-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CpzqqBjVnplY4JsMuc8f9qYW9ScGDlpFkwbmvUob+rFdNcVHHgrbE8nO6h+WESwZ CBcQFrV1nE0X6CaRS6VSAA== 0000950130-99-003245.txt : 19990524 0000950130-99-003245.hdr.sgml : 19990524 ACCESSION NUMBER: 0000950130-99-003245 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 20 FILED AS OF DATE: 19990521 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: GLOBAL CROSSING LTD CENTRAL INDEX KEY: 0001061322 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 980189783 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-55643 FILM NUMBER: 99632446 BUSINESS ADDRESS: STREET 1: WESSEX HOUSE 45 REID STREET STREET 2: HAMILTON 11M12 CITY: BERMUDA BUSINESS PHONE: 4412968600 MAIL ADDRESS: STREET 1: WESSEX HOUSE 45 REID STREET STREET 2: HAMILTON 11M12 CITY: BERMUDA SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: GLOBAL CROSSING LTD CENTRAL INDEX KEY: 0001061322 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 980189783 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: SEC FILE NUMBER: 005-55643 FILM NUMBER: 99632447 BUSINESS ADDRESS: STREET 1: WESSEX HOUSE 45 REID STREET STREET 2: HAMILTON 11M12 CITY: BERMUDA BUSINESS PHONE: 4412968600 MAIL ADDRESS: STREET 1: WESSEX HOUSE 45 REID STREET STREET 2: HAMILTON 11M12 CITY: BERMUDA FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: U S WEST INC /DE/ CENTRAL INDEX KEY: 0001054522 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 840953188 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: 1801 CALIFORNIA STREET STREET 2: SUITE 390 CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3036722700 MAIL ADDRESS: STREET 1: 1801 CALIFORNIA STREET STREET 2: SUITE 390 CITY: DENVER STATE: CO ZIP: 80202 FORMER COMPANY: FORMER CONFORMED NAME: USW-C INC DATE OF NAME CHANGE: 19980204 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: U S WEST INC /DE/ CENTRAL INDEX KEY: 0001054522 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 840953188 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: 1801 CALIFORNIA STREET STREET 2: SUITE 390 CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3036722700 MAIL ADDRESS: STREET 1: 1801 CALIFORNIA STREET STREET 2: SUITE 390 CITY: DENVER STATE: CO ZIP: 80202 FORMER COMPANY: FORMER CONFORMED NAME: USW-C INC DATE OF NAME CHANGE: 19980204 SC 14D1 1 SCHEDULE 14D-1 AND SCHEDULE 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------- SCHEDULE 14D-1 Tender Offer Statement Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934 and SCHEDULE 13D Under the Securities Exchange Act of 1934 ---------------- Global Crossing Ltd. (Name of Subject Company) U S WEST, Inc. (Bidder) Common Stock, $.01 Par Value (Titles of Class of Securities) CUSIP: G3921A100 (CUSIP Number of Class of Securities) (Common Stock) U S WEST, Inc. 1801 California Street Denver, CO 80202 (303) 672-2700 (Name, address and telephone number of person authorized to receive notices and communications on behalf of bidder) Copies to: Dennis J. Block, Esq. Cadwalader, Wickersham & Taft 100 Maiden Lane New York, New York 10038 (212) 504-6000 Thomas O. McGimpsey, Esq. U S WEST, Inc. 1801 California Street Suite 5100 Denver, CO 80202 (303) 672-2712 May 17, 1999 (Date Of Event Which Requires Filing Statement On Schedule 14D-1) ---------------- CALCULATION OF FILING FEE =============================================================================== Transaction Valuation Amount of Filing Fee+ - ------------------------------------------------------------------------------- $2,463,521,389 $492,704.28 =============================================================================== + For the purpose of calculating the fee only, this amount assumes the purchase of 39,259,305 shares of Common Stock of Berra at $62.75 per share. The amount of the filing fee, calculated in accordance with Rule 0-11(d) under the Securities Exchange Act of 1934, equals 1/50 of one percent of the cash offered by the Bidder. [_]Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. Amount Previously Paid: N/A Filing Party: N/A Form or Registration No.: N/A Date Filed: N/A - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON. U S WEST, Inc. - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) (a) [_] (b) [X] - -------------------------------------------------------------------------------- 3.SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCES OF FUNDS (SEE INSTRUCTIONS) BK, AF, WC, OO - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) OR 2(f) [_] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 39,259,305 - -------------------------------------------------------------------------------- 8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 7 EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) [X] - -------------------------------------------------------------------------------- 9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 7 9.49% * - -------------------------------------------------------------------------------- 10. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) HC, CO - -------------------------------------------------------------------------------- - -------- * Pursuant to the Tender and Voting Agreement, dated as of May 16, 1999, certain parties thereto agreed to tender at least 39,259,305 shares of Common Stock beneficially owned by them in the Offer. 2 This Statement relates to a tender offer by U S WEST, Inc., a Delaware corporation ("Offeror"), to purchase just below 9.5% of the shares of Common Stock, par value $.01 per share (the "Common Stock" or the "Shares"), of Global Crossing Ltd., a Company organized under the laws of Bermuda (the "Company"), at a purchase price of $62.75 per share of Common Stock (the "Offer Price") net to the seller in cash, without interest, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated May 21, 1999 (the "Offer to Purchase"), and in the Letter of Transmittal relating to such Shares (which, as either may be amended or supplemented from time to time, collectively constitute the "Offer"), copies of which are filed as Exhibits hereto, respectively, and which are incorporated herein by reference. The 39,259,305 shares of Common Stock sought to be purchased pursuant to the Offer represent, to the best knowledge of the Offeror, just below 9.5% of the shares of Common Stock outstanding as of the date of the Offer. This Statement shall also constitute a Statement on Schedule 13D with respect to shares of Common Stock which Offeror may be deemed to beneficially own. Item 1. Security and Subject Company. (a) The name of the subject company is Global Crossing Ltd. The address of the principal executive offices of the Company is set forth in Section 8 ("Certain Information Concerning the Company") of the Offer to Purchase and is incorporated herein by reference. (b) The exact title of the class of equity securities of the Company being sought in the Offer is common stock, par value $.01 per share. The information set forth in the Introduction to the Offer to Purchase is incorporated herein by reference. (c) The information set forth in Section 6 ("Price Range of Common Stock; Dividends") of the Offer to Purchase is incorporated herein by reference. Item 2. Identity and Background. (a) through (d), (g) The information set forth in the Introduction and Section 9 ("Certain Information Concerning the Offeror") of the Offer to Purchase, and in Schedule I thereto, is incorporated herein by reference. (e) and (f) Neither the Offeror nor, to the best of its knowledge, any of the persons listed in Schedule I of the Offer to Purchase, has during the last five years (i) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws. Item 3. Past Contacts, Transactions or Negotiations With the Subject Company. (a) The information set forth in Section 11 ("Background of the Offer; Past Contacts with the Company") of the Offer to Purchase is incorporated herein by reference. (b) The information set forth in the Introduction and Section 11 ("Background of the Offer; Past Contacts with the Company"), Section 8 ("Certain Information Concerning the Company") and Section 9 ("Certain Information Concerning the Offeror") of the Offer to Purchase is incorporated herein by reference. Item 4. Source and Amount of Funds or Other Consideration. (a) through (c) The information set forth in Section 10 ("Source and Amount of Funds") of the Offer to Purchase is incorporated herein by reference. Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder. (a) through (e) The information set forth in the Introduction, Section 11 ("Background of the Offer; Past Contacts with the Company"), Section 12 ("Purpose of the Offer; Plans for the Company") and Section 13 ("The Tender Offer and Purchase Agreement") of the Offer to Purchase is incorporated herein by reference. (f) and (g) The information set forth in Section 7 ("Effect of the Offer on the Market for the Common Stock and Registration under the Exchange Act") of the Offer to Purchase is incorporated herein by reference. 3 Item 6. Interest in Securities of the Subject Company. (a) and (b) The information set forth in the Introduction, Section 9 ("Certain Information Concerning the Offeror") and Section 13 ("The Merger Agreement and Related Agreements") of the Offer to Purchase is incorporated herein by reference. Item 7. Contracts, Arrangements, Understandings or Relationships With Respect to the Subject Company's Securities. The information set forth in the Introduction, Section 11 ("Background of the Offer; Past Contacts with the Company") and Section 13 ("The Tender Offer and Purchase Agreement and Related Agreements") of the Offer to Purchase is incorporated herein by reference. Item 8. Persons Retained, Employed or to be Compensated. The information set forth in the Introduction and in Section 17 ("Fees and Expenses") of the Offer to Purchase is incorporated herein by reference. Item 9. Financial Statements of Certain Bidders. The information set forth in Section 9 ("Certain Information Concerning the Offeror") of the Offer to Purchase is hereby incorporated by reference. Item 10. Additional Information. (a) The information set forth in Section 11 ("Background of the Offer; Past Contacts with the Company"), Section 12 ("Purpose of the Offer; Short Form Merger; Plans for the Company") and Section 13 ("The Merger Agreement and Related Agreements") of the Offer to Purchase is incorporated herein by reference. (b) and (c) The information set forth in Section 16 ("Certain Legal Matters; Required Regulatory Approvals") of the Offer to Purchase is incorporated herein by reference. (d) The information set forth in Section 7 ("Effect of the Offer on the Market for the Common Stock and Registration under the Exchange Act") is incorporated herein by reference. (e) None. (f) The information set forth in the Offer to Purchase and the Letters of Transmittal is incorporated herein by reference in its entirety. Item 11. Material to be Filed as Exhibits. (a)(1) Offer to Purchase, dated May 21, 1999. (a)(2) Letter of Transmittal relating to the Common Stock. (a)(3) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(4) Letter from Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees to Clients. (a)(5) Notices of Guaranteed Delivery relating to the Common Stock. (a)(6) Press Release issued by the Offeror and the Company on May 17, 1999. (a)(7) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. 4 (b)(1) $1,000,000,000 Five-Year Credit Agreement, dated as of May 8, 1998, among U S WEST Capital Funding, Inc., U S WEST, Inc., USW-C, Inc., the Banks listed therein and Morgan Guaranty Trust Company of New York. (b)(2) $3,500,000,000 364-Day Credit Agreement, dated as of May 8, 1998, among U S WEST Capital Funding Inc., U S WEST, Inc., USW-C, Inc., the Banks listed therein and Morgan Guaranty Trust Company of New York. (b)(3) Amendment No. 1 to Credit Agreements, dated as of June 30, 1998, to the 364-Day Credit Agreement dated as of May 8, 1998 and the Five-Year Credit Agreement dated as of May 8, 1998 among U S WEST Capital Funding, Inc., U S WEST, Inc., the Banks listed on the signature pages thereto and Morgan Guaranty Trust Company of New York. (b)(4) Amended and Restated by Credit Agreement, dated as of May 7, 1999 among U S WEST Capital Funding, Inc., U S WEST, Inc. and the Banks listed on the signature pages thereof. (c)(1) Agreement and Plan of Merger, dated as of May 16, 1999, between Global Crossing Ltd. and U S WEST, Inc. (c)(2) Tender Offer and Purchase Agreement, dated as of May 16, 1999, between Global Crossing Ltd. and U S WEST, Inc. (c)(3) Voting Agreement, dated as of May 16, 1999, between Global Crossing Ltd. and U S WEST, Inc. (c)(4) Standstill Agreement, dated as of May 16, 1999, between Global Crossing Ltd. and U S WEST, Inc. (c)(5) Tender and Voting Agreement, dated as of May 16, 1999, between U S WEST, Inc. and each of the parties listed on the signature page thereto. (c)(6) Agreement, dated as of May 16, 1999, between U S WEST, Inc., Global Crossing Ltd. and each person whose name appears on the signature page thereto. (c)(7) Letter Agreement, dated as of May 16, 1999, between U S WEST, Inc. and Global Crossing Ltd. (d) None. (e) Not applicable. (f) None. 5 SIGNATURE After due inquiry and to the best of its knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct. Dated: May 21, 1999 U S WEST, INC. /s/ Thomas O. McGimpsey By: _________________________________ Thomas O. McGimpsey Assistant Secretary and Senior Attorney 6 EXHIBIT INDEX (a)(1) Offer to Purchase, dated May 21, 1999. (a)(2) Letter of Transmittal relating to the Common Stock. (a)(3) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(4) Letter from Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees to Clients. (a)(5) Notices of Guaranteed Delivery relating to the Common Stock. (a)(6) Press Release issued by the Offeror and the Company on May 17, 1999. (a)(7) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (b)(1) $1,000,000,000 Five-Year Credit Agreement, dated as of May 8, 1998, among U S WEST Capital Funding, Inc., U S WEST, Inc., USW-C, Inc., the Banks listed therein and Morgan Guaranty Trust Company of New York. (b)(2) $3,500,000,000 364-Day Credit Agreement, dated as of May 8, 1998, among U S WEST Capital Funding Inc., U S WEST, Inc., USW-C, Inc., the Banks listed therein and Morgan Guaranty Trust Company of New York. (b)(3) Amendment No. 1 to Credit Agreements, dated as of June 30, 1998, to the 364-Day Credit Agreement dated as of May 8, 1998, and the Five-Year Credit Agreement, dated as of May 8, 1998 among U S WEST Capital Funding, Inc., U S WEST, Inc., the Banks listed on the signature pages thereto and Morgan Guaranty Trust Company of New York. (b)(4) Amended and Restated 364-Day Credit Agreement, dated as of May 7, 1999 among U S WEST Capital Funding, Inc., U S WEST, Inc. and the Banks listed on the signature pages hereof. (c)(1) Agreement and Plan of Merger, dated as of May 16, 1999, between Global Crossing Ltd. and U S WEST, Inc. (c)(2) Tender Offer and Purchase Agreement, dated as of May 16, 1999, between Global Crossing Ltd. and U S WEST, Inc. (c)(3) Voting Agreement, dated as of May 16, 1999, between Global Crossing Ltd. and U S WEST, Inc. (c)(4) Standstill Agreement, dated as of May 16, 1999, between Global Crossing Ltd. and U S WEST, Inc. (c)(5) Tender and Voting Agreement, dated as of May 16, 1999, between U S WEST, Inc. and each of the parties listed on the signature page thereto. (c)(6) Agreement, dated as of May 16, 1999, between U S WEST, Inc., Global Crossing Ltd. and each person whose name appears on the signature page thereto. (c)(7) Letter Agreement, dated as of May 16, 1999, between U S WEST, Inc. and Global Crossing Ltd. (c)(8) Transfer Agreement, dated as of May 16, 1999, between Global Crossing Ltd. and each person whose name appears on the signature page thereto. (d) None. (e) Not applicable. (f) None. EX-99.(A)(1) 2 OFFER TO PURCHASE EXHIBIT (a)(1) Offer to Purchase for Cash 39,259,305 of the Outstanding Shares of Common Stock of Global Crossing Ltd. at $62.75 Net Per Share of Common Stock by U S WEST, Inc. THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JUNE 18, 1999, UNLESS THE OFFER IS EXTENDED. THE OFFER (THE "OFFER") IS CONDITIONED UPON THE SATISFACTION OF CERTAIN TERMS AND CONDITIONS. SEE SECTIONS 1 AND 15. THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED. --------------- The Offer is being made pursuant to a Tender Offer and Purchase Agreement, dated as of May 16, 1999 (the "Agreement"), between Global Crossing Ltd., a Bermuda company (the "Company" or "Global"), and U S WEST, Inc., a Delaware corporation (the "Offeror" or "U S WEST"). The Board of Directors of the Company has unanimously approved the Offer and the Agreement and recommends that shareholders of the Company who desire to receive cash at this time tender their shares of Common Stock pursuant to the Offer. --------------- IMPORTANT Any shareholder desiring to tender shares of Common Stock should either (1) complete and sign the appropriate Letter of Transmittal (or a facsimile thereof) in accordance with the instructions in the appropriate Letter of Transmittal, including any required signature guarantees, and mail or deliver the appropriate Letter of Transmittal (or such facsimile) with the certificate(s) for the tendered shares and all other required documents to the Depositary (as hereinafter defined) or tender such shares pursuant to the procedures for book-entry transfer set forth in Section 3, or (2) request such shareholder's broker, dealer, commercial bank, trust company or other nominee effect the transaction for such shareholder. Shareholders having shares registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such broker, dealer, commercial bank, trust company or other nominee if they desire to tender shares so registered. A shareholder who desires to tender shares of Common Stock and whose certificates representing such shares are not immediately available, or who cannot comply with the procedures for book-entry transfer on a timely basis, must tender such shares by following the procedures for guaranteed delivery set forth in Section 3. QUESTIONS AND REQUESTS FOR ASSISTANCE MAY BE DIRECTED TO THE INFORMATION AGENT, BEACON HILL PARTNERS, INC. OR THE DEALER MANAGER FOR THIS OFFER, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED AT THEIR RESPECTIVE ADDRESSES AND TELEPHONE NUMBERS SET FORTH ON THE BACK COVER OF THIS OFFER TO PURCHASE. ADDITIONAL COPIES OF THIS OFFER TO PURCHASE, THE LETTER OF TRANSMITTAL, THE NOTICE OF GUARANTEED DELIVERY AND OTHER RELATED MATERIALS MAY ALSO BE OBTAINED FROM THE INFORMATION AGENT OR FROM BROKERS, DEALERS, COMMERCIAL BANKS OR TRUST COMPANIES. --------------- Dealer Manager for the Offer is: Merrill Lynch & Co. TABLE OF CONTENTS
Page ---- INTRODUCTION............................................................. 1 1.Terms of the Offer.................................................... 2 2.Acceptance for Payment, Proration and Payment for Shares.............. 3 3.Procedure for Tendering Shares........................................ 5 4.Withdrawal Rights..................................................... 7 5.Certain Federal Income Tax Consequences............................... 8 6.Price Range of Common Stock; Dividends................................ 9 7.Effect of the Offer on the Market for Common Stock and Registration under the Exchange Act.................................................. 9 8.Certain Information Concerning the Company............................ 9 9.Certain Information Concerning the Offeror............................ 16 10.Source and Amount of Funds............................................ 21 11.Background of the Offer; Past Contacts with the Company............... 21 12.Purpose of the Offer; Plans for the Company........................... 23 13.The Tender Offer and Purchase Agreement and Related Agreements........ 23 14.Dividends and Distributions........................................... 43 15.Certain Conditions of the Offer....................................... 43 16.Certain Legal Matters; Required Regulatory Approvals.................. 44 17.Fees and Expenses..................................................... 45 18.Miscellaneous......................................................... 46 Schedule I--Directors and Executive Officers of the Offeror.............. I-1
To: The Holders of Common Stock of Global Crossing Ltd. INTRODUCTION U S WEST, Inc., a Delaware corporation (the "Offeror" or "U S WEST"), hereby offers to purchase 39,259,305 shares of common stock, par value $.01 per share (the "Common Stock" or the "Shares"), of Global Crossing Ltd., a company formed under the laws of Bermuda (the "Company"), at a purchase price of $62.75 per share of Common Stock (the "Offer Price"), in each case net to the seller in cash, without interest, upon the terms and subject to the conditions set forth in this Offer to Purchase and in the Letter of Transmittal relating to such Shares, including the proration provisions set forth in Section 2 hereof (which, as either may be amended or supplemented from time to time, collectively constitute the "Offer"). The 39,259,305 shares of Common Stock sought to be purchased pursuant to the Offer represent, to the best knowledge of the Offeror, just below 9.5% of the shares of Common Stock outstanding as of the date of the Offer. Tendering holders of Shares will not be obligated to pay brokerage fees or commissions or, except as set forth in the appropriate Letter of Transmittal, transfer taxes on the purchase of Shares by the Offeror pursuant to the Offer. The Offeror will pay all charges and expenses of Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), which firm is acting as dealer manager (the "Dealer Manager"), The Bank of New York, which firm is acting as the depositary (the "Depositary"), and Beacon Hill Partners, Inc., which firm is acting as the information agent (the "Information Agent"), incurred in connection with the Offer. See Section 17. THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED. IF MORE THAN 39,259,305 SHARES ARE VALIDLY TENDERED AND NOT WITHDRAWN, THE OFFEROR WILL ACCEPT FOR PURCHASE AN AMOUNT OF TENDERED SHARES EQUAL TO 39,259,305 SHARES OF COMMON STOCK, ON A PRO RATA BASIS, SUBJECT TO THE TERMS AND CONDITIONS HEREIN. SEE SECTION 2. THE OFFER IS CONDITIONED UPON CERTAIN TERMS AND CONDITIONS. SEE SECTIONS 1 AND 15. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER AND THE AGREEMENT, AND RECOMMENDS THAT SHAREHOLDERS OF THE COMPANY WHO DESIRE TO RECEIVE CASH AT THIS TIME TENDER THEIR SHARES PURSUANT TO THE OFFER. The purpose of the Offer is to facilitate the terms and conditions and the transactions contemplated by the Agreement and Plan of Merger, dated as of May 16, 1999, between the Offeror and the Company. The Offer is being made pursuant to a Tender Offer and Purchase Agreement, dated as of May 16, 1999 (the "Agreement"), between the Offeror and the Company. See Section 5 for a description of certain federal income tax consequences of the Offer. In connection with the Agreement, certain shareholders of the Company owning, in the aggregate, approximately 77.1% of the outstanding Common Stock, entered into an agreement with the Offeror pursuant to which such shareholders agreed to tender 12.3045% of the shares of Common Stock owned by them in the Offer. See Section 13. As of the date hereof, except pursuant to the Agreement and the agreements described in Section 13, the Offeror does not beneficially own any shares of Common Stock. The Offer Price represents the price at which the Offeror is willing to purchase the Shares. No independent person has been retained by the Offeror to evaluate or render any opinion with respect to the fairness of the Offer Price and no representation is made by the Offeror or any affiliate of the Offeror as to such fairness. Other measures of the value of the Shares may be relevant to shareholders. Shareholders are urged to consider carefully all of the information contained herein and consult with their own advisors, tax, financial or otherwise in evaluating the terms of the Offer before deciding whether to tender Shares. THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. 1 THE TENDER OFFER 1. Terms of the Offer. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), the Offeror will accept for payment and thereby purchase up to 39,259,305 Shares validly tendered and not theretofore withdrawn in accordance with the procedures set forth in Section 4 hereto prior to the Expiration Date (as hereinafter defined), including the proration provisions set forth in Section 2. If more than 39,259,305 shares of Common Stock are validly tendered and not withdrawn, the Offeror will accept for purchase an amount of tendered shares equal to 39,259,305 shares of Common Stock, on a pro rata basis, subject to the terms and conditions specified herein based upon the number of Shares validly tendered by the Expiration Date and not withdrawn (including shares tendered pursuant to the guaranteed delivery procedures set forth in Section 3). The term "Expiration Date" means 12:00 Midnight, New York City time, on June 18, 1999, unless the Offeror has extended the period of time for which the Offer is open, in which event the term "Expiration Date" will mean the latest time and date at which the Offer, as so extended by the Offeror, will expire. THE OFFER IS ALSO SUBJECT TO CERTAIN TERMS AND CONDITIONS. SEE SECTION 15. The Offeror reserves the right (but will not be obligated), in accordance with applicable rules and regulations of the United States Securities and Exchange Commission (the "Commission") to waive any condition of the Offer, subject to the terms of the Agreement. If any condition set forth in Section 15 has not been satisfied by 12:00 Midnight, New York City time, on June 18, 1999 (or any other time then set as the Expiration Date), the Offeror may, subject to the terms of the Agreement, elect to terminate the Offer (whether or not any Shares have theretofore been accepted for payment) and not accept for payment any Shares and return all tendered Shares to tendering shareholders. Under the terms of the Agreement, the Offeror may not (except as described in the next sentence), without the prior written consent of the Company, increase or reduce the maximum number of Shares subject to the Offer, decrease the Offer Price to be paid pursuant to the Offer, change the form of consideration payable in the Offer, amend or impose additional conditions or make other changes adverse to the Company or any shareholders of the Company or which may delay the consummation of the Offer. Notwithstanding the foregoing, the Offeror shall extend the Offer if, at the then scheduled Expiration Date, any of the conditions to the Offeror's obligation to accept for payment and pay for the Shares have not been satisfied or waived, each such extension not to exceed (unless otherwise consented to in writing by the Company) the lesser of 10 additional business days or such fewer number of days that the Offeror and the Company reasonably believe are necessary to cause those conditions to be satisfied. In any event, no extension will be less than the minimum number of days required by the Securities Exchange Act of 1934, as amended (the "Exchange Act") the rules and regulations promulgated thereunder or by other applicable law. Assuming the prior satisfaction or waiver of the conditions of the Offer, the Offeror will accept for payment and pay for the Shares validly tendered and not withdrawn pursuant to the Offer as soon as legally permitted after the commencement thereof. The Offeror agrees not to let the Offer expire if the Offer conditions have not been satisfied or waived and for so long as the Agreement shall not have been terminated pursuant to its terms (See Section 13, description of the Agreement). Subject to the limitations set forth in the Agreement, the Offeror expressly reserves the right (but will not be obligated) in its sole discretion, at any time and from time to time, to extend the period during which the Offer is open for any reason by giving oral or written notice of such extension to the Depositary and by making a public announcement of such extension as more fully specified below. There can be no assurance that the Offeror will exercise its right to extend the Offer. During any such extension, all Shares previously tendered and not withdrawn will remain subject to the Offer and subject to the right of a tendering shareholder to withdraw such Shares. Subject to the applicable rules and regulations of the Commission and subject to the limitations set forth in the Agreement, the Offeror also expressly reserves the right, at any time and from time to time, in its sole discretion, (i) to delay payment for any Shares regardless of whether such Shares had theretofore been accepted for payment, or to terminate the Offer and not to accept for payment or pay for any Shares not theretofore accepted for payment or paid for, upon the occurrence of any of the conditions set forth in Section 15, by giving 2 oral or written notice of such delay or termination to the Depositary and (ii) at any time or from time to time, to amend the Offer in any respect. The Offeror's right to delay payment for any Shares or not to pay for any Shares theretofore accepted for payment is subject to the applicable rules and regulations of the Commission, including Rule 14e-1(c) of the Exchange Act, relating to the Offeror's obligation to pay the consideration offered or return tendered Shares promptly after the termination or withdrawal of the Offer. Any extension of the period during which the Offer is open, delay in acceptance for payment or payment, termination or amendment of the Offer will be followed, as promptly as practicable, by public announcement thereof, such announcement in the case of an extension to be issued not later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date in accordance with the public announcement requirements of Rules 14d-4(c), 14d-6(d) and 14e-1(d) under the Exchange Act. Without limiting the obligation of the Offeror under such rule or the manner in which the Offeror may choose to make any public announcement, the Offeror currently intends to make announcements by issuing a press release to the Dow Jones News Service. If the Offeror makes a material change in the terms of the Offer or the information concerning the Offer, or if it waives a material condition of the Offer, the Offeror will disseminate additional tender offer materials and extend the Offer if and to the extent required by Rules 14d-4(c), 14d-6(d) and 14(e)-1 under the Exchange Act. In addition, notwithstanding anything to the contrary in the Agreement or in the conditions to the Offeror's obligations to accept for payment and pay for the Shares, the Offeror may waive any of the conditions to such obligations only after giving 5 business days prior written notice of its intention to do so to the Company. The minimum period during which the Offer must remain open following material changes in the terms of the Offer or the information concerning the Offer, other than a change in price or a change in percentage of securities sought, will depend upon the facts and circumstances, including the relative materiality of the terms or information changes. In a public release, the Commission has stated its view that an offer must remain open for a minimum period of time following a material change in the terms of the Offer and that waiver of a material condition is a material change in the terms of the Offer. The release states that an offer should remain open for a minimum of five business days from the date a material change is first published, sent or given to securityholders and that, if material changes are made with respect to information not materially less significant than the offer price and the number of shares being sought, a minimum of 10 business days may be required to allow adequate dissemination and investor response. For purposes of the Offer, a "business day" means any day other than a Saturday, Sunday or a federal holiday, and consists of the time period from 12:01 a.m. through 12:00 midnight, New York City time. The requirement to extend the Offer will not apply to the extent that the number of business days remaining between the occurrence of the change and the then-scheduled Expiration Date equals or exceeds the minimum extension period that would be required because of such amendment. If, prior to the Expiration Date, the Offeror increases the consideration offered to holders of Shares pursuant to the Offer, such increased consideration will be paid to all holders whose Shares are purchased in the Offer whether or not such Shares were tendered prior to such increase. The Company has provided the Offeror with a copy of the register of shareholders of the Company for the purpose of disseminating the Offer to holders of Shares. This Offer to Purchase and the related Letter of Transmittal will be mailed to registered holders of the Shares whose names appear on the register of shareholders of the Company and will be furnished to brokers, dealers, commercial banks, trust companies, nominees or similar persons, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares. 2. Acceptance for Payment, Proration and Payment for Shares. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of the Offer as so extended or amended), the Offeror will accept for payment and will pay for up to 39,259,305 Shares, except that if more than 39,259,305 Shares are validly tendered and not withdrawn, the Offeror will accept for purchase an amount of the tendered Shares equal to 39,259,305 shares of Common Stock, on a pro rata basis, validly 3 tendered prior to the Expiration Date and not theretofore withdrawn in accordance with Section 4 promptly after the later to occur of (a) the Expiration Date and (b) subject to compliance with Rule 14e-1(c) under the Exchange Act, the satisfaction or waiver of the conditions set forth in Section 15. Subject to compliance with Rule 14e-1(c) under the Exchange Act, the Offeror expressly reserves the right to delay payment for Shares in order to comply in whole or in part with any applicable law. See Sections 1 and 16. In the event that proration of tendered Shares is required, the Offeror will determine the proration as soon as practicable following the Expiration Date. Proration for each shareholder tendering Shares will be based on the ratio of the number of Shares properly tendered and not withdrawn by a shareholder to the total number of Shares properly tendered and not withdrawn by all shareholders (with adjustments to avoid purchases of fractional shares). Because of the difficulty in determining the number of Shares properly tendered (including Shares tendered by guaranteed delivery procedures) and not withdrawn, the Offeror does not expect that it will be able to announce the final proration factor or commence payment for any Shares purchased pursuant to the Offer until approximately five trading days after the Expiration Date. The preliminary results of any proration will be announced by press release as promptly as practicable after the Expiration Date. Shareholders may obtain such preliminary information from the Information Agent and may be able to obtain such information from their brokers. In the event of any proration, the Depositary shall select certain identifiable Shares for payment from the total Shares properly tendered and not withdrawn by a shareholder in accordance with such shareholder's directions, if any, as set forth in such shareholder's Letter of Transmittal. In all cases, payment for Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates for such Shares or timely confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such Shares into the Depositary's account at The Depositary Trust Company (the "Book-Entry Transfer Facility"), pursuant to the procedures set forth in Section 3, (ii) a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof) with all required signature guarantees or, in the case of Shares, an Agent's Message (as defined below) in connection with a book-entry transfer and (iii) any other documents required by the Letter of Transmittal. The term "Agent's Message" means a message transmitted by the Book-Entry Transfer Facility to, and received by, the Depositary and forming a part of a Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has received an express acknowledgment from the participant in the Book-Entry Transfer Facility tendering the Shares that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that the Offeror may enforce such agreement against the participant. For purposes of the Offer, the Offeror will be deemed to have accepted for payment, and thereby purchased, Shares validly tendered and not withdrawn, except if more than 39,259,305 Shares are validly tendered and not withdrawn, the Offeror will accept for purchase an amount of the tendered Shares equal to 39,259,305 Shares, on a pro rata basis as described herein, if and when the Offeror gives oral or written notice to the Depositary of the Offeror's acceptance of such Shares for payment pursuant to the Offer. In all cases, upon the terms and subject to the conditions of the Offer, payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the purchase price with the Depositary, which will act as agent for tendering shareholders for the purpose of receiving payment from the Offeror and transmitting such payment to validly tendering shareholders. If, for any reason whatsoever, acceptance for payment of any Shares tendered pursuant to the Offer is delayed, or the Offeror is unable to accept for payment Shares tendered pursuant to the Offer, then, without prejudice to the Offeror's rights under Section 1, the Depositary may, nevertheless, on behalf of the Offeror, retain tendered Shares, and such Shares may not be withdrawn, except to the extent that the tendering shareholders are entitled to withdrawal rights as described in Section 4 below and as otherwise required by Rule 14e- 1(c) under the Exchange Act. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE OFFER PRICE FOR SHARES BE PAID BY THE OFFEROR. If any tendered Shares are not accepted for payment pursuant to the terms and conditions of the Offer for any reason, including as a result of proration, certificates for such unpurchased or untendered Shares will be returned, without expense to the tendering shareholder (or, in the case of Shares delivered by book-entry transfer into the Depositary's account at the Book-Entry Transfer Facility, such Shares will be credited to an account 4 maintained within the Book-Entry Transfer Facility), as promptly as practicable following the expiration, termination or withdrawal of the Offer. 3. Procedure for Tendering Shares. Valid Tenders For Shares to be validly tendered pursuant to the Offer, a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof), with any required signature guarantees, or, in the case of a book-entry transfer, an Agent's Message, and any other required documents, must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase on or prior to the Expiration Date, or the tendering shareholder must comply with the guaranteed delivery procedure set forth below. In addition, either (i) certificates representing such Shares must be received by the Depositary or such Shares must be tendered pursuant to the procedure for book-entry set forth below, and a Book-Entry Confirmation must be received by the Depositary, in each case prior to the Expiration Date or (ii) the guaranteed delivery procedures set forth below must be complied with. No alternative, conditional or contingent tenders will be accepted. THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF TENDERING SHAREHOLDERS. SHARES WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUIRED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. Book-Entry Transfer The Depositary will make a request to establish an account with respect to the Shares at the Book-Entry Transfer Facility for purposes of the Offer within two business days after the date of this Offer to Purchase. Any financial institution that is a participant in the Book-Entry Transfer Facility's system may make book-entry delivery of Shares by causing the Book- Entry Transfer Facility to transfer such Shares into the Depositary's account at the Book-Entry Transfer Facility in accordance with the Book-Entry Transfer Facility's procedures for such transfer. Although delivery of Shares may be effected through book-entry transfer at the Book-Entry Transfer Facility prior to the Expiration Date, (i) an appropriate Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message in connection with a book-entry transfer, and any other required documents, must, in any case, be transmitted to and received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase or (ii) the guaranteed delivery procedures described below must be complied with. DELIVERY OF THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURE WILL NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. Signature Guarantee Signatures on all of the appropriate Letters of Transmittal must be guaranteed by a financial institution (which includes most commercial banks, savings and loan associations and brokerage houses) that is a participant in the Security Transfer Agent's Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program (each of the foregoing being referred to as an "Eligible Institution"), unless the Shares tendered thereby are tendered (i) by a registered holder of Shares who has not completed either the box labeled "Special Delivery Instructions" or the box labeled "Special Payment Instructions" on the Letter of Transmittal or (ii) for the account of any Eligible Institution. See Instructions 1 and 5 of the Letter of Transmittal. 5 If the certificates evidencing Shares are registered in the name of a person or persons other than the signer of the Letter of Transmittal, or if payment is to be made, or delivered to, or certificates for unpurchased Shares are to be issued or returned to, a person other than the registered holder or holders, then the tendered certificates must be endorsed or accompanied by duly executed stock powers, in either case signed exactly as the name or names of the registered holder or holders appear on the certificates, with the signatures on the certificates or stock powers guaranteed by an Eligible Institution as provided in the Letter of Transmittal. See Instructions 1 and 5 of the Letter of Transmittal. Guaranteed Delivery If a shareholder desires to tender Shares pursuant to the Offer and such shareholder's certificates for such Shares are not immediately available or time will not permit all required documents to reach the Depositary on or prior to the Expiration Date or the procedure for book-entry transfer cannot be completed on a timely basis, such Shares may nevertheless be tendered if all of the following guaranteed delivery procedures are duly complied with: (i) the tender is made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by the Offeror herewith, is received by the Depositary, as provided below, prior to the Expiration Date; and (iii) the certificates for all tendered Shares, in proper form for transfer (or a Book-Entry Confirmation), together with a properly completed and duly executed Letter of Transmittal relating to the Common Stock (or a manually signed facsimile thereof), and any required signature guarantees, or, in the case of a book-entry transfer, an Agent's Message, and any other documents required by the Letter of Transmittal are received by the Depositary within three trading days after the date of such Notice of Guaranteed Delivery. The Notice of Guaranteed Delivery may be delivered by hand or transmitted by telegram, telex, facsimile transmission or mail to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in the Notice of Guaranteed Delivery. Notwithstanding any other provision hereof, payment for Shares accepted for payment pursuant to the Offer will in all cases be made only after timely receipt by the Depositary of (i) certificates for such Shares or a Book-Entry Confirmation, (ii) a properly completed and duly executed Letter of Transmittal relating to the Common Stock (or a manually signed facsimile thereof), with all required signature guarantees, or, in the case of a book- entry transfer, an Agent's message and (iii) any other documents required by the Letter of Transmittal. Accordingly, tendering shareholders may be paid at different times depending upon when certificates for Shares or Book-Entry Confirmation are actually received by the Depositary. Under no circumstances will interest be paid on the purchase price of the Shares to be paid by the Offeror, regardless of any extension of the Offer or any delay in making such payment. The valid tender of Shares pursuant to one of the procedures described above will constitute a binding agreement between the tendering shareholder and the Offeror upon the terms and subject to the conditions of the Offer. Backup Withholding In order to avoid "backup withholding" of federal income tax on payments of cash pursuant to the Offer, each shareholder surrendering Shares in the Offer must provide the Depositary with such shareholder's correct taxpayer identification number ("TIN") on a Substitute Form W-9 and certify under penalties of perjury that such TIN is correct and that such shareholder is not subject to backup withholding. Certain shareholders (including, among others, all domestic corporations and certain foreign individuals and entities) are not subject 6 to backup withholding. If a shareholder does not provide its correct TIN or fails to provide the certifications described above, the Internal Revenue Service may impose a penalty on such shareholder, and payment of the gross proceeds to such shareholder pursuant to the Offer may be subject to backup withholding of 31%. All shareholders surrendering Shares pursuant to the Offer should complete and sign the main signature form and the Substitute Form W-9 included as part of the Letter of Transmittal to provide the information and certification necessary to avoid backup withholding (unless an applicable exemption exists and is proved in a manner satisfactory to the Offeror and the Depositary). Foreign shareholders should complete and sign the main signature form and a Form W-8, Certificate of Foreign Status, a copy of which may be obtained from the Depositary, in order to avoid backup withholding. See Instruction 9 to the Letter of Transmittal. Determination of Validity All questions as to the form of documents and the validity, eligibility (including time of receipt) and acceptance for payment of any tender of Shares will be determined by the Offeror, in its sole discretion, and its determination will be final and binding on all parties. The Offeror reserves the absolute right to reject any or all tenders of any Shares that are determined by it not to be in proper form or the acceptance of or payment for which may, in the opinion of the Offeror's counsel, be unlawful. The Offeror also reserves the absolute right to waive any of the conditions of the Offer, subject to the limitations set forth in the Agreement, or any defect or irregularity in the tender of any particular Shares, whether or not similar defects or irregularities are waived in the case of other Shares. The Offeror's interpretation of the terms and conditions of the Offer (including the Letter of Transmittal and the Instructions thereto) will be final and binding on all parties. No tender of Shares will be deemed to have been validly made until all defects and irregularities have been cured or waived by the Offeror. None of the Offeror or any of its affiliates or assignees, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. Appointment By executing the appropriate Letter of Transmittal as set forth above (including delivery through an Agent's Message), a tendering Shareholder irrevocably appoints designees of the Offeror as such shareholder's attorneys- in-fact and proxies, each with full power of substitution, in the manner set forth in the Letter of Transmittal, to the full extent of such shareholder's right with respect to the Shares tendered by such shareholder and accepted for payment by the Offeror (and any and all other Shares or other securities or rights issued or issuable in respect of such Shares on or after May 16, 1999). All such powers of attorney and proxies will be considered irrevocable and coupled with an interest in the tendered Shares. This appointment is effective upon the acceptance for payment of such Shares by the Offeror in accordance with the terms of the Offer. Upon acceptance for payment, all prior proxies given by the shareholder with respect to such Shares or other securities or rights will, without further action, be revoked and no subsequent proxies may be given or written consent executed (and, if given or executed, will not be deemed effective). The proxies or corporate representative of the Offeror will, with respect to the Shares and other securities or rights, be empowered to exercise all voting and other rights of such shareholder as they in their sole judgment deem proper in respect of any annual or special general meeting of the Company's shareholders, or any adjournment or postponement thereof, or by consent in lieu of any such meeting or otherwise. The Offeror reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon the Offeror's payment for such Shares, the Offeror or its designee must be able to exercise full voting and other rights with respect to such Shares and the other securities or rights issued or issuable in respect of such Shares, including voting at any meeting of Shares (whether annual or special or whether or not adjourned) in respect of such Shares. 4. Withdrawal Rights. Except as otherwise provided in this Section 4 or as provided by applicable law, tenders of Shares made pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date and, unless theretofore accepted for payment pursuant to the 7 Offer, may also be withdrawn at any time after July 19, 1999. If purchase of or payment for Shares is delayed for any reason or if the Offeror is unable to purchase or pay for Shares for any reason, then, without prejudice to the Offeror's right under the Offer, tendered Shares may be retained by the Depositary on behalf of the Offeror and may not be withdrawn except to the extent that tendering shareholders are entitled to withdrawal rights as set forth in this Section 4 and subject to Rule 14e-1(c) under the Exchange Act, which provides that no person who makes a tender offer shall fail to pay the consideration offered or fail to return the securities deposited by or on behalf of security holders promptly after the termination or withdrawal of the Offer. For a withdrawal to be effective, a written, telegraphic, telex or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase. Any notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name in which the certificates representing such Shares are registered, if different from that of the person who tendered the Shares. If certificates for Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such certificates, the serial numbers shown on such certificates must be submitted to the Depositary and, unless such Shares have been tendered by an Eligible Institution, the signatures on the notice of withdrawal must be guaranteed by an Eligible Institution. If Shares have been tendered pursuant to the procedure for book-entry transfer set forth in Section 3, any notice of withdrawal must also specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares, in which case a notice of withdrawal will be effective if delivered to the Depositary by any method of delivery described in the first sentence of this paragraph. Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn will be deemed not validly tendered for purposes of the Offer, but may be retendered at any subsequent time prior to the Expiration Date by following any of the procedures described in Section 3. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by the Offeror, in its sole discretion, and its determination will be final and binding on all parties. None of the Offeror, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification. 5. Certain Federal Income Tax Consequences. The following is a summary of certain federal income tax consequences of the Offer to holders whose Shares are purchased pursuant to the Offer. The discussion applies only to holders of Shares in whose hands Shares are capital assets, and may not apply to Shares received upon conversion of securities or exercise of warrants or other rights to acquire Shares or pursuant to the exercise of stock options or otherwise as compensation, or to holders of Shares who are in special tax situations (such as insurance companies, tax-exempt organizations, non-U.S. persons, dealers in securities or commodities, holders that own (or are deemed for U.S. federal income tax purposes to own under certain attribution or constructive ownership rules) 10% or more of the voting stock of the Company, or persons who hold Shares as a position in a "straddle" or as part of a "hedging" or "conversion" transaction for United States federal income tax purposes). THE FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW ARE INCLUDED FOR GENERAL INFORMATIONAL PURPOSES ONLY AND ARE BASED UPON CURRENT LAW. BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH HOLDER OF SHARES SHOULD CONSULT SUCH HOLDER'S TAX ADVISOR TO DETERMINE THE APPLICABILITY OF THE RULES DISCUSSED BELOW TO SUCH SHAREHOLDER AND THE PARTICULAR TAX EFFECTS OF THE OFFER, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND OTHER INCOME TAX LAWS. The receipt of cash for Shares pursuant to the Offer will be a taxable transaction for federal income tax purposes (and also may be a taxable transaction under applicable state, local and other income tax laws). In general, for federal income tax purposes, a holder of Shares will recognize gain or loss equal to the difference between the holder's adjusted tax basis in the Shares sold pursuant to the Offer and the amount of cash received therefor. Gain or loss must be determined separately for each block of Shares (i.e., Shares acquired at the same 8 cost in a single transaction) sold pursuant to the Offer. Such gain or loss will be capital gain or loss and will be treated as long-term capital gain if the Shares were held for more than a year at the time of the sale. The Company has indicated in publicly available documents that it does not believe that it is a "passive foreign investment company" (a "PFIC"). However, if the Company is or was a PFIC for any taxable year in which the holder held Shares and the holder has not, in the first taxable year in which the Shares were held, elected to treat the Company as a "qualified electing fund" with respect to the holder or to mark to market the Shares on an annual basis (i.e., treat the Shares as sold and repurchased at the end of each taxable year), any gain recognized in respect of Shares sold pursuant to the Offer would be generally allocated ratably to each day of the holder's holding period before such election. The amounts allocated to the current taxable year would be included as ordinary income in the holder's gross income for the current taxable year. The amounts allocated to each prior taxable year would be taxable as ordinary income in the current taxable year at the highest rate in effect for the holder in each such prior taxable year and the tax liability on such income would be subject to an additional tax in the nature of an interest charge at the rates applicable to deficiencies in income taxes. Holders should consult their tax advisors regarding the possible status of the Company as a PFIC and the federal income tax consequences to them if the Company is treated as a PFIC. 6. Price Range of Common Stock; Dividends. According to the Company's Annual Report on Form 10-K for the year ended December 31, 1998, the Common Stock has been trading on The Nasdaq Stock Market, Inc.'s ("Nasdaq") National Market System ("NMS") under the symbol "GBLX" since its initial public offering of common stock on August 14, 1998. The following table sets forth, for the periods indicated, the high and low closing sales prices for the Common Stock as reported on NMS (adjusted for a two for one stock split which occurred on March 10, 1999):
High Low ------ ------ Fiscal Year 1999 Second Quarter (through May 20, 1999)........................ $61.38 $41.75 First Quarter................................................ $56.56 $20.06 Fiscal Year 1998 Fourth Quarter............................................... $23.50 $ 8.63 Third Quarter (from August 14, 1998)......................... $12.75 $ 8.00 ------
On May 14, 1999, the last trading day before public announcement of the execution of the Agreement, the last sale price of Common Stock, as reported on the NMS, was $61.38 per share. On May 20, 1999, the last full trading day prior to the commencement of the Offer, the closing price per share as reported on the NMS was $50.94. Shareholders are urged to obtain current market quotations for the Shares. The Company has never paid any dividends on the Common Stock. 7. Effect of the Offer on the Market for Common Stock and Registration under the Exchange Act. The Offer standing alone, is not anticipated by the Offeror to have a long-term impact on the price of the Common Stock. 8. Certain Information Concerning the Company. The Company is a Bermuda company with its principal executive offices located at Wessex House, 45 Reid Street, Hamilton HM12, Bermuda. Except as otherwise set forth herein, the information concerning the Company contained in this Offer to Purchase, including financial information, has been furnished by the Company or has been taken from or based upon publicly available documents and records on file with the Commission and other public sources. Although the Offeror has no knowledge that would indicate that statements contained herein based upon such documents or otherwise provided are untrue, neither the Offeror nor the Information Agent assumes any responsibility for the accuracy or completeness of the information concerning the Company, furnished by the Company, or contained 9 in such documents and records or for any failure by the Company to disclose events which may have occurred or may affect the significance or accuracy of any such information but which are unknown to the Offeror. According to the Company's most recent quarterly report to shareholders filed on Form 10-Q, the Company is the world's first independent global provider of state-of-the-art Internet and long distance telecommunications facilities and related services utilizing a network of undersea and terrestrial digital fiber optic cable systems (the "Global Crossing Ltd. Network"). The Company believes that it is the first to offer "one-stop shopping" for their customers to multiple destinations worldwide. The Company currently operates as a "carriers' carrier", providing tiered pricing and segmented products to licensed providers of international telecommunications services. Capacity on the Global Crossing Ltd. Network is offered to all customers on an open, equal access basis. The Company anticipates that the systems completed or under development will form a state-of-the-art interconnected worldwide high capacity fiber optic network: Atlantic Crossing ("AC-1") and Atlantic Crossing-2, undersea systems connecting the United States and Europe; Pacific Crossing ("PC-1"), an undersea system connecting the United States and Asia; Mid Atlantic Crossing ("MAC"), an undersea system connecting the eastern United States and the Caribbean; Pan American Crossing ("PAC"), an undersea system connecting the western United States, Mexico, Panama, Venezuela and the Caribbean; South American Crossing, an undersea and terrestrial system connecting the major cities of South America to MAC, PAC and the rest of the Global Crossing Ltd. Network; Pan European Crossing, a terrestrial system connecting 24 European cities to AC-1; and a terrestrial system to be operated by the Company connecting certain cities in Japan to PC- 1. The undersea component of this initial portion of the Global Crossing Ltd. Network totals 74,500 km and the terrestrial component adds 13,400 km for a total of 87,900 km. The Company is in the process of developing several new undersea and terrestrial cable systems and evaluating other business development opportunities which will complement the Global Crossing Ltd. Network. 10 Set forth below is certain summary consolidated financial data with respect to the Company excerpted or derived from financial information contained in the Company's Annual Report on Form 10-K for the year ended December 31, 1998 and Quarterly Report on Form 10-Q for the quarter ended March 31, 1999. More comprehensive financial information is included in such report and other documents filed by the Company with the Commission, and the following summary is qualified in its entirety by reference to such reports and such other documents and all the financial information (including any related notes) contained therein. Such reports and other documents should be available for inspection and copies thereof should be obtainable in the manner set forth below. GLOBAL CROSSING LTD. SELECTED SUMMARY CONSOLIDATED FINANCIAL DATA
Period from Three-Months March 19, 1997 Ended Year Ended (Date of Inception) March 31, 1999 December 31, 1998 to December 31, 1997 -------------- ----------------- -------------------- (unaudited) (In thousands, except share and per share information) Statement of Operations Data: Revenues................ $ 178,183 $ 424,099 $ -- Expenses: Cost of capacity sold... 69,387 178,492 -- Operations, administration and maintenance............ 11,861 18,056 -- Sales and marketing..... 9,758 26,194 1,366 Network development..... 4,905 10,962 78 General and administrative......... 22,625 26,844 1,657 Stock related expense... 16,716 39,374 -- Provision for doubtful accounts............... 1,864 4,233 -- Termination of advisory services agreement..... -- 139,669 -- ----------- ------------ ------------ 137,116 443,824 3,101 ----------- ------------ ------------ Operating income (loss)................. 41,067 (19,725) (3,101) Equity in loss of affiliates............. (2,736) (2,508) -- Interest income (expense): Interest income....... 14,392 29,986 2,941 Interest expense...... (23,779) (42,880) -- Provision for income taxes.................. (16,142) (33,067) -- ----------- ------------ ------------ Income (loss) before extraordinary item and cumulative effect of change in accounting principle.............. 12,802 (68,194) (160) Extraordinary loss on retirement of senior notes.................. -- (19,709) -- Cumulative effect of change in accounting principle, net of income tax benefit of $1400.................. (14,710) -- -- ----------- ------------ ------------ Net loss................ (1,908) (87,903) (160) Preferred stock dividends.............. (13,044) (12,681) (12,690) Redemption of preferred stock.................. (34,140) -- ----------- ------------ ------------ Net loss applicable to common shareholders.... $ (14,952) $ (134,724) $ (12,850) =========== ============ ============ NET LOSS PER COMMON SHARE Loss applicable to common shareholders before extraordinary item and cumulative effect of change in accounting principle Basic and diluted.... $(0.00) $ (0.32) $ (0.04) Extraordinary item and cumulative effect of change in accounting principle Basic and diluted.... $(0.04) $ (0.06) $ -- Net loss applicable to common shareholders Basic and diluted..... $(0.04) $ (0.38) $ (0.04) Shares used in computing basic and diluted loss per share.............. 410,797,073 358,735,340 325,773,934
11
March 31, December 31, ----------- ----------------------- 1999 1998 1997 ----------- -------------- -------- (unaudited) (in thousands) Balance sheet data: Current assets including cash and cash equivalents and restricted cash and cash equivalents........ $ 766,469 $ 976,615 $ 27,744 Long term restricted cash and cash equivalents...................... 422,933 367,600 -- Long term accounts receivable..... 70,884 43,315 -- Property, plant and equipment, net.............................. 45,400 5,500 -- Construction in progress and capacity available for sale...... 1,109,926 1,003,056 518,519 Deferred finance and organization costs, net of accumulated amortization..................... 42,527 45,757 25,934 Investment in affiliates.......... 187,458 177,334 -- Other Assets...................... 44,200 20,000 -- ---------- ---------- -------- Total assets...................... $2,689,797 $2,639,177 572,197 ---------- ---------- -------- Current liabilities............... $ 273,664 $ 251,890 $ 90,817 Long term debt.................... 248,475 269,598 162,325 Senior notes...................... 796,588 796,495 150,000 Deferred revenue.................. 50,725 25,325 -- Obligations under inland service agreements and capital leases.... 16,158 24,520 3,009 Deferred income taxes............. 31,779 9,654 -- ---------- ---------- -------- Total liabilities................. 1,417,389 1,377,482 406,151 ---------- ---------- -------- Mandatorily redeemable preferred stock............................ 500,419 487,375 91,925 Shareholders' equity Common stock.................... 4,331 4,328 3,258 Treasury stock.................. (209,415) (209,415) -- Other shareholders' equity........ 1,067,044 1,067,470 71,023 Accumulated deficit............... (89,971) (88,063) (160) ---------- ---------- -------- Total shareholders' equity........ 771,989 774,320 74,121 ---------- ---------- -------- Total liabilities and shareholders' equity............. $2,689,797 $2,639,177 $572,197 ========== ========== ========
Certain Company Projections To the knowledge of the Offeror, the Company does not as a matter of course make public forecasts as to its future financial performance. However, in connection with the discussions and negotiations described in Section 11, the Company furnished the Offeror with certain financial projections which the Offeror believes are not publicly available. The Offeror has not verified the accuracy of such financial forecasts. These projections assume the completion of the Frontier merger and the acquisition of Cable & Wireless Global Marine on a pro forma basis. 12 Income Statement (Dollars in Millions, Except Per Share Amounts)
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 CAGR -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- ---- Total Revenues...... 4,068.5 5,065.7 5,983.8 7,523.0 9,372.9 10,666.7 12,418.7 14,289.7 16,319.7 18,792.9 18.5% EBITDA.............. 1,125.6 1,673.0 2,001.3 2,905.0 3,974.9 4,585.3 5,553.6 6,534.0 7,547.2 8,860.9 25.8% Adjusted EBITDA*.... 1,156.1 1,760.6 2,122.8 3,058.7 4,178.4 4,839.5 5,845.7 6,862.7 7,910.4 9,277.7 26.0% Operating income.... 647.4 813.5 1,121.1 1,882.5 2,538.7 3,305.2 4,038.1 4,831.6 5,831.6 6,847.0 -- Net income to common............. $ 20.5 $ (344.7) $ (118.7) $ 550.1 $1,218.8 $2,009.3 $2,827.5 $3,782.2 $5,167.6 $6,509.3 -- ======== ======== ======== ======== ======== ======== ======== ======== ======== ======== ==== EPS to common....... $ 0.03 $ (0.53) $ (0.18) $ 0.85 $ 1.89 $ 3.12 $ 4.38 $ 5.86 $ 8.01 $ 10.09 -- EPS to common before goodwill........... $ 0.38 $ 0.43 $ 0.78 $ 1.81 $ 2.85 $ 4.08 $ 5.35 $ 6.83 $ 8.97 $ 11.05 -- Dividend to common.. 35.3 36.6 37.2 38.0 38.8 38.8 38.8 38.8 38.8 38.8 -- Capital Expenditures....... $2,294.8 $1,662.7 $1,064.4 $1,324.0 $ 1319.4 $1,508.9 $1,252.7 $1,698.3 $1,469.2 $1,221.4 --
- ------ * Includes change in deferred revenues. 13 [This Page Left Blank For Filing Only] 14 The following sets forth the material assumptions used in the preparation of the above financial projections: (1) The financial projections contain projections for the Company, Frontier (including cost synergies), and Global Marine. It is important to note that the Frontier and Global Marine acquisitions have not yet closed. These projections do not reflect the financial or accounting impact of the merger with U S WEST. (2) The Company revenue assumptions are based on the following systems: AC-1 (Initial RFS 1998), PC-1 (Initial RFS 1999), MAC (Initial RFS 1999), PAC (Initial RFS 2000), PEC (Initial RFS 1999), GAL (Initial RFS 1999), SAC (Initial RFS 2001), Services Business (Initial RFS 2000), System X (Initial RFS 2003), AC-2 (Initial RFS 2005), PC-2 (Initial RFS 2005). The underlying revenue assumptions are based largely on third party consulting reports. PC-1 is accounted for on the equity method of accounting. (3) The goodwill created by both the Frontier and Global Marine transactions are projected to be amortized over 20 years and 10 years, respectively. IT IS THE UNDERSTANDING OF THE OFFEROR THAT THE PROJECTIONS INCLUDED IN THIS OFFER TO PURCHASE WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR COMPLIANCE WITH PUBLISHED GUIDELINES OF THE COMMISSION OR THE GUIDELINES ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS OR FORECASTS AND ARE INCLUDED HEREIN ONLY BECAUSE SUCH INFORMATION WAS PROVIDED TO THE OFFEROR. THESE FORWARD-LOOKING STATEMENTS (AS THAT TERM IS DEFINED IN THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995) ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE PROJECTIONS. THE COMPANY HAS ADVISED THE OFFEROR THAT ITS INTERNAL FINANCIAL FORECASTS (UPON WHICH THE PROJECTIONS PROVIDED WERE BASED IN PART) ARE, IN GENERAL, PREPARED SOLELY FOR INTERNAL USE AND CAPITAL BUDGETING AND OTHER MANAGEMENT DECISIONS, AND ARE SUBJECTIVE IN MANY RESPECTS AND THUS SUSCEPTIBLE TO INTERPRETATIONS AND PERIODIC REVISION BASED ON ACTUAL EXPERIENCE AND BUSINESS DEVELOPMENTS. THE PROJECTIONS ALSO REFLECT NUMEROUS ASSUMPTIONS (NOT ALL OF WHICH WERE PROVIDED TO OFFEROR), ALL MADE BY MANAGEMENT OF THE COMPANY, WITH RESPECT TO INDUSTRY PERFORMANCE, GENERAL BUSINESS, ECONOMIC, MARKET AND FINANCIAL CONDITIONS AND OTHER MATTERS, INCLUDING EFFECTIVE TAX RATES CONSISTENT WITH HISTORICAL LEVELS FOR THE COMPANY, ALL OF WHICH ARE DIFFICULT TO PREDICT, MANY OF WHICH ARE BEYOND THE COMPANY'S CONTROL AND NONE OF WHICH WERE SUBJECT TO APPROVAL BY THE OFFEROR. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THE ASSUMPTIONS MADE IN PREPARING THE PROJECTIONS WILL PROVE ACCURATE, AND ACTUAL RESULTS MAY BE MATERIALLY GREATER OR LESS THAN THOSE CONTAINED IN THE PROJECTIONS. THE INCLUSION OF THE PROJECTIONS HEREIN SHOULD NOT BE REGARDED AS AN INDICATION THAT THE OFFEROR, THE COMPANY OR THEIR RESPECTIVE AFFILIATES OR REPRESENTATIVES CONSIDERED OR CONSIDER THE PROJECTIONS TO BE A RELIABLE PREDICTION OF FUTURE EVENTS, AND THE PROJECTIONS SHOULD NOT BE RELIED UPON AS SUCH. NONE OF THE OFFEROR, THE COMPANY NOR ANY OF THEIR RESPECTIVE AFFILIATES ASSUMES ANY RESPONSIBILITY FOR THE VALIDITY, REASONABLENESS, ACCURACY OR COMPLETENESS OF THE PROJECTIONS. NONE OF THE OFFEROR, THE COMPANY OR ANY OF THEIR RESPECTIVE AFFILIATES OR REPRESENTATIVES HAS MADE, OR MAKES, ANY REPRESENTATION TO ANY PERSON REGARDING THE INFORMATION CONTAINED IN THE PROJECTIONS AND NONE OF THEM INTENDS TO UPDATE OR OTHERWISE REVISE THE PROJECTIONS TO REFLECT CIRCUMSTANCES 15 EXISTING AFTER THE DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE PROJECTIONS ARE SHOWN TO BE IN ERROR. Available Information The Company is subject to the reporting requirements of the Exchange Act and, in accordance therewith, is required to file reports and other information with the Commission relating to its business, financial condition and other matters. Information as of particular dates concerning the Company's directors and officers, their remuneration, stock options and other matters, the principal holders of the Company's securities and any material interest of such persons in transactions with the Company is required to be disclosed in proxy statements distributed to the Company's shareholders and filed with the Commission. Such reports, proxy statements and other information should be available for inspection at the public reference facilities of the Commission located at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the Commission located in the Citicorp Center, 500 West Madison Street (suite 1400), Chicago, Illinois 60661, and at Seven World Trade Center, 13th Floor, New York, New York 10048. Such reports, proxy statements and other information may also be obtained at the web site that the Commission maintains at http://www.sec.gov. Copies may be obtained by mail, upon payment of the Commission's customary charges, by writing to the Commission's principal office at 450 Fifth Street, N.W., Washington, DC 20549. Such information should also be on file at the offices of Nasdaq Operations, l735 K Street, N.W., Washington, D.C. 20006. 9. Certain Information Concerning the Offeror. Except pursuant to the Agreement and related agreements and except for Solomon D. Trujillo, the Chairman and Chief Executive Officer of the Offeror, who owns approximately 1200 shares of the Company, and George J. Harad, a Director of the Offeror, who owns, together with his spouse, approximately 200 shares of the Company, to the best knowledge of the Offeror, none of the persons listed on Schedule I hereto or any associate of the Offeror, including Offeror, or any of the persons so listed, beneficially owns or has a right to acquire directly or indirectly any securities of the Company. Neither the Offeror, nor, to the best knowledge of the Offeror, any of the persons or entities referred to above, or any of the respective executive officers, directors or subsidiaries of any of the foregoing, has effected any transactions in the securities of the Company during the past 60 days. Offeror is incorporated under the laws of the State of Delaware and has its principal executive offices at 1801 California Street, Denver, Colorado 80202, telephone number (303) 672-2700. Offeror is a diversified communications company providing services principally to customers in a 14-state mountain and western region of the United States, which is comprised of the states of Arizona, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington and Wyoming (the "Region"). Offeror's services include telecommunications and related services, wireless services, high-speed data and Internet services and directory services. The largest component of U S WEST, Inc. is U S WEST Communications, Inc. ("U S WEST Communications"), a wholly-owned subsidiary, which provides communications services to more than 25 million residential and business customers in the Region. U S WEST Communications serves approximately 75% of the Region's population. 16 Set forth below is certain summary consolidated financial data with respect to the Offeror excerpted or derived from financial information contained in the Offeror's Annual Report on Form 10-K/A for the year ended December 31, 1998 and Quarterly Report on Form 10-Q for the period ended March 31, 1999. More comprehensive financial information is included in such report and other documents filed by the Offeror with the Commission, and the following summary is qualified in its entirety by reference to such reports and such other documents and all the financial information (including any related notes) contained therein. Such reports and other documents should be available for inspection and copies thereof should be obtainable in the manner set forth below. U S WEST, INC. CONSOLIDATED ANNUAL STATEMENTS OF INCOME
Year Ended December 31, ------------------------- 1998 1997 1996 ------- ------- ------- (Dollars in Millions, except Per Share Amounts) Operating revenues: Local service..................................... $ 5,525 $ 5,016 $ 4,770 Interstate access service......................... 2,816 2,666 2,507 Intrastate access service......................... 822 761 770 Long-distance network services.................... 779 885 1,100 Directory services................................ 1,277 1,197 1,120 Other services.................................... 1,159 954 901 ------- ------- ------- Total operating revenues........................ 12,378 11,479 11,168 ------- ------- ------- Operating expenses: Employee-related expenses......................... 4,312 3,953 3,893 Other operating expenses.......................... 2,818 2,587 2,305 Depreciation and amortization..................... 2,199 2,163 2,158 ------- ------- ------- Total operating expenses........................ 9,329 8,703 8,356 ------- ------- ------- Operating income.................................... 3,049 2,776 2,812 Other income (expense): Interest expense.................................. (543) (405) (448) Gains on sales of local telephone exchanges....... -- 77 59 Gain on sale of investment in Bellcore............ -- 53 -- Other expense--net................................ (87) (72) (46) ------- ------- ------- Total other expense--net........................ (630) (347) (435) ------- ------- ------- Income before income taxes, extraordinary item and cumulative effect of change in accounting principle.......................................... 2,419 2,429 2,377 Provision for income taxes.......................... 911 902 876 Income before extraordinary item and cumulative effect of change in accounting principle........... 1,508 1,527 1,501 Extraordinary item--early extinguishment of debt-- net of tax......................................... -- (3) -- Income before cumulative effect of change in accounting principle............................... 1,508 1,524 1,501 Cumulative effect of change in accounting principle--net of tax.............................. -- -- 34 ------- ------- ------- Net income.......................................... $ 1,508 $ 1,524 $ 1,535 ======= ======= =======
17 U S WEST, INC. CONSOLIDATED ANNUAL STATEMENTS OF INCOME (CONTINUED)
Year Ended December 31, --------------------------- 1998 1997 1996 -------- -------- -------- (Dollars in Millions, except Per Share Amounts) Basic earnings per share: Income before extraordinary item and cumulative effect of change in accounting principle........ $ 3.05 $ 3.16 $ 3.14 Extraordinary item--early extinguishment of debt............................................ -- (0.01) -- Cumulative effect of change in accounting principle....................................... -- -- 0.07 Basic earnings per share........................... $ 3.05 $ 3.16 $ 3.21 Basic average shares outstanding (in 000's)........ 494,395 482,751 477,549 Diluted earnings per share: Income before extraordinary item and cumulative effect of change in accounting principle........ $ 3.02 $ 3.13 $ 3.10 Extraordinary item--early extinguishment of debt............................................ -- (0.01) -- Cumulative effect of change in accounting principle....................................... -- -- 0.07 Diluted earnings per share......................... $ 3.02 $ 3.12 $ 3.17 Diluted average shares outstanding (in 000's)...... 498,798 491,232 488,591 Dividends per share................................ $ 2.14 $ 2.14 $ 2.14
18 U S WEST, INC. CONSOLIDATED QUARTERLY STATEMENT OF INCOME (unaudited)
Quarter Ended March 31, ------------------ 1999 1998 -------- -------- (Dollars in millions, except Per Share Amounts) Operating revenues: Local services............................................ $ 1,867 $ 1,730 Access services........................................... 681 665 Long-distance services.................................... 174 204 Directory services........................................ 326 306 Other Services............................................ 134 104 -------- -------- Total operating revenues................................ 3,182 3,009 Operating expenses: Employee-related expenses................................. 1,125 1,006 Other operating expenses.................................. 662 656 Depreciation and amortization............................. 602 532 -------- -------- Total operating expenses................................ 2,389 2,194 -------- -------- Operating income............................................ 793 815 Other expense: Interest expense.......................................... (153) (97) Other expense-net......................................... (1) (25) -------- -------- Total other expense-net................................. (154) (122) -------- -------- Income before income taxes.................................. 639 693 Provision for income taxes.................................. 242 259 -------- -------- Net income.................................................. $ 397 $ 434 ======== ======== Basic earnings per share.................................... $ 0.79 $ 0.89 ======== ======== Basic average shares outstanding (in 000's)................. 503,306 484,964 ======== ======== Diluted earnings per share.................................. $ 0.78 $ 0.89 ======== ======== Diluted average shares outstanding (in 000's)............... 508,121 489,113 ======== ======== Dividends per share......................................... $ 0.535 $ 0.535 ======== ========
The accompanying notes are an integral part of the consolidated financial statements. 19 U S WEST, INC. CONSOLIDATED BALANCE SHEETS
December 31, March 31, --------------- ----------- 1998 1997 1999 ------- ------- ----------- (unaudited) (Dollars in Millions, except per Share Amounts) ASSETS Current assets: Cash and cash equivalents........................ $ 49 $ 27 $ 36 Accounts receivable less allowance for uncollectibles of $70, $69 and $72, respectively.................................... 1,743 1,717 1,700 Inventories and supplies......................... 197 150 236 Deferred directory costs......................... 274 257 276 Deferred tax assets.............................. 151 271 161 Prepaid and other................................ 78 82 127 ------- ------- ------- Total current assets............................... 2,492 2,504 2,536 ------- ------- ------- Property, plant and equipment--net................. 14,908 14,308 15,098 Other assets--net.................................. 1,007 855 1,075 ------- ------- ------- Total assets....................................... $18,407 $17,667 $18,709 ------- ------- ------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term debt.................................. $ 1,277 $ 695 $ 1,393 Accounts payable................................. 1,347 1,377 1,326 Accrued expenses................................. 1,702 1,791 1,753 Advance billings and customer deposits........... 370 336 377 ------- ------- ------- Total current liabilities.......................... 4,696 4,199 4,849 ------- ------- ------- Long-term debt..................................... 8,642 5,020 8,642 Postretirement and other postemployment benefit obligations....................................... 2,643 2,534 2,632 Deferred income taxes.............................. 786 791 811 Unamortized investment tax credits................. 159 168 159 Deferred credits and other......................... 726 588 696 Commitments and Contingencies Shareholders' equity: Preferred stock--$1.00 par value, 190,000,000 shares authorized, none issued and outstanding.. -- -- -- Series A junior preferred stock--$1.00 par value, 10,000,000 shares authorized, none issued and outstanding..................................... -- -- -- Common stock--$0.01 par value, 2,000,000,000 shares authorized, 503,207,058, 484,522,015 and 503,797,638 issued, 502,903,055, 484,515,415 and 503,493,635 outstanding......................... 532 -- 553 Retained earnings................................ 223 -- 352 Pre-separation equity............................ -- 4,367 -- Accumulated and other comprehensive income....... -- -- 15 ------- ------- ------- Total shareholders' equity......................... 755 4,367 920 ------- ------- ------- Total liabilities and shareholders' equity......... $18,407 $17,667 $18,709 ======= ======= =======
20 The notes to the Selected Summary Consolidated Financial Statements set forth in the Offeror's annual report to shareholders on Form 10-K/A are an integral part of the consolidated financial statements. Except as described in this Offer to Purchase, neither the Offeror, nor to the best knowledge of the Offeror, any of the persons listed on Schedule I hereto, has any contract, arrangement, understanding or relationship with any other person with respect to any securities of the Company, including, but not limited to, contracts, arrangements, understandings or relationships concerning the transfer or voting of such securities, joint ventures, loan or option arrangements, puts or calls, guaranties of loans, guaranties against loss or the giving or withholding or proxies. Except as described in this Offer to Purchase, the Offeror, nor to the best knowledge of the Offeror, none of the persons listed on Schedule I hereto, has had since the formation of the Company any business relationships or transactions with the Company or any of its executive officers, directors or affiliates that are required to be reported under the rules and regulations of the Commission applicable to the Offer. Except as described in this Offer to Purchaser, there have been no contracts, negotiations or transactions between the Offeror nor, to the best knowledge of the Offeror, any of the persons listed in Schedule I hereto, on the one hand, and the Company or its affiliates, on the other hand, concerning a merger, consolidation or acquisition, a tender offer or other acquisition of securities, an election of directors, or a sale or other transfer of a material amount of assets. 10. Source and Amount of Funds. The total funds required by the Offeror to purchase 39,259,305 Shares pursuant to the Offer and to pay related fees and expenses will be approximately $2.5 billion. These funds will be obtained by the Offeror from working capital and/or borrowings. A portion of the borrowings will be obtained under the Offeror's ongoing Section 4(2) Commercial Paper Program (the "Program"). Under the Program, U S WEST Capital Funding, Inc., a Colorado corporation and a wholly-owned subsidiary of the Offeror ("Capital Funding"), issues commercial paper which is unconditionally guaranteed by the Offeror. Capital Funding and the Offeror maintain unsecured bank borrowing facilities sufficient to support the outstanding commercial paper. The Offeror recently increased the borrowing capacity under the Program to accommodate the purchase of the Common Stock pursuant to the Offer. The commercial paper issued under the Program has a maturity of up to 270 days and will be rated by Standard & Poor's Rating Service, Moody's Investors Service, Inc. and Duff & Phelps. The commercial paper ranks pari passu with Capital Funding's other unsubordinated and unsecured indebtedness. The Offeror intends to refinance the commercial paper indebtedness relating to the purchase through additional private placements, public offerings and/or third party financings. The Offeror is in discussions with various lending sources relating to additional financing for the Offer and is considering, among other alternatives, entering into financing arrangements with banks and/or other financial institutions and/or completing a private placement of securities under Rule 144A of the Securities Act. 11. Background of the Offer; Past Contacts with the Company. On October 25, 1997, the Board of Directors of the former parent of the Offeror ("Old U S WEST") adopted a proposal to separate Old U S WEST into two independent companies (the "Separation"). The Separation became effective on June 12, 1998. Subsequent to the Separation, the Offeror commenced a comprehensive review of its strategic position and objectives in light of changes in the competitive marketplace as evidenced by recent significant consolidations and mergers in the telecommunications industry, swiftly advancing technology and changes in the regulatory landscape. From September 30 through October 2, 1998, the Board of Directors of the Offeror held a strategy session during which it reviewed the changes in the competitive marketplace, technology, regulation and customer demands. With this background it considered various strategic alternatives. These alternatives included potential relationships and alliances with other entities. Following this session, during the Fall of 1998, senior management of the Company and the Offeror met on various occasions to discuss a potential transaction involving the Company and the Offeror's data business. These discussions ended in January, 1999. 21 On February 4 and 5, 1999, in the context of the discussion of a potential opportunity, the Board of Directors of the Offeror had lengthy discussions regarding the various strategies the Offeror could pursue. Through February and into April, 1999, senior management of the Company and the Offeror had further discussions about ways of combining the Company and the data business of the Offeror. At a regular meeting of the Board of Directors of the Offeror held on April 4, 1999, the Board reviewed the strategic objectives of the Offeror and requested that Solomon D. Trujillo, the Chief Executive Officer of the Offeror, together with senior management of the Offeror, further investigate possible long-term strategic alternatives and options for the Offeror including the possibility of a business combination transaction involving the Company. Analysis of possible strategies to either acquire or build the technology necessary to advance the Offeror into the forefront of the rapidly expanding data and telecommunication industry was undertaken. The Offeror considered a number of potential acquisition candidates with a variety of technologies that would enhance the Offeror's products or services. Thereafter, the Offeror had preliminary discussions with a number of significant potential partners that could strategically fit with the Offeror's goals of becoming a global leader in the data/communications race. The Offeror retained Merrill Lynch to advise it with respect to a possible transaction. On April 22, 1999, Mr. Trujillo and Gary Winnick, Co-Chairman of the Board of Directors of the Company, met in Beverly Hills, California for the purpose of discussing industry-related matters. At such meeting, Messrs. Trujillo and Winnick discussed the possibility of a business combination or a joint venture between the Offeror and the Company. At the end of the meeting, Messrs. Trujillo and Winnick agreed to meet again and direct their respective senior managements to pursue further the possibility of a business combination between the Offeror and the Company. Shortly following these meetings, in light of the pending merger transaction with Frontier Corporation ("Frontier"), Mr. Winnick preliminarily advised senior management of Frontier of his discussions with the Offeror. Subsequent thereto, senior management of the Offeror and representatives of Merrill Lynch had several meetings with senior management of the Company and its financial advisor, Salomon Smith Barney, Inc., to discuss the feasibility and advisability of a business alliance or combination between the Offeror and the Company, including tours of various facilities. On May 3, 1999, the Offeror and the Company executed a mutual confidentiality agreement and agreed to exchange non-public information. During the first two weeks of May, senior managements of the Company and the Offeror and their respective financial and legal advisors met to discuss a possible structure for a business combination between the Offeror and the Company and agreed that any business combination transaction between the Company and the Offeror would include the Offer. On May 11, 1999, at a regular meeting of the Board of Directors of the Offeror, senior management of the Offeror and the Offeror's financial and legal advisors reviewed with the Board of Directors of the Offeror possible long-term strategic alternatives for the Offeror and the status of the discussions between the Offeror and the Company. The Board of Directors of the Offeror then authorized senior management of the Offeror to continue discussions with the Company. Senior management of the Offeror and the Company and their respective legal and financial advisors continued to meet to negotiate the terms of a possible business combination including the terms of the Offer and commenced negotiations for the Mergers and the Offer. On May 16, 1999, the Board of Directors of the Offeror met for the purpose of considering the terms and conditions of the Merger Agreement, the Mergers, the Offer and the related transactions and agreements. The 22 Offeror's financial and legal advisors were present at such meeting. The Board of Directors of the Offeror was advised that another company that had become aware of the possible combination with the Company and requested that the Offeror delay negotiations while it continued to consider making an alternative proposal. However, the third party indicated that it was unwilling to make an offer at that time. Throughout the day and evening, management encouraged the third party to make a firm and specific proposal that could be considered. No proposal was received and the Offeror was informed that no proposal was imminent. At the Board of Directors meeting, senior management of the Offeror and representatives of the Offeror's legal and financial advisors reviewed with the Board of Directors the terms and conditions of the Merger Agreement, the Mergers, the Offer and the related transactions. Merrill Lynch addressed certain financial aspects of the Mergers. Counsel reviewed legal considerations to be considered by the Board of Directors of the Offeror in approving the Merger and the Offer. Extensive discussion followed relating to the financial and legal aspects of the transaction as well as the status of the conversations with the third party. After discussion, the Board of Directors of the Offeror unanimously approved the Merger, the Offer, the Merger Agreement and the related transactions and agreements and agreed to reconvene later that evening to authorize management to execute and deliver the Merger Agreement and the related agreements. Following the meeting of the Board of Directors of the Offeror, the Board of Directors of the Company met to consider, among other things, the terms and conditions of the Merger Agreement, the Mergers, the Offer and the related transactions and agreements. The Company's financial and legal advisors attended the meeting. Senior management of the Company and representatives of the Company's legal and financial advisors reviewed with the Board of Directors of the Company the terms and conditions of the Merger Agreement, the Mergers, the Offer and the related transactions. Counsel to the Company reviewed legal considerations to be considered by the Board of Directors of the Company in approving the Merger and the Offer. Extensive discussion followed relating to the financial and legal aspects of the transaction. After discussion, the Board of Directors of the Company unanimously approved the Merger, the Offer, the Merger Agreement and the related transactions and agreements. Senior management of the Company was authorized to execute and deliver the Merger Agreement. At approximately 10:30 p.m., the Board of Directors of the Offeror reconvened and, after being advised that no proposal from the third party was imminent and that the Company would not defer entering into the Merger Agreement, authorized senior management of the Offeror to execute and deliver the Merger Agreement and commence the Offer. Prior to the opening of business on May 17, 1999, each of the Offeror and the Company executed and delivered the Merger Agreement and the related documents. 12. Purpose of the Offer; Plans for the Company. The purpose of the Offer is to facilitate the terms and conditions and the transactions contemplated by the Merger Agreement. See Section 13. Except as contemplated by the Merger Agreement, as more fully described in Section 13, the Offeror does not have any present intentions or plans with respect to the Company. 13. The Tender Offer and Purchase Agreement and Related Agreements. TENDER OFFER AND PURCHASE AGREEMENT General The Agreement provides that U S WEST will commence this offer. Because the description of the tender offer agreement contained in this document is a summary, it does not contain all the information that may be important to you. A copy of the Agreement is filed as Exhibit (c)(2) to the Schedule 14D-1 filed by U S WEST with the Securities and Exchange Commission on May 21, 1999. 23 The Offer Subject to the satisfaction of certain conditions (see "--Offer Conditions"), and unless the parties agree to exercise their respective termination rights (see "--Termination"), U S WEST or one of its direct or indirect wholly-owned subsidiaries will commence an offer to purchase for cash up to 39,259,305 shares of Global common stock at a price of $62.75 per share net to the seller in cash. The number of shares of Global common stock subject to the tender offer will be adjusted for any change or distribution in respect of Global's common stock by reason of a stock split, combination, reclassification, stock dividend, or any similar event, so as to provide U S WEST and the tendering shareholders the economic benefits provided under the Agreement. If, at the expiration of the tender offer, more than 39,259,305 Shares of common stock have been tendered and not withdrawn, U S WEST will purchase such shares on a pro rata basis, based on the number of shares tendered by each Global shareholder, with appropriate adjustment to avoid purchase of fractional shares. U S WEST and Global agree to cooperate to make necessary adjustments to the proration mechanism to allow holders of exercisable options to purchase Global common stock (issued by the Company) to tender shares issuable upon exercise of such options without exercising such options until such time as it is determined that such shares will be purchased by U S WEST pursuant to the tender offer. U S WEST will pay for tendered shares of Global common stock as soon as it is permitted to do so under applicable law. U S WEST's obligation to pay for tendered shares of Global common stock is subject only to certain conditions (see "--Offer Conditions"). U S WEST reserves the right to waive any tender offer condition and make any other changes in the terms of the tender offer. However, unless U S WEST receives the written approval of Global, it may not: a. decrease the price offered per share of Global common stock; b. change the form of consideration payable in the tender offer; c. increase or reduce the maximum number of shares of Global common stock to be purchased in the tender offer; d. amend or impose additional tender offer conditions; or e. make other changes adverse to Global or its shareholders or which may delay the consummation of the tender offer. Offering Period. The tender offer will remain open for an initial period of twenty business days after its commencement. Unless the Agreement has been terminated, U S WEST will extend the tender offer from time to time if, at the then-scheduled expiration date, all the tender offer conditions (see --"Offer Conditions") have not been satisfied or waived. Unless Global consents in writing, each extension will not exceed ten business days. However, if U S WEST and Global reasonably believe fewer than ten business days are necessary to satisfy the tender offer conditions, then the extension will not exceed such fewer number of days. Any extension will not be less than the minimum number of days required by the Exchange Act or any applicable law. Securities and Exchange Commission filings. As soon as reasonably practicable on the date the tender offer is commenced, U S WEST will file a tender offer statement on Schedule 14D-1 with the Securities and Exchange Commission. The Schedule 14D-1 will contain an "Offer to Purchase" and forms of the related letter of transmittal, in compliance with the rules under the Exchange Act. U S WEST agrees to give Global and its counsel an opportunity to review the Schedule 14D-1 before it is filed with the Securities and Exchange Commission. U S WEST and Global agree to promptly correct any information they provide which becomes false or misleading in any material respect. U S WEST agrees to cause any corrected Schedule 14D-1 to be filed with the Securities and Exchange Commission and to disseminate to Global common shareholders the corrected "Offer to Purchase" and forms of the related letter of transmittal, to the extent required by federal securities laws. As soon as U S WEST receives any comments from the Securities and Exchange Commission, U S WEST will provide Global with a copy of such comments. Contemporaneously with the commencement of the tender offer, Global will file with the Securities and Exchange Commission a Solicitation/Recommendation Statement on Schedule 14D-9 containing Global's board 24 of directors' recommendation that shareholders accept the offer and tender their shares of common stock. Global will also promptly mail the Schedule 14D- 9 to its shareholders. The Schedule 14D-9 and all amendments thereto will comply in all material respect with the rules of the Exchange Act. Global and U S WEST agree to promptly correct any information they provide which becomes false or misleading in any material respect. Global agrees to cause any corrected Schedule 14D-9 to be filed with the Securities and Exchange Commission, and disseminated to its common shareholders, to the extent required by federal securities laws. Global Action. In connection with the tender offer, Global will promptly furnish U S WEST with mailing labels, security position listings, any non- objecting beneficial owner lists and any available listings or computer files containing the names and addresses of the record holders of shares of Global Common Stock. Global will furnish U S WEST with such additional information and assistance as Global or its agents may reasonably require to communicate the tender offer to the record and beneficial holders of shares of Global Common Stock. U S WEST will use such information only in connection with the tender offer. U S WEST will deliver to Global all copies of such information in its possession if the Agreement is terminated. Representations and Warranties by Global The Agreement contains representations and warranties, subject to qualifications, made by Global to U S WEST as to, among other things: . its due organization, valid existence and good standing; . corporate authorization to enter into the Agreement, to perform its obligations under the Agreement and to consummate the transactions contemplated thereby, and the enforceability of the Agreement against Global; . absence of conflicts of the Agreement with its organizational documents, any law or regulation and any agreement to which it is party (including the registration rights agreement, dated as of August 12, 1998); and . consents and filings needed in connection with the execution and delivery by Global of the Agreement. Representations and Warranties by U S WEST The Tender Offer and Purchase Agreement contains representations and warranties, subject to qualifications, made by U S WEST to Global as to, among other things: . its due organization, valid existence and good standing; . corporate authorization to enter into the Agreement, to perform its obligations under the Agreement and to consummate the transactions contemplated thereby, and the enforceability of the Agreement against U S WEST; . absence of conflicts of the Agreement with its organizational documents, any law or regulation and any agreement to which it is party; . consents and filings needed in connection with the execution and delivery by U S WEST of the Agreement; . compliance with state and federal securities laws regarding unregistered shares of Global common stock; and . necessary financing. Additional Agreements Registration Rights. U S WEST will have the right to exercise certain registration rights as provided in the registration rights agreement as if U S WEST were a party thereto. Global entered an agreement, dated as of May 16, 1999, with the shareholders who are parties to the registration rights agreement granting U S WEST 25 such registration rights. U S WEST cannot exercise any of these registration rights until the later of (i) the termination of the Frontier Merger Agreement (as defined below) (or consummation of the transactions pursuant thereto) and (ii) the termination of the Merger Agreement. Board Representation. After the merger agreement is terminated and as long as U S WEST beneficially owns more than 5% of Global's outstanding shares of Common Stock (for purposes hereof, if U S WEST's ownership of Global Common Stock is reduced to less than 5% because of issuances by Global of Global Common Stock, U S WEST will be deemed to beneficially own 5% until it transfers shares of Global Common Stock), Global agrees to use its best efforts to cause one individual designated by U S WEST to be nominated to serve on its board of directors. Global agrees to solicit proxies for such individual to the same extent as for other members of its slate of nominees. After U S WEST no longer beneficially owns 5% of Global Common Stock, at the request of Global, U S WEST will cause any U S WEST designee to resign. Hart-Scott-Rodino Act. U S WEST and Global agree to make all filings and submissions required by the Hart-Scott-Rodino Act (with respect to the tender offer). U S WEST and Global will provide to each other any assistance, information, or documents necessary to comply with the Hart-Scott-Rodino Act. U S WEST and Global will provide each other copies of all correspondence each has with any governmental authority in connection with the Agreement. Public Announcements. U S WEST and Global agree not to issue any press release or public statement without prior approval, unless required by law. Legend. Following consummation of the tender offer, the parties agree to cooperate to legend the Global common stock certificates purchased pursuant to the tender offer to refer to the applicable restrictions on the transfer of such certificate under the voting agreement, the standstill agreement, the Agreement and applicable law. Termination The Tender Offer and Purchase Agreement provides that prior to the closing of the tender offer, the agreement may be terminated: . by mutual written consent of U S WEST and Global; or . by U S WEST or Global on or after May 16, 2000, but only if the merger agreement has previously been terminated; or . by U S WEST at any time after the termination of the merger agreement pursuant to Section 9.1(d)(ii)(A) or 9.1(e) of the merger agreement (see "--The Merger Agreement") or by Global pursuant to Section 9(h)(i) of the merger agreement; or . by Global at any time beginning on the first business day prior to the mailing of the proxy statement in connection with the Agreement and Plan of Merger, dated as of March 16, 1999 among Global, GCF Acquisition Corp. and Frontier (the "Frontier Merger Agreement"); or . by U S WEST at any time beginning on the first business day following the termination of the Frontier Merger Agreement in accordance with its terms. If the Agreement is terminated, U S WEST will promptly terminate the tender offer without accepting any shares of Global Common Stock for payment. Amendment U S WEST and Global may amend the Agreement at any time by a writing signed by both parties. 26 Offer Conditions U S WEST will not accept or pay for any shares tendered, if prior to the termination of the tender offer the Hart-Scott Rodino Act waiting period is not expired or the tender offer has been terminated. U S WEST will not be required to accept or pay for any shares tendered, and may amend or terminate the tender offer if, prior to the expiration of the tender offer, any order or injunction is entered or any other action taken which makes illegal or prohibits payment for shares of Global Common Stock pursuant to the tender offer. The above tender offer conditions may be asserted by U S WEST regardless of the circumstances (subject to the other terms of the Agreement). U S WEST may waive any of the above conditions only after giving five business days' notice to Global. TENDER AND VOTING AGREEMENT General The tender and voting agreement establishes certain rights and obligations of the signatory shareholders of the Company in connection with the tender offer by U S WEST for Shares and the Merger. Because the description of the tender and voting agreement contained in this document is a summary, it does not contain all the information that may be important to you. A copy of the tender and voting agreement is attached as Exhibit (c)(5) to the Schedule 14D- 1 filed by U S WEST with the Securities and Exchange Commission on May 21, 1999. Agreement to Tender Shares Each shareholder who is a party to the tender and voting agreement agrees to tender and not to withdraw at least 12.3045% of the total number of Shares owned by such shareholder. Agreement to Vote Shares Each shareholder who is a party to the tender and voting agreement agrees to: . be present, in person or by proxy, at all Global shareholders meetings, so that all Shares then held by such shareholder and entitled to vote may be counted; and . vote, or deliver a written consent covering, all the Shares then held by such shareholder to approve the merger and against any action which would reasonably be expected to result in a failure of the conditions to the Merger to occur. Waiver of Appraisal Rights To the extent permitted by law, each shareholder who is a party to the tender and voting agreement agrees to waive any appraisal, dissenters' or similar rights that such shareholder may have under Bermuda law with respect to the merger. Restriction on Transfer--Global Merger Until the Merger is consummated or the Merger Agreement is terminated, the shareholders who are a party to the Tender and Voting Agreement agree not to transfer Shares representing 15% of the issued and outstanding 27 shares of Global Common Stock to any single person or group unless such recipient agrees to comply with the voting requirements of the tender and voting agreement. Restriction on Transfer--Frontier Merger Until Global's merger with Frontier is consummated or the Frontier Merger Agreement is terminated, each shareholder who is a party to the tender and voting agreement (other than certain shareholders identified on Exhibit A to the tender and voting agreement) agrees not to transfer the shares without Global's consent. The certain shareholders of Global identified as Exhibit A to the tender and voting agreement have entered into a separate transfer agreement with Global pursuant to which each such shareholder has agreed not to transfer their shares until the Frontier merger is consummated or terminated without Global's consent, which consent is not to be unreasonably withheld. A copy of such transfer agreement is attached as Exhibit (c)(8) to the Schedule 14D-1 filed by U S WEST with the Securities and Exchange Commission on May 21, 1999. Representations and Warranties of Shareholders Each shareholder who is a party to the tender and voting agreement represents and warrants, among other things: . if a corporation, that it is duly incorporated and validly existing and has the authority and power to enter the tender and voting agreement; . valid execution and due authorization of the tender and voting agreement and absence of any violation with the shareholder's charter documents; . the agreement is binding and enforceable against each signing shareholder; . each shareholder is the owner of the shares listed beside its name on Exhibit A to the tender and voting agreement; and . absence of material litigation. Termination The obligations of the shareholders who are party to the tender and voting agreement under the tender and voting agreement terminate upon the first to occur of the consummation of the Global Merger, the termination of the Merger Agreement, the approval of the Global Merger and the Merger Agreement have been approved by the requisite vote of the shareholders of the Company and the Offeror or the termination of the Agreement without the purchase of shares of Global Common Stock. THE STANDSTILL AGREEMENT General The standstill agreement establishes certain arrangements between U S WEST and Global with respect to U S WEST's ownership of Global Common Stock. Because the description of the standstill agreement contained in this document is a summary, it does not contain all the information that may be important to you. A copy of the standstill agreement is filed as Exhibit (c)(4) to the Schedule 14D-1 filed by U S WEST with the Securities and Exchange Commission on May 21, 1999. Covenants with Respect to Global Voting Securities Acquisition of Global Common Stock. U S WEST and its affiliates (other than Global) agree not to acquire any Global Common Stock during the standstill period, except pursuant to the Agreement. However, U S WEST and its affiliates may buy Global Common Stock directly from Global. The standstill period began on May 16, 1999 and continues until the earlier of May 16, 2009 or the effective time (as defined in the Merger Agreement (see description of merger agreement)). However, the standstill period will expire May 16, 2004 if the Merger Agreement is terminated by Global or U S WEST pursuant to certain termination provisions of the Merger Agreement. 28 Disposition of Global Common Stock. Until the later of the termination or consummation of the merger agreement and the termination or consummation of the Frontier Merger Agreement (as defined in the voting agreement (see description of voting agreement), U S WEST and its affiliates will not sell, transfer, pledge or otherwise dispose of any beneficial interest in any Global common stock. During the standstill period, U S WEST and its affiliates will not sell or otherwise dispose of any Global common stock if U S WEST knows that such transaction will result in any person or group controlling more than 5% of the voting power of Global, unless such transferee would own between 5% and 9.5% of Global voting securities and agrees in writing to be bound by this standstill agreement. However, U S WEST may sell Global voting securities under the following circumstances: (i) to its affiliates that agree to be bound by the provisions of the standstill agreement; (ii) pursuant to a tender or exchange offer for Global voting securities which is not opposed by Global's board of directors; (iii) in a business combination; or (iv) as provided by the registration rights given U S WEST in the Agreement (see description of Tender Offer and Purchase Agreement). U S WEST agrees not to transfer all or a substantial part of any affiliate's or subsidiary's capital stock which purchases Global common stock pursuant to the tender offer, without first acquiring such Global Stock from its subsidiary or affiliate. Proxy Solicitations/Voting. During the standstill period, U S WEST and its affiliates will not solicit proxies or participate in a proxy solicitation in opposition to Global's board of directors' recommendation or proposal. U S WEST will not submit a proposal or induce any person to do so or influence any person with respect to Global common stock without a formal resolution adopted by Global's board approving such action. At any meeting or consent solicitation to elect the Global board of directors, U S WEST and its affiliates will vote all of their shares in favor of the individuals recommended for election by the Global board of directors. No Voting Trusts, Pooling Agreements or Formation of Groups. Except as contemplated by the voting agreement, during the standstill period, U S WEST and its affiliates will not participate in a pooling agreement, syndicate, voting trust or other group for the purpose of acquiring, holding, voting or disposing of Global common stock. Limitation on Various Other Actions. During the standstill period, U S WEST and its affiliates will not, among other things, take any of the following actions: . seek to effect a change in control or reorganization of Global; . seek to effect any influence over Global's management, directors, or policies; . assist anyone in circumventing the provisions of the standstill agreement; . present any proposal, or encourage any person to make such a proposal, expected to result in any of the above-mentioned actions or result in U S WEST increasing its Global common stock in violation of the standstill agreement; . publicly suggest its willingness to engage in any of the above-mentioned actions; or . request a waiver or amendment of any of the covenants with respect to Global common stock. Representations During standstill period and if requested by Global, U S WEST will be present at all meetings of shareholders at which Global board members are to be elected. VOTING AGREEMENT General The voting agreement establishes, among other things, how U S WEST will vote its shares of Global common stock. Because the description of the voting agreement contained in this document is a summary, it does not contain all the information that may be important to you. A copy of the voting agreement is filed as Exhibit (c)(3) to the 14D-1 filed by U S WEST with the Securities and Exchange Commission on May 21, 1999. 29 Agreement to Vote Shares The voting agreement provides that at every Global shareholder meeting and on every action taken by written consent, U S WEST agrees to vote its shares in favor of the following: . the Merger (See "--The Merger Agreement") and any action required in furtherance thereof; and . the Frontier Merger Agreement and any action required in furtherance thereof. The voting agreement also provides that at every Global shareholder meeting and on every action taken by written consent, unless otherwise agreed to by Global, U S WEST agrees to vote its shares against the following: . any action which would reasonably be expected to result in a failure to satisfy the conditions to the consummation of the merger agreement. Representations and Warranties of U S WEST The voting agreement contains representations and warranties, subject to qualifications, made by U S WEST to Global as to, among other things: . its current ownership of no shares of Global Common Stock; . its sole power to vote, dispose of, convert, or demand appraisal rights with respect to shares of Global Common Stock it acquires; . corporate authorization to enter into the voting agreement, to consummate the transactions contemplated thereby, and the enforceability of the voting agreement against U S WEST; . absence of conflicts with its organizational documents, any law or regulation and any agreement to which it is a party; . consents and filings required in connection with the voting agreement; and . absence of liens on U S WEST's shares of Global Common Stock. Representations and Warranties of Global The voting agreement contains representations and warranties, subject to qualifications, made by Global to U S WEST as to, among other things: . corporate authorization to enter into the voting agreement, to consummate the transactions contemplated thereby, and the enforceability of the voting agreement against Global; . absence of conflicts with its organizational documents, any law or regulation and any agreement to which it is a party; and . consents and filings required in connection with the voting agreement. Covenants of U S WEST Restriction on Transfer, Proxies and Noninterference. The voting agreement contains certain covenants whereby U S WEST agrees not to: . offer, sell, or otherwise dispose of, or enter into an arrangement to offer, sell or otherwise dispose of, any shares of Global Common Stock; . grant proxies or powers of attorney with respect to such shares; . deposit such shares into a voting trust or enter into a voting agreement with respect to such shares. 30 U S WEST further agrees not to take any action that would make any of its representations and warranties contained in the voting agreement (see "-- Representations and Warranties" of U S WEST) untrue or which would prevent U S WEST from performing its obligations under the voting agreement. U S WEST agrees to use its reasonable efforts to consummate the transactions contemplated by the merger agreement and the voting agreement. Termination The voting agreement terminates upon the later of: . the earlier of (a) the consummation of the merger and (b) the termination of the merger agreement pursuant to its terms; and . the earlier of (a) the consummation of the Frontier merger and (b) the termination of the Frontier merger agreement pursuant to its terms. Upon termination, the voting agreement will become void and there will be no liability on any party or any of its directors, officers, partners, shareholders, employees, agents, advisors, representatives and affiliates in connection with the voting agreement or the transactions contemplated thereby. However, parties remain liable for their breach of the voting agreement. The voting agreement provides that it does not limit or modify the rights, obligations or liabilities of any person under any other contract, including the merger agreement. 31 THE MERGER AGREEMENT General The merger agreement provides that U S WEST and Global will form a corporation under Delaware law that, after the merger becomes effective, will be the Parent corporation. Parent will be equally owned by U S WEST and Global. Parent will issue two classes of common stock. One class, the Parent Class A Common Stock, will reflect the local service provider business of Parent. The other class, the Parent Class B Common Stock will reflect the global service provider business of Parent. Promptly after the formation of Parent, U S WEST and Global will cause Parent to form two wholly owned subsidiaries. At the effective time of the merger, U S WEST Merger Sub will be merged into U S WEST and U S WEST will be the surviving company and Global Merger Sub will merge into Global and Global will be the surviving company. This section of the document describes material provisions of the merger agreement. Because the description of the merger agreement contained in this document is a summary, it does not contain all the information that may be important to you. A copy of the Merger Agreement is filed as Exhibit (c)(1) to the Schedule 14D-1 filed by U S WEST with the Securities and Exchange Commission on May 21, 1999. General Information Regarding the Mergers Closing of the Mergers. The mergers will close as soon as practicable upon the fulfillment or waiver of all closing conditions. The mergers are expected to close shortly after the approval of the shareholders of U S WEST and Global, respectively. Effective Time of the Mergers. At the closing of the mergers, the parties to the merger agreement will file a certificate of merger with the Delaware Secretary of State and an application for a certificate of amalgamation with the Bermuda Registrar of Companies. The mergers will become effective at the time specified in the certificate of merger and the certificate of amalgamation referenced in the preceding sentence. Operation of Parent Following the Mergers. In addition to containing the terms of Parent Class A Common Stock and Parent Class B Common Stock (as described elsewhere in this Offer to Purchase), the certificate of incorporation of Parent will contain such other provisions as are customary for public companies, including a classified board of directors. In addition, the parties have agreed that Parent will also adopt an appropriate shareholder rights plan. Parent's board of directors will have twenty-two members, ten of whom will be designated by U S WEST, ten of whom will be designated by Global and two of who will be designated by U S WEST (and be reasonably satisfactory to Global) and will not be affiliated with either U S WEST or Global. The merger agreement also provides that Mr. Trujillo and Robert Annunziata, currently the Chief Executive Officer of U S WEST, will serve as Co-Chairmen and Co-Chief Executive Officers of Parent following the Closing. Alternative Structure. U S WEST and Global agree to use their best efforts to restructure the mergers to qualify as tax-free, if Global's acquisition of Frontier is consummated pursuant to Section of 1.10 of the Frontier Merger Agreement. Location and Corporate Identity of Parent. At the effective time, the Parent's headquarters will be located in New York City and Parent's corporate name will be "Global Crossing, Inc." Conversion Common Stock. At the time the merger becomes effective, each share of Global Common Stock and each share of U S WEST Common Stock (excluding treasury shares and shares of Global Common Stock owned by 32 U S WEST and shares of U S WEST Common Stock owned by Global) shall be converted into shares of Parent Class A Common Stock and shares of Parent Class B Common Stock according to the conversion and election procedures below. Options, Warrants and Other Rights. Each option, warrant and other right to purchase or otherwise acquire Global Common Stock or U S WEST Common Stock (excluding any such options, warrants or other rights owned by U S WEST or Global) shall be converted into options, warrants or rights to purchase or otherwise acquire Parent Class A Common Stock and Parent Class B Common Stock according to the conversion and election procedures below. The exercise price of the new options, warrant or rights will be adjusted in proportion to the Class B to Class A Value Ratio (as defined below). Conversion Ratio. Each holder of Global Common Stock or options, warrants, or rights to purchase or otherwise acquire Global Common Stock (with the same exceptions as noted above) shall have the right to make a number of elections for Parent Class A Common Stock and Parent Class B Common Stock equal to the sum of the number of shares of Global Common Stock held by the holder at the effective time of the merger and the number of shares of Global Common Stock issuable upon exercise of options, warrants or rights held by the holder at the effective time (with the same exceptions as noted above) could be exchanged if exercised. Each holder of U S WEST Common Stock or options, rights or warrants to purchase or otherwise acquire U S WEST Common Stock (with the same exceptions as noted above) shall have the right to make a number of elections between Parent Class A Common Stock and Parent Class B Common Stock equal to the sum of the shares of U S WEST Common Stock held by the holder at the effective time of the merger and the number of shares of U S WEST Common Stock issuable upon exercise of options, warrants or rights held by the holder at the effective time of the merger (with the same exceptions as noted above) multiplied by the conversion ratio. The conversion ratio is determined by dividing the total number of shares of Global Common Stock outstanding on the date of the Merger Agreement (on a fully diluted basis, using the treasury method of calculation) less 39,259,305, divided by the total number of shares of U S WEST Common Stock outstanding on the date of the Merger Agreement (on a fully diluted basis, using the treasury method of calculation). For the purpose of calculating the conversion ratio above, the number of outstanding shares of Global Common Stock outstanding on the date of the Merger Agreement includes the number of shares of Global Common Stock to be issued in exchange for Frontier shares according to the terms of the Global/Frontier Merger Agreement. Election. Each election entitles the holder to make an election for Parent Class A Common Stock or Parent Class B Common Stock. For each election made for Parent Class B Common Stock, the holder shall be entitled to receive a number of shares of Parent Class B Common Stock equal to the sum of 1 plus the Class B to Class A Value Ratio (as defined below) divided by the Class B to Class A Value Ratio (as defined below) for each election made for. If Parent Class A Common Stock, the holder shall be entitled to receive a number of shares of Parent Class A Common Stock equal to the sum of 1 plus the Class A to Class B Value Ratio (as defined below) multiplied by the number of elections. Pro Rata Adjustment. The maximum aggregate number of shares of Parent Class A Common Stock or Parent Class B Common Stock that may be elected equal the maximum number of elections that can be made. If the holders of Global Common Stock and U S WEST Common Stock and the holders of options, warrants or rights to purchase Global Common Stock or U S WEST Common Stock elect, in the aggregate, a number of shares of Parent Class A Common Stock or Parent Class B common stock exceeding the applicable cap, the number of shares exceeding the cap will be reduced pro rata. Election Procedures Not later than thirty days prior to the anticipated effective time of the merger or such other date as the parties may agree in writing, Global and U S WEST shall fix a record date for determining which of its shareholders and holders of options, warrants or rights to purchase common stock are entitled to make an election and will mail a form of election together with a letter of transmittal to such holders and each person who subsequently becomes a holder. The election will be made by delivering the form of election to the exchange agent mutually 33 chosen by Global and U S WEST. Such election will be made in terms of the percentage (in increments of one percent (1%)) that such holder seeks of shares of Parent Class B Common Stock and/or shares of Parent Class A Common Stock. The form of election must be properly completed, signed and submitted to the exchange agent by 5:00 p.m. (New York City time) on the last business day prior to the effective time of the merger (or such other time and date as the Parties may agree) and accompanied by the following (other than in the case of holders of Global and U S WEST options, warrants and rights to acquire their respective common stock): . the certificates as to which the election is being made; or . an appropriate guarantee of delivery of such certificates from a firm which is a member of a registered national securities exchange or of the National Association of Securities Dealers, Inc., or a commercial bank or trust company having an office or correspondent in the United States and such certificates are delivered to the exchange agent: (i) within three NYSE trading days after the date of execution of the guarantee of delivery, and (ii) with a properly completed and signed letter of transmittal. Failure to deliver certificates covered by a guarantee of delivery within three New York Stock Exchange trading days will invalidate the election. Parent will have the discretion, which it may delegate to the exchange agent, to determine in good faith whether forms of election have been properly completed and is under no obligation to notify any person of a defect. Any form of election may be changed or revoked prior to the election deadline, and if so revoked Parent or the exchange agent will return the certificates representing the shares of the Global or U S WEST common stock covered by such form of election to be promptly returned without charge. If a holder of Global or U S WEST common stock or holder of options, warrants or rights to purchase such common stock: . does not submit a form of election which is received by the exchange agent prior to the Election deadline (including a holder who submits and then revokes his or her form of election and does not resubmit a form election which is timely received by the exchange agent); or . submits a form of election without the corresponding certificates or guarantee; or . if the exchange agent cannot reasonably determine the election preference of such holder submitting a form of election then such holder shall be deemed to have elected shares of Parent Class B Common Stock and shares of Parent Class A Common Stock in the same proportion as the holders of Global Common Stock or U S WEST Common Stock, respectively, who actually made elections. Certificates surrendered for exchange by any affiliate of Global or U S WEST shall not be exchanged until Parent shall have received a signed agreement from such affiliate. Exchange of Shares Exchange Agent. Prior to the merger, Global and U S WEST will choose an exchange agent to effect the exchange of certificates representing shares of U S WEST and Global common stock for certificates representing shares of Parent Class A Common Stock and Parent Class B Common Stock and cash to be paid in lieu of fractional shares. From time to time after the merger, Parent will deposit with the exchange agent certificates representing Parent Class A and Class B stock. Exchange of Shares. U S WEST and Global shareholders who surrender their stock certificates to the exchange agent, or to the Parent (if the exchange agent's appointment is terminated) will receive certificates representing the number of whole shares of Parent Class A Common Stock and Class B Common Stock to which the holders are entitled in accordance with the election procedure described above, with cash being paid in lieu of fractional shares. Holders of unexchanged U S WEST and Global stock certificates will not receive any dividends or other distributions made by Parent after the mergers until their stock certificates are surrendered. Upon surrender, however, the holders will receive all dividends and distributions made on the related Parent shares subsequent to the mergers, without interest, together with cash in lieu of fractional shares. If the exchange 34 agent's appointment is terminated, holders will look solely to the Parent for payment of such dividends and distributions. No party will be liable to U S WEST or Global shareholders for any Parent shares or cash delivered to a public official pursuant to any abandoned property, escheat or similar laws. Fractional Shares. No fractional Parent Common Stock shares will be issued to holders of U S WEST or Global common stock. In lieu of fractional shares, each holder of fractional shares of Parent common stock will receive a cash payment. Conditions to the Mergers Conditions to Each Party's Obligation to Effect the Mergers. The obligations of each party to effect the mergers are subject to the following conditions: . the approval by the shareholders of Global and U S WEST of the mergers; . the approval by Parent shareholders of the issuance of Parent Class A Common Stock and Parent Class B Common Stock; . the absence of any order, injunction or other legal restraint making illegal or prohibiting the consummation of the mergers or creating an adverse effect on Global or U S WEST; . the expiration or early termination of the waiting period under the Hart-Scott-Rodino Act; . the receipt of all material approvals or permits from any governmental authority necessary to consummate the mergers; . the Securities and Exchange Commission not having issued a stop order suspending the effectiveness of the registration statement and there not being pending or threatened any proceedings for such purpose; . the receipt of all required state securities or "blue sky" permits or approvals; . the approval for listing on the New York Stock Exchange or the Nasdaq National Market System of the Parent Class A Common Stock and Parent Class B Common Stock, subject to official notice of issuance; . the receipt by Global and U S WEST of all approvals or consents required under any agreement, except where it would not materially adversely affect Parent, U S WEST or Global; . the consummation of Global's acquisition of Frontier pursuant to the Frontier Merger Agreement; and . Global's filing of a notice of discontinuance, an application for the sanctioning of a "scheme of arrangement", or an application for a certificate of amalgamation, as the case may be, with the appropriate Bermuda authority. Additional Conditions to Obligations of Global. The obligations of Global to effect the mergers are further subject to the following additional conditions: . the representations and warranties of U S WEST set forth in the merger agreement being true and correct in all material respects on May 16, 1999 and as of the closing date, or another date stated any representation or warranty, and an officer's certificate received by Global to such effect; . compliance by U S WEST in all material respects with its agreements and covenants under the merger agreement, and an officer's certificate received by Global to such effect; . the receipt by Global of a written opinion of Skadden, Arps, Slate, Meagher & Flom LLP that the consummation of the transactions will for U.S. federal income tax purposes: a. constitute a tax-free exchange of shares of Global Common Stock for shares of Parent Common Stock; and b. be a non-recognition transaction for both Global and Parent . if the opinion of Cadwalader, Wickersham & Taft that the consummation of the transactions will be a non-recognition transaction as to U S WEST and Parent is not rendered to U S WEST, then Global will not be obligated to effect the mergers (even if U S WEST waives the condition) provided that Global has received an opinion of Skadden, Arps, Slate, Meagher & Flom LLP that there exists a substantial likelihood of a tax liability that would result in a material adverse effect on U S WEST or Parent, as the case may be. . the receipt by Global of affiliate agreements from each affiliate of U S WEST; 35 . U S WEST taking all actions necessary so that the Parent's board will have the agreed-upon composition as described under "Operation of Parent Following the Mergers." Additional Conditions to Obligations of U S WEST. The obligations of U S WEST to effect the merger are further subject to the following additional conditions: . the representations and warranties of Global set forth in the merger agreement being true and correct in all material respects on May 16, 1999 and as of the closing date, or another date stated in any representation or warranty, and an officer's certificate received by U S WEST to such effect; . compliance by Global in all material respects with its agreements and covenants under the merger agreement, and an officer's certificate received by U S WEST to such effect; . the receipt by U S WEST of a written opinion of Cadwalader, Wickersham & Taft that the consummation of the transactions will for U.S. federal income tax purposes: a. not cause the spin-off of U S WEST completed on June 12, 1998 to become taxable, including taxability pursuant to Section 355(e) of the Internal Revenue Code; b. constitute for U.S. federal income tax purposes a tax-free exchange of shares of U S WEST common stock for shares of Parent common stock; and c. be a non-recognition transaction as to U S WEST and Parent. . if the opinion of Skadden, Arps, Slate, Meagher & Flom LLP that the consummation of the transactions will be a non-recognition as to Global and Parent are not rendered, with respect to Global or Parent, then U S WEST shall not be obligated to effect the mergers, even if Global waives the condition, provided that U S WEST has received an opinion of Cadwalader, Wickersham & Taft, that there exists a substantial likelihood of a tax liability that would represent a material adverse effect to Global or Parent, as the case may be. . the receipt by U S WEST of affiliate agreements from each affiliate of Global; . Global taking all actions necessary so that the Parent's board will be comprised of twenty-two people, ten of which appointed by Global, ten of which appointed by U S WEST, and the remaining two shall be appointed by U S WEST, but shall be independent directors not affiliated with U S WEST; and . the Mergers being accounted for under the purchase method of accounting, with U S WEST as the acquiror. Representations and Warranties In the merger agreement U S WEST and Global each make similar representations and warranties, which include, among other things: . its organization and the organization of its significant subsidiaries; . effectiveness of its certificate of incorporation and bylaws, and the certificate and bylaws of its significant subsidiaries, and there being no violation of such certificates and bylaws; . its capital structure; . corporate power and authorization to enter into the merger agreement and to consummate the merger and related transactions; . absence of conflict with its charter documents and receipt of all required consents and approvals; . all recent required reports having been filed with the SEC and the accuracy of those reports; . absence of material adverse changes since December 31, 1998; . the absence of material litigation; 36 . compliance with laws and permits; . accuracy of information supplied for use in the registration statement and joint proxy statement; . employee benefit matters; . labor matters; . environmental matters; . board approval; . approval by a majority of votes cast being the only shareholder vote required; . the opinion of its financial advisor; . brokers' and finders' fees; . tax matters; . intellectual property matters; . insurance matters; . its ownership of less than 10% of the other's outstanding shares; . material contracts; . necessary licenses; . year 2000 readiness matters; and . no violation of, among other things, Section 104 of the Foreign Corrupt Practices Act or similar laws. Conduct of U S WEST and Global prior to the Mergers Transition Planning. Global and U S WEST have agreed to establish a four- person committee (comprised equally of representatives) responsible for coordinating all transition planning and implementation relating to the mergers, including examining alternatives regarding the future organization and management of Global and U S WEST and the coordination of policies and strategies with respect to regulatory authorities. Operating Covenants. Prior to the mergers Global, U S WEST and their respective subsidiaries have agreed to conduct their operations in the ordinary course consistent with past practice, and will use their best efforts to preserve intact their business organization, keep available the services of their officers and employees and maintain advantageous relationships with persons having business relationships with them. Subject to some exceptions, including obtaining the written consent of the transition committee, the merger agreement places specific restrictions on the ability of Global and U S WEST and their respective subsidiaries to, among other things: . issue, sell, encumber or dispose of its capital stock or securities convertible into or exercisable for its capital stock (excluding employee benefit plans); . amend or propose to amend its certificate of incorporation, bylaws, or shareholder rights plan except as disclosed in the draft proxy statement of Global and Frontier to be filed in connection with the Frontier Merger Agreement; . split, combine or reclassify its outstanding shares of common stock; . with respect to Global, declare or pay any dividend (U S WEST is permitted to pay dividends consistent with past practice); . redeem, purchase or acquire its capital stock, except in connection with its employee benefit plans; 37 . acquire any corporation, partnership or business or increase any investment if the aggregate of such transactions exceeds $3 billion . except in the ordinary course of business, make certain capital expenditures; No Solicitation. Pursuant to the merger agreement and except as described below, Global and U S WEST agree that neither they nor their respective subsidiaries will, solicit, initiate, encourage (including by way of furnishing information) or knowingly facilitate any alternative transaction, as defined below, or participate in any discussions regarding any alternative transaction. Under the merger agreement, "alternative transaction" means, with respect to Global or U S WEST: . any acquisition by a third party of more than 20% of its outstanding shares pursuant to a tender offer, exchange offer or otherwise; . any merger or other business combination involving it or one of its subsidiaries, regardless of who the surviving corporation may be; or . any other transaction pursuant to which any third party acquires control of its assets or its subsidiaries' assets for consideration equal to 20% or more of the fair market value of its outstanding common stock. Notwithstanding the foregoing, the board of directors of Global or U S WEST, as the case may be, is permitted under the merger agreement to: . engage in discussions or negotiations with, or provide information to, any person in response to an unsolicited alternative transaction proposal submitted to it prior to the date its shareholders adopt the merger agreement, if, among other things, prior to participating in discussions or furnishing information: a. it executes a confidentiality agreement with the third party in question containing terms at least as favorable to it as the one previously entered into between Global and U S WEST; and b. it determines that the alternative transaction proposal is a superior proposal (as defined in the merger agreement) and, after receiving the advice of outside Counsel, determines that failing to participate in discussions with the third party in question or to furnish information would result in a reasonable likelihood that it would breach its fiduciary duties to its shareholders. Global and U S WEST must also provide the other with contemporaneous notice of entering into any discussions or furnishing any information and prompt notice of the terms and conditions of any alternative transaction and the identity of the person making it. Global and U S WEST agree not to release any third party from any provision of any standstill agreement which could affect an alternative transaction and agree that either party will be entitled to enforce the other party's rights and remedies in connection with such agreements. Nothing shall prohibit either party (i) from taking and disclosing to its shareholders a position contemplated by Rule 14e-9 or Rule 14e-2(a) under the Exchange Act regarding the tender offer or (ii) from making any disclosure to its shareholders if, in the good faith judgment of such party's board of directors, after receipt of advice from outside counsel, failure to disclose would result in a possible breach of fiduciary duty. Other Covenants Regarding the Period Prior to the Mergers. . Global and U S WEST have agreed to consult regarding their disclosure and filings of financial statements prior to the merger; and . neither U S WEST nor Global has the right to control the other's operations prior to the merger. 38 Covenants and Other Agreements. The merger agreement contains additional agreements relating to, among other things: . the preparation, filing, and distribution of the registration statement and the mailing of the joint proxy statement subject to the delivery of "comfort" letters from each company's independent accountants; . mutual access to information; . cooperation in the issuance of press releases relating to the merger; . cooperation regarding certain filings with governmental authorities and other agencies and organizations; . notification upon the occurrence or non-occurrence of an event that would: a. violate a representation, warranty, covenant or condition in the merger agreement or, b. have a material adverse effect on such party or require an amendment to the registration and joint proxy statement. . cooperation to cause the merger to qualify as a tax free exchange; . each parties' best efforts to obtain blue sky permits for Parent Class A Common Stock and Parent Class B Common Stock prior to the merger; and . obtaining the prior written consent of the other party to engage in acquisitions prior to the merger in excess of $3 billion in the aggregate. Board Recommendation; Shareholders Meetings. Global and U S WEST have each agreed to convene a shareholders meeting as soon as practicable for the purpose of voting on the adoption of the merger agreement. Each company's board of directors may not withdraw or modify its recommendation in any manner adverse to the other company, unless: . it has concluded in good faith, on the advice of its outside financial advisors, that the proposal is a superior proposal. Affiliate Agreements. Each of Global and U S WEST have agreed to disclose to the other party all persons who may be deemed an affiliate of such party for purposes of Rule 145 under the Securities Act. Each of Global and U S WEST has further agreed to use its reasonable best efforts to deliver to the other party, a letter from each such affiliate in the form agreed to in the Merger Agreement. Listing of Shares. The parties agree to use their best efforts to cause the Parent Class A Common Stock and Parent Class B Common Stock shares to be listed on the New York Stock Exchange or Nasdaq. Directors' and Officers' Indemnification and Insurance. For a period of six years following the merger, U S WEST and Global agree: . not to modify the provisions in their respective charter documents regarding director and officer indemnification; . to maintain in effect their current director and officer liability insurance; and . to indemnify the directors of U S WEST and Global, respectively, as permitted by their charter documents and applicable law. Determination of Class B to Class A Value Ratio. At least sixty days prior to the anticipated effective time, U S WEST and Global will retain a nationally recognized investment bank as an appraiser to determine the "Class B to Class A Value Ratio", The Class B to Class A Value Ratio represents the appraiser's assessment of the relative value of Parent Class B Common Stock to Parent Class A Common Stock. In determining such 39 valuations, the appraiser will employ methodologies and analyses consistent with those traditionally utilized by investment banking firms in performing public company valuations: Global/Frontier Merger. In connection with Frontier Merger, Global agrees to: . use its reasonable best efforts to close the transactions contemplated by the Frontier Merger Agreement; . not take any action which would materially adversely impact the timing of the closing of the transactions contemplated by the Frontier Merger Agreement; . not waive or amend any material economic provision of the Frontier Merger Agreement without the prior written approval of U S WEST (Global may increase the merger consideration without consent in the event an Acquisition Proposal (as defined in the Frontier Merger Agreement) is made to Frontier, but, if the increase is in cash, not in excess of $3 billion. Global's Cable & Wireless Acquisition. Global agrees, in connection with its acquisition of Cable & Wireless Global Marine, to use its reasonable efforts to close the Cable & Wireless acquisition and not to take any action which would materially adversely impact the timing of the closing of the Cable & Wireless acquisition or on its ability to satisfy the conditions precedent. Interim Dividend Policy. Global agrees not to declare any dividend without U S WEST's written consent. U S WEST is permitted, without Global's consent, to pay dividends not in excess of $0.75 per quarter. Additionally, U S WEST may declare and pay to shareholders of record on the date immediately prior to the effective time: (i) a special dividend of $1.00 per share and (ii) the pro rata portion of the then regular quarterly dividend through such date. Services Agreement. U S WEST and Global have agreed to use their best efforts to enter into a retail marketing and services agreement within thirty 30 days of the date of the merger agreement, covering the marketing of U S WEST's services and the purchase by U S WEST of Global's services. U S WEST and Global further agree to use their best efforts to enter into an agreement to form and operate outside of U S WEST's service territory a data-focused competitive local exchange carrier. Global Group/Local Group Definitions. Sixty days prior to the merger, U S WEST and Global will agree on the definitions of Global Group and Local Group to be used for purposes of the determination of the Class B to Class A Value Ratio. Termination The merger agreement provides that prior to the merger, the merger agreement may be terminated: . by mutual written consent of Global and U S WEST; . by either Global or U S WEST if: a. the merger is not consummated by May 16, 2000 (or November 30, 2000 if all conditions, except those relating to the expiration of the Hart-Scott-Rodino waiting period and other regulatory consents, have been fulfilled prior to May 16, 2000), so long as the party seeking to terminate did not prevent consummation by failing to fulfill any of its obligations under the merger agreement; b. any court or other governmental authority issues a non-appealable final order, decree or ruling or takes any other action which prohibits the merger, so long as the party seeking termination on that basis has used its reasonable best efforts to prevent such action; c. the shareholders of Global or U S WEST fail to adopt the merger agreement; d. the other party materially breaches the merger agreement and the breach is incapable of being cured prior to May 16, 2000 (or November 30, 2000 if all conditions, except those relating to the 40 expiration of the Hart-Scott-Rodino waiting period and other regulatory consents, have been fulfilled prior to May 16, 2000); e. the other party's board of directors withdraws or adversely modifies its approval or recommendation that its shareholders adopt the merger agreement, or fails to reaffirm such approval or recommendation upon request; f. the other party's board of directors approves or recommends any alternative transaction; g. the other party's board of directors fails to include its unqualified recommendation that its shareholders approve the merger; h. the other party's board resolves to take any of the action specified in e. through f. above; i. the Frontier Merger Agreement is terminated; j. prior to the vote of its respective shareholders adopting the merger agreement, its board of directors decides to accept a transaction proposal which is a superior proposal provided that: i. it has complied with the covenant described under "--No Solicitation"; ii. its board determines in good faith, on the basis of advice from outside counsel that proposal is a superior proposal; and iii. its board determines in good faith, on the basis of advice from outside counsel, that accepting the superior proposal would likely be required to prevent the board from breaching its fiduciary duties. . by Global, if: a. U S WEST fails to consummate the purchase of Global shares pursuant to its tender offer by July 31, 1999 (or August 30, 1999, if the Hart-Scott-Rodino Act waiting period applicable to the tender offer has not expired) (see description of Tender Offer). b. it determines that the approval of the fair value of Global common stock, as determined by the Bermuda Court, is excessive. Termination Fees and Expenses Termination Fee Payable to Global The merger agreement provides for U S WEST to pay Global a termination fee, in cash, of $850 million if the merger agreement is: . terminated by Global because: a. U S WEST's board withdraws or adversely modifies its approval or recommendation that U S WEST's shareholders adopt the merger agreement or fails to reaffirm such approval or recommendation upon request; b. U S WEST's board approves or recommends any "alternative transaction"; c. U S WEST's board fails to include its unqualified recommendation that its shareholders approve the merger; or d. U S WEST's board resolves to take any of the above actions. . terminated by U S WEST or Global because of the failure to obtain U S WEST's shareholder approval (and the agreement could not have been terminated by Global for any of the conditions listed in a. through d. above), and: 41 a.prior to U S WEST's shareholders' meeting an "alternative transaction" proposal is made involving the acquisition of more than 40% of the outstanding shares of U S WEST or any of its subsidiaries, and b.within twelve months after the termination of the merger agreement, U S WEST enters into a definitive agreement with respect to an "alternative transaction." . terminated by Global as a result of U S WEST's material breach concerning: a. its covenant concerning the preparation, filing, and distribution of the registration statement and the mailing of the joint proxy statement to its shareholders, subject to the delivery of "comfort" letters from its independent accountants, which remains uncured for 30 days after notice. b. its covenant regarding the convening of a shareholders meeting as soon as practicable for the purposes of voting on the adoption of the merger agreement which remains uncured for 30 days after notice, and its board of directors not withdrawing or modifying its recommendation in any manner adverse to Global unless it has concluded in good faith, on the advice of its outside financial advisors, that the proposal is a superior proposal. . terminated by U S WEST pursuant to the provision which allows termination where prior to the vote of its shareholders adopting the merger agreement, its board of directors decides to accept a transaction proposal which is a superior proposal provided that: i. it has complied with the covenant described under "--No Solicitation"; ii. its board determines in good faith, on the basis of advice from outside counsel that proposal is a superior proposal; and iii. its board determines in good faith, on the basis of advice from outside counsel, that accepting the superior proposal would likely be required to prevent the board from breaching its fiduciary duties. Termination Fee Payable to U S WEST The merger agreement provides for the payment by Global to U S WEST of a termination fee, in cash, of $850 million if the merger agreement is: . terminated by U S WEST because: a. Global's board withdraws or adversely modifies its approval or recommendation that Global's shareholders adopt the merger agreement or fails to reaffirm such approval or recommendation upon request; b. Global's board approves or recommends any "alternative transaction"; c. Global's board fails to include its unqualified recommendation that its shareholders approve the merger; or d. Global's board resolves to take any of the above actions. . terminated by Global or U S WEST because of the failure to obtain Global's shareholder approval (and where the agreement could have been, but was not, terminated by U S WEST for any of the conditions listed in a. through d. above.) . terminated by Global or U S WEST because of the failure to obtain Global's shareholder approval (and the agreement could not have been terminated by U S WEST for any of the conditions listed in a. through d. above), and: a. prior to Global's shareholders' meeting an "alternative transaction" proposal is made involving the acquisition of more than 40% of the outstanding shares of Global or any of its subsidiaries, and 42 b. within twelve months after the termination of the merger agreement, Global enters into a definitive agreement with respect to an "alternative transaction." . terminated by U S WEST as a result of Global's material breach concerning: a. its covenant concerning the preparation, filing, and distribution of the registration statement and the mailing of the joint proxy statement to its shareholders, subject to the delivery of "comfort" letters from its independent accountants, which remains uncured for 30 days after notice. b. its covenant regarding the convening of a shareholders meeting as soon as practicable for the purposes of voting on the adoption of the merger agreement which remains uncured for 30 days after notice, and its board of directors not withdrawing or modifying its recommendation in any manner adverse to U S WEST unless it has concluded in good faith, on the advice of its outside financial advisors, that the proposal is a superior proposal. . terminated by Global pursuant to the provision which allows termination where prior to the vote of its shareholders adopting the merger agreement, its board of directors decides to accept a transaction proposal which is a superior proposal provided that: i. it has complied with the covenant described under "--No Solicitation"; ii. its board determines in good faith, on the basis of advice from outside counsel that proposal is a superior proposal; and iii. its board determines in good faith, on the basis of advice from outside counsel, that accepting the superior proposal would likely be required to prevent the board from breaching its fiduciary duties. The termination fee is payable within one business day following the delivery of notice of termination to the other party, or within one business day after such party enters into any definitive agreement regarding an "alternative transaction" which gives rise to the termination fee. If either party fails to promptly pay the other any termination fee, they will pay the costs and expenses (including legal fees and expenses) in connection with any action taken to collect payment. Amendment; Extension and Waiver. Global and U S WEST may amend the merger agreement pursuant to a writing adopted by their respective boards at any time before the merger, but after the merger agreement is adopted by either Global's or U S WEST's shareholders, no amendment may reduce or change the consideration to be paid in the merger, or alter or change any of the terms and conditions of the merger agreement if such change would adversely affect U S WEST's or Global's shareholders. At any time before the merger, either Global or U S WEST may: . extend the other party's time to perform their obligations; . waive any inaccuracies in the representations and warranties contained in the merger agreement; and . waive compliance with any of the agreements or conditions contained in the merger agreement. 14. Dividends and Distributions. As noted in Section 6 of this Offer to Purchase, the Company has not paid cash dividends on the Common Stock. 15. Certain Conditions of the Offer. Notwithstanding any other term of the Offer, the Offeror will not accept for payment or, subject to any applicable rules and regulations of the Commission, including Rule 14e-1(c) under the Exchange Act (relating to the Offeror's obligation to pay for or return tendered shares of Common Stock promptly after termination or withdrawal of the Offer), pay for any shares of Common Stock tendered pursuant to the Offer unless any waiting periods applicable to the Offer under the HSR Act shall have expired or been terminated and the Agreement shall not have been terminated in accordance with its terms (See Section 13, description of the Agreement). Furthermore, notwithstanding any other provision of the Offer or the Agreement, 43 the Offeror shall not be required to accept for payment or, subject to the restriction referred to above, pay for any shares of Common Stock tendered pursuant to the Offer, and may, subject to the terms of the Agreement, terminate the Offer if, prior to the expiration of the Offer, any of the following conditions exist or have occurred and remain in effect (other than as a result of any action or inaction by the Offeror or any of its subsidiaries which constitutes a breach of the Agreement): any order or preliminary or permanent injunction shall have been entered in any action or proceeding before any federal or state court or governmental, administrative or regulatory authority or agency, or any other action shall have been taken, or statute, rule, regulation, legislation, judgment or order enacted, entered, enforced, promulgated, amended or issued by any legislative body, court, government or governmental, administrative or regulatory authority or agency which has the effect of making illegal or otherwise prohibiting the acceptance for payment of, or payment for, some of or all the shares of Common Stock pursuant to the Offer, which, in the reasonable judgment of the Offeror with respect to each and every matter referred to above and regardless of the circumstances giving rise to any such condition, makes it inadvisable to proceed with the Offer or with such acceptance for payment of or payment for shares of Common Stock. The foregoing conditions are for the benefit of the Offeror and may be asserted by the Offeror regardless of the circumstances giving rise to any such condition or may be waived by the Offeror in whole or in part at any time and from time to time in its sole discretion (subject to the terms of the Agreement). The failure by the Offeror at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right, the waiver of any such right with respect to particular facts and other circumstances shall not be deemed a waiver with respect to any other facts and circumstances, and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time. 16. Certain Legal Matters; Required Regulatory Approvals. Except as set forth in this Offer to Purchase, including under the caption "State Approvals" below, based on its review of publicly available filings by the Company with the Commission and other publicly available information regarding the Company, the Offeror is not aware of any licenses or regulatory permits that appear to be material to the business of the Company and its subsidiaries, taken as a whole, and that might be adversely affected by the Offeror's acquisition of Shares as contemplated herein, or any filings, approvals or other actions by or with any governmental authority or administrative or regulatory agency that would be required for the acquisition or ownership of the Shares by the Offeror pursuant to the Offer as contemplated herein. Should any such approval or other action be required, it is presently contemplated that such approval or action would be sought. Should any such approval or other action be required, there can be no assurance that any such approval or action, if needed, would be obtained without substantial conditions or that adverse consequences might not result to the Company's or its subsidiaries' businesses, or that certain parts of the Company's, the Offeror's or any of their respective subsidiaries' businesses might not have to be disposed of or held separate or other substantial conditions complied with in order to obtain such approval or action or in the event that such approvals were not obtained or such actions were not taken. The Offeror's obligation to purchase and pay for Shares is subject to certain conditions, including conditions with respect to governmental actions. See "Introduction" and Section 15 for a description thereof. Antitrust Under the provisions of the Hart Scott Rodino Antitrust Improvements Act applicable to the Offer, the acquisition of Shares under the Offer may be consummated following the expiration of a 15-calendar day waiting period following the filing by the Offeror of a Notification and Report Form with respect to the Offer, unless the Offeror receives a request for additional information or documentary material from the Antitrust Division or the Federal Trade Commission ("FTC") or unless early termination of the waiting period is granted. The Offeror is in the process of making such filing. If, within the initial 15-day waiting period, either the Antitrust Division or the FTC requests additional information or material from the Offeror concerning the Offer, the waiting period will be extended and would expire at 11:59 p.m., New York City time, on the tenth calendar day after the date of substantial compliance by the Offeror with such request. Only one extension of the waiting period pursuant to 44 a request for additional information is authorized by the HSR Act. Thereafter, such waiting period may be extended only by court order or with the consent of the Offeror. In practice, complying with a request for additional information or material can take a significant amount of time. In addition, if the Antitrust Division or the FTC raises substantive issues in connection with a proposed transaction, the parties frequently engage in negotiations with the relevant governmental agency concerning possible means of addressing those issues and may agree to delay consummation of the transaction while such negotiations continue. Expiration or termination of the applicable waiting period under the HSR Act is a condition to the Offeror's obligation to accept for payment and pay for Shares tendered pursuant to the Offer. The Antitrust Division and the FTC frequently scrutinize the legality under the antitrust laws of transactions such as the Offeror's proposed acquisition of the Company. At any time before or after the Offeror's acquisition of Shares pursuant to the Offer, the Antitrust Division or the FTC could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the purchase of Shares pursuant to the Offer or the consummation of the Merger or seeking the divestiture of Shares acquired by the Offeror or the divestiture of substantial assets of the Company or its subsidiaries or the Offeror's or its subsidiaries. Private parties may also bring legal action under the antitrust laws under certain circumstances. Based upon a preliminary examination of information provided by the Company relating to the businesses in which the Offeror and the Company are engaged, the Offeror believes that the acquisition of Shares by the Offeror will not violate the antitrust laws. Nevertheless, there can be no assurance that a challenge to the Offer or antitrust grounds will not be made or, if such a challenge is made, of the result thereof. State Takeover Laws The Offeror has not attempted to comply with any state takeover statutes in connection with the Offer. The Offeror reserves the right to challenge the validity or applicability of any state law allegedly applicable to the Offer and nothing in this Offer to Purchase nor any action taken in connection herewith is intended as a waiver of that right. In the event that it is asserted that one or more takeover statutes apply to the Offer and it is not determined by an appropriate court that such statute or statutes do not apply or are invalid as applied to the Offer, the Offeror may be required to file certain documents with, or receive approvals from, the relevant state authorities, and the Offeror might be unable to accept for payment or purchase Shares tendered pursuant to the Offer or be delayed in continuing or consummating the Offer. In such case, the Offeror may not be obligated to accept for purchase, or pay for, any Shares tendered. 17. Fees and Expenses. Neither the Offeror, nor any officer, director, shareholder, agent or other representative of the Offeror, will pay any fees or commissions to any broker, dealer or other person (other than the Information Agent and the Depositary) for soliciting tenders of Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust companies and other nominees will, upon request, be reimbursed by the Offeror for customary mailing and handling expenses incurred by them in forwarding materials to their customers. The Offeror has retained Beacon Hill Partners, Inc., as Information Agent, The Bank of New York, as Depositary, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Dealer Manager, in connection with the Offer. The Information Agent and the Depositary will receive reasonable and customary compensation for their services hereunder and reimbursement for their reasonable out-of- pocket expenses. The Information Agent and the Depositary will also be indemnified by the Offeror against certain liabilities in connection with the Offer. Pursuant to the terms of Merrill Lynch's engagement, the Offeror has agreed to pay Merrill Lynch for its services as financial advisor and Dealer Manager in connection with the Merger and the Offer, (i) an initial fee of $100,000 that was payable upon execution of the engagement agreement, (ii) an additional fee of $5,000,000 contingent and payable upon the Offeror acquiring 10% or less of the Common Stock of the Company, (iii) an additional fee of $5,000,000 that was payable upon execution of the Merger Agreement, and (iv) an additional fee of $30,000,000 which will be payable upon the closing of the mergers, provided that the fee payable pursuant to this clause (iv) will be reduced by any fees already paid to Merrill Lynch pursuant to clauses (i) through (iii) of this sentence. Offeror has also agreed to reimburse Merrill Lynch for its reasonable out-of-pocket expenses and the reasonable fees and disbursements of its legal counsel (which fees shall not exceed $50,000), and to 45 indemnify Merrill Lynch and certain related parties against certain liabilities, including liabilities under the federal securities laws, arising out of Merrill Lynch's engagement. 18. Miscellaneous. The Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of Shares residing in any jurisdiction in which the making or acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on behalf of the Offeror by one or more registered brokers or dealers licensed under the laws of such jurisdiction. No person has been authorized to give any information or make any representation on behalf of the Offeror other than as contained in this Offer to Purchase or in the Letter of Transmittal, and, if any such information or representation is given or made, it should not be relied upon as having been authorized by the Offeror. The Offeror has filed with the Commission the Schedule 14D-1, pursuant to Section 14(d)(1) of the Exchange Act and Rule 14d-1 promulgated thereunder, furnishing certain information with respect to the Offer. Such Schedule 14D-1 and any amendments, including exhibits, may be examined and copies may be obtained at the same places and in the same manner as set forth with respect to the Company in Section 8 (except that they will not be available at the regional offices of the Commission). U S WEST, Inc. May 21, 1999 46 Facsimile copies of the Letter of Transmittal, properly completed and duly executed, will be accepted. The Letter of Transmittal, certificates for Shares and any other required documents should be sent or delivered by each shareholder of the Company or his broker, dealer, commercial bank, trust company or other nominee to the Depositary at one of its addresses set forth below: The Depositary for the Offer is: THE BANK OF NEW YORK By Mail: Facsimile Transmission: By Hand or Overnight (for Eligible Courier: Institutions Only) Tender & Exchange Tender & Exchange Department Department (212) 815-6213 101 Barclay Street P.O. Box 11248 Receive and Deliver Window Church Street Station For Confirmation New York, New York 10286 New York, New York 10286- Telephone: 1248 (212) 815-6173 Questions and requests for assistance may be directed to the Information Agent at its address set forth below. Additional copies of this Offer to Purchase, the Letter of Transmittal and other tender offer materials may be obtained from the Information Agent as set forth below, and will be furnished promptly at the Offeror's expense. You may also contact your broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Offer. The Information Agent for the Offer is: BEACON HILL PARTNERS, INC. 90 Broad Street New York, New York 10004 (800) 755-5001 (toll free) Bankers and Brokers Please Call: (212) 843-8500 The Dealer Manager for the Offer is: Merrill Lynch & Co. World Financial Center North Tower New York, New York 10281-1305 (212) 449-8971 (Call Collect) EX-99.(A)(2) 3 LETTER OF TRANSMITTAL EXHIBIT (a)(2) Letter of Transmittal To Tender Shares of Common Stock of Global Crossing Ltd. Pursuant to the Offer to Purchase Dated May 21, 1999 of U S WEST, Inc. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JUNE 18, 1999, UNLESS THE OFFER IS EXTENDED. The Depositary for the Offer is: THE BANK OF NEW YORK By Mail: By Facsimile By Hand or Overnight Transmission: Courier: Tender & Exchange Department (212) 815-6213 Tender & Exchange P.O. Box 11248 (for Eligible Department Church Street Station Institutions Only) 101 Barclay Street New York, New York Receive and Deliver 10286-1248 Window For Confirmation Telephone: New York, New York 10286 (212) 815-6173 DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER, OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY. THE INSTRUCTIONS CONTAINED WITHIN THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. DESCRIPTION OF SHARES TENDERED - -------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Holder(s) (Please fill in, if blank, exactly as name(s) appear(s) on Share Shares Tendered certificate(s)) (Attach additional signed list if necessary) - --------------------------------------------------------------------------------- Total Number of Shares Share Represented by Number Certificate Share of Shares Number(s)(1) Certificate(s)(1) Tendered(2) -------------------------------------------------- -------------------------------------------------- -------------------------------------------------- -------------------------------------------------- -------------------------------------------------- -------------------------------------------------- Total Shares - ---------------------------------------------------------------------------------
(1) Need not be completed by Book-Entry Stockholders. (2) Unless otherwise indicated, it will be assumed that all Shares represented by Share certificates delivered to the Depositary are being tendered hereby. See Instruction 4. 1 [_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER): Name of Tendering Institution _________________________________________________ Account Number ________________________________________________________________ Transaction Code Number _______________________________________________________ [_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING: Name(s) of Registered Owner(s) ________________________________________________ Window Ticket Number (if any) _________________________________________________ Date of Execution of Notice of Guaranteed Delivery ____________________________ Name of Institution which Guaranteed Delivery _________________________________ If delivered by Book-Entry Transfer, check box: [_] Account Number ________________________________________________________________ Transaction Code Number _______________________________________________________ Shares to be selected for Payment (See Instruction 7): _______________________ This Letter of Transmittal is to be used by stockholders of Global Crossing Ltd. if certificates for Shares (as such term is defined below) are to be forwarded herewith or, unless an Agent's message (as defined in Instruction 2 below) is utilized, if delivery of Shares is to be made by book-entry transfer to an account maintained by the Depositary at the Book-Entry Transfer Facility (as defined in and pursuant to the procedures set forth in Section 3 of the Offer to Purchase). Stockholders who deliver Shares by book-entry transfer are referred to herein as "Book-Entry Stockholders" and other stockholders who deliver shares are referred to herein as "Certificate Stockholders." Stockholders whose certificates for Shares are not immediately available or who cannot deliver either the certificates for, or a Book-Entry Confirmation (as defined in Section 3 of the Offer to Purchase) with respect to, their Shares and all other documents required hereby to the Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase) must tender their Shares pursuant to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. 2 NOTE: SIGNATURES MUST BE PROVIDED BELOW FOR THIS LETTER OF TRANSMITTAL AND FOR THE SUBSTITUTE FORM W-9 INCLUDED HEREWITH. PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL CAREFULLY. Ladies and Gentlemen: The undersigned hereby tenders to U S WEST, Inc. a Delaware corporation ("Purchaser"), the above-described shares of common stock, par value $0.01 per share (the "Shares"), of Global Crossing Ltd., a company formed under the laws of Bermuda (the "Company"), pursuant to Purchaser's offer to purchase 39,259,305 of the outstanding Shares at a price of $62.75 per Share, net to the seller in cash, without interest thereon (the "Offer Price") upon the terms and subject to the conditions set forth in the Offer to Purchase dated May 21, 1999, and in this Letter of Transmittal (which, together with any amendments or supplements thereto or hereto, collectively constitute the "Offer"). The undersigned understands that Purchaser reserves the right to transfer or assign, in whole at any time, or in part from time to time, to one or more of its affiliates, the right to purchase all or any portion of the Shares tendered pursuant to the Offer, but any such transfer or assignment will not relieve Purchaser of its obligations under the Offer and will in no way prejudice the rights of tendering stockholders to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer. Receipt of the Offer is hereby acknowledged. The Offer is being made pursuant to a Tender Offer and Purchase Agreement, dated as of May 16, 1999 (the "Agreement"), by and between Purchaser and the Company. Upon the terms and subject to the conditions of the Offer (and if the Offer is extended or amended, the terms of any such extension or amendment), subject to, and effective upon, acceptance for payment of, and payment for, the Shares tendered herewith in accordance with the terms of the Offer, the undersigned hereby sells, assigns and transfers to, or upon the order of, Purchaser all right, title and interest in and to all the Shares that are being tendered hereby (and any and all non-cash dividends, distributions, rights, other Shares or other securities issued or issuable in respect thereof on or after May 16, 1999 (collectively, "Distributions")) and irrevocably constitutes and appoints the Depositary the true and lawful Agent and attorney-in-fact of the undersigned with respect to such Shares (and all Distributions), with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to (i) deliver certificates for such Shares (and any and all Distributions), or transfer ownership of such Shares (and any and all Distributions) on the account books maintained by the Book-Entry Transfer Facility, together, in any such case, with all accompanying evidences of transfer and authenticity, to or upon the order of Purchaser, (ii) present such Shares (and any and all Distributions) for transfer on the books of the Company, and (iii) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares (and any and all Distributions), all in accordance with the terms of the Offer. By executing this Letter of Transmittal, the undersigned hereby irrevocably appoints Mark Roellig and Thomas O. McGimpsey in their respective capacities as officers of Purchaser, and any individual who shall thereafter succeed to any such office of Purchaser, and each of them, the attorneys-in-fact and proxies of the undersigned, each with full power of substitution, to vote at any annual or special meeting of the Company's stockholders or any adjournment or postponement thereof or otherwise in such manner as each such attorney-in- fact and proxy or his substitute shall in his sole discretion deem proper with respect to, to execute any written consent concerning any matter as each such attorney-in-fact and proxy or his substitute shall in his sole discretion deem proper with respect to, and to otherwise act as each such attorney-in-fact and proxy or his substitute shall in his sole discretion deem proper with respect to, all of the Shares (and any and all Distributions) tendered hereby and accepted for payment by Purchaser. This appointment will be effective if and when, and only to the extent that, Purchaser accepts such Shares for payment pursuant to the Offer. This power of attorney and proxy are irrevocable and are granted in consideration of the acceptance for payment of such Shares in accordance with the terms of the Offer. Such acceptance for payment shall, without further action, revoke any prior powers of attorney and proxies granted by the undersigned at any time with respect to such Shares (and any and all Distributions), and no subsequent powers of attorney, proxies, consents or revocations may be given by the undersigned with respect thereto (and, if given, will not be deemed effective). Purchaser reserves the right to require that, in order for Shares or other securities to be deemed validly tendered, immediately upon Purchaser's acceptance for payment of such Shares, Purchaser must be able to exercise full voting, consent and other rights with respect to such Shares (and any and all Distributions), including voting at any meeting of the Company's stockholders. 3 The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Shares tendered hereby and all Distributions, that the undersigned owns the Shares tendered hereby within the meaning of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that the tender of the tendered Shares complies with Rule 14e-4 under the Exchange Act, and that when the same are accepted for payment by Purchaser, Purchaser will acquire good, marketable and unencumbered title thereto and to all Distributions, free and clear of all liens, restrictions, charges and encumbrances and the same will not be subject to any adverse claims. The undersigned will, upon request, execute and deliver any additional documents deemed by the Depositary or Purchaser to be necessary or desirable to complete the sale, assignment and transfer of the Shares tendered hereby and all Distributions. In addition, the undersigned shall remit and transfer promptly to the Depositary for the account of Purchaser all Distributions in respect of the Shares tendered hereby, accompanied by appropriate documentation of transfer, and, pending such remittance and transfer or appropriate assurance thereof, Purchaser shall be entitled to all rights and privileges as owner of each such Distribution and may withhold the entire purchase price of the Shares tendered hereby or deduct from such purchase price, the amount or value of such Distribution as determined by Purchaser in its sole discretion. All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned, and any obligation of the undersigned hereunder shall be binding upon the heirs, executors, administrators, personal representatives, trustees in bankruptcy, successors and assigns of the undersigned. Except as stated in the Offer, this tender is irrevocable. The undersigned understands that the valid tender of Shares pursuant to any one of the procedures described in Section 3 of the Offer to Purchase and in the Instructions hereto will constitute a binding agreement between the undersigned and Purchaser upon the terms and subject to the conditions of the Offer (and if the Offer is extended or amended, the terms or conditions of any such extension or amendment). Without limiting the foregoing, if the price to be paid in the Offer is amended in accordance with the terms of the Agreement, the price to be paid to the undersigned will be the amended price notwithstanding the fact that a different price is stated in this Letter of Transmittal. The undersigned recognizes that under certain circumstances set forth in the Offer to Purchase, Purchaser may not be required to accept for payment any of the Shares tendered hereby. Unless otherwise indicated under "Special Payment Instructions," please issue the check for the purchase price of all Shares purchased and/or return any certificates for Shares not tendered or accepted for payment in the name(s) of the registered holder(s) appearing above under "Description of Shares Tendered." Similarly, unless otherwise indicated under "Special Delivery Instructions," please mail the check for the purchase price of all Shares purchased and/or return any certificates for Shares not tendered or not accepted for payment (and any accompanying documents, as appropriate) to the address(es) of the registered holder(s) appearing above under "Description of Shares Tendered." In the event that the boxes entitled "Special Payment Instructions" and "Special Delivery Instructions" are both completed, please issue the check for the purchase price of all Shares purchased and/or return any certificates evidencing Shares not tendered or not accepted for payment (and any accompanying documents, as appropriate) in the name(s) of, and deliver such check and/or return any such certificates (and any accompanying documents, as appropriate) to, the person(s) so indicated. Unless otherwise indicated herein in the box entitled "Special Payment Instructions," please credit any Shares tendered herewith by book-entry transfer that are not accepted for payment by crediting the account at the Book-Entry Transfer Facility. The undersigned recognizes that Purchaser has no obligation, pursuant to the "Special Payment Instructions," to transfer any Shares from the name of the registered holder thereof if Purchaser does not accept for payment any of the Shares so tendered. 4 [_]CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE BEEN LOST, DESTROYED OR STOLEN AND SEE INSTRUCTION 11. Number of Shares represented by lost, destroyed or stolen certificates: ____ SPECIAL PAYMENT INSTRUCTIONS (See SPECIAL DELIVERY INSTRUCTIONS Instructions 1, 5, 6 and 7) (See Instructions 1, 5, 6 and 7) To be completed ONLY if the To be completed ONLY if certifi- check for the purchase price of cates for Shares not tendered or Shares accepted for payment is to not accepted for payment and/or be issued in name of someone the check for the purchase price other than the undersigned, if of Shares accepted for payment is certificates for Shares not ten- to be sent to someone other than dered or not accepted for payment the undersigned or to the under- are to be issued in the name of signed at an address other than someone other than the under- that shown under "Description of signed or if Shares tendered Shares Tendered." hereby and delivered by book-en- try transfer that are not ac- Mail check and/or Share certifi- cepted for payment are to be re- cates to: turned by credit to an account maintained at the Book-Entry Name _____________________________ Transfer Facility other than the (Please Print) account indicated above. Address __________________________ Issue: [_] Check [_] Certifi- cates to: __________________________________ (Include Zip Code) Name _____________________________ (Please Print) __________________________________ (Taxpayer Identification or Address __________________________ Social Security Number) (See Substitute Form W-9) __________________________________ (Include Zip Code) __________________________________ (Taxpayer Identification or Social Security Number) (See Substitute Form W-9) Credit Shares delivered by book- entry transfer and not purchased to the Book-Entry Transfer Facility account. __________________________________ (Account Number) 5 SIGN HERE (Also Complete Substitute Form W-9 Below) ............................................................................ ............................................................................ (Signature(s) of Stockholder(s)) Dated: ................ 1999 (Must be signed by registered holder(s) exactly as name(s) appear(s) on the Share certificate(s) or on a security position listing or by person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith. If signature is by trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, please provide the following information and see Instruction 5.) Name(s)..................................................................... (Please Print) Name of Firm................................................................ Capacity (full title)....................................................... (see Instruction 5) Address..................................................................... ..................................................................... (Include Zip Code) Area Code and Telephone Number.............................................. Tax Identification or Social Security Number...................................................... (See Substitute Form W-9) GUARANTEE OF SIGNATURE(S) (See Instructions 1 and 5) Authorized Signature........................................................ Name(s)..................................................................... (Please Print) Title....................................................................... Name of Firm................................................................ Address..................................................................... ..................................................................... (Include Zip Code) Area Code and Telephone Number.............................................. 6 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. Guarantee of Signatures. No signature guarantee is required on this Letter of Transmittal (a) if this Letter of Transmittal is signed by the registered holder(s) (which term, for purposes of this Section, includes any participant in the Book-Entry Transfer Facility's system whose name appears on a security position listing as the owner of the Shares) of Shares tendered herewith, unless such registered holder(s) has completed either the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" on the Letter of Transmittal or (b) if such Shares are tendered for the account of a financial institution (including most commercial banks, savings and loan associations and brokerage houses) that is a participant in the Security Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program (each, an "Eligible Institution"). In all other cases, all signatures on this Letter of Transmittal must be guaranteed by an Eligible Institution. See Instruction 5. 2. Delivery of Letter of Transmittal and Shares; Guaranteed Delivery Procedures. This Letter of Transmittal is to be completed by stockholders of the Company either if Share certificates are to be forwarded herewith or, unless an Agent's Message is utilized, if delivery of Shares is to be made by book-entry transfer pursuant to the procedures set forth herein and in Section 3 of the Offer to Purchase. For a stockholder validly to tender Shares pursuant to the Offer, either (a) a properly completed and duly executed Letter of Transmittal (or facsimile thereof), together with any required signature guarantees or an Agent's Message (in connection with book-entry transfer) and any other required documents, must be received by the Depositary at one of its addresses set forth herein prior to the Expiration Date and either (i) certificates for tendered Shares must be received by the Depositary at one of such addresses prior to the Expiration Date or (ii) Shares must be delivered pursuant to the procedures for book-entry transfer set forth herein and in Section 3 of the Offer to Purchase and a Book-Entry Confirmation must be received by the Depositary prior to the Expiration Date or (b) the tendering stockholder must comply with the guaranteed delivery procedures set forth herein and in Section 3 of the Offer to Purchase. Stockholders whose certificates for Shares are not immediately available or who cannot deliver their certificates and all other required documents to the Depositary prior to the Expiration Date or who cannot comply with the book- entry transfer procedures on a timely basis may tender their Shares by properly completing and duly executing the Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedure set forth herein and in Section 3 of the Offer to Purchase. Pursuant to such guaranteed delivery procedures, (i) such tender must be made by or through an Eligible Institution, (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by Purchaser, must be received by the Depositary prior to the Expiration Date and (iii) the certificates for all tendered Shares, in proper form for transfer (or a Book-Entry Confirmation with respect to all tendered Shares), together with a properly completed and duly executed Letter of Transmittal (or a facsimile thereof), with any required signature guarantees, or, in the case of a book-entry transfer, an Agent's Message, and any other required documents must be received by the Depositary within three trading days after the date of execution of such Notice of Guaranteed Delivery. A "trading day" is any day on which the Nasdaq National Market is open for business. The term "Agent's Message" means a message, transmitted by the Book-Entry Transfer Facility to, and received by, the Depositary and forming a part of a Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has received an express acknowledgment from the participant in the Book-Entry Transfer Facility tendering the Shares, that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that Purchaser may enforce such agreement against the participant. The signatures on this Letter of Transmittal cover the Shares tendered hereby. THE METHOD OF DELIVERY OF THE SHARES, THIS LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. THE SHARES WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. 7 No alternative, conditional or contingent tenders will be accepted, and no fractional Shares will be purchased. All tendering stockholders, by executing this Letter of Transmittal (or facsimile thereof), waive any right to receive any notice of acceptance of their Shares for payment. 3. Inadequate Space. If the space provided herein under "Description of Shares Tendered" is inadequate, the number of Shares tendered and the Share certificate numbers with respect to such Shares should be listed on a separate signed schedule attached hereto. 4. Partial Tenders. (Not applicable to stockholders who tender by book-entry transfer). If fewer than all the Shares evidenced by any Share certificate delivered to the Depositary herewith are to be tendered hereby, fill in the number of Shares that are to be tendered in the box entitled "Number of Shares Tendered." In any such case, new certificate(s) for the remainder of the Shares that were evidenced by the old certificates will be sent to the registered holder, unless otherwise provided in the appropriate box on this Letter of Transmittal, as soon as practicable after the Expiration Date or the termination of the Offer. All Shares represented by certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the certificate(s) without alteration, enlargement or any change whatsoever. If any of the Shares tendered hereby are held of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If any of the tendered Shares are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of certificates. If this Letter of Transmittal or any Share certificate or stock power is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing, and proper evidence satisfactory to Purchaser of the authority of such person so to act must be submitted. If this Letter of Transmittal is signed by the registered holder(s) of the Shares listed and transmitted hereby, no endorsements of Share certificates or separate stock powers are required unless payment or certificates for Shares not tendered or not accepted for payment are to be issued in the name of a person other than the registered holder(s). Signatures on any such Share certificates or stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the registered holder(s) of the Shares evidenced by certificates listed and transmitted hereby, the Share certificates must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear(s) on the Share certificates. Signature(s) on any such Share certificates or stock powers must be guaranteed by an Eligible Institution. 6. Stock Transfer Taxes. Except as otherwise provided in this Instruction 6, Purchaser will pay or cause to be paid all stock transfer taxes with respect to the transfer and sale of any Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price of any Shares purchased is to be made to, or if certificates for Shares not tendered or not accepted for payment are to be registered in the name of, any person other than the registered holder(s), or if tendered certificates are registered in the name of any person other than the person(s) signing this Letter of Transmittal, the amount of any stock transfer taxes (whether imposed on the registered holder(s) or such other person) payable on account of the transfer to such other person will be deducted from the purchase price of such Shares purchased unless evidence satisfactory to Purchaser of the payment of such taxes, or exemption therefrom, is submitted. Except as provided in this Instruction 6, it will not be necessary for transfer tax stamps to be affixed to the Share certificates evidencing the Shares tendered hereby. 8 7. Special Payment and Delivery Instructions; Wire Transfers. If a check for the purchase price of any Shares accepted for payment is to be issued in the name of, and/or Share certificates for Shares not accepted for payment or not tendered are to be issued in the name of and/or returned to, a person other than the signer of this Letter of Transmittal or if a check is to be sent, and/or such certificates are to be returned, to a person other than the signer of this Letter of Transmittal, or to an address other than that shown above, the appropriate boxes on this Letter of Transmittal should be completed. Book- Entry Stockholders may request that Shares not purchased be credited to such account maintained at a Book-Entry Transfer Facility as such stockholder(s) may designate in the box entitled "Special Payment Instructions." If no such instructions are given, any such Shares not purchased will be returned by crediting the account at the Book-Entry Transfer Facility designated above as the account from which such Shares were delivered. 8. Requests for Assistance or Additional Copies. Questions and requests for assistance or additional copies of the Offer to Purchase, this Letter of Transmittal, the Notice of Guaranteed Delivery and the Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 may be directed to the Information Agent at its address and phone number set forth below, or from brokers, dealers, commercial banks or trust companies. 9. Waiver of Conditions. Subject to the Merger Agreement, Purchaser reserves the absolute right in its sole discretion to waive, at any time or from time to time, any of the specified conditions of the Offer, in whole or in part, in the case of any Shares tendered. 10. Backup Withholding. In order to avoid "backup withholding" of federal income tax on payments of cash pursuant to the Offer, a stockholder surrendering Shares in the Offer must, unless an exemption applies, provide the Depositary with such stockholder's correct taxpayer identification number ("TIN") on Substitute Form W-9 in this Letter of Transmittal and certify, under penalties of perjury, that such TIN is correct and that such stockholder is not subject to backup withholding. Backup withholding is not an additional income tax. Rather, the amount of the backup withholding can be credited against the federal income tax liability of the person subject to the backup withholding, provided that the required information is given to the IRS. If backup withholding results in an overpayment of tax, a refund can be obtained by the stockholder upon filing an income tax return. The stockholder is required to give the Depositary the TIN (i.e., social security number or employer identification number) of the record owner of the Shares. If the Shares are held in more than one name or are not in the name of the actual owner, consult the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional guidance on which number to report. The box in Part 3 of the Substitute Form W-9 may be checked if the tendering stockholder has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the box in Part 3 is checked, the stockholder or other payee must also complete the Certificate of Awaiting Taxpayer Identification Number below in order to avoid backup withholding. Notwithstanding that the box in Part 3 is checked and the Certificate of Awaiting Taxpayer Identification Number is completed, the Depositary will withhold 31% on all payments made prior to the time a properly certified TIN is provided to the Depositary. However, such amounts will be refunded to such stockholder if a TIN is provided to the Depositary within 60 days. Certain stockholders (including, among others, all corporations and certain foreign individuals and entities) are not subject to backup withholding. Noncorporate foreign stockholders should complete and sign the main signature form and a Form W-8, Certificate of Foreign Status, a copy of which may be obtained from the Depositary, in order to avoid backup withholding. See the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for more instructions. 11. Lost, Destroyed or Stolen Share Certificates. If any certificate(s) representing Shares has been lost, destroyed or stolen, the stockholder should promptly notify the Depositary by checking the box immediately preceding the special payment/special delivery instructions and indicating the number of Shares lost. The stockholder will then be instructed as to the steps that must be taken in order to replace the Share certificate(s). This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost, destroyed or stolen Share certificates have been followed. If shares are not selected for payment, the Depositary will select shares for payment from the total shares properly tendered and not withdrawn by a shareholder in accordance with each shareholder's direction as indicated above in this letter of transmittal. 9 IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF) TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER, AN AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR TENDERED SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED PURSUANT TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR TO THE EXPIRATION DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY WITH THE PROCEDURES FOR GUARANTEED DELIVERY. IMPORTANT TAX INFORMATION Under Federal income tax law, a stockholder whose tendered Shares are accepted for payment is required to provide the Depositary (as payer) with such stockholder's correct TIN on Substitute Form W-9 below. If such stockholder is an individual, the TIN is his social security number. If a tendering stockholder is subject to backup withholding, such stockholder must cross out item (2) of the Certification box on the Substitute Form W-9. If the Depositary is not provided with the correct taxpayer identification number, the stockholder may be subject to a $50 penalty imposed by the Internal Revenue Service. In addition, payments that are made to such stockholder with respect to Shares purchased pursuant to the Offer may be subject to backup withholding. Certain stockholders (including, among others, all corporations, and certain foreign individuals) are not subject to these backup withholding and reporting requirements. In order for a foreign individual to qualify as an exempt recipient, that stockholder must submit a statement, signed under penalties of perjury, attesting to that individual's exempt status. Such statements can be obtained from the Depositary. Exempt stockholders, other than foreign individuals, should furnish their TIN, write "Exempt" on the face of the Substitute Form W-9 below, and sign, date and return the Substitute Form W-9 to the Depositary. See the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional instructions. If backup withholding applies, the Depositary is required to withhold 31% of any payments made to the stockholder. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service. Purpose of Substitute Form W-9 To prevent backup withholding on payments that are made to a stockholder with respect to Shares purchased pursuant to the Offer, the stockholder is required to notify the Depositary of such stockholder's correct TIN by completing the form contained herein certifying that the TIN provided on Substitute Form W-9 is correct (or that such stockholder is awaiting a TIN. What Number to Give the Depositary The stockholder is required to give the Depositary the social security number or employer identification number of the record owner of the Shares. If the Shares are in more than one name or are not in the name of the actual owner, consult the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional guidance on which number to report. If the tendering stockholder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future, such stockholder should write "Applied For" in the space provided for in the TIN in Part 1, and sign and date the Substitute Form W-9. If "Applied For" is written in Part I and the Depositary is not provided with a TIN within 60 days, the Depositary will withhold 31% on all payments of the purchase price until a TIN is provided to the Depositary. 10 PAYER'S NAME: The Bank of New York - ------------------------------------------------------------------------------- SUBSTITUTE Part 1--PLEASE PROVIDE YOUR ---------------------- Form W-9 TIN IN THE BOX AT RIGHT AND Social Security Number Department of CERTIFY BY SIGNING AND (If awaiting TIN write the Treasury DATING BELOW "Applied For") Internal Revenue Service OR ---------------------- Employer Identification Number (If awaiting TIN write "Applied For") -------------------------------------------------------- Payer's Request for Taxpayer Identification Number ("TIN") Part 2--Certificate--Under penalties of perjury, I certify that: (1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued for me), and -------------------------------------------------------- (2) I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding. -------------------------------------------------------- CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have been notified by the IRS that you are currently subject to backup withholding be- cause of under-reporting interest or dividends on your tax returns. However, if after being notified by the IRS that you are subject to backup withholding, you receive another notification from the IRS that you are no longer subject to backup withholding, do not cross out such item (2). (Also see instructions in the enclosed Guidelines). SIGNATURE __________________________ DATE ______,1999 -------------------------------------------------------- Part 3--Awaiting TIN [_] NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY CASH PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a Taxpayer Identification Number has not been issued to me, and either (1) I have mailed or delivered an application to receive a Taxpayer Identification Number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (2) I intend to mail or deliver an application in the near future. I understand that if I do not provide a Taxpayer Identification Number to the Depositary by the time of payment, 31% of all reportable payments made to me thereafter will be withheld, but that such amounts will be refunded to me if I provide a certified Taxpayer Identification Number to the Depositary within sixty (60) days. ______________________________________ ____________________________, 1999 Signature Date 11 Questions and requests for assistance or additional copies of the Offer to Purchase, this Letter of Transmittal and other tender offer materials may be directed to the Information Agent or the Dealer Manager at their respective addresses and telephone numbers set forth below: The Information Agent for the Offer is: BEACON HILL PARTNERS, INC. 90 Broad Street New York, New York 10004 (800) 755-5001 (toll free) Bankers and Brokers Please Call: (212) 843-8500 The Dealer Manager for the Offering is: Merrill Lynch & Co. World Financial Center North Tower New York, New York 10281-1305 (212) 449-8971 (Call Collect) EX-99.(A)(3) 4 LETTER TO BROKERS, DEALERS EXHIBIT (a)(3) _____________________________ _____________________________ _____________________________ Offer to Purchase for Cash 39,259,305 Shares of Common Stock of Global Crossing Ltd. at $62.75 Net Per Share of Common Stock by U S WEST, Inc. THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON JUNE 18, 1999, UNLESS THE OFFER IS EXTENDED. May 21, 1999 To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: We have been appointed by U S WEST, Inc., a Delaware corporation ("Offeror" or "U S WEST"), to act as Dealer Manager in connection with the Offeror's offer to purchase 39,259,305 shares of common stock, par value $.01 per share (the "Common Stock" or the "Shares") of Global Crossing Ltd., a company formed under the laws of Bermuda (the "Company") at a purchase price of $62.75 per share of Common Stock net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated May 21, 1999 (the "Offer to Purchase"), and in the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer") enclosed herewith. Holders of Shares whose certificates for such Shares (the "Share Certificates") are not immediately available or who cannot deliver their Share Certificates and all other required documents to the Depositary on or prior to the Expiration Date, or who cannot complete the procedures for book-entry transfer on a timely basis, must tender their Shares according to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. Please furnish copies of the enclosed materials to those of your clients for whose accounts you hold Shares in your name or in the name of your nominee. The Offer is also subject to other terms and conditions contained in the Tender Offer and Purchase Agreement. See the Introduction and Sections 1 and 15 of the Offer to Purchase. Enclosed herewith for your information and forwarding to your clients for whom you hold Shares registered in your name or in the name of your nominee are copies of the following documents: 1. The Offer to Purchase, dated May 21, 1999. 2. The related Letter of Transmittal for your use and for the information of your clients. Facsimile copies of the Letter of Transmittal may be used to tender Shares. 3. The Notice of Guaranteed Delivery for Shares to be used to accept the Offer if certificates for Shares are not immediately available or if such certificates and all other required documents cannot be delivered to The Bank of New York (the "Depositary") by the Expiration Date or if, in the case of the Shares, the procedure for book-entry transfer cannot be completed by the Expiration Date. 4. A printed form of letter which may be sent to your clients for whose accounts you hold Shares registered in your name or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Offer. 5. Guidelines of the Internal Revenue Service for Certification of Taxpayer Identification Number on Substitute Form W-9. 6. A return envelope addressed to the Depositary. YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON JUNE 18, 1999 (THE "EXPIRATION DATE") UNLESS THE OFFER IS EXTENDED. In order to accept the Offer, an appropriate duly executed and properly completed Letter of Transmittal and any required signature guarantees, or an Agent's Message (as defined in the Offer to Purchase) in connection with a book-entry delivery of Shares and any other documents required by the Letter of Transmittal should be sent to the Depositary and either Share Certificates representing the tendered Shares should be delivered to the Depositary, or, in the case of Shares, such Shares should be tendered by book-entry transfer into the Depositary's account maintained at one of the Book Entry Transfer Facilities (as described in the Offer to Purchase), all in accordance with the instructions set forth in the Letter of Transmittal and the Offer to Purchase. If holders of Shares wish to tender, but it is impracticable for them to forward their Share Certificates or other required documents on or prior to the Expiration Date or to comply with the book-entry transfer procedures on a timely basis, a tender may be effected by following the guaranteed delivery procedures specified in Section 3 of the Offer to Purchase. The Offeror will not pay any commissions or fees to any broker, dealer or other person (other than the Dealer Manager or the Information Agent, as described in the Offer to Purchase) for soliciting tenders of Shares pursuant to the Offer. The Offeror will, however, upon request, reimburse you for customary clerical and mailing expenses incurred by you in forwarding any of the enclosed materials to your clients. The Offeror will pay or cause to be paid any stock transfer taxes payable on the transfer of Shares to it, except as otherwise provided in Instruction 6 of the Letter of Transmittal. Any inquiries you may have with respect to the Offer should be addressed to, and additional copies of the enclosed material may be obtained from the Dealer Manager or the Information Agent, at their addresses and telephone numbers set forth on the back cover of the Offer to Purchase. Very truly yours, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON THE AGENT OF THE OFFEROR, THE DEALER MANAGER, THE COMPANY, THE DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN. EX-99.(A)(4) 5 LETTER TO CLIENTS EXHIBIT (a)(4) Offer to Purchase for Cash 39,259,305 Shares of Common Stock of Global Crossing Ltd. at $62.75 Net Per Share of Common Stock by U S WEST, Inc. THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON JUNE 18, 1999, UNLESS THE OFFER IS EXTENDED To Our Clients: Enclosed for your consideration are the Offer to Purchase, dated May 21, 1999 (the "Offer to Purchase"), and the related Letter of Transmittal (which, together with any amendments thereto, collectively constitute the "Offer") relating to the offer by U S WEST, Inc., a Delaware corporation ("Offeror"), to purchase 39,259,305 shares of common stock, par value $.01 per share (the "Common Stock" or the "Shares") of Global Crossing Ltd., a company formed under the laws of Bermuda (the "Company"), at a purchase price of $62.75 per share of Common Stock net to the seller in cash, without interest thereon and upon the terms and subject to the conditions set forth in the Offer to Purchase and in the related Letter of Transmittal enclosed herewith. Holders of Shares whose certificates for such Shares (the "Share Certificates") are not immediately available or who cannot deliver their Share Certificates and all other required documents to the Depositary on or prior to the Expiration Date, or who cannot complete the procedures for book-entry transfer on a timely basis, must tender their Shares according to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. We are the holder of record of Shares held by us for your account. A tender of such Shares can be made only by us as the holder of record and pursuant to your instructions. The related Letter of Transmittal is furnished to you for your information only and cannot be used by you to tender Shares. Accordingly, we request instructions as to whether you wish to have us tender on your behalf any or all Shares held by us for your account pursuant to the terms and conditions set forth in the Offer. Please note the following: 1. The tender price is $62.75 per share of Common Stock net to you in cash without interest thereon, upon the terms and subject to the conditions set forth in the Offer. 2. The Offer is being made for 39,259,305 Shares. 3. The Offer is conditioned upon the satisfaction of certain terms and conditions. See the Introduction and Sections 1 and 15 of the Offer to Purchase. 4. Tendering stockholders will not be obligated to pay brokerage fees or commissions or, except as otherwise provided in Instruction 6 of the Letter of Transmittal, stock transfer taxes on the purchase of Shares by the Purchaser pursuant to the Offer. 5. The Offer, proration period and withdrawal rights will expire at 12:00 midnight, New York City time, on June 18, 1999 (the "Expiration Date"), unless the Offer is extended. 6. Payment for Shares purchased pursuant to the Offer will in all cases be made only after timely receipt by The Bank of New York (the "Depositary") of (a) Share Certificates or, in the case of Shares, timely confirmation of the book-entry transfer of such Shares into the account maintained by the Depositary at the Depositary Trust Company (the "Book- Entry Transfer Facility"), pursuant to the procedures set forth in Section 3 of the Offer to Purchase, (b) the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees or an Agent's Message (as defined in the Offer to Purchase), in connection with a book-entry delivery, and (c) any other documents required by the Letter of Transmittal. Accordingly, payment may not be made to all tendering stockholders at the same time depending upon when certificates for or, in the case of Shares, confirmations of book-entry transfer of such Shares into the Depositary's account at the Book-Entry Transfer Facility are actually received by the Depositary. If you wish to have us tender any or all of the Shares held by us for your account, please so instruct us by completing, executing, detaching and returning to us the instruction form set forth on the back page of this letter. If you authorize the tender of your Shares, all such Shares will be tendered unless otherwise specified on the back page of this letter. An envelope to return your instructions to us is enclosed. Your instructions should be forwarded to us in ample time to permit us to submit a tender on your behalf prior to the expiration of the Offer. The Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Shares residing in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. However, the Offeror may, in its discretion, take such action as it may deem necessary to make the Offer in any jurisdiction and extend the Offer to holders of Shares in such jurisdiction. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on behalf of the Offeror or one or more registered brokers or dealers that are licensed under the laws of such jurisdiction. 2 Instructions With Respect to the Offer to Purchase for Cash 39,259,305 Shares of Common Stock of GLOBAL CROSSING LTD. The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase, dated May 21, 1999 (the "Offer to Purchase"), and the related Letter of Transmittal (which, together with any amendments thereto, collectively constitute the "Offer") in connection with the offer by U S WEST, Inc., a Delaware corporation ("Offeror"), to purchase 39,259,305 shares of common stock, par value $.01 per share (the "Common Stock" or the "Shares"), of Global Crossing Ltd., a company formed under the laws of Bermuda (the "Company"), at a purchase price of $62.75 per share of Common Stock, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase. This will instruct you to tender to the Offeror the number of shares of Common Stock, indicated below (or if no number is indicated below, all shares of Common Stock) which are held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer. Number of Common Stock to be Tendered: Shares Unless otherwise indicated, it will be assumed that you instruct us to tender all shares of Common Stock held by us for your account. SIGN HERE Signature(s) ________________________________________________________________ (Print Name(s)) _____________________________________________________________ (Print Address(es)) _________________________________________________________ (Area Code and Telephone Number(s)) _________________________________________ (Taxpayer Identification or Social Security Number(s)) ______________________ 3 EX-99.(A)(5) 6 NOTICE OF GUARANTEED DELIVERY EXHIBIT (a)(5) Notice of Guaranteed Delivery for Tender for 39,259,305 Shares of Common of GLOBAL CROSSING LTD. to U S WEST, Inc. This Notice of Guaranteed Delivery, or substantially equivalent hereto, must be used to accept the Offer (as defined below) if certificates representing shares of Common Stock, par value $.01 per share (the "Common Stock" or the "Shares") of Global Crossing Ltd., a company formed under the laws of Bermuda (the "Company"), are not immediately available or time will not permit all required documents to reach The Bank of New York (the "Depositary") on or prior to the Expiration Date (as defined in the Offer to Purchase), or the procedures for delivery by book-entry transfer cannot be completed on a timely basis. This Notice of Guaranteed Delivery may be delivered by hand or sent by facsimile transmission or mail to the Depositary. See Section 3 of the Offer to Purchase. The Depositary for the Offer is: THE BANK OF NEW YORK By Mail: Facsimile Transmission: By Hand or Overnight Courier: (for Eligible Institutions Only) (212) 815-6213 Tender & Exchange Department Tender & Exchange Department P.O. Box 11248 101 Barclay Street Church Street Station Receive and Deliver Window New York, New York 10286-1248 New York, New York 10286 For Confirmation Telephone: (212) 815-6173
Delivery of this Notice of Guaranteed Delivery to an address other than as set forth above or transmission of instructions via a facsimile transmission to a number other than as set forth above will not constitute a valid delivery. This Notice of Guaranteed Delivery is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an "Eligible Institution" under the instructions thereto, such signature guarantee must appear in the applicable space provided in the signature box on the Letter of Transmittal. Ladies and Gentlemen: The undersigned hereby tenders to U S WEST, Inc., a Delaware corporation, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated May 21, 1999 (the "Offer to Purchase"), and in the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer"), receipt of each of which is hereby acknowledged, the number of Shares indicated below pursuant to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. Number of Common Stock:_______ shares Name(s) of Holder(s):________________ ------------------------------------- Address(es):_________________________ Certificate No(s). (if available):___ ------------------------------------- - ------------------------------------- ------------------------------------- - ------------------------------------- Area Code and Telephone Number(s):___ If shares of Common Stock will be tendered by book-entry transfer, check one box: ------------------------------------- [_] _________________________________ [_] _________________________________ Signature(s):________________________ ------------------------------------- Account No.:_________________________ ------------------------------------- Date:________________________________ 2 THE GUARANTEE BELOW MUST BE COMPLETED GUARANTEE (Not to be used for signature guarantee) The undersigned, a participant in the Security Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program, hereby (a) represents that the tender of Shares effected hereby complies with Rule 14e-4 under the Securities Exchange Act of 1934, as amended, and (b) guarantees to deliver to the Depositary, at one of its addresses set forth above, the certificates representing all tendered Shares in proper form for transfer, or, in the case of book-entry delivery of Shares, a Book-Entry Confirmation (as defined in the Offer to Purchase), together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof), with any required signature guarantees, or, in the case of book-entry delivery of Shares, an Agent's Message (as defined in the Offer to Purchase), and any other documents required by the Letter of Transmittal within, in the case of Shares, trading days after the date of execution of this Notice of Guaranteed Delivery. The Eligible Institution that completes this form must communicate the guarantee to the Depositary and must deliver the Letter of Transmittal and certificates for Shares to the Depositary within the time period shown herein. Failure to do so could result in a financial loss to such Eligible Institution. Name of Firm: _______________________ ------------------------------------- (Authorized Signature) Address: ____________________________ Title: ______________________________ - ------------------------------------- Name: _______________________________ Area Code and Telephone No.: ________ ------------------------------------- (Please Print or Type) Date: _______________________________ NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED DELIVERY. CERTIFICATES FOR SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. 3 EX-99.(A)(6) 7 PRESS RELEASE EXHIBIT (a)(6) This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares. The Offer is made solely by the Offer to Purchase, dated May 21, 1999, and the related Letter of Transmittal and is not being made to, nor will tenders be accepted from or on behalf of, holders of Shares in any jurisdiction in which the making of the Offer or acceptance thereof would not be in compliance with the securities laws of such jurisdiction. In those jurisdictions where securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Offeror by Merrill Lynch, Pierce, Fenner & Smith Incorporated or one or more registered brokers or dealers licensed under the laws of such jurisdictions. Notice of Offer to Purchase for Cash 39,259,305 of the Outstanding Shares of Common Stock of Global Crossing Ltd. at $62.75 Net Per Share of Common Stock by U S WEST, Inc. U S WEST, Inc., a Delaware corporation (the "Offeror"), hereby offers to purchase 39,259,305 of the outstanding shares of Common Stock, par value $.01 per share (the "Common Stock" or the "Shares"), of Global Crossing Ltd., a company formed under the laws of Bermuda (the "Company"), at a purchase price of $62.75 per share of Common Stock (the "Offer Price"), net to the seller in cash, without interest, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated May 21, 1999 (the "Offer to Purchase") and in the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer"). - -------------------------------------------------------------------------------- THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, FRIDAY, JUNE 18, 1999, UNLESS THE OFFER IS EXTENDED. - -------------------------------------------------------------------------------- The Offer is being made pursuant to a Tender Offer and Purchase Agreement, dated as of May 16, 1999 (the "Agreement"), between the Company and the Offeror. The Offer is conditioned upon the satisfaction of certain terms and conditions described in the Offer to Purchase. If more than 39,259,305 Shares of Common Stock are validly tendered and not withdrawn prior to the Expiration Date (defined below), Shares so tendered shall be accepted for payment on a pro rata basis (adjusted to avoid acceptance for payment of fractional Shares). THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER AND THE AGREEMENT AND RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY WHO DESIRE TO RECEIVE CASH AT THIS TIME TENDER THEIR SHARES OF COMMON STOCK PURSUANT TO THE OFFER. The purpose of the Offer is to facilitate the terms and conditions and the transactions contemplated thereby of the Agreement and Plan of Merger, dated as of May 16, 1999, between the Offeror and the Company. The terms and provisions of the Offer to Purchase are incorporated herein by reference and the Offeror urges each holder of Shares to read the Offer to Purchase in its entirety. For purposes of the Offer, the Offeror will be deemed to have accepted for payment, and thereby purchased, Shares validly tendered to the Offeror and not withdrawn, if and when the Offeror gives oral or written notice to The Bank of New York (the "Depositary") of the Offeror's acceptance of such Shares for payment pursuant to the Offer. In all cases, payment for Shares purchased pursuant to the Offer will be made by deposit of the purchase price with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving payment from the Offeror and transmitting payment to tendering stockholders. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE PAID BY THE OFFEROR. Payment for Shares accepted for payment pursuant to the Offer will in all cases be made only after timely receipt by the Depositary of (i) certificates for such Shares or timely confirmation (a "Book-Entry Confirmation") of a book- entry transfer of such shares into the Depositary's account at the Depositary Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedures set forth in the Offer to Purchase, (ii) a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof), with all required signature guarantees or, in the case of a book-entry transfer, an Agent's Message (as defined in the Offer to Purchase) in connection with a book-entry delivery of Shares, and (iii) any other documents required by the Letter of Transmittal. If by 12:00 Midnight, New York City time, on June 18, 1999 (or any other date or time then set as the Expiration Date), any or all conditions to the Offer have not been satisfied or waived, subject to the terms and conditions of the Agreement, the Offeror reserves the right (but shall not be obligated), subject to the applicable rules and regulations of the Securities and Exchange Commission (the "Commission"), to (i) terminate the Offer and not accept for payment any Shares and return all tendered Shares to tendering stockholders, and (ii) extend the Offer and, subject to the right of stockholders to withdraw Shares until the Expiration Date, retain all tendered Shares until the expiration of the Offer, as extended. The term "Expiration Date" means 12:00 Midnight, New York City time, on June 18, 1999, unless the Offeror shall have extended the period of time for which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by the Offeror, shall expire. Subject to the limitations set forth in the applicable rules and regulations of the Commission and subject to the terms and conditions of the Agreement, the Offeror expressly reserves the right, in its sole discretion, at any time and from time to time, (i) to delay payment for any Shares regardless of whether such Shares were therefore accepted for payment, or to terminate the Offer and not to accept for payment or pay for any Shares not therefore accepted for payment or paid for, upon the occurrence of any of the conditions set forth in Section 15 of the Offer to Purchase and (ii) at any time and from time to time, to amend the Offer in any respect. Except as otherwise provided in the Offer to Purchase, tenders of Shares are irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant to the procedures set forth below at any time prior to the Expiration Date and, unless accepted for payment pursuant to the Offer, may also be withdrawn at any time after July 19, 1999. For a withdrawal to be effective, a written, telegraphic, telex or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of the Offer to Purchase and must specify the name of the person having tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name in which the certificates representing such Shares are registered, if different from the name of the person who tendered the Shares. If certificates for Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such certificates, the serial numbers shown on such certificates must be submitted to the Depositary and, unless such Shares have been tendered by an Eligible Institution, the signatures on the notice of withdrawal must be guaranteed by an Eligible Institution. If Shares have been tendered pursuant to the procedures for book-entry transfer set forth in Section 3 of the Offer to Purchase, any notice of withdrawal must also specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares. Any Shares properly withdrawn will be deemed not validly tendered for purposes of the Offer, but may be retendered at any subsequent time prior to the Expiration Date by following the procedures described in the Offer to Purchase. All questions as to the form of documents and the validity, eligibility (including time of receipt) and acceptance for payment of any tender of Shares will be determined by the Offeror in its sole discretion, which determination will be final and binding. None of the Offeror, the Depositary, the Dealer Manager, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. The information required to be disclosed by Paragraph (e)(1)(vii) of Rule 14d- 6 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, is contained in the Offer to Purchase and is incorporated herein by reference. The Company has provided the Offeror its list of stockholder and security position listings for the purpose of disseminating the Offer to holders of Shares. The Offer to Purchase and the related Letter of Transmittal and other relevant materials will be mailed by the Offeror to record holders of Shares and will be furnished by the Offeror to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the Company's stockholder lists or, if applicable, who are listed as participants in a clearing agency's security position listing, for subsequent transmittal to beneficial owners of Shares. THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. Requests for copies of the Offer to Purchase and the related Letter of Transmittal and other tender offer material may be directed to the Information Agent or the Dealer Manager as set forth below, and copies will be furnished promptly at the Offeror's expense. No fees or commissions will be payable to brokers, dealers or other persons other than the Information Agent, the Dealer Manager, and the Depositary for soliciting tenders of Shares pursuant to the Offer. The Information Agent for the Offer is: BEACON HILL PARTNERS, INC. 90 Broad Street New York, New York 10004 (800) 755-5001 (toll free) Bankers and Brokers Please Call: (212) 843-8500 The Dealer Manager for the Offer is: MERRILL LYNCH & Co. World Financial Center North Tower New York, New York 10281-1305 (212) 449-8971 (Call Collect) May 21, 1999 EX-99.(A)(7) 8 GUIDELINES SUBSTITUTE FORM W-9 EXHIBIT (a)(7) GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 Guidelines for Determining the Proper Identification Number to Give the Payer. -- Social Security numbers have nine digits separated by two hyphens: i.e., 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e., 00-0000000. The table below will help determine the number to give the payer. - -------------------------------------------------------------------------------
Give the For this type of account: SOCIAL SECURITY number of -- - -------------------------------------------------------- 1. An individual's account The individual 2. Two or more individuals The actual owner (joint account) of the account or, if combined funds, any one of the individuals(1) 3. Husband and wife (joint The actual owner account) of the account or, if joint funds, either person(1) 4. Custodian account of a The minor(2) minor (Uniform Gift to Minors Act) 5. Adult and minor (joint The adult or, if account) the minor is the only contributor, the minor(1) 6. Account in the name of The ward, minor, guardian or committee for a or incompetent designated ward, minor, or person(3) incompetent person 7. a. The usual revocable sav- ings trust account The grantor- (grantor is also trustee) trustee(1) b. So-called trust account The actual that is not a legal or owner(1) valid trust under State law 8. Sole proprietorship account The owner(4)
- ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
Give the EMPLOYER For this type of account: IDENTIFICATION number of -- - ------------------------------------------------------------------------------ 9. A valid trust, estate, or pension trust Legal entity (Do not furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title.)(5) 10. Corporate account The corporation 11. Religious, charitable, or educational organization The organization account 12. Partnership account held in the name of the business The partnership 13. Association, club, or other tax-exempt organization The organization 14. A broker or registered nominee The broker or nominee 15. Account with the Department of Agriculture in the name The public of a public entity (such as a State or local government, entity school district, or prison) that receives agricultural program payments
- ------------------------------------------------------------------------------- (1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) Circle the ward's, minor's or incompetent person's name and furnish such person's social security number. (4) Show the name of the owner. (5) List first and circle the name of the legal trust, estate, or pension trust. Note: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 Page 2 . Payments of tax-exempt interest (including exempt-interest dividends under section 852). . Payments described in section 6049(b)(5) to non-resident aliens. . Payments on tax-free covenant bonds under section 1451. . Payments made by certain foreign organizations. . Payments of mortgage interest to you. Exempt payees described above should file Form W-9 to avoid possible errone- ous backup withholding. FILE THIS FORM WITH THE PAYOR, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM. Certain payments other than interest, dividends, and patronage dividends, that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under sections 6041, 6041A(a), 6045, and 6050A. Privacy Act Notice.-- Section 6109 requires most recipients of dividend, in- terest, or other payments to give taxpayer identification numbers to payers who must report the payments to IRS. IRS uses the numbers for identification purposes. Payers must be given the numbers whether or not recipients are re- quired to file tax returns. Beginning January 1, 1993, payers must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Cer- tain penalties may also apply. Penalties (1) Penalty for Failure to Furnish Taxpayer Identification Number.--If you fail to furnish your taxpayer identification number to a payer, you are sub- ject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) Failure to Report Certain Dividend and Interest Payments.--If you fail to include any portion of an includable payment for interest, dividends, or pat- ronage dividends in gross income, such failure will be treated as being due to negligence and will be subject to a penalty of 20% on any portion of an under- payment attributable to that failure unless there is clear and convincing evi- dence to the contrary. (3) Civil Penalty for False Information With Respect to Withholding.--If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (4) Criminal Penalty for Falsifying Information.--Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or im- prisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE. Obtaining a Number If you don't have a taxpayer identification number or you do not know your number, obtain Form SS-5, Application for a Social Security Number Card, or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service and ap- ply for a number. Payees Exempt from Backup Withholding Payees specifically exempted from backup withholding on ALL payments include the following: . A corporation. . A financial institution. . An organization exempt from tax under section 501(a), or an individual re- tirement plan. . The United States or any agency or instrumentality thereof. . A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof. . A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof. . An international organization or any agency or instrumentality thereof. . A registered dealer in securities or commodities registered in the U.S. or a possession of the U.S. . A real estate investment trust. . A common trust fund operated by a bank under section 584(a) . An exempt charitable remainder trust, or a non-exempt trust described in section 4947(a)(1). . An entity registered at all times under the Investment Company Act of 1940. . A foreign central bank of issue. Payments of dividends and patronage dividends not generally subject to backup withholding include the following: . Payments to nonresident aliens subject to withholding under section 1441. . Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident partner. . Payments of patronage dividends where the amount received is not paid in money. . Payments made by certain foreign organizations. . Payments made to a nominee. Payments of interest not generally subject to backup withholding include the following: . Payments of interest on obligations issued by indi- viduals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not pro- vided your correct taxpayer identification number to the payer. EX-99.(B)(1) 9 FIVE YEAR CREDIT AGREEMENT EXHIBIT (b)(1) CONFORMED COPY - -------------------------------------------------------------------------------- $1,000,000,000 FIVE-YEAR CREDIT AGREEMENT dated as of May 8, 1998 among U S WEST Capital Funding, Inc. U S WEST, Inc. USW-C, Inc. The Banks Listed Herein and Morgan Guaranty Trust Company of New York, as Administrative Agent - -------------------------------------------------------------------------------- J.P. Morgan Securities Inc. Lead Arranger Bank of America National Trust and Savings Association, Chase Securities Inc. and Mellon Bank, N.A., Co-Syndication Agents
TABLE OF CONTENTS PAGE ---- ARTICLE 1 DEFINITIONS SECTION 1.01. The Definitions..................................................................1 SECTION 1.02. Accounting Terms and Determinations.............................................12 SECTION 1.03. Types of Borrowings.............................................................12 ARTICLE 2 THE CREDITS SECTION 2.01. Commitments to Lend.............................................................13 SECTION 2.02. Notice of Committed Borrowing...................................................14 SECTION 2.03. Money Market Borrowings.........................................................15 SECTION 2.04. Notice to Banks; Funding of Loans...............................................19 SECTION 2.05. Notes...........................................................................20 SECTION 2.06. Maturity of Loans...............................................................20 SECTION 2.07. Interest Rates..................................................................21 SECTION 2.08. Facility Fees...................................................................23 SECTION 2.09. Termination or Reduction of Commitments.........................................23 SECTION 2.10. Method of Electing Interest Rates...............................................24 SECTION 2.11. Prepayments....................................................................25 SECTION 2.12. General Provisions as to Payments...............................................26 SECTION 2.13. Funding Losses..................................................................26 SECTION 2.14. Computation of Interest and Fees................................................27 SECTION 2.15. Change of Control...............................................................27 ARTICLE 3 CONDITIONS SECTION 3.01. Closing.........................................................................28 SECTION 3.02. All Borrowings..................................................................29 SECTION 3.03. Loans after Separation..........................................................29 ARTICLE 4 REPRESENTATIONS AND WARRANTIES SECTION 4.01. Corporate Existence and Power...................................................30 SECTION 4.02. Corporate and Governmental Authorization; No Contravention.........................................................................30
i SECTION 4.03. Binding Effect..................................................................30 SECTION 4.04. Financial Information...........................................................31 SECTION 4.05. Litigation......................................................................31 SECTION 4.06. Compliance with ERISA...........................................................31 SECTION 4.07. Environmental Matters...........................................................32 SECTION 4.08. Taxes...........................................................................32 SECTION 4.09. Subsidiaries....................................................................33 SECTION 4.10. Not an Investment Company.......................................................33 SECTION 4.11. Full Disclosure.................................................................33 ARTICLE 5 COVENANTS SECTION 5.01. Information.....................................................................33 SECTION 5.02. Maintenance of Property; Insurance..............................................35 SECTION 5.03. Maintenance of Existence........................................................36 SECTION 5.04. Compliance with Laws............................................................36 SECTION 5.05. Inspection of Property, Books and Records.......................................36 SECTION 5.06. Subsidiary Debt.................................................................36 SECTION 5.07. Debt Coverage...................................................................37 SECTION 5.08. Negative Pledge.................................................................37 SECTION 5.09. Consolidations, Mergers and Sales of Assets.....................................38 SECTION 5.10. Use of Proceeds.................................................................39 SECTION 5.11. Year 2000 Compatibility.........................................................39 ARTICLE 6 DEFAULTS SECTION 6.01. Events of Default...............................................................39 SECTION 6.02. Notice of Default...............................................................42 ARTICLE 7 THE AGENT SECTION 7.01. Appointment and Authorization...................................................42 SECTION 7.02. Agent and Affiliates............................................................42 SECTION 7.03. Action by Agent.................................................................43 SECTION 7.04. Consultation with Experts.......................................................43 SECTION 7.05. Liability of Agent..............................................................43 SECTION 7.06. Indemnification.................................................................43 SECTION 7.07. Credit Decision.................................................................43 SECTION 7.08. Successor Agent.................................................................44 SECTION 7.09. Agent's Fee.....................................................................44
ii
ARTICLE 8 CHANGES IN CIRCUMSTANCES SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair........................44 SECTION 8.02. Illegality......................................................................45 SECTION 8.03. Increased Cost and Reduced Return...............................................46 SECTION 8.04. Taxes...........................................................................47 SECTION 8.05. Domestic Loans Substituted for Affected Euro-Dollar Loans.................................................................................49 SECTION 8.06. Substitution of Bank............................................................49 ARTICLE 9 GUARANTY SECTION 9.01. The Guaranty....................................................................49 SECTION 9.02. Guaranty Unconditional..........................................................50 SECTION 9.03. Discharge Only upon Payment in Full; Reinstatement In Certain Circumstances.................................................................51 SECTION 9.04. Waiver by the Company...........................................................51 SECTION 9.05. Subrogation.....................................................................51 SECTION 9.06. Stay of Acceleration............................................................51 SECTION 9.07. Release upon Separation.........................................................51 ARTICLE 10 MISCELLANEOUS SECTION 10.01. Notices........................................................................52 SECTION 10.02. No Waivers.....................................................................52 SECTION 10.03. Expenses; Indemnification......................................................52 SECTION 10.04. Sharing of Set-offs............................................................53 SECTION 10.05. Amendments and Waivers.........................................................54 SECTION 10.06. Successors and Assigns........................................................54 SECTION 10.07. Termination of Existing Credit Agreements......................................56 SECTION 10.08. Governing Law; Submission to Jurisdiction......................................56 SECTION 10.09. Counterparts; Integration; Effectiveness.......................................56 SECTION 10.10. WAIVER OF JURY TRIAL...........................................................57 SECTION 10.11. Confidentiality................................................................57
iii Pricing Schedule Schedule 4.07 - Environmental Matters Exhibit A - Note Exhibit B - Money Market Quote Request Exhibit C - Invitation for Money Market Quotes Exhibit D - Money Market Quote Exhibit E - Opinion of Counsel for the Company and the Borrower Exhibit F - Opinion of Special Counsel for the Administrative Agent Exhibit G - Assignment and Assumption Agreement Exhibit H - Extension Agreement iv CREDIT AGREEMENT AGREEMENT dated as of May 8, 1998 among U S WEST Capital Funding, Inc., U S WEST, Inc., USW-C, Inc., the BANKS listed on the signature pages hereof and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent. The parties hereto agree as follows: ARTICLE 1 DEFINITIONS SECTION 1.01. The Definitions. The following terms, as used herein, have the following meanings: "Absolute Rate Auction" means a solicitation of Money Market Quotes setting forth Money Market Absolute Rates pursuant to Section 2.03. "Adjusted London Interbank Offered Rate" has the meaning set forth in Section 2.07. "Administrative Questionnaire" means, with respect to each Bank, an administrative questionnaire in the form prepared by the Agent and submitted to the Agent (with a copy to the Company) duly completed by such Bank. "Agent" means Morgan Guaranty Trust Company of New York in its capacity as administrative agent for the Banks hereunder, and its successors in such capacity. "Applicable Lending Office" means, with respect to any Bank, (i) in the case of its Domestic Loans, its Domestic Lending Office, (ii) in the case of its Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the case of its Money Market Loans, its Money Market Lending Office. "Assignee" has the meaning set forth in Section 10.06(c). "Bank" means each lender listed on the signature pages hereof, each Assignee which becomes a Bank pursuant to Section 10.06(c), and their respective successors. "Base Rate" means, for any day, a rate per annum equal to the higher of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal Funds Rate for such day. "Benefit Arrangement" means at any time an employee benefit plan within the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and which is maintained or otherwise contributed to by any member of the ERISA Group. "Borrower" means U S WEST Capital Funding, Inc., a Colorado corporation, and its successors. "Borrowing" has the meaning set forth in Section 1.03. "Closing Date" means the date on or after the Effective Date on which the Agent shall have received the documents specified in or pursuant to Section 3.01. "Commitment" means, with respect to each Bank, the amount set forth opposite the name of such Bank on the signature pages hereof, as such amount may be reduced from time to time pursuant to Sections 2.09 and 2.11. "Committed Loan" means a loan to be made by a Bank pursuant to Section 2.01(a); provided that if any such loan or loans are combined or subdivided pursuant to a Notice of Interest Rate Election, the term "Committed Loan" shall refer to the combined principal amount resulting from such combination or to each of the separate principal amounts resulting from such subdivision, as the case may be. "Company" means (i) prior to the Separation, U S WEST, Inc., a Delaware corporation, and its successors and (ii) after the Separation, USW-C, Inc., a Delaware corporation, which will be renamed U S WEST, Inc., and its successors. "Company's 1997 Form 10-K" means U S WEST, Inc.'s annual report on Form 10-K for 1997, as amended by Form 10-K/A filed April 13, 1998, in each case as filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934. "Consolidated EBITDA" means, for any period, the net income of the Company and its Consolidated Subsidiaries determined on a consolidated basis 2 for such period (adjusted to exclude the effect of (x) equity gains or losses in unconsolidated Persons, (y) any preferred dividend income and any extraordinary or other non-recurring non-cash gain or loss or (z) any gain or loss on the disposition of investments), plus, to the extent deducted in determining such adjusted net income, the aggregate amount of (i) interest expense, (ii) income tax expense and (iii) depreciation, amortization and other similar non-cash charges and minus, to the extent included in determining such adjusted net income, the aggregate amount of (i) interest income and (ii) income tax benefit. "Consolidated Net Worth" means at any date the consolidated shareowners' equity of the Company and its Consolidated Subsidiaries determined as of such date. "Consolidated Subsidiary" means at any date any Subsidiary or other entity the accounts of which would be consolidated with those of the Company in its consolidated financial statements if such statements were prepared as of such date. "Debt" of any Person means at any date, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, (iv) all obligations of such Person as lessee which are capitalized in accordance with generally accepted accounting principles, (v) all Debt secured by a Lien on any asset of such Person, whether or not such Debt is otherwise an obligation of such Person, and (vi) all Debt of others Guaranteed by such Person. Notwithstanding the foregoing, for purposes of Sections 5.06 and 5.07 Debt shall in no event include the following: (x) Debt of Persons which are not Consolidated Subsidiaries ("Joint Ventures") (i) which is secured by a Lien on the assets or capital stock of a Minor Subsidiary or the equity interests in such Joint Ventures or is Guaranteed by a Minor Subsidiary, which Lien or Guaranty is incurred in connection with the international operations of the Company and its Subsidiaries, and (ii) for the payment of which no other recourse may be had to the Company or any of its Subsidiaries; and (y) Debt of the Company or the Borrower issued in connection with the issuance of Trust Originated Preferred Securities or substantially similar securities, so long as such Debt is subordinated and junior in right of payment to substantially all liabilities of the Company or the Borrower, as the case may be, including, without limitation, the Loans. 3 "Default" means any condition or event which constitutes an Event of Default or which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default. "Domestic Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in New York City are authorized by law to close. "Domestic Lending Office" means, as to each Bank, its office located at its address set forth in its Administrative Questionnaire (or identified in its Administrative Questionnaire as its Domestic Lending Office) or such other office as such Bank may hereafter designate as its Domestic Lending Office by notice to the Company and the Agent. "Domestic Loan" means (i) a Committed Loan which bears interest at the Base Rate pursuant to the applicable Notice of Committed Borrowing or Notice of Interest Rate Election or the provisions of Article 8 or (ii) an overdue amount which was a Domestic Loan immediately before it became overdue. "Effective Date" means the date this Agreement becomes effective in accordance with Section 10.09. "Environmental Laws" means any and all federal, state, local and foreign statutes, laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, plans, injunctions, permits, concessions, grants, franchises, licenses, agreements and other governmental restrictions relating to the environment, the effect of the environment on human health or to emissions, discharges or releases of pollutants, contaminants, Hazardous Substances or wastes into the environment including, without limitation, ambient air, surface water, ground water, or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, Hazardous Substances or wastes or the clean-up or other remediation thereof. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute. "ERISA Group" means the Company, any Subsidiary and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Company or any Subsidiary, are treated as a single employer under Section 414 of the Internal Revenue Code. 4 "Euro-Dollar Business Day" means any Domestic Business Day on which commercial banks are open for international business (including dealings in dollar deposits) in London. "Euro-Dollar Lending Office" means, as to each Bank, its office, branch or affiliate located at its address set forth in its Administrative Questionnaire (or identified in its Administrative Questionnaire as its Euro-Dollar Lending Office) or such other office, branch or affiliate of such Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice to the Company and the Agent. "Euro-Dollar Loan" means (i) a Committed Loan which bears interest at a Euro-Dollar Rate pursuant to the applicable Notice of Committed Borrowing or Notice of Interest Rate Election or (ii) an overdue amount which was a Euro- Dollar Loan before it became overdue. "Euro-Dollar Margin" has the meaning set forth in Section 2.07. "Euro-Dollar Rate" means a rate of interest determined pursuant to Section 2.07 on the basis of an Adjusted London Interbank Offered Rate. "Euro-Dollar Reference Banks" means the principal London offices of Bank of America National Trust and Savings Association, Mellon Bank, N.A., and Morgan Guaranty Trust Company of New York, and "Euro-Dollar Reference Bank" means any one of the foregoing. "Euro-Dollar Reserve Percentage" has the meaning set forth in Section 2.07. "Event of Default" has the meaning set forth in Section 6.01. "Existing Credit Agreements" means the Amended and Restated Credit Agreements dated as of October 31, 1997, among the Borrower, the Company, the banks listed on the signature pages thereof and Morgan Guaranty Trust Company of New York, as administrative agent. "Federal Funds Rate" means, for any day, the rate per annum (rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Domestic Business Day next succeeding such day, provided that (i) if such day is not a Domestic Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Domestic Business Day as so published on the next 5 succeeding Domestic Business Day, and (ii) if no such rate is so published on such next succeeding Domestic Business Day, the Federal Funds Rate for such day shall be the average rate quoted to Morgan Guaranty Trust Company of New York on such day on such transactions as determined by the Agent. "Fixed Rate Loans" means Euro-Dollar Loans or Money Market Loans (excluding Money Market LIBOR Loans bearing interest at the Base Rate pursuant to Section 8.01(a)) or any combination of the foregoing. "Group of Loans" means at any time a group of Loans consisting of (i) all Committed Loans which are Domestic Loans at such time or (ii) all Committed Loans which are Euro-Dollar Loans having the same Interest Period at such time; provided that, if a Committed Loan of any particular Bank is converted to or made as a Domestic Loan pursuant to Section 8.02 or 8.05, such Loan shall be included in the same Group or Groups of Loans from time to time as it would have been in if it had not been so converted or made. "Guaranty" by any Person means any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Debt or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation (whether arising by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (ii) entered into for the purpose of assuring in any other manner the obligee of such Debt or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part), provided that the term Guaranty shall not include endorsements for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a corresponding meaning. "Hazardous Substances" means any toxic, radioactive, caustic or otherwise hazardous substance, including petroleum, its derivatives, by-products and other hydrocarbons, or any substance having any constituent elements displaying any of the foregoing characteristics. "Indemnitee" has the meaning set forth in Section 10.03(b). "Indentures" means the agreements or instruments evidencing the following Debt of Continental Cablevision, Inc., and its successors: (i) the 11% Senior Subordinated Debentures Due June 1, 2007; (ii) the 8 5/8% Senior Notes Due August 15, 2003; (iii) the 9% Senior Debentures Due September 1, 2008; (iv) the 8 7/8% Senior Debentures Due September 15, 2002; (v) the 9 1/2% Senior 6 Debentures Due August 1, 2013; (vi) the 8 1/2% Senior Notes Due September 15, 2001; (vii) the 8.3% Senior Notes Due May 15, 2006; and (viii) any other Debt containing terms and conditions as or more favorable to the holders thereof than the terms and conditions of any of the foregoing Debt. "Interest Period" means: (1) with respect to each Euro-Dollar Loan, a period commencing on the date of borrowing specified in the applicable Notice of Borrowing or the date specified in the applicable Notice of Interest Rate Election and ending one, two, three or six months thereafter, as the Borrower may elect in the applicable notice; provided that: (a) any Interest Period which would otherwise end on a day which is not a Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Euro-Dollar Business Day; (b) any Interest Period which begins on the last Euro-Dollar Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clause (c) below, end on the last Euro-Dollar Business Day of a calendar month; and (c) any Interest Period which would otherwise end after a Termination Date shall end on such Termination Date. (2) with respect to each Money Market LIBOR Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing and ending such whole number of months thereafter as the Borrower may elect in accordance with Section 2.03; provided that: (a) any Interest Period which would otherwise end on a day which is not a Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Euro-Dollar Business Day; (b) any Interest Period which begins on the last Euro-Dollar Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clause (c) below, end on the last Euro-Dollar Business Day of a calendar month; and 7 (c) any Interest Period which would otherwise end after a Termination Date shall end on such Termination Date. (3) with respect to each Money Market Absolute Rate Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing and ending such number of days thereafter (but not less than 7 days) as the Borrower may elect in accordance with Section 2.03; provided that: (a) any Interest Period which would otherwise end on a day which is not a Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar Business Day; and (b) any Interest Period which would otherwise end after a Termination Date shall end on such Termination Date. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended, or any successor statute. "LIBOR Auction" means a solicitation of Money Market Quotes setting forth Money Market Margins based on the London Interbank Offered Rate pursuant to Section 2.03. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind, or any other type of preferential arrangement that has the practical effect of creating a security interest, in respect of such asset. For the purposes of this Agreement, the Company or any Subsidiary shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset. "Loan" means a Domestic Loan or a Euro-Dollar Loan or a Money Market Loan and "Loans" means Domestic Loans or Euro-Dollar Loans or Money Market Loans or any combination of the foregoing. "London Interbank Offered Rate" has the meaning set forth in Section 2.07. "Margin Stock" means "margin stock" as such term is defined in Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time. 8 "Material Debt" means Debt (other than the Notes) of the Company and/or one or more of its Subsidiaries, arising in one or more related or unrelated transactions, in an aggregate principal amount exceeding $100,000,000. "Material Plan" means at any time a Plan or Plans having aggregate Unfunded Liabilities in excess of $100,000,000. "Minor Subsidiary" means, for purposes of the last sentence of the definition of Debt and of Section 5.08(f) (the "Relevant Provisions"), (i) USW PCN Inc., and (ii) any other Subsidiary which, at the time of the issuance of a Guaranty or grant of a Lien referred to in the Relevant Provisions, had assets which, when taken together with all assets of Subsidiaries at any earlier time when such Subsidiaries were deemed to be Minor Subsidiaries pursuant to this clause (ii), did not exceed $250,000,000. "Money Market Absolute Rate" has the meaning set forth in Section 2.03(d). "Money Market Absolute Rate Loan" means a loan to be made by a Bank pursuant to an Absolute Rate Auction. "Money Market Lending Office" means, as to each Bank, its Domestic Lending Office or such other office, branch or affiliate of such Bank as it may hereafter designate as its Money Market Lending Office by notice to the Company and the Agent; provided that any Bank may from time to time by notice to the Company and the Agent designate separate Money Market Lending Offices for its Money Market LIBOR Loans, on the one hand, and its Money Market Absolute Rate Loans, on the other hand, in which case all references herein to the Money Market Lending Office of such Bank shall be deemed to refer to either or both of such offices, as the context may require. "Money Market LIBOR Loan" means a loan to be made by a Bank pursuant to a LIBOR Auction (including such a loan bearing interest at the Base Rate pursuant to Section 8.01(a)). "Money Market Loan" means a Money Market LIBOR Loan or a Money Market Absolute Rate Loan. "Money Market Margin" has the meaning set forth in Section 2.03(d). "Money Market Quote" means an offer by a Bank to make a Money Market Loan in accordance with Section 2.03. 9 "Multiemployer Plan" means at any time an employee pension benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any member of the ERISA Group is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions, including for these purposes any Person which ceased to be a member of the ERISA Group during such five year period. "Notes" means promissory notes of the Borrower, substantially in the form of Exhibit A hereto, evidencing the obligation of the Borrower to repay the Loans made to it, and "Note" means any one of such promissory notes issued hereunder. "Notice of Borrowing" means a Notice of Committed Borrowing (as defined in Section 2.02) or a Notice of Money Market Borrowing (as defined in Section 2.03(f)). "Parent" means, with respect to any Bank, any Person controlling such Bank. "Participant" has the meaning set forth in Section 10.06(b). "PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. "Person" means an individual, a corporation, a partnership, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Plan" means at any time an employee pension benefit plan (other than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Internal Revenue Code and either (i) is maintained, or contributed to, by any member of the ERISA Group for employees of any member of the ERISA Group or (ii) has at any time within the preceding five years been maintained, or contributed to, by any Person which was at such time a member of the ERISA Group for employees of any Person which was at such time a member of the ERISA Group. "Pricing Schedule" means the Schedule attached hereto and identified as such. "Prime Rate" means the rate of interest publicly announced by Morgan Guaranty Trust Company of New York in New York City from time to time as its Prime Rate. 10 "Proxy Statement" means the definitive Proxy Statement for 1998 Annual Meeting of Stockholders of U S WEST, Inc., dated and filed with the Securities and Exchange Commission on April 20, 1998. "Required Banks" means at any time Banks having more than 50% of the aggregate amount of the Commitments or, if the Commitments shall have been terminated, holding Notes evidencing more than 50% of the aggregate unpaid principal amount of the Loans. "Revolving Credit Period" means the period from and including the Effective Date to but excluding the Termination Date. "Separation" has the meaning set forth in the Proxy Statement. "Significant Subsidiary" means any Subsidiary which would meet the definition of "significant subsidiary" contained as of the date hereof in Regulation S-X of the Securities and Exchange Commission. "Subsidiary" means any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by the Company. "Super-Majority Banks" means at any time Banks having at least 85% of the aggregate amount of the Commitments or, if the Commitments shall have been terminated, holding Notes evidencing at least 85% of the aggregate unpaid principal amount of the Loans. "Termination Date" means, with respect to each Bank, May 8, 2003, or such later date to which the Termination Date for such Bank shall have been extended pursuant to Section 2.01(b), or, if such day is not a Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day. "Unfunded Liabilities" means, with respect to any Plan at any time, the amount (if any) by which (i) the value of all benefit liabilities under such Plan, determined on a plan termination basis using the assumptions prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market value of all Plan assets allocable to such liabilities under Title IV of ERISA (excluding any accrued but unpaid contributions), all determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of a member of the ERISA Group to the PBGC or any other Person under Title IV of ERISA. 11 "United States" means the United States of America, including the States and the District of Columbia, but excluding its territories and possessions. "Wholly-Owned Consolidated Subsidiary" means any Consolidated Subsidiary all of the shares of capital stock or other ownership interests of which (except directors' qualifying shares) are at the time directly or indirectly owned by the Company. SECTION 1.02. Accounting Terms and Determinations. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with generally accepted accounting principles as in effect from time to time in the United States, applied on a basis consistent (except for changes concurred in by the Company's independent public accountants) with the most recent audited consolidated financial statements of the Company and its Consolidated Subsidiaries delivered to the Banks; provided that, if the Company notifies the Agent that the Company wishes to amend any covenant in Article 5 to eliminate the effect of any change in such generally accepted accounting principles on the operation of such covenant (or if the Agent notifies the Company that the Required Banks wish to amend Article 5 for such purpose), then compliance with such covenant shall be determined on the basis of generally accepted accounting principles in effect in the United States immediately before the relevant change in generally accepted accounting principles became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Company and the Required Banks. SECTION 1.03. Types of Borrowings. The term "Borrowing" denotes the aggregation of Loans of one or more Banks to be made to the Borrower pursuant to Article 2 on a single date, all of which Loans are of the same type (subject to Article 8) and, except in the case of Domestic Loans, have the same Interest Period or initial Interest Period. Borrowings are classified for purposes of this Agreement either by reference to the pricing of Loans comprising such Borrowing (e.g., a "Euro-Dollar Borrowing" is a Borrowing comprised of Euro-Dollar Loans) or by reference to the provisions of Article 2 under which participation therein is determined (i.e., a "Committed Borrowing" is a Borrowing under Section 2.01(a) in which all Banks participate in proportion to their Commitments, while a "Money Market Borrowing" is a Borrowing under Section 2.03 in which the Bank participants are determined on the basis of their bids in accordance therewith). 12 ARTICLE 2 THE CREDITS SECTION 2.01. Commitments to Lend. (a) The Commitments. During the Revolving Credit Period each Bank severally agrees, on the terms and conditions set forth in this Agreement, to make loans to the Borrower pursuant to this subsection (a) from time to time in amounts such that the aggregate principal amount of Committed Loans by such Bank at any one time outstanding to the Borrower shall not exceed the amount of its Commitment. Each Borrowing under this Section shall be in an aggregate principal amount of $25,000,000 or any larger multiple of $5,000,000 (except that any such Borrowing may be in the aggregate amount available in accordance with Section 3.02(c)) and shall be made from the several Banks ratably in proportion to their respective Commitments. Within the foregoing limits, the Borrower may borrow under this subsection (a), repay, or to the extent permitted by Section 2.11, prepay Loans and reborrow at any time during the Revolving Credit Period under this subsection (a). The Commitments shall terminate at the close of business on the Termination Date. (b) Extension of Commitments. The Commitments may be extended in the manner and amount set forth in this subsection (b), for a period of 364 days measured from the Termination Date then in effect. If the Company wishes to request an extension of each Bank's Commitment, it shall give notice to that effect to the Agent not less than 45 days and not more than 60 days prior to the Termination Date then in effect, whereupon the Agent shall promptly notify each of the Banks of such request. Each Bank will use its best efforts to respond to such request, whether affirmatively or negatively, as it may elect in its discretion, within 30 days of such notice to the Agent. If any Bank shall not have responded affirmatively within such 30-day period, such Bank shall be deemed to have rejected the Company's proposal to extend its Commitment, and only the Commitments of those Banks which have responded affirmatively shall be extended, subject to receipt by the Agent of counterparts of an Extension Agreement in substantially the form of Exhibit H hereto duly completed and signed by the Borrower, the Company, the Agent and all of the Banks which have responded affirmatively. The Agent shall provide to the Company, no later than 10 days prior to the Termination Date then in effect, a list of the Banks which have responded affirmatively. The Extension Agreement shall be executed and delivered no later than five days prior to the Termination Date then in effect, and no extension of the Commitments pursuant to this subsection (b) shall be legally binding on any party hereto unless and until such Extension Agreement is so 13 executed and delivered. The Company and the Borrower may decline to execute and deliver such Extension Agreement if any Bank has rejected the Company's proposal to extend its Commitment or has failed to execute and deliver such Extension Agreement, and will promptly notify the Agent and the Banks if it so declines. (c) Additional Commitments. At any time during the Revolving Credit Period (unless the Commitments shall have been reduced pursuant to Section 2.09(b)), if no Default shall have occurred and be continuing at such time, the Company may, if it so elects, increase the aggregate amount of the Commitments, either by designating a Person not theretofore a Bank and acceptable to the Agent to become a Bank or by agreeing with an existing Bank that such Bank's Commitment shall be increased. Upon execution and delivery by the Company, the Borrower and such Bank or other Person of an instrument of assumption in form and amount satisfactory to the Administrative Agent, such existing Bank shall have a Commitment as therein set forth or such other Person shall become a Bank with a Commitment as therein set forth and all the rights and obligations of a Bank with such a Commitment hereunder; provided that (i) the Company shall provide prompt notice of such increase to the Agent, which shall promptly notify the other Banks, (ii) the aggregate amount of each such increase which is effective on any day shall be at least $50,000,000 and (iii) the aggregate amount of the Commitments shall at no time exceed $1,250,000,000. Upon any increase in the aggregate amount of the Commitments pursuant to this subsection (c), within five Domestic Business Days in the case of each Group of Domestic Loans outstanding, and at the end of the then current Interest Period with respect thereto in the case of each Group of Euro-Dollar Loans then outstanding, the Borrower shall prepay such Group in its entirety, and, to the extent the Borrower elects to do so and subject to the conditions specified in Article 3, the Borrower shall reborrow Committed Loans from the Banks in proportion to their respective Commitments after giving effect to such increase, until such time as all outstanding Committed Loans are held by the Banks in such proportion. SECTION 2.02. Notice of Committed Borrowing. The Borrower shall give the Agent notice (a "Notice of Committed Borrowing") not later than 10:30 A.M. (New York City time) on (x) the date of each Domestic Borrowing, and (y) the third Euro-Dollar Business Day before each Euro-Dollar Borrowing, specifying: (i) the date of such Borrowing, which shall be a Domestic Business Day in the case of a Domestic Borrowing or a Euro-Dollar Business Day in the case of a Euro-Dollar Borrowing, (ii) the aggregate amount of such Borrowing, 14 (iii) whether the Loans comprising such Borrowing bear interest initially at the Base Rate or at a Euro-Dollar Rate, and (iv) in the case of a Euro-Dollar Borrowing, the duration of the initial Interest Period applicable thereto, subject to the provisions of the definition of Interest Period. SECTION 2.03. Money Market Borrowings. (a) The Money Market Option. In addition to Committed Borrowings pursuant to Section 2.01(a), the Borrower may, as set forth in this Section, request the Banks during the Revolving Credit Period to make offers to make Money Market Loans to the Borrower. The Banks may, but shall have no obligation to, make such offers and the Borrower may, but shall have no obligation to, accept any such offers in the manner set forth in this Section. (b) Money Market Quote Request. When the Borrower wishes to request offers to make Money Market Loans under this Section, it shall transmit to the Agent by telex or facsimile transmission a Money Market Quote Request substantially in the form of Exhibit B hereto so as to be received no later than 9:00 A.M. (New York City time) on (x) the fourth Euro-Dollar Business Day prior to the date of Borrowing proposed therein, in the case of a LIBOR Auction or (y) the Domestic Business Day prior to the date of Borrowing proposed therein, in the case of an Absolute Rate Auction (or, in either case, such other time or date as the Company and the Agent shall have mutually agreed and shall have notified to the Banks not later than the date of the Money Market Quote Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective) specifying: (i) the proposed date of Borrowing, which shall be a Euro- Dollar Business Day in the case of a LIBOR Auction or a Domestic Business Day in the case of an Absolute Rate Auction, (ii) the aggregate amount of such Borrowing, which shall be $25,000,000 or a larger multiple of $5,000,000, (iii) the duration of the Interest Period applicable thereto, subject to the provisions of the definition of Interest Period, and (iv) whether the Money Market Quotes requested are to set forth a Money Market Margin or a Money Market Absolute Rate. 15 The Borrower may request offers to make Money Market Loans for more than one Interest Period in a single Money Market Quote Request. No Money Market Quote Request shall be given within five Euro-Dollar Business Days (or such other number of days as the Company and the Agent may agree) of any other Money Market Quote Request. (c) Invitation for Money Market Quotes. Promptly upon receipt of a Money Market Quote Request, the Agent shall send to the Banks by telex or facsimile transmission an Invitation for Money Market Quotes substantially in the form of Exhibit C hereto, which shall constitute an invitation by the Borrower to each Bank to submit Money Market Quotes offering to make the Money Market Loans to which such Money Market Quote Request relates in accordance with this Section. (d) Submission and Contents of Money Market Quotes. (i) Each Bank may submit a Money Market Quote containing an offer or offers to make Money Market Loans in response to any Invitation for Money Market Quotes. Each Money Market Quote must comply with the requirements of this subsection (d) and must be submitted to the Agent by telex or facsimile transmission at its offices specified in or pursuant to Section 10.01 not later than (x) 10:30 A.M. (New York City time) on the third Euro-Dollar Business Day prior to the proposed date of Borrowing, in the case of a LIBOR Auction or (y) 9:15 A.M. (New York City time) on the proposed date of Borrowing, in the case of an Absolute Rate Auction (or, in either case, such other time or date as the Company and the Agent shall have mutually agreed and shall have notified to the Banks not later than the date of the Money Market Quote Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective); provided that Money Market Quotes submitted by the Agent (or any affiliate of the Agent) in the capacity of a Bank may be submitted, and may only be submitted, if the Agent or such affiliate notifies the Borrower of the terms of the offer or offers contained therein not later than (x) one hour prior to the deadline for the other Banks, in the case of a LIBOR Auction or (y) 15 minutes prior to the deadline for the other Banks, in the case of an Absolute Rate Auction. Subject to Articles 3 and 6, any Money Market Quote so made shall be irrevocable except with the written consent of the Agent given on the instructions of the Borrower. (ii) Each Money Market Quote shall be in substantially the form of Exhibit D hereto and shall in any case specify: (A) the proposed date of Borrowing, 16 (B) the principal amount of the Money Market Loan for which each such offer is being made, which principal amount (w) may be greater than or less than the Commitment of the quoting Bank, (x) must be $5,000,000 or a larger multiple of $1,000,000, (y) may not exceed the principal amount of Money Market Loans for which offers were requested, and (z) may be subject to an aggregate limitation as to the principal amount of Money Market Loans for which offers being made by such quoting Bank may be accepted, (C) in the case of a LIBOR Auction, the margin above or below the applicable London Interbank Offered Rate (the "Money Market Margin") offered for each such Money Market Loan, expressed as a percentage (specified to the nearest 1/10,000th of 1%) to be added to or subtracted from such base rate, (D) in the case of an Absolute Rate Auction, the rate of interest per annum (specified to the nearest 1/10,000th of 1%) (the "Money Market Absolute Rate") offered for each such Money Market Loan, and (E) the identity of the quoting Bank. A Money Market Quote may set forth up to five separate offers by the quoting Bank with respect to each Interest Period specified in the related Invitation for Money Market Quotes. (iii) Any Money Market Quote shall be disregarded if it: (A) is not substantially in conformity with Exhibit D hereto or does not specify all of the information required by subsection (d)(ii); (B) contains qualifying, conditional or similar language; (C) proposes terms other than or in addition to those set forth in the applicable Invitation for Money Market Quotes; or (D) arrives after the time set forth in subsection (d)(i). (e) Notice to Borrower. The Agent shall promptly (and in any event no later than 11:00 A.M. (New York time) on (i) the third Euro-Dollar Business Day prior to the proposed date of Borrowing, in the case of a LIBOR Auction or (ii) 17 the proposed date of Borrowing, in the case of an Absolute Rate Auction) notify the Borrower of the terms (x) of any Money Market Quote submitted by a Bank that is in accordance with subsection (d) and (y) of any Money Market Quote that amends, modifies or is otherwise inconsistent with a previous Money Market Quote submitted by such Bank with respect to the same Money Market Quote Request. Any such subsequent Money Market Quote shall be disregarded by the Agent unless such subsequent Money Market Quote is submitted solely to correct a manifest error in such former Money Market Quote. The Agent's notice to the Borrower shall specify (A) the aggregate principal amount of Money Market Loans for which offers have been received for each Interest Period specified in the related Money Market Quote Request, (B) the respective principal amounts and Money Market Margins or Money Market Absolute Rates, as the case may be, so offered and (C) if applicable, limitations on the aggregate principal amount of Money Market Loans for which offers in any single Money Market Quote may be accepted. (f) Acceptance and Notice by Borrower. Not later than 11:15 A.M. (New York City time) on (x) the third Euro-Dollar Business Day prior to the proposed date of Borrowing, in the case of a LIBOR Auction or (y) the proposed date of Borrowing, in the case of an Absolute Rate Auction (or, in either case, such other time or date as the Company and the Agent shall have mutually agreed and shall have notified to the Banks not later than the date of the Money Market Quote Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective), the Borrower shall notify the Agent of its acceptance or non-acceptance of the offers so notified to it pursuant to subsection (e). In the case of acceptance, such notice (a "Notice of Money Market Borrowing") shall specify the aggregate principal amount of offers for each Interest Period that are accepted. The Borrower may accept any Money Market Quote in whole or in part; provided that: (i) the aggregate principal amount of each Money Market Borrowing may not exceed the applicable amount set forth in the related Money Market Quote Request, (ii) the principal amount of each Money Market Borrowing must be $25,000,000 or a larger multiple of $5,000,000, (iii) acceptance of offers may only be made on the basis of ascending Money Market Margins or Money Market Absolute Rates, as the case may be, and 18 (iv) the Borrower may not accept any offer that is described in subsection (d)(iii) or that otherwise fails to comply with the requirements of this Agreement. (g) Allocation by Agent. If offers are made by two or more Banks with the same Money Market Margins or Money Market Absolute Rates, as the case may be, for a greater aggregate principal amount than the amount in respect of which such offers are accepted for the related Interest Period, the principal amount of Money Market Loans in respect of which such offers are accepted shall be allocated by the Agent among such Banks as nearly as possible (in multiples of $1,000,000, as the Agent may deem appropriate) in proportion to the aggregate principal amounts of such offers. Determinations by the Agent of the amounts of Money Market Loans shall be conclusive in the absence of manifest error. SECTION 2.04. Notice to Banks; Funding of Loans. (a) Upon receipt of a Notice of Borrowing, the Agent shall promptly notify each Bank of the contents thereof and of such Bank's share (if any) of such Borrowing and such Notice of Borrowing shall not thereafter be revocable by the Borrower. (b) Not later than 1:00 P.M. (New York City time) on the date of each Borrowing, each Bank participating therein shall (except as provided in subsection (c) of this Section) make available its share of such Borrowing, in Federal or other funds immediately available in New York City, to the Agent at its address referred to in Section 10.01. Unless any applicable condition specified in Article 3 has not been satisfied, as determined by the Agent in accordance with Article 3, the Agent will make the funds so received from the Banks immediately available to the Borrower at the Agent's aforesaid address. (c) If any Bank makes a new Loan hereunder to the Borrower on a day on which the Borrower is to repay all or any part of an outstanding Loan from such Bank, such Bank shall apply the proceeds of its new Loan to make such repayment and only an amount equal to the difference (if any) between the amount being borrowed by the Borrower and the amount being repaid shall be made available by such Bank to the Agent as provided in subsection (b) of this Section, or remitted by the Borrower to the Agent as provided in Section 2.12, as the case may be. (d) Unless the Agent shall have received notice from a Bank prior to the date of any Borrowing (or, in the case of a Base Rate Borrowing, prior to Noon (New York City time) on the date of such Borrowing) that such Bank will not make available to the Agent such Bank's share of such Borrowing, the Agent may assume that such Bank has made such share available to the Agent on the date of 19 such Borrowing in accordance with subsections (b) and (c) of this Section 2.04 and the Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Bank shall not have so made such share available to the Agent, such Bank and the Borrower severally agree to repay to the Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Agent, at (i) in the case of the Borrower, a rate per annum equal to the higher of the Federal Funds Rate and the interest rate applicable thereto pursuant to Section 2.07 and (ii) in the case of such Bank, the Federal Funds Rate. If such Bank shall repay to the Agent such corresponding amount, such amount so repaid shall constitute such Bank's Loan included in such Borrowing for purposes of this Agreement. If the Borrower shall have repaid such corresponding amount of such Bank, such Bank shall reimburse the Borrower for any loss on account thereof incurred by the Borrower. SECTION 2.05. Notes. (a) The Loans of each Bank to the Borrower shall be evidenced by a single Note of the Borrower payable to the order of such Bank for the account of its Applicable Lending Office, unless such Bank requests otherwise, in an amount equal to the aggregate unpaid principal amount of such Bank's Loans to the Borrower. (b) Each Bank may, by notice to the Borrower and the Agent, request that its Loans of a particular type to the Borrower be evidenced by a separate Note of the Borrower in an amount equal to the aggregate unpaid principal amount of such Loans. Each such Note shall be in substantially the form of Exhibit A hereto with appropriate modifications to reflect the fact that it evidences solely Loans of the relevant type. Each reference in this Agreement to a "Note" or the "Notes" of such Bank shall be deemed to refer to and include any or all of such Notes, as the context may require. (c) Upon receipt of each Bank's Note pursuant to Section 3.01, the Agent shall forward such Note to such Bank. Each Bank shall record the date, amount and type of each Loan made by it to the Borrower and the date and amount of each payment of principal made with respect thereto, and may, if such Bank so elects in connection with any transfer or enforcement of its Note of the Borrower, endorse on the schedule forming a part thereof appropriate notations to evidence the foregoing information with respect to each such Loan to the Borrower then outstanding; provided that the failure of any Bank to make any such recordation or endorsement shall not affect the obligations of the Borrower hereunder or under the Notes. Each Bank is hereby irrevocably authorized by the 20 Borrower so to endorse its Notes and to attach to and make a part of any Note a continuation of any such schedule as and when required. SECTION 2.06. Maturity of Loans. Each Loan by a Bank included in any Borrowing made pursuant to Section 2.01(a) shall mature, and the principal amount thereof shall be due and payable, together with accrued interest thereon, on the Termination Date for such Bank. Each Loan included in any Borrowing made pursuant to Section 2.03 shall mature, and the principal amount thereof shall be due and payable, together with accrued interest thereon, on the last day of the Interest Period applicable thereto. SECTION 2.07. Interest Rates. (a) Each Domestic Loan shall bear interest on the outstanding principal amount thereof, for each day from the date such Loan is made until it becomes due, at a rate per annum equal to the Base Rate for such day. Such interest shall be payable quarterly in arrears on the last day of each calendar quarter and, with respect to the principal amount of any Domestic Loan converted to a Euro-Dollar Loan, on each date a Domestic Loan is so converted. Any overdue principal of or interest on any Domestic Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 2% plus the rate otherwise applicable to Domestic Loans for such day. (b) Each Euro-Dollar Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the sum of the Euro-Dollar Margin plus the applicable Adjusted London Interbank Offered Rate. Such interest shall be payable for each Interest Period on the last day thereof and, if such Interest Period is longer than three months, at intervals of three months after the first day thereof. The "Adjusted London Interbank Offered Rate" applicable to any Interest Period means a rate per annum equal to the quotient obtained (rounded upward, if necessary, to the next higher 1/100 of 1%) by dividing (i) the applicable London Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar Reserve Percentage. "Euro-Dollar Margin" means a rate per annum determined in accordance with the Pricing Schedule. The "London Interbank Offered Rate" applicable to any Interest Period means the average (rounded upward, if necessary, to the next higher 1/16 of 1%) of the respective rates per annum at which deposits in dollars are offered to each of the Euro-Dollar Reference Banks in the London interbank market at approximately 11:00 A.M. (London time) two Euro-Dollar Business Days before the first day of such Interest Period in an amount approximately equal to the 21 principal amount of the Euro-Dollar Loan of such Euro-Dollar Reference Bank to which such Interest Period is to apply and for a period of time comparable to such Interest Period. "Euro-Dollar Reserve Percentage" means for any day that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement for a member bank of the Federal Reserve System in New York City with deposits exceeding five billion dollars in respect of "Eurocurrency liabilities" (or in respect of any other category of liabilities which includes deposits by reference to which the interest rate on Euro-Dollar Loans is determined or any category of extensions of credit or other assets which includes loans by a non-United States office of any Bank to United States residents). The Adjusted London Interbank Offered Rate shall be adjusted automatically on and as of the effective date of any change in the Euro-Dollar Reserve Percentage. (c) Any overdue principal of or interest on any Euro-Dollar Loan shall bear interest, payable on demand, for each day from and including the date payment thereof was due to but excluding the date of actual payment, at a rate per annum equal to the sum of 2% plus the higher of (i) the Euro-Dollar Margin plus the quotient obtained (rounded upward, if necessary, to the next higher 1/100 of 1%) by dividing (x) the average (rounded upward, if necessary, to the next higher 1/16 of 1%) of the respective rates per annum at which one day (or, if such amount due remains unpaid more than three Euro-Dollar Business Days, then for such other period of time not longer than six months as the Agent may select) deposits in dollars in an amount approximately equal to such overdue payment due to each of the Euro-Dollar Reference Banks are offered to such Euro-Dollar Reference Bank in the London interbank market for the applicable period determined as provided above by (y) 1.00 minus the Euro-Dollar Reserve Percentage (or, if the circumstances described in clause (a) or (b) of Section 8.01 shall exist, at a rate per annum equal to the sum of 2% plus the rate applicable to Domestic Loans for such day) and (ii) the sum of the Euro-Dollar Margin plus the Adjusted London Interbank Offered Rate applicable to such Loan at the date such payment was due. (d) Subject to Section 8.01, each Money Market LIBOR Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the sum of the London Interbank Offered Rate for such Interest Period (determined in accordance with Section 2.07 as if the related Money Market LIBOR Borrowing were a Committed Euro-Dollar Borrowing) plus (or minus) the Money Market Margin quoted by the Bank 23 making such Loan in accordance with Section 2.03. Each Money Market Absolute Rate Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the Money Market Absolute Rate quoted by the Bank making such Loan in accordance with Section 2.03. Such interest shall be payable for each Interest Period on the last day thereof and, if such Interest Period is longer than three months, at intervals of three months after the first day thereof. Any overdue principal of or interest on any Money Market Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 2% plus the Base Rate for such day. (e) The Agent shall determine each interest rate applicable to the Loans hereunder. The Agent shall give prompt notice to the Borrower and the participating Banks of each rate of interest so determined, and its determination thereof shall be conclusive in the absence of manifest error. (f) Each Euro-Dollar Reference Bank agrees to use its best efforts to furnish quotations to the Agent as contemplated hereby. If any Euro-Dollar Reference Bank does not furnish a timely quotation, the Agent shall determine the relevant interest rate on the basis of the quotation or quotations furnished by the remaining Euro-Dollar Reference Bank or Banks or, if none of such quotations is available on a timely basis, the provisions of Section 8.01 shall apply. SECTION 2.08. Facility Fees. The Company shall pay to the Agent for the account of the Banks ratably a facility fee at the Facility Fee Rate (determined daily in accordance with the Pricing Schedule). Such facility fee shall accrue (i) from and including the Effective Date to but excluding the Termination Date (or earlier date of termination of the Commitments in their entirety), on the daily average aggregate amount of the Commitments (whether used or unused) and (ii) from and including the Termination Date (or earlier date of termination of the Commitments in their entirety) to but excluding the date the Loans shall be repaid in their entirety, on the daily average aggregate outstanding principal amount of the Loans. Accrued facility fees shall be payable quarterly in arrears on the last day of each calendar quarter and upon the date of termination of the Commitments in their entirety (and, if later, the date the Loans shall be repaid in their entirety). "Facility Fee Rate" means a rate per annum determined in accordance with the Pricing Schedule. SECTION 2.09. Termination or Reduction of Commitments. (a) During the Revolving Credit Period, the Company may, upon at least three Domestic 23 Business Days' notice to the Agent, (i) terminate the Commitments at any time, if no Loans are outstanding at such time or (ii) ratably reduce from time to time by an aggregate amount of $25,000,000 or any larger multiple of $5,000,000, the aggregate amount of the Commitments in excess of the aggregate outstanding principal amount of the Loans. (b) If the Separation has not been consummated on or before November 8, 1998, the Commitments shall be ratably reduced by 50% on the next succeeding Domestic Business Day. SECTION 2.10. Method of Electing Interest Rates. (a) The Loans included in each Committed Borrowing shall bear interest initially at the type of rate specified by the Borrower in the applicable Notice of Committed Borrowing. Thereafter, the Borrower may from time to time elect to change or continue the type of interest rate borne by each Group of Loans (subject in each case to the provisions of Article 8), as follows: (i) if such Loans are Domestic Loans, the Borrower may elect to convert such Loans to Euro-Dollar Loans as of any Euro-Dollar Business Day; (ii) if such Loans are Euro-Dollar Loans, the Borrower may elect to convert such Loans to Domestic Loans or elect to continue such Loans as Euro-Dollar Loans for an additional Interest Period, in each case effective on the last day of the then current Interest Period applicable to such Loans. Each such election shall be made by delivering a notice (a "Notice of Interest Rate Election") to the Agent at least three Euro-Dollar Business Days before the conversion or continuation selected in such notice is to be effective. A Notice of Interest Rate Election may, if it so specifies, apply to only a portion of the aggregate principal amount of the relevant Group of Loans; provided that (i) such portion is allocated ratably among the Loans comprising such Group and (ii) the portion to which such Notice applies, and the remaining portion to which it does not apply, are each $25,000,000 or any larger multiple of $5,000,000. (b) Each Notice of Interest Rate Election shall specify: (i) the Group of Loans (or portion thereof) to which such notice applies; 24 (ii) the date on which the conversion or continuation selected in such notice is to be effective, which shall comply with the applicable clause of subsection (a) above; (iii) if the Loans comprising such Group are to be converted, the new type of Loans and, if such new Loans are Euro-Dollar Loans, the duration of the initial Interest Period applicable thereto; and (iv) if such Loans are to be continued as Euro-Dollar Loans for an additional Interest Period, the duration of such additional Interest Period. Each Interest Period specified in a Notice of Interest Rate Election shall comply with the provisions of the definition of Interest Period. (c) Upon receipt of a Notice of Interest Rate Election from the Borrower pursuant to subsection (a) above, the Agent shall promptly notify each Bank of the contents thereof and such notice shall not thereafter be revocable by such Borrower. If the Borrower fails to deliver a timely Notice of Interest Rate Election to the Agent for any Group of Euro-Dollar Loans, such Loans shall be converted into Domestic Loans on the last day of the then current Interest Period applicable thereto. SECTION 2.11. Prepayments. (a) Subject in the case of any Euro-Dollar Loans to Section 2.13, the Borrower may, upon at least one Domestic Business Day's notice to the Agent, prepay the Group of Domestic Loans (or any Money Market Borrowing bearing interest at the Base Rate pursuant to Section 8.01(a)), or, upon three Euro-Dollar Business Days' notice to the Agent, prepay any Group of Euro-Dollar Loans, in each case in whole at any time, or from time to time in part in amounts aggregating $25,000,000 or any larger multiple of $5,000,000, by paying the principal amount to be prepaid together with accrued interest thereon to the date of prepayment. (b) Except as provided in subsection (a) above, the Borrower may not prepay all or any portion of the principal amount of any Money Market Loan prior to the maturity thereof. (c) Upon receipt of a notice of prepayment pursuant to this Section, the Agent shall promptly notify each Bank of the contents thereof and of such Bank's ratable share (if any) of such prepayment and such notice shall not thereafter be revocable by the Borrower. Each such prepayment shall be applied to prepay 25 ratably the Loans of the several Banks included in the relevant Group or Borrowing. (d) On the date of any reduction of Commitments pursuant to Section 2.09(b), the Borrower shall repay such principal amount (together with accrued interest thereon) of outstanding Loans, if any, as may be necessary so that after such repayment (i) the aggregate outstanding principal amount of each Bank's Committed Loans does not exceed the amount of such Bank's Commitment as then reduced, and (ii) the aggregate unpaid principal amount of all outstanding Loans does not exceed the aggregate amount of the Commitments as then reduced. Any such prepayment shall be made in accordance with all applicable provisions of this Agreement (including without limitation subsections (a) (other than as to amount), (b) and (c) of this Section 2.11). SECTION 2.12. General Provisions as to Payments. (a) The Borrower shall make each payment of principal of, and interest on, the Loans and of fees and other amounts payable hereunder, not later than 12:00 Noon (New York City time) on the date when due, in Federal or other funds immediately available in New York City, without off set or counterclaim, to the Agent at its address referred to in Section 10.01. The Agent will promptly distribute to each Bank its ratable share of each such payment received by the Agent for the account of the Banks. Whenever any payment of principal of, or interest on, the Domestic Loans or of fees or other amounts payable hereunder shall be due on a day which is not a Domestic Business Day, the date for payment thereof shall be extended to the next succeeding Domestic Business Day. Whenever any payment of principal of, or interest on, the Euro-Dollar Loans shall be due on a day which is not a Euro-Dollar Business Day, the date for payment thereof shall be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case the date for payment thereof shall be the next preceding Euro-Dollar Business Day. Whenever any payment of principal of, or interest on, the Money Market Loans shall be due on a day which is not a Euro-Dollar Business Day, the date for payment thereof shall be extended to the next succeeding Euro-Dollar Business Day. If the date for any payment of principal is extended by operation of law or otherwise, interest thereon shall be payable for such extended time. (b) Unless the Agent shall have received notice from the Borrower prior to the date on which any payment is due from the Borrower to the Banks hereunder that the Borrower will not make such payment in full, the Agent may assume that the Borrower has made such payment in full to the Agent on such date and the Agent may, in reliance upon such assumption, cause to be distributed to each Bank on such due date an amount equal to the amount then due such 26 Bank. If and to the extent that the Borrower shall not have so made such payment, each Bank shall repay to the Agent forthwith on demand such amount distributed to such Bank together with interest thereon, for each day from the date such amount is distributed to such Bank until the date such Bank repays such amount to the Agent, at the Federal Funds Rate. SECTION 2.13. Funding Losses. If the Borrower makes any payment of principal with respect to any Fixed Rate Loan or any Fixed Rate Loan is converted to a Domestic Loan (pursuant to Article 2, 6 or 8 or otherwise) on any day other than the last day of an Interest Period applicable thereto, or the last day of an applicable period fixed pursuant to Section 2.07(c), or if the Borrower fails to borrow, convert, continue or prepay any Fixed Rate Loans after notice has been given to any Bank in accordance with Section 2.04(a), 2.10(c) or 2.11(c), the Company shall reimburse each Bank within 15 days after demand for any resulting loss or expense incurred by it (or by an existing or prospective Participant in the related Loan), including (without limitation) any loss incurred in obtaining, liquidating or employing deposits from third parties, but excluding loss of margin for the period after any such payment or conversion or failure to borrow or prepay, provided that such Bank shall have delivered to the Company a certificate as to the amount of such loss or expense, which certificate shall be conclusive in the absence of manifest error. SECTION 2.14. Computation of Interest and Fees. Interest based on the Prime Rate hereunder shall be computed on the basis of a year of 365 days (or 366 days in a leap year) and paid for the actual number of days elapsed (including the first day but excluding the last day). All other interest and fees hereunder shall be computed on the basis of a year of 360 days and paid for the actual number of days elapsed (including the first day but excluding the last day). SECTION 2.15. Change of Control. If a Change of Control shall occur, the Company will, within ten days after the occurrence thereof, give each Bank notice thereof, which notice shall describe in reasonable details the facts and circumstances giving rise thereto and shall specify an Optional Termination Date for purposes of this Section (the "Optional Termination Date") which date shall not be less than 30 nor more than 60 days after the date of such notice. Each Bank may, by notice to the Company and the Agent given not less than three Domestic Business Days prior to the Optional Termination Date, terminate its Commitment (if any), which shall thereupon be terminated, and declare the Note held by it (together with accrued interest thereon) and any other amounts payable hereunder for its account to be, and such Note and such other amounts shall thereupon become, due and payable without presentment, demand, protest or 27 other notice of any kind, all of which are hereby waived by the Company and the Borrower, in each case effective on the Optional Termination Date. A "Change of Control" shall occur if any person or group of persons (within the meaning of Section 13 or 14 of the Securities Exchange Act of 1934, as amended) shall have acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated by the Securities and Exchange Commission under said Act) of 30% or more of the outstanding shares of common stock of the Company; or, during any period of twelve consecutive calendar months, individuals who were directors of the Company on the first day of such period shall cease to constitute a majority of the board of directors of the Company. The Separation shall not constitute a Change of Control. ARTICLE 3 CONDITIONS SECTION 3.01. Closing. The closing hereunder shall occur upon receipt by the Agent of the following (in the case of any document, dated the Closing Date unless otherwise indicated): (a) a duly executed Note of the Borrower for the account of each Bank dated on or before the Closing Date complying with the provisions of Section 2.05; (b) an opinion of Thomas O. McGimpsey, Esq., counsel for the Company and the Borrower, substantially in the form of Exhibit E hereto and covering such additional matters relating to the transactions contemplated hereby as the Required Banks may reasonably request; (c) an opinion of Davis Polk & Wardwell, special counsel for the Agent, substantially in the form of Exhibit F hereto and covering such additional matters relating to the transactions contemplated hereby as the Required Banks may reasonably request; (d) evidence satisfactory to the Agent that the commitments under the Existing Credit Agreements have been terminated and that the principal and interest on all loans and accrued fees outstanding thereunder have been paid in full; (e) evidence satisfactory to the Agent of the payment of all fees and other amounts payable to the Agent for the account of the Banks or the Agent on or prior to the Closing Date, including, to the extent invoiced, reimbursement of all out-of-pocket expenses (including, without limitation, legal fees and expenses) required to be reimbursed or paid by the Borrower or the Company hereunder; and (f) all documents the Agent may reasonably request relating to the existence of the Company and the Borrower, the corporate authority for and the validity of this Agreement and the Notes, and any other matters relevant hereto, all in form and substance satisfactory to the Agent. The Agent shall promptly notify the Company and the Banks of the Closing Date, and such notice shall be conclusive and binding on all parties hereto. SECTION 3.02. All Borrowings. The obligation of any Bank to make a Loan on the occasion of any Borrowing is subject to the satisfaction of the following conditions: (a) the fact that the Closing Date shall have occurred on or prior to May 30, 1998; (b) receipt by the Agent of a Notice of Borrowing as required by Section 2.02 or 2.03, as the case may be; (c) the fact that, immediately before and after such Borrowing, the aggregate outstanding principal amount of the Loans will not exceed the aggregate amount of the Commitments; (d) the fact that, immediately before and after such Borrowing, no Default shall have occurred and be continuing; and (e) the fact that the representations and warranties contained in this Agreement shall be true on and as of the date of such Borrowing (except, in the case of the representations and warranties contained in Section 4.04(b), as disclosed by the Borrower to the Banks in writing in the Notice of Borrowing relating to such Borrowing). Each Borrowing hereunder shall be deemed to be a representation and warranty by the Borrower on the date of such Borrowing as to the facts specified in clauses (c), (d) and (e) of this Section. 29 SECTION 3.03. Loans after Separation. The obligation of any Bank to make or maintain a Loan after the Separation is subject to receipt by the Agent of the following documents, each dated or effective on the date of consummation of the Separation: (a) an instrument, satisfactory in form and substance to the Agent, and duly executed and delivered by USW-C, Inc. pursuant to which USW-C, Inc. (to be renamed U S WEST, Inc.) assumes the obligations of U S WEST, Inc. (to be renamed MediaOne Group, Inc.) under this Agreement; (b) evidence satisfactory to it that the Separation has been consummated substantially on the terms described in the Proxy Statement; (c) an opinion of Thomas O. McGimpsey, Esq., counsel for USW-C, Inc., substantially in the form of Exhibit E hereto with such modifications as are acceptable to the Agent and covering such additional matters relating to the transactions contemplated hereby as the Required Banks may reasonably request; and (d) all documents the Agent may reasonably request relating to the existence of USW-C, Inc., the corporate authority for and the validity of this Agreement and the Notes, and any other matters relevant hereto, all in form and substance satisfactory to the Agent. The Agent shall promptly notify the Company and the Banks of the satisfaction of the foregoing conditions. ARTICLE 4 REPRESENTATIONS AND WARRANTIES Each of the Company and the Borrower represents and warrants that: SECTION 4.01. Corporate Existence and Power. Each of the Company and the Borrower is a corporation duly incorporated, validly existing and in good standing under the laws of the state of its incorporation, and has all corporate powers and all material governmental licenses, authorizations, qualifications, consents and approvals required to carry on its business as now conducted. 30 SECTION 4.02. Corporate and Governmental Authorization; No Contravention. The execution, delivery and performance by the Company and the Borrower of this Agreement and by the Borrower of the Notes are within such Person's corporate powers, have been duly authorized by all necessary corporate action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate of incorporation or by-laws of such Person or of any agreement, judgment, injunction, order, decree or other instrument binding upon such Person or any Significant Subsidiary or result in the creation or imposition of any Lien on any material asset of such Person or any Significant Subsidiary. SECTION 4.03. Binding Effect. This Agreement constitutes a valid and binding agreement of the Company and the Borrower, and the Notes, when executed and delivered in accordance with this Agreement, will constitute valid and binding obligations of the Borrower, in each case enforceable in accordance with its terms except as the same may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and by general principles of equity. SECTION 4.04. Financial Information. (a) The consolidated balance sheet of the Company and its Consolidated Subsidiaries as of December 31, 1997 and the related consolidated statements of income and cash flows for the fiscal year then ended, reported on by Arthur Andersen L.L.P. and set forth in the Company's 1997 Form 10-K, a copy of which has been delivered to each of the Banks, fairly present, in conformity with generally accepted accounting principles, the consolidated financial position of the Company and its Consolidated Subsidiaries as of such date and their consolidated results of operations and cash flows for such fiscal year. (b) Since December 31, 1997 there has been no material adverse change in the financial position or results of operations of the Company and its Consolidated Subsidiaries, considered as a whole (it being understood that the consummation of the Separation shall not be considered such a change). SECTION 4.05. Litigation. Except as disclosed in the Company's 1997 Form 10-K, there is no action, suit or proceeding pending against, or to the knowledge of the Company threatened against or affecting, the Company or any of its Subsidiaries before any court or arbitrator or any governmental body, agency or official in which there is a reasonable possibility of an adverse decision which would materially adversely affect the consolidated financial position or 31 consolidated results of operations of the Company and its Consolidated Subsidiaries, considered as a whole, or which in any manner draws into question the validity of this Agreement or the Notes. SECTION 4.06. Compliance with ERISA. Each member of the ERISA Group has fulfilled its obligations under the minimum funding standards of ERISA and the Internal Revenue Code with respect to each Plan and is in compliance in all respects with the presently applicable provisions of ERISA and the Internal Revenue Code with respect to each Plan, except where failure to comply would not have a material adverse effect on the consolidated financial position or consolidated results of operations of the Company and its Consolidated Subsidiaries, considered as a whole. No member of the ERISA Group has (i) sought a waiver of the minimum funding standard under Section 412 of the Internal Revenue Code in respect of any Plan, (ii) failed to make any contribution or payment to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement, which has resulted or could result in the imposition of a Lien or the posting of a bond or other security under ERISA or the Internal Revenue Code or (iii) incurred any liability under Title IV of ERISA other than a liability to the PBGC for premiums under Section 4007 of ERISA. SECTION 4.07. Environmental Matters. (a) The operations of the Company and each of its Subsidiaries comply in all respects with all Environmental Laws except such non-compliance which would not (if enforced in accordance with applicable law) reasonably be expected to result, individually or in the aggregate, in a material adverse effect on the financial position or results of operations of the Company and its Consolidated Subsidiaries, considered as a whole. (b) Except as specifically identified in Schedule 4.07, the Company and each of its Subsidiaries have obtained all material licenses, permits, authorizations and registrations required under any Environmental Laws ("Environmental Permits") necessary for their respective operations, and all such Environmental Permits are in good standing, and the Company and each of its Subsidiaries is in compliance with all material terms and conditions of such Environmental Permits. (c) Except as specifically identified in Schedule 4.07, (i) none of the Company, any of its Subsidiaries or any of their present property or operations are subject to any outstanding written order from or settlement or consent agreement with any governmental authority or other Person, nor is any of the foregoing subject to any judicial or docketed administrative proceedings, respecting any Environmental Laws or Hazardous Substances with a potential liability in excess of $1,000,000 and (ii) there are no other conditions or circumstances known to the 32 Company which may give rise to any claims respecting any Environmental Laws arising from the operations of the Company or its Subsidiaries (including, without limitation, off-site liabilities), or any additional costs of compliance with Environmental Laws, that would reasonably be expected to have a material adverse effect on the financial position or results of operations of the Company and its Subsidiaries, considered as a whole. SECTION 4.08. Taxes. United States Federal income tax returns of the Company and its Subsidiaries have been examined and closed through the fiscal year ended December 31, 1987. The Company and its Subsidiaries have filed all United States Federal income tax returns and all other material tax returns which are required to be filed by them and have paid all taxes due pursuant to such returns or pursuant to any assessment received by the Company or any Subsidiary, except for taxes the amount, applicability or validity of which is being contested in good faith by appropriate proceedings. The charges, accruals and reserves on the books of the Company and its Subsidiaries in respect of taxes or other governmental charges are, in the opinion of the Company, adequate. SECTION 4.09. Subsidiaries. Each of the Company's corporate Significant Subsidiaries (including, but not limited to, the Borrower) is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation, and has all corporate powers and all material governmental licenses, authorizations, qualifications, consents and approvals required to carry on its business as now conducted. SECTION 4.10. Not an Investment Company. Neither the Company nor the Borrower is an "investment company" within the meaning of the Investment Company Act of 1940, as amended. SECTION 4.11. Full Disclosure. All written information heretofore furnished by the Company or the Borrower to the Agent or any Bank for purposes of or in connection with this Agreement or any transaction contemplated hereby is, and all such information hereafter furnished by the Company or the Borrower to the Agent or any Bank will be, true and accurate in all material respects on the date as of which such information is stated or certified. ARTICLE 5 COVENANTS 33 The Company agrees that, so long as any Bank has any Commitment hereunder or any amount payable under any Note remains unpaid: SECTION 5.01. Information. The Company will deliver to each of the Banks: (a) as soon as available and in any event within 95 days after the end of each fiscal year of the Company, a consolidated balance sheet of the Company and its Consolidated Subsidiaries as of the end of such fiscal year and the related consolidated statements of income and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on in a manner acceptable to the Securities and Exchange Commission by Arthur Andersen L.L.P. or other independent public accountants of nationally recognized standing; (b) as soon as available and in any event within 50 days after the end of each of the first three quarters of each fiscal year of the Company, a consolidated balance sheet of the Company and its Consolidated Subsidiaries as of the end of such quarter and the related consolidated statements of income and cash flows for such quarter and for the portion of the Company's fiscal year ended at the end of such quarter, setting forth in the case of such statements of income and cash flows in comparative form the figures for the corresponding quarter and the corresponding portion of the Company's previous fiscal year, all certified (subject to normal year-end adjustments) as to fairness of presentation, generally accepted accounting principles and consistency by the chief financial officer or the chief accounting officer of the Company; (c) simultaneously with the delivery of each set of financial statements referred to in clauses (a) and (b) above, a certificate of the chief financial officer (or such officer's designee, designated in writing by such officer) or the chief accounting officer of the Company (i) setting forth in reasonable detail the calculations required to establish whether the Company was in compliance with the requirements of Sections 5.06 to 5.08, inclusive, on the date of such financial statements and (ii) stating whether any Default exists on the date of such certificate and, if any Default then exists, setting forth the details thereof and the action which the Company is taking or proposes to take with respect thereto; (d) within five Domestic Business Days after any officer of the Company or the Borrower obtains knowledge of any Default, if such Default is then continuing, a certificate of the chief financial officer or the chief accounting officer of the Company or the Borrower setting forth the details thereof and the 34 action which the Company or the Borrower is taking or proposes to take with respect thereto; (e) promptly upon the mailing thereof to the shareholders of the Company generally, copies of all financial statements, reports and proxy statements so mailed; (f) promptly upon the filing thereof, copies of all registration statements (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their equivalents) (other than any amendment on Form 8-K the sole purpose of which is to file exhibits relating to existing Debt meeting the requirements of clause (ii) of the definition of Debt) which the Company shall have filed with the Securities and Exchange Commission; (g) if and when any member of the ERISA Group (i) gives or is required to give notice to the PBGC of any "reportable event" (as defined in Section 4043 of ERISA) with respect to any Plan which might constitute grounds for a termination of such Plan under Title IV of ERISA, or knows that the plan administrator of any Plan has given or is required to give notice of any such reportable event, a copy of the notice of such reportable event given or required to be given to the PBGC; (ii) receives notice of complete or partial withdrawal liability under Title IV of ERISA or notice that any Multiemployer Plan is in reorganization, is insolvent or has been terminated, a copy of such notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent to terminate, impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of such notice; (iv) applies for a waiver of the minimum funding standard under Section 412 of the Internal Revenue Code, a copy of such application; (v) gives notice of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of such notice and other information filed with the PBGC; (vi) gives notice of withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such notice; or (vii) fails to make any payment or contribution to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement or makes any amendment to any Plan or Benefit Arrangement which has resulted or could result in the imposition of a Lien or the posting of a bond or other security, a certificate of the chief financial officer or the chief accounting officer of the Company setting forth details as to such occurrence and action, if any, which the Company or applicable member of the ERISA Group is required or proposes to take; and 35 (h) from time to time such additional information regarding the financial position or business of the Company and its Subsidiaries and the Borrower and its Subsidiaries as the Agent, at the request of any Bank, may reasonably request. SECTION 5.02. Maintenance of Property; Insurance. (a) The Company will keep, and will cause each Significant Subsidiary to keep, all property useful and necessary in its business in good working order and condition, ordinary wear and tear excepted. (b) The Company will maintain, and will cause each Significant Subsidiary to maintain (either in the name of the Borrower or in such Significant Subsidiary's own name), with financially sound and responsible insurance companies, insurance on all their respective properties in at least such amounts and against at least such risks (and with such risk retention) as are usually insured against in the same general area by companies of established repute engaged in the same or a similar business; and will furnish to the Banks, upon request from the Agent, information presented in reasonable detail as to the insurance so carried; provided that, in lieu of any such insurance, the Company and any Significant Subsidiary may maintain a system or systems of self-insurance and reinsurance which will accord with sound practices of similarly situated corporations maintaining such systems and with respect to which the Company or such Significant Subsidiary will maintain adequate insurance reserves, all in accordance with generally accepted accounting principles and in accordance with sound insurance principles and practice. SECTION 5.03. Maintenance of Existence. The Company will, and will cause each Significant Subsidiary to, preserve, renew and keep in full force and effect their respective corporate existence and their respective rights, privileges and franchises necessary or desirable in the normal conduct of business; provided that nothing in this Section 5.03 shall prohibit or interfere with the Company's publicly announced strategy to discontinue or dispose of in one or more transactions the financial services businesses of it or of any of its Subsidiaries. SECTION 5.04. Compliance with Laws. The Company will comply, and will cause each Significant Subsidiary to comply, in all material respects with all applicable laws, ordinances, rules, regulations, and requirements of governmental authorities (including, without limitation, Environmental Laws and ERISA and the rules and regulations thereunder), except where the necessity of compliance therewith is contested in good faith by appropriate proceedings and for which adequate reserves in conformity with generally accepted accounting principles have been established. 36 SECTION 5.05. Inspection of Property, Books and Records. The Company will keep, and will cause each Significant Subsidiary to keep, proper books of record and account in which full, true and correct entries shall be made of all dealings and transactions in relation to its business and activities; and will permit, and will cause each Significant Subsidiary to permit, representatives of any Bank at such Bank's expense to visit and inspect any of their respective properties, to examine and make abstracts from any of their respective books and records and to discuss their respective affairs, finances and accounts with their respective officers, employees and independent public accountants, all at such reasonable times and as often as may reasonably be desired. SECTION 5.06. Subsidiary Debt. (a) Prior to the Separation, total debt of all Consolidated Subsidiaries (excluding Debt of a Consolidated Subsidiary to the Company or to a Wholly-Owned Consolidated Subsidiary) ("Subsidiary Debt") will at no time exceed 250% of Consolidated Net Worth. (b) After the Separation, Subsidiary Debt as of the last day of any fiscal quarter of the Company ending during any period set forth below will not exceed the percentage of Consolidated EBITDA for the four consecutive fiscal quarters of the Company ending on such date set forth below opposite such period; provided that in the case of any four fiscal quarter period ending prior to the first anniversary of the Separation, Consolidated EBITDA for such period shall equal Consolidated EBITDA for each fiscal quarter (a "Relevant Quarter") beginning after the Separation and ending on or prior to the last day of such period, multiplied by a fraction, the numerator of which is four and the denominator of which is the number of Relevant Quarters. Period Percentage Prior to December 31, 1999 150% December 31, 1999- December 30, 2000 140% December 31, 2000- December 30, 2001 130% On or after December 31, 2001 125% (c) For purposes of this Section, any preferred stock of a Consolidated Subsidiary other than the Borrower which is held by a Person other than the Company or a Wholly-Owned Consolidated Subsidiary shall be included, at the 37 higher of its voluntary or involuntary liquidation value, in the Debt of such Consolidated Subsidiary. SECTION 5.07. Debt Coverage. (a) Prior to the Separation, consolidated Debt of the Company and its Consolidated Subsidiaries will at all times be less than 70% of the sum of consolidated Debt of the Company and its Consolidated Subsidiaries and consolidated shareowners' equity of the Company and its Consolidated Subsidiaries. (b) After the Separation, consolidated Debt of the Company and its Consolidated Subsidiaries as of the last day of any fiscal quarter of the Company will not exceed 400% of Consolidated EBITDA for the four consecutive fiscal quarters of the Company ending on such date; provided that in the case of any four fiscal quarter period ending prior to the first anniversary of the Separation, Consolidated EBITDA for such period shall equal Consolidated EBITDA for each fiscal quarter (a "Relevant Quarter") beginning after the Separation and ending on or prior to the last day of such period, multiplied by a fraction, the numerator of which is four and the denominator of which is the number of Relevant Quarters. SECTION 5.08. Negative Pledge. Neither the Company nor the Borrower will, and the Company will not permit any Subsidiary to, create, assume or suffer to exist any Lien on any asset now owned or hereafter acquired by it, except: (a) Liens existing on the date of this Agreement securing Debt outstanding on the date of this Agreement in an aggregate principal amount not exceeding $265,000,000; (b) any Lien existing on any asset of any corporation at the time such corporation becomes a Subsidiary and not created in contemplation of such event; (c) any Lien on any asset securing Debt incurred or assumed for the purpose of financing all or any part of the cost of acquiring such asset, provided that such Lien attaches to such asset concurrently with or within 180 days after the acquisition thereof. (d) any Lien on any asset of any corporation existing at the time such corporation is merged or consolidated with or into the Company or a Subsidiary and not created in contemplation of such event; (e) any Lien existing on any asset prior to the acquisition thereof by the Company or a Subsidiary and not created in contemplation of such acquisition; 38 (f) any Lien on assets or capital stock of Minor Subsidiaries which secures Debt of Persons which are not Consolidated Subsidiaries in which the Company or any of its Subsidiaries has made investments ("Joint Ventures"), but for the payment of which Debt no other recourse may be had to the Company or any Subsidiaries ("Limited Recourse Debt"), or any Lien on equity interests in a Joint Venture securing Limited Recourse Debt of such Joint Venture; (g) any Lien arising out of the refinancing, replacement, extension, renewal or refunding of any Debt secured by any Lien permitted by any of the foregoing clauses of this Section, provided that such Debt is not increased and is not secured by any additional assets; (h) Liens arising in the ordinary course of business which (i) do not secure Debt, (ii) do not secure any obligation in an amount exceeding $50,000,000 and (iii) do not in the aggregate materially detract from the value of its assets or materially impair the use thereof in the operation of its business; and (i) Liens not otherwise permitted by and in addition to the foregoing clauses of this Section securing Debt in an aggregate principal amount at any time outstanding not to exceed $750,000,000. SECTION 5.09. Consolidations, Mergers and Sales of Assets. The Company will not (i) consolidate with or merge into any other Person or (ii) sell, lease or otherwise transfer, directly or indirectly, all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, to any other Person. The Company will retain ownership, directly or indirectly, of at least 80% of the capital stock, and at least 80% of the voting power, of U S WEST Communications, Inc. ("Communications"), and will cause Communications to continue to own substantially all of the telecommunications assets it owns on the date of this Agreement. SECTION 5.10. Use of Proceeds. The proceeds of the Loans made under this Agreement will be used by the Borrower for general corporate purposes. None of such proceeds will be used, directly or indirectly, in violation of any applicable law or regulation, and no use of such proceeds will include any use for the purpose, whether immediate, incidental or ultimate, of buying or carrying any Margin Stock. SECTION 5.11. Year 2000 Compatibility. The Company shall take all reasonable action necessary to ensure that the computer based systems of the Company and its Subsidiaries are able to operate and effectively process data including dates on or after January 1, 2000, except that such action shall not be 39 required to the extent that the failure to take such action would not have a material adverse effect on the consolidated financial position or consolidated results of operations of the Company and its Consolidated Subsidiaries, considered as a whole. At the request of the Agent, the Company shall provide assurance reasonably acceptable to the Agent of the year 2000 compatibility of the Company and its Subsidiaries. ARTICLE 6 DEFAULTS SECTION 6.01. Events of Default. If one or more of the following events shall have occurred and be continuing: (a) any principal of any Loan shall not be paid when due, or any interest, any fees or any other amount payable hereunder shall not be paid within five days of the due date thereof; (b) the Company or the Borrower shall fail to observe or perform any covenant contained in Sections 5.06 to 5.10, inclusive; (c) the Company or the Borrower shall fail to observe or perform any covenant or agreement contained in this Agreement (other than those covered by clause (a) or (b) above) for 10 days (or, in the case of Section 5.11, 30 days) after written notice thereof has been given to the Company by the Agent at the request of any Bank; (d) any representation, warranty, certification or statement made by the Company or the Borrower in this Agreement or in any certificate, financial statement or other document delivered pursuant to this Agreement shall prove to have been incorrect in any material respect when made (or deemed made); (e) the Company or any Subsidiary shall fail to make any payment or payments, in the aggregate in excess of $100,000,000, in respect of any Material Debt when due or within any applicable grace period; (f) any event or condition shall occur which results in the acceleration of the maturity of any Material Debt; 40 (g) the Company or any Significant Subsidiary shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action to authorize or otherwise acquiesce in any of the foregoing; (h) an involuntary case or other proceeding shall be commenced against the Company or any Significant Subsidiary seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 days; or an order for relief shall be entered against the Company or any Significant Subsidiary under the federal bankruptcy laws as now or hereafter in effect; (i) any member of the ERISA Group shall fail to pay when due an amount or amounts aggregating in excess of $100,000,000 which it shall have become liable to pay under Title IV of ERISA; or notice of intent to terminate a Material Plan shall be filed under Title IV of ERISA by any member of the ERISA Group, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate, to impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be appointed to administer any Material Plan; or a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Material Plan must be terminated; or there shall occur a complete or partial withdrawal from, or a default, within the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which could cause one or more members of the ERISA Group to incur a current payment obligation in excess of $100,000,000; 41 (j) a judgment or order for the payment of money in excess of $100,000,000 shall be rendered against the Company or any Subsidiary and such judgment or order shall continue unsatisfied and unstayed for a period of 10 days; (k) the Company shall repudiate in writing any of its obligations under Article 9 or any such obligation shall be unenforceable against the Company in accordance with its terms, or the Company shall so assert in writing; (l) prior to the Separation, one or more events or conditions shall occur which result in a default under any agreement or agreements in respect of any Material Debt that is subject to the Indentures and as a consequence of such default or defaults the Company or any of its Subsidiaries shall make any payment or give or agree to give any consideration or benefit of any kind (including, without limitation, any increased compensation, prepayment, shortening of maturities, security or other credit support) to the holders of such Debt and such payment, consideration or benefit is determined by the Required Banks, after taking into account any payment, consideration or benefit made, given or agreed to be given by such holders to the Company or any of its Subsidiaries (other than a waiver of such default), to be a material benefit to the holders of such Debt; or (m) the Separation shall have occurred on terms and conditions which are not substantially the same as those set forth in the Proxy Statement; then, and in every such event, the Agent shall (i) if requested by Banks having more than 50% in aggregate amount of the Commitments, by notice to the Company terminate the Commitments and they shall thereupon terminate, and/or (ii) if requested by Banks holding Notes evidencing more than 50% in aggregate principal amount of the Loans, by notice to the Company declare the Notes (together with accrued interest thereon) to be, and the Notes shall thereupon become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Company and the Borrower; provided that in the case of any of the Events of Default specified in clause (g) or (h) above with respect to the Company or the Borrower, without any notice to the Company or the Borrower or any other act by the Agent or the Banks, the Commitments shall thereupon automatically terminate and the Notes (together with accrued interest thereon) shall become immediately due and payable without presentment, 42 demand, protest or other notice of any kind, all of which are hereby waived by the Company and the Borrower. SECTION 6.02. Notice of Default. The Agent shall give notice to the Company under Section 6.01(c) promptly upon being requested to do so by any Bank and shall thereupon notify all the Banks thereof. ARTICLE 7 THE AGENT SECTION 7.01. Appointment and Authorization. Each Bank irrevocably appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under this Agreement and the Notes as are delegated to the Agent by the terms hereof or thereof, together with all such powers as are reasonably incidental thereto. SECTION 7.02. Agent and Affiliates. Morgan Guaranty Trust Company of New York shall have the same rights and powers under this Agreement as any other Bank and may exercise or refrain from exercising the same as though it were not the Agent, and Morgan Guaranty Trust Company of New York and its affiliates may accept deposits from, lend money to, and generally engage in any kind of business with the Company, the Borrower or any Subsidiary or affiliate of the Company or the Borrower as if it were not the Agent hereunder. SECTION 7.03. Action by Agent. The obligations of the Agent hereunder are only those expressly set forth herein. Without limiting the generality of the foregoing, the Agent shall not be required to take any action with respect to any Default, except as expressly provided in Article 6. SECTION 7.04. Consultation with Experts. The Agent may consult with legal counsel (who may be counsel for the Company or the Borrower), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts. SECTION 7.05. Liability of Agent. Neither the Agent nor any of its affiliates nor any of their respective directors, officers, agents or employees shall be liable for any action taken or not taken by it in connection herewith (i) with the consent or at the request of the Required Banks or (ii) in the absence of its own gross negligence or willful misconduct. Neither the Agent nor any of its affiliates nor 43 any of their respective directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into or verify (i) any statement, warranty or representation made in connection with this Agreement or any borrowing hereunder; (ii) the performance or observance of any of the covenants or agreements of the Company or the Borrower; (iii) the satisfaction of any condition specified in Article 3, except receipt of items required to be delivered to the Agent; or (iv) the validity, effectiveness or genuineness of this Agreement, the Notes or any other instrument or writing furnished in connection herewith. The Agent shall not incur any liability by acting in reliance upon any notice, consent, certificate, statement, or other writing (which may be a bank wire, telex or similar writing) believed by it to be genuine or to be signed by the proper party or parties. SECTION 7.06. Indemnification. Each Bank shall, ratably in accordance with its Commitment, indemnify the Agent, its affiliates and their respective directors, officers, agents and employees (to the extent not reimbursed by the Company or the Borrower) against any cost, expense (including counsel fees and disbursements), claim, demand, action, loss or liability (except such as result from such indemnitees' gross negligence or willful misconduct) that such indemnitees may suffer or incur in connection with this Agreement or any action taken or omitted by such indemnitees hereunder. SECTION 7.07. Credit Decision. Each Bank acknowledges that it has, independently and without reliance upon the Agent or any other Bank, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Bank also acknowledges that it will, independently and without reliance upon the Agent or any other Bank, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking any action under this Agreement. SECTION 7.08. Successor Agent. The Agent may resign at any time by giving notice thereof to the Banks and the Company. Upon any such resignation, the Required Banks shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Required Banks, and shall have accepted such appointment, within 30 days after the retiring Agent gives notice of resignation, then the retiring Agent may, on behalf of the Banks, appoint a successor Agent (with the consent of the Company, such consent not to be unreasonably withheld), which shall be a commercial bank organized or licensed under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $400,000,000. Upon the acceptance of its appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights and duties of the 44 retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. After any retiring Agent's resignation hereunder as Agent, the provisions of this Article shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent. SECTION 7.09. Agent's Fee. The Company shall pay to the Agent for its own account fees in the amounts and at the times previously agreed upon between the Company and the Agent. ARTICLE 8 CHANGES IN CIRCUMSTANCES SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair. If on or prior to the first day of any Interest Period for any Euro- Dollar Loan or Money Market LIBOR Loan: (a) the Agent is advised by the Euro-Dollar Reference Banks that deposits in dollars (in the applicable amounts) are not being offered to the Euro- Dollar Reference Banks in the market for such Interest Period, or (b) in the case of Euro-Dollar Loans, Banks having 50% or more of the aggregate amount of the Euro-Dollar Loans advise the Agent that the Adjusted London Interbank Offered Rate as determined by the Agent will not adequately and fairly reflect the cost to such Banks of funding their Euro-Dollar Loans for such Interest Period, the Agent shall forthwith give notice thereof to the Company and the Banks, whereupon until the Agent notifies the Company that the circumstances giving rise to such suspension no longer exist, (i) the obligations of the Banks to make Euro-Dollar Loans or to convert outstanding Loans into Euro-Dollar Loans shall be suspended and (ii) each outstanding Euro-Dollar Loan shall be converted into a Domestic Loan on the last day of the then current Interest Period applicable thereto. Unless the Borrower notifies the Agent at least two Domestic Business Days before the date of any Fixed Rate Borrowing for which a Notice of Borrowing has previously been given that it elects not to borrow on such date, (i) if such Fixed Rate Borrowing is a Committed Borrowing, such Borrowing shall instead be made as a Domestic Borrowing and (ii) if such Fixed Rate Borrowing is a Money Market LIBOR Borrowing, the Money Market LIBOR Loans comprising such Borrowing 45 shall bear interest for each day from and including the first day to but excluding the last day of the Interest Period applicable thereto at the Base Rate for such day. SECTION 8.02. Illegality. If, on or after the date of this Agreement, the adoption of any applicable law, rule or regulation, or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank (or its Euro-Dollar Lending Office) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall make it unlawful or impossible for any Bank (or its Euro-Dollar Lending Office) to make, maintain or fund its Euro-Dollar Loans to the Borrower and such Bank shall so notify the Agent, the Agent shall forthwith give notice thereof to the other Banks and the Company, whereupon until such Bank notifies the Company and the Agent that the circumstances giving rise to such suspension no longer exist, the obligation of such Bank to make Euro-Dollar Loans to the Borrower, or to convert outstanding Loans into Euro-Dollar Loans, shall be suspended. Before giving any notice to the Agent pursuant to this Section, such Bank shall designate a different Euro-Dollar Lending Office if such designation will avoid the need for giving such notice and will not, in the judgment of such Bank, be otherwise disadvantageous to such Bank. If such notice is given, each Euro-Dollar Loan of such Bank then outstanding shall be converted to a Domestic Loan either (a) on the last day of the then current Interest Period applicable to such Euro-Dollar Loan if such Bank may lawfully continue to maintain and fund such Loan to such day or (b) immediately if such Bank shall determine that it may not lawfully continue to maintain and fund such Loan to such day. SECTION 8.03. Increased Cost and Reduced Return. (a) If on or after (x) the date hereof, in the case of any Committed Loan or any obligation to make Committed Loans or (y) the date of the related Money Market Quote, in the case of any Money Market Loan, the adoption of any applicable law, rule or regulation, or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank (or its Applicable Lending Office) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall impose, modify or deem applicable any reserve (including, without limitation, any such requirement imposed by the Board of Governors of the Federal Reserve System with respect to any Euro-Dollar Loan any such requirement included in an applicable Euro-Dollar Reserve Percentage), special deposit, insurance assessment or similar requirement against assets of, deposits with or for the account of, or credit extended by, any 46 Bank (or its Applicable Lending Office) or shall impose on any Bank (or its Applicable Lending Office) or on the United States market for certificates of deposit or the London interbank market any other condition affecting its Fixed Rate Loans, its Note or its obligation to make Fixed Rate Loans and the result of any of the foregoing is to increase the cost to such Bank (or its Applicable Lending Office) of making or maintaining any Fixed Rate Loan, or to reduce the amount of any sum received or receivable by such Bank (or its Applicable Lending Office) under this Agreement or under its Note with respect thereto, by an amount deemed by such Bank to be material, then, within 15 days after demand by such Bank (with a copy to the Agent), the Company shall pay to such Bank such additional amount or amounts as will compensate such Bank for such increased cost or reduction. (b) If any Bank shall have determined that, after the date hereof, the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change in any such law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on capital of such Bank (or its Parent) as a consequence of such Bank's obligations hereunder to a level below that which such Bank (or its Parent) could have achieved but for such adoption, change, request or directive (taking into consideration its policies with respect to capital adequacy) by an amount deemed by such Bank to be material, then from time to time, within 15 days after demand by such Bank (with a copy to the Agent), the Company shall pay to such Bank such additional amount or amounts as will compensate such Bank (or its Parent) for such reduction. (c) Each Bank will promptly notify the Company and the Agent of any event of which it has knowledge, occurring after the date hereof, which will entitle such Bank to compensation pursuant to this Section and will designate a different Applicable Lending Office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the judgment of such Bank, be otherwise disadvantageous to such Bank. A certificate of any Bank claiming compensation under this Section and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error. In determining such amount, such Bank may use any reasonable averaging and attribution methods. SECTION 8.04. Taxes. (a) Any and all payments by the Company or the Borrower to or for the account of any Bank or the Agent hereunder or under any 47 Note shall be made free and clear of and without deduction for any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of each Bank and the Agent, taxes imposed on its income, and franchise taxes imposed on it, by the jurisdiction under the laws of which such Bank or the Agent (as the case may be) is organized or any political subdivision thereof and, in the case of each Bank, taxes imposed on its income, and franchise or similar taxes imposed on it, by the jurisdiction of such Bank's Applicable Lending Office or any political subdivision thereof (all such non-excluded taxes, duties, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "Taxes"). If the Company or the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any Note to any Bank or the Agent, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 8.04) such Bank or the Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Person shall make such deductions, (iii) such Person shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law and (iv) such Person shall furnish to the Agent, at its address referred to in Section 10.01, the original or a certified copy of a receipt evidencing payment thereof. (b) In addition, the Company agrees to pay any present or future stamp or documentary taxes and any other excise or property taxes, or charges or similar levies which arise from any payment made hereunder or under any Note or from the execution or delivery of, or otherwise with respect to, this Agreement or any Note (hereinafter referred to as "Other Taxes"). (c) The Company agrees to indemnify each Bank and the Agent for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section 8.04) paid by such Bank or the Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be made within 15 days from the date such Bank or the Agent (as the case may be) makes demand therefor. (d) Each Bank organized under the laws of a jurisdiction outside the United States, on or prior to the date of its execution and delivery of this Agreement in the case of each Bank listed on the signature pages hereof and on or prior to the date on which it becomes a Bank in the case of each other Bank, and from time to time thereafter if requested in writing by the Company (but only so long as such Bank remains lawfully able to do so), shall provide the Company 48 with Internal Revenue Service form 1001 or 4224, as appropriate, or any successor form prescribed by the Internal Revenue Service, certifying that such Bank is entitled to benefits under an income tax treaty to which the United States is a party which reduces the rate of withholding tax on payments of interest or certifying that the income receivable pursuant to this Agreement is effectively connected with the conduct of a trade or business in the United States. If the form provided by a Bank at the time such Bank first becomes a party to this Agreement indicates a United States interest withholding tax rate in excess of zero, withholding tax at such rate shall be considered excluded from "Taxes" as defined in Section 8.04(a) imposed by the United States. (e) For any period with respect to which a Bank has failed to provide the Company with the appropriate form pursuant to Section 8.04(d) (unless such failure is due to a change in treaty, law or regulation occurring subsequent to the date on which a form originally was required to be provided), such Bank shall not be entitled to indemnification under Section 8.04(a) with respect to Taxes imposed by the United States; provided, however, that should a Bank, which is otherwise exempt from or subject to a reduced rate of withholding tax, become subject to Taxes because of its failure to deliver a form required hereunder, the Company shall take such steps as such Bank shall reasonably request to assist such Bank to recover such Taxes. (f) If the Company or the Borrower is required to pay additional amounts to or for the account of any Bank pursuant to this Section 8.04, then such Bank will change the jurisdiction of its Applicable Lending Office so as to eliminate or reduce any such additional payment which may thereafter accrue if such change, in the judgment of such Bank, is not otherwise disadvantageous to such Bank. SECTION 8.05. Domestic Loans Substituted for Affected Euro-Dollar Loans. If (i) the obligation of any Bank to make Euro-Dollar Loans to the Borrower has been suspended pursuant to Section 8.02 or (ii) any Bank has demanded compensation under Section 8.03 or 8.04 with respect to its Euro- Dollar Loans and the Borrower shall, by at least five Euro-Dollar Business Days' prior notice to such Bank through the Agent, have elected that the provisions of this Section shall apply to such Bank, then, unless and until such Bank notifies the Company that the circumstances giving rise to such suspension or demand for compensation no longer exist: (a) all Loans to the Borrower which would otherwise be made by such Bank as (or continued as or converted into) Euro-Dollar Loans shall instead be 49 Domestic Loans (on which interest and principal shall be payable contemporaneously with the related Euro-Dollar Loans of the other Banks), and (b) after each of its Euro-Dollar Loans to the Borrower has been repaid (or converted to a Domestic Loan), all payments of principal which would otherwise be applied to repay such Euro-Dollar Loans shall be applied to repay its Domestic Loans instead. If such Bank notifies the Borrower that the circumstances giving rise to such notice no longer apply, the principal amount of each such Domestic Loan shall be converted into a Euro-Dollar Loan on the first day of the next succeeding Interest Period applicable to the related Euro-Dollar Loans of the other Banks. SECTION 8.06. Substitution of Bank. If (i) the obligation of any Bank to make Euro-Dollar Loans has been suspended pursuant to Section 8.02, (ii) any Bank has demanded compensation under Section 8.03 or (iii) any Bank has not signed an amendment or waiver which must be signed by all the Banks to become effective, and such amendment or waiver has been signed by the Super-Majority Banks, the Company shall have the right, with the assistance of the Agent, to seek a mutually satisfactory substitute bank or banks (which may be one or more of the Banks) to purchase the Notes and assume the Commitment of such Bank. ARTICLE 9 GUARANTY SECTION 9.01. The Guaranty. The Company hereby unconditionally guarantees the full and punctual payment (whether at stated maturity, upon acceleration or otherwise) of the principal of and interest on each Note issued by the Borrower pursuant to this Agreement, and the full and punctual payment of all other amounts payable by the Borrower under this Agreement. Upon failure by the Borrower to pay punctually any such amount, the Company shall forthwith on demand pay the amount not so paid at the place and in the manner specified in this Agreement. SECTION 9.02. Guaranty Unconditional. The obligations of the Company hereunder shall be unconditional, irrevocable and absolute and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by: 50 (i) any extension, renewal, settlement, compromise, waiver or release in respect of any obligation of the Borrower under this Agreement or any Note, by operation of law or otherwise; (ii) any modification or amendment of or supplement to this Agreement or any Note; (iii) any release, impairment, non-perfection or invalidity of any direct or indirect security for any obligation of the Borrower under this Agreement or any Note; (iv) any change in the corporate existence, structure or ownership of the Borrower, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting the Borrower or its assets or any resulting release or discharge of any obligation of the Borrower contained in this Agreement or any Note; (v) the existence of any claim, set-off or other rights which the Company may have at any time against the Borrower, the Agent, any Bank or any other Person, whether in connection herewith or any unrelated transactions, provided that nothing herein shall prevent the assertion of any such claim by separate suit or compulsory counterclaim; (vi) any invalidity or unenforceability relating to or against the Borrower for any reason of this Agreement or any Note, or any provision of applicable law or regulation purporting to prohibit the payment by the Borrower of the principal of or interest on any Note or any other amount payable by it under this Agreement; or (vii) any other act or omission to act or delay of any kind by the Borrower, the Agent, any Bank or any other Person or any other circumstance whatsoever which might, but for the provisions of this paragraph, constitute a legal or equitable discharge of the Company's obligations hereunder. SECTION 9.03. Discharge Only upon Payment in Full; Reinstatement In Certain Circumstances. The Company's obligations hereunder shall remain in full force and effect until the Commitments shall have terminated and the principal of and interest on the Notes and all other amounts payable by the Company and the Borrower under this Agreement shall have been indefeasibly paid in full. If at any time any payment of the principal of or interest on any Note or any other amount payable by the Borrower under this Agreement is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of the Borrower or otherwise, the Company's obligations hereunder with respect to such payment shall be reinstated at such time as though such payment had been due but not made at such time. 51 SECTION 9.04. Waiver by the Company. The Company irrevocably waives acceptance hereof, presentment, demand, protest and any notice not provided for herein, as well as any requirement that at any time any action be taken by any Person against the Borrower or any other Person. SECTION 9.05. Subrogation. The Company irrevocably waives any and all rights to which it may be entitled, by operation of law or otherwise, upon making any payment hereunder to be subrogated to the rights of the payee against the Borrower with respect to such payment or against any direct or indirect security therefor, or otherwise to be reimbursed, indemnified or exonerated by or for the account of the Borrower in respect thereof. SECTION 9.06. Stay of Acceleration. In the event that acceleration of the time for payment of any amount payable by the Borrower under this Agreement or its Notes is stayed upon insolvency, bankruptcy or reorganization of the Borrower, all such amounts otherwise subject to acceleration under the terms of this Agreement shall nonetheless be payable by the Company hereunder forthwith on demand by the Agent made at the request of the Required Banks. 52 SECTION 9.07. Release upon Separation. So long as, immediately before and after the consummation of the Separation, no Default shall have occurred and be continuing, simultaneously with such consummation, USW-C, Inc. (to be renamed U S WEST, Inc.) shall succeed to all of the rights, duties and obligations of U S WEST, Inc. (to be renamed MediaOne Group, Inc.) ("Old U S WEST") hereunder, whereupon Old U S WEST shall have no further rights, duties and obligations hereunder, in each case automatically, without any further action on the part of any party hereto. ARTICLE 10 MISCELLANEOUS SECTION 10.01. Notices. All notices, requests and other communications to any party hereunder shall be in writing (including bank wire, telex, facsimile transmission or similar writing) and shall be given to such party: (x) in the case of the Company, the Borrower or the Agent, at its address or facsimile number set forth on the signature pages hereof, (y) in the case of any Bank, at its address or facsimile number set forth in its Administrative Questionnaire or (z) in the case of any party, such other address or facsimile number as such party may hereafter specify for the purpose by notice to the Agent and the Company. Each such notice, request or other communication shall be effective (i) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid, (ii) if given by facsimile transmission, when such facsimile is transmitted to the facsimile number specified pursuant to this Section 10.01 and telephonic confirmation of receipt thereof is received, or (iii) if given by any other means, when delivered at the address specified in this Section; provided that notices to the Agent under Article 2 or Article 8 shall not be effective until received. SECTION 10.02. No Waivers. No failure or delay by the Agent or any Bank in exercising any right, power or privilege hereunder or under any Note shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. SECTION 10.03. Expenses; Indemnification. (a) The Company shall pay (i) all out-of-pocket expenses of the Agent, including fees and disbursements of special counsel for the Agent, in connection with the preparation and 53 administration of this Agreement, any waiver or consent hereunder or any amendment hereof or any Default or alleged Default hereunder and (ii) if an Event of Default occurs, all out-of-pocket expenses incurred by the Agent and each Bank, including fees and disbursements of counsel, in connection with such Event of Default and collection, bankruptcy, insolvency and other enforcement proceedings resulting therefrom. (b) The Company agrees to indemnify the Agent and each Bank, their respective affiliates and the respective directors, officers, agents and employees of the foregoing (each an "Indemnitee") and hold each Indemnitee harmless from and against any and all liabilities, losses, damages, costs and expenses of any kind, including, without limitation, the reasonable fees and disbursements of counsel, which may be incurred by such Indemnitee in connection with any investigative, administrative or judicial proceeding (whether or not such Indemnitee shall be designated a party thereto) brought or threatened relating to or arising out of this Agreement or any actual or proposed use of proceeds of Loans hereunder; provided that (i) no Indemnitee shall have the right to be indemnified hereunder for such Indemnitee's own gross negligence or willful misconduct as determined by a court of competent jurisdiction and (ii) the Company shall not be liable for any settlement entered into by an Indemnitee without its consent (which shall not be unreasonably withheld). (c) Each Indemnitee agrees to give the Company prompt written notice after it receives any notice of the commencement of any action, suit or proceeding for which such Indemnitee may wish to claim indemnification pursuant to subsection (b). The Company shall have the right, exercisable by giving written notice within fifteen Domestic Business Days after the receipt of notice from such Indemnitee of such commencement, to assume, at the Company's expense, the defense of any such action, suit or proceeding; provided, that such Indemnitee shall have the right to employ separate counsel in any such action, suit or proceeding and to participate in the defense thereof, but the fees and expenses of such separate counsel shall be at such Indemnitee's expense unless (1) the Company shall have agreed to pay such fees and expenses; (2) the Company shall have failed to assume the defense of such action, suit or proceeding or shall have failed to employ counsel reasonably satisfactory to such Indemnitee in any such action, suit or proceeding; or (3) such Indemnitee shall have been advised by independent counsel in writing (with a copy to the Company) that there may be one or more defenses available to such Indemnitee which are in conflict with those available to the Company (in which case, if such Indemnitee notifies the Company in writing that it elects to employ separate counsel at the Company's expense, the Company shall be obligated to assume the expense, it being understood, however, that the Company shall not be liable for the fees or expenses 54 of more than one separate firm of attorneys, which firm shall be designated in writing by such Indemnitee). SECTION 10.04. Sharing of Set-offs. Each Bank agrees that if it shall, by exercising any right of set-off or counterclaim or otherwise, receive payment of a proportion of the aggregate amount of principal and interest due with respect to any Note held by it which is greater than the proportion received by any other Bank in respect of the aggregate amount of principal and interest due with respect to any Note held by such other Bank, the Bank receiving such proportionately greater payment shall purchase such participations in the Notes held by the other Banks, and such other adjustments shall be made, as may be required so that all such payments of principal and interest with respect to the Notes held by the Banks shall be shared by the Banks pro rata; provided that nothing in this Section shall impair the right of any Bank to exercise any right of set-off or counterclaim it may have and to apply the amount subject to such exercise to the payment of indebtedness of the Borrower other than its indebtedness hereunder. The Borrower agrees, to the fullest extent it may effectively do so under applicable law, that any holder of a participation in a Note, whether or not acquired pursuant to the foregoing arrangements, may exercise rights of set-off or counterclaim and other rights with respect to such participation as fully as if such holder of a participation were a direct creditor of the Borrower in the amount of such participation. SECTION 10.05. Amendments and Waivers. Any provision of this Agreement or the Notes may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by the Company, the Borrower and the Required Banks (and, if the rights or duties of the Agent are affected thereby, by the Agent); provided that no such amendment or waiver shall, unless signed by all the Banks, (i) increase or decrease the Commitment of any Bank (except for a ratable decrease in the Commitments of all Banks) or subject any Bank to any additional obligation, (ii) reduce the principal of or rate of interest on any Loan or any fees hereunder, except as provided below, (iii) postpone the date fixed for any payment of principal of or interest on any Loan or any fees hereunder or for any reduction or termination of any Commitment, (iv) amend or waive the provisions of Article 9 or (v) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Notes, or the number of Banks, which shall be required for the Banks or any of them to take any action under this Section or any other provision of this Agreement. SECTION 10.06. Successors and Assigns. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that neither the Company nor the 55 Borrower may assign or otherwise transfer any of its rights under this Agreement without the prior written consent of all Banks. (b) Any Bank may at any time grant to one or more banks or other institutions (each a "Participant") participating interests in its Commitment or any or all of its Loans, with (and subject to) the written consent of the Company and the Agent, which consents shall not be unreasonably withheld; provided that if a Participant is an affiliate of such grantor Bank or is another Bank, no such consent shall be required. In the event of any such grant by a Bank of a participating interest to a Participant, such Bank shall remain responsible for the performance of its obligations hereunder, and the Company, the Borrower and the Agent shall continue to deal solely and directly with such Bank in connection with such Bank's rights and obligations under this Agreement. Any agreement pursuant to which any Bank may grant such a participating interest shall provide that such Bank shall retain the sole right and responsibility to enforce the obligations of the Company and the Borrower hereunder including, without limitation, the right to approve any amendment, modification or waiver of any provision of this Agreement; provided that such participation agreement may provide that such Bank will not agree to any modification, amendment or waiver of this Agreement described in clause (i), (ii) or (iii) of Section 10.05 without the consent of the Participant. The Borrower agrees that each Participant shall, to the extent provided in its participation agreement, be entitled to the benefits of Article 8 with respect to its participating interest. An assignment or other transfer which is not permitted by subsection (c) or (d) below but which is consented to in accordance with this subsection (b) shall be given effect for purposes of this Agreement only to the extent of a participating interest granted in accordance with this subsection (b). (c) Any Bank may at any time assign to one or more banks or other institutions (each an "Assignee") all, or a proportionate part of all, of its rights and obligations under this Agreement and the Notes, and such Assignee shall assume such rights and obligations, pursuant to an Assignment and Assumption Agreement in substantially the form of Exhibit G hereto executed by such Assignee and such transferor Bank, with (and subject to) the subscribed consent of the Company and the Agent, which consents shall not be unreasonably withheld; provided that (i) if an Assignee is an affiliate of such transferor Bank or is another Bank, no such consent shall be required; (ii) such assignment may, but need not, include rights of the transferor Bank in respect of outstanding Money Market Loans; and (iii) any assignment shall not be less than $15,000,000, or if less, shall constitute an assignment of all of such Bank's rights and obligations under this Agreement and the Notes except for any rights retained in accordance with clause (ii) of this proviso. Upon execution and delivery of such instrument 56 and payment by such Assignee to such transferor Bank of an amount equal to the purchase price agreed between such transferor Bank and such Assignee, such Assignee shall be a Bank party to this Agreement and shall have all the rights and obligations of a Bank with a Commitment as set forth in such instrument of assumption, and the transferor Bank shall be released from its obligations hereunder to a corresponding extent, and no further consent or action by any party shall be required. Upon the consummation of any assignment pursuant to this subsection (c), the transferor Bank, the Agent and the Borrower shall make appropriate arrangements so that, if required, new Notes are issued to the Assignee. In connection with any such assignment, the transferor Bank shall pay to the Agent an administrative fee for processing such assignment in the amount of $2,500. If the Assignee is not incorporated under the laws of the United States of America or a state thereof, it shall deliver to the Company and the Agent certification as to exemption from deduction or withholding of any United States federal income taxes in accordance with Section 8.04. (d) Any Bank may at any time assign all or any portion of its rights under this Agreement and its Notes to a Federal Reserve Bank. No such assignment shall release the transferor Bank from its obligations hereunder. (e) No Assignee, Participant or other transferee of any Bank's rights shall be entitled to receive any greater payment under Section 8.03 or 8.04 than such Bank would have been entitled to receive with respect to the rights transferred, unless such transfer is made with the Company's prior written consent or by reason of the provisions of Section 8.02, 8.03 or 8.04 requiring such Bank to designate a different Applicable Lending Office under certain circumstances or at a time when the circumstances giving rise to such greater payment did not exist. SECTION 10.07. Termination of Existing Credit Agreements. The Company and each of the Banks that is also a "Bank" party to the Existing Credit Agreements agrees that the "Commitments" as defined in the Existing Credit Agreements shall be terminated in their entirety on the Effective Date. Each of such Banks waives (a) any requirement of notice of such termination pursuant to Section 2.09 of the Existing Credit Agreements and (b) any claim to any facility fees or other fees under the Existing Credit Agreements for any day on or after the Effective Date. Each of the Company and the Borrower (i) represents and warrants that (x) after giving effect to the preceding sentences of this Section 10.07, the commitments under the Existing Credit Agreements will be terminated effective not later than the Effective Date, (y) no loans are, as of the date hereof, or will be, as of the Effective Date, outstanding under the Existing Credit Agreements and (ii) covenants that all accrued and unpaid facility fees and any 57 other amounts due and payable under the Existing Credit Agreements shall have been paid on or prior to the Effective Date. SECTION 10.08. Governing Law; Submission to Jurisdiction. This Agreement and each Note shall be governed by and construed in accordance with the laws of the State of New York. Each of the Company and the Borrower hereby submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York State court sitting in New York City for purposes of all legal proceedings arising out of or relating to this Agreement or the transactions contemplated hereby, and irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. SECTION 10.09. Counterparts; Integration; Effectiveness. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement constitutes the entire agreement and understanding among the parties hereto and supersedes any and all prior agreements and understandings, oral or written, relating to the subject matter hereof. This Agreement shall become effective upon receipt by the Agent of counterparts hereof signed by each of the Company, the Borrower, the Banks and the Agent (or, in the case of any party as to which an executed counterpart shall not have been received, receipt by the Agent in form satisfactory to it of telegraphic, telex or other written confirmation from such party of execution of a counterpart hereof by such party). SECTION 10.10. WAIVER OF JURY TRIAL. EACH OF THE COMPANY, THE BORROWER, THE AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. SECTION 10.11. Confidentiality. Each of the Agent and the Banks agrees to use its reasonable best efforts to keep confidential any information delivered or made available by the Company or the Borrower to it which is clearly stated by the Company or the Borrower to be confidential; provided that nothing herein shall prevent the Agent or any Bank from disclosing such information (i) to the Agent or any other Bank in connection with the transactions contemplated hereby, (ii) to its officers, directors, employees, agents, attorneys and accountants who have a need to know such information in accordance with customary banking 58 practices and who receive such information having been made aware of the restrictions set forth in this Section, (iii) upon the order of any court or administrative agency, (iv) upon the request or demand of any regulatory agency or authority having jurisdiction over such party, (v) which has been publicly disclosed, (vi) which has been obtained from any Person other than the Company and its Subsidiaries, provided that such Person is not (x) known to it to be bound by a confidentiality agreement with the Company or its Subsidiaries or (y) known to it to be otherwise prohibited from transmitting the information to it by a contractual, legal or fiduciary obligation, (vii) in connection with the exercise of any remedy hereunder or under the Notes or (viii) to any actual or proposed participant or assignee of all or any of its rights hereunder which has agreed in writing to be bound by the provisions of this Section. 59 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. U S WEST CAPITAL FUNDING, INC. By /s/ Sean Foley ------------------------------------- Title: Vice President and Treasurer 7800 East Orchard Road Englewood, Colorado 80111 Facsimile number: 303-793-6307 Telephone number: 303-793-6250 Attention: Sean Foley U S WEST, INC. By /s/ Rahn K. Porter ------------------------------------- Title: Assistant Treasurer 7800 East Orchard Road Englewood, Colorado 80111 Facsimile number: 303-793-6307 Telephone number: 303-793-6250 Attention: Rahn Porter USW-C, INC. By /s/ Allan R. Spies ------------------------------------- Title: Chief Financial Officer 7800 East Orchard Road Englewood, Colorado 80111 Facsimile number: 303-793-6307 Telephone number: 303-793-6250 Attention: Allan R. Spies 60 Commitments $55,555,556 REVOLVING COMMITMENT VEHICLE CORPORATION By /s/ Andrew D. Brown ------------------------------------- Title: Vice President $55,555,556 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By /s/ R. Vernon Howard ------------------------------------- Title: Managing Director $55,555,556 THE CHASE MANHATTAN BANK By /s/ Ann B. Kerns ------------------------------------- Title: Vice President $55,555,556 MELLON BANK, N.A. By /s/ David McGowan ------------------------------------- Title: Vice President 61 $53,333,333 ABN AMRO BANK N.V. By /s/ Thomas M. Toerpe ------------------------------------- Title: Vice President By /s/ Roxana Sopala ------------------------------------- Title: Vice President $53,333,333 THE BANK OF NEW YORK By /s/ James W. Whitaker ------------------------------------- Title: Vice President $53,333,333 BANK ONE, COLORADO, N.A. By /s/ David L. Ericson ------------------------------------- Title: Vice President $53,333,333 CITIBANK, N.A. By /s/ Prakash M. Chonkar ------------------------------------- Title: Attorney In-Fact $53,333,333 KEYBANK NATIONAL ASSOCIATION By /s/ Mary K. Young ------------------------------------- Title: Commercial Banking Office 62 $53,333,333 NATIONSBANK, N.A. By /s/ Whitney Busse ------------------------------------- Title: Vice President $44,444,444 COMMERZBANK AG LOS ANGELES BRANCH By /s/ Christian Jagenberg ------------------------------------- Title: Senior Vice President & Manager By /s/ John Korthuis ------------------------------------- Title: Vice President $44,444,444 FLEET NATIONAL BANK By /s/ Sue Anderson ------------------------------------- Title: Vice President $32,222,222 CANADIAN IMPERIAL BANK OF COMMERCE By /s/ Matthew S. Hannon ------------------------------------- Title: Executive Director, CIBC Oppenheimer acting as Agent 63 $30,000,000 BANKERS TRUST COMPANY By /s/ Gregory P. Shefrin ------------------------------------- Title: Vice President $30,000,000 THE FIRST NATIONAL BANK OF CHICAGO By /s/ Michael J. Harrington ------------------------------------- Title: Corporate Banking Officer $30,000,000 KREDIETBANK N.V. By /s/ Robert Snauffer ------------------------------------- Title: Vice President By /s/ Robert M. Surdam, Jr. ------------------------------------- Title: Vice President $30,000,000 THE ROYAL BANK OF SCOTLAND PLC By /s/ K.C. Barclay ------------------------------------- Title: Manager 64 $30,000,000 WELLS FARGO BANK, N.A. By /s/ Donald A. Hartmann ------------------------------------- Title: Senior Vice President By /s/ Judy A. Vodhanel ------------------------------------- Title: Vice President $16,666,667 BANK OF HAWAII By /s/ Elizabeth O. MacLean ------------------------------------- Title: Vice President $16,666,667 BARCLAYS BANK PLC By /s/ Les Bek ------------------------------------- Title: Director $16,666,667 BAYERISCHE LANDESBANK GIROZENTRALE CAYMAN ISLANDS BRANCH By /s/ Peter Obermann ------------------------------------- Title: Senior Vice President Manager Lending Division By /s/ Sean O'Sullivan ------------------------------------- Title: Vice President 65 $16,666,667 BAYERISCHE HYPOTHEKEN-UND WECHSEL-BANK AKTIENGESELLSCHAFT By /s/ Yoram Dankner ------------------------------------- Title: Senior Vice President By /s/ Christian Walter ------------------------------------- Title: Vice President $16,666,667 LEHMAN COMMERCIAL PAPER INC. By /s/ Michele Swenson ------------------------------------- Title: Authorized Signatory $16,666,667 MERRILL LYNCH CAPITAL CORPORATION By /s/ Robert Stevens ------------------------------------- Title: Vice President $16,666,667 NORWEST BANK COLORADO, NATIONAL ASSOCIATION By /s/ Carol A. Ward ------------------------------------- Title: Vice President $16,666,667 THE TOKAI BANK, LIMITED By /s/ Masahiko Saito ------------------------------------- Title: Senior Vice President and Assistant General Manager 66 $16,666,667 U.S. BANK NATIONAL ASSOCIATION By /s/ Scott E. Page ------------------------------------- Title: Vice President $11,111,111 BANQUE NATIONALE DE PARIS By /s/ C. Bettles ------------------------------------- Title: Senior Vice President & Manager By /s/ Stephane Ronze ------------------------------------- Title: Assistant Vice President $11,111,111 ROYAL BANK OF CANADA By /s/ John Page ------------------------------------- Title: Senior Manager $11,111,111 ISTITUTO BANCARIO SAN PAOLO DI TORINO S.P.A. By /s/ Robert S. Wurster ------------------------------------- Title: First Vice President By /s/ Jim Girolamo ------------------------------------- Title: Vice President 67 $3,333,333 THE PROVIDENT BANK. By /s/ Tom B. Scherpenberg ------------------------------------- Title: Vice President Total Commitments: $1,000,000,000 =========== 68 MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent By /s/ John M. Mikolay ------------------------------------- Title: Vice President 500 Stanton Christiana Road Newark, Delaware 19713 Attention: Mark Connor Facsimile number: 302-634-1092 Telephone number: 302-634-4218 69 PRICING SCHEDULE The "Euro-Dollar Margin" and "Facility Fee Rate" for any day are the respective percentages set forth below in the applicable row under the column corresponding to the Status that exists on such day:
Level Level Level Level Level Level Status I II III IV V VI Euro-Dollar Margin: Usage less than 50% .1175% .125% .145% .185% .215% .250% Usage greater than = 50% .1675% .175% .195% .235% .265% .300% Facility Fee .070% .075% .080% .090% .110% .150% Rate ===================== ============ ============= ============= ============ ============= ============
For purposes of this Schedule, the following terms have the following meanings: "Level I Status" exists at any date after the Separation if, at such date, the Borrower's outstanding senior unsecured long-term debt securities are rated A+ or higher by S&P or A1 or higher by Moody's. "Level II Status" exists at any date after the Separation if, at such date, (i) the Borrower's outstanding senior unsecured long-term debt securities are rated A or higher by S&P or A2 or higher by Moody's and (ii) Level I Status does not exist. "Level III Status" exists (x) at any date prior to the Separation, and (y) at any date after the Separation if, at such date, (i) the Borrower's outstanding senior unsecured long-term debt securities are rated A- or higher by S&P or A3 or higher by Moody's and (ii) neither Level I Status nor Level II Status exists. "Level IV Status" exists at any date after the Separation if, at such date, (i) the Borrower's outstanding senior unsecured long-term debt securities are rated BBB+ or higher by S&P or Baa1 or higher by Moody's and (ii) none of Level I Status, Level II Status or Level III Status exists. "Level V Status" exists at any date after the Separation if, at such date, (i) the Borrower's outstanding senior unsecured long-term debt securities are rated BBB or higher by S&P or Baa2 or higher by Moody's and (ii) none of Level I Status, Level II Status, Level III Status or Level IV Status exists. "Level VI Status" exists at any date after the Separation if, at such date, none of Level I Status, Level II Status, Level III Status, Level IV Status or Level V Status exists. "Moody's" means Moody's Investors Service, Inc., a Delaware corporation, and its successors or, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, "Moody's" shall be deemed to refer to any other nationally recognized securities rating agency designated by the Required Banks, with the approval of the Company, by notice to the Agent and the Company. "S&P" means Standard & Poor's Ratings Group, a New York corporation, and its successors or, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, "S&P" shall be deemed to refer to any other nationally recognized securities rating agency designated by the Required Banks, with the approval of the Company, by notice to the Agent and the Company. "Status" refers to the determination of which of Level I Status, Level II Status, Level III Status, Level IV Status, Level V Status or Level VI Status exists at any date. "Usage" means at any date the percentage equivalent of a fraction (i) the numerator of which is the sum of the aggregate outstanding principal amount of the Loans at such date, after giving effect to any borrowing or payment on such date, and (ii) the denominator of which is the aggregate amount of the Commitments at such date, after giving effect to any reduction of the Commitments on such date. For purposes of this Schedule, if for any reason any Loans remain outstanding after termination of the Commitments, the Usage for each date on or after the date of such termination shall be deemed to be greater than 50%. The credit ratings to be utilized for purposes of this Schedule are those assigned to the senior unsecured long-term debt securities of the Borrower guaranteed by the Company, and any rating assigned to any other debt security of the Borrower shall be disregarded. The rating in effect at any date is that in effect at the close of business on such date. 2 SCHEDULE 4.07 Environmental Matters NONE. EXHIBIT A NOTE New York, New York ________, 19__ For value received, U S WEST CAPITAL FUNDING, INC., a Colorado corporation (the "Borrower"), promises to pay to the order of (the "Bank"), for the account of its Applicable Lending Office, the unpaid principal amount of each Loan made by the Bank to the Borrower pursuant to the Credit Agreement referred to below on the maturity date therefor specified in the Credit Agreement. The Borrower promises to pay interest on the unpaid principal amount of each such Loan on the dates and at the rate or rates provided for in the Credit Agreement. All such payments of principal and interest shall be made in lawful money of the United States in Federal or other immediately available funds at the office of Morgan Guaranty Trust Company of New York, 60 Wall Street, New York, New York. All Loans made by the Bank, the respective types and maturities thereof and all repayments of the principal thereof shall be recorded by the Bank and, if the Bank so elects in connection with any transfer or enforcement hereof, appropriate notations to evidence the foregoing information with respect to each such Loan then outstanding may be endorsed by the Bank on the schedule attached hereto, or on a continuation of such schedule attached to and made a part hereof; provided that the inaccuracy of, or the failure of the Bank to make, any such recordation or endorsement shall not affect the obligations of the Borrower hereunder or under the Credit Agreement. This note is one of the Notes referred to in the Five-Year Credit Agreement dated as of May 8, 1998 among U S WEST Capital Funding, Inc., U S WEST, Inc., USW-C, Inc., the banks listed on the signature pages thereof, the other agents named therein and Morgan Guaranty Trust Company of New York, as Administrative Agent (as the same may be amended from time to time, the "Credit Agreement"). Terms defined in the Credit Agreement are used herein with the same meanings. Reference is made to the Credit Agreement for provisions for the prepayment hereof and the acceleration of the maturity hereof. U S WEST, Inc., has, pursuant to the provisions of the Credit Agreement, unconditionally guaranteed the payment in full of the principal of and interest on this Note. U S WEST CAPITAL FUNDING, INC. By -------------------------------- Title: 2
LOANS AND PAYMENTS OF PRINCIPAL - ----------------------------------------------------------------------------------------------------------------------------------- Date Amount of Type of Loan Amount of Maturity Date Notation Made Loan Principal By Repaid - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - -----------------------------------------------------------------------------------------------------------------------------------
3 EXHIBIT B Form of Money Market Quote Request [Date] To: Morgan Guaranty Trust Company of New York (the "Agent") From: U S WEST Capital Funding, Inc. Re: Five-Year Credit Agreement (the "Credit Agreement") dated as of May 8, 1998 among U S WEST Capital Funding, Inc., U S WEST, Inc., USW-C, Inc., the Banks listed on the signature pages thereof, the other agents named therein and the Agent We hereby give notice pursuant to Section 2.03 of the Credit Agreement that we request Money Market Quotes for the following proposed Money Market Borrowing(s): Date of Borrowing: __________________ Principal Amount/1/ Interest Period/2/ $ Such Money Market Quotes should offer a Money Market [Margin] [Absolute Rate]. [The applicable base rate is the London Interbank Offered Rate.] Terms used herein have the meanings assigned to them in the Credit Agreement. - -------- 1Amount must be $25,000,000 or a larger multiple of $5,000,000. 2Not less than one month (LIBOR Auction) or not less than 7 days (Absolute Rate Auction), subject to the provisions of the definition of Interest Period. Terms used herein have the meanings assigned to them in the Credit Agreement. U S WEST CAPITAL FUNDING, INC. By________________________ Title: 2 EXHIBIT C Form of Invitation for Money Market Quotes To: [Name of Bank] Re: Invitation for Money Market Quotes to U S WEST Capital Funding, Inc. (the "Borrower") Pursuant to Section 2.03 of the Five-Year Credit Agreement dated as of May 8, 1998 among U S WEST Capital Funding, Inc., U S WEST, Inc., USW-C, Inc., the Banks parties thereto, the other agents named therein and the undersigned, as Administrative Agent, we are pleased on behalf of the Borrower to invite you to submit Money Market Quotes to the Borrower for the following proposed Money Market Borrowing(s): Date of Borrowing: __________________ Principal Amount Interest Period $ Such Money Market Quotes should offer a Money Market [Margin] [Absolute Rate]. [The applicable base rate is the London Interbank Offered Rate.] Please respond to this invitation by no later than [10:30 A.M.] [9:15 A.M.] (New York City time) on [date]. MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent By______________________________ Authorized Officer EXHIBIT D Form of Money Market Quote To: Morgan Guaranty Trust Company of New York, as Administrative Agent (the "Agent") Re: Money Market Quote to U S WEST Capital Funding, Inc. (the "Borrower") In response to your invitation on behalf of the Borrower dated _____________, 19__, we hereby make the following Money Market Quote on the following terms: 1. Quoting Bank: ________________________________ 2. Person to contact at Quoting Bank: _____________________________ 3. Date of Borrowing: ____________________* 4. We hereby offer to make Money Market Loan(s) in the following principal amounts, for the following Interest Periods and at the following rates: Principal Interest Money Market Amount** Period*** [Margin****] [Absolute Rate*****] $ $ [Provided, that the aggregate principal amount of Money Market Loans for which the above offers may be accepted shall not exceed $____________.]** - ---------- * As specified in the related Invitation. (notes continued on following page) We understand and agree that the offer(s) set forth above, subject to the satisfaction of the applicable conditions set forth in the Five-Year Credit Agreement dated as of May 8, 1998 among U S WEST Capital Funding, Inc., U S WEST, Inc., USW-C, Inc., the Banks listed on the signature pages thereof, the other agents named therein and yourselves, as Agent, irrevocably obligates us to make the Money Market Loan(s) for which any offer(s) are accepted, in whole or in part. Very truly yours, [NAME OF BANK] Dated:_______________ By:__________________________ Authorized Officer - ---------- ** Principal amount bid for each Interest Period may not exceed principal amount requested. Specify aggregate limitation if the sum of the individual offers exceeds the amount the Bank is willing to lend. Bids must be made for $5,000,000 or a larger multiple of $1,000,000. *** Not less than one month or not less than 7 days, as specified in the related Invitation. No more than five bids are permitted for each Interest Period. **** Margin over or under the London Interbank Offered Rate determined for the applicable Interest Period. Specify percentage (to the nearest 1/10,000 of 1%) and specify whether "PLUS" or "MINUS". ***** Specify rate of interest per annum (to the nearest 1/10,000th of 1%). EXHIBIT E OPINION OF COUNSEL FOR THE COMPANY AND THE BORROWER To the Banks and the Administrative Agent Referred to Below c/o Morgan Guaranty Trust Company of New York, as Administrative Agent 60 Wall Street New York, New York 10260 Gentlemen and Ladies: I have acted as counsel for U S WEST, Inc., USW-C, Inc. and U S WEST Capital Funding, Inc., in connection with the Five-Year Credit Agreement (the "Credit Agreement") dated as of May 8, 1998, among them, the banks listed on the signature pages thereof, the other agents named therein and Morgan Guaranty Trust Company of New York, as Administrative Agent. Terms defined in the Credit Agreement are used herein as therein defined. This opinion is being rendered to you at the instruction of the client pursuant to Section 3.01(b) of the Credit Agreement. I am familiar with the proceedings taken by the Company, USW-C, Inc. and the Borrower in connection with the authorization, execution and delivery of the Credit Agreement and the Notes, and I have examined such documents, certificates, and such other matters of fact and questions of law as I have deemed relevant under the circumstances to express an informed opinion. Upon the basis of the foregoing, I am of the opinion that: 1. The Company and USW-C, Inc. are each corporations duly incorporated, validly existing and in good standing under the laws of the State of Delaware, and each has all corporate powers and all governmental licenses, authorizations, qualifications, consents and approvals required to carry on its business as now conducted, except where the absence of any such license, authorization, qualification, consent or approval would not have a material adverse effect on the consolidated financial position or consolidated results of operations of the Company and its Consolidated Subsidiaries considered as one enterprise. 2. The execution, delivery and performance by the Company, USW-C, Inc. and the Borrower of the Credit Agreement and by the Borrower of the Notes are within such Person's corporate powers, have been duly authorized by all necessary corporate action, and require no action by or in respect of, or filing with, any governmental body, agency or official. 3. The execution, delivery and performance by the Company, USW-C, Inc. and the Borrower of the Credit Agreement and by the Borrower of the Notes will not (i) result in a breach or violation of, conflict with, or constitute a default under, the articles of incorporation or bylaws of such Person or any material law or regulation or any material order, judgment, agreement or instrument to which such Person is a party or by which such Person is bound, or (ii) result in the creation or imposition of any Lien on any asset of such Person. 4. The Credit Agreement constitutes a valid and binding agreement of the Company, USW-C, Inc. and the Borrower and the Notes constitute valid and binding obligations of the Borrower, in each case enforceable in accordance with its terms except as the same may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and by general principles of equity. 5. To my knowledge, and except as disclosed in the Company's 1997 Form 10-K (as amended by Form 10-K/A) as filed with the Securities and Exchange Commission, there is no action, suit or proceeding pending against or threatened against, or, to the best of my knowledge affecting the Company or any of its Subsidiaries before any court or arbitrator or any governmental body, agency or official, in which there is a reasonable possibility of an adverse decision which could materially adversely affect the business, consolidated financial position or consolidated results of operations of the Company and its Consolidated Subsidiaries, considered as a whole, or which in any manner draws into question the validity of the Credit Agreement or the Notes. 6. The Borrower and each of the Company's other corporate Significant Subsidiaries are corporations validly existing and in good standing under the laws of their jurisdictions of incorporation, and have all corporate powers and all governmental licenses, authorizations, qualifications, consents and approvals required to carry on its business as now conducted, except where the absence of any such license, authorization, qualification, consent or approval would not have a material adverse effect on the consolidated financial position or consolidated results of operations of the Company and its Consolidated Subsidiaries considered as one enterprise. 2 For purposes of my opinion set forth in numbered paragraph 4 above, I have assumed that the laws of the State of New York, which are stated to govern the Credit Agreement and the Notes, are the same as the laws of the State of Colorado. In rendering the opinions set forth herein, I have assumed that the Credit Agreement and the Notes will conform to the specimens thereof examined by me, that the signatures on all documents examined by me were genuine, and the authenticity of all documents submitted to me as originals or as copies of originals, assumptions which I have not independently verified. This opinion is furnished by me as counsel for the Company and the Borrower and is solely for your benefit and the benefit of any Assignee under the Credit Agreement. Without my prior written consent, this opinion may not be relied upon by you or any Assignee in any other context or by any other person. This opinion may not be quoted, in whole or in part, or copies thereof furnished, to any other person without my prior written consent, except that you may furnish copies hereof (a) to your auditors and attorneys, (b) to any state or federal authority having regulatory jurisdiction over you or the Company or the Borrower, (c) pursuant to order or legal process of any court or governmental agency, (d) in connection with any legal action to which you are a party arising out of the transactions contemplated by the Credit Agreement, and (e) to any Participant or proposed Participant in the Commitment of any Bank. This opinion is limited to the present laws of the State of Colorado and the General Corporation Law of the State of Delaware, to present judicial interpretations thereof, and to the facts as they presently exist, and I assume no responsibility as to the applicability or effect of the laws of any other jurisdiction. In rendering this opinion, I assume no obligation to revise or supplement this opinion should the present laws of the State of Colorado or the General Corporation Law of the State of Delaware be changed by legislative action, judicial decision, or otherwise. Very truly yours, Thomas O. McGimpsey 3 EXHIBIT F OPINION OF DAVIS POLK & WARDWELL, SPECIAL COUNSEL FOR THE ADMINISTRATIVE AGENT To the Banks and the Administrative Agent Referred to Below c/o Morgan Guaranty Trust Company of New York, as Administrative Agent 60 Wall Street New York, New York 10260 Dear Sirs: We have participated in the preparation of the Five-Year Credit Agreement (the "Credit Agreement") dated as of May 8, 1998 among U S WEST Capital Funding, Inc., U S WEST, Inc., USW-C, Inc., the banks listed on the signature pages thereof (the "Banks"), the other agents named therein and Morgan Guaranty Trust Company of New York, as Administrative Agent (the "Agent"), and have acted as special counsel for the Agent for the purpose of rendering this opinion pursuant to Section 3.01(c) of the Credit Agreement. Terms defined in the Credit Agreement are used herein as therein defined. We have examined originals or copies, certified or otherwise identified to our satisfaction, of such documents, corporate records, certificates of public officials and other instruments and have conducted such other investigations of fact and law as we have deemed necessary or advisable for purposes of this opinion. Upon the basis of the foregoing, we are of the opinion that, assuming that the execution, delivery and performance by the Company and the Borrower of the Credit Agreement and by the Borrower of the Notes are within such Person's corporate powers and have been duly authorized by all necessary corporate action, the Credit Agreement constitutes a valid and binding agreement of the Company and the Borrower and the Notes constitute valid and binding obligations of the Borrower. We are members of the Bar of the State of New York and the foregoing opinion is limited to the laws of the State of New York. In giving the foregoing opinion, we express no opinion as to the effect (if any) of any law of any jurisdiction (except the State of New York) in which any Bank is located which limits the rate of interest that such Bank may charge or collect. This opinion is rendered solely to you in connection with the above matter. This opinion may not be relied upon by you for any other purpose or relied upon by or furnished to any other person without our prior written consent. Very truly yours, EXHIBIT G ASSIGNMENT AND ASSUMPTION AGREEMENT AGREEMENT dated as of __________, __ 199_ among [ASSIGNOR] (the "Assignor"), [ASSIGNEE] (the "Assignee"), U S WEST, Inc. (the "Company") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent (the "Agent"). W I T N E S S E T H WHEREAS, this Assignment and Assumption Agreement (the "Agreement") relates to the Five-Year Credit Agreement dated as of May 8, 1998 among the Company, USW-C, Inc., the Borrower named therein, the Assignor and the other Banks party thereto, as Banks, the other agents named therein and the Agent (the "Credit Agreement"); WHEREAS, as provided under the Credit Agreement, the Assignor has a Commitment to make Loans in an aggregate principal amount at any time outstanding not to exceed $__________; WHEREAS, Committed Loans made by the Assignor under the Credit Agreement in the aggregate principal amount of $__________ are outstanding at the date hereof; and WHEREAS, the Assignor proposes to assign to the Assignee all of the rights of the Assignor under the Credit Agreement in respect of a portion of its Commitment thereunder in an amount equal to $__________ (the "Assigned Amount"), together with a corresponding portion of its outstanding Committed Loans, and the Assignee proposes to accept assignment of such rights and assume the corresponding obligations from the Assignor on such terms; NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the parties hereto agree as follows: SECTION 1. Definitions. All capitalized terms not otherwise defined herein shall have the respective meanings set forth in the Credit Agreement. SECTION 2. Assignment. The Assignor hereby assigns and sells to the Assignee all of the rights of the Assignor under the Credit Agreement to the extent of the Assigned Amount, and the Assignee hereby accepts such assignment from the Assignor and assumes all of the obligations of the Assignor under the Credit Agreement to the extent of the Assigned Amount, including the purchase from the Assignor of the corresponding portion of the principal amount of the Committed Loans made by the Assignor outstanding at the date hereof. Upon the execution and delivery hereof by the Assignor, the Assignee, the Company and the Agent and the payment of the amounts specified in Section 3 required to be paid on the date hereof (i) the Assignee shall, as of the date hereof, succeed to the rights and be obligated to perform the obligations of a Bank under the Credit Agreement with a Commitment in an amount equal to the Assigned Amount, and (ii) the Commitment of the Assignor shall, as of the date hereof, be reduced by a like amount and the Assignor released from its obligations under the Credit Agreement to the extent such obligations have been assumed by the Assignee. The assignment provided for herein shall be without recourse to the Assignor. SECTION 3. Payments. As consideration for the assignment and sale contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the date hereof in Federal funds the amount heretofore agreed between them.3 It is understood that commitment and/or facility fees accrued to the date hereof are for the account of the Assignor and such fees accruing from and including the date hereof are for the account of the Assignee. Each of the Assignor and the Assignee hereby agrees to that if it receives any amount under the Credit Agreement which is for the account of the other party hereto, it shall receive the same for the account of such other party to the extent of such other party's interest therein and shall promptly pay the same to such other party. [SECTION 4. Consent of the Company and the Agent. This Agreement is conditioned upon the consent of the Company and the Agent pursuant to Section - -------- 3 Amount should combine principal together with accrued interest and breakage compensation, if any, to be paid by the Assignee, net of any portion of any upfront fee to be paid by the Assignor to the Assignee. It may be preferable in an appropriate case to specify these amounts generically or by formula rather than as a fixed sum. 2 10.06(c) of the Credit Agreement. The execution of this Agreement by the Company and the Agent is evidence of this consent. Pursuant to Section 10.06(c) the Company agrees to cause the Borrower to execute and deliver a Note payable to the order of the Assignee to evidence the assignment and assumption provided for herein.] SECTION 5. Non-Reliance on Assignor. The Assignor makes no representation or warranty in connection with, and shall have no responsibility with respect to, the solvency, financial condition, or statements of the Company or the Borrower, or the validity and enforceability of the obligations of the Company or the Borrower in respect of the Credit Agreement or any Note. The Assignee acknowledges that it has, independently and without reliance on the Assignor, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and will continue to be responsible for making its own independent appraisal of the business, affairs and financial condition of the Company and the Borrower. SECTION 6. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. SECTION 7. Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by their duly authorized officers as of the date first above written. [ASSIGNOR] By -------------------------- Title: 3 [ASSIGNEE] By -------------------------- Title: [U S WEST, INC. By -------------------------- Title: MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent By -------------------------- Title:] 4 EXHIBIT H EXTENSION AGREEMENT US WEST Capital Funding, Inc. US WEST, Inc. 7800 East Orchard Road Englewood, Colorado 80111 Morgan Guaranty Trust Company of New York, as Administrative Agent under the Credit Agreement referred to below 60 Wall Street New York, NY 10260 Gentlemen: The undersigned hereby agree to extend the Revolving Credit Period under the Five-Year Credit Agreement dated as of May 8, 1998 among US WEST Capital Funding, Inc., US WEST, Inc., USW-C, Inc., the Banks listed therein, the other agents named therein and Morgan Guaranty Trust Company of New York, as Administrative Agent (the "Credit Agreement") for 364 days to ____________ __, ____. Terms defined in the Credit Agreement are used herein as therein defined. This Extension Agreement shall be construed in accordance with and governed by the law of the State of New York. It may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. [NAME OF BANK]1 By ------------------------- - -------- 1 Insert names of Banks which have responded affirmatively in accordance with Section 2.01(b) of the Credit Agreement. Title: [NAME OF BANK]1 By ------------------------- Title: [NAME OF BANK]* By ------------------------- Title: [NAME OF BANK]* By ------------------------- Title: [NAME OF BANK]* By ------------------------- Title: [NAME OF BANK]* By ------------------------- Title: - -------- 1 Insert names of Banks which have responded affirmatively in accordance with Section 2.01(b) of the Credit Agreement. Agreed and accepted: US WEST CAPITAL FUNDING, INC. By ------------------------- Title US WEST, INC. By ------------------------- Title MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent By ------------------------- Title EX-99.(B)(2) 10 364-DAY CREDIT AGREEMENT EXHIBIT (b)(2) CONFORMED COPY - -------------------------------------------------------------------------------- $3,500,000,000 364-DAY CREDIT AGREEMENT dated as of May 8, 1998 among U S WEST Capital Funding, Inc. U S WEST, Inc. USW-C, Inc. The Banks Listed Herein and Morgan Guaranty Trust Company of New York, as Administrative Agent - -------------------------------------------------------------------------------- J.P. Morgan Securities Inc. Lead Arranger Bank of America National Trust and Savings Association, Chase Securities Inc. and Mellon Bank, N.A., Co-Syndication Agents TABLE OF CONTENTS PAGE ARTICLE 1 DEFINITIONS SECTION 1.01. The Definitions................................................1 SECTION 1.02. Accounting Terms and Determinations...........................12 SECTION 1.03. Types of Borrowings...........................................12 ARTICLE 2 THE CREDITS SECTION 2.01. Commitments to Lend...........................................13 SECTION 2.02. Notice of Committed Borrowing.................................15 SECTION 2.03. Money Market Borrowings.......................................15 SECTION 2.04. Notice to Banks; Funding of Loans.............................19 SECTION 2.05. Notes.........................................................20 SECTION 2.06. Maturity of Loans.............................................21 SECTION 2.07. Interest Rates................................................21 SECTION 2.08. Facility Fees.................................................23 SECTION 2.09. Termination or Reduction of Commitments.......................24 SECTION 2.10. Method of Electing Interest Rates.............................24 SECTION 2.11. Prepayments..................................................25 SECTION 2.12. General Provisions as to Payments.............................26 SECTION 2.13. Funding Losses................................................27 SECTION 2.14. Computation of Interest and Fees..............................27 SECTION 2.15. Change of Control.............................................27 ARTICLE 3 CONDITIONS SECTION 3.01. Closing.......................................................28 SECTION 3.02. All Borrowings................................................29 SECTION 3.03. Loans after Separation........................................30 ARTICLE 4 REPRESENTATIONS AND WARRANTIES SECTION 4.01. Corporate Existence and Power.................................30 SECTION 4.02. Corporate and Governmental Authorization; No Contravention.......................................................31 i PAGE SECTION 4.03. Binding Effect................................................31 SECTION 4.04. Financial Information.........................................31 SECTION 4.05. Litigation....................................................31 SECTION 4.06. Compliance with ERISA.........................................32 SECTION 4.07. Environmental Matters.........................................32 SECTION 4.08. Taxes.........................................................33 SECTION 4.09. Subsidiaries..................................................33 SECTION 4.10. Not an Investment Company.....................................33 SECTION 4.11. Full Disclosure...............................................33 ARTICLE 5 COVENANTS SECTION 5.01. Information...................................................34 SECTION 5.02. Maintenance of Property; Insurance............................36 SECTION 5.03. Maintenance of Existence......................................36 SECTION 5.04. Compliance with Laws..........................................36 SECTION 5.05. Inspection of Property, Books and Records.....................37 SECTION 5.06. Subsidiary Debt...............................................37 SECTION 5.07. Debt Coverage.................................................37 SECTION 5.08. Negative Pledge...............................................38 SECTION 5.09. Consolidations, Mergers and Sales of Assets...................39 SECTION 5.10. Use of Proceeds...............................................39 SECTION 5.11. Year 2000 Compatibility.......................................39 ARTICLE 6 DEFAULTS SECTION 6.01. Events of Default.............................................40 SECTION 6.02. Notice of Default.............................................42 ARTICLE 7 THE AGENT SECTION 7.01. Appointment and Authorization.................................43 SECTION 7.02. Agent and Affiliates..........................................43 SECTION 7.03. Action by Agent...............................................43 SECTION 7.04. Consultation with Experts.....................................43 SECTION 7.05. Liability of Agent............................................43 SECTION 7.06. Indemnification...............................................44 SECTION 7.07. Credit Decision...............................................44 SECTION 7.08. Successor Agent...............................................44 SECTION 7.09. Agent's Fee...................................................44 ii ARTICLE 8 CHANGES IN CIRCUMSTANCES SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair......45 SECTION 8.02. Illegality....................................................45 SECTION 8.03. Increased Cost and Reduced Return.............................46 SECTION 8.04. Taxes.........................................................47 SECTION 8.05. Domestic Loans Substituted for Affected Euro-Dollar Loans...............................................................49 SECTION 8.06. Substitution of Bank..........................................49 ARTICLE 9 GUARANTY SECTION 9.01. The Guaranty..................................................50 SECTION 9.02. Guaranty Unconditional........................................50 SECTION 9.03. Discharge Only upon Payment in Full; Reinstatement In Certain Circumstances...............................................51 SECTION 9.04. Waiver by the Company.........................................51 SECTION 9.05. Subrogation...................................................51 SECTION 9.06. Stay of Acceleration..........................................52 SECTION 9.07. Release upon Separation.......................................52 ARTICLE 10 MISCELLANEOUS SECTION 10.01. Notices......................................................52 SECTION 10.02. No Waivers...................................................52 SECTION 10.03. Expenses; Indemnification....................................53 SECTION 10.04. Sharing of Set-offs..........................................54 SECTION 10.05. Amendments and Waivers.......................................54 SECTION 10.06. Successors and Assigns......................................55 SECTION 10.07. Termination of Existing Credit Agreements....................56 SECTION 10.08. Governing Law; Submission to Jurisdiction....................57 SECTION 10.09. Counterparts; Integration; Effectiveness.....................57 SECTION 10.10. WAIVER OF JURY TRIAL.........................................57 SECTION 10.11. Confidentiality..............................................57 iii Pricing Schedule Schedule 4.07 - Environmental Matters Exhibit A - Note Exhibit B - Money Market Quote Request Exhibit C - Invitation for Money Market Quotes Exhibit D - Money Market Quote Exhibit E - Opinion of Counsel for the Company and the Borrower Exhibit F - Opinion of Special Counsel for the Administrative Agent Exhibit G - Assignment and Assumption Agreement Exhibit H - Extension Agreement iv CREDIT AGREEMENT AGREEMENT dated as of May 8, 1998 among U S WEST Capital Funding, Inc., U S WEST, Inc., USW-C, Inc., the BANKS listed on the signature pages hereof and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent. The parties hereto agree as follows: ARTICLE 1 DEFINITIONS SECTION 1.01. The Definitions. The following terms, as used herein, have the following meanings: "Absolute Rate Auction" means a solicitation of Money Market Quotes setting forth Money Market Absolute Rates pursuant to Section 2.03. "Adjusted London Interbank Offered Rate" has the meaning set forth in Section 2.07. "Administrative Questionnaire" means, with respect to each Bank, an administrative questionnaire in the form prepared by the Agent and submitted to the Agent (with a copy to the Company) duly completed by such Bank. "Agent" means Morgan Guaranty Trust Company of New York in its capacity as administrative agent for the Banks hereunder, and its successors in such capacity. "Applicable Lending Office" means, with respect to any Bank, (i) in the case of its Domestic Loans, its Domestic Lending Office, (ii) in the case of its Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the case of its Money Market Loans, its Money Market Lending Office. "Assignee" has the meaning set forth in Section 10.06(c). "Bank" means each lender listed on the signature pages hereof, each Assignee which becomes a Bank pursuant to Section 10.06(c), and their respective successors. "Base Rate" means, for any day, a rate per annum equal to the higher of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal Funds Rate for such day. "Benefit Arrangement" means at any time an employee benefit plan within the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and which is maintained or otherwise contributed to by any member of the ERISA Group. "Borrower" means U S WEST Capital Funding, Inc., a Colorado corporation, and its successors. "Borrowing" has the meaning set forth in Section 1.03. "Closing Date" means the date on or after the Effective Date on which the Agent shall have received the documents specified in or pursuant to Section 3.01. "Commitment" means, with respect to each Bank, the amount set forth opposite the name of such Bank on the signature pages hereof, as such amount may be reduced from time to time pursuant to Sections 2.09 and 2.11. "Committed Loan" means a loan to be made by a Bank pursuant to Section 2.01(a); provided that if any such loan or loans are combined or subdivided pursuant to a Notice of Interest Rate Election, the term "Committed Loan" shall refer to the combined principal amount resulting from such combination or to each of the separate principal amounts resulting from such subdivision, as the case may be. "Company" means (i) prior to the Separation, U S WEST, Inc., a Delaware corporation, and its successors and (ii) after the Separation, USW-C, Inc., a Delaware corporation, which will be renamed U S WEST, Inc., and its successors. "Company's 1997 Form 10-K" means U S WEST, Inc.'s annual report on Form 10-K for 1997, as amended by Form 10-K/A filed April 13, 1998, in each case as filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934. "Consolidated EBITDA" means, for any period, the net income of the Company and its Consolidated Subsidiaries determined on a consolidated basis 2 for such period (adjusted to exclude the effect of (x) equity gains or losses in unconsolidated Persons, (y) any preferred dividend income and any extraordinary or other non-recurring non-cash gain or loss or (z) any gain or loss on the disposition of investments), plus, to the extent deducted in determining such adjusted net income, the aggregate amount of (i) interest expense, (ii) income tax expense and (iii) depreciation, amortization and other similar non-cash charges and minus, to the extent included in determining such adjusted net income, the aggregate amount of (i) interest income and (ii) income tax benefit. "Consolidated Net Worth" means at any date the consolidated shareowners' equity of the Company and its Consolidated Subsidiaries determined as of such date. "Consolidated Subsidiary" means at any date any Subsidiary or other entity the accounts of which would be consolidated with those of the Company in its consolidated financial statements if such statements were prepared as of such date. "Debt" of any Person means at any date, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, (iv) all obligations of such Person as lessee which are capitalized in accordance with generally accepted accounting principles, (v) all Debt secured by a Lien on any asset of such Person, whether or not such Debt is otherwise an obligation of such Person, and (vi) all Debt of others Guaranteed by such Person. Notwithstanding the foregoing, for purposes of Sections 5.06 and 5.07 Debt shall in no event include the following: (x) Debt of Persons which are not Consolidated Subsidiaries ("Joint Ventures") (i) which is secured by a Lien on the assets or capital stock of a Minor Subsidiary or the equity interests in such Joint Ventures or is Guaranteed by a Minor Subsidiary, which Lien or Guaranty is incurred in connection with the international operations of the Company and its Subsidiaries, and (ii) for the payment of which no other recourse may be had to the Company or any of its Subsidiaries; and (y) Debt of the Company or the Borrower issued in connection with the issuance of Trust Originated Preferred Securities or substantially similar securities, so long as such Debt is subordinated and junior in right of payment to substantially all liabilities of the Company or the Borrower, as the case may be, including, without limitation, the Loans. 3 "Default" means any condition or event which constitutes an Event of Default or which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default. "Domestic Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in New York City are authorized by law to close. "Domestic Lending Office" means, as to each Bank, its office located at its address set forth in its Administrative Questionnaire (or identified in its Administrative Questionnaire as its Domestic Lending Office) or such other office as such Bank may hereafter designate as its Domestic Lending Office by notice to the Company and the Agent. "Domestic Loan" means (i) a Committed Loan which bears interest at the Base Rate pursuant to the applicable Notice of Committed Borrowing or Notice of Interest Rate Election or the provisions of Article 8 or (ii) an overdue amount which was a Domestic Loan immediately before it became overdue. "Effective Date" means the date this Agreement becomes effective in accordance with Section 10.09. "Environmental Laws" means any and all federal, state, local and foreign statutes, laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, plans, injunctions, permits, concessions, grants, franchises, licenses, agreements and other governmental restrictions relating to the environment, the effect of the environment on human health or to emissions, discharges or releases of pollutants, contaminants, Hazardous Substances or wastes into the environment including, without limitation, ambient air, surface water, ground water, or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, Hazardous Substances or wastes or the clean-up or other remediation thereof. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute. "ERISA Group" means the Company, any Subsidiary and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Company or any Subsidiary, are treated as a single employer under Section 414 of the Internal Revenue Code. 4 "Euro-Dollar Business Day" means any Domestic Business Day on which commercial banks are open for international business (including dealings in dollar deposits) in London. "Euro-Dollar Lending Office" means, as to each Bank, its office, branch or affiliate located at its address set forth in its Administrative Questionnaire (or identified in its Administrative Questionnaire as its Euro-Dollar Lending Office) or such other office, branch or affiliate of such Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice to the Company and the Agent. "Euro-Dollar Loan" means (i) a Committed Loan which bears interest at a Euro-Dollar Rate pursuant to the applicable Notice of Committed Borrowing or Notice of Interest Rate Election or (ii) an overdue amount which was a Euro- Dollar Loan before it became overdue. "Euro-Dollar Margin" has the meaning set forth in Section 2.07. "Euro-Dollar Rate" means a rate of interest determined pursuant to Section 2.07 on the basis of an Adjusted London Interbank Offered Rate. "Euro-Dollar Reference Banks" means the principal London offices of Bank of America National Trust and Savings Association, Mellon Bank, N.A., and Morgan Guaranty Trust Company of New York, and "Euro-Dollar Reference Bank" means any one of the foregoing. "Euro-Dollar Reserve Percentage" has the meaning set forth in Section 2.07. "Event of Default" has the meaning set forth in Section 6.01. "Existing Credit Agreements" means the Amended and Restated Credit Agreements dated as of October 31, 1997, among the Borrower, the Company, the banks listed on the signature pages thereof and Morgan Guaranty Trust Company of New York, as administrative agent. "Federal Funds Rate" means, for any day, the rate per annum (rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Domestic Business Day next succeeding such day, provided that (i) if such day is not a Domestic Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Domestic Business Day as so published on the next 5 succeeding Domestic Business Day, and (ii) if no such rate is so published on such next succeeding Domestic Business Day, the Federal Funds Rate for such day shall be the average rate quoted to Morgan Guaranty Trust Company of New York on such day on such transactions as determined by the Agent. "Fixed Rate Loans" means Euro-Dollar Loans or Money Market Loans (excluding Money Market LIBOR Loans bearing interest at the Base Rate pursuant to Section 8.01(a)) or any combination of the foregoing. "Group of Loans" means at any time a group of Loans consisting of (i) all Committed Loans which are Domestic Loans at such time or (ii) all Committed Loans which are Euro-Dollar Loans having the same Interest Period at such time; provided that, if a Committed Loan of any particular Bank is converted to or made as a Domestic Loan pursuant to Section 8.02 or 8.05, such Loan shall be included in the same Group or Groups of Loans from time to time as it would have been in if it had not been so converted or made. "Guaranty" by any Person means any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Debt or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation (whether arising by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (ii) entered into for the purpose of assuring in any other manner the obligee of such Debt or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part), provided that the term Guaranty shall not include endorsements for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a corresponding meaning. "Hazardous Substances" means any toxic, radioactive, caustic or otherwise hazardous substance, including petroleum, its derivatives, by-products and other hydrocarbons, or any substance having any constituent elements displaying any of the foregoing characteristics. "Indemnitee" has the meaning set forth in Section 10.03(b). "Indentures" means the agreements or instruments evidencing the following Debt of Continental Cablevision, Inc., and its successors: (i) the 11% Senior Subordinated Debentures Due June 1, 2007; (ii) the 8 5/8% Senior Notes Due August 15, 2003; (iii) the 9% Senior Debentures Due September 1, 2008; (iv) the 8 7/8% Senior Debentures Due September 15, 2002; (v) the 9 1/2% Senior 6 Debentures Due August 1, 2013; (vi) the 8 1/2% Senior Notes Due September 15, 2001; (vii) the 8.3% Senior Notes Due May 15, 2006; and (viii) any other Debt containing terms and conditions as or more favorable to the holders thereof than the terms and conditions of any of the foregoing Debt. "Interest Period" means: (1) with respect to each Euro-Dollar Loan, a period commencing on the date of borrowing specified in the applicable Notice of Borrowing or the date specified in the applicable Notice of Interest Rate Election and ending one, two, three or six months thereafter, as the Borrower may elect in the applicable notice; provided that: (a) any Interest Period which would otherwise end on a day which is not a Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Euro-Dollar Business Day; (b) any Interest Period which begins on the last Euro-Dollar Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clause (c) below, end on the last Euro-Dollar Business Day of a calendar month; and (c) any Interest Period beginning prior to a Termination Date which would otherwise end after a Termination Date shall end on such Termination Date, and any Interest Period beginning on or after a Termination Date which would otherwise end after the first anniversary of such Termination Date shall end on the first anniversary of such Termination Date. (2) with respect to each Money Market LIBOR Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing and ending such whole number of months thereafter as the Borrower may elect in accordance with Section 2.03; provided that: (a) any Interest Period which would otherwise end on a day which is not a Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Euro-Dollar Business Day; (b) any Interest Period which begins on the last Euro-Dollar Business Day of a calendar month (or on a day for which there is no 7 numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clause (c) below, end on the last Euro-Dollar Business Day of a calendar month; and (c) any Interest Period beginning prior to a Termination Date which would otherwise end after a Termination Date shall end on such Termination Date. (3) with respect to each Money Market Absolute Rate Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing and ending such number of days thereafter (but not less than 7 days) as the Borrower may elect in accordance with Section 2.03; provided that: (a) any Interest Period which would otherwise end on a day which is not a Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar Business Day; and (b) any Interest Period beginning prior to a Termination Date which would otherwise end after a Termination Date shall end on such Termination Date. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended, or any successor statute. "LIBOR Auction" means a solicitation of Money Market Quotes setting forth Money Market Margins based on the London Interbank Offered Rate pursuant to Section 2.03. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind, or any other type of preferential arrangement that has the practical effect of creating a security interest, in respect of such asset. For the purposes of this Agreement, the Company or any Subsidiary shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset. "Loan" means a Domestic Loan or a Euro-Dollar Loan or a Money Market Loan and "Loans" means Domestic Loans or Euro-Dollar Loans or Money Market Loans or any combination of the foregoing. "London Interbank Offered Rate" has the meaning set forth in Section 2.07. 8 "Margin Stock" means "margin stock" as such term is defined in Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time. "Material Debt" means Debt (other than the Notes) of the Company and/or one or more of its Subsidiaries, arising in one or more related or unrelated transactions, in an aggregate principal amount exceeding $100,000,000. "Material Plan" means at any time a Plan or Plans having aggregate Unfunded Liabilities in excess of $100,000,000. "Minor Subsidiary" means, for purposes of the last sentence of the definition of Debt and of Section 5.08(f) (the "Relevant Provisions"), (i) USW PCN Inc., and (ii) any other Subsidiary which, at the time of the issuance of a Guaranty or grant of a Lien referred to in the Relevant Provisions, had assets which, when taken together with all assets of Subsidiaries at any earlier time when such Subsidiaries were deemed to be Minor Subsidiaries pursuant to this clause (ii), did not exceed $250,000,000. "Money Market Absolute Rate" has the meaning set forth in Section 2.03(d). "Money Market Absolute Rate Loan" means a loan to be made by a Bank pursuant to an Absolute Rate Auction. "Money Market Lending Office" means, as to each Bank, its Domestic Lending Office or such other office, branch or affiliate of such Bank as it may hereafter designate as its Money Market Lending Office by notice to the Company and the Agent; provided that any Bank may from time to time by notice to the Company and the Agent designate separate Money Market Lending Offices for its Money Market LIBOR Loans, on the one hand, and its Money Market Absolute Rate Loans, on the other hand, in which case all references herein to the Money Market Lending Office of such Bank shall be deemed to refer to either or both of such offices, as the context may require. "Money Market LIBOR Loan" means a loan to be made by a Bank pursuant to a LIBOR Auction (including such a loan bearing interest at the Base Rate pursuant to Section 8.01(a)). "Money Market Loan" means a Money Market LIBOR Loan or a Money Market Absolute Rate Loan. "Money Market Margin" has the meaning set forth in Section 2.03(d). 9 "Money Market Quote" means an offer by a Bank to make a Money Market Loan in accordance with Section 2.03. "Multiemployer Plan" means at any time an employee pension benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any member of the ERISA Group is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions, including for these purposes any Person which ceased to be a member of the ERISA Group during such five year period. "Notes" means promissory notes of the Borrower, substantially in the form of Exhibit A hereto, evidencing the obligation of the Borrower to repay the Loans made to it, and "Note" means any one of such promissory notes issued hereunder. "Notice of Borrowing" means a Notice of Committed Borrowing (as defined in Section 2.02) or a Notice of Money Market Borrowing (as defined in Section 2.03(f)). "Parent" means, with respect to any Bank, any Person controlling such Bank. "Participant" has the meaning set forth in Section 10.06(b). "PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. "Person" means an individual, a corporation, a partnership, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Plan" means at any time an employee pension benefit plan (other than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Internal Revenue Code and either (i) is maintained, or contributed to, by any member of the ERISA Group for employees of any member of the ERISA Group or (ii) has at any time within the preceding five years been maintained, or contributed to, by any Person which was at such time a member of the ERISA Group for employees of any Person which was at such time a member of the ERISA Group. "Pricing Schedule" means the Schedule attached hereto and identified as such. 10 "Prime Rate" means the rate of interest publicly announced by Morgan Guaranty Trust Company of New York in New York City from time to time as its Prime Rate. "Proxy Statement" means the definitive Proxy Statement for 1998 Annual Meeting of Stockholders of U S WEST, Inc., dated and filed with the Securities and Exchange Commission on April 20, 1998. "Required Banks" means at any time Banks having more than 50% of the aggregate amount of the Commitments or, if the Commitments shall have been terminated, holding Notes evidencing more than 50% of the aggregate unpaid principal amount of the Loans. "Revolving Credit Period" means the period from and including the Effective Date to but excluding the Termination Date. "Separation" has the meaning set forth in the Proxy Statement. "Significant Subsidiary" means any Subsidiary which would meet the definition of "significant subsidiary" contained as of the date hereof in Regulation S-X of the Securities and Exchange Commission. "Subsidiary" means any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by the Company. "Super-Majority Banks" means at any time Banks having at least 85% of the aggregate amount of the Commitments or, if the Commitments shall have been terminated, holding Notes evidencing at least 85% of the aggregate unpaid principal amount of the Loans. "Termination Date" means, with respect to each Bank, May 7, 1999, or such later date to which the Termination Date for such Bank shall have been extended pursuant to Section 2.01(b), or, if such day is not a Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day. "Unfunded Liabilities" means, with respect to any Plan at any time, the amount (if any) by which (i) the value of all benefit liabilities under such Plan, determined on a plan termination basis using the assumptions prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market value of all Plan assets allocable to such liabilities under Title IV of ERISA (excluding any accrued but unpaid contributions), all determined as of the then most recent 11 valuation date for such Plan, but only to the extent that such excess represents a potential liability of a member of the ERISA Group to the PBGC or any other Person under Title IV of ERISA. "United States" means the United States of America, including the States and the District of Columbia, but excluding its territories and possessions. "Wholly-Owned Consolidated Subsidiary" means any Consolidated Subsidiary all of the shares of capital stock or other ownership interests of which (except directors' qualifying shares) are at the time directly or indirectly owned by the Company. SECTION 1.02. Accounting Terms and Determinations. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with generally accepted accounting principles as in effect from time to time in the United States, applied on a basis consistent (except for changes concurred in by the Company's independent public accountants) with the most recent audited consolidated financial statements of the Company and its Consolidated Subsidiaries delivered to the Banks; provided that, if the Company notifies the Agent that the Company wishes to amend any covenant in Article 5 to eliminate the effect of any change in such generally accepted accounting principles on the operation of such covenant (or if the Agent notifies the Company that the Required Banks wish to amend Article 5 for such purpose), then compliance with such covenant shall be determined on the basis of generally accepted accounting principles in effect in the United States immediately before the relevant change in generally accepted accounting principles became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Company and the Required Banks. SECTION 1.03. Types of Borrowings. The term "Borrowing" denotes the aggregation of Loans of one or more Banks to be made to the Borrower pursuant to Article 2 on a single date, all of which Loans are of the same type (subject to Article 8) and, except in the case of Domestic Loans, have the same Interest Period or initial Interest Period. Borrowings are classified for purposes of this Agreement either by reference to the pricing of Loans comprising such Borrowing (e.g., a "Euro-Dollar Borrowing" is a Borrowing comprised of Euro-Dollar Loans) or by reference to the provisions of Article 2 under which participation therein is determined (i.e., a "Committed Borrowing" is a Borrowing under Section 2.01(a) in which all Banks participate in proportion to their Commitments, while a "Money Market Borrowing" is a Borrowing under Section 12 2.03 in which the Bank participants are determined on the basis of their bids in accordance therewith). ARTICLE 2 THE CREDITS SECTION 2.1. Commitments to Lend. (a) The Commitments. During the Revolving Credit Period each Bank severally agrees, on the terms and conditions set forth in this Agreement, to make loans to the Borrower pursuant to this subsection (a) from time to time in amounts such that the aggregate principal amount of Committed Loans by such Bank at any one time outstanding to the Borrower shall not exceed the amount of its Commitment. Each Borrowing under this Section shall be in an aggregate principal amount of $25,000,000 or any larger multiple of $5,000,000 (except that any such Borrowing may be in the aggregate amount available in accordance with Section 3.02(c)) and shall be made from the several Banks ratably in proportion to their respective Commitments. Within the foregoing limits, the Borrower may borrow under this subsection (a), repay, or to the extent permitted by Section 2.11, prepay Loans and reborrow at any time during the Revolving Credit Period under this subsection (a). The Commitments shall terminate at the close of business on the Termination Date. (b) Extension of Commitments. The Commitments may be extended in the manner and amount set forth in this subsection (b), for a period of 364 days measured from the Termination Date then in effect. If the Company wishes to request an extension of each Bank's Commitment, it shall give notice to that effect to the Agent not less than 45 days and not more than 60 days prior to the Termination Date then in effect, whereupon the Agent shall promptly notify each of the Banks of such request. Each Bank will use its best efforts to respond to such request, whether affirmatively or negatively, as it may elect in its discretion, within 30 days of such notice to the Agent. If any Bank shall not have responded affirmatively within such 30-day period, such Bank shall be deemed to have rejected the Company's proposal to extend its Commitment, and only the Commitments of those Banks which have responded affirmatively shall be extended, subject to receipt by the Agent of counterparts of an Extension Agreement in substantially the form of Exhibit H hereto duly completed and signed by the Borrower, the Company, the Agent and all of the Banks which have responded affirmatively. The Agent shall provide to the Company, no later than 13 10 days prior to the Termination Date then in effect, a list of the Banks which have responded affirmatively. The Extension Agreement shall be executed and delivered no later than five days prior to the Termination Date then in effect, and no extension of the Commitments pursuant to this subsection (b) shall be legally binding on any party hereto unless and until such Extension Agreement is so executed and delivered. The Company and the Borrower may decline to execute and deliver such Extension Agreement if any Bank has rejected the Company's proposal to extend its Commitment or has failed to execute and deliver such Extension Agreement, and will promptly notify the Agent and the Banks if it so declines. (c) Additional Commitments. At any time during the Revolving Credit Period (unless the Commitments shall have been reduced pursuant to Section 2.09(b)), if no Default shall have occurred and be continuing at such time, the Company may, if it so elects, increase the aggregate amount of the Commitments, either by designating a Person not theretofore a Bank and acceptable to the Agent to become a Bank or by agreeing with an existing Bank that such Bank's Commitment shall be increased. Upon execution and delivery by the Company, the Borrower and such Bank or other Person of an instrument of assumption in form and amount satisfactory to the Administrative Agent, such existing Bank shall have a Commitment as therein set forth or such other Person shall become a Bank with a Commitment as therein set forth and all the rights and obligations of a Bank with such a Commitment hereunder; provided that (i) the Company shall provide prompt notice of such increase to the Agent, which shall promptly notify the other Banks, (ii) the aggregate amount of each such increase which is effective on any day shall be at least $50,000,000 and (iii) the aggregate amount of the Commitments shall at no time exceed $3,750,000,000. Upon any increase in the aggregate amount of the Commitments pursuant to this subsection (c), within five Domestic Business Days in the case of each Group of Domestic Loans outstanding, and at the end of the then current Interest Period with respect thereto in the case of each Group of Euro-Dollar Loans then outstanding, the Borrower shall prepay such Group in its entirety, and, to the extent the Borrower elects to do so and subject to the conditions specified in Article 3, the Borrower shall reborrow Committed Loans from the Banks in proportion to their respective Commitments after giving effect to such increase, until such time as all outstanding Committed Loans are held by the Banks in such proportion. (d) Term Loans. Each Bank severally agrees, on the terms and conditions set forth in this Agreement, to make a loan to the Borrower on the Termination Date in amounts such that the aggregate principal amount of such Bank's outstanding Loans to the Borrower at the close of business on the Termination Date shall not exceed its Commitment. Each Borrowing under this 14 subsection (d) shall be made from the several Banks ratably in proportion to their respective Commitments. Amounts prepaid pursuant to Section 2.11 shall not be reborrowed. If less than all the Banks shall have agreed to extend the Termination Date pursuant to subsection (b) above, but the Termination Date for those Banks which have not so agreed has not yet occurred (the "Earlier Date"), and the Borrower has requested a Borrowing pursuant to this subsection (d), then such Borrowing shall be made on the Earlier Date. SECTION 2.2. Notice of Committed Borrowing. The Borrower shall give the Agent notice (a "Notice of Committed Borrowing") not later than 10:30 A.M. (New York City time) on (x) the date of each Domestic Borrowing, and (y) the third Euro-Dollar Business Day before each Euro-Dollar Borrowing, specifying: (i) the date of such Borrowing, which shall be a Domestic Business Day in the case of a Domestic Borrowing or a Euro-Dollar Business Day in the case of a Euro-Dollar Borrowing, (ii) the aggregate amount of such Borrowing, (iii) whether the Loans comprising such Borrowing bear interest initially at the Base Rate or at a Euro-Dollar Rate, and (iv) in the case of a Euro-Dollar Borrowing, the duration of the initial Interest Period applicable thereto, subject to the provisions of the definition of Interest Period. SECTION 2.3. Money Market Borrowings. (a) The Money Market Option. In addition to Committed Borrowings pursuant to Section 2.01(a), the Borrower may, as set forth in this Section, request the Banks during the Revolving Credit Period to make offers to make Money Market Loans to the Borrower. The Banks may, but shall have no obligation to, make such offers and the Borrower may, but shall have no obligation to, accept any such offers in the manner set forth in this Section. (b) Money Market Quote Request. When the Borrower wishes to request offers to make Money Market Loans under this Section, it shall transmit to the Agent by telex or facsimile transmission a Money Market Quote Request substantially in the form of Exhibit B hereto so as to be received no later than 9:00 A.M. (New York City time) on (x) the fourth Euro-Dollar Business Day prior to the date of Borrowing proposed therein, in the case of a LIBOR Auction or (y) the Domestic Business Day prior to the date of Borrowing proposed therein, in the case of an Absolute Rate Auction (or, in either case, such other time or date as the Company and the Agent shall have mutually agreed and shall have notified 15 to the Banks not later than the date of the Money Market Quote Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective) specifying: (i) the proposed date of Borrowing, which shall be a Euro-Dollar Business Day in the case of a LIBOR Auction or a Domestic Business Day in the case of an Absolute Rate Auction, (ii) the aggregate amount of such Borrowing, which shall be $25,000,000 or a larger multiple of $5,000,000, (iii) the duration of the Interest Period applicable thereto, subject to the provisions of the definition of Interest Period, and (iv) whether the Money Market Quotes requested are to set forth a Money Market Margin or a Money Market Absolute Rate. The Borrower may request offers to make Money Market Loans for more than one Interest Period in a single Money Market Quote Request. No Money Market Quote Request shall be given within five Euro-Dollar Business Days (or such other number of days as the Company and the Agent may agree) of any other Money Market Quote Request. (c) Invitation for Money Market Quotes. Promptly upon receipt of a Money Market Quote Request, the Agent shall send to the Banks by telex or facsimile transmission an Invitation for Money Market Quotes substantially in the form of Exhibit C hereto, which shall constitute an invitation by the Borrower to each Bank to submit Money Market Quotes offering to make the Money Market Loans to which such Money Market Quote Request relates in accordance with this Section. (d) Submission and Contents of Money Market Quotes. (i) Each Bank may submit a Money Market Quote containing an offer or offers to make Money Market Loans in response to any Invitation for Money Market Quotes. Each Money Market Quote must comply with the requirements of this subsection (d) and must be submitted to the Agent by telex or facsimile transmission at its offices specified in or pursuant to Section 10.01 not later than (x) 10:30 A.M. (New York City time) on the third Euro-Dollar Business Day prior to the proposed date of Borrowing, in the case of a LIBOR Auction or (y) 9:15 A.M. (New York City time) on the proposed date of Borrowing, in the case of an Absolute Rate Auction (or, in either case, such other time or date as the Company and the Agent shall have mutually agreed and shall have notified to the Banks not 16 later than the date of the Money Market Quote Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective); provided that Money Market Quotes submitted by the Agent (or any affiliate of the Agent) in the capacity of a Bank may be submitted, and may only be submitted, if the Agent or such affiliate notifies the Borrower of the terms of the offer or offers contained therein not later than (x) one hour prior to the deadline for the other Banks, in the case of a LIBOR Auction or (y) 15 minutes prior to the deadline for the other Banks, in the case of an Absolute Rate Auction. Subject to Articles 3 and 6, any Money Market Quote so made shall be irrevocable except with the written consent of the Agent given on the instructions of the Borrower. (ii) Each Money Market Quote shall be in substantially the form of Exhibit D hereto and shall in any case specify: (A) the proposed date of Borrowing, (B) the principal amount of the Money Market Loan for which each such offer is being made, which principal amount (w) may be greater than or less than the Commitment of the quoting Bank, (x) must be $5,000,000 or a larger multiple of $1,000,000, (y) may not exceed the principal amount of Money Market Loans for which offers were requested, and (z) may be subject to an aggregate limitation as to the principal amount of Money Market Loans for which offers being made by such quoting Bank may be accepted, (C) in the case of a LIBOR Auction, the margin above or below the applicable London Interbank Offered Rate (the "Money Market Margin") offered for each such Money Market Loan, expressed as a percentage (specified to the nearest 1/10,000th of 1%) to be added to or subtracted from such base rate, (D) in the case of an Absolute Rate Auction, the rate of interest per annum (specified to the nearest 1/10,000th of 1%) (the "Money Market Absolute Rate") offered for each such Money Market Loan, and (E) the identity of the quoting Bank. A Money Market Quote may set forth up to five separate offers by the quoting Bank with respect to each Interest Period specified in the related Invitation for Money Market Quotes. 17 (iii) Any Money Market Quote shall be disregarded if it: (A) is not substantially in conformity with Exhibit D hereto or does not specify all of the information required by subsection (d)(ii); (B) contains qualifying, conditional or similar language; (C) proposes terms other than or in addition to those set forth in the applicable Invitation for Money Market Quotes; or (D) arrives after the time set forth in subsection (d)(i). (e) Notice to Borrower. The Agent shall promptly (and in any event no later than 11:00 A.M. (New York time) on (i) the third Euro-Dollar Business Day prior to the proposed date of Borrowing, in the case of a LIBOR Auction or (ii) the proposed date of Borrowing, in the case of an Absolute Rate Auction) notify the Borrower of the terms (x) of any Money Market Quote submitted by a Bank that is in accordance with subsection (d) and (y) of any Money Market Quote that amends, modifies or is otherwise inconsistent with a previous Money Market Quote submitted by such Bank with respect to the same Money Market Quote Request. Any such subsequent Money Market Quote shall be disregarded by the Agent unless such subsequent Money Market Quote is submitted solely to correct a manifest error in such former Money Market Quote. The Agent's notice to the Borrower shall specify (A) the aggregate principal amount of Money Market Loans for which offers have been received for each Interest Period specified in the related Money Market Quote Request, (B) the respective principal amounts and Money Market Margins or Money Market Absolute Rates, as the case may be, so offered and (C) if applicable, limitations on the aggregate principal amount of Money Market Loans for which offers in any single Money Market Quote may be accepted. (f) Acceptance and Notice by Borrower. Not later than 11:15 A.M. (New York City time) on (x) the third Euro-Dollar Business Day prior to the proposed date of Borrowing, in the case of a LIBOR Auction or (y) the proposed date of Borrowing, in the case of an Absolute Rate Auction (or, in either case, such other time or date as the Company and the Agent shall have mutually agreed and shall have notified to the Banks not later than the date of the Money Market Quote Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective), the Borrower shall notify the Agent of its acceptance or non-acceptance of the offers so notified to it pursuant to subsection (e). In the case of acceptance, such notice (a "Notice of Money Market Borrowing") shall 18 specify the aggregate principal amount of offers for each Interest Period that are accepted. The Borrower may accept any Money Market Quote in whole or in part; provided that: (i) the aggregate principal amount of each Money Market Borrowing may not exceed the applicable amount set forth in the related Money Market Quote Request, (ii) the principal amount of each Money Market Borrowing must be $25,000,000 or a larger multiple of $5,000,000, (iii) acceptance of offers may only be made on the basis of ascending Money Market Margins or Money Market Absolute Rates, as the case may be, and (iv) the Borrower may not accept any offer that is described in subsection (d)(iii) or that otherwise fails to comply with the requirements of this Agreement. (g) Allocation by Agent. If offers are made by two or more Banks with the same Money Market Margins or Money Market Absolute Rates, as the case may be, for a greater aggregate principal amount than the amount in respect of which such offers are accepted for the related Interest Period, the principal amount of Money Market Loans in respect of which such offers are accepted shall be allocated by the Agent among such Banks as nearly as possible (in multiples of $1,000,000, as the Agent may deem appropriate) in proportion to the aggregate principal amounts of such offers. Determinations by the Agent of the amounts of Money Market Loans shall be conclusive in the absence of manifest error. SECTION 2.04. Notice to Banks; Funding of Loans. (a) Upon receipt of a Notice of Borrowing, the Agent shall promptly notify each Bank of the contents thereof and of such Bank's share (if any) of such Borrowing and such Notice of Borrowing shall not thereafter be revocable by the Borrower. (b) Not later than 1:00 P.M. (New York City time) on the date of each Borrowing, each Bank participating therein shall (except as provided in subsection (c) of this Section) make available its share of such Borrowing, in Federal or other funds immediately available in New York City, to the Agent at its address referred to in Section 10.01. Unless any applicable condition specified in Article 3 has not been satisfied, as determined by the Agent in accordance with Article 3, the Agent will make the funds so received from the Banks immediately available to the Borrower at the Agent's aforesaid address. 19 (c) If any Bank makes a new Loan hereunder to the Borrower on a day on which the Borrower is to repay all or any part of an outstanding Loan from such Bank, such Bank shall apply the proceeds of its new Loan to make such repayment and only an amount equal to the difference (if any) between the amount being borrowed by the Borrower and the amount being repaid shall be made available by such Bank to the Agent as provided in subsection (b) of this Section, or remitted by the Borrower to the Agent as provided in Section 2.12, as the case may be. (d) Unless the Agent shall have received notice from a Bank prior to the date of any Borrowing (or, in the case of a Base Rate Borrowing, prior to Noon (New York City time) on the date of such Borrowing) that such Bank will not make available to the Agent such Bank's share of such Borrowing, the Agent may assume that such Bank has made such share available to the Agent on the date of such Borrowing in accordance with subsections (b) and (c) of this Section 2.04 and the Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Bank shall not have so made such share available to the Agent, such Bank and the Borrower severally agree to repay to the Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Agent, at (i) in the case of the Borrower, a rate per annum equal to the higher of the Federal Funds Rate and the interest rate applicable thereto pursuant to Section 2.07 and (ii) in the case of such Bank, the Federal Funds Rate. If such Bank shall repay to the Agent such corresponding amount, such amount so repaid shall constitute such Bank's Loan included in such Borrowing for purposes of this Agreement. If the Borrower shall have repaid such corresponding amount of such Bank, such Bank shall reimburse the Borrower for any loss on account thereof incurred by the Borrower. SECTION 2.05. Notes. (a) The Loans of each Bank to the Borrower shall be evidenced by a single Note of the Borrower payable to the order of such Bank for the account of its Applicable Lending Office, unless such Bank requests otherwise, in an amount equal to the aggregate unpaid principal amount of such Bank's Loans to the Borrower. (b) Each Bank may, by notice to the Borrower and the Agent, request that its Loans of a particular type to the Borrower be evidenced by a separate Note of the Borrower in an amount equal to the aggregate unpaid principal amount of such Loans. Each such Note shall be in substantially the form of Exhibit A hereto with appropriate modifications to reflect the fact that it evidences solely Loans of 20 the relevant type. Each reference in this Agreement to a "Note" or the "Notes" of such Bank shall be deemed to refer to and include any or all of such Notes, as the context may require. (c) Upon receipt of each Bank's Note pursuant to Section 3.01, the Agent shall forward such Note to such Bank. Each Bank shall record the date, amount and type of each Loan made by it to the Borrower and the date and amount of each payment of principal made with respect thereto, and may, if such Bank so elects in connection with any transfer or enforcement of its Note of the Borrower, endorse on the schedule forming a part thereof appropriate notations to evidence the foregoing information with respect to each such Loan to the Borrower then outstanding; provided that the failure of any Bank to make any such recordation or endorsement shall not affect the obligations of the Borrower hereunder or under the Notes. Each Bank is hereby irrevocably authorized by the Borrower so to endorse its Notes and to attach to and make a part of any Note a continuation of any such schedule as and when required. SECTION 2.6. Maturity of Loans. Each Loan by a Bank included in any Borrowing made pursuant to Section 2.01(a) shall mature, and the principal amount thereof shall be due and payable, together with accrued interest thereon, on the Termination Date for such Bank. Each Loan included in any Borrowing made pursuant to Section 2.01(d) shall mature, and the principal amount thereof shall be due and payable, together with accrued interest thereon, on the first anniversary of the Termination Date on which such Borrowing is made. Each Loan included in any Borrowing made pursuant to Section 2.03 shall mature, and the principal amount thereof shall be due and payable, together with accrued interest thereon, on the last day of the Interest Period applicable thereto. SECTION 2.7. Interest Rates. (a) Each Domestic Loan shall bear interest on the outstanding principal amount thereof, for each day from the date such Loan is made until it becomes due, at a rate per annum equal to the Base Rate for such day. Such interest shall be payable quarterly in arrears on the last day of each calendar quarter and, with respect to the principal amount of any Domestic Loan converted to a Euro-Dollar Loan, on each date a Domestic Loan is so converted. Any overdue principal of or interest on any Domestic Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 2% plus the rate otherwise applicable to Domestic Loans for such day. (b) Each Euro-Dollar Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the sum of the Euro-Dollar Margin plus the applicable Adjusted London Interbank Offered Rate. Such interest shall be payable for each Interest 21 Period on the last day thereof and, if such Interest Period is longer than three months, at intervals of three months after the first day thereof. The "Adjusted London Interbank Offered Rate" applicable to any Interest Period means a rate per annum equal to the quotient obtained (rounded upward, if necessary, to the next higher 1/100 of 1%) by dividing (i) the applicable London Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar Reserve Percentage. "Euro-Dollar Margin" means a rate per annum determined in accordance with the Pricing Schedule. The "London Interbank Offered Rate" applicable to any Interest Period means the average (rounded upward, if necessary, to the next higher 1/16 of 1%) of the respective rates per annum at which deposits in dollars are offered to each of the Euro-Dollar Reference Banks in the London interbank market at approximately 11:00 A.M. (London time) two Euro-Dollar Business Days before the first day of such Interest Period in an amount approximately equal to the principal amount of the Euro-Dollar Loan of such Euro-Dollar Reference Bank to which such Interest Period is to apply and for a period of time comparable to such Interest Period. "Euro-Dollar Reserve Percentage" means for any day that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement for a member bank of the Federal Reserve System in New York City with deposits exceeding five billion dollars in respect of "Eurocurrency liabilities" (or in respect of any other category of liabilities which includes deposits by reference to which the interest rate on Euro-Dollar Loans is determined or any category of extensions of credit or other assets which includes loans by a non-United States office of any Bank to United States residents). The Adjusted London Interbank Offered Rate shall be adjusted automatically on and as of the effective date of any change in the Euro-Dollar Reserve Percentage. (c) Any overdue principal of or interest on any Euro-Dollar Loan shall bear interest, payable on demand, for each day from and including the date payment thereof was due to but excluding the date of actual payment, at a rate per annum equal to the sum of 2% plus the higher of (i) the Euro-Dollar Margin plus the quotient obtained (rounded upward, if necessary, to the next higher 1/100 of 1%) by dividing (x) the average (rounded upward, if necessary, to the next higher 1/16 of 1%) of the respective rates per annum at which one day (or, if such amount due remains unpaid more than three Euro-Dollar Business Days, then for 22 such other period of time not longer than six months as the Agent may select) deposits in dollars in an amount approximately equal to such overdue payment due to each of the Euro-Dollar Reference Banks are offered to such Euro-Dollar Reference Bank in the London interbank market for the applicable period determined as provided above by (y) 1.00 minus the Euro-Dollar Reserve Percentage (or, if the circumstances described in clause (a) or (b) of Section 8.01 shall exist, at a rate per annum equal to the sum of 2% plus the rate applicable to Domestic Loans for such day) and (ii) the sum of the Euro-Dollar Margin plus the Adjusted London Interbank Offered Rate applicable to such Loan at the date such payment was due. (d) Subject to Section 8.01, each Money Market LIBOR Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the sum of the London Interbank Offered Rate for such Interest Period (determined in accordance with Section 2.07 as if the related Money Market LIBOR Borrowing were a Committed Euro-Dollar Borrowing) plus (or minus) the Money Market Margin quoted by the Bank making such Loan in accordance with Section 2.03. Each Money Market Absolute Rate Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the Money Market Absolute Rate quoted by the Bank making such Loan in accordance with Section 2.03. Such interest shall be payable for each Interest Period on the last day thereof and, if such Interest Period is longer than three months, at intervals of three months after the first day thereof. Any overdue principal of or interest on any Money Market Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 2% plus the Base Rate for such day. (e) The Agent shall determine each interest rate applicable to the Loans hereunder. The Agent shall give prompt notice to the Borrower and the participating Banks of each rate of interest so determined, and its determination thereof shall be conclusive in the absence of manifest error. (f) Each Euro-Dollar Reference Bank agrees to use its best efforts to furnish quotations to the Agent as contemplated hereby. If any Euro-Dollar Reference Bank does not furnish a timely quotation, the Agent shall determine the relevant interest rate on the basis of the quotation or quotations furnished by the remaining Euro-Dollar Reference Bank or Banks or, if none of such quotations is available on a timely basis, the provisions of Section 8.01 shall apply. SECTION 2.08. Facility Fees. The Company shall pay to the Agent for the account of the Banks ratably a facility fee at the Facility Fee Rate (determined daily in accordance with the Pricing Schedule). Such facility fee shall accrue (i) 23 from and including the Effective Date to but excluding the Termination Date (or earlier date of termination of the Commitments in their entirety), on the daily average aggregate amount of the Commitments (whether used or unused) and (ii) from and including the Termination Date (or earlier date of termination of the Commitments in their entirety) to but excluding the date the Loans shall be repaid in their entirety, on the daily average aggregate outstanding principal amount of the Loans. Accrued facility fees shall be payable quarterly in arrears on the last day of each calendar quarter and upon the date of termination of the Commitments in their entirety (and, if later, the date the Loans shall be repaid in their entirety). "Facility Fee Rate" means a rate per annum determined in accordance with the Pricing Schedule. SECTION 2.9. Termination or Reduction of Commitments. (a) During the Revolving Credit Period, the Company may, upon at least three Domestic Business Days' notice to the Agent, (i) terminate the Commitments at any time, if no Loans are outstanding at such time or (ii) ratably reduce from time to time by an aggregate amount of $25,000,000 or any larger multiple of $5,000,000, the aggregate amount of the Commitments in excess of the aggregate outstanding principal amount of the Loans. (b) If the Separation has not been consummated on or before November 8, 1998, the Commitments shall be ratably reduced by 50% on the next succeeding Domestic Business Day. SECTION 2.10. Method of Electing Interest Rates. (a) The Loans included in each Committed Borrowing shall bear interest initially at the type of rate specified by the Borrower in the applicable Notice of Committed Borrowing. Thereafter, the Borrower may from time to time elect to change or continue the type of interest rate borne by each Group of Loans (subject in each case to the provisions of Article 8), as follows: (i) if such Loans are Domestic Loans, the Borrower may elect to convert such Loans to Euro-Dollar Loans as of any Euro-Dollar Business Day; (ii) if such Loans are Euro-Dollar Loans, the Borrower may elect to convert such Loans to Domestic Loans or elect to continue such Loans as Euro-Dollar Loans for an additional Interest Period, in each case effective on the last day of the then current Interest Period applicable to such Loans. 24 Each such election shall be made by delivering a notice (a "Notice of Interest Rate Election") to the Agent at least three Euro-Dollar Business Days before the conversion or continuation selected in such notice is to be effective. A Notice of Interest Rate Election may, if it so specifies, apply to only a portion of the aggregate principal amount of the relevant Group of Loans; provided that (i) such portion is allocated ratably among the Loans comprising such Group and (ii) the portion to which such Notice applies, and the remaining portion to which it does not apply, are each $25,000,000 or any larger multiple of $5,000,000. (b) Each Notice of Interest Rate Election shall specify: (i) the Group of Loans (or portion thereof) to which such notice applies; (ii) the date on which the conversion or continuation selected in such notice is to be effective, which shall comply with the applicable clause of subsection (a) above; (iii) if the Loans comprising such Group are to be converted, the new type of Loans and, if such new Loans are Euro-Dollar Loans, the duration of the initial Interest Period applicable thereto; and (iv) if such Loans are to be continued as Euro-Dollar Loans for an additional Interest Period, the duration of such additional Interest Period. Each Interest Period specified in a Notice of Interest Rate Election shall comply with the provisions of the definition of Interest Period. (c) Upon receipt of a Notice of Interest Rate Election from the Borrower pursuant to subsection (a) above, the Agent shall promptly notify each Bank of the contents thereof and such notice shall not thereafter be revocable by such Borrower. If the Borrower fails to deliver a timely Notice of Interest Rate Election to the Agent for any Group of Euro-Dollar Loans, such Loans shall be converted into Domestic Loans on the last day of the then current Interest Period applicable thereto. SECTION 2.11. Prepayments. (a) Subject in the case of any Euro-Dollar Loans to Section 2.13, the Borrower may, upon at least one Domestic Business Day's notice to the Agent, prepay the Group of Domestic Loans (or any Money Market Borrowing bearing 25 interest at the Base Rate pursuant to Section 8.01(a)), or, upon three Euro-Dollar Business Days' notice to the Agent, prepay any Group of Euro-Dollar Loans, in each case in whole at any time, or from time to time in part in amounts aggregating $25,000,000 or any larger multiple of $5,000,000, by paying the principal amount to be prepaid together with accrued interest thereon to the date of prepayment. (b) Except as provided in subsection (a) above, the Borrower may not prepay all or any portion of the principal amount of any Money Market Loan prior to the maturity thereof. (c) Upon receipt of a notice of prepayment pursuant to this Section, the Agent shall promptly notify each Bank of the contents thereof and of such Bank's ratable share (if any) of such prepayment and such notice shall not thereafter be revocable by the Borrower. Each such prepayment shall be applied to prepay ratably the Loans of the several Banks included in the relevant Group or Borrowing. (d) On the date of any reduction of Commitments pursuant to Section 2.09(b), the Borrower shall repay such principal amount (together with accrued interest thereon) of outstanding Loans, if any, as may be necessary so that after such repayment (i) the aggregate outstanding principal amount of each Bank's Committed Loans does not exceed the amount of such Bank's Commitment as then reduced, and (ii) the aggregate unpaid principal amount of all outstanding Loans does not exceed the aggregate amount of the Commitments as then reduced. Any such prepayment shall be made in accordance with all applicable provisions of this Agreement (including without limitation subsections (a) (other than as to amount), (b) and (c) of this Section 2.11). SECTION 2.12. General Provisions as to Payments. (a) The Borrower shall make each payment of principal of, and interest on, the Loans and of fees and other amounts payable hereunder, not later than 12:00 Noon (New York City time) on the date when due, in Federal or other funds immediately available in New York City, without off set or counterclaim, to the Agent at its address referred to in Section 10.01. The Agent will promptly distribute to each Bank its ratable share of each such payment received by the Agent for the account of the Banks. Whenever any payment of principal of, or interest on, the Domestic Loans or of fees or other amounts payable hereunder shall be due on a day which is not a Domestic Business Day, the date for payment thereof shall be extended to the 26 next succeeding Domestic Business Day. Whenever any payment of principal of, or interest on, the Euro-Dollar Loans shall be due on a day which is not a Euro-Dollar Business Day, the date for payment thereof shall be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case the date for payment thereof shall be the next preceding Euro-Dollar Business Day. Whenever any payment of principal of, or interest on, the Money Market Loans shall be due on a day which is not a Euro-Dollar Business Day, the date for payment thereof shall be extended to the next succeeding Euro-Dollar Business Day. If the date for any payment of principal is extended by operation of law or otherwise, interest thereon shall be payable for such extended time. (b) Unless the Agent shall have received notice from the Borrower prior to the date on which any payment is due from the Borrower to the Banks hereunder that the Borrower will not make such payment in full, the Agent may assume that the Borrower has made such payment in full to the Agent on such date and the Agent may, in reliance upon such assumption, cause to be distributed to each Bank on such due date an amount equal to the amount then due such Bank. If and to the extent that the Borrower shall not have so made such payment, each Bank shall repay to the Agent forthwith on demand such amount distributed to such Bank together with interest thereon, for each day from the date such amount is distributed to such Bank until the date such Bank repays such amount to the Agent, at the Federal Funds Rate. SECTION 2.13. Funding Losses. If the Borrower makes any payment of principal with respect to any Fixed Rate Loan or any Fixed Rate Loan is converted to a Domestic Loan (pursuant to Article 2, 6 or 8 or otherwise) on any day other than the last day of an Interest Period applicable thereto, or the last day of an applicable period fixed pursuant to Section 2.07(c), or if the Borrower fails to borrow, convert, continue or prepay any Fixed Rate Loans after notice has been given to any Bank in accordance with Section 2.04(a), 2.10(c) or 2.11(c), the Company shall reimburse each Bank within 15 days after demand for any resulting loss or expense incurred by it (or by an existing or prospective Participant in the related Loan), including (without limitation) any loss incurred in obtaining, liquidating or employing deposits from third parties, but excluding loss of margin for the period after any such payment or conversion or failure to borrow or prepay, provided that such Bank shall have delivered to the Company a certificate as to the amount of such loss or expense, which certificate shall be conclusive in the absence of manifest error. SECTION 2.14. Computation of Interest and Fees. Interest based on the Prime Rate hereunder shall be computed on the basis of a year of 365 days (or 366 days in a leap year) and paid for the actual number of days elapsed (including the first day but excluding the last day). All other interest and fees hereunder shall be 27 computed on the basis of a year of 360 days and paid for the actual number of days elapsed (including the first day but excluding the last day). SECTION 2.15. Change of Control. If a Change of Control shall occur, the Company will, within ten days after the occurrence thereof, give each Bank notice thereof, which notice shall describe in reasonable details the facts and circumstances giving rise thereto and shall specify an Optional Termination Date for purposes of this Section (the "Optional Termination Date") which date shall not be less than 30 nor more than 60 days after the date of such notice. Each Bank may, by notice to the Company and the Agent given not less than three Domestic Business Days prior to the Optional Termination Date, terminate its Commitment (if any), which shall thereupon be terminated, and declare the Note held by it (together with accrued interest thereon) and any other amounts payable hereunder for its account to be, and such Note and such other amounts shall thereupon become, due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Company and the Borrower, in each case effective on the Optional Termination Date. A "Change of Control" shall occur if any person or group of persons (within the meaning of Section 13 or 14 of the Securities Exchange Act of 1934, as amended) shall have acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated by the Securities and Exchange Commission under said Act) of 30% or more of the outstanding shares of common stock of the Company; or, during any period of twelve consecutive calendar months, individuals who were directors of the Company on the first day of such period shall cease to constitute a majority of the board of directors of the Company. The Separation shall not constitute a Change of Control. ARTICLE 3 CONDITIONS SECTION 3.01. Closing. The closing hereunder shall occur upon receipt by the Agent of the following (in the case of any document, dated the Closing Date unless otherwise indicated): (a) a duly executed Note of the Borrower for the account of each Bank dated on or before the Closing Date complying with the provisions of Section 2.05; 28 (b) an opinion of Thomas O. McGimpsey, Esq., counsel for the Company and the Borrower, substantially in the form of Exhibit E hereto and covering such additional matters relating to the transactions contemplated hereby as the Required Banks may reasonably request; (c) an opinion of Davis Polk & Wardwell, special counsel for the Agent, substantially in the form of Exhibit F hereto and covering such additional matters relating to the transactions contemplated hereby as the Required Banks may reasonably request; (d) evidence satisfactory to the Agent that the commitments under the Existing Credit Agreements have been terminated and that the principal and interest on all loans and accrued fees outstanding thereunder have been paid in full; (e) evidence satisfactory to the Agent of the payment of all fees and other amounts payable to the Agent for the account of the Banks or the Agent on or prior to the Closing Date, including, to the extent invoiced, reimbursement of all out-of-pocket expenses (including, without limitation, legal fees and expenses) required to be reimbursed or paid by the Borrower or the Company hereunder; and (f) all documents the Agent may reasonably request relating to the existence of the Company and the Borrower, the corporate authority for and the validity of this Agreement and the Notes, and any other matters relevant hereto, all in form and substance satisfactory to the Agent. The Agent shall promptly notify the Company and the Banks of the Closing Date, and such notice shall be conclusive and binding on all parties hereto. SECTION 3.2. All Borrowings. The obligation of any Bank to make a Loan on the occasion of any Borrowing is subject to the satisfaction of the following conditions: (a) the fact that the Closing Date shall have occurred on or prior to May 30, 1998; (b) receipt by the Agent of a Notice of Borrowing as required by Section 2.02 or 2.03, as the case may be; 29 (c) the fact that, immediately before and after such Borrowing, the aggregate outstanding principal amount of the Loans will not exceed the aggregate amount of the Commitments; (d) the fact that, immediately before and after such Borrowing, no Default shall have occurred and be continuing; and (e) the fact that the representations and warranties contained in this Agreement shall be true on and as of the date of such Borrowing (except, in the case of the representations and warranties contained in Section 4.04(b), as disclosed by the Borrower to the Banks in writing in the Notice of Borrowing relating to such Borrowing). Each Borrowing hereunder shall be deemed to be a representation and warranty by the Borrower on the date of such Borrowing as to the facts specified in clauses (c), (d) and (e) of this Section. SECTION 3.3. Loans after Separation. The obligation of any Bank to make or maintain a Loan after the Separation is subject to receipt by the Agent of the following documents, each dated or effective on the date of consummation of the Separation: (a) an instrument, satisfactory in form and substance to the Agent, and duly executed and delivered by USW-C, Inc. pursuant to which USW-C, Inc. (to be renamed U S WEST, Inc.) assumes the obligations of U S WEST, Inc. (to be renamed MediaOne Group, Inc.) under this Agreement; (b) evidence satisfactory to it that the Separation has been consummated substantially on the terms described in the Proxy Statement; (c) an opinion of Thomas O. McGimpsey, Esq., counsel for USW-C, Inc., substantially in the form of Exhibit E hereto with such modifications as are acceptable to the Agent and covering such additional matters relating to the transactions contemplated hereby as the Required Banks may reasonably request; and (d) all documents the Agent may reasonably request relating to the existence of USW-C, Inc., the corporate authority for and the validity of this Agreement and the Notes, and any other matters relevant hereto, all in form and substance satisfactory to the Agent. 30 The Agent shall promptly notify the Company and the Banks of the satisfaction of the foregoing conditions. ARTICLE 4 REPRESENTATIONS AND WARRANTIES Each of the Company and the Borrower represents and warrants that: SECTION 4.1. Corporate Existence and Power. Each of the Company and the Borrower is a corporation duly incorporated, validly existing and in good standing under the laws of the state of its incorporation, and has all corporate powers and all material governmental licenses, authorizations, qualifications, consents and approvals required to carry on its business as now conducted. SECTION 4.2. Corporate and Governmental Authorization; No Contravention. The execution, delivery and performance by the Company and the Borrower of this Agreement and by the Borrower of the Notes are within such Person's corporate powers, have been duly authorized by all necessary corporate action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate of incorporation or by-laws of such Person or of any agreement, judgment, injunction, order, decree or other instrument binding upon such Person or any Significant Subsidiary or result in the creation or imposition of any Lien on any material asset of such Person or any Significant Subsidiary. SECTION 4.3. Binding Effect. This Agreement constitutes a valid and binding agreement of the Company and the Borrower, and the Notes, when executed and delivered in accordance with this Agreement, will constitute valid and binding obligations of the Borrower, in each case enforceable in accordance with its terms except as the same may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and by general principles of equity. SECTION 4.4. Financial Information. (a) The consolidated balance sheet of the Company and its Consolidated Subsidiaries as of December 31, 1997 and the related consolidated statements of income and cash flows for the fiscal year then ended, reported on by Arthur Andersen L.L.P. and set forth in the Company's 1997 Form 10-K, a copy 31 of which has been delivered to each of the Banks, fairly present, in conformity with generally accepted accounting principles, the consolidated financial position of the Company and its Consolidated Subsidiaries as of such date and their consolidated results of operations and cash flows for such fiscal year. (b) Since December 31, 1997 there has been no material adverse change in the financial position or results of operations of the Company and its Consolidated Subsidiaries, considered as a whole (it being understood that the consummation of the Separation shall not be considered such a change). SECTION 4.5. Litigation. Except as disclosed in the Company's 1997 Form 10-K, there is no action, suit or proceeding pending against, or to the knowledge of the Company threatened against or affecting, the Company or any of its Subsidiaries before any court or arbitrator or any governmental body, agency or official in which there is a reasonable possibility of an adverse decision which would materially adversely affect the consolidated financial position or consolidated results of operations of the Company and its Consolidated Subsidiaries, considered as a whole, or which in any manner draws into question the validity of this Agreement or the Notes. SECTION 4.6. Compliance with ERISA. Each member of the ERISA Group has fulfilled its obligations under the minimum funding standards of ERISA and the Internal Revenue Code with respect to each Plan and is in compliance in all respects with the presently applicable provisions of ERISA and the Internal Revenue Code with respect to each Plan, except where failure to comply would not have a material adverse effect on the consolidated financial position or consolidated results of operations of the Company and its Consolidated Subsidiaries, considered as a whole. No member of the ERISA Group has (i) sought a waiver of the minimum funding standard under Section 412 of the Internal Revenue Code in respect of any Plan, (ii) failed to make any contribution or payment to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement, which has resulted or could result in the imposition of a Lien or the posting of a bond or other security under ERISA or the Internal Revenue Code or (iii) incurred any liability under Title IV of ERISA other than a liability to the PBGC for premiums under Section 4007 of ERISA. SECTION 4.7. Environmental Matters. (a) The operations of the Company and each of its Subsidiaries comply in all respects with all Environmental Laws except such non-compliance which would not (if enforced in accordance with applicable law) reasonably be expected to result, individually or in the aggregate, 32 in a material adverse effect on the financial position or results of operations of the Company and its Consolidated Subsidiaries, considered as a whole. (b) Except as specifically identified in Schedule 4.07, the Company and each of its Subsidiaries have obtained all material licenses, permits, authorizations and registrations required under any Environmental Laws ("Environmental Permits") necessary for their respective operations, and all such Environmental Permits are in good standing, and the Company and each of its Subsidiaries is in compliance with all material terms and conditions of such Environmental Permits. (c) Except as specifically identified in Schedule 4.07, (i) none of the Company, any of its Subsidiaries or any of their present property or operations are subject to any outstanding written order from or settlement or consent agreement with any governmental authority or other Person, nor is any of the foregoing subject to any judicial or docketed administrative proceedings, respecting any Environmental Laws or Hazardous Substances with a potential liability in excess of $1,000,000 and (ii) there are no other conditions or circumstances known to the Company which may give rise to any claims respecting any Environmental Laws arising from the operations of the Company or its Subsidiaries (including, without limitation, off-site liabilities), or any additional costs of compliance with Environmental Laws, that would reasonably be expected to have a material adverse effect on the financial position or results of operations of the Company and its Subsidiaries, considered as a whole. SECTION 4.8. Taxes. United States Federal income tax returns of the Company and its Subsidiaries have been examined and closed through the fiscal year ended December 31, 1987. The Company and its Subsidiaries have filed all United States Federal income tax returns and all other material tax returns which are required to be filed by them and have paid all taxes due pursuant to such returns or pursuant to any assessment received by the Company or any Subsidiary, except for taxes the amount, applicability or validity of which is being contested in good faith by appropriate proceedings. The charges, accruals and reserves on the books of the Company and its Subsidiaries in respect of taxes or other governmental charges are, in the opinion of the Company, adequate. SECTION 4.9. Subsidiaries. Each of the Company's corporate Significant Subsidiaries (including, but not limited to, the Borrower) is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation, and has all corporate powers and all material governmental licenses, authorizations, qualifications, consents and approvals required to carry on its business as now conducted. 33 SECTION 4.10. Not an Investment Company. Neither the Company nor the Borrower is an "investment company" within the meaning of the Investment Company Act of 1940, as amended. SECTION 4.11. Full Disclosure. All written information heretofore furnished by the Company or the Borrower to the Agent or any Bank for purposes of or in connection with this Agreement or any transaction contemplated hereby is, and all such information hereafter furnished by the Company or the Borrower to the Agent or any Bank will be, true and accurate in all material respects on the date as of which such information is stated or certified. ARTICLE 5 COVENANTS The Company agrees that, so long as any Bank has any Commitment hereunder or any amount payable under any Note remains unpaid: SECTION 5.1. Information. The Company will deliver to each of the Banks: (a) as soon as available and in any event within 95 days after the end of each fiscal year of the Company, a consolidated balance sheet of the Company and its Consolidated Subsidiaries as of the end of such fiscal year and the related consolidated statements of income and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on in a manner acceptable to the Securities and Exchange Commission by Arthur Andersen L.L.P. or other independent public accountants of nationally recognized standing; (b) as soon as available and in any event within 50 days after the end of each of the first three quarters of each fiscal year of the Company, a consolidated balance sheet of the Company and its Consolidated Subsidiaries as of the end of such quarter and the related consolidated statements of income and cash flows for such quarter and for the portion of the Company's fiscal year ended at the end of such quarter, setting forth in the case of such statements of income and cash flows in comparative form the figures for the corresponding quarter and the corresponding portion of the Company's previous fiscal year, all certified (subject to normal year-end adjustments) as to fairness of presentation, generally accepted accounting principles and consistency by the chief financial officer or the chief accounting officer of the Company; 34 (c) simultaneously with the delivery of each set of financial statements referred to in clauses (a) and (b) above, a certificate of the chief financial officer (or such officer's designee, designated in writing by such officer) or the chief accounting officer of the Company (i) setting forth in reasonable detail the calculations required to establish whether the Company was in compliance with the requirements of Sections 5.06 to 5.08, inclusive, on the date of such financial statements and (ii) stating whether any Default exists on the date of such certificate and, if any Default then exists, setting forth the details thereof and the action which the Company is taking or proposes to take with respect thereto; (d) within five Domestic Business Days after any officer of the Company or the Borrower obtains knowledge of any Default, if such Default is then continuing, a certificate of the chief financial officer or the chief accounting officer of the Company or the Borrower setting forth the details thereof and the action which the Company or the Borrower is taking or proposes to take with respect thereto; (e) promptly upon the mailing thereof to the shareholders of the Company generally, copies of all financial statements, reports and proxy statements so mailed; (f) promptly upon the filing thereof, copies of all registration statements (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their equivalents) (other than any amendment on Form 8-K the sole purpose of which is to file exhibits relating to existing Debt meeting the requirements of clause (ii) of the definition of Debt) which the Company shall have filed with the Securities and Exchange Commission; (g) if and when any member of the ERISA Group (i) gives or is required to give notice to the PBGC of any "reportable event" (as defined in Section 4043 of ERISA) with respect to any Plan which might constitute grounds for a termination of such Plan under Title IV of ERISA, or knows that the plan administrator of any Plan has given or is required to give notice of any such reportable event, a copy of the notice of such reportable event given or required to be given to the PBGC; (ii) receives notice of complete or partial withdrawal liability under Title IV of ERISA or notice that any Multiemployer Plan is in reorganization, is insolvent or has been terminated, a copy of such notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent to terminate, impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of such notice; (iv) 35 applies for a waiver of the minimum funding standard under Section 412 of the Internal Revenue Code, a copy of such application; (v) gives notice of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of such notice and other information filed with the PBGC; (vi) gives notice of withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such notice; or (vii) fails to make any payment or contribution to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement or makes any amendment to any Plan or Benefit Arrangement which has resulted or could result in the imposition of a Lien or the posting of a bond or other security, a certificate of the chief financial officer or the chief accounting officer of the Company setting forth details as to such occurrence and action, if any, which the Company or applicable member of the ERISA Group is required or proposes to take; and (h) from time to time such additional information regarding the financial position or business of the Company and its Subsidiaries and the Borrower and its Subsidiaries as the Agent, at the request of any Bank, may reasonably request. SECTION 5.2. Maintenance of Property; Insurance. (a) The Company will keep, and will cause each Significant Subsidiary to keep, all property useful and necessary in its business in good working order and condition, ordinary wear and tear excepted. (b) The Company will maintain, and will cause each Significant Subsidiary to maintain (either in the name of the Borrower or in such Significant Subsidiary's own name), with financially sound and responsible insurance companies, insurance on all their respective properties in at least such amounts and against at least such risks (and with such risk retention) as are usually insured against in the same general area by companies of established repute engaged in the same or a similar business; and will furnish to the Banks, upon request from the Agent, information presented in reasonable detail as to the insurance so carried; provided that, in lieu of any such insurance, the Company and any Significant Subsidiary may maintain a system or systems of self-insurance and reinsurance which will accord with sound practices of similarly situated corporations maintaining such systems and with respect to which the Company or such Significant Subsidiary will maintain adequate insurance reserves, all in accordance with generally accepted accounting principles and in accordance with sound insurance principles and practice. SECTION 5.3. Maintenance of Existence. The Company will, and will cause each Significant Subsidiary to, preserve, renew and keep in full force and effect their respective corporate existence and their respective rights, privileges and franchises necessary or desirable in the normal conduct of business; provided 36 that nothing in this Section 5.03 shall prohibit or interfere with the Company's publicly announced strategy to discontinue or dispose of in one or more transactions the financial services businesses of it or of any of its Subsidiaries. SECTION 5.4. Compliance with Laws. The Company will comply, and will cause each Significant Subsidiary to comply, in all material respects with all applicable laws, ordinances, rules, regulations, and requirements of governmental authorities (including, without limitation, Environmental Laws and ERISA and the rules and regulations thereunder), except where the necessity of compliance therewith is contested in good faith by appropriate proceedings and for which adequate reserves in conformity with generally accepted accounting principles have been established. SECTION 5.5. Inspection of Property, Books and Records. The Company will keep, and will cause each Significant Subsidiary to keep, proper books of record and account in which full, true and correct entries shall be made of all dealings and transactions in relation to its business and activities; and will permit, and will cause each Significant Subsidiary to permit, representatives of any Bank at such Bank's expense to visit and inspect any of their respective properties, to examine and make abstracts from any of their respective books and records and to discuss their respective affairs, finances and accounts with their respective officers, employees and independent public accountants, all at such reasonable times and as often as may reasonably be desired. SECTION 5.6. Subsidiary Debt. (a) Prior to the Separation, total debt of all Consolidated Subsidiaries (excluding Debt of a Consolidated Subsidiary to the Company or to a Wholly-Owned Consolidated Subsidiary) ("Subsidiary Debt") will at no time exceed 250% of Consolidated Net Worth. (b) After the Separation, Subsidiary Debt as of the last day of any fiscal quarter of the Company will not exceed 150% of Consolidated EBITDA for the four consecutive fiscal quarters of the Company ending on such date; provided that in the case of any four fiscal quarter period ending prior to the first anniversary of the Separation, Consolidated EBITDA for such period shall equal Consolidated EBITDA for each fiscal quarter (a "Relevant Quarter") beginning after the Separation and ending on or prior to the last day of such period, multiplied by a fraction, the numerator of which is four and the denominator of which is the number of Relevant Quarters. (c) For purposes of this Section, any preferred stock of a Consolidated Subsidiary other than the Borrower which is held by a Person other than the Company or a Wholly-Owned Consolidated Subsidiary shall be included, at the 37 higher of its voluntary or involuntary liquidation value, in the Debt of such Consolidated Subsidiary. SECTION 5.7. Debt Coverage. (a) Prior to the Separation, consolidated Debt of the Company and its Consolidated Subsidiaries will at all times be less than 70% of the sum of consolidated Debt of the Company and its Consolidated Subsidiaries and consolidated shareowners' equity of the Company and its Consolidated Subsidiaries. (b) After the Separation, consolidated Debt of the Company and its Consolidated Subsidiaries as of the last day of any fiscal quarter of the Company will not exceed 400% of Consolidated EBITDA for the four consecutive fiscal quarters of the Company ending on such date; provided that in the case of any four fiscal quarter period ending prior to the first anniversary of the Separation, Consolidated EBITDA for such period shall equal Consolidated EBITDA for each fiscal quarter (a "Relevant Quarter") beginning after the Separation and ending on or prior to the last day of such period, multiplied by a fraction, the numerator of which is four and the denominator of which is the number of Relevant Quarters. SECTION 5.8. Negative Pledge. Neither the Company nor the Borrower will, and the Company will not permit any Subsidiary to, create, assume or suffer to exist any Lien on any asset now owned or hereafter acquired by it, except: (a) Liens existing on the date of this Agreement securing Debt outstanding on the date of this Agreement in an aggregate principal amount not exceeding $265,000,000; (b) any Lien existing on any asset of any corporation at the time such corporation becomes a Subsidiary and not created in contemplation of such event; (c) any Lien on any asset securing Debt incurred or assumed for the purpose of financing all or any part of the cost of acquiring such asset, provided that such Lien attaches to such asset concurrently with or within 180 days after the acquisition thereof. (d) any Lien on any asset of any corporation existing at the time such corporation is merged or consolidated with or into the Company or a Subsidiary and not created in contemplation of such event; (e) any Lien existing on any asset prior to the acquisition thereof by the Company or a Subsidiary and not created in contemplation of such acquisition; 38 (f) any Lien on assets or capital stock of Minor Subsidiaries which secures Debt of Persons which are not Consolidated Subsidiaries in which the Company or any of its Subsidiaries has made investments ("Joint Ventures"), but for the payment of which Debt no other recourse may be had to the Company or any Subsidiaries ("Limited Recourse Debt"), or any Lien on equity interests in a Joint Venture securing Limited Recourse Debt of such Joint Venture; (g) any Lien arising out of the refinancing, replacement, extension, renewal or refunding of any Debt secured by any Lien permitted by any of the foregoing clauses of this Section, provided that such Debt is not increased and is not secured by any additional assets; (h) Liens arising in the ordinary course of business which (i) do not secure Debt, (ii) do not secure any obligation in an amount exceeding $50,000,000 and (iii) do not in the aggregate materially detract from the value of its assets or materially impair the use thereof in the operation of its business; and (i) Liens not otherwise permitted by and in addition to the foregoing clauses of this Section securing Debt in an aggregate principal amount at any time outstanding not to exceed $750,000,000. SECTION 5.9. Consolidations, Mergers and Sales of Assets. The Company will not (i) consolidate with or merge into any other Person or (ii) sell, lease or otherwise transfer, directly or indirectly, all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, to any other Person. The Company will retain ownership, directly or indirectly, of at least 80% of the capital stock, and at least 80% of the voting power, of U S WEST Communications, Inc. ("Communications"), and will cause Communications to continue to own substantially all of the telecommunications assets it owns on the date of this Agreement. SECTION 5.10. Use of Proceeds. The proceeds of the Loans made under this Agreement will be used by the Borrower for general corporate purposes. None of such proceeds will be used, directly or indirectly, in violation of any applicable law or regulation, and no use of such proceeds will include any use for the purpose, whether immediate, incidental or ultimate, of buying or carrying any Margin Stock. SECTION 5.11. Year 2000 Compatibility. The Company shall take all reasonable action necessary to ensure that the computer based systems of the Company and its Subsidiaries are able to operate and effectively process data including dates on or after January 1, 2000, except that such action shall not be required to the extent that the failure to take such action would not have a material 39 adverse effect on the consolidated financial position or consolidated results of operations of the Company and its Consolidated Subsidiaries, considered as a whole. At the request of the Agent, the Company shall provide assurance reasonably acceptable to the Agent of the year 2000 compatibility of the Company and its Subsidiaries. ARTICLE 6 DEFAULTS SECTION 6.1. Events of Default. If one or more of the following events shall have occurred and be continuing: (a) any principal of any Loan shall not be paid when due, or any interest, any fees or any other amount payable hereunder shall not be paid within five days of the due date thereof; (b) the Company or the Borrower shall fail to observe or perform any covenant contained in Sections 5.06 to 5.10, inclusive; (c) the Company or the Borrower shall fail to observe or perform any covenant or agreement contained in this Agreement (other than those covered by clause (a) or (b) above) for 10 days (or, in the case of Section 5.11, 30 days) after written notice thereof has been given to the Company by the Agent at the request of any Bank; (d) any representation, warranty, certification or statement made by the Company or the Borrower in this Agreement or in any certificate, financial statement or other document delivered pursuant to this Agreement shall prove to have been incorrect in any material respect when made (or deemed made); (e) the Company or any Subsidiary shall fail to make any payment or payments, in the aggregate in excess of $100,000,000, in respect of any Material Debt when due or within any applicable grace period; (f) any event or condition shall occur which results in the acceleration of the maturity of any Material Debt; 40 (g) the Company or any Significant Subsidiary shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action to authorize or otherwise acquiesce in any of the foregoing; (h) an involuntary case or other proceeding shall be commenced against the Company or any Significant Subsidiary seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 days; or an order for relief shall be entered against the Company or any Significant Subsidiary under the federal bankruptcy laws as now or hereafter in effect; (i) any member of the ERISA Group shall fail to pay when due an amount or amounts aggregating in excess of $100,000,000 which it shall have become liable to pay under Title IV of ERISA; or notice of intent to terminate a Material Plan shall be filed under Title IV of ERISA by any member of the ERISA Group, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate, to impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be appointed to administer any Material Plan; or a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Material Plan must be terminated; or there shall occur a complete or partial withdrawal from, or a default, within the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which could cause one or more members of the ERISA Group to incur a current payment obligation in excess of $100,000,000; (j) a judgment or order for the payment of money in excess of $100,000,000 shall be rendered against the Company or any Subsidiary 41 and such judgment or order shall continue unsatisfied and unstayed for a period of 10 days; (k) the Company shall repudiate in writing any of its obligations under Article 9 or any such obligation shall be unenforceable against the Company in accordance with its terms, or the Company shall so assert in writing; (l) prior to the Separation, one or more events or conditions shall occur which result in a default under any agreement or agreements in respect of any Material Debt that is subject to the Indentures and as a consequence of such default or defaults the Company or any of its Subsidiaries shall make any payment or give or agree to give any consideration or benefit of any kind (including, without limitation, any increased compensation, prepayment, shortening of maturities, security or other credit support) to the holders of such Debt and such payment, consideration or benefit is determined by the Required Banks, after taking into account any payment, consideration or benefit made, given or agreed to be given by such holders to the Company or any of its Subsidiaries (other than a waiver of such default), to be a material benefit to the holders of such Debt; or (m) the Separation shall have occurred on terms and conditions which are not substantially the same as those set forth in the Proxy Statement; then, and in every such event, the Agent shall (i) if requested by Banks having more than 50% in aggregate amount of the Commitments, by notice to the Company terminate the Commitments and they shall thereupon terminate, and/or (ii) if requested by Banks holding Notes evidencing more than 50% in aggregate principal amount of the Loans, by notice to the Company declare the Notes (together with accrued interest thereon) to be, and the Notes shall thereupon become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Company and the Borrower; provided that in the case of any of the Events of Default specified in clause (g) or (h) above with respect to the Company or the Borrower, without any notice to the Company or the Borrower or any other act by the Agent or the Banks, the Commitments shall thereupon automatically terminate and the Notes (together with accrued interest thereon) shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Company and the Borrower. 42 SECTION 6.2. Notice of Default. The Agent shall give notice to the Company under Section 6.01(c) promptly upon being requested to do so by any Bank and shall thereupon notify all the Banks thereof. ARTICLE 7 THE AGENT SECTION 7.1. Appointment and Authorization. Each Bank irrevocably appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under this Agreement and the Notes as are delegated to the Agent by the terms hereof or thereof, together with all such powers as are reasonably incidental thereto. SECTION 7.2. Agent and Affiliates. Morgan Guaranty Trust Company of New York shall have the same rights and powers under this Agreement as any other Bank and may exercise or refrain from exercising the same as though it were not the Agent, and Morgan Guaranty Trust Company of New York and its affiliates may accept deposits from, lend money to, and generally engage in any kind of business with the Company, the Borrower or any Subsidiary or affiliate of the Company or the Borrower as if it were not the Agent hereunder. SECTION 7.3. Action by Agent. The obligations of the Agent hereunder are only those expressly set forth herein. Without limiting the generality of the foregoing, the Agent shall not be required to take any action with respect to any Default, except as expressly provided in Article 6. SECTION 7.4. Consultation with Experts. The Agent may consult with legal counsel (who may be counsel for the Company or the Borrower), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts. SECTION 7.5. Liability of Agent. Neither the Agent nor any of its affiliates nor any of their respective directors, officers, agents or employees shall be liable for any action taken or not taken by it in connection herewith (i) with the consent or at the request of the Required Banks or (ii) in the absence of its own gross negligence or willful misconduct. Neither the Agent nor any of its affiliates nor any of their respective directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into or verify (i) any statement, warranty or representation made in connection with this Agreement or any borrowing 43 hereunder; (ii) the performance or observance of any of the covenants or agreements of the Company or the Borrower; (iii) the satisfaction of any condition specified in Article 3, except receipt of items required to be delivered to the Agent; or (iv) the validity, effectiveness or genuineness of this Agreement, the Notes or any other instrument or writing furnished in connection herewith. The Agent shall not incur any liability by acting in reliance upon any notice, consent, certificate, statement, or other writing (which may be a bank wire, telex or similar writing) believed by it to be genuine or to be signed by the proper party or parties. SECTION 7.6. Indemnification. Each Bank shall, ratably in accordance with its Commitment, indemnify the Agent, its affiliates and their respective directors, officers, agents and employees (to the extent not reimbursed by the Company or the Borrower) against any cost, expense (including counsel fees and disbursements), claim, demand, action, loss or liability (except such as result from such indemnitees' gross negligence or willful misconduct) that such indemnitees may suffer or incur in connection with this Agreement or any action taken or omitted by such indemnitees hereunder. SECTION 7.7. Credit Decision. Each Bank acknowledges that it has, independently and without reliance upon the Agent or any other Bank, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Bank also acknowledges that it will, independently and without reliance upon the Agent or any other Bank, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking any action under this Agreement. SECTION 7.8. Successor Agent. The Agent may resign at any time by giving notice thereof to the Banks and the Company. Upon any such resignation, the Required Banks shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Required Banks, and shall have accepted such appointment, within 30 days after the retiring Agent gives notice of resignation, then the retiring Agent may, on behalf of the Banks, appoint a successor Agent (with the consent of the Company, such consent not to be unreasonably withheld), which shall be a commercial bank organized or licensed under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $400,000,000. Upon the acceptance of its appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. After any retiring Agent's resignation hereunder as Agent, 44 the provisions of this Article shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent. SECTION 7.9. Agent's Fee. The Company shall pay to the Agent for its own account fees in the amounts and at the times previously agreed upon between the Company and the Agent. ARTICLE 8 CHANGES IN CIRCUMSTANCES SECTION 8.1. Basis for Determining Interest Rate Inadequate or Unfair. If on or prior to the first day of any Interest Period for any Euro-Dollar Loan or Money Market LIBOR Loan: (a) the Agent is advised by the Euro-Dollar Reference Banks that deposits in dollars (in the applicable amounts) are not being offered to the Euro- Dollar Reference Banks in the market for such Interest Period, or (b) in the case of Euro-Dollar Loans, Banks having 50% or more of the aggregate amount of the Euro-Dollar Loans advise the Agent that the Adjusted London Interbank Offered Rate as determined by the Agent will not adequately and fairly reflect the cost to such Banks of funding their Euro-Dollar Loans for such Interest Period, the Agent shall forthwith give notice thereof to the Company and the Banks, whereupon until the Agent notifies the Company that the circumstances giving rise to such suspension no longer exist, (i) the obligations of the Banks to make Euro-Dollar Loans or to convert outstanding Loans into Euro-Dollar Loans shall be suspended and (ii) each outstanding Euro- Dollar Loan shall be converted into a Domestic Loan on the last day of the then current Interest Period applicable thereto. Unless the Borrower notifies the Agent at least two Domestic Business Days before the date of any Fixed Rate Borrowing for which a Notice of Borrowing has previously been given that it elects not to borrow on such date, (i) if such Fixed Rate Borrowing is a Committed Borrowing, such Borrowing shall instead be made as a Domestic Borrowing and (ii) if such Fixed Rate Borrowing is a Money Market LIBOR Borrowing, the Money Market LIBOR Loans comprising such Borrowing shall bear interest for each day from and including the first day to but excluding the last day of the Interest Period applicable thereto at the Base Rate for such day. SECTION 8.2. Illegality. If, on or after the date of this Agreement, the adoption of any applicable law, rule or regulation, or any change in any applicable 45 law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank (or its Euro-Dollar Lending Office) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall make it unlawful or impossible for any Bank (or its Euro-Dollar Lending Office) to make, maintain or fund its Euro-Dollar Loans to the Borrower and such Bank shall so notify the Agent, the Agent shall forthwith give notice thereof to the other Banks and the Company, whereupon until such Bank notifies the Company and the Agent that the circumstances giving rise to such suspension no longer exist, the obligation of such Bank to make Euro-Dollar Loans to the Borrower, or to convert outstanding Loans into Euro-Dollar Loans, shall be suspended. Before giving any notice to the Agent pursuant to this Section, such Bank shall designate a different Euro-Dollar Lending Office if such designation will avoid the need for giving such notice and will not, in the judgment of such Bank, be otherwise disadvantageous to such Bank. If such notice is given, each Euro-Dollar Loan of such Bank then outstanding shall be converted to a Domestic Loan either (a) on the last day of the then current Interest Period applicable to such Euro-Dollar Loan if such Bank may lawfully continue to maintain and fund such Loan to such day or (b) immediately if such Bank shall determine that it may not lawfully continue to maintain and fund such Loan to such day. SECTION 8.3. Increased Cost and Reduced Return. (a) If on or after (x) the date hereof, in the case of any Committed Loan or any obligation to make Committed Loans or (y) the date of the related Money Market Quote, in the case of any Money Market Loan, the adoption of any applicable law, rule or regulation, or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank (or its Applicable Lending Office) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall impose, modify or deem applicable any reserve (including, without limitation, any such requirement imposed by the Board of Governors of the Federal Reserve System with respect to any Euro-Dollar Loan any such requirement included in an applicable Euro-Dollar Reserve Percentage), special deposit, insurance assessment or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Bank (or its Applicable Lending Office) or shall impose on any Bank (or its Applicable Lending Office) or on the United States market for certificates of deposit or the London interbank market any other condition affecting its Fixed Rate Loans, its Note or its obligation to make Fixed Rate Loans and the result of any of the foregoing is to increase the cost to such Bank (or its Applicable Lending Office) of making or maintaining any Fixed Rate Loan, or to reduce the amount of any sum received or receivable by such Bank (or its Applicable 46 Lending Office) under this Agreement or under its Note with respect thereto, by an amount deemed by such Bank to be material, then, within 15 days after demand by such Bank (with a copy to the Agent), the Company shall pay to such Bank such additional amount or amounts as will compensate such Bank for such increased cost or reduction. (b) If any Bank shall have determined that, after the date hereof, the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change in any such law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on capital of such Bank (or its Parent) as a consequence of such Bank's obligations hereunder to a level below that which such Bank (or its Parent) could have achieved but for such adoption, change, request or directive (taking into consideration its policies with respect to capital adequacy) by an amount deemed by such Bank to be material, then from time to time, within 15 days after demand by such Bank (with a copy to the Agent), the Company shall pay to such Bank such additional amount or amounts as will compensate such Bank (or its Parent) for such reduction. (c) Each Bank will promptly notify the Company and the Agent of any event of which it has knowledge, occurring after the date hereof, which will entitle such Bank to compensation pursuant to this Section and will designate a different Applicable Lending Office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the judgment of such Bank, be otherwise disadvantageous to such Bank. A certificate of any Bank claiming compensation under this Section and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error. In determining such amount, such Bank may use any reasonable averaging and attribution methods. SECTION 8.4. Taxes. (a) Any and all payments by the Company or the Borrower to or for the account of any Bank or the Agent hereunder or under any Note shall be made free and clear of and without deduction for any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of each Bank and the Agent, taxes imposed on its income, and franchise taxes imposed on it, by the jurisdiction under the laws of which such Bank or the Agent (as the case may be) 47 is organized or any political subdivision thereof and, in the case of each Bank, taxes imposed on its income, and franchise or similar taxes imposed on it, by the jurisdiction of such Bank's Applicable Lending Office or any political subdivision thereof (all such non-excluded taxes, duties, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "Taxes"). If the Company or the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any Note to any Bank or the Agent, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 8.04) such Bank or the Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Person shall make such deductions, (iii) such Person shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law and (iv) such Person shall furnish to the Agent, at its address referred to in Section 10.01, the original or a certified copy of a receipt evidencing payment thereof. (b) In addition, the Company agrees to pay any present or future stamp or documentary taxes and any other excise or property taxes, or charges or similar levies which arise from any payment made hereunder or under any Note or from the execution or delivery of, or otherwise with respect to, this Agreement or any Note (hereinafter referred to as "Other Taxes"). (c) The Company agrees to indemnify each Bank and the Agent for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section 8.04) paid by such Bank or the Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be made within 15 days from the date such Bank or the Agent (as the case may be) makes demand therefor. (d) Each Bank organized under the laws of a jurisdiction outside the United States, on or prior to the date of its execution and delivery of this Agreement in the case of each Bank listed on the signature pages hereof and on or prior to the date on which it becomes a Bank in the case of each other Bank, and from time to time thereafter if requested in writing by the Company (but only so long as such Bank remains lawfully able to do so), shall provide the Company with Internal Revenue Service form 1001 or 4224, as appropriate, or any successor form prescribed by the Internal Revenue Service, certifying that such Bank is entitled to benefits under an income tax treaty to which the United States is a party which reduces the rate of withholding tax on payments of interest or certifying that the income receivable pursuant to this Agreement is effectively 48 connected with the conduct of a trade or business in the United States. If the form provided by a Bank at the time such Bank first becomes a party to this Agreement indicates a United States interest withholding tax rate in excess of zero, withholding tax at such rate shall be considered excluded from "Taxes" as defined in Section 8.04(a) imposed by the United States. (e) For any period with respect to which a Bank has failed to provide the Company with the appropriate form pursuant to Section 8.04(d) (unless such failure is due to a change in treaty, law or regulation occurring subsequent to the date on which a form originally was required to be provided), such Bank shall not be entitled to indemnification under Section 8.04(a) with respect to Taxes imposed by the United States; provided, however, that should a Bank, which is otherwise exempt from or subject to a reduced rate of withholding tax, become subject to Taxes because of its failure to deliver a form required hereunder, the Company shall take such steps as such Bank shall reasonably request to assist such Bank to recover such Taxes. (f) If the Company or the Borrower is required to pay additional amounts to or for the account of any Bank pursuant to this Section 8.04, then such Bank will change the jurisdiction of its Applicable Lending Office so as to eliminate or reduce any such additional payment which may thereafter accrue if such change, in the judgment of such Bank, is not otherwise disadvantageous to such Bank. SECTION 8.5. Domestic Loans Substituted for Affected Euro-Dollar Loans. If (i) the obligation of any Bank to make Euro-Dollar Loans to the Borrower has been suspended pursuant to Section 8.02 or (ii) any Bank has demanded compensation under Section 8.03 or 8.04 with respect to its Euro- Dollar Loans and the Borrower shall, by at least five Euro-Dollar Business Days' prior notice to such Bank through the Agent, have elected that the provisions of this Section shall apply to such Bank, then, unless and until such Bank notifies the Company that the circumstances giving rise to such suspension or demand for compensation no longer exist: (a) all Loans to the Borrower which would otherwise be made by such Bank as (or continued as or converted into) Euro-Dollar Loans shall instead be Domestic Loans (on which interest and principal shall be payable contemporaneously with the related Euro-Dollar Loans of the other Banks), and (b) after each of its Euro-Dollar Loans to the Borrower has been repaid (or converted to a Domestic Loan), all payments of principal which would 49 otherwise be applied to repay such Euro-Dollar Loans shall be applied to repay its Domestic Loans instead. If such Bank notifies the Borrower that the circumstances giving rise to such notice no longer apply, the principal amount of each such Domestic Loan shall be converted into a Euro-Dollar Loan on the first day of the next succeeding Interest Period applicable to the related Euro-Dollar Loans of the other Banks. SECTION 8.6. Substitution of Bank. If (i) the obligation of any Bank to make Euro-Dollar Loans has been suspended pursuant to Section 8.02, (ii) any Bank has demanded compensation under Section 8.03 or (iii) any Bank has not signed an amendment or waiver which must be signed by all the Banks to become effective, and such amendment or waiver has been signed by the Super-Majority Banks, the Company shall have the right, with the assistance of the Agent, to seek a mutually satisfactory substitute bank or banks (which may be one or more of the Banks) to purchase the Notes and assume the Commitment of such Bank. ARTICLE 9 GUARANTY SECTION 9.1. The Guaranty. The Company hereby unconditionally guarantees the full and punctual payment (whether at stated maturity, upon acceleration or otherwise) of the principal of and interest on each Note issued by the Borrower pursuant to this Agreement, and the full and punctual payment of all other amounts payable by the Borrower under this Agreement. Upon failure by the Borrower to pay punctually any such amount, the Company shall forthwith on demand pay the amount not so paid at the place and in the manner specified in this Agreement. SECTION 9.2. Guaranty Unconditional. The obligations of the Company hereunder shall be unconditional, irrevocable and absolute and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by: (i) any extension, renewal, settlement, compromise, waiver or release in respect of any obligation of the Borrower under this Agreement or any Note, by operation of law or otherwise; 50 (ii) any modification or amendment of or supplement to this Agreement or any Note; (iii) any release, impairment, non-perfection or invalidity of any direct or indirect security for any obligation of the Borrower under this Agreement or any Note; (iv) any change in the corporate existence, structure or ownership of the Borrower, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting the Borrower or its assets or any resulting release or discharge of any obligation of the Borrower contained in this Agreement or any Note; (v) the existence of any claim, set-off or other rights which the Company may have at any time against the Borrower, the Agent, any Bank or any other Person, whether in connection herewith or any unrelated transactions, provided that nothing herein shall prevent the assertion of any such claim by separate suit or compulsory counterclaim; (vi) any invalidity or unenforceability relating to or against the Borrower for any reason of this Agreement or any Note, or any provision of applicable law or regulation purporting to prohibit the payment by the Borrower of the principal of or interest on any Note or any other amount payable by it under this Agreement; or (vii) any other act or omission to act or delay of any kind by the Borrower, the Agent, any Bank or any other Person or any other circumstance whatsoever which might, but for the provisions of this paragraph, constitute a legal or equitable discharge of the Company's obligations hereunder. SECTION 9.3. Discharge Only upon Payment in Full; Reinstatement In Certain Circumstances. The Company's obligations hereunder shall remain in full force and effect until the Commitments shall have terminated and the principal of and interest on the Notes and all other amounts payable by the Company and the Borrower under this Agreement shall have been indefeasibly paid in full. If at any time any payment of the principal of or interest on any Note or any other amount payable by the Borrower under this Agreement is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of the 51 Borrower or otherwise, the Company's obligations hereunder with respect to such payment shall be reinstated at such time as though such payment had been due but not made at such time. SECTION 9.4. Waiver by the Company. The Company irrevocably waives acceptance hereof, presentment, demand, protest and any notice not provided for herein, as well as any requirement that at any time any action be taken by any Person against the Borrower or any other Person. SECTION 9.5. Subrogation. The Company irrevocably waives any and all rights to which it may be entitled, by operation of law or otherwise, upon making any payment hereunder to be subrogated to the rights of the payee against the Borrower with respect to such payment or against any direct or indirect security therefor, or otherwise to be reimbursed, indemnified or exonerated by or for the account of the Borrower in respect thereof. SECTION 9.6. Stay of Acceleration. In the event that acceleration of the time for payment of any amount payable by the Borrower under this Agreement or its Notes is stayed upon insolvency, bankruptcy or reorganization of the Borrower, all such amounts otherwise subject to acceleration under the terms of this Agreement shall nonetheless be payable by the Company hereunder forthwith on demand by the Agent made at the request of the Required Banks. SECTION 9.7. Release upon Separation. So long as, immediately before and after the consummation of the Separation, no Default shall have occurred and be continuing, simultaneously with such consummation, USW-C, Inc. (to be renamed U S WEST, Inc.) shall succeed to all of the rights, duties and obligations of U S WEST, Inc. (to be renamed MediaOne Group, Inc.) ("Old U S WEST") hereunder, whereupon Old U S WEST shall have no further rights, duties and obligations hereunder, in each case automatically, without any further action on the part of any party hereto. ARTICLE 10 MISCELLANEOUS SECTION 10.1. Notices. All notices, requests and other communications to any party hereunder shall be in writing (including bank wire, telex, facsimile transmission or similar writing) and shall be given to such party: (x) in the case of the Company, the Borrower or the Agent, at its address or facsimile number set forth on the signature pages hereof, (y) in the case of any Bank, at its address or facsimile number set forth in its Administrative Questionnaire or (z) in the case of any party, such other address or facsimile number as such party may hereafter specify for the purpose by notice to the Agent and the Company. Each such notice, request or other communication shall be effective (i) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid, (ii) if given by facsimile transmission, when such facsimile is transmitted to the facsimile number specified pursuant to this Section 10.01 and telephonic confirmation of receipt thereof is received, or (iii) if given by any other means, when delivered at the address specified in this Section; provided that notices to the Agent under Article 2 or Article 8 shall not be effective until received. SECTION 10.2. No Waivers. No failure or delay by the Agent or any Bank in exercising any right, power or privilege hereunder or under any Note shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. SECTION 10.3. Expenses; Indemnification. (a) The Company shall pay (i) all out-of-pocket expenses of the Agent, including fees and disbursements of special counsel for the Agent, in connection with the preparation and administration of this Agreement, any waiver or consent hereunder or any amendment hereof or any Default or alleged Default hereunder and (ii) if an Event of Default occurs, all out-of-pocket expenses incurred by the Agent and each Bank, including fees and disbursements of counsel, in connection with such Event of Default and collection, bankruptcy, insolvency and other enforcement proceedings resulting therefrom. (b) The Company agrees to indemnify the Agent and each Bank, their respective affiliates and the respective directors, officers, agents and employees of the foregoing (each an "Indemnitee") and hold each Indemnitee harmless from and against any and all liabilities, losses, damages, costs and expenses of any kind, including, without limitation, the reasonable fees and disbursements of counsel, which may be incurred by such Indemnitee in connection with any investigative, administrative or judicial proceeding (whether or not such Indemnitee shall be designated a party thereto) brought or threatened relating to or arising out of this Agreement or any actual or proposed use of proceeds of Loans hereunder; provided that (i) no Indemnitee shall have the right to be indemnified hereunder for such Indemnitee's own gross negligence or willful misconduct as determined by a court of competent jurisdiction and (ii) the Company shall not be 53 liable for any settlement entered into by an Indemnitee without its consent (which shall not be unreasonably withheld). (c) Each Indemnitee agrees to give the Company prompt written notice after it receives any notice of the commencement of any action, suit or proceeding for which such Indemnitee may wish to claim indemnification pursuant to subsection (b). The Company shall have the right, exercisable by giving written notice within fifteen Domestic Business Days after the receipt of notice from such Indemnitee of such commencement, to assume, at the Company's expense, the defense of any such action, suit or proceeding; provided, that such Indemnitee shall have the right to employ separate counsel in any such action, suit or proceeding and to participate in the defense thereof, but the fees and expenses of such separate counsel shall be at such Indemnitee's expense unless (1) the Company shall have agreed to pay such fees and expenses; (2) the Company shall have failed to assume the defense of such action, suit or proceeding or shall have failed to employ counsel reasonably satisfactory to such Indemnitee in any such action, suit or proceeding; or (3) such Indemnitee shall have been advised by independent counsel in writing (with a copy to the Company) that there may be one or more defenses available to such Indemnitee which are in conflict with those available to the Company (in which case, if such Indemnitee notifies the Company in writing that it elects to employ separate counsel at the Company's expense, the Company shall be obligated to assume the expense, it being understood, however, that the Company shall not be liable for the fees or expenses of more than one separate firm of attorneys, which firm shall be designated in writing by such Indemnitee). SECTION 10.4. Sharing of Set-offs. Each Bank agrees that if it shall, by exercising any right of set-off or counterclaim or otherwise, receive payment of a proportion of the aggregate amount of principal and interest due with respect to any Note held by it which is greater than the proportion received by any other Bank in respect of the aggregate amount of principal and interest due with respect to any Note held by such other Bank, the Bank receiving such proportionately greater payment shall purchase such participations in the Notes held by the other Banks, and such other adjustments shall be made, as may be required so that all such payments of principal and interest with respect to the Notes held by the Banks shall be shared by the Banks pro rata; provided that nothing in this Section shall impair the right of any Bank to exercise any right of set-off or counterclaim it may have and to apply the amount subject to such exercise to the payment of indebtedness of the Borrower other than its indebtedness hereunder. The Borrower agrees, to the fullest extent it may effectively do so under applicable law, that any holder of a participation in a Note, whether or not acquired pursuant to the foregoing arrangements, may exercise rights of set-off or counterclaim and 54 other rights with respect to such participation as fully as if such holder of a participation were a direct creditor of the Borrower in the amount of such participation. SECTION 10.5. Amendments and Waivers. Any provision of this Agreement or the Notes may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by the Company, the Borrower and the Required Banks (and, if the rights or duties of the Agent are affected thereby, by the Agent); provided that no such amendment or waiver shall, unless signed by all the Banks, (i) increase or decrease the Commitment of any Bank (except for a ratable decrease in the Commitments of all Banks) or subject any Bank to any additional obligation, (ii) reduce the principal of or rate of interest on any Loan or any fees hereunder, except as provided below, (iii) postpone the date fixed for any payment of principal of or interest on any Loan or any fees hereunder or for any reduction or termination of any Commitment, (iv) amend or waive the provisions of Article 9 or (v) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Notes, or the number of Banks, which shall be required for the Banks or any of them to take any action under this Section or any other provision of this Agreement. SECTION 10.6. Successors and Assigns. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that neither the Company nor the Borrower may assign or otherwise transfer any of its rights under this Agreement without the prior written consent of all Banks. (b) Any Bank may at any time grant to one or more banks or other institutions (each a "Participant") participating interests in its Commitment or any or all of its Loans, with (and subject to) the written consent of the Company and the Agent, which consents shall not be unreasonably withheld; provided that if a Participant is an affiliate of such grantor Bank or is another Bank, no such consent shall be required. In the event of any such grant by a Bank of a participating interest to a Participant, such Bank shall remain responsible for the performance of its obligations hereunder, and the Company, the Borrower and the Agent shall continue to deal solely and directly with such Bank in connection with such Bank's rights and obligations under this Agreement. Any agreement pursuant to which any Bank may grant such a participating interest shall provide that such Bank shall retain the sole right and responsibility to enforce the obligations of the Company and the Borrower hereunder including, without limitation, the right to approve any amendment, modification or waiver of any provision of this Agreement; provided that such participation agreement may provide that such Bank will not agree to any modification, amendment or waiver of this Agreement 55 described in clause (i), (ii) or (iii) of Section 10.05 without the consent of the Participant. The Borrower agrees that each Participant shall, to the extent provided in its participation agreement, be entitled to the benefits of Article 8 with respect to its participating interest. An assignment or other transfer which is not permitted by subsection (c) or (d) below but which is consented to in accordance with this subsection (b) shall be given effect for purposes of this Agreement only to the extent of a participating interest granted in accordance with this subsection (b). (c) Any Bank may at any time assign to one or more banks or other institutions (each an "Assignee") all, or a proportionate part of all, of its rights and obligations under this Agreement and the Notes, and such Assignee shall assume such rights and obligations, pursuant to an Assignment and Assumption Agreement in substantially the form of Exhibit G hereto executed by such Assignee and such transferor Bank, with (and subject to) the subscribed consent of the Company and the Agent, which consents shall not be unreasonably withheld; provided that (i) if an Assignee is an affiliate of such transferor Bank or is another Bank, no such consent shall be required; (ii) such assignment may, but need not, include rights of the transferor Bank in respect of outstanding Money Market Loans; and (iii) any assignment shall not be less than $15,000,000, or if less, shall constitute an assignment of all of such Bank's rights and obligations under this Agreement and the Notes except for any rights retained in accordance with clause (ii) of this proviso. Upon execution and delivery of such instrument and payment by such Assignee to such transferor Bank of an amount equal to the purchase price agreed between such transferor Bank and such Assignee, such Assignee shall be a Bank party to this Agreement and shall have all the rights and obligations of a Bank with a Commitment as set forth in such instrument of assumption, and the transferor Bank shall be released from its obligations hereunder to a corresponding extent, and no further consent or action by any party shall be required. Upon the consummation of any assignment pursuant to this subsection (c), the transferor Bank, the Agent and the Borrower shall make appropriate arrangements so that, if required, new Notes are issued to the Assignee. In connection with any such assignment, the transferor Bank shall pay to the Agent an administrative fee for processing such assignment in the amount of $2,500. If the Assignee is not incorporated under the laws of the United States of America or a state thereof, it shall deliver to the Company and the Agent certification as to exemption from deduction or withholding of any United States federal income taxes in accordance with Section 8.04. (d) Any Bank may at any time assign all or any portion of its rights under this Agreement and its Notes to a Federal Reserve Bank. No such assignment shall release the transferor Bank from its obligations hereunder. 56 (e) No Assignee, Participant or other transferee of any Bank's rights shall be entitled to receive any greater payment under Section 8.03 or 8.04 than such Bank would have been entitled to receive with respect to the rights transferred, unless such transfer is made with the Company's prior written consent or by reason of the provisions of Section 8.02, 8.03 or 8.04 requiring such Bank to designate a different Applicable Lending Office under certain circumstances or at a time when the circumstances giving rise to such greater payment did not exist. SECTION 10.7. Termination of Existing Credit Agreements. The Company and each of the Banks that is also a "Bank" party to the Existing Credit Agreements agrees that the "Commitments" as defined in the Existing Credit Agreements shall be terminated in their entirety on the Effective Date. Each of such Banks waives (a) any requirement of notice of such termination pursuant to Section 2.09 of the Existing Credit Agreements and (b) any claim to any facility fees or other fees under the Existing Credit Agreements for any day on or after the Effective Date. Each of the Company and the Borrower (i) represents and warrants that (x) after giving effect to the preceding sentences of this Section 10.07, the commitments under the Existing Credit Agreements will be terminated effective not later than the Effective Date, (y) no loans are, as of the date hereof, or will be, as of the Effective Date, outstanding under the Existing Credit Agreements and (ii) covenants that all accrued and unpaid facility fees and any other amounts due and payable under the Existing Credit Agreements shall have been paid on or prior to the Effective Date. SECTION 10.8. Governing Law; Submission to Jurisdiction. This Agreement and each Note shall be governed by and construed in accordance with the laws of the State of New York. Each of the Company and the Borrower hereby submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York State court sitting in New York City for purposes of all legal proceedings arising out of or relating to this Agreement or the transactions contemplated hereby, and irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. SECTION 10.9. Counterparts; Integration; Effectiveness. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement constitutes the entire agreement and understanding among the parties hereto and supersedes any and all prior agreements and 57 understandings, oral or written, relating to the subject matter hereof. This Agreement shall become effective upon receipt by the Agent of counterparts hereof signed by each of the Company, the Borrower, the Banks and the Agent (or, in the case of any party as to which an executed counterpart shall not have been received, receipt by the Agent in form satisfactory to it of telegraphic, telex or other written confirmation from such party of execution of a counterpart hereof by such party). SECTION 10.10. WAIVER OF JURY TRIAL. EACH OF THE COMPANY, THE BORROWER, THE AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. SECTION 10.11. Confidentiality. Each of the Agent and the Banks agrees to use its reasonable best efforts to keep confidential any information delivered or made available by the Company or the Borrower to it which is clearly stated by the Company or the Borrower to be confidential; provided that nothing herein shall prevent the Agent or any Bank from disclosing such information (i) to the Agent or any other Bank in connection with the transactions contemplated hereby, (ii) to its officers, directors, employees, agents, attorneys and accountants who have a need to know such information in accordance with customary banking practices and who receive such information having been made aware of the restrictions set forth in this Section, (iii) upon the order of any court or administrative agency, (iv) upon the request or demand of any regulatory agency or authority having jurisdiction over such party, (v) which has been publicly disclosed, (vi) which has been obtained from any Person other than the Company and its Subsidiaries, provided that such Person is not (x) known to it to be bound by a confidentiality agreement with the Company or its Subsidiaries or (y) known to it to be otherwise prohibited from transmitting the information to it by a contractual, legal or fiduciary obligation, (vii) in connection with the exercise of any remedy hereunder or under the Notes or (viii) to any actual or proposed participant or assignee of all or any of its rights hereunder which has agreed in writing to be bound by the provisions of this Section. 58 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. U S WEST CAPITAL FUNDING, INC. By /s/ Sean Foley ---------------------------------- Title: Vice President & Treasurer 7800 East Orchard Road Englewood, Colorado 80111 Facsimile number: 303-793-6307 Telephone number: 303-793-6250 Attention: Sean Foley U S WEST, INC. By /s/ Rahn K. Porter ---------------------------------- Title: Assistant Treasurer 7800 East Orchard Road Englewood, Colorado 80111 Facsimile number: 303-793-6307 Telephone number: 303-793-6250 Attention: Rahn Porter USW-C, INC. By /s/ Allan R. Spies ---------------------------------- Title: Chief Financial Officer 7800 East Orchard Road Englewood, Colorado 80111 Facsimile number: 303-793-6307 Telephone number: 303-793-6250 Attention: Allan R. Spies 59 Commitments $194,444,444 MORGAN GUARANTY TRUST COMPANY OF NEW YORK By /s/ John M. Mikolay ---------------------------------- Title: Vice President $194,444,444 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By /s/ R. Vernon Howard ---------------------------------- Title: Managing Director $194,444,444 THE CHASE MANHATTAN BANK By /s/ Ann B. Kerns ---------------------------------- Title: Vice President $194,444,444 MELLON BANK, N.A. By /s/ David McGowan ---------------------------------- Title: Vice President 60 $186,666,667 ABN AMRO BANK N.V. By /s/ Thomas M. Toerpe ---------------------------------- Title: Vice President By /s/ Roxana Sopala ---------------------------------- Title: Vice President $186,666,667 THE BANK OF NEW YORK By /s/ James W. Whitaker ---------------------------------- Title: Vice President $186,666,667 BANK ONE, COLORADO, N.A. By /s/ David L. Ericson ---------------------------------- Title: Vice President $186,666,667 CITIBANK, N.A. By /s/ Prakash M. Chonkar ---------------------------------- Title: Attorney In-Fact $186,666,667 KEYBANK NATIONAL ASSOCIATION By /s/ Mary K. Young ---------------------------------- Title: Commercial Banking Officer 61 $186,666,667 NATIONSBANK, N.A. By /s/ Whitney Busse ---------------------------------- Title: Vice President $155,555,556 COMMERZBANK AG LOS ANGELES BRANCH By /s/ Christian Jagenberg ---------------------------------- Title: Senior Vice President and Manager By /s/ John Korthius ---------------------------------- Title: Vice President $155,555,556 FLEET NATIONAL BANK By /s/ Sue Anderson ---------------------------------- Title: Vice President $112,777,778 CANADIAN IMPERIAL BANK OF COMMERCE By /s/ Matthew S. Hannon ---------------------------------- Title: Executive Director, CIBC Oppenheimer acting as Agent 62 $105,000,000 BANKERS TRUST COMPANY By /s/ Gregory Shefrin ---------------------------------- Title: Vice President $105,000,000 THE FIRST NATIONAL BANK OF CHICAGO By /s/ Michael J. Harrington ---------------------------------- Title: Corporate Banking Officer $105,000,000 KREDIETBANK N.V. By /s/ Robert Snauffer ---------------------------------- Title: Vice President By /s/ Robert M. Surdam, Jr. ---------------------------------- Title: Vice President $105,000,000 THE ROYAL BANK OF SCOTLAND PLC By /s/ K.C. Barclay ---------------------------------- Title: Manager 63 $105,000,000 WELLS FARGO BANK, N.A. By /s/ Donald A. Hartmann ---------------------------------- Title: Senior Vice President By /s/ Judy A. Vodhanel ---------------------------------- Title: Vice President $58,333,333 BANK OF HAWAII By /s/ Elizabeth O. MacLean ---------------------------------- Title: Vice President $58,333,333 BARCLAYS BANK PLC By /s/ Les Bek ---------------------------------- Title: Director $58,333,333 BAYERISCHE LANDESBANK GIROZENTRALE CAYMAN ISLANDS BRANCH By /s/ Peter Obermann ---------------------------------- Title: Senior Vice President Manager Lending Division By /s/ Sean O'Sullivan ---------------------------------- Title: Vice President 64 $58,333,333 BAYERISCHE HYPOTHEKEN-UND WECHSEL-BANK AKTIENGESELLSCHAFT By /s/ Yoram Dankner ---------------------------------- Title: Senior Vice President By /s/ Christian Walter ---------------------------------- Title: Vice President $58,333,333 LEHMAN COMMERCIAL PAPER INC. By /s/ Michele Swenson ---------------------------------- Title: Authorized Signatory $58,333,333 MERRILL LYNCH CAPITAL CORPORATION By /s/ Robert Stevens ---------------------------------- Title: Vice President $58,333,333 NORWEST BANK COLORADO, NATIONAL ASSOCIATION By /s/ Carol A. Ward ---------------------------------- Title: Vice President $58,333,333 THE TOKAI BANK, LIMITED By /s/ Masahiko Saito ---------------------------------- Title: Senior Vice President and Assistant General Manager 65 $58,333,333 U.S. BANK NATIONAL ASSOCIATION By /s/ Scott E. Page ---------------------------------- Title: Vice President $38,888,889 BANQUE NATIONALE DE PARIS By /s/ C. Bettles ---------------------------------- Title: Senior Vice President & Manager By /s/ Stephane Ronze ---------------------------------- Title: Assistant Vice President $38,888,889 ROYAL BANK OF CANADA By /s/ John Page ---------------------------------- Title: Senior Manager $38,888,889 ISTITUTO BANCARIO SAN PAOLO DI TORINO S.P.A. By /s/ Robert S. Wurster ---------------------------------- Title: First Vice President By /s/ Jim Girolamo ---------------------------------- Title: Vice President 66 $11,666,667 THE PROVIDENT BANK. By /s/ Tom B. Scherpenberg ---------------------------------- Title: Vice President Total Commitments: $3,500,000,000 ============== 67 MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent By /s/ John M. Mikolay ---------------------------------- Title: Vice President 500 Stanton Christiana Road Newark, Delaware 19713 Attention: Mark Connor Facsimile number: 302-634-1092 Telephone number: 302-634-4218 68 PRICING SCHEDULE The "Euro-Dollar Margin" and "Facility Fee Rate" for any day are the respective percentages set forth below in the applicable row under the column corresponding to the Status that exists on such day:
=================================================================================================================== Level Level Level Level Level Level Status I II III IV V VI =================================================================================================================== Euro-Dollar Margin: .1475% .155% .175% .215% .245% .300% Usage less than 50% Usage greater than or equal to 50% .1975% .205% .225% .265% .295% .350% Facility Fee .040% .045% .050% .060% .080% .100% Rate ===================================================================================================================
For purposes of this Schedule, the following terms have the following meanings: "Level I Status" exists at any date after the Separation if, at such date, the Borrower's outstanding senior unsecured long-term debt securities are rated A+ or higher by S&P or A1 or higher by Moody's. "Level II Status" exists at any date after the Separation if, at such date, (i) the Borrower's outstanding senior unsecured long-term debt securities are rated A or higher by S&P or A2 or higher by Moody's and (ii) Level I Status does not exist. "Level III Status" exists (x) at any date prior to the Separation, and (y) at any date after the Separation if, at such date, (i) the Borrower's outstanding senior unsecured long-term debt securities are rated A- or higher by S&P or A3 or higher by Moody's and (ii) neither Level I Status nor Level II Status exists. "Level IV Status" exists at any date after the Separation if, at such date, (i) the Borrower's outstanding senior unsecured long-term debt securities are rated BBB+ or higher by S&P or Baa1 or higher by Moody's and (ii) none of Level I Status, Level II Status or Level III Status exists. "Level V Status" exists at any date after the Separation if, at such date, (i) the Borrower's outstanding senior unsecured long-term debt securities are rated BBB or higher by S&P or Baa2 or higher by Moody's and (ii) none of Level I Status, Level II Status, Level III Status or Level IV Status exists. "Level VI Status" exists at any date after the Separation if, at such date, none of Level I Status, Level II Status, Level III Status, Level IV Status or Level V Status exists. "Moody's" means Moody's Investors Service, Inc., a Delaware corporation, and its successors or, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, "Moody's" shall be deemed to refer to any other nationally recognized securities rating agency designated by the Required Banks, with the approval of the Company, by notice to the Agent and the Company. "S&P" means Standard & Poor's Ratings Group, a New York corporation, and its successors or, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, "S&P" shall be deemed to refer to any other nationally recognized securities rating agency designated by the Required Banks, with the approval of the Company, by notice to the Agent and the Company. "Status" refers to the determination of which of Level I Status, Level II Status, Level III Status, Level IV Status, Level V Status or Level VI Status exists at any date. "Usage" means at any date the percentage equivalent of a fraction (i) the numerator of which is the sum of the aggregate outstanding principal amount of the Loans at such date, after giving effect to any borrowing or payment on such date, and (ii) the denominator of which is the aggregate amount of the Commitments at such date, after giving effect to any reduction of the Commitments on such date. For purposes of this Schedule, if for any reason any Loans remain outstanding after termination of the Commitments, the Usage for each date on or after the date of such termination shall be deemed to be greater than 50%. The credit ratings to be utilized for purposes of this Schedule are those assigned to the senior unsecured long-term debt securities of the Borrower guaranteed by the Company, and any rating assigned to any other debt security of the Borrower shall be disregarded. The rating in effect at any date is that in effect at the close of business on such date. 2 SCHEDULE 4.07 Environmental Matters NONE. EXHIBIT A NOTE New York, New York ________, 19__ For value received, U S WEST CAPITAL FUNDING, INC., a Colorado corporation (the "Borrower"), promises to pay to the order of (the "Bank"), for the account of its Applicable Lending Office, the unpaid principal amount of each Loan made by the Bank to the Borrower pursuant to the Credit Agreement referred to below on the maturity date therefor specified in the Credit Agreement. The Borrower promises to pay interest on the unpaid principal amount of each such Loan on the dates and at the rate or rates provided for in the Credit Agreement. All such payments of principal and interest shall be made in lawful money of the United States in Federal or other immediately available funds at the office of Morgan Guaranty Trust Company of New York, 60 Wall Street, New York, New York. All Loans made by the Bank, the respective types and maturities thereof and all repayments of the principal thereof shall be recorded by the Bank and, if the Bank so elects in connection with any transfer or enforcement hereof, appropriate notations to evidence the foregoing information with respect to each such Loan then outstanding may be endorsed by the Bank on the schedule attached hereto, or on a continuation of such schedule attached to and made a part hereof; provided that the inaccuracy of, or the failure of the Bank to make, any such recordation or endorsement shall not affect the obligations of the Borrower hereunder or under the Credit Agreement. This note is one of the Notes referred to in the 364-Day Credit Agreement dated as of May 8, 1998 among U S WEST Capital Funding, Inc., U S WEST, Inc., USW-C, Inc., the banks listed on the signature pages thereof, the other agents named therein and Morgan Guaranty Trust Company of New York, as Administrative Agent (as the same may be amended from time to time, the "Credit Agreement"). Terms defined in the Credit Agreement are used herein with the same meanings. Reference is made to the Credit Agreement for provisions for the prepayment hereof and the acceleration of the maturity hereof. U S WEST, Inc., has, pursuant to the provisions of the Credit Agreement, unconditionally guaranteed the payment in full of the principal of and interest on this Note. U S WEST CAPITAL FUNDING, INC. By ------------------------------- Title: 2 LOANS AND PAYMENTS OF PRINCIPAL
- -------------------------------------------------------------------------------------------------------------- Date Amount of Type of Loan Amount of Maturity Date Notation Made Loan Principal By Repaid - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------
3 EXHIBIT B Form of Money Market Quote Request [Date] To: Morgan Guaranty Trust Company of New York (the "Agent") From: U S WEST Capital Funding, Inc. Re: 364-Day Credit Agreement (the "Credit Agreement") dated as of May 8, 1998 among U S WEST Capital Funding, Inc., U S WEST, Inc., USW-C, Inc., the Banks listed on the signature pages thereof, the other agents named therein and the Agent We hereby give notice pursuant to Section 2.03 of the Credit Agreement that we request Money Market Quotes for the following proposed Money Market Borrowing(s): Date of Borrowing: __________________ Principal Amount/1/ Interest Period/2/ $ Such Money Market Quotes should offer a Money Market [Margin] [Absolute Rate]. [The applicable base rate is the London Interbank Offered Rate.] Terms used herein have the meanings assigned to them in the Credit Agreement. - -------------- /1/ Amount must be $25,000,000 or a larger multiple of $5,000,000. /2/ Not less than one month (LIBOR Auction) or not less than 7 days (Absolute Rate Auction), subject to the provisions of the definition of Interest Period. Terms used herein have the meanings assigned to them in the Credit Agreement. U S WEST CAPITAL FUNDING, INC. By________________________ Title: EXHIBIT C Form of Invitation for Money Market Quotes To: [Name of Bank] Re: Invitation for Money Market Quotes to U S WEST Capital Funding, Inc. (the "Borrower") Pursuant to Section 2.03 of the 364-Day Credit Agreement dated as of May 8, 1998 among U S WEST Capital Funding, Inc., U S WEST, Inc., USW-C, Inc., the Banks parties thereto, the other agents named therein and the undersigned, as Administrative Agent, we are pleased on behalf of the Borrower to invite you to submit Money Market Quotes to the Borrower for the following proposed Money Market Borrowing(s): Date of Borrowing: __________________ Principal Amount Interest Period - ---------------- --------------- $ Such Money Market Quotes should offer a Money Market [Margin] [Absolute Rate]. [The applicable base rate is the London Interbank Offered Rate.] Please respond to this invitation by no later than [10:30 A.M.] [9:15 A.M.] (New York City time) on [date]. MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent By______________________________ Authorized Officer EXHIBIT D Form of Money Market Quote To: Morgan Guaranty Trust Company of New York, as Administrative Agent (the "Agent") Re: Money Market Quote to U S WEST Capital Funding, Inc. (the "Borrower") In response to your invitation on behalf of the Borrower dated _____________, 19__, we hereby make the following Money Market Quote on the following terms: 1. Quoting Bank: ________________________________ 2. Person to contact at Quoting Bank: __________________________ 3. Date of Borrowing: ____________________* 4. We hereby offer to make Money Market Loan(s) in the following principal amounts, for the following Interest Periods and at the following rates: Principal Interest Money Market Amount** Period*** [Margin****] [Absolute Rate*****] $ $ [Provided, that the aggregate principal amount of Money Market Loans for which the above offers may be accepted shall not exceed $____________.]** - ---------- * As specified in the related Invitation. (notes continued on following page) We understand and agree that the offer(s) set forth above, subject to the satisfaction of the applicable conditions set forth in the 364-Day Credit Agreement dated as of May 8, 1998 among U S WEST Capital Funding, Inc., U S WEST, Inc., USW-C, Inc., the Banks listed on the signature pages thereof, the other agents named therein and yourselves, as Agent, irrevocably obligates us to make the Money Market Loan(s) for which any offer(s) are accepted, in whole or in part. Very truly yours, [NAME OF BANK] Dated:_______________ By:__________________________ Authorized Officer - ---------- ** Principal amount bid for each Interest Period may not exceed principal amount requested. Specify aggregate limitation if the sum of the individual offers exceeds the amount the Bank is willing to lend. Bids must be made for $5,000,000 or a larger multiple of $1,000,000. *** Not less than one month or not less than 7 days, as specified in the related Invitation. No more than five bids are permitted for each Interest Period. **** Margin over or under the London Interbank Offered Rate determined for the applicable Interest Period. Specify percentage (to the nearest 1/10,000 of 1%) and specify whether "PLUS" or "MINUS". ***** Specify rate of interest per annum (to the nearest 1/10,000th of 1%). EXHIBIT E OPINION OF COUNSEL FOR THE COMPANY AND THE BORROWER To the Banks and the Administrative Agent Referred to Below c/o Morgan Guaranty Trust Company of New York, as Administrative Agent 60 Wall Street New York, New York 10260 Gentlemen and Ladies: I have acted as counsel for U S WEST, Inc., USW-C, Inc. and U S WEST Capital Funding, Inc., in connection with the 364-Day Credit Agreement (the "Credit Agreement") dated as of May 8, 1998, among them, the banks listed on the signature pages thereof, the other agents named therein and Morgan Guaranty Trust Company of New York, as Administrative Agent. Terms defined in the Credit Agreement are used herein as therein defined. This opinion is being rendered to you at the instruction of the client pursuant to Section 3.01(b) of the Credit Agreement. I am familiar with the proceedings taken by the Company, USW-C, Inc. and the Borrower in connection with the authorization, execution and delivery of the Credit Agreement and the Notes, and I have examined such documents, certificates, and such other matters of fact and questions of law as I have deemed relevant under the circumstances to express an informed opinion. Upon the basis of the foregoing, I am of the opinion that: 1. The Company and USW-C, Inc. are each corporations validly existing and in good standing under the laws of the State of Delaware, and each has all corporate powers and all governmental licenses, authorizations, qualifications, consents and approvals required to carry on its business as now conducted, except where the absence of any such license, authorization, qualification, consent or approval would not have a material adverse effect on the consolidated financial position or consolidated results of operations of the Company and its Consolidated Subsidiaries considered as one enterprise. 2. The execution, delivery and performance by the Company, USW-C, Inc. and the Borrower of the Credit Agreement and by the Borrower of the Notes are within such Person's corporate powers, have been duly authorized by all necessary corporate action, and require no action by or in respect of, or filing with, any governmental body, agency or official. 3. The execution, delivery and performance by the Company, USW-C, Inc. and the Borrower of the Credit Agreement and by the Borrower of the Notes will not (i) result in a breach or violation of, conflict with, or constitute a default under, the articles of incorporation or bylaws of such Person or any material law or regulation or any material order, judgment, agreement or instrument to which such Person is a party or by which such Person is bound, or (ii) result in the creation or imposition of any Lien on any asset of such Person. 4. The Credit Agreement constitutes a valid and binding agreement of the Company USW-C, Inc. and the Borrower and the Notes constitute valid and binding obligations of the Borrower, in each case enforceable in accordance with its terms except as the same may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and by general principles of equity. 5. To my knowledge, and except as disclosed in the Company's 1997 Form 10-K (as amended by Form 10-K/A) as filed with the Securities and Exchange Commission, there is no action, suit or proceeding pending against, or to the best of my knowledge threatened against or affecting the Company or any of its Subsidiaries before any court or arbitrator or any governmental body, agency or official, in which there is a reasonable possibility of an adverse decision which could materially adversely affect the business, consolidated financial position or consolidated results of operations of the Company and its Consolidated Subsidiaries, considered as a whole, or which in any manner draws into question the validity of the Credit Agreement or the Notes. 6. The Borrower and each of the Company's other corporate Significant Subsidiaries are corporations validly existing and in good standing under the laws of their jurisdictions of incorporation, and have all corporate powers and all governmental licenses, authorizations, qualifications, consents and approvals required to carry on its business as now conducted, except where the absence of any such license, authorization, qualification, consent or approval would not have a material adverse effect on the consolidated financial position or consolidated results of operations of the Company and its Consolidated Subsidiaries considered as one enterprise. For purposes of my opinion set forth in numbered paragraph 4 above, I have assumed that the laws of the State of New York, which are stated to govern the Credit Agreement and the Notes, are the same as the laws of the State of Colorado. In rendering the opinions set forth herein, I have assumed that the Credit Agreement and the Notes will conform to the specimens thereof examined by me, that the signatures on all documents examined by me were genuine, and the authenticity of all documents submitted to me as originals or as copies of originals, assumptions which I have not independently verified. This opinion is furnished by me as counsel for the Company and the Borrower and is solely for your benefit and the benefit of any Assignee under the Credit Agreement. Without my prior written consent, this opinion may not be relied upon by you or any Assignee in any other context or by any other person. This opinion may not be quoted, in whole or in part, or copies thereof furnished, to any other person without my prior written consent, except that you may furnish copies hereof (a) to your auditors and attorneys, (b) to any state or federal authority having regulatory jurisdiction over you or the Company or the Borrower, (c) pursuant to order or legal process of any court or governmental agency, (d) in connection with any legal action to which you are a party arising out of the transactions contemplated by the Credit Agreement, and (e) to any Participant or proposed Participant in the Commitment of any Bank. This opinion is limited to the present laws of the State of Colorado and the General Corporation Law of the State of Delaware, to present judicial interpretations thereof, and to the facts as they presently exist, and I assume no responsibility as to the applicability or effect of the laws of any other jurisdiction. In rendering this opinion, I assume no obligation to revise or supplement this opinion should the present laws of the State of Colorado or the General Corporation Law of the State of Delaware be changed by legislative action, judicial decision, or otherwise. Very truly yours, Thomas O. McGimpsey 3 EXHIBIT F OPINION OF DAVIS POLK & WARDWELL, SPECIAL COUNSEL FOR THE ADMINISTRATIVE AGENT To the Banks and the Administrative Agent Referred to Below c/o Morgan Guaranty Trust Company of New York, as Administrative Agent 60 Wall Street New York, New York 10260 Dear Sirs: We have participated in the preparation of the 364-Day Credit Agreement (the "Credit Agreement") dated as of May 8, 1998 among U S WEST Capital Funding, Inc., U S WEST, Inc., USW-C, Inc., the banks listed on the signature pages thereof (the "Banks"), the other agents named therein and Morgan Guaranty Trust Company of New York, as Administrative Agent (the "Agent"), and have acted as special counsel for the Agent for the purpose of rendering this opinion pursuant to Section 3.01(c) of the Credit Agreement. Terms defined in the Credit Agreement are used herein as therein defined. We have examined originals or copies, certified or otherwise identified to our satisfaction, of such documents, corporate records, certificates of public officials and other instruments and have conducted such other investigations of fact and law as we have deemed necessary or advisable for purposes of this opinion. Upon the basis of the foregoing, we are of the opinion that, assuming that the execution, delivery and performance by the Company and the Borrower of the Credit Agreement and by the Borrower of the Notes are within such Person's corporate powers and have been duly authorized by all necessary corporate action, the Credit Agreement constitutes a valid and binding agreement of the Company and the Borrower and the Notes constitute valid and binding obligations of the Borrower. We are members of the Bar of the State of New York and the foregoing opinion is limited to the laws of the State of New York. In giving the foregoing opinion, we express no opinion as to the effect (if any) of any law of any jurisdiction (except the State of New York) in which any Bank is located which limits the rate of interest that such Bank may charge or collect. This opinion is rendered solely to you in connection with the above matter. This opinion may not be relied upon by you for any other purpose or relied upon by or furnished to any other person without our prior written consent. Very truly yours, 2 EXHIBIT G ASSIGNMENT AND ASSUMPTION AGREEMENT AGREEMENT dated as of __________, __ 199_ among [ASSIGNOR] (the "Assignor"), [ASSIGNEE] (the "Assignee"), U S WEST, Inc. (the "Company") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent (the "Agent"). W I T N E S S E T H WHEREAS, this Assignment and Assumption Agreement (the "Agreement") relates to the 364-Day Credit Agreement dated as of May 8, 1998 among the Company, USW-C, Inc., the Borrower named therein, the Assignor and the other Banks party thereto, as Banks, the other agents named therein and the Agent (the "Credit Agreement"); WHEREAS, as provided under the Credit Agreement, the Assignor has a Commitment to make Loans in an aggregate principal amount at any time outstanding not to exceed $__________; WHEREAS, Committed Loans made by the Assignor under the Credit Agreement in the aggregate principal amount of $__________ are outstanding at the date hereof; and WHEREAS, the Assignor proposes to assign to the Assignee all of the rights of the Assignor under the Credit Agreement in respect of a portion of its Commitment thereunder in an amount equal to $__________ (the "Assigned Amount"), together with a corresponding portion of its outstanding Committed Loans, and the Assignee proposes to accept assignment of such rights and assume the corresponding obligations from the Assignor on such terms; NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the parties hereto agree as follows: SECTION 1. Definitions. All capitalized terms not otherwise defined herein shall have the respective meanings set forth in the Credit Agreement. SECTION 2. Assignment. The Assignor hereby assigns and sells to the Assignee all of the rights of the Assignor under the Credit Agreement to the extent of the Assigned Amount, and the Assignee hereby accepts such assignment from the Assignor and assumes all of the obligations of the Assignor under the Credit Agreement to the extent of the Assigned Amount, including the purchase from the Assignor of the corresponding portion of the principal amount of the Committed Loans made by the Assignor outstanding at the date hereof. Upon the execution and delivery hereof by the Assignor, the Assignee, the Company and the Agent and the payment of the amounts specified in Section 3 required to be paid on the date hereof (i) the Assignee shall, as of the date hereof, succeed to the rights and be obligated to perform the obligations of a Bank under the Credit Agreement with a Commitment in an amount equal to the Assigned Amount, and (ii) the Commitment of the Assignor shall, as of the date hereof, be reduced by a like amount and the Assignor released from its obligations under the Credit Agreement to the extent such obligations have been assumed by the Assignee. The assignment provided for herein shall be without recourse to the Assignor. SECTION 3. Payments. As consideration for the assignment and sale contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the date hereof in Federal funds the amount heretofore agreed between them.3 It is understood that commitment and/or facility fees accrued to the date hereof are for the account of the Assignor and such fees accruing from and including the date hereof are for the account of the Assignee. Each of the Assignor and the Assignee hereby agrees to that if it receives any amount under the Credit Agreement which is for the account of the other party hereto, it shall receive the same for the account of such other party to the extent of such other party's interest therein and shall promptly pay the same to such other party. [SECTION 4. Consent of the Company and the Agent. This Agreement is conditioned upon the consent of the Company and the Agent pursuant to Section - -------- /3/ Amount should combine principal together with accrued interest and breakage compensation, if any, to be paid by the Assignee, net of any portion of any upfront fee to be paid by the Assignor to the Assignee. It may be preferable in an appropriate case to specify these amounts generically or by formula rather than as a fixed sum. 10.06(c) of the Credit Agreement. The execution of this Agreement by the Company and the Agent is evidence of this consent. Pursuant to Section 10.06(c) the Company agrees to cause the Borrower to execute and deliver a Note payable to the order of the Assignee to evidence the assignment and assumption provided for herein.] SECTION 5. Non-Reliance on Assignor. The Assignor makes no representation or warranty in connection with, and shall have no responsibility with respect to, the solvency, financial condition, or statements of the Company or the Borrower, or the validity and enforceability of the obligations of the Company or the Borrower in respect of the Credit Agreement or any Note. The Assignee acknowledges that it has, independently and without reliance on the Assignor, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and will continue to be responsible for making its own independent appraisal of the business, affairs and financial condition of the Company and the Borrower. SECTION 6. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. SECTION 7. Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by their duly authorized officers as of the date first above written. [ASSIGNOR] By ---------------------------- Title: 3 [ASSIGNEE] By ---------------------------- Title: [U S WEST, INC. By ---------------------------- Title: MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent By ---------------------------- Title:] 4 EXHIBIT H EXTENSION AGREEMENT US WEST Capital Funding, Inc. US WEST, Inc. 7800 East Orchard Road Englewood, Colorado 80111 Morgan Guaranty Trust Company of New York, as Administrative Agent under the Credit Agreement referred to below 60 Wall Street New York, NY 10260 Gentlemen: The undersigned hereby agree to extend the Revolving Credit Period under the 364-Day Credit Agreement dated as of May 8, 1998 among US WEST Capital Funding, Inc., US WEST, Inc., USW-C, Inc., the Banks listed therein, the other agents named therein and Morgan Guaranty Trust Company of New York, as Administrative Agent (the "Credit Agreement") for 364 days to ____________ __, ____. Terms defined in the Credit Agreement are used herein as therein defined. This Extension Agreement shall be construed in accordance with and governed by the law of the State of New York. It may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. [NAME OF BANK]/1/ By ---------------------------- - -------------------------- /1/ Insert names of Banks which have responded affirmatively in accordance with Section 2.01(b) of the Credit Agreement. Title: [NAME OF BANK]/1/ By ----------------------------- Title: [NAME OF BANK]* By ----------------------------- Title: [NAME OF BANK]* By ----------------------------- Title: [NAME OF BANK]* By ----------------------------- Title: [NAME OF BANK]* By ----------------------------- Title: - ------------------------- /1/ Insert names of Banks which have responded affirmatively in accordance with Section 2.01(b) of the Credit Agreement. Agreed and accepted: US WEST CAPITAL FUNDING, INC. By ------------------------------ Title US WEST, INC. By ------------------------------ Title MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent By ------------------------------ Title CROSS-REFERENCE TARGET LIST ===========================
NOTE: Due to the number of targets some target names may not appear in the target pull-down list. (This list is for the use of the wordprocessor only, is not a part of this document and may be discarded.) ARTICLE/SECTION TARGET NAME ======================================
1.03.............................types 2..............................CREDITS 2.01.......................commit.lend 2.01(a).....................the.commit 2.01(b)......................extension 2.03......................money.market 2.03(d).....................submission 2.03(f)..................accept.notice 2.04.........................not.banks 2.04(a).................upon.not .borr 2.05.............................notes 2.07....................interest.rates 2.07(c).....................anyoverdue 2.09.......................termination 2.09(b).........................if.sep 2.10(c)................notice.int.rate 2.11.......................prepayments 2.11(c)...................upon.receipt 2.12......................general.prof 2.13....................funding.losses 3.01...........................closing 3.01(b).....................opin.brilz 3.01(c).......................opin.dpw 3.02(c)......................fact.that 4.04(b)......................since.dec 5.01.......................information 5.02.......................maintenance 5.03.......................maint.exist 5.04...................compliance.laws 5.06..........................sub.debt 5.07.....................debt.coverage 5.08........................neg.pledge 5.08(f)........................anylien 5.11..........................year2000 6.............................DEFAULTS 6.01....................events.default 6.01(c).....................cobor.fail 8..............................CHANGES 8.01.......................basis.deter 8.01(a)..................agent.advised 8.02........................illegality 8.03....................increased cost 8.04.............................taxes 8.04(a)...................taxes.anyand 8.04(d).....................taxes.each 8.05....................domestic.loans 10.01..........................notices 10.03(b).....................exp.indem 10.05....................amend.waivers 10.06(b)..................succ.ass.any 10.06(c)..............succ.assign.bank 10.07...............terminate.existing 10.09.....................counterparts 1 EX-99.(B)(3) 11 AMENDMENT NO. 1 TO CREDIT AGREEMENTS EXHIBIT (b)(3) [CONFORMED COPY] AMENDMENT NO. 1 TO CREDIT AGREEMENTS AMENDMENT dated as of June 30, 1998 to the 364-Day Credit Agreement dated as of May 8, 1998 and the Five-Year Credit Agreement dated as of May 8, 1998 (individually a "Credit Agreement" and together, the "Credit Agreements") among U S WEST CAPITAL FUNDING, INC. (the "Borrower"), U S WEST, INC. (formerly named USW-C, Inc.), the BANKS listed on the signature pages thereto (the "Banks") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent (the "Agent"). W I T N E S S E T H : WHEREAS, the parties hereto desire to amend the Credit Agreements to modify a condition to borrowing; NOW, THEREFORE, the parties hereto agree as follows: Section 1. Defined Terms; References. Unless otherwise specifically defined herein, each term used herein which is defined in a Credit Agreement has the meaning assigned to such term in such Credit Agreement. Each reference to "hereof", "hereunder", "herein" and "hereby" and each other similar reference and each reference to "this Agreement" and each other similar reference contained in a Credit Agreement shall, after this Amendment becomes effective, refer to such Credit Agreement as amended hereby. Section 2. Amendment of Section 5.06(a). Section 5.06(a) of each of the Credit Agreements is amended and restated in its entirety to read as follows: (a) Prior to the Separation, total Debt of all Consolidated Subsidiaries (excluding Debt of (i) the Borrower and (ii) a Consolidated Subsidiary to the Company or to a Wholly-Owned Consolidated Subsidiary) ("Subsidiary Debt") will at no time exceed 250% of Consolidated Net Worth. Section 3. Representations of Borrower. The Borrower represents and warrants that (i) the representations and warranties of the Borrower set forth in Article 4 of each Credit Agreement will be true on and as of the Amendment Effective Date and (ii) no Default will have occurred and be continuing on such date. Section 4. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of New York. Section 5. Counterparts. This Amendment may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. Section 6. Effectiveness. This Amendment shall become effective as of the date hereof on the date (the "Amendment Effective Date") when the Agent shall have received from each of the Borrower and the Required Banks (as defined in each Credit Agreement) a counterpart hereof signed by such party or facsimile or other written confirmation (in form satisfactory to the Agent) that such party has signed a counterpart hereof; 2 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written. U S WEST CAPITAL FUNDING, INC. By /s/ Thomas. O McGimpsey ------------------------ Title: Assistant Secretary U S WEST, INC. (FORMERLY NAMED USW-C, INC.) By /s/ Thomas O. McGimpsey ------------------------ Title: Assistant Secretary 3 MORGAN GUARANTY TRUST COMPANY OF NEW YORK By /s/ John M. Mikolay -------------------- Title: Vice President BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By /s/ Doug Meckelnburg --------------------- Title: Vice President THE CHASE MANHATTAN BANK By /s/ Ann B. Kerns ----------------- Title: Vice President MELLON BANK, N.A. By /s/ David McGowan ------------------ Title: Vice President 4 ABN AMRO BANK N.V. By /s/ Thomas M. Toerpe --------------------- Title: Vice President By /s/ Roxana Sopala ------------------ Title: Vice President THE BANK OF NEW YORK By /s/ James W. Whitaker ---------------------- Title: Vice President BANK ONE, COLORADO, N.A. By /s/ David L. Ericson --------------------- Title: Vice President CITIBANK, N.A. By /s/ P. M. Chonkar ------------------ Title: Attorney-In-Fact KEYBANK NATIONAL ASSOCIATION By /s/ Mary Young --------------- Title: Commercial Banking Officer 5 NATIONSBANK, N.A. By /s/ Anthony M. Cacheria ------------------------ Title: Senior Vice President COMMERZBANK AG LOS ANGELES BRANCH By /s/ Christian Jagenberg ------------------------ Title: Senior Vice President and Manager By /s/ John Korthuis ------------------ Title: Vice President FLEET NATIONAL BANK By /s/ Sue Anderson ----------------- Title: Vice President CANADIAN IMPERIAL BANK OF COMMERCE By /s/ Gerald Girardi ------------------- Title: Executive Director CIBC Oppenheimer Corp., As Agent 6 BANKERS TRUST COMPANY By /s/ Gina S. Thompson --------------------- Title: Vice President THE FIRST NATIONAL BANK OF CHICAGO By /s/ Michael J. Harrington -------------------------- Title: Corporate Banking Officer KBC BANK N.V. By /s/ Robert Snauffer -------------------- Title: First Vice President By /s/ Marcel Claes ----------------- Title: Deputy General Manager THE ROYAL BANK OF SCOTLAND PLC By /s/ R.A. Green --------------- Title: Senior Relationship Manager 7 WELLS FARGO BANK, N.A. By /s/ Catherine M. Wallace ------------------------- Title: Vice President By /s/ Donald A. Hartmann ----------------------- Title: Senior Vice President BANK OF HAWAII By /s/ Eric N. Pelletier ---------------------- Title: Vice President BARCLAYS BANK PLC By /s/ Les Bek ------------ Title: Director BAYERISCHE LANDESBANK GIROZENTRALE CAYMAN ISLANDS BRANCH By /s/ Alexander Kohnert ---------------------- Title: Vice President By /s/ James H. Boyle ------------------- Title: Second Vice President 8 BAYERISCHE HYPO-UND VEREINSBANK AG By /s/ P.M. Tresnan ----------------- Title: Vice President By /s/ Steve Atwell ----------------- Title: Vice President LEHMAN COMMERCIAL PAPER INC. By /s/ Michele Swanson -------------------- Title: Authorized Signatory MERRILL LYNCH CAPITAL CORPORATION By /s/ Robert Stevens ------------------- Title: Vice President NORWEST BANK COLORADO, NATIONAL ASSOCIATION By /s/ Carol A. Ward ------------------ Title: Vice President THE TOKAI BANK, LIMITED By /s/ Masahiko Saito ------------------- Title: Senior Vice President and Assistant General Manager 9 U.S. BANK NATIONAL ASSOCIATION By /s/ Scott E. Page ------------------ Title: Vice President BANQUE NATIONALE DE PARIS By /s/ Mitchell M. Ozawa ---------------------- Title: Vice President By /s/ Marc T. Schaefer --------------------- Title: Assistant Vice President ROYAL BANK OF CANADA By /s/ John P. Page ----------------- Title: Senior Manager ISTITUTO BANCARIO SAN PAOLO DI TORINO S.P.A. By ------------------------------- Name: Title: By ------------------------------- Name: Title: 10 THE PROVIDENT BANK. By /s/ Tom B. Scherpenberg ------------------------ Title: Vice President 11 EX-99.(B)(4) 12 AMENDED & RESTATED CREDIT AGREEMENT EXHIBIT (b)(4) [EXECUTION COPY] AMENDED AND RESTATED CREDIT AGREEMENT AMENDED AND RESTATED 364-DAY CREDIT AGREEMENT dated as of May 7, 1999 among U S WEST Capital Funding, Inc., U S WEST, Inc. and the Banks listed on the signature pages hereof (the "Amendment and Restatement"). W I T N E S S E T H : WHEREAS, the parties hereto and Morgan Guaranty Trust Company of New York, as Administrative Agent (the "Administrative Agent"), have heretofore entered into a 364-Day Credit Agreement dated as of May 8, 1998, as amended by Amendment No. 1 dated as of June 30, 1998 (the "Agreement"); and WHEREAS, the parties hereto desire to amend the Agreement to provide for the extension of the termination date for an additional 364 days and changes in interest rates and facility fees and additional commitment amounts, and to restate the Agreement in its entirety to read as set forth in the Agreement with the amendments specified below; NOW, THEREFORE, the parties hereto agree as follows: Section 1. Definitions; References. Unless otherwise specifically defined herein, each term used herein which is defined in the Agreement shall have the meaning assigned to such term in the Agreement. Each reference to "hereof", "hereunder", "herein" and "hereby" and each other similar reference and each reference to "this Agreement" and each other similar reference contained in the Agreement shall from and after the date hereof refer to the Agreement as amended and restated hereby. Section 2. Amendment of Section 1.01. The definition of "Termination Date" in Section 1.01 of the Agreement is amended to replace "May 7, 1999" with "May 5, 2000". Section 3. Amendment of Section 2.01(c). Section 2.01(c) of the Agreement is amended to replace "$3,750,000,000" with "$1,000,000,000". Section 4. Amendment of Pricing Schedule. The Pricing Schedule is amended and restated to read in its entirety as set forth in the attached Pricing Schedule. Section 5. Additional and Departing Banks; Total Commitments. The Northern Trust Company hereby becomes, and each of Bank of Hawaii, Bank One, Colorado, N.A., Barclays Bank Plc, Canadian Imperial Bank of Commerce, Merrill Lynch Capital Corporation, Norwest Bank of Colorado National Association, Royal Bank of Canada, The Provident Bank and The Tokai Bank, Limited hereby ceases to be, a party to the Agreement as amended by this Amendment and Restatement and a "Bank" for all purposes thereof, entitled to all rights and subject to all duties of a "Bank" thereunder. The aggregate amount of the Commitments as of the date hereof is $750,000,000, and each Bank's Commitment is the amount set forth opposite its name on the signature pages hereof. Section 6. Governing Law. This Amendment and Restatement shall be governed by and construed in accordance with the laws of the State of New York. Section 7. Counterparts; Effectiveness. This Amendment and Restatement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Amendment and Restatement shall become effective as of the date hereof when the Administrative Agent shall have received: (a) duly executed counterparts hereof signed by the parties hereto (or, in the case of any party as to which an executed counterpart shall not have been received, the Administrative Agent shall have received telegraphic, telex or other written confirmation from such party of execution of a counterpart hereof by such party); (b) an opinion of Thomas O. McGimpsey, Esq., Counsel for the Company and the Borrower, substantially in the form of Exhibit A hereto and covering such additional matters relating to the transactions contemplated hereby as the Required Banks may reasonably request; and (c) all documents the Administrative Agent may reasonably request relating to the existence of the Borrower, the corporate authority for and the validity of the Agreement as amended by this Amendment and Restatement, and any other matters relevant hereto, all in form and substance satisfactory to the Administrative Agent. 2 IN WITNESS WHEREOF, the parties hereto have caused this Amendment and Restatement to be duly executed as of the date first above written. U S WEST CAPITAL FUNDING, INC. By ----------------------------- Title: Name: U S WEST, INC. By ----------------------------- Title: Name: 3 Commitment $48,000,000 MORGAN GUARANTY TRUST COMPANY OF NEW YORK By ----------------------------- Title: Name: $48,000,000 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By ----------------------------- Name: Title: $48,000,000 CITIBANK, N.A. By ----------------------------- Name: Title: $48,000,000 THE CHASE MANHATTAN BANK By ----------------------------- Name: Title: $48,000,000 THE FIRST NATIONAL BANK OF CHICAGO By ----------------------------- 4 Commitment Name: Title: $45,000,000 ABN AMRO BANK N.V. By----------------------------- Name: Title: By----------------------------- Name: Title: $45,000,000 COMMERZBANK AG LOS ANGELES BRANCH By----------------------------- Name: Title: By----------------------------- Name: Title: $45,000,000 MELLON BANK, N.A. By----------------------------- Name: Title: $45,000,000 WELLS FARGO BANK, NATIONAL ASSOCIATION 5 Commitment By----------------------------- Name: Title: $34,000,000 FLEET NATIONAL BANK By----------------------------- Name: Title: $34,000,000 ISTITUTO BANCARIO SAN PAOLO DI TORINO S.P.A. By----------------------------- Name: Title: By----------------------------- Name: Title: $34,000,000 KBC BANK N.V. By----------------------------- Name: Title: By----------------------------- Name: Title: 6 Commitment $34,000,000 THE BANK OF NEW YORK By ----------------------------- Name: Title: $25,000,000 BAYERISCHE LANDESBANK GIROZENTRALE CAYMAN ISLANDS BRANCH By ----------------------------- Name: Title: By ----------------------------- Name: Title: $25,000,000 THE NORTHERN TRUST COMPANY By ----------------------------- Name: Title: $25,000,000 THE ROYAL BANK OF SCOTLAND PLC By ----------------------------- Name: Title: 7 Commitment $25,000,000 U.S. BANK NATIONAL ASSOCIATION By ----------------------------- Name: Title: $24,000,000 KEYBANK NATIONAL ASSOCIATION By ----------------------------- Name: Title: $20,000,000 BANKERS TRUST COMPANY By ----------------------------- Name: Title: $20,000,000 BAYERISCHE HYPO- UND VEREINSBANK, AG, NEW YORK BRANCH By ----------------------------- Name: Title: $15,000,000 BANQUE NATIONALE DE PARIS By ----------------------------- Name: Title: By ----------------------------- Name: Title: 8 Commitment By ----------------------------- Name: Title: $15,000,000 LEHMAN COMMERCIAL PAPER INC. By ------------------------------ Name: Title: $ 0 BANK OF HAWAII By ------------------------------ Name: Title: $ 0 BARCLAYS BANK PLC By ------------------------------- Name: Title: $ 0 CANADIAN IMPERIAL BANK OF COMMERCE By ------------------------------- Name: Title: $ 0 MERRILL LYNCH CAPITAL CORPORATION 9 Commitment By ------------------------------- Name Title $ 0 NORWEST BANK COLORADO, NATIONAL ASSOCIATION By ------------------------------- Name: Title: $ 0 THE FIRST NATIONAL BANK OF CHICAGO By ------------------------------- Name: Title: $ 0 THE PROVIDENT BANK By ------------------------------- Name: Title: $ 0 ROYAL BANK OF CANADA By ------------------------------- Name: Title: 10 Commitment $ 0 THE TOKAI BANK, LIMITED By------------------------------- Name: Title: Total Commitments: $ 750,000,000 ============= 11 PRICING SCHEDULE The "Euro-Dollar Margin" and "Facility Fee Rate" for any day are the respective percentages set forth below in the applicable row under the column corresponding to the Status that exists on such day:
=============================================================================== Level Level Level Level Level Status I II III IV V - ------------------------------------------------------------------------------- Euro-Dollar Margin .365% .430% .545% .650% .750% - ------------------------------------------------------------------------------- Facility Fee Rate .060% .070% .080% .100% .125% ===============================================================================
For purposes of this Schedule, the following terms have the following meanings: "Level I Status" exists at any date if, at such date, the Borrower's outstanding senior unsecured long-term debt securities guaranteed by the Company are rated A+ or higher by S&P or A1 or higher by Moody's. "Level II Status" exists at any date if, at such date, (i) the Borrower's outstanding senior unsecured long-term debt securities guaranteed by the Company are rated A or higher by S&P or A2 or higher by Moody's and (ii) Level I Status does not exist. "Level III Status" exists at any date if, such date, the Borrower's outstanding senior unsecured long-term debt securities guaranteed by the Company are rated A- or higher by S&P or A3 or higher by Moody's and (ii) neither Level I Status nor Level II Status exists. "Level IV Status" exists at any date if, at such date, (i) the Borrower's outstanding senior unsecured long-term debt securities guaranteed by the Company are rated BBB+ or higher by S&P or Baa1 or higher by Moody's and (ii) none of Level I Status, Level II Status or Level III Status exists. "Level V Status" exists at any date if, at such date, none of Level I Status, Level II Status, Level III Status or Level IV Status exists. "Moody's" means Moody's Investors Service, Inc., a Delaware corporation, and its successors or, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, "Moody's" shall be deemed to refer to any other nationally recognized securities rating agency designated by the Required Banks, with the approval of the Company, by notice to the Agent and the Company. "S&P" means Standard & Poor's Ratings Group, a New York corporation, and its successors or, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, "S&P" shall be deemed to refer to any other nationally recognized securities rating agency designated by the Required Banks, with the approval of the Company, by notice to the Agent and the Company. "Status" refers to the determination of which of Level I Status, Level II Status, Level III Status, Level IV Status or Level V Status exists at any date. The credit ratings to be utilized for purposes of this Schedule are those assigned to the senior unsecured long-term debt securities of the Borrower guaranteed by the Company and any rating assigned to any other debt security of the Borrower shall be disregarded. The rating in effect at any date is that in effect at the close of business on such date. 2 EXHIBIT A OPINION OF COUNSEL FOR THE COMPANY AND THE BORROWER May 7, 1999 To the Banks and the Administrative Agent Referred to Below c/o Morgan Guaranty Trust Company of New York, as Administrative Agent 60 Wall Street New York, New York 10260 Gentleman and Ladies: I have acted as counsel for U S WEST, Inc. (the "Company") and U S WEST Capital Funding, Inc. (the "Borrower") in connection with the Amended and Restated 364-Day Credit Agreement dated as of May 7, 1999 (the "Amendment and Restatement"), which amends and restates the 364-Day Credit Agreement dated as of May 8, 1998 among them, the banks listed on the signature pages thereof and Morgan Guaranty Trust Company of New York, as Administrative Agent, as amended by Amendment No. 1 dated as of June 30, 1998 (the "Credit Agreement"). Such Credit Agreement as in effect prior to the effectiveness of the Amendment and Restatement is referred to herein as the "Existing Agreement", and the Existing Credit Agreement as amended by the Amendment and Restatement is referred to herein as the "Amended Credit Agreement". Terms defined in the Existing Credit Agreement and not otherwise defined are used herein as therein defined. This opinion is being rendered to you at the request of my clients pursuant to Section 7(b) of the Amendment and Restatement. I am familiar with the proceedings taken by each of the Company and the Borrower in connection with the authorization, execution and delivery of the Amendment and Restatement, and I have examined such documents, certificates, and such other matters of fact and questions of law as I have deemed relevant under the circumstances to express an informed opinion. Upon the basis of the foregoing, I am of the opinion that: 1. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, and has all corporate powers and all governmental licenses, authorizations, qualifications, consents and approvals required to carry on its business as now conducted, except where the absence of any such license, authorization, qualification, consent or approval would not have a material adverse effect on the consolidated financial position or consolidated results of operations of the Company and its Consolidated Subsidiaries considered as one enterprise. 2. The execution, delivery and performance by each of the Company and the Borrower of the Amendment and Restatement are within such Person's corporate powers, have been duly authorized by all necessary corporate action, and require no action by or in respect of, or filing with, any governmental agency or official. 3. The execution, delivery and performance by each of the Company and the Borrower of the Amendment and Restatement will not (i) result in a breach or violation of, conflict with or constitute a default under, the articles or certificate of incorporation or bylaws of such Person or any material law or regulation or any material order, judgment, agreement or instrument to which such Person is a party or by which such Person is bound, or (ii) result in the creation or imposition of any Lien on any asset of such Person. 4. Each of the Amendment and Restatement and the Amended Credit Agreement constitutes a valid and binding agreement of the Company and the Borrower, in each case enforceable in accordance with its terms except as the same may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and by general principles of equity. 5. To my knowledge, and except as disclosed in the Company's 1998 Form 10- K/A and the Company's Form 10-Q for the quarter ended March 31, 1999, as filed with the Securities and Exchange Commission, there is no action, suit or proceeding pending against or threatened against or affecting the Company or any of its Subsidiaries before any court or arbitrator or any governmental body, agency or official, in which there is a reasonable possibility of an adverse decision which could materially adversely affect the consolidated financial position or consolidated results of operations of the Company and its Consolidated Subsidiaries, considered as a whole, or which in any manner draws into question the validity of the Amendment and Restatement or the Amended Credit Agreement. 6. Each of the Borrower and the Company's other corporate Significant Subsidiaries is a corporation validly existing and in good standing under the laws of its jurisdiction of incorporation, and has all corporate powers and all governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted, except where the absence thereof would not have a material adverse effect on the consolidated financial position or consolidated results of operations of the Company and its Consolidated Subsidiaries considered as one enterprise. For purposes of my opinion set forth in numbered paragraph 4, I have assumed that the laws of the State of New York, which are stated to govern the Amendment and Restatement and the Amended Credit Agreement, are the same as the laws of the State of Colorado. In rendering the opinions set forth herein, I have assumed that the Amendment and Restatement will conform to the specimen thereof examined by me, that the signatures on all documents examined by me were genuine, and the authenticity of all documents submitted to me as originals or as copies of originals, assumptions which I have not independently verified. Further, this opinion is governed by, and shall be interpreted in accordance with, the Legal Opinion Accord (the "Accord") of the ABA Section of Business Law (1991). This opinion is subject to a number of qualifications (including the General Qualification, as defined in the Accord), exceptions, definitions and limitations on coverage, all as more particularly described in the Accord. This opinion is furnished by me as counsel for the Company and the Borrower and is solely for your benefit and the benefit of any Assignee under the Amended Credit Agreement. Without my prior written consent, the opinion may not be relied upon by you or any Assignee in any other context or by any other person. This opinion may not be quoted, in whole or in part, or copies thereof furnished, to any other person without my prior written consent, except that you may furnish copies hereof (a) to your auditors and attorneys, (b) to any state or federal authority having regulatory jurisdiction over you or the Company or the Borrower, (c) pursuant to any order or legal process of any court or governmental agency, (d) in connection with any legal action to which you are a party arising out of the transactions contemplated by the Amended Credit Agreement, and (e) to any Participant or proposed Participant in the Commitment of any Bank. This opinion is limited to the present laws of the State of Colorado and the General Corporation Law of the State of Delaware, to present judicial interpretations thereof, and to the facts as they presently exist, and I assume no 3 responsibility as to the applicability or effect of the laws of any other jurisdiction. In rendering this opinion, I assume no obligation to revise or supplement this opinion should the present laws of the State of Colorado or the General Corporation Law of the State of Delaware be changed by legislative action, judicial decision, or otherwise. Very truly yours, Thomas O. McGimpsey 4 EX-99.(C)(1) 13 AGREEMENT & PLAN OF MERGER EXHIBIT (c)(1) ================================================================================ AGREEMENT AND PLAN OF MERGER ---------------------------- Dated as of May 16, 1999 Between U S WEST, INC. and GLOBAL CROSSING LTD. ================================================================================ TABLE OF CONTENTS ----------------- Page ---- ARTICLE I THE MERGERS Section 1.1 Formation of Subsidiaries; The Mergers........................1 Section 1.2 Effective Time................................................3 Section 1.3 Effect of the Mergers.........................................3 Section 1.4 Subsequent Actions............................................3 Section 1.5 Certificates of Incorporation; Bylaws; Directors and Officers of the Surviving Corporations.......................4 Section 1.6 Alternative Structure.........................................4 Section 1.7 Location of Headquarters......................................5 Section 1.8 Corporate Identity............................................5 ARTICLE II EFFECT OF MERGERS ON STOCK AND OPTIONS Section 2.1 Conversion of Securities......................................5 Section 2.2 Conversion....................................................5 Section 2.3 Common Stock of Merged Corporations...........................9 Section 2.4 Election Procedures; Exchange of Shares.......................9 Section 2.5 Transfer Books...............................................14 Section 2.6 No Fractional Share Certificates.............................14 Section 2.7 Certain Adjustments..........................................16 ARTICLE III [INTENTIONALLY OMITTED] ARTICLE IV REPRESENTATIONS AND WARRANTIES OF GLOBAL Section 4.1 Organization and Qualification; Subsidiaries.................17 Section 4.2 Certificate of Incorporation and Byelaws.....................17 Section 4.3 Capitalization...............................................17 Section 4.4 Authority Relative to this Agreement.........................18 Section 4.5 No Conflict; Required Filings and Consents...................19 Section 4.6 SEC Filings; Financial Statements............................19 -i- Section 4.7 Absence of Certain Changes or Events.........................20 Section 4.8 Litigation...................................................20 Section 4.9 No Violation of Law; Permits.................................20 Section 4.10 Joint Proxy Statement........................................21 Section 4.11 Employee Matters; ERISA......................................21 Section 4.12 Labor Matters................................................24 Section 4.13 Environmental Matters........................................24 Section 4.14 Board Action; Vote Required..................................25 Section 4.15 Opinions of Financial Advisors...............................25 Section 4.16 Brokers......................................................25 Section 4.17 Tax Matters..................................................25 Section 4.18 Intellectual Property........................................26 Section 4.19 Insurance....................................................26 Section 4.20 Ownership of Securities......................................26 Section 4.21 Certain Contracts............................................27 Section 4.22 Licenses.....................................................27 Section 4.23 Year 2000....................................................27 Section 4.24 Foreign Corrupt Practices and International Trade Sanctions.............................................27 ARTICLE V REPRESENTATIONS AND WARRANTIES OF U S WEST Section 5.1 Organization and Qualification; Subsidiaries.................28 Section 5.2 Certificate of Incorporation and Bylaws......................28 Section 5.3 Capitalization...............................................28 Section 5.4 Authority Relative to this Agreement.........................30 Section 5.5 No Conflict; Required Filings and Consents...................30 Section 5.6 SEC Filings; Financial Statements............................30 Section 5.7 Absence of Certain Changes or Events.........................31 Section 5.8 Litigation...................................................31 Section 5.9 No Violation of Law; Permits.................................31 Section 5.10 Joint Proxy Statement........................................32 Section 5.11 Employee Matters; ERISA......................................32 Section 5.12 Labor Matters................................................32 Section 5.13 Environmental Matters........................................35 Section 5.14 Board Action; Vote Required; U S WEST Rights Plan; Applicability of Section 203................................35 Section 5.15 Opinion of Financial Advisor.................................36 Section 5.16 Brokers......................................................36 Section 5.17 Tax Matters..................................................36 Section 5.18 Intellectual Property........................................37 Section 5.19 Insurance....................................................37 Section 5.20 Ownership of Securities......................................37 Section 5.21 Certain Contracts............................................37 Section 5.22 Licenses.....................................................38 -ii- Section 5.23 Year 2000....................................................38 Section 5.24 Foreign Corrupt Practices and International Trade Sanctions.............................................38 ARTICLE VI CONDUCT OF INDEPENDENT BUSINESSES PENDING THE MERGERS Section 6.1 Transition Planning..........................................39 Section 6.2 Conduct of Business in the Ordinary Course...................39 Section 6.3 No Solicitation..............................................42 Section 6.4 Subsequent Financial Statements..............................44 Section 6.5 Control of Operations........................................44 ARTICLE VII ADDITIONAL AGREEMENTS Section 7.1 Joint Proxy Statement and the Registration Statement.........45 Section 7.2 Global and U S WEST Stockholders'Meetings and Consummation of the Mergers..............................................45 Section 7.3 Additional Agreements........................................47 Section 7.4 Notification of Certain Matters..............................48 Section 7.5 Access to Information........................................49 Section 7.6 Public Announcements.........................................49 Section 7.7 Cooperation..................................................49 Section 7.8 Indemnification, Directors'and Officers'Insurance............49 Section 7.9 Employee Benefit Plans.......................................50 Section 7.10 Officers of Parent...........................................50 Section 7.11 Stock Exchange Listing.......................................51 Section 7.12 Post-Mergers Parent Board of Directors; Executive Committee.........................................51 Section 7.13 No Shelf Registration........................................51 Section 7.14 Affiliates...................................................51 Section 7.15 Blue Sky.....................................................52 Section 7.16 Tax-Free Exchange............................................52 Section 7.17 Determination of Class B to Class A Value Ratio..............52 Section 7.18 Permitted Acquisitions.......................................53 Section 7.19 Certain Transactions.........................................53 Section 7.20 Interim Dividend Policy......................................54 Section 7.21 Subsidiary Definition........................................54 Section 7.22 Exchange Procedures..........................................54 Section 7.23 Services Agreement...........................................54 Section 7.24 Certain Definitions..........................................54 -iii- ARTICLE VIII CONDITIONS TO THE MERGERS Section 8.1 Conditions to Obligations of Each Party to Effect the Mergers..........................................55 Section 8.2 Additional Conditions to Obligations of Global...............57 Section 8.3 Additional Conditions to Obligations of U S WEST.............58 ARTICLE IX TERMINATION, AMENDMENT AND WAIVER Section 9.1 Termination..................................................59 Section 9.2 Effect of Termination........................................61 Section 9.3 Amendment....................................................62 Section 9.4 Waiver.......................................................62 ARTICLE X DEFINITIONS Section 10.1 Certain Definitions..........................................63 ARTICLE XI GENERAL PROVISIONS Section 11.1 Non-Survival of Representations, Warranties and Agreements...65 Section 11.2 Notices......................................................65 Section 11.3 Expenses.....................................................66 Section 11.4 Headings.....................................................66 Section 11.5 Severability.................................................67 Section 11.6 Entire Agreement; No Third-Party Beneficiaries...............67 Section 11.7 Assignment...................................................67 Section 11.8 Governing Law................................................67 Section 11.9 Submission to Jurisdiction; Waivers..........................67 Section 11.10 Counterparts.................................................68 -iv- Schedules --------- Schedule 4.1 = Subsidiaries of Global Schedule 4.3 = Option Plans and Equity Rights of Global Schedule 4.5 = Required Filings and Consents of Global Schedule 4.7 = Certain Changes or Events of Global Schedule 4.9 = Violations of Laws, Permits, Regulations, etc. of Global Schedule 4.11 = Global Employee Benefit Plans Schedule 4.17 = Tax Liens or Liabilities of Global Schedule 4.18 = Global Intellectual Property Losses and Claims Schedule 4.20 = Global's Ownership of U S WEST's Common Stock Schedule 4.22 = Proceedings against, or Violations of Global Licenses or permits Schedule 5.1 = Subsidiaries of U S WEST Schedule 5.3 = Option Plans and Equity Rights of U S WEST Schedule 5.5 = Required Filings and Consents of U S WEST Schedule 5.7 = Certain Changes or Events of U S WEST Schedule 5.8 = Pending or Threatened Litigation against U S WEST Schedule 5.9 = Violations of Laws, Permits, Regulations, etc. of U S WEST Schedule 5.11 = U S WEST Employee Benefit Plans Schedule 5.12 = Collective Bargaining or Labor Agreements of U S WEST Schedule 5.13 = Environmental Claims Against U S WEST Schedule 5.17 = Tax Liens or Liabilities of U S WEST Schedule 5.18 = U S WEST Intellectual Property Losses and Claims Schedule 5.19 = Termination or Cancellation of Insurance Coverage of U S WEST Schedule 5.20 = U S WEST's Ownership of Global's Common Stock Schedule 5.21 = U S WEST Contracts Schedule 5.22 = Proceedings against, or Violations of U S WEST Licenses or Permits Schedule 6.1 = Transition Committee Schedule 6.2 = Conduct of Business Schedule 7.14 = Securities Act Affiliates Schedule 7.18 = Permitted Acquisitions
Exhibits -------- Exhibit A = Terms of Parent Class A Common Stock and Parent Class B Common Stock -v- AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER, dated as of May 16, 1999, between U S WEST, Inc., a Delaware corporation ("U S WEST"), and Global Crossing Ltd., a Bermuda company ("Global"). W I T N E S S E T H WHEREAS, the Boards of Directors of U S WEST and Global have each determined that it is in the best interests of their respective stockholders that U S WEST and Global combine their businesses and enter into this Agreement. WHEREAS, the Boards of Directors of U S WEST and Global have each determined that the mergers and the other transactions contemplated hereby are consistent with, and in furtherance of, their respective business strategies and goals and have each approved the mergers contemplated hereby. WHEREAS, for U.S. federal income tax purposes, it is intended that the transactions to be effected pursuant to this Agreement shall constitute a tax-free exchange or series of exchanges. WHEREAS, U S WEST has entered into a Tender Offer and Purchase Agreement dated as of the date hereof pursuant to which U S WEST will commence a tender offer (the "U S WEST Tender Offer") for up to 39,259,305 shares of common stock, par value $0.01 per share of Global ("Global Common Stock"), at a net price per share in cash of $62.75, subject to the terms and conditions thereof. WHEREAS, the parties hereto intend that the transactions contemplated hereby shall be accounted for using the purchase method of accounting with U S WEST as the acquiror. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the parties hereto hereby agree as follows: ARTICLE I THE MERGERS Section 1.1 Formation of Subsidiaries; The Mergers. (a) Promptly following the date hereof, U S WEST and Global will form a corporation under Delaware Law ("Parent"). Parent will initially be owned equally by U S WEST and Global. The Certificate of Incorporation of Parent will provide that Parent will have authority to issue two classes of common stock as follows: subject to Section 7.24, (i) one class of common stock that will reflect the local service provider business of Parent, including all of U S WEST's assets, liabilities and business operations (other than its data, wireless and internet yellow pages directory assets and liabilities) plus the local exchange assets, liabilities and business operations of Frontier Corporation, a New York corporation ("Frontier") (the "Parent Class A Common Stock"), and (ii) a second class of common stock that will reflect the global service provider business of Parent, including all of the assets, liabilities, and business operations of Global and Frontier (other than Frontier's local exchange assets, liabilities and business operations) plus U S WEST's data, wireless and internet yellow pages assets, liabilities and business operations (the "Parent Class B Common Stock"). The terms of the Parent Class A Common Stock and Parent Class B Common Stock will be as set forth in Exhibit A. The Certificate of Incorporation of Parent will contain such other provisions as are customary for public companies including a classified Board of Directors. Parent will also adopt an appropriate shareholder rights agreement. Promptly following the incorporation of Parent, U S WEST and Global will cause Parent to form (i) a wholly-owned subsidiary under Delaware Law ("U S WEST Merger Sub"), and (ii) if necessary to consummate the transaction contemplated by the Election, as defined herein, a wholly-owned subsidiary under Delaware Law or under the laws of such other jurisdiction as necessary to consummate the transaction contemplated by the Election ("Global Merger Sub"). Parent, U S WEST Merger Sub and Global Merger Sub will be formed solely to facilitate the Mergers (as defined below) and will conduct no business or activity prior to the Effective Time other than in connection with the Mergers. U S WEST and Global will (i) cause Parent, U S WEST Merger Sub and Global Merger Sub to execute and deliver a joinder to this Agreement pursuant to Section 251 of Delaware Law, (ii) execute a formal written consent under Section 228 of Delaware Law as all of the stockholders of Parent, approving the execution, delivery and performance of this Agreement by Parent, (iii) cause Parent to execute a formal written consent under Section 228 of Delaware Law as the sole stockholder of U S WEST Merger Sub, approving the execution, delivery and performance of this Agreement by U S WEST Merger Sub, and (iv) cause Parent to execute a formal written consent under Bermuda Law (or similar required documentation under the relevant jurisdiction) as the sole stockholder of Global Merger Sub, approving the execution, delivery and performance of this Agreement by Global Merger Sub. (b) At the Effective Time, (i) U S WEST Merger Sub shall be merged with and into U S WEST in accordance with Delaware Law, whereupon the separate existence of U S WEST Merger Sub shall cease, and U S WEST shall be the surviving corporation (the "U S WEST Merger"), and (ii) at Global's reasonable election (the "Election") either (A) Global shall "discontinue" under the laws of Bermuda and continue in, and be subject to, the laws of the United States or any other jurisdiction and Global Merger Sub shall immediately thereafter be merged into Global with Global as the surviving corporation, (B) Global shall enter into a scheme of arrangement under the laws of Bermuda pursuant to which the shares of Global shall be exchanged for shares of Parent, or (C) Global Merger Sub shall be amalgamated with and into Global in accordance with Bermuda Law, whereupon the separate existence of Global Merger Sub shall cease, and Global shall continue in the form of the amalgamated company (any of the transactions described in the immediately preceding clauses (A), (B) or (C), the "Global Merger" and together with the U S WEST Merger, the "Mergers"); provided in any case that the Election shall not cause a failure to satisfy the conditions contained in Sections 8.2(d) or 8.3(d), and provided further that if the Election would cause a failure to satisfy the conditions contained in Section 8.2(d) or 8.3(d), the parties agree to use commercially reasonable efforts to restructure the Mergers or take other steps in accordance with this Section 1.1(b) to the extent such -2- restructuring or other steps would allow the conditions contained in Sections 8.2(d) and 8.3(d) to be satisfied. U S WEST and Global are sometimes collectively referred to herein as the "Surviving Corporations". U S WEST Merger Sub and Global Merger Sub are sometimes collectively referred to herein as the "Merged Corporations". U S WEST and Global, as well as Parent, U S WEST Merger Sub, Global Merger Sub and any other Person which may become a party to this Agreement after the date of this Agreement, are herein referred to collectively as the "Parties" and each individually as a "Party." Section 1.2 Effective Time. As promptly as practicable after the satisfaction or waiver of the conditions set forth in Article VIII hereof and the consummation of the Closing referred to in Section 7.3(a) hereof, the Parties shall cause the Mergers to be consummated by (i) filing a Certificate of Merger (the "Delaware Certificate") with the Secretary of State of the State of Delaware with respect to the U S WEST Merger, in such form as is required by, and executed in accordance with, the relevant provisions of Delaware Law, and (ii) taking such actions as may be necessary to consummate the transaction contemplated by the Election (the "Election Transaction Filings"). The effective time of the U S WEST Merger specified in the Delaware Certificate shall also be the effective time of the Global Merger specified in the applicable Election Transaction Filing. The term "Effective Time" shall mean the effective time of the U S WEST Merger and the Global Merger. Section 1.3 Effect of the Mergers. At the Effective Time, the effect of the U S WEST Merger and the Global Merger shall be as provided in the applicable provisions of Delaware Law and the laws of the relevant jurisdiction or jurisdictions of Global, respectively. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time (i) all the property, rights, privileges, powers and franchises of U S WEST and U S WEST Merger Sub shall continue with, or vest in, as the case may be, U S WEST as the Surviving Corporation in the U S WEST Merger, and all debts, liabilities and duties of U S WEST and U S WEST Merger Sub shall continue to be, or become, as the case may be, the debts, liabilities and duties of U S WEST as the Surviving Corporation in the U S WEST Merger and (ii) all the property, rights, privileges, powers and franchises of Global and Global Merger Sub shall continue with, or vest in, as the case may be, Global as the Surviving Corporation in the Global Merger, and all debts, liabilities and duties of Global and Global Merger Sub shall continue to be, or become, as the case may be, the debts, liabilities and duties of Global as the Surviving Corporation in the Global Merger. As of the Effective Time, the Surviving Corporations shall be direct wholly-owned subsidiaries of Parent. Section 1.4 Subsequent Actions. If, at any time after the Effective Time, any Surviving Corporation shall consider or be advised that any deeds, bills of sale, assignments, assurances or any other actions or things are necessary or desirable to continue in, vest, perfect or confirm of record or otherwise in such Surviving Corporation their respective right, title or interest in, to or under any of the rights, properties, privileges, franchises or assets of either of its constituent corporations acquired or to be acquired by such Surviving Corporation as a result of, or in connection with, the Mergers or otherwise to carry out this Agreement, then the officers and directors of such Surviving Corporation shall be directed and authorized to execute and deliver, in the name and on behalf of either of such constituent corporations, all such deeds, bills of sale, assignments and assurances and to take and do, in the name and on behalf of each of such corporations or otherwise, all such other actions and things as may be necessary or desirable to -3- vest, perfect or confirm any and all right, title and interest in, to and under such rights, properties, privileges, franchises or assets in such Surviving Corporation or otherwise to carry out this Agreement. Section 1.5 Certificates of Incorporation; Bylaws; Directors and Officers of the Surviving Corporations. Unless otherwise agreed by Global and U S WEST before the Effective Time, at the Effective Time: (a) the Certificate of Incorporation of U S WEST as the Surviving Corporation of the U S WEST Merger shall be the Certificate of Incorporation of U S WEST as in effect immediately prior to the Effective Time, until thereafter amended as provided by law and such Certificate of Incorporation; (b) the Memorandum of Association or similar documentation of Global as the Surviving Corporation of the Global Merger shall be the Memorandum of Association or similar documentation of Global as in effect immediately prior to the Effective Time, until thereafter amended as provided by law; (c) the Bylaws of U S WEST as the Surviving Corporation of the U S WEST Merger shall be the Bylaws of U S WEST as in effect immediately prior to the Effective Time, until thereafter amended as provided by law and the Certificate of Incorporation and the Bylaws of such Surviving Corporation; (d) the Byelaws of Global as the Surviving Corporation of the Global Merger shall be the Byelaws of Global as in effect immediately prior to the Effective Time, until thereafter amended as provided by law and the Certificate of Incorporation and the Byelaws of such Surviving Corporation; and (e) the directors and officers of U S WEST immediately prior to the Effective Time shall continue to serve in their respective offices of U S WEST as the Surviving Corporation of the U S WEST Merger from and after the Effective Time, in each case until their successors are elected or appointed and qualified or until their resignation or removal. The directors and officers of Global immediately prior to the Effective Time shall continue to serve in their respective offices of Global as the Surviving Corporation of the Global Merger from and after the Effective Time, in each case until their successors are elected or appointed and qualified or until their resignation or removal. If, at the Effective Time, a vacancy shall exist on the Board of Directors or in any office of either Surviving Corporation, then such vacancy may thereafter be filled in the manner provided by law and the Bylaws of such Surviving Corporation. Section 1.6 Alternative Structure. In the event the Frontier Acquisition is consummated pursuant to the alternative merger provisions of Section 1.10 of the Agreement and Plan of Merger dated as of March 16, 1999 among Global, GCF Acquisition Corp. and Frontier, as amended (the "Frontier Merger Agreement") (the "Frontier Alternative Merger"), then U S WEST and Global shall use commercially reasonable efforts to restructure the Mergers and other transactions to be effected hereunder or take such other steps to allow the Mergers and other transactions to be effected hereunder to qualify as tax-free transactions for U.S. federal income tax purposes. -4- Section 1.7 Location of Headquarters. Global and U S WEST agree that commencing at the Effective Time the headquarters of Parent shall be located in New York, New York. Section 1.8 Corporate Identity. Global and U S WEST agree that at the Effective Time, the corporate name of Parent shall be "Global Crossing, Inc." ARTICLE II EFFECT OF MERGERS ON STOCK AND OPTIONS Section 2.1 Conversion of Securities. The manner and basis of converting the shares of common stock of Global and Global Merger Sub and U S WEST and U S WEST Merger Sub, as well as options, warrants and other rights to purchase or otherwise acquire shares of common stock of Global or shares of common stock of U S WEST, at the Effective Time, by virtue of the Mergers and without any action on the part of any of the Parties or the holder of any of such securities, shall be as hereinafter set forth in this Article II. Section 2.2 Conversion. (a) Each share of Global Common Stock and each share of common stock, par value $.01 per share, of U S WEST ("U S WEST Common Stock") issued and outstanding immediately prior to the Effective Time (excluding shares of Global Common Stock held in the treasury of Global or owned by U S WEST or any of its Subsidiaries and shares of U S WEST Common Stock held in the treasury of U S WEST or owned by Global or any of its Subsidiaries (collectively, the " Disqualified Shares")), and all rights in respect thereof, shall at the Effective Time forthwith cease to exist and be converted into and become exchangeable for a number of shares of Parent Class A Common Stock and a number of shares of Parent Class B Common Stock determined as provided in this Section 2.2. (b) Each option, warrant and other right issued and outstanding immediately prior to the Effective Time to purchase or otherwise acquire Global Common Stock (each a "Global Right") or U S WEST Common Stock (each a "U S WEST Right") (other than Global Rights owned by U S WEST or any of its Subsidiaries and U S WEST Rights owned by Global or any of its Subsidiaries (collectively, the "Disqualified Rights")) shall at the Effective Time no longer be options, warrants or rights to purchase or otherwise acquire Global Common Stock or U S WEST Common Stock, as applicable, and shall become options, warrants or rights, as applicable, to purchase or otherwise acquire a number of shares of Parent Class A Common Stock and Parent Class B Common Stock, determined as provided in this Section 2.2 on the same terms and conditions that would have applied to the purchase or other acquisition of Global Common Stock or U S WEST Common Stock, as applicable; provided, that the exercise price of any such option, warrant or right shall be adjusted as provided in Section 2.2(g). Prior to the Effective Time, the compensation committee of both U S WEST and Global will review the Global Rights and U S WEST Rights, as applicable, with a view to providing incentives for and retaining employees for Parent. U S WEST and Global shall take all such steps as may be required to cause consummation of the transactions contemplated by this Section 2.2(b) and any other disposition of U S WEST and Global equity securities (including derivative securities) or acquisitions of Parent equity securities (including derivative securities) in connection with this Agreement by each individual who (x) is a director or officer of U S WEST or Global or (y) at -5- the Effective Time, will become a director or officer of Parent, to be exempt under Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended, such steps to be taken in accordance with the No-Action Letter dated January 12, 1999, issued by the SEC to Skadden, Arps, Slate, Meagher & Flom LLP. (c) Each holder of record of Global Common Stock and/or Global Rights (other than Global Common Stock which is Disqualified Stock and Global Rights which are Disqualified Rights) immediately prior to the Effective Time shall be entitled to make a number of elections for shares of Parent Class B Common Stock and/or Parent Class A Common Stock equal to the sum of the number of shares of Global Common Stock held by such holder at the Effective Time and the number of shares of Global Common Stock issuable pursuant to Global Rights held by such holders at the Effective Time. Each holder of record of U S WEST Common Stock and/or U S WEST Rights (other than U S WEST Common Stock which is Disqualified Stock and U S WEST Rights which are Disqualified Rights) immediately prior to the Effective Time shall be entitled to make a number of elections for shares of Parent Class B Common Stock and/or Parent Class A Common Stock equal to the product of the Conversion Ratio (as defined below) multiplied by the number of shares of U S WEST Common Stock held by such holder at the Effective Time and the number of shares of U S WEST Common Stock issuable pursuant to U S WEST Rights held by such holders at the Effective Time. The "Conversion Ratio" shall be equal to the quotient (rounded to the nearest 1/10,000) of (A) the sum of (i) the fully diluted number of shares of Global Common Stock outstanding on the date hereof (based on the treasury method of accounting assuming the price of Global Common Stock at the close of trading on May 13, 1999), plus (ii) the product of the fully diluted number of shares of Frontier common stock outstanding (based on the treasury method of accounting assuming the price of Frontier common stock as of the close of trading on the day prior to consummation of the transactions contemplated by the Frontier Merger Agreement) on the date of the closing pursuant to the Frontier Merger Agreement multiplied by the Exchange Ratio (as defined in the Frontier Merger Agreement) determined as of the date of such closing, less (iii) 39,259,305 divided by (B) the fully diluted number of shares of U S WEST Common Stock outstanding on the date hereof (based on the treasury method of accounting assuming the price of U S WEST Common Stock at the close of trading on May 13, 1999). Each election may be made for Parent Class B Common Stock or Parent Class A Common Stock. A holder holding both Global Common Stock and Global Rights and/or U S WEST Common Stock and U S WEST Rights shall have the right to separately elect with respect to such common stock and rights. Each election made (or, pursuant to Section 2.4, deemed to be made) for Parent Class B Common Stock shall be an election for a number of shares of Parent Class B Common Stock equal to a quotient the numerator of which is the sum of 1 plus the Class B to Class A Value Ratio (as defined in Section 7.17) and the denominator of which is the Class B to Class A Value Ratio. Each election made (or, pursuant to Section 2.4 deemed to be made) for Parent Class A Common Stock shall be an election for a number of shares of Parent Class A Common Stock equal to the sum of 1 plus the Class B to Class A Value Ratio. (d) If the aggregate number of shares of Parent Class B Common Stock elected (or deemed to be elected) pursuant to Sections 2.2(c) and 2.4 equals the aggregate number of elections that may be made pursuant to Section 2.2(c) by all holders of Global Common Stock and Global Rights and U S WEST Common Stock and U S WEST Rights (the "Number of Group Shares") and the aggregate number of shares of Parent Class A Common -6- Stock elected (or deemed to be elected) pursuant to Sections 2.2(c) an 2.4 equals the Number of Group Shares, then (i) the shares of Global Common Stock as to which each holder of record of Global Common Stock is entitled to make an election pursuant to Section 2.2(c) shall be converted into and exchangeable for, and the Global Rights as to which each holder of record of Global Rights is entitled to make an election pursuant to Section 2.2(c) shall become options, warrants or rights, as applicable, to purchase or otherwise acquire, the number of shares of Parent Class B Common Stock and the number of shares of Parent Class A Common Stock elected (or deemed to be elected) by such holder pursuant to Sections 2.2(c) and 2.4 and (ii) the shares of U S WEST Common Stock as to which each holder of record of U S WEST Common Stock is entitled to make an election pursuant to Section 2.2(c) shall be converted into and exchangeable for, and the U S WEST Rights as to which each holder of record of U S WEST Rights is entitled to make an election pursuant to Section 2.2(c) shall become options, warrants or rights, as applicable, to purchase or otherwise acquire, the number of shares of Parent Class B Common Stock and the number of shares of Parent Class A Common Stock elected (or deemed to be elected) by such holder pursuant to Sections 2.2(c) and 2.4. (e) If the aggregate number of shares of Parent Class B Common Stock elected (or deemed to be elected) pursuant to Sections 2.2(c) and 2.4 exceeds the Number of Group Shares, then (A) the shares of Global Common Stock as to which each holder of record of Global Common Stock is entitled to make an election pursuant to Section 2.2(c) shall be converted into and exchangeable for, (B) the shares of U S WEST Common Stock as to which each holder of record of U S WEST Common Stock is entitled to make an election pursuant to Section 2.2(c) shall be converted into and exchangeable for, (C) the Global Rights as to which each holder of record of Global Rights is entitled to make an election pursuant to Section 2.2(c) shall become options, warrants or rights, as applicable, to purchase or otherwise acquire, and (D) the U S WEST Rights as to which each holder of record of U S WEST Rights is entitled to make an election pursuant to Section 2.2(c) shall become options, warrants or rights, as applicable, to purchase or otherwise acquire: (i) a number of shares of Parent Class B Common Stock equal to the product of the number of shares of Parent Class B Common Stock elected (or deemed to be elected) by such holder pursuant to Sections 2.2(c) and 2.4, multiplied by the quotient of the Number of Group Shares divided by the aggregate number of shares of Parent Class B Common Stock elected (or deemed to be elected) pursuant to Sections 2.2(c) and 2.4, (ii) the number of shares of Parent Class A Common Stock elected (or deemed to be elected) by such holder pursuant to Sections 2.2(c) and 2.4, and (iii) a number of shares of Parent Class A Common Stock equal to the product of the Class B to Class A Value Ratio multiplied by the difference between the number of shares of Parent Class B Common Stock elected (or deemed to be elected) by such holder pursuant to Sections 2.2(c) and 2.4 and the number of shares of Parent Class B Common Stock allocated to such holder pursuant to clause (i) of this sentence. (f) If the aggregate number of shares of Parent Class A Common Stock elected (or deemed to be elected) pursuant to Sections 2.2(c) and 2.4 exceeds the Number of -7- Group Shares, then (A) the shares of Global Common Stock as to which each holder of record of Global Common Stock is entitled to make an election pursuant to Section 2.2(c) shall be converted into and exchangeable for, (B) the shares of U S WEST Common Stock as to which each holder of record of U S WEST Common Stock is entitled to make an election pursuant to Section 2.2(c) shall be converted into and exchangeable for, (C) the Global Rights as to which each holder of record of Global Rights is entitled to make an election pursuant to Section 2.2(c) shall become options, warrants or rights, as applicable, to purchase or otherwise acquire, and (D) the U S WEST Rights as to which each holder of record of U S WEST Rights is entitled to make an election pursuant to Section 2.2(c) shall become options, warrants or rights, as applicable, to purchase or otherwise acquire: (i) a number of shares of Parent Class A Common Stock equal to the product of the number of shares of Parent Class A Common Stock elected (or deemed to be elected) by such holder pursuant to Sections 2.2(c) and 2.4, multiplied by the quotient of the Number of Group Shares divided by the aggregate number of shares of Parent Class A Common Stock elected (or deemed to be elected) pursuant to Sections 2.2(c) and 2.4, (ii) the number of shares of Parent Class B Common Stock elected (or deemed to be elected) by such holder pursuant to Sections 2.2(c) and 2.4, and (iii) a number of shares of Parent Class B Common Stock equal to the product of the quotient of 1 divided by the Class B to Class A Value Ratio multiplied by the difference between the number of shares of Parent Class A Common Stock elected (or deemed to be elected) by such holder pursuant to Sections 2.2(c) and 2.4, and the number of shares of Parent Class A Common Stock allocated to such holder pursuant to clause (i) of this sentence. (g) Commencing immediately after the Effective Time, each certificate which, immediately prior to the Effective Time, represented issued and outstanding shares of Global Common Stock or U S WEST Common Stock shall evidence ownership of Parent Class A Common Stock and Parent Class B Common Stock on the basis hereinbefore set forth. Commencing immediately after the Effective Time, each option, warrant or other right which, immediately prior to the Effective Time, represented the right to purchase or otherwise acquire shares of Global Common Stock or U S WEST Common Stock shall evidence the right to purchase or otherwise acquire shares of Parent Class A Common Stock and Parent Class B Common Stock on the basis hereinabove set forth and otherwise, subject to Section 2.6, on the same terms and conditions that would have applied to the purchase or other acquisition of Global Common Stock or U S WEST Common Stock, as applicable; provided that the exercise price shall be allocated to the purchase of Parent Class B Common Stock and Parent Class A Common Stock in proportion to the Class B to Class A Value Ratio. (h) For all purposes of this Agreement, unless otherwise specified, all shares held by employee stock ownership plans or other pension or deferred compensation plans of Global or U S WEST (i) shall be deemed to be issued and outstanding, (ii) shall not be deemed to be held in the treasury of Global or U S WEST respectively, and (iii) shall be subject to the election rights and procedures described in Sections 2.2(c) and 2.4. -8- (i) Under Bermuda law (or the law of the relevant jurisdiction) within one month of receiving notice of the meeting of the Global stockholders which is to consider the Global Merger, a Global stockholder is entitled to apply to the Bermuda Court (or may be entitled under the laws of the relevant jurisdiction) for an appraisal of the fair value of his shares. Prior to the Effective Time, and within one month of the Bermuda Court (or the court of the relevant jurisdiction) appraising the fair value of such shares, Global shall cause Frontier to pay to the dissenting stockholder an amount equal to the value of his shares as appraised by the Bermuda Court (or the court of the relevant jurisdiction) or alternatively may terminate this Agreement as provided in Section 9.1(f) hereof. After the Effective Time, where the Bermuda Court (or the court of the relevant jurisdiction) has appraised the shares of a dissenting stockholder of Global and the amount paid to such dissenting stockholder in the Global Merger was less than the amount appraised by the Bermuda Court (or the court of the relevant jurisdiction), Global, as the Surviving Corporation in the Global Merger, shall cause Frontier to pay to such stockholder the difference in value. If any former shareholder of Frontier seeks appraisal of his Global shares and becomes entitled to be paid the value of his shares, Global shall cause such cash payment to be made by Frontier. Section 2.3 Common Stock of Merged Corporations. (a) At the Effective Time, each share of common stock, par value $.01 per share, of Global Merger Sub issued and outstanding immediately prior to the Effective Time, and all rights in respect thereof, shall, without any action on the part of Parent, be automatically converted into one share of common stock, par value $.01 per share, of Global as the Surviving Corporation of the Global Merger. (b) At the Effective Time, each share of common stock, par value $.01 per share, of U S WEST Merger Sub issued and outstanding immediately prior to the Effective Time, and all rights in respect thereof, shall, without any action on the part of Parent, be automatically converted into one share of common stock, par value $.01 per share, of U S WEST as the Surviving Corporation of the U S WEST Merger. Section 2.4 Election Procedures; Exchange of Shares. (a) Not later than thirty (30) days prior to the anticipated Effective Time or such other date as the Parties may agree in writing, Global shall fix a record date (which may be the record date for the stockholders meeting contemplated by Section 7.2 if such meeting date is anticipated to be within ten (10) days of the Effective Time) for determining which of its stockholders and holders of Global Rights shall be entitled to elect to make the election contemplated by Section 2.2(c) and shall cause a Notice and Form of Election (the "Form of Election") together with a letter of transmittal to be mailed to the holders of record of shares of Global Common Stock as of such record date and holders of record of Global Rights as of such record date. Holders of record of both Global Common Stock and Global Rights shall receive a Form of Election relating to such Global Common Stock and a separate Form of Election relating to such Global Rights. Global shall also cause the Form of Election together with a letter of transmittal to be mailed to each person to whom a share of Global Common Stock or a Global Right is issued subsequent to such record date. The election contemplated by Section 2.2(c) shall be made by holders of shares of Global Common Stock and Global Rights by delivering the Form of Election to the exchange agent mutually chosen by Global and U S WEST to act as exchange agent hereunder (the "Exchange Agent"). Such election shall be made in terms of the percentage (in increments of one percent (1%)) of each holder's elections that such holder seeks to make for shares of Parent -9- Class B Common Stock and/or shares of Parent Class A Common Stock. To be effective, a Form of Election must be properly completed, signed and submitted to the Exchange Agent by 5:00 p.m. (New York City time) on the last business day prior to the Effective Time or such other time and date as the Parties may agree (the "Election Deadline"), and accompanied by (1) other than in the case of Global Rights, (x) the certificates as to which the election is being made, or (y) an appropriate guarantee of delivery of such certificates as set forth in such Form of Election from a firm which is a member of a registered national securities exchange or of the National Association of Securities Dealers, Inc., or a commercial bank or trust company having an office or correspondent in the United States; provided, however, that such certificates are in fact delivered to the Exchange Agent within three (3) NYSE trading days after the date of execution of such guarantee of delivery (a "Guarantee of Delivery"), and (2) a properly completed and signed letter of transmittal. Failure to deliver certificates covered by a Guarantee of Delivery within three (3) New York Stock Exchange ("NYSE") trading days after the date of execution of such Guarantee of Delivery shall be deemed to invalidate any otherwise properly made election. Parent will have the discretion, which it may delegate in whole or in part to the Exchange Agent, to determine whether Forms of Election have been properly completed, signed and submitted or revoked and to disregard immaterial defects in Forms of Election. The good faith decision of Parent (or the Exchange Agent) in such matters shall be conclusive and binding. Neither Parent nor the Exchange Agent will be under any obligation to notify any Person of any defect in a Form of Election submitted to the Exchange Agent. Any Form of Election may be changed or revoked prior to the Election Deadline. In the event a Form of Election is revoked prior to the Election Deadline, Parent shall, or shall cause the Exchange Agent to, if applicable, cause the certificates representing the shares of the Global Common Stock or Global Rights covered by such Form of Election to be promptly returned without charge to the Person submitting the Form of Election upon written request to that effect from such Person. For purposes hereof, if a holder of Global Common Stock or Global Rights does not submit a Form of Election which is received by the Exchange Agent prior to the Election Deadline (including a holder who submits and then revokes his or her Form of Election and does not resubmit a Form of Election which is timely received by the Exchange Agent), if a holder of Global Common Stock submits a Form of Election without the corresponding certificates or a Guarantee of Delivery or if the Exchange Agent cannot reasonably determine the election preference of a holder of Global Common Stock or Global Rights submitting a Form of Election, then such holder shall be deemed to have elected shares of Parent Class B Common Stock and shares of Parent Class A Common Stock in the same proportion as the holders of Global Common Stock who actually made (and were not merely deemed to have made) elections pursuant to Section 2.2(c) and this Section 2.4. (b) Subject to the terms and conditions hereof, Parent shall cause the Exchange Agent to effect the exchange of Global Common Stock for the Parent Class B Common Stock and/or Parent Class A Common Stock in accordance with the provisions of this Article II. From time to time after the Effective Time, Parent shall deposit, or cause to be deposited, with the Exchange Agent certificates representing Parent Class A Common Stock and Parent Class B Common Stock for conversion of Global Common Stock in accordance with the provisions of Section 2.2 hereof (such certificates, together with any dividends or distributions with respect thereto, being herein referred to as the "Global Exchange Fund"). Commencing immediately after the Effective Time and until the appointment of the Exchange Agent shall be terminated, each holder of a certificate or certificates theretofore representing Global Common -10- Stock may surrender the same to the Exchange Agent, and, after the appointment of the Exchange Agent shall be terminated, any such holder may surrender any such certificate to Parent. Such holder shall be entitled upon such surrender to receive in exchange therefor a certificate or certificates representing the number of full shares of Parent Class A Common Stock and Parent Class B Common Stock into which the Global Common Stock theretofore represented by the certificate or certificates so surrendered shall have been converted in accordance with the provisions of Sections 2.2 and 2.4 hereof, together with a cash payment in lieu of fractional shares, if any, in accordance with Section 2.6 hereof, and all such shares of Parent Class A Common Stock and Parent Class B Common Stock so issued shall be deemed to have been issued at the Effective Time. Until so surrendered and exchanged, each outstanding certificate which, prior to the Effective Time, represented issued and outstanding Global Common Stock shall be deemed for all corporate purposes of Parent, other than the payment of dividends and other distributions, if any, to evidence ownership of the number of full shares of Parent Class A Common Stock and Parent Class B Common Stock into which the Global Common Stock theretofore represented thereby shall have been converted at the Effective Time. Unless and until any such certificate theretofore representing Global Common Stock is so surrendered, no dividend or other distribution, if any, payable to the holders of record of Parent Class A Common Stock and Parent Class B Common Stock as of any date subsequent to the Effective Time shall be paid to the holder of such certificate in respect thereof. Upon the surrender of any such certificate theretofore representing Global Common Stock, however, the record holder of the certificate or certificates representing shares of Parent Class A Common Stock and Parent Class B Common Stock issued in exchange therefor shall receive from the Exchange Agent, or from Parent, as the case may be, payment of the amount of dividends and other distributions, if any, which as of any date subsequent to the Effective Time and until such surrender shall have become payable with respect to such number of shares of Parent Class A Common Stock and Parent Class B Common Stock ("Pre-Surrender Global Dividends"). No interest shall be payable with respect to the payment of Pre-Surrender Global Dividends upon the surrender of certificates theretofore representing Global Common Stock. After the appointment of the Exchange Agent shall have been terminated, any holders of certificates representing Global Common Stock which have not received payment of Pre-Surrender Global Dividends shall look only to Parent for payment thereof. Notwithstanding the foregoing provisions of this Section 2.4(b), neither the Exchange Agent nor any Party shall be liable to a holder of Global Common Stock for any Parent Class A Common Stock and Parent Class B Common Stock, any dividends or distributions thereon or any cash payment for fractional shares as contemplated by Section 2.6 delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. (c) Not later than thirty (30) days prior to the anticipated Effective Time or such other date as the Parties may agree in writing, U S WEST shall fix a record date (which may be the record date for the stockholders' meeting contemplated by Section 7.2 if such meeting date is anticipated to be within ten (10) days of the Effective Time) for determining which of its stockholders and holders of U S WEST Rights shall be entitled to elect to make the election contemplated by Section 2.2(c) and shall cause a Form of Election together with a letter of transmittal to be mailed to the holders of record of shares of U S WEST Common Stock as of such record date and holders of record of U S WEST Rights as of such record date. Holders of record of both U S WEST Common Stock and U S WEST Rights shall receive a form of Election relating to -11- such U S WEST Common Stock and a separate form of Election relating to such U S WEST Rights. U S WEST shall also cause the Form of Election together with a letter of transmittal to be mailed to each person to whom a share of U S WEST Common Stock or a U S WEST Right is issued subsequent to such record date. The election contemplated by Section 2.2(c) shall be made by holders of shares of U S WEST Common Stock and U S WEST Rights by delivering the Form of Election to the Exchange Agent. Such election shall be made in terms of the percentage (in increments of one percent (1%)) of each holder's elections that such holder seeks to make for shares of Parent Class B Common Stock and/or shares of Parent Class A Common Stock. To be effective, a Form of Election must be properly completed, signed and submitted to the Exchange Agent by 5:00 p.m. (New York City time) on the Election Deadline, and accompanied by (1) other than in the case of U S WEST Rights, (x) the certificates as to which the election is being made, or (y) an appropriate Guarantee of Delivery of such certificates as set forth in such Form of Election, and (2) a properly completed and signed letter of transmittal. Failure to deliver certificates covered by a Guarantee of Delivery within three (3) NYSE trading days after the date of execution of such Guarantee of Delivery shall be deemed to invalidate any otherwise properly made election. Parent will have the discretion, which it may delegate in whole or in part to the Exchange Agent, to determine whether Forms of Election have been properly completed, signed and submitted or revoked and to disregard immaterial defects in Forms of Election. The good faith decision of Parent (or the Exchange Agent) in such matters shall be conclusive and binding. Neither Parent nor the Exchange Agent will be under any obligation to notify any Person of any defect in a Form of Election submitted to the Exchange Agent. Any Form of Election may be changed or revoked prior to the Election Deadline. In the event a Form of Election is revoked prior to the Election Deadline, Parent shall, or shall cause the Exchange Agent to, if applicable, cause the certificates representing the shares of the U S WEST Common Stock or U S WEST Rights covered by such Form of Election to be promptly returned without charge to the Person submitting the Form of Election upon written request to that effect from such Person. For purposes hereof, if a holder of U S WEST Common Stock or U S WEST Rights does not submit a Form of Election which is received by the Exchange Agent prior to the Election Deadline (including a holder who submits and then revokes his or her Form of Election and does not resubmit a Form of Election which is timely received by the Exchange Agent), if a holder of U S WEST Common Stock submits a Form of Election without the corresponding certificates or a Guarantee of Delivery or if the Exchange Agent cannot reasonably determine the election preference of a holder of U S WEST Common Stock or U S WEST Rights submitting a Form of Election, then such holder shall be deemed to have elected shares of Parent Class A Common Stock and shares of Parent Class B Common Stock in the same proportion as the holders of U S WEST Common Stock who actually made (and were not merely deemed to have made) elections pursuant to Section 2.2(c), and this Section 2.4. (d) Subject to the terms and conditions hereof, Parent shall cause the Exchange Agent to effect the exchange of U S WEST Common Stock for the Parent Class B Common Stock and Parent Class A Common Stock in accordance with the provisions of this Article II. From time to time after the Effective Time, Parent shall deposit, or cause to be deposited, with the Exchange Agent certificates representing Parent Class A Common Stock and Parent Class B Common Stock for conversion of U S WEST Common Stock in accordance with the provisions of Section 2.2 hereof (such certificates, together with any dividends or distributions with respect thereto, being herein referred to as the "U S WEST Exchange Fund"). Commencing immediately after the Effective Time and until the appointment of the Exchange Agent shall be terminated, each holder of a certificate or certificates theretofore representing -12- U S WEST Common Stock may surrender the same to the Exchange Agent, and, after the appointment of the Exchange Agent shall be terminated, any such holder may surrender any such certificate to Parent. Such holder shall be entitled upon such surrender to receive in exchange therefor a certificate or certificates representing the number of full shares of Parent Class A Common Stock and Parent Class B Common Stock into which the U S WEST Common Stock theretofore represented by the certificate or certificates so surrendered shall have been converted in accordance with the provisions of Sections 2.2 and 2.4 hereof, together with a cash payment in lieu of fractional shares, if any, in accordance with Section 2.6 hereof, and all such shares of Parent Class A Common Stock and Parent Class B Common Stock so issued shall be deemed to have been issued at the Effective Time. Until so surrendered and exchanged, each outstanding certificate which, prior to the Effective Time, represented issued and outstanding U S WEST Common Stock shall be deemed for all corporate purposes of Parent, other than the payment of dividends and other distributions, if any, to evidence ownership of the number of full shares of Parent Class A Common Stock and Parent Class B Common Stock into which the U S WEST Common Stock theretofore represented thereby shall have been converted at the Effective Time. Unless and until any such certificate theretofore representing U S WEST Common Stock is so surrendered, no dividend or other distribution, if any, payable to the holders of record of Parent Class A Common Stock and Parent Class B Common Stock as of any date subsequent to the Effective Time shall be paid to the holder of such certificate in respect thereof. Upon the surrender of any such certificate theretofore representing U S WEST Common Stock, however, the record holder of the certificate or certificates representing shares of Parent Class A Common Stock and Parent Class B Common Stock issued in exchange therefor shall receive from the Exchange Agent, or from Parent, as the case may be, payment of the amount of dividends and other distributions, if any, which as of any date subsequent to the Effective Time and until such surrender shall have become payable with respect to such number of shares of Parent Class A Common Stock and Parent Class B Common Stock ("Pre-Surrender U S WEST Dividends"). No interest shall be payable with respect to the payment of Pre-Surrender U S WEST Dividends upon the surrender of certificates theretofore representing U S WEST Common Stock. After the appointment of the Exchange Agent shall have been terminated, any holders of certificates representing U S WEST Common Stock which have not received payment of Pre-Surrender Dividends shall look only to Parent for payment thereof. Notwithstanding the foregoing provisions of this Section 2.4(d), neither the Exchange Agent nor any Party shall be liable to a holder of U S WEST Common Stock for any Parent Class A Common Stock and Parent Class B Common Stock, any dividends or distributions thereon or any cash payment for fractional shares as contemplated by Section 2.6 delivered to a public official pursuant to any applicable abandoned property, or escheat or similar law. (e) Notwithstanding anything herein to the contrary, certificates surrendered for exchange by any affiliate of Global or U S WEST shall not be exchanged until Parent shall have received a signed agreement from such affiliate as provided in Section 7.14 hereof. (f) Any portion of the Global Exchange Fund and U S WEST Exchange Fund which remains undistributed for six (6) months after the Effective Time shall be delivered to Parent, upon demand, and any holders of Global Common Stock and U S WEST Common Stock who have not theretofore complied with the provisions of this Article II shall thereafter look only to Parent for satisfaction of their claims for Parent Class A Common Stock or Parent Class B -13- Common Stock and any Pre-Surrender Global Dividends or Pre-Surrender U S WEST Dividends. Section 2.5 Transfer Books. (a) The stock transfer books of Global shall be closed at the Effective Time and no transfer of any Global Common Stock will thereafter be recorded on any of such stock transfer books. In the event of a transfer of ownership of Global Common Stock that is not registered in the stock transfer records of Global at the Effective Time, a certificate or certificates representing the number of full shares of Parent Class A Common Stock and Parent Class B Common Stock into which such Global Common Stock shall have been converted shall be issued to the transferee and a cash payment in the amount of Pre-Surrender Global Dividends, if any, in accordance with Section 2.4(b) hereof, if the certificate or certificates representing such Global Common Stock is or are surrendered as provided in Section 2.4 hereof, accompanied by all documents required to evidence and effect such transfer and by evidence of payment of any applicable stock transfer tax. (b) The stock transfer books of U S WEST shall be closed at the Effective Time and no transfer of any U S WEST Common Stock will thereafter be recorded on any of such stock transfer books. In the event of a transfer of ownership of U S WEST Common Stock that is not registered in the stock transfer records of U S WEST at the Effective Time, a certificate or certificates representing the number of full shares of Parent Class A Common Stock and Parent Class B Common Stock into which such U S WEST Common Stock shall have been converted shall be issued to the transferee and a cash payment in the amount of Pre-Surrender U S WEST Dividends, if any, in accordance with Section 2.4(d) hereof, if the certificate or certificates representing such U S WEST Common Stock is or are surrendered as provided in Section 2.4 hereof, accompanied by all documents required to evidence and effect such transfer and by evidence of payment of any applicable stock transfer tax. Section 2.6 No Fractional Share Certificates. (a) No scrip or fractional share certificate for Parent Class A Common Stock or Parent Class B Common Stock will be issued upon the surrender for exchange of certificates evidencing Global Common Stock or U S West Common Stock or upon exercise of Global Rights or U S WEST Rights, and an outstanding fractional share interest will not entitle the owner thereof to vote, to receive dividends or to any rights of a stockholder of Parent or of a Surviving Corporation with respect to such fractional share interest. (b) As promptly as practicable following the Effective Time, the Exchange Agent shall determine the excess of (i) the number of full shares of Parent Class A Common Stock and Parent Class B Common Stock to be issued and delivered to the Exchange Agent pursuant to Section 2.4 hereof, over (ii) the aggregate number of full shares of Parent Class A Common Stock and Parent Class B Common Stock to be distributed to holders of Global Common Stock and U S WEST Common Stock pursuant to Section 2.4 hereof (such excess being herein called the "Excess Shares"). Following the Effective Time, the Exchange Agent, as agent for the holders of Global Common Stock and U S WEST Common Stock, shall sell the Excess Shares at then prevailing prices on the NYSE or the Nasdaq National Market ("Nasdaq"), all in the manner provided in Section 2.6(c). -14- (c) The sale of the Excess Shares by the Exchange Agent shall be executed on the NYSE or Nasdaq and shall be executed in round lots to the extent practicable. The Exchange Agent shall use all reasonable efforts to complete the sale of the Excess Shares as promptly following the Effective Time as, in the Exchange Agent's reasonable judgment, is practicable consistent with obtaining the best execution of such sales in light of prevailing market conditions. Until the net proceeds of such sale or sales have been distributed to the holders of Global Common Stock and U S WEST Common Stock, the Exchange Agent will hold such proceeds in trust for the holders of Global Common Stock and U S WEST Common Stock (the "Common Shares Trust"). The Exchange Agent shall determine the portion of the Common Shares Trust to which each holder of Global Common Stock and U S West Common Stock shall be entitled, if any, by multiplying (i) the amount of the aggregate net proceeds comprising the Common Shares Trust resulting from the sale of shares of Parent Class B Common Stock by a fraction the numerator of which is the amount of fractional Parent Class B Common Stock interests to which such holder of Global Common Stock or U S WEST Common Stock is entitled (after taking into account all shares of Global Common Stock and/or U S West Stock, as applicable, held at the Effective Time by such holder) and the denominator of which is the aggregate amount of fractional Parent Class B Common Shares interests to which all holders of Global Common Stock and U S West Common Stock are entitled and (ii) the amount of the aggregate net proceeds comprising the Common Shares Trust resulting from the sale of shares of Parent Class A Common Stock by a fraction the numerator of which is the amount of fractional Parent Class A Common Stock interests to which such holder of Global Common Stock or U S WEST Common Stock is entitled (after taking into account all shares of Global Common Stock and/or U S West Stock, as applicable, held at the Effective Time by such holder) and the denominator of which is the aggregate amount of fractional Parent Class A Common Shares interests to which all holders of Global Common Stock and U S West Common Stock are entitled. (d) Notwithstanding the provisions of subsections (b) and (c) of this Section 2.6, Parent may decide, at its option, exercised prior to the Effective Time, in lieu of the issuance and sale of Excess Shares and the making of the payments contemplated in such subsections, that Parent shall pay to the Exchange Agent an amount sufficient for the Exchange Agent to pay each holder of Global Common Stock and U S WEST Common Stock the amount such holder would have received pursuant to Section 2.6(c) assuming that the sales of Parent Class A Common Stock and Parent Class B Common Stock were made at a price equal to the average of the closing prices of the Parent Class A Common Stock or Parent Class B Common Stock, as applicable, on the New York Stock Exchange or on Nasdaq, as applicable, for the ten consecutive trading days immediately following the Effective Time and, in such case, all references herein to the cash proceeds of the sale of the Excess Shares and similar references shall be deemed to mean and refer to the payments calculated as set forth in this subsection (d). In such event, Excess Shares shall not be issued or otherwise transferred to the Exchange Agent pursuant to Section 2.4(b) or 2.4(d) hereof. (e) As soon as practicable after the determination of the amount of cash, if any, to be paid to holders of Global Common Stock and U S WEST Common Stock with respect to any fractional share interests, the Exchange Agent shall make available such amounts, net of any required withholding and net of fees and expenses, to such holders of Global Common Stock and U S WEST Common Stock, subject to and in accordance with the terms of Section 2.4 hereof. -15- (f) Following the Effective Time, upon the exercise of any Global Right or U S WEST Right entitling the holder thereof to purchase a fractional share of Parent Class A Common Stock or Parent Class B Common Stock, Parent will, in lieu of issuing a fractional share Certificate therefor, pay to such holder the value of such fractional interest as determined based on the closing price on the trading day immediately preceding the date of exercise of a share of Parent Class B Common Stock or Parent Class A Common Stock, as applicable, on the New York Stock Exchange, Nasdaq or such other principal security exchange on which the Parent Class A Common Stock and Parent Class B Common Stock shall then be trading, or, if not so traded, based on such price as shall be determined by, or pursuant to authority delegated by, the Board of Directors of Parent. Section 2.7 Certain Adjustments. (a) If between the date hereof and the Effective Time, the outstanding shares of Global Common Stock shall be changed into a different number of shares by reason of any reclassification, recapitalization, split-up, combination or exchange of shares, or any dividend payable in stock or other securities shall be declared thereon with a record date within such period, then the Conversion Ratio shall be adjusted accordingly to provide to the holders of Global Common Stock the same economic effect as contemplated by this Agreement prior to such reclassification, recapitalization, split-up, combination, exchange or dividend. (b) If between the date hereof and the Effective Time, the outstanding shares of U S WEST Common Stock shall be changed into a different number of shares by reason of any reclassification, recapitalization, split-up, combination or exchange of shares, or any dividend payable in stock or other securities shall be declared thereon with a record date within such period, then the Conversion Ratio shall be adjusted accordingly to provide to the holders of U S WEST Common Stock the same economic effect as contemplated by this Agreement prior to such reclassification, recapitalization, split-up, combination, exchange or dividend. ARTICLE III [INTENTIONALLY OMITTED] ARTICLE IV REPRESENTATIONS AND WARRANTIES OF GLOBAL Global hereby represents and warrants as of the date hereof to U S WEST as follows: Section 4.1 Organization and Qualification; Subsidiaries. Global and each of its Significant Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization. Each of the Global Subsidiaries which is not a Significant Subsidiary is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization, except for such failure which, when taken together with all other such failures, would not reasonably be expected to have a Material Adverse Effect on Global. Each of Global and its Subsidiaries has the requisite corporate power and authority and any necessary Permit to own, operate or lease the properties that it purports to own, operate or lease and to carry on its business as it is now being -16- conducted, and is duly qualified as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of its properties owned, operated or leased or the nature of its activities makes such qualification necessary, except for such failure which, when taken together with all other such failures, would not reasonably be expected to have a Material Adverse Effect on Global. Section 4.2 Certificate of Incorporation and Byelaws. Global has heretofore furnished, or otherwise made available, to U S WEST a complete and correct copy of the Certificate of Incorporation and the Byelaws, each as amended to the date hereof, of Global and each of its Significant Subsidiaries. Such Certificates of Incorporation and Byelaws are in full force and effect. Neither Global nor any of its Significant Subsidiaries is in violation of any of the provisions of its respective Certificate of Incorporation or, in any material respect, its Byelaws. Section 4.3 Capitalization. (a) The authorized capital stock of Global consists solely of 600,000,000 shares of Global Common Stock, of which, as of May 13, 1999, (i) 413,901,537 shares were issued and outstanding, (ii) 22,033,758 shares were held in the treasury of Global, (iii) 33,382,907 shares were issuable upon the exercise of options outstanding under the Global option plans listed on Schedule 4.3 hereto, and (iv) (A) 12,500,012 shares were issuable upon the exercise of warrants expiring August 13, 2003, exercisable at $9.50 per share of Global Common Stock, and (B) 5,108,358 shares were issuable upon the exercise of warrants expiring August 13, 2008, exercisable at $9.50 per share of Global Common Stock (collectively, the "Global Warrants"). Except as set forth on Schedule 4.3 or in connection with the transactions contemplated by the Frontier Merger Agreement or, after the date hereof, as permitted by Section 6.2 hereof, (i) since May 13, 1999, no shares of Global Common Stock have been issued, except upon the exercise of options and warrants described in the immediately preceding sentence, and (ii) there are no outstanding Global Equity Rights. For purposes of this Agreement, Global Equity Rights shall mean subscriptions, options, warrants, calls, commitments, agreements, conversion rights or other rights of any character (contingent or otherwise) to purchase or otherwise acquire from Global or any of Global's Subsidiaries at any time, or upon the happening of any stated event, any shares of the capital stock or other voting or non-voting securities of Global ("Global Equity Rights"). Schedule 4.3 hereto sets forth a complete and accurate list of all outstanding Global Equity Rights as of May 13, 1999. Since May 13, 1999, no Global Equity Rights have been issued except as set forth on Schedule 4.3 or in connection with the transactions contemplated by the Frontier Merger Agreement or, after the date hereof, as permitted by Section 6.2 hereof. (b) Except as set forth on Schedule 4.3, or, after the date hereof, as permitted by Section 6.2 hereof, there are no outstanding obligations of Global or any of Global's Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock of Global. (c) All of the issued and outstanding shares of Global Common Stock are validly issued, fully paid and nonassessable. (d) Except as disclosed on Schedule 4.1 hereto, all the outstanding capital stock of each of Global's Significant Subsidiaries which is owned by Global is duly authorized, validly issued, fully paid and nonassessable, and is owned by Global free and clear of any liens, security -17- interest, pledges, agreements, claims, charges or encumbrances except for any liens, security interest, pledges, agreements, claims, charges or encumbrances which are granted to secure indebtedness permitted by Section 6.2. Except as hereafter issued or entered into in accordance with Section 6.2 hereof, there are no existing subscriptions, options, warrants, calls, commitments, agreements, conversion rights or other rights of any character (contingent or otherwise) to purchase or otherwise acquire from Global or any of Global's Subsidiaries at any time, or upon the happening of any stated event, any shares of the capital stock or other voting or non-voting securities of any Global Subsidiary, whether or not presently issued or outstanding (except for rights of first refusal to purchase interests in Subsidiaries which are not wholly-owned by Global), and there are no outstanding obligations of Global or any of Global's Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock or other voting or non-voting securities of any of Global's Subsidiaries, other than such as would not, individually or in the aggregate, have a Material Adverse Effect on Global. Except for (i) its Subsidiaries, (ii) immaterial amounts of equity securities, (iii) investments of Persons in which Global has less than a five percent (5%) interest, and (iv) equity interests disclosed on Schedule 4.3 hereto or hereafter acquired as permitted under Section 6.2 hereof, Global does not directly or indirectly own any equity interest in any other Person. (e) No bonds, debentures, notes or other indebtedness of Global having the right to vote on any matters on which shareholders may vote are issued or outstanding except for any securities issued after the date hereof in accordance with Section 6.2. Section 4.4 Authority Relative to this Agreement. Global has the necessary corporate power and authority to enter into this Agreement and, subject to obtaining any necessary stockholder approval of the Global Merger and this Agreement, to carry out its obligations hereunder. The execution and delivery of this Agreement by Global and the consummation by Global of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Global, subject to the approval of this Agreement by Global's stockholders required by Bermuda Law. This Agreement has been duly executed and delivered by Global and, assuming the due authorization, execution and delivery thereof by the other Parties, constitutes a legal, valid and binding obligation of Global, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting the rights and remedies of creditors generally and to general principles of equity (regardless of whether considered in a proceeding in equity or at law). Section 4.5 No Conflict; Required Filings and Consents. (a) Except as described in subsection (b) below, the execution and delivery of this Agreement by Global does not, and the performance of this Agreement by Global will not, (i) violate or conflict with the Certificate of Incorporation or Byelaws of Global, (ii) conflict with or violate any law, regulation, court order, judgment or decree applicable to Global or any of its Significant Subsidiaries or by which any of their respective property is bound or affected, (iii) violate or conflict with the Certificate of Incorporation or Byelaws of any of Global's Subsidiaries, or (iv) result in any breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination or cancellation of, or result in the creation of a lien or encumbrance on any of the properties or assets of Global or any of its Subsidiaries pursuant to, result in the loss of any material benefit under, or require -18- the consent of any other party to, any contract, instrument, Permit, license or franchise to which Global or any of its Significant Subsidiaries is a party or by which Global, any of such Subsidiaries or any of their respective property is bound or affected, except, in the case of clauses (ii), (iii), and (iv) above, for conflicts, violations, breaches, defaults, rights, results or consents which, individually or in the aggregate, would not have a Material Adverse Effect on Global. (b) Except for applicable requirements, if any, of state, District of Columbia, or foreign regulatory laws and commissions, the Federal Communications Commission, the Exchange Act, the premerger notification requirements of the HSR Act, filing and recordation of appropriate Mergers or other documents as required by Delaware Law and Bermuda Law and any filings required pursuant to any state securities or "blue sky" laws or the rules of any applicable stock exchanges, neither Global nor any of its Significant Subsidiaries is required to submit any notice, report or other filing with any Governmental or Regulatory Authority in connection with the execution, delivery or performance of this Agreement. Except as set forth in the immediately preceding sentence, no waiver, consent, approval or authorization of any Governmental or Regulatory Authority is required to be obtained by Global or any of its Significant Subsidiaries in connection with its execution, delivery or performance of this Agreement. Section 4.6 SEC Filings; Financial Statements. (a) Global has filed all forms, reports and documents required to be filed with the Securities and Exchange Commission (the "SEC") since January 1, 1998, and has heretofore delivered or made available to U S WEST, in the form filed with the SEC, together with any amendments thereto, its (i) Annual Report on Form 10-K for the fiscal year ended December 31, 1998, (ii) all proxy statements relating to Global's meetings of stockholders (whether annual or special) held since January 1, 1998, (iii) Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, June 30 and September 30, 1998, and (iv) all other reports or registration statements filed by Global with the SEC since January 1, 1998 (collectively, the "Global SEC Reports"). The Global SEC Reports (i) were prepared substantially in accordance with the requirements of the Securities Act or the Exchange Act (as defined in Article X hereof), as the case may be, and the rules and regulations promulgated under each of such respective acts, and (ii) did not at the time they were filed contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (b) The financial statements, including all related notes and schedules, contained in the Global SEC Reports (or incorporated by reference therein) fairly present the consolidated financial position of Global and its Subsidiaries as at the respective dates thereof and the consolidated results of operations and cash flows of Global and its Subsidiaries for the periods indicated in accordance with GAAP applied on a consistent basis throughout the periods involved (except for changes in accounting principles disclosed in the notes thereto) and subject in the case of interim financial statements to normal year-end adjustments. Section 4.7 Absence of Certain Changes or Events. Except as disclosed in the Global SEC Reports filed prior to the date hereof and on Schedule 4.7, since December 31, 1998, and except as permitted by this Agreement or consented to hereunder, Global and its -19- Subsidiaries have not incurred any material liability, except in the ordinary course of their businesses consistent with their past practices, and there has not been any change, or any event involving a prospective change, in the business, financial condition or results of operations of Global or any of its Subsidiaries which has had, or is reasonably likely to have, a Material Adverse Effect on Global, and Global and its Subsidiaries have conducted their respective businesses in the ordinary course consistent with their past practices. Section 4.8 Litigation. There are no claims, actions, suits, proceedings or investigations pending or, to Global's Knowledge, threatened against Global or any of its Subsidiaries, or any properties or rights of Global or any of its Subsidiaries, before any Governmental or Regulatory Authority as to which there is a reasonable likelihood of an adverse judgment or determination against Global or any of its Subsidiaries, except for those that are not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect on Global or prevent, or materially delay the ability of Global to consummate the transactions contemplated by this Agreement. With respect to tax matters, litigation shall not be deemed threatened unless a tax authority has delivered a written notice of deficiency to Global or any of its Subsidiaries. Section 4.9 No Violation of Law; Permits. The business of Global and its Subsidiaries is not being conducted in violation of any statute, law, ordinance, regulation, judgment, order or decree of any Governmental or Regulatory Authority (including, without limitation, any stock exchange or other self-regulatory body) ("Legal Requirements"), or in violation of any permits, franchises, licenses, privileges, immunities, approvals, certificates, orders, authorizations or consents that are granted by any Governmental or Regulatory Authority (including, without limitation, any stock exchange or other self-regulatory body) ("Permits"), except for possible violations none of which, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect on Global. Except as disclosed in Global SEC Reports and as set forth on Schedule 4.9 hereto, no investigation, review or proceeding by any Governmental or Regulatory Authority (including, without limitation, any stock exchange or other self-regulatory body) with respect to Global or its Subsidiaries in relation to any alleged violation of law or regulation is pending or, to Global's Knowledge, threatened, nor has any Governmental or Regulatory Authority (including, without limitation, any stock exchange or other self-regulatory body) indicated an intention to conduct the same, except for such investigations which, if they resulted in adverse findings, would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Global. Except as set forth in the Global SEC Reports and on Schedule 4.9 hereto, neither Global nor any of its Subsidiaries is subject to any cease and desist or other order, judgment, injunction or decree issued by, or is a party to any written agreement, consent agreement or memorandum of understanding with, or is a party to any commitment letter or similar undertaking to, or is subject to any order or directive by, or has adopted any board resolutions at the request of, any Governmental or Regulatory Authority that materially restricts the conduct of its business or which would reasonably be expected to have a Material Adverse Effect on Global, nor has Global or any of its Subsidiaries been advised that any Governmental or Regulatory Authority is considering issuing or requesting any of the foregoing. None of the representations and warranties made in this Section 4.9 are being made with respect to Environmental Laws. Section 4.10 Joint Proxy Statement. None of the information supplied or to be supplied by or on behalf of Global for inclusion or incorporation by reference in the registration -20- statement to be filed with the SEC by Parent in connection with the issuance of shares of Parent Class A Common Stock and Parent Class B Common Stock in the Mergers (the "Registration Statement") will, at the time the Registration Statement becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. None of the information supplied or to be supplied by or on behalf of Global for inclusion or incorporation by reference in the joint proxy statement, in definitive form, relating to the meetings of Global and U S WEST stockholders to be held in connection with the Mergers, or in the related proxy and notice of meeting, or soliciting material used in connection therewith (referred to herein collectively as the "Joint Proxy Statement") will, at the dates mailed to stockholders and at the times of the Global stockholders' meeting and the U S WEST stockholders' meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. The Registration Statement and the Joint Proxy Statement (except for information relating solely to U S WEST) will comply as to form in all material respects with the provisions of the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder. Section 4.11 Employee Matters; ERISA. Except as set forth on Schedule 4.11: (a) Schedule 4.11 contains a true and complete list of all employee benefit plans covering present or former employees or directors of Global and of each of its Subsidiaries or their beneficiaries, or providing benefits to such persons in respect of services provided to any such entity, or with respect to which Global or any of its Subsidiaries has, or has had, an obligation to contribute or any other liability, including, but not limited to, any employee benefit plans within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), any deferred compensation, bonus, stock option, restricted stock, incentive, profit sharing, retirement, savings, medical, health, life insurance, disability, sick leave, cafeteria or flexible spending, vacation, unemployment compensation, severance or change in control agreements, arrangements, programs, policies or plans and any other benefit arrangements or payroll practice (collectively, the "Global Benefit Plans"), whether funded or unfunded, insured or uninsured, written or unwritten. (b) All contributions and other payments required to be made by Global or any of its Subsidiaries to or under any Global Benefit Plan (or to any person pursuant to the terms thereof) have been made or the amount of such payment or contribution obligation has been reflected in the Global Financial Statements. (c) Each of the Global Benefit Plans intended to be "qualified" within the meaning of Section 401(a) of the Code has been determined by the Internal Revenue Service (the "IRS") to be so qualified, and, to Global's Knowledge, no circumstances exist that could reasonably be expected by Global to adversely affect such qualification. Global is in compliance in all material respects with, and each of the Global Benefit Plans complies in form with, and is and has been operated in all material respects in compliance with, all applicable Legal Requirements, including, without limitation, ERISA and the Code. No assets of Global or any of its Subsidiaries are subject to liens arising under ERISA or the Code on account of any Global -21- Benefit Plan, neither Global nor any of its Subsidiaries has been required to provide any security under Sections 401(a)(29) or 412(f) of the Code, or under Section 307 of ERISA, and no event has occurred that could give rise to any such lien or a requirement to provide such security. (d) With respect to the Global Benefit Plans, individually and in the aggregate, no event has occurred and, to Global's Knowledge, there does not now exist any condition or set of circumstances, that could subject Global or any of its Subsidiaries to any material liability arising under the Code, ERISA or any other applicable Legal Requirements (including, without limitation, any liability to any such plan or the Pension Benefit Guaranty Corporation (the "PBGC")), or under any indemnity agreement to which Global or any of its Subsidiaries is a party, excluding liability for benefit claims and funding obligations payable in the ordinary course. No Global Benefit Plan subject to Title IV of ERISA has terminated, nor has a "reportable event" (within the meaning of Section 4043 of ERISA) occurred with respect to any such plan (other than such events with respect to which the reporting requirement has been waived by regulation). (e) None of the Global Benefit Plans that are "welfare plans" within the meaning of Section 3(1) of ERISA (i) provide for any post-employment or retiree benefits other than continuation coverage required to be provided under Section 4980B of the Code, Part 6 of Title I of ERISA, or applicable state law, or (ii) has provided any disqualified benefit, within the meaning of Section 4976 of the Code, with respect to which an excise tax has been, or could be, imposed. (f) Global has made available to U S WEST a true and correct copy of each current or last, in the case where there is no current, expired, collective bargaining agreement to which Global or any of its Subsidiaries is a party or under which Global or any of its Subsidiaries has obligations and copies of the following documents with respect to each Global Benefit Plan, where applicable; (i) all plan documents governing such plan and the most recent summary plan description furnished to employees, (ii) the three (3) most recent annual reports filed with the IRS, (Form 5500-series), including all schedules and attachments thereto, (iii) each related trust agreement or other funding arrangement (including all amendments to each such agreement), (iv) the most recent determination of the IRS with respect to the qualified status of such Global Benefit Plan, and any currently-pending application for such a letter, (v) the most recent actuarial report or valuation, and (vi) written descriptions of unwritten Global Benefit Plans. (g) Except as set forth on Schedule 4.11 hereto as made available to U S WEST prior to the date hereof, (i) the consummation or announcement of any transaction contemplated by this Agreement will not (either alone or upon the occurrence of any additional or further acts or events) result in any (A) payment (whether of severance pay or otherwise) becoming due from Global or any of its Subsidiaries to any officer, employee, former employee or director thereof or to the trustee under any "rabbi trust" or similar arrangement, (B) benefit under any Global Benefit Plan being established or becoming accelerated, vested or payable, or (C) "reportable event" (as defined in Section 4043 of ERISA) with respect to a Global Benefit Plan subject to Title IV of ERISA, and (ii) neither Global nor any of its Subsidiaries is a party to (A) any management, employment, deferred compensation, severance (including any payment, right or benefit resulting from a change in control), bonus or other contract for personal services with any current or former officer, director or employee (whether or not characterized as a plan for -22- purposes of ERISA), (B) any consulting contract with any person who prior to entering into such contract was a director or officer of Global or any of its Subsidiaries, or (C) any plan, agreement, arrangement or understanding similar to any of the items described in clause (ii)(A) or (B) of this sentence. (h) The consummation or announcement of any transaction contemplated by this Agreement will not (either alone or upon the occurrence of any additional or further acts or events) result in the disqualification of any of the Global Benefit Plans intended to be qualified under, result in a prohibited transaction or breach of fiduciary duty under, or otherwise violate, ERISA or the Code. (i) Neither Global nor any of its Subsidiaries nor any of their directors, officers, employees or agents, nor any "party in interest" or "disqualified person", as such terms are defined in Section 3 of ERISA and Section 4975 of the Code, with respect to any Global Benefit Plan, has engaged in or been a party to any "prohibited transaction", as such term is defined in Section 4975 of the Code or Section 406 of ERISA which is not otherwise exempt, which could result in the imposition of either a penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the Code upon Global or its Subsidiaries, or which could constitute a breach of fiduciary duty which could result in liability on the part of Global or any of its Subsidiaries. (j) No Global Benefit Plan has incurred any "accumulated funding deficiency" (as defined in Section 412 of the Code or Part 3 of Title I of ERISA), whether or not waived. Neither Global nor any of its Subsidiaries has incurred, and none of such entities reasonably expects to incur, any material liability to the PBGC with respect to any Global Benefit Plan. Neither Global nor any of its Subsidiaries is a party to, contributes to, or is required to contribute to, and neither has incurred or reasonably expects to incur, any withdrawal liability with respect to, any "multiemployer plan" (as defined in Section 3(37) of ERISA). No Global Benefit Plan is a "multiple employer plan", within the meaning of the Code or ERISA. Section 4.12 Labor Matters. Neither Global nor any of its Subsidiaries is the subject of nor is there pending or threatened, to Global's Knowledge, any material proceeding asserting that it or any of its Subsidiaries has committed an unfair labor practice or seeking to compel it to bargain with any labor union or labor organization, except in each case as would not, individually or in the aggregate, be reasonably likely to have a Material Adverse Effect on Global. Section 4.13 Environmental Matters. Except for such matters that, individually or in the aggregate, are not reasonably likely to have a Material Adverse Effect on Global, or would not otherwise require disclosure pursuant to the Securities Act, (i) each of Global and its Subsidiaries has complied and is in compliance with all applicable Environmental Laws (as defined below); (ii) the properties currently owned or operated by it or any of its Subsidiaries (including soils, groundwater, surface water, buildings or other structures) are not contaminated with any Hazardous Substances (as defined below); (iii) Hazardous Substances were not present, disposed, released or otherwise deposited on, under, at or from the properties formerly owned or operated by it or any of its Subsidiaries during the period of ownership or operation by it or any of its Subsidiaries; (iv) neither it nor any of its Subsidiaries is subject to -23- liability for any Hazardous Substance disposal or contamination on any third party property; (v) neither it nor any of its Subsidiaries has been associated with any release or threat of release of any Hazardous Substance; (vi) neither it nor any of its Subsidiaries has received any notice, demand, threat, letter, claim or request for information alleging that it or any of its Subsidiaries may be in violation of or liable under any Environmental Law (including any claims relating to electromagnetic fields or microwave transmissions); (vii) neither it nor any of its Subsidiaries is subject to any orders, decrees, injunctions or other arrangements with any Governmental or Regulatory Entity or is subject to any indemnity or other agreement with any third party relating to liability under any Environmental Law or relating to Hazardous Substances; and (viii) there are no circumstances or conditions involving it or any of its Subsidiaries that could reasonably be expected to result in any claims, liability, investigations, costs or restrictions on the ownership, use, or transfer of any of its properties pursuant to any Environmental Law. As used herein and in Section 5.13, the term "Environmental Law" means any federal, state, local, foreign or other law (including common law), statutes, ordinances or codes relating to: (A) the protection, investigation or restoration of the environment, health, safety or natural resources, (B) the handling, use, presence, disposal, release or threatened release of any Hazardous Substance, or (C) noise, odor, wetlands, pollution, contamination or any injury or threat of injury to person or property in connection with any Hazardous Substance. As used herein and in Section 5.13, the term "Hazardous Substances " means any substance that is: listed, classified or regulated pursuant to any Environmental Law, including any petroleum product or by- product, asbestos-containing material, lead-containing paint or plumbing, polychlorinated biphenyls, radioactive materials or radon. Section 4.14 Board Action; Vote Required. (a) The Board of Directors of Global has unanimously determined that the transactions contemplated by this Agreement are in the best interests of Global and its stockholders and has resolved to recommend to such stockholders that they vote in favor thereof. (b) The approval of the this Agreement by a majority of the votes entitled to be cast by all holders of Global Common Stock is the only vote of the holders of any class or series of the capital stock of Global required to approve this Agreement, the Mergers and the other transactions contemplated hereby. Section 4.15 Opinions of Financial Advisors. Global has received the opinions of Salomon Smith Barney Inc. and Chase Securities, Inc. dated the date hereof, to the effect that, as of such date, the Conversion Ratio is fair from a financial point of view to the holders of Global Common Stock. Section 4.16 Brokers. Except for Salomon Smith Barney Inc. and Chase Securities, Inc., the arrangements with which have been disclosed to U S WEST prior to the date hereof, who have been engaged by Global, no broker, finder or investment banker is entitled to any brokerage, finder's, investment banking or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Global or any of its Subsidiaries. -24- Section 4.17 Tax Matters. Except as set forth on Schedule 4.17 attached hereto and except to the extent that the failure of the following representations to be true would not have a Material Adverse Effect on Global: (a) All Tax Returns required to be filed by Global or its Subsidiaries on or prior to the Effective Time have been or will be timely filed with the appropriate Governmental or Regulatory Authorities and are or will be correct in all material respects, and all material taxes due by Global or its Subsidiaries on or prior to the Effective Time have been or will be timely paid; (b) All unpaid Taxes in respect of Global or its Subsidiaries with respect to taxable periods ending on or prior to the Effective Time or with respect to taxable periods that begin before the Effective Time and end after the Effective Time, to the extent such Taxes are attributable to the portion of such period ending at the Effective Time, have been or will be adequately reflected as a liability on the books of Global or its Subsidiaries on or prior to the Effective Time; (c) There are no liens (except for statutory liens for current Taxes not yet due and payable) against any domestic or foreign assets of Global or any of its Subsidiaries resulting from any unpaid Taxes; (d) No audit or other proceeding with respect to Taxes due from Global or any of its Subsidiaries, or any Tax Return of Global or any of its Subsidiaries is pending, threatened in writing, or being conducted by any Governmental or Regulatory Authority; and (e) No extension of the statute of limitations on the assessment of any Taxes has been granted by Global or any of its Subsidiaries and is currently in effect. Section 4.18 Intellectual Property. Global and its Subsidiaries have all right, title and interest in, or a valid and binding license to use, all Intellectual Property (as defined below) that is individually or in the aggregate material to the conduct of the businesses of Global and its Subsidiaries taken as a whole ("Global Intellectual Property"). Neither Global nor any Subsidiary of Global is or is alleged to be in default (or with the giving of notice or lapse of time or both, would be in default) in any material respect under any license to use Global Intellectual Property, such Intellectual Property is not being infringed by any third party, and neither Global nor any Subsidiary of Global is infringing any Intellectual Property of any third party, except for such defaults and infringements which, individually or in the aggregate, are not having and could not be reasonably expected to have a Material Adverse Effect on Global and its Subsidiaries, taken as a whole. Except as disclosed on Schedule 4.18, there are no (i) circumstances which, with the giving of notice or the lapse of time, or both, or the failure of Global to act in a timely fashion, would cause the loss or materially impair the value or validity of any Global Intellectual Property, or (ii) notices of any material claim of infringement with respect to any item of Global Intellectual Property, or notices of any contested patent or other contested item of Global Intellectual Property except for such circumstances or notices which would not have a Material Adverse Effect on Global. Global and its Subsidiaries have taken all reasonable actions necessary to protect, maintain and safeguard the Global Intellectual Property, including without limitation the Global Intellectual Property that is confidential in nature, and have executed all -25- necessary agreements in connection therewith except where failure to take such actions or execute such agreements would not have a Material Adverse Effect on Global. For purposes of this Agreement, "Intellectual Property" means patents and patent rights, trademarks and trademark rights, trade names and trade name rights, service marks and service mark rights, copyrights and copyright rights, trade secret and related non-disclosure rights, and all other proprietary intellectual property, and all pending applications for and registrations of any of the foregoing. Section 4.19 Insurance. Each of Global and each of its Significant Subsidiaries is insured with financially responsible insurers in such amounts and against such risks and losses as are customary for companies conducting the business as conducted by Global and its Subsidiaries during such time period. Since January 1, 1998, neither Global nor any of its Subsidiaries has received notice of cancellation or termination with respect to any material insurance policy of Global or its Subsidiaries which has not been cured. The insurance policies of Global and its Subsidiaries are valid and enforceable policies. Section 4.20 Ownership of Securities. As of the date hereof, neither Global nor, to Global's Knowledge, any of its affiliates or associates (as such terms are defined under the Exchange Act), (a)(i) beneficially owns, directly or indirectly, or (ii) is party to any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of, in each case, shares of capital stock of U S WEST, which in the aggregate represent ten percent (10%) or more of the outstanding shares of U S WEST Common Stock (other than shares held by Global Benefit Plans), nor (b) is an "interested stockholder" of U S WEST within the meaning of Section 203 of Delaware Law. Except as set forth on Schedule 4.20 hereto, Global owns no shares of U S WEST Common Stock described in the parenthetical clause of Section 2.2(b) hereof which would be canceled and retired without consideration pursuant to Section 2.3(a) hereof. Section 4.21 Certain Contracts. All material contracts required to be described in Item 601(b)(10) of Regulation S-K to which Global or its Subsidiaries is a party or may be bound have been filed as exhibits to, or incorporated by reference in, Global's Annual Report on Form 10-K for the year ended December 31, 1998. All contracts, licenses, consents, royalty or other agreements which are material to Global and its Subsidiaries, taken as a whole, to which Global or any of its Subsidiaries is a party (the "Global Contracts") are valid and in full force and effect on the date hereof except to the extent they have previously expired in accordance with their terms or to the extent that such invalidity would not have a Material Adverse Effect on Global, and, to Global's Knowledge, neither Global nor any of its Subsidiaries has violated any provision of, or committed or failed to perform any act which with or without notice, lapse of time or both would constitute a default under the provisions of, any Global Contract, except for defaults which, individually and in the aggregate, would not reasonably be expected to result in a Material Adverse Effect on Global. Section 4.22 Licenses. Global and each of its Subsidiaries are the authorized legal holders or otherwise have rights to all material Permits and licenses and operating rights necessary for the operation of their businesses as presently operated (collectively, the "Global Licenses"). All Global Licenses were duly obtained and are validly issued and in full force and effect. Global is in compliance in all respects with the Communications Act of 1934, as -26- amended, and the rules, regulations and policies of the FCC and all applicable Governmental or Regulatory Authorities, except where such failure to comply would not have a Material Adverse Effect on Global. There is not now pending and, to Global's Knowledge, there is not threatened in each case as of the date hereof, any action by or before the FCC or any Governmental or Regulatory Authority to revoke, suspend, cancel, rescind or modify in any material respect any of the Global Licenses. Section 4.23 Year 2000. Global has (i) initiated a review and assessment of all areas within its and each of its existing Subsidiaries' business and operations that could be adversely affected by a failure of any of its Systems to be Year 2000 Compliant (as defined below), (ii) developed a plan and timeline for addressing Year 2000 compliance on a timely basis, and (iii) to date, implemented that plan in accordance with that timetable. Subject to the qualification contained in the Global SEC Reports, based on the foregoing, to Global's Knowledge, all Systems that are material to its or any of its Subsidiaries' business or operations are reasonably expected on a timely basis to be Year 2000 Compliant. Section 4.24 Foreign Corrupt Practices and International Trade Sanctions. To Global's Knowledge, neither Global, nor any of its Subsidiaries, nor any of their respective directors, officers, agents, employees or any other Persons acting on their behalf has, in connection with the operation of their respective businesses, (i) used any corporate or other funds for unlawful contributions, payments, gifts or entertainment, or made any unlawful expenditures relating to political activity to government officials, candidates or members of political parties or organizations, or established or maintained any unlawful or unrecorded funds in violation of Section 104 of the Foreign Corrupt Practices Act of 1977, as amended, or any other similar applicable foreign, federal or state law, (ii) paid, accepted or received any unlawful contributions, payments, expenditures or gifts, or (iii) violated or operated in non-compliance with any export restrictions, anti-boycott regulations, embargo regulations or other applicable domestic or foreign laws and regulations, except in each case where there would be no Material Adverse Effect on Global. ARTICLE V REPRESENTATIONS AND WARRANTIES OF U S WEST U S WEST hereby represents and warrants as of the date hereof to Global as follows: Section 5.1 Organization and Qualification; Subsidiaries. U S WEST and each of its Significant Subsidiaries, as listed on Schedule 5.1 hereto, is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization. Each of the U S WEST Subsidiaries which is not a Significant Subsidiary is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization, except for such failure which, when taken together with all other such failures, would not reasonably be expected to have a Material Adverse Effect on U S WEST Each of U S WEST and its Subsidiaries has the requisite corporate power and authority and any necessary Permit to own, operate or lease the properties that it purports to own, operate or lease and to carry on its business as it is now being conducted, and is duly qualified as -27- a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of its properties owned, operated or leased or the nature of its activities makes such qualification necessary, except for such failure which, when taken together with all other such failures, would not reasonably be expected to have a Material Adverse Effect on U S WEST. Section 5.2 Certificate of Incorporation and Bylaws. U S WEST has heretofore furnished, or otherwise made available, to Global a complete and correct copy of the Certificate of Incorporation and the Bylaws, each as amended to the date hereof, of U S WEST and each of its Significant Subsidiaries. Such Certificates of Incorporation and Bylaws are in full force and effect. Neither U S WEST nor any of its Significant Subsidiaries is in violation of any of the provisions of its respective Certificate of Incorporation or, in any material respect, its Bylaws. Section 5.3 Capitalization. (a) The authorized capital stock of U S WEST consists solely of (i) 10,000,000 shares of Series A Junior Preferred Stock, par value $1.00 per share, none of which are outstanding and none of which are reserved for issuance, (ii) 190,000,000 shares of Preferred Stock, par value $1.00 per share, none of which are outstanding and none of which are reserved for issuance, and (iii) 2,000,000,000 shares of U S WEST Common Stock, of which, as of May 14, 1999, 503,861,953 shares were issued and outstanding, 304,003 shares were held in the treasury of U S WEST and 25,532,355 shares were issuable upon the exercise of options outstanding under the U S WEST option plans listed on Schedule 5.3 hereto. Except as set forth on Schedule 5.3 or as permitted by Section 6.2 hereof, (x) since May 14, 1999, no shares of U S WEST Common Stock have been issued, except upon the exercise of options and rights described in the immediately preceding sentence, and (y) there are no outstanding U S WEST Equity Rights. For purposes of this Agreement, U S WEST Equity Rights shall mean subscriptions, options, warrants, calls, commitments, agreements, conversion rights or other rights of any character (contingent or otherwise) to purchase or otherwise acquire from U S WEST or any of U S WEST's Subsidiaries at any time, or upon the happening of any stated event, any shares of the capital stock or other voting or non-voting securities of U S WEST ("U S WEST Equity Rights"). Schedule 5.3 hereto sets forth a complete and accurate list of all outstanding U S WEST Equity Rights as of May 14, 1999. Since May 14, 1999, no U S WEST Equity Rights have been issued except as set forth on Schedule 5.3 or, after the date hereof, as permitted by Section 6.2 hereof. (b) Except as set forth on Schedule 5.3, or, after the date hereof, as permitted by Section 6.2 hereof, there are no outstanding obligations of U S WEST or any of U S WEST's Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock of U S WEST. (c) All of the issued and outstanding shares of U S WEST Common Stock are validly issued, fully paid and nonassessable. (d) Except as disclosed on Schedule 5.1 hereto, all the outstanding capital stock of each of U S WEST's Significant Subsidiaries which is owned by U S WEST is duly authorized, validly issued, fully paid and nonassessable, and is owned by U S WEST free and clear of any liens, security interests, pledges, agreements, claims, charges or encumbrances except for liens, security interests, pledges, agreements, claims, charges or encumbrances which -28- are granted to secure indebtedness permitted by Section 6.2. Except as set forth on Schedule 5.3, or hereafter issued or entered into in accordance with Section 6.2 hereof, there are no existing subscriptions, options, warrants, calls, commitments, agreements, conversion rights or other rights of any character (contingent or otherwise) to purchase or otherwise acquire from U S WEST or any of U S WEST's Subsidiaries at any time, or upon the happening of any stated event, any shares of the capital stock or other voting or non-voting securities of any U S WEST Subsidiary, whether or not presently issued or outstanding (except for rights of first refusal to purchase interests in Subsidiaries which are not wholly-owned by U S WEST), and there are no outstanding obligations of U S WEST or any of U S WEST's Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock or other voting or non-voting securities of any of U S WEST's Subsidiaries, other than such as would not, individually or in the aggregate, have a Material Adverse Effect on U S WEST Except for (i) its Subsidiaries, (ii) immaterial amounts of equity securities, (iii) investments of Persons in which U S WEST has less than a five percent (5%) interest, and (iv) equity interests disclosed on Schedule 5.3 hereto or hereafter acquired as permitted under Section 6.2 hereof, U S WEST does not directly or indirectly own any equity interest in any other Person. (e) No bonds, debentures, notes or other indebtedness of U S WEST having the right to vote on any matters on which shareholders may vote are issued or outstanding except for any securities issued after the date hereof in accordance with Section 6.2. Section 5.4 Authority Relative to this Agreement. U S WEST has the necessary corporate power and authority to enter into this Agreement and, subject to obtaining any necessary stockholder approval of the U S WEST Merger and this Agreement, to carry out its obligations hereunder. The execution and delivery of this Agreement by U S WEST and the consummation by U S WEST of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of U S WEST, subject to the approval of this Agreement by U S WEST's stockholders required by the rules of the NYSE and by Delaware Law. This Agreement has been duly executed and delivered by U S WEST and, assuming the due authorization, execution and delivery thereof by the other Parties, constitutes a legal, valid and binding obligation of U S WEST, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting the rights and remedies of creditors generally and to general principles of equity (regardless of whether considered in a proceeding in equity or at law). Section 5.5 No Conflict; Required Filings and Consents. (a) Except as listed on Schedule 5.5 hereto or as described in subsection (b) below, the execution and delivery of this Agreement by U S WEST does not, and the performance of this Agreement by U S WEST will not, (i) violate or conflict with the Certificate of Incorporation or Bylaws of U S WEST, (ii) conflict with or violate any law, regulation, court order, judgment or decree applicable to U S WEST or any of its Significant Subsidiaries or by which any of their respective property is bound or affected, (iii) violate or conflict with the Certificate of Incorporation or Bylaws of any of U S WEST's Subsidiaries, or (iv) result in any breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination or cancellation of, or result in the creation of a lien or encumbrance on any of the properties or assets of U S WEST or any of its Subsidiaries pursuant to, result in the loss of any material benefit under, or require the consent of any other party to, -29- any contract or instrument, relating to financing to which U S WEST or any of its Significant Subsidiaries is a party or by which U S WEST, any of such Subsidiaries or any of their respective property is bound or affected, except, in the case of clauses (ii), (iii), and (iv) above, for conflicts, violations, breaches, defaults, rights, results or consents which, individually or in the aggregate, would not have a Material Adverse Effect on U S WEST. (b) Except for applicable requirements, if any, of state, District of Columbia, or foreign regulatory laws and commissions, the Federal Communications Commission, the Exchange Act, the premerger notification requirements of the HSR Act, filing and recordation of appropriate Mergers or other documents as required by Delaware Law and any filings required pursuant to any state securities or "blue sky" laws or the rules of any applicable stock exchanges, neither U S WEST nor any of its Significant Subsidiaries is required to submit any notice, report or other filing with any Governmental or Regulatory Authority in connection with the execution, delivery or performance of this Agreement. Except as set forth in the immediately preceding sentence, no waiver, consent, approval or authorization of any Governmental or Regulatory Authority is required to be obtained by U S WEST or any of its Significant Subsidiaries in connection with its execution, delivery or performance of this Agreement. Section 5.6 SEC Filings; Financial Statements. (a) U S WEST has filed all forms, reports and documents required to be filed with the SEC since June 12, 1998, and has heretofore delivered or made available to Global, in the form filed with the SEC, together with any amendments thereto, its (i) Annual Reports on Form 10-K for the fiscal years ended December 31, 1996, 1997 and 1998, (ii) all proxy statements relating to U S WEST's meetings of stockholders (whether annual or special) held since January 1, 1996, (iii) Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, June 30, September 30, 1998, and March 31, 1999 and (iv) all other reports or registration statements filed by U S WEST with the SEC since January 1, 1996 (collectively, the "U S WEST SEC Reports"). The U S WEST SEC Reports (i) were prepared substantially in accordance with the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations promulgated under each of such respective acts, and (ii) did not at the time they were filed contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (b) The financial statements, including all related notes and schedules, contained in the U S WEST SEC Reports (or incorporated by reference therein) fairly present the consolidated financial position of U S WEST and its Subsidiaries as at the respective dates thereof and the consolidated results of operations and cash flows of U S WEST and its Subsidiaries for the periods indicated in accordance with GAAP applied on a consistent basis throughout the periods involved (except for changes in accounting principles disclosed in the notes thereto) and subject in the case of interim financial statements to normal year-end adjustments. Section 5.7 Absence of Certain Changes or Events. Except as disclosed in the U S WEST SEC Reports filed prior to the date hereof and on Schedule 5.7, since December 31, 1998, and except as permitted by this Agreement or consented to hereunder, U S WEST and its Subsidiaries have not incurred any material liability, except in the ordinary -30- course of their businesses consistent with their past practices, and there has not been any change, or any event involving a prospective change, in the business, financial condition or results of operations of U S WEST or any of its Subsidiaries which has had, or is reasonably likely to have, a Material Adverse Effect on U S WEST, and U S WEST and its Subsidiaries have conducted their respective businesses in the ordinary course consistent with their past practices. Section 5.8 Litigation. There are no claims, actions, suits, proceedings or investigations pending or, to U S WEST's Knowledge, threatened against U S WEST or any of its Subsidiaries, or any properties or rights of U S WEST or any of its Subsidiaries, before any Governmental or Regulatory Authority as to which there is a reasonable likelihood of an adverse judgment or determination against U S WEST or any of its Subsidiaries, except for those that are not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect on U S WEST, or prevent or materially delay the ability of U S WEST to consummate the transactions contemplated by this Agreement, except as set forth on Schedule 5.8 hereto. With respect to tax matters, litigation shall not be deemed threatened unless a tax authority has delivered a written notice of deficiency to U S WEST or any of its Subsidiaries. Section 5.9 No Violation of Law; Permits. The business of U S WEST and its Subsidiaries is not being conducted in violation of any Legal Requirements or in violation of any Permits, except for possible violations none of which, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect on U S WEST. Except as disclosed in U S WEST SEC Reports and as set forth in the U S WEST SEC Reports and on Schedule 5.9 hereto, no investigation, review or proceeding by any Governmental or Regulatory Authority (including, without limitation, any stock exchange or other self-regulatory body) with respect to U S WEST or its Subsidiaries in relation to any alleged violation of law or regulation is pending or, to U S WEST's Knowledge, threatened, nor has any Governmental or Regulatory Authority (including, without limitation, any stock exchange or other self-regulatory body) indicated an intention to conduct the same, except for such investigations which, if they resulted in adverse findings, would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on U S WEST Except as set forth in the U S WEST SEC Reports and on Schedule 5.9 hereto, neither U S WEST nor any of its Subsidiaries is subject to any cease and desist or other order, judgment, injunction or decree issued by, or is a party to any written agreement, consent agreement or memorandum of understanding with, or is a party to any commitment letter or similar undertaking to, or is subject to any order or directive by, or has adopted any board resolutions at the request of, any Governmental or Regulatory Authority that materially restricts the conduct of its business or which would reasonably be expected to have a Material Adverse Effect on U S WEST, nor has U S WEST or any of its Subsidiaries been advised that any Governmental or Regulatory Authority is considering issuing or requesting any of the foregoing. None of the representations and warranties made in this Section 5.9 are being made with respect to Environmental Laws. Section 5.10 Joint Proxy Statement. None of the information supplied or to be supplied by or on behalf of U S WEST for inclusion or incorporation by reference in the Registration Statement will, at the time the Registration Statement becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. None of the information supplied -31- or to be supplied by or on behalf of U S WEST for inclusion or incorporation by reference in the Joint Proxy Statement will, at the dates mailed to stockholders and at the times of the Global stockholders' meeting and the U S WEST stockholders' meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. The Registration Statement and the Joint Proxy Statement (except for information relating solely to Global) will comply as to form in all material respects with the provisions of the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder. Section 5.11 Employee Matters; ERISA. Except as set forth on Schedule 5.11: (a) Schedule 5.11 contains a true and complete list of all employee benefit plans covering present or former employees or directors of U S WEST and of each of its Subsidiaries or their beneficiaries, or providing benefits to such persons in respect of services provided to any such entity, or with respect to which U S WEST or any of its Subsidiaries has, or has had, an obligation to contribute or any other liability, including, but not limited to, any employee benefit plans within the meaning of Section 3(3) of ERISA, any deferred compensation, bonus, stock option, restricted stock, incentive, profit sharing, retirement, savings, medical, health, life insurance, disability, sick leave, cafeteria or flexible spending, vacation, unemployment compensation, severance or change in control agreements, arrangements, programs, policies or plans and any other benefit arrangements or payroll practice (collectively, the "U S WEST Benefit Plans"), whether funded or unfunded, insured or uninsured, written or unwritten. (b) All contributions and other payments required to be made by U S WEST or any of its Subsidiaries to or under any U S WEST Benefit Plan (or to any person pursuant to the terms thereof) have been made or the amount of such payment or contribution obligation has been reflected in the U S WEST Financial Statements. (c) Each of the U S WEST Benefit Plans intended to be "qualified" within the meaning of Section 401(a) of the Code has been determined by the IRS to be so qualified, and, to U S WEST's Knowledge, no circumstances exist that could reasonably be expected by U S WEST to adversely affect such qualification. U S WEST is in compliance in all material respects with, and each of the U S WEST Benefit Plans complies in form with, and is and has been operated in all material respects in compliance with, all applicable Legal Requirements, including, without limitation, ERISA and the Code. No assets of U S WEST or any of its Subsidiaries are subject to liens arising under ERISA or the Code on account of any U S WEST Benefit Plan, neither U S WEST nor any of its Subsidiaries has been required to provide any security under Sections 401(a)(29) or 412(f) of the Code, or under Section 307 of ERISA, and no event has occurred that could give rise to any such lien or a requirement to provide such security. (d) With respect to the U S WEST Benefit Plans, individually and in the aggregate, no event has occurred and, to U S WEST's Knowledge, there does not now exist any condition or set of circumstances, that could subject U S WEST or any of its Subsidiaries to any material liability arising under the Code, ERISA or any other applicable Legal Requirements (including, without limitation, any liability to any such plan or the PBGC), or under any -32- indemnity agreement to which U S WEST or any of its Subsidiaries is a party, excluding liability for benefit claims and funding obligations payable in the ordinary course. No U S WEST Benefit Plan subject to Title IV of ERISA has terminated, nor has a "reportable event" (within the meaning of Section 4043 of ERISA) occurred with respect to any such plan (other than such events with respect to which the reporting requirement has been waived by regulation). (e) None of the U S WEST Benefit Plans that are "welfare plans" within the meaning of Section 3(1) of ERISA (i) provides for any post- employment or retiree benefits other than continuation coverage required to be provided under Section 4980B of the Code, Part 6 of Title I of ERISA or applicable state law, or (ii) has provided any disqualified benefit, within the meaning of Section 4976 of the Code, with respect to which an excise tax has been, or could be, imposed. (f) U S WEST has made available to Global a true and correct copy of each current or last, in the case where there is no current, expired collective bargaining agreement to which U S WEST or any of its Subsidiaries is a party or under which U S WEST or any of its Subsidiaries has obligations and copies of the following documents with respect to each U S WEST Benefit Plan, where applicable, (i) all plan documents governing such plan and the most recent summary plan description furnished to employees, (ii) the three (3) most recent annual reports filed with the IRS, (Form 5500-series), including all schedules and attachments thereto, (iii) each related trust agreement or other funding arrangement (including all amendments to each such agreement), (iv) the most recent determination of the IRS with respect to the qualified status of such U S WEST Benefit Plan, and any currently-pending application for such a letter, (v) the most recent actuarial report or valuation, and (vi) written description of unwritten U S WEST Benefit Plans. (g) Except as set forth on Schedule 5.11 hereto as made available to Global prior to the date hereof, (i) the consummation or announcement of any transaction contemplated by this Agreement will not (either alone or upon the occurrence of any additional or further acts or events) result in any (A) payment (whether of severance pay or otherwise) becoming due from U S WEST or any of its Subsidiaries to any officer, employee, former employee or director thereof or to the trustee under any "rabbi trust" or similar arrangement, (B) benefit under any U S WEST Benefit Plan being established or becoming accelerated, vested or payable, or (C) "reportable event" (as defined in Section 4043 of ERISA) with respect to a U S WEST Benefit Plan subject to Title IV of ERISA, and (ii) neither U S WEST nor any of its Subsidiaries is a party to (A) any management, employment, deferred compensation, severance (including any payment, right or benefit resulting from a change in control), bonus or other contract for personal services with any current or former officer, director or employee (whether or not characterized as a plan for purposes of ERISA), (B) any consulting contract with any person who prior to entering into such contract was a director or officer of U S WEST or any of its Subsidiaries, or (C) any plan, agreement, arrangement or understanding similar to any of the items described in clause (ii)(A) or (B) of this sentence. (h) The consummation or announcement of any transaction contemplated by this Agreement will not (either alone or upon the occurrence of any additional or further acts or events) result in the disqualification of any of the U S WEST Benefit Plans intended to be -33- qualified under, result in a prohibited transaction or breach of fiduciary duty under, or otherwise violate, ERISA or the Code. (i) Neither U S WEST nor any of its Subsidiaries nor any of their directors, officers, employees or agents, nor any "party in interest" or "disqualified person", as such terms are defined in Section 3 of ERISA and Section 4975 of the Code, with respect to any U S WEST Benefit Plan, has engaged in or been a party to any "prohibited transaction", as such term is defined in Section 4975 of the Code or Section 406 of ERISA, which is not otherwise exempt, which could result in the imposition of either a penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the Code upon U S WEST or its Subsidiaries, or which could constitute a breach of fiduciary duty which could result in liability on the part of U S WEST or any of its Subsidiaries. (j) No U S WEST Benefit Plan has incurred any "accumulated funding deficiency" (as defined in Section 412 of the Code or Part 3 of Title I of ERISA), whether or not waived. Neither U S WEST nor any of its Subsidiaries has incurred, and none of such entities reasonably expects to incur, any material liability to the PBGC with respect to any U S WEST Benefit Plan. Neither U S WEST nor any of its Subsidiaries is a party to, contributes to, or is required to contribute to, and neither has incurred or reasonably expects to incur, any withdrawal liability with respect to, any "multiemployer plan" (as defined in Section 3(37) of ERISA). No U S WEST Benefit Plan is a "multiple employer plan", within the meaning of the Code or ERISA. Section 5.12 Labor Matters. Except as set forth on Schedule 5.12, neither U S WEST nor any of its Subsidiaries is the subject of any material proceeding asserting that it or any of its Subsidiaries has committed an unfair labor practice or seeking to compel it to bargain with any labor union or labor organization, nor is any such proceeding pending or, to U S WEST's Knowledge, threatened, except in each case as would not, individually or in the aggregate, be reasonably likely to have a Material Adverse Effect on U S WEST. Section 5.13 Environmental Matters. Except for such matters that, individually or in the aggregate, are not reasonably likely to have a Material Adverse Effect on U S WEST, or would not otherwise require disclosure pursuant to the Securities Act, or are listed on Schedule 5.13 hereto, (i) each of U S WEST and its Subsidiaries has complied and is in compliance with all applicable Environmental Laws (as defined below); (ii) the properties currently owned or operated by it or any of its Subsidiaries (including soils, groundwater, surface water, buildings or other structures) are not contaminated with any Hazardous Substances (as defined below); (iii) Hazardous Substances were not present, disposed, released or otherwise deposited on, under, at or from the properties formerly owned or operated by it or any of its Subsidiaries during the period of ownership or operation by it or any of its Subsidiaries; (iv) neither it nor any of its Subsidiaries is subject to liability for any Hazardous Substance disposal or contamination on any third party property; (v) neither it nor any of its Subsidiaries has been associated with any release or threat of release of any Hazardous Substance; (vi) neither it nor any of its Subsidiaries has received any notice, demand, threat, letter, claim or request for information alleging that it or any of its Subsidiaries may be in violation of or liable under any Environmental Law (including any claims relating to electromagnetic fields or microwave transmissions); (vii) neither it nor any of its Subsidiaries is subject to any orders, decrees, -34- injunctions or other arrangements with any Governmental or Regulatory Entity or is subject to any indemnity or other agreement with any third party relating to liability under any Environmental Law or relating to Hazardous Substances; and (viii) there are no circumstances or conditions involving it or any of its Subsidiaries that could reasonably be expected to result in any claims, liability, investigations, costs or restrictions on the ownership, use, or transfer of any of its properties pursuant to any Environmental Law. Section 5.14 Board Action; Vote Required; U S WEST Rights Plan; Applicability of Section 203. (a) The Board of Directors of U S WEST has unanimously determined that the transactions contemplated by this Agreement are in the best interests of U S WEST and its stockholders and has resolved to recommend to such stockholders that they vote in favor thereof. (b) The approval of this Agreement by a majority of the votes entitled to be cast by all holders of U S WEST Common Stock is the only vote of the holders of any class or series of the capital stock of U S WEST required to approve this Agreement, the Mergers and the other transactions contemplated hereby. (c) The provisions of Section 203 of Delaware Law will not, assuming the accuracy of the representations contained in Section 4.20 hereof (without giving effect to the knowledge qualification therein), apply to this Agreement or any of the transactions contemplated hereby. (d) The Board of Directors of U S WEST have taken all actions necessary to render Article IX of the U S WEST Certificate of Incorporation inapplicable to the transactions contemplated hereby. (e) The Rights Agreement dated as of June 1, 1998 between U S WEST and State Street Bank and Trust Company has been amended so as to provide that none or Global or any of its Subsidiaries will be an "Acquiring Person" thereunder. Section 5.15 Opinion of Financial Advisor. U S WEST has received the opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), dated the date hereof, to the effect that, as of such date, the Conversion Ratio is fair from a financial point of view to the holders of U S WEST Common Stock. Section 5.16 Brokers. Except for Merrill Lynch, the arrangements with which have been disclosed to Global prior to the date hereof, who has been engaged by U S WEST, no broker, finder or investment banker is entitled to any brokerage, finder's, investment banking or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of U S WEST or any of its Subsidiaries. Section 5.17 Tax Matters. Except as set forth on Schedule 5.17 attached hereto and except to the extent that the failure of the following representations to be true would not have a Material Adverse Effect on U S WEST: (a) All Tax Returns required to be filed by U S WEST or its Subsidiaries on or prior to the Effective Time have been or will be timely filed with the appropriate -35- Governmental or Regulatory Authorities and are or will be correct in all material respects, and all material taxes due by U S WEST or its Subsidiaries on or prior to the Effective Time have been, or will be, timely paid; (b) All unpaid Taxes in respect of U S WEST or its Subsidiaries with respect to taxable periods ending on or prior to the Effective Time or with respect to taxable periods that begin before the Effective Time and end after the Effective Time, to the extent such Taxes are attributable to the portion of such period ending at the Effective Time, have been or will be adequately reflected as a liability on the books of U S WEST or its Subsidiaries on or prior to the Effective Time; (c) There are no liens (except for statutory liens for current Taxes not yet due and payable) against any domestic or foreign assets of U S WEST or any of its Subsidiaries resulting from any unpaid Taxes; (d) No audit or other proceeding with respect to Taxes due from U S WEST or any of its Subsidiaries, or any Tax Return of U S WEST or any of its Subsidiaries is pending, threatened in writing, or being conducted by any Governmental or Regulatory Authority. (e) No extension of the statute of limitations on the assessment of any Taxes has been granted by U S WEST or any of its Subsidiaries and is currently in effect. Section 5.18 Intellectual Property. U S WEST and its Subsidiaries have all right, title and interest in, or a valid and binding license to use, all Intellectual Property that is individually or in the aggregate material to the conduct of the businesses of U S WEST and its Subsidiaries taken as a whole ("U S WEST Intellectual Property"). Neither U S WEST nor any Subsidiary of U S WEST is or is alleged to be in default (or with the giving of notice or lapse of time or both, would be in default) in any material respect under any license to use U S WEST Intellectual Property, such Intellectual Property is not being infringed by any third party, and neither U S WEST nor any Subsidiary of U S WEST is infringing any Intellectual Property of any third party, except for such defaults and infringements which, individually or in the aggregate, are not having and could not be reasonably expected to have a Material Adverse Effect on U S WEST. Except as disclosed in Schedule 5.18, there are no (i) circumstances which, with the giving of notice or the lapse of time, or both, or the failure of U S WEST to act in a timely fashion, would cause the loss or materially impair the value or validity of any U S WEST Intellectual Property, or (ii) notices of any material claim of infringement with respect to any item of U S WEST Intellectual Property, or notices of any contested patent or other contested item of Intellectual Property except for such circumstances or notices which would not have a Material Adverse Effect on U S WEST. U S WEST and its Subsidiaries have taken all reasonable actions necessary to protect, maintain and safeguard the U S WEST Intellectual Property, including without limitation the U S WEST Intellectual Property that is confidential in nature, and have executed all necessary agreements in connection therewith except where the failure to take such actions or execute such agreements would not have a Material Adverse Effect on U S WEST. Section 5.19 Insurance. Except as set forth on Schedule 5.19 hereto, each of U S WEST and each of its Significant Subsidiaries is insured with financially responsible -37- insurers in such amounts and against such risks and losses as are customary for companies conducting the business as conducted by U S WEST and its Subsidiaries during such time period. Except as set forth on such Schedule 5.19, since January 1, 1998, neither U S WEST nor any of its Subsidiaries has received notice of cancellation or termination with respect to any material insurance policy of U S WEST or its Subsidiaries which has not been cured. The insurance policies of U S WEST and its Subsidiaries are valid and enforceable policies. Section 5.20 Ownership of Securities. Except as set forth on Schedule 5.20, as of the date hereof, neither U S WEST nor, to U S WEST's Knowledge, any of its affiliates or associates (as such terms are defined under the Exchange Act), beneficially owns, directly or indirectly, or is party to any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of, in each case, shares of capital stock of Global, which in the aggregate represent ten percent (10%) or more of the outstanding shares of Global Common Stock (other than shares held by U S WEST Benefit Plans). Except as set forth on Schedule 5.20 hereto, U S WEST owns no shares of Global Common Stock described in the parenthetical clause of Section 2.2(a) hereof which would be canceled and retired without consideration pursuant to Section 2.3(a) hereof. Section 5.21 Certain Contracts. All material contracts required to be described in Item 601(b)(10) of Regulation S-K to which U S WEST or its Subsidiaries is a party or may be bound have been filed as exhibits to, or incorporated by reference in, U S WEST's Annual Report on Form 10-K for the year ended December 31, 1998. All contracts, licenses, consents, royalty or other agreements which are material to U S WEST and its Subsidiaries, taken as a whole, to which U S WEST or any of its Subsidiaries is a party (the "U S WEST Contracts") are valid and in full force and effect on the date hereof except to the extent they have previously expired in accordance with their terms or to the extent such invalidity would not have a Material Adverse Effect on U S WEST, and, to U S WEST's Knowledge, neither U S WEST nor any of its Subsidiaries has violated any provision of, or committed or failed to perform any act which with or without notice, lapse of time or both would constitute a default under the provisions of, any U S WEST Contract, except for defaults which, individually and in the aggregate, would not reasonably be expected to result in a Material Adverse Effect on U S WEST. Section 5.22 Licenses. U S WEST and each of its Subsidiaries are the authorized legal holders or otherwise has rights to all material Permits and licenses and operating rights necessary for the operation of their businesses as presently operated (collectively, the "U S WEST Licenses"). All U S WEST Licenses were duly obtained and are validly issued and in full force and effect. U S WEST is in compliance in all respects with the Communications Act of 1934, as amended, and the rules, regulations and policies of the FCC and all applicable Governmental or Regulatory Authorities except for such failure to comply which would not have a Material Adverse Effect on U S WEST. There is not now pending and, to U S WEST's Knowledge, there is not threatened, in each case as of the date hereof, any action by or before the FCC or any Governmental or Regulatory Authority to revoke, suspend, cancel, rescind or modify in any material respect any of the U S WEST Licenses. Section 5.23 Year 2000. U S WEST has (i) initiated a review and assessment of all areas within its and each of its existing Subsidiaries' business and operations that could be -37- adversely affected by a failure of any of its Systems to be Year 2000 Compliant (as defined below), (ii) developed a plan and timeline for addressing Year 2000 compliance on a timely basis, and (iii) to date, implemented that plan in accordance with that timetable. Subject to the qualification contained in the U S WEST SEC Reports, based on the foregoing, to U S WEST's Knowledge, all Systems that are material to its or any of its Subsidiaries' business or operations are reasonably expected on a timely basis to be Year 2000 Compliant. Section 5.24 Foreign Corrupt Practices and International Trade Sanctions. To U S WEST's Knowledge, neither U S WEST, nor any of its Subsidiaries, nor any of their respective directors, officers, agents, employees or any other Persons acting on their behalf has, in connection with the operation of their respective businesses, (i) used any corporate or other funds for unlawful contributions, payments, gifts or entertainment, or made any unlawful expenditures relating to political activity to government officials, candidates or members of political parties or organizations, or established or maintained any unlawful or unrecorded funds in violation of Section 104 of the Foreign Corrupt Practices Act of 1977, as amended, or any other similar applicable foreign, federal or state law, (ii) paid, accepted or received any unlawful contributions, payments, expenditures or gifts, or (iii) violated or operated in noncompliance with any export restrictions, anti-boycott regulations, embargo regulations or other applicable domestic or foreign laws and regulations except in each case which would not have a Material Adverse Effect on U S WEST. ARTICLE VI CONDUCT OF INDEPENDENT BUSINESSES PENDING THE MERGERS Section 6.1 Transition Planning. A four-person committee (the "Transition Committee") comprised of the persons set forth on Schedule 6.1 attached hereto shall be established promptly following the date hereof. If any of such persons is unable to serve on the Transition Committee for any reason, then Global and U S WEST shall take such action as may be required so that the Transition Committee consists of two (2) persons designated by each of Global and U S WEST The Transition Committee shall be responsible for coordinating all aspects of transition planning and implementation relating to the Mergers and the other transactions contemplated hereby. During the period between the date hereof and the Effective Time, the Transition Committee shall (i) examine various alternatives regarding the manner in which to best organize and manage the businesses of U S WEST and Global after the Effective Time, and (ii) coordinate policies and strategies with respect to regulatory authorities and bodies, in all cases subject to all Legal Requirements and Permits. The affirmative vote of three (3) members of the Transition Committee shall be required for such committee to take action. Section 6.2 Conduct of Business in the Ordinary Course. Each of Global and U S WEST covenants and agrees that, between the date hereof and the Effective Time, unless the Transition Committee shall otherwise consent in writing, and except as described on Schedule 6.2 hereto or as otherwise expressly contemplated hereby, the business of such Party and its Subsidiaries shall be conducted only in, and such entities shall not take any action except in, the ordinary course of business and in a manner consistent with past practice and all Legal Requirements and Permits; and each of Global and U S WEST and their respective Subsidiaries will use their commercially reasonable efforts to preserve substantially intact their business -38- organizations, to keep available the services of those of their present officers, employees and consultants who are integral to the operation of their businesses as presently conducted and to preserve their present relationships with significant customers and suppliers and with other persons with whom they have significant business relations; provided, however, that no action by Global or U S WEST or its Subsidiaries with respect to matters specifically addressed by any other provision of this Section 6.2 shall be deemed a breach of this sentence unless such action would constitute a breach of one or more of such other provisions. By way of amplification and not limitation, unless the Transition Committee shall otherwise consent in writing, and except as set forth on Schedule 6.2 hereto or as otherwise expressly contemplated by this Agreement, each of Global and U S WEST agrees on behalf of itself and its Subsidiaries that they will not, between the date hereof and the Effective Time, directly or indirectly, do any of the following without the prior written consent of the other: (a) (i) except for (A) the issuance of shares of Global Common Stock and U S WEST Common Stock in the ordinary course of business and in a manner consistent with past practice in amounts not exceeding the amounts set forth in Schedule 6.2 in order to satisfy obligations under employee benefit plans disclosed in Schedule 4.3 or 5.3 and U S WEST Equity Rights or Global Equity Rights issued thereunder and under existing dividend reinvestment plans; (B) grants of stock options with respect to Global Common Stock or U S WEST Common Stock to employees as set forth on Schedule 6.2 hereto in the ordinary course of business and in a manner consistent with past practice; (C) the issuance of shares of Global Common Stock pursuant to the transaction contemplated by the Frontier Merger Agreement; (D) issuances made to newly hired employees of Global or its Subsidiaries in amounts not exceeding the amounts set forth in Schedule 6.2; (E) issuances in respect of or in connection with any acquisitions, mergers, share exchanges, consolidations, business combinations or similar transactions by Global or its Subsidiaries permitted by Section 7.18 hereof; (F) sales of securities in connection with a secondary offering by shareholders of Global; and (G) issuances of equity securities as set forth on Schedule 6.2; (H) the issuance of securities by a Subsidiary to any Person which is directly or indirectly wholly-owned by Global or U S WEST (as the case may be); and (I) liens granted to secure indebtedness permitted by Schedule 6.2: issue, sell, pledge, dispose of, encumber, authorize, or propose the issuance, sale, pledge, disposition, encumbrance or authorization of any shares of capital stock of any class, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of capital stock of, or any other ownership interest in, such Party or any of its Subsidiaries; (ii) amend or propose to amend the Certificate of Incorporation or Bylaws (or other comparable organizational document) of such Party or any of its Subsidiaries, except as disclosed in the draft joint proxy statement of Global and Frontier to be filed in connection with the Frontier Merger, or adopt, amend or propose to amend any shareholder rights plan or related rights agreement; provided, however, Global shall be permitted to (A) achieve a "discontinuance" under the laws of Bermuda and (B) continue in, and be subject to; the laws of the State of Delaware (or any other State of the United States of America) or, subject to the consent of U S WEST, which consent shall not be unreasonably withheld or delayed, the laws of any other jurisdiction; (iii) split, combine or reclassify any outstanding shares of Global Common Stock or U S WEST Common Stock, or declare, set aside or pay any dividend or distribution payable in cash, stock, property or otherwise with respect to shares of Global Common Stock or U S WEST Common Stock, except pursuant to Section 7.20; (iv) redeem, purchase or otherwise acquire or offer to redeem, purchase or otherwise acquire any shares of its capital stock, except that Global shall be permitted to acquire shares of Global -39- Common Stock and U S WEST shall be permitted to acquire shares of U S WEST Common Stock from time to time in open market transactions, consistent with past practice and in compliance with applicable law and the provisions of any applicable employee benefit plan, program or arrangement, for issuance upon the exercise of options and other rights granted, and the lapsing of restrictions, under such Party's respective employee benefit plans, programs and arrangements and dividend reinvestment plans; or (v) authorize or propose or enter into any contract, agreement, commitment or arrangement with respect to any of the matters prohibited by this Section 6.2(a); (b) (i) except with respect to acquisition transactions which are subject to Section 7.18 hereof, acquire (by merger, consolidation, or acquisition of stock or assets) any corporation, partnership or other business organization or division thereof or make or increase any investment in another entity (other than an entity which is a wholly-owned Subsidiary of such Party as of the date hereof and other than incorporation of a wholly-owned Subsidiary) or joint ventures in connection with network buildouts, and investments in customers in the ordinary course of business and investments permitted by Schedule 6.2; (ii) except in the ordinary course of business and in a manner consistent with past practice or as may be required by, or in accordance with, law or any Governmental or Regulatory Authority in order to permit or facilitate the consummation of the transactions contemplated hereby, sell, pledge, dispose of, or encumber or authorize or propose the sale, pledge, disposition or encumbrance of any assets of such Party or any of its Subsidiaries, except for transactions which do not exceed $2,000,000 individually or $10,000,000 in the aggregate in any twelve (12) month period; (iii) except in the ordinary course of business and in a manner consistent with past practice and all Legal Requirements and Permits, authorize or make capital expenditures; (iv) except with respect to acquisition transactions which are subject to Section 7.18 hereof, enter into any other agreement, contract or commitment except (1) in the ordinary course of business of operating the existing businesses of Global or U S WEST, as the case may be, or (2) in accordance with the then current business plan for any of the other existing businesses of Global or U S WEST, as the case may be; or (v) authorize or enter into any contract, agreement, commitment or arrangement with respect to any of the matters prohibited by this Section 6.2(b); (c) incur indebtedness (from that shown on its balance sheet as of December 31, 1998) except as permitted by Schedule 6.2 hereto; (d) enter into (i) leveraged derivative contracts (defined as contracts that use a factor to multiply the underlying index exposure), or (ii) other derivative contracts except for the purpose of hedging known interest rate and foreign exchange exposures or otherwise reducing such Party's cost of financing; (e) take any action with respect to the grant of any severance or termination pay, or stay, bonus, or other incentive arrangements (otherwise than pursuant to Benefit Plans and policies of such Party in effect on the date hereof or in the ordinary course of such Party's business) or with respect to any increase in benefits payable under its severance or termination pay policies, or stay, bonus or other incentive arrangements in effect on the date hereof, if all such actions taken were to result, in the payment, or the obligation to pay, of an amount, in any particular case, in excess of $2,000,000; -40- (f) make any payments (except in the ordinary course of business and in amounts and in a manner consistent with past practice or as otherwise required by Legal Requirements or the provisions of any Global Benefit Plan or U S WEST Benefit Plan, as the case may be) under any Global Benefit Plan or any U S WEST Benefit Plan, as the case may be, to any director or employee of, or independent contractor or consultant to, such Party or any of its Subsidiaries, adopt or otherwise materially amend (except for amendments required or made advisable by Legal Requirements) any Global Benefit Plan or U S WEST Benefit Plan, as the case may be, or enter into or amend any employment or consulting agreement of the type which would be required to be disclosed hereunder pursuant to Section 4.11 hereof with respect to Global or Section 5.11 hereof with respect to U S WEST, or grant or establish any new awards under any such existing Global Benefit Plan or U S WEST Benefit Plan or agreement (except in the ordinary course of business and in amounts and in a manner consistent with past practice); (g) file any material amended Tax Returns, settle any material tax audits, or change in any material respect (i) its method of tax accounting or tax practice or (ii) its accounting policies, methods or procedures, except as required by GAAP, or, in the case of Global, as previously disclosed to U S WEST; (h) take any action which could reasonably be expected to materially adversely affect or delay the ability of any of the Parties to obtain any approval of any Governmental or Regulatory Authority required to consummate the transactions contemplated hereby; (i) take any action that would prevent or impede the transactions to be effected pursuant to this Agreement from qualifying for U.S. federal income tax purposes as a tax-free exchange or series of exchanges; (j) other than pursuant to this Agreement, take any action to cause the shares of their respective Common Stock to cease to be quoted on any of the stock exchanges on which such shares are now quoted, other than in the case of Global, the Bermuda Stock Exchange or Nasdaq, provided the Global Common Stock is then listed on the NYSE; (k) (i) issue SARs, new performance shares, restricted stock, or similar equity based rights, except as set forth in Section 6.2(a) and except in the ordinary course of business and in a manner consistent with past practice and as set forth on Schedule 6.2; (ii) materially modify any actuarial cost method, assumption or practice used in determining benefit obligations, annual expense and funding for any Benefit Plan, except to the extent required by GAAP; (iii) materially modify the investment philosophy of the Benefit Plan trusts or maintain an asset allocation which is not consistent with such philosophy, subject to any ERISA fiduciary obligation; (iv) subject to any ERISA fiduciary obligation, enter into any outsourcing agreement, or any other material contract relating to the Benefit Plans or management of the Benefit Plan trusts, provided that U S WEST and Global may enter into any such contracts that may be terminated within two years; (v) offer any new or extend any existing retirement incentive, "window" or similar benefit program; (vi) grant any ad hoc pension increase; (vii) establish any new or fund any existing "rabbi" or similar trust (except in accordance with the current terms of such trust), or enter into any other arrangement for the purpose of securing non-qualified benefits or deferred compensation; (viii) adopt or implement any corporate owned life insurance; or -41- (ix) adopt, implement or maintain any "split dollar" life insurance program; provided, howeve , that the foregoing shall not restrict Global from increasing the number of shares subject to its Incentive Stock Option Plan as set forth in the Joint Proxy of Global and Frontier to be filed in connection with the Frontier Merger; (l) Global and U S WEST agree that any written approval obtained under this Section 6.2 may be relied upon by the other Party if signed by a member of the Transition Committee on behalf of the Transition Committee; (m) agree to enter into any merger, reorganization, share exchange, business combination or similar transaction pursuant to which the shareholders of U S WEST or Global, as applicable, will receive any consideration (whether payable in cash, securities, property or other consideration) in exchange for their shares of Global Common Stock or U S WEST Common Stock, as applicable; or (n) authorize or enter into any contract, agreement, commitment or arrangement with respect to any of the matters prohibited by this Section 6.2(b). Section 6.3 No Solicitation. (a) From and after the date hereof, Global and U S WEST shall not nor shall they permit any of their respective Subsidiaries to, nor shall they authorize or permit any of their respective officers, directors or employees or any investment banker, financial advisor, attorney, accountants or other representatives retained by them or any of their respective Subsidiaries to, directly or indirectly through another person, (i) solicit, initiate or encourage (including by way of furnishing information), or knowingly take any other action designed to facilitate, any Alternative Transaction (as hereinafter defined), or (ii) participate in any discussions regarding any Alternative Transaction; provided, however, that if, at any time prior to the time the Global Stockholders' Approval or the U S WEST Stockholders' Approval, as the case may be, is obtained, the Board of Directors of Global or U S WEST, as the case may be, determines in good faith, after receipt of advice from outside counsel, that the failure to provide such information or to participate in such negotiations or discussions would result in a reasonable likelihood that such Board of Directors would breach their fiduciary duties to stockholders under applicable law, Global or U S WEST, as the case may be, may, in response to a proposal that has been determined by it to be a Global Superior Proposal (as defined in Section 7.2 hereof) or a U S WEST Superior Proposal (as defined in Section 7.2 hereof), as the case may be, that was not solicited by it and that did not otherwise result from a breach of this Section 6.3, and subject to the Party receiving such proposal giving the other Party at least two business days written notice of its intention to do so, (x) furnish information with respect to Global or U S WEST, as the case may be, to any person pursuant to a customary confidentiality agreement containing terms no less restrictive than the terms of the Confidentiality Agreement (as defined in Section 7.5(b) hereof), provided that a copy of all such information is delivered simultaneously to the other Party, and (y) engage in negotiations regarding such proposal. Each of Global and U S WEST shall promptly notify the other orally and in writing of any request for information or of any proposal in connection with an Alternative Transaction, the material terms and conditions of such request or proposal (including a copy thereof, if in writing, and all other documentation and any related correspondence) and the identity of the person making such request or proposal. -42- Each of Global and U S WEST will keep the other Party reasonably informed of the status and details (including amendments or proposed amendments) of such request or proposal on a current basis. Each of Global and U S WEST each immediately cease and terminate any existing solicitation, initiation, encouragement activity, discussion or negotiation with any persons conducted heretofore by them or their representatives with respect to the foregoing. (b) Each of Global and U S WEST (i) agrees not to release any Third Party (as defined in Section 6.3(c)) from, or waive any provision of, or fail to enforce, any standstill agreement or similar agreement to which it is a party related to, or which could affect, an Alternative Transaction and agrees that either Party shall be entitled to enforce the other Party's rights and remedies under and in connection with such agreements and (ii) acknowledges that the provisions of clause (i) are an important and integral part of this Agreement. Nothing contained in this Section 6.3 or in Section 7.2 shall prohibit either Party (i) from taking and disclosing to its stockholders a position contemplated by Rule 14e-9 or Rule 14e-2(a) promulgated under the Exchange Act, or (ii) from making any disclosure to its stockholders if, in the good faith judgment of the Board of Directors of such Party, after receipt of advice from outside counsel, failure to disclose would result in a reasonable likelihood that such Board of Directors would breach its duties to such Party's stockholders under applicable law. (c) For purposes of this Agreement, "Alternative Transaction" means a proposal or intended proposal, regarding any of (i) a transaction or series of transactions pursuant to which any person (or group of persons) other than a Party and its Subsidiaries (a "Third Party") acquires or would acquire, directly or indirectly, beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of more than twenty percent (20%) of the outstanding shares of Global or U S WEST, as the case may be, whether from Global or U S WEST or pursuant to a tender offer or exchange offer or otherwise, (ii) any acquisition or proposed acquisition of, or business combination with, Global or any of its Significant Subsidiaries or U S WEST or any of its Significant Subsidiaries, as the case may be, by a merger or other business combination (including any so-called "merger-of-equals" and whether or not Global or any of its Significant Subsidiaries or U S WEST or any of its Significant Subsidiaries, as the case may be, is the entity surviving any such merger or business combination), or (iii) any other transaction pursuant to which any third party acquires or would acquire, directly or indirectly, control of assets (including for this purpose the outstanding equity securities of Subsidiaries of Global or U S WEST, as the case may be, and any entity surviving the merger or business combination including any of them) of Global or any of its Subsidiaries or U S WEST or any of its Subsidiaries, as the case may be, for consideration equal to twenty percent (20%) or more of the fair market value of all of the outstanding shares of Global Common Stock or all of the outstanding shares of U S WEST Common Stock, as the case may be, on the date of this Agreement. Section 6.4 Subsequent Financial Statements. Prior to the Effective Time, each of Global and U S WEST (a) will consult with the other prior to making publicly available its financial results for any period and (b) will consult with the other prior to the filing of, and will timely file with the SEC, each Annual Report on Form 10-K, Quarterly Report on Form 10-Q and Current Report on Form 8-K required to be filed by such Party under the Exchange Act and the rules and regulations promulgated thereunder and will promptly deliver to the other copies of each such report filed with the SEC. As of their respective dates, none of such reports -43- shall contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The respective audited financial statements and unaudited interim financial statements of each of Global and U S WEST, as the case may be, included in such reports will fairly present the financial position of such Party and its Subsidiaries as at the dates thereof and the results of their operations and cash flows for the periods then ended in accordance with GAAP applied on a consistent basis and, subject, in the case of unaudited interim financial statements, to normal year-end adjustments and any other adjustments described therein. Section 6.5 Control of Operations. Nothing contained in this Agreement shall give U S WEST, directly or indirectly, the right to control or direct Global's operations prior to the Effective Time. Nothing contained in this Agreement shall give Global, directly or indirectly, the right to control or direct U S WEST's operations prior to the Effective Time. Prior to the Effective Time, each of U S WEST and Global shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over their respective operations. ARTICLE VII ADDITIONAL AGREEMENTS Section 7.1 Joint Proxy Statement and the Registration Statement. (a) As promptly as practicable after the execution and delivery of this Agreement but in no event later than August 31, 1999, U S WEST and Global shall cause Parent to, and Parent shall, prepare and file with the SEC the Registration Statement, provided that such Registration Statement shall in no event be filed prior to the mailing of the joint proxy statement in connection with the Frontier Merger, and they shall use all reasonable efforts to have the Registration Statement declared effective by the SEC under the Securities Act, and the Parties shall prepare and file with the SEC, and shall use all reasonable efforts to have cleared by the SEC, and promptly thereafter shall mail to the holders of record of shares of U S WEST Common Stock and Global Common Stock, the Joint Proxy Statement; provided, however, that Global and U S WEST shall not mail or otherwise furnish the Joint Proxy Statement to their respective stockholders unless and until: (i) they have received notice from the SEC that the Registration Statement is effective under the Securities Act; (ii) Global shall have received a letter of its independent accountants, dated a date within two (2) business days prior to the date of the first mailing of the Joint Proxy Statement, and addressed to Global, in form and substance reasonably satisfactory to Global and customary in scope and substance for "cold comfort" letters delivered by independent public accountants in connection with registration statements on Form S-4 with respect to the financial statements of U S WES included in the Joint Proxy Statement and the Registration Statement; and (iii) U S WEST shall have received a letter of its independent accountants, dated a date within two (2) business days prior to the date of the first mailing of the Joint -44- Proxy Statement, and addressed to U S WEST, in form and substance reasonably satisfactory to U S WEST and customary in scope and substance for "cold comfort" letters delivered by independent public accountants in connection with registration statements on Form S-4 with respect to the financial statements of Global included in the Joint Proxy Statement and the Registration Statement. (b) The Parties will cooperate in the preparation of the Joint Proxy Statement and the Registration Statement and in having the Registration Statement declared effective as soon as practicable. Section 7.2 Global and U S WEST Stockholders' Meetings and Consummation of the Mergers. (a) As promptly as practicable after the Registration Statement is declared effective under the Securities Act (but in any event not prior to consummation of the Frontier Merger), Global shall duly give notice of, convene and hold a meeting of its stockholders (the "Global Stockholders' Meeting") in accordance with Bermuda Law for the purpose of obtaining the approval of Global stockholders required to approve this Agreement and the transactions contemplated hereby (the "Global Stockholder Approval") and shall, subject to the provisions of Section 7.2(b) hereof, through its Board of Directors, recommend to its stockholders the approval of this Agreement and the transactions contemplated hereby and shall use its best efforts to obtain the Global Stockholder Approval. (b) Neither the Board of Directors of Global nor any committee thereof shall (i) except as expressly permitted by this Section 7.2(b), withdraw, qualify or modify, or propose publicly to withdraw, qualify or modify, in a manner adverse to U S WEST, the approval or recommendations of such Board of Directors or such committee of the approval of this Agreement and the transactions contemplated hereby, (ii) approve or recommend, or propose publicly to approve or recommend, any Alternative Transaction, or (iii) cause Global to enter into any letter of intent, agreement in principle, acquisition agreement or other similar agreement (each a "Global Acquisition Agreement") related to any Alternative Transaction. Notwithstanding the foregoing, in the event that prior to the time the Global Stockholder Approval is obtained, the Board of Directors of Global determines in good faith, after it has received a Global Superior Proposal (as defined below) and after receipt of advice from outside counsel, that the failure to do so would result in a reasonable likelihood that the Board of Directors of Global would breach its fiduciary duties to Global stockholders under applicable law, then the Board of Directors of Global may (subject to this and the following sentences) inform Global stockholders that it no longer believes that the transactions contemplated by this Agreement are advisable and no longer recommends approval of this Agreement and the transactions contemplated hereby (a " Global Subsequent Determination"), but only at a time that is after the fifth business day following U S WEST's receipt of written notice advising U S WEST that the Board of Directors of Global has received a Global Superior Proposal specifying the material terms and conditions of such Global Superior Proposal (and including a copy thereof with all accompanying documentation, if in writing), identifying the person making such Global Superior Proposal and stating that it intends to make a Global Subsequent Determination. After providing such notice, Global shall provide a reasonable opportunity to U S WEST to make such adjustments in the terms and conditions of this Agreement as would enable Global to proceed with its recommendation to its stockholders without a Global Subsequent Determination; provided, however, that any such adjustment shall be at the -45- discretion of the Parties at the time. For purposes of this Agreement, a "Global Superior Proposal" means any proposal (on its most recently amended or modified terms, if amended or modified) made by a Third Party to enter into an Alternative Transaction which the Board of Directors of Global determines in its good faith judgment (based on, among other things, the advice of a financial advisor of nationally recognized reputation) to be more favorable to Global's stockholders than the transactions contemplated by this Agreement taking into account all relevant factors (including whether, in the good faith judgment of the Board of Directors of Global, after obtaining the advice of a financial advisor of nationally recognized reputation, the Third Party is reasonably able to finance the transaction, and any proposed changes to this Agreement that may be proposed by U S WEST in response to such Alternative Transaction). (c) As promptly as practicable after the Registration Statement is declared effective under the Securities Act, U S WEST shall duly give notice of, convene and hold a meeting of its stockholders (the "U S WEST Stockholders' Meeting") in accordance with Delaware Law for the purposes of obtaining the approval of U S WEST Stockholders required to approve this Agreement and the transactions contemplated hereby (the "U S WEST Stockholder Approval") and shall, subject to the provisions of Section 7.2(d) hereof, through its Board of Directors, recommend to its stockholders the approval and adoption of this Agreement and the transactions contemplated hereby and shall use its best efforts to obtain the U S WEST Stockholder Approval. (d) Neither the Board of Directors of U S WEST nor any committee thereof shall (i) except as expressly permitted by this Section 7.2(d), withdraw, qualify or modify, or propose publicly to withdraw, qualify or modify, in a manner adverse to Global, the approval or recommendation of such Board of Directors or such committee of this Agreement or the transactions contemplated hereby, (ii) approve or recommend, or propose publicly to approve or recommend, any Alternative Transaction, or (iii) cause U S WEST to enter into any letter of intent, agreement in principle, acquisition agreement or other similar agreement (each, a "U S WEST Acquisition Agreement") related to any Alternative Transaction. Notwithstanding the foregoing, in the event that prior to the time U S WEST Stockholder Approval is obtained, the Board of Directors of U S WEST determines in good faith, after it has received a U S WEST Superior Proposal (as defined below) and after receipt of advice from outside counsel, that the failure to do so would result in a reasonable possibility that the Board of Directors of U S WEST would breach its fiduciary duties to U S WEST stockholders under applicable law, then the Board of Directors of U S WEST may (subject to this and the following sentences) inform U S WEST stockholders that it no longer believes that the transactions contemplated by this Agreement are advisable and no longer recommends approval of this Agreement and the transactions contemplated hereby (a "U S WEST Subsequent Determination"), but only at a time that is after the fifth business day following Global's receipt of written notice advising Global that the Board of Directors of U S WEST has received a U S WEST Superior Proposal specifying the material terms and conditions of such U S WEST Superior Proposal (and including a copy thereof with all accompanying documentation, if in writing), identifying the person making such U S WEST Superior Proposal and stating that it intends to make a U S WEST Subsequent Determination. After providing such notice, U S WEST shall provide a reasonable opportunity to Global to make such adjustments in the terms and conditions of this Agreement as would enable U S WEST to proceed with its recommendation to its stockholders without a U S WEST Subsequent Determination; provided, however, that any such adjustment -46- shall be at the discretion of the Parties at the time. For purposes of this Agreement a "U S WEST Superior Proposal" means any proposal (on its most recently amended or modified terms, if amended or modified) made by a Third Party to enter into an Alternative Transaction which the Board of Directors of U S WEST determines in its good faith judgment (based on, among other things, the advice of a financial advisor of nationally recognized reputation) to be more favorable to U S WEST's stockholders than the transactions contemplated by this Agreement, taking into account all relevant factors (including whether, in the good faith judgment of the Board of Directors of U S WEST, after obtaining the advice of a financial advisor of nationally recognized reputation, the Third Party is reasonably able to finance the transaction, and any proposed changes to this Agreement that may be proposed by Global in response to such Alternative Transaction). Section 7.3 Additional Agreements. (a) Upon the terms and subject to the conditions hereof and as soon as practicable after the conditions set forth in Article VIII hereof have been fulfilled or waived, each of the Parties, including, without limitation, Parent, U S WEST Merger Sub and Global Merger Sub when they become parties hereto, shall execute in the manner required by Delaware Law and Bermuda Law and deliver to and file with the Secretary of State of the State of Delaware and with the Registrar of Companies in Bermuda such instruments and agreements as may be required by Delaware Law and Bermuda Law and the Parties shall take all such other and further actions as may be required by law to make the Mergers effective. Prior to the filings referred to in this Section 7.3(b), a closing (the "Closing") will be held at the offices of Cadwalader, Wickersham & Taft (or such other place as the Parties may agree) for the purpose of confirming all the foregoing. The Closing will take place upon the fulfillment or waiver of all of the conditions to closing set forth in Article VIII of this Agreement, or as soon thereafter as practicable (the date of the Closing being herein referred to as the "Closing Date"). (b) Each of the Parties will comply in all material respects with all applicable laws and with all applicable rules and regulations of any Governmental or Regulatory Authority, in connection with its execution, delivery and performance of this Agreement and the transactions contemplated hereby. Each of the Parties agrees to use all commercially reasonable efforts to obtain in a timely manner all necessary waivers, consents and approvals and to effect all necessary registrations and filings, and to use all commercially reasonable efforts to take, or cause to be taken, all other actions and to do, or cause to be done, all other things necessary, proper or advisable to consummate and make effective as promptly as practicable the transactions contemplated by this Agreement. Without limiting the generality of the foregoing, each of Global and U S WEST shall promptly prepare and file a Premerger Notification in accordance with the HSR Act, shall promptly comply with any requests for additional information, and shall use its commercially reasonable efforts to obtain termination of the waiting period thereunder as promptly as practicable. Section 7.4 Notification of Certain Matters. Each of Global and U S WEST shall give prompt notice to the other of the following: (a) the occurrence or nonoccurrence of any event (including, without limitation, with respect to Global, the transactions contemplated by the Frontier Merger Agreement) whose occurrence or nonoccurrence would be likely to cause either (i) any -47- representation or warranty contained in this Agreement to be untrue, inaccurate or incomplete in any material respect at any time from the date hereof to the Effective Time, in which case such Party shall promptly update and deliver to the other Party any Schedules hereto which require an update to remain true, accurate and complete, or (ii) directly or indirectly, any Material Adverse Effect on such Party; (b) any material failure of such Party, or any officer, director, employee or agent of any thereof, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; (c) any facts relating to such Party which would make it necessary or advisable to amend the Joint Proxy Statement or the Registration Statement in order to make the statements therein not misleading or to comply with applicable law; provided, however, that the delivery of any notice pursuant to this Section 7.4 shall not limit or otherwise affect the remedies available hereunder to the Party receiving such notice; and (d) its becoming aware of any fact, event or other information which reveals or indicates that the consummation of the Mergers would or may result in any illegality, forfeiture or loss on the part of either Parent, U S WEST or any of its Subsidiaries, or Global or any of its Subsidiaries. Section 7.5 Access to Information. (a) From the date hereof to the Effective Time, each of Global and U S WEST shall, and shall cause its respective Subsidiaries, and its and their officers, directors, employees, auditors, counsel and agents to afford the officers, employees, auditors, counsel and agents of the other Party reasonable access during regular business hours to such Party's and its Subsidiaries' officers, employees, auditors, counsel, agents, properties, offices and other facilities and to all of their respective books and records, and shall furnish the other with all financial, operating and other data and information as such other Party may reasonably request. (b) Each of Global and U S WEST agrees that all non-public, confidential information so received from the other Party shall be deemed received pursuant to the confidentiality agreement, dated as of May 3, 1999, between Global and U S WEST (the "Confidentiality Agreement") and such Party shall, and shall cause its Subsidiaries and each of its and their respective officers, directors, employees, financial advisors, attorneys, accountants, consultants and agents ("Party Representatives ), to comply with the provisions of the Confidentiality Agreement with respect to such information, and the provisions of the Confidentiality Agreement are hereby incorporated herein by reference with the same effect as if fully set forth herein. (c) Global shall use its commercially reasonable efforts to allow U S WEST and its Party Representatives such access to Frontier and its Party Representatives and Frontier's books and records and facilities as is allowed Global in connection with the Frontier Acquisition, subject to the execution of a confidentiality agreement acceptable to Frontier. Section 7.6 Public Announcements. Global and U S WEST shall develop a joint communications plan and each Party shall use all reasonable efforts to ensure that all press -48- releases and other public statements with respect to the transactions contemplated hereby shall be consistent with such joint communications plan or, to the extent inconsistent therewith, shall have received the prior written approval of the other Parties. Section 7.7 Cooperation. (a) Upon the terms and subject to the conditions hereof, each of the Parties agrees to use its commercially reasonable efforts to take or cause to be taken all actions and to do or cause to be done all things necessary, proper or advisable to consummate the transactions contemplated by this Agreement and shall use its commercially reasonable efforts to obtain all necessary waivers, consents and approvals from any Governmental or Regulatory Authority or other Person, and to effect all necessary filings under the Securities Act, the Exchange Act and the HSR Act. Global and U S WEST agree to abide by and comply with any conditions that may be imposed by any Governmental or Regulatory Authority as a condition of its waiver, consent or approval, including, without limitation, any conditions which are necessary in order to be in compliance with Section 271 of the Telecommunications Act of 1996 ("Section 271 Compliance"). The Parties shall (i) cooperate in responding to inquiries from, and making presentations to, Governmental or Regulatory Authorities; (ii) promptly inform the other Party of any material oral or written communication received by such Party from, or given by such party to any Governmental or Regulatory Authority and of any material communication received or given in connection with any proceeding by a private Party, in each case regarding any of the transactions contemplated hereby; and (iii) consult with each other in advance of any meeting or conference with, or of making any filing or other written submission to, any such Governmental or Regulatory Authority or, in connection with any proceeding by a private party, with any other Person, and to the extent permitted by the applicable Governmental or Regulatory Authority or other Person, give the other Party the opportunity to attend and participate in such meetings and conferences, or to review and approve any such filing or other written submission, in each case regarding the Mergers. U S WEST and Global shall cooperate with each other, and use their respective commercially reasonable efforts to take or cause to be taken and to do or cause to be done all things necessary, proper or advisable to ensure compliance with the Telecommunications Act of 1996, including, without limitation, the amendment of this Agreement as may be necessary, proper or advisable in order to ensure such compliance. (b) Notwithstanding subsection (a), U S WEST and Global shall use their reasonable best efforts to secure or obtain any Required Regulatory Approvals, including, without limitation, certificates for operating rights and licenses for use of spectrum. (c) Each of U S WEST and Global shall cooperate with each other to eliminate or reduce to the extent possible any illegality, forfeiture or loss of which one may have notified the other pursuant to Section 7.4(d) in order to permit the consummation of the Mergers. Section 7.8 Indemnification, Directors' and Officers' Insurance. For a period of six (6) years after the Effective Time, (a) U S WEST and Global shall maintain in effect the current provisions regarding indemnification of officers and directors contained in the charter and bylaws of U S WEST and Global and each of their respective Subsidiaries and any directors, officers or employees indemnification agreements of U S WEST and Global and their respective Subsidiaries, (b) U WEST and Global shall maintain in effect the current policies of directors' and officers' liability insurance and fiduciary liability insurance maintained by -49- U S WEST and Global, respectively, (provided that U S WEST may substitute therefor policies of at least the same coverage and amounts containing terms and conditions which are, in the aggregate, no less advantageous to the insured in any material respect) with respect to claims arising from facts or events which occurred on or before the Effective Time, and (c) U S WEST and Global shall indemnify the directors and officers of U S WEST and Global, respectively, to the fullest extent to which U S WEST and Global are permitted to indemnify such officers and directors under their respective charters and bylaws and applicable law. Section 7.9 Employee Benefit Plans. Except as otherwise provided herein or set forth on Schedule 6.2, Global and U S WEST agree that, unless otherwise mutually agreed, they (or their Subsidiaries, as applicable) may, but shall have no obligation to, maintain the U S WEST Benefit Plans and the Global Benefit Plans as separate plans after the Effective Time with respect to employees covered by such plans immediately prior to the Effective Time. Section 7.10 Officers of Parent. Solomon D. Trujillo and Robert Annunziata shall hold the position of Co-Chairmen of Parent, and they each shall also hold the position of Co-Chief Executive Officers of Parent. The Co-Chief Executive Officers of Parent shall appoint the senior management of Parent following the Effective Time. Section 7.11 Stock Exchange Listing. Each of the Parties shall use its reasonable best efforts to obtain, prior to the Effective Time, the approval for listing on the NYSE or Nasdaq, effective upon official notice of issuance, of the shares of Parent Class A Common Stock and Parent Class B Common Stock. Section 7.12 Post-Mergers Parent Board of Directors; Executive Committee. (a) At the Effective Time, the total number of persons serving on the Board of Directors of Parent shall be twenty two (22) (unless otherwise agreed in writing by Global and U S WEST prior to the Effective Time). The persons to serve initially on the Board of Directors of Parent at the Effective Time shall be selected as follows: ten (10) directors shall be designated by each of U S WEST and Global, and the remaining two (2) directors shall be designated by U S WEST and shall be independent directors not affiliated with U S WEST or Global in any manner; provided, however, that the additional two (2) directors shall be reasonably satisfactory to Global. Each such person shall serve as a director until their successor is elected or appointed in accordance with the Bylaws of Parent and qualified. (b) The Board of Directors of Parent shall have at the Effective Time an Executive Committee, which shall be comprised of three (3) directors designated by U S WEST and three (3) directors designated by Global, and which shall exercise the authority granted to it by the Bylaws of Parent. Each of Global and U S WEST shall take such action as shall reasonably be deemed by either thereof to be advisable to give effect to the provisions set forth in this section, including but not limited, to incorporating such provisions in the Bylaws of Parent in effect at the Effective Time. The Bylaws of Parent shall provide that the executive committee will have the full powers which may be granted to it by the Board of Directors under Delaware Law, except as otherwise provided by resolutions of the Board of Directors. Section 7.13 No Shelf Registration. Parent shall not be required to amend or maintain the effectiveness of the Registration Statement for the purpose of permitting resale of -50- the shares of Parent Class A Common Stock or Parent Class B Common Stock received pursuant hereto by the Persons who may be deemed to be "affiliates" of Global or U S WEST within the meaning of Rule 145 promulgated under the Securities Act. The shares of Parent Class A Common Stock or Parent Class B Common Stock issuable upon exercise of options pursuant to Section 2.8 or Section 3.8 hereof shall be registered under the Securities Act and such registration shall be effective at the time of issuance. Section 7.14 Affiliates. Each of Global and U S WEST (i) has disclosed to the other on Schedule 7.14 hereof all persons who are, or may be, as of the date hereof its Affiliates for purposes of Rule 145 under the Securities Act, and (ii) shall use all reasonable efforts to cause each person who is identified as an "affiliate" of it on Schedule 7.14 to deliver to the other as promptly as practicable but in no event later than the Closing Date, a signed agreement substantially in the form previously agreed to by Global and U S WEST. Global and U S WEST shall notify each other from time to time of any other persons who then are, or may be, such an "affiliate" and use all reasonable efforts to cause each additional person who is identified as an "affiliate" to execute a signed agreement as set forth in this Section 7.14. Section 7.15 Blue Sky. Global and U S WEST will use their best efforts to obtain prior to the Effective Time all necessary state securities or "blue sky" Permits and approvals required to permit the distribution of the shares of Parent Class A Common Stock or Parent Class B Common Stock to be issued in accordance with the provisions of this Agreement. Section 7.16 Tax-Free Exchange. Each of the Parties will use its reasonable efforts, and each agrees to cooperate with the other and provide each other with such documentation, information and materials, as may be reasonably necessary, proper or advisable, to cause the transactions to be effected pursuant to this Agreement to qualify for U.S. federal income tax purposes as a tax-free exchange or a series of exchanges. Section 7.17 Determination of Class B to Class A Value Ratio. At such time as may be agreed by U S WEST and Global, but in no event later than sixty (60) days prior to the anticipated Effective Time, U S WEST and Global will each retain, and provide relevant information to, a nationally recognized investment banking firm (each, an "appraiser") to determine the "Class B to Class A Value Ratio". The Class B to Class A Value Ratio shall be determined by dividing the "Global Value" by the "Local Value" (rounded to the nearest 1/10,000). The Global Value shall represent the fully distributed equity value of the Global Group (as such term is defined for the purposes of such determination pursuant to Section 7.24), and the Local Value shall represent the fully distributed equity value of the Local Group (as such term is defined for the purposes of such determination pursuant to Section 7.24), in each case, calculated as if each such group were an independent, publicly traded and widely held company. Global and U S WEST shall instruct the appraisers to meet and work together for a period of two weeks to resolve their differences, if any, as to the calculation of such ratios. If the appraisers are able to resolve their difference as to such calculations during such period, then the joint decision of the appraisers will be the Class B to Class A Value Ratio. If the difference between the determinations submitted by each appraiser is less than 10.0 percent of the lowest of such determinations, then the -51- appraisers will in turn select a third nationally recognized banking firm to make such determination. The average of the determinations submitted by the appraisers shall be the Class B to Class A Value Ratio. If the difference between the determinations submitted by each appraiser equals or exceeds 10.0 percent of the lowest of such determinations, then the appraisers will in turn select a third nationally recognized investment banking firm to make such determination. The average of the determinations provided by such third firm and the determination submitted by the appraiser retained by Global or U S WEST that is closest to the determination provided by such third firm shall be the Class B to Class A Value Ratio; provided, however, that the Class B to Class A Value Ratio shall not be less than the lower of the proposed Class B to Class A Value Ratios submitted by the appraisers nor greater than the higher of the proposed Class B to Class A Value Ratios submitted by the appraisers. In determining the Class B to Class A Value Ratio, each appraiser (including any third investment banking firm engaged as provided above in this Section 7.17) will employ methodologies and analyses consistent with those traditionally utilized by investment banking firms in performing public company valuations including: (i) reviewing publicly available information concerning the proposed businesses, assets and liabilities of such groups, (ii) reviewing other financial information concerning the proposed businesses, assets and liabilities of such groups, including financial forecasts to be provided by Global and U S WEST management relating to the proposed businesses, assets and liabilities of such groups, respectively, including any costs or benefits accruing to such groups as a result of the Mergers as well as the intercompany relationships between the Global Group and the Local Group, (iii) performing reasonable due diligence, including discussing the proposed businesses, assets and liabilities of such groups with officers of Global and U S WEST, and (iv) considering such other information, financial studies, analyses, investigations and financial, economic and market criteria that the appraiser deems relevant. Such valuations will not give effect to any tracking stock, initial public offering, shareholder concentration or other similar factors that may adversely impact the Global Value or Local Value. Global and U S WEST shall each use reasonable best efforts to supply to the appraisers such information, analyses and access to books, records and personnel as the appraisers may reasonably request. The fees and expenses of the third appraiser will be split evenly between U S WEST and Global. Section 7.18 Permitted Acquisitions. During the period from the date of this Agreement through the Closing Date, each of Global and U S WEST may engage in acquisition transactions taking the form of a stock acquisition, asset acquisition, merger or similar type form of transaction ("Acquisitions"); provided, however, that such transactions comply with this Section 7.18. Each of Global and U S WEST may engage in Acquisitions having an aggregate consideration value of $3 billion (including assumptions of debt) and in the case of Global except as set forth on Schedule 7.18. Any Acquisition in excess of such amount shall require the prior written consent of the other party. -52- Section 7.19 Certain Transactions. (a) Global will (i) use its reasonable best efforts to close the transactions contemplated by the Frontier Merger Agreement (the "Frontier Acquisition") in accordance with the terms thereof, (ii) not take any action which would materially adversely impact the timing of the closing of the transactions contemplated by the Frontier Merger Agreement or the ability of Global to satisfy the conditions precedent to the closing of the transactions contemplated by the Frontier Merger Agreement, and (iii) not waive or amend any material economic provision of the Frontier Merger Agreement without the prior written approval of U S WEST; provided, however, that, without U S WEST's consent, Global may increase the merger consideration in the Frontier Merger in the event an Acquisition Proposal (as defined in the Frontier Merger Agreement) is made to Frontier, but, if the increase is in cash, not in excess of the amount then available for acquisitions set forth in Section 7.18 hereof which shall thereafter reduce the amounts available for acquisition. (b) Global will use its reasonable efforts to close the transactions contemplated by the agreement governing Global's acquisition (the "C&W Acquisition Agreement") of Cable & Wireless Global Marine ("C&W") in accordance with the terms thereof, and (ii) not take any action which would materially adversely impact the timing of the closing of the transactions contemplated by the C&W Acquisition Agreement or the ability of Global to satisfy the conditions precedent to the closing of the transactions contemplated by the C&W Acquisition Agreement. Section 7.20 Interim Dividend Policy. Global shall not, without the prior written consent of U S WEST, declare, set aside or pay any dividend or distribution payable in cash, stock, property or otherwise (a "Dividend") with respect to shares of Global Common Stock. U S WEST shall be permitted, without the prior written consent of Global, to declare and pay Dividends with respect to shares of U S WEST Common Stock in the ordinary course of business and in a manner consistent with past practice not in excess of $0.75 per quarter. In addition, U S WEST may declare and pay to stockholders of record on the date immediately prior to the Effective Time (i) a special dividend of $1.00 per share and (ii) the pro rata portion of the then regular quarterly dividend through such date. Section 7.21 Subsidiary Definition. Upon consummation of the Frontier Acquisition and the C&W Acquisition, Frontier and C&W shall each be a Subsidiary of Global for all purposes of this Agreement; provided that (i) in no event shall Global be required to make or be deemed to be required to make any representation and warranty pursuant to Article V or Section 9.3 regarding Frontier, C&W or any of their respective subsidiaries if such representation and warranty was not made or given to Global in connection with the consummation of the Frontier Acquisition, in the case of Frontier and its Subsidiaries, and the acquisition of C&W, in the case of C&W and its Subsidiaries, and (ii) no breach of a representation and warranty shall be deemed to exist by reason of the failure of any Schedule referred to in Article V which requires disclosure of specified information concerning Global Subsidiaries to include responsive disclosure concerning Frontier, C&W or any of their respective subsidiaries. Section 7.22 Exchange Procedures. If, in consultation with Nasdaq and the NYSE, the parties determine that the procedures contemplated by Section 2.4 may interfere with the orderly market trading of the Global Common Stock and/or U S WEST Common Stock or -53- may otherwise be inadvisable, then the parties shall negotiate in good faith to provide for alternative procedures. Section 7.23 Services Agreement. U S WEST and Global will use reasonable best efforts to enter into a retail marketing and services agreement within thirty (30) days of the date of this Agreement covering the marketing of U S WEST's services and the purchase by U S WEST of Global's services. U S WEST and Global further agree to use reasonable best efforts to enter into an arms- length agreement to form and operate outside of U S WEST's service territory a data-focused competitive local exchange carrier. Section 7.24 Certain Definitions. No later than the time the Parties engage the appraisers pursuant to Section 7.17, U S WEST and Global will agree on the definitions of Global Group and Local Group (as such terms are contemplated to be used for purposes of Parent's Certificate of Incorporation) to be used for purposes of the determination of the Class B to Class A Value Ratio and for purposes of Parent's Certificate of Incorporation, which determination shall, to the extent practicable, be made consistent with the present intent of the parties as set forth in Section 1.1. ARTICLE VIII CONDITIONS TO THE MERGERS Section 8.1 Conditions to Obligations of Each Party to Effect the Mergers. The respective obligations of each Party to effect the Mergers shall be subject to the following conditions: (a) Stockholder Approval. The Mergers and this Agreement shall have been approved and adopted by the requisite vote of the stockholders of each of Global and U S WEST and the issuance of Parent Class A Common Stock and Parent Class B Common Stock pursuant to the Mergers shall have been approved by the requisite vote of the stockholders of Parent, in each case in accordance with Delaware Law and Bermuda Law and the rules of the Nasdaq and the NYSE, as applicable; (b) Legality. No federal, state or foreign statute, rule, regulation, executive order, decree or injunction shall have been enacted, entered, promulgated or enforced by any Governmental or Regulatory Authority which is in effect and has the effect of (i) making either of the Mergers illegal or otherwise prohibiting the consummation of either of the Mergers, or (ii) creating a Material Adverse Effect on Global, or on U S WEST; (c) HSR Act. Any waiting period applicable to the consummation of the Mergers under the HSR Act shall have expired or been terminated; (d) Regulatory Matters. All Permits from, approvals of, or declarations or filings with, and all expirations of waiting periods imposed by, any Governmental or Regulatory Authority (all of the foregoing, "Consents") which are necessary for the consummation of the transactions contemplated hereby, other than Consents the failure to obtain which would have no Material Adverse Effect on the consummation of the transactions contemplated hereby and no -54- Material Adverse Effect on Parent, S WEST or Global, shall have been filed, have occurred or have been obtained in form and under terms and conditions acceptable to U S WEST and Global (all such Permits, approvals, declarations, filings and expiration or lapse of all such waiting periods being referred to as the "Required Regulatory Approvals") and all such Required Regulatory Approvals shall be in full force and effect; provided, however, that a Required Regulatory Approval shall not be deemed to have been obtained if the period for review or reconsideration thereof has not expired or if in connection with the grant thereof there shall have been an imposition by any Governmental or Regulatory Authority of any condition, requirement, restriction or change of regulation, or any other action directly or indirectly related to such grant taken by such Governmental or Regulatory Authority, which would reasonably be expected to prevent or materially delay the consummation of the transactions contemplated hereby or have a material adverse effect on the consummation of the transaction contemplated hereby or a Material Adverse Effect on Parent, Global and its Subsidiaries, taken as a whole, or U S WEST; and provided further, however, that (A) the imposition of conditions by any Governmental or Regulatory Authority relating to Section 271 Compliance, such as a restriction on the provision of certain services by any Party, or (B) the withholding of approval by any Governmental or Regulatory Authority pending the completion of actions required of any Party to eliminate or resolve any regulatory problems (including, without limitation, any problems regarding Section 271 Compliance), shall not in and of itself be deemed to result in the failure to satisfy the condition set forth in this subsection (d); (e) Registration Statement Effective. The Registration Statement shall have become effective prior to the mailing by each of Global and U S WEST of the Joint Proxy Statement to its respective stockholders, no stop order suspending the effectiveness of the Registration Statement shall then be in effect, and no proceedings for that purpose shall then be threatened by the SEC or shall have been initiated by the SEC and not concluded or withdrawn; (f) Blue Sky. All state securities or "blue sky" Permits or approvals required to carry out the transactions contemplated hereby shall have been received; (g) Stock Exchange Listing. The shares of Parent Class A Common Stock and the shares of Parent Class B Common Stock shall have been duly approved for listing on the NYSE or Nasdaq, subject to official notice of issuance; (h) Consents Under Global Agreements. Global shall have obtained the consent or approval of any Person whose consent or approval shall be required under any agreement or instrument in order to permit the consummation of the transactions contemplated hereby except those which the failure to obtain would not, individually or in the aggregate, have a Material Adverse Effect on Parent, U S WEST, or Global; (i) Consents Under U S WEST Agreements. U S WEST shall have obtained the consent or approval of any Person whose consent or approval shall be required under any agreement or instrument in order to permit the consummation of the transactions contemplated hereby except those which the failure to obtain would not, individually or in the aggregate, have a Material Adverse Effect on Parent, U S WEST, or Global; -55- (j) Frontier Acquisition. Global shall have consummated its acquisition of Frontier (the "Frontier Acquisition") in accordance with the terms and provisions of that certain Agreement and Plan of Merger dated as of March 16, 1999, among Global, a wholly-owned subsidiary of Global, and Frontier (the "Frontier Merger Agreement"); and (k) Bermuda Approval. Global shall have either filed (i) a notice of discontinuance with the Registrar of Companies of Bermuda under Section 132H of the Companies Act 1981 of Bermuda (the "Companies Act"), (ii) an application to the Supreme Court of Bermuda under Section 99 of the Companies Act for the sanctioning of a proposed arrangement between Global and persons permitted under such statute, or (iii) filed an application with the Registrar of Companies of Bermuda for a Certificate of Amalgamation under Sections 104 and 108 of the Companies Act in connection with the Global Merger. Section 8.2 Additional Conditions to Obligations of Global. The obligations of Global to effect the Mergers are also subject to the fulfillment of the following conditions: (a) Representations and Warranties. The representations and warranties of U S WEST set forth in this Agreement shall have been true and correct on the date hereof and, without giving effect to any materiality qualifications or limitations therein, on and as of the Closing Date as though made on the Closing Date (except to the extent that any representation or warranty expressly speaks as of an earlier date, in which case it shall be true and correct as of such date) except (i) for changes permitted under Section 6.2 hereof or otherwise contemplated by this Agreement, and (ii) for such failures to be true and correct which in the aggregate would not reasonably be expected to result in a Material Adverse Effect on U S WEST. (b) Agreements and Covenants. U S WEST shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by it on or before the Effective Time; provided, however, that for purposes of this Section 8.2(b) only, such agreements and covenants shall be deemed to have been complied with unless the failure or failures of such agreements and convenants to have been complied with (without regard to materiality qualifiers contained therein), individually or in the aggregate, results or which would reasonably be expected to result in a Material Adverse Effect on Global, or Parent (after the Effective Time), or a material adverse effect on the consummation of the transactions contemplated hereby; (c) Certificates. Global shall have received a certificate of an executive officer of U S WEST to the effect set forth in paragraphs (a) and (b) above; (d) Tax Opinion. Global shall have received an opinion of Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to Global, dated as of the Closing Date, in form and substance reasonably satisfactory to Global, substantially to the effect that, on the basis of the facts, representations and assumptions set forth or referred to in such opinion, the consummation of the transactions to be effected pursuant to this Agreement (including the Mergers) will for U.S. federal income tax purposes (i) constitute a tax-free exchange of shares of Global Common Stock for shares of Parent Common Stock (ii) be a non-recognition transaction for both Global and Parent. In rendering such opinion, Skadden, Arps, Slate, Meagher & Flom LLP may require and rely upon representations and covenants including those contained in -56- certificates of officers of Parent, Global and U S WEST and others. Additionally, in the event the opinion referred to in Section 8.3(d) (iii) is not rendered to U S WEST, then Global shall not be obligated to effect the Mergers, notwithstanding a waiver of the condition referred to in such clause by U S WEST, provided that Global has received an opinion of Skadden, Arps, Slate, Meagher & Flom LLP, dated prior to the Effective Time, that there exists a substantial likelihood of a Tax liability that would result in a Material Adverse Effect on U S WEST or Parent, as the case may be. (e) Affiliate Agreements. Global shall have received the agreements required by Section 7.14 hereof to be delivered by the U S WEST "affiliates," duly executed by each "affiliate" of U S WEST. (f) Board of Directors. U S WEST shall have taken all such actions as shall be necessary so that at the Effective Time, the composition of Parent's Board shall comply with Section 7.12 hereof. Section 8.3 Additional Conditions to Obligations of U S WEST. The obligations of U S WEST to effect the Mergers are also subject to the fulfillment of the following conditions: (a) Representations and Warranties. The representations and warranties of Global set forth in this Agreement shall have been true and correct on the date hereof and, without giving effect to any materiality qualifications or limitations therein, on and as of the Closing Date as though made on the Closing Date (except to the extent that any representation or warranty expressly speaks as of an earlier date, in which case it shall be true and correct as of such date) except (i) for changes permitted under Section 6.2 hereof or otherwise contemplated by this Agreement, and (ii) for such failures to be true and correct which in the aggregate would not reasonably be expected to result in a Material Adverse Effect on Global. (b) Agreements, Covenants. Global shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by it on or before the Effective Time; provided, however, that for purposes of this Section 8.3(b) only, such agreements and covenants shall be deemed to have been complied with unless the failure or failures of such agreements and covenants to have been complied with (without regard to materiality qualifiers contained therein), individually or in the aggregate, results or would reasonably be expected to result in a Material Adverse Effect on U S WEST, either with or without including its ownership of Global and its Subsidiaries after the Merger, or a material adverse effect on the consummation of the transactions contemplated hereby. (c) Certificates. U S WEST shall have received a certificate of an executive officer of Global to the effect set forth in paragraphs (a) and (b) above. (d) Tax Opinion. U S WEST shall have received an opinion of Cadwalader, Wickersham & Taft, special counsel to U S WEST, dated as of the Effective Time, in form and substance reasonably satisfactory to U S WEST, substantially to the effect that, on the basis of the facts, representations and assumptions set forth or referred to in such opinion, the consummation of the transactions to be effected pursuant to this Agreement (including the -57- Mergers) will for U.S. federal income tax purposes (i) not cause the spinoff of U S WEST completed on June 12, 1998, to become taxable, including taxability pursuant to Section 355(e) of the Code, (ii) constitute for U.S. federal income tax purposes a tax-free exchange of shares of U S WEST Common stock for shares of Parent Common Stock, and (iii) be a non-recognition transaction as to U S WEST and Parent. Additionally, in the event the opinion referred to in Section 8.2(d)(ii) is not rendered with respect to Global or Parent, then U S WEST shall not be obligated to effect the Mergers, notwithstanding a waiver of the condition referred to in such clause by Global, provided that U S WEST has received an opinion of Cadwalader, Wickersham & Taft, dated prior to the Effective Time, that there exists a substantial likelihood of a Tax liability that would represent a Material Adverse Effect to Global or Parent, as the case may be. In rendering the opinion referred to in the first sentence of this subsection (d), Cadwalader, Wickersham & Taft may require and rely upon representations and covenants including those contained in certificates of officers of Parent, U S WEST and Global and others. (e) Affiliate Agreements. U S WEST shall have received the agreements required by Section 7.14 hereof to be delivered by the Global "affiliates," duly executed by each "affiliate" of Global. (f) Board of Directors. Global shall have taken all such actions as shall be necessary so that at the Effective Time, the composition of Parent's Board shall comply with Section 7.12 hereof. (g) Accounting Treatment. The Mergers shall have been accounted for under the purchase method of accounting with U S WEST as the acquiror. ARTICLE IX TERMINATION, AMENDMENT AND WAIVER Section 9.1 Termination. This Agreement may be terminated at any time before the Effective Time, in each case as authorized by the respective Board of Directors of Global or U S WEST: (a) By mutual written consent of each of Global and U S WEST; (b) By either Global or U S WEST if the Mergers shall not have been consummated on or before May 16, 2000 (the "Termination Date"); provided, however, that the right to terminate this Agreement under this Section 9.1(b) shall not be available to any Party whose failure to fulfill any obligation under this Agreement has been the cause of, or resulted in, the failure of the Effective Time to occur on or before the Termination Date; and provided further, however, that if on the Termination Date the conditions to the Closing set forth in Sections 8.1(c) or (d) shall not have been fulfilled, but all other conditions to the Closing shall be fulfilled or shall be capable of being fulfilled, then the Termination Date shall be extended to November 30, 2000; (c) By either Global or U S WEST if any Governmental or Regulatory Authority shall have issued an order, decree or ruling or taken any other action (which order, -58- decree or ruling the Parties shall use their commercially reasonable efforts to lift), in each case permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement, and such order, decree, ruling or other action shall have become final and nonappealable; (d) (i) by Global, (A) if U S WEST shall have breached or failed to perform in any material respect any of its representations, warranties, covenant or other agreement contained in this Agreement, which breach or failure to perform (1) is incapable of being cured by U S WEST prior to the Termination Date, and (2) renders any condition under Sections 8.1 or 8.2 incapable of being satisfied prior to the Termination Date, or (B) if a condition under Sections 8.1 or 8.2 to Global's obligations hereunder cannot be satisfied prior to the Termination Date; (ii) by U S WEST, (A) if Global shall have breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements contained in this Agreement, which breach or failure to perform (1) is incapable of being cured by Global prior to the Termination Date, and (2) renders any condition under Sections 8.1 and 8.3 incapable of being satisfied prior to the Termination Date, or (B) if a condition under Sections 8.1 or 8.3 to U S WEST's obligation hereunder cannot be satisfied prior to the Termination Date; (e) By either Global or U S WEST if the Board of Directors of the other or any committee of the Board of Directors of the other (i) shall fail to include in the Joint Proxy Statement its recommendation without modification or qualification that its stockholders approve this Agreement and the applicable Merger, (ii) shall withdraw or modify in any adverse manner its approval or recommendation of this Agreement or the applicable Merger, (iii) shall fail to reaffirm such approval or recommendation upon such Party's request, (iv) shall approve or recommend any Alternative Transaction, or (v) shall resolve to take any of the actions specified in this Section 9.1(e); (f) By either Global or U S WEST if the Global Stockholder Approval or the U S WEST Stockholder Approval shall fail to have been obtained at a duly held stockholders meeting of either of such companies, including any adjournments thereof, or by Global if Global determines that the appraisal of the fair value of Global Common Stock, as determined by the Bermuda Court, is excessive; (g) By Global, if U S WEST shall have failed to consummate, purchase and pay for shares of Global Common Stock pursuant to the U S WEST Tender Offer by July 31, 1999; provided, however, that such date shall be extended to August 30, 1999, if the waiting period under the HSR Act applicable to the U S WEST Tender Offer shall not have expired or been terminated by July 31, 1999; or (h) (i) by Global, in the event that prior to the time the Global Stockholder Approval is obtained, (A) the Board of Directors of Global determines in good faith, in response to a Global Superior Proposal and after receipt of advice from outside counsel, that the failure to terminate this Agreement in order to accept such Global Superior Proposal would result in a reasonable likelihood that the Board of Directors of Global would breach its fiduciary duties to -59- Global stockholders under applicable law, and (B) Global has complied with the requirements of Section 7.2(b) with respect to such Global Superior Proposal; provided that termination pursuant to this Section shall not be effective until payment of the U S WEST Termination Fee pursuant to Section 9.2(c); (ii) by U S WEST, in the event that prior to the time the U S WEST Stockholder Approval is obtained, (A) the Board of Directors of U S WEST determines in good faith, in response to a U S WEST Superior Proposal and after receipt of advice from outside counsel, that the failure to terminate this Agreement in order to accept such U S WEST Superior Proposal would result in a reasonable likelihood that the Board of Directors of U S WEST would breach its fiduciary duties to U S WEST stockholders under applicable law, and (B) U S WEST has complied with the requirements of Section 7.2(b) with respect to such U S WEST Superior Proposal; provided that termination pursuant to this Section shall not be effective until payment of the Global Termination Fee pursuant to Section 9.2(b); or (iii) by Global or U S WEST if the Frontier Merger Agreement shall have been terminated in accordance with its terms. Section 9.2 Effect of Termination. (a) In the event of termination of this Agreement as provided in Section 9.1 hereof, and subject to the provisions of Section 11.1 hereof, this Agreement shall forthwith become void and there shall be no liability on the part of any of the Parties, except (i) as set forth in this Section 9.2 and in Sections 4.16, 5.16, 7.5, and 11.3 hereof, and (ii) nothing herein shall relieve any Party from liability for any willful breach hereof. (b) If this Agreement (i) is terminated by Global pursuant to Section 9.1(e) hereof, (ii) could have been (but was not) terminated by Global pursuant to Section 9.1(e) hereof and is subsequently terminated by U S WEST or Global pursuant to Section 9.1(e) because of the failure to obtain the U S WEST Stockholder Approval, (iii)(A) could not have been terminated by Global pursuant to Section 9.1(e) hereof but is subsequently terminated by U S WEST or Global pursuant to Section 9.1(f) because of the failure to obtain the U S WEST Stockholder Approval, (B) prior to the U S WEST Stockholders' Meeting there shall have been an offer or proposal for, an announcement of any intention with respect to (including the filing of a statement of beneficial ownership on Schedule 13D discussing the possibility of or reserving the right to engage in), or any agreement with respect to, a transaction that would constitute an Alternative Transaction (as defined in Section 6.3(c) hereof, except that for the purposes of this Section 9.2(b), the applicable percentage in clause (i) of such definition shall be forty percent (40%) involving U S WEST or any of U S WEST's Subsidiaries, and (C) within twelve (12) months after the termination of this Agreement, U S WEST enters into a definitive agreement with any Third Party with respect to an Alternative Transaction, (iv) is terminated by Global as a result of U S WEST's material beach of Section 7.1, 7.2(a) or Section 7.2(b) hereof which in the case of Section 7.1 and Section 7.2(a) only, is not cured within thirty (30) days after notice thereof to U S WEST or (v) is terminated by U S WEST pursuant to Section 9.1(h)(ii), U S WEST shall pay to Global a termination fee of $850,000,000 (the "Global Termination Fee"). -60- (c) If this Agreement (i) is terminated by U S WEST pursuant to Section 9.1(e) hereof, (ii) could have been (but was not) terminated by U S WEST pursuant to Section 9.1(e) hereof and is subsequently terminated by Global or U S WEST pursuant to Section 9.1(f) because of the failure to obtain the Global Stockholder Approval, (iii)(A) could not have been terminated by U S WEST pursuant to Section 9.1(e) hereof but is subsequently terminated by Global or U S WEST pursuant to Section 9.1(f) because of the failure to obtain the Global Stockholder Approval, (B) prior to the Global Stockholders' Meeting there shall have been an offer or proposal for, an announcement of any intention with respect to (including the filing of a statement of beneficial ownership on Schedule 13D discussing the possibility of or reserving the right to engage in), or any agreement with respect to, a transaction that would constitute an Alternative Transaction (as defined in Section 6.3(c) hereof, except that for the purposes of this Section 9.2(c), the applicable percentage in clause (i) of such definition shall be forty percent (40%) involving Global or any of Global's Subsidiaries, and (C) within twelve (12) months after the termination of this Agreement, Global enters into a definitive agreement with any Third Party with respect to an Alternative Transaction, (iv) is terminated by U S WEST as a result of Global's material breach of Section 7.1, Section 7.2(c) or Section 7.2(d) hereof which, in the case of Section 7.1 and Section 7.2(c) only, or (v) is terminated by Global pursuant to Section 9.1(h)(i), Global shall pay to U S WEST a termination fee of $850,000,000 (the "U S WEST Termination Fee"). (d) Each termination fee payable under Section 9.2(b) and (c) above shall be payable in cash, payable no later than one business day following the delivery of notice of termination to the other Party, or, if such fee shall be payable pursuant to clause (iii) of either Section 9.2(b) or (c), such fee shall be payable no later than one business day following the day such Party enters into the definitive agreement referenced in such clause (iii). (e) Global and U S WEST agree that the agreements contained in Sections 9.2(b) and (c) above are an integral part of the transactions contemplated by this Agreement and constitute liquidated damages and not a penalty. If one Party fails to promptly pay to the other any fee due under such Sections 9.2(b) and (c), then the defaulting Party shall pay the costs and expenses (including legal fees and expenses) in connection with any action, including the filing of any lawsuit or other legal action, taken to collect payment, together with interest on the amount of any unpaid fee at the publicly announced prime rate of Citibank, N.A., from the date such fee was required to be paid. Section 9.3 Amendment. This Agreement may be amended by the Parties pursuant to a writing adopted by action taken by all of the Parties at any time before the Effective Time; provided, however, that, after approval of this Agreement by the stockholders of Global or U S WEST, whichever shall occur first, no amendment may be made which would (a) alter or change the amount or kinds of consideration to be received by the holders of U S WEST Common Stock or Global Common Stock upon consummation of the Mergers, (b) alter or change any term of the Certificate of Incorporation of Global or the Certificate of Incorporation of U S WEST, or (c) alter or change any of the terms and conditions of this Agreement if such alteration or change would adversely affect the holders of any class or series of securities of Global or U S WEST. This Agreement may not be amended except by an instrument in writing signed by the Parties. -61- Section 9.4 Waiver. At any time before the Effective Time, any Party may (a) extend the time for the performance of any of the obligations or other acts of the other Parties, (b) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto, and (c) waive compliance with any of the agreements or conditions contained herein. Any agreement on the part of a Party to any such extension or waiver shall be valid only as against such Party and only if set forth in an instrument in writing signed by such Party. ARTICLE X DEFINITIONS Section 10.1 Certain Definitions. For purposes of this Agreement, the following terms shall have the following meanings: "Affiliate" of a Person means a Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the first mentioned Person. "Agreement" means this Agreement and Plan of Merger, together with all of its schedules and exhibits. "Bermuda Law" means the Bermuda Companies Act 1981. "Code" means the Internal Revenue Code of 1986, as amended, and the Treasury regulations promulgated thereunder. "Control" (including the terms "controlled by" and "under common control with") means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of stock, as trustee or executor, by contract or credit arrangement or otherwise. "Delaware Law" means the Delaware General Corporation Law, as amended. "Exchange Act" means the Securities Exchange Act of 1934, as the same may be amended from time to time. "FCC" means the United States Federal Communications Commission. "GAAP" means United States generally accepted accounting principles. "Governmental or Regulatory Authority" means any domestic or foreign, national, federal, state, county, city, local or other administrative, legislative, regulatory or other governmental authority, commission, agency, court of competent jurisdiction or other judicial entity, tribunal, arbitrator, office, principality, registry (including, but not limited to, with respect to patents, trademarks, designs, or copyrights), legislative or regulatory body, instrumentality, or non-governmental, quasi-governmental, or private agency, commission or authority or any arbitral tribunal exercising any regulatory or taxing authority. -62- "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as the same may be amended from time to time. "Knowledge" of any Party means the actual knowledge of the executive officers of such Party. "Material Adverse Effect" means any change in or effect on the business of the referenced Person or any of its Subsidiaries that is or will be materially adverse to the business, operations (including the income statement), management, properties (including intangible properties), condition (financial or otherwise), assets, liabilities or regulatory status of such referenced corporation and its Subsidiaries taken as a whole, but shall not include the effects of changes that are generally applicable in (i) the telecommunications industry, (ii) the United States economy, or (iii) the United States securities markets. "Person" means an individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust, unincorporated organization, entity or group (as defined in the Exchange Act) or a Governmental or Regulatory Authority. "Securities Act" means the Securities Act of 1933, as the same may be amended from time to time. "Significant Subsidiary" means any Subsidiary which on the date of determination is a "significant subsidiary" within the meaning of Rule 1-02(w) of Regulation S-X promulgated under the Exchange Act. "Subsidiary", "Global Subsidiary", or "U S WEST Subsidiary" means any Person on the date of determination of which Global or U S WEST, as the case may be (either alone or through or together with any other Subsidiary or Subsidiaries), owns, directly or indirectly, more than fifty percent (50%) of the stock or other equity interests the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such Person which, in the case of Global, shall pursuant to Section 7.21 include Frontier as of the closing of the Frontier Acquisition, C&W as of the closing of the acquisition of C&W, and with respect to any other Person which Global may acquire after the date of this Agreement, such Person, as of the date of such acquisition. "Tax" or "Taxes" means any U.S. federal, state, local or foreign taxes of any kind, including, without limitation, those on or measured by or referred to as income, gross receipts, capital, sales, use, ad valorem, franchise, profits, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, value added, property or windfall profits taxes, customs, duties, or similar fees, assessments, or charges of any kind whatsoever, together with any interest and any penalties, additions to tax, or additional amounts imposed by any Governmental or Regulatory Authority. "Tax Returns" means any U.S. federal, state, local or foreign return, report, or statement required to be filed with any Governmental or Regulatory Authority with respect to Taxes. -63- "Year 2000 Compliant" means, with respect to any computer hardware, software, databases, automated systems or other computer and telecommunications equipment owned or used by a Person, or included or incorporated in such Person's products ("Systems"), that such Systems are designed to be used prior to, during and after the calendar year 2000 A.D. and will (i) operate normally, (ii) record, process, calculate, compare, sequence, or use dates properly, (iii) accurately determine intervals between and time elapsed among dates before, within and after such year, and (iv) otherwise operate without error relating to date data, specifically including any error relating to, or the product of, date data which represents or references different centuries or more than one century. Without limiting the generality of the foregoing, "Year 2000 Compliant" means that such Person's Systems: (i) will not abnormally terminate, malfunction or stop processing upon encountering date data either from before, within or after such year; (ii) will properly identify leap years and process related date data; (iii) have been designed to ensure Year 2000 Compliance, including, but not limited to, recognizing and recording the proper century associated with date data and properly calculating same century and multi- century formulas and date values; (iv) include user interfaces that properly display, record and accept date data in single century and multi-century cases; and (v) properly send date data to, receive date data from, any other hardware, software and systems with which such Systems normally operate and interact, including on-site backup, hot-site companion and disaster recovery systems, as well as properly recording, retaining and manipulating such date data; provided, however, that such other hardware, software and Systems are themselves Year 2000 Compliant. ARTICLE XI GENERAL PROVISIONS Section 11.1 Non-Survival of Representations, Warranties and Agreements. The representations, warranties and agreements in this Agreement shall terminate at the Effective Time or upon the termination of this Agreement pursuant to Section 9.1 hereof, as the case may be, except that (a) the agreements set forth in Article I and Sections 2.4, 2.5, 2.6, 2.7, 7.8, and 7.12 hereof shall survive the Effective Time indefinitely, (b) the agreements and representations set forth in Sections 4.16, 5.10, 5.16, 7.5(b), 9.2 and 11.3 hereof shall survive termination indefinitely, and (c) nothing contained herein shall limit any covenant or agreement of the Parties which by its terms contemplates performance after the Effective Time. Section 11.2 Notices. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been duly given or made as of the date of receipt and shall be delivered personally or mailed by registered or certified mail (postage prepaid, return receipt requested), sent by overnight courier or sent by telecopy, to the -64- Parties at the following addresses or telecopy numbers (or at such other address or telecopy number for a Party as shall be specified by like notice): (a) if to Global: Global Crossing Ltd. 45 Reid Street Wessex House Hamilton HM 12, Bermuda Attention: James C. Gorton, Esq Facsimile: (441) 296-8606 with a copy to: Skadden, Arps, Slate, Meagher & Flom LLP 300 South Grand Avenue Los Angeles, California 90071 Attention: Brian J. McCarthy, Esq Facsimile: (213) 687-5600 (b) if to U S WEST: U S WEST, Inc. 1801 California Street Denver, Colorado 80202 Attention: Mark Roellig, Esq. Facsimile: (303) 298-8763 with copy to: Cadwalader, Wickersham & Taft 100 Maiden Lane New York, New York 10038-4892 Attention: Dennis J. Block, Esq. Facsimile: (212) 504-6666 Section 11.3 Expenses. Except as otherwise provided herein, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such costs and expenses, except that those expenses incurred in connection with the printing of the Joint Proxy Statement and the Registration Statement, as well as the filing fees related thereto and any filing fee required in connection with the filing of Premerger Notifications under the HSR Act, shall be shared equally by Global and U S WEST. Section 11.4 Headings. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. -65- Section 11.5 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, then all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the maximum extent possible. Section 11.6 Entire Agreement; No Third-Party Beneficiaries. This Agreement, the Tender Offer Agreement, the Standstill Agreement, the Voting Agreement and the Confidentiality Agreement constitute the entire agreement and, except as expressly set forth herein, supersedes any and all other prior agreements and undertakings, both written and oral, among the Parties, or any of them, with respect to the subject matter hereof and, except for Section 7.8 (Indemnification, Directors' and Officers' Insurance) and Section 7.12 (Post-Merger Parent Board of Directors), is not intended to confer upon any person other than Global, U S WEST, and, after the Effective Time, their respective stockholders, any rights or remedies hereunder. Section 11.7 Assignment. This Agreement shall not be assigned by operation of law or otherwise. Section 11.8 Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware applicable to contracts executed in and to be performed entirely within that State, without regard to the conflicts of laws provisions thereof. Section 11.9 Submission to Jurisdiction; Waivers. Each of the parties hereof irrevocably agrees that any legal action or proceeding with respect to this Agreement or for recognition and enforcement of any judgment in respect hereof brought by the other party hereto or its successors or assigns may be brought and determined in the courts of the State of Delaware, and each of the parties hereto hereby irrevocable submits with regard to any such action or proceeding for itself and in respect to its property, generally and unconditionally, to the nonexclusive jurisdiction of the aforesaid courts. Each of the parties hereto hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding with respect to this Agreement, (a) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason other than the failure to serve in accordance with this Section 11.9, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise), and (c) to the fullest extent permitted by the applicable law, that (i) the suit, action or proceeding in such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper and (iii) this Agreement, or the subject mater hereof, may not be enforced in or by such courts. -66- Section 11.10 Counterparts. This Agreement may be executed in one or more counterparts, and by the different Parties in separate counterparts, each of which when executed shall be deemed to be an original, but all of which shall constitute one and the same agreement. (Remainder of Page Intentionally Left Blank - Signature Page Follows) -67- IN WITNESS WHEREOF, U S WEST and Global have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized. U S WEST, INC. By: /s/ Solomon D. Trujillo ---------------------------- Name: Title: GLOBAL CROSSING LTD. By: /s/ Robert Annunziata --------------------------- Name: Title:
INDEX OF DEFINED TERMS DEFINED TERM PAGE NO. - ------------ ------- Acquisitions.....................................................................................................53 Affiliate........................................................................................................63 Agreement........................................................................................................63 appraiser........................................................................................................52 Bermuda Law......................................................................................................63 Closing..........................................................................................................48 Closing Date.....................................................................................................48 Code.............................................................................................................63 Common Shares Trust..............................................................................................15 Confidentiality Agreement........................................................................................49 Consents.........................................................................................................55 Control..........................................................................................................63 Conversion Ratios.................................................................................................6 Delaware Certificate..............................................................................................3 Delaware Law.....................................................................................................63 Disqualified Rights...............................................................................................5 Disqualified Shares...............................................................................................5 Dividend.........................................................................................................54 Effective Time....................................................................................................3 Election..........................................................................................................2 Election Deadline................................................................................................10 Election Transaction Filings......................................................................................3 Environmental Law................................................................................................24 ERISA............................................................................................................22 Excess Shares....................................................................................................15 Exchange Act.....................................................................................................63 Exchange Agent...................................................................................................10 FCC..............................................................................................................63 Form of Election..................................................................................................9 Frontier Acquisition.............................................................................................56 Frontier Alternative Merger.......................................................................................4 Frontier Merger Agreement.....................................................................................5, 56 GAAP.............................................................................................................63 Global Common Stock...............................................................................................5 Global Crossing, Ltd..............................................................................................1 Global Crossing, Ltd. Benefit Plans..............................................................................22 Global Crossing, Ltd. Common Stock................................................................................1 Global Crossing, Ltd. Contracts..................................................................................27 Global Crossing, Ltd. Intellectual Property......................................................................26 Global Crossing, Ltd. Licenses...................................................................................27 Global Crossing, Ltd. SEC Reports................................................................................20 Global Crossing, Ltd. Stockholder Approval.......................................................................45 Global Crossing, Ltd. Subsidiary.................................................................................64
Global Crossing, Ltd. Superior Proposal..........................................................................46 Global Crossing, Ltd. Termination Fee............................................................................61 Global Equity Rights.............................................................................................18 Global Exchange Fund.............................................................................................11 Global Merger.....................................................................................................2 Global Merger Sub.................................................................................................2 Global Rights.....................................................................................................5 Global Warrants..................................................................................................17 Governmental or Regulatory Authority.............................................................................63 Guarantee of Delivery............................................................................................10 Hazardous Substance..............................................................................................24 HSR Act..........................................................................................................63 Intellectual Property............................................................................................26 IRS..............................................................................................................22 Joint Proxy Statement............................................................................................21 Knowledge........................................................................................................64 Legal Requirements...............................................................................................20 Material Adverse Effect..........................................................................................64 Merged Corporations...............................................................................................3 Mergers...........................................................................................................2 Merrill Lynch....................................................................................................36 NYSE.............................................................................................................15 Parent............................................................................................................1 Parent Class A Common Stock.......................................................................................2 Parent Class B Common Stock.......................................................................................2 Parties...........................................................................................................3 Party.............................................................................................................3 Party Representatives............................................................................................49 PBGC.............................................................................................................22 Permits..........................................................................................................20 Person...........................................................................................................64 Pre-Surrender Global Dividends...................................................................................11 Pre-Surrender U S WEST Dividends.................................................................................13 Registration Statement...........................................................................................21 Required Regulatory Approvals....................................................................................55 SEC..............................................................................................................19 Section 271 Compliance...........................................................................................50 Securities Act...................................................................................................64 Significant Subsidiary...........................................................................................64 Subsidiary.......................................................................................................64 Surviving Corporations............................................................................................3 Systems..........................................................................................................65 Tax or Taxes.....................................................................................................64 Tax Returns......................................................................................................64 Termination Date.................................................................................................59
Third Party......................................................................................................44 Transition Committee.............................................................................................39 U S WEST..........................................................................................................1 U S WEST Benefit Plans...........................................................................................33 U S WEST Common Stock.............................................................................................5 U S WEST Contracts...............................................................................................38 U S WEST Equity Rights...........................................................................................29 U S WEST Exchange Fund...........................................................................................123 U S WEST Intellectual Property...................................................................................37 U S WEST Licenses................................................................................................38 U S WEST Merger...................................................................................................2 U S WEST Merger Sub...............................................................................................2 U S WEST Rights...................................................................................................5 U S WEST SEC Reports.............................................................................................31 U S WEST Stockholder Approval....................................................................................47 U S WEST Stockholders' Meeting...................................................................................46 U S WEST Subsequent Determination................................................................................47 U S WEST Subsidiary..............................................................................................64 U S WEST Superior Proposal.......................................................................................47 U S WEST Tender Offer.............................................................................................1 U S WEST Termination Fee.........................................................................................62 Year 2000 Compliant..............................................................................................65
Exhibit A Terms of Parent Class A Common Stock and Parent Class B Common Stock Definition of Global Group and Local Group Parent Class A Common Stock is intended to reflect the performance of the Local Group. Parent Class B Common Stock is intended to reflect the performance of the Global Group. The definition of the Global Group and the Local Group shall be determined as provided in Section 7.24 of the Merger Agreement. Dividend Policy At the discretion of the Board of Directors. Funds available for dividends on the stock of each group shall be the lesser of (i) legally available funds under Delaware law and (ii) an amount which is the amount that could be paid as dividends if the relevant group were a separate corporation under Delaware law. Voting Global Group: Fixed at one vote per share. Local Group: Variable based on the average market values over a 20-day period ending 10 days prior to the record date. Class Vote: None, except as provided by law, the terms of any preferred stock or the Certificate of Incorporation or at the discretion of the Board of Directors. Liquidation Global Group: Fixed at the Class B to Class A Value Ratio. Local Group: Fixed at one liquidation unit per share. Conversion at the Option of the Board of Directors Conversion at no premium at any time following a tax event. No other optional conversion from the Effective Time of the Merger until the second anniversary of the Effective Time of the Merger. After the second anniversary of the Effective Time of the Merger, conversion at such conversion ratio, with or without premium, as the Board of Directors determines to be fair to the holders of the Parent Class A Common Stock, taken as a separate class, and the holders of Parent Class B Common Stock, taken as a separate class. A-1 Sale of Substantially all of the Assets of a Group Board of Directors elects between: (i) shareholders of the relevant group receive, by dividend or redemption, cash and/or securities or other property with a value equal to their proportionate interest in the net proceeds or (ii) shares of the relevant group are converted into shares of the other group at a 10% premium over the ratio of post- transaction average market values over a 10-day period. Provision does not apply to a sale of substantially all of the assets of a group in exchange for equity securities in any entity which will engage in a similar or complementary business. "Substantially all" means properties or assets that represent at least 80% of either the then-current market value of, or the aggregate revenues for the preceding 12 fiscal quarters derived from, the properties and assets of the relevant group. Redemption in Exchange for Stock of Subsidiary Global Group: Yes. Local Group: Yes. A-2 EX-99.(C)(2) 14 TENDER OFFER AND PURCHASE AGREEMENT EXHIBIT (c)(2) CONFORMED COPY -------------- TENDER OFFER AND PURCHASE AGREEMENT TENDER OFFER AND PURCHASE AGREEMENT, dated as of May 16, 1999 (this "Agreement"), between Global Crossing Ltd., a company formed under the laws of - ---------- Bermuda ("Global"), and U S West, Inc., a Delaware corporation ("USW"). ------ --- WHEREAS, Global and USW are parties to that certain Agreement and Plan of Merger dated as of the date hereof (the "Merger Agreement"; capitalized terms ---------------- used and not otherwise defined herein having the meaning set forth in the Merger Agreement); WHEREAS , in connection with the transactions contemplated by this Agreement and the Merger Agreement, certain holders of shares of Global Common Stock have entered into an agreement with USW to tender such shares as set forth in such agreement; WHEREAS, in connection with this Agreement and the Merger Agreement, USW and Global are entering into a Voting Agreement (the "Voting Agreement"), a ---------------- Standstill Agreement (the "Standstill Agreement") and an Agreement (the -------------------- "Agreement"), all of which agreements are dated as of the date hereof; and - ---------- WHEREAS, as a condition of its entering into the Merger Agreement and the agreements and transactions pursuant thereto, USW requires that Global enter into, and Global has agreed to enter into, this Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the parties hereby agree as follows: ARTICLE I THE OFFER SECTION 1.1 The Offer. (a) Provided that this Agreement shall not have --------- been terminated in accordance with Section 5.1 hereof and subject to the satisfaction of the conditions set forth in Exhibit A hereto (the "Offer ----- Conditions"), USW shall or shall cause a direct or indirect wholly-owned - ---------- subsidiary of USW (the entity making the Offer, the "Offeror"), as soon as ------- reasonably practicable after the date hereof (and in any event within five business days from the date of public announcement of the execution hereof), commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), an offer (the "Offer") to purchase for ------------ ----- cash up to a number of the issued and outstanding shares of Global Common Stock equal to the Maximum Offer Number (as defined below) at a price of 2 $62.75 per share of Global Common Stock, net to the seller in cash. The obligation of the Offeror to accept for payment shares of Global Common Stock tendered pursuant to the Offer shall be subject only to the satisfaction or waiver by the Offeror of the Offer Conditions. Subject to the last sentence of this Section 1.1(a), USW expressly reserves the right to waive, or to cause the Offeror to waive, any such condition and make any other changes in the terms and conditions of the Offer; provided that, unless previously approved by Global in -------- writing, no change may be made which decreases the price per share of Global Common Stock payable in the Offer, changes the form of consideration payable in the Offer, increases or reduces the maximum number of 39,259,305 shares of Global Common Stock (the "Maximum Offer Number"), amends the Offer Conditions or --------------------- imposes conditions to the Offer in addition to the Offer Conditions, or makes other changes to the terms or conditions to the Offer which may be adverse to Global or any holder (each, a "Stockholder") of shares of Global Common Stock or ----------- which may result in a delay of the consummation of the Offer. USW covenants and agrees that, subject to the terms and conditions of this Agreement, including but not limited to the Offer Conditions, it will, or will cause the Offeror to, accept for payment and pay for shares of Global Common Stock as soon as it is permitted to do so under applicable law (the time of such payment being referred to herein as the "Offer Closing"). The Offer shall initially be scheduled to ------------- expire 20 business days following the commencement thereof, provided that, -------- unless this Agreement has been terminated pursuant to Section 5.1, USW shall extend the Offer from time to time in the event that, at a then-scheduled expiration date, all of the Offer Conditions have not been satisfied or waived as permitted pursuant to this Agreement, each such extension not to exceed (unless otherwise consented to in writing by Global) the lesser of 10 additional business days or such fewer number of days that USW and Global reasonably believe are necessary to cause the Offer Conditions to be satisfied; provided -------- that, under no circumstances shall any such extension be less than the minimum number of days required by the Exchange Act or the rules and regulations promulgated thereunder or by other applicable law. It is agreed that the Offer Conditions are for the benefit of USW and the Offeror and may be asserted by USW and the Offeror regardless of the circumstances giving rise to any such condition (except for any action or inaction by USW or the Offeror constituting a breach of this Agreement). Except as provided in Section 1.1(c), USW shall not, and shall not permit the Offeror to, terminate the Offer without purchasing shares of Global Common Stock pursuant to the Offer. In addition, notwithstanding anything in this Agreement or the Offer Conditions to the contrary, USW or the Offeror may waive any of the Offer Conditions only after giving 5 business days prior written notice of its intention to do so to Global. (b) As soon as reasonably practicable on the date the Offer is commenced, USW and/or the Offeror shall file a Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1") with respect to the Offer with the -------------- Securities and Exchange Commission (the "SEC"). The Schedule 14D-1 shall --- contain an Offer to Purchase and forms of the related letter of transmittal (which Schedule 14D-1, Offer to Purchase and other documents, together with any supplements or amendments thereto, are referred to herein collectively as the "Offer Documents"). The Offer Documents and all amendments thereto will comply - ---------------- in all material respects with the Exchange Act and the rules and regulations promulgated thereunder. USW agrees that Global and its counsel shall be given an opportunity to review the Schedule 14D-1 before it is filed with the SEC. USW and Global each agree promptly to correct any information provided by it for use in 3 the Offer Documents that shall have become false or misleading in any material respect, and USW further agrees to take all steps necessary to cause the Schedule 14D-1 as so corrected to be filed with the SEC and the other Offer Documents as so corrected to be disseminated to holders of shares of Global Common Stock, in each case as and to the extent required by applicable federal securities laws. (c) In the event that this Agreement has been terminated pursuant to Section 5.1, USW shall, or shall cause the Offeror to, promptly terminate the Offer without accepting any shares of Global Common Stock for payment. USW will provide Global with a copy of any comments USW or the Offeror may receive from the SEC or its staff with respect to the Offer Documents as soon as possible following receipt thereof. (d) If, at the expiration of the Offer, a number of shares of Global Common Stock in excess of the Maximum Offer Number have been validly tendered and not withdrawn, USW will purchase such shares on a pro rata basis, based on the number of shares of Global Common Stock tendered by each Stockholder (provided, that, to the extent permitted by the Exchange Act, the rules and - --------- regulations promulgated thereunder and any other applicable law or regulation, USW and Global will cooperate to make such adjustments to the proration mechanism and/or take all other reasonable actions as may be necessary to allow holders of exercisable options for shares of Global Common Stock issued by Global to tender shares issuable upon exercise of such options without exercising such options until such time as it is determined that such shares will be purchased by USW pursuant to the Offer), with appropriate adjustments to avoid purchase of fractional shares of Global Common Stock. SECTION 1.2 Company Action. (a) Global shall file with the SEC, -------------- contemporaneously with the commencement of the Offer pursuant to Section 1.1, a Solicitation/Recommendation Statement on Schedule 14D-9 (together with all amendments and supplements thereto, the "Schedule 14D-9"), containing the -------------- recommendation of Global's Board of Directors that the stockholders of Global accept the Offer and tender their shares of Global Common Stock pursuant to the Offer, and shall promptly mail the Schedule 14D-9 to the stockholders of Global. The Schedule 14D-9 and all amendments thereto will comply in all material respects with the Exchange Act and the rules and regulations promulgated thereunder. Global and USW each agree promptly to correct any information provided by it for use in the Schedule 14D-9 that shall have become false or misleading in any material respect, and Global further agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC and disseminated to holders of shares of Global Common Stock, in each case as and to the extent required by applicable federal securities laws. (b) In connection with the Offer, Global shall promptly furnish USW with mailing labels, security position listings, any non-objecting beneficial owner lists and any available listings or computer files containing the names and addresses of the record holders of shares of Global Common Stock, each as of a recent date, and shall promptly furnish USW with such additional information (including but not limited to updated lists of stockholders, mailing labels, security position listings and non-objecting beneficial owner lists) and such other assistance as USW or its agents may reasonably require in communicating the Offer to the record 4 and beneficial holders of shares of Global Common Stock. Subject to the requirements of applicable law, and except for such steps as are appropriate to disseminate the Offer Documents and any other documents necessary to consummate the Offer, USW and its affiliates, associates, agents and advisors shall use the information contained in any such labels, listings and files only in connection with the Offer, and, if this Agreement shall be terminated, will deliver to Global all copies of such information then in their possession. SECTION 1.3 Adjustments to Number of Shares of Global Common Stock. ------------------------------------------------------ If, prior to the Offer Closing, Global should split, combine or otherwise reclassify the Global Common Stock, or pay (or set a record date that is prior to the Offer Closing with respect to) a stock dividend or other stock distribution in Global Common Stock, or otherwise change Global Common Stock into any other securities, or make any other such stock dividend or distribution with respect to the Global Common Stock in capital stock of Global or its subsidiaries in respect of the Global Common Stock, then the Maximum Offer Number will be appropriately adjusted to reflect such split, combination, dividend or other distribution or change to provide USW and the Stockholders the same economic effect as contemplated by this Agreement prior to such event. ARTICLE II REPRESENTATIONS AND WARRANTIES OF GLOBAL Global hereby represents and warrants to USW that: SECTION 2.1 Corporate Organization. Global is duly organized, ---------------------- validly existing and in good standing under the laws of Bermuda and has the requisite power and authority to own, operate or lease its properties and to carry on its business as it is now being conducted. SECTION 2.2 Authority Relative to This Agreement. Global has all ------------------------------------ necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Global and the consummation by Global of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action, and no other corporate proceedings on the part of Global are necessary to authorize this Agreement or to consummate the transactions so contemplated. This Agreement has been duly and validly executed and delivered by Global and, assuming the due authorization, execution and delivery hereof by USW constitutes a legal, valid and binding obligation of Global enforceable against Global in accordance with its terms. SECTION 2.3 No Conflict; Required Filings and Consents. (a) The ------------------------------------------ execution and delivery of this Agreement by Global and the consummation by Global of the transactions contemplated hereby and the consummation of the Offer as contemplated hereby do not and will not (i) conflict with or violate the Memorandum of Association or by-laws of Global, (ii assuming that all consents, approvals and authorizations contemplated by subsection (b) below have been obtained and all filings described in such subsection have been made, conflict 5 with or violate any law, rule, regulation, order, judgment or decree applicable to Global or any of its subsidiaries or by which its or any of their respective properties are bound, (ii conflict with or violate any provision of the Registration Rights Agreement (as defined in Section 4.1 hereof) or (iv result in any breach or violation of or constitute a default (or an event which with notice or lapse of time or both would become a default) or result in the loss of a material benefit under, or give rise to any right of termination, cancellation, material amendment or material acceleration of, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit or other instrument or obligation to which Global or any of its subsidiaries is a party or by which Global or any of its subsidiaries or its or any of their respective properties are bound, except, in the case of clauses (ii), (iii) and (iv), for any such conflict, violation, breach, default or other occurrence which, individually or in the aggregate, would not reasonably be likely to have a Material Adverse Effect on Global or have a material adverse effect on the ability of the Offeror to consummate the Offer in accordance with the terms hereof. (b) The execution and delivery of this Agreement by Global and the consummation by Global of the transactions contemplated hereby do not and will not require any consent, approval, authorization or permit of, action by, filing with or notification to, any Federal, state, local or foreign court of competent jurisdiction, administrative agency or commission or other governmental authority or instrumentality ("Governmental Entity"), except for (i) compliance ------------------- with and filings under, to the extent required, the Exchange Act and the rules and regulations promulgated thereunder, the HSR Act, and state securities, takeover and blue sky laws, and (ii any such consent, approval, authorization, permit, action, filing or notification the failure of which to make or obtain, individually or in the aggregate, would not reasonably be likely to have a Material Adverse Effect on Global or have a material adverse effect on the ability of the Offeror to consummate the Offer in accordance with the terms hereof. ARTICLE III REPRESENTATIONS AND WARRANTIES OF USW USW hereby represents and warrants to Global that: SECTION 3.1 Corporate Organization. USW is duly organized, validly ---------------------- existing and in good standing under the laws of the state of Delaware and has the requisite power and authority to own, operate or lease its properties and to carry on its business as it is now being conducted. SECTION 3.2 Authority Relative to This Agreement. USW has all ------------------------------------ necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by USW and the consummation by USW of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action, and no other 6 corporate proceedings on the part of USW is necessary to authorize this Agreement or to consummate the transactions so contemplated. This Agreement has been duly and validly executed and delivered by USW and, assuming the due authorization, execution and delivery hereof by Global, constitutes a legal, valid and binding obligation of USW, enforceable against USW in accordance with its terms. SECTION 3.3 No Conflict; Required Filings and Consents. (a) The ------------------------------------------ execution and delivery of this Agreement by USW and the consummation by USW of the transactions contemplated hereby and the consummation of the Offer as contemplated hereby do not and will not (i) conflict with or violate the certificate of incorporation or by-laws of USW, (ii assuming that all consents, approvals and authorizations contemplated by subsection (b) below have been obtained and all filings described in such subsection have been made, conflict with or violate any law, rule, regulation, order, judgment or decree applicable to USW or any of its subsidiaries including, without limitation, Purchaser) or by which its or any of their respective properties are bound or (ii result in any breach or violation of or constitute a default (or an event which with notice or lapse of time or both would become a default) or result in the loss of a material benefit under, or give rise to any right of termination, cancellation, material amendment or material acceleration of, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit or other instrument or obligation to which USW or any of its subsidiaries is a party or by which USW or any of its subsidiaries or its or any of their respective properties are bound, except, in the case of clauses (ii) and (iii), for any such conflict, violation, breach, default or other occurrence which, individually or in the aggregate, would not reasonably be likely to have a Material Adverse Effect on USW. (b) The execution and delivery of this Agreement by USW and the consummation by USW of the transactions contemplated hereby do not and will not require any consent, approval, authorization or permit of, action by, filing with or notification to, any Governmental Entity, except for (i) compliance with and filings under, to the extent required, the Exchange Act and the rules and regulations promulgated thereunder, the HSR Act, and state securities, takeover and blue sky laws, and (ii any such consent, approval, authorization, permit, action, filing or notification the failure of which to make or obtain, individually or in the aggregate, would not reasonably be likely to have a Material Adverse Effect on USW. SECTION 3.4 Purchase for Investment. USW acknowledges that certain of ----------------------- the shares of Global Common Stock which may be tendered in the Offer have not been registered under the Securities Act of 1933, as amended (the "Securities ---------- Act"), or under any state securities laws. USW (i) is not an underwriter as - --- such term is defined under the Securities Act and the rules and regulations promulgated thereunder, (ii) is purchasing the shares of Global Common Stock solely for investment with no present intention to distribute any of such shares to any person and (iii) will not sell or otherwise transfer or dispose of any of such shares, except in compliance with the registration requirements or exemption provisions of the Securities Act and the rules and regulations promulgated thereunder, and any other applicable securities laws. 7 SECTION 3.5 Financing. USW has on the date hereof, and will have at --------- the time of the Offer Closing, the funds necessary to consummate the Offer in accordance with this Agreement. ARTICLE IV CERTAIN ADDITIONAL AGREEMENTS SECTION 4.1 Registration Rights. (a) Subject to the provisions of ------------------- this Section 4.1, with respect to shares of Global Common Stock purchased by USW in the Offer (collectively, "Purchased Securities"), USW shall have all the -------------------- rights and obligations of a Holder (as such term is defined in that certain Registration Rights Agreement dated as of August 12, 1998 by and among Global and the other persons named on the signature pages thereto (the "Registration ------------ Rights Agreement")) under the Registration Rights Agreement (other than any - ---------------- rights a Holder may have under or with respect to Section 2(f) of the Registration Rights Agreement). (b) The Purchased Securities shall be deemed to be Registrable Securities within the meaning of the Registration Rights Agreement until distributed or sold in the manner contemplated in the second sentence of the definition of Registrable Securities in the Registration Rights Agreement. (c) With respect to demand registration rights, USW shall have the same rights (including number of demand registrations) as the BCLP Holders (as such term is defined in the Registration Rights Agreement) as set forth in Section 2 of the Registration Rights Agreement (other than any rights a Holder may have under or with respect to Section 2(f) of the Registration Rights Agreement); provided, that USW shall have two demand registration rights, and --------- provided, further, that the last proviso set forth in Section 2(a)(v) of the - -------- ------- Registration Rights Agreement shall not apply to USW. (d) USW agrees to be subject to the obligations set forth in Section 4 of the Registration Rights Agreement as if named as a holder therein. (e) None of the rights of USW provided in this Section 4.1 shall be exercised by USW until the later of (i) the termination of the Frontier Merger Agreement (or consummation of the transactions pursuant thereto) and (ii) the termination of the Merger Agreement. (f) Global shall not amend the Registration Rights Agreement in a manner which would adversely affect USW's registration rights provided in this Section 4.1. SECTION 4.2 Standstill Agreement and Voting Agreement. USW agrees ----------------------------------------- that simultaneously with the purchase by USW of shares of Global Common Stock pursuant to the Offer or otherwise, such shares shall become subject to each of the Standstill Agreement and the Voting Agreement between USW and Global. 8 SECTION 4.3 Tag-Along Rights. (a) Global agrees that USW shall have ---------------- the right, in connection with any CoC Tag-Along Sale (as defined in the Stockholders Agreement (as such term is defined in the Agreement)) to participate in such sale on the same basis as any other CoC Other Holder (as defined in the Stockholders Agreement) pursuant to Section 4(b) of the Stockholders Agreement. (b) Global shall not amend the Stockholders Agreement in a manner which would adversely affect USW's tag-along rights provided in this Section 4.3. SECTION 4.4 Board Representation. From and after the date of the -------------------- termination of the Merger Agreement and so long as USW beneficially owns the Threshold Amount (as defined below) of Global Common Stock, Global agrees to use its reasonable best efforts to cause to be nominated to stand for election to serve on the Board of Directors of Global, together with Global's slate of nominees, one individual designated by USW (a "USW Designee"), and Global agrees ------------ to solicit proxies for such individual to the same extent as for other members of its slate of nominees; provided, however, that Global shall not be obligated -------- ------- to nominate a USW Designee if an individual previously so designated by USW continues to serve on the Board of Directors of Global following the applicable election unless USW requested in writing to Global that such person not be renominated at least 90 days prior to such election. The term "Threshold --------- Amount" shall mean Global Common Stock representing 5% or more of the - ------ outstanding shares of Global Common Stock; provided, however, that if USW's -------- ------- ownership of Global Common Stock is reduced from its level to less than 5% of Global Common Stock as a result of issuances of Global Common Stock, USW shall be deemed to beneficially own the Threshold Amount until such time as it transfers one or more shares of Global Common Stock, at which time USW shall no longer beneficially own the Threshold Amount of Global Common Stock. At such time as USW no longer beneficially owns the Threshold Amount of Global Common Stock, at the request of Global, USW shall cause any USW Designee to resign from the Board of Directors of Global. SECTION 4.5 HSR Act. As promptly as practicable, Global and USW shall ------- make all filings and submissions under the HSR Act as may be required to be made in connection with this Agreement and the transactions contemplated hereby. Global will furnish to USW, and USW will furnish to Global, such information and assistance as the other may reasonably request in connection with the preparation of any such filings or submissions. Global will provide to USW, and USW will provide to Global, copies of all correspondence, filings or communications between such party or any of its representatives, on the one hand, and any Governmental Authority or members of their respective staffs, on the other hand, with respect to this Agreement and the transactions contemplated hereby. SECTION 4.6 Public Announcements. USW and Global agree that they will -------------------- not issue any press release or otherwise make any public statement or respond to any press inquiry with respect to this Agreement or the transactions contemplated hereby without the prior approval of the other party (which approval shall not be unreasonably withheld), except as may be required by law. 9 SECTION 4.7 Legend. Promptly following consummation of the Offer, ------ the parties shall cooperate to legend the certificates representing the Global Common Stock purchased pursuant to the Offer to refer to the applicable restrictions on the transfer of such certificates under the Voting Agreement, the Standstill Agreement, this Agreement and applicable law. ARTICLE V TERMINATION, AMENDMENT AND WAIVER SECTION 5.1 Termination. This Agreement may be terminated and the ----------- transactions contemplated hereby may be abandoned at any time prior to the Offer Closing: (a) by the mutual written consent of USW and Global; or (b) by USW or Global on or after May 16, 2000, but only if the Merger Agreement has been terminated prior to such termination; or (c) by USW at any time after the termination of the Merger Agreement by USW pursuant to Section 9.1(d)(ii)(A) or Section 9.1(e) of the Merger Agreement or by Global pursuant to Section 9.1(h)(i) of the Merger Agreement; or (d) by Global at any time commencing on the first business day prior to the mailing of the Frontier Proxy Statement in connection with the Frontier Merger Agreement; or (e) by USW at any time commencing on the first business day following the termination of the Frontier Merger Agreement in accordance with its terms. SECTION 5.2 Effect of Termination. In the event of the termination --------------------- of this Agreement pursuant to Section 5.1, this Agreement shall forthwith become void and there shall be no liability on the part of any party hereto; provided -------- that the obligation of USW set forth in the first sentence of Section 1.1(c) hereof shall survive any such termination and provided, further, that nothing -------- ------- herein shall relieve any party from liability for any breach hereof. SECTION 5.3 Amendment. This Agreement may be amended by the parties --------- hereto at any time only by an instrument in writing signed by the parties hereto. 10 ARTICLE VI GENERAL PROVISIONS SECTION 6.1 Notices. All notices, requests, claims, demands and ------- other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by cable, facsimile, telegram or telex or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified by like notice): If to USW or the Offeror: U S West, Inc. 1801 California Street Denver, Colorado Attention: Mark Roellig Facsimile: (303) 840-0381 with a copy to: Cadwalader, Wickersham & Taft 100 Maiden Lane New York, New York Attention: Dennis J. Block Facsimile: (212) 504-6666 If to Global: Global Crossing Ltd. Wessex House 45 Reid Street Hamilton HM12, Bermuda Attention: K. Eugene Shutler Facsimile No.: (441) 296-8606 and Global Crossing Ltd. 150 South El Camino Drive Suite 204 Attention: General Counsel Facsimile No.: (310) 281-4942 11 with a copy to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, New York 10017-3954 Attention: Charles I. Cogut, Esq. Facsimile No.: (212) 455-2502 and Skadden, Arps, Slate, Meagher & Flom 300 South Grand Avenue Los Angeles, California 90071 Attention: Brian J. McCarthy Facsimile: (213) 687-5600 SECTION 6.2 Severability. If any term or other provision of this ------------ Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible. SECTION 6.3 Entire Agreement; Assignment. Except as may otherwise be ---------------------------- agreed by the parties, this Agreement, the Voting Agreement, the Standstill Agreement, the Merger Agreement and the Agreement constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by any of the parties without the prior written consent of the other parties. SECTION 6.4 Governing Law. This Agreement shall be governed by, and ------------- construed in accordance with, the internal laws of the State of New York. SECTION 6.5 Headings. The descriptive headings contained in this -------- Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. SECTION 6.6 Counterparts. This Agreement may be executed in two or ------------ more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. 12 SECTION 6.7 Specific Performance; Jurisdiction. The parties agree ---------------------------------- that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any court of the United States located in the State of New York or in any New York state court, this being in addition to any other remedy to which such party is entitled at law or in equity. In addition, each of the parties hereto (i) consents to submit itself to the personal jurisdiction of any Federal court located in the State of New York or any New York state court in the event any dispute arises out of this Agreement or any of the transactions contemplated by this Agreement, (ii agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, (ii agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than a Federal or state court sitting in the State of New York and (iv consents to service being made through the notice procedures set forth in Section 6.1. 13 IN WITNESS WHEREOF, USW and Global have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized. U S WEST, INC. By: /s/ Solomon D. Trujilllo -------------------------------------- Title: President and Chief Executive Officer GLOBAL CROSSING LTD. By: /s/ Robert Annunziata -------------------------------------- Title: Chief Executive Officer Exhibit A Offer Conditions ---------------- Notwithstanding any other provision of the Offer or this Agreement, USW shall not accept for payment or, subject to any applicable rules and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating to USW's obligation to pay for or return tendered shares of Global Common Stock promptly after termination or withdrawal of the Offer), pay for any shares of Global Common Stock tendered pursuant to the Offer unless any waiting periods applicable to the Offer under the HSR Act shall have expired or been terminated and this Agreement shall not have been terminated in accordance with its terms. Furthermore, notwithstanding any other provision of the Offer or this Agreement, USW shall not be required to accept for payment or, subject to the restriction referred to above, pay for any shares of Global Common Stock tendered pursuant to the Offer, and may, subject to the terms of this Agreement, terminate the Offer if, prior to the expiration of the Offer, any of the following conditions occurs or has occurred and continues to exist (other than as a result of any action or inaction by USW or any of its subsidiaries which constitutes a breach of this Agreement): any order or preliminary or permanent injunction shall have been entered in any action or proceeding before any federal or state court or governmental, administrative or regulatory authority or agency, or any other action shall have been taken, or statute, rule, regulation, legislation, judgment or order enacted, entered, enforced, promulgated, amended or issued by any legislative body, court, government or governmental, administrative or regulatory authority or agency which has the effect of making illegal or otherwise prohibiting the acceptance for payment of, or payment for, some of or all the shares of Global Common Stock pursuant to the Offer, which, in the reasonable judgment of USW with respect to each and every matter referred to above and regardless of the circumstances giving rise to any such condition, makes it inadvisable to proceed with the Offer or with such acceptance for payment of or payment for shares of Global Common Stock. The foregoing conditions are for the benefit of USW and may be asserted by USW regardless of the circumstances giving rise to any such condition or may be waived by USW in whole or in part at any time and from time to time in its sole discretion (subject to the terms of this Agreement). The failure by USW at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right, the waiver of any such right with respect to particular facts and other circumstances shall not be deemed a waiver with respect to any other facts and circumstances, and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time. EX-99.(C)(3) 15 VOTING AGREEMENT EXHIBIT (c)(3) CONFORMED COPY -------------- VOTING AGREEMENT VOTING AGREEMENT, dated as of May 16, 1999 (this "Agreement"), between --------- Global Crossing Ltd., a company formed under the laws of Bermuda ("Global") and ------ U S West, Inc., a Delaware corporation ("USW"). --- WHEREAS, Global, and USW are parties to that certain Agreement and Plan of Merger dated as of the date hereof (the "Merger Agreement"; capitalized ---------------- terms used and not otherwise defined herein having the meaning set forth in the Merger Agreement); WHEREAS, Global, GCF Acquisition Corp. and Frontier Corporation ("Frontier") are parties to that certain Agreement and Plan of Merger, dated - ---------- March 16, 1999 (as amended, the "Frontier Merger Agreement"; the transactions ------------------------- contemplated by the Frontier Merger Agreement being referred to herein as the "Frontier Merger"); - ---------------- WHEREAS, certain shareholders of Global and Frontier are parties to that certain Voting Agreement dated as of March 16, 1999 which was entered into in connection with the Frontier Merger Agreement ( "Frontier Voting Agreement"); ------------------------- and WHEREAS, in connection with the Merger Agreement, Global and USW have entered into a Tender Offer and Purchase Agreement dated the date hereof (the "TOP Agreement") pursuant to which USW will acquire up to 39,259,305 shares of - -------------- the common stock, par value $0.01 per share, of Global ("Global Common Stock"), ------------------- upon the terms and subject to the conditions set forth in the TOP Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the parties hereby agree as follows: 1. Representations and Warranties of USW. USW represents and ------------------------------------- warrants to Global as follows: (a) Ownership of Securities. USW is the record and beneficial owner of ----------------------- the number of shares of Global Common Stock (the "Existing Securities") ------------------- (together with any shares of Global Common Stock or other securities hereafter acquired by USW (including by USW or the Offeror (as such term is defined in the TOP Agreement) pursuant to the TOP Agreement), the "Subject Securities") set ------------------ forth on the signature page to this Agreement. USW does not own any shares of Global Common Stock on the date hereof other than the Existing Securities. USW has or will have sole voting power and sole power to issue instructions with respect to the voting of 2 the Subject Securities, sole power of disposition, sole power of exercise or conversion and the sole power to demand appraisal rights, in each case with respect to all of the Subject Securities. (b) Power; Binding Agreement. USW has all necessary corporate power and ------------------------ authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by USW and the consummation by USW of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action, and no other corporate proceedings on the part of USW are necessary to authorize this Agreement or to consummate the transactions so contemplated. This Agreement has been duly and validly executed and delivered by USW and, assuming the due authorization, execution and delivery hereof by Global, constitutes a legal, valid and binding obligation of USW, enforceable against USW in accordance with its terms. (c) No Conflicts. (i) The execution and delivery of this Agreement by ------------ USW and the consummation by USW of the transactions contemplated hereby does not and will not (1) conflict with or violate the certificate of incorporation or by-laws of USW, (2) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to USW or any of its subsidiaries or by which its or any of their respective properties are bound or (3) result in any breach or violation of or constitute a default (or an event which with notice or lapse of time or both would become a default) or result in the loss of a material benefit under, or give rise to any right of termination, cancellation, material amendment or material acceleration of, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit or other instrument or obligation to which USW or any of its subsidiaries is a party or by which USW or any of its subsidiaries or its or any of their respective properties are bound. (ii) The execution and delivery of this Agreement by USW and the consummation by USW of the transactions contemplated hereby does not and will not require any consent, approval, authorization or permit of, action by, filing with or notification to, any Governmental Entity other than filings, if any, which may be required under the Exchange Act. (d) No Liens. The Existing Securities (if any) are now and, at all -------- times during the term hereof, the Subject Securities will be held by USW, or by a nominee or custodian for the benefit of USW, free and clear of all liens, claims, security interests, proxies, voting trusts or agreements, understandings or arrangements or any other encumbrances whatsoever, except for any encumbrances arising hereunder. 2. Agreement to Vote Shares. At every meeting of the stockholders ------------------------ of Global called with respect to any of the following, and at every adjournment thereof, and on every action or approval by written consent of the stockholders of Global with respect to any of the following, USW agrees that it shall vote (or cause to be voted), or deliver a written consent (or cause a consent to be delivered) covering all the Subject Securities (to the extent such securities have voting rights) that it or any of its subsidiaries beneficially owns on the record date of any such vote: (i) (x) in favor of the Global Merger and any action required in furtherance thereof and (y) in favor of the Frontier Merger and any action required in furtherance thereof and (ii) unless otherwise agreed to in writing by Global, against any action which would reasonably 3 be expected to result in a failure of the conditions described in Article VIII of the Merger Agreement to be satisfied. 3. Representations and Warranties of Global. ---------------------------------------- (a) Power; Binding Agreement. Global has all necessary corporate power ------------------------ and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Global and the consummation by Global of the transactions contemplated hereby has been duly and validly authorized by all necessary corporate action, and no other corporate proceedings on the part of Global is necessary to authorize this Agreement or to consummate the transactions so contemplated. This Agreement has been duly and validly executed and delivered by Global and, assuming the due authorization, execution and delivery hereof by Global, constitutes a legal, valid and binding obligation of Global, enforceable against Global in accordance with its terms. (b) No Conflicts. (i) The execution and delivery of this Agreement ------------ by Global and the consummation by Global of the transactions contemplated hereby does not and will not (1) conflict with or violate the Memorandum of Association or by-laws of Global, (2) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to Global or any of its subsidiaries or by which its or any of their respective properties are bound or (3) result in any breach or violation of or constitute a default (or an event which with notice or lapse of time or both would become a default) or result in the loss of a material benefit under, or give rise to any right of termination, cancellation, material amendment or material acceleration of, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit or other instrument or obligation to which Global or any of its subsidiaries is a party or by which Global or any of its subsidiaries or its or any of their respective properties are bound. (ii) The execution and delivery of this Agreement by Global and the consummation by Global of the transactions contemplated hereby does not and will not require any consent, approval, authorization or permit of, action by, filing with or notification to, any Governmental Entity. 4. Covenants of the Holders. USW agrees and covenants that: ------------------------ (a) Restriction on Transfer, Proxies and Noninterference. USW shall ---------------------------------------------------- not, and shall cause each of its affiliates not to, directly or indirectly: (i) offer for sale, sell, transfer, tender, pledge, encumber, assign or otherwise dispose of, or enter into any contract, option or other arrangement or understanding with respect to or consent to the offer for sale, sale, transfer, tender, pledge, encumbrance, assignment or other disposition of, any or all of the Subject Securities; (ii) except as contemplated hereby, grant any proxies or powers of attorney, deposit any such Subject Securities into a voting trust or enter into a voting agreement with respect to any of the Subject Securities; or (iii) take any action that would make any representation or warranty contained herein untrue or incorrect or have the effect of preventing or disabling USW from performing its obligations under this Agreement. 4 (b) Further Actions. USW shall use reasonable efforts to take all --------------- actions and to do all things necessary, proper or advisable to consummate the transactions contemplated by the Merger Agreement and this Agreement. 5. Entire Agreement; Assignment. Except as may otherwise be agreed ---------------------------- by the parties, this Agreement, the TOP Agreement, the Standstill Agreement (as defined in the TOP Agreement), and the Merger Agreement constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by any of the parties without the prior written consent of the other parties. 6. Notices. All notices, requests, claims, demands and other ------- communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by cable, facsimile, telegram or telex or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified by like notice): If to USW: U S West, Inc. 1801 California Street Denver, Colorado Attention: Mark Roellig Facsimile: (303) 840-0381 with a copy to: Cadwalader, Wickersham & Taft 100 Maiden Lane New York, New York Attention: Dennis J. Block Facsimile: (212) 504-6666 If to Global: Global Crossing Ltd. Wessex House 45 Reid Street Hamilton HM12, Bermuda Attention: K. Eugene Shutler Facsimile No.: (441) 296-8606 and 5 Global Crossing Ltd. 150 South El Camino Drive Suite 204 Attention: General Counsel Facsimile No.: (310) 281-4942 with a copy to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, New York 10017-3954 Attention: Charles I. Cogut, Esq. Facsimile No.: (212) 455-2502 and Skadden, Arps, Slate, Meagher & Flom 300 South Grand Avenue Los Angeles, California 90071 Attention: Brian J. McCarthy Facsimile: (213) 687-5600 7. Specific Performance; Jurisdiction. The parties agree that ---------------------------------- irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any court of the United States located in the State of New York or in any New York state court, this being in addition to any other remedy to which such party is entitled at law or in equity. In addition, each of the parties hereto (1) consents to submit itself to the personal jurisdiction of any Federal court located in the State of New York or any New York state court in the event any dispute arises out of this Agreement or any of the transactions contemplated by this Agreement, (2) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, (3) agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than a Federal or state court sitting in the State of New York and (4) consents to service being made through the notice procedures set forth in Section 6. 8. Amendment. This Agreement may be amended by the parties hereto at --------- any time only by an instrument in writing signed by the parties hereto. 9. Governing Law. This Agreement shall be governed by, and construed ------------- in accordance with, the internal laws of the State of New York. 10. Counterparts. This Agreement may be executed in two or more ------------ counterparts, and by the different parties hereto in separate counterparts, each of which when 6 executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. 11. Termination. This Agreement shall terminate upon the later of ----------- (x) the earlier of (i) the consummation of the Global Merger and (ii) the termination of the Merger Agreement pursuant to its terms and (y) the earlier of (i) the consummation of the Frontier Merger and (ii) the termination of the Frontier Merger Agreement pursuant to its terms. The date and time at which this Agreement is terminated in accordance with this Section 11 is referred to herein as the "Termination Date." Upon any termination of this Agreement, this Agreement shall thereupon become void and of no further force and effect, and there shall be no liability in respect of this Agreement or of any transactions contemplated hereby on the part of any party hereto or any of its directors, officers, partners, stockholders, employees, agents, advisors, representatives or affiliates; provided, however, that nothing herein shall relieve any party -------- ------- from any liability for such party's breach of this Agreement; and provided -------- further that nothing herein shall limit, restrict, impair, amend or otherwise - ------- modify the rights, remedies, obligations or liabilities of any person under any other contract or agreement, including, without limitation, the Merger Agreement. 7 IN WITNESS WHEREOF, this Agreement has been executed by or on behalf of each of the parties hereto, all as of the date first above written. GLOBAL CROSSING LTD. By: /s/ Robert Annunziata ------------------------------------------- Title: Chief Executive Officer U S WEST, INC. By: /s/ Solomon D. Trujillo -------------------------------------------- Title: President and Chief Executive Officer Existing Securities: NONE --------------- EX-99.(C)(4) 16 STANDSTILL AGREEMENT EXHIBIT (c)(4) -------------- CONFORMED COPY -------------- STANDSTILL AGREEMENT STANDSTILL AGREEMENT, dated as of May 16, 1999 (this "Agreement"), --------- between Global Crossing Ltd., a company formed under the laws of Bermuda ("Global") and U S West, Inc., a Delaware corporation ("USW") ------ --- WHEREAS, Global and USW are parties to that certain Agreement and Plan of Merger dated as of the date hereof (the "Merger Agreement"; capitalized ---------------- terms used and not otherwise defined herein having the meaning set forth in the Merger Agreement); WHEREAS, in connection with the Merger Agreement, Global and USW have entered into (i) a Tender Offer and Purchase Agreement dated the date hereof (the "Tender Offer and Purchase Agreement") pursuant to which USW (or a direct ----------------------------------- or indirect subsidiary of USW) will acquire up to 39,259,305 shares of the common stock, par value $0.01 per share, of Global ("Global Common Stock"), upon ------------------- the terms and subject to the conditions set forth in the Tender Offer and Purchase Agreement and (ii) a Voting Agreement (the "Voting Agreement"); and ---------------- WHEREAS, USW and Global are entering into this Agreement to establish certain arrangements with respect to the shares of Global Voting Securities to be purchased by USW pursuant to the Tender Offer and Purchase Agreement, as well as certain restrictions in respect of the capital stock of Global, corporate governance and other related corporate matters; NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties hereto agree as follows: Section 1. Defined Terms. Unless otherwise defined herein: ------------- "Global Board of Directors" shall mean the board of directors of ------------------------- Global or any successor thereof. "Global Combined Voting Power" at any measurement date shall mean the ---------------------------- total number of votes which could have been cast in an election of members of the Global Board of Directors had a meeting of the stockholders of Global (or any successor thereof) been duly held based upon a record date as of the measurement date if all Global Voting Securities then outstanding and entitled to vote at such meeting were present and voted to the fullest extent possible at such meeting. "Global Voting Securities" shall mean, collectively, (i) Global Common ------------------------ Stock, (ii) any other securities entitled, or that may be entitled, to vote generally for the election of members of the Global Board of Directors and (iii) any other securities, warrants or options or rights of any nature (whether or not issued by Global) that are convertible into, exchangeable for, or exercisable for, or otherwise give the holder thereof any rights in respect of (whether or not subject to the passage of time, contingencies or contractual 2 restrictions or any combination thereof), any security described in clause (i) or (ii) of this definition (including, without limitation, Frontier Corporation common stock). "Group" means two or more persons acquiring, holding, voting or ----- disposing of securities which would constitute a "person" within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended. "person" means an individual, partnership, corporation, business ------ trust, joint stock company, trust, unincorporated association, joint venture or other entity of whatever nature. "Reorganization Transaction" means (i) any merger, consolidation, -------------------------- recapitalization, liquidation or other business combination transaction involving Global or any of its subsidiaries (or any successors to any of such entities), (ii) any tender offer or exchange offer for any securities of Global or any of its subsidiaries (or any successors to any of such entities) or (iii) any sale or other disposition of assets of Global or any of its subsidiaries (or any successors to any of such entities) in a single transaction or in a series of related transactions in each of the foregoing cases constituting individually or in the aggregate 5% or more of the assets of Global (or any successor), or 5% or more of the then outstanding Global Voting Securities. "Standstill Period" shall mean the period commencing on the date ----------------- hereof and continuing until the earlier of (a) the tenth anniversary of the date hereof and (b) the Effective Time (as defined in the Merger Agreement); provided, that if the Merger Agreement is terminated by Global --------- pursuant to Section 9.1(b) or 9.1(h)(i) or by USW pursuant to Section 9.1(e), 9.1(d)(ii)(A) or 9.1(h)(iii), the Standstill Period shall expire on the fifth anniversary of the date hereof. Section 2. Covenants with Respect to Global Voting Securities and ------------------------------------------------------ Other Matters. - ------------- 2.1 Acquisition of Global Voting Securities. During the Standstill --------------------------------------- Period, except for shares of Global Common Stock acquired pursuant to the Tender Offer and Purchase Agreement, USW will not, and will cause its affiliates (other than Global) not to, directly or indirectly, acquire, offer to acquire, agree to acquire, become the beneficial owner of or obtain any rights in respect of any Global Voting Securities; provided, that neither USW nor any of its affiliates -------- shall be prohibited from buying Global Voting Securities directly from Global. 2.2 Disposition of Global Voting Securities. Until the later of the --------------------------------------- termination of the Merger Agreement and the termination of the Frontier Merger Agreement (as defined in the Voting Agreement) (or the consummation of the transactions pursuant thereto), USW will not, and will cause its affiliates not to, directly or indirectly, sell, transfer any beneficial interest in, pledge, lend, hypothecate or otherwise dispose of any Global Voting Securities (each transaction described above, a "Transfer"). Subject in all respects to the -------- preceding sentence, during the Standstill Period, USW will not, and will cause its affiliates not to, directly or indirectly, Transfer 3 any Global Voting Securities in any transaction that to the knowledge of USW would result in any person or Group having, upon consummation of such Transfer transaction, directly or indirectly, beneficial ownership of or the right to acquire beneficial ownership of such number of Global Voting Securities as represent more than 5% of the Global Combined Voting Power; provided that USW -------- shall be permitted to Transfer Global Voting Securities in any transaction that to the knowledge of USW would result in a Transfer to any person or Group that would have, upon consummation of such Transfer transaction, directly or indirectly, beneficial ownership of or the right to acquire beneficial ownership of such number of Global Voting Securities as represent more than 5% but less than 9.5% of the Global Combined Voting Power so long as such person or Group agrees in writing to be bound by the terms of this Agreement. Notwithstanding the preceding sentence, USW shall be permitted to sell, transfer or otherwise dispose of Global Voting Securities (a) to one or more of its affiliates that is directly or indirectly controlled by it (each, a "Permitted Transferee"), (b) -------------------- pursuant to a tender or exchange offer for Global Voting Securities which is not opposed by the Global Board of Directors, (c) in a merger, recapitalization, business combination or other similar transaction or (d) as expressly provided in Section 4.1 of the Tender Offer and Purchase Agreement; provided, that in the -------- case of clause (a) the Permitted Transferee shall agree in writing to be bound by the terms of this Agreement. USW shall not directly or indirectly transfer all or any substantial part of the capital stock of any subsidiary which purchases shares of Global Common Stock in accordance with the Tender Offer and Purchase Agreement or any Permitted Transferee without first transferring to USW or a Permitted Transferee of USW any Global Voting Securities held by such subsidiary or Permitted Transferee. 2.3 Proxy Solicitations, Voting, etc. (a) During the Standstill --------------------------------- Period, USW will not, and will cause its affiliates not to, directly or indirectly, solicit proxies, assist any other person in any way, directly or indirectly, in the solicitation of proxies, or otherwise become a "participant" in a "solicitation," or assist any "participant" in a "solicitation" (as such terms are defined in Rule 14a-1 of Regulation 14A under the Exchange Act as in effect on the date of this Agreement) in opposition to the recommendation or proposal of the Global Board of Directors, or submit any proposal for the vote of stockholders of Global or any successor thereof or recommend or request or induce or attempt to induce any other person to take any such actions, or seek to advise, encourage or influence any other Person with respect to the voting of Global Voting Securities, unless in each case it obtains the prior approval of the Global Board of Directors to do so as evidenced by a formal resolution adopted by the Global Board of Directors and recorded in its minutes. (b) In furtherance of USW's obligations pursuant to Section 2.3(a), during the Standstill Period USW shall, and shall cause its affiliates to, at any annual or special meeting of stockholders at which members of the Global Board of Directors are to be elected or in connection with a solicitation of consents through which members of the Global Board of Directors are to be elected, vote or cause to be voted (or give or cause to be given a written consent or proxy with respect to) all Global Voting Securities beneficially owned by it in favor of the election to the Global Board of Directors of the individuals recommended by the Global Board of Directors. 4 2.4 No Voting Trusts, Pooling Agreements, or Formation of Groups. ------------------------------------------------------------ Except as contemplated by the Voting Agreement, during the Standstill Period, USW will not, and will cause its affiliates not to, directly or indirectly, join in or in any other way participate in a pooling agreement, syndicate, voting trust or other Group with respect to Global Voting Securities or otherwise act in concert with any other person, for the purpose of acquiring, holding, voting or disposing of Global Voting Securities. 2.5 Limitation on Various Other Actions. During the Standstill ----------------------------------- Period, USW will not, and will cause its affiliates not to, take any action, alone or in concert with any other person, (a) to seek to effect a change in control of Global, its successors or any of its affiliates, (b) to seek to effect a Reorganization Transaction with respect to Global, its successors or any of its affiliates, (c) to seek to effect any control or influence over the management of Global, its successors or any of its affiliates, the Global Board of Directors or the policies of Global, its successors or any of its affiliates, (d) to advise, assist or encourage or finance (or assist or arrange financing to or for) any other person in connection with any of the matters restricted by, or to otherwise seek to circumvent the limitations of the provisions of, Section 2 of this Agreement (any such action described in clause (a), (b), (c) or (d) of this Section 2.5, a "Global Transaction Proposal"), (e) to present to Global, --------------------------- its stockholders or any third party any proposal that can reasonably be expected to result in a Global Transaction Proposal or in an increase in the Global Combined Voting Power represented by Global Voting Securities beneficially owned in the aggregate by USW and its successors or any of their affiliates that would be prohibited by Section 2.1, (f) to publicly suggest or announce its willingness or desire to engage in a transaction or group of transactions or have another person engage in a transaction or group of transactions that would result in (i) a Global Transaction Proposal or (ii) an increase in the Global Combined Voting Power represented by Global Voting Securities beneficially owned in the aggregate by USW and its respective successors or any of their affiliates that would be restricted by Section 2.1, (g) to initiate, request, induce, encourage or attempt to induce or give encouragement to any other person to initiate, or otherwise provide assistance to any person who has made or is contemplating making, any proposal that can reasonably be expected to result in (i) a Global Transaction Proposal or (ii) an increase in the Global Combined Voting Power represented by Global Voting Securities beneficially owned in the aggregate by USW and its successors or any of their affiliates that would be restricted by Section 2.1, or (h) to request a waiver, modification or amendment of any of the provisions of Section 2 of this Agreement. 2.6 Representation. During the Standstill Period, if requested by -------------- Global, USW shall and shall cause each of its Permitted Transferees to be present, in person or represented by proxy, at all meetings of stockholders of Global at which members of the Global Board of Directors are to be elected so that all Global Voting Securities beneficially owned by USW and each such Permitted Transferee shall be counted for the purpose of determining the presence of a quorum at such meetings and for voting such securities. Section 3. Term of Agreement. This Agreement shall terminate on the ----------------- last day of the Standstill Period. 5 Section 4. Remedies. Each of the parties hereto acknowledges and -------- agrees that (i) the provisions of this Agreement are reasonable and necessary to protect the proper and legitimate interests of Global, and (ii) Global would be irreparably damaged in the event any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that Global shall be entitled to preliminary and permanent injunctive relief to prevent breaches of the provisions of this Agreement by USW or any of its Permitted Transferees without the necessity of proving actual damages or of posting any bond, and to enforce specifically the terms and provisions hereof and thereof, which rights shall be cumulative and in addition to any other remedy to which Global may be entitled hereunder or at law or equity. Section 5. General Provisions. ------------------ 5.1 Notices. All notices, requests, claims, demands and other ------- communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by cable, facsimile, telegram or telex or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified by like notice): If to USW: U S West, Inc. 1801 California Street Denver, Colorado Attention: Mark Roellig Facsimile: (303) 840-0381 with a copy to: Cadwalader, Wickersham & Taft 100 Maiden Lane New York, New York Attention: Dennis J. Block Facsimile: (212) 504-6666 If to Global: Global Crossing Ltd. Wessex House 45 Reid Street Hamilton HM12, Bermuda Attention: K. Eugene Shutler Facsimile No.: (441) 296-8606 6 and Global Crossing Ltd. 150 South El Camino Drive Suite 204 Attention: General Counsel Facsimile No.: (310) 281-4942 with a copy to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, New York 10017-3954 Attention: Charles I. Cogut, Esq. Facsimile No.: (212) 455-2502 and Skadden, Arps, Slate, Meagher & Flom 300 South Grand Avenue Los Angeles, California 90071 Attention: Brian J. McCarthy Facsimile: (213) 687-5600 5.2 Severability. If any term or other provision of this Agreement ------------ is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible. 5.3 Entire Agreement; Assignment. Except as may otherwise be agreed ---------------------------- by the parties, this Agreement, the Voting Agreement, the Tender Offer and Purchase Agreement and the Merger Agreement constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by any of the parties without the prior written consent of the other parties. 5.4 Parties in Interest. This Agreement shall be binding upon and ------------------- inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement. 7 5.5 Governing Law. This Agreement shall be governed by, and ------------- construed in accordance with, the internal laws of the State of New York. 5.6 Headings. The descriptive headings contained in this Agreement -------- are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. 5.7 Counterparts. This Agreement may be executed in two or more ------------ counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. 5.8. Submission to Jurisdiction. Each of the parties hereto (i) -------------------------- consents to submit itself to the personal jurisdiction of any Federal court located in the State of New York or any New York state court in the event any dispute arises out of this Agreement or any of the transactions contemplated by this Agreement, (ii agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, (ii agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than a Federal or state court sitting in the State of New York and (iv consents to service being made through the notice procedures set forth in Section 5.1. 8 IN WITNESS WHEREOF, USW and Global have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized. U S WEST, INC. By: /s/ Solomon D. Trujillo --------------------------------------------- Title: President and Chief Executive Officer GLOBAL CROSSING LTD. By: /s/ Robert Annunziata ------------------------------------------------ Title: Chief Executive Officer EX-99.(C)(5) 17 TENDER AND VOTING AGREEMENT EXHIBIT (c)(5) CONFORMED COPY TENDER AND VOTING AGREEMENT TENDER AND VOTING AGREEMENT (this "Agreement"), dated as of May 16, --------- 1999, by and among U S West, Inc., a company organized under the laws of Delaware ("Purchaser"), Global Crossing Ltd., a company formed under the laws of --------- Bermuda ("Global") and each of the parties listed on the signature page hereto ------ (individually, a "Shareholder" and collectively, the "Shareholders"). ----------- ------------ WHEREAS, Global and Purchaser are parties to that certain Agreement and Plan of Merger dated as of the date hereof (the "Merger Agreement"; ---------------- capitalized terms used and not otherwise defined herein having the meaning set forth in the Merger Agreement); WHEREAS, Global, GCF Acquisition Corp. and Frontier Corporation ("Frontier") are parties to that certain Agreement and Plan of Merger, dated - ---------- March 16, 1999 (the "Frontier Merger Agreement"; the transactions contemplated ------------------------- by the Frontier Merger Agreement being referred to herein as the "Frontier -------- Merger"); - ------ WHEREAS, Frontier and certain shareholders of Global are parties to that certain Voting Agreement dated as of March 16, 1999 which was entered into in connection with the Frontier Merger Agreement ( "Frontier Voting Agreement"); ------------------------- WHEREAS, in connection with the Merger Agreement, Global and Purchaser have entered into a Tender Offer and Purchase Agreement dated the date hereof (the "Tender Offer and Purchase Agreement") pursuant to which Purchaser has ----------------------------------- agreed to make a tender offer (the "Offer") to acquire shares of the outstanding ----- common stock, par value $0.01 per share, of Global ("Global Common Stock"), upon ------------------- the terms and subject to the conditions set forth in the Tender Offer and Purchase Agreement; and WHEREAS, as a condition to its willingness to enter into the Merger Agreement and make the Offer, Purchaser has required that each of the Shareholders enter into this Agreement and that Global enter into the Tender Offer and Purchase Agreement; NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the parties hereby agree as follows: 2 SECTION 1. COVENANTS OF THE SHAREHOLDERS (a) AGREEMENT TO TENDER. Until the termination of the Tender Offer and Purchase Agreement, each Shareholder hereby agrees to validly tender pursuant to the Offer and not to withdraw at least 12.3045% of the total number of shares of Global Common Stock owned by each Shareholder as of the date hereof (the "Subject Shares"). -------------- (b) VOTING. Subject to the receipt of proper notice and the absence of a preliminary or permanent injunction or other final order by any United States federal court or state court or Bermuda court barring such action, each Shareholder shall do the following: (1) be present, in person or represented by proxy, at each meeting (whether annual or special, and whether or not an adjourned or postponed meeting) of the shareholders of Global, however called, or in connection with any written consent of the shareholders of Global, so that all Subject Shares then held by such Shareholder and entitled to vote may be counted for the purposes of determining the presence of a quorum at such meetings; and (2) at each such meeting held before the Effective Time and with respect to each such written consent, vote (or cause to be voted), or deliver a written consent (or cause a consent to be delivered) covering, all the Subject Shares then held by such Shareholder to approve the Global Merger and the Global Merger Agreement and any action required in furtherance thereof and against any action which would reasonably be expected to result in a failure of the conditions described in Article VIII of the Merger Agreement to be satisfied. (c) NO INCONSISTENT AGREEMENTS. Each Shareholder shall not enter into any voting agreement or grant a proxy or power of attorney with respect to the Subject Shares which is inconsistent with this Agreement. (d) WAIVER OF APPRAISAL RIGHTS. To the extent permitted by applicable law, each Shareholder hereby agrees to waive any appraisal, dissenters' or similar rights that such Shareholder may have under Bermuda law with respect to the Global Merger. (e) TRANSFER OF SUBJECT SHARES--GLOBAL MERGER. From the date hereof until the earlier of the termination of the Global Merger Agreement and the consummation of the Global Merger, the Shareholders shall not transfer record ownership or beneficial ownership, or both, of any Subject Shares (other than pursuant to the Offer) representing 15% of the issued and outstanding shares of Global Common Stock in any one transaction or series of related transactions to any single person or "group" (as determined pursuant to Rule 13d-5 under the Exchange Act) (other than transfers to agents for purposes of distribution) unless such transferee agrees to comply with the voting requirements of this Section 1(b) with respect to the transferred shares of Global Common Stock. 3 SECTION 2. TRANSFER OF SUBJECT SHARES--FRONTIER MERGER. From the date hereof until the earlier of the termination of the Frontier Merger Agreement and the consummation of the Frontier Merger, each Shareholder (other than Excluded Shareholders (as defined below)) shall not transfer record ownership or beneficial ownership, or both, of any Subject Shares (other than pursuant to the Offer); provided, that each Shareholder shall be permitted to transfer ownership of Subject Shares if consented to by Global (such consent not to be unreasonably withheld). For the purposes of this Agreement, the term "transfer" means a sale, an assignment, a grant, a transfer, a pledge, the creation of a lien or other disposition of any Subject Shares or any interest of any nature in any Subject Shares, including, without limitation, the "beneficial ownership" of such Subject Shares (as determined pursuant to Regulation 13D-G under the Exchange Act). "Excluded Shareholders" means the Shareholders identified as such on Exhibit A. SECTION 3. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS. Each Shareholder severally represents and warrants to Purchaser as follows: (a) EXISTENCE AND POWER. Each Shareholder that is a corporation (1) is a corporation duly incorporated, validly existing and in good standing under the laws of the State of its incorporation and (2) has all requisite corporate power and authority to execute and deliver this Agreement. (b) AUTHORIZATION; CONTRAVENTION. The execution and delivery by each Shareholder of this Agreement and the performance by it of its obligation under this Agreement have, (1) in the case of each Shareholder that is a corporation, been duly authorized by all necessary corporate action and (2) do not and will not conflict with or result in a violation pursuant to, (A) in the case of each Shareholder that is a corporation, any provision of its certificate of incorporation or bylaws, or similar organizational document, or (B) any loan or credit agreement, note, mortgage, bond, indenture, lease, benefit plan or other agreement, obligation, instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to such Shareholder, the Subject Shares or any of such Shareholder's other properties or assets. (c) BINDING EFFECT. This Agreement constitutes a valid and binding obligation of such Shareholder, enforceable against such Shareholder, in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws relating to or affecting creditors' rights generally, by general equity principles (regardless of whether such enforceability is considered in a proceeding in equity or at law), or by an implied covenant of good faith and fair dealing. 4 (d) OWNERSHIP. As of the date hereof, each Shareholder is the record owner or beneficial owner of the Subject Shares listed beside its name in Exhibit A, free and clear of liens except with respect to pledges or other liens that such Shareholder would be entitled to effect or create as of the date of this Agreement pursuant to the second sentence of Section 2 of the Frontier Voting Agreement and in accordance with the terms thereof and hereof. As of the date of this Agreement, each Shareholder does not own beneficially or of record any equity securities of Global other than the Subject Shares. Except pursuant to the Frontier Voting Agreement no Shareholder has appointed or granted any proxy which is still effective with respect to its Subject Shares. As of the date hereof, each Shareholder has sole voting power or power to direct the vote of the Global Common Stock set forth beside its name on Exhibit A and on the record date and the date of the Global Stockholders' Meeting at which the Global Merger shall be presented for approval, each Shareholder will have sole voting power or power to direct the vote of such Shareholder's Subject Shares then held by such Shareholder. (e) LITIGATION. There is no action, suit, investigation, complaint or other proceeding pending against any Shareholder or, to the knowledge of any Shareholder, threatened against any Shareholder or any other Person that restricts in any material respect or prohibits (or, if successful, would restrict or prohibit) the exercise by any party or beneficiary of its rights under this Agreement or the performance by any party of its obligations under this Agreement. SECTION 4. MISCELLANEOUS PROVISIONS. (a) NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed duly given (1) on the date of delivery if delivered personally, or by telecopy or telefacsimile, upon confirmation of receipt, (2) on the first business day following the date of dispatch if delivered by a recognized next-day courier service, or (3) on the tenth business day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be given to Global and Purchaser at its address stated in Section 11.2 of the Merger Agreement and all notices to the Shareholders shall be given at its address in the records of Global or, in each case, at any other address as the party may specify for this purpose by notice to the other parties. (b) NO WAIVERS; REMEDIES; SPECIFIC PERFORMANCE. (1) No failure or delay by Purchaser in exercising any right, power or privilege under this Agreement shall operate as a waiver of the right, power or privilege. A single or partial exercise of any right, power or privilege shall not preclude any other further exercise of the right, power or privilege or the exercise of any other right, power or privilege. The rights and remedies provided in this Agreement shall be cumulative and not exclusive of any rights or remedies provided by law. 5 (2) In view of the uniqueness of the agreements contained in this Agreement and the transactions contemplated hereby and thereby and the fact that Purchaser would not have an adequate remedy at law for money damages in the event that any obligation under this Agreement is not performed in accordance with its terms, each of the Shareholders therefore agrees that Global shall be entitled to specific enforcement of the terms of this Agreement in addition to any other remedy to which Global may be entitled, at law or in equity. (c) AMENDMENTS, ETC. No amendment, modification, termination, or waiver of any provision of this Agreement, and no consent to any departure by any of the Shareholders or Purchaser from any provision of this Agreement, shall be effective unless it shall be in writing and signed and delivered by all the Shareholders and Purchaser, and then it shall be effective only in the specific instance and for the specific purpose for which it is given. (d) SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARIES. (1) No party shall assign any of its rights or delegate any of its obligations under this Agreement. Any assignment or delegation in contravention of this Section 4(d) shall be void AB INITIO and shall not relieve the assigning or delegating party of any obligation under this Agreement. (2) The provisions of this Agreement shall be binding upon and inure solely to the benefit of the parties hereto, the express beneficiaries thereof (to the extent provided therein) and their respective permitted heirs, executors, legal representatives, successors and assigns, and no other person. (e) GOVERNING LAW. This Agreement and all rights, remedies, liabilities, powers and duties of the parties hereto and thereto, shall be governed in accordance with the laws of the State of New York. (f) SEVERABILITY OF PROVISION. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible. (g) ENTIRE AGREEMENT. This Agreement embodies the entire agreement and understanding of the Shareholders and Purchaser, and supersedes all prior agreements or understandings, with respect to the subject matters of this Agreement. 6 (h) SURVIVAL. Except as otherwise specifically provided in this Agreement, each representation, warranty or covenant of a party contained in this Agreement shall remain in full force and effect, notwithstanding any investigation or notice to the contrary or any waiver by any other party or beneficiary of a related condition precedent to the performance by the other party or beneficiary of an obligation under this Agreement. (i) SUBMISSION TO JURISDICTION; WAIVERS. Each Shareholder and Purchaser irrevocably agrees that any legal action or proceeding with respect to any voting document or for recognition and enforcement of any judgment in respect hereto or thereof brought by the other party hereto or its successors or assigns may be brought and determined in the courts of the State of New York, and each Shareholder and Purchaser hereby irrevocably submit with regard to any such action or proceeding for itself and in respect to its property, generally and unconditionally, to the non-exclusive jurisdiction of the aforesaid courts. Each Shareholder and Purchaser hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding with respect to this Agreement, (a) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason other than the failure to serve process in accordance with this Section 4(i), (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise), and (c) to the fullest extent permitted by applicable law, that (i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper and (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts. (j) TERMINATION. Unless terminated by mutual agreement of the parties, the obligations of the Shareholders under Sections 1(b), 1(c), 1(d) and 1(e) of this Agreement shall terminate upon the first to occur of (i) consummation of the Global Merger, (ii) the termination of the Merger Agreement, (iii) the full and irrevocable satisfaction of the condition set forth in Section 8.1(a) of the Merger Agreement with respect to the Global Merger and (iv) termination of the Tender Offer and Purchase Agreement without the purchase of shares of Global Common Stock pursuant thereto. This Agreement shall automatically terminate at such time as all of the obligations of the Shareholders pursuant to Sections 1 and 2 shall have terminated in accordance with their terms. (k) COUNTERPARTS. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if all signatures were on the same instrument. (l) FRONTIER VOTING AGREEMENT. Nothing herein is intended to modify the obligations of the parties set forth in the Frontier Voting Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above. GLOBAL CROSSING LTD. By: /s/ Robert Annunziata -------------------------------------------- Title: Chief Executive Officer U S WEST, INC. By: /s/ Solomon D. Trujillo ------------------------------------------- Title: President and Chief Executive Officer CIBC WOOD GUNDY CAPITAL (SFC) INC. By: /s/ Jay R. Levine -------------------------------------------- Title: Agent CIBC WG ARGOSY MERCHANT FUND 3, L.P. By: /s/ Jay R. Levine -------------------------------------------- Title: Managing Director CO-INVESTMENT MERCHANT FUND, LLC By: /s/ Jay R. Levine ------------------------------------------- Title: Agent CONTINENTAL CASUALTY CORPORATION CONTINENTAL CASUALTY CORP. DESIGNATED HIGH YIELD FUND By: /s/ Hillel Weinberger ------------------------------------------- Title: Authorized Signatory MRCO, INC. By: /s/ Michael R. Steed ------------------------------------------- Title: President /s/ Gary Winnick -------------------------------------------- GARY WINNICK PACIFIC CAPITAL GROUP, INC. By: /s/ Gary Winnick ------------------------------------------- Title: Chairman and Chief Executive Officer GKW UNIFIED HOLDINGS, LLC By: /s/ Gary Winnick ------------------------------------------- Title: Authorized Signatory /s/ Abbott L. Brown -------------------------------------------- ABBOTT L. BROWN BROWN LIVING TRUST RIDGESTONE CORP. By: /s/ Abbott L. Brown ------------------------------------------- Title: President /s/ Barry Porter ------------------------------------------- BARRY PORTER GALENIGHT CORP. By: /s/ Barry Porter ------------------------------------------- Title: President /s/ David Lee -------------------------------------------- DAVID LEE SAN PASQUAL CORP. By: /s/ David Lee ------------------------------------------- Title: President DAVID AND ELLEN LEE FAMILY TRUST By: /s/ David Lee ------------------------------------------- Title: Trustee /s/ Lodwrick Cook -------------------------------------------- LODWRICK COOK GLOBAL CROSSING LTD., LDC By: /s/ Jay R. Levine ------------------------------------------- Title: Agent GLOBAL CROSSING TRUST 1998 By: /s/ Hillel Weinberger ------------------------------------------- Title: Settlor GLOBAL CROSSING PARTNERS By: /s/ Hillel Weinberger ------------------------------------------- Title: General Partner CANADIAN IMPERIAL BANK OF COMMERCE By: /s/ Jay R. Levine ------------------------------------------- Title: Agent EXHIBIT A Brown Living Trust 3,435,922 Ridgestone Corp. 7,765,418 ---------- Total Abbott L. Brown 11,201,340 Barry Porter 6,335,780 Galenight Corp. 11,883,968 ---------- Total Barry Porter 18,219,748 Continental Casualty Corp. 16,795,500 Continental Casualty Corp. Designated High Yield 23,279,670 Global Crossing Partners (Hillel Weinberger) 486,630 Global Crossing Trust 1998 (Hillel Weinberger) 2,100,000 ---------- Total Continental Casualty 42,661,800 CIBC WG Argosy Merchant Fund 3, LP* 17,223,628 CIBC Wood Gundy Capital (SFC) Inc.* 1,340,000 Co-Investment Merchant Fund, LLC* 9,568,684 Global Crossing Ltd., LDC* 68,894,488 ---------- Total CIBC 97,026,800 David and Ellen Lee Family Trust 5,233,234 David L. Lee 4,869,964 San Pasqual Corp. 9,900,822 ---------- Total David Lee 20,004,020 GKW Unified Holdings, LLC 77,195,744 Pacific Capital Group, Inc. 15,993,406 ---------- Total Gary Winnick 93,189,150 Lodwrick Cook 3,580,452 MRCo, Inc. 33,180,260 __________________ * Excluded Shareholder. EX-99.(C)(6) 18 AGREEMENT EXHIBIT (c)(6) CONFORMED COPY AGREEMENT AGREEMENT (this "Agreement"), dated as of May 16, 1999, is entered --------- into by Global Crossing Ltd. ("Global") and those other persons whose names ------ appear on the signature pages hereto (each, a "Stockholder" and collectively, ----------- the "Stockholders"). ------------ Reference is hereby made to (i) the Stockholders Agreement dated as of August 12, 1998 (the "Stockholders Agreement") by and among Global and the ---------------------- Stockholders, (ii) the Registration Rights Agreement dated as of August 12, 1998 (the "Registration Rights Agreement") by and among Global and the Stockholders, ----------------------------- (iii) the Agreement and Plan of Merger dated the date hereof (the "Merger ------ Agreement") between Global and U S West, Inc. ("USW") and (iv) the Tender Offer - --------- and Purchase Agreement dated the date hereof (the "TOP Agreement") between ------------- Global and USW. In connection with the transactions pursuant to the Merger Agreement and the TOP Agreement, the undersigned hereby agree as follows: 1. Clause (d) of Section 1 of the Stockholders Agreement shall be amended to read in its entirety as follows: "(d) in a public offering pursuant to a registration statement under the Securities Act or a Transfer pursuant to Rule 144 under the Securities Act or pursuant to the tender offer under the Tender Offer and Purchase Agreement dated May 16, 1999 between the Company and U S West, Inc." 2. Each Stockholder and Global agrees that USW shall have the right, in connection with any CoC Tag-Along Sale (as defined in the Stockholders Agreement) to participate in such sale on the same basis as any CoC Other Holder (as defined in the Stockholders Agreement) pursuant to Section 4(b) of the Stockholders Agreement. 3. Each Stockholder and Global agrees that, to give effect to the registration rights granted to USW by Global pursuant to Section 4.1 of the TOP Agreement, USW shall be treated as a Holder (as defined in the Registration Rights Agreement) for purposes of Sections 2(e) and 3(b) of the Registration Rights Agreement. 4. Global hereby agrees that it shall not unreasonably withhold its consent referenced in Section 2 of the Tender and Voting Agreement between USW and the Stockholders dated the date hereof. 5. This Agreement may be executed in counterparts, each of which when so executed shall be deemed to be an original, and such counterparts shall together constitute one and the same instrument. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above. GLOBAL CROSSING LTD. By: /s/ Robert Annunziata ----------------------------------------- Title: Chief Executive Officer CIBC WOOD GUNDY CAPITAL (SFC) INC. By: /s/ Jay R. Levine ----------------------------------------- Title: Agent CIBC WG ARGOSY MERCHANT FUND 3, L.P. By: /s/ Jay R. Levine ----------------------------------------- Title: Managing Director CO-INVESTMENT MERCHANT FUND, LLC By: /s/ Jay R. Levine ------------------------------------------ Title: Agent CONTINENTAL CASUALTY CORPORATION CONTINENTAL CASUALTY CORP. DESIGNATED HIGH YIELD FUND By: /s/ Hillel Weinberger ------------------------------------------ Title: Authorized Signatory MRCO, INC. By: /s/ Michael R. Steed ------------------------------------------ Title: President /s/ Gary Winnick ------------------------------------------- GARY WINNICK PACIFIC CAPITAL GROUP, INC. By: /s/ Gary Winnick ------------------------------------------ Title: Chairman and Chief Executive Officer GKW UNIFIED HOLDINGS, LLC By: /s/ Gary Winnick ------------------------------------------ Title: Authorized Signatory /s/ Abbott L. Brown ------------------------------------------- ABBOTT L. BROWN BROWN LIVING TRUST RIDGESTONE CORP. By: /s/ Abbott L. Brown ------------------------------------------ Title: President /s/ Barry Porter ------------------------------------------ BARRY PORTER GALENIGHT CORP. By: /s/ Barry Porter ------------------------------------------ Title: President /s/ David Lee ------------------------------------------- DAVID LEE SAN PASQUAL CORP. By: /s/ David Lee ------------------------------------------ Title: President DAVID AND ELLEN LEE FAMILY TRUST By: /s/ David Lee ------------------------------------------ Title: Trustee /s/ Lodwrick Cook ------------------------------------------- LODWRICK COOK GLOBAL CROSSING LTD., LDC By: /s/ Jay R. Levine ------------------------------------------ Title: Agent GLOBAL CROSSING TRUST 1998 By: /s/ Hillel Weinberger ------------------------------------------ Title: Settlor GLOBAL CROSSING PARTNERS By: /s/ Hillel Weinberger ------------------------------------------ Title: General Partner CANADIAN IMPERIAL BANK OF COMMERCE By: /s/ Jay R. Levine ------------------------------------------- Title: Agent EXHIBIT A Brown Living Trust 3,435,922 Ridgestone Corp. 7,765,418 ---------- Total Abbott L. Brown 11,201,340 Barry Porter 6,335,780 Galenight Corp. 11,883,968 ---------- Total Barry Porter 18,219,748 Continental Casualty Corp. 16,795,500 Continental Casualty Corp. Designated High Yield 23,279,670 Global Crossing Partners (Hillel Weinberger) 486,630 Global Crossing Trust 1998 (Hillel Weinberger) 2,100,000 ---------- Total Continental Casualty 42,661,800 CIBC WG Argosy Merchant Fund 3, LP 17,223,628 CIBC Wood Gundy Capital (SFC) Inc. 1,340,000 Co-Investment Merchant Fund, LLC 9,568,684 Global Crossing Ltd., LDC 68,894,488 ---------- Total CIBC 97,026,800 David and Ellen Lee Family Trust 5,233,234 David L. Lee 4,869,964 San Pasqual Corp. 9,900,822 ---------- Total David Lee 20,004,020 GKW Unified Holdings, LLC 77,195,744 Pacific Capital Group, Inc. 15,993,406 ---------- Total Gary Winnick 93,189,150 Lodwrick Cook 3,580,452 MRCo, Inc. 33,180,260 EX-99.(C)(7) 19 LETTER AGREEMENT Exhibit (c)(7) Dated as of May 16, 1999 Global Crossing Ltd. 150 El Camino Drive Beverly Hills, California 90212 Attention: Tom Casey Reference is made to the Merger Agreement, dated as of May 16, 1999 (as amended, supplemented or otherwise modified from time to time, the "Merger Agreement") between Global Crossing Ltd. ("Global Crossing") and U S WEST, Inc. ("U S WEST"). If the Merger Agreement is terminated under Section 9.2 thereof and results in a fee payable by U S West, U S West shall be permitted to reduce the fee payable thereunder by no more than $250 million (any such reduction, the "Reduced Amount"), so long as U S West purchases and pays in full for capacity on Global Crossing's systems in an aggregate amount equal to the Reduced Amount. The purchase price for any capacity to be acquired by U S West in accordance with this paragraph (i) shall be at the market price then available for such capacity from Global Crossing and/or its affiliates and (ii) shall be payable in dollars on the date the fee payable in Section 9.2 is otherwise due. U S West shall execute, deliver and comply with a Global Crossing Capacity Purchase Agreement (containing standard terms and conditions) in respect of all purchases of capacity under this paragraph. Very truly yours, U S WEST, INC. By: /s/ Solomon D. Trujillo ------------------------------- Name: Solomon D. Trujillo Title: Chairman AGREED AND ACCEPTED: GLOBAL CROSSING LTD. By: /s/ Thomas J. Casey ------------------------------ Name: Thomas J. Casey Title: Vice Chairman EX-99.(C)(8) 20 TRANSFER AGREEMENT EXHIBIT (C)(8) CONFORMED COPY -------------- TRANSFER AGREEMENT TRANSFER AGREEMENT (this "Agreement"), dated as of May 16, 1999, by --------- and between Global Crossing Ltd., a company organized under the laws of Bermuda ("Global"), and each of the parties listed on the signature page hereto ------ (individually, a "Shareholder" and collectively, the "Shareholders"); and ----------- ------------ WHEREAS, Global, the Shareholders and each of the other parties listed on the signature page thereto are parties to that certain Tender and Voting Agreement dated as of the date hereof (the "Tender and Voting Agreement"; --------------------------- capitalized terms used and not otherwise defined herein having the meaning set forth in the Tender and Voting Agreement); NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the parties hereby agree as follows: SECTION 1. TRANSFER OF SUBJECT SHARES--FRONTIER MERGER. From the date hereof until the earlier of the termination of the Frontier Merger Agreement and the consummation of the Frontier Merger, each Shareholder shall not transfer record ownership or beneficial ownership, or both, of any Subject Shares (other than pursuant to the Offer); provided, that each Shareholder shall be permitted to transfer ownership of Subject Shares if consented to by Global (such consent not to be unreasonably withheld). For the purposes of this Agreement, the term "transfer" means a sale, an assignment, a grant, a transfer, a pledge, the creation of a lien or other disposition of any Subject Shares or any interest of any nature in any Subject Shares, including, without limitation, the "beneficial ownership" of such Subject Shares (as determined pursuant to Regulation 13D-G under the Exchange Act). SECTION 2. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS. Each Shareholder severally represents and warrants to Global as follows: (a) EXISTENCE AND POWER. Each Shareholder that is a corporation (1) is a corporation duly incorporated, validly existing and in good standing under the laws of the State of its incorporation and (2) has all requisite corporate power and authority to execute and deliver this Agreement. (b) AUTHORIZATION; CONTRAVENTION. The execution and delivery by each Shareholder of this Agreement and the performance by it of its obligation under this Agreement have, (1) in the case of each Shareholder that is a corporation, been duly authorized by all necessary corporate action and (2) do not and will not conflict with or result in a violation pursuant to, (A) in the case of each Shareholder that is a corporation, any provision of its certificate of incorporation or bylaws, or similar organizational 2 document, or (B) any loan or credit agreement, note, mortgage, bond, indenture, lease, benefit plan or other agreement, obligation, instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to such Shareholder, the Subject Shares or any of such Shareholder's other properties or assets. (c) BINDING EFFECT. This Agreement constitutes a valid and binding obligation of such Shareholder, enforceable against such Shareholder, in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws relating to or affecting creditors' rights generally, by general equity principles (regardless of whether such enforceability is considered in a proceeding in equity or at law), or by an implied covenant of good faith and fair dealing. (d) OWNERSHIP. As of the date hereof, each Shareholder is the record owner or beneficial owner of the Subject Shares listed beside its name in Exhibit A, free and clear of liens except with respect to pledges or other liens that such Shareholder would be entitled to effect or create as of the date of this Agreement pursuant to the second sentence of Section 2 of the Frontier Voting Agreement and in accordance with the terms thereof and hereof. As of the date of this Agreement, each Shareholder does not own beneficially or of record any equity securities of Global other than the Subject Shares. (e) LITIGATION. There is no action, suit, investigation, complaint or other proceeding pending against any Shareholder or, to the knowledge of any Shareholder, threatened against any Shareholder or any other Person that restricts in any material respect or prohibits (or, if successful, would restrict or prohibit) the exercise by any party or beneficiary of its rights under this Agreement or the performance by any party of its obligations under this Agreement. SECTION 3. MISCELLANEOUS PROVISIONS. (a) NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed duly given (1) on the date of delivery if delivered personally, or by telecopy or telefacsimile, upon confirmation of receipt, (2) on the first business day following the date of dispatch if delivered by a recognized next-day courier service, or (3) on the tenth business day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be given to Global at its address stated in Section 11.2 of the Merger Agreement and all notices to the Shareholders shall be given at its address in the records of Global or, in each case, at any other address as the party may specify for this purpose by notice to the other parties. (b) NO WAIVERS; REMEDIES; SPECIFIC PERFORMANCE. (1) No failure or delay by Global in exercising any right, power or privilege under this Agreement shall operate as a waiver of the right, power or 3 privilege. A single or partial exercise of any right, power or privilege shall not preclude any other further exercise of the right, power or privilege or the exercise of any other right, power or privilege. The rights and remedies provided in this Agreement shall be cumulative and not exclusive of any rights or remedies provided by law. (2) In view of the uniqueness of the agreements contained in this Agreement and the transactions contemplated hereby and thereby and the fact that Global would not have an adequate remedy at law for money damages in the event that any obligation under this Agreement is not performed in accordance with its terms, each of the Shareholders therefore agrees that Global shall be entitled to specific enforcement of the terms of this Agreement in addition to any other remedy to which Global may be entitled, at law or in equity. (c) AMENDMENTS, ETC. No amendment, modification, termination, or waiver of any provision of this Agreement, and no consent to any departure by any of the Shareholders or Global from any provision of this Agreement, shall be effective unless it shall be in writing and signed and delivered by all the Shareholders and Global, and then it shall be effective only in the specific instance and for the specific purpose for which it is given. (d) SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARIES. (1) No party shall assign any of its rights or delegate any of its obligations under this Agreement. Any assignment or delegation in contravention of this Section 4(d) shall be void AB INITIO and shall not relieve the assigning or delegating party of any obligation under this Agreement. (2) The provisions of this Agreement shall be binding upon and inure solely to the benefit of the parties hereto, the express beneficiaries thereof (to the extent provided therein) and their respective permitted heirs, executors, legal representatives, successors and assigns, and no other person. (e) GOVERNING LAW. This Agreement and all rights, remedies, liabilities, powers and duties of the parties hereto and thereto, shall be governed in accordance with the laws of the State of New York. (f) SEVERABILITY OF PROVISION. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible. 4 (g) ENTIRE AGREEMENT. This Agreement embodies the entire agreement and understanding of the Shareholders and Global, and supersedes all prior agreements or understandings, with respect to the subject matters of this Agreement. (h) SURVIVAL. Except as otherwise specifically provided in this Agreement, each representation, warranty or covenant of a party contained in this Agreement shall remain in full force and effect, notwithstanding any investigation or notice to the contrary or any waiver by any other party or beneficiary of a related condition precedent to the performance by the other party or beneficiary of an obligation under this Agreement. (i) SUBMISSION TO JURISDICTION; WAIVERS. Each Shareholder and Global irrevocably agrees that any legal action or proceeding with respect to any voting document or for recognition and enforcement of any judgment in respect hereto or thereof brought by the other party hereto or its successors or assigns may be brought and determined in the courts of the State of New York, and each Shareholder and Global hereby irrevocably submit with regard to any such action or proceeding for itself and in respect to its property, generally and unconditionally, to the non-exclusive jurisdiction of the aforesaid courts. Each Shareholder and Global hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding with respect to this Agreement, (a) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason other than the failure to serve process in accordance with this Section 4(i), (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise), and (c) to the fullest extent permitted by applicable law, that (i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper and (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts. (j) TERMINATION. Unless terminated by mutual agreement of the parties, this Agreement shall automatically terminate at such time as all of the obligations of the Shareholders pursuant to Sections 1 shall have terminated in accordance with thier terms. (k) COUNTERPARTS. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if all signatures were on the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. GLOBAL CROSSING LTD. /s/ Thomas J. Casey By:_______________________________________ Title: Vice Chairman CIBC WOOD GUNDY CAPITAL (SFC) INC. /s/ Jay R. Levine By:_______________________________________ Title: Agent CIBC WG ARGOSY MERCHANT FUND 3, L.P. /s/ Jay R. Levine By:_______________________________________ Title: Agent CO-INVESTMENT MERCHANT FUND, LLC /s/ Jay R. Levine By:_______________________________________ Title: Agent GLOBAL CROSSING LTD., LDC /s/ Jay R. Levine By:_______________________________________ Title: Agent EXHIBIT A CIBC WG Argosy Merchant Fund 3, LP 17,223,628 CIBC Wood Gundy Capital (SFC) Inc. 1,340,000 Co-Investment Merchant Fund, LLC 9,568,684 Global Crossing Ltd., LDC 68,894,488 ---------- Total CIBC 97,026,800 -----END PRIVACY-ENHANCED MESSAGE-----