressed written
approval by Contractor.
B. The Purchaser will, at its own expense, defend all suits against the
Contractor for such excepted infringement and hold the Contractor harmless from
all expense of defending any such suit and from all payments by final judgment
assessed against the Contractor on account of such excepted infringement.
C. The Contractor and the Purchaser agree to give each other prompt
written notice of claims and suits for infringement, full opportunity and
authority to assume the sole defense, including appeals and, upon request and at
its own expense, the other agrees to furnish all information and assistance
available to it for such defense.
D. If all or any portion of the System (as upgraded by any System
Upgrades) or any material, part or equipment provided by the Contractor or on
its behalf is held to constitute an infringement (excluding such excepted
infringements specified in Sub-Article 19(A)) and is subject to an injunction
restraining its use or any order providing for its delivery up to or
destruction, or if in respect of any such claim of infringement the Contractor
deems it advisable to do so, the Contractor shall at its own expense either:
1. Procure for the Purchaser the right to retain and continue to use
the System, the affected portion thereof, or any such material,
part or equipment without interruption for the Purchaser;
2. Replace or modify the System, the affected portion thereof, or
any material, part or equipment so that it becomes noninfringing
while continuing to meet the Performance Requirements or
3. If the remedies specified in Sub-Articles 19(D)(1) an 19(D)(2)
are not feasible, refund to the Purchaser the full purchase price
paid for the System, the affected portion thereof, or any
material, part or equipment found to be infringing.
E. In no event shall the Purchaser make any admission or settle any claim
in relation with any claim for infringement without Contractor's consent.
Article 20 Safeguarding of Information and Technology
- ------------------------------------------------------
A. In performance of this Contract, it may be mutually advantageous to the
Parties hereto to share certain specifications, designs, plans, drawings,
software, market research or operating data, prototypes, or other business,
financial, and or/technical information related to
<PAGE>
58
products, services, or systems which are proprietary to the disclosing Party or
its affiliates (and in the case of Contractor, Contractor's parent company)
(together with this Contract and related documents, AInformation"). The Parties
recognize and agree that Information includes information that was supplied in
contemplation hereof prior to execution of this Contract, and further agree that
Information includes information in both tangible and intangible form.
B. Unless such Information was previously known to the Party receiving
such Information free of any obligation to keep it confidential, or such
Information has been or is subsequently made public through other than
unauthorized disclosure by the receiving Party or is independently developed by
the receiving Party (as documented by the records of the receiving Party), it
shall be kept confidential by the Party receiving such Information, shall be
used only in the performance of this Contract, and may not be used for any other
purposes except upon such terms as may be agreed upon in writing by the Party
owning such Information. The receiving Party may disclose such Information to
other persons, upon the furnishing Party's prior written authorization, but
solely to perform acts which this Article expressly authorizes the receiving
Party to perform itself and further provided such other person agrees in writing
(a copy of which writing will be provided to the furnishing Party at its
request) to the same conditions respecting disclosure and use of Information
contained in this Article and to any other reasonable conditions requested by
the furnishing Party. Nothing herein shall prevent a Party from disclosing
Information (a) upon the order of any court or administrative agency, (b) upon
the request or demand of, or pursuant to any regulation of, any regulatory
agency or authority, (c) to the extent reasonably required in connection with
the exercise of any remedy hereunder and (d) to a Party's legal counsel or
independent auditors.
C. The Purchaser may disclose Information to its lenders and their
representatives in connection with obtaining financing for the System, provided
that each such lender or their representative enters into a confidentiality
agreement containing terms and conditions similar to those in this Contract. Any
such disclosure of Information shall be subject to the restrictions in Sub-
Article 20(B).
Article 21 Export Control
- --------------------------
The Parties acknowledge that any products, software, and technical
information (including, but not limited to, services and training) provided by
either Party under this Contract are or may be subject to export laws and
regulations of the United States and the destination country(ies) and any use or
transfer of such products, software and technical information must be authorized
under those Laws. The Parties agree that they will not use, distribute, transfer
or transmit the products, software or technical information (even if
incorporated into other products) except in compliance with export Laws. If
requested by either Party, the other Party agrees to sign all necessary export-
related documents as may be required to comply with export Laws.
Article 22 Liquidated Damages
- ------------------------------
<PAGE>
59
A. If Phase 1 of the System is not Ready for Commercial Acceptance or
Provisional Acceptance * the Scheduled Phase 1 System RFS Date, as it may have
been extended under:
1. Article 6 (Contract Variations);
2. Article 17 (Force Majeure);
3. Article 15 (Suspension); or
4. Other arrangements as agreed between the Purchaser and the
Contractor;
then Contractor shall pay to Purchaser for each day of delay following * for up
to 200 days or, if earlier, to the day Contractor begins making payments under
paragraph C of this Article 22, by way of pre-estimated and liquidated damages
for the delay and not as a penalty, an amount equal to * of the Phase 1 portion
of the Initial Contract Price for the System, subject to the maximum aggregate
amount set forth in Paragraph E of this Article 22.
B. If Phase 2 of the System is not Ready for Commercial Acceptance or
Provisional Acceptance * of the Scheduled Phase 2 RFS Date, as it may have been
extended under:
1. Article 6 (Contract Variations);
2. Article 17 (Force Majeure);
3. Article 15 (Suspension); or
4. Other arrangements as agreed between the Purchaser and the
Contractor;
then Contractor shall pay to Purchaser for each day of delay following * for up
to 200 days or, if earlier, to the day Contractor begins making payments under
paragraph C of this Article 22, by way of pre-estimated and liquidated damages
for the delay and not as a penalty, an amount equal to * of the Phase 2 portion
of the Initial Contract Price for the System, subject to the maximum aggregate
amount set forth in Paragraph E of this Article 22.
C. If the System is not Ready for Commercial Acceptance or Provisional
Acceptance by the Scheduled RFS Date, as it may have been extended under:
1. Article 6 (Contract Variations);
2. Article 17 (Force Majeure); or
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
<PAGE>
60
3. Article 15 (Suspension); or
4. Other arrangements as agreed between the Purchaser and the
Contractor; then Contractor shall pay to Purchaser for each day of delay, for up
to 200 days, by way of pre-estimated and liquidated damages for the delay and
not as a penalty, an amount equal to * of the Initial Contract Price for the
System, * subject to the maximum aggregate amount set forth in Paragraph E of
this Article 22.
D. If a System Upgrade is not Ready for Commercial Acceptance or
Provisional Acceptance by the Scheduled Upgrade Date, as it may have been
extended under:
1. Article 6 (Contract Variations);
2. Article 17 (Force Majeure); or
3. Article 15 (Suspension); or
4. Other arrangements as agreed between the Purchaser and the
Contractor; then Contractor shall pay to Purchaser for each day of delay, for up
to 90 days, by way of pre-estimated and liquidated damages for the delay and not
as a penalty, an amount equal to * of the Initial Upgrade Contract Price.
E. In no event shall the aggregate amount payable with respect to Phases
and/or the System pursuant to Paragraphs A, B and/or C above exceed * of the
Initial Contract Price.
Article 23 Limitation of Liability/Indemnification
- ---------------------------------------------------
A. NOTWITHSTANDING ANY OTHER PROVISION IN THIS CONTRACT, AND IRRESPECTIVE
OF ANY FAULT, NEGLIGENCE OR GROSS NEGLIGENCE OF ANY KIND, IN NO EVENT SHALL
EITHER PARTY OR ANY OF ITS DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS BE LIABLE
FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, RELIANCE OR SPECIAL (INCLUDING
PUNITIVE) DAMAGES, INCLUDING, BUT NOT LIMITED TO, LOSS OF REVENUE, LOSS OF
BUSINESS OPPORTUNITY OR THE COSTS ASSOCIATED WITH THE USE OF RESTORATION
FACILITIES RESULTING FROM ITS FAILURE TO PERFORM PURSUANT TO THE TERMS AND
CONDITIONS OF THIS CONTRACT.
B. EXCEPT AS SET FORTH BELOW IN THE LAST TWO SENTENCES OF THIS SUB-ARTICLE
23(B), THE CONTRACTOR'S MAXIMUM AGGREGATE LIABILITY, WHETHER IN TORT, CONTRACT
OR OTHERWISE, EXCEPT FOR CLAIMS RELATING TO SYSTEM UPGRADES, SHALL NOT EXCEED
* OF THE CONTRACT PRICE. THE CONTRACTOR'S MAXIMUM AGGREGATE LIABILITY
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
<PAGE>
61
FOR CLAIMS RELATING TO SYSTEM UPGRADES (IF CONTRACTOR CAN PROVE THAT THE SYSTEM
WAS DESIGNED WITH SUFFICIENT TRANSMISSION MARGIN AND THUS SUCH CLAIMS DO NOT
ARISE UNDER CLAUSE (ii) OF SUB-ARTICLE 10(B)) SHALL NOT EXCEED * OF THE
APPLICABLE UPGRADE PRICE. THE FOREGOING LIMITATION SHALL NOT APPLY TO CLAIMS
UNDER SUB-ARTICLES 19(A) AND 23(C). IF CONTRACTOR CANNOT PROVE THAT THE SYSTEM
WAS DESIGNED WITH SUFFICIENT TRANSMISSION MARGIN FOR A SYSTEM UPGRADE, THE
CONTRACTOR'S MAXIMUM AGGREGATE LIABILITY FOR CLAIMS ARISING UNDER CLAUSE (ii) OF
SUB-ARTICLE 10(B) SHALL NOT EXCEED *
C. Contractor, at its expense, shall defend, indemnify and hold harmless
Purchaser, its affiliates, agents, subcontractors and employees (collectively,
the "Indemnitees") against any and all claims, proceedings, demands, costs,
expenses, liabilities (including without limitation, reasonable legal fees), and
judgements for losses (collectively, "Liabilities") asserted against or incurred
by any Indemnitee, arising out of, or in connection with (a) this Contract,
and/or the performance thereof by Contractor or any of its subcontractors, or
(b) the operation and maintenance of the System prior to the risk of loss
passing to Purchaser, resulting from acts or omissions of Contractor or any
Subcontractor, regardless of whether involving errors, negligence or willful
misconduct or resulting from, strict liability or statutory liability, except to
the extent that such Liabilities were caused by the negligent acts or willful
misconduct of Purchaser. The defense, indemnification and save harmless
obligation is specifically conditioned on the following: (i) Purchaser
providing prompt notification in writing of any such Liability when it obtains
Actual Knowledge thereof, unless such failure shall not have materially impaired
Contractor's ability to defend against such claim; (ii) Contractor having
control of the defense of any such action, claim or demand and of all
negotiations for its settlement or compromise; and (iii) Purchaser cooperating,
at Contractor's expense, in a reasonable way to facilitate the defense of such
claim or demand or the negotiations for its settlement. The Purchaser, at its
option, shall be entitled to participate, at its own expense, in any proceeding,
claim or demand involving an Indemnitee.
D. Purchaser, at its expense, shall defend, indemnify and hold harmless
Contractor, its agents, subcontractors and employees against any and all claims,
demands, and judgments for losses due to any act or omission, arising out of, or
in connection with this Contract or, after risk of loss passes to Purchaser, the
operation or maintenance of the System, to the extent such losses were caused by
the negligence or willful misconduct of the Purchaser, its subcontractors,
employees or agents (other than Contractor). The defense, indemnification and
save harmless obligation is specifically conditioned on the following (i)
Contractor providing prompt notification in writing of any such claim or demand
when it obtains Actual Knowledge thereof, unless such failure shall not have
materially impaired Purchaser's ability to defend against such claim; (ii)
Purchaser having control of the defense of any such action, claim or demand and
of all negotiations for its settlement or compromise; and (iii) Contractor
cooperating, at Purchaser's expense, in a reasonable way to facilitate the
defense of such claim or demand or the negotiations for its settlement.
Article 24 Counterparts
- ------------------------
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
<PAGE>
62
This Contract 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.
Article 25 Design and Performance Responsibility; Subcontractors
- -----------------------------------------------------------------
A. The Contractor shall be solely responsible for the engineering and
design of and for all details of the System and the System Upgrades and for the
adequacy thereof.
B. The Contractor's responsibility for engineering and designing of the
System and the System Upgrades shall not in any way be diminished, nor shall the
Contractor's design approach be restricted or limited by, the Purchaser's
acceptance of the Contractor's guidance or recommendations as to engineering
standards and design specifications, or by the Purchaser's approval, suggestions
or recommendations on any aspect of the engineering or design.
C. Purchaser shall use reasonable efforts in assisting the Contractor, at
Contractor's expense, to obtain in a timely manner accurate information required
for the Contractor to perform the Work and the Upgrade Work, which Contractor
cannot expeditiously and cost-effectively obtain from any source other than the
Purchaser.
D. The Contractor will select Subcontractors in connection with the
performance of the Work such that all Work provided by any such Subcontractors
meet the System specifications set out in the Technical Volume hereto and the
reliability and performance requirements set forth in this Contract. Regardless
of whether or not the Contractor obtains approval from the Purchaser of a
Subcontractor or whether the Contractor uses a Subcontractor recommended or
designated by the Purchaser, use by the Contractor of a Subcontractor will not,
under any circumstances: (i) give rise to any claim by the Contractor against
the Purchaser if such Subcontractor breaches its subcontract or contract with
the Contractor; (ii) give rise to any claim by such Subcontractor against the
Purchaser; (iii) create any contractual obligation by the Purchaser to the
Subcontractor; (iv) give rise to a waiver by the Purchaser of its rights to
reject any defects or deficiencies or defective Work; or (v) in any way release
the Contractor from being solely responsible to the Purchaser for the Work to be
performed under this Contract.
E. The Contractor is the general contractor for the Work and remains
responsible for all of its obligations under this Contract, including the Work,
regardless of whether a subcontract or supply agreement is made or whether the
Contractor relies upon any Subcontractor to any extent. The Contractor's use of
Subcontractors for any of the Work will in no way increase the Contractor's
rights or diminish the Contractor's liabilities to the Purchaser with respect to
this Contract, and in all events the Contractor's rights and liabilities
hereunder with respect to the Purchaser will be as though the Contractor had
itself performed such Work. The Contractor will be liable for any delays caused
by any Subcontractor as if such delays were caused by the Contractor.
F. The terms of this Contract will in all events be binding upon the
Contractor regardless of and without regard to the existence of any inconsistent
terms in any agreement
<PAGE>
63
between the Contractor and any Subcontractor whether or not and without regard
to the fact that the Purchaser may have directly and/or indirectly had notice of
any such inconsistent term.
G. The Contractor must make all payments to all Subcontractors (except in
the case of legitimate disputes between the Contractor and any such
Subcontractor arising out of the agreement between the Contractor and such
Subcontractor) in accordance with the respective agreements between the
Contractor and its Subcontractors such that Subcontractors will not be in a
position to enforce liens and/or other rights against the Purchaser, the System
or any part thereof.
H. If a proposed Subcontractor of major Supplies is not listed on Exhibit
G hereto, Contractor shall obtain approval thereof from Purchaser, which
approval will not be unreasonably withheld. Contractor will not terminate any
such listed or approved Subcontractor except for good cause (taking into account
the interests of Purchaser) and after consultation with Purchaser, *
Article 26 Product Changes
- ---------------------------
The Contractor may at any time make changes to the System or System
Upgrades furnished pursuant to this Contract, or modify the drawings and
published specifications relating thereto, or substitute equipment of later
design, provided the changes, modifications, or substitutions under normal and
proper use do not impact upon the form, fit, expected life or function of the
System as provided in the System Performance Requirements.
Article 27 Risk and Insurance
- ------------------------------
A. The Contractor shall at all times maintain, and upon request, the
Contractor shall furnish the Purchaser with certificates, or other reasonable
evidence, that Contractor maintains, the following insurance or has adequate
self-insurance (other than as required to comply with any statutory insurance
requirements); provided, that the following insurance coverages may be combined
--------
or in different form so long as Contractor maintains insurance consistent with
the following requirements:
1. Workmen's Compensation and Employers Liability Insurance (with a
limit of not less than * for any one incident or series of
incidents arising from one event or such higher limit as may be
required by the laws of any jurisdiction) covering the officers
and employees of the Contractor for all compensation or other
benefits required of the Contractor by the laws of any nation or
political sub-division thereof to which the Contractor and its
operations under this Contract are subject in respect of injury
of death of any such employee.
2. Comprehensive General Public Liability Insurance, covering
personal injury and/or property damage, with combined single
limits of not less
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
<PAGE>
64
than * for claims of injury or death of any persons or loss of or
damage to property resulting from any one accident. This
insurance to be extended to provide Marine Comprehensive General
Liability including liabilities arising out of the operation of
subsea equipment.
3. Comprehensive Automobile Liability insurance covering all
vehicles and automotive equipment owned, hired, or in the custody
and control of Contractor and complying with all applicable
legislation with limits not less than * combined single limit for
the death or injury of any person per accident and not less than
* for the loss or damage to property resulting from any one
accident.
4. Excess Liability Coverage over that required in Sub-Articles
27(A)(1), (2) and (3) with minimum limits of * for any one
accident or occurrence.
5. All Risk Insurance in respect of all property of Contractor, its
respective officers, agents and employees connected with the
performance of the Work against all loss or damage from whatever
cause.
6. Conventional Marine Hull and Machinery Insurance including War
Risks or any vessel(s) owned, operated or chartered by the
Contractor, in an amount equal to the full value thereof. In the
event of damage to or loss of such vessel(s), the Contractor
agrees to look to its insurance carrier for payment of such loss
or damage and hereby releases the Purchaser and waives any claims
against the Purchaser for the loss of such vessel(s) unless due
to the negligence of Purchaser, its agent or representatives
(other than Contractor).
7. All vessels are to be entered in a Mutual Protection and
Indemnity Association with a full and unlimited entry or to have
Marine Protection and Indemnity Insurance with a limit of not
less than * including coverage for illness, injury or death of
crew members (unless covered under Workmen's Compensation
Insurance), Contractual Liability Coverage, Collision and Tower's
Liability, Removal of Wreck and Debris and Third Party Liability,
except that the foregoing shall not apply to small craft which
are not customarily so insured; provided, that such small craft
--------
will be insured to the limits customary for such commercial small
craft vessels.
8. Specialist Operations Insurance with a limit of not less than
* as per London Wording 1993 or equivalent.
9. Transit Insurance including inland, air, and Marine Cargo
coverage including War (other than on land) in an amount
sufficient to cover the expected highest value of any one
shipment. Coverage to include Institute Cargo Clauses, all risks
1.1.63, Institute War Clauses, London Malicious
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
<PAGE>
65
Damage Clause, and Institute Strikes Riots and Civil Commotion
Clauses or their equivalent.
10. Marine Cargo or equivalent is required to protect, for full cost,
against all risks of physical loss or damage to the plant,
equipment and supplies to be included in the System (other than
War Risks) beginning with when each such item is ready for
shipping and ending when the submersible plant and equipment are
placed overside the cable laying vessel and when the equipment
and supplies are delivered to the cable stations, central
offices, or network operation center. The coverage continues to
cover cable lying on the seabed.
11. Sea Bed or equivalent coverage (including an Old Mines and
Torpedoes Clause, including other derelict weapons of War) is
required to protect, for full cost, against all risks of physical
loss or damage to the submersible plant and equipment described
in Sub-Article 27(A)(10) above. See last paragraph.
12. War Risks or equivalent coverage is required to protect against
damage to, seizure by and/or destruction of the System by means
of war, piracy, takings at sea and other warlike operations until
discharge of the submersible plant and equipment. For the
purposes of this Article Adischarge of the submersible plant and
equipment" shall be deemed to take place when the plant and
equipment reaches the sea bottom, as far as the submersible plant
and equipment is concerned, and when the plant is off-loaded in
the respective terminal country, as far as non-submersible plant
is concerned.
13. Pollution Liability (EIL) insurance for installation operations
and as arising from the use of vessels in an amount not less than
* or such higher sum as may be required to meet any legal
requirement in area of operations.
The Comprehensive General Liability Insurance required pursuant to
Sub-Article 27(A)(2) above, shall include Contractual Liability Coverage which
shall specifically apply to the obligations assumed by the Contractor under the
Terms and Conditions of this Contract.
B. 1. All the foregoing insurances shall be effected with a
creditworthy insurer and shall be endorsed to provide Purchaser
with at least thirty (30) days prior written notice of
cancellation or material change.
2. The foregoing insurances, where relevant, shall name Purchaser
and its lenders as an additional insured as to operations
hereunder, in which event the Contractor's insurance shall be
primary and non-contributory to any insurance carried by
Purchaser.
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
<PAGE>
66
3. The limits specified herein are minimum requirements and shall
not be construed in any way as limits of liability or as
constituting acceptance by Purchaser of such responsibility for
financial liabilities in excess of such limits. The Contractor
shall bear all deductibles applicable to any insurance.
4. If it is judicially determined that the monetary limits of
insurance required hereunder or of any indemnity voluntarily
assumed under the Terms and Conditions of this Contract which the
Contractor agrees will be supported either by available liability
insurance or voluntarily self-insured, in part or whole, exceeds
the maximum limits permitted under applicable law, it is agreed
that said insurance requirements or indemnity shall automatically
be amended to conform to the maximum monetary limits permitted
under such law.
5. Contractor shall take reasonable steps to provide that any sub-
contractor engaged by it has in effect or will effect Employer's
Liability, Workmen's Compensation, Hull and Machinery and
Protection and Indemnity insurances and any other insurances
required by law, together with such other insurances as the
Contractor may consider necessary.
6. If the Contractor fails to effect or keep in force any of the
insurances required under this Contract, Purchaser may effect and
keep in force any such insurances and pay such premiums as may be
necessary for that purpose and from time to time deduct the
amount so paid by Purchaser from any money due or which may
become due to the Contractor hereunder or recover the same as a
debt due from the Contractor, provided that Purchaser is not in
Default.
7. Each Party shall give the other prompt notification of any claim
with respect to any of the insurances to be provided hereunder,
accompanied by full details giving rise to such claim. Each Party
shall afford the other all such assistance as may be required for
the preparation and negotiation of insurance claims.
8. Contractor shall report to Purchaser as soon as practicable all
accidents or occurrences resulting in injuries to Contractor's
employees or third parties, or damage to property of third
parties, arising out of our during the course of services for
Purchaser by Contractor.
C. The Contractor may organize such reasonable levels of deductibles,
excesses and self-insurance as it considers appropriate and which are within
prudent industry standards.
D. The insurance requirements of this Article 27 will remain in place
with respect to each Segment, the System or System Upgrade, as the case may be,
and will not in any way be diminished or reduced until the transfer of title and
risk of loss shall have passed to Purchaser of
<PAGE>
67
such Segment, System or System Upgrade, as the case may be, even in the event of
the sale of substantially all the assets of the Contractor by way of a merger,
consolidation or sale of assets.
Article 28 Plant and Work Rules
- --------------------------------
Employees and agents of each Party shall, while on the premises of the
other or its subcontractors, comply with all plant rules and governmental
regulations.
Article 29 Right of Access and Review
- --------------------------------------
A. The Contractor shall, upon reasonable notice during normal business
hours and in a manner to avoid any disruption of the work on the premises
including performance of other contracts, permit access by the Purchaser or its
Quality Assurance (QA) Representatives (other than a competitor of the
Contractor or any affiliate of a competitor) to the Contractor's premises where
the work will be performed, and will use its best endeavors to secure rights of
access to premises of its subcontractors where the work will be performed,
having subcontracts or orders in the amount of, or equivalent to U.S. $125,000
or more, in accordance with the Contractor's contractual arrangements with its
Subcontractors, and allow the Purchaser or its QA Representative to:
1. audit the Contractor's quality assurance system and its
application to the Work and Upgrade Work, including manufacture,
development and raw materials and components provision;
2. inspect all parts of the Work and Upgrade Work to the extent
reasonably practicable to ensure that their quality meets the
Specification.
This right of access shall allow for the Purchaser and/or its QA
representatives. The Purchaser shall provide the name(s) of each such visitor
prior to the visit. The Contractor shall not be responsible for any costs,
including travel and accommodation costs, of the Purchaser or its
representatives.
B. The right of access shall also allow for the Purchaser and/or
representatives to be aboard the vessel(s) during installation and the route
survey, provided accommodations are available. The Contractor shall not be
responsible for any costs of the Purchaser or its representatives, except for
living expenses on board the vessel which includes one (1) daily telex or fax,
all other travel and accommodation costs for the Purchaser or its QA
Representatives shall be for the account of the Purchaser.
C. Any right of access shall not be construed as creating any obligation
requiring the Contractor or its subcontractors to disclose trade secrets or
proprietary information. Further, such right of access may be conditioned on the
execution of a confidentiality and non-disclosure agreement and/or subject to
routine building or security rules, regulations or procedures.
D. Any exercise of any right of the Purchaser under this Contract to
inspect, audit, visit or to observe or to review or approve any part of the Work
or System Upgrades shall not be
<PAGE>
68
construed as limiting any obligation of Contractor hereunder, including without
limitation, under Articles 1 and 10 hereof.
E. Contractor will have access to the System as necessary to accomplish
its responsibilities under this Contract and in order to make repairs and to
make System Upgrades. Contractor will provide reasonable notice of its need for
access and will take reasonable steps to minimize disruptions to the operation
of the System.
F. Contractor shall give the Purchaser reasonable prior written notice of
each monthly project management review meeting with respect to the status of the
construction and/or installation of the System, and Purchaser's representatives
shall at their cost be permitted to attend and participate in such meetings.
Article 30 Quality Assurance; First Application
- ---------- -------------------------------------
A. All equipment, material and supplies provided under this Contract shall
be inspected and tested by representatives designated by the Contractor to the
extent reasonably practical to assure that the quality of the equipment,
materials and supplies being incorporated is sufficient to realize the System
Performance Requirements. The inspection and test program established for such
equipment, materials and supplies shall be consistent with commercial practices
normally employed by the Contractor in the construction of submarine cable
systems. The foregoing shall not be construed as limiting any of the
Contractor's obligations under this Contract.
B. The Contractor represents that the list in Exhibit F identifies (i) all
major System elements and subsystems and (ii) all Deliverable Software, which
have not been used, as of the date hereof, in any other currently operating
submarine cable system, the qualification plans for which are more fully
described in the First Office Application section of the Quality Plan section of
the Technical Volume.
Article 31 Documentation
- -------------------------
The Contractor shall furnish to the Purchaser one copy of the standard
documentation in the English language for the System provided hereunder. Such
documentation shall be provided prior to the Acceptance testing. Additional
copies of the documentation are available at additional cost. The Contractor
agrees to reformat the Commercial Volume and the Technical Volume in a manner
that is consistent with Purchaser's guidelines within four weeks of the
execution of this Contract.
Article 32 Training
- --------------------
The Contractor will provide, as part of the Initial Contract Price,
any and all training, as more particularly described in the training section of
the Technical Volume, necessary for the operation and maintenance of the System.
Article 33 Settlement of Disputes/Arbitration/Litigation
- ---------------------------------------------------------
<PAGE>
69
A. The Parties shall endeavor to settle amicably by mutual discussions any
disputes, differences, or claims whatsoever related to this Contract.
B. Failing such amicable settlement, any controversy, claim or dispute
arising under or relating to this Contract, including the existence, validity,
interpretation, performance, termination or breach thereof, shall, if both
Parties agree in writing thereto, finally be settled by arbitration in
accordance with the International Arbitration Rules of the American Arbitration
Association "AAA"). Unless the Parties agree to a sole arbitrator, there shall
be three (3) arbitrators, with each Party appointing one arbitrator, who
collectively will select a third. The language of the arbitration shall be
English. The Arbitrator will not have authority to award punitive damages to
either Party. Each Party shall bear its own expenses, but the Parties shall
share equally the fees and expenses of the Arbitration Tribunal and the AAA.
This Contract shall be enforceable, and any arbitration award shall be final,
and judgment thereon may be entered in any court of competent jurisdiction. In
any such arbitration, the decision in any prior arbitration under this Contract
shall not be deemed conclusive of the rights as among themselves of the Parties
hereunder. The arbitration shall be held in New York, New York, U.S.A.
C. 1. If both Parties do not agree to arbitration pursuant to paragraph
(B) above, then either Party may institute suit in the Supreme
Court of the State of New York sitting in New York County or the
United States District Court of the Southern District of New
York, or any appellate court from any thereof.
2. Each Party hereby irrevocably and unconditionally submits to the
non-exclusive jurisdiction of any New York State or Federal court
sitting in The City of New York, and any appellate court from any
thereof, in any action or proceeding arising out of or relating
to this Contract, and each Party hereby irrevocably and
unconditionally agrees that all claims in respect of such action
or proceeding may be heard and determined in such New York State
court or, to the extent permitted by law, in such Federal court.
Each Party hereby irrevocably and unconditionally waives, to the
fullest extent it may effectively do so, any defense of an
inconvenient forum to the maintenance of such action or
proceeding in any such court and any right of jurisdiction on
account of the place of residence or domicile of either Party.
The Contractor hereby irrevocably and unconditionally appoints CT
Corporation System with an office on the date hereof at 1633
Broadway, New York, New York, as its agent and Purchaser hereby
irrevocably appoints Global Crossing Ltd., with an office at 712
Fifth Avenue, New York, New York, as its agent (collectively, the
"New York Process Agents"), in the case of each, to receive on
behalf of each such Party and its respective property service of
copies of the summons and complaint and any other process which
may be served in any such action or proceeding in any such New
York State or Federal court and agrees promptly to appoint a
successor New York Process Agent in The City of New York (which
successor Process Agent
<PAGE>
70
shall accept such appointment in a writing prior to the
termination for any reason of the appointment of the initial New
York Process Agent). In any such action or proceeding in such New
York State or Federal court sitting in The City of New York, such
service may be made on a Party by delivering a copy of such
process to such Party in care of the appropriate Process Agent at
such Process Agent's above address and by depositing a copy of
such process in the mails by certified or registered air mail,
addressed to such Party at its address referred to in Article 35
of this Contract (such service to be effective upon such receipt
by the appropriate Process Agent and the depositing of such
process in the mails as aforesaid). Each Party hereby irrevocably
and unconditionally authorizes and directs such Process Agent to
accept such service on its behalf. As an alternate method of
service, each Party also irrevocably and unconditionally consents
to the service of any and all process in any such action or
proceeding in such New York State or Federal court sitting in The
City of New York by mailing of copies of such process to such
Party, as the case may be, by certified or registered air mail at
its address referred to in Article 35 of this Contract. Each
Party agrees that, to the fullest extent permitted by applicable
law, a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law.
3. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
--------------------
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH.
D. THE OBLIGATIONS OF EACH PARTY IN RESPECT OF THIS CONTRACT DUE TO ANY
PARTY SHALL, NOTWITHSTANDING ANY JUDGMENT IN A CURRENCY (THE AJUDGMENT
CURRENCY") OTHER THAN DOLLARS, BE DISCHARGED ONLY TO THE EXTENT THAT ON THE
BUSINESS DAY FOLLOWING RECEIPT BY SUCH PARTY OF ANY SUM ADJUDGED TO BE SO DUE IN
THE JUDGMENT CURRENCY SUCH PARTY MAY IN ACCORDANCE WITH NORMAL BANKING
PROCEDURES PURCHASE DOLLARS WITH THE JUDGMENT CURRENCY;
<PAGE>
71
IF THE AMOUNT OF DOLLARS SO PURCHASED IS LESS THAN THE SUM ORIGINALLY DUE TO
SUCH PARTY IN DOLLARS, EACH PARTY AGREES, AS A SEPARATE OBLIGATION AND
NOTWITHSTANDING ANY SUCH JUDGMENT, TO INDEMNIFY SUCH PARTY AGAINST SUCH LOSS,
AND IF THE AMOUNT OF DOLLARS SO PURCHASED EXCEEDS THE SUM ORIGINALLY DUE TO ANY
PARTY TO THIS CONTRACT, EACH PARTY AGREES TO REMIT TO SUCH PARTY, SUCH EXCESS.
Article 34 Applicable Law
- --------------------------
THIS CONTRACT SHALL BE CONSTRUED AND GOVERNED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, UNITED STATES, EXCLUDING ITS CONFLICTS OF LAW
PROVISIONS AND EXCLUDING THE CONVENTION FOR THE INTERNATIONAL SALE OF GOODS.
Article 35 Notices
- -------------------
A. Any notices, consent, approval, or other communication pursuant to
this Contract shall be in writing, in the English language, and shall be deemed
to be duly given or served on a Party if sent to the Party at the address
stipulated in Sub-Article 35(B) and if sent by any one of the following means
only:
1. Sent by hand: Such communication shall be deemed to have been
received on the day of delivery provided receipt of delivery is
obtained.
2. Sent by facsimile: Such communication shall be deemed to have
been received, under normal service conditions, twenty-four (24)
hours following the time of dispatch or on confirmation by the
receiving Party, whichever is earlier.
3. Sent by registered or certified mail: Such communication shall be
deemed to have been received, under normal service conditions, on
the day it was received or on the tenth day after it was
dispatched, whichever is earlier.
B. For purposes of this Article, the names, addresses and fax numbers of
the Parties are as detailed below. Any change to the name, address, and
facsimile numbers may be made at any time by giving thirty (30) days prior
written notice.
Alcatel Submarine Networks
30, rue Pierre Beregovoy
92111 Clichy Cedex
France
Facsimile: 33-(0)-1-4756-6920
Attn: Charles H. Matthews
<PAGE>
72
South American Crossing Ltd.
Wessex House
45 Reid Street
Hamilton HM12, Bermuda
Facsimile: 441-296-6749/8606
Attn: Robert Klug
Article 36 Publicity and Confidentiality
- -----------------------------------------
A. No information relating to this Contract shall be released by either
Party to any newspaper, magazine, journal or other written, oral or visual
medium without the prior written approval of an authorized representative of the
other Party; provided that, subject to Article 20 (Safeguarding of Information
--------
and Technology) and the following Sub-Article, this Article shall not restrict
either Party from responding to customary press inquiries or otherwise making
public or private statements in the normal course of business, so long as
consistent with a mutually agreed press-release.
B. This Contract and any non-public information, written or oral, with
respect to this Contract, AConfidential Information", will be kept confidential
and shall not be disclosed, in whole or in part, to any person other than
affiliates, officers, directors, employees, agents or representatives of a Party
(collectively, ARepresentatives") who need to know such Confidential Information
for the purpose of negotiating and executing this Contract. Each Party agrees to
inform each of its Representatives of the non-public nature of the Confidential
Information and to direct such persons to treat such Confidential Information in
accordance with the terms of this Article. Nothing herein shall prevent a Party
from disclosing Confidential Information (a) upon the order of any court or
administrative agency, (b) upon the request or demand of, or pursuant to any
regulation of, any regulatory agency or authority, (c) to the extent reasonably
required in connection with the exercise of any remedy hereunder, (d) to a
Party's legal counsel or independent auditors, (e) prospective lenders to the
Purchaser or Purchaser's parent or affiliate companies, (f) to the extent
required, to any actual or proposed person or entity which will provide any
operation, administrative or maintenance services with respect to the System or
any part thereof and (g) to any actual or proposed assignee of all or part of
its rights hereunder provided that such actual or proposed assignee agrees in
writing to be bound by the provisions of this Article.
Article 37 Assignment
- ----------------------
A. Except as provided in this Article, neither Party shall assign this
Contract or any right or interest under this Contract, nor delegate any work or
obligation to be performed under this Contract "Assignment"), without the other
Party's prior written consent which shall not be unreasonably withheld (it being
understood that it shall be deemed to be reasonable to withhold consent to the
assignment of this Contract or any rights, interest or obligations hereunder to
a competitor of Contractor or an affiliate of a competitor or uncreditworthy
party).
B. The Contractor has the right to assign all or any part of its rights
under this Contract, or to delegate all or any part of its duties hereunder at
any time without the Purchaser's consent to a successor to substantially all the
assets of the Contractor by way of a merger,
<PAGE>
73
consolidation or sale of assets; provided that in the case of any assignment or
--------
delegation pursuant to this Sub-Article 37(B), such assignee or delegee shall
assume in writing all liabilities, warranties, representations and obligations
of Contractor under this Contract. The Contractor shall give the Purchaser
written notice 30 days prior to any assignment or delegation. Contractor shall
remain jointly and severally liable with any assignee or delegee described in
clause (i) of this paragraph.
C. The Purchaser has the right to assign all of its rights and delegate
all of its duties under this Contract to any other entity to whom all of
Purchaser's rights and interests in the System have been transferred. Purchaser
also has the right (i) to assign all of its rights hereunder with respect to any
particular Landing Assets to any Transferee, (ii) to assign Permits with respect
to such Landing Assets, or have Permits with respect to such Landing Assets
issued in the name of, such Transferee and (iii) to transfer such Landing Assets
or have such Landing Assets transferred directly to, such Transferee; provided
--------
that such Transferee shall execute a supplement to this Contract whereby it
becomes jointly and severally liable, together with Purchaser, for all of
Purchaser's obligations under this Contract. ALanding Assets" means, with
respect to each jurisdiction where a portion of the System is located, all or
part of such portion of the System located therein. It is understood that the
Purchaser, at its option, may assign and transfer rights with respect to Landing
Assets in different jurisdictions to different Transferees. Purchaser
contemplates effecting the foregoing assignment pursuant to a Supplement hereto
and the Contractor agrees to execute and deliver such Supplement. Purchaser
shall not transfer any of its rights under this Contract or the System except in
accordance with the foregoing. Any assignment or transfer by Purchaser not
expressly permitted by Sub-Article 37(C) shall be of no force and effect. Any
assignment or transfer by Purchaser which results in any increase in costs or
any loss, damage, delay or failure of performance shall constitute a Force
Majeure, and, without limiting the applicability of Article 17 (Force Majeure),
Purchaser shall be responsible for any increase in costs resulting therefrom.
Article 38 Relationship of the Parties
- ---------------------------------------
All work performed by a Party under this Contract shall be performed
as an independent contractor and not as an agent of the other and no persons
furnished by a Party shall be considered the employees or agents of the other.
Each Party shall be responsible for its employees' compliance with all Laws
while performing under this Contract. This Contract shall not form a joint
venture or partnership between the Parties.
Article 39 Successors Bound
- ----------------------------
This Contract shall be binding on the Contractor and the Purchaser and
their respective successors and permitted assigns.
Article 40 Article Captions; Joint Drafting
- --------------------------------------------
A. The captions of the Articles do not form part of this Contract and
shall not have any effect on the interpretation thereof.
<PAGE>
74
B. This Contract has been fully negotiated between, and jointly drafted
by, the Parties hereto.
Article 41 Severability
- ------------------------
If any of the provisions of this Contract shall be invalid or
unenforceable, such invalidity or unenforceability shall not invalidate or
render unenforceable the entire Contract, but rather the entire Contract shall
be construed as if not containing the particular invalid or unenforceable
provision or provisions and the rights and obligations of the Contractor and the
Purchaser shall be construed and enforced accordingly. In the event such invalid
or unenforceable provision is an essential and material element of this
Contract, the Parties shall promptly negotiate a replacement provision.
Article 42 *
- ----------
Article 43 Survival of Obligations
- -----------------------------------
The Parties' rights and obligations, which, by their nature would
continue beyond the termination, cancellation or expiration of this Contract,
including, but not limited to, those contained in Sub-Article 4(B) (Taxes,
Levies and Duties) and Sub-Article 4(C) (Withholding Tax), Article 18
(Intellectual Property), Article 20 (Safeguarding of Information and
Technology), Article 21 (Export Control) and Article 23 (Limitation of
Liability/Indemnification) shall survive termination, cancellation or expiration
hereof. Article 10 (Warranty) and Article 11 (Contractor Support), shall survive
termination, cancellation or expiration hereof, if and only if, this Contract is
terminated by Purchaser pursuant to Sub-Article 13(A).
Article 44 Non-Waiver
- ----------------------
A waiver of any of the terms and conditions of this Contract, or the
failure of either Party strictly to enforce any such term or condition, on one
or more occasions shall not be construed as a waiver of the same or of any other
term or condition of this Contract on any other occasion.
Article 45 Language
- --------------------
This Contract has been executed in the English language and English
will be the controlling language for interpretation of this Contract.
Article 46 Entire Agreement
- ----------------------------
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
<PAGE>
75
This Contract supersedes all prior oral or written understanding
between the Parties and constitutes the entire agreement with respect to the
subject matter herein. Such terms and conditions shall not be modified or
amended except by a writing signed by authorized representatives of all Parties.
<PAGE>
76
This Contract is executed as of the date first set forth above in the
location set forth below the signature of the duly authorized representative of
each Party, as set forth below.
ALCATEL SUBMARINE NETWORKS
By: /s/ Pat A. Scully
----------------------------
Name: Pat A. Scully
Title: Contracting Director
Signed In:
SOUTH AMERICAN CROSSING LTD.
By: /s/ S. Wallace Dawson, Jr.
----------------------------
Name:
Title:
Signed In: The Netherlands
<PAGE>
Exhibit 10.21
1998 GLOBAL CROSSING LTD.
STOCK INCENTIVE PLAN
Amended and Restated as of December 7, 1999
-------------------------------------------
1. Purpose of the Plan
The purpose of the Plan is to aid the Company and its Subsidiaries in recruiting
and retaining key individuals of outstanding ability and to motivate such
individuals to exert their best efforts on behalf of the Company and its
Subsidiaries by providing incentives through the granting of Awards. The Company
expects that it will benefit from the added interest which such key individuals
will have in the welfare of the Company as a result of their proprietary
interest in the Company's success.
2. Definitions
The following capitalized terms used in the Plan have the respective
meanings set forth in this Section:
(a) Act: The Securities Exchange Act of 1934, as amended, or any successor
---
thereto.
(b) Award: An Option, Stock Appreciation Right or Other Stock-Based Award
-----
granted pursuant to the Plan.
(c) Beneficial Owner: A "beneficial owner", as such term is defined in Rule
----------------
13d-3 under the Act (or any successor rule thereto).
(d) Board: The Board of Directors of the Company.
-----
(e) Change in Control: The occurrence of any of the following events:
-----------------
(i) any Person (other than a Person holding securities representing 10% or
more of the combined voting power of the Company's outstanding
securities as of the Effective Date, the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company, or any company owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportions as
their ownership of Stock of the Company), becomes the Beneficial
Owner, directly or indirectly, of securities of the Company, (a) in
excess of the interest in the Company held by the shareholders of the
Company as of the Effective Date (or their heirs or distributors by
will or the laws of descent and distribution) and (b) representing 30%
or more of the combined voting power of the Company's then-outstanding
securities;
(ii) during any period of twenty-four months (not including any period
prior to the Effective Date), individuals who at the beginning of such
period constitute the Board, and any new director (other than (A) a
director nominated by a Person who
<PAGE>
has entered into an agreement with the Company to effect a transaction
described in Sections 2(e)(i), (iii) or (iv) of the Plan, (B) a
director nominated by any Person (including the Company) who publicly
announces an intention to take or to consider taking actions
(including, but not limited to, an actual or threatened proxy contest)
which if consummated would constitute a Change in Control or (C) a
director nominated by any Person who is the Beneficial Owner, directly
or indirectly, of securities of the Company representing 10% or more
of the combined voting power of the Company's securities) whose
election by the Board or nomination for election by the Company's
shareholders was approved in advance by a vote of at least two-thirds
(2/3) of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to
constitute at least a majority thereof;
(iii) the shareholders of the Company approve any transaction or series of
transactions under which the Company is merged or consolidated with
any other company, other than a merger or consolidation which would
result in the shareholders of the Company immediately prior thereto
continuing to own (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than
65% of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after such
merger or consolidation; or
(iv) the shareholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets, other
than a liquidation of the Company into a wholly-owned subsidiary.
(f) Code: The Internal Revenue Code of 1986, as amended, or any successor
----
thereto.
(g) Committee: The Compensation Committee of the Board.
----------
(h) Company: Global Crossing Ltd.
-------
(i) Disability: Inability to engage in any substantial gainful activity by
----------
reason of a medically determinable physical or mental impairment which
constitutes a permanent and total disability, as defined in Section
22(e)(3) of the Code (or any successor section thereto). The determination
whether a Participant has suffered a Disability shall be made by the
Committee based upon such evidence as it deems necessary and appropriate. A
Participant shall not be considered disabled unless he or she furnishes
such medical or other evidence of the existence of the Disability as the
Committee, in its sole discretion, may require.
(j) Effective Date: July 1, 1998
--------------
<PAGE>
(k) Fair Market Value: on a given date, the closing price of the Shares as
-----------------
reported on such date on the Composite Tape of the principal national
securities exchange on which such Shares are listed or admitted to trading,
or, if no Composite Tape exists for such national securities exchange on
such date, then on the principal national securities exchange on which such
Shares are listed or admitted to trading, or, if the Shares are not listed
or admitted on a national securities exchange, the per Share closing bid
price on such date as quoted on the National Association of Securities
Dealers Automated Quotation System (or such market in which such prices are
regularly quoted), or, if there is no market on which the Shares are
regularly quoted, the Fair Market Value shall be the value established by
the Committee in good faith. If no sale of Shares shall have been reported
on such Composite Tape or such national securities exchange on such date or
quoted on the National Association of Securities Dealer Automated Quotation
System on such date, then the immediately preceding date on which sales of
the Shares have been so reported or quoted shall be used.
(l) ISO: An Option that is also an incentive stock option granted pursuant to
---
Section 6(d) of the Plan.
(m) LSAR: A limited stock appreciation right granted pursuant to Section 7(d)
----
of the Plan.
(n) Other Stock-Based Awards: Awards granted pursuant to Section 8 of the Plan.
------------------------
(o) Option: A stock option granted pursuant to Section 6 of the Plan.
------
(p) Option Price: The purchase price per Share of an Option, as determined
------------
pursuant to Section 6(a) of the Plan.
(q) Participant: An individual who is selected by the Committee to participate
-----------
in the Plan.
(r) Performance-Based Awards: Certain Other Stock-Based Awards granted pursuant
------------------------
to Section 8(b) of the Plan.
(s) Person: A "person", as such term is used for purposes of Section 13(d) or
------
14(d) of the Act (or any successor section thereto).
(t) Plan: The 1998 Global Crossing Ltd. Stock Incentive Plan.
----
(u) Public offering A sale of shares of the Company's common stock to the
---------------
public pursuant to a registration statement under the Securities Act of
1933, as amended, that has been declared effective by the Securities and
Exchange Commission (other than a registration statement on Form S-4 or
Form S-8, or any other successor or other forms promulgated for similar
purposes, or a registration statement in connection with an offering to
employees of the Company and its Subsidiaries) that results in an active
trading market in the Company's common stock; provided, that there shall be
deemed to be an "active
<PAGE>
trading market" if the Company's common stock is listed or quoted on a
national stock exchange or the NASDAQ National Market.
(v) Shares: Common Shares of the Company, par value $0.01 per Share.
------
(w) Stock Appreciation Right: A stock appreciation right granted pursuant to
------------------------
Section 7 of the Plan.
(x) Subsidiary: A subsidiary corporation, as defined in Section 424(f) of the
----------
Code (or any successor section thereto).
3. Shares Subject to the Plan
The total number of Shares which may be issued under the Plan is
90,000,000. The maximum number of Shares for which Options and Stock
Appreciation Rights may be granted during a calendar year to any Participant
shall be 5,000,000. The Shares may consist, in whole or in part, of unissued
Shares or treasury Shares. The issuance of Shares or the payment of cash upon
the exercise of an Award shall reduce the total number of Shares available under
the Plan, as applicable. Shares which are subject to Awards which terminate or
lapse may be granted again under the Plan.
4. Administration
The Plan shall be administered by the Committee, which may delegate its
duties and powers in whole or in part to any subcommittee thereof consisting
solely of at least two individuals who are intended to qualify as "non-employee
directors" within the meaning of Rule 16b-3 under the Act (or any successor rule
thereto) and "outside directors" within the meaning of Section 162(m) of the
Code (or any successor section thereto). Awards may, in the discretion of the
Committee, be made under the Plan in assumption of, or in substitution for,
outstanding awards previously granted by the Company or its affiliates or a
company acquired by the Company or with which the Company combines. The number
of Shares underlying such substitute awards shall be counted against the
aggregate number of Shares available for Awards under the Plan. The Committee
is authorized to interpret the Plan, to establish, amend and rescind any rules
and regulations relating to the Plan, and to make any other determinations that
it deems necessary or desirable for the administration of the Plan. The
Committee may correct any defect or supply any omission or reconcile any
inconsistency in the Plan in the manner and to the extent the Committee deems
necessary or desirable. Any decision of the Committee in the interpretation and
administration of the Plan, as described herein, shall lie within its sole and
absolute discretion and shall be final, conclusive and binding on all parties
concerned (including, but not limited to, Participants and their beneficiaries
or successors). The Committee shall have the full power and authority to
establish the terms and conditions of any Award consistent with the provisions
of the Plan and to waive any such terms and conditions at any time (including,
without limitation, accelerating or waiving any vesting conditions). The
Committee shall require payment of any amount it may determine to be necessary
to withhold for federal, state, local or other taxes as a result of the exercise
of an Award. Unless the Committee specifies otherwise, the
<PAGE>
Participant may elect to pay a portion or all of such withholding taxes by (a)
delivery in Shares or (b) having Shares withheld by the Company from any Shares
that would have otherwise been received by the Participant.
5. Limitations
No Award may be granted under the Plan after the tenth anniversary of the
Effective Date, but Awards theretofore granted may extend beyond that date.
6. Terms and Conditions of Options
Options granted under the Plan shall be, as determined by the Committee,
nonqualified or incentive stock options for federal income tax purposes, as
evidenced by the related Award agreements, and shall be subject to the foregoing
and the following terms and conditions and to such other terms and conditions,
not inconsistent therewith, as the Committee shall determine:
(a) Option Price. The Option Price per Share shall be determined by the
------------
Committee, but shall not be less than 100% of the Fair Market Value of the
Shares on the date an Option is granted.
(b) Exercisability. Options granted under the Plan shall be exercisable at such
--------------
time and upon such terms and conditions as may be determined by the
Committee, but in no event shall an Option be exercisable more than ten
years after the date it is granted.
(c) Exercise of Options. Except as otherwise provided in the Plan or in an
-------------------
Award agreement, an Option may be exercised for all, or from time to time
any part, of the Shares for which it is then exercisable. For purposes of
Section 6 of the Plan, the exercise date of an Option shall be the later of
the date a notice of exercise is received by the Company and, if
applicable, the date payment is received by the Company pursuant to clauses
(i), (ii) or (iii) in the following sentence. The purchase price for the
Shares as to which an Option is exercised shall be paid to the Company in
full at the time of exercise at the election of the Participant (i) in cash
or its equivalent (e.g., by check); (ii) in Shares having a Fair Market
Value equal to the aggregate Option Price for the Shares being purchased
and satisfying such other requirements as may be imposed by the Committee;
provided, that such Shares have been held by the Participant for no less
than six months (or such other period as established from time to time by
the Committee or generally accepted accounting principles); (iii) partly in
cash and partly in such Shares; or (iv) through the delivery of irrevocable
instruments to a broker to deliver promptly to the Company an amount equal
to the aggregate Option price for the shares being purchased. No
Participant shall have any rights to dividends or other rights of a
stockholder with respect to Shares subject to an Option until the
Participant has given written notice of exercise of the Option, paid in
full for such Shares and, if applicable, has satisfied any other conditions
imposed by the Committee pursuant to the Plan.
<PAGE>
(d) ISOs. The Committee may grant Options under the Plan that are intended to
----
be ISOS. Such ISOS shall comply with the requirements of Section 422 of the
Code (or any successor section thereto). No ISO may be granted to any
Participant who at the time of such grant, owns more than ten percent of
the total combined voting power of all classes of stock of the Company or
of any Subsidiary, unless (i) the Option Price for such ISO is at least
110% of the Fair Market Value of a Share on the date the ISO is granted and
(ii) the date on which such ISO terminates is a date not later than the day
preceding the fifth anniversary of the date on which the ISO is granted.
Any Participant who disposes of Shares acquired upon the exercise of an ISO
either (i) within two years after the date of grant of such ISO or (ii)
within one year after the transfer of such Shares to the Participant, shall
notify the Company of such disposition and of the amount realized upon such
disposition.
(e) Attestation. Wherever in this Plan or any agreement evidencing an Award a
-----------
Participant is permitted to pay the exercise price of an Option or taxes
relating to the exercise of an Option by delivering Shares, the Participant
may, subject to procedures satisfactory to the Committee, satisfy such
delivery requirement by presenting proof of beneficial ownership of such
Shares, in which case the Company shall treat the Option as exercised
without further payment and shall withhold such number of Shares from the
Shares acquired by the exercise of the Option.
7. Terms and Conditions of Stock Appreciation Rights
(a) Grants. The Committee also may grant (i) a Stock Appreciation Right
------
independent of an Option or (ii) a Stock Appreciation Right in connection
with an Option, or a portion thereof A Stock Appreciation Right granted
pursuant to clause (ii) of the preceding sentence (A) may be granted at the
time the related Option is granted or at any time prior to the exercise or
cancellation of the related Option, (B) shall cover the same Shares covered
by an Option (or such lesser number of Shares as the Committee may
determine) and (C) shall be subject to the same terms and conditions as
such Option except for such additional limitations as are contemplated by
this Section 8 (or such additional limitations as may be included in an
Award agreement).
(b) Terms. The exercise price per Share of a Stock Appreciation Right shall be
-----
an amount determined by the Committee but in no event shall such amount be
less than the greater of (i) the Fair Market Value of a Share on the date
the Stock Appreciation Right is granted or, in the case of a Stock
Appreciation Right granted in conjunction with an Option, or a portion
thereof, the Option Price of the related Option and (ii) an amount
permitted by applicable laws, rules, by-laws or policies of regulatory
authorities or stock exchanges. Each Stock Appreciation Right granted
independent of an Option shall entitle a Participant upon exercise to an
amount equal to (i) the excess of (A) the Fair Market Value on the exercise
date of one Share over (B) the exercise price per Share, times (ii) the
number of Shares covered by the Stock Appreciation Right. Each Stock
Appreciation Right granted in conjunction with an Option, or a portion
thereof, shall entitle a Participant to surrender to the Company the
unexercised Option, or any portion thereof, and to receive from the
<PAGE>
Company in exchange therefor an amount equal to (i) the excess of (A) the
Fair Market Value on the exercise date of one Share over (B) the Option
Price per Share, times (ii) the number of Shares covered by the Option, or
portion thereof, which is surrendered. The date a notice of exercise is
received by the Company shall be the exercise date. Payment shall be made
in Shares or in cash, or partly in Shares and partly in cash (any such
Shares valued at such Fair Market Value), all as shall be determined by the
Committee. Stock Appreciation Rights may be exercised from time to time
upon actual receipt by the Company of written notice of exercise stating
the number of Shares with respect to which the Stock Appreciation Right is
being exercised. No fractional Shares will be issued in payment for Stock
Appreciation Rights, but instead cash will be paid for a fraction or, if
the Committee should so determine, the number of Shares will be rounded
downward to the next whole Share.
(c) Limitations. The Committee may impose, in its discretion, such conditions
-----------
upon the exercisability or transferability of Stock Appreciation Rights as
it may deem fit.
(d) Limited Stock Appreciation Rights. The Committee may grant LSARs that are
---------------------------------
exercisable upon the occurrence of specified contingent events. Such LSARs
may provide for a different method of determining appreciation, may specify
that payment will be made only in cash and may provide that any related
Awards are not exercisable while such LSARs are exercisable. Unless the
context otherwise requires, whenever the term "Stock Appreciation Right" is
used in the Plan, such term shall include LSARs.
8. Other Stock-Based Awards
(a) Generally. The Committee, in its sole discretion, may grant Awards of
---------
Shares, Awards of restricted Shares and Awards that are valued in whole or
in part by reference to, or are otherwise based on the Fair Market Value
of, Shares ("Other Stock-Based Awards"). Such Other Stock-Based Awards
shall be in such form, and dependent on such conditions, as the Committee
shall determine, including, without limitation, the right to receive one or
more Shares (or the equivalent cash value of such Shares) upon the
completion of a specified period of service, the occurrence of an event
and/or the attainment of performance objectives. Other Stock-Based Awards
may be granted alone or in addition to any other Awards granted under the
Plan. Subject to the provisions of the Plan, the Committee shall determine
to whom and when other Stock-Based Awards will be made, the number of
Shares to be awarded under (or otherwise related to) such Other Stock-Based
Awards; whether such Other Stock-Based Awards shall be settled in cash,
Shares or a combination of cash and Shares; and all other terms and
conditions of such Awards (including, without limitation, the vesting
provisions thereof and provisions ensuring that all Shares so awarded and
issued shall be fully paid and non-assessable).
(b) Performance-Based Awards. Notwithstanding anything to the contrary herein,
------------------------
certain Other Stock-Based Awards granted under this Section 8 may be
granted in a manner which is deductible by the Company under Section 162(m)
of the Code (or any successor section thereto) ("Performance-Based
Awards"). A Participant's Performance-Based
<PAGE>
Award shall be determined based on the attainment of written performance
goals approved by the Committee for a performance period established by the
Committee (i) while the outcome for that performance period is
substantially uncertain and (ii) no more than 90 days after the
commencement of the performance period to which the performance goal
relates or, if less, the number of days which is equal to 25 percent of the
relevant performance period. The performance goals, which must be
objective, shall be based upon one or more of the following criteria: (i)
consolidated earnings before or after taxes (including earnings before
interest, taxes, depreciation and amortization); (ii) net income; (iii)
operating income; (iv) earnings per Share; (v) book value per Share; (vi)
return on shareholders' equity; (vii) expense management; (viii) return on
investment; (ix) improvements in capital structure; (x) profitability of an
identifiable business unit or product; (xi) maintenance or improvement of
profit margins; (xii) stock price; (xiii) market share; (xiv) revenues or
sales; (xv) costs; (xvi) cash flow; (xvii) working capital and (xviii)
return on assets. The foregoing criteria may relate to the Company, one or
more of its Subsidiaries or one or more of its divisions or units, or any
combination of the foregoing, and may be applied on an absolute basis
and/or be relative to one or more peer group companies or indices, or any
combination thereof, all as the Committee shall determine. In addition, to
the degree consistent with Section 162(m) of the Code (or any successor
section thereto), the performance goals may be calculated without regard to
extraordinary items. The maximum amount of a Performance-Based Award during
a calendar year to any Participant shall be (x) with respect to
Performance-Based Awards that are granted in shares, 1,500,000 shares and
(y) with respect to Performance-Based Awards that are not granted in
shares, $20,000,000. The Committee shall determine whether, with respect to
a performance period, the applicable performance goals have been met with
respect to a given Participant and, if they have, to so certify and
ascertain the amount of the applicable Performance Based Award. No
Performance-Based Awards will be paid for such performance period until
such certification is made by the Committee. The amount of the Performance-
Based Award actually paid to a given Participant may be less than the
amount determined by the applicable performance goal formula, at the
discretion of the Committee. The amount of the Performance-Based Award
determined by the Committee for a performance period shall be paid to the
Participant at such time as determined by the Committee in its sole
discretion after the end of such performance period; provided, however,
that a Participant may, if and to the extent permitted by the Committee and
consistent with the provisions of Section 162(m) of the Code, elect to
defer payment of a Performance-Based Award.
9. Adjustments Upon Certain Events
Notwithstanding any other provisions in the Plan to the contrary, the
following provisions shall apply to all Awards granted under the Plan:
(a) Generally. In the event of any change in the outstanding Shares after the
---------
Effective Date by reason of any Share dividend or split, reorganization,
recapitalization, merger, consolidation, spin-off, combination or exchange
of Shares or other corporate exchange, or any distribution to shareholders
of Shares other than regular cash dividends or any
<PAGE>
transactions similar to the foregoing, the Committee in its sole discretion
and without liability to any person may make such substitution or
adjustment, if any, as it deems to be equitable, as to (i) the number or
kind of Shares or other securities issued or reserved for issuance pursuant
to the Plan or pursuant to outstanding Awards, (ii) the Option Price and/or
(iii) any other affected terms of such Awards.
(b) Change in Control. Except as otherwise provided in an Award agreement, in
-----------------
the event of a Change in Control, the Committee in its sole discretion and
without liability to any person may take such actions, if any, as it deems
necessary or desirable with respect to any Award (including, without
limitation, (i) the acceleration of an Award, (ii) the payment of a cash
amount in exchange for the cancellation of an Award and/or (iii) the
requiring of the issuance of substitute Awards that will substantially
preserve the value, rights and benefits of any affected Awards previously
granted hereunder) as of the date of the consummation of the Change in
Control.
10. No Right to Employment or Awards
The granting of an Award under the Plan shall impose no obligation on the
Company or any Subsidiary to continue the employment or service or consulting
relationship of a Participant and shall not lessen or affect the Company's or
Subsidiary's right to terminate the employment or service or consulting
relationship of such Participant. No Participant or other Person shall have any
claim to be granted any Award, and there is no obligation for uniformity of
treatment of Participants, or holders or beneficiaries of Awards. The terms and
conditions of Awards and the Committee's determinations and interpretations with
respect thereto need not be the same with respect to each Participant (whether
or not such Participants are similarly situated).
11. Successors and Assigns
The Plan shall be binding on all successors and assigns of the Company and
a Participant, including without limitation, the estate of such Participant and
the executor, administrator or trustee of such estate, or any receiver or
trustee in bankruptcy or representative of the Participant's creditors.
12. Nontransferability of Awards
Unless otherwise determined by the Committee, an Award shall not be
transferable or assignable by the Participant otherwise than by will or by the
laws of descent and distribution. An Award exercisable after the death of a
Participant may be exercised by the legatees, personal representatives or
distributees of the Participant.
13. Amendments or Termination
The Board may amend, alter or discontinue the Plan, but no amendment,
alteration or discontinuation shall be made which, (a) without the approval of
the shareholders of the Company, would (except as is provided in Section 9 of
the Plan), increase the total number of Shares reserved for the purposes of the
Plan or change the maximum number of Shares for which
<PAGE>
Awards may be granted to any Participant or (b) without the consent of a
Participant, would impair any of the rights or obligations under any Award
theretofore granted to such Participant under the Plan; provided, however, that
-------- -------
the Committee may amend the Plan in such manner as it deems necessary to permit
the granting of Awards meeting the requirements of the Code or other applicable
laws. Notwithstanding anything to the contrary herein, the Board may not amend,
alter or discontinue the provisions relating to Section 9(b) of the Plan after
the occurrence of a Change in Control.
14. International Participants
With respect to Participants who reside or work outside the United States
of America and who are not (and who are not expected to be) "covered employees"
within the meaning of Section 162(m) of the Code, the Committee may, in its sole
discretion, amend the terms of the Plan or Awards with respect to such
Participants in order to conform such terms with the requirements of local law.
15. Choice of Law
The Plan shall be governed by and construed in accordance with the laws of
the State of New York without regard to conflicts of laws.
16. Effectiveness of the Plan
The Plan shall be effective as of the Effective Date. The Plan, as amended
and restated as of December 7, 1999, shall be effective as of such latter date,
subject to the approval of the shareholders of the Company.
<PAGE>
Exhibit 10.32
================================================================================
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
Dated as of November 19, 1999
by and among
Global Crossing Holdings Ltd.,
Global Crossing Ltd. as Guarantor
and
Chase Securities Inc.
CIBC World Markets Corp.
================================================================================
<PAGE>
This Registration Rights Agreement (this "Agreement") is made and entered
---------
into as of November 19, 1999, by and among Global Crossing Holdings Ltd., a
Bermuda company (the "Company"), Global Crossing Ltd., a Bermuda company (the
-------
"Guarantor"), and Chase Securities Inc. and CIBC World Markets Corp. (each, an
- ----------
"Initial Purchaser" and, collectively, the "Initial Purchasers"), each of whom
- ------------------ ------------------
has agreed to purchase the Company's 9-1/8% Senior Notes (including the
guarantees thereof by the Guarantor) due 2006 (the "2006 Notes") and the
----------
Company's 9-1/2% Senior Notes (including the guarantees thereof by the
Guarantor) due 2009 (the "2009 Notes", and collectively with the 2006 Notes, the
----------
"Notes") pursuant to the Purchase Agreement (as defined below).
-----
This Agreement is made pursuant to the Purchase Agreement, dated as of
November 12, 1999, (the "Purchase Agreement"), by and among the Company, the
------------------
Guarantor and the Initial Purchasers. In order to induce the Initial Purchasers
to purchase the Notes, the Company has agreed to provide the registration rights
set forth in this Agreement. The execution and delivery of this Agreement is a
condition to the obligations of the Initial Purchasers set forth in Section 6 of
the Purchase Agreement. Capitalized terms used herein and not otherwise defined
shall have the meanings assigned to them in the Indenture, dated as of November
19, 1999, by and among the Company, the Guarantor and United States Trust
Company of New York, as Trustee, relating to the Notes and the Exchange Notes
(as defined below) (the "Indenture").
---------
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Act: The Securities Act of 1933, as amended.
---
Affiliate: As defined in Rule 144 of the Act.
---------
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
-------------
Certificated Securities: Definitive Notes, as defined in the Indenture.
-----------------------
Closing Date: The date hereof.
------------
Commission: The Securities and Exchange Commission.
----------
Consummate: An Exchange Offer shall be deemed "Consummated" for purposes
----------
of this Agreement upon the occurrence of (a) the filing and effectiveness under
the Act of the Exchange Offer Registration Statement relating to the Exchange
Notes to be issued in the Exchange Offer, (b) the maintenance of such Exchange
Offer Registration Statement continuously effective and the keeping of the
Exchange Offer open for a period not less than the period required pursuant to
Section 3(b) hereof and (c) the delivery by the Company to the Registrar under
the Indenture of
1
<PAGE>
Exchange Notes in the same aggregate principal amount as the aggregate principal
amount of Notes tendered by Holders thereof pursuant to the Exchange Offer.
Effectiveness Deadline: As defined in Sections 3(a) and 4(a) hereof.
----------------------
Exchange Act: The Securities Exchange Act of 1934, as amended.
------------
Exchange Notes: The Company's 9-1/8% Series B Senior Notes (including the
--------------
guarantees thereof by the Guarantor) due 2006, and the Company's 9-1/2% Series B
Senior Notes (including the guarantees thereof by the Guarantor) due 2009, to be
issued pursuant to the Indenture, either (i) in the Exchange Offer or (ii) as
contemplated by Section 4 hereof.
Exchange Offer: The exchange and issuance by the Company of a principal
--------------
amount of Exchange Notes (which shall be registered pursuant to the Exchange
Offer Registration Statement) equal to the outstanding principal amount of Notes
that are tendered by such Holders in connection with such exchange and issuance.
Exchange Offer Registration Statement: The Registration Statement relating
-------------------------------------
to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchasers propose
--------------
to sell the Notes to certain "qualified institutional buyers," as such term is
defined in Rule 144A under the Act and resales undertaken in compliance with
Regulation S under the Securities Act.
Filing Deadline: As defined in Sections 3(a) and 4(a) hereof.
---------------
Holders: As defined in Section 2 hereof.
-------
Indemnified Holder: As defined in Section 8(a) hereof.
------------------
Prospectus: The prospectus included in a Registration Statement at the
----------
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
Recommencement Date: As defined in Section 6(d) hereof.
-------------------
Registration Default: As defined in Section 5 hereof.
--------------------
Registration Statement: Any registration statement of the Company and the
----------------------
Guarantor relating to (a) an offering of Exchange Notes pursuant to an Exchange
Offer or (b) the registration for resale of Transfer Restricted Securities
pursuant to the Shelf Registration Statement, in each case, (i) that is filed
pursuant to the provisions of this Agreement and (ii) including the Prospectus
included therein, all amendments and supplements thereto (including post-
effective amendments) and all exhibits and material incorporated by reference
therein.
Regulation S: Regulation S promulgated under the Act.
------------
2
<PAGE>
Restricted Broker-Dealer: Any Broker-Dealer that holds Exchange Notes that
------------------------
were acquired in the Exchange Offer in exchange for Notes that such Broker-
Dealer acquired for its own account as a result of market making activities or
other trading activities (other than Notes acquired directly from the Company or
any of its affiliates).
Rule 144: Rule 144 promulgated under the Act.
--------
Shelf Registration Statement: As defined in Section 4 hereof.
----------------------------
Suspension Notice: As defined in Section 6(d) hereof.
-----------------
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb), as
---
in effect on the date of the Indenture.
Transfer Restricted Securities: Each Note, until the earliest to occur of
------------------------------
(a) the date on which such Note is exchanged in the Exchange Offer by a person
other than a Broker-Dealer for an Exchange Note, (b) the date on which such Note
is effectively registered under the Act and disposed of in accordance with a
Shelf Registration Statement, (c) the date, following the date on which such
Note is exchanged for an Exchange Note by a Broker-Dealer in the Exchange Offer,
on which such Exchange Note is sold to a purchaser who receives from such
Broker-Dealer on or prior to the date of such sale a copy of the Prospectus
contained in the Exchange Offer Registration Statement, (d) the date on which
such Note is distributed to the public pursuant to Rule 144 under the Act or (e)
the date on which such Note is eligible for resale pursuant to Rule 144 without
volume restriction.
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities (each,
a "Holder") whenever such Person owns Transfer Restricted Securities.
------
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable federal
law or Commission policy (after the procedures set forth in Section 6(a)(i)
below have been complied with), the Company and the Guarantor shall (i) cause
the Exchange Offer Registration Statement to be filed with the Commission as
soon as practicable after the Closing Date (the "Exchange Offer Filing Date"),
--------------------------
but in no event later than 90 days after the Closing Date (such 90th day being
referred to herein as the "Filing Deadline"), (ii) use their reasonable best
---------------
efforts to cause such Exchange Offer Registration Statement to become effective
at the earliest practicable time, but in no event later than 150 days after the
Closing Date (such 150th day being referred to herein as the "Effectiveness
-------------
Deadline"), (iii) in connection with the foregoing, (A) file all pre-effective
- --------
amendments to such Exchange Offer Registration Statement as may be necessary in
order to cause it to become effective, (B) file, if applicable, a post-effective
amendment to such Exchange Offer Registration Statement pursuant to Rule 430A
under the Act and (C) cause all necessary filings, if any, in connection with
the registration and qualification of the Exchange Notes to be made under the
Blue Sky laws of such jurisdictions as are necessary to permit Consummation of
3
<PAGE>
the Exchange Offer, and (iv) upon the effectiveness of such Exchange Offer
Registration Statement, commence and Consummate the Exchange Offer. The
Exchange Offer shall be on the appropriate form permitting registration of the
Exchange Notes to be offered in exchange for the Notes that are Transfer
Restricted Securities and to permit resales of Exchange Notes by Broker-Dealers
as contemplated by Section 3(c) below.
(b) The Company and the Guarantor shall use their reasonable best efforts
to cause the Exchange Offer Registration Statement to be effective continuously,
and shall keep the Exchange Offer open for a period of not less than the minimum
period required under applicable federal and state securities laws to Consummate
the Exchange Offer; provided, however, that in no event shall such period be
less than 20 Business Days. The Company and the Guarantor shall cause the
Exchange Offer to comply with all applicable federal and state securities laws.
No securities other than the Exchange Notes shall be included in the Exchange
Offer Registration Statement. The Company and the Guarantor shall use their
reasonable best efforts to cause the Exchange Offer to be Consummated on the
earliest practicable date after the Exchange Offer Registration Statement has
become effective, but in no event later than 180 days after the Closing Date.
(c) The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Broker-Dealer who holds Transfer Restricted Securities that
were acquired for the account of such Broker-Dealer as a result of market-making
activities or other trading activities (other than Transfer Restricted
Securities acquired directly from the Company or any Affiliate of the Company),
may exchange such Transfer Restricted Securities pursuant to the Exchange Offer;
however, such Broker-Dealer may be deemed to be an "underwriter" within the
meaning of the Act and must, therefore, deliver a prospectus meeting the
requirements of the Act in connection with any resales of any Exchange Notes
received by such Broker-Dealer in the Exchange Offer and that the Prospectus
contained in the Exchange Offer Registration Statement may be used to satisfy
such prospectus delivery requirement. Such "Plan of Distribution" section shall
also contain all other information with respect to such sales by such Broker-
Dealers that the Commission may require in order to permit such sales pursuant
thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer
or disclose the amount of Transfer Restricted Securities held by any such
Broker-Dealer, except to the extent required by the Commission.
To the extent necessary to ensure that the Exchange Offer Registration
Statement is available for resales of Exchange Notes or Transfer Restricted
Securities by Broker-Dealers that were acquired for the account of such Broker-
Dealers as a result of market-making activities or other trading activities
(other than Exchange Notes or Transfer Restricted Securities acquired directly
from the Company or any Affiliate of the Company), the Company and the Guarantor
agree to use their respective reasonable best efforts to keep the Exchange Offer
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Section 6(c) hereof and in conformity with the
requirements of this Agreement, the Act and the policies, rules and regulations
of the Commission as announced from time to time, for a period of 180 days from
the date on which the Exchange Offer is Consummated, or such shorter period as
will terminate when all Transfer Restricted Securities covered by such
Registration Statement
4
<PAGE>
have been sold pursuant thereto. The Company and the Guarantor shall promptly
provide sufficient copies of the latest version of such Prospectus to such
Broker-Dealers promptly upon request at any time during such period.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Exchange Offer is not permitted by
------------------
applicable law or Commission policy (after the Company and the Guarantor have
complied with the procedures set forth in Section 6(a)(i) below) or (ii) if any
Holder of Transfer Restricted Securities shall notify the Company within 20
Business Days following the Consummation of the Exchange Offer that (A) such
Holder was prohibited by law or Commission policy from participating in the
Exchange Offer or (B) such Holder may not resell the Exchange Notes acquired by
it in the Exchange Offer to the public without delivering a prospectus and the
Prospectus contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales by such Holder or (C) such Holder is a
Broker-Dealer and holds Notes acquired directly from the Company or any of its
Affiliates, then the Company and the Guarantor shall:
(x) use their reasonable best efforts to cause to be filed, on or prior to
30 days after the earlier of (i) the date on which the Company determines that
the Exchange Offer Registration Statement cannot be filed as a result of clause
(a)(i) above and (ii) the date on which the Company receives the notice
specified in clause (a) (ii) above (such earlier date being referred to herein
as the "Filing Deadline"), but in no event earlier than 90 days after the
---------------
Closing Date, a shelf registration statement pursuant to Rule 415 under the Act
(which may be an amendment to the Exchange Offer Registration Statement (the
"Shelf Registration Statement")), relating to all Transfer Restricted
- -----------------------------
Securities, and
(y) use their reasonable best efforts to cause such Shelf Registration
Statement to become effective on or prior to 90 days after the Filing Deadline
(such 90th day being referred to herein as the "Effectiveness Deadline").
----------------------
If, after the Company has filed an Exchange Offer Registration Statement
that satisfies the requirements of Section 3(a) above, the Company is required
to file and make effective a Shelf Registration Statement solely because the
Exchange Offer is not permitted under applicable federal law, then the filing of
the Exchange Offer Registration Statement shall be deemed to satisfy the
requirements of clause (x) above; provided that, in such event, the Company
shall remain obligated to meet the Effectiveness Deadline set forth in clause
(y).
The Company and the Guarantor shall use their respective reasonable best
efforts to keep any Shelf Registration Statement required by this Section 4(a)
continuously effective, supplemented and amended as required by, and subject to
the provisions of, Sections 6(b) and (c) hereof to the extent necessary to
ensure that it is available for sales of Transfer Restricted Securities by the
Holders thereof entitled to the benefit of this Section 4(a), and to ensure that
it conforms with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period of at least two years (as extended pursuant to Section 6(c)(i)) following
the date on which such Shelf Registration Statement first
5
<PAGE>
becomes effective under the Act, or such shorter period as will terminate when
all Transfer Restricted Securities covered by such Registration Statement have
been sold pursuant thereto.
(b) Provision by Holders of Certain Information in Connection with the
------------------------------------------------------------------
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
- ----------------------------
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 days after receipt of a request therefor, the
information specified in Item 507 or 508 of Regulation S-K, as applicable, of
the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. Each selling Holder
agrees to promptly furnish additional information required to be disclosed in
order to make the information previously furnished to the Company by such Holder
not materially misleading.
SECTION 5. SPECIAL INTEREST
If (i) any Registration Statement required by this Agreement is not filed
with the Commission on or prior to the applicable Filing Deadline, (ii) any such
Registration Statement has not been declared effective by the Commission on or
prior to the applicable Effectiveness Deadline, (iii) the Exchange Offer has not
been Consummated within 180 days after the Closing Date or (iv) any Registration
Statement required by this Agreement is filed and declared effective but shall
thereafter cease to be effective or fail to be usable for its intended purpose
without being succeeded immediately by a post-effective amendment to such
Registration Statement that cures such failure and that is itself declared
effective immediately (each such event referred to in clauses (i) through (iv),
a "Registration Default"), then the Company and the Guarantor hereby jointly and
--------------------
severally agree to pay to each Holder of Transfer Restricted Securities affected
thereby interest ("Special Interest") which will accrue and be payable semi-
----------------
annually on the Notes and the Exchange Notes (in addition to the stated interest
on the Notes and the Exchange Notes) from and including the date such
Registration Default occurs to, but excluding the date on which (1) the Exchange
Offer Registration Statement (and/or, if applicable, the Shelf Registration
Statement) is filed, in the case of (i) above, (2) the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf Registration Statement)
is declared effective, in the case of (ii) above, (3) the Exchange Offer is
Consummated, in the case of (iii) above, or (4) a post-effective amendment to
the Registration Statement or an additional Registration Statement is filed that
causes the Exchange Offer Registration Statement (and/or, if applicable, the
Shelf Registration Statement) to again be declared effective or made usable, in
the case of (iv) above. During the time that Special Interest is accruing
continuously, the rate of such Special Interest shall be 0.50% per annum during
the first 90-day period and shall increase by 0.25% per annum for each
subsequent 90-day period, but in no event shall such rate exceed 1.00% per annum
in the aggregate regardless of the number of Registration Defaults. If, after
the cure of all Registration Defaults then in effect, there is a subsequent
Registration Default, the Special Interest rate for such subsequent Registration
Default shall initially be 0.25%, regardless of the Special Interest rate in
effect with respect to any prior Registration Default at the time of the cure of
such Registration Default. All accrued Special Interest shall be paid to the
Holders entitled thereto, in the manner provided for the payment of interest in
the Indenture, as more fully set forth in the Indenture and the Notes. All
obligations of the Company and the Guarantor set forth in this
6
<PAGE>
paragraph that are outstanding with respect to any Transfer Restricted Security
at the time such security ceases to be a Transfer Restricted Security shall
survive until such time as all such obligations with respect to such Transfer
Restricted Security shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the
-------------------------------------
Exchange Offer, the Company and the Guarantor shall comply with all applicable
provisions of Section 6(c) below, shall use their respective reasonable best
efforts to effect such exchange and to permit the resale of Exchange Notes by
Broker-Dealers that tendered in the Exchange Offer Notes that such Broker-Dealer
acquired for its own account as a result of its market making activities or
other trading activities (other than Notes acquired directly from the Company or
any of its Affiliates) being sold in accordance with the intended method or
methods of distribution thereof, and shall comply with all of the following
provisions:
(i) If, following the date hereof there has been announced a change
in Commission policy with respect to exchange offers such as the Exchange
Offer, that in the reasonable opinion of counsel to the Company raises a
substantial question as to whether the Exchange Offer is permitted by
applicable federal law, the Company and the Guarantor hereby agree to seek
a no-action letter or other favorable decision from the Commission,
including oral advice from the staff of the Commission, allowing the
Company and the Guarantor to Consummate an Exchange Offer for such Transfer
Restricted Securities. The Company and the Guarantor hereby agree to
pursue the issuance of such a decision to the Commission staff level but
shall not be required to take commercially unreasonable action to effect a
change of Commission policy. In connection with the foregoing, the Company
and the Guarantor hereby agree to take all such other actions as may be
requested by the Commission or otherwise required in connection with the
issuance of such decision, including without limitation (A) participating
in telephonic conferences with the Commission, (B) delivering to the
Commission staff an analysis prepared by counsel to the Company setting
forth the legal bases, if any, upon which such counsel has concluded that
such an Exchange Offer should be permitted and (C) diligently pursuing a
resolution (which need not be favorable) by the Commission staff.
(ii) As a condition to its participation in the Exchange Offer, each
Holder of Transfer Restricted Securities (including, without limitation,
any Holder who is a Broker Dealer) shall furnish, upon the request of the
Company, prior to the Consummation of the Exchange Offer, a written
representation to the Company and the Guarantor (which may be contained in
the letter of transmittal contemplated by the Exchange Offer Registration
Statement) to the effect that (A) it is not an Affiliate of the Company or
the Guarantor, (B) it is not engaged in, and does not intend to engage in,
and has no arrangement or understanding with any person to participate in,
a distribution of the Exchange Notes to be issued in the Exchange Offer and
(C) it is acquiring the Exchange Notes in its ordinary course of business.
Each Holder using the Exchange Offer to participate in a distribution of
the Exchange Notes hereby acknowledges and agrees that, if the resales are
of Exchange Notes obtained by such Holder in exchange for Notes acquired
directly from the
7
<PAGE>
Company or an Affiliate thereof, it (1) could not, under Commission policy
as in effect on the date of this Agreement, rely on the position of the
Commission enunciated in Morgan Stanley and Co., Inc. (available June 5,
----------------------------
1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as
----------------------------------
interpreted in the Commission's letter to Shearman & Sterling dated July 2,
-------------------
1993, and similar no-action letters (including, if applicable, any no-
action letter obtained pursuant to clause (i) above), and (2) must comply
with the registration and prospectus delivery requirements of the Act in
connection with a secondary resale transaction and that such a secondary
resale transaction must be covered by an effective registration statement
containing the selling security holder information required by Item 507 or
508, as applicable, of Regulation S-K.
(iii) Prior to the effectiveness of the Exchange Offer Registration
Statement, the Company and the Guarantor shall provide a supplemental
letter to the Commission (A) stating that the Company and the Guarantor are
registering the Exchange Offer in reliance on the position of the
Commission enunciated in Exxon Capital Holdings Corporation (available May
----------------------------------
13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991) as
----------------------------
interpreted in the Commission's letter to Shearman & Sterling dated July 2,
-------------------
1993, and, if applicable, any no-action letter obtained pursuant to clause
(i) above, (B) including a representation that neither the Company nor the
Guarantor has entered into any arrangement or understanding with any Person
to distribute the Exchange Notes to be received in the Exchange Offer and
that, to the best of the Company's and the Guarantor's information and
belief, each Holder participating in the Exchange Offer is acquiring the
Exchange Notes in its ordinary course of business and has no arrangement or
understanding with any Person to participate in the distribution of the
Exchange Notes received in the Exchange Offer and (C) any other undertaking
or representation required by the Commission as set forth in any no-action
letter obtained pursuant to clause (i) above, if applicable.
(b) Shelf Registration Statement. In connection with the Shelf
----------------------------
Registration Statement, the Company and the Guarantor shall comply with all the
provisions of Section 6(c) below and shall use their respective reasonable best
efforts to effect such registration to permit the sale of the Transfer
Restricted Securities being sold in accordance with the intended method or
methods of distribution thereof (as indicated in the information furnished to
the Company pursuant to Section 4(b) hereof), and pursuant thereto the Company
and the Guarantor will prepare and file with the Commission a Registration
Statement relating to the registration on any appropriate form under the Act,
which form shall be available for the sale of the Transfer Restricted Securities
in accordance with the intended method or methods of distribution thereof within
the time periods and otherwise in accordance with the provisions hereof.
(c) General Provisions. In connection with any Registration Statement and
------------------
any related Prospectus required by this Agreement, the Company and the Guarantor
shall:
(i) use their respective reasonable best efforts to keep such
Registration Statement continuously effective and provide all requisite
financial statements for the period specified in Section 3 or 4 of this
Agreement, as applicable. Upon the occurrence
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<PAGE>
of any event that would cause any such Registration Statement or the
Prospectus contained therein (A) to contain a material misstatement or
omission or (B) not to be effective and usable for the resale of Transfer
Restricted Securities during the period required by this Agreement, the
Company and the Guarantor shall file promptly an appropriate amendment to
such Registration Statement curing such defect, and, if Commission review
is required, use their respective best efforts to cause such amendment to
be declared effective as soon as reasonably practicable thereafter.
(ii) prepare and file with the Commission such amendments and post-
effective amendments to the applicable Registration Statement as may be
necessary to keep such Registration Statement effective for the applicable
period set forth in Section 3 or 4 hereof, as the case may be, or such
shorter period as will terminate when all Transfer Restricted Securities
covered by such Registration Statement have been exchanged or sold or until
such Transfer Restricted Securities no longer constitute Transfer
Restricted Securities or are no longer outstanding; cause the Prospectus to
be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Act, and to comply
fully with Rules 424, 430A and 462, as applicable, under the Act in a
timely manner; and comply with the provisions of the Act with respect to
the disposition of all securities covered by such Registration Statement
during the applicable period in accordance with the intended method or
methods of distribution by the sellers thereof set forth in such
Registration Statement or supplement to the Prospectus;
(iii) advise the selling Holders promptly and, if requested by such
Persons, confirm such advice in writing, (A) when the Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and, with
respect to any applicable Registration Statement or any post-effective
amendment thereto, when the same has become effective, (B) of any request
by the Commission for amendments to the Registration Statement or
amendments or supplements to the Prospectus or for additional information
relating thereto, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement under the Act or
of the suspension by any state securities commission of the qualification
of the Transfer Restricted Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for any of the preceding
purposes, or (D) of the existence of any fact or the happening of any event
that makes any statement of a material fact made in the Registration
Statement, the Prospectus, any amendment or supplement thereto or any
document incorporated by reference therein untrue, or that requires the
making of any additions to or changes in the Registration Statement in
order to make the statements therein not misleading, or that requires the
making of any additions to or changes in the Prospectus in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading. If at any time the Commission shall issue any
stop order suspending the effectiveness of the Registration Statement, or
any state securities commission or other regulatory authority shall issue
an order suspending the qualification or exemption from qualification of
the Transfer Restricted Securities under state securities or Blue Sky laws,
the Company and the Guarantor shall use their respective best efforts to
obtain the withdrawal or lifting of such order at the earliest practicable
time;
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<PAGE>
(iv) subject to Section 6(c)(i), if any fact or event contemplated by
Section 6(c)(iii)(D) above shall exist or have occurred, prepare a
supplement or post-effective amendment to the Registration Statement or
related Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
purchasers of Transfer Restricted Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(v) furnish to the Initial Purchasers and each selling Holder named
in any Registration Statement or Prospectus in connection with such sale,
if any, before filing with the Commission, copies of any Registration
Statement or any Prospectus included therein or any amendments or
supplements to any such Registration Statement or Prospectus (including all
documents incorporated by reference, if requested by such person), which
documents will be subject to the review and comment of such Holders in
connection with such sale, if any, for a period of at least five Business
Days, and the Company will not file any such Registration Statement or
Prospectus or any amendment or supplement to any such Registration
Statement or Prospectus (including all such documents incorporated by
reference, if requested by such person) to which the selling Holders of the
Transfer Restricted Securities covered by such Registration Statement in
connection with such sale, if any, shall reasonably object within five
Business Days after the receipt thereof. A selling Holder shall be deemed
to have reasonably objected to such filing if such Registration Statement,
amendment, Prospectus or supplement, as applicable, as proposed to be
filed, contains a material misstatement or omission or fails to comply with
the applicable requirements of the Act;
(vi) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus, if
requested by any selling Holders within five Business Days after receipt of
notification thereof from the Company, provide copies of such document to
such selling Holders in connection with such sale, if any, make the
Company's and the Guarantor's representatives available for discussion of
such document and other customary due diligence matters, and include such
information in such document prior to the filing thereof as such selling
Holders may reasonably request;
(vii) make available at reasonable times for inspection by the
selling Holders participating in any disposition pursuant to such
Registration Statement and any attorney or accountant retained by such
selling Holders, all financial and other records, pertinent corporate
documents of the Company and the Guarantor and cause the Company's and the
Guarantor's officers, directors and employees to supply all information
reasonably requested by any such selling Holder, attorney or accountant in
connection with such Registration Statement or any post-effective amendment
thereto subsequent to the filing thereof and prior to its effectiveness;
(viii) if requested by any selling Holders in connection with such
sale, if any, promptly include in any Registration Statement or Prospectus,
pursuant to a supplement
10
<PAGE>
or post-effective amendment if necessary, such information as such selling
Holders may reasonably request to have included therein, including, without
limitation, information relating to the "Plan of Distribution" of the
Transfer Restricted Securities; and make all required filings of such
Prospectus supplement or post-effective amendment as soon as practicable
after the Company is notified of the matters to be included in such
Prospectus supplement or post-effective amendment;
(ix) furnish to each selling Holder in connection with such sale, if
any, without charge, at least one copy of the Registration Statement, as
first filed with the Commission, and of each amendment thereto, including
all documents incorporated by reference therein and all exhibits (including
exhibits incorporated therein by reference);
(x) deliver to each selling Holder, without charge, as many copies of
the Prospectus (including each preliminary prospectus) and any amendment or
supplement thereto as such Persons reasonably may request; the Company and
the Guarantor hereby consent to the use (in accordance with law) of the
Prospectus and any amendment or supplement thereto by each of the selling
Holders in connection with the offering and the sale of the Transfer
Restricted Securities covered by the Prospectus or any amendment or
supplement thereto;
(xi) upon the request of any selling Holder, enter into such
agreements (including underwriting agreements) and make such
representations and warranties and take all such other actions in
connection therewith in order to expedite or facilitate the disposition of
the Transfer Restricted Securities pursuant to any applicable Registration
Statement contemplated by this Agreement, all to such extent as may be
reasonably acceptable to the Company and the Guarantor and as may be
reasonably requested by any Holder of Transfer Restricted Securities in
connection with any sale or resale pursuant to any applicable Registration
Statement contemplated by this Agreement and in such connection, the
Company and the Guarantor shall:
(A) upon request of any selling Holder, furnish (or in the case of
paragraphs (2) and (3), use their respective best efforts to cause to be
furnished) to each selling Holder, upon the effectiveness of the Shelf
Registration Statement or upon Consummation of the Exchange Offer, as the
case may be:
(1) a certificate, dated such date, signed on behalf of the
Company and the Guarantor by (x) the Chief Executive Officer,
President or any Vice President and (y) a principal financial or
accounting officer of the Company and the Guarantor, confirming, as of
the date thereof, the matters set forth in paragraph (e) of Section 6
of the Purchase Agreement and such other similar matters as the
selling Holders may reasonably request;
(2) opinions, dated such date, of counsel for the Company and the
Guarantor covering matters similar to those set forth in paragraphs
(a), (b) and (c) of Section 6 of the Purchase Agreement and such other
matters as the selling
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<PAGE>
Holders may reasonably request, and in any event including a statement
to the effect that certain such counsel has participated in
conferences with officers and other representatives of the Company and
the Guarantor and representatives of the independent public
accountants for the Company and the Guarantor at which the contents of
such Registration Statement and the related Prospectus were discussed,
although such counsel has not independently verified the accuracy,
completeness or fairness of such statements; and that such counsel
advises that, on the basis of the foregoing, no facts came to such
counsel's attention that caused such counsel to believe that the
applicable Registration Statement, at the time such Registration
Statement or any post-effective amendment thereto became effective
and, in the case of the Exchange Offer Registration Statement, as of
the date of Consummation of the Exchange Offer, contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus contained in such
Registration Statement as of its date and, in the case of the opinion
dated the date of Consummation of the Exchange Offer, as of the date
of Consummation, contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. Without limiting the foregoing, such
counsel may state further that such counsel assumes no responsibility
for, and has not independently verified, the accuracy, completeness or
fairness of the financial statements, notes and schedules and other
financial data included in any Registration Statement contemplated by
this Agreement or the related Prospectus; and
(3) a customary comfort letter, dated such date, from the
Company's independent accountants, in the customary form and covering
matters of the type customarily covered in comfort letters to
underwriters in connection with underwritten offerings, and affirming
the matters set forth in the comfort letters delivered pursuant to
Section 6(i) of the Purchase Agreement; and
(B) deliver such other documents and certificates as may be reasonably
requested by the selling Holders to evidence compliance with clause (A)
above and with any customary conditions contained in the any agreement
entered into by the Company and the Guarantor pursuant to this clause
(xi);
(xii) prior to any public offering of Transfer Restricted Securities,
cooperate with the selling Holders and their counsel in connection with the
registration and qualification of the Transfer Restricted Securities under
the securities or Blue Sky laws of such jurisdictions as the selling
Holders may reasonably request and do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of
the Transfer Restricted Securities covered by the applicable Registration
Statement; provided, however, that neither the Company nor the Guarantor
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shall be required to register or qualify as a foreign corporation where it
is not now so qualified or to take any action that would subject it to the
service of process in suits or to taxation, other than as to matters
12
<PAGE>
and transactions relating to the Registration Statement, in any
jurisdiction where it is not now so subject;
(xiii) issue, upon the request of any Holder of Notes covered by any
Shelf Registration Statement contemplated by this Agreement, Exchange Notes
having an aggregate principal amount equal to the aggregate principal
amount of Notes surrendered to the Company by such Holder in exchange
therefor or being sold by such Holder; such Exchange Notes to be registered
in the name of such Holder or in the name of the purchaser(s) of such
Exchange Notes, as the case may be; in return, the Notes held by such
Holder shall be surrendered to the Company for cancellation;
(xiv) in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the selling Holders to facilitate the timely
preparation and delivery of certificates representing Transfer Restricted
Securities to be sold and not bearing any restrictive legends; and to
register such Transfer Restricted Securities in such denominations (which
denominations shall be of $1,000 and integral multiples thereof) and such
names as the selling Holders may request at least two Business Days prior
to such sale of Transfer Restricted Securities;
(xv) use their respective best efforts to cause the disposition of
the Transfer Restricted Securities covered by the Registration Statement to
be registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof to
consummate the disposition of such Transfer Restricted Securities, subject
to the proviso contained in clause (xii) above;
(xvi) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of a Registration Statement covering such
Transfer Restricted Securities and provide the Trustee under the Indenture
with printed certificates for the Transfer Restricted Securities which are
in a form eligible for deposit with the Depository Trust Company;
(xvii) otherwise use their respective best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to Holders with regard to any applicable Registration Statement,
as soon as practicable, a consolidated earnings statement meeting the
requirements of Rule 158 under the Act (which need not be audited) covering
a twelve-month period beginning after the effective date of the
Registration Statement (as such term is defined in paragraph (c) of Rule
158 under the Act);
(xviii) make appropriate officers of the Company available to the
selling Holders for meetings with prospective purchasers of the Transfer
Restricted Securities; and
(xix) if the Notes are being included in any Registration Statement,
cause the Indenture to be qualified under the TIA not later than the
effective date of the first
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<PAGE>
Registration Statement required by this Agreement and, in connection
therewith, cooperate with the Trustee and the Holders to effect such
changes to the Indenture as may be required for the Indenture to be so
qualified in accordance with the terms of the TIA; and execute and use
their respective best efforts to cause the Trustee to execute all documents
that may be required to effect such changes and all other forms and
documents required to be filed with the Commission to enable such Indenture
to be so qualified in a timely manner; and
(xx) provide promptly to each Holder upon request each document filed
with the Commission pursuant to the requirements of Section 13 or Section
15(d) of the Exchange Act.
(d) Restrictions on Holders. Each Holder agrees by acquisition of a
-----------------------
Transfer Restricted Security that, upon receipt of the notice referred to in
Section 6(c)(i) or any notice from the Company of the existence of any fact of
the kind described in Section 6(c)(iii)(D) hereof (in each case, a "Suspension
----------
Notice"), such Holder will forthwith discontinue disposition of Transfer
- ------
Restricted Securities pursuant to the applicable Registration Statement until
(i) such Holder has received copies of the supplemented or amended Prospectus
contemplated by Section 6(c)(iv) hereof, or (ii) such Holder is advised in
writing by the Company that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings that are incorporated
by reference in the Prospectus (in each case, the "Recommencement Date"). Each
-------------------
Holder receiving a Suspension Notice hereby agrees that it will either (i)
destroy any Prospectuses, other than permanent file copies, then in such
Holder's possession which have been replaced by the Company with more recently
dated Prospectuses or (ii) deliver to the Company (at the Company's expense) all
copies, other than permanent file copies, then in such Holder's possession of
the Prospectus covering such Transfer Restricted Securities that was current at
the time of receipt of the Suspension Notice. In the event the Company shall
deliver a Suspension Notice, the time period regarding the effectiveness of such
Registration Statement set forth in Section 3 or 4 hereof, as applicable, shall
be extended by a number of days equal to the number of days in the period from
and including the date of delivery of the Suspension Notice to the date of
delivery of the Recommencement Date.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's and the Guarantor's performance
of or compliance with this Agreement shall be borne by the Company and the
Guarantor, regardless of whether a Registration Statement becomes effective,
including without limitation: (i) all registration and filing fees and expenses;
(ii) all fees and expenses of compliance with federal securities and state
securities or Blue Sky laws; (iii) all expenses of printing (including printing
certificates for the Exchange Notes to be issued in the Exchange Offer and
printing of Prospectuses), messenger and delivery services and telephone; (iv)
all fees and disbursements of counsel for the Company, the Guarantor(s) and , in
accordance with Section 7(b) below, the Holders of Transfer Restricted
Securities; (v) all fees and disbursements of independent certified public
accountants of the Company and the Guarantor (including the expenses of any
special audit and comfort letters required by or incident to such performance);
and (vi) fees and expenses of the
14
<PAGE>
Trustee and any exchange agent in the Exchange Offer, including the fees and
expenses of each of their counsel.
The Company and the Guarantor will, in any event, bear their respective
internal expenses (including, without limitation, all salaries and expenses of
their respective officers and employees performing legal or accounting duties),
the expenses of any annual audit and the fees and expenses of any Person,
including special experts, retained by the Company or the Guarantor.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company and the Guarantor
will reimburse the Initial Purchasers and the Holders of Transfer Restricted
Securities being tendered in the Exchange Offer and/or resold pursuant to the
"Plan of Distribution" contained in the Exchange Offer Registration Statement or
registered pursuant to the Shelf Registration Statement, as applicable, for the
reasonable fees and disbursements of not more than one counsel, who shall be
Latham & Watkins, unless another firm shall be chosen by the Holders of a
majority in principal amount of the Transfer Restricted Securities for whose
benefit such Registration Statement is being prepared.
SECTION 8. INDEMNIFICATION AND CONTRIBUTION.
(a) Each of the Company and the Guarantor agrees to indemnify and
hold harmless (i) each Holder, (ii) the directors, officers, employees and
agents of each Holder and (iii) each person who controls any Holder within the
meaning of either the Act or the Exchange Act (any person referred to in clause
(i), (ii) or (iii) may hereinafter be referred to as an "Indemnified Holder")
against any and all losses, claims, damages or liabilities, joint or several, to
which they or any of them may become subject under the Act, the Exchange Act or
other Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement,
preliminary prospectus or Prospectus or any information provided by the Company
to any Holder or prospective purchaser of Series B Notes, or in any amendment
thereof or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and agree to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company and the
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Guarantor will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission (i) made
in any Registration Statement, preliminary prospectus or Prospectus, or in any
amendment thereof or supplement thereto, in reliance upon and in conformity with
written information furnished to the Company by any Holder specifically for
inclusion therein or (ii) made in any preliminary prospectus, if such untrue
statement or omission or alleged omission made in such preliminary prospectus is
eliminated or remedied in the Prospectus relating to it (as amended or
supplemented, as applicable) and a copy of such Prospectus shall not have been
furnished to the person alleging
15
<PAGE>
such loss, claim, damage or liability as required under applicable law. This
indemnity agreement will be in addition to any liability which the Company and
the Guarantor may otherwise have.
(b) Each Holder of Transfer Restricted Securities severally agrees to
indemnify and hold harmless the Company, the Guarantor, their respective
directors, officers, employees and agents and each person who controls the
Company or the Guarantor within the meaning of either the Act or the Exchange
Act, to the same extent as the foregoing indemnity from the Company and the
Guarantor to each of the Indemnified Holders, but only with reference to written
information relating to such Indemnified Holder furnished to the Company by such
Indemnified Holder specifically for inclusion in any Registration Statement,
preliminary prospectus or Prospectus (or in any amendment or supplement
thereto). This indemnity agreement will be in addition to any liability which
any Indemnified Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure to so notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of the institution of such action or (iv) the
indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. It is understood that the
indemnifying party shall not, in connection with any proceeding or related
proceeding in the same jurisdiction, be liable for the fees and expenses of more
than one separate firm (in addition to any local counsel) for all indemnified
parties, and that all such fees and expenses shall be reimbursed as they are
incurred. Any such separate firm for the Indemnified Holder and such control
persons shall be designated in writing by a majority of the Indemnified Holders
and any such separate firm of the Company, its directors, its officers and such
control
16
<PAGE>
persons of the Company shall be designated in writing by the Company. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle, compromise or consent to the entry of any judgment
with respect to any pending or threatened claim, action, suit or proceeding in
respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified parties are actual or potential parties to such
claim or action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising out
of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 8 is unavailable to hold harmless an indemnified party for any
reason, the Company, the Guarantor and the Holders agree to contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating or defending same)
(collectively "Losses") to which the Company or the Guarantor and one or more of
the Holders may be subject in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Guarantor, on the one hand,
and by the Indemnified Holders, on the other hand, from the sale of Transfer
Restricted Securities; provided, however, that in no case shall any Holder
(except as may be provided in any agreement among the Holders relating to the
sale of its Transfer Restricted Securities) be responsible for any amount in
excess of the amount by which the total received by such Holder with respect to
its sale of Transfer Restricted Securities pursuant to a Registration Statement
exceeds the sum of (A) the amount paid to such Holder for such Transfer
Restricted Securities plus (B) the amount of any damages which such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Company and
the Guarantor and the Indemnified Holder shall contribute in such proportion as
is appropriate to reflect not only such relative benefits but also the relative
fault of the Company and the Guarantor, on the one hand, and of the Indemnified
Holder, on the other hand, in connection with the statements or omissions which
resulted in such Losses as well as any other relevant equitable considerations.
Relative fault shall be determined by reference to whether any alleged untrue
statement or omission relates to information provided by either the Company or
the Guarantor, or the Holders and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company, the Guarantor and each Holder agree that it would not be
just and equitable if contribution were determined by pro rata allocation or any
other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 8, each person who controls a Holder within the meaning of either
the Act or the Exchange Act and each director, officer, employee and agent of a
Holder shall have the same rights to contribution as such Holder, and each
person who controls the Company or the Guarantor within the meaning of either
the Act or the Exchange Act and each officer and director of the Company or the
Guarantor shall have the same rights to contribution as the Company and the
Guarantor, subject in each case to the applicable terms and conditions of this
paragraph (d). The remedies provided in this Section 8 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
17
<PAGE>
SECTION 9. RULE 144A
The Company and the Guarantor hereby agrees with each Holder, for so long
as any Transfer Restricted Securities remain outstanding and during any period
in which the Company or the Guarantor is not subject to Section 13 or 15(d) of
the Exchange Act, to make available, upon request of any Holder of Transfer
Restricted Securities, to any Holder or beneficial owner of Transfer Restricted
Securities in connection with any sale thereof and any prospective purchaser of
such Transfer Restricted Securities designated by such Holder or beneficial
owner, the information required by Rule 144A(d)(4) under the Act in order to
permit resales of such Transfer Restricted Securities pursuant to Rule 144A.
SECTION 10. MISCELLANEOUS
(a) Remedies. The Company and the Guarantor acknowledge and agree that
--------
any failure by the Company and/or the Guarantor to comply with their respective
obligations under Sections 3 and 4 hereof may result in material irreparable
injury to the Initial Purchasers or the Holders for which there is no adequate
remedy at law, that it will not be possible to measure damages for such injuries
precisely and that, in the event of any such failure, any Initial Purchaser or
any Holder may obtain such relief as may be required to specifically enforce the
Company's and the Guarantor's obligations under Sections 3 and 4 hereof. The
Company and the Guarantor further agree to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor the Guarantor
--------------------------
shall, on or after the date of this Agreement, enter into any agreement with
respect to its securities that is inconsistent with the rights granted to the
Holders in this Agreement or otherwise conflicts with the provisions hereof.
The rights granted to the Holders hereunder do not in any way conflict with and
are not inconsistent with the rights granted to the holders of the Company's and
the Guarantor's securities under any agreement in effect on the date hereof.
(c) Amendments and Waivers. The provisions of this Agreement may not be
----------------------
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 10(c)(i), the Company has obtained the written consent
of the Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Company has obtained the written
consent of the Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities (excluding Transfer Restricted Securities held by
the Company or its Affiliates). Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates exclusively to the
rights of Holders whose securities are being tendered pursuant to the Exchange
Offer or registered pursuant to the Shelf Registration Statement and that does
not affect, directly or indirectly, the rights of other Holders whose securities
are not being tendered pursuant to such Exchange Offer or registered pursuant to
the Shelf Registration Statement may be given by the Holders of a majority of
the outstanding principal amount of Transfer Restricted Securities subject to
such Exchange Offer or such Shelf Registration Statement, as applicable.
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(d) Third Party Beneficiary. The Holders shall be third party
-----------------------
beneficiaries to the agreements made hereunder between the Company and the
Guarantor, on the one hand, and the Initial Purchasers, on the other hand, and
shall have the right to enforce such agreements directly to the extent they may
deem such enforcement necessary or advisable to protect their rights or the
rights of Holders hereunder.
(e) Notices. All notices and other communications provided for or
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permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telecopier, or air courier
guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to the Company and the Guarantor:
Global Crossing Holdings Ltd.
Wessex House
45 Reid Street
Hamilton HM12 Bermuda
Telecopier No.: (441) 296-8606
Attention: Secretary of the Company
With a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Telecopier No.: (212) 455-2502
Attention: D. Rhett Brandon, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next Business Day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
----------------------
and be binding upon the successors and assigns of each of the parties hereto,
including, without limitation, and without the need for an express assignment,
subsequent Holders of Transfer Restricted Securities; provided, that nothing
herein shall be deemed to permit any assignment, transfer or other disposition
of Transfer Restricted Securities in violation of the terms hereof or of the
Purchase Agreement or the Indenture. If any transferee of any Holder shall
acquire Transfer Restricted Securities in any manner, whether by operation of
law or otherwise, such Transfer Restricted Securities shall be held subject to
all of the terms of this Agreement, and by taking and
19
<PAGE>
holding such Transfer Restricted Securities, such Person shall be conclusively
deemed to have agreed to be bound by and to perform all of the terms and
provisions of this Agreement, including the restrictions on resale set forth in
this Agreement and, if applicable, the Purchase Agreement, and such Person shall
be entitled to receive the benefits hereof.
(g) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(j) Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the parties as a
----------------
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
(l) Consent to Jurisdiction and Service. To the fullest extent permitted
------------------------------------
by applicable law, the Company and the Guarantor hereby irrevocably submit to
the jurisdiction of any Federal or State court located in the Borough of
Manhattan in The City of New York, New York in any suit, action or proceeding
based on or arising out of or relating to this Agreement or any Notes or
Exchange Notes, and irrevocably agree that all claims in respect of such suit or
proceeding may be determined in any such court. The Company and the Guarantor
irrevocably waive, to the fullest extent permitted by law, any objection which
they may have to the laying of the venue of any such suit, action or proceeding
brought in such a court and any claim that any suit, action or proceeding
brought in such a court has been brought in an inconvenient forum. The Company
and the Guarantor agree that final judgment in any such suit, action or
proceeding brought in such a court shall be conclusive and binding upon the
Company and the Guarantor and may be enforced in the courts of Bermuda (or any
other courts to the jurisdiction of which the Company or the Guarantor is
subject) by a suit upon such judgment, provided that service of process is
--------
effected upon the Company or the Guarantor in the manner specified herein or as
otherwise permitted by law. The Company and the Guarantor hereby irrevocably
designate and appoint CT Corporation System, 1633 Broadway - 23rd Floor, New
York, New York (the "Process Agent"),
-------------
20
<PAGE>
as the authorized agent of the Company and the Guarantor upon whom process may
be served in any such suit or proceeding, it being understood that the
designation and appointment of the Process Agent as such authorized agent shall
become effective immediately without any further action on the part of the
Company or the Guarantor. The Company and the Guarantor hereby represent to each
Initial Purchaser that they have notified the Process Agent of such designation
and appointment and that the Process Agent has accepted the same in writing. The
Company and the Guarantor hereby irrevocably authorize and direct the Process
Agent to accept such service. The Company and the Guarantor further agree that
service of process upon the Process Agent and written notice of said service to
the Company mailed by prepaid registered first class mail or delivered to the
Process Agent at its principal office, shall be deemed in every respect
effective service of process upon the Company and the Guarantor in any such suit
or proceeding. Nothing herein shall affect the right of any Initial Purchaser or
any person controlling any Initial Purchaser to serve process in any other
matter permitted by law. The Company and the Guarantor further agree to take any
and all action, including the execution and filing of any and all such documents
and instruments as may be necessary to continue such designation and appointment
of the Process Agent in full force and effect so long as the Company or the
Guarantor has any outstanding obligations under this Agreement, the Notes, the
Exchange Notes or the Indenture. To the extent that the Company or the Guarantor
has or hereafter may acquire any immunity from jurisdiction of any court or from
any legal process (whether through service of note, attachment prior to
judgment, attachment in aid of execution, executor or otherwise) with respect to
itself or its property, the Company and the Guarantor hereby irrevocably waive
such immunity in respect of their respective obligations under this Agreement,
to the extent permitted by law.
[Registration Rights Agreement Signature Pages Follow]
21
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
Global Crossing Holdings Ltd.
By:________________________________
Name:
Title:
Guarantor:
Global Crossing Ltd.
By:________________________________
Name:
Title:
<PAGE>
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Chase Securities Inc.
By:________________________________
Name:
Title:
CIBC World Markets Corp.
By:________________________________
Name:
Title:
<PAGE>
Exhibit 10.33
CONFORMED COPY
--------------
Dated 15th November, 1999
-------------------------
HUTCHISON WHAMPOA LIMITED
and
HUTCHISON TELECOMMUNICATIONS LIMITED
and
GLOBAL CROSSING LTD.
and
GLOBAL CROSSING LTD.
and
HCL HOLDINGS LIMITED
________________________________________
SUBSCRIPTION AND SALE AND
PURCHASE AGREEMENT
in relation to
HCL HOLDINGS LIMITED
________________________________________
<PAGE>
EXHIBIT 10.33
THIS AGREEMENT is made on 15th November, 1999
BETWEEN:
(1) HUTCHISON WHAMPOA LIMITED, a company incorporated in Hong Kong and having
its registered office at 22nd Floor, Hutchison House, 10 Harcourt Road,
Hong Kong (the "Vendor Guarantor");
(2) HUTCHISON TELECOMMUNICATIONS LIMITED, a company incorporated in Hong Kong
and having its registered office at 22nd Floor, Hutchison House, 10
Harcourt Road, Hong Kong (the "Vendor");
(3) GLOBAL CROSSING LTD., a company incorporated in Bermuda and having its
registered office at Wessex House, 45 Reid Street, Hamilton, HM12, Bermuda
(the "Purchaser");
(4) GLOBAL CROSSING LTD., a company incorporated in Bermuda and having its
registered office at Wessex House, 45 Reid Street, Hamilton, HM12, Bermuda
(the "Purchaser Guarantor"); and
(5) HCL HOLDINGS LIMITED, a company incorporated in the British Virgin Islands
and having its registered office at P.O. Box 146, Road Town, Tortola,
British Virgin Islands (the "Company").
WHEREAS:
(A) The Company is a company limited by shares incorporated in the British
Virgin Islands. The authorised share capital of the Company is as at the
date hereof US$50,000.00 divided into 50,000 shares of US$1.00 each.
Certain other particulars of the Company are set out in Schedule 1.
(B) Hutchison Communications Limited ("HCL") is a company limited by shares
incorporated in Hong Kong and is a wholly-owned subsidiary of the Company.
Certain other particulars of HCL are set out in Schedule 2.
(C) Immediately prior to Completion, the Vendor will be the beneficial owner of
three shares of US$1.00 each in the Company, all of which will have been
issued and fully paid up or credited as fully paid up and will represent
the entire issued share capital of the Company.
(D) The Vendor has agreed to sell and the Purchaser has agreed to purchase the
Vendor Share (as hereinafter defined) subject to and upon the terms and
conditions hereinafter appearing.
(E) The Purchaser has agreed to subscribe for and the Company has agreed to
issue and allot the New Share (as hereinafter defined).
<PAGE>
2
(F) Following completion of the transactions described in Recitals (D) and (E),
the Vendor and the Purchaser will each be the holder of one half of the
issued share capital of the Company.
(G) The Purchaser may, in accordance with Clause 2.3, transfer its rights and
obligations under this Agreement to another person. The Purchaser
Guarantor agrees to enter into this Agreement to, inter alia, guarantee the
due and punctual performance of the obligations of that person.
(H) The Vendor is a wholly-owned subsidiary of the Vendor Guarantor. In
consideration of the Purchaser entering into this Agreement and at the
request of the Vendor, the Vendor Guarantor agrees to enter into this
Agreement to, inter alia, guarantee the due and punctual performance of the
obligations of the Vendor hereunder.
NOW IT IS HEREBY AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 In this Agreement (including the recitals above), the words and expressions
set out below shall have the following meanings attributed to them:
"Accounts" the HCL Accounts, the HMSL Accounts, the HGNL
Accounts and the Partnership Accounts;
"Accounts Date" 31st December, 1998;
"Affiliate" in relation to a company, any body corporate which
is for the time being the holding company or a
subsidiary of that company or a subsidiary of that
holding company ("holding company" and
"subsidiary" have for purposes of this Agreement
the meaning ascribed thereto in Section 2 of the
Companies Ordinance, Chapter 32 of the Laws of
Hong Kong);
"Agreement" this Agreement including its schedules and
exhibits;
"Business Day" a day on which banks in Hong Kong, New York and
Los Angeles are open for business (other than a
Saturday or a Sunday);
"Business Plan" the business plan of the Group set out in Exhibit
L;
<PAGE>
3
"Certificate of the certificate of designations of the
Designations" Convertible Preferred Stock a draft of which is in
the agreed form;
"Completion" completion of the sale and purchase of the Vendor
Share and the subscription, issue and allotment of
the New Share in accordance with Clause 5 and
Schedule 3;
"Completion (a) if the Completion Date is on or before 15th
Accounts" January, 2000, the audited consolidated accounts
of the Group made up to 31st December, 1999; and
(b) if the Completion Date is after 15th January,
2000, the consolidated accounts of the Group made
up to the Completion Date and audited by the
auditors for the time being of the Company;
"Completion Date" (a) if the Conditions are satisfied before 31st
December, 1999, 3rd January, 2000; and
(b) if the Conditions are satisfied after 31st
December, 1999, the day falling ten Business Days
after the Conditions (other than the Condition in
Clause 4.1(e)) are so satisfied or waived but in
no event later than the End Date;
"Conditions" the conditions precedent set out in Clause 4.1 and
the expression "Condition" shall mean any of them;
"Consideration" the consideration due by the Purchaser in
accordance with Clause 3;
"Convertible the convertible preferred stock to be issued by
Preferred Stock" the Purchaser Guarantor, the terms and conditions
of which are set out in the Certificate of
Designations;
"Counter-indemnities" the counter-indemnities, particulars of which are
set out in Schedule 6;
"Disclosure Letter" the letter of even date herewith written by the
Vendor to the Purchaser and the Purchaser
<PAGE>
4
Guarantor for the purposes of Clause 6.13(e)
before execution of this Agreement;
"End Date" 15th March, 2000 or such later date as the parties
may agree in writing;
"Exchange Act" the Securities Exchange Act of 1934 of the United
States;
"Excluded Business" the businesses of the provision of paging, call
centres and other ancillary services and the sales
of mobile phones, pagers and accessories carried
on and operated by HCL and the other retailing
activities to be within the scope of the Marketing
and Distribution Agreement;
"Excluded Business the arrangements for the transfer of the
Transfer Arrangements" Excluded Business and the Excluded Companies, a
summary of which is set out in Schedule 7;
"Excluded Companies" Mollson Limited, Hutchison-Management of
Telecommunication Services Limited, Goldpraise
Limited and Goldtop Limited and "Excluded Company"
means any of them;
"Global Crossing the licence agreement regarding the licence of
Licence Agreement" certain trademarks between a wholly-owned
subsidiary of the Purchaser Guarantor and HCL to
be executed by the parties thereto at Completion a
draft of which is in the agreed form;
"Global Crossing the agreement between the Company and Global
Network Agreement" Crossing USA Inc. to be entered into between the
parties thereto at Completion a draft of which is
in the agreed form;
"Group" the Company and the Subsidiaries, the expression
"Group Company" means any of them and the
expression "Group Companies" means all of them;
"Hong Kong" the Hong Kong Special Administrative Region of the
People's Republic of China;
<PAGE>
5
"H" Hutchison Telecommunications (Hong Kong) Limited;
"H Service Agreement" the service agreement between H, HWL and HCL to be
executed by the parties thereto at Completion a
draft of which is in the agreed form;
"HCL Accounts" the audited accounts of HCL for the period ended
on and as at the Accounts Date, a copy of which is
in Exhibit A;
"HCL Network the partnership between Hongville Limited,
Partnership" Palliser Investments Limited and Aberdeen
Commercial Investments Limited constituted by a
partnership agreement dated 30th June, 1994 for
the purpose of leasing telecommunications
equipment to HCL, to be reorganised pursuant to
the Partnership Agreement;
"HGNL Accounts" the audited accounts of Hutchison Global Net
Limited ended on and as at the Accounts Date, a
copy of which is in Exhibit A;
"HMSL Accounts" the audited accounts of Hutchison Multimedia
Services Limited for the period ended on and as at
the Accounts Date, a copy of which is in Exhibit
A;
"Hutchison Licence the licence agreement regarding the licence of
Agreement" certain trade marks between Hutchison Whampoa
Enterprises Limited, HWL and HCL to be executed by
the parties thereto at Completion a draft of which
is in the agreed form;
"HWL Service Agreement" the service agreement between the Vendor Guarantor
and HCL to be executed by the parties thereto at
Completion a draft of which is in the agreed form;
"Intellectual Property" means patents, trade marks and service marks,
rights in designs, trade or business names, domain
names, copyrights and topography rights (whether
or not any of these is registered and including
applications for registration of any
<PAGE>
6
such thing) and rights under licences and consents
in relation to any such thing and all rights or
forms of protection of a similar nature or having
equivalent or similar effect to any of these which
may subsist anywhere in the world;
"in the agreed form" in the form agreed (subject to Clause 4.12)
between the Vendor and the Purchaser, as evidenced
by initialling on their behalf simultaneously with
the execution of this Agreement;
"Interconnect Agreement" the agreement between Hutchison Telephone Company
Limited, HWL and HCL regarding interconnection to
be executed by the parties thereto at Completion a
draft of which is in the agreed form;
"Leased Lines Agreement" the agreement between HCL, HWL and Hutchison
Telephone Company Limited regarding leased lines
to be executed by the parties thereto at
Completion a draft of which is in the agreed form;
"Management Accounts" the unaudited proforma consolidated management
accounts of the Group Companies as at the
Management Accounts Date (prepared on the basis
that the Excluded Business Transfer Arrangements
and the restructuring referred to in Clause 4.5(d)
have taken place), a copy of which is in Exhibit
B;
"Management Accounts 30th September, 1999;
Date"
"Marketing and the agreement between HCL, HWL and Hutchison
Distribution Agreement" Paging Services Limited regarding marketing and
distribution services to be provided by Hutchison
Paging Services Limited to be executed by the
parties thereto at Completion a draft of which is
in the agreed form;
"MDC Agreement" the agreement between Global Crossing Holdings
Ltd. and HCL regarding a media distribution centre
to be executed by the parties
<PAGE>
7
thereto at Completion a draft of which is in the
agreed form;
"New Share" means one new Share to be subscribed by the
Purchaser and issued and allotted by the Company
under this Agreement;
"OFTA" Office of the Telecommunications Authority;
"Partnership Accounts" the audited accounts of the HCL Network
Partnership for the period ended on and as at the
Accounts Date, a copy of which is in Exhibit A;
"Partnership Agreement" the deed between Hongville Limited, Palliser
Investments Limited, Aberdeen Commercial
Investments Limited, HCL and HCL Network
Partnership Holdings Limited referred to in Clause
4.5(d) in the agreed form to be executed by the
parties thereto at or before Completion whereby,
inter alia, HCL, Hongville Limited and HCL Network
Partnership Holdings Limited become respectively
99.98%, 0.01% and 0.01% partners of HCL Network
Partnership;
"Proceedings" any proceedings, suit or action arising out of or
in connection with this Agreement;
"Proforma 1998 Accounts" the unaudited proforma consolidated accounts of
the Group Companies for the period ended on and as
at the Accounts Date (prepared on the basis that
the Excluded Business Transfer Arrangements and
the restructuring referred to in Clause 4.5(d)
have taken place), a copy of which is in Exhibit
A;
"Purchaser Conditions" the Conditions in Clause 4.1(a)(ii), 4.1(b),
4.1(e)(ii), 4.1(f)(ii) and 4.1(h);
"Purchaser Warranties" the representations, warranties and undertakings
set out in Clause 7 and Part 3 of Schedule 5 given
by the Purchaser under this Agreement and under
the completion certificate to be provided under
Clause 4.1(h) and "Purchaser Warranty" shall be
construed accordingly;
<PAGE>
8
"Purchaser Guarantor the representations, warranties and undertakings
Warranties" set out in Clause 7 and Part 4 of Schedule 5 given
by the Purchaser Guarantor under this Agreement
and under the completion certificate to be
provided under clause 4.1(h) and "Purchaser
Guarantor Warranty" shall be construed
accordingly;
"Purchaser Parties" the Purchaser, the Purchaser Guarantor and each
subsidiary of the Purchaser Guarantor which is a
party to any Relevant Agreement and "Purchaser
Party" means any of them;
"Registration Rights the registration rights agreement between the
Agreement" Purchaser Guarantor and the Vendor to be executed
by the parties thereto at Completion a draft of
which is in the agreed form;
"Relevant Agreements" this Agreement, the Global Crossing Network
Agreement, the H Service Agreement, the HWL
Service Agreement, the Hutchison Licence
Agreement, the Global Crossing Licence Agreement,
the Marketing and Distribution Agreement, the
Partnership Agreement, the Shareholders Agreement,
the Tax Covenant, the Registration Rights
Agreement, the MDC Agreement, the Interconnect
Agreement, the Leased Lines Agreement and the
Certificate of Designations and "Relevant
Agreement" means any of them;
"SEC" the Securities and Exchange Commission of the
United States of America;
"Securities Act" the Securities Act of 1933 of the United States;
"Shareholders Agreement" the shareholders agreement between the Vendor, the
Vendor Guarantor, the Purchaser, the Purchaser
Guarantor and the Company in the agreed form to be
executed by the parties thereto at Completion;
"Shares" means shares of US$1.00 each in the capital of the
Company;
<PAGE>
9
"Subsidiaries" the companies which are to be the subsidiaries of
the Company at Completion, particulars of which
are set out in Schedule 2;
"Target Date" 15th December, 1999;
"Taxation" (a) any form of tax whenever created or imposed and
whether of Hong Kong or elsewhere, payable to or
imposed by any Taxation Authority and includes,
without limitation, profits tax, provisional
profits tax, interest tax, salaries tax, property
tax, taxes on gross or net income or receipts,
taxes on gains, estate duty, capital duty, stamp
duty, payroll tax, sales or use tax, franchise
tax, ad valorem tax, transfer tax, value added tax
and other similar liabilities or contributions and
any other taxes, levies, duties, charges, imposts
or withholdings similar to, corresponding with, or
replacing or replaced by any of the foregoing; and
(b) all charges, interest, additional tax, penalties
and fines, incidental or relating to any taxation
falling within (a) above
and includes (for the avoidance of doubt) any of
the foregoing (within (a) or (b)) which arises out
of the Excluded Business Transfer Arrangements and
the restructuring referred to in Clause 4.5(d) or
which are payable by or imposed on the HCL Network
Partnership;
"Taxation Authority" the Inland Revenue Department of Hong Kong and/or
any other revenue, customs, fiscal governmental,
statutory, central, federal, regional, state,
provincial, local governmental or municipal
authority, body or person, whether of Hong Kong or
elsewhere;
"Tax Covenant" the tax covenant to be executed in the agreed form
by the Vendor and the Vendor Guarantor in favour
of the Purchaser, the Purchaser Guarantor and the
Company at Completion;
<PAGE>
10
"Vendor Conditions" the Conditions except (i) the Purchaser Conditions
and (ii) the Condition in Clause 4.1(l);
"Vendor Parties" the parties to the Relevant Agreements (other than
the Purchaser Parties) and the Group Companies and
"Vendor Party" means any of them;
"Vendor Share" one issued Share to be sold by the Vendor and
purchased by the Purchaser under this Agreement;
"Vendor Warranties" the representations, warranties and undertakings
set out in Clause 6 and Part 1 of Schedule 5 given
by the Vendor under this Agreement and under the
completion certificate to be provided under Clause
4.1(g) and "Vendor Warranty" shall be construed
accordingly;
"Vendor Guarantor the representations, warranties and undertakings
Warranties" set out in Clause 6 and Part 2 of Schedule 5 given
by the Vendor Guarantor under this Agreement and
under the completion certificate to be provided
under Clause 4.1(g) and "Vendor Guarantor
Warranty" shall be construed accordingly;
"Warranties" the Vendor Warranties, the Vendor Guarantor
Warranties, the Purchaser Warranties and the
Purchaser Guarantor Warranties and "Warranty"
shall be construed accordingly;
"HK$" and "Hong Kong Hong Kong dollars, the lawful currency of Hong
dollars" Kong; and
"US$" and "US dollars" United States dollars, the lawful currency of the
United States of America.
1.2 References to statutory provisions shall where the context so admits or
requires be construed as references to those provisions as respectively amended,
consolidated, extended, or re-enacted from time to time, and shall, where the
context so admits or requires, be construed as including reference to the
corresponding provisions of any earlier legislation (whether repealed or not)
directly or indirectly amended, consolidated, extended, or replaced thereby or
re-enacted therein, which may be applicable to any
<PAGE>
11
relevant tax year or other period, and shall include any orders, regulations,
instruments or other subordinate legislation made under the relevant statute.
1.3 Unless the context otherwise requires, words importing the singular only
shall include the plural and vice versa and words importing natural persons
shall include corporations and un-incorporated associations; words
importing the masculine gender only shall include the feminine gender and
the neuter gender. References to Clauses, Schedules and Exhibits are to
clauses of, schedules to and exhibits to this Agreement.
1.4 In this Agreement and the Schedules, the words and expressions hereinbefore
defined shall (unless the context otherwise requires) bear the same
meanings therein given to them and this Agreement and the Schedules shall
be construed and interpreted accordingly. The Schedules and Exhibits form
part of this Agreement and shall be construed and have the same full force
and effect as if expressly set out in the body of this Agreement. The
headings contained in this Agreement are for the purposes of convenience
only and do not form part of and shall not affect the construction of this
Agreement or any part thereof.
1.5 References to a "company" shall be construed so as to include any company,
corporation or other body corporate, wherever and however incorporated or
established.
1.6 References to a "person" shall be construed so as to include any
individual, firm, company, government, state or agency of a state or any
joint venture, association or partnership (whether or not having separate
legal personality).
1.7 References to "indemnify" and "indemnifying" any person against any
circumstance include indemnifying and keeping him harmless from all
actions, claims and proceedings from time to time made against that person
and all loss or damage and all payments, costs or expenses made or incurred
by that person as a consequence of or which would not have arisen but for
that circumstance.
1.8 References to the knowledge, information, belief or awareness of any person
shall be treated as including any knowledge, information, belief or
awareness which the person would have if the person made reasonable
enquiries.
1.9 The rule known as the ejusdem generis rule shall not apply and accordingly:
(a) general words introduced by the word "other" shall not be given a
restrictive meaning by reason of the fact that they are preceded by words
indicating a particular class of acts, matters or things; and
(b) general words shall not be given a restrictive meaning by reason of the
fact that they are followed by particular examples intended to be embraced
by the general words.
<PAGE>
12
2. SALE AND PURCHASE AND SUBSCRIPTION AND SUBSTITUTION OF PURCHASER
2.1 Subject to the fulfilment of the Conditions and the terms and conditions of
this Agreement, the Vendor shall sell and transfer all the legal and
beneficial interests in the Vendor Share to the Purchaser and the Purchaser
shall purchase the Vendor Share free from all charges, liens and other
encumbrances whatsoever and together with all rights attaching thereto
including in particular but without prejudice to the generality of the
foregoing the right to all dividends and other distributions declared
and/or paid on or after the Completion Date.
2.2 Subject to the fulfilment of the Conditions and the terms and conditions of
this Agreement, the Purchaser shall subscribe for and the Company shall
allot and issue, fully paid, the New Share. The New Share shall be free
from all charges, liens and other encumbrances whatsoever and together with
all rights attaching thereto including in particular but without prejudice
to the generality of the foregoing the right to all dividends and other
distributions declared and/or paid on or after the Completion Date.
2.3 The Purchaser Guarantor may, at any time before Completion, by delivering a
notice to that effect to the other parties to this Agreement, cause any of
its wholly-owned subsidiaries or any person to whom it could, following
Completion, transfer Shares under the Shareholders Agreement to become the
Purchaser instead of itself, whereupon such person shall have all the
rights and obligations of the Purchaser under this Agreement and the
Purchaser Guarantor shall cease to have such rights and obligations, but
without prejudice to its rights and obligations in its capacity as
Purchaser Guarantor.
3. CONSIDERATION
3.1 The consideration for the sale of the Vendor Share shall be the issue and
allotment to the Vendor (or to such other wholly-owned subsidiary of the
Vendor Guarantor as the Vendor may direct and as shall have agreed with the
Purchaser Guarantor to be bound by Clause 10) of US$400 million in nominal
amount of Convertible Preferred Stock credited as fully paid at par. The
conversion price for the Convertible Preferred Stock shall be as set forth
in the Certificate of Designations. If any event requiring adjustment of
the Conversion Price (as defined in the Certificate of Designations) under
the Certificate of Designations occurs between the date hereof and the
Completion Date, the Conversion Price will be modified in accordance with
such provisions and the change shall be reflected in the Certificate of
Designations.
3.2 The consideration for the issue and allotment of the New Share shall be the
payment to the Company of US$50 million in cash, US$200 million to be
satisfied by the entry into and performance of the Global Crossing Network
Agreement and US$150 million to be satisfied by the entry into and
performance of the MDC Agreement.
<PAGE>
13
4. CONDITIONS PRECEDENT AND PRE- AND POST-COMPLETION MATTERS
4.1 Completion shall be subject to and conditional upon the fulfilment of the
following Conditions:
(a) all approvals and consents which may be required or necessary to be
obtained from any government or any governmental or regulatory
authority in order for:
(i) each Vendor Party to enter into and perform each Relevant
Agreement to which it is a party and to do every thing
contemplated to be done by it as a result of or as a condition
precedent (or otherwise preparatory) to the entry into and
performance of the Relevant Agreements; and
(ii) each Purchaser Party to enter into and perform each Relevant
Agreement to which it is a party and to do every thing
contemplated to be done by it as a result of or as a condition
precedent (or otherwise preparatory) to the entry into and
performance of the Relevant Agreements having been obtained;
(b) the approvals and/or consents listed in Part 1 of Schedule 9 having
been obtained;
(c) the approvals and/or consents listed in Part 2 of Schedule 9 having
been obtained and OFTA shall not have objected in writing to the entry
into or performance of any Relevant Agreement (on the grounds that it
will or might breach the terms of any licence referred to in paragraph
7.1(1)(a) of Part 1 of Schedule 5 or otherwise);
(d) the Vendor and the Vendor Guarantor having complied with their
obligations under Clause 4.4 and 4.6;
(e) no government or governmental or regulatory authority having
instituted or threatened in writing any action (including the passing
of any statute or regulation), suit or investigation to restrain,
prohibit or otherwise challenge, or which would materially restrict or
delay, the entry into or performance:
(i) by any Vendor Party of any Relevant Agreement or any thing to be
done by any Vendor Party under or as contemplated by any Relevant
Agreement; or
(ii) by any Purchaser Party of any Relevant Agreement or any thing to
be done by any Purchaser Party under or as contemplated by any
Relevant Agreement.
<PAGE>
14
(f) the delivery of legal opinions:
(i) reasonably satisfactory to the Purchaser, covering the existence
and due incorporation of the Vendor Parties, their capacity and
authority to their enter into and perform the Relevant Agreements
to which they are parties, the validity, binding nature and
enforceability of their obligations under those Relevant
Agreements and the obtaining of all necessary legal and
regulatory consents; and
(ii) reasonably satisfactory to the Vendor, covering the existence and
due incorporation of the Purchaser Parties and their capacity and
authority to enter into and perform the Relevant Agreements to
which they are parties, the validity, binding nature and
enforceability of their obligations under those Relevant
Agreements and the obtaining of all necessary legal and
regulatory consents;
(g) the Vendor Warranties and the Vendor Guarantor Warranties being
accurate in all material respects and not misleading if they were
repeated at the time of Completion and on the basis that a reference
to the actual time of Completion were substituted for any express or
implied reference to the time of this Agreement and a completion
certificate shall be delivered by the Vendor (in relation to the
Vendor Warranties) and by the Vendor Guarantor (in relation to the
Vendor Guarantor Warranties) to the Purchaser and the Purchaser
Guarantor to that effect;
(h) the Purchaser Warranties and the Purchaser Guarantor Warranties being
accurate in all material respects and not misleading if they were
repeated at the time of Completion and on the basis that a reference
to the actual time of Completion were substituted for any express or
implied reference to the time of this Agreement and a completion
certificate shall be delivered by the Purchaser (in relation to the
Purchaser Warranties) and by the Purchaser Guarantor (in relation to
the Purchaser Guarantor Warranties) to the Vendor and the Vendor
Guarantor to that effect;
(i) each contract and licence in existence at the date of this Agreement
which relates to the business of any Group Company but which has been
entered into by the Vendor Guarantor or a subsidiary of the Vendor
Guarantor which is not a Group Company shall have been novated to that
first mentioned Group Company without amendment to its terms or the
economic benefit and burden of that contract or, as case may be,
licence, shall have been otherwise transferred to that first mentioned
Group Company in a manner satisfactory to the Purchaser;
(j) each contract in existence at the date of this Agreement which has
been entered into by the Vendor Guarantor or any subsidiary of the
Vendor Guarantor which is not a Group Company as agent for a Group
Company but which has not been
<PAGE>
15
reduced to writing shall have been reduced to writing on terms
satisfactory to the Purchaser;
(k) the Vendor having delivered to the Purchaser proforma audited
consolidated accounts of the Group (including balance sheet and
related statement of income and statement of cash flows and prepared
on the basis that the Excluded Business Transfer Arrangements and the
restructuring referred to in Clause 4.5(d) have taken place) prepared
in accordance with generally accepted accounting principles in the
United States for the financial years ended and as of 31st December,
1996, 1997 and 1998;
(l) each of the Relevant Agreements referred to in Clause 4.12 having been
entered into in form and content satisfactory to the parties; and
(m) the constitutive documents of each Group Company having been amended
in the manner contemplated by Clause 3 of the Shareholders Agreement.
4.2 If the Vendor Conditions shall not have been fulfilled (or waived by the
Purchaser) on or before the End Date, the Purchaser shall have the right,
in its sole discretion, to terminate this Agreement. If the Condition in
Clause 4.1(l) shall have not been fulfilled (or waived by both parties) on
or before the End Date, each of the Purchaser and the Vendor shall have the
right (in its sole discretion) to terminate this Agreement. If the
Purchaser Conditions shall not have been fulfilled (or waived by the
Vendor) on or before the End Date, the Vendor shall have the right, in its
sole discretion, to terminate this Agreement. Notwithstanding the foregoing
the Purchaser may not, without the consent of the Vendor, require
Completion if any Vendor Condition in Clause 4.1(a)(i) or 4.1(b) is not
fulfilled and the Vendor may not, without the consent of the Purchaser,
require Completion if any Purchaser Condition in Clause 4.1(a)(ii) or
4.1(c) is not fulfilled. Upon any termination by the Vendor or the
Purchaser under this Clause 4.2, this Agreement and everything contained in
it (except for the continuing obligations under Clauses 16 and 17) shall
terminate and be null and void and of no further effect and no party to
this Agreement shall have any liability to the other parties, save in
respect of any prior breaches of the terms of this Agreement.
4.3 The Vendor and the Vendor Guarantor agree to use all reasonable endeavours
to procure the fulfilment of the Vendor Conditions and the Purchaser and
the Purchaser Guarantor agree to use all reasonable endeavours to procure
the fulfilment of the Purchaser Conditions, in each case by the Target
Date.
4.4 Subject to the matters specifically disclosed (against this Clause 4.4) in
the Disclosure Letter and matters specifically provided for in this
Agreement (including its Exhibits) or the Relevant Agreements, the Vendor
and the Vendor Guarantor will procure that, between the time of this
Agreement and Completion, each Group Company will carry on business in the
normal course. In addition, the matters listed in Schedule 4 shall require
the prior consent in writing of the Purchaser or the Purchaser Guarantor.
<PAGE>
16
4.5 The Vendor shall, immediately prior to Completion:
(a) procure that no Group Company has outstanding any indebtedness, actual
or contingent, except for:
(i) any indebtedness owed by Group Companies to each other and to no
other person; and
(ii) any indebtedness permitted to exist because of Clause 4.6;
(b) procure that there are no amounts outstanding from any of the Vendor,
the Vendor Guarantor or any of their respective Affiliates (other than
the Excluded Companies) to any of the Group Companies other than
routine trade payables arising in the ordinary course of business or
amounts payable in respect of the matters referred to in (i), (ii) or
(iii) of paragraph (v) of Schedule 4;
(c) implement and carry out the Excluded Business Transfer Arrangements so
as, inter alia, to ensure that the Group does not include any Excluded
Company, that no Group Company carries on or is in any way interested
in the Excluded Business and that there are no amounts outstanding
from any of the Excluded Companies to any of the Group Companies (the
Vendor hereby agreeing to indemnify each Group Company against any
liability, actual or contingent, arising out of or connected with the
Excluded Business); and
(d) implement and carry out such steps and acts and execute such
documents, instruments and deeds as referred to in Schedule 8
(including without limitation the Partnership Agreement) to procure
that, inter alia, HCL and HCL Network Partnership Holdings Limited
shall become 99.98% and 0.01% partners respectively of HCL Network
Partnership and that no Group Company has any liability, actual or
contingent, arising out of or connected with the HCL Network
Partnership incurred before the date of the Partnership Agreement.
4.6 The Vendor shall be responsible for the advancement of such sum of money to
the Group, by way of interest free shareholder loans, as is necessary to
fund the Group's operations until the Completion Date. All such shareholder
loans advanced up to the later of the Target Date and the date on which all
of the Vendor Conditions (except that in Clause 4.1(k)) are satisfied shall
(together with any excess of the balance referred to in the next sentence
over the maximum amount referred to in the next sentence) be capitalised
upon Completion. The balance (up to a maximum of HK$100 million per month
on a cumulative basis, prorated on a daily basis for part of a month) shall
be repaid upon Completion.
4.7 The parties shall use their respective reasonable endeavours to procure
that, as soon as practicable after the Completion Date, the Counter-
indemnities shall be absolutely released and cancelled and to be replaced
by new counter-indemnities or guarantees or other security documents to be
given by HCL or, if and to the extent that this is not
<PAGE>
17
possible, by new counter-indemnities or guarantees or other security
documents to be given by the Vendor and the Purchaser on a several basis
(not joint or joint and several) in proportion to their respective
shareholdings in the Company immediately after Completion.
4.8 If and to the extent that the replacements contemplated by Clause 4.7
cannot be procured, the Purchaser shall give counter-indemnities to the
Vendor in respect of one-half of the amounts for which the Vendor is liable
under each of the non-replaced Counter-indemnities for the period from the
Completion Date until the expiry of the relevant non-replaced Counter-
indemnity. Pending such counter-indemnities being given, the Purchaser
shall indemnify the Vendor Guarantor, the Vendor and their subsidiaries and
keep the Vendor Guarantor, the Vendor and their subsidiaries harmless from
and against one-half of all claims, proceedings, liability, costs and
expenses incurred or suffered by the Vendor Guarantor, the Vendor and their
subsidiaries pursuant to the Counter-indemnities for the period from the
Completion Date until the date of the counter-indemnities being given by
the Purchaser.
4.9 As soon as practicable following Completion, the Company shall prepare and
have audited the Completion Accounts which shall be reviewed by Arthur
Andersen. The Completion Accounts will be prepared in accordance with
generally accepted accounting principles in Hong Kong and on a basis
consistent with the Management Accounts. If the consolidated net book value
of the tangible assets (less the consolidated liabilities) of the Group
appearing in the Completion Accounts (after adding back thereto the net
operating losses which are incurred between 30th September, 1999 and the
Completion Date) (the "Adjusted Net Assets") fall short of the consolidated
net book value of the tangible assets (less the consolidated liabilities)
of the Group shown in the Management Accounts (the "Initial Net Assets")
then an amount equal to one half of the shortfall will be paid by the
Vendor to the Purchaser. The Vendor agrees not to release, for the purpose
of preparing the Completion Accounts, any provision in the Management
Accounts for future expenditure which has not been incurred and is not
expected to be incurred or, if any such provision is released, that it
shall be deducted for the purpose of computing the Adjusted Net Assets.
4.10 This Clause applies if, following their review under Clause 4.9 above,
Arthur Andersen are of the opinion that the Adjusted Net Assets fall short
of the Initial Net Assets (when the firm of accountants undertaking the
audit are not of such opinion) or that the shortfall is greater than that
which exists in the opinion of such firm. If this Clause applies, the
Vendor and the Purchaser shall jointly appoint a third firm of accountants
to conduct a second review. If the third firm is of the same opinion as
Arthur Andersen, the shortfall shall be that which exists in the opinion of
that third firm for the purposes of computing the
<PAGE>
18
amount payable by the Vendor to the Purchaser under Clause 4.9. If that
third firm is not of the same opinion as Arthur Andersen, this Clause 4.10
shall cease to apply. If the Vendor and the Purchaser cannot agree on the
identity of the third firm, it shall be a reputable major international
firm of accountants practising in Hong Kong selected by the President for
the time being of the Hong Kong Society of Accountants.
4.11 At any time, the Purchaser may notify the Vendor that the Purchaser wants
one or more of the Group Companies to file an election to be classified as
a disregarded entity (or as a partnership if such Group Company is owned by
more than one person or entity) for U.S. federal income tax purposes, in
which event each relevant Group Company shall promptly file such an
election (and the Vendor shall join in the making of such an election) on
Internal Revenue Service Form 8832 (or any successor form), which election
shall be effective as of a date specified by the Purchaser (the
"Election"). The Purchaser Guarantor shall indemnify and hold harmless the
Company and the Subsidiaries and the Vendor Guarantor and its Affiliates
against any income tax arising under the laws of the United States or any
political subdivision thereof for any period after Completion as a result
of the filing of the Election if such income tax arises as a result of
either (i) a post-Completion change in the tax law of the United States or
any political subdivision thereof or (ii) any post-Completion change in the
structure of the Group Companies (it being understood that the Election
itself shall not constitute a change in the structure of the Group
Companies). Notwithstanding anything to the contrary in this Section 4.11,
the Purchaser shall have no indemnity obligation hereunder with respect to
any tax that arises as a result of (i) any voluntary action taken by the
Vendor, the Vendor Guarantor or their respective Affiliates, (ii) any joint
action (other than the filing of the Election) taken by the Vendor or the
Vendor Guarantor and the Purchaser (or their respective Affiliates), (iii)
any connection between the Vendor, the Vendor Guarantor or their respective
Affiliates and the United States or any political subdivision thereof
(including, without limitation, the existence of a permanent establishment,
the carrying on of any trade or business, or the ownership of any assets
therein), or (iv) any obligation of the Vendor, the Vendor Guarantor or
their respective Affiliates under any contract or other agreement by which
it is responsible for the tax liability of any other person (including,
without limitation, under any tax sharing agreement).
4.12 The parties will cooperate in good faith with a view to agreeing the terms
of the Interconnect Agreement, the Leased Lines Agreement, the Global
Crossing
<PAGE>
19
Licence Agreement, the Hutchison Licence Agreement, the Registration Rights
Agreement, the Marketing and Distribution Agreement, the Global Crossing
Network Agreement, the H Service Agreement, the HWL Service Agreement, the
MDC Agreement and the Certificate of Designations by the Target Date.
5. COMPLETION
5.1 Subject to the fulfilment of the Conditions, Completion shall take place on
the Completion Date at the offices of Slaughter and May in Hong Kong, or at
such other place as the parties hereto may agree where the parties hereto
shall each perform the acts required of them as specified in Schedule 3.
5.2 Failure by the Vendor, the Vendor Guarantor or the Company to comply with
its obligations under Clause 5.1 shall entitle the Purchaser and the
Purchaser Guarantor to defer Completion or to terminate this Agreement.
Failure by the Purchaser or the Purchaser Guarantor to comply with its
obligations under Clause 5.1 shall entitle the remaining parties to defer
Completion or to terminate this Agreement.
6. VENDOR WARRANTIES AND VENDOR GUARANTOR WARRANTIES
6.1 The Vendor represents and warrants to the Purchaser and the Purchaser
Guarantor that each of the Vendor Warranties is accurate in all respects
and not misleading at the date of this Agreement and will be accurate in
all respects and not misleading as if it was repeated on the Completion
Date and on the basis that any reference to the Completion Date is
substituted for any express or implied reference to the date of this
Agreement.
6.2 The Vendor Guarantor represents and warrants to the Purchaser and the
Purchaser Guarantor that each of the Vendor Guarantor Warranties is
accurate in all respects and not misleading at the date of this Agreement
and will be accurate in all respects and not misleading as if it was
repeated on the Completion Date and on the basis that any reference to the
Completion Date is substituted for any express or implied reference to the
date of this Agreement.
6.3 The Vendor and the Vendor Guarantor accept that the Purchaser and the
Purchaser Guarantor are entering into this Agreement in reliance upon each
of the Vendor Warranties and the Vendor Guarantor Warranties.
6.4 The Vendor (in respect of the Vendor Warranties) and the Vendor Guarantor
(in respect of the Vendor Guarantor Warranties) undertake to disclose in
writing to the Purchaser and the Purchaser Guarantor anything which is or
may constitute a breach of or be inconsistent with any of the Vendor
Warranties (or, as the case may be, the Vendor Guarantor Warranties)
immediately it comes to the notice of any of them before Completion.
6.5 The Vendor and the Vendor Guarantor undertake (if any claim is made against
either of them in connection with any Relevant Agreement) not to enforce a
right which either
<PAGE>
20
may have against any Group Company or any director, officer or employee of
any Group Company in respect of a misrepresentation, inaccuracy or omission
in or from information given by that Group Company or that director,
officer or employee for the purpose of assisting the Vendor or the Vendor
Guarantor in reaching agreement on any terms of any Relevant Agreement
provided that the foregoing shall not prevent the Vendor or the Vendor
Guarantor from enforcing any right where such misrepresentation, inaccuracy
or omission arises as a result of wilful or fraudulent misconduct or
omission by the Group Company, director, officer or employee in question.
6.6 Each of the Vendor Warranties and the Vendor Guarantor Warranties shall be
construed as a separate and independent warranty and (except where
expressly provided to the contrary) shall not be limited or restricted by
reference to or inference from the terms of any other Vendor Warranty or
Vendor Guarantor Warranty or any other term of this Agreement.
6.7 Subject to the provisions herein, none of the Vendor Warranties or the
Vendor Guarantor Warranties shall in any way be extinguished or affected by
Completion.
6.8 Without restricting the rights of the Purchaser or the Purchaser Guarantor
or its ability to claim damages on any basis in the event that any Vendor
Warranty or Vendor Guarantor Warranty is breached or is untrue or
misleading, the Vendor (in respect of the Vendor Warranties) and the Vendor
Guarantor (in respect of the Vendor Guarantor Warranties) covenant with the
Purchaser that the Vendor (or, as the case may be, the Vendor Guarantor)
will pay to the Group Company concerned an amount sufficient to place that
Group Company in the financial position which it would have been in had
such Vendor Warranty or (as the case may be) Vendor Guarantor Warranty not
been breached, untrue or misleading, taking into account, inter alia, the
following:
(a) the amount by which the value of an asset (including one warranted to
exist but not in fact existing) or contract of any Group Company is or
becomes less than its value would have been if that Vendor Warranty
(or, as the case may be, Vendor Guarantor Warranty) had not been
breached or not been untrue or misleading;
(b) the amount of any liability or increase in any liability which any
Group Company has incurred or is or becomes subject to which it would
not have incurred or become subject to or which would not have
increased if the Vendor Warranties (or, as the case may be, the Vendor
Guarantor Warranties) had not been breached or not been untrue or
misleading;
(c) the amount by which the profits of any Group Company are less or its
losses greater than would have been the case if that Vendor Warranty
(or, as the case may be, that Vendor Guarantor Warranty) had not been
breached or not been untrue or misleading; and
<PAGE>
21
(d) any costs and expenses incurred directly or indirectly as a result of
or in connection with any deficiency or diminution in value of any
asset or contract or any liability or increased liability, as the case
may be, referred to in paragraph (a) or (b)
or will, at the direction the Purchaser, pay to the Purchaser an amount
equal to one-half of the amount which is so sufficient.
6.9 For the avoidance of doubt, amounts payable under Clause 6.8 will be
calculated without reference to the rules of general law relating to claims
for damages for breach of warranty.
6.10 Subject to the other provisions contained in this Clause 6, the Vendor and
the Vendor Guarantor (in respect of the Vendor Guarantor Warranties)
undertake to indemnify the Purchaser and the Purchaser Guarantor against
any losses, costs (including legal costs reasonably incurred), expenses,
claims, damages and liabilities which the Purchaser and the Purchaser
Guarantor may incur or suffer as a result of, arising out of or in
connection with any breach of the Vendor Warranties or of the obligations
of the Vendor in clause 4.5 (or, as the case may be, the Vendor Guarantor
Warranties).
6.11 Subject to the limitations set out in Clause 6.12 and 6.13, the Purchaser
and the Purchaser Guarantor shall be entitled to claim both before and
after Completion that any of the Vendor Warranties or the Vendor Guarantor
Warranties has or had been breached or is or was misleading and, without
limitation, to claim under any covenant. Notwithstanding the foregoing, if
(not less than two Business Days before Completion) the Vendor or the
Vendor Guarantor provides notice to the Purchaser or the Purchaser
Guarantor pursuant to Clause 6.4 (with full details of the breach) and the
Purchaser and the Purchaser Guarantor proceed to Completion, such shall
constitute a waiver of the Purchaser's and the Purchaser Guarantor's rights
to make a claim for breach of such Warranty or that such Warranty is
misleading.
6.12 The Vendor and the Vendor Guarantor shall not be liable for a claim for
breach of any of the Vendor Warranties or the Vendor Guarantor Warranties
to the extent that provision or reserve in respect thereof has been made in
the Management Accounts.
6.13 The liability of the Vendor in respect of any claims for breach of the
Vendor Warranties and the liability of the Vendor Guarantor in respect of
any claims for breach of the Vendor Guarantor Warranties shall be limited
as follows:
(a) the maximum liability of the Vendor and the Vendor Guarantor in
respect of all claims for breach of the Vendor Warranties (other
<PAGE>
22
than the Vendor Warranties relating to Taxation) and the Vendor Guarantor
Warranties shall not exceed US$400 million in aggregate;
(b) neither the Vendor (in respect of the Vendor Warranties) nor the
Vendor Guarantor (in respect of the Vendor Guarantor Warranties) shall
be liable (other than in respect of the Vendor Warranties relating to
Taxation) for any individual claim which does not exceed US$150,000;
(c) the Vendor and the Vendor Guarantor shall only be liable in respect of
any claim for breach of the Vendor Warranties (other than the Vendor
Warranties relating to Taxation) if the liability of the Vendor and
the Vendor Guarantor for all such claims (excluding those which may
not be made because of paragraph (b) above) exceeds US$10,000,000 and
in such event the Vendor and the Vendor Guarantor shall be liable for
the whole amount of such claims and not only the excess.
(d) no claims may be brought against the Vendor in respect of a breach of
the Vendor Warranties or the Vendor Guarantor (in respect of a breach
of the Vendor Guarantor Warranties) after the expiry of a period of
six months after delivery of the audited accounts of the Group to the
directors of the Company for the year ended 31 December, 2000 (31st
March, 2006 where the relevant Vendor Warranty relates to Taxation),
and any claims brought within the specified time period shall be
notified to the Vendor or Vendor Guarantor in writing specifying the
basis of such claim.
(e) the Purchaser and the Purchaser Guarantor shall not be entitled to
claim that any fact causes any of the Vendor Warranties (or, as the
case may be, the Vendor Guarantor Warranties) to be breached or
renders any of them misleading to the extent that it has been fairly
disclosed to the Purchaser and the Purchaser Guarantor in the
Disclosure Letter.
(f) the Vendor (in respect of the Vendor Warranties) and the Vendor
Guarantor (in respect of the Vendor Guarantor Warranties) shall not be
liable for or in respect of any breach of the Vendor Warranties (or,
as the case may be, the Vendor Guarantor Warranties) which would not
have arisen but for a voluntary act, omission or transaction after the
date hereof on the part of the Purchaser which could reasonably have
been avoided or carried out and which was not in the ordinary course
of business or which arises from something done or omitted at the
Purchaser's written request or with its written consent;
(g) the Vendor (in respect of the Vendor Warranties) and the Vendor
Guarantor (in respect of the Vendor Guarantor Warranties) shall not be
liable for or in respect of any breach of the Vendor Warranties (or,
as the case may be, the Vendor Guarantor Warranties) which arises as a
result of legislation which comes into force after the Completion Date
and which is retrospective in effect;
(h) the Vendor shall not be liable for or in respect of any breach of the
Vendor Warranties which, being a liability in respect of Taxation,
arises by reason of an increase in the rates of taxation made after
the date hereof with retrospective effect;
<PAGE>
23
(i) the Vendor (in respect of the Vendor Warranties) and the Vendor
Guarantor (in respect of the Vendor Guarantor Warranties) shall not be
liable for or in respect of any breach of the Vendor Warranties (or,
as the case may be, the Vendor Guarantor Warranties) which arises as a
result of a change in the Group's accounting policies after
Completion;
(j) the Vendor (in respect of the Vendor Warranties) and the Vendor
Guarantor (in respect of the Vendor Guarantor Warranties) shall not be
liable for or in respect of any breach of the Vendor Warranties (or,
as the case may be, the Vendor Guarantor Warranties) which arises as a
result of a Group Company failing to act in accordance with any
reasonable request of the Vendor or the Vendor Guarantor, which action
would have the effect of avoiding a breach of such Warranty or
mitigating losses or damages due to a breach of such Warranty after
being given a reasonable time in which to comply with any such request
and provided that the Group Company has been indemnified by the Vendor
and/or the Vendor Guarantor to the reasonable satisfaction of the
Purchaser against any liability, costs, damages or expenses which may
be incurred thereby; and
(k) the Vendor shall not be liable for or in respect of any breach of
Vendor Warranties to the extent of any recovery for such matter under
the Tax Covenant.
6.14 The Purchaser shall:
(a) upon any claim, action, demand or assessment being made or issued
against the Purchaser or the Company which could lead to a claim by
the Purchaser for breach of any of the Vendor Warranties or the Vendor
Guarantor Warranties, as soon as reasonably practicable, give notice
thereof to the Vendor (or, as the case may be, to the Vendor
Guarantor) provided however, that failure to provide such notice shall
not preclude a claim by the Purchaser hereunder unless and to the
extent that such failure materially prejudices the Vendor's ability to
take action as described in subsection (b) below;
(b) permit the Vendor (or, as the case may be, to the Vendor Guarantor) to
take, in the name of the Company, such action as it deems appropriate
to avoid, resist, dispute, defend, compromise or appeal against any
such claim, action, demand or assessment and the Purchaser shall
provide or make available to the Vendor (or, as the case may be, to
the Vendor Guarantor) all information and documents reasonably
required by it for such purposes and shall give all such other
assistance in connection with such claim, action, demand or assessment
as the Vendor (or, as the case may be, the Vendor Guarantor) may
reasonably require, subject to the Purchaser and the Company being
indemnified to the Purchaser's reasonable satisfaction against any
liability, costs, damages or expenses which may be incurred thereby;
and
<PAGE>
24
(c) in the case of any claim against the Purchaser or the Purchaser
Guarantor which could lead to a claim by the Purchaser for breach of
any of the Vendor Warranties or the Vendor Guarantor Warranties,
consult the Vendor as to the conduct of such claim and not settle it
without the consent of the Vendor, not to be unreasonably withheld.
6.15 The Vendor Guarantor hereby covenants and undertakes with the Purchaser
that it shall use all reasonable endeavours to procure the due and punctual
performance and observance of all the obligations and terms of each other
Vendor Party under each Relevant Agreement to which it is a party.
7. PURCHASER WARRANTIES AND PURCHASER GUARANTOR WARRANTIES
7.1 The Purchaser represents and warrants to the Vendor and the Vendor
Guarantor that each of the Purchaser Warranties is accurate in all respects
and not misleading at the date of this Agreement and will be accurate in
all respects and not misleading as if it was repeated on the Completion
Date and on the basis that any reference to the Completion Date is
substituted for any express or implied reference to the date of this
Agreement.
7.2 The Purchaser Guarantor represents and warrants to the Vendor and the
Vendor Guarantor that each of the Purchaser Guarantor Warranties is
accurate in all respects and not misleading at the date of this Agreement
and will be accurate in all respects and not misleading as if it was
repeated on the Completion Date and on the basis that any reference to the
Completion Date is substituted for any express or implied reference to the
date of this Agreement.
7.3 The Purchaser and the Purchaser Guarantor accept that the Vendor and the
Vendor Guarantor are entering into this Agreement in reliance upon each of
the Purchaser Warranties and the Purchaser Guarantor Warranties.
7.4 The Purchaser (in respect of the Purchaser Warranties) and the Purchaser
Guarantor (in respect of the Purchaser Guarantor Warranties) undertake to
disclose in writing to the Vendor and the Vendor Guarantor anything which
is or may constitute a breach of or be inconsistent with any of the
Purchaser Warranties (or, as the case may be, the Purchaser Guarantor
Warranties) immediately it comes to the notice of any of them before
Completion.
7.5 Each of the Purchaser Warranties and the Purchaser Guarantor Warranties
shall be construed as a separate and independent warranty and (except where
expressly provided to the contrary) shall not be limited or restricted by
reference to or inference from the terms of any other Purchaser Warranty or
Purchaser Guarantor Warranty or any other term of this Agreement.
7.6 Subject to the provisions herein, none of the Purchaser Warranties or the
Purchaser Guarantor Warranties shall in any way be extinguished or affected
by Completion.
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25
7.7 Subject to the other provisions contained in this Clause 7, the Purchaser
(in respect of the Purchaser Warranties) and the Purchaser Guarantor (in
respect of the Purchaser Guarantor Warranties) undertake to indemnify the
Vendor and the Vendor Guarantor against any losses, costs (including legal
costs reasonably incurred), expenses, claims, damages and liabilities which
the Vendor and the Vendor Guarantor may incur or suffer as a result of,
arising out of or in connection with any breach of the Purchaser Warranties
(or, as the case may be, the Purchaser Guarantor Warranties).
7.8 Subject to the limitations set out in Clause 7.9, the Vendor and the Vendor
Guarantor shall be entitled to claim both before and after Completion that
any of the Purchaser Warranties or the Purchaser Guarantor Warranties has
or had been breached or is or was misleading and, without limitation, to
claim under any covenant. Notwithstanding the foregoing, if (not less than
two Business Days before Completion) the Purchaser or the Purchaser
Guarantor provides notice to the Vendor or the Vendor Guarantor pursuant to
Clause 7.4 (with full details of the breach), and the Vendor and the Vendor
Guarantor proceed to Completion, such shall constitute a waiver of the
Vendor's and the Vendor Guarantor's rights to make a claim for breach of
such Warranty or that such Warranty is misleading.
7.9 The liability of the Purchaser in respect of any claims for breach of the
Purchaser Warranties and the liability of the Purchaser Guarantor
Warranties in respect of any claims for breach of the Purchaser Guarantor
Warranties shall be limited as follows:
(a) the maximum liability of the Purchaser and the Purchaser Guarantor in
respect of all claims for breach of the Purchaser Warranties and the
Purchaser Guarantor Warranties shall not exceed US$400 million in
aggregate;
(b) neither the Purchaser (in respect of the Purchaser Warranties) nor the
Purchaser Guarantor (in respect of the Purchaser Guarantor Warranties)
shall be liable for any individual claim which does not exceed
US$150,000;
(c) the Purchaser and the Purchaser Guarantor shall only be liable in
respect of any claim for breach of the Purchaser Warranties if the
liability of the Purchaser and the Purchaser Guarantor for all such
claims (excluding those which may not be made because of paragraph (b)
above) exceeds US$10,000,000 and in such event the Purchaser and the
Purchaser Guarantor shall be liable for the whole amount of such
claims and not only the excess; and
(d) no claims may be brought against the Purchaser (in respect of the
Purchaser Warranties) or the Purchaser Guarantor (in respect of a
breach of the Purchaser Guarantor Warranties) after the expiry of the
earlier of (i) two years after the date of this Agreement and (ii) a
period of six months after delivery of the audited accounts of the
Group to the directors of the Company for the year ended 31 December,
2000, and any claims brought within the specified time period shall be
notified to the Vendor or Vendor Guarantor in writing specifying the
basis of such claim;
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26
7.10 The Purchaser hereby covenants and undertakes with the Vendor that it shall
use all reasonable endeavours to procure the due and punctual performance
and observance of all the obligations and terms of the Global Crossing
Network Agreement, the Global Crossing Licence Agreement and the MDC
Agreement respectively on the part of the parties thereto which are
subsidiaries of the Purchaser Guarantor to be performed and observed.
8. EFFECT OF COMPLETION
Any provision of this Agreement and any other documents referred to in it
which is capable of being performed after but which has not been performed
at or before Completion and all Warranties, indemnities, covenants and
other undertakings contained in or entered into pursuant to this Agreement
shall remain in full force and effect notwithstanding Completion.
9. GUARANTEES
9.1 (a) The Purchaser Guarantor, in consideration of the Vendor entering into
this Agreement, hereby guarantees, unconditionally and irrevocably as
primary obligor, the due observance and performance by the Purchaser
of all the agreements, obligations, commitments and undertakings
contained in this Agreement (including the Purchaser Warranties)
("Purchaser Guaranteed Obligations") on the part of the Purchaser to
be observed and performed and undertakes and agrees subject to Clause
7.9 that it will indemnify the Vendor on a full indemnity basis in
respect of all losses, costs, expenses and damage sustained by it by
reason of or in consequence of any failure of the Purchaser to carry
out any such Purchaser Guaranteed Obligations.
(b) The guarantee and indemnity provided by the Purchaser Guarantor in
this Clause 9.1 shall subject to Clause 7.9 be a continuing guarantee
and indemnity and shall cover all Purchaser Guaranteed Obligations of
the Purchaser under this Agreement notwithstanding the liquidation,
incapacity or any change in the constitution of the Purchaser or any
settlement of account or variation or modification of this Agreement
or any indulgence or waiver given by any party hereto or other matter
whatsoever until the last claim whatsoever by the Vendor against the
Purchaser has been satisfied in full.
(c) Should any Purchaser Guaranteed Obligation of the Purchaser, which if
valid or enforceable would be the subject of the guarantee and
indemnity in this Clause 9.1, be or become wholly or in part invalid
or unenforceable against the Purchaser by reason of any defect in or
insufficiency or want of powers of the Purchaser or irregular or
improper purported exercise thereof or breach or want of authority by
any person purporting to act on behalf of the Purchaser or because any
of the rights have become barred by reason of any legal limitation,
disability, incapacity or any other fact or circumstance whether or
not always known to the Vendor, the Purchaser Guarantor shall
nevertheless be liable to
<PAGE>
27
the Vendor notwithstanding the avoidance or invalidity of any term or
condition of this Agreement whatsoever including (without limitation)
avoidance under any enactment relating to liquidation) in respect of
that Purchaser Guaranteed Obligation as if the same were wholly valid
and enforceable.
(d) The guarantee and indemnity provided by the Purchaser Guarantor in
this Clause 9.1 may be enforced against it by the Vendor at any time
without first instituting legal proceedings against the Purchaser in
the first instance or joining in the Purchaser as a party in the same
proceedings against it.
9.2 (a) The Vendor Guarantor, in consideration of the Purchaser entering into
this Agreement, hereby guarantees, unconditionally and irrevocably as
primary obligor, the due observance and performance by the Vendor of
all the agreements, obligations, commitments and undertakings
contained in this Agreement (including the Vendor Warranties) ("Vendor
Guaranteed Obligations") on the part of the Vendor to be observed and
performed and undertakes and agrees subject to Clause 6.13 that it
will indemnify the Purchaser on a full indemnity basis in respect of
all losses, costs, expenses and damage sustained by it by reason of or
in consequence of any failure of the Vendor to carry out any such
Vendor Guaranteed Obligations.
(b) The guarantee and indemnity provided by the Vendor Guarantor in this
Clause 9.2 shall subject to Clause 6.13 be a continuing guarantee and
indemnity and shall cover all Vendor Guaranteed Obligations of the
Vendor under this Agreement notwithstanding the liquidation,
incapacity or any change in the constitution of the Vendor or any
settlement of account or variation or modification of this Agreement
or any indulgence or waiver given by any party hereto or other matter
whatsoever until the last claim whatsoever by the Purchaser against
the Vendor has been satisfied in full.
(c) Should any Vendor Guaranteed Obligation of the Vendor, which if valid
or enforceable would be the subject of the guarantee and indemnity in
this Clause 9.2, be or become wholly or in part invalid or
unenforceable against the Vendor by reason of any defect in or
insufficiency or want of powers of the Vendor or irregular or improper
purported exercise thereof or breach or want of authority by any
person purporting to act on behalf of the Vendor or because any of the
rights have become barred by reason of any legal limitation,
disability, incapacity or any other fact or circumstance whether or
not always known to the Purchaser, the Vendor Guarantor shall
nevertheless be liable to the Purchaser notwithstanding the avoidance
or invalidity of any term or condition of this Agreement whatsoever
including (without limitation) avoidance under any enactment relating
to liquidation) in respect of that Vendor Guaranteed Obligation as if
the same were wholly valid and enforceable.
(d) The guarantee and indemnity provided by the Vendor Guarantor in this
Clause 9.2 may be enforced against it by the Purchaser at any time
without first
<PAGE>
28
instituting legal proceedings against the Vendor in the first instance
or joining in the Vendor as a party in the same proceedings against
it.
10. RESTRICTION ON DISPOSAL OF CONVERTIBLE PREFERRED STOCK; REGISTRATION OF
CONSIDERATION SHARES
10.1 The Vendor undertakes to the Purchaser and the Purchaser Guarantor that,
subject to Clause 10.2, for a period of one year from the Completion Date,
the Vendor and each entity holding the Convertible Preferred Stock as
directed by the Vendor pursuant to Clause 3.1 (each a "Holder") shall not,
except with the prior written consent of the Purchaser Guarantor:
(a) charge, mortgage, pledge, sell, transfer or otherwise dispose of or
encumber (collectively "Transfer") any Convertible Preferred Stock (or
any interest in it) or agree to do any of the foregoing; or
(b) issue any securities, derivatives or other financial products or grant
any option or other rights that may be convertible into any shares or
stock of the Purchaser Guarantor or any interest therein or enter into
any agreement or arrangement in respect of the foregoing or any other
agreement or arrangement for the purpose of hedging the risk of a
decline in the value of the Convertible Preferred Stock.
10.2 The Vendor shall be entitled to Transfer any of the Convertible Preferred
Stock:
(a) at any time upon the occurrence of a Change in Control; or
(b) at any time to a Subsidiary (as defined below for the purposes of this
Clause 10 only) of the Vendor Guarantor only for so long as the
transferee remains a Subsidiary (a "Permitted Transferee") provided
however that the Permitted Transferee becomes a party to this
Agreement by executing and delivering to the Purchaser Guarantor an
Agreement Counterpart and Acknowledgement in substantially the form of
Schedule 10. Following any such Transfer, the Vendor Guarantor shall
remain bound by the terms of this Agreement.
10.3 In this Clause 10:
"Affiliate" of any person means any other person who, directly or
indirectly, Controls, is under common control or is
controlled by such other person. For purposes of this
definition, "Control" (including, with correlative
meanings, the terms "controlling," "controlled by" and
"under common control with"), as used with respect to
any person, shall mean the power, directly or
indirectly, to direct or cause the direction of the
management or policies of such person, whether through
the ownership of voting securities, by contract or
<PAGE>
29
otherwise; provided that beneficial ownership of 10% or
more of the Voting Stock of a person shall be deemed to
be Control.
"Change in means, with respect to the Purchaser Guarantor, the
Control" occurrence of any of the following: (i) any "person" (as
such term is used in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")),
other than a Permitted Holder, is or becomes the
beneficial owner, directly or indirectly, of 35% or more
of the Voting Stock (as defined below) (measured by
voting power rather than number of shares) of the
Purchaser Guarantor, and the Permitted Holders own, in
the aggregate, a lesser percentage of the total Voting
Stock (measured by voting power rather than by number of
shares) of the Purchaser Guarantor than such person and
do not have the right or ability by voting power,
contract or otherwise to elect or designate for election
a majority of the board of directors of the Purchaser
Guarantor (for the purposes of this definition, such
other person shall be deemed to "beneficially own" any
Voting Stock of a specified corporation held by a parent
corporation if such other person beneficially owns,
directly or indirectly, more than 35% of the Voting
Stock (measured by voting power rather than by number of
shares) of such parent corporation and the Permitted
Holders beneficially own, directly or indirectly, in the
aggregate a lesser percentage of Voting Stock (measured
by voting power rather than by number of shares) of such
parent corporation and do not have the right or ability
by voting power, contract or otherwise to elect or
designate for election a majority of the board of
directors of such parent corporation), (ii) during any
period of two consecutive years, Continuing Directors
cease for any reason to constitute a majority of the
board of directors of the Purchaser Guarantor, (iii) the
Purchaser Guarantor consolidates or merges with or into
any other person, other than a consolidation or merger
(a) of the Purchaser Guarantor into Global Crossing
Holdings Ltd. ("GCH") or GCH into the Purchaser
Guarantor, or the Purchaser Guarantor with or into a
Subsidiary of the Purchaser Guarantor or (b) pursuant to
a transaction in which the outstanding Voting Stock of
the Purchaser Guarantor is changed into or exchanged for
cash, securities or other property with the effect that
the beneficial owners of the outstanding Voting Stock of
the
<PAGE>
30
Purchaser Guarantor immediately prior to such
transaction, beneficially own, directly or indirectly,
more than 35% of the Voting Stock (measured by voting
power rather than number of shares) of the surviving
corporation immediately following such transaction or
(iv) the sale, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one
or a series of related transactions, of all or
substantially all of the assets of the Purchaser
Guarantor and its Subsidiaries, taken as a whole, to any
person other than a Subsidiary of the Purchaser
Guarantor or a Permitted Holder or a person more than
50% of the Voting Stock (measured by voting power rather
than by number of shares) of which is owned, directly or
indirectly, following such transaction or transactions
by the Permitted Holders; provided however that sales,
transfers, conveyances or other dispositions in the
ordinary course of business of capacity on cable systems
owned, controlled or operated by the Purchaser Guarantor
or any Subsidiary or of telecommunications capacity or
transmission rights acquired by the Purchaser Guarantor
or any Subsidiary for use in its business, including,
without limitation, for sale, lease, transfer,
conveyance or other disposition to any customer of the
Purchaser Guarantor or any Subsidiary shall not be
deemed a disposition of assets for purposes of this
clause (iv).
"Continuing means individuals who at the beginning of the period
Directors" of determination constituted the board of directors of
the Purchaser Guarantor, together with any new directors
whose election by such board of directors or whose
nomination for election by the shareholders of the
Purchaser Guarantor was approved by a vote of at least a
majority of the directors of the Purchaser Guarantor
then still in office who were either directors at the
beginning of such period or whose election or nomination
for election was previously so approved or is designee
of any one of the Permitted Holders or any combination
thereof or was nominated or elected by any such
Permitted Holder(s) or any of their designees.
"Permitted Holder" means, with respect to the Purchaser Guarantor, any of
(i) Pacific Capital Group, Inc. and its Affiliates, (ii)
CIBC Oppenheimer Corp. and its Affiliates and (iii) any
other "person" (as such term is used in Section 13(d)(3)
of the Exchange Act) which, together with such person's
<PAGE>
31
Affiliates, is the "beneficial owner" (as such term is
defined in Rule 13d-3 and Rule 13d-5 under the Exchange
Act) on the date hereof of more than 20% of the common
stock of the Purchaser Guarantor;
"Subsidiary" means, with respect to any person, (i) any corporation,
association or other business entity of which more than
50% of the total voting power of shares of capital stock
entitled (without regard to the occurrence of any
contingency) to vote in the election of directors,
managers or trustee thereof is at the time owned or
controlled, directly or indirectly, by such person or
one or more of the other Subsidiary of that person (or a
combination thereof) and (ii) any partnership (a) the
sole general partner or the managing general partner of
which is such person or a Subsidiary of such person or
(b) the only general partners of which are such person
or of one or more Subsidiaries of such person (or any
combination thereof);"Voting Stock" of any person as of
any date means the capital stock of such person that is
at the time entitled to vote in the election of the
Board of Directors of such person.
The "occurrence" or "consummation" of any transaction involving any offer,
exchange, conversion or like arrangement with respect to the Convertible
Preferred Stock shall be deemed to take place three days (being any other
than a Saturday or a United States federal, Bermuda or Hong Kong holiday)
prior to the record date, acceptance date or similar deadline or expiration
date for participation in the relevant transaction or on such other earlier
date as may be necessary to permit the holder of the Convertible Preferred
Stock to participate fully in such transaction on a basis no less
favourable than other stockholders of the Purchaser Guarantor.
References to Convertible Preferred Stock include any shares or stock of
the Purchaser Guarantor into which the Convertible Preferred Stock is
convertible or is converted.
10.4 Notwithstanding anything to the contrary in this Agreement, any Transfer
otherwise permitted pursuant to this Clause 10 shall be in compliance with
the provisions of the Securities Act and applicable state securities laws
of the states of the United States and other jurisdictions, as applicable
and, if the Purchaser Guarantor so requests, the transferor shall deliver
to the Purchaser Guarantor an opinion, reasonably satisfactory to the
Purchaser Guarantor, of counsel to the transferor as to such compliance.
10.5 (a) (i) Each certificate evidencing outstanding Convertible Preferred
Stock held of record or owned beneficially, directly or
indirectly, by the Vendor or a Permitted Transferee shall bear
the following legend:
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32
"THE SHARES OF PREFERRED STOCK, WITH LIQUIDATION PREFERENCE $100
PER SHARE, OF THE COMPANY REPRESENTED BY THIS CERTIFICATE MAY NOT
BE OFFERED OR SOLD ABSENT REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), AND ANY APPLICABLE STATE
SECURITIES LAWS OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS UNDER THE ACT. THE SHARES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE TRANSFERRED PRIOR TO [ ]."
(ii) Each certificate evidencing shares of common stock of the
Purchaser Guarantor of par value US$0.01 per share issuable upon
conversion of the shares of Convertible Preferred Stock held of
record or owned beneficially, directly or indirectly, by the
Vendor or a Permitted Transferee shall bear the following legend:
"THE SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE, OF THE
COMPANY REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED OR
SOLD ABSENT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND ANY APPLICABLE STATE SECURITIES LAWS OR
AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER
THE ACT. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED PRIOR TO [ ] AND, THEREAFTER, ONLY IN
COMPLIANCE WITH THE PROVISIONS OF THE SALE AND PURCHASE AND
SUBSCRIPTION AGREEMENT, DATED 15TH NOVEMBER, 1999, AMONG
HUTCHISON WHAMPOA LIMITED, HUTCHISON TELECOMMUNICATIONS LIMITED,
GLOBAL CROSSING LTD., GLOBAL CROSSING LTD. AND HCL HOLDINGS
LIMITED."
(b) At any time after the second anniversary of the Completion Date, each
Person who is the record holder of Convertible Preferred Stock may
surrender to the Purchaser Guarantor any certificates held of record
by such Person and bearing the legend set forth in Clause 10.5(a), and
upon surrender of such certificates, the purchaser Guarantor shall
reissue such certificates without such legend. The Purchaser Guarantor
shall not include any legend on any certificate issued or reissued
that it determines is no longer applicable or required by this
Agreement or applicable securities laws.
10.6 At Completion, the relevant parties will enter into the Registration Rights
Agreement.
11. REMEDIES AND WAIVERS
11.1 Any party may, in its discretion, by a notice in writing signed by such
party, in whole or in part release, compound or compromise, or waive its
rights or grant time or indulgence
<PAGE>
33
in respect of, any liability to it under this Agreement without in any way
prejudicing or affecting the liability of or its rights in respect of the
same or a like liability.
11.2 Neither the single or partial exercise or temporary or partial waiver by
any party hereto of any right, nor the failure by any party to exercise in
whole or in part any right or to insist on the strict performance of any
provision of this Agreement, nor the discontinuance, abandonment or adverse
determination of any proceedings taken by any party to enforce any right or
any such provision shall (except for the period or to the extent covered by
any such temporary or partial waiver) operate as a waiver of, or preclude
any exercise or enforcement or (as the case may be) further or other
exercise or enforcement by such party of, that or any other right or
provision.
11.3 The rights, powers and remedies provided in this Agreement are cumulative
and not exclusive of any rights, powers and remedies provided by law.
12. ASSIGNMENT
Except as contemplated by Clause 2.3, the rights or benefits of or under
this Agreement, including without limitation the Warranties, may not be
assigned (nor may any cause of action arising in connection with any of
them be assigned) by any party or its successor in title without the prior
written consent of the other parties.
13. ACCESS AND FURTHER ASSURANCE
13.1 As from the date of this Agreement, the Purchaser, its accountants and
agents will be given full access during normal business hours to the
premises and all the books and records of each Group Company and the
directors and employees of each Group Company and each Group Company will
be instructed to give promptly all information and explanation to the
Purchaser or any such persons as they may reasonably request.
13.2 Subject to Completion, each party agrees with and undertakes to the other
parties that at any time and from time to time upon the written request of
the other parties, such party will:
(a) promptly and duly execute and deliver any and all such further
instruments and documents and do or procure to be done all and any
such acts or things as any other party may reasonably deem necessary
in obtaining the full benefits of this Agreement and of the rights and
ownership herein granted; and
(b) do or procure to be done each and every act or thing which any other
party may from time to time reasonably require to be done for the
purpose of enforcing such other party's rights under this Agreement.
<PAGE>
34
14. ENTIRE AGREEMENT
14.1 This Agreement together with all other documents which are referred to in
this Agreement or are required by its terms to be entered into constitute
the entire agreement and understanding between the parties relating to the
transactions hereby contemplated.
14.2 No purported alteration or variation of this Agreement shall be effective
unless it is in writing, refers specifically to this Agreement and is duly
executed by each of the parties hereto.
15. NOTICES
15.1 Any notice or other communication given or made under or in connection with
the matters contemplated by this Agreement shall be in writing (other than
writing on the screen of a visual display unit or other similar device
which shall not be treated as writing for the purposes of this Clause) and
shall be deemed to be duly given if it (or the envelope containing it)
identifies the party to whom it is intended to be given as the addressee
and:
(a) it is delivered by being handed personally to the addressee; or
(b) the envelope containing the notice is properly addressed to the
addressee at its address set out below and duly posted by first class
mail or registered post or recorded delivery service (or by airmail
registered post if overseas) or the notice is duly transmitted to that
address by facsimile transmission, and, in proving the giving or
service of such notice, it shall be sufficient to prove that the
notice was duly given within the meaning of this Clause 15.1.
15.2 A notice (or the envelope containing it) sent by post shall not be deemed
to be duly posted for the purposes of Clause 15.1 unless it is put into the
post properly stamped or with all postal or other charges in respect of it
otherwise prepaid.
15.3 Any such notice or other communication shall be addressed as provided in
Clause 15.4 and, if so addressed, shall be deemed to have been duly given
and received as follows:
(a) if sent by personal delivery, upon delivery at the address of the relevant
party;
(b) if sent by post, two (or, when sent by airmail, five) Business Days after
the date of posting; and
(c) if sent by facsimile, when despatched upon receipt of a correct
transmission report
<PAGE>
35
provided that if, in accordance with the above provisions, any such notice
or other communication would otherwise be deemed to be given or made
outside working hours, such notice or other communication shall be deemed
to be given or made at the start of working hours on the next Business Day.
15.4 The relevant addressee, address and facsimile number of each party for the
purposes of this Agreement, subject to Clause 15.5, are:
Hutchison Whampoa Limited
Address: 22nd Floor, Hutchison House
10 Harcourt Road
Hong Kong
Attn: The Company Secretary
Facsimile No.: 2128-1778
Hutchison Telecommunications Limited
Address: 18th Floor, 2 Harbour Front
22 Tak Fung Street
Hung Hom
Kowloon
Hong Kong
Attn: The Finance Director
Facsimile No.: 2128-3104
<PAGE>
36
Global Crossing Ltd.
Address: c/o Global Crossing Development Co.
360N Crescent Drive
Beverly Hills
CA90210
Attn: General Counsel
Facsimile No.: 310-281-3820
HCL Holdings Limited
Address: c/o Hutchison Telecommunications Limited
18th Floor, 2 Harbour Front
22 Tak Fung Street
Hung Hom
Kowloon
Hong Kong
Attn: The Finance Director
Facsimile No.: 2128-3104
15.5 A party may notify the other parties to this Agreement of a change of its
name, relevant addressee, address or facsimile number for the purposes of
Clause 15.4 provided that such notification shall only be effective on:
(a) the date specified in the notification as the date on which the change
is to take place; or
(b) if no date is specified or the date specified is less than five
Business Days after the date on which notice is given, the date
falling five clear Business Days after notice of any such change has
been given.
16. ANNOUNCEMENTS
16.1 Subject to Clause 16.2, no party to this Agreement shall make any public
announcement or public communication or despatch any circular concerning
this Agreement or the transactions or arrangements hereby contemplated or
herein referred to or any matter ancillary hereto or thereto without the
prior written consent of the other parties to this Agreement.
16.2 Each party may after consultation with the other parties (if practicable in
the circumstances) make an announcement or communication or despatch a
circular concerning this Agreement and the transactions hereby contemplated
if required by:
(a) the law of any relevant jurisdiction; or
(b) a court of competent jurisdiction, any securities exchange or
regulatory or governmental body to which any party is subject,
wherever situated, including but not limited to The Stock Exchange of
Hong Kong Limited, the Securities and
<PAGE>
37
Futures Commission, the SEC, the NASDAQ Stock Market or the National
Association of Securities Dealers, whether or not the requirement has the
force of law.
17. COST AND EXPENSES
17.1 Except as otherwise stated in Clauses 17.2 and 17.3 and any other provision
of this Agreement, each party shall pay its own costs and expenses
(including the fees and costs of any investment bank, lawyers and
accountants engaged by it) in relation to the negotiations leading up to
the transactions contemplated hereunder and to the preparation, execution
and carrying into effect of the Relevant Agreements and all other documents
referred to in them which relate to the transactions contemplated under
them. Without limiting that generality, the Vendor and the Vendor Guarantor
shall bear all costs and expenses (including all stamp and similar duties
and taxes) incurred in doing what is required to be done under Clause 4.5.
17.2 Any stamp duty payable in connection with the transfer of the Vendor Share
shall be shared between the Vendor and the Purchaser in equal proportions.
Any capital or similar duty payable on or preparatory to the issue of the
New Share shall be paid by the Company.
17.3 Any capital duty, fees or expenses payable in connection with the issue and
allotment of Convertible Preferred Stock pursuant to this Agreement shall
be borne by the Purchaser Guarantor.
18. TIME OF ESSENCE
Time shall be of the essence of this Agreement as regards any time, date or
period fixed by this Agreement for the performance of any obligation by any
of the parties hereto whether as originally fixed or as altered in any
manner provided herein.
19. EXECUTION AND COUNTERPARTS
This Agreement may be executed in one or more counterparts each of which
shall be binding on each party by whom or on whose behalf it is so
executed, but which together shall constitute a single instrument. For the
avoidance of doubt, this Agreement shall not be binding on any party hereto
unless and until it shall have been executed by or on behalf of all persons
expressed to be party hereto.
20. INVALIDITY
Each provision of this Agreement is severable and distinct from the others
and if at any time any provision of this Agreement is or becomes illegal,
invalid or unenforceable in any respect under the law of any jurisdiction,
that shall not affect or impair:
<PAGE>
38
(a) the legality, validity or enforceability in that jurisdiction of any
other provision of this Agreement; or
(b) the legality, validity or enforceability under the law of any other
jurisdiction of that or any other provision of this Agreement.
21. GOVERNING LAW AND JURISDICTION
21.1 This Agreement shall be governed by and construed in all respects in
accordance with the laws of England.
21.2 The parties to this Agreement irrevocably agree that the courts of England
are to have jurisdiction to settle any disputes which may arise out of or
in connection with this Agreement and that accordingly any Proceedings may
be brought in such courts. Nothing contained in this clause shall limit the
right of any of the parties to take Proceedings against any other party in
any other court of competent jurisdiction, nor shall the taking of
Proceedings in one or more jurisdictions preclude the taking of proceedings
in any other jurisdiction, whether concurrently or not, to the extent
permitted by the law of such other jurisdiction.
22. AGENTS FOR SERVICE
22.1 The Purchaser and the Purchaser Guarantor hereby irrevocably agree that any
Service Document may be sufficiently and effectively served on it in
connection with Proceedings by service on Global Crossing Ltd. at 4th
Floor, Washington House, 40-41 Conduit Street, London W1R 9FB, England, if
no replacement agent has been appointed and notified to the other parties
pursuant to Clause 22.4, or on the replacement agent if one has been
appointed and notified to the other parties.
22.2 The Vendor, the Vendor Guarantor and the Company hereby irrevocably agree
that any Service Document may be sufficiently and effectively served on it
in connection with Proceedings by service on its agent The Law Debenture
Corporation plc at 95 Gresham Street, London, EC2V 7LY, England, if no
replacement agent has been appointed and notified to the other parties
pursuant to Clause 22.4, or on the replacement agent if one has been
appointed and notified to the other parties.
22.3 Any document addressed in accordance with Clause 22.1 or 22.2 shall be
deemed to have been duly served if:
(a) left at the specified address, when it is left; or
(b) sent by first class post, two Business Days after the date of posting.
22.4 If any agent referred to in Clause 22.1 or 22.2 (or any replacement agent
appointed pursuant to this Clause) at any time ceases for any reason to act
as such or the original appointer wishes to appoint a replacement agent,
the original appointer shall appoint a
<PAGE>
39
replacement agent to accept service having an address for service in
England and shall notify the other parties of the name and address of the
replacement agent. If the Purchaser or the Purchaser Guarantor does not do
this, each of them irrevocably authorises the Vendor to do it on their
behalf. If the Vendor or the Vendor Guarantor does not do this, each of
them irrevocably authorises the Purchaser to do it on their behalf.
22.5 "Service Document" means a writ, summons, order, judgement or other process
issued out of the courts of England in connection with any Proceedings.
IN WITNESS whereof this Agreement has been duly executed on the date first
above written.
<PAGE>
40
SIGNED by FOK KIN NING, CANNING )
for and on behalf of )
HUTCHISON WHAMPOA LIMITED ) FOK KIN NING, CANNING
(as Vendor Guarantor) )
in the presence of: )
JOHN EDWARD LANGE II
Solicitor, Hong Kong SAR
SIGNED by FOK KIN NING, CANNING )
for and on behalf of )
HUTCHISON TELECOMMUNICATIONS ) FOK KIN NING, CANNING
LIMITED (as Vendor) )
in the presence of: )
JOHN EDWARD LANGE II
Solicitor, Hong Kong SAR
SIGNED by GARY WINNICK )
for and on behalf of )
GLOBAL CROSSING LTD. (as Purchaser ) GARY WINNICK
and Purchaser Guarantor) )
in the presence of: )
ST.J.A. FLAHERTY
Solicitor, Hong Kong SAR
Slaughter and May
SIGNED by FOK KIN NING, CANNING )
for and on behalf of )
HCL HOLDINGS LIMITED ) FOK KIN NING, CANNING
(as the Company) )
in the presence of: )
JOHN EDWARD LANGE II
Solicitor, Hong Kong SAR
<PAGE>
41
SCHEDULE 1:
Particulars of HCL Holdings Limited
<TABLE>
<CAPTION>
Name : HCL Holdings Limited
<S> <C> <C>
1. Registered office : P.O. Box 146, Road Town, Tortola, British Virgin Islands
2. Date of Incorporation : 10th September, 1992
Incorporation Number: 69098
Place of Incorporation : British Virgin Islands
3. Directors : KHOO Chek Ngee
CHAN Ting Yu
NARDI Agnes
4. Secretary : SHIH Edith
5. Share Capital: Authorised: US$50,000.00 divided into 50,000 shares of one dollar
(US$1.00) par value each
Issued: US$1.00 comprising one share of US$1.00 (as at the date of
this Agreement)
: US$3.00 divided into three shares of US$1.00 each
(immediately prior to Completion)
</TABLE>
<TABLE>
<CAPTION>
6. Shareholders:
<S> <C> <C> <C> <C>
Registered Shareholder Beneficial Shareholder No. of shares No. of shares
---------------------- ---------------------- ------------- -------------
(as at the date of (immediately prior to
this Agreement) Completion)
Vendor Vendor -1- -3-
7. Auditors : PricewaterhouseCoopers
8. Financial Year End : 31st December
</TABLE>
<PAGE>
42
SCHEDULE 2:
Part 1
Particulars of HCL
<TABLE>
<CAPTION>
Name : Hutchison Communications Limited
<S> <C> <C>
1. Registered office: 22nd Floor, Hutchison House, 10 Harcourt Road, Hong Kong
2. Date of Incorporation : 22nd October, 1992
Incorporation Number: 385946
Place of Incorporation : Hong Kong
3. Directors : SNOOK Hans Roger
FOK Kin Ning, Canning
KHOO Chek Ngee
CHOW WOO Mo Fong, Susan
LUI Pok Man, Dennis
NARDI Agnes
SIXT Frank John
WONG King Fai, Peter
4. Secretary : SHIH Edith
5. Share Capital: Authorised: HK$10,000.00 divided into 1,000 shares of HK$10.00 each
Issued: HK$20.00 divided into 2 shares of HK$10.00 each
</TABLE>
<TABLE>
<CAPTION>
6. Shareholders:
<S> <C> <C> <C>
Registered shareholder Beneficial shareholder No. of Shares
---------------------- ---------------------- -------------
HCL Holdings Limited HCL Holdings Limited -1-
Colonial Nominees Limited HCL Holdings Limited -1-
________
-2-
7. Auditors : PricewaterhouseCoopers
8. Financial Year End : 31st December
</TABLE>
<PAGE>
43
Part 2
Particulars of Carmarthen Limited
<TABLE>
<CAPTION>
Name: Carmarthen Limited
<S> <C> <C>
1. Registered office : P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola,
British Virgin Islands
2. Date of Incorporation : 8th January, 1999
Incorporation Number: 307753
Place of Incorporation : British Virgin Islands
3. Directors : CHOW WOO Mo Fong, Susan
LUI Pok Man, Dennis
NARDI Agnes
4. Secretary : SHIH Edith
5. Share Capital: Authorised: US$50,000.00 divided into 50,000 shares of US$1.00 each
Issued: US$1.00 divided into 1 share of US$1.00
</TABLE>
<TABLE>
<CAPTION>
6. Shareholders:
<S> <C> <C> <C>
Registered shareholder Beneficial shareholder No. of Shares
---------------------- ---------------------- -------------
Hutchison Communications Limited Hutchison Communications Limited -1-
7. Financial Year End : 31st December
</TABLE>
<PAGE>
44
Part 3
Particulars of Galla Town Limited
<TABLE>
<CAPTION>
Name: Galla Town Limited
<S> <C> <C> <C>
1. Registered office : P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola,
British Virgin Islands
2. Date of Incorporation : 18th January, 1999
Incorporation Number: 308988
Place of Incorporation : British Virgin Islands
3. Directors : CHOW WOO Mo Fong, Susan
LUI Pok Man, Dennis
NARDI Agnes
4. Secretary : SHIH Edith
5. Share Capital: Authorised: US$50,000.00 divided into 50,000 shares of US$1.00 each
Issued: US$1.00 divided into 1 share of US$1.00
</TABLE>
<TABLE>
<CAPTION>
6. Shareholders:
<S> <C> <C> <C>
Registered shareholder Beneficial shareholder No. of Shares
---------------------- ---------------------- -------------
Carmarthen Limited Carmarthen Limited -1-
7. Financial Year End : 31st December
</TABLE>
<PAGE>
45
Part 4
Particulars of Hutchison Global Net Limited
<TABLE>
<CAPTION>
Name: Hutchison Global Net Limited
<S> <C> <C>
1. Registered office : 22nd Floor, Hutchison House, 10 Harcourt Road, Hong Kong
2. Date of Incorporation : 18th December, 1996
Incorporation Number: 581796
Place of Incorporation : Hong Kong
3. Directors : CHOW WOO Mo Fong, Susan
LUI Pok Man, Dennis
KHOO Chek Ngee
NARDI Agnes
WONG King Fai, Peter
SIXT Frank John
4. Secretary : SHIH Edith
5. Share Capital: Authorised: HK$10,000.00 divided into 1,000 shares of HK$10.00 each
Issued: HK$20.00 divided into 2 shares of HK$10.00 each
</TABLE>
<TABLE>
<CAPTION>
6. Shareholders:
<S> <C> <C> <C>
Registered shareholder Beneficial shareholder No. of Shares
---------------------- ---------------------- -------------
Penstock Limited Penstock Limited -1-
Colonial Nominees Limited Penstock Limited -1-
________
-2-
7. Auditors : PricewaterhouseCoopers
8. Financial Year End : 31st December
</TABLE>
<PAGE>
46
Part 5
Particulars of Hutchison MultiMedia Services Limited
<TABLE>
<CAPTION>
Name: Hutchison MultiMedia Services Limited
<S> <C> <C>
1. Registered office : 22nd Floor, Hutchison House, 10 Harcourt Road, Hong Kong
2. Date of Incorporation : 15th February, 1996
Incorporation Number: 539375
Place of Incorporation : Hong Kong
3. Directors : CHOW WOO Mo Fong, Susan
LUI Pok Man, Dennis
NARDI Agnes
KHOO Chek Ngee
SIXT Frank John
WONG King Fai, Peter
4. Secretary : SHIH Edith
5. Share Capital: Authorised: HK$10,000.00 divided into 1,000 shares of HK$10.00 each
Issued: HK$20.00 divided into 2 share of HK$10.00 each
</TABLE>
<TABLE>
<CAPTION>
6. Shareholders:
<S> <C> <C> <C>
Registered shareholder Beneficial shareholder No. of Shares
---------------------- ---------------------- -------------
Oppenheim Limited Oppenheim Limited -1-
Colonial Nominees Ltd. Oppenheim Limited -1-
________
-2-
7. Auditors : PricewaterhouseCoopers
8. Financial Year End : 31st December
</TABLE>
<PAGE>
47
Part 6
Particulars of Oppenheim Limited
<TABLE>
<CAPTION>
Name: Oppenheim Limited
<S> <C> <C>
1. Registered office : P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola,
British Virgin Islands
2. Date of Incorporation : 25th March, 1996
Incorporation Number: 179999
Place of Incorporation : British Virgin Islands
3. Directors : CHOW WOO Mo Fong, Susan
SIXT Frank John
SHIH Edith
4. Secretary : SHIH Edith
5. Share Capital: Authorised: US$50,000.00 divided into 50,000 shares of US$1.00 each
Issued: US$1.00 divided into 1 share of US$1.00
</TABLE>
<TABLE>
6. Shareholders:
<S> <C> <C> <C>
Registered shareholder Beneficial shareholder No. of Shares
---------------------- ---------------------- -------------
Hutchison Communications Limited Hutchison Communications Limited -1-
7. Financial Year End : 31st December
</TABLE>
<PAGE>
48
Part 7
Particulars of Penstock Limited
<TABLE>
<CAPTION>
<S> <C> <C>
Name : Penstock Limited
1. Registered office : P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola,
British Virgin Islands
2. Date of Incorporation : 8th August, 1997
Incorporation Number: 243382
Place of Incorporation : British Virgin Islands
3. Directors : CHOW WOO Mo Fong, Susan
SIXT Frank John
LUI Pok Man, Dennis
NARDI Agnes
4. Secretary : SHIH Edith
5. Share Capital: Authorised: US$50,000.00 divided into 50,000 shares of US$1.00 each
Issued: US$1.00 divided into 1 share of US$1.00
</TABLE>
<TABLE>
<CAPTION>
6. Shareholders:
<S> <C> <C> <C>
Registered shareholder Beneficial shareholder No. of Shares
---------------------- ---------------------- -------------
Hutchison Communications Limited Hutchison Communications Limited -1-
7. Financial Year End : 31st December
</TABLE>
<PAGE>
49
Part 8
Particulars of Timbo Star Investment Limited
<TABLE>
<CAPTION>
Name: Timbo Star Investment Limited
<S> <C> <C>
1. Registered office : 22nd Floor, Hutchison House, 10 Harcourt Road, Hong Kong
2. Date of Incorporation : 10th February, 1999
Incorporation Number: 667392
Place of Incorporation : Hong Kong
3. Directors : FOK Kin Ning, Canning
CHOW WOO Mo Fong, Susan
LUI Pok Man, Dennis
NARDI Agnes
WONG King Fai, Peter
SIXT Frank John
4. Secretary : SHIH Edith
5. Share Capital: Authorised: HK$10,000.00 divided into 10,000 shares of HK$1.00 each
Issued: HK$2.00 divided into 2 shares of HK$1.00 each
</TABLE>
<TABLE>
<CAPTION>
6. Shareholders:
<S> <C> <C> <C>
Registered shareholder Beneficial shareholder No. of Shares
---------------------- ---------------------- -------------
Galla Town Limited Galla Town Limited -1-
Colonial Nominees Limited Galla Town Limited -1-
________
-2-
7. Auditors : PricewaterhouseCoopers
8. Financial Year End : 31st December
</TABLE>
<PAGE>
50
Part 9
Particulars of HCL Partnership Holdings Limited
<TABLE>
<CAPTION>
Name: HCL Partnership Holdings Limited
<S> <C> <C>
1. Registered office : 22nd Floor, Hutchison House, 10 Harcourt Road, Hong Kong
2. Date of Incorporation : 15th January, 1999
Incorporation Number: 590569
Place of Incorporation : Hong Kong
3. Directors : CHOW WOO Mo Fong, Susan
SIXT Frank John
LUI Pok Man, Dennis
NARDI Agnes
4. Secretary : SHIH Edith
5. Share Capital: Authorised: HK$10,000.00 divided into 10,000 shares of HK$1.00 each
Issued: HK$2.00 divided into 2 shares of HK$1.00 each
</TABLE>
<TABLE>
<CAPTION>
6. Shareholders:
<S> <C> <C> <C>
Registered shareholder Beneficial shareholder No. of Shares
---------------------- ---------------------- -------------
Hutchison Communications Limited Hutchison Communications Limited -1-
Colonial Nominees Limited Hutchison Communications Limited -1-
________
-2-
7. Auditors : PricewaterhouseCoopers
8. Financial Year End : 31st December
</TABLE>
<PAGE>
51
SCHEDULE 3:
Completion Requirements
At Completion, all of the matters set out or referred to in this Schedule 3
shall be transacted:
1. Obligations of the Vendor
1.1 The Vendor shall deliver or cause to be delivered to the Purchaser :
(a) duly executed instruments of transfer in favour of the Purchaser
and/or its nominee in respect of the Vendor Share;
(b) counterparts of the Shareholders Agreement, the Tax Covenant and the
Registration Rights Agreement duly executed by the Vendor; and
(c) a certified copy of resolutions of its board of directors authorising
its execution and performance of this Agreement, the Shareholders
Agreement and the Tax Covenant.
1.2 The Vendor shall procure that each Vendor Party (other than itself, the
Company and the Vendor Guarantor) shall deliver or cause to be delivered to
the Purchaser:
(a) a counterpart of each Relevant Agreement to which that Vendor Party is
a party duly executed by that Vendor Party; and
(b) a certified copy of resolutions of that Vendor Party's board of
directors authorising its execution and performance of each Relevant
Agreement to which that Vendor Party is a party.
2. Obligations of the Company
2.1 The Company shall deliver or cause to be delivered to the Purchaser:
(a) share certificates in the name of the Purchaser and/or its nominee in
respect of the Vendor Share and the New Share;
(b) counterparts of the Shareholders Agreement and the Tax Covenant duly
executed by the Company; and
(c) a certified copy of resolutions of the board of directors of the
Company:
(i) approving and passing for registration the transfer in respect
of the Vendor Share delivered pursuant to paragraph 1.1(a) of
this Schedule 3;
(ii) issuing and allotting the New Share to the Purchaser and/or its
nominee;
<PAGE>
52
(iii) authorising the issue of new share certificates in the name of
the Purchaser and/or its nominee in respect of the Vendor Share
and the New Share; and
(iv) authorising its execution and delivery of this Agreement, the
Shareholders Agreement and the Tax Covenant.
3. Obligations of the Vendor Guarantor
The Vendor Guarantor shall deliver or cause to be delivered to the
Purchaser:
(a) counterparts of each Relevant Agreement to which the Vendor Guarantor
is a party duly executed by the Vendor Guarantor; and
(b) a certified copy of resolutions of its board of directors authorising
the execution and performance by the Vendor Guarantor of each Relevant
Agreement to which it is a party.
4. Obligations of the Purchaser
4.1 The Purchaser shall deliver or cause to be delivered to the Vendor:
(a) counterparts of the Shareholders Agreement and the Tax Covenant duly
executed by the Purchaser; and
(b) a certified copy of resolutions of its board of directors authorising
execution and performance of this Agreement, the Tax Covenant and the
Shareholders Agreement.
4.2 The Purchaser shall procure that each Purchaser Party (other than itself
and the Purchaser Guarantor) shall deliver or cause to be delivered to the
Vendor:
(a) a counterpart of each Relevant Agreement to which that Purchaser Party
is a party duly executed by that Purchaser Party; and
(b) a certified copy of resolutions of the board of directors of that
Purchaser Party authorising its execution and performance of each
Relevant Agreement to which that Purchaser Party is a party.
4.3 The Purchaser shall pay (or procure that there shall be paid) to the
Company US$50,000,000 in immediately available funds.
5. Obligations of the Purchaser Guarantor
The Purchaser Guarantor shall deliver or cause to be delivered to the
Vendor:
<PAGE>
53
(a) stock certificates in the name of the Purchaser and/or its nominees in
respect of the Convertible Preferred Stock;
(b) counterparts of the Shareholders Agreement, the Tax Covenant and the
Registration Rights Agreement duly executed by the Purchaser
Guarantor; and
(c) a certified copy of resolutions of the board of directors of the
Purchaser Guarantor:
(i) issuing and allotting the Convertible Preferred Stock;
(ii) authorising the issue of stock certificates in respect of the
Convertible Preferred Stock in the name of the Vendor and/or its
nominee; and
(iii) authorising its execution and performance of this Agreement,
the Shareholders Agreement and the Tax Covenant.
<PAGE>
54
SCHEDULE 4:
Conduct of Business before Completion
Without limitation to Clause 4.4, the Vendor and the Vendor Guarantor undertake
with the Purchaser and the Purchaser Guarantor that they will procure that no
Group Company shall between the time of this Agreement and Completion, other
than exclusively in relation to the Excluded Businesses:
(a) dispose of, agree to dispose of, or grant or agree to grant any option in
respect of, any material part of its assets; or
(b) enter into any individual contract or commitment which;
(i) relates to matters not within the ordinary business of that Group
Company or it exceeds HK$10 million in value; or
(ii) is of 18 months or greater duration, or if it has no specified
duration, it may not be terminated on less than six months' notice;
or
(iii) can be terminated in the event of any change in the underlying
ownership or control of the Group Company that is a party to that
contract or commitment;
(c) declare, make or pay any dividend or other distribution; or
(d) create, grant or issue, or agree to create, grant or issue, any mortgages,
charges (other than liens arising by operation of law), debentures or other
securities or redeem or agree to redeem any such securities or give or
agree to give, any guarantees or indemnities, except, in the case of
guarantees and indemnities, in the ordinary course of trading and except
the proposed issuance of shares in Timbo Star Investment Limited as
described in the Disclosure Letter; or
(e) create, allot or issue or agree to create, allot or issue any shares or
other securities of whatsoever nature convertible into shares; or
(f) create, issue, redeem or grant any option or right to subscribe in respect
of any share capital or agree so to do; or
(g) borrow (other than by bank overdraft or similar facility in the ordinary
course of business and within limits subsisting at the date of this
Agreement) any money or agree so to do other than interim funding as
permitted by Clause 4.6; or
(h) make any capital commitment with an individual contract value of HK$5
million or more, including for this purpose, the acquisition of any capital
asset under a finance lease; or
<PAGE>
55
(i) make a capital commitment, which, together with all other such capital
commitments entered into between the date hereof and Completion, exceeds
the sum of HK$175 million in the aggregate; or
(j) dispose of any fixed asset having a net book value in excess of HK$10
million or fixed assets having an aggregate book value in excess of HK$20
million; or
(k) fail to take any action required to maintain any of its insurances in force
or knowingly do anything to make any policy of insurance void or voidable;
or
(l) alter the provisions of its memorandum and articles of association or by-
laws or adopt or pass further regulations or resolutions inconsistent
therewith; or
(m) change its financial year end; or
(n) make any substantial change in the nature or organisation of its business
(other than the acts described in Clause 4.5(d)); or
(o) discontinue or cease to operate all or a material part of its business
(other than pursuant to the Excluded Business Transfer Arrangements); or
(p) change its residence for Taxation purposes, change any Taxation election,
change any annual Taxation accounting period, change any method of Taxation
accounting, file any material amended Taxation return, settle any material
Taxation claim or assessment, surrender any right to claim a Taxation
refund or consent to any extension or waiver of the limitations period
applicable to any Taxation claim or assessment; or
(q) reduce its share capital or purchase its own shares; or
(r) transfer all or any material part of its business or assets to any other
Group Company (other than pursuant to the Excluded Business Transfer
Arrangements); or
(s) engage or dismiss other than for cause any employee (except where the
engagement or dismissal process has already commenced) or make any
variation to the terms and conditions of employment of any employees other
than in the ordinary course of business; or
(t) pass any resolutions in general meeting or by way of written resolution,
including, without limitation, any resolution for winding-up, or to
capitalise any profits or any sum standing to the credit of share premium
account or capital redemption reserve fund or any other reserve; or
(u) make any change to the accounting procedures or principles by reference to
which its accounts are drawn up
<PAGE>
56
(v) enter into or modify any transaction or arrangement with the Vendor or the
Vendor Guarantor or any of their respective Affiliates (other than pursuant
to the Excluded Business Transfer Arrangements or as provided for in Clause
4.5(d) and other than (i) contracts with Affiliates for the supply of
consumer goods in the ordinary course of business, (ii) the supply of
telecommunications services in the ordinary course of business and (iii)
the provision or purchase of services in accordance with existing practice
and with no material change in terms or amounts of payment); or
(w) take any action related to developing, building, acquiring, operating or
leasing a cable landing station.
except in each case with the prior written consent of the Purchaser (not to be
unreasonably withheld in the case of the matters referred to in paragraph (r)
above) and except as expressly provided in the Relevant Agreements.
<PAGE>
57
SCHEDULE 5:
Warranties
Part 1
Vendor
The Vendor hereby represents and warrants as follows:
1. Accounts
1.1 Accounts
--------
Each of the HCL Accounts, the HMSL Accounts, the HGNL Accounts and the
Partnership Accounts:
(1) have been prepared on a basis consistent with previous balance sheets
and profit and loss accounts of the Group Companies and in accordance
with generally accepted accounting principles in Hong Kong;
(2) comply (to the extent that they are required to do so) in all material
respects with the Companies Ordinance and all other applicable
ordinances, statutes and regulations;
(3) show a true and fair view of the state of affairs, assets and
liabilities, profit and/or loss and financial position of the Group
Companies as at the Accounts Date and of the results for the financial
period ended on such date and are not affected by any unusual or non-
recurring items not disclosed therein;
(4) make proper provision for the liabilities of the Group Companies as at
the Accounts Date in accordance with generally accepted accounting
principles referred to in (1) above; and
(5) make proper provision for the bad and doubtful debts and all Taxation
not yet due and payable in accordance with generally accepted
accounting principles referred to in (1) above.
1.2 Contingent Amounts
------------------
At the Accounts Date, no Group Company had any liability, contingent,
unquantified or disputed liability or outstanding capital commitment which
is not adequately disclosed or provided for in the Accounts (provided that
such liability or commitment was required to be disclosed in the Accounts
pursuant to generally accepted accounting principles in Hong Kong).
<PAGE>
58
1.3 Books and records
-----------------
All the accounts, books, ledgers and records of each of the Group Companies
and of the HCL Network Partnership have been maintained in accordance with
generally accepted accounting principles standards and practices applied in
Hong Kong.
1.4 Proforma 1998 Accounts and Management Accounts
----------------------------------------------
Each of the Proforma 1998 Accounts and the Management Accounts have been
prepared in good faith in accordance with generally accepted accounting
principles and policies in Hong Kong and:
(1) are true and fair in all material respects as at the Accounts Date and
the Management Accounts Date respectively; and
(2) make proper provision for the liabilities of the relevant Group
Company as at the Management Accounts Date in accordance with the
generally accepted accounting principles in Hong Kong.
2. Corporate matters and Information
2.1 Incorporation
-------------
Each of the Group Companies is duly incorporated or established and validly
existing under the laws of its place of incorporation or establishment, and
the amount and particulars of its share capital and other particulars set
out in Schedule 2 are and will on Completion be true and accurate.
2.2 Options and Encumbrances
------------------------
(1) There are no agreements or arrangements in force which provide for the
present or future issue, allotment or transfer of or grant to any
person the right (whether conditional or otherwise) to call for the
issue, allotment or transfer of any share, interest or loan capital of
any of the Group Companies (including any option or right of pre-
emption or conversion).
(2) No option, right to acquire, mortgage, charge, pledge, lien (other
than a lien arising by operation of law in the ordinary course of
trading) or other form of security or encumbrance or equity on, over
or affecting the whole or any part of the undertaking or assets of any
Group Company (including any investment in any other Group Company or
any share in the HCL Network Partnership) or any asset comprising part
of the partnership property of the HCL Network Partnership is
outstanding and there is no agreement or commitment to give or create
any and no claim has been made by any person to be entitled to any.
<PAGE>
59
2.3 New issues of capital
---------------------
No share or loan capital has been issued or allotted, or agreed to be
issued or allotted, by any of the Group Companies since the Accounts Date
and there will not be any such issue or allotment or agreement to issue or
allot prior to Completion except for the New Share to be issued under this
Agreement.
2.4 Constitutional documents, statutory books and resolutions
---------------------------------------------------------
(1) The Vendor has delivered to the Purchaser a true and complete copy of
the memorandum and articles of association or such other similar
constitutional documents of each of the Group Companies and a true and
complete copy of the partnership agreement dated 30th June, 1994
relating to the HCL Network Partnership (the "1994 Partnership
Agreement").
(2) Since the Accounts Date no alteration has been made to the memorandum
or articles of association or other similar constitutional documents
of any of the Group Companies and since 30th June, 1994 no alteration
has been made to the 1994 Partnership Agreement.
(3) The register of members and other statutory books of each Group
Company have been properly kept and maintained in accordance with all
laws applicable thereto and contain an accurate and complete record of
the matters which they contain.
(4) No notice or allegation that any of the foregoing is incorrect or
should be rectified has been received.
2.5 Documents filed
---------------
All returns, particulars, resolutions and documents required by the
Companies Ordinance or any other legislation to be filed with the Registrar
of Companies or any other authority in Hong Kong or the British Virgin
Islands in respect of each of the Group Companies have been duly filed and
were correct when filed.
2.6 Vendor Share and New Share
--------------------------
The Vendor Share and the New Share will at Completion be free from all
liens, charges, encumbrances and third party rights whatsoever, the Vendor
will at Completion be beneficially entitled to and/or able to procure the
sale and transfer or otherwise dispose of the Vendor Share and the Company
will at Completion be entitled to issue and allot the New Share. The
Company has not exercised any lien over any of its shares and each of the
Vendor Share and the New Share will be fully-paid at Completion. No
consent of any third party is required to be obtained in relation to the
transfer of the Vendor Share or the issue and allotment of the New Share.
The Vendor Share and the New Share will at Completion comprise one half of
the issued and allotted share capital
<PAGE>
60
of the Company and all of the Shares will be fully paid up or credited as
fully paid up at Completion.
2.7 Interest in companies
---------------------
At Completion the Company will (itself or through one or more other Group
Companies) own the entire legal and beneficial interest in the whole of the
issued share capital of each Group Company (other than itself). Except for
the interests of HCL and HCL Network Partnership Holdings Limited in the
Partnership Agreement, each Group Company is not and will not at Completion
be the owner or the registered holder of any share or interest in or other
security of or directly or indirectly interested in any body corporate,
partnership, joint venture or any form of equity wherever incorporated or
established. The information in Schedule 2 and in Recitals (A), (B) and
(C) to this Agreement is accurate in all respects.
2.8 Corporate authority
-------------------
Each of the Group Companies has full power, authority and legal right to
own its assets and carry on its business. Each of the partners of the HCL
Network Partnership has full power, authority and legal right to own the
assets comprising the partnership property of the HCL Network Partnership
and to carry on the business of the HCL Network Partnership.
3. Taxation
3.1 Administration
--------------
(1) All returns, notifications, documents, computations and payments which
should be or should have been made by any of the Group Companies or by
or on behalf of the HCL Network Partnership for any Taxation purpose
have been duly made within the requisite periods and are up-to-date,
correct and on a proper basis and none of them is or is likely, in the
Vendor's reasonable judgment, to be the subject of any dispute,
disagreement or audit between any of the Group Companies or any person
on behalf of the HCL Network Partnership and the Inland Revenue
Department or any other Taxation Authority.
(2) Each of the Group Companies and the HCL Network Partnership has
complied in all respects with all laws, regulations, legislation,
decrees or orders relating to Taxation applicable to such Group
Company or the HCL Network Partnership, including, without limitation,
all laws, regulations, legislation, decrees or orders requiring the
deduction or withholding of Taxation from amounts paid or received by
such Group Company or the HCL Network Partnership, whether on its own
behalf or as agent, and has kept and retained all records and
documents appropriate or requisite for the purposes of any such laws,
regulations, legislation, decrees or orders.
<PAGE>
61
3.2 Taxation claims, liabilities and reliefs
----------------------------------------
(1) (Except as reflected in the Management Accounts) since the Accounts
Date, no event has occurred which has given rise or will or is likely
to give rise to a liability to Taxation on any Group Company or the
HCL Network Partnership other than Taxation on the trading profits or
business profits of such Group Company or the HCL Network Partnership
accruing or arising since the Accounts Date.
(2) Each of the Group Companies and the HCL Network Partnership has paid
all Taxation for which it is liable and which has become due and
payable (including, without limitation, any Taxation required to be
deducted or withheld by it, whether on its own behalf or as agent) to
the Inland Revenue Department or other Taxation Authority on the due
date for payment thereof and is under no liability to pay any penalty
or interest in connection therewith.
(3) None of the Group Companies or the HCL Network Partnership has made
or is under any obligation to make any payment of interest which is
wholly or partly disallowed as deductions against its profits.
3.3 Records and other
-----------------
(1) Where applicable, each of the Group Companies and the HCL Network
Partnership has sufficient and accurate records relating to past
events during the seven (7) years prior to Completion or the period
from the date of incorporation (or, in the case of the HCL Network
Partnership, 30th June, 1994) to Completion (whichever is shorter) to
calculate the tax liability or relief which would arise on any
disposal or realisation of any asset owned at the Management Accounts
Date or acquired since the Management Accounts Date.
(2) No Group Company has received notice of an assessment or claim against
it or against the HCL Network Partnership nor has any Affiliate of a
Group Company received notice of an assessment or claim against any
Group Company or against the HCL Network Partnership in relation to
any alleged deficiency in Taxation.
(3) None of the Group Companies or the HCL Network Partnership (a) is a
party to any Taxation allocation or sharing agreement other than with
another Group Company, (b) has in the last six years been a member of
any group filing a combined or consolidated Taxation return (other
than a group the common parent of which was HWL or a Group Company) or
(c) has any liability for the Taxation of any person (other than of
any Group Company), whether primary or secondary, and whether as a
transferee or successor, by contract, by operation of law, or
otherwise.
<PAGE>
62
(4) No Group Company nor any Affiliate of a Group Company has received
notice that a claim for unpaid Taxation has become a lien against the
property of any Group Company or the HCL Network Partnership or is
being asserted against any Group Company or the HCL Network
Partnership.
(5) There are no outstanding agreements, waivers or arrangements extending
the statutory period of limitation applicable to any claim for, or the
period for the collection or assessment of, Taxation due from or with
respect to any Group Company or the HCL Network Partnership for any
taxable period, and no power of attorney granted by or with respect to
any Group Company or the HCL Network Partnership relating to Taxation
is currently in force.
(6) The amount of Taxation chargeable on each of the Group Companies or
the HCL Network Partnership since 1st January, 1993 has not to any
material extent depended on any concession, agreement, dispensation or
other formal arrangement with any Taxation Authority in circumstances
where either:
(a) the Vendor has received notice that the availability of any such
arrangement will be prejudiced as a result of the acquisition or
change of control of the Group Companies resulting from this
Agreement or the restructuring of the HCL Network Partnership
described in Clause 4.5(d); or
(b) the Group Company or the HCL Network Partnership has not acted in
accordance with the terms of any such arrangement.
(7) Insofar as the Vendor and the Vendor Guarantor are reasonably aware,
each Group Company and the HCL Network Partnership is and has at all
times been resident for Taxation purposes in its place of
incorporation or, in the case of the HCL Network Partnership, Hong
Kong and is not and has not been treated as resident in any other
jurisdiction for any Taxation purposes (including any double taxation
arrangement).
(8) All stamp duty and similar taxes or duties have been duly paid in
respect of all transactions carried out by the Group Companies and/or
the HCL Network Partnership.
4. Finance
4.1 Dividends and distributions
---------------------------
None of the Group Companies has declared, made or paid any dividends or
distributions since its date of incorporation.
4.2 Bank and other borrowings
-------------------------
<PAGE>
63
(1) At Completion no Group Company will have outstanding any Indebtedness
(as defined in paragraph (2) below) except as may be permitted by
Clause 4.5(a).
(2) None of the Group Companies has any outstanding mortgages, charges,
debentures or other loan capital or bank overdrafts, loans or other
similar indebtedness, financial facilities, finance leases or hire
purchase commitments or other arrangements which have as their purpose
or effect the raising of finance or any guarantees or other contingent
liabilities in connection with any of the foregoing (collectively,
"Indebtedness") except as reflected in the Accounts or the Management
Accounts or the Disclosure Letter.
(3) No outstanding Indebtedness of any of the Group Companies has become
payable by reason of default by the relevant Group Company and no
event of default has occurred or is pending which with the lapse of
time or the fulfilment of any condition or the giving of notice may
result in any such indebtedness becoming so payable prior to maturity.
4.3 Bank Accounts
-------------
Full details of all bank accounts maintained or used by each Group Company
(whether in its own name or in the name of the HCL Network Partnership)
(including, in each case, the name and address of the bank with whom the
account is kept and the number and nature of the account) and of all direct
debit or standing order or similar authorities applicable to any of the
accounts.
5. Trading
5.1 Events Since the Accounts Date:
------------------------------
Since the Accounts Date and except as reflected in the Management Accounts:
(1) there has been no adverse change in the financial or trading position
or (save for the effect of changes in general economic, market or
industry (including regulatory) conditions) prospects of the Group or
the HCL Network Partnership;
(2) the business of each Group Company and the HCL Network Partnership has
in all material respects been carried on in the ordinary course of
such business;
(3) each Group Company has not borrowed or raised any money or taken any
financial facility, nor has it repaid or agreed to repay any loan
capital or borrowed moneys in whole or in part or by reason of any
default by it in its obligations;
(4) no dividends bonuses or distributions have been paid declared or made
in respect of any shares or stock of any Group Company;
<PAGE>
64
(5) no debts or other receivables and no trading stock, goods, plant,
machinery or equipment of any Group Company or of the HCL Network
Partnership have been factored or sold or agreed to be sold, apart
from the sale of trading stock to trade customers or the public in the
ordinary course of business;
(6) no change in the financial year end of any Group Company or of the HCL
Network Partnership has been made; and
(7) subject to any provision for bad or doubtful debts in the Accounts,
all book debts shown in the Accounts or in the Partnership Accounts
have been realised for an aggregate sum not being less than that shown
in the Accounts or in the Partnership Accounts and no written
indication has been received by HCL or any Group Company or any
Affiliate of any Group Company that any debt now owing to any Group
Company or to the HCL Network Partnership is bad or doubtful.
5.2 Effect of transactions contemplated under this Agreement
--------------------------------------------------------
Neither the execution of any Relevant Agreement nor the compliance with the
terms of any Relevant Agreement does and will:
(1) result in a breach of any of the terms, conditions or provisions of
any encumbrances or leases by which or to which any asset of any of
the Group Companies or any asset comprising part of the partnership of
the HCL Network Partnership is bound or subject;
(2) relieve any person from any obligation to any of the Group Companies
or to the HCL Network Partnership or cause any person to determine any
such obligation or any right or benefit enjoyed by any of the Group
Companies or by the HCL Network Partnership, or to exercise any right
under an agreement with or otherwise in respect of any of the Group
Companies or the HCL Network Partnership;
(3) result in the crystallisation or enforcement of any encumbrance
whatsoever on any of the assets of any of the Group Companies or any
of the assets comprising part of the partnership property of the HCL
Network Partnership; and
(4) result in any present or future indebtedness of any of the Group
Companies becoming due and payable prior to its stated maturity.
<PAGE>
65
5.3 Conduct of businesses in accordance with memorandum and articles of
-------------------------------------------------------------------
association or other constitutional documents
---------------------------------------------
Each of the Group Companies has at all times carried on business and
conducted its affairs in all respects in accordance with its memorandum and
articles of association or other similar constitutional documents for the
time being in force.
5.4 Litigation, disputes and winding up
-----------------------------------
(1) None of the Group Companies nor the HCL Network Partnership is engaged
in any litigation or arbitration proceedings as plaintiff or defendant
and there are no such proceedings pending or, to the best of the
knowledge and belief of the Vendor, threatened either by or against
any of the Group Companies or the HCL Network Partnership.
(2) There is no dispute with any revenue or other governmental departments
in Hong Kong or the British Virgin Islands, in relation to the affairs
of any of the Group Companies or of the HCL Network Partnership, and
to the best of the knowledge and belief of the Vendor there are no
facts which may give rise to any such dispute.
(3) No order has been made and no resolution has been passed for the
winding up of any Group Company or any partner in the HCL Network
Partnership or for a provisional liquidator to be appointed in respect
of any Group Company or any partner in the HCL Network Partnership and
no petition has been presented and no meeting has been convened for
the purpose of winding up any Group Company or any partner in the HCL
Network Partnership and no partner in the HCL Network Partnership has
applied for a dissolution of the HCL Network Partnership.
(4) No receiver has been appointed in respect of any Group Company or all
or any of its assets or all or any of the assets comprising the
partnership property of the HCL Network Partnership.
(5) No Group Company nor any partner in the HCL Network Partnership is
insolvent or unable to pay its debts or has stopped paying its debts
as they fall due.
(6) No event analogous to any of the foregoing has occurred in or outside
Hong Kong.
(7) No unsatisfied judgment is outstanding against any Group Company or
the HCL Network Partnership.
5.5 Compliance with statutes etc.
-----------------------------
<PAGE>
66
(1) Each of the Group Companies and the HCL Network Partnership has
complied in all respects with all applicable statutes and legislation,
including the Telecommunications Ordinance and the Data Protection
Ordinance (including compliance with the data protection principles in
it).
(2) Each of the Group Companies and the HCL Network Partnership has
conducted and is conducting its business in all respects in accordance
with all applicable laws and regulations of Hong Kong and the British
Virgin Islands.
(3) No Group Company and the HCL Network Partnership has committed or is
liable for any criminal, illegal, unlawful or unauthorised act or
breach of any obligation or duty whether imposed by or pursuant to
statute, contract or otherwise, and no Group Company nor any Affiliate
of any Group Company nor any Affiliate of any Group Company has
received notice that any such claim remains outstanding against any
such Group Company or the HCL Network Partnership.
(4) So far as the Vendor and the Vendor Guarantor are aware no Group
Company nor any Affiliate of any Group Company has received
notification that any investigation or inquiry is being conducted by
any governmental or other body in respect of the affairs of any Group
Company or of the HCL Network Partnership and the Vendor and the
Vendor Guarantor are not aware of any circumstances which would give
rise to such investigation or inquiry.
5.6 Contracts and Related Matters
-----------------------------
(1) No Group Company nor the HCL Network Partnership is a party to any
contracts with a term in excess of one year (except for routine
confidentiality agreements and for contracts included in the list of
contracts set forth in Exhibit D and E). Except for the Relevant
Agreements (and for those listed in Exhibit D and E and for those
which are to be replaced by the Relevant Agreements) there are no
agreements or arrangements subsisting and no indebtedness (actual or
contingent) between (i) any Group Company or the HCL Network
Partnership and (ii) the Vendor Guarantor or any of their respective
Affiliates or subsidiaries and termination of any such agreements or
arrangements has not had and will not have a material effect on the
Group (including its financial or trading position or prospects).
(2) Except for those contracts included in the list of contracts set forth
in Exhibit D-I no Group Company nor the HCL Network Partnership is a
party to or has any liability (present or future) under any guarantee
or indemnity or letter of credit or any leasing, hiring, hire
purchase, credit sale or conditional sale agreement or has entered
into any contract or commitment involving, or likely to involve,
obligations or expenditure of HK$20 million.
<PAGE>
67
(3) No Group Company nor the HCL Network Partnership is a party to any
non-competition contract or arrangement which restricts its freedom to
carry on its business in any part of the world.
(4) No Group Company nor the HCL Network Partnership and neither the
Vendor nor the Vendor Guarantor is aware of any breach of, or any
invalidity, or grounds for determination, rescission, avoidance or
repudiation of, any contract to which any Group Company nor the HCL
Network Partnership is a party or of any allegation of such a thing.
(5) No Group Company or the HCL Network Partnership is a party to any
contract which falls within any of the cases specified below:
(a) the contract relates to matters not within the scope of business
of the Group Companies to be continued after Completion as
reflected in the Shareholders Agreement; or
(b) the contract can be terminated in the event of any change in the
underlying ownership or control of the Group Company that is a
party to such contract or by the retirement or admission of
partners to the HCL Network Partnership;
and for this purpose "contract" includes any understanding,
arrangement or commitment however described.
(6) No Group Company or the HCL Network Partnership has given any power of
attorney or other authority (express, implied or ostensible) which is
still outstanding or effective to any person to enter into any
contract or commitment on its behalf (other than to its employees to
enter into routine trading contracts in the normal course of their
duties or defined authority to counterparties under normal commercial
contracts to act within the scope of such contracts).
(7) No Group Company or the HCL Network Partnership has applied for or
received any grant, allowance, aid or subsidy from any supranational,
national or local authority or government agency during the last six
years.
(8) Neither in the financial period ending on the Accounts Date nor in the
period since the Accounts Date has any person (together with other
persons connected with him) purchased from or sold to any Group
Company or the HCL Network Partnership more than 10 per cent. of the
aggregate amount of all sales or purchases made by that Group Company
or the HCL Network Partnership during such period, and there is no
person (together with other persons connected with him) on whom any
Group Company or the HCL Network Partnership is substantially
dependent or the cessation of transactions with whom would have a
material adverse effect on the financial position of such Group
Company or the HCL Network Partnership.
<PAGE>
68
5.7 Defaults under agreements by the Group Companies or the HCL Network
-------------------------------------------------------------------
Partnership
-----------
(1) None of the Group Companies or the HCL Network Partnership is:
(a) in material default under any agreement to which it is a party;
(b) liable in respect of any material breach of representation or
warranty given under any agreement to which it is a party and
which breach will have a material adverse effect on the financial
position of the Group as a whole.
(2) No material claim of default under any agreement to which any of the
Group Companies or the HCL Network Partnership is a party has been
made and is outstanding against it.
5.8 Other party's defaults
----------------------
To the best of the knowledge and belief of the Vendor, no party to any
agreement with or which is under an obligation to any of the Group
Companies or the HCL Network Partnership is in material default under it.
5.9 Working Capital
---------------
Each Group Company has sufficient working capital for its present
requirements (that is to say, to enable it to continue to carry on its
business in its present form and at its present level of turnover) and for
the purpose of performing in accordance with their terms all orders,
projects and contractual obligations which have been placed with or
undertaken by it.
5.10 Product Liability
-----------------
No Group Company has manufactured, sold or provided any product or service
which does not in any material respect comply with all applicable laws,
regulations or standards or which is defective or dangerous or not in
accordance with any representation or warranty, express or implied, given
in respect of it.
5.11 Trade Regulations
-----------------
None of the businesses or activities of any Group Company or the HCL
Network Partnership as currently conducted could reasonably be expected to
give rise to the imposition of any sanction under any trade regulation
legislation currently in effect.
<PAGE>
69
6. Assets
6.1 Insurances
----------
(1) Each Group Company and the HCL Network Partnership has maintained
adequate insurance cover against risks normally insured against by
companies carrying on a similar business in the geographic area in
which the Group Companies and the HCL Network Partnership carry on
their business, and in particular has maintained all insurance
required by statute.
(2) Full details of the insurance policies taken out over the business and
assets of the Group and the HCL Network Partnership at the date hereof
are set out in Exhibit I and all such policies are in full force and
effect and are not void or voidable (on the basis of the facts and
circumstances at the time this Warranty is made or repeated). The
value of all claims outstanding by the Group Companies and the HCL
Network Partnership does not exceed HK$20,000. No event has occurred
(except as described in that Exhibit) which might give rise to any
additional claim.
6.2 Capital Assets
--------------
Since the Accounts Date (except as reflected in the Management Accounts or
as permitted by Clause 4.4), none of the Group Companies or the HCL Network
Partnership has disposed of or realised any capital assets other than in
the ordinary course of business.
7. Consents and Licences
7.1 Licences
--------
(1) The Group holds:
(a) all licences required to be held by the Group under the
Telecommunication Ordinance in order to carry on its business in
the manner it is presently being conducted and as contemplated by
the Business Plan including without limitation the licences
described in Part 1 of Exhibit C;
(b) all other licences (including all wayleaves), approvals and
consents from any person, authority or body, as the case may be,
required by law in order to carry on its business in the manner
it is presently being conducted and as contemplated by the
Business Plan,
and all such licences and consents are valid and subsisting.
<PAGE>
70
(2) The Group has applied for the licences described in Exhibit C and has
pursued and will continue to pursue such applications with all
reasonable due diligence.
7.2 No breach
---------
(1) The Group is not in breach of any of the terms or conditions of any
such licences, approvals or consents referred to in paragraph 7.1
above; and
(2) all such licences are in full force and effect in accordance with
their respective terms.
Exhibit C sets out accurate details of the annual fees paid in the 12 month
period ending on the date of this Agreement under the licences referred to
in paragraph 7.1(1)(a) and all other licences requiring payment of licence
fees exceeding US$1,000 per annum.
7.3 Notification of breach
----------------------
None of the Group Companies or any of their Affiliates has received any
notification from the OFTA relating to an asserted breach of any of the
terms and conditions of any licences.
7.4 Special Conditions of FTNS Licence
----------------------------------
The Group has complied with the Special Conditions contained in the Fixed
Telecommunications Network Service Licence issued to the Group on 30 June,
1995 (as amended on 19 June, 1998) (the "FTNS Licence") in all respects.
Without limiting the foregoing:
(1) the Group has completed the network rollout and service obligations
contained in Special Conditions 1 and 2 of the FTNS Licence to the
extent required to be completed up to and including the date of this
Agreement;
(2) the Group has received from OFTA certificates of completion relating
to obligations under Special Conditions 1.1 through to 1.3 inclusive,
1.6, 2.1 and 3.1 of the FTNS Licence; and
(3) the Vendor reasonably expects that the Group will complete the
obligations set out in Special Conditions 1.4 and 2.2 of the FTNS
Licence upon or prior to the date required by the FTNS Licence, being
31 December, 1999.
7.5 Future Milestone Obligations
----------------------------
Exhibit C contains a true and correct description of the status of the
discussions between OFTA and the Group regarding the continuation of the
moratorium on the issue of further FTNS Licences. The Vendor reasonably
expects that the Group will complete
<PAGE>
71
the obligations to be imposed on it in connection with such moratorium upon
or prior to the date required by OFTA.
7.6 Frequencies and WLL
-------------------
The Group does not require any frequencies in order to carry on its
business in the manner it is presently being conducted and as contemplated
by the Business Plan.
8. Employees
8.1 General
-------
(1) Exhibit J sets out a complete list of those persons who at Completion
will be employees of or seconded to the Group (distinguishing between
those who will be employees of the Group and those who will be
seconded) and none of them will have given or received notice
terminating their employment. Exhibit J sets out for each employee
their job title and remuneration. Each contract of employment with
any employee is or will be terminable without payment of damages or
compensation exceeding those payable under statute.
(2) No Group Company is involved in any industrial or trade dispute with
any of its employees or any trade union or association.
(3) No Group Company is bound or accustomed to pay any moneys other than
in respect of normal salary, remuneration or emoluments of employment
to or for the benefit of its employees and no employees are
remunerated by reference to sales, profits or performance or otherwise
receive variable remuneration.
(4) Each Group Company has in relation to each of its employees complied
in all material respects with all obligations imposed on it by all
legislation relevant to the relations between it and its employees.
(5) No liability has been incurred by any Group Company for breach of any
contract of service or for redundancy payments or severance payments
or long service payments or for compensation for wrongful dismissal or
unfair dismissal.
(6) No Group Company has entered into any agreement to acquire consultancy
services from any person.
(7) No Group Company has any outstanding undischarged liability to pay to
any governmental or regulatory authority in any jurisdiction any
contribution, Taxation or other impost arising in connection with the
employment or engagement of personnel by any Group Company.
(8) Each Group Company has at all relevant times complied with all its
obligations under statute and otherwise concerning the health and
safety at work of its
<PAGE>
72
employees, and the Vendor has received no notice that any such claims
are threatened or pending by any employee or third party in respect of
any accident or injury which are not fully covered by insurance.
8.2 No claim
--------
No former director, officer, employee or agent of any Group Company has any
claim against such Group Company for compensation due to loss or
termination of office or employment.
8.3 Provident Funds
---------------
Exhibit K contains details of all provident fund and similar schemes for
the benefit of the persons who will be employees at Completion. All
contributions required to have been made (at or before Completion) to those
schemes have been made and they are fully funded in accordance with prudent
actuarial principles as to enable all such employees to obtain the benefits
to which they are or will be entitled under those schemes have been made.
9. Intellectual Property
(1) Details of all rights in any Intellectual Property (other than
copyright and unregistered designs) owned by any Group Company are set
out in Exhibit F, distinguishing between rights which have been
registered and those in respect of which applications to register have
been made.
(2) Details of all licences granted to or by any Group Company in respect
of any Intellectual Property are set out in Exhibit F. Where any
licence is subject to any limit as to time or any other limitation,
right of termination or restriction the nature and extent of this is
set out in that Exhibit.
(3) All rights in all Intellectual Property and confidential business
information owned or otherwise required for the business of any Group
Company are vested in or validly granted to the Group Company and,
except as disclosed in relation to paragraph (2) above, are not
subject to any limit as to time or any other limitation, right of
termination (including on any change in the underlying ownership or
control of the relevant Group Company) or restriction and all renewal
fees and steps required (as of the date on which this Warranty is made
or repeated) for their maintenance or protection have been paid and
taken.
(4) Each Group Company has all rights in Intellectual Property and all
business information required for the business of that Group Company
and no Group Company is a party to any confidentiality or other
agreement or subject to any duty which restricts the free use or
disclosure (or requires disclosure) of business information owned by
or required for the business of such Group Company.
<PAGE>
73
(5) Except as listed in Exhibit F, no Group Company has granted or is
obliged to grant any licence, sub-licence or assignment in respect of
any Intellectual Property owned or otherwise required for the business
of that Group Company or has disclosed or is obliged to disclose any
confidential business information required for the business of that
Group Company to any person, other than its employees or those of
another Group Company for the purpose of carrying on its business.
(6) No Group Company nor to the best of the knowledge and belief of the
Vendor any party with which such Group Company has contracted is in
breach of any licence, sub-licence or assignment granted to or by it
in respect of any Intellectual Property owned or otherwise required
for the business of that Group Company or of any agreement under which
any confidential business information was or is to be made available
to it.
(7) The processes and methods employed, the services provided, the
businesses conducted and the products manufactured, used or dealt in
by any Group Company within the last six years do not, and/or at the
time of being employed, provided, conducted, manufactured, used or
dealt in did not, to the Vendor's knowledge, infringe the rights of
any other person in any Intellectual Property or business information.
(8) To the Vendor's knowledge, there is no, nor has there been at any time
during the past six years any, unauthorised use or infringement by any
person of any of the Intellectual Property or confidential business
information owned or otherwise required for the business of any Group
Company.
(9) The Group has outstanding no applications to register any Intellectual
Property which are not being pursued with all reasonable due diligence
and speed.
10. Interconnection arrangements
(1) The contracts referred to in Exhibit D and (by being under the short
description "INTERCONNECTION AND LEASED CIRCUITS") identified as
falling within this sub-paragraph (1) comprise (together, when they
are executed, with the Interconnect Agreement and the Leased Lines
Agreement) all agreements to which the Group is a party relating to
interconnection between the network of the Group and the network or
networks of other telecommunications operators in Hong Kong or
relating to the establishment of interconnect links or facilities for
interconnection in Hong Kong. The interconnection arrangements
established under these agreements enable communications to be sent
and received in accordance with principles established by the
Telecommunications Authority of Hong Kong.
(2) Exhibit D contains a description of all such agreements as are
mentioned in paragraph (1) and which are being negotiated with third
parties.
<PAGE>
74
11. Switch Sites and the Networks
11.1 Switch Sites
------------
(1) Lists of the cell sites and switch sites used by the Group for its
business have been set out in Exhibit G. Such sites are all the cell
sites and switch sites which the Group requires in order to carry on
its business in the manner it is presently being conducted. The Group
holds all licences, leases or consents necessary for the use of such
sites and all such licences, leases or consents are valid and
subsisting.
(2) No site referred to in paragraph (1) is used in whole or in part in or
for the purposes of the Excluded Business.
11.2 Networks
--------
The fixed networks and systems which are operated for the purposes of the
Group's business including network management and customer service systems,
billing systems, switches, nodes and other hardware are in good operating
order, are capable of performing and do perform the functions which they
are intended to perform in accordance with normal industry practice in Hong
Kong and the nature of the business of the Group and are all such systems
as are required by the Group in order for it to conduct its business in the
manner it is presently being conducted. A network map is in Exhibit M.
12. Ownership and Condition of Assets
(1) All assets necessary for the business of any Group Company as it is
now carried on are both legally and beneficially owned by such Group
Company or by the HCL Network Partnership free from any third party
rights and all such assets are included in the Accounts.
(2) Each of the assets included in the Accounts or acquired by any Group
Company since the Accounts Date (other than current assets sold,
realised or applied in the normal course of trading) is owned both
legally and beneficially by that Group Company free from any third
party rights, and each of those assets capable of possession is in the
possession of the Group Company. Each of the assets appearing in the
Partnership Accounts or acquired by the HCL Network Partnership since
the Partnership Accounts Date is owned legally and beneficially by the
HCL Network Partnership and is leased to HCL and subject to this
lease, is free from all third party rights.
(3) All plant and machinery (including fixed plant and machinery),
equipment and vehicles used by any Group Company in connection with
its business are in good repair and condition (ordinary wear and tear
excepted).
<PAGE>
75
(4) The plant register kept by each Group Company which has been produced
to the Purchaser for its inspection sets out a record of the plant and
machinery and vehicles owned or possessed by it which is complete and
accurate in all material respects.
13. Property
13.1 Except as referred to in Exhibit E, neither the Group nor the HCL Network
Partnership owns any land or properties. The Group has good and marketable
title to each property so referred to, free of all encumbrances. The HCL
Network Partnership does not rent or licence any land or properties.
13.2 In relation to the properties rented/licensed by any Group Company (being
those properties described as such in Exhibit E) ("Rented Properties"):
(1) All the rent, licence fees, maintenance and other charges have been
duly paid in accordance with the terms of the relevant tenancy or
licence agreement and the material covenants, terms and conditions
contained in any tenancy/licence agreement to be performed by a Group
Company have been duly performed and observed by such Group Company
and there are no proceedings pending for the recovery of any sums due
and payable.
(2) No notice affecting the Rented Properties or any part thereof or its
use has been received by the relevant Group Company whether given or
served by a Government department or other authority or any person or
body which has not been materially complied with.
(3) The use of the Rented Properties complies with the material
provisions, covenants, terms and conditions under which they are
rented or licensed (as the case may be), and no circumstances are
known to the Group which are likely to result in the forfeiture of the
same.
(4) There are no circumstances existing at the date on which this Warranty
is made or repeated which would entitle the landlord or any other
person to exercise any right of re-entry or to take possession of any
of the Rented Properties or any part thereof or which would otherwise
restrict or terminate the continued possession and occupation of any
of the Rented Properties or any part thereof.
14. Information Technology
(1) Details of the Information Technology owned or used by each Group
Company and all material agreements or arrangements relating to the
maintenance and support (including escrow agreements relating to the
deposit of source codes), security, disaster recovery management and
utilisation (including facilities management and computer bureau
services agreements) of the Information Technology owned or used by
each Group Company are contained in Exhibit H
<PAGE>
76
and in Exhibit D under the short descriptions "MAINTENANCE", "HARDWARE
AND SOFTWARE", "SOFTWARE LICENCE" and "SERVICE PROVISIONING". For the
purposes of this paragraph 14, "Information Technology" means computer
hardware, software, networks and/or other information technology and
any aspect or asset of a business which relies on computer hardware
and software.
(2) All Information Technology required to carry on the business of each
Group Company and fulfil its existing contracts and commitments is
either owned by or validly leased or licensed to that Group Company.
(3) No records, systems, controls data or information of any Group Company
are recorded, stored, maintained, operated or otherwise wholly or
partly dependent on or held by any means (including any electronic,
mechanical or photographic process whether computerised or not) which
(including all means of access thereto and therefrom) are not under
the exclusive ownership or control of the Group Company.
(4) There are no material defects relating to the Information Technology
owned or used by each Group Company and the Information Technology
owned or used by each Group Company has the capacity and performance
necessary to fulfil the present and foreseeable requirements of each
Group Company as described in the Business Plan.
(5) The Company's network has passed Y2K Stage A Testing prescribed by
OFTA. The Company has conducted Y2K Stage B Testing prescribed by
OFTA, as guided by the Company's third party network equipment
manufacturers and in the presence of OFTA representatives. The
results of the Y2K Stage B Testing are attached to the Disclosure
Letter. Based upon the foregoing tests, the Company has no reason to
believe that its network and services are not Y2K Ready in all
material respects. However, it should be noted that the Company's
assessment of its Y2K Readiness is largely dependent on the Y2K status
of its network equipment, information in respect of which has been
supplied to the Company by the network equipment manufacturers and
upon which the Company can conduct only limited internal and external
testing. Each Group Company had used all commercially reasonable
endeavours to secure from suppliers and other third parties
appropriate assurances as to their Y2K Readiness and nothing has come
to any Group Company's attention which suggests that any material
supplier or other third party is not Y2K Ready. For purposes of this
Agreement, the terms "Y2K Ready" and "Y2K Readiness" refer to the
capability of a person's (including the Company's) network, services
and systems, when used in accordance with their associated
documentation, to correctly process, provide and/or receive date data
in the year 2000, including leap year calculations, provided (in the
case of the Company) that all other products and systems (for example,
third party manufactured handsets, customer premises equipment,
hardware, software and firmware) that use the
<PAGE>
77
Company's network, services and systems properly exchange accurate
date data with it.
15. The Restructuring
15.1 At Completion:
(1) the Group will not include any Excluded Company; and
(2) no Group Company shall carry on or be in any way interested in the
Excluded Business or have any liability, actual or contingent, arising
out of or connected with the Excluded Business (except for any
liability covered by the indemnity referred to in Clause 4.5(c)).
16. The Environment
16.1 Definitions
-----------
In paragraph 16.2:
"Environment" means all or any part of the air (including, without
limitation, the air within buildings and the air
within other natural or man-made structures above or
below ground), water and land and any living organisms
or systems supported by those media;
"Environmental Laws" means all applicable laws as in effect on the date
hereof insofar as they relate to or apply to
Environmental Matters;
"Environmental Matters" means:
(i) pollution or contamination;
(ii) the disposal, release, spillage, deposit,
escape, discharge, leak or emission of,
Hazardous Materials or Waste;
(iii) exposure of any person to Hazardous
Materials or Waste;
(iv) all matters related to health and safety of
employees;
(v) the creation or existence of any noise,
vibration, radiation, common law or
statutory nuisance, or
<PAGE>
78
other adverse impact on the Environment;
(vi) use and recovery of packaging; and
(vii) any other matters relating to human health
and safety or the condition, protection,
maintenance, restoration or replacement of
the Environment arising directly or
indirectly out or the manufacturing,
processing, treatment, keeping, handing, use
(including as a building material),
possession, supply, receipt, sale, purchase,
import, export, transportation or presence
of Hazardous Materials or Waste;
"Environmental Permits" means any registration, permit, licence, consent or
authorisation required by Environmental Laws to be
held by any Group Company;
"Hazardous Material" means anything which alone or in combination with
other things is capable of causing harm or damage to
property or to man or to the Environment or any other
organism supported by the Environment including,
without limitation, any hazardous or toxic substances
or pollutants;
"Waste" means any waste including anything which is abandoned,
unwanted or surplus irrespective of whether it is
capable of being recovered or recycled or has any
value; and
"Works" means the carrying out of:
(i) inspection, investigation, sampling and
monitoring works; and
(ii) any works, including the installation,
operation, repair or replacement of plant or
equipment, in order to remove, remediate or
contain any Environmental Matter or in order
to prevent an Environmental Matter from
arising.
16.2 Compliance
----------
(1) All Environmental Permits which are required as at the date on which
this Warranty is made or repeated have been obtained and are in full
force and effect.
<PAGE>
79
(2) No material operating expenditure is required in order to comply with
the Environmental Permits.
(3) The entry into and performance of this Agreement will not result in
the variation, limitation or revocation of any Environmental Permit,
any Environmental Permit not being extended, renewed or granted, or
any requirement to carry out Works.
(4) Each Group Company has complied at all times and in all respects with
Environmental Law and there are and have been no acts or omissions of
the Company in relation to Environmental Matters which could give rise
to fines, penalties, losses, damages, costs, expenses or liabilities
or could require any Works.
(5) No Group Company is or has been involved in any litigation
proceedings, claim or complaint by any person under Environmental
Laws, none is threatened and, so far as the Vendor Guarantor are
aware, none is likely to arise. At no time has the Group Company
received any notice or communication or information alleging any
liability in relation to Environmental Matters or that any Works are
required or stating or suggesting that there is or might be any
pollution, contamination or nuisance at or from any Relevant Property.
(6) All environmental audits and other assessments, reviews and reports in
the possession or control of any Group Company relating to any
Relevant Property or any of the activities of the Group Company have
been Disclosed.
(7) All information provided to the Purchaser or its advisors by or on
behalf of the Vendor or the Vendor Guarantor in relation to
Environmental Matters on or prior to the date of this Agreement is
complete and accurate and is not misleading.
(8) So far as the Vendor is aware, no Group Company has any liability in
respect of Environmental Matters arising out of or in connection with
any act or omission of any former subsidiary or former business of any
Group Company.
(9) So far as the Vendor is aware, there has been no transfer to any
person or disposal of Hazardous Materials or Waste by or on behalf of
any Group Company which could give rise to fines, penalties, losses,
damages, costs, expenses or liabilities.
(10) So far as the Vendor is aware, no Group Company has any liability to
any person in respect of Environmental Matters under any contract or
other agreement relating to the sale or other disposal or grant of any
interest or rights in relation to any shares, land or other asset.
(11) The Group Companies either (a) have no obligation under applicable
laws to recycle or recover packaging or participate in any scheme or
other arrangement for the recycling or recovery of packaging (a
"Relevant Obligation") or (b) have
<PAGE>
80
complied in full with each Relevant Obligation and full details have
been provided to the Purchaser of such Relevant Obligation, including
relevant quantities and costs.
17. Accuracy of Information
17.1 The information given in Exhibits C to M inclusive is true and accurate in
all material respects and is not misleading. The licences, material
contracts, properties, intellectual property rights, equipment and systems
described in those Exhibits constitute all the licences, material
contracts, properties, intellectual property rights, equipment and systems
necessary for the Group Companies and the HCL Network Partnership to carry
on their businesses in all material respects, the Group Companies require
no other material assets or rights (apart from working capital) for such
purposes and the Group Companies do not have any other licences and
frequencies, material contracts, properties, intellectual property rights,
equipment or systems.
17.2 There is no fact or circumstance relating to the affairs of the Vendor or
the Vendor Guarantor nor, is there any fact or circumstance relating to the
affairs of any Group Company (other than publicly available information)
which has not been disclosed to the Purchaser or the Purchaser Guarantor or
any of their advisers and which if disclosed might reasonably have been
expected to influence the decision of the Purchaser and the Purchaser
Guarantor to enter into this Agreement other than as arising out of or
resulting from the economy or the securities market generally or arising
out of or resulting from changes in or affecting the industry in which the
Vendor Guarantor operates and not specifically related to the Vendor
Guarantor.
18. Investment Representations
The Vendor and/or, if applicable, its Affiliates, are acquiring the
Convertible Preferred Stock for investment and not with a view to, or for
sale in connection with, any distribution thereof. The Vendor and/or, if
applicable, its Affiliates (either alone or together with its advisors)
have sufficient knowledge and experience in financial and business matters
so as to be capable of evaluating the merits and risks of its investment in
the Convertible Preferred Stock and is capable of bearing the economic
risks of such investment. This paragraph will not limit the rights of the
Vendor with respect to any breach of the Purchaser Guarantor Warranties.
19. General
19.1 The execution and delivery of, and the performance by each Vendor Party
(other than the Vendor Guarantor) of its obligations under the Relevant
Agreements to which it is a party will not:
(1) breach or constitute a default under the constitutive documents of
such Vendor Party; or
<PAGE>
81
(2) result in a breach of, or constitute a default under any instrument or
agreement to which such Vendor Party is a party or by which such
Vendor Party is bound; or
(3) result in a breach of any order, judgment or decree of any court or
governmental agency to which such Vendor Party is a party or by which
such Vendor Party is bound; or
(4) require the consent of the shareholders of such Vendor Party.
19.2 Each Vendor Party (other than the Vendor Guarantor) has all the requisite
power and capacity to enter into and perform its obligations under each
Relevant Agreement to which it is a party.
19.3 Each Relevant Agreement and all documents and instruments executed pursuant
thereto are, and when delivered will be, valid and legally binding
obligations of each Vendor Party (other than the Vendor Guarantor) which is
a party to it and the execution, performance and implementation of each
Relevant Agreement and the matters contemplated thereby have been duly
authorised by all necessary corporate action on the part of each Vendor
Party (other than the Vendor Guarantor) which is a party to it and each
Relevant Agreement has been duly executed by each Vendor Party (other than
the Vendor Guarantor) which is a party to it.
19.4 Except as set forth in Schedule 9, no consent, authorisation, order or
approval of, or filing or registration with, any governmental authority or
other person that has not been obtained is required for the execution and
delivery of the Relevant Agreements by the Vendor Parties party thereto or
the consummation of the transactions contemplated by the Relevant
Agreements.
<PAGE>
82
Part 2
Vendor Guarantor Warranties
The Vendor Guarantor hereby represents and warrants as follows:
1. Due Organisation
----------------
The Vendor Guarantor is a corporation duly organised and validly existing
under the laws of Hong Kong.
2. Power and Authority
-------------------
(a) The execution and delivery of and performance of the Relevant
Agreements to which it is a party will not result in a breach of or
constitute a default under the constitutive documents of the Vendor
Guarantor or result in a breach of or constitute a default under any
agreement or other instrument to which the Vendor Guarantor is a party
or by which the Vendor Guarantor is bound.
(b) The Vendor Guarantor has all the requisite power and capacity to enter
into and perform its obligations under the Relevant Agreements to
which it is a party.
(c) Each Relevant Agreement to which the Vendor Guarantor is a party and
all documents and instruments executed pursuant thereto by it are, and
when delivered will be, valid and legally binding obligations of the
Vendor Guarantor, enforceable, subject to exceptions which would be
customary in a formal legal opinion, in accordance with their terms,
and the execution, performance and implementation of each Relevant
Agreement and the matters contemplated thereby by the Vendor Guarantor
have been duly authorised by all necessary corporate action on the
part of the Vendor Guarantor and each Relevant Agreement to which it
is a party has been duly executed by the Vendor Guarantor.
3. Hutchison Whampoa Accounts
--------------------------
The audited consolidated accounts of the Vendor Guarantor comprising its
consolidated balance sheet as at the Accounts Date and its consolidated
profit and loss account and statement of cash flows for the financial year
ended on the Accounts Date (the "Hutchison Whampoa Accounts"):
(1) have been prepared on a basis consistent with previous balance sheets
and profit and loss accounts of the Vendor Guarantor and in accordance
with generally accepted accounting principles in Hong Kong;
(2) comply (to the extent that they are required to do so) in all material
respects with the Companies Ordinance and all other applicable
ordinances, statues and regulations;
<PAGE>
83
(3) show a true and fair view of the state of affairs, assets and
liabilities, profit and/or loss and financial position of the Vendor
Guarantor as at the Accounts Date and of the results for the financial
period ended on such date and are not affected by any unusual or non-
recurring items not disclosed therein;
(4) make proper provision for the liabilities of the Vendor Guarantor as
at the Accounts Date in accordance with generally accepted accounting
principles referred to in (1) above; and
(5) make proper provision for the bad and doubtful debts and all Taxation
not yet due any payable in accordance with generally accepted
accounting principles, standards and practice referred to in (1)
above.
4. No Material Adverse Effect on the Vendor Guarantor
--------------------------------------------------
Since the Accounts Date there has been no material adverse change in the
financial condition or results of operations of the Vendor Guarantor and
its subsidiaries, taken as a whole, other than any such change arising out
of or resulting from the economy or securities markets generally, and there
is no fact or circumstance relating to the affairs of the Vendor Guarantor
which has not been disclosed to the Purchaser or the Purchaser Guarantor or
any of their advisers and which if disclosed might reasonably have been
expected to influence the decision of the Purchaser and the Purchaser
Guarantor to enter into this Agreement other than any such change arising
out of or resulting from the economy or securities markets generally.
<PAGE>
84
Part 3
Purchaser Warranties
The Purchaser hereby represents and warrants as follows:
1. Due Organisation
----------------
The Purchaser is a corporation duly organised and validly existing under
the laws of Bermuda.
2. Power and Authority
-------------------
(a) The execution and delivery of and performance by each Purchaser Party
(other than the Purchaser Guarantor) of its obligations under the
Relevant Agreements to which it is a party will not:
(1) result in a breach or constitute a default under the constitutive
documents of such Purchaser Party; or
(2) result in a breach of, or constitute a default under any
agreement or other instrument to which such Purchaser Party is a
party or by which such Purchaser Party is bound; or
(3) result in a breach of any order, judgment or decree of any court
or governmental agency to which such Purchaser Party is a party
or by which such Purchaser Party is bound; or
(4) require the consent of the shareholder of such Purchaser Party.
(b) The Purchaser has all the requisite power and capacity to enter into
and perform its obligations under this Agreement.
(c) Each Relevant Agreement and all documents and instruments executed
pursuant thereto are, and when delivered will be, valid and legally
binding obligations of each Purchaser Party (other than the Purchaser
Guarantor) which is a party to it, enforceable, subject to exceptions
which would be customary in a formal legal opinion, in accordance with
their terms, and the execution, performance and implementation of each
Relevant Agreement and the matters contemplated thereby have been duly
authorised by all necessary corporate action on the part of each
Purchaser Party (other than the Purchaser Guarantor) which is a party
to it and each Relevant Agreement have been duly executed by each
Purchaser Party (other than the Purchaser Guarantor) which is a party
to it.
<PAGE>
85
3. Consents
--------
Except as set forth in Schedule 9, no consent, authorisation, order or
approval of, or filing or registration with, any governmental authority or
other person that has not been obtained is required for the execution and
delivery of the Relevant Agreements by the Purchaser Parties party thereto
or the consummation of the transactions contemplated by the Relevant
Agreements.
<PAGE>
86
Part 4
Purchaser Guarantor Warranties
The Purchaser Guarantor hereby represents and warrants as follows:
1. Due Organisation
----------------
The Purchaser Guarantor is a corporation duly organised and validly
existing under the laws of Bermuda.
2. Power and Authority
-------------------
(a) The execution and delivery of and performance of the Relevant
Agreements to which it is a party will not result in a breach of or
constitute a default under the constitutive documents of the Purchaser
Guarantor or result in a breach of or constitute a default under any
agreement or other instrument to which the Purchaser Guarantor is a
party or by which the Purchaser Guarantor is bound.
(b) The Purchaser Guarantor has all the requisite corporate power and
capacity to enter into and perform its obligations under the Relevant
Agreements to which it is a party.
(c) Each Relevant Agreement to which the Purchaser Guarantor is a party
and all documents and instruments executed pursuant thereto by it are,
and when delivered will be, valid and legally binding obligations of
the Purchaser Guarantor, enforceable, subject to exceptions which
would be customary in a formal legal opinion, in accordance with their
terms, and the execution, performance and implementation of each
Relevant Agreement and the matters contemplated thereby by the
Purchaser Guarantor have been duly authorised by all necessary
corporate action on the part of the Purchaser Guarantor and each
Relevant Agreement to which it is a party has been duly executed by
the Purchaser Guarantor.
3. The Convertible Preferred Stock
-------------------------------
The Convertible Preferred Stock will on issue be credited as fully paid.
None of the Convertible Preferred Stock will be subject to any pre-emptive
rights of the holders of any class of the capital stock of the Purchaser
Guarantor.
4. Investment Company Act
----------------------
The Purchaser Guarantor is not an "investment company" within the meaning
of the Investment Company Act of 1940 of the United States.
<PAGE>
87
5. Reports and Financial Statements
--------------------------------
The Purchaser Guarantor has filed all reports required under the Exchange
Act to be filed by the Purchaser Guarantor with the SEC since its initial
public offering on August 13, 1998 (collectively, the "SEC Reports").
None of the SEC Reports, as of their respective dates, contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading. Each of
the balance sheets (including the related notes) included in the SEC
Reports presents fairly, in all material respects, the consolidated
financial position of the Purchaser Guarantor and its subsidiaries as of
the respective dates thereof, and the other related statements (including
the related notes) included in the SEC Reports present fairly, in all
material respects, the results of operations and the changes in financial
position of the Purchaser Guarantor and its subsidiaries for the respective
periods or as of the respective dates set forth therein, all in conformity
with generally accepted accounting principles consistently applied during
the periods involved, except as otherwise noted therein and subject, in the
case of the unaudited interim financial statements, to normal year-end
adjustments. All of the SEC Reports, as of their respective dates,
complied as to form in all material respects with the requirements of the
Exchange Act, the Securities Act and the applicable rules and regulations
thereunder.
6. No Material Adverse Effect on the Purchaser Guarantor
-----------------------------------------------------
Since September 30, 1999, except as disclosed in the SEC Reports there has
been no material adverse change in the financial condition or results of
operations of the Purchaser Guarantor and its subsidiaries, taken as a
whole, other than any such change arising out of or resulting from the
economy or securities markets generally.
<PAGE>
88
SCHEDULE 6:
Counter-indemnities
<TABLE>
<CAPTION>
In favour of Issued by Nature of instrument Guaranteed Amount
<C> <S> <C> <C> <C>
1 The Government of the Hong Hutchison Whampoa Limited Deed of Undertaking and HK$50,000,000.00
Kong SAR Guarantee (in relation to the
moratorium)
========================================================================================================================
2 The Government of the Hong Hutchison Whampoa Limited Guarantee (in relation to the N/A
Kong SAR ESD Project)
========================================================================================================================
3 The Hongkong and Shanghai Hutchison Counter-indemnity for HK$12,320,000.00
Banking Corporation Telecommunications Limited Performance Bond given in
(to be confirmed) respect of the ESD Project
========================================================================================================================
4 The Hongkong and Shanghai Hutchison Counter-indemnity (in respect HK$250,000.00
Banking Corporation Telecommunications (Hong of Guarantee provided by HSBC
Kong) Ltd to the Hong Kong Electric Co
Ltd for the development of the
Electronic Billing System
========================================================================================================================
In favour of Commencement Date Expiry Date
1 The Government of the Hong To be executed* 30 June 2003
Kong SAR
============================================================================
2 The Government of the Hong To be executed* 3 months after
Kong SAR completion of the
ESD Project
============================================================================
3 The Hongkong and Shanghai To be executed* Till end of all
Banking Corporation obligations under
contract
============================================================================
4 The Hongkong and Shanghai 28 April 1999 31 October 2000
Banking Corporation
============================================================================
</TABLE>
* substantially in the form attached to the Disclosure Letter
<PAGE>
89
SCHEDULE 7:
Summary of Excluded Business Transfer Arrangements
<TABLE>
<CAPTION>
Abbreviations Companies/Parties Place of Incorporation
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
"HTPHL" Hutchison Telecom Properties Holdings Limited BVI
"HTSL" Hutchison Teleservices Limited BVI
"CNL" Colonial Nominees Limited HK
"Excluded Companies" Goldpraise, Goldtop, HMTSL and Mollson
"Goldpraise" Goldpraise Limited BVI
"Goldtop" Goldtop Limited BVI
"HCL" Hutchison Communications Limited HK
"HCL Holdings" HCL Holdings Limited (formerly known as Rapid Profit Limited) BVI
"HIL" Hutchison International Limited HK
"HMSL" Hutchison MultiMedia Services Limited HK
"HMTSL" Hutchison-Management of Telecommunication Services, Limited Macau
"HTHK" Hutchison Telecommunications (Hong Kong) Limited HK
"HWL" Hutchison Whampoa Limited HK
"Mollson" Mollson Limited BVI
"HPSL" Hutchison Paging Services Limited HK
"WHL (CI)" Whampoa Holdings (C.I.) Limited Jersey
- ---------------------------------------------------------------------------------------------------------------------------
"BVI" British Virgin Islands -
"HK" Hong Kong Special Administrative Region of the People's Republic
of China -
- ---------------------------------------------------------------------------------------------------------------------------
"Macau lawyers" J. Neto Valente Advogades -
"WKLL" Woo, Kwan, Lee & Lo -
</TABLE>
<PAGE>
90
<TABLE>
<CAPTION>
Steps/Documents Parties Responsibility Remarks
<S> <C> <C> <C> <C>
1. Incorporation of HPSL
---------------------
a. Date of Incorporation : 5th January 1995 (Name changed to
Hutchison Paging Services Limited on
29th September 1999)
b. Place of Incorporation : HK
c. Authorised share capital: HK$10,000
d. Issued share capital : HK$20 divided into 2 shares of HK$10
each
e. Shareholders : 1. Mollson
2. CNL
f. Directors : Dennis Lui
Agnes Nardi
Stephen Ngan
g. Registered Office : 22nd Floor, Hutchison House, 10 Harcourt
Road, Hong Kong
h. Secretary : Edith Shih
i. Company no. : 502096
</TABLE>
<PAGE>
91
<TABLE>
<CAPTION>
Steps/Documents Parties Responsibility Remarks
<S> <C> <C> <C> <C>
2.1.1 Incorporation of HTPHL
----------------------
a. Date of Incorporation : 30th March 1994 (Name changed to
Hutchison Telecom Properties Holdings
Limited on 23rd September 1999)
b. Place of Incorporation : BVI
c. Authorised share capital: US$50,000 divided into 50,000 shares of
US$1.00 each
d. Issued share capital : 1 share of US$1.00 each
e. Shareholder : Mollson
f. Directors : Dennis Lui
Agnes Nardi
Stephen Ngan
g. Registered Office : P.O. Box 71, Craigmuir Chambers, Road
Town, Tortola, British Virgin Islands
h. Registered Agent : HWR Services Limited
</TABLE>
<PAGE>
92
<TABLE>
<CAPTION>
Steps/Documents Parties Responsibility Remarks
<S> <C> <C> <C> <C>
2.1.2 Incorporation of HTSL
---------------------
a. Date of Incorporation : 2nd June 1993 (Name changed to
Hutchison Teleservices Limited on 4th
October 1999)
b. Place of Incorporation : BVI
c. Authorised share capital: US$50,000 divided into 50,000 shares of
US$1 each
d. Issued share capital : 1 share of US$1.00 each
e. Shareholder : Mollson
f. Directors : Dennis Lui
Agnes Nardi
Steve Li
g. Registered Office : P.O. Box 71, Craigmuir Chambers, Road
Town, Tortola, British Virgin Islands
h. Registered Agent : HWR Services Limited
2.2 Registration of HTPHL under Part XI of Companies Ordinance of Hong Kong
-----------------------------------------------------------------------
2.2.1 Form F1 - One Director of HTPHL WKLL
Registration of an oversea company in HK
2.2.2 Letter of Undertaking - One Director of HTPHL WKLL
Undertaking from HTPHL to the HK Companies Registry to submit its accounts
required under s.336(1) of the Companies Ordinance
</TABLE>
<PAGE>
93
<TABLE>
<CAPTION>
Steps/Documents Parties Responsibility Remarks
<S> <C> <C> <C> <C>
2.2.3 Power of Attorney - One Director of WKLL
Appointment of authorised person(s) HTPHL
under Part XI of the Companies Ordinance
2.2.4 Certified copies of Certificate of Incorporation One Director of WKLL
and M&A of HTPHL - Certified by a director of HTPHL HTPHL
under oath before a HK solicitor
2.2.5 Directors' written resolutions of HTPHL Directors of WKLL see 7.2.5
to approve Part XI Registration and HTPHL
appointment of authorised persons
2.2.6 Submission of documents nos. 2.2.1 to 2.2.4 WKLL WKLL
above and cheque of HK$1,800 to the
HK Companies Registry
3.1 Transfer of Mollson by HCL Holdings to WHL(CI)
----------------------------------------------
3.1.1 Sale and Purchase Agreement - HCL Holdings, WKLL
HCL Holdings agrees to transfer to WHL(CI) WHL(CI)
one share in Mollson, representing
the entire issued share capital of Mollson
3.1.2 Instrument of transfer HCL Holdings, WKLL Register of members of
WHL(CI) Mollson outside HK
3.1.3 Directors' written resolutions of HCL Holdings Directors of WKLL
to approve signing of Sale and HCL Holdings
Purchase Agreement
3.1.4 Directors' written resolutions of WHL(CI) Directors of WKLL
to approve signing of Sale and WHL(CI)
Purchase Agreement and change of directorships
3.1.5 Directors' written resolutions of Mollson to Directors of WKLL
approve the transfer and change of Mollson
directorships
3.1.6 Inform registered agent to make relevant Secretary of Secretary of
entries in the register of members Mollson Mollson
3.1.7 Cancellation of old share certificate and issue of Secretary of Secretary of
new share certificate of Mollson Mollson
Mollson to WHL(CI)
</TABLE>
<PAGE>
94
<TABLE>
<CAPTION>
Steps/Documents Parties Responsibility Remarks
<S> <C> <C> <C> <C>
3.2 Change of Directorships of WHL(CI) and Mollson
----------------------------------------------
In respect of WHL(CI) :-
------------------------
3.2.1 Directors' written resolutions - Directors of WHL(CI) WKLL See 3.1.4
to approve resignation and appointment of directors
3.2.2 2 Letters of Resignation from George Magnus relevant Directors of WKLL
and Edith Shih WHL(CI)
3.2.3 2 Letters of Consent to Act as director from relevant Directors of WKLL
Dennis Lui and Agnes Nardi WHL(CI)
3.2.4 Inform registered agent to make relevant Secretary of WHL(CI) Secretary of WHL(CI)
entries in register of directors
In respect of Mollson :-
------------------------
3.2.5 Directors' written resolutions - Directors of Mollson WKLL See 3.1.5
to approve resignation and appointment of directors
3.2.6 Letter of Resignation from Edith Shih relevant Director of WKLL
Mollson
3.2.7 Letter of Consent to Act as director from Agnes Nardi relevant Director of WKLL
Mollson
3.2.8 Inform registered agent to make relevant Secretary of Mollson Secretary of Mollson
entries in register of directors
4. Transfer of Goldtop by HCL to HTSL
----------------------------------
4.1 Sale and Purchase Agreement - HCL, HTSL WKLL
HCL agrees to transfer to HTSL one share in Goldtop,
representing the entireissued share capital of Goldtop
4.2 Instrument of transfer HCL, HTSL WKLL Register of members
of Goldtop outside
Steps/Documents Parties Responsibility Remarks
HK
</TABLE>
<PAGE>
95
<TABLE>
<CAPTION>
4.3 Loan Assignment Deed HCL, HTSL, Goldtop WKLL
<S> <C> <C> <C> <C>
4.4 Directors' written resolutions of HCL to approve Directors of HCL WKLL To cover all matters
signing of Sale and Purchase Agreement and the relating to this
Loan Assignment Deed restructuring
4.5 Directors' written resolutions of HTSL to approve Directors of HTSL WKLL To cover all matters
signing of Sale and Purchase Agreement and the relating to this
Loan Assignment Deed restructuring
4.6 Directors' written resolutions of Goldtop to approve Directors of Goldtop WKLL
the transfer and the Loan Assignment Deed
4.7 Inform registered agent to make relevant entries Secretary of Goldtop Secretary of Goldtop
in the register of members
4.8 Cancellation of old share certificate and issue Secretary of Goldtop Secretary of Goldtop
of new share certificate of Goldtop to HTSL
5. Transfer of Goldpraise by HCL to HTSL
-------------------------------------
5.1 Sale and Purchase Agreement - HCL, HTSL WKLL
HCL agrees to transfer to HTSL one share in
Goldpraise, representing the entire
issued share capital of Goldpraise
5.2 Instrument of transfer HCL, HTSL WKLL Register of members
of Goldpraise
outside HK
5.3 Loan Assignment Deed HCL, HTSL, Goldpraise WKLL
5.4 Directors' written resolutions of HCL to approve Directors of HCL WKLL See 4.4
signing of Sale and Purchase Agreement and the
Loan Assignment Deed
5.5 Directors' written resolutions of HTSL to approve Directors of HTSL WKLL See 4.5
signing of Sale and Purchase Agreement and the
Loan Assignment Deed
5.6 Directors' written resolutions of Goldpraise to Directors of Goldpraise WKLL
approve the transfer and the Loan Assignment Deed
</TABLE>
<PAGE>
96
<TABLE>
<CAPTION>
Steps/Documents Parties Responsibility Remarks
<S> <C> <C> <C> <C>
5.7 Inform registered agent to make relevant entries Secretary of Secretary of
in the register of members Goldpraise Goldpraise
5.8 Cancellation of old share certificate and issue Secretary of Secretary of
of new share certificate of Goldpraise to HTSL Goldpraise Goldpraise
6. Transfer of HMTSL by HCL to HTSL
--------------------------------
6.1 Sale and Purchase Agreement - HCL, HTSL WKLL
HCL agrees to transfer to HTSL two shares
in HMTSL, representing the entire issued share
capital of HMTSL
6.2 (a) Transfer Deed HCL, HTSL WKLL/Macau lawyers Register of members
(b) Declaration of Trust CNL of HMTSL outside
Hong Kong
6.3 Loan Assignment Deed HCL, HTSL, HMTSL WKLL
6.4 (a) Directors' written resolutions of HCL to Directors of HCL WKLL See 4.4
approve/ratify signing of Sale and Purchase
Agreement and the Loan Assignment Deed
(b) Directors' written resolutions of HCL to Directors of WKLL/Macau lawyers
approve/ratify the signing of the Transfer HCL/ Notary
Deed (with Notary Public certificate) Public
6.5 Directors' written resolutions of CNL to Directors of WKLL/Macau lawyers
approve/ratify the signing of Transfer CNL/ Notary
Deed (with Notary Public certificate) Public
6.6 (a) Directors' written resolutions of Directors of WKLL See 4.5
HTSL to approve/ratify signing of Sale HTSL
and Purchase Agreement
(b) Directors' written resolutions of HTSL Directors of WKLL/Macau lawyers
to approve/ratify the signing of the HTSL/ Notary
Transfer Deed (with Notary Public certificate) Public
6.7 Directors' written resolutions of HMTSL to Directors of WKLL
approve/ratify the transfer and the HMTSL
Loan Assignment Deed
6.8 Make relevant entries in the register of members Secretary of Secretary of
HMTSL HMTSL
6.9 Cancellation of old share certificates and issue Secretary of Secretary of
of new share certificates of HMTSL to HTSL HMTSL HMTSL
Steps/Documents Parties Responsibility Remarks
</TABLE>
<PAGE>
97
<TABLE>
<CAPTION>
7. Transfer of properties from HCL at revalued cost
<S> <C> <C> <C> <C>
------------------------------------------------
7.1 Transfer of properties from HCL to HPSL
(a) Flat 3, 34/F., Block A with Block Roof, Po Sing
Centre, Ta Chuen Ping Street, Kwai Chung
(b) Shop C, G/F and Lavatory M/F., Silver Commercial Building,
719 Nathan Road, Mongkok, Kowloon
(c) Flat C, 23/F with Roof, Tung Po Building,
483-497 King's Road, North Point
(d) Office No. 1 of 29/F and Portion of Roof Top, Ho King
Commercial Centre, 2-16 Fa Yuen Street, Kowloon
7.1.1 Statutory Declaration as to loss of title Director of HCL WKLL
deeds for property (a)
7.1.2 Memorandum for Sale and Purchase for each property HCL, HPSL WKLL
7.1.3 Assignment for each property HCL, HPSL WKLL
7.1.4 Directors' written resolutions of HCL Directors of HCL WKLL See 4.4
approving the transfer
7.1.5 Directors' written resolutions of HPSL Directors of HPSL WKLL To cover all matters
approving the acquisition relating to
this restructuring
7.1.6 Memorials for WKLL WKLL
(a) Memorandum for Sale and Purchase
(b) Assignment
7.1.7 Questionnaire for stamping of Assignment WKLL WKLL
7.1.8 Submit Assignment to Stamp Office for stamping WKLL Within 30 days
7.1.9 Register Memorandum for Sale and Purchase and WKLL Within one month
Assignment with Land Registry
Steps/Documents Parties Responsibility Remarks
</TABLE>
<PAGE>
98
<TABLE>
<CAPTION>
7.2 Transfer of properties from HCL to HTPHL
<S> <C> <C> <C> <C>
(a) Shop D on G/F., 1/F., Flat C on 2/F and Flat Roof, Gardenview
Building, 197-209 Sai Yeung Choi Street
(b) Flat F, 28/F with Roof, Kwong Fai Mansion, 1G-1H, 3-13 Kwong Wah
Street, Mongkok, Kowloon
(c) Workshop F, 7/F., Hop Hing Industrial Building, 704 Castle Peak
Road, Kowloon
(d) Shop 18, M/F, Kwun Tong Plaza, 68 Hoi Yuen Road, Kwun Tong,
Kowloon
(e) 1/F. of 90 and 92 Sai Yee Street, 1/F. of 72 and 74 Argyle
Street, 2/F. of 90 Sai Yee Street and 2/F. of 72 Argyle Street
(f) Shop 33 and 39, 1/F., Ho King Commercial Centre, 2-16 Fa Yuen
Street, Kowloon
(g) Portion A of 4/F., Ho King Commercial Centre, 2-16 Fa Yuen
Street, Kowloon
(h) 2/F and 3/F., Portion of 3/F., Ho King Commercial Centre,
2-16 Fa Yuen Street, Kowloon
7.2.1 Statutory Declaration as to loss of title deeds for Director of HCL WKLL
properties (c) and (d)
7.2.2 Memorandum for Sale and Purchase for each property HCL, HTPHL WKLL
7.2.3 Assignment HCL, HTPHL WKLL
7.2.4 Directors' written resolutions of HCL approving the transfer Directors of HCL WKLL See 4.4
7.2.5 Directors' written resolutions of HTPHL approving the Directors of WKLL
acquisition and Part XI registration under HTPHL
Companies Ordinance
7.2.6 Memorials for WKLL WKLL
(a) Memorandum for Sale and Purchase
(b) Assignment
7.2.7 Questionnaire for stamping of Assignment WKLL WKLL
7.2.8 Submit Assignment to Stamp Office for stamping WKLL Within 30
days
Steps/Documents Parties Responsibility Remarks
7.2.9 Register Memorandum for Sale and Purchase and Assignment WKLL Within one
with month
</TABLE>
<PAGE>
99
<TABLE>
<CAPTION>
Land Registry
<S> <C> <C> <C> <C>
8. Transfer of business, assets and liabilities relating
-----------------------------------------------------
to paging business by HCL to HPSL
---------------------------------
8.1 Sale and Purchase Agreement for the transfer of :- HCL, HPSL WKLL
(a) fixed assets
(b) current assets and current liabilities
(c) business
(d) rights under all existing contracts
8.2 Deed of Assignment and Assumption HCL, HPSL WKLL See Schedule
1 to 8.1
8.3 Notice in Government Gazette as to transfer of business HPSL WKLL
8.4 Directors' written resolutions of HCL approving the transfer Directors of HCL WKLL See 4.4
8.5 Directors' written resolutions of HPSL approving the acquisition Directors of HPSL WKLL See 7.1.5
9. Paging Licences
---------------
Letter from HCL to OFTA - 2 Public Radiocommunication Service HPSL, HCL HPSL, HCL
Licences granted to HCL to be transferred/assigned to HPSL
with the prior written consent of OFTA
10. Radio Dealer Licence
--------------------
To inform FADM to apply for new BR Certificates and Radio Dealer
Licences
11. Shares in Hong Kong Radio Paging Association Limited ("HKRPAL")
---------------------------------------------------------------
11.1 Instrument of Transfer HCL, HPSL WKLL
11.2 Bought and Sold Notes HCL, HPSL WKLL
Steps/Documents Parties Responsibility Remarks
11.3 Minutes of Board Meeting/Directors' written resolutions of HKRPAL Directors of WKLL
to approve the transfer HKRPAL
</TABLE>
<PAGE>
100
<TABLE>
<CAPTION>
12. Waiving of loan by HWL
<S> <C> <C> <C> <C>
----------------------
Directors' written resolutions of HWL waiving loan advanced to HCL Directors of HWL WKLL
13. Repayment of bank loan and part of the restructuring loan and
-------------------------------------------------------------
conversion of the balance to shareholders' loans
------------------------------------------------
14. Novation/assignment of contracts
--------------------------------
</TABLE>
<PAGE>
101
SCHEDULE 8:
Summary of the Partnership Reorganisation Arrangements
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Abbreviations Companies/Parties Place of Incorporation
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
"Analogue" Analogue Technical Agencies Limited HK
"Aberdeen" Aberdeen Commercial Investments Limited HK
"CSC" CSC Intelicom, Inc. Delaware
"CNL" Colonial Nominees Limited
"HCL" Hutchison Communications Limited HK
"HIL" Hutchison International Limited HK
"HNP" HCL Network Partnership HK
"Hongville" Hongville Limited HK
"HPHL" HCL Partnership Holdings Limited HK
"HTHK" Hutchison Telecommunications (Hong Kong) Limited HK
"HWPL" Hutchison Whampoa Properties Limited HK
"IVRS" IVRS (International) Limited HK
"Palliser" Palliser Investments Limited HK
"Siemens" Siemens Limited HK
"Siemens Guarantor" Siemens Aktiengesellschaft Germany
"Unitech" Unitech Computer Systems Limited
- ------------------------------------------------------------------------------------------------------------------------
"HK" Hong Kong Special Administrative Region of
the People's Republic of China -
- ------------------------------------------------------------------------------------------------------------------------
"WKLL" Woo, Kwan, Lee & Lo -
</TABLE>
<PAGE>
102
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Steps/Documents Parties Responsibility Remarks
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Ratification of Execution of Documents
--------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
1.1 Directors' written resolution of Hongville to Directors of Hongville WKLL
ratify the execution of the following agreements
(the "Existing Agreements") :-
(a) the international software license,
maintenance and services agreement
between HNP and CSC dated 10th July, 1995
(the "CSC Agreement")
(b) the agreement between HNP and IVRS on
customer service support technology
and related equipment and software (the
"IVRS Agreement")
(c) the maintenance service agreements between
HNP and Unitech regarding ECL DTX-360 system
and ECI DTX-240 and coherent EC-6000 Echo
Canceller systems respectively; and
(d) contract for post warranty support dated
14th March, 1997 between HNP, Siemens and
Siemens Guarantor
- -----------------------------------------------------------------------------------------------------------------------------------
1.2 Directors' written resolution of Palliser to Directors of Palliser WKLL
Existing Agreements
- -----------------------------------------------------------------------------------------------------------------------------------
1.3 Directors' written resolution of Aberdeen to Directors of Aberdeen WKLL
ratify the execution of the Existing
Agreements
- -----------------------------------------------------------------------------------------------------------------------------------
1.4 Written consent of action by the partners of Hongville, Palliser, WKLL
HNP to ratify the execution of the Existing Aberdeen
Agreements
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
103
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Steps/Documents Parties Responsibility Remarks
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2. Restructuring of HNP in Year 1999
---------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
2.1 Incorporation of HPHL HTHK
(a) Date of Incorporation : 15th January 1997
(Name to be changed
to HCL Partnership
Holdings Limited)
(b) Place of Incorporation : HK
(c) Authorised share capital : HK$10.000
(d) Issued share capital : HK$2.00 divided into
2 shares of HK$1.00 each
(e) Shareholders : 1. HCL
2. CNL
(f) Directors : Canning Fok
Susan Chow
Dennis Lui
Agnes Nardi
(g) Registered Office : 22nd Floor, Hutchison
House, 10 Harcourt Road,
Hong Kong
(h) Secretary : Edith Shih
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
104
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Steps/Documents Parties Responsibility Remarks
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2.2 Restructuring agreement regarding :- Hongville, Palliser, WKLL
(a) retirement of Palliser and Aberdeen as Aberdeen, HCL, HPHL
partners of HNP;
(b) admission of HCL and HPHL as new partners
of HNP holding respectively 99.98% and
0.01% interest in the newly constituted
partnership (see Chart 2);
(c) capital contribution by HCL and HPHL
according to their respective percentage
holding in HNP;
(d) loan advance by HCL and HPHL respectively to HNP;
(e) repayments by HNP to Hongville, Palliser and
Aberdeen as to:-
(i) the entire amount of their respective
capital contribution (except for Hongville,
an amount representing Hongville's reduced
partnership share in HNP shall be retained
with HNP to reflect its pro-rata capital
contribution); and
(ii) the entire amount of their respective loan
advance (except for Hongville, an amount
representing Hongville's reduced partnership
share in HNP shall be retained with HNP to
reflect its pro-rata loan advance)
- -----------------------------------------------------------------------------------------------------------------------------------
2.3 Directors' written resolution of Hongville to approve Directors of Hongville WKLL
the Restructuring Agreement and other documents relating
to the restructuring
- -----------------------------------------------------------------------------------------------------------------------------------
2.4 Directors' written resolution of Palliser to approve Directors of Palliser WKLL
the Restructuring Agreement and other documents
relating to the restructuring
- -----------------------------------------------------------------------------------------------------------------------------------
2.5 Directors' written resolution of Aberdeen to approve Directors of Aberdeen WKLL
the Restructuring Agreement and other documents relating
to the restructuring
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Steps/Documents Parties Responsibility Remarks
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2.6 Directors' written resolution of HCL to approve the Directors of HCL WKLL
Restructuring Agreement and other documents relating
to the restructuring and to approve borrowing of a
non-interest bearing loan from HIL and granting of
a non-interest bearing loan to HPHL
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
105
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Steps/Documents Parties Responsibility Remarks
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2.7 Directors' written resolution of HPHL to approve the Directors of HPHL WKLL
Restructuring Agreement and other documents relating
to the restructuring and to approve borrowing of a
non-interest bearing loan from HCL
- -----------------------------------------------------------------------------------------------------------------------------------
2.8 Directors' written resolution of HIL to approve granting Directors of HIL WKLL
of a non-interest bearing loan to HCL
- -----------------------------------------------------------------------------------------------------------------------------------
2.9 Contribution of capital and loan advance by HCL and HK Co HIL, HCL, HPHL
to HNP through loan provided by HIL
- -----------------------------------------------------------------------------------------------------------------------------------
2.10 Written consent of action by the partners of HNP to HNP, Hongville,
approve repayment of loan advance by HNP to Hongville, Palliser, Aberdeen,
Palliser and Aberdeen which amount shall be ultimately HWPL, HIL
repaid to HIL
- ----------------------------------------------------------------------------------------------------------------------------------
2.11 Form IRBR64 regarding changes to particulars of HNP Hongville, Palliser, WKLL Particulars have to
filed under the Business Registration Ordinance Aberdeen, HCL, HK Co to be filed within 1
month from the date
of change
- -----------------------------------------------------------------------------------------------------------------------------------
2.12 Notice in Government Gazette as to change of partners WKLL WKLL Government Gazette
of HNP is published on
every Friday and
deadline of
Government Printer
for receiving notice
for publication is
noon of Monday
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Steps/Documents Parties Responsibility Remarks
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2.13 Notification to all persons who deal with HNP as to HNP WKLL
the change of partners of HNP, including :-
(a) CSC
(b) IVRS
(c) Unitech
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
106
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Steps/Documents Parties Responsibility Remarks
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(d) Siemens
(e) Siemens Guarantor
(f) HCL
(g) Analogue
- -----------------------------------------------------------------------------------------------------------------------------------
2.14 Direct Covenants to be executed by HCL and HPHL HCL, HPHL WKLL
acknowledging that they are bound by the following
existing licence agreements :-
(a) the CSC Agreement
(b) the IVRS Agreement
(c) the equipment lease agreement dated 29th July, 1996
between HNP and HCL
(d) the system supply and project management agreement
dated 9th September, 1994 between HNP, Siemens and
Siemens Guarantor
(e) the software licence dated 9th September, 1994 between
HNP and Siemens Guarantor
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
107
SCHEDULE 9:
Approvals
Part 1
------
1. Requisite consent of the Federal Communications Commission
2. Approval of the banks under the Global Crossing US$3 billion credit
agreement.
Part 2
------
1. OFTA having approved in writing the proposed transfer of Public
Radiocommunication Service Licences No. 044 and 047 held by HCL to
Hutchison Paging Services Limited pursuant to the Excluded Business
Transfer Arrangements.
<PAGE>
108
SCHEDULE 10:
Agreement Counterpart and Acknowledgement
TO: Global Crossing Ltd.
RE: The Subscription and Sale and Purchase Agreement (the "Purchase
Agreement") dated 15th November, 1999, by and among Hutchison Whampoa
Limited, Hutchison Telecommunications Limited, Global Crossing Ltd.,
Global Crossing Ltd. and HCL Holdings Limited and the Registration
Rights Agreement (the "Registration Rights Agreement") dated as of
_______, 1999, by and among Global Crossing Ltd. and the Holders (as
defined in the Registration Rights Agreement)
The undersigned hereby agrees to be bound by the terms of Clause 10 of the
Purchase Agreement and the Registration Rights Agreement as a party to such
agreements, and shall be entitled to all benefits of the Holders (as defined in
the Registration Rights Agreement) and shall be subject to all obligations and
restrictions of the Holders pursuant to the Registration Rights Agreement, as
fully and effectively as though the undersigned had executed a counterpart of
such agreements together with the other parties to such agreements. The
undersigned hereby acknowledges having received and reviewed a copy of the
Purchase Agreement and the Registration Rights Agreement.
DATED this _____ day of ______________, _____
By:
Title:
Number of
Shares of
Registrable Securities:
<PAGE>
EXHIBIT 12.1
GLOBAL CROSSING LTD. AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Historical Proforma
---------------------------------------------------- --------------------------------
For the Period
March 19, 1997
Nine Months Year Ended (Date of Inception) Nine Months Year Ended
Ended September 30, December 31, to December 31, Ended September 30, December 31,
1999 1998 1997 1999 1998
------------------- ------------ ------------------- ------------------- ------------
<S> <C> <C> <C> <C> <C>
FIXED CHARGES:
Interest on debt and
capitalized leases and
amortization of
deferred finance
fees................... $ 81,538 $ 42,880 $ -- $ 375,401 $ 450,092
Interest element of
rentals................ 951 202 2 47,447 61,694
Interest capitalized... 35,313 49,933 -- 64,460 68,085
-------- -------- -------- --------- ---------
TOTAL................ $117,802 $ 93,015 $ 2 $ 487,308 $ 579,871
======== ======== ======== ========= =========
PREFERRED DIVIDENDS:
Amount................. $ 41,313 $ 12,681 $ 12,690 $ 142,140 $ 147,116
======== ======== ======== ========= =========
Gross up to pretax
based on 42.22%
effective tax rate
(except for 1997
information)........... $ 71,501 $ 21,947 $ 12,690 $ 246,002 $ 254,614
======== ======== ======== ========= =========
EARNINGS:
Income before
cumulative effect of
change in accounting
principle and
extraordinary item..... $158,636 $(68,194) $ (160) $(348,664) $(631,004)
Add back:
Provision for income
taxes................ 110,055 33,067 -- 152,827 139,522
Equity in loss of
affiliates........... 5,471 2,508 -- 12,939 21,206
Capitalized interest
included in cost of
capacity sold........ 11,345 9,128 -- 11,345 9,128
Fixed charges less
interest
capitalized.......... 82,489 43,082 2 422,848 511,786
-------- -------- -------- --------- ---------
$367,996 $ 19,591 $ (158) $ 251,295 $ 991,841
======== ======== ======== ========= =========
RATIO OF EARNINGS TO
FIXED CHARGES........... 3.12x -- -- -- --
EXCESS OF FIXED CHARGES
OVER EARNINGS........... $(73,424) $ (160) $(236,063) $(529,233)
RATIO OF EARNINGS TO
FIXED CHARGES AND
PREFERRED DIVIDENDS..... 1.94x -- -- -- --
EXCESS FIXED CHARGES AND
PREFERRED DIVIDENDS OVER
EARNINGS................ $(95,371) $(12,850) $(482,065) $(783,847)
</TABLE>
<PAGE>
Exhibit 21.1
GLOBAL CROSSING SUBSIDIARIES
Asia Global Crossing Holdings Ltd. (GC owns 93%)
Asia Global Crossing Hong Kong Limited
Asia Global Crossing Ltd.
Atlantic Crossing Holdings Ltd.
Atlantic Crossing Holdings U.K. Ltd.
Atlantic Crossing Ltd.
BRT Limited
Eulink Limited
Euratel Limited
Eutel Limited
Frontier Corporation
GC Dev. Co., Inc.
GC Pacific Landing Corp.
GC Pan European Crossing Belgie B.V.B.A.
GC Pan European Crossing Danmark A.p.S.
GC Pan European Crossing Deutschland GmbH
GC Pan European Crossing Espana S.L.
GC Pan European Crossing France S.A.R.L.
GC Pan European Crossing Holdings B.V.
GC Pan European Crossing Italia s.r.l.
GC Pan European Crossing Luxembourg I, S.R.L.
GC Pan European Crossing Luxembourg II, S.R.L.
GC Pan European Crossing Nederland B.V.
GC Pan European Crossing Osterreich GmbH
GC Pan European Crossing Switzerland GmbH
GC Pan European Crossing UK Ltd.
GC SAC Argentina S.R.L.
GC St. Croix Co.
GC UK Holding Ltd.
GCT Pacific Holdings, Ltd.
Global Access Ltd. (GC owns 49%)
Global Crossing (Bidco) Limited
Global Crossing (Holdco) Limited
Global Crossing Development Co.
Global Crossing Employee Services Inc.
Global Crossing Europe Ltd.
Global Crossing Holdings II Ltd.
Global Crossing Holdings Ltd.
Global Crossing Holdings U.K. Ltd.
Global Crossing Intermediate UK Holdings Limited
Global Crossing International, Ltd.
Global Crossing Ireland, Limited
Global Crossing Japan KK
Global Crossing Landing Holdings Ltd.
Global Crossing Landing Mexicana S. De R.L.
Global Crossing Ltd.
Global Crossing Marketing U.K. Ltd.
Global Crossing Mexicana S. De R.L. de C.V.
Global Crossing Network Center Ltd.
Global Crossing Network Center UK Ltd.
Global Crossing Services Europe, Ltd.
Global Crossing Services Ireland, Ltd.
Global Crossing Servicios S. De R.L. de C.V.
Global Crossing USA Inc.
Global Crossing USA Inc.
<PAGE>
Global Marine Systems Ltd.
Global Telesystems GmbH
GT Landing Corp.
GT Netherlands B.V.
GT U.K. Ltd.
MAC Landing Corp.
Mid-Atlantic Crossing Holding UK Ltd.
Mid-Atlantic Crossing Holdings Ltd.
Mid-Atlantic Crossing Ltd.
PAC Landing Corp.
PAC Panama Ltd.
Pacific Crossing Holdings Ltd.
Pacific Crossing Ltd. (GCT Pacific Holdings, Ltd. owns 57%)
Pacific Crossing UK Limited
Pan American Crossing Holdings Ltd.
Pan American Crossing Landing B.V.
Pan American Crossing Ltd.
Pan American Crossing UK Ltd.
PC Landing Corp.
PCL Japan Ltd.
Racal Internet Services Limited
Racal Telecommunications Inc.
Racal Telecommunications Limited
Racal Telecommunications Networks Limited
SAC Brasil Backhaul Holdings Ltda.
SAC Brasil Backhaul Ltda.
SAC Brasil Holding Ltda
SAC Brasil Ltda.
SAC Brazil (Backahaul)Ltd.
SAC Brazil Landing Holding Ltda.
SAC Brazil Landing Ltda.
SAC Chile S.A.
SAC Columbia Backhaul Limitada
SAC Columbia Limitada
SAC Landing Corp.
SAC Panama Landing Ltd.
SAC Panama S.A.
SAC Peru Backhaul S.R.L.
SAC Peru S.R.L.
South American Crossing (Backahul) Ltd.
South American Crossing (Subsea) Ltd.
South American Crossing Holding Ltd.
South American Crossing Holdings (Backhaul) Ltd.
South American Crossing Holdings (Subsea) Ltd.
South American Crossing Ltd.
US Crossing, Inc.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANT
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or incorporated by
reference in this Registration Statement on Form S-4.
/s/ Arthur Andersen & Co.
January 10, 2000
Hamilton, Bermuda
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 of Global Crossing Ltd. of our report dated January 25,
1999 relating to the financial statements, which appears on page 28 of the 1998
Annual Report to Shareholders of Frontier Corporation, which is incorporated by
reference in Frontier Corporation's Annual Report on Form 10-K for the year
ended December 31, 1998, and which appears on Page 20 of the Frontier
Corporation Current Report on Form 8-K dated January 26, 1999. We also consent
to the incorporation by reference of our report dated January 25, 1999 relating
to the financial statement schedule, which appears on page 30 of such Annual
Report on Form 10-K. We also consent to the reference to us under the headings
"Experts" and "Frontier Selected Historical Financial Information" in such
Registration Statement.
/s/ PricewaterhouseCoopers LLP
- ----------------------------------
PricewaterhouseCoopers LLP
Rochester, New York
January 10, 2000
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the inclusion of our report dated 26 May 1999 with respect to
the balance sheets of Cable & Wireless Global Marine as of 31 March 1999 and
1998 and the results of their operations and cashflows for each of the years in
the three-year period ended 31 March 1999, incorporated by reference into this
Registration Statement on Form S-4, of Global Crossing Ltd. and to the
references to our firm under the headings "Experts" and "Global Marine Systems
selected historical financial information" in the Registration Statement.
Yours faithfully
/s/ KPMG Audit Plc
-------------------------------
KPMG Audit Plc
Ipswich, England
January 10, 2000
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT AUDITORS
We consent to the inclusion of our report dated 8 October 1999, except for 2
December 1999 as to Note 5 and 17 December 1999 as to Notes 29, 30, 31 and 32
with respect to the combined balance sheets of Racal Telecommunications Limited,
Racal Telecommunications Networks Limited, Racal Internet Services Limited and
Racal Telecommunications Inc. (collectively "Racal Telecom") as of 31 March 1999
and 1998 and the combined profit and loss accounts and combined cash flow
statements for each of the years in the three year period ended 31 March 1999,
incorporated by reference into this Registration Statement on Form S-4 of Global
Crossing Ltd. and to the references to our firm under the headings "Experts" and
"Racal Telecom selected historical financial information" in this Registration
Statement.
Yours faithfully
/s/ Deloitte & Touche
-------------------------------
Deloitte & Touche
London, England
January 10, 2000
<PAGE>
EXHIBIT 23.5
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 of Global Crossing Ltd. of our report dated December 15,
1999 relating to the financial statements of HCL Holdings Limited for each of
the three years ended December 31, 1998. We also consent to the reference to us
under the headings "Experts" and "HCL Holdings selected historical financial
information" in this Registration Statement.
/s/ PricewaterhouseCoopers
- ----------------------------------
PricewaterhouseCoopers
Hong Kong
January 10, 2000
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
__________________________
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
__________________________
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) _______
__________________________
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I. R. S. Employer
if not a U. S. national bank) Identification No.)
114 West 47th Street 10036-1532
New York, New York (Zip Code)
(Address of principal
executive offices)
__________________________
Global Crossing Ltd.
(Exact name of obligor as specified in its charter)
Bermuda 98-0189783
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
<PAGE>
- 2 -
__________________________
Global Crossing Holdings Ltd.
(Exact name of obligor as specified in its charter)
Bermuda 98-0186828
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
Wessex House
45 Reid Street
Hamilton HM12 Bermuda
(Address of principal
executive offices)
__________________________
9 1/8% Senior Notes due 2006
9 1/2% Senior Notes due 2009
(Title of the indenture securities)
<PAGE>
- 3 -
GENERAL
1. General Information
-------------------
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Washington, D.C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. Affiliations with the Obligor
-----------------------------
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None
3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15:
Global Crossing Ltd. and Global Crossing Holdings Ltd. currently are not in
default. Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9, 10, 11, 12,
13, 14 and 15 of Form T-1 are not required under General Instruction B.
16. List of Exhibits
----------------
T-1.1 -- Organization Certificate, as amended, issued by the State of
New York Banking Department to transact business as a Trust
Company, is incorporated by reference to Exhibit T-1.1 to Form T-
1 filed on September 15, 1995 with the Commission pursuant to the
Trust Indenture Act of 1939, as amended by the Trust Indenture
Reform Act of 1990 (Registration No. 33-97056).
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
<PAGE>
- 4 -
16. List of Exhibits
----------------
(cont'd)
T-1.4 -- The By-Laws of United States Trust Company of New York, as
amended, is incorporated by reference to Exhibit T-1.4 to Form T-
1 filed on September 15, 1995 with the Commission pursuant to the
Trust Indenture Act of 1939, as amended by the Trust Indenture
Reform Act of 1990 (Registration No. 33-97056).
T-1.6 -- The consent of the trustee required by Section 321(b) of the
Trust Indenture Act of 1939, as amended by the Trust Indenture
Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the trustee
pursuant to law or the requirements of its supervising or
examining authority.
NOTE
====
As of December 20, 1999, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U.S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States
Trust Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility as to matters peculiarly
within the knowledge of the obligor or its directors, the trustee has relied
upon information furnished to it by the obligor and will rely on information to
be furnished by the obligor and the trustee disclaims responsibility for the
accuracy or completeness of such information.
__________________
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
United States Trust Company of New York, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York, and State of New York, on the 20th day
of December 1999.
UNITED STATES TRUST COMPANY
OF NEW YORK, Trustee
By: /s/Cynthia Chaney
-----------------
Cynthia Chaney
Assistant Vice President
CC/kk
<PAGE>
Exhibit T-1.6
-------------
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
September 1, 1995
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
/s/Gerard F. Ganey
------------------
By: Gerard F. Ganey
Senior Vice President
<PAGE>
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
JUNE 30, 1999
-------------
($ IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS
- ------
<S> <C>
Cash and Due from Banks $ 237,532
Short-Term Investments 155,678
Securities, Available for Sale 505,561
Loans 2,312,569
Less: Allowance for Credit Losses 17,486
----------
Net Loans 2,295,083
Premises and Equipment 56,119
Other Assets 128,087
----------
Total Assets $3,378,060
==========
LIABILITIES
- -----------
Deposits:
Non-Interest Bearing $ 815,644
Interest Bearing 1,931,882
----------
Total Deposits 2,747,526
Short-Term Credit Facilities 310,113
Accounts Payable and Accrued Liabilities 131,638
----------
Total Liabilities $3,189,277
==========
STOCKHOLDER'S EQUITY
- --------------------
Common Stock 14,995
Capital Surplus 53,041
Retained Earnings 121,974
Unrealized Loss on Securities
Available for Sale (Net of Taxes) (1,227)
----------
Total Stockholder's Equity 188,783
----------
Total Liabilities and
Stockholder's Equity $3,378,060
==========
</TABLE>
I, Richard E. Brinkmann, Managing Director & Comptroller of the named bank do
hereby declare that this Statement of Condition has been prepared in conformance
with the instructions issued by the appropriate regulatory authority and is true
to the best of my knowledge and belief.
Richard E. Brinkmann, Managing Director & Controller
August 23, 1999
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
for
9-1/8% Senior Notes due 2006
and
9-1/2% Senior Notes due 2009
of
GLOBAL CROSSING HOLDINGS LTD.
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
[ ] (THE "EXPIRATION DATE") UNLESS EXTENDED
BY GLOBAL CROSSING HOLDINGS LTD.
- --------------------------------------------------------------------------------
EXCHANGE AGENT:
UNITED STATES TRUST COMPANY OF NEW YORK.
<TABLE>
<S> <C> <C>
By Registered or Certified By Hand Delivery By Overnight Courier and By
Mail: (before 4:30 p.m.): Hand after 4:30 p.m. on the
Expiration Date:
United States Trust Company United States Trust Company United States Trust Company
of New York of New York of New York
P.O. Box 843 Cooper Station 111 Broadway 770 Broadway, 13th Floor
New York, New York 10276 New York, New York 10006 New York, New York 10003
Attn: Corporate Trust Services Attn: Lower Level Corporate Attn: Corporate Trust
Trust Window Operations
</TABLE>
By Facsimile:
(212) 420-6211
Attn: Customer Service
Confirm by telephone:
(800) 548-6565
Delivery of this Letter of Transmittal to an address other than as set
forth above or transmission via a facsimile transmission to a number other than
as set forth above will not constitute a valid delivery.
<PAGE>
2
The undersigned acknowledges receipt of the Prospectus dated [ ] (the
"Prospectus") of Global Crossing Holdings Ltd. (the "Company") and this Letter
of Transmittal (the "Letter of Transmittal"), which together describe the
Company's offer (the "Exchange Offer") to exchange $1,000 in principal amount of
the Company's new 9-1/8% Senior Notes due 2006 and $1,000 in principal amount of
the Company's new 9-1/2% Senior Notes due 2009 (the "Exchange Notes") for each
$1,000 in principal amount of outstanding 9-1/8% Senior Notes due 2006 and
$1,000 in principal amount of outstanding 9-1/2% Senior Notes due 2009,
respectively (the "Restricted Notes"). The terms of the Exchange Notes are
identical in all material respects (including principal amount, interest rate
and maturity) to the terms of the Restricted Notes for which they may be
exchanged pursuant to the Exchange Offer, except that the Exchange Notes are
freely transferable by holders thereof (except as provided herein or in the
Prospectus) and are not subject to any covenant regarding registration under the
Securities Act of 1933, as amended (the "Securities Act").
The undersigned has checked the appropriate boxes below and signed this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS CAREFULLY BEFORE
CHECKING ANY BOX BELOW.
YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE INSTRUCTIONS
INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED. QUESTIONS AND
REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS AND THIS
LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
List below the Restricted Notes to which this Letter of Transmittal
relates. If the space provided below is inadequate, the Certificate Numbers
and Principal Amounts should be listed on a separate signed schedule affixed
hereto.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
DESCRIPTION OF RESTRICTED NOTES TENDERED HEREWITH
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Name(s) and Address(es) of Registered Holder(s) Certificate Aggregate Principal Amount
(Please fill in) Number(s)* Principal Amount Tendered**
Represented by
Restricted Notes*
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
Total
- ------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by book-entry holders.
** Unless otherwise indicated, the holder will be deemed to have tendered the
full aggregate principal amount represented by such Restricted Notes. See
instruction 2.
This Letter of Transmittal is to be used either if certificates
representing Restricted Notes are to be forwarded herewith or if delivery of
Restricted Notes is to be made by book-entry transfer to an account maintained
by the Exchange Agent at The Depository Trust Company ("DTC"), pursuant to the
procedures set forth in "The Exchange Offer-Procedures for Tendering Restricted
Notes" in the Prospectus unless an Agent=s Message is delivered in lieu thereof.
Delivery of documents to the book-entry transfer facility does not constitute
delivery to the Exchange Agent.
Unless the context requires otherwise, the term "holder" for purposes of
this Letter of Transmittal means any person in whose name Restricted Notes are
registered or any other person who has obtained a properly completed bond power
from the registered holder or any person whose Restricted Notes are held of
record by DTC.
Holders whose Restricted Notes are not immediately available or who cannot
deliver their Restricted Notes and all other documents required hereby to the
Exchange Agent on or prior to the Expiration Date must tender their Restricted
Notes according to the guaranteed delivery procedure set forth in the Prospectus
under the caption "The Exchange Offer-Guaranteed Delivery Procedures."
<PAGE>
3
<TABLE>
<S> <C>
[_] CHECK HERE IF TENDERED RESTRICTED NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-
ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution______________________________________________
The Depository Trust Company_______________________________________________
Account Number_____________________________________________________________
Transaction Code Number____________________________________________________
[_] CHECK HERE IF TENDERED RESTRICTED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s)_______________________________________________
Name of Eligible Institution that Guaranteed Delivery______________________
Date of Execution of Notice of Guaranteed Delivery_________________________
If Delivered by Book-Entry Transfer:
Account Number_____________________________________________________________
[_] CHECK HERE IF EXCHANGE NOTES ARE TO BE DELIVERED TO PERSON OTHER THAN PERSON
SIGNING THE LETTER OF TRANSMITTAL:
Name_______________________________________________________________________
(Please Print)
Address____________________________________________________________________
(Including Zip Code)
[_] CHECK HERE IF EXCHANGE NOTES ARE TO BE DELIVERED TO ADDRESS DIFFERENT FROM THAT
LISTED ELSEWHERE IN THIS LETTER OF TRANSMITTAL:
Address____________________________________________________________________
(Including Zip Code)
[_] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES
OF THIS PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO:
Name_______________________________________________________________________
Address____________________________________________________________________
</TABLE>
If the undersigned, or the person receiving such Exchange Notes, whether or
not such person is the undersigned, is not a broker-dealer, the undersigned
represents that neither it nor such person is engaged in, and does not intend to
engage in, a distribution of Exchange Notes. If the undersigned, or the person
receiving such Exchange Notes, whether or not such person is the undersigned, is
a broker-dealer that will receive Exchange Notes for its own account in exchange
for Restricted Notes that were acquired as result of market-making activities or
other trading activities, the undersigned acknowledges that it or such person,
as the case may be, will deliver a prospectus in connection with any resale of
such Exchange Notes pursuant to the Exchange Offer; however, by so acknowledging
and by delivering a prospectus meeting the requirements of the Securities Act,
neither the undersigned nor such person will be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. Any holder who is an
"affiliate" of the Company or who has an arrangement or understanding with
respect to the distribution of the Exchange Notes to be acquired pursuant to the
Exchange Offer, or any broker-dealer who purchased Restricted Notes from the
Company to resell pursuant to Rule 144A
<PAGE>
4
under the Securities Act or any other available exemption under the Securities
Act, must comply with the registration and prospectus delivery requirements
under the Securities Act.
<PAGE>
5
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the principal amount of the Restricted
Notes indicated above. Subject to, and effective upon, the acceptance for
exchange of the Restricted Notes tendered herewith, the undersigned hereby
exchanges, assigns and transfers to, or upon the order of, the Company all
right, title and interest in and to such Restricted Notes. The undersigned
hereby irrevocably constitutes and appoints the Exchange Agent the true and
lawful agent and attorney-in-fact of the undersigned (with full knowledge that
said Exchange Agent acts as the agent of the Company, in connection with the
Exchange Offer) to cause the Restricted Notes to be assigned, transferred and
exchanged. The undersigned represents and warrants that it has full power and
authority to tender, exchange, assign and transfer the Restricted Notes and to
acquire Exchange Notes issuable upon the exchange of such tendered Restricted
Notes, and that, when the same are accepted for exchange, the Company will
acquire good and unencumbered title to the tendered Restricted Notes, free and
clear of all liens, restrictions, charges and encumbrances and not subject to
any adverse claim. The undersigned also warrants that it will, upon request,
execute and deliver any additional documents deemed by the Exchange Agent or the
Company to be necessary or desirable to complete the exchange, assignment and
transfer of tendered Restricted Notes or transfer ownership of such Restricted
Notes on the account books maintained by the book-entry transfer facility.
The Exchange Offer is subject to certain conditions as set forth in the
Prospectus under the caption "The Exchange Offer-Certain Conditions to the
Exchange Offer." The undersigned recognizes that as a result of these
conditions (which may be waived, in whole or in part, by the Company), as more
particularly set forth in the Prospectus, the Company may not be required to
exchange any of the Restricted Notes tendered hereby and, in such event, the
Restricted Notes not exchanged will be returned to the undersigned at the
address shown above. In addition, the Company may amend the Exchange Offer at
any time prior to the Expiration Date if any of the conditions set forth under
"The Exchange Offer-Certain Conditions to the Exchange Offer" occur.
By tendering, each holder will represent to the Company that, among other
things, (a) the Exchange Notes acquired pursuant to the Exchange Offer are being
acquired in the ordinary course of business of the person receiving such
Exchange Notes, whether or not such person is the holder, (b) neither the holder
nor any such other person has an arrangement or understanding with any person to
participate in the distribution of such Exchange Notes and (c) neither the
holder nor any such other person is an "Affiliate" of the Company as defined
under Rule 405 of the Securities Act, or if it is an affiliate, it will comply
with the registration and prospectus delivery requirements of the Securities Act
to the extent applicable. Any holder of Restricted Notes using the Exchange
Offer to participate in a distribution of the Exchange Notes (i) cannot rely on
the position of the staff of the Securities and Exchange Commission (the
"Commission") enunciated in its interpretive letter with respect to Exxon
Capital Holdings Corporation (available April 13, 1989) or similar letters and
(ii) must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with a secondary resale transaction.
If the undersigned, or the person receiving such Exchange Notes, whether or
not such person is the undersigned, is not a broker-dealer, the undersigned
represents that neither it nor such person is engaged in, and does not intend to
engage in, a distribution of Exchange Notes. If the undersigned, or the person
receiving such Exchange Notes, whether or not such person is the undersigned, is
a broker-dealer that will receive Exchange Notes for its own account in exchange
for Restricted Notes that were acquired as a result of market-making activities
or other trading activities, the undersigned acknowledges that it or such
person, as the case may be, will deliver a prospectus in connection with any
resale of such Exchange Notes; however, by so acknowledging and by delivering a
prospectus, neither the undersigned nor such person will be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, legal representatives, successors,
assigns, executors and administrators of the undersigned. Tendered Restricted
Notes may be withdrawn at any time prior to the Expiration Date in accordance
with the terms of this Letter of Transmittal. See Instruction 2.
Certificates for all Exchange Notes delivered in exchange for tendered
Restricted Notes and any Restricted Notes delivered herewith but not exchanged,
and in each case registered in the name of the undersigned, shall be delivered
to the undersigned at the address shown below the signature of the undersigned.
<PAGE>
6
TENDERING HOLDER(S) SIGN HERE
(Complete accompanying substitute Form W-9)
Signature(s) of Holder(s)
Dated____________________________
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
certificate(s) for Restricted Notes. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, please set forth the
full title of such person.) See Instruction 3.
Name(s)_________________________________________________________________________
________________________________________________________________________________
(Please Print)
Capacity (full title)___________________________________________________________
Address_________________________________________________________________________
(Including Zip Code)
Area Code and Telephone No._____________________________________________________
Taxpayer Identification No._____________________________________________________
GUARANTEE OF SIGNATURE(S)
(If Required-See Instruction 3)
Authorized Signature____________________________________________________________
Name____________________________________________________________________________
Title___________________________________________________________________________
Address_________________________________________________________________________
Name of Firm____________________________________________________________________
Area Code and Telephone No._____________________________________________________
Dated___________________________________________________________________________
<PAGE>
7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. Delivery of this Letter of Transmittal and Certificates.
A holder of Restricted Notes may tender the same by (i) properly completing
and signing this Letter of Transmittal or a facsimile hereof (all references in
the Prospectus to the Letter of Transmittal shall be deemed to include a
facsimile thereof) and delivering the same, together with the certificate or
certificates representing the Restricted Notes being tendered and any required
signature guarantees and any other documents required by this Letter of
Transmittal, to the Exchange Agent at its address set forth above on or prior to
the Expiration Date (or complying with the procedure for book-entry transfer
described below unless an Agent=s Message is delivered in lieu thereof) or (ii)
complying with the guaranteed delivery procedures described below.
The method of delivery of this Letter of Transmittal, the Restricted Notes
and any other required documents is at the election and risk of the holder, and
except as otherwise provided below, the delivery will be deemed made only when
actually received or confirmed by the Exchange Agent. If such delivery is by
mail, it is suggested that registered mail with return receipt requested,
properly insured, be used. In all cases sufficient time should be allowed to
permit timely delivery. No Restricted Notes or Letters of Transmittal should be
sent to the Company.
If tendered Restricted Notes are registered in the name of the signer of
the Letter of Transmittal and the Exchange Notes to be issued in exchange
therefor are to be issued (and any untendered Restricted Notes are to be
reissued) in the name of the registered holder (which term, for the purposes
described herein, shall include any participant in DTC (also referred to as a
"book-entry transfer facility") whose name appears on a security listing as the
owner of Restricted Notes), the signature of such signer need not be guaranteed.
In any other case, the tendered Restricted Notes must be endorsed or accompanied
by written instruments of transfer in form satisfactory to the Company and duly
executed by the registered holder, and the signature on the endorsement or
instrument of transfer must be guaranteed by a bank, broker, dealer, credit
union, savings association, clearing agency or other institution (each an
"Eligible Institution") that is a member of a recognized signature guarantee
medallion program within the meaning of Rule 17Ad-15 under the Securities
Exchange Act of 1934, as amended. If the Exchange Notes and/or Restricted Notes
not exchanged are to be delivered to an address other than that of the
registered holder appearing on the note register for the Restricted Notes, the
signature on the Letter of Transmittal must be guaranteed by an Eligible
Institution.
The Exchange Agent will make a request within two business days after the
date of receipt of the Prospectus to establish accounts with respect to the
Restricted Notes at the book-entry transfer facility for the purpose of
facilitating the Exchange Offer, and subject to the establishment thereof, any
financial institution that is a participant in the book-entry transfer
facility's system may make book-entry delivery of Restricted Notes by causing
such book-entry transfer facility to transfer such Restricted Notes into the
Exchange Agent's account with respect to the Restricted Notes in accordance with
the book-entry transfer facility's procedures for such transfer. Although
delivery of Restricted Notes may be effected through book-entry transfer into
the Exchange Agent's account at the book-entry transfer facility, an appropriate
Letter of Transmittal with any required signature guarantee and all other
required documents must in each case be transmitted to and received or confirmed
by the Exchange Agent on or prior to the Expiration Date, or, if the guaranteed
delivery procedures described below are complied with, within the time period
provided under such procedures.
If a holder desires to accept the Exchange Offer and time will not permit a
Letter of Transmittal or Restricted Notes to reach the Exchange Agent before the
Expiration Date or the procedure for book-entry transfer cannot be completed on
a timely basis, a tender may be effected if the Exchange Agent has received on
or prior to the Expiration Date, a letter, telegram or facsimile transmission
(receipt confirmed by telephone and an original delivered by guaranteed
overnight courier) from an Eligible Institution setting forth the name and
address of the tendering holder, the names in which the Restricted Notes are
registered and, if possible, the certificate numbers of the Restricted Notes to
be tendered, and stating that the tender is being made thereby and guaranteeing
that within three business days after the Expiration
<PAGE>
8
any other required documents), the Company may, at its option, reject the
tender. Copies of the notice of guaranteed delivery ("Notice of Guaranteed
Delivery") which may be used by Eligible Institutions for the purposes described
in this paragraph are available from the Exchange Agent.
A tender will be deemed to have been received as of the date when (i) the
tendering holder's properly completed and duly executed Letter of Transmittal
accompanied by the Restricted Notes (or a confirmation of book-entry transfer of
such Restricted Notes into the Exchange Agent's account at the book-entry
transfer facility or an Agent's Message in lieu thereof) is received by the
Exchange Agent, or (ii) a Notice of Guaranteed Delivery or letter, telegram or
facsimile transmission to similar effect (as provided above) from an Eligible
Institution is received by the Exchange Agent. Issuances of Exchange Notes in
exchange for Restricted Notes tendered pursuant to a Notice of Guaranteed
Delivery or letter, telegram or facsimile transmission to similar effect (as
provided above) by an Eligible Institution will be made only against deposit of
the Letter of Transmittal (or an Agent's Message in lieu thereof and any other
required documents) and the tendered Restricted Notes (or a confirmation of
book-entry transfer of such Restricted Notes into the Exchange Agent's account
at the book-entry transfer facility).
If the Letter of Transmittal signed by a person or persons other than the
registered holder or holders of Restricted Notes, such Restricted Notes must be
endorsed or accompanied by appropriate powers of attorney in a form satisfactory
to the Company, in either case signed exactly as the name or names of the
registered holder or holders appear on the Restricted Notes.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders, by execution of this Letter of Transmittal (or
facsimile thereof), shall waive any right to receive notice of the acceptance of
the Restricted Notes for exchange.
2. Partial Tenders; Withdrawals.
If less than the entire principal amount of Restricted Notes evidenced by a
submitted certificate is tendered, the tendering holder should fill in the
principal amount tendered in the box entitled "Principal Amount Tendered." A
newly issued certificate for the principal amount of Restricted Notes submitted
but not tendered will be sent to such holder as soon as practicable after the
Expiration Date. All Restricted Notes delivered to the Exchange Agent will be
deemed to have been tendered unless otherwise clearly indicated.
Tenders of Restricted Notes may be withdrawn at any time prior to the
Expiration Date.
For a withdrawal to be effective, a written notice of withdrawal sent by
telegram, facsimile transmission (receipt confirmed by telephone) or letter must
be received by the Exchange Agent at the address set forth herein prior to the
Expiration Date. Any such notice of withdrawal must (i) specify the name of the
person having tendered the Restricted Notes to be withdrawn (the "Depositor"),
(ii) identify the Restricted Notes to be withdrawn (including the certificate
number or numbers of such Restricted Notes and principal amount of each such
Restricted Note), (iii) specify the principal amount of Restricted Notes to be
withdrawn, (iv) include a statement that such holder is withdrawing its election
to have such Restricted Notes exchanged, (v) be signed by the holder in the same
manner as the original signature on the Letter of Transmittal by which such
Restricted Notes were tendered or as otherwise described above (including any
required signature guarantees) or be accompanied by documents of transfer
sufficient to have the Trustee under the Indenture register the transfer of such
Restricted Notes into the name of the person withdrawing the tender and (vi)
specify the name in which any such Restricted Notes are to be registered, if
different from that of the Depositor. The Exchange Agent will return the
properly withdrawn Restricted Notes promptly following receipt of notice of
withdrawal. If Restricted Notes have been tendered pursuant to the procedure
for book-entry transfer, any notice of withdrawal must specify the name and
number of the account at the book-entry transfer facility to be credited with
the withdrawn Restricted Notes or otherwise comply with the book-entry transfer
facility procedure. All questions as to the validity of
<PAGE>
9
notices of withdrawals, including time of receipt, will be determined by the
Company and such determination will be final and binding on all parties.
Any Restricted Notes so withdrawn will be deemed not to have been validly
tendered for exchange for purposes of the Exchange Offer. Any Restricted Notes
which have been tendered for exchange but which are not exchanged for any reason
will be returned to the holder thereof without cost to such holder (or, in the
case of Restricted Notes tendered by book-entry transfer into the Exchange
Agent's account at the book-entry transfer facility pursuant to the book-entry
transfer procedures described above, such Restricted Notes will be credited to
an account with such book-entry transfer facility specified by the holder) as
soon as practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Restricted Notes may be retendered by
following one of the procedures described under the caption "Exchange
Offer-Procedure for Tendering Restricted Notes" in the Prospectus at any time on
or prior to the Expiration Date.
3. Signature on this Letter of Transmittal; Written Instruments and
Endorsements; Guarantee of Signatures.
If this Letter of Transmittal is signed by the registered holder(s) of the
Restricted Notes tendered hereby, the signature must correspond with the name(s)
as written on the face of the certificates without alteration, enlargement or
any change whatsoever.
If any of the Restricted Notes tendered hereby are owned of record by two
or more joint owners, all such owners must sign this Letter of Transmittal.
If a number of Restricted Notes registered in different names are tendered,
it will be necessary to complete, sign and submit as many separate copies of
this Letter of Transmittal as there are different registrations of Restricted
Notes.
When this Letter of Transmittal is signed by the registered holder or
holders (which term, for the purposes described herein, shall include the book-
entry transfer facility whose name appears on a security listing as the owner of
the Restricted Notes) of Restricted Notes listed and tendered hereby, no
endorsements of certificates or separate written instruments of transfer or
exchange are required.
If this Letter of Transmittal is signed by a person other than the
registered holder or holder of the Restricted Notes listed, such Restricted
Notes must be endorsed or accompanied by separate written instruments of
transfer or exchange in form satisfactory to the Company and duly executed by
the registered holder, in either case signed exactly as the name or names of the
registered holder or holders appear(s) on the Restricted Notes.
If this Letter of Transmittal, any certificates or separate written
instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by the Company, proper evidence
satisfactory to the Company of their authority so to act must be submitted.
Endorsements on certificates or signatures on separate written instruments
of transfer or exchange required by this Instruction 3 must be guaranteed by an
Eligible Institution.
Signatures on this Letter of Transmittal need not be guaranteed by an
Eligible Institution, provided the Restricted Notes are tendered: (i) by a
registered holder of such Restricted Notes, for the holder of such Restricted
Notes; or (ii) for the account of an Eligible Institution.
4. Transfer Taxes.
The Company shall pay all transfer taxes, if any, applicable to the
transfer and exchange of Restricted Notes pursuant to the Exchange Offer. If,
however, certificates representing Exchange Notes or Restricted Notes for
principal amounts not tendered or accepted for exchange are to be delivered to,
or are to be issued in the name of, any person other than the registered holder
of the Restricted Notes tendered, or if tendered Restricted Notes are registered
in the name of any person other than the person signing the Letter of
Transmittal, or if a transfer tax is imposed for any reason other than the
exchange of Restricted Notes pursuant to the Exchange Offer, then the amount of
any such transfer taxes (whether imposed on the registered holder or any other
persons) will be payable by the tendering holder. If satisfactory evidence of
payment of such taxes or exemption therefrom is not submitted herewith, the
amount of such transfer taxes will be billed directly to such tendering holder.
<PAGE>
10
Except as provided in this Instruction 4, it will not be necessary for
transfer tax stamps to be affixed to the Restricted Notes listed in this Letter
of Transmittal.
5. Waiver of Conditions.
The Company reserves the right to waive in its reasonable judgment, in
whole or in part, any of the conditions to the Exchange Offer set forth in the
Prospectus.
6. Mutilated, Lost, Stolen or Destroyed Restricted Notes.
Any holder whose Restricted Notes have been mutilated, lost, stolen or
destroyed, should contact the Exchange Agent at the address indicated above for
further instructions.
7. Substitute Form W-9.
Each holder of Restricted Notes whose Restricted Notes are accepted for
exchange (or other payee) is required to provide a correct taxpayer
identification number ("TIN"), generally the holder's Social Security or federal
employer identification number, and certain other information, on Substitute
Form W-9, which is provided under "Important Tax Information" below, and to
certify that the holder (or other payee) is not subject to backup withholding.
Failure to provide the information on the Substitute Form W-9 may subject the
holder (or other payee) to a $50 penalty imposed by the Internal Revenue Service
and 31% federal income tax backup withholding on payments made in connection
with the Exchange Notes. The box in Part 3 of the Substitute Form W-9 may be
checked if the holder (or other payee) 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 and a TIN is not provided by the time any payment is made in
connection with the Exchange Notes, 31% of all such payments will be withheld
until a TIN is provided.
8. Requests for Assistance or Additional Copies.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter of Transmittal, may be
directed to the Exchange Agent at the address and telephone number set forth
above. In addition, all questions relating to the Exchange Offer, as well as
requests for assistance or additional copies of the Prospectus and this Letter
of Transmittal, may be directed to the Exchange Agent, at the address and
telephone number indicated above.
IMPORTANT: This Letter of Transmittal or a facsimile hereof (together with
certificates for Restricted Notes (or confirmation of book-entry transfer) and
all other required documents) or a Notice of Guaranteed Delivery must be
received by the Exchange Agent on or prior to the Expiration Date.
<PAGE>
11
IMPORTANT TAX INFORMATION
Under U.S. Federal income tax law, a holder of Restricted Notes whose
Restricted Notes are accepted for exchange may be subject to backup withholding
unless the holder provides United States Trust Company of New York, as Paying
Agent (the "Paying Agent"), through the Exchange Agent, with either (i) such
holder's correct taxpayer identification number ("TIN") on Substitute Form W-9
attached hereto, certifying that the TIN provided on Substitute Form W-9 is
correct (or that such holder of Restricted Notes is awaiting a TIN) and that (A)
the holder of Restricted Notes has not been notified by the Internal Revenue
Service that he or she is subject to backup withholding as a result of a failure
to report all interest or dividends or (B) the Internal Revenue Service has
notified the holder of Restricted Notes that he or she is no longer subject to
backup withholding; or (ii) an adequate basis for exemption from backup
withholding. If such holder of Restricted Notes is an individual, the TIN is
such holder's social security number. If the Paying Agent is not provided with
the correct TIN, the holder of Restricted Notes may be subject to certain
penalties imposed by the Internal Revenue Service.
Certain holders of Restricted Notes (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. However, exempt holders of Restricted
Notes should indicate their exempt status on Substitute Form W-9. For example,
a corporation must complete the Substitute Form W-9, providing its TIN and
indicating that it is exempt from backup withholding. In order for a foreign
individual to qualify as an exempt recipient, the holder must submit a Form W-8,
signed under penalties of perjury, attesting to that individual's exempt status.
A Form W-8 can be obtained from the Paying Agent. See the enclosed "Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9" for
more instructions.
If backup withholding applies, the Paying Agent is required to withhold 31%
of any such payments made to the holder of Restricted Notes or other payee.
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.
The box in Part 3 of the Substitute Form W-9 may be checked if the
surrendering holder of Restricted Notes 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 holder of Restricted Notes 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 Paying Agent will withhold 31% of all payments made prior to the
time a properly certified TIN is provided to the Paying Agent.
The holder of Restricted Notes is required to give the Paying Agent the TIN
(e.g., social security number or employer identification number) of the record
owner of the Restricted Notes. If the Restricted Notes 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.
<PAGE>
12
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PAYER'S NAME: UNITED STATES TRUST COMPANY OF NEW YORK, AS PAYING AGENT
- --------------------------------------------------------------------------------
<S> <C> <C>
Part 1--PLEASE PROVIDE YOUR TIN Social Security number(s) or
IN THE BOX AT RIGHT AND Employer Identification
SUBSTITUTE CERTIFY BY SIGNING AND DATING Number(s)
BELOW.
- --------------------------------------------------------------------------------
Part 2--Certification--Under penalties of
perjury, I certify that:
Form W-9
Department of the Treasury
Internal Revenue Service (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
Payor's Request for (2) I am not subject to backup withholding
Taxpayer Identification because: (a) I am exempt from backup
Number ("TIN") withholding, or (b) I have not been
notified by the Internal Revenue Service
(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 because of under reporting interest
or dividends on your tax return.
- --------------------------------------------------------------------------------
Signature Part 3-Awaiting TIN
--------------------------------
Date --------------------------------
- --------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN A $50 PENALTY
IMPOSED BY THE INTERNAL REVENUE SERVICE AND BACKUP WITHHOLDING OF 31% OF
ANY CASH PAYMENTS MADE TO YOU. 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 by the time of payment, 31%
of all reportable cash payments made to me thereafter will be withheld until I
provide a taxpayer identification number.
- --------------------------------------------------------------------------------
Signature Date
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 99.2
NOTICE OF GUARANTEED DELIVERY
for
Tender of all Outstanding
9-1/8% Senior Notes due 2006
in Exchange for New
9-1/8% Senior Notes due 2006
and
9-1/2% Senior Notes due 2009
in Exchange for New
9-1/2% Senior Notes due 2009
of
GLOBAL CROSSING HOLDINGS LTD.
Registered holders of outstanding 9-1/8% Senior Notes due 2006 and
outstanding 9-1/2% Senior Notes due 2009 (the "Restricted Notes") who wish to
tender their Restricted Notes in exchange for a like principal amount of new 9-
1/8% Senior Notes due 2006 and new 9-1/2% Senior Notes due 2009, respectively
(the "Exchange Notes") and whose Restricted Notes are not immediately available
or who cannot deliver their Restricted Notes and Letter of Transmittal (and any
other documents required by the Letter of Transmittal) to United States Trust
Company of New York (the "Exchange Agent") prior to the Expiration Date, may use
this Notice of Guaranteed Delivery or one substantially equivalent hereto. This
Notice of Guaranteed Delivery may be delivered by hand or sent by facsimile
transmission (receipt confirmed by telephone and an original delivered by
guaranteed overnight courier) or mail to the Exchange Agent. See "The Exchange
Offer Guaranteed Delivery Procedures" in the Prospectus.
<PAGE>
Delivery of this Notice of Guaranteed Delivery to an address other than as
set forth above or transmission 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 (as defined in the Prospectus), such
signature guarantee must appear in the applicable space provided on the Letter
of Transmittal for Guarantee of Signatures.
<PAGE>
3
Ladies and Gentlemen:
The undersigned hereby tenders to the Exchange Agent the principal amount
of Restricted Notes indicated below, upon the terms and subject to the
conditions contained in the Prospectus dated [ ] of Global
Crossing Holdings Ltd. (the "Prospectus"), receipt of which is hereby
acknowledged.
DESCRIPTION OF SECURITIES TENDERED
<TABLE>
<S> <C> <C> <C>
Name of Tendering Holder Name and address of Certificate Number(s) Principal Amount
registered holder as it of Restricted Notes of Restricted Notes
appears on the Tendered (or Account Tendered
Restricted Notes Number at Book-Entry
(Please Print) Facility)
- ------------------------- -------------------------- --------------------- ---------------------
- ------------------------- -------------------------- --------------------- ---------------------
- ------------------------- -------------------------- --------------------- ---------------------
- ------------------------- -------------------------- --------------------- ---------------------
- ------------------------- -------------------------- --------------------- ---------------------
- ------------------------- -------------------------- --------------------- ---------------------
</TABLE>
SIGN HERE
Name of Registered or Acting Holder:___________________________________________
Signature(s):__________________________________________________________________
Name(s) (please print):________________________________________________________
Address:_______________________________________________________________________
_______________________________________________________________________
Telephone Number:______________________________________________________________
Date:__________________________________________________________________________
<PAGE>
4
THE FOLLOWING GUARANTEE MUST BE COMPLETED
GUARANTEE OF DELIVERY
(Not to be used for signature guarantee)
The undersigned, a member of a recognized signature guarantee medallion
program within the meaning of Rule 17Ad-15 under the Securities Exchange Act of
1934, as amended, hereby guarantees to deliver to the Exchange Agent at one of
its addresses set forth above, the certificates representing the Restricted
Notes (or a confirmation of book-entry transfer of such Restricted Notes into
the Exchange Agent's account at the book-entry transfer facility), together with
a properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees, and any other documents
required by the Letter of Transmittal within three business days after the
Expiration Date (as defined in the Prospectus and the Letter of Transmittal).
Name of Firm:______________________________ ______________________________
(Authorized Signature)
Address:___________________________________
Title:________________________
___________________________________________
(Zip Code) Name:_________________________
Area Code and Telephone No.: (Please type or print)
___________________________________________ Date:_________________________
NOTE: DO NOT SEND RESTRICTED NOTES WITH THIS NOTICE OF GUARANTEED DELIVERY.
RESTRICTED NOTES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
