-----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, SwT20A95WQ3TLKjjbn5pfaYskGhqzkNjyFD6pKIK1qVrZZ9qwl5n/koDIiIzUZfA 8EMSrV/IcaMS9vFzNx1kNg== 0000950130-99-001544.txt : 19990322 0000950130-99-001544.hdr.sgml : 19990322 ACCESSION NUMBER: 0000950130-99-001544 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19990316 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990319 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FRONTIER CORP /NY/ CENTRAL INDEX KEY: 0000084567 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 160613330 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-04166 FILM NUMBER: 99568403 BUSINESS ADDRESS: STREET 1: ROCHESTER TEL CENTER STREET 2: 180 S CLINTON AVE CITY: ROCHESTER STATE: NY ZIP: 14646-0995 BUSINESS PHONE: 7167771000 FORMER COMPANY: FORMER CONFORMED NAME: ROCHESTER TELEPHONE CORP DATE OF NAME CHANGE: 19920703 8-K 1 FORM 8-K ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549-1004 ----------------- FORM 8-K ----------------- CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) March 16, 1999 ----------------- Frontier Corporation (Exact name of registrant as specified in its charter) ----------------- New York 1-4166 16-0613330 (State or other jurisdiction of (Commission File Number) (I.R.S. Employer incorporation or organization) Identification No.) 180 South Clinton Avenue 14646-0700 Rochester, New York (Zip Code) (Address of principal executive offices) Registrant's telephone number, including area code (716) 777-1000 ================================================================================ Item 5. Other Events On March 16, 1999, Frontier Corporation, a New York corporation ("Frontier"), Global Crossing Ltd., a Bermuda company ("Global Crossing"), and GCF Acquisition Corp., a New York corporation and a wholly owned subsidiary of Global Crossing ("Merger Sub"), entered into an Agreement and Plan of Merger (the "Merger Agreement"), providing for, among other things, the merger (the "Merger") of Merger Sub with and into Frontier, that will result in Frontier becoming a wholly owned subsidiary of Global Crossing. A copy of the Merger Agreement is attached hereto as Exhibit 2 and is incorporated herein by reference. A copy of Frontier's and Global Crossing's joint press release dated March 17, 1999 and the Frontier and Global Crossing joint analyst presentation dated March 17, 1999 are attached hereto as Exhibits 99.1 and 99.2, respectively, and are incorporated herein by reference. In connection with the execution of the Merger Agreement, Frontier and Global Crossing entered into a Stock Option Agreement, dated as of March 16, 1999 (the "Stock Option Agreement"), pursuant to which Frontier has granted to Global an option to purchase up to 34,291,944 shares of Frontier Common Stock at a price of $62.00 per share, exercisable only upon the occurrence of certain events. The Stock Option Agreement provides (a) Global Crossing with the right, in certain circumstances, to require Frontier to repurchase the option and any shares acquired by the exercise of the option and (b) Frontier with the right, in certain circumstances, to repurchase the option and any shares acquired by the exercise of the option. A copy of the Stock Option Agreement is attached as Exhibit 10.1 to this Form 8-K and is incorporated herein by reference. In connection with the execution of the Merger Agreement, Frontier, certain shareholders (the "Shareholders") of Global Crossing who are the beneficial or record owners of 319,063,570 shares of Global Crossing Common Stock, and, for certain purposes, Global Crossing, entered into a Voting Agreement, dated as of March 16, 1999 (the "Voting Agreement"), pursuant to which, among other things, the Shareholders have agreed to vote their shares of Global Crossing Common Stock to approve the Share Issuance, the Global Charter Amendment and if applicable, the Alternative Merger (each as defined in the Merger Agreement). The 319,063,570 shares represent approximately 72% of the voting power of Global Crossing Common Stock. A copy of the Voting Agreement is attached as Exhibit 10.2 to this Form 8-K and is incorporated herein by reference. The foregoing descriptions of the Merger Agreement, the Stock Option Agreement and the Voting Agreement and transactions contemplated thereby do not purport to be complete and are qualified in their entirety by reference to the Merger Agreement, the Stock Option Agreement and the Voting Agreement. Statements made in analyst presentation that state either companies' or managements' intentions, beliefs, expectations or predictions for the future are forward-looking statements. It is important to note that both companies' actual results could differ materially from those projected in such forward-looking statements. Information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in each companies' filings with the Securities and Exchange Commission ("SEC"). Copies of these filings may be obtained by contacting either Frontier or the SEC. 2 Item 7. Financial Statements and Exhibits. (c) Exhibits. 2 Agreement and Plan of Merger, dated as of March 16, 1999, among Frontier Corporation, Global Crossing Ltd. and GCF Acquisition Corp. 10.1 Stock Option Agreement, dated as of March 16, 1999, between Frontier Corporation and Global Crossing Ltd. 10.2 Voting Agreement, dated as of March 16, 1999, among Frontier Corporation, certain shareholders of Global Crossing Ltd. parties thereto and, for certain purposes, Global Crossing Ltd. 99.1 Joint Press Release of Frontier and Global Crossing dated March 17, 1999. 99.2 Joint Analyst Presentation of Frontier and Global Crossing Ltd. dated March 17, 1999. 3 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Frontier Corporation Dated: March 18, 1999 By: /s/ Martin T. McCue ------------------------------ Name: Martin T. McCue Title: Senior Vice President and General Counsel 4 EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 2 Agreement and Plan of Merger, dated March 16, 1999, among Global Crossing Ltd., Frontier Corporation and GCF Acquisition Corp. 10.1 Stock Option Agreement, dated March 16, 1999, between Global Crossing Ltd. and Frontier Corporation 10.2 Voting Agreement, dated March 16, 1999, among certain shareholders of Global Crossing Ltd. parties thereto, Frontier Corporation and, for certain purposes, Global Crossing Ltd. 99.1 Joint Press Release of Global Crossing and Frontier, dated March 17, 1999. 99.2 Joint Analyst Presentation of Global Crossing and Frontier, dated March 17, 1999 EX-2 2 AGREEMENT AND PLAN OF MERGER EXHIBIT 2 AGREEMENT AND PLAN OF MERGER DATED AS OF MARCH 16, 1999 AMONG GLOBAL CROSSING LTD., GCF ACQUISITION CORP. AND FRONTIER CORPORATION ================================================================================ TABLE OF CONTENTS Page ---- ARTICLE I THE MERGER 1.1 THE MERGER. 2 1.2 CLOSING. 2 1.3 EFFECTIVE TIME 3 1.4 EFFECTS OF THE MERGER 3 1.5 CERTIFICATE OF INCORPORATION 3 1.6 BY-LAWS 3 1.7 OFFICERS AND DIRECTORS OF SURVIVING CORPORATION 3 1.8 EFFECT ON CAPITAL STOCK 4 1.9 VOTING AGREEMENT 5 1.10 ALTERNATIVE TRANSACTION STRUCTURE 5 ARTICLE II EXCHANGE OF CERTIFICATES 2.1 EXCHANGE FUND 13 2.2 EXCHANGE PROCEDURES 13 2.3 DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES 14 2.4 NO FURTHER OWNERSHIP RIGHTS IN FRONTIER COMMON STOCK 15 2.5 NO FRACTIONAL SHARES OF GLOBAL COMMON STOCK 15 2.6 TERMINATION OF EXCHANGE FUND 16 2.7 NO LIABILITY 16 2.8 INVESTMENT OF THE EXCHANGE FUND 16 2.9 LOST CERTIFICATES 17 2.10 WITHHOLDING RIGHTS 17 2.11 FURTHER ASSURANCES 17 2.12 STOCK TRANSFER BOOKS 17 ARTICLE III REPRESENTATIONS AND WARRANTIES 3.1 REPRESENTATIONS AND WARRANTIES OF FRONTIER 18 3.2 REPRESENTATIONS AND WARRANTIES OF GLOBAL 27 3.3 REPRESENTATIONS AND WARRANTIES OF GLOBAL AND MERGER SUB 34 ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS 4.1 COVENANTS OF FRONTIER 35 4.2 COVENANTS OF GLOBAL 39 4.3 ADVICE OF CHANGES; GOVERNMENTAL FILINGS 43 4.4 TRANSITION PLANNING; CONTINUED OPERATIONS OF FRONTIER 44 4.5 SERVICES AGREEMENT 44 4.6 CONTROL OF OTHER PARTY'S BUSINESS 44 ARTICLE V ADDITIONAL AGREEMENTS 5.1 PREPARATION OF PROXY STATEMENT; SHAREHOLDERS MEETINGS 45 5.2 GLOBAL BOARD OF DIRECTORS; OFFICERS; HEADQUARTERS 47 5.3 ACCESS TO INFORMATION 47 5.4 REASONABLE BEST EFFORTS 48 5.5 ACQUISITION PROPOSALS 50 5.6 ASSUMPTION OF FRONTIER STOCK OPTIONS AND WARRANTS; OTHER STOCK PLANS; EMPLOYEE BENEFITS MATTERS 52 5.7 FEES AND EXPENSES 54 5.8 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE 54 5.9 REDEMPTION OF FRONTIER PREFERRED STOCK 55 5.10 PUBLIC ANNOUNCEMENTS 55 5.11 ACCOUNTANTS' LETTERS 55 5.12 LISTING OF SHARES OF GLOBAL COMMON STOCK 56 5.13 VOTING TRUST 56 ARTICLE VI CONDITIONS PRECEDENT 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER 56 6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF GLOBAL AND MERGER SUB 57 6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF FRONTIER 59 ARTICLE VII TERMINATION AND AMENDMENT 7.1 TERMINATION 60 7.2 EFFECT OF TERMINATION 63 7.3 AMENDMENT 64 7.4 EXTENSION; WAIVER 64 ARTICLE VIII GENERAL PROVISIONS 8.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS 64 8.2 NOTICES 65 8.3 INTERPRETATION 66 8.4 COUNTERPARTS 66 8.5 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES 66 8.6 GOVERNING LAW 67 8.7 SEVERABILITY 67 8.8 ASSIGNMENT 67 8.9 SUBMISSION TO JURISDICTION; WAIVERS 67 8.10 ENFORCEMENT 68 8.11 DEFINITIONS 68 8.12 OTHER AGREEMENTS 70 LIST OF EXHIBITS EXHIBIT TITLE A Form of Stock Option Agreement 1.9 Form of Voting Agreement 3.1(k) Form of Affiliate Agreement 4.5 Services Agreement Term Sheet 5.2 Classification of Directors 5.6 Assumption of Frontier Stock Options and Frontier Warrants GLOSSARY OF DEFINED TERMS Definition Location of Definition - ---------- ---------------------- Acquisition Proposal Section 5.5 Affiliate Agreement Section 3.1(k) Agreement Preamble Alternative Merger Section 1.10(a) Alternative Merger Notice Section 1.10(a) Alternative Merger Notice Date Section 1.10(a) Amalgamation Agreement Section 1.10(j)(iii) Applicable Closing Conditions Section 8.11(a) Average Price Section 1.8(a) Blue Sky Laws Section 3.1(c)(iii) Board of Directors Section 8.11(b) Business Day Section 8.11(c) Cash Top-Up Section 7.1(g) Cash Top-Up Election Section 7.1(g) Certificate Section 1.8(b) Closing Section 1.2 Closing Date Section 1.2 Code Recitals Combination Election Section 7.1(g) Combined Voting Power Section 8.11(d) Communications Act Section 3.1(c)(iii) Confidentiality Agreement Section 5.3 Determination Date Section 1.8(a) DOJ Section 5.4(b) Effective Time Section 1.3 Employees Section 1.10(f)(i) ERISA Section 3.1(o)(i) ERISA Affiliate Section 3.1(o)(i) Exchange Act Section 3.1(c)(iii) Exchange Agent Section 2.1 Exchange Fund Section 2.1 Exchange Ratio Section 1.8(a) Expenses Section 5.7 FCC Section 3.1(c)(iii) Form S-4 Section 5.1(a) Frontier Preamble Frontier Affiliate Letter Section 3.1(k) Frontier Benefit Plans Section 3.1(o)(i) Frontier Board Approval Section 3.1(f) Frontier Common Stock Recitals Frontier Disclosure Schedule Section 3.1 Frontier Employees Section 1.10(f)(i) Frontier Evaluation Period Section 7.1(g) Frontier Financial Advisor Section 3.1(i) Frontier Merger Sub Section 1.10(b) Frontier Preferred Stock Section 3.1(b)(i) Frontier SEC Reports Section 3.1(d)(i) Frontier Shareholders Meeting Section 5.1(b) Frontier Stock Option Plans Section 3.1(b)(i) Frontier Stock Options Section 3.1(b)(i) Frontier Sub Section 3.1(d)(i) Frontier Voting Debt Section 3.1(b)(ii) Frontier Warrants Section 3.1(b)(i) GAAP Section 3.1(d)(i) Global Preamble Global Adjustment Election Section 7.1(g) Global Benefit Plans Section 3.2(m) Global Charter Amendment Section 3.2(c)(i) Global Common Stock Recitals Global Disclosure Schedule Section 3.2 Global Draft Disclosures Section 3.2(d)(ii) Global Election Period Section 7.1(g) Global Employees Section 1.10(f)(i) Global Financial Advisor Section 3.2(h) Global Holdings Section 3.2(d)(i) Global Merger Sub Section 1.10(b) Global SEC Reports Section 3.2 (d)(i) Global Shareholders Meeting Section 5.1(c) Global Stock Option Plan Section 3.2(b)(i) Global Transaction Information Section 3.2(d)(ii) Global Voting Debt Section 3.2(b)(ii) Global Warrants Section 3.2 (b)(i) Governmental Entity Section 3.1(c)(iii) HSR Act Section 3.1(c)(iii) Joint Proxy Statement/Prospectus Section 5.1(a) Material Adverse Effect Section 8.11(e) Material Network Contract Section 8.11(f) Merger Recitals Merger Consideration Section 1.8(a) Merger Sub Preamble NASDAQ Section 1.8(a) New Global Section 1.10(b) New Global Common Stock Section 1.10(c)(i) New Global Share Issuance Section 1.10(h)(ii) New York Certificate of Merger Section 1.3 NYBCL Section 1.1 NYSE Section 3.1(c)(iii) Person Section 8.11(g) Plans Section 1.10(f)(i) Principal Shareholders Recitals PUCs Section 3.1(c)(iii) Regulatory Law Section 5.4(b) Required Consents Section 3.1(c)(iii) Required Frontier Vote Section 3.l(g) Required Global Vote Section 3.2(g) Rights Section 3.1(b)(i) Rights Agreement Section 3.1(b)(i) Rule 145 Section 3.1(k) SAS 72 Section 5.11 SEC Section 3.1(d)(i) Securities Act Section 3.1(c)(iii) Share Issuance Section 3.2(c)(i) Stock Option Agreement Recitals Subsidiary Section 8.11(h) Superior Proposal Section 8.11(i) Surviving Corporation Section 1.1 Termination Date Section 7.1(b) Termination Fee Section 7.2(b) Termination Notice Section 7.1(g) The Other Party Section 8.11(j) The Trigger Event Section 8.11(k) Violation Section 3.1(c)(ii) AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER, dated as of March 16, 1999 (this "AGREEMENT"), among Global Crossing Ltd., a company formed under the laws of Bermuda ("GLOBAL"), GCF Acquisition Corp., a New York corporation and a direct wholly-owned subsidiary of Global ("MERGER SUB"), and Frontier Corporation, a New York corporation ("FRONTIER"). W I T N E S S E T H ------------------- WHEREAS, the respective Boards of Directors of Global, Merger Sub and Frontier have each determined that the merger of Merger Sub with and into Frontier (the "MERGER") is in the best interests of their respective shareholders, and such Boards of Directors have approved such Merger and the Alternative Merger (as defined in Section 1.10), upon the terms and subject to the conditions set forth in this Agreement, pursuant to which each outstanding share of common stock, par value $1.00 per share, of Frontier ("FRONTIER COMMON STOCK") issued and out standing immediately prior to the Effective Time (as defined in Section 1.3), other than shares owned or held directly or indirectly by Global or directly by Frontier will be converted into the right to receive shares of common stock, par value $.01 per share, of Global ("GLOBAL COMMON STOCK") as set forth in Section 1.8 or as otherwise provided in Section 1.10 hereof; WHEREAS, Global, Merger Sub and Frontier desire to make certain representations, warranties, covenants and agreements in connection with the transactions contemplated hereby and also to prescribe various conditions to the transactions contemplated hereby; WHEREAS, Global, Merger Sub and Frontier intend, by approving resolutions authorizing this Agreement, to adopt this Agreement as a plan of reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the "CODE"), and the regulations promulgated thereunder; WHEREAS, the Boards of Directors of Frontier and Global have approved and concurrently with the execution of this Agreement Frontier and Global will execute an Agreement in the form attached hereto as Exhibit A (the "STOCK OPTION AGREEMENT") whereby Frontier will grant Global an option to purchase shares of Frontier Common Stock upon the terms and conditions provided in such agreement; WHEREAS, concurrently herewith certain shareholders of Global (collectively, the "PRINCIPAL SHAREHOLDERS") have agreed to vote their shares in favor of the transactions contemplated hereby pursuant to the Voting Agreement (as defined in Section 1.9); and NOW, THEREFORE in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, and intending to be legally bound hereby, the parties hereto agree as follows: ARTICLE I THE MERGER 1.1 THE MERGER. Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the New York Business Corporation Law (the "NYBCL"), Merger Sub shall be merged with and into Frontier at the Effective Time. Following the Merger, the separate corporate existence of Merger Sub shall cease and Frontier shall continue as the surviving corporation (the "SURVIVING CORPORATION"). 1.2 CLOSING. The closing of the Merger (the "CLOSING") will take place on the second Business Day after the satisfaction or waiver (subject to applicable law) of the conditions (excluding conditions that, by their terms, cannot be satisfied until the Closing Date) set forth in Article VI (the "CLOSING DATE"); PROVIDED, HOWEVER, that if the Average Price is less than $34.5625, then the Closing shall not occur prior to (i) if Frontier shall not deliver a Termination Notice (as defined in Section 7.1(g)) to Global in accordance with Section 7.1(g), the second Business Day following the expiration of the Frontier Evaluation Period (as defined in Section 7.1(g)), or (ii) if Frontier shall deliver a Termination Notice to Global in accordance with Section 7.1(g), the second Business Day following the earlier of (A) Global's delivery of a Global Adjustment Election, a Cash Top-Up Election or a Combination Election (in each case, as defined in Section 7(g)) and (B) the expiration of the Global Election Period, in all cases, unless another time or date is agreed to by the parties hereto. The Closing shall be held at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York 10022, unless another place is agreed to by the parties hereto. 1.3 EFFECTIVE TIME. As soon as practicable following the Closing, the parties shall (i) file a certificate of merger (the "NEW YORK CERTIFICATE OF MERGER") in such form as is required by and executed in accordance with the relevant provisions of the NYBCL and (ii) make all other filings or record required under the NYBCL. The Merger shall become effective at such time as the New York Certificate of Merger is duly filed with the New York Department of State in accordance with Section 904 of the NYBCL or at such subsequent time as Global and Frontier shall agree and as shall be specified in the New York Certificate of Merger (the date and time the Merger becomes effective being the "EFFECTIVE TIME"). 1.4 EFFECTS OF THE MERGER. At and after the Effective Time, the Merger will have the effects set forth in Section 906 of the NYBCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time all the property, rights, privileges, powers and franchises of Frontier and Merger Sub shall be vested in the Surviving Corporation, and all debts, liabilities and duties of Frontier and Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation. 1.5 CERTIFICATE OF INCORPORATION. At the Effective Time, the certificate of incorporation of the Surviving Corporation shall be amended in accordance with the NYBCL such that the certificate of incorporation of the Surviving Corporation shall consist of the provisions of the certificate of incorpora incorporation of Merger Sub. 1.6 BY-LAWS. The by-laws of Merger Sub as in effect at the Effective Time shall be the by-laws of the Surviving Corporation until thereafter changed or amended as provided therein or by applicable law. 1.7 OFFICERS AND DIRECTORS OF SURVIVING CORPO RATION. The officers of Frontier as of the Effective Time shall be the officers of the Surviving Corporation, until the earlier of their resignation or removal or otherwise ceasing to be an officer or until their respective successors are duly elected and qualified, as the case may be. The directors of Merger Sub as of the Effective Time shall be the directors of the Surviving Corporation until the earlier of their resignation or removal or otherwise ceasing to be a director or until their respective successors are duly elected and qualified. 1.8 EFFECT ON CAPITAL STOCK. (a) At the Effective Time by virtue of the Merger and without any action on the part of the holder thereof, each share of Frontier Common Stock issued and outstanding immediately prior to the Effective Time (other than shares of Frontier Common Stock owned or held directly or indirectly by Global or directly by Frontier, all of which shall be canceled as provided in Section 1.8(c)) shall, except as provided in Section 7.1(g), be converted into the right to receive that number of shares of Global Common Stock equal to the Exchange Ratio (as defined below) (the "MERGER CONSIDERATION"). "EXCHANGE RATIO" means the quotient (rounded to the nearest 1/10,000) determined by dividing $62.00 by the Average Price as defined below. "AVERAGE PRICE" means the average (rounded to the nearest 1/10,000) of the volume weighted averages (rounded to the nearest 1/10,000) of the trading prices of Global Common Stock on the Nasdaq National Market ("NASDAQ"), as reported by Bloomberg Financial Markets (or such other source as the parties shall agree in writing), for the 15 trading days randomly selected by lot by Frontier and Global together from the 30 consecutive trading days ending on the trading day immediately preceding the date on which all the conditions to Closing (other than conditions that, by their terms, cannot be satisfied until the Closing Date so long as it is reasonably apparent that such conditions will be able to be satisfied on the Closing Date) set forth in Article VI shall have been satisfied or waived (the "DETERMINATION DATE"); PROVIDED, that the Exchange Ratio shall not be less than 1.0919, or, unless Global shall have exercised its rights to make a Global Adjustment Election or a Combination Election under Section 7.1(g), greater than 1.7939. If prior to the Effective Time, Global should split or combine the shares of Global Common Stock, or pay a stock dividend or other stock distribution in shares of Global Common Stock, or otherwise change the shares of Global Common Stock into any other securities, or make any other dividend or distribution on the shares of Global Common Stock, then the Exchange Ratio will be appropriately adjusted to reflect such split, combination, dividend or other distribution or change. (b) As a result of the Merger and without any action on the part of the holders thereof, at the Effective Time, all shares of Frontier Common Stock shall cease to be outstanding and shall be canceled and retired and shall cease to exist, and each holder of a certificate which immediately prior to the Effective Time repre represented any such shares of Frontier Common Stock (a "CERTIFICATE") (other than Merger Sub, Global and Frontier) shall thereafter cease to have any rights with respect to such shares of Frontier Common Stock, except the right to receive the applicable Merger Consideration in accordance with Article II upon the surrender of such certificate. (c) Each share of Frontier Common Stock issued and owned or held directly or indirectly by Global or directly by Frontier at the Effective time shall, by virtue of the Merger, cease to be outstanding and shall be canceled and retired and no stock of Global or other consideration shall be delivered in exchange therefor. (d) Each share of common stock, par value $1.00 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall forthwith cease to exist and shall be converted into one validly issued, fully paid and non-assessable share of common stock, par value $1.00 per share, of the Surviving Corporation as of the Effective Time. 1.9 VOTING AGREEMENT. Concurrently with the execution and delivery of this Agreement, Frontier and the Principal Shareholders are executing and delivering an agreement substantially in the form of Exhibit 1.9 hereto, pursuant to which, among other things, the Principal Shareholders are agreeing to vote all of the shares of Global Common Stock owned, beneficially or of record, by them to approve the Share Issuance and the Global Charter Amendment (in each case, as defined in Section 3.2(c)(i)) and such shares in the aggregate constitute, and at the record date for the Global Shareholders Meeting (as defined in Section 5.1(d)), will constitute at least 51% of the Combined Voting Power (as defined in Section 8.11). 1.10 ALTERNATIVE TRANSACTION STRUCTURE. (a) ALTERNATIVE MERGER NOTICE. Frontier shall be entitled to give Global a notice to adopt the alternative merger structure (the "ALTERNATIVE MERGER") as described in Section 1.10(b) (the "ALTERNATIVE MERGER NOTICE") if (i) the Applicable Closing Conditions (as defined in Section 8.11) have been satisfied, (ii) a Trigger Event (as defined in Section 8.11) has not occurred or is no longer in effect for any reason, and (iii) at least 180 days have passed since the date of this Agreement; provided, however, that if a Trigger Event occurs between 180 days and 240 days after the date of this Agreement, the Alternative Merger Structure Notice shall be deemed terminated if the Form S-4 which contains the Joint Proxy Statement/Prospectus (as defined in Section 5.1) relating to the Merger could be declared effective by the SEC under the Securities Act at an earlier time than the Form S-4 which contains the Joint Proxy Statement/Prospectus relating to the Alternative Merger. Unless the parties otherwise agree, without action on the part of either Global or Frontier, an Alternative Merger Notice shall be deemed to have been given on the date that is 240 days after the date of this Agreement, provided that if a Trigger Event has not occurred or is no longer in effect for any reason, or, if a Trigger Event had occurred, on the later date that such Trigger Event is no longer in effect for any reason. In the event an Alternative Merger Notice is given or deemed to have been given (the "ALTERNATIVE MERGER NOTICE DATE"), the Merger contemplated by Section 1.1 of this Agreement shall be restructured in the manner set forth in this Section 1.10. In such event, all references to the term "MERGER" in this Agreement shall be deemed references to the transactions contemplated by this Section 1.10, all references to the term "EFFECTIVE TIME" in this Agreement shall be deemed references to the time at which (i) the certificate of merger is duly filed with the New York Department of State in accordance with Section 904 of the NYBCL and (ii) the registration of an amalgamated company and such other documents as are required by the Companies Act 1981 Bermuda in connection with the merger are duly filed with the Registrar of Companies Bermuda (or at such later time as is specified in the certificate of merger) with respect to the Merger as restructured in the manner contemplated by this Section 1.10 and except as provided below, Sections 1.8 and 2.5 shall no longer be of any force or effect and the provisions of this Section 1.10 shall govern the terms of the Merger. In the event that the Alternative Merger Notice is given or deemed to be given, references to the term Merger shall be deemed to be a reference to the Alternative Merger. (b) THE ALTERNATIVE MERGER. In the event an Alternative Merger Notice is given or deemed to have been given, New Global corporation, a Delaware corporation ("NEW GLOBAL"), will promptly be formed by and owned equally by Global and Frontier. Global and Frontier will cause New Global to become a party to this Agreement. Prior to the Effective Time of the Alternative Merger, Global and Frontier will cause New Global to incorporate two wholly owned subsidiaries ("GLOBAL MERGER SUB", a Bermuda company and "FRONTIER MERGER SUB", a New York corporation). At the Effective Time of the Alternative Merger, (i) Global Merger Sub shall be amalgamated with and into Global in accordance with the Companies Act of 1981 of Bermuda whereupon the separate existence of Global Merger Sub shall cease, and Global shall continue in the form of the amalgamated company, and (ii) Frontier Merger Sub shall be merged with and into Frontier in accordance with New York Law, whereupon the separate existence of Frontier Merger Sub shall cease, and Frontier shall be the surviving corporation. Frontier and Global are sometimes referred to herein as the "SURVIVING CORPORATIONS". (c) EFFECT OF ALTERNATIVE MERGER ON CAPITAL STOCK. (i) At the Effective Time of the Alternative Merger, (A) each share of Frontier Common Stock outstanding immediately prior to such Effective Time shall, except as otherwise provided below, be converted into the right to receive that number of shares of New Global Common Stock, par value $.01 per share (the "NEW GLOBAL COMMON STOCK"), equal to the Exchange Ratio (as defined in section 1.8(a)) and (B) each share of Global Common Stock outstanding immediately prior to such Effective Time shall be converted into the right to receive 1.0 share of New Global Common Stock. For purposes of the immediately preceding sentence, any cash transferred to the Frontier shareholders pursuant to the Cash Top-Up Election or the Combination Election shall be paid by New Global. (ii) As a result of the Alternative Merger and without any action on the part of the holders thereof, at the Effective Time, all shares of Frontier Common Stock and Global Common Stock shall cease to be outstanding and shall be canceled and retired and shall cease to exist, and each holder of a certificate which immediately prior to the Effective Time represented any such shares of Frontier Common Stock or Global Common Stock (a "CERTIFICATE") (other than New Global, Global Merger Sub, Frontier Merger Sub, Global and Frontier) shall thereafter cease to have any rights with respect to such shares of Frontier Common Stock or Global Common Stock, except the right to receive the applicable Merger Consider ation upon the surrender of such certificate. (iii) Each share of Frontier Common Stock issued and owned or held directly or indirectly by Global or directly by Frontier at the Effective Time and each Share of Global Common Stock issued and owned or held directly or indirectly by Frontier or directly by Global at the Effective Time shall, by virtue of the Alternative Merger, cease to be outstanding and shall be canceled and retired and no stock of New Global or other consideration shall be delivered in exchange therefor. (iv) Each share of common stock of Global Merger Sub or Frontier Merger Sub issued and outstanding immediately prior to the Effective Time shall forthwith cease to exist and shall be converted into one validly issued, fully paid and non-assessable share of common stock of the respective surviving corporation as of the Effective Time. (d) MERGER CONSIDERATION. The New Global Common Stock to be received as consideration in the Alternative Merger by holders of Global Common Stock or Frontier Common Stock is referred to herein as the "MERGER CONSIDERATION". (e) ASSUMPTION OF STOCK OPTIONS AND WARRANTS. New Global shall assume the Frontier Stock Options and Frontier Warrants (as defined in Section 3.1(b)) and the Global Stock Options and Global Warrants (as defined in Section 3.2(b)) on the terms set forth in Exhibits 5.6(i) and (ii) hereto respectively. Frontier and Global agree that each of the company's other stock plans and treatment of each of the company's officers and employees shall be as set forth in the respective exhibits. Frontier and Global shall take all such steps as may be required to cause the transactions contemplated by this Section 1.10(e) and any other dispositions of Frontier and Global equity securities (including derivative securities) or acquisitions of New Global equity securities (including derivative securities) in connection with this Agreement by each individual who (x) is a director or officer of Frontier or Global or (y) at the Effective Time, will become a director or officer of New Global, to be exempt under Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended, such steps to be taken in accordance with the No-Action Letter dated January 12, 1999, issued by the SEC to Skadden, Arps, Slate, Meagher & Flom LLP. (f) EMPLOYEE BENEFITS. (i) OBLIGATIONS OF NEW GLOBAL; COMPARA BILITY OF BENEFITS. Each Frontier and Global Benefit Plan as to which Frontier or Global or any of their respective Subsidiaries has any obligation with respect to any current or former employee (the "FRONTIER EMPLOYEES" and the "GLOBAL EMPLOYEES" together the "EMPLOYEES") shall, as of the Effective Time, be the obligations of New Global and the respective Surviving Corporations. At the Effective Time and for at least two years thereafter, New Global shall, or shall cause the respective Surviving Corporations to, provide benefits, in the aggregate, that are no less favorable than the benefits provided, in the aggregate, under Fron tier's and Global's respective Benefit Plans (the "PLANS") to the Employees immediately prior to the Effective Time. Notwithstanding the foregoing, nothing herein shall require (A) the continuation of any particular Plan or prevent the amendment or termination thereof (subject to the maintenance, in the aggregate, of the benefits as provided in the preceding sentence) or (B) New Global or the respective Surviving Corporations to continue or maintain any stock purchase or other equity plan related to the equity of Frontier or Global or the respective Surviving Corporations. (ii) PRE-EXISTING LIMITATIONS; DEDUCTIBLE; SERVICE CREDIT. With respect to any New Global Benefit Plans in which the Employees participate effective as of the Closing Date or thereafter, New Global shall, or shall cause each of the Surviving Corporations to: (A) not impose any limitations more onerous than those currently in effect as to pre-existing conditions, exclusions and waiting periods with respect to participation and coverage requirements applicable to the Employees under any welfare New Global Benefit Plan in which such Employees may be eligible to participate after the Effective Time, (B) provide each Employee with credit for any co-payments and deductibles paid prior to the Effective Time in satisfying any applicable deductible or out-of-pocket requirements under any welfare New Global Benefit Plan in which such employees may be eligible to participate after the Effective Time, and (C) recognize all service of the Employees with Frontier and Global respectively for all purposes (including, without limitation, purposes of eligibility to participate, vesting credit, entitlement for benefits, and benefit accrual) in any New Global Benefit Plan in which such employ ees may be eligible to participate after the Effective Time, to the same extent taken into account under a comparable Frontier or Global Plan immediately prior to the Closing Date. (g) NO FRACTIONAL SHARES OF NEW GLOBAL COMMON STOCK. (i) No certificates or scrip for shares of New Global Common Stock representing fractional shares of New Global Common Stock shall be issued upon the surrender for exchange of Certificates and such fractional share interests will not entitle the owner thereof to vote or to have any rights of a share holder of New Global or a holder of shares of New Global Common Stock. (ii) Notwithstanding any other provision of this Agreement, each holder of shares of Frontier Common Stock exchanged pursuant to the Alternative Merger who would otherwise have been entitled to receive a fraction of a share of New Global Common Stock (after taking into account all Certificates delivered by such holder) shall receive, in lieu thereof, cash (without interest) in an amount equal to the product of (A) such fractional part of a share of New Global Common Stock multiplied by (B) the last sales price per share of Global Common Stock reported on NASDAQ as reported in THE WALL STREET JOURNAL, Eastern edition, on the Closing Date. As promptly as practicable after the determina tion of the amount of cash, if any, to be paid to holders of fractional interests, the Exchange Agent shall notify New Global, and New Global shall cause the surviving corporation to deposit such amount with the Exchange Agent and shall cause the Exchange Agent to forward payments to such holders of fractional interests subject to and in accordance with the terms hereof. (h) REPRESENTATIONS AND WARRANTIES OF NEW GLOBAL. Immediately prior to the Effective Time of the Alternative Merger, New Global will become a party to this Agreement and make the following representa tions and warranties to each of Global and Frontier: (i) ORGANIZATION, STANDING AND POWER. At the Effective Time, New Global will be a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization, and will have all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted by Frontier and Global and will be duly qualified and in good standing to do business in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification necessary other than in such jurisdictions where the failure so to qualify or to be in good standing would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on New Global. (ii) AUTHORITY; NO CONFLICTS (A) At the Effective Time, New Global will have all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby, subject, in the case of the issuance of the shares of New Global Common Stock to be issued in the Merger (the "NEW GLOBAL SHARE ISSUANCE") and the New Global certificate of incorpo ration will provide for authorized shares of New Global Common Stock of not less than 2 billion shares. The execution and delivery of this Agreement and the consum mation of the transactions contemplated hereby will be duly authorized by all necessary corporate action on the part of New Global. This Agreement will be duly executed and delivered by New Global and will constitute a valid and binding agreement of New Global, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws relating to or affecting creditors generally, by general equity principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) or by an implied covenant of good faith and fair dealing. (B) At the Effective Time, the execution and delivery of this Agreement by New Global will not, and the consummation by New Global of the Alternative Merger and the other transactions contemplated hereby will not, conflict with, or result in a Violation (as defined in Section 3.1(c)(ii)) pursuant to: (x) any provision of the certificate of incorporation or by-laws of New Global or any charter document of any Subsidiary of New Global, or (y) except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on New Global, subject to obtaining or making the consents, approvals, orders, authorizations, registrations, declarations and filings referred to in paragraph (C) below, any loan or credit agreement, note, mortgage, bond, indenture, lease, benefit plan or other agreement, obligation, instrument, permit, concession, fran chise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to New Global or any Subsidiary of New Global or their respective properties or assets. (C) At the Effective Time, no consent, approval, order or authorization of, or registration, declaration or filing with, any Governmen tal Entity will be required by or with respect to New Global or any Subsidiary of New Global in connection with the execution and delivery of this Agreement by New Global or the consummation of the Alternative Merger and the other transactions contemplated hereby, except for the Required Consents, and such consents, approvals, orders, authorizations, registrations, declarations and filings the failure of which to make or obtain would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on New Global. (iii) BOARD APPROVAL. At the Effective Time, the Board of Directors of New Global, by resolutions duly adopted at a meeting duly called and held and not subsequently rescinded or modified in any way, will duly (A) determine that this Agreement and the Alternative Merger are in the best interests of New Global and its shareholders, and (B) approve this Agreement, the Alternative Merger and the issuance of shares of New Global Common Stock, and (C) recommend that the shareholders of New Global approve this Agreement and the issuance of shares of New Global Common Stock in the Alternative Merger. (iv) SHAREHOLDER VOTE. Global and Frontier as the holders of all of the outstanding shares of New Global Common Stock shall vote to approve this Agreement and the issuance of shares of New Global Common Stock in the Alternative Merger. (i) COVENANTS OF GLOBAL AND FRONTIER. Prior to the Effective Time of the Alternative Merger, Global and Frontier shall ensure that New Global, Global Merger Sub and Frontier Merger Sub take no actions and undertake no operations except as may be necessary in connection with the consummation of the Merger and the transactions contemplated hereby. (j) MODIFICATIONS TO AGREEMENT. (i) At the time of the Alternative Merger Notice Date, and without any further action on the part of either Frontier or Global, a new Section 6.2(e) and 6.3(d) to this Agreement will be added as follows: "New Global shall have performed in all material respects all of its obligations hereunder required to be performed by it at or prior to the Effective Time, and the representations and warranties of New Global shall be accurate in all material respects at and as of the Effective Time." and a new Section 6.1(h) will be added as follows: "The shares of New Global Common Stock to be issued in the Alternative Merger and such other shares to be reserved for issuance in the Alterna tive Merger shall have been approved upon official notice of issuance for quotation on NASDAQ." (ii) Global and Frontier agree that in the event of the Alternative Merger Notice, any and all other appropriate adjustments shall be made to the other terms and conditions of this Agreement to reflect the transactions contemplated by this Section 1.10. (iii) For the purposes of implementing the Alternative Merger, Global and Global Merger Sub shall enter into an Amalgamation Agreement (the "AMALGAMATION AGREEMENT") in accordance with the laws of Bermuda for presentation to and approval of the shareholders of Global and Global Merger Sub. (k) LISTING OF SHARES OF NEW GLOBAL COMMON STOCK. New Global shall use its best efforts to cause the shares of New Global Common Stock to be issued in the Alternative Merger, and the shares of New Global Common Stock to be reserved for issuance upon exercise of the Frontier Stock Options, the Frontier Warrants, the Frontier Convertible Debt (as defined in Section 3.1(b)), and the Global Stock Options and Warrants, to be approved for quotation, upon official notice of issuance, on NASDAQ. ARTICLE II EXCHANGE OF CERTIFICATES 2.1 EXCHANGE FUND. Prior to the Effective Time, Global shall appoint First Chicago Trust Company of New York or another commercial bank or trust company having net capital of not less than $100,000,000, or a subsidiary thereof, to act as exchange agent hereunder for the purpose of exchanging Certificates for the Merger Consideration (the "EXCHANGE AGENT"). At or prior to the Effective Time, Global shall deposit with the Exchange Agent, in trust for the benefit of holders of shares of Frontier Common Stock, certificates representing the Global Common Stock issuable pursuant to Section 1.8 in exchange for outstanding shares of Frontier Common stock and, if applicable, cash to be paid as a result of the Cash Top-Up pursuant to Section 7.1(g). Global agrees to make available to the Exchange Agent from time to time as needed, cash sufficient to pay cash in lieu of fractional shares pursuant to Section 2.5, and any dividends and other distributions pursuant to Section 2.3. Any cash and certificates of Global Common Stock depos ited with the Exchange Agent shall hereinafter be referred to as the "EXCHANGE FUND." 2.2 EXCHANGE PROCEDURES. As soon as reasonably practicable after the Effective Time, the Surviving Corporation shall cause the Exchange Agent to mail to each holder of a Certificate (i) a letter of transmittal which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Exchange Agent, and which letter shall be in customary form and have such other provisions as Global may reasonably specify and (ii) instructions for effecting the surrender of such Certificates in exchange for the applicable Merger Consideration. Upon surrender of a Certificate to the Exchange Agent together with such letter of transmittal, duly executed and completed in accordance with the instructions thereto, and such other documents as may reasonably be required by the Exchange Agent, the holder of such Certificate shall be entitled to receive in exchange therefor (A) one or more certifi cates for Global Common Stock representing, in the aggregate, the whole number of shares that such holder has the right to receive pursuant to Section 1.8 (after taking into account all shares of Frontier Common Stock then held by such holder) and (B) a check in the amount equal to the cash that such holder has the right to receive pursuant to the provisions of this Article II, including cash in lieu of any fractional shares of Global Common Stock pursuant to Section 2.5, any dividends and other distributions pursuant to Section 2.3 and any cash to be paid as a result of a Cash Top-Up pursuant to Section 7.1(g). No interest will be paid or will accrue on any cash payable pursuant to Section 2.3, Section 2.5 or as a result of a Cash Top-Up pursuant to Section 7.1(g). In the event of a transfer of ownership of Frontier Common Stock which is not registered in the transfer records of Frontier, certificates for one or more shares of Global Common Stock evidencing, in the aggregate, the proper number of shares of Global Common Stock and a check in the proper amount of cash in lieu of any fractional shares of Global Common Stock pursuant to Section 2.5, any dividends or other distributions to which such holder is entitled pursuant to Section 2.3, and as a result of a Cash Top-Up pursuant to Section 7.1(g) may be issued with respect to such Frontier Common Stock to such a transferee if the Certificate representing such shares of Frontier Common Stock is presented to the Exchange Agent, accompanied by all documents required to evidence and effect such transfer and to evidence that any applicable stock transfer taxes have been paid. 2.3 DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or other distributions declared or made with respect to shares of Global Common Stock with a record date after the Effective Time (if any) shall be paid to the holder of an unsurrendered Certificate with respect to the shares of Global Common Stock that such holder would be entitled to receive upon surrender of such Certificate, no cash payment in lieu of fractional shares of Global Common Stock shall be paid to any such holder pursuant to Section 2.5 and no cash payment as a result of a Cash Top-Up pursuant to Section 7.1(g) shall be paid to any such holder, until such holder shall surrender such Certificate in accordance with Section 2.2. Subject to the effect of applicable laws, following surrender of any such Certificate, there shall be paid to such holder of shares of Global Common Stock issuable in exchange therefor, without interest, (a) promptly after the time of such surrender, the amount of any cash payable in lieu of fractional shares of Global Common Stock to which such holder is entitled pursuant to Section 2.5, the amount of any dividends or other distributions with a record date after the Effective Time theretofore paid with respect to such whole shares of Global Common Stock and any cash payment as a result of a Cash Top-Up pursuant to Section 7.1(g), and (b) at the appropriate payment date, the amount of any dividends or other distributions with a record date after the Effective Time but prior to such surrender and a payment date subsequent to such surrender payable with respect to such shares of Global Common Stock. 2.4 NO FURTHER OWNERSHIP RIGHTS IN FRONTIER COMMON STOCK. All shares of Global Common Stock issued and cash paid upon conversion of shares of Frontier Common Stock in accordance with the terms of Article I and this Article II (including any cash paid pursuant to Section 2.3, 2.5 or as a result of a Cash Top-Up pursuant to Section 7.1(g)) shall be deemed to have been issued or paid in full satisfaction of all rights pertaining to the shares of Frontier Common Stock. 2.5 NO FRACTIONAL SHARES OF GLOBAL COMMON STOCK. (a) No certificates or scrip for shares of Global Common Stock representing fractional shares of Global Common Stock shall be issued upon the surrender for exchange of Certificates and such fractional share interests will not entitle the owner thereof to vote or to have any rights of a shareholder of Global or a holder of shares of Global Common Stock. (b) Notwithstanding any other provision of this Agreement, each holder of shares of Frontier Common Stock exchanged pursuant to the Merger who would otherwise have been entitled to receive a fraction of a share of Global Common Stock (after taking into account all Certificates delivered by such holder) shall receive, in lieu thereof, cash (without interest) in an amount equal to the product of (i) such fractional part of a share of Global Common Stock multiplied by (ii) the last sales price per share of Global Common Stock reported on NASDAQ as reported in THE WALL STREET JOURNAL, Eastern edition, on the Closing Date. As promptly as practicable after the determination of the amount of cash, if any, to be paid to holders of fractional interests, the Exchange Agent shall notify Global, and Global shall cause the Surviving Corporation to deposit such amount with the Exchange Agent and shall cause the Exchange Agent to forward payments to such holders of fractional interests subject to and in accordance with the terms hereof. 2.6 TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund which remains undistributed to the holders of Certificates for twelve months after the Effective Time shall be delivered to the Surviving Corpora tion or otherwise on the instruction of the Surviving Corporation, and any holders of the Certificates who have not theretofore complied with this Article II shall thereafter look only to the Surviving Corporation and Global for the Merger Consideration with respect to the shares of Frontier Common Stock formerly represented thereby to which such holders are entitled pursuant to Section 1.8 and Section 2.2, any cash in lieu of fractional shares of Global Common Stock to which such holders are entitled pursuant to Section 2.5, any dividends or distributions with respect to shares of Global Common Stock to which such holders are entitled pursuant to Section 2.3 and any cash payment as a result of a Cash Top-Up pursuant to Section 7.1(g). 2.7 NO LIABILITY. None of Global, Merger Sub, Frontier, the Surviving Corporation or the Exchange Agent shall be liable to any Person in respect of any Merger Consideration from the Exchange Fund delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. 2.8 INVESTMENT OF THE EXCHANGE FUND. Except as provided below, the Exchange Agent shall invest any cash included in the Exchange Fund as directed by the Surviving Corporation on a daily basis. If Global exercises the Cash Top-Up Election pursuant to Section 7.1(g), then the Exchange Agent shall invest the cash included in the Exchange Fund only in one or more of the following investments as directed by the Surviving Corporation from time to time in (a) obligations of the United States government maturing not more than 180 days after the date of purchase; (b) certificates of deposit maturing not more than 180 days after the date of purchase issued by a bank organized under the laws of the United States or any state thereof having combined capital and surplus of at least $500,000,000; (c) a money market fund having assets of at least $3,000,000,000; or (d) tax-exempt or corporate debt obligations maturing not more than 180 days after the date of pur chase given the highest investment grade rating by Standard & Poor's and Moody's Investor Service. Any interest and other income resulting from such investments shall promptly be paid to the Surviving Corporation. 2.9 LOST CERTIFICATES. If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by the Surviving Corporation, the posting by such Person of a bond in such reasonable amount as the Surviving Corporation may direct as indemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agent will deliver in exchange for such lost, stolen or destroyed Certificate the applicable Merger Consideration with respect to the shares of Frontier Common Stock formerly represented thereby, any cash in lieu of fractional shares of Global Common Stock, and unpaid dividends and distributions on shares of Global Common Stock deliverable in respect thereof, pursuant to this Agreement. 2.10 WITHHOLDING RIGHTS. Each of the Surviving Corpora tion and Global shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of shares of Frontier Common Stock such amounts as it is required to deduct and withhold with respect to the making of such payment under the Code and the rules and regulations promul gated thereunder, or any provision of state, local or foreign tax law. To the extent that amounts are so withheld by the Surviving Corporation or Global, as the case may be, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the shares of Frontier Common Stock in respect of which such deduction and withholding was made by the Surviving Corporation or Global, as the case may be. 2.11 FURTHER ASSURANCES. At and after the Effective Time, the officers and directors of the Surviving Corporation will be authorized to execute and deliver, in the name and on behalf of Frontier or Merger Sub, any deeds, bills of sale, assignments or assurances and to take and do, in the name and on behalf of Frontier or Merger Sub, any other actions and things to vest, perfect or confirm of record or otherwise in the Surviving Corporation any and all right, title and interest in, to and under any of the rights, properties or assets acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger. 2.12 STOCK TRANSFER BOOKS. At the close of business, New York City time, on the day the Effective Time occurs, the stock transfer books of Frontier shall be closed and there shall be no further registration of transfers of shares of Frontier Common Stock thereafter on the records of Frontier. From and after the Effective Time, the holders of Certificates shall cease to have any rights with respect to such shares of Frontier Common Stock formerly represented thereby, except as otherwise provided herein or by law. On or after the Effective Time, any Certificates presented to the Exchange Agent, the Surviving Corporation or Global for any reason shall be converted into the Merger Consideration with respect to the shares of Frontier Common Stock formerly represented thereby, any cash in lieu of fractional shares of Global Common Stock to which the holders thereof are entitled pursuant to Section 2.5, any dividends or other distributions to which the holders thereof are entitled pursuant to Section 2.3 and any cash payment as a result of a Cash Top-Up pursuant to Section 7.1(g). ARTICLE III REPRESENTATIONS AND WARRANTIES 3.1 REPRESENTATIONS AND WARRANTIES OF FRON TIER. Except as set forth in the Frontier Disclosure Schedule delivered by Frontier to Global prior to the execution of this Agreement (the "FRONTIER DISCLOSURE SCHEDULE"), Frontier represents and warrants to Global as follows: (a) ORGANIZATION, STANDING AND POWER. Each of Frontier and each of its Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organiza tion, has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted and is duly qualified and in good standing to do business in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification necessary other than in such jurisdictions where the failure so to qualify or to be in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect (as defined in Section 8.11) on Frontier. The copies of the restated certificate of incorporation and by-laws of Frontier which were previously furnished to Global are true, complete and correct copies of such documents as in effect on the date of this Agreement. (b) CAPITAL STRUCTURE. (i) As of March 12, 1999, the authorized capital stock of Frontier consisted of (A) 300,000,000 shares of Frontier Common Stock, of which 172,321,329 shares were outstanding, (B) 850,000 shares of Cumulative Preferred Stock, par value $100 per share, of which 53,067 shares of Cumulative Preferred Stock, 5% Series, 38,492 shares of Cumulative Preferred Stock, Second 5% Series, 48,044 shares of Cumulative Preferred Stock, 5.65% Series, 41,514 shares of Cumulative Preferred Stock, 4.60% Series (collectively, the "FRONTIER PRE FERRED STOCK") and no shares of Convertible Preferred Stock, 5% Series were outstanding, (C) 4,000,000 shares of Class A Preferred Stock, par value $100 per share, of which no shares were outstanding, and (D) 3,000,000 shares of Junior Participating Class A Preferred Stock which were reserved for issuance upon exercise of the rights (the "RIGHTS") distributed to the holders of Frontier Common Stock pursuant to the Rights Agreement, dated as of April 9, 1995, between Frontier and First National Bank of Boston, as Rights Agent, as amended (the "RIGHTS AGREEMENT"). Since March 12, 1999 to the date of this Agreement, there have been no issuances of shares of the capital stock of Frontier or any other securities of Frontier other than issuances of shares (and accompanying Rights) pursuant to options or rights outstanding as of March 12, 1999 under the Frontier Benefit Plans (as defined in Section 3.1(o)). All issued and outstanding shares of the capital stock of Frontier are duly authorized, validly issued, fully paid and non-assessable, and no class of capital stock is entitled to preemptive rights. There were outstanding as of March 12, 1999 no options, warrants or other rights to acquire capital stock from Frontier other than (w) the Rights, (x) options representing in the aggregate the right to purchase 14,902,015 shares of Frontier Common Stock (collectively, the "FRONTIER STOCK OPTIONS") under the Directors' Stock Incentive Plan, the Employees' Stock Option Plan, the Management Stock Incentive Plan, the ALC Communications Corporation 1994 Non-Employee Director Stock Option Plan, the ALC Communications Corporation 1990 Stock Option Plan, the ALC Communications Corporation 1986 Stock Option Plan, the GlobalCenter, Inc. 1997 Stock Plan Stock Option Agreement and the (GlobalCenter) Primenet Services for the Internet, Inc. 1995 Stock Option Plan (collectively, the "FRONTIER STOCK OPTION PLANS"), (y) warrants to purchase up to 27,699 shares of Frontier Common Stock (the "FRONTIER WARRANTS"), and (z) 10.46% convertible debenture due October 27, 2008 with the Walters Trust (Canandaigua National Bank) which are Convertible into Frontier Common Stock at $10.5375 per share (the "FRONTIER CONVERTIBLE DEBT"). As of March 12, 1999, Frontier had further reserved 17,857,123 shares of Frontier Common Stock for purchase pursuant to the Frontier Stock Option Plans, Convertible Debentures and the Frontier Warrants. Other than pursuant to the Stock Option Agreement, the associated Rights issued with the shares issued as described above, no options or warrants or other rights to acquire capital stock from Frontier have been issued or granted since March 12, 1999 to the date of this Agreement. (ii) As of the date of this Agreement, no bonds, debentures, notes or other indebtedness of Frontier having the right to vote on any matters on which shareholders may vote ("FRONTIER VOTING DEBT") are issued or outstanding. (iii) Except as otherwise set forth in this Section 3.1(b) and the Stock Option Agreement and as contemplated by Section 5.6, as of the date of this Agreement, there are no securities, options, warrants, calls, rights, commitments, agreements, arrangements or undertakings of any kind to which Frontier or any of its Subsidiaries is a party or by which any of them is bound obligating Frontier or any of its Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other voting securities of Frontier or any of its Subsidiaries or obligating Frontier or any of its Subsidiaries to issue, grant, extend or enter into any such security, option, warrant, call, right, commitment, agreement, arrangement or undertaking. As of the date of this Agreement, and except as contemplated by Section 5.9, there are no outstanding obligations of Frontier or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock of Frontier or any of its Subsidiaries. (c) AUTHORITY; NO CONFLICTS. (i) Frontier has all requisite corporate power and authority to enter into this Agreement and the Stock Option Agreement and to consummate the transactions contemplated hereby and thereby, subject in the case of the consummation of the Merger to the adoption of this Agreement by the Required Frontier Vote (as defined in Section 3.1(g)). The execution and delivery of this Agreement and the Stock Option Agreement and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of Frontier, subject in the case of the consummation of the Merger to the adoption of this Agreement by the Required Frontier Vote. This Agreement and the Stock Option Agreement have been duly executed and delivered by Frontier and each constitutes a valid and binding agreement of Frontier, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws relating to or affecting creditors generally, by general equity principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) or by an implied covenant of good faith and fair dealing. (ii) The execution and delivery of this Agreement and the Stock Option Agreement by Frontier does not and the consummation of the Merger by Frontier and the other transactions contemplated hereby or thereby will not, conflict with, or result in any violation of, or constitute a default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, amend ment, cancellation or acceleration of any obligation or the loss of a material benefit under, or the creation of a lien, pledge, security interest, charge or other encumbrance on any assets (any such conflict, violation, default, right of termination, amendment, cancellation or acceleration, loss or creation, a "VIOLATION") pursuant to: (A) any provision of the certificate of incorporation or by-laws of Frontier or any Subsidiary of Frontier, or (B) except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Frontier, subject to obtaining or making the consents, approvals, orders, authorizations, registrations, declarations and filings referred to in paragraph (iii) below, any loan or credit agreement, note, mortgage, bond, indenture, lease, benefit plan or other agreement, Material Network Contract (as defined in Section 8.11), obligation, instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Frontier or any Subsidiary of Frontier or their respective properties or assets. (iii) No consent, approval, order or authorization of, or registration, declaration or filing with, any supranational, national, state, municipal or local government, any instrumentality, subdivision, court, administrative agency or commission or other authority thereof, or any quasi- governmental or private body exercising any regulatory, taxing, importing or other governmental or quasi-governmental authority (a "GOVERNMENTAL ENTITY"), is required by or with respect to Frontier or any Subsidiary of Frontier in connection with the execu tion and delivery of this Agreement and the Stock Option Agreement by Frontier or the consummation of the Merger and the other transactions contemplated hereby or thereby, except for those required under or in relation to (A) the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), (B) the Communications Act of 1934, as amended (the "COMMUNICATIONS ACT"), and any rules and regulations promulgated by the Federal Communications Commission ("FCC"), (C) state securities or "blue sky" laws (the "BLUE SKY LAWS"), (D) the Securities Act of 1933, as amended (the "SECURITIES ACT"), (E) the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), (F) the NYBCL with respect to the filing of the New York Certificate of Merger, (G) laws, rules, regula tions, practices and orders of any state or state public service commissions ("PUCS"), local franchising authorities, foreign telecommunications regulatory agencies or similar state or foreign regulatory bodies, (H) rules and regulations of NASDAQ and the New York Stock Exchange, Inc. (the "NYSE"), (I) antitrust or other competition laws of other jurisdictions, and (J) such consents, approvals, orders, authorizations, registrations, declarations and filings the failure of which to make or obtain would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Frontier. Consents, approvals, orders, authorizations, registrations, declarations and filings required under or in relation to any of the foregoing clauses (A) through (I) are hereinafter referred to as "REQUIRED CONSENTS." (d) REPORTS AND FINANCIAL STATEMENTS. (i) Frontier and Frontier Telephone of Rochester, Inc., a New York corporation ("FRONTIER SUB"), have filed all required reports, schedules, forms, statements and other documents required to be filed by it with the Securities and Exchange Commission (the "SEC") since January 1, 1998 including Frontier's Current Report on Form 8-K, dated January 26, 1999, containing Frontier's audited financial statements for the year ended December 31, 1998 and its proxy statement with respect to the proposed 1999 annual meeting of shareholders of Frontier (collectively, including all exhibits thereto, the "FRONTIER SEC REPORTS"). Other than Frontier Sub, no Subsidiary of Frontier is required to file any form, report or other document with the SEC. None of the Frontier SEC Reports, as of their respective dates (and, if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing), contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Each of the financial statements (including the related notes) included in the Frontier SEC Reports presents fairly, in all material respects, the consolidated financial position and consolidated results of operations and cash flows of Frontier and its Subsidiaries as of the respective dates or for the respective periods set forth therein, all in conformity with United States generally accepted accounting principles ("GAAP") consistently applied during the periods involved except as otherwise noted therein, and subject, in the case of the unaudited interim financial statements, to normal and recurring year-end adjustments that have not been and are not expected to be material in amount. All of such Frontier SEC Reports, as of their respective dates, complied as to form in all material respects with the applicable requirements of the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder. (ii) From December 31, 1998 until the date of this Agreement, Frontier and its Subsidiaries have not incurred any liabilities that are of a nature that would be required to be disclosed on a balance sheet of Frontier and its Subsidiaries or the footnotes thereto prepared in conformity with GAAP, other than (A) liabilities incurred in the ordinary course of business or (B) liabilities that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Frontier. (e) INFORMATION SUPPLIED. (i) None of the information supplied or to be supplied by Frontier for inclusion or incorporation by reference in (A) the registration statement on Form S-4 (as defined in Section 5.1) to be filed with the SEC by Global in connection with the issuance of the Global Common Stock in the Merger will, at the time it becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and (B) the Joint Proxy Statement/Prospectus (as defined in Section 5.1) included in the Form S-4 relating to the Frontier Shareholders Meeting and the Global Shareholders Meeting (each, as defined in Section 5.1) and the Global Common Stock to be issued in the Merger will, on the date it is first mailed to Frontier shareholders or Global shareholders or at the time of the Frontier Shareholders Meeting or the Global Shareholders Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (ii) Notwithstanding the foregoing provisions of this Section 3.1(e), no representation or warranty is made by Frontier with respect to statements made or incorporated by reference in the Form S-4 or the Joint Proxy Statement/Prospectus based on information supplied by Global for inclusion or incorporation by reference therein. (f) BOARD APPROVAL. The Board of Directors of Frontier, by resolutions duly adopted at a meeting duly called and held and not subsequently rescinded or modified in any way (the "FRONTIER BOARD APPROVAL"), has duly (i) determined that this Agreement, the Stock Option Agreement, the Merger and the Alternative Merger are in the best interests of Frontier and its shareholders, (ii) adopted this Agreement and approved the Stock Option Agreement, the Merger and the Alternative Merger and (iii) recommended that the shareholders of Frontier adopt this Agreement and approve the Merger or, if applicable, the Alternative Merger. The Frontier Board Approval constitutes approval of this Agreement, the Stock Option Agreement, the Merger and the Alternative Merger for purposes of Section 912 of the NYBCL (assuming that Global is not an "interested shareholder" under Section 912 of the NYBCL immediately before the execution and delivery of this Agreement and the Stock Option Agreement and does not take any other actions to become an "interested shareholder" thereunder). (g) VOTE REQUIRED. The affirmative vote of the holders of two-thirds of the outstanding shares of Frontier Common Stock (the "REQUIRED FRONTIER VOTE") is the only vote of the holders of any class or series of Frontier capital stock necessary to adopt this Agreement and approve the transactions contemplated hereby (assuming that Global is not an "interested shareholder" under Section 912 of the NYBCL immediately before the execution and delivery of this Agreement and the Stock Option Agreement and does not take any other actions to become an "interested shareholder" thereunder); provided that the redemption notice described in Frontier's restated certificate of incorporation is given and all funds necessary for such redemption are set aside prior to the Frontier Shareholders Meeting. No vote of the shareholders of Frontier is required to approve the Stock Option Agreement. (h) RIGHTS AGREEMENT. The Board of Directors of Frontier has approved an amendment to the Rights Agreement to the effect that none of Global or its affiliates or associates shall become an "Acquiring Person" (as defined in the Rights Agreement) by reason of the execution of this Agreement or the Stock Option Agreement, the exercise of the option granted thereby or the consummation of the Merger or the Alternative Merger. (i) BROKERS OR FINDERS. No agent, broker, investment banker, financial advisor or other firm or Person is or will be entitled to any broker's or finder's fee or any other similar commission or fee in connection with any of the transactions contemplated by this Agreement, except Morgan Stanley & Co. Incorporated (the "FRONTIER FINANCIAL ADVISOR"), whose fees and expenses will be paid by Frontier in accordance with Frontier's agreement with such firm, based upon arrangements made by or on behalf of Frontier and previously disclosed to Global. (j) OPINION OF FRONTIER FINANCIAL ADVISOR. Frontier has received the opinion of the Frontier Financial Advisor, dated the date of this Agreement, to the effect that, as of such date, the Exchange Ratio is fair, from a financial point of view, to the holders of Frontier Common Stock, a copy of which opinion has been made available to Global. (k) AFFILIATE LETTER AND AGREEMENTS. On or prior to the date of the Frontier Shareholders Meeting, Frontier will deliver to Global a letter (the "FRONTIER AFFILIATE LETTER") identifying all persons who may, at the time this Agreement is submitted for adoption by the shareholders of Frontier, be deemed to be "affiliates" of Frontier for purposes of Rule 145 under the Securities Act ("RULE 145"). On or prior to the Closing Date, Frontier will use all reasonable efforts to cause each person identified as an "affiliate" in the Frontier Affiliate Letter to deliver a written agreement (an "AFFILIATE AGREEMENT") in substantially the form of Exhibit 3.1(k) attached hereto in connection with restrictions on affiliates under Rule 145. (l) LITIGATION. Except as disclosed in the Frontier SEC Reports and except for claims, actions, suits, proceedings or investigations which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Frontier, there are no claims, actions, suits, proceedings or investigations pending or, to Frontier's knowledge, threatened against Frontier or any of its Subsidiaries, or any properties or rights of Frontier or any of its Subsidiaries, before any Governmental Entity. (m) NO VIOLATION OF LAW. The business of Frontier and its Subsidiaries is not being conducted in violation of any statute, law, ordinance, regulation, judgment, order or decree of any Governmental Entity (including any stock exchange or other self-regulatory body), or in violation of any permits, franchises, licenses, authorizations or consents that are granted by any Governmental Entity (including any stock exchange or other self-regulatory body), except for possible violations which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Frontier, and except as disclosed in the Frontier SEC Reports. Except as disclosed in the Frontier SEC Reports and except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Frontier, no investigation or review by any Governmental Entity (including any stock exchange or other self-regulatory body) with respect to Frontier or its Subsidiaries in relation to any alleged violation of law or regulation is pending or, to Frontier's knowledge, threatened, nor has any Govern mental Entity (including any stock exchange or other self-regulatory body) indicated in writing an intention to conduct the same. Neither Frontier nor any of its Subsid iaries is subject to any cease and desist or other order, judgment, injunction or decree issued by, or is a party to any written agreement, consent agreement or memorandum of understanding with, or is a party to any commitment letter or similar undertaking to, or is subject to any order or directive by, or has adopted any board resolutions at the request of, any Governmental Entity that materially restricts the conduct of its business other than those which would not, individually or in the aggregate, reason ably be expected to have a Material Adverse Effect on Frontier, nor has Frontier or any of its Subsidiaries been advised in writing that any Governmental Entity is considering issuing or requesting any of the foregoing. (n) TAXES. All material Federal, state, local, and foreign tax returns required to be filed by Frontier and its Subsidiaries have been timely filed. All material taxes shown on such returns as being due or claimed to be due from Frontier and its Subsidiaries in a written statement have been paid other than those (i) currently payable without penalty or interest or (ii) being contested in good faith and by appropriate proceedings timely instituted and diligently pursued and for which adequate reserves have been established on the books and records of Frontier and its Subsidiaries, as the case may be, in accordance with generally accepted accounting principles. (o) FRONTIER BENEFIT PLANS (i) Each deferred compensation and each incentive compensation, equity compensation plan, "welfare" plan, fund or program (within the meaning of section 3(1) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")); "pension" plan, fund or program (within the meaning of section 3(2) of ERISA); each employment, consulting, continuation, termination or severance agreement; and each other employee benefit plan, fund, program, agreement or arrangement, in each case, that is sponsored, maintained or contributed to or required to be contributed to by Frontier or by any trade or business, whether or not incorporated (an "ERISA AFFILIATE"), that together with Frontier would be deemed a "single employer" within the meaning of section 4001(b) of ERISA, or to which Frontier or an ERISA Affiliate is party, whether written or oral, for the benefit of any employee or former employee of Frontier or any Subsidiary (the "FRONTIER BENEFIT PLANS") is in compliance with all applicable provisions of ERISA and the Code, and neither Frontier nor any ERISA Affiliates have any liabilities or obligations with respect to any such Frontier Benefit Plans, whether or not accrued, contingent or otherwise, except (x) as described in any of the Frontier SEC Reports or set forth in Section 3.1(o)(i) of the Frontier Disclosure Schedule or (y) for in stances of noncompliance or liabilities or obligations that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Frontier. (ii) No amount in excess of $150 million, which amount relates to "parachute payments" (as defined in the Code) to the nineteen executive officers of Frontier under the change in control agreements to which each such executive officer is a party or under the Frontier Benefit Plans in which such executive officers participate, shall fail to be deductible for federal income tax purposes by virtue of Section 280G of the Code. 3.2 REPRESENTATIONS AND WARRANTIES OF GLOBAL. Except as set forth in the Global Disclosure Schedule delivered by Global to Frontier prior to the execution of this Agreement (the "GLOBAL DISCLOSURE SCHED ULE"), Global represents and warrants to Frontier as follows: (a) ORGANIZATION, STANDING AND POWER. Each of Global and each of its Subsidiaries is a company, or a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization, has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted and is duly qualified and in good standing to do business in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification necessary other than in such jurisdictions where the failure so to qualify or to be in good standing would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Global. The copies of the memoran dum of association and bye-laws of Global which were previously furnished to Frontier are true, complete and correct copies of such documents as in effect on the date of this Agreement. (b) CAPITAL STRUCTURE. (i) As of March 12, 1999, the authorized capital stock of Global consisted of 600,000,000 shares of Global Common Stock of which 411,357,572 shares were outstanding. Since March 12, 1999 to the date of this Agreement, there have been no issuances of shares of the capital stock of Global or any other securities of Global other than issuances of shares pursuant to options or rights outstanding under the Global Benefit Plans (as defined in Section 3.2(m)). All issued and outstanding shares of the capital stock of Global are duly authorized, validly issued, fully paid and non-assessable, and no class of capital stock is entitled to preemptive rights. There were outstanding as of March 12, 1999 no options, warrants or other rights to acquire capital stock from Global other than (A) options representing in the aggregate the right to purchase 32,403,528 shares of Global Common Stock issued to current or former employees and directors of Global and its Subsidiaries pursuant to Global's 1998 Stock Incentive Plan (the "GLOBAL STOCK OPTION PLAN") and (B) (i) 12,500,012 warrants expiring August 13, 2003, exercisable at $9.50 per share of Global Common Stock, and (ii) 5,108,358 warrants expiring August 13, 2008, exercisable at $9.50 per share of Global Common Stock (collectively, the "GLOBAL WARRANTS"). No options or warrants or other rights to acquire capital stock from Global have been issued or granted since March 12, 1999 to the date of this Agreement. (ii) As of the date of this Agreement, no bonds, debentures, notes or other indebtedness of Global having the right to vote on any matters on which Shareholders may vote ("GLOBAL VOTING DEBT") are issued or outstanding. (iii) Except as otherwise set forth in this Section 3.2(b), as of the date of this Agreement, there are no securities, options, warrants, calls, rights, commitments, agreements, arrangements or undertakings of any kind to which Global or any of its Subsidiaries is a party or by which any of them is bound obligat ing Global or any of its Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other voting securities of Global or any of its Subsidiaries or obligating Global or any of its Subsidiaries to issue, grant, extend or enter into any such security, option, warrant, call, right, commitment, agreement, arrangement or undertaking. As of the date of this Agree ment, there are no outstanding obligations of Global or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock of Global or any of its Subsidiaries. (c) AUTHORITY; NO CONFLICTS. (i) Global has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby, subject, to the approval of the issuance of the shares of Global Common Stock to be issued in the Merger (the "SHARE ISSUANCE") and to the adoption of an amendment to the memorandum of association of Global increasing the number of authorized shares of Global Common Stock to not less than 2 billion shares (the "GLOBAL CHARTER AMENDMENT") by the Required Global Vote (as defined in Section 3.2(g)) and the filing of the requisite Memorandum of Increase with the Registrar of Companies of Bermuda and the approval of the Share Issuance (and the subsequent free transferability of the corresponding shares between nonresident persons for exchange control purposes) by the Bermuda Monetary Authority. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Global, subject to the approval by the shareholders of Global of the Share Issuance and the Global Charter Amendment. This Agreement has been duly executed and delivered by Global and constitutes a valid and binding agreement of Global, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws relating to or affecting creditors generally, by general equity principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) or by an implied covenant of good faith and fair dealing. (ii) The execution and delivery of this Agreement by Global does not or will not, as the case may be, and the consummation by Global of the Merger and the other transactions contemplated hereby will not, conflict with, or result in a Violation pursuant to: (A) any provision of the memorandum of associa tion or bye-laws of Global or any other constitient document of any Subsidiary of Global, or (B) except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Global, subject to obtaining or making the consents, approvals, orders, authorizations, registrations, declarations and filings referred to in paragraph (iii) below, any loan or credit agreement, note, mortgage, bond, indenture, lease, benefit plan or other agreement, obligation, instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Global or any Subsidiary of Global or their respective properties or assets. (iii) No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required by or with respect to Global or any Subsidiary of Global in connection with the execution and delivery of this Agreement by Global or the consummation of the Merger and the other transactions contemplated hereby, except for the Required Consents, filing of the requisite Memorandum of Increase with the Registrar of Companies of Bermuda and the approval of the Share Issuance (and of the subsequent free transferability of the corresponding shares between nonresident persons for exchange control purposes) by the Bermuda Monetary Authority and such consents, approvals, orders, authorizations, registrations, declarations and filings the failure of which to make or obtain would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Global. (d) REPORTS AND FINANCIAL STATEMENTS. (i) Global and Global Crossing Holdings Ltd. ("GLOBAL HOLDINGS") have filed all required reports, schedules, forms, statements and other documents required to be filed by it with the SEC since January 1, 1998 (collectively, including all exhibits thereto, the "GLOBAL SEC REPORTS"). No Subsid iary of Global other than Global Holdings is required to file any form, report or other document with the SEC. None of the Global SEC Reports, as of their respective dates (and, if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing), contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Each of the financial statements (including the related notes) included in the Global SEC Reports presents fairly, in all material respects, the consolidated financial position and consolidated results of operations and cash flows of Global and its Subsidiaries as of the respective dates or for the respective periods set forth therein, all in conformity with GAAP consistently applied during the periods involved except as otherwise noted therein, and subject, in the case of the unaudited interim financial statements, to normal and recurring year-end adjustments that have not been and are not expected to be material in amount. All of such Global SEC Reports, as of their respective dates, complied as to form in all material respects with the applicable requirements of the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder. (ii) Global has made available to Frontier drafts of the consolidated financial statements of Global and its Subsidiaries at and for the year ended December 31, 1998 of Global (in the respective form thereof as of the date of this Agreement, collectively, the "GLOBAL DRAFT DISCLOSURES"). To the knowledge of Global, each of the Global Draft Disclosures, including the financial statements included therein, is in substantially final form, except that the Global Draft Disclosures do not disclose any information with respect to this Agreement, the transactions contemplated hereby or the effect that this Agreement or such transactions might have on the business, financial condition or results of operations (actual, pro forma or projected) of Global and its Subsidiaries (collectively, the "GLOBAL TRANSACTION INFORMATION"). The Global Draft Disclosures were not prepared for the purpose of providing to Frontier or any other Person any Global Transaction Information. To the knowledge of Global, except with respect to Global Transaction Information, (x) the draft financial statements (including the related notes) included in the Global Draft Disclosures present fairly, in all material respects, the consolidated financial position and consolidated results of operations and cash flows of Global and its Subsidiaries as of the respective dates or for the respective periods set forth therein, all in conformity with GAAP consistently applied during the periods involved except as otherwise noted therein and (y) all of the Global Draft Disclosures comply as to form in all material respects with the applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder. (iii) From December 31, 1998 until the date of this Agreement, Global and its Subsidiaries have not incurred any liabilities that are of a nature that would be required to be disclosed on a balance sheet of Global and its Subsidiar ies or the footnotes thereto prepared in conformity with GAAP, other than (A) liabilities incurred in the ordinary course of business or (B) liabilities that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Global. (e) INFORMATION SUPPLIED. (i) None of the information supplied or to be supplied by Global for inclusion or incorporation by reference in (A) the Form S-4 will, at the time the Form S-4 becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and (B) the Joint Proxy Statement/Prospectus will, on the date it is first mailed to Frontier sharehold ers or Global shareholders or at the time of the Frontier Shareholders Meeting or the Global Shareholders Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The Form S-4 and the Joint Proxy Statement/Prospectus will comply as to form in all material respects with the requirements of the Exchange Act and the Securities Act and the rules and regulations of the SEC thereunder. (ii) Notwithstanding the foregoing provisions of this Section 3.2(e), no representation or warranty is made by Global with respect to statements made or incorporated by reference in the Form S-4 or the Joint Proxy Statement/Prospectus based on information supplied by Frontier for inclusion or incorporation by reference therein. (f) BOARD APPROVAL. The Board of Directors of Global, by resolutions duly adopted at a meeting duly called and held and not subsequently rescinded or modified in any way, has duly (i) determined that this Agreement, the Merger and the Alternative Merger are in the best interests of Global and its share holders, (ii) approved this Agreement, the Merger and the Alternative Merger, (iii) approved the Global Charter Amendment and the Share Issuance and (iv) recom mended that the shareholders of Global approve the Global Charter Amendment, the Share Issuance or, if applicable, the Alternative Merger. (g) VOTE REQUIRED. The affirmative vote of holders of shares of Global Common Stock representing a simple majority of votes that may be cast by all holders of shares of Global Common Stock (the "REQUIRED GLOBAL VOTE") is the only vote of the holders of any class or series of Global capital stock necessary to approve the Global Charter Amendment, the Share Issuance and, if applicable, the Alternative Merger. The Principal Shareholders hold, and as of the record date for the Global Shareholders Meeting will hold, shares of Global Common Stock which are subject to the Voting Agreement and that, in the aggregate, constitute at least 51% of the Combined Voting Power. (h) BROKERS OR FINDERS. No agent, broker, investment banker, financial advisor or other firm or Person is or will be entitled to any broker's or finder's fee or any other similar commission or fee in connection with any of the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Global, except Merrill Lynch, Pierce, Fenner & Smith Incorporated and Salomon Smith Barney (collectively, the "GLOBAL FINANCIAL ADVISORS") and Chase Securities Inc., whose fees and expenses will be paid by Global in accordance with Global's agreement with such firms based upon arrangements made by or on behalf of Global and previously disclosed to Frontier. (i) OPINIONS OF FINANCIAL ADVISORS. Global has received the opinions of the Global Financial Advisors, dated the date of this Agreement, to the effect that, as of such date, the Exchange Ratio is fair, from a financial point of view, to Global, a copy of which opinions have been made available to Frontier. (j) LITIGATION. Except as disclosed in the Global SEC Reports and except for claims, actions, suits, proceedings or investigations which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Global, there are no claims, actions, suits, proceedings or investigations pending or, to Global's knowledge, threatened against Global or any of its Subsidiaries, or any properties or rights of Global or any of its Subsidiaries, before any Governmental Entity. (k) NO VIOLATION OF LAW. The business of Global and its Subsidiaries is not being conducted in violation of any statute, law, ordinance, regulation, judgment, order or decree of any Governmental Entity (including any stock exchange or other self-regulatory body), or in violation of any permits, franchises, licenses, authorizations or consents that are granted by any Governmental Entity (including any stock exchange or other self-regulatory body), except for possible violations which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Global. Except as disclosed in the Global SEC Reports and except as would not, individually or in the aggregate reasonably be expected to have a Material Adverse Effect on Global, no investigation or review by any Governmental Entity (including any stock exchange or other self-regulatory body) with respect to Global or its Subsidiaries in relation to any alleged violation of law or regulation is pending or, to Global's knowledge, threatened, nor has any Governmental Entity (including any stock exchange or other self-regulatory body) indicated in writing an intention to conduct the same. Neither Global nor any of its Subsidiaries is subject to any cease and desist or other order, judgment, injunction or decree issued by, or is a party to any written agreement, consent agreement or memorandum of understanding with, or is a party to any commitment letter or similar undertaking to, or is subject to any order or directive by, or has adopted any board resolutions at the request of, any Governmental Entity that materially restricts the conduct of its business other than those which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Global, nor has Global or any of its Subsidiaries been advised in writing that any Governmental Entity is considering issuing or requesting any of the foregoing. (l) TAXES. All material Federal, state, local, and foreign tax returns required to be filed by Global and its Subsidiaries have been filed. All material taxes shown on such returns as being due or claimed to be due from Global and its Subsidiaries in a written assessment have been paid other than those (i) currently payable without penalty or interest or (ii) being contested in good faith and by appropriate proceedings timely instituted and diligently pursued and for which adequate reserves have been established on the books and records of Global and its Subsidiaries, as the case may be, in accordance with generally accepted accounting principles. (m) GLOBAL BENEFIT PLANS. Each deferred compensation and each incentive compensation, equity compensation plan, "welfare" plan, fund or program (within the meaning of Section 3(1) of the ERISA); "pension" plan, fund or program (within the meaning of section 3(2) of ERISA); each employment, consulting, continuation, termination or severance agreement; and each other employee benefit plan, fund, program, agreement or arrangement, in each case, that is spon sored, maintained or contributed to or required to be contributed to by Global or by any trade or business, whether or not incorporated (an "ERISA AFFILIATE"), that together with Global would be deemed a "single employer" within the meaning of section 4001(b) of ERISA, or to which Global or an ERISA Affiliate is party, whether written or oral, for the benefit of any employee or former employee of Global or any Subsidiary (the "GLOBAL BENEFIT PLANS") is in compliance with all applicable provisions of ERISA and the Code, and neither Global nor any ERISA Affiliates have any liabilities or obligations with respect to any such Global Benefit Plans, whether or not accrued, contingent or otherwise, except (x) as described in any of the Global SEC Reports or (y) for instances of noncompliance or liabilities or obligations that would not, individually or in the aggregate, have a Material Adverse Effect on Global. Except with respect to awards granted under the Global Benefit Plans that are in effect on the date hereof, no employee of Global will be entitled to any additional benefits or any acceleration of the time of payment or vesting of any benefits under any Global Benefit Plan as a result of the transactions contemplated by this Agreement, either alone or in combination with another event. 3.3 REPRESENTATIONS AND WARRANTIES OF GLOBAL AND MERGER SUB. Global and Merger Sub represent and warrant to Frontier as follows: (a) ORGANIZATION AND CORPORATE POWER. Merger Sub is a corporation duly incorporated, validly existing and in good standing under the laws of New York. Merger Sub is a direct wholly-owned subsidiary of Global. (b) CORPORATE AUTHORIZATION. Merger Sub has all requisite corporate power and authority to enter into this Agreement and to consum mate the transactions contemplated hereby. The execution, delivery and performance by Merger Sub of this Agreement and the consummation by Merger Sub of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Merger Sub. This Agreement has been duly executed and delivered by Merger Sub and constitutes a valid and binding agreement of Merger Sub, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors generally, by general equity principles (regardless or whether such enforceability is considered in a proceeding in equity or at law) or by an implied covenant of good faith and fair dealing. (c) NON-CONTRAVENTION. The execution, delivery and performance by Merger Sub of this Agreement and the consummation by Merger Sub of the transactions contemplated hereby do not and will not contravene or conflict with the certificate of incorporation or by-laws of Merger Sub. (d) NO BUSINESS ACTIVITIES. Merger Sub has not conducted any activities other than in connection with the organization of Merger Sub, the negotiation and execution of this Agreement and the consummation of the transactions contemplated hereby. Merger Sub has no Subsidiaries. ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS 4.1 COVENANTS OF FRONTIER. During the period from the date of this Agreement and continuing until the Effective Time, Frontier agrees as to itself and its Subsidiaries that (except as expressly contemplated or permitted by this Agreement or as otherwise indicated on the Frontier Disclosure Schedule or as required by a Governmental Entity of competent jurisdiction or to the extent that Global shall otherwise consent in writing, which consent shall not be unreasonably withheld or delayed): (a) ORDINARY COURSE. (i) Frontier and its Subsidiaries shall carry on their respective businesses in the usual, regular and ordinary course in all material respects, in substantially the same manner as heretofore conducted, and shall use all reasonable efforts to preserve intact their present lines of business, maintain their rights, franchises and licenses and other authorizations issued by Governmental Entities, and preserve their relationships with customers, suppliers and others having business dealings with them to the end that their ongoing businesses shall not be impaired in any material respect at the Effective Time; PROVIDED, HOWEVER, that no action by Frontier or its Subsidiaries with respect to matters specifically addressed by any other provision of this Section 4.1 shall be deemed a breach of this Section 4.1(a)(i) unless such action would constitute a breach of one or more of such other provisions. (ii) Frontier shall not, and shall not permit any of its Subsidiaries to, (A) enter into any new material line of business or (B) incur or commit to any capital expenditures other than capital expenditures incurred or committed to in the ordinary course of business consistent with past practice and which, together with all such expenditures incurred or committed for fiscal year 1999, are not in excess of $900 million or, if the Closing Date has not occurred prior to December 31, 1999, such additional amounts for any subsequent period as may be consented to by Global, such consent not to be unreasonably withheld or delayed, or, if Global shall not have so consented, an amount not greater than an amount equal to a pro rata portion of Frontier's 1999 capital expenditure budget included in Section 4.1(a) of the Frontier Disclosure Schedule. (b) DIVIDENDS; CHANGES IN SHARE CAPITAL. Frontier shall not, and shall not permit any of its Subsidiaries to, and shall not propose to, (i) declare or pay any dividends on or make other distributions in respect of any of its capital stock, except (x) dividends by wholly owned Subsidiaries of Frontier, (y) the regular dividends on Frontier Common Stock in the amount of $.05 per share of Frontier Common Stock per quarter, and (z) regular dividends on Frontier Preferred Stock, (ii) split, combine or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for, shares of its capital stock, except for any such transaction by a wholly owned Subsidiary of Frontier which remains a wholly owned Subsidiary after consumma tion of such transaction, or (iii) except for the purchase from time to time by Frontier of Frontier Common Stock (and the associated Rights) in the ordinary course of business consistent with past practice in connection with the Frontier Benefit Plans, or as contemplated in Section 5.9, repurchase, redeem or otherwise acquire any shares of its capital stock or any securities convertible into or exercisable for any shares of its capital stock. (c) ISSUANCE OF SECURITIES. Frontier shall not, and shall not permit any of its Subsidiaries to, issue, deliver or sell, or authorize or propose the issuance, delivery or sale of, any shares of its capital stock of any class, or any securities convertible into or exercisable for, or any rights, warrants or options to acquire, any such shares, or enter into any agreement with respect to any of the foregoing, other than (i) the issuance of Frontier Common Stock (and the associated Rights) upon the exercise of stock options or warrants or in connection with other stock-based benefits plans outstanding on the date hereof in accordance with their present terms, (ii) issuances by a wholly owned Subsidiary of Frontier of capital stock to such Subsidiary's parent, (iii) issuances in accordance with the Rights Agreement or (iv) issuances of shares, options, rights or other awards in numbers not greater than those set forth in Section 4.1(c) of the Frontier Disclosure Schedule. (d) GOVERNING DOCUMENTS. Except to the extent required to comply with their respective obligations hereunder, required by law or required by the rules and regulations of the NYSE, Frontier and its Subsidiaries shall not amend, in the case of Subsidiaries, in any material respect, or propose to so amend their respective certificates of incorporation, by-laws or other governing documents. (e) NO ACQUISITIONS. Except for (i) acquisitions that are part of, related to or in support of the communications or internet business and provide for less than $500 million of consideration (excluding assumption of debt) in the aggregate and (ii) acquisitions or investments that are made by Frontier Internet Ventures, Inc. that are not in excess of $30 million of consideration (excluding assumption of debt), Frontier shall not, and shall not permit any of its Subsidiaries to, acquire or agree to acquire by merging or consolidating with, or by purchasing a substantial equity interest in or a substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets (other than the acquisition of assets used in the operations of the business of Frontier and its Subsidiaries in the ordinary course); PROVIDED, HOWEVER, that the foregoing shall not prohibit (x) internal reorganizations or consolidations involving existing Subsidiaries of Frontier or (y) the creation of new Subsidiaries of Frontier organized to conduct or continue activities otherwise permitted by this Agreement. (f) NO DISPOSITIONS. Other than (i) internal reorganizations or consolidations involving existing Subsidiaries of Frontier, (ii) dispositions referred to in Frontier SEC Reports filed prior to the date of this Agreement, (iii) as may be required by or in conformance with law or regulation in order to permit or facilitate the consummation of the transactions contemplated hereby or (iv) in the ordinary course of business, Frontier shall not, and shall not permit any Subsidiary of Frontier to, sell, lease, encumber (other than in connection with secured debt) or otherwise dispose of, or agree to sell, lease, encumber or otherwise dispose of, any of its assets (including capital stock of Subsidiaries of Frontier) which are material, individually or in the aggregate, to Frontier. (g) INVESTMENTS; INDEBTEDNESS. Frontier shall not, and shall not permit any of its Subsidiaries to, (i) other than in connection with actions permitted by Section 4.1(e), make any loans, advances or capital contributions to, or investments in, any other Person, other than by Frontier or an affiliate of Frontier to or in Frontier or any affiliate of Frontier, (ii) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than loans, advances, capital contributions, investments, payments, discharges or satisfactions incurred or committed to in the ordinary course of business consistent with past practice or (iii) other than in connection with actions permitted by Section 4.1(e), create, incur, assume or suffer to exist any indebtedness, issuances of debt securities, guarantees, loans or advances not in existence as of the date of this Agreement except pursuant to the credit facilities, indentures and other arrangements in existence on the date of this Agreement and in the ordinary course of business, and any other indebtedness existing on the date of this Agreement, in each case as such credit facilities, indentures, other arrangements and other existing indebtedness may be amended, extended, modified, refunded, renewed or refinanced after the date of this Agreement, but only if the aggregate principal amount thereof is not increased thereby, the term thereof is not extended thereby and the other terms and conditions thereof, taken as a whole, are not less advantageous to Frontier and its Subsidiaries than those in existence as of the date of this Agreement. (h) TAX-FREE QUALIFICATION. Frontier shall not, and shall not permit any of its Subsidiaries to, take any action that would prevent or impede the Merger from qualifying as a reorganization under Section 368 of the Code. (i) COMPENSATION. Other than as contemplated by Section 5.6 or by Section 4.1(i) of the Frontier Disclosure Schedule, Frontier shall not, and shall not permit any of its Subsidiaries to, increase the amount of compensation of any senior executive officer except in the ordinary course of business consistent with past practice or as required by an existing agreement, make any increase in or commitment to increase any employee benefits, issue any additional Frontier Stock Options, adopt or make any commitment to adopt any additional employee benefit plan or make any contribution, other than regularly scheduled contributions, to any Frontier Benefit Plan. (j) OTHER ACTIONS. Frontier shall not, and shall not permit any of its Subsidiaries to, take any action that would, or that would reasonably be expected to, result in, except as otherwise permitted by Section 5.5, any of the conditions to the Merger set forth in Article VI not being satisfied. (k) ACCOUNTING METHODS; INCOME TAX ELECTIONS. Except as disclosed in Frontier SEC Reports filed prior to the date of this Agreement, or as required by a Governmental Entity, Frontier shall not change its methods of accounting in effect at December 31, 1998, except as required by GAAP or changes in GAAP as concurred to by Frontier's independent auditors. Frontier shall not (i) change its fiscal year or (ii) make any material tax election, other than in the ordinary course of business consistent with past practice, without the prior approval of Global, which approval shall not be unreasonably withheld. (l) RIGHTS AGREEMENT. Frontier shall not amend, modify or waive any provision of the Rights Agreement, and shall not take any action to redeem the Rights or render the Rights inapplicable to any transaction, other than to permit another transaction that the Frontier Board has determined is a Superior Proposal (as defined in Section 8.11), to be consummated after termination of this Agreement. 4.2 COVENANTS OF GLOBAL. During the period from the date of this Agreement and continuing until the Effective Time, Global agrees as to itself and its Subsidiaries that (except as expressly contemplated or permitted by this Agreement or as otherwise indicated on the Global Disclosure Schedule or as required by a Governmental Entity of competent jurisdiction or to the extent that Frontier shall otherwise consent in writing, which consent shall not be unreasonably withheld or delayed): (a) ORDINARY COURSE. (i) Global and its Subsidiaries shall carry on their respective businesses in the usual, regular and ordinary course in all material respects, in substantially the same manner as heretofore conducted, and shall use all reasonable efforts to preserve intact their present lines of business, maintain their rights and franchises and preserve their relationships with customers, suppliers and others having business dealings with them to the end that their ongoing businesses shall not be impaired in any material respect at the Effective Time; PROVIDED, HOWEVER, that no action by Global or its Subsidiaries with respect to matters specifically addressed by any other provisions of this Section 4.2 shall be deemed a breach of this Section 4.2(a)(i) unless such action would constitute a breach of one or more of such other provisions. (ii) Global shall not, and shall not permit any of its Subsidiaries to, enter into any new material line of business that is not part of, related to or in support of the communications business, other than incidentally as part of a larger acquisition within an existing line of business. (b) DIVIDENDS; CHANGES IN SHARE CAPITAL. Global shall not, and shall not permit any of its Subsidiaries to, and shall not propose to, (i) declare or pay any dividends on or make other distributions in respect of any of its capital stock, except (x) dividends by wholly owned Subsidiaries of Global or Global Holdings, or (y) dividends to joint venture parties or (ii) repurchase, redeem or otherwise acquire any shares of its capital stock or any securities convertible into or exercisable for any shares of its capital stock except for (x) the purchase from time to time by Global of Global Common Stock in the ordinary course of business required by any Global Benefit Plan on a non- discretionary basis, or (y) regular purchases pursuant to a stock purchase plan approved by the Global Board of Directors. (c) ISSUANCE OF SECURITIES. Global shall not, and shall not permit any of its Subsidiaries to, issue, deliver or sell, or authorize or propose the issuance, delivery or sale of, any shares of its capital stock of any class, any Global Voting Debt or any securities convertible into or exercisable for, or any rights, warrants or options to acquire, any such shares or Global Voting Debt, or enter into any agreement with respect to any of the foregoing other than (i) the issuance of Global Common Stock upon the exercise of stock options or warrants or in connection with other stock-based benefit plans, (ii) issuances by a wholly owned Subsidiary of Global of capital stock to such Subsidiary's parent or another wholly owned Subsidiary of Global, (iii) issuances of options, awards, and amendments to equity-related awards pursuant to Global benefit plans as in effect from time to time, (iv) issuances made to newly hired employees of Global or its Subsidiaries, (v) issuances in respect of any acquisitions, mergers, share exchanges, consolidations, business combinations or similar transactions by Global or its Subsidiaries permitted by Section 4.2(e), or (vi) any other issuance of any Global Common Stock; provided that, with respect to clauses (v) and (vi), any such issuances prior to the termination of the Voting Agreement would not cause the shares of Global Comon Stock that are subject to the Voting Agreement to constitute, in the aggregate, less than 51% of the Combined Voting Power. (d) GOVERNING DOCUMENTS. Except to the extent required to comply with their respective obligations hereunder, required by law or required by the rules and regulations of NASDAQ, Global and its material Subsidiaries shall not amend, in the case of Subsidiaries, in any material respect, or propose to so amend their respective certificates of incorporation, bye-laws or other governing documents, except for the Global Charter Amendment. (e) NO ACQUISITIONS. Global shall not, and shall not permit any of its Subsidiaries to, acquire or agree to acquire by merging or consolidating with, or by purchasing a substantial equity interest in or a substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets (other than the acquisition of assets used in the operations of the business of Global and its Subsidiaries in the ordinary course), except for acquisitions that are part of, related to or in support of the communications business, which acquisitions Global may enter into in its discretion, so long as (i) such acquisitions would not, individually or in the aggregate, reasonably be expected to prevent or materially delay the Merger, (ii) the issuance of any Global Common Stock in such acquisitions prior to the termination of the Voting Agreement would not cause the shares of Global Common Stock that are subject to the Voting Agreement to constitute, in the aggregate, less than 51% of the Combined Voting Power, (iii) such acquisitions provide less than $2.5 billion of consideration (excluding assumption of debt) per acquisition and consideration (excluding assumption of debt) no greater than $8.5 billion in the aggregate, and (iv) no more than $7.5 billion, in the aggregate, of the consideration provided for such acquisitions consists of Global Common Stock or other voting equity securities; PROVIDED, HOWEVER, that the foregoing shall not prohibit (x) internal reorganizations or consolidations involving existing Subsidiaries of Global or (y) the creation of new Subsidiaries of Global organized to conduct or continue activities otherwise permitted by this Agreement. (f) NO DISPOSITIONS. Other than (i) internal reorganizations or consolidations involving existing Subsidiaries of Global, (ii) dispositions referred to in Global SEC Reports filed prior to the date of this Agreement, (iii) as may be required by or in conformance with law or regulation in order to permit or facilitate the consummation of the transactions contemplated hereby or (iv) in the ordinary course of business, Global shall not, and shall not permit any Subsidiary of Global to, sell, lease, encumber (other than in connection with secured debt) or otherwise dispose of, or agree to sell, lease, encumber or otherwise dispose of, any of its assets (including capital stock of Subsidiaries of Global) which are material, individually or in the aggregate, to Global. (g) INVESTMENTS. Other than in the ordinary course of business or as permitted by Section 4.2(e), or as otherwise set forth in the Global SEC Reports, Global shall not, and shall not permit any of its Subsidiaries to make any loans, advances or capital contributions to, or investments in, any other Person, other than by Global or an affiliate of Global (including Global Holdings) to or in Global or any affiliate of Global. (h) TAX-FREE QUALIFICATION. Each of Global and Merger Sub shall not, and shall not permit any of their Subsidiaries to, take any action that would prevent or impede the Merger from qualifying as a reorganization under Section 368 of the Code. (i) OTHER ACTIONS. Global shall not, and shall not permit any of its Subsidiaries to, take any action that would, or that would reasonably be expected to, result in any of the conditions to the Merger set forth in Article VI not being satisfied. (j) ACCOUNTING METHODS; INCOME TAX ELECTIONS. Except as disclosed in the Global SEC Reports filed prior to the date of this Agree ment, or as required by a Governmental Entity, Global shall not change its methods of accounting in effect at December 31, 1998, except as required by GAAP or changes in GAAP as concurred to by Global's independent auditors. Global shall not (i) change its fiscal year or (ii) make any material tax election, other than in the ordinary course of business consistent with past practice, without the prior approval of Frontier, which approval shall not be unreasonably withheld. (k) CERTAIN TRANSACTIONS. Global agrees that prior to the Closing Date it shall not, without the prior written consent of Frontier (which consent shall not to be unreasonably withheld or delayed), agree to enter into any merger, reorganization, share exchange, business combination or similar transaction pursuant to which the shareholders of Global will receive any consideration (whether payable in cash, securities, property or other consideration) in exchange for their shares of Global Common Stock unless (i) such transaction is not to be consummated until after the Effective Time or the termination of this Agreement pursuant to Section 7.1, (ii) the consideration per share of Global Common Stock payable in connection therewith has a value, as reasonably determined by, Global of not less than $34.5625 and (iii) either (A) if the Merger is to be effected as described herein, such transac tion will not result in the Merger failing to qualify as a reorganization under Section 368(a) of the Code or failing to satisfy the requirements of Section 367 of the Code or (B) if the Alternative Merger is to be effected pursuant to Section 1.10, such transaction will not result in the Alternative Merger failing to qualify as a reorganiza tion under Section 368(a) of the Code, unless the Alternative Merger otherwise qualifies for non-recognition treatment under Section 351 of the Code. Notwithstanding anything set forth in this Agreement to the contrary, and in addition to the restrictions set forth above, during the period during which the Average Price is to be determined for purposes of calculating the Exchange Ratio, Global shall not (and shall not announce an intention to) (1) acquire any Global Common Stock in the open market, (2) sell or issue any shares of Global Common Stock (other than pursuant to clause (i) of Section 4.2(c)), (3) redeem or purchase any shares of Global Common Stock, (4) take any other action prohibited under Regulation M promul gated under the Securities Act, (5) enter into any material acquisition or disposition transaction or (6) except as required by applicable law or by obligations pursuant to any listing agreement with or rules of NASDAQ, make any announcement which would reasonably be expected to have the effect of resulting in a change in the trading prices of the Global Common Stock. (l) REQUIRED GLOBAL VOTE. Notwithstanding anything in this Agreement to the contrary between the date of this Agreement and the termina tion of the Voting Agreement, in no event shall Global take any actions that, taken together with any transfers of shares by the Principal Shareholders under the Voting Agreement, cause the shares subject to the Voting Agreement to constitute less than the Required Global Vote. 4.3 ADVICE OF CHANGES; GOVERNMENTAL FILINGS. Each party shall (a) confer on a regular and frequent basis with the other and (b) report (to the extent permitted by law or regulation or any applicable confidentiality agreement) on operational matters. Frontier and Global shall file all reports required to be filed by each of them with the SEC (and all other Governmental Entities) between the date of this Agreement and the Effective Time and shall (to the extent permitted by law or regulation or any applicable confidentiality agreement) deliver to the other party copies of all such reports, announcements and publications promptly after the same are filed. Subject to applicable laws relating to the exchange of information, each of Frontier and Global shall have the right to review in advance, and will consult with the other with respect to, all the information relating to the other party and each of their respective Subsidiaries, which appears in any filings, announcements or publications made with, or written materials submitted to, any third party or any Governmental Entity in connection with the transactions contem plated by this Agreement. In exercising the foregoing right, each of the parties hereto agrees to act reasonably and as promptly as practicable. Each party agrees that, to the extent practicable and as timely as practicable, it will consult with, and provide all appropriate and necessary assistance to, the other party with respect to the obtaining of all permits, consents, approvals and authorizations of all third parties and Governmental Entities necessary or advisable to consummate the transactions contemplated by this Agreement and each party will keep the other party informed of the status of matters relating to completion of the transactions contemplated hereby. 4.4 TRANSITION PLANNING; CONTINUED OPERATIONS OF FRONTIER. Frontier and Global shall collectively appoint eight (8) officers, to be evenly divided between Frontier and Global, to serve from time to time as their respective representatives on a committee that will be responsible for coordinating transition planning and implementation relating to the Merger. 4.5 SERVICES AGREEMENT. Frontier and Global will exercise reasonable good faith efforts as soon as practicable after execution of this Agreement to negotiate and finalize a Services Agreement pursuant to which each party shall provide certain services to the other consistent with the terms included in the Term Sheet attached as Exhibit 4.5 hereto. 4.6 CONTROL OF OTHER PARTY'S BUSINESS. Nothing contained in this Agreement shall give Frontier, directly or indirectly, the right to control or direct Global's operations prior to the Effective Time. Nothing contained in this Agreement shall give Global, directly or indirectly, the right to control or direct Frontier's operations prior to the Effective Time. Prior to the Effective Time, each of Frontier and Global shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its respective operations. ARTICLE V ADDITIONAL AGREEMENTS 5.1 PREPARATION OF PROXY STATEMENT; SHAREHOLDERS MEETINGS. (a) As promptly as practicable following the date hereof, Global shall, in cooperation with Frontier, prepare and file with the SEC preliminary proxy materials which shall constitute the Joint Proxy Statement/Prospectus (such proxy statement/prospectus, and any amendments or supplements thereto, the "JOINT PROXY STATEMENT/PROSPECTUS") and a registration statement on Form S-4 with respect to the issuance of Global Common Stock in the Merger (the "FORM S- 4"). The Joint Proxy Statement/Prospectus will be included in the Form S-4 as Global's prospectus. The Form S-4 and the Joint Proxy Statement/Prospectus shall comply as to form in all material respects with the applicable provisions of the Securities Act and the Exchange Act and the rules and regulations thereunder. Each of Global and Frontier shall use all reasonable efforts to have the Form S-4 cleared by the SEC as promptly as practicable after filing with the SEC and to keep the Form S-4 effective as long as is necessary to consummate the Merger. Global shall, as promptly as practicable after receipt thereof, provide copies of any written comments received from the SEC with respect to the Joint Proxy Statement/Prospectus to Frontier and advise Frontier of any oral comments with respect to the Proxy State ment/Prospectus received from the SEC. Global agrees that none of the information supplied or to be supplied by Global for inclusion or incorporation by reference in the Joint Proxy Statement/Prospectus and each amendment or supplement thereto, at the time of mailing thereof and at the time of the Frontier Shareholders Meeting or the Global Shareholders Meeting, will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Frontier agrees that none of the information supplied or to be supplied by Frontier for inclusion or incorporation by reference in the Joint Proxy State ment/Prospectus and each amendment or supplement thereto, at the time of mailing thereof and at the time of the Frontier Shareholders Meeting or the Global Sharehold ers Meeting, will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. For purposes of the foregoing, it is understood and agreed that information concern ing or related to Global and the Global Shareholders Meeting will be deemed to have been supplied by Global and information concerning or related to Frontier and the Frontier Shareholders Meeting shall be deemed to have been supplied by Frontier. Global will provide Frontier with a reasonable opportunity to review and comment on any amendment or supplement to the Joint Proxy Statement/Prospectus prior to filing such with the SEC, and will provide Frontier with a copy of all such filings made with the SEC. No amendment or supplement to the information supplied by Frontier for inclusion in the Joint Proxy Statement/Prospectus shall be made without the approval of Frontier, which approval shall not be unreasonably withheld or delayed. (b) Subject to Sections 5.1(c), 5.5 and 7.1(f), Frontier shall, as promptly as practicable following the execution of this Agreement, duly call, give notice of, convene and hold a meeting of its shareholders (the "FRONTIER SHAREHOLDERS MEETING") for the purpose of obtaining the Required Frontier Vote with respect to the transactions contemplated by this Agreement, shall take all lawful action to solicit the adoption of this Agreement by the Required Frontier Vote and the Board of Directors of Frontier shall recommend adoption of this Agreement by the Shareholders of Frontier. Without limiting the generality of the foregoing but subject to its rights pursuant to Sections 5.5 and 7.1(f), Frontier agrees that its obligations pursuant to the first sentence of this Section 5.1(b) shall not be affected by the commencement, public proposal, public disclosure or communication to Frontier of any Acquisition Proposal. (c) Notwithstanding Section 5.1(b) hereof, it is the intention of the parties that the Frontier Shareholders Meeting be scheduled to the extent reasonably practicable such that it shall occur reasonably proximate to the Effective Time: provided that to the extent not prohibited by law, Frontier shall duly call, give notice of, convene and hold the Frontier Shareholders Meeting within 120 days following the occurrence of a Trigger Event (as defined in Section 8.11); provided, however, that if a Trigger Event has occurred and the Applicable Closing Conditions (as defined in Section 8.11) have been satisfied, then Frontier shall, as promptly as practicable, duly call, give notice of, convene and hold the Frontier Shareholders Meeting. (d) Global shall, as promptly as practicable following the execu tion of this Agreement, duly call, give notice of, convene and hold a meeting of its Shareholders (the "GLOBAL SHAREHOLDERS MEETING") for the purpose of obtaining the Required Global Vote, shall take all lawful action to solicit the ap proval of the Share Issuance and the Global Charter Amendment by the Required Global Vote and the Board of Directors of Global shall recommend approval of the transactions contemplated by this Agreement by the shareholders of Global. Not withstanding the foregoing, Global shall not be obligated to duly call, give notice of, convene and hold the Global Shareholders Meeting until such time as Frontier is obligated to do the same with respect to the Frontier Shareholders Meeting. (e) Global may elect to duly call, give notice of, convene and hold the Global Shareholders Meeting prior to the Frontier Shareholders Meeting (an "EARLY GLOBAL MEETING") for the purposes of approving the Alternative Merger (in addition to the Share Issuance and the Global Charter Amendment), notwithstanding that no Alternative Merger Notice has been delivered to Global. If Global elects to hold an Early Global Meeting, then Frontier shall (i) cooperate in the formation of New Global and (ii) assist Global in the preparation of an appropriate registration statement for the issuance of New Global Common Stock that will accompany the proxy statement/prospectus for the Early Global Meeting; provided that Global shall pay the SEC filing fee with respect thereto. In the event that the Early Global Meeting is held and the actions presented to Global Shareholders are approved at such meeting, then subsequently Global shall not call, give notice of, convene or hold any meeting of Global Shareholders at which action would be taken which would reasonably be expected to cause the conditions set forth in Section 6.3 to fail to become satisfied. 5.2 GLOBAL BOARD OF DIRECTORS; OFFICERS; HEAD QUARTERS OF FRONTIER SUB. At or prior to the Effective Time, the Board of Directors of Global will take all action necessary to (i) elect four (4) individuals to be designated by Frontier as members of the Board of Directors of Global to serve in the classes set forth in Exhibit 5.2 hereto, (ii) elect Joseph P. Clayton as Vice Chairman of Global and (iii) elect Rolla P. Huff as President and Chief Operating Officer of North American Operations of Global. The headquarters of Frontier Sub shall remain in Rochester, New York. 5.3 ACCESS TO INFORMATION. Upon reasonable notice, each party shall (and shall cause its Subsidiaries to) afford to the officers, employees, accountants, counsel, financial advisors and other representatives of the other party reasonable access during normal business hours, during the period prior to the Effective Time, to all its properties, books, contracts, commitments and records and, during such period, such party shall (and shall cause its Subsidiaries to) furnish promptly to the other party (a) a copy of each report, schedule, registration statement and other document filed, published, announced or received by it during such period pursuant to the requirements of Federal or state securities laws, as applicable (other than documents which such party is not permitted to disclose under applicable law), and (b) consistent with its legal obligations, all other information concerning its business, properties and personnel as such other party may reasonably request; PROVIDED, HOWEVER, that either party may restrict the foregoing access to the extent that (i) a Governmental Entity requires such party or any of its Subsidiaries to restrict access to any properties or information reasonably related to any such contract on the basis of applicable laws and regulations with respect to national security matters, (ii) any law, treaty, rule or regulation of any Governmental Entity applicable to such party requires such party or its Subsidiaries to restrict access to any properties or information or (iii) such party or its Subsidiaries is bound by a confidentiality agreement that requires such party or its Subsidiaries to restrict such access. The parties will hold any such information which is non-public in confidence to the extent required by, and in accordance with, the provisions of the letter dated November 30, 1998 between Frontier and Global (the "CONFIDENTIALITY AGREEMENT"). Any investigation by Global or Frontier shall not affect the representations and warranties of Frontier or Global, as the case may be. 5.4 REASONABLE BEST EFFORTS. (a) Subject to the terms and conditions of this Agreement, each party will use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate the Merger (or the Alternative Merger, as the case may be) and the other transactions contemplated by this Agreement as soon as practicable after the date hereof. In furtherance and not in limitation of the forego ing, each party hereto agrees (i) to make an appropriate filing of a Notification and Report Form pursuant to the HSR Act with respect to the transactions contemplated hereby as promptly as practicable after the date hereof and to supply as promptly as practicable any additional information and documentary material that may be requested pursuant to the HSR Act and to take all other actions necessary to cause the expiration or termination of the applicable waiting periods under the HSR Act as soon as practicable and (ii) to file all necessary applications for Required Consents at the FCC, PUCs and local franchising authorities with respect to the transactions contemplated hereby as promptly as practical after the date hereof. Nothing in this Section 5.4(a) shall require any of Global and its Subsidiaries to sell or otherwise dispose of, or permit the sale or other disposition of, any assets of Global, Frontier or their respective Subsidiaries, whether as a condition to obtaining any approval from a Governmental Entity or any other Person or for any other reason, if Global reason ably determines that such sale or other disposition would reasonably be expected to have a Material Adverse Effect on Global and its Subsidiaries (including the Surviv ing Corporation and its Subsidiaries), taken together, after giving effect to the Merger. (b) Each of Global and Frontier shall, in connection with the efforts referenced in Section 5.4(a) to obtain all requisite approvals and authorizations for the transactions contemplated by this Merger Agreement under the HSR Act or any other Regulatory Law (as defined below), use its reasonable best efforts to (i) cooperate in all respects with each other in connection with any filing or submission and in connection with any investigation or other inquiry, including any proceeding initiated by a private party, (ii) promptly inform the other party of any communication received by such party from, or given by such party to, the FCC, PUCs, the Antitrust Division of the Department of Justice (the "DOJ") or any other Govern mental Entity and of any material communication received or given in connection with any proceeding by a private party, in each case regarding any of the transactions contemplated hereby, and (iii) permit the other party to review any communication given by it to, and consult with each other in advance of any meeting or conference with, the FCC, PUCs, the DOJ or any such other Governmental Entity or, in connection with any proceeding by a private party, with any other Person, and to the extent permitted by the FCC, PUCs, the DOJ or such other applicable Governmental Entity or other Person, give the other party the opportunity to attend and participate in such meetings and conferences. For purposes of this Agreement, "REGULATORY LAW" means the Sherman Act, as amended, the Clayton Act, as amended, the HSR Act, the Federal Trade Commission Act, as amended, the Communications Act, Bermuda law (including the filing of the requisite Memorandum of Increase with the Registrar of Companies in Bermuda and the approval of the Share Issuance (and the subsequent free transferability of the corresponding shares between nonresident persons for exchange control purposes) by the Bermuda Monetary Authority), and all other federal, state and foreign, if any, statutes, rules, regulations, orders, decrees, administrative and judicial doctrines and other laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or lessening of competition, whether in the communications industry or otherwise through merger or acquisition. (c) In furtherance and not in limitation of the covenants of the parties contained in Sections 5.4(a) and 5.4(b), if any administrative or judicial action or proceeding, including any proceeding by a private party, is instituted (or threat ened to be instituted) challenging any transaction contemplated by this Agreement as violative of any Regulatory Law, each of Global and Frontier shall cooperate in all respects with each other and use its respective reasonable best efforts to contest and resist any such action or proceeding and to have vacated, lifted, reversed or over turned any decree, judgment, injunction or other order, whether temporary, prelimi nary or permanent, that is in effect and that prohibits, prevents or restricts consum mation of the transactions contemplated by this Agreement. Notwithstanding the foregoing or any other provision of this Agreement, nothing in this Section 5.4 shall limit a party's right to terminate this Agreement pursuant to Section 7.1(b) or 7.1(c) so long as such party has up to then complied in all respects with its obligations under this Section 5.4. (d) If any objections are asserted with respect to the transactions contemplated hereby under any Regulatory Law or if any suit is instituted by any Governmental Entity or any private party challenging any of the transactions contemplated hereby as violative of any Regulatory Law, each of Global and Frontier shall use its reasonable best efforts to resolve any such objections or challenge as such Governmental Entity or private party may have to such transactions under such Regulatory Law so as to permit consummation of the transactions contemplated by this Agreement. 5.5 ACQUISITION PROPOSALS. Frontier agrees that neither it nor any of its Subsidiaries nor any of the officers and directors of it or its Subsidiaries shall, and that it shall direct and use its best efforts to cause its and its Subsidiaries' employees, agents and representatives (including any investment banker, attorney or accountant retained by it or any of its Subsidiaries) not to, directly or indirectly, initiate, solicit, encourage or knowingly facilitate (including by way of furnishing information) any inquiries or the making of any proposal or offer with respect to a merger, reorganization, share exchange, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving, or any purchase or sale of all or any significant portion of the assets or more than 20% of the common stock of, it or any of its Subsidiaries (any such proposal or offer (other than a proposal or offer made by Global or an affiliate thereof) being hereinafter referred to as an "ACQUISITION PROPOSAL"). Frontier further agrees that neither it nor any of its Subsidiaries nor any of the officers and directors of it or its Subsidiaries shall, and that it shall direct and use its best efforts to cause its and its Subsidiaries' employees, agents and representatives (including any investment banker, attorney or accountant retained by it or any of its Subsidiaries) not to, directly or indirectly, have any discussion with or provide any confidential information or data to any Person relating to an Acquisition Proposal, or engage in any negotiations concerning an Acquisition Proposal, or knowingly facilitate any effort or attempt to make or implement an Acquisition Proposal or accept an Acquisition Proposal. Notwithstanding the foregoing, Frontier or its Board of Directors shall be permitted to (A) to the extent applicable, comply with Rule 14d-9 and Rule 14e-2(a) promul gated under the Exchange Act with regard to an Acquisition Proposal, (B) in response to an unsolicited bona fide written Acquisition Proposal by any Person, recommend approval of such an unsolicited bona fide written Acquisition Proposal to the shareholders of Frontier or withdraw or modify in any adverse manner the Frontier Board Approval, or (C) engage in any discussions or negotiations with, or provide any information to, any Person in response to an unsolicited bona fide written Acquisition Proposal by any such Person, if and only to the extent that, in any such case as is referred to in clause (B) or (C), (i) the Frontier Shareholders Meeting shall not have occurred, (ii) the Board of Directors of Frontier concludes in good faith that such Acquisition Proposal (x) in the case of clause (B) above would, if consummated, constitute a Superior Proposal (as defined in Section 8.11) or (y) in the case of clause (C) above could reasonably be expected to constitute a Superior Proposal, (iii) prior to providing any information or data to any Person in connection with an Acquisition Proposal by any such Person, the Board of Directors of Frontier receives from such Person an executed confidentiality agreement on terms substantially similar to those contained in the Confidentiality Agreement (except as to the standstill provisions, provided that if under the aforementioned circumstances Frontier enters into any such confidentiality agreement without standstill provisions substantially similar to those contained in the Confidentiality Agreement, then Global shall to the extent of the difference be relieved of compliance with the Confidentiality Agreement's standstill provisions), and (iv) prior to providing any information or data to any Person or entering into discussions or negotiations with any Person, the Board of Directors of Frontier notifies Global promptly of such inquiries, proposals or offers received by, any such information requested from, or any such discussions or negotiations sought to be initiated or continued with, any of its representatives indicating, in connection with such notice, the name of such Person and the material terms and conditions of any proposals or offers. Frontier agrees that it will keep Global informed, on a current basis, of the status and terms of any such proposals or offers and the status of any such discussions or negotiations. Frontier agrees that it will immediately cease and cause to be terminated any existing activities, discussions or negotiations with any parties conducted heretofore with respect to any Acquisition Proposal. Frontier agrees that it will take the necessary steps to promptly inform the individuals or entities referred to in the first sentence of this Section 5.5 of the obligations undertaken in this Section 5.5. Nothing in this Section 5.5 shall (x) permit Frontier to terminate this Agreement (except as specifi cally provided in Article VII hereof) or (y) affect any other obligation of Frontier under this Agreement. 5.6 ASSUMPTION OF FRONTIER STOCK OPTIONS AND WARRANTS; OTHER STOCK PLANS; EMPLOYEE BENEFITS MATTERS. (a) OPTIONS AND WARRANTS; OTHER STOCK PLANS. Global shall assume the Frontier Stock Options and Warrants on the terms set forth in Exhibit 5.6 hereto. Frontier and Global agree that Frontier's other stock plans and treatment of Frontier's officers and employees shall be as set forth in Exhibit 5.6 hereto. Frontier and Global shall take all such steps as may be required to cause the transactions contemplated by this Section 5.6 and any other dispositions of Frontier equity securities (including derivative securities) or acquisitions of Global equity securities (including derivative securities) in connection with this Agreement by each individual who (a) is a director or officer of Frontier or (b) at the Effective Time, will become a director or officer of Global, to be exempt under Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended, including, without limitation, steps to be taken in accordance with the No-Action Letter dated January 12, 1999, issued by the SEC to Skadden, Arps, Slate, Meagher & Flom LLP. (b) EMPLOYEE BENEFITS. (i) OBLIGATIONS OF GLOBAL; COMPARABILITY OF BENEFITS. Each Frontier Benefit Plan as to which Frontier or any of its Subsidiaries has any obligation with respect to any current or former employee (the "FRONTIER EMPLOYEES") shall, as of the Effective Time, be the obligations of Global and the Surviving Corporation. At the Effective Time and for at least two years thereafter, Global shall, or shall cause the Surviving Corporation to, provide benefits, in the aggregate, that are no less favorable than the benefits provided, in the aggregate, under such Frontier Benefit Plans to the Frontier Employees immediately prior to the Effective Time. Notwithstanding the foregoing, nothing herein shall require (A) the continuation of any particular Frontier Plan or prevent the amend ment or termination thereof (subject to the maintenance, in the aggregate, of the benefits as provided in the preceding sentence) or (B) require Global or the Surviving Corporation to continue or maintain any stock purchase or other equity plan related to the equity of Frontier or the Surviving Corporation; provided, however, that the Surviving -------- ------- Company shall maintain, for a period of two (2) years following the Effective Time, substantially in the form in effect at the Effective Time (except for amendments required by applicable law), the Employee Telecommunications Benefit program, the Educational Assistance Fund, the Educational Assistance Program, the Executive Perquisite program and the Change in Control Severance Plan for Salary Band Levels 25 and Above. In the event of any sale, transfer or other disposition of any of the businesses or operations of Frontier or the Surviving Corporation (whether by merger, sale of stock or assets or otherwise) prior to the second anniversary of the Effective Time, Global shall cause any such purchaser to assume and perform all obligations of Global under this Section 5.6(b) for not less than the balance of the period ending on the second anniversary of the Effective Time. (ii) PRE-EXISTING LIMITATIONS; DEDUCTIBLE; SERVICE CREDIT. With respect to any Global Benefit Plans in which the Frontier Employees participate effective as of the Closing Date or thereafter, Global shall, or shall cause the Surviving Corporation to: (A) not impose any limitations more onerous than those currently in effect as to pre-existing conditions, exclusions and waiting periods with respect to participation and coverage requirements applicable to the Frontier Employees under any welfare Global Benefit Plan in which such employees may be eligible to participate after the Effective Time, (B) provide each Frontier Employee with credit for any co-payments and deductibles paid prior to the Effective Time in satisfying any applicable deductible or out-of- pocket requirements under any welfare Global Benefit Plan in which such employees may be eligible to participate after the Effective Time, and (C) recognize all service of the Frontier Employees with Frontier for all purposes (including, without limitation, purposes of eligibility to participate, vesting credit, entitlement for benefits, and benefit accrual) in any Global Benefit Plan in which such employees may be eligible to participate after the Effective Time, to the same extent taken into account under a comparable Frontier Plan immediately prior to the Closing Date. (iii) CHANGE IN/OF CONTROL. Frontier and Global agree that, for purposes of the Frontier Benefit Plans, the consummation of the transactions contemplated by this Agreement shall constitute a Change in Control or Change of Control, as applicable under such Frontier Benefit Plans. (iv) RETENTION BONUS PROGRAMS. The transition committee appointed pursuant to Section 4.4 shall jointly administer how the retention bonus programs of $35 million in the aggregate to employees of Frontier at the level of VP-2 and below will be administered. 5.7 FEES AND EXPENSES. Whether or not the Merger is consummated, all Expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such Expenses, except (a) if the Merger is consummated, the Surviving Corporation shall pay, or cause to be paid, any and all property or transfer taxes imposed on Frontier or its Subsidiaries and any real property transfer tax imposed on any holder of shares of capital stock of Frontier resulting from the Merger, (b) Expenses incurred in connec tion with the filing, printing and mailing of the Joint Proxy Statement/Prospectus, which shall be shared equally by Global and Frontier and (c) as provided in Section 7.2. As used in this Agreement, "EXPENSES" includes all out-of-pocket expenses (including, without limitation, all fees and expenses of counsel, accountants, invest ment bankers, experts and consultants to a party hereto and its affiliates) incurred by a party or on its behalf in connection with or related to the authorization, preparation, negotiation, execution and performance of this Agreement and the transactions contemplated hereby, including the preparation, printing, filing and mailing of the Joint Proxy Statement/Prospectus and the solicitation of shareholder approvals and all other matters related to the transactions contemplated hereby. 5.8 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE. The Surviving Corporation shall cause to be maintained in effect in its certificate of incorporation and by-laws (i) for a period of six years after the Effective Time, the current provisions regarding elimination of liability of directors and indemnification of officers, directors and employees contained in the certificate of incorporation and by-laws of Frontier and (ii) for a period of six years, the current policies of directors' and officers' liability insurance and fiduciary liability insurance maintained by Frontier (PROVIDED that the Surviving Corporation may substitute therefor policies of at least the same coverage and amounts containing terms and conditions which are, in the aggregate, no less advantageous to the insured) with respect to claims arising from facts or events that occurred on or before the Effective Time; PROVIDED, HOWEVER, that in no event shall the Surviving Corporation be required to expend in any one year an amount in excess of 200% of the annual premiums currently paid by Frontier for such insurance; and, PROVIDED, further, that if the annual premiums of such insurance coverage exceed such amount, the Surviving Corporation shall be obligated to obtain a policy with the greatest coverage available for a cost not exceeding such amount. The provisions of the immediately preceding sentence shall be deemed to have been satisfied if prepaid policies have been obtained by Frontier prior to the Closing for purposes of this Section 5.8, which policies provide such directors and officers with coverage for an aggregate period of six years with respect to claims arising from facts or events that occurred on or before the Effective Time, including, without limitation, in respect of the transactions contemplated by this Agreement and for a premium not in excess of the aggregate of the premiums set forth in the preceding sentence. If such prepaid policies have been obtained by Frontier prior to the Closing, Global shall and shall cause the Surviving Corporation to maintain such policies in full force and effect, and continue to honor Frontier's obligations thereunder. 5.9 REDEMPTION OF FRONTIER PREFERRED STOCK. At or prior to the mailing of the Joint Proxy Statement/Prospectus by Frontier in accordance with Section 5.1, Frontier shall mail a notice of redemption of the Frontier Preferred Stock to all holders of the Frontier Preferred Stock and shall set aside all funds necessary for such redemption prior to the Frontier Shareholders Meeting and shall take all other actions as are necessary to redeem all the Frontier Preferred Stock then outstanding, using its own cash, and in compliance with the applicable provisions as set forth in its restated certificate of incorporation. 5.10 PUBLIC ANNOUNCEMENTS. Frontier and Global shall use all reasonable efforts to develop a joint communications plan and each party shall use all reasonable efforts (i) to ensure that all press releases and other public statements with respect to the transactions contemplated hereby shall be consistent with such joint communications plan, and (ii) unless otherwise required by applicable law or by obligations pursuant to any listing agreement with or rules of any securities exchange or NASDAQ, to consult with each other before issuing any press release or otherwise making any public statement with respect to this Agreement or the transactions contemplated hereby. 5.11 ACCOUNTANTS' LETTERS. Upon reasonable notice from the other, Frontier and Global shall use their respective reasonable best efforts to cause PricewaterhouseCoopers LLP and Arthur Andersen & Co., respectively, to deliver to Frontier or Global, as the case may be, a letter, dated within two business days of the Effective Time of the Form S-4 covering such matters as are requested by Global or Frontier, as the case may be, and as are customarily addressed in accoun tant's "comfort" letters. In connection with Frontier's efforts to obtain such letter, if requested by PricewaterhouseCoopers LLP, Global shall provide a representation letter to PricewaterhouseCoopers LLP complying with the statement on Auditing Standards No. 72 ("SAS 72"), if then required. In connection with Global's efforts to obtain such letter, if requested by Arthur Andersen & Co., Frontier shall provide a representation letter to Arthur Andersen & Co. complying with SAS 72, if then required. 5.12 LISTING OF SHARES OF GLOBAL COMMON STOCK. Global shall use its best efforts to cause the shares of Global Common Stock to be issued in the Merger and the shares of Global Common Stock to be reserved for issuance upon exercise of the Frontier Stock Options to be approved for quotation, upon official notice of issuance, on NASDAQ. 5.13 VOTING TRUST. If at any time prior to the Frontier Share holders Meeting, a third party shall make an unsolicited tender or exchange offer to acquire control of Frontier, which offer is not recommended by Frontier's Board of Directors, then Global and Frontier will use their reasonable best efforts to consum mate the transactions contemplated hereby by implementing a "voting trust" or similar structure permitting consummation of the transactions contemplated hereby prior to the receipt of final FCC and PUC approvals. ARTICLE VI CONDITIONS PRECEDENT 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The obligations of Frontier, Global and Merger Sub to effect the Merger are subject to the satisfaction or waiver of, on or prior to the Closing Date, of the following conditions: (a) SHAREHOLDER APPROVAL. (i) Frontier shall have obtained the Required Frontier Vote in connection with the adoption of this Agree ment by the shareholders of Frontier and (ii) (x) if the Merger is to be effected, Global shall have obtained the Required Global Vote in connection with the approval of the Share Issuance and the Global Charter Amendment by the shareholders of Global, or (y) if the Alternative Merger is to be effected, Global shall have obtained the required Global Vote in connection with the Alternative Merger. (b) NO INJUNCTIONS OR RESTRAINTS, ILLEGALITY. No Laws shall have been adopted or promulgated, and no temporary restraining order, preliminary or permanent injunction or other order issued by a court or other Govern mental Entity of competent jurisdiction shall be in effect, having the effect of making the Merger illegal or otherwise prohibiting consummation of the Merger; PROVIDED, HOWEVER, that the provisions of this Section 6.1(b) shall not be available to any party whose failure to fulfill its obligations pursuant to Section 5.4 shall have been the cause of, or shall have resulted in, such order or injunction. (c) FCC AND PUBLIC UTILITY COMMISSION APPROV ALS. All approvals for the Merger from the FCC and PUCs shall have been obtained (i) other than those the failure of which to be obtained would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Global and its Subsidiaries (including following the Merger the Surviving Corporation and its Subsidiaries), taken together, and (ii) without the imposition of conditions that would individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Global and its Subsidiaries (including following the Merger, the Surviving Corporation and its Subsidiaries), taken together. (d) HSR ACT. The waiting period (and any extension thereof) applicable to the Merger under the HSR Act shall have been terminated or shall have expired. (e) NASDAQ LISTING. The shares of Global Common Stock to be issued in the Merger and such other shares to be reserved for issuance in connection with the Merger shall have been approved upon official notice of issuance for quotation on NASDAQ. (f) EFFECTIVENESS OF THE FORM S-4. The Form S-4 shall have been declared effective by the SEC under the Securities Act. No stop order suspending the effectiveness of the Form S-4 shall have been issued by the SEC and no proceedings for that purpose shall have been initiated or threatened by the SEC. (g) BERMUDA APPROVAL. The Share Issuance (and the subsequent free transferability of the corresponding shares between nonresident persons for exchange control purposes) shall have been approved by the Bermuda Monetary Authority. 6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF GLOBAL AND MERGER SUB. The obligations of Global and Merger Sub to effect the Merger are subject to the satisfaction of, on or waiver by Global, on or prior to the Closing Date, of the following conditions: (a) REPRESENTATIONS AND WARRANTIES. (i) Each of the representations and warranties of Frontier set forth in this Agreement that is qualified as to Material Adverse Effect shall have been true and correct on the date of this Agreement and (except to the extent such representations and warranties speak as of a specified date) shall also be true and correct on and as of the Closing Date, and (ii) each of the representations and warranties of Frontier that is not so qualified shall have been true and correct in all material respects on the date of this Agreement and (except to the extent such representations and warranties speak as of a specified date) shall also be true and correct in all material respects on and as of the Closing Date provided that clause (ii) of -------- this paragraph (a) shall be deemed satisfied so long as all failures of such representations and warranties referred to therein to be so true and correct, taken together, would not reasonably be expected to have a Material Adverse Effect on Frontier; and Global shall have received a certificate of the chief executive officer and the chief financial officer of Frontier to the effect of the foregoing. (b) PERFORMANCE OF OBLIGATIONS OF FRONTIER. Frontier shall have performed or complied with all agreements and covenants required to be performed by it under this Agreement at or prior to the Closing Date that are qualified as to materiality and shall have performed or complied in all material respects with all other agreements and covenants required to be performed by it under this Agreement at or prior to the Closing Date that are not so qualified as to materiality, and Global shall have received a certificate of the chief executive officer and the chief financial officer of Frontier to such effect. (c) TAX OPINION. Global shall have received from Skadden, Arps, Slate, Meagher & Flom LLP, counsel to Global and Merger Sub, on the Closing Date, a written opinion dated as of such date substantially in the form of (i) Section 6.2(c)(i) of the Global Disclosure Schedule with respect to the Merger or (ii) Section 6.2(c)(ii) of the Global Disclosure Schedule with respect to the Alternative Merger, as the case may be. In rendering such opinion, counsel to Global shall be entitled to rely upon representations of officers of Global and Frontier satisfactory to it and substantially in the form of Section 6.2(c)(1) of the Global Disclosure Schedule or Section 6.2(c)(2) of the Frontier Disclosure Schedule, respectively (allowing for such amendments to the representations as counsel to Global deems necessary or appropriate). (d) REDEMPTION OF FRONTIER PREFERRED STOCK. Frontier shall have redeemed all of the Frontier Preferred Stock. 6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF FRONTIER. The obligations of Frontier to effect the Merger are subject to the satisfaction of, or waiver by Frontier, on or prior to the Closing Date of the following additional conditions: (a) REPRESENTATIONS AND WARRANTIES. (i) Each of the representations and warranties of Global and Merger Sub set forth in this Agree ment that is qualified as to Material Adverse Effect shall have been true and correct on the date of this Agreement and (except to the extent such representations and warranties speak as of a specified date) shall also be true and correct on and as of the Closing Date, and (ii) each of the representations and warranties of each of Global and Merger Sub that is not so qualified shall have been true and correct in all material respects on the date of this Agreement and (except to the extent such representations and warranties speak as of a specified date) shall also be true and correct in all material respects on and as of the Closing Date provided that clause (ii) of this paragraph (a) shall be deemed satisfied -------- so long as all failures of such repre sentations and warranties referred to therein to be so true and correct, taken together, would not reasonably be expected to have a Material Adverse Effect on Global; and Frontier shall have received a certificate of the chief executive officer and the chief financial officer of Global to the effect of the foregoing. (b) PERFORMANCE OF OBLIGATIONS OF GLOBAL. Global shall have performed or complied with all agreements and covenants required to be performed by it under this Agreement at or prior to the Closing Date that are quali fied as to materiality and shall have performed or complied in all material respects with all agreements and covenants required to be performed by it under this Agree ment at or prior to the Closing Date that are not so qualified as to materiality, and Frontier shall have received a certificate of the chief executive officer and the chief financial officer of Global to such effect. (c) TAX OPINION. Frontier shall have received from Simpson Thacher & Bartlett, counsel to Frontier, on the Closing Date, a written opinion dated as of such date substantially in the form of (i) Section 6.3(c)(i) of the Frontier Disclosure Schedule with respect to the Merger or (ii) Section 6.3(c)(ii) of the Frontier Disclosure Schedule with respect to the Alternative Merger, as the case may be. In rendering such opinion, counsel to Frontier shall be entitled to rely upon representations of officers of Global and Frontier satisfactory to it and substantially in the form of Section 6.2(c)(1) of the Global Disclosure Schedule or 6.2(c)(2) of the Frontier Disclosure Schedule, respectively (allowing for such amendments to the representations as counsel to Frontier deems necessary or appropriate). ARTICLE VII TERMINATION AND AMENDMENT 7.1 TERMINATION. This Agreement may be terminated at any time prior to the Effective Time, by action taken or authorized by the Board of Directors of the terminating party or parties, and except as provided below, whether before or after approval of the matters presented in connection with the Merger by the shareholders of Frontier or Global: (a) By mutual written consent of Global and Frontier, by action of their respective Boards of Directors; (b) By either Frontier or Global if the Effective Time shall not have occurred on or before the first anniversary date of this Agreement (the "TERMINATION DATE"); PROVIDED, HOWEVER, in the event that a Trigger Event had occurred and is no longer in effect, the Termination Date shall be the later of (i) the first anniversary date of this Agreement, or (ii) 180 days after the date on which the Trigger Event is no longer in effect, PROVIDED FURTHER, that the right to terminate this Agreement under this Section 7.1(b) shall not be available to any party whose failure to fulfill any obligation under this Agreement (including without limitation Section 5.4) has to any extent been the cause of, or resulted in, the failure of the Effective Time to occur on or before the Termination Date; (c) By either Frontier or Global if any Governmental Entity (i) shall have issued an order, decree or ruling or taken any other action (which the parties shall have used their reasonable best efforts to resist, resolve or lift, as applicable, in accordance with Section 5.4) permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement, and such order, decree, ruling or other action shall have become final and nonappealable or (ii) shall have failed to issue an order, decree or ruling or to take any other action (which order, decree, ruling or other action the parties shall have used their reasonable best efforts to obtain, in accordance with Section 5.4), in each case of (i) and (ii) which is necessary to fulfill the conditions set forth in subsections 6.1(c) and (d), as applicable, and such denial of a request to issue such order, decree, ruling or take such other action shall have become final and nonappealable; PROVIDED, HOWEVER, that the right to terminate this Agreement under this Section 7.1(c) shall not be available to any party whose failure to comply with Section 5.4 has to any extent been the cause of such action or inaction; (d) By either Frontier or Global if (i) the approval by the share holders of Frontier required for the consummation of the Merger shall not have been obtained by reason of the failure to obtain the Required Frontier Vote or (ii) the approval by the shareholders of Global required for the consummation of the Merger shall not have been obtained by reason of the failure to obtain the Required Global Vote, in each case upon the taking of such vote at a duly held meeting of sharehold ers of Frontier or Global, as the case may be, or at any adjournment thereof; (e) By Global if the Board of Directors of Frontier, prior to the Frontier Shareholders Meeting (i) shall withdraw or modify in any adverse manner the Frontier Board Approval, (ii) shall approve or recommend a Superior Proposal pursuant to Section 5.5 or (iii) shall resolve to take any of the actions specified in clauses (i) or (ii) above; (f) By Frontier at any time prior to the Frontier Shareholders Meeting, upon three Business Days' prior notice to Global, if the Board of Directors of Frontier shall approve a Superior Proposal; PROVIDED, HOWEVER, that (i) Frontier shall have complied with Section 5.5, (ii) the Board of Directors of Frontier shall have concluded in good faith, after giving effect to all concessions which may be offered by Global pursuant to clause (iii) below, on the basis of the advice of its financial advisors and outside counsel, that such proposal is a Superior Proposal and (iii) prior to any such termination, Frontier shall, and shall cause its financial and legal advisors to, negotiate with Global to make such adjustments in the terms and conditions of this Agreement as would enable Global to proceed with the transac tions contemplated hereby; PROVIDED, HOWEVER, that it shall be a condition to termination by Frontier pursuant to this Section 7.l(f) that Frontier shall have made the payment of the Termination Fee to Global required by Section 7.2(b); (g) By Frontier, if its Board of Directors so determines by a vote of the majority of the members of its entire Board, at any time during the three- Business Day period commencing on the Determination Date (the "FRON TIER EVALUATION PERIOD"), if the Average Price is less than $34.5625, SUBJECT, HOWEVER, to the following: (A) if Frontier elects to exercise its termination right pursuant to this Section 7.1(g), it shall give Global written notice of its intention to terminate (the "TERMINATION NOTICE"), which termination shall be effective at the close of business on the third Business Day following the delivery of the Termination Notice (which Termination Notice may be withdrawn by Frontier at any time prior to the effectiveness of such termination), (B) during the two-Business Day period commencing with the delivery of a Termination Notice (the "GLOBAL ELECTION PERIOD"), Global shall have the option of (x) adjusting the Exchange Ratio to equal the quotient determined by dividing $62.00 by the Average Price (rounded to the nearest 1/10,000) by delivering written notice to Frontier within such two-Business Day period of its intention to so adjust the Exchange Ratio, (y) paying Merger Consideration consisting of shares of Global Common Stock equal to the Exchange Ratio and cash (the "CASH TOP-UP") equal to the difference between $62.00 and the Exchange Ratio multiplied by the Average Price or (z) any combination of an adjustment in the Exchange Ratio and a Cash Top-Up provided that the sum of (i) the Cash Top-Up and (ii) the Exchange Ratio, as adjusted, multiplied by the Average Price, equals $62.00 and (C) if Global makes an election to adjust the Exchange Ratio pursuant to the preceding clause (B)(x) (a "GLOBAL ADJUSTMENT ELECTION"), or to pay Merger Consideration that includes the Cash Top-Up (the "CASH TOP-UP ELECTION") pursuant to the preceding clause (B)(y), or a combination of an adjustment to the Exchange Ratio and a Cash Top-Up pursuant to Clause (B)(z) a ("COMBINATION ELECTION"), then this Agreement shall not terminate pursuant to this Section 7.1(g) and this Agreement shall remain in effect in accordance with its terms (except as the Ex change Ratio shall have been so modified or the Merger Consideration so modified), and any references in this Agreement to "Exchange Ratio" or "Merger Consideration," as applicable, shall thereafter be deemed to refer to the Exchange Ratio or Merger Consideration, as applicable, as adjusted pursuant to this Section 7.1(g). Unless the Alternative Merger is consummated pursuant to Section 1.10 hereof and such Alternative Merger qualifies for non-recognition treatment under Section 351 of the Code, cash paid pursuant to the Cash Top-Up Election or the Combination Election in accordance with Sections (B)(y) or (B)(z) of the immediately preceding sentence, shall be less than the amount, taken together with all other cash to be paid in the Merger or the Alternative Merger, that would result in the Merger or the Alternative Merger failing to qualify as a reorganization under Section 368 of the Code and any reduction in the cash paid pursuant to a Cash Top-Up shall be compen sated by an adjustment in the Exchange Ratio. 7.2 EFFECT OF TERMINATION. (a) In the event of termination of this Agreement by either Frontier or Global as provided in Section 7.1, this Agreement shall forthwith become void and there shall be no liability or obligation on the part of Global or Frontier or their respective officers or directors except with respect to Section 3.1(i), Section 3.2(h), the second sentence of Section 5.3, Section 5.7, this Section 7.2 and Article VIII. (b) Global and Frontier agree that Frontier shall pay to Global the sum of $270 million (the "TERMINATION FEE") solely as follows: (i) if Frontier shall terminate this Agreement pursuant to Section 7.1(f), (ii) if (A) Frontier or Global shall terminate this Agreement pursuant to Section 7.1(d)(i) due to the failure of Frontier's shareholders to approve and adopt this Agreement, (B) at any time after the date of this Agreement and at or before the time of the event giving rise to such termination there shall exist an Acquisition Proposal and (C) within 12 months of the termination of this Agreement, Frontier enters into a definitive agreement with any third party with respect to an Acquisition Proposal or an Acquisition Proposal is consummated, (iii) if Global shall terminate this Agreement pursuant to Section 7.1(e), or (iv) if (A) Global shall terminate this Agreement pursuant to Section 7.1(b) or Frontier or Global shall terminate this Agreement pursuant to Section 7.1(c), (B) at any time after the date of this Agreement and at or before the time of the event giving rise to such termination there shall exist an Acquisition Proposal with respect to Frontier, (C) following the existence of such Acquisition Proposal and prior to any such termination, Frontier shall have intentionally breached (and not cured after notice thereof) any of its material covenants or agreements set forth in this Agreement in any material respect and (D) within 12 months of any such termination of this Agreement, Frontier shall enter into a definitive agreement with any third party with respect to an Acquisition Proposal or an Acquisition Proposal is consummated. (c) The Termination Fee required to be paid pursuant to Section 7.2(b) shall be made prior to, and shall be a pre-condition to the effectiveness of termination of this Agreement by Frontier pursuant to Section 7.1(f). Any other payment required to be made pursuant to Section 7.2(b) shall be made to Global not later than two Business Days after the entering into of a definitive agreement with respect to, or the consummation of, an Acquisition Proposal, as applicable, or a termination pursuant to Section 7.1(e). All payments under this Section 7.2 to Global shall be made by wire transfer of immediately available funds to an account designated by Global. 7.3 AMENDMENT. This Agreement may be amended by the parties hereto, by action taken or authorized by their respective Boards of Directors, at any time before or after approval of the matters presented in connection with the Merger by the shareholders of Frontier and Global, but, after any such approval, no amendment shall be made which by law or in accordance with the rules of any relevant stock exchange requires further approval by such shareholders without such further approval. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto. 7.4 EXTENSION; WAIVER. At any time prior to the Effective Time, the parties hereto, by action taken or authorized by their respective Boards of Directors, may, to the extent legally allowed, (i) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (ii) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto and (iii) waive compliance with any of the agree ments or conditions contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such party. The failure of any party to this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of those rights. ARTICLE VIII GENERAL PROVISIONS 8.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. None of the representations, warranties, covenants and other agreements in this Agreement or in any instrument delivered pursuant to this Agreement, including any rights arising out of any breach of such representations, warranties, covenants and other agreements, shall survive the Effective Time, except for those covenants and agreements contained herein and therein that by their terms apply or are to be performed in whole or in part after the Effective Time and this Article VIII. Nothing in this Section 8.1 shall relieve any party for any breach of any representation, warranty, covenant or other agreement in this Agreement occurring prior to termination. 8.2 NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed duly given (a) on the date of delivery if delivered personally, or by telecopy or telefacsimile, upon confirmation of receipt, (b) on the first Business Day following the date of dispatch if delivered by a recognized next-day courier service, or (c) on the tenth Business Day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice: (a) if to Global or Global Sub, to Global Crossing Ltd. 45 Reid Street Wessex House Hamilton HM 12, Bermuda Fax: (441) 296-8606 Attention: James C. Gorton with a copy to Skadden, Arps, Slate, Meagher & Flom LLP 300 South Grand Avenue, Suite 3400 Los Angeles, California 90071 Fax: (213) 687-5600 Attention: Brian J. McCarthy and an additional copy to Skadden, Arps, Slate, Meagher & Flom LLP One Rodney Square P.O. Box 636 Wilmington, Delaware 19899 Fax: (302) 651-3001 Attention: Richard L. Easton (b) if to Frontier to Frontier Corporation 180 South Clinton Avenue Rochester, New York 14646 Fax: (716) 546-7823 Attention: Martin T. McCue with a copy to Simpson Thacher & Bartlett 425 Lexington Avenue New York, New York 10017-3954 Fax: (212) 455-2502 Attention: Robert E. Spatt 8.3 INTERPRETATION. When a reference is made in this Agreement to Sections, Exhibits or Schedules, such reference shall be to a Section of or Exhibit or Schedule to this Agreement unless otherwise indicated. The table of contents, glossary of defined terms and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words "include", "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation". 8.4 COUNTERPARTS. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that both parties need not sign the same counterpart. 8.5 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIA RIES. (a) This Agreement, the Stock Option Agreement and the agreements referred to in Sections 1.9, 4.5 and 5.3 constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof, other than the Confidentiality Agreement, which shall survive the execution and delivery of this Agreement. (b) This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement, other than Section 5.8 (which is intended to be for the benefit of the Persons covered thereby and may be enforced by such Persons). 8.6 GOVERNING LAW. This Agreement shall be governed and construed in accordance with the laws of the State of New York. 8.7 SEVERABILITY. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible. 8.8 ASSIGNMENT. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto, in whole or in part (whether by operation of law or otherwise), without the prior written consent of the other party, and any attempt to make any such assignment without such consent shall be null and void, except that Merger Sub may assign, in its sole discretion, any or all of its rights, interests and obligations under this Agreement to any direct wholly owned Subsidiary of Global without the consent of Frontier, but no such assignment shall relieve Merger Sub of any of its obligations under this Agreement. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective succes sors and assigns. 8.9 SUBMISSION TO JURISDICTION; WAIVERS. Each of Global and Frontier irrevocably agrees that any legal action or proceeding with respect to this Agreement or for recognition and enforcement of any judgment in respect hereof brought by the other party hereto or its successors or assigns may be brought and determined in the Courts of the State of New York, and each of Global and Frontier hereby irrevocably submits with regard to any such action or proceeding for itself and in respect to its property, generally and unconditionally, to the nonex clusive jurisdiction of the aforesaid courts. Each of Global and Frontier hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counter claim or otherwise, in any action or proceeding with respect to this Agreement, (a) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason other than the failure to serve process in accordance with this Section 8.9, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise), and (c) to the fullest extent permitted by applicable law, that (i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is im proper and (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts. This Agreement does not involve less than $250,000 and the parties intend that Section 5-1401 of the New York General Obligations Law shall apply to this Agreement. 8.10 ENFORCEMENT. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms. It is accordingly agreed that the parties shall be entitled to specific performance of the terms hereof, this being in addition to any other remedy to which they are entitled at law or in equity. 8.11 DEFINITIONS. As used in this Agreement: (a) "APPLICABLE CLOSING CONDITIONS" means the conditions to Closing set forth in Sections 6.1(b), 6.1(c) and 6.1(d) hereof. (b) "BOARD OF DIRECTORS" means the Board of Directors of any specified Person and any committees thereof. (c) "BUSINESS DAY" means any day on which banks are not required or authorized to close in the City of New York. (d) "COMBINED VOTING POWER" means the combined voting power of Global Common Stock on a fully diluted basis and for purposes of computing such "fully diluted basis", the following shall be excluded: (i) any options, warrants or other securities exchangeable or convertible into Global Com mon Stock (collectively, "Convertible Voting Securities"), which are not and cannot become exercisable prior to the earlier of (x) the Termination Date, or (y) the date of the Global Shareholders Meeting, and (ii) any Convertible Voting Securities that are held by a shareholder of Global who owns more than 200,000 shares of Global Common Stock that enters into an agreement with Global for the benefit of Frontier and which gives Frontier the right of specific performance thereunder, that is reasonably acceptable to Frontier, which provides that such shareholder shall not exercise any of its Convertible Voting Securities prior to the earlier of (x) the Termination Date or (y) the termination of the Voting Agreement. (e) "MATERIAL ADVERSE EFFECT" means, with respect to any entity, any adverse change, circumstance or effect that is or is reasonably likely to be materially adverse to the business, financial condition or results of operations of such entity and its Subsidiaries taken as a whole, other than any change, circum stance or effect relating to (i) the economy or securities markets in general or (ii) the industries in which Global or Frontier operate and not specifically relating to Global or Frontier. (f) "MATERIAL NETWORK CONTRACT" means any material contract relating to the construction, installation (including, but not limited to, any upgrade), operation, maintenance, provision of capacity for, sale or use of capacity on (including, but not limited to, the provision for web hosting services) Frontier's fiber optic network. (g) "PERSON" means an individual, corporation, company, limited liability company, partnership, association, trust, unincorporated organization, other entity or group (as defined in the Exchange Act). (h) "SUBSIDIARY" when used with respect to any party means any corporation or other organization, whether incorporated or unincorporated, (i) of which such party or any other Subsidiary of such party is a general partner (excluding partnerships, the general partnership interests of which held by such party or any Subsidiary of such party do not have a majority of the voting interests in such partnership) or (ii) at least a majority of the securities or other interests of which having by their terms ordinary voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such party or by any one or more of its Subsidiaries, or by such party and one or more of its Subsidiaries. (i) "SUPERIOR PROPOSAL" means a bona fide written Acquisition Proposal which the Board of Directors of Frontier or Global, as applicable, concludes in good faith (after consultation with its financial advisors and legal counsel), taking into account all legal, financial, regulatory and other aspects of the proposal and the Person making the proposal, (i) would, if consummated, result in a transaction that is more favorable to Frontier's shareholders (in their capacities as shareholders) from a financial point of view, than the transactions contemplated by this Agreement and (ii) is reasonably capable of being completed (provided that for purposes of this definition the term Acquisition Proposal shall have the meaning assigned to such term in Section 5.5 except that the references to "20%" in the definition of "Acquisition Proposal" shall be deemed to be a reference to "50%" and "Acquisition Proposal" shall only be deemed to refer to a transaction involving Frontier, or with respect to assets (including the shares of any Subsidiary of Frontier) of Frontier and its Subsidiaries, taken as a whole, and not any of its Subsidiaries alone). (j) "THE OTHER PARTY" means, with respect to Frontier, Global and means, with respect to Global, Frontier. (k) "TRIGGER EVENT" occurs when all of the following conditions are and remain satisfied: (i) Global has consummated an acquisition of a trade or business outside the United States consistent with its business plan and (ii) counsel to Global and Frontier confirm that, based upon the facts and circumstances of such acquisition, they each could render the respective opinions required by Sections 6.2(c)(i) and 6.3(c)(i) hereof. 8.12 OTHER AGREEMENTS. The parties hereto acknowledge and agree that, except as otherwise expressly set forth in this Agreement, the rights and obligations of Frontier and Global under any other agreement between the parties shall not be affected by any provision of this Agreement. IN WITNESS WHEREOF, Global, Merger Sub and Frontier have caused this Agreement to be signed by their respective officers thereunto duly authorized, all as of March 16, 1999. GLOBAL CROSSING LTD. By: /s/ Thomas J. Casey ------------------- Name: Thomas J. Casey Title: Vice Chairman GCF ACQUISITION CORP. By: /s/ Thomas J. Casey ------------------- Name: Thomas J. Casey Title: Vice Chairman FRONTIER CORPORATION By: /s/ Joseph P. Clayton --------------------- Name: Joseph P. Clayton Title: Chief Executive Officer EXHIBIT A FORM OF STOCK OPTION AGREEMENT [An executed copy of the Stock Option Agreement has been filed as Exhibit 10.1 to this Form 8-K and is incorporated herein by reference] EXHIBIT 1.9 FORM OF VOTING AGREEMENT [An executed copy of the Voting Agreement has been filed as Exhibit 10.2 to this Form 8-K and is incorporated herein by reference] EXHIBIT 3.1(K) Form of Frontier Affiliate Letter --------------------------------- Gentlemen: The undersigned, a holder of shares of Common Stock, par value $1.00 per share ("Frontier Common Stock"), of Frontier Corporation, a New York ---------------------- corporation ("Frontier"), will be entitled to receive in connection with the -------- merger (the "Merger") of GCF Acquisition Corp., a New York corporation, with and ------ into Frontier, securities (the "Global Securities") of Global Crossing Ltd., a ----------------- company formed under the laws of Bermuda ("Global"), into which the shares of ------ Frontier Common Stock owned by the undersigned are converted at the effective time of the Merger. The undersigned acknowledges that the undersigned may be deemed an "affiliate" of Frontier within the meaning of Rule 145 ("Rule 145") -------- promulgated under the Securities Act of 1933 (together with the rules and regulations thereunder, the "Act"), although nothing contained herein should be --- construed as an admission of such fact. If in fact the undersigned were an affiliate under the Act, the undersigned's ability to sell, assign or transfer the Global Securities received by the undersigned in exchange for any shares of Frontier Common Stock pursuant to the Merger may be restricted unless such transaction is registered under the Act or an exemption from such registration is available. The undersigned understands that such exemptions are limited and the undersigned has obtained advice of counsel as to the nature and conditions of such exemptions, including information with respect to the applicability to the sale of such securities of Rules 144 and 145(d) promulgated under the Act. The undersigned understands that Global will not be required to maintain the effectiveness of any registration statement under the Act for the purposes of resale of Global Securities by the undersigned. The undersigned hereby represents to and covenants with Global that the undersigned will not sell, assign or transfer any of the Global Securities received by the undersigned in exchange for any shares of Frontier Common Stock pursuant to the Merger except (i) pursuant to an effective registration statement under the Act, (ii) in conformity with the volume and other limitations of Rule 145 or (iii) in a transaction which, in the opinion of counsel reasonably satisfactory to Global or as described in a "no-action" or interpretive letter from the Staff of the Securities and Exchange Commission (the "SEC"), is not required to be registered under the Act. --- In the event of a sale or other disposition by the undersigned of Global Securities pursuant to Rule 145, the undersigned will supply Global with evidence of compliance with such Rule, in the form of a letter in the form of Annex I hereto. The undersigned understands that Global may instruct its transfer agent to withhold the transfer of any Global Securities disposed of by the undersigned, but that upon receipt of such evidence of compliance the transfer agent shall effectuate the transfer of the Global Securities sold as indicated in the letter (issuing certificates without any restrictive legend to the transferee). The undersigned acknowledges and agrees that Global reserves the right to place the following legend on certificates representing Global Securities received by the undersigned in the Merger: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933 APPLIES AND MAY BE SOLD OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE REQUIREMENTS OF RULE 145 OR PURSUANT TO A REGISTRATION STATEMENT UNDER SAID ACT OR AN EXEMPTION FROM SUCH REGISTRATION." The undersigned also acknowledged and agrees that unless a sale or transfer of the Global Securities received by the undersigned in connection with the Merger is made in conformity with the provisions of Rule 145 or pursuant to a registration statement (in which case certificates issued to the transferee shall not contain any restrictive legend), Global reserves the right to place the following legend (or other appropriate legend) on the certificates issued to any transferee: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933." It is understood and agreed that such legends will be substituted by delivery of certificates without such legends if (i) one year shall have elapsed from the date of the effective time of the Merger and the provisions of Rule 145(d)(2) under the Act are then available to the undersigned or (ii) Global shall have received an opinion in form and substance reasonably satisfactory to Global from independent counsel reasonably satisfactory to Global or a Ano-action" or interpretive letter from the Staff of the SEC to the effect that such legends are not required for purposes of the Act. The undersigned acknowledges that (i) the undersigned has carefully read this letter and understands the requirements hereof and the limitations imposed upon the distribution, sale, transfer or other disposition of Global Securities and (ii) the receipt by Global of this letter is an inducement and a condition to Global's obligations to consummate the Merger. By Global's acceptance of this letter, Global agrees with the undersigned that, if the undersigned receives any Global Securities in the Merger: (i) for so long as and to the extent necessary to permit the undersigned to sell such Global Securities pursuant to Rule 145 and, to the extent applicable, Rule 144 under the Act, Global shall take all such actions as may be reasonably available to it to file, on a timely basis, all reports and data required to be filed with the SEC by it pursuant to Section 13 of the Securities and Exchange Act of 1934, as amended, and furnish to the undersigned upon request a written statement as to whether Global has complied with such reporting requirements during the 12 months preceding any proposed sale of Global Securities by the undersigned under Rule 145, and Global shall otherwise take all such actions as may be reasonably available to it to permit such sales pursuant to Rule 145 and Rule 144. Very truly yours, -------------------------------------------- Name: ACCEPTED AND AGREED: Global Crossing Ltd. By: ------------------------- Name: Title: Date: ANNEX I TO EXHIBIT 3.1(K) [Name] [Date] On the undersigned sold the securities ("Securities") of ---------- ---------- Global ("Global") described below in the space provided for that purpose (the ------ "Securities"). The Securities were received by the undersigned in connection ---------- with the merger of Merger Sub with and into Frontier. Based upon the most recent report or statement filed by Global with the Securities and Exchange Commission, the Securities sold by the undersigned were within the prescribed limitations set forth in paragraph (e) of Rule 144 promulgated under the Securities Act of 1933, as amended (the "Act"). --- The undersigned hereby represents that the Securities were sold in "brokers' transactions" within the meaning of Section 4(4) of the Act or in transactions directly with a "market maker" as that term is defined in Section 3(a)(38) of the Securities Exchange Act of 1934, as amended. The undersigned further represents that the undersigned has not solicited or arranged for the solicitation of orders to buy the Securities, and that the undersigned has not made any payment in connection with the offer or sale of the Securities to any person other than to the broker who executed the order in respect of such sale. Very truly yours, [Space to be provided for description of securities] Exhibit 4.5 ----------- SERVICES AGREEMENT TERM SHEET. ----------------------------- Frontier and Global will exercise reasonable good faith efforts as soon as practicable after the execution of this agreement to negotiate and finalize an agreement or agreements whereby each party will provide agreed amounts of lit capacity derived from electronics on its network to the other party, for a term of three (3) years, at rates that are (a) at the same level as the lowest bona fide bid procured on an arms' length basis from another provider of available fiber capacity for the same areas and the same capabilities/characteristics, or (b) in lieu thereof, at rates that are most competitive with rates paid by other similarly-situated customers, taking into account the term, the fiber capability/characteristics sought, expected volume, and locations at which traffic originates and terminates. Where traffic is to be exchanged in comparable amounts, the parties will share the costs of establishing connections between points of presence (POPs) in the same metropolitan areas. Each party will agree to make reasonable space available to the other party for collocation at POPs or Telehouses in the metropolitan center or city nearest the other's access point or point of landing for interconnection, and at selected other sites identified and agreed upon by the parties, at rates and charges most recently quoted to the party's best customers for similar amounts and types of space and collocation services and equipment, and assuming such space can be made available. Each party will consider avenues for joint marketing of services, including the development of marketing plans and sales incentives to promote sales of one another's products and services. The parties will consider methods to engage in joint billing, and to have available for the other party certain customer care, network monitoring and other services on mutually acceptable and compensatory terms and conditions. Exhibit 5.2 ----------- CLASSIFICATION OF DIRECTORS --------------------------- (I) One director, selected by Frontier, shall be elected to the Global Board of Directors, Class B, with a term expiring in 2000. (II) One director, selected by Frontier, shall be elected to the Global Board of Directors, Class C, with a term expiring in 2001. (III) Two directors, selected by Frontier, shall be elected to the Global Board of Directors, Class A, with a term expiring in 2002. Exhibit 5.6 ----------- Assumption of Frontier Stock Options and Frontier Warrant --------------------------------------------------------- (1) Each Frontier Stock Option and each Frontier Warrant outstanding at the Effective Time shall be assumed by Global. Each Frontier Stock Option shall be deemed to constitute an option to acquire, and each Frontier Warrant shall be deemed to constitute a warrant to acquire, on the same terms and conditions, mutatis mutandis, as were applicable under such Frontier Stock ------- -------- Options or such Frontier Warrants, prior to the Effective Time, the number of shares of Global Common Stock (or in the event of the Alternative Merger, New Global Common Stock) as the holder of each such Frontier Stock Option or Frontier Warrant would have been entitled to receive pursuant to the Merger had such holder exercised such Frontier Stock Option or such Frontier Warrant in full immediately prior to the Effective Time (not taking into account whether or not such option was in fact exercisable). The price per share subject to each such option and warrant shall be equal to (a) the aggregate exercise price for Frontier Common Stock otherwise purchasable pursuant to such Frontier Stock Option or Frontier Warrant divided by (b) the number of shares of Global Common Stock (or in the event of the Alternative Merger, New Global Common Stock) deemed purchasable pursuant to such assumed Frontier Stock Option or such Frontier Warrant; provided, that the number of shares of Global Common Stock -------- that may be purchased upon exercise of any such Frontier Stock Option or such Frontier Warrant shall not include any fractional share and, upon exercise of such Frontier Stock Option or such Frontier Warrant, a cash payment shall be made for any fractional share based upon the last sale price per share of Global Common Stock (or in the event of the Alternative Merger, New Global Common Stock) on the trading day immediately preceding the date of exercise; provided, -------- further, that in the event of a Cash Top-Up Election, the appropri ate committee - ------- of the Board of Directors of Frontier (or of the applicable Frontier Benefit Plan) shall determine, subject to the terms of the applicable Frontier Benefit Plan or Frontier Warrant, as the case may be, in their reasonable discretion, the manner and method by which the Frontier Stock Options and Frontier Warrants will be adjusted to account for any cash payments to be made pursuant to such Cash Top-Up Election. All such Frontier Stock Options shall be immediately exercisable by the holder thereof at or after the Effective Time, notwithstanding any provision to the contrary set forth in any option agreement. As soon as practicable (but in no event later than fourteen Business Days) after the Effective Time, Global shall cause to be delivered to each holder of an outstanding Frontier Stock Option an appropriate notice setting forth such holder's rights pursuant thereto, and such assumed Frontier Stock Option or such Frontier Warrant (as adjusted with respect to exercise price and the purchasable number of shares of Global Common Stock (or in the event of the Alternative Merger, New Global Common Stock)) shall continue in effect on the same terms and conditions. From and after the Effective Time, Global shall comply with the terms of the warrant agreement pursuant to which the Frontier Warrant was issued (the "Warrant Agreements") and the Frontier Stock Option Plans pursuant to which the Frontier Stock Options were granted. The adjustments provided in this Exhibit 5.6 with respect to any Stock Options that are "incentive stock options" (as defined in section 422 of the Code) shall be effected in a manner consistent with Section 424(a) of the Code. (2) Global shall cause to be taken all corporate action necessary to reserve for issuance a sufficient number of shares of Global Common Stock for delivery upon exercise of Frontier Stock Options and Frontier Warrants in accor dance with this Exhibit 5.6. Within three Business Days after the Effective Time, Global shall cause the Global Common Stock subject to Frontier Stock Options and, to the extent required by the respective Warrant Agreements, the Frontier Warrants to be registered under the Securities Act pursuant to a registration statement on Form S-8 (or any successor or other appropriate forms), and shall use its best efforts to cause the effectiveness of such registration statement (and the current status of the prospectus or prospectuses contained therein) to be maintained for so long as the Frontier Stock Options and, if applicable, the Frontier Warrants remain outstanding. EX-10.1 3 STOCK OPTION AGREEMENT EXHIBIT 10.1 STOCK OPTION AGREEMENT STOCK OPTION AGREEMENT, dated as of March 16, 1999 (the "Agreement"), by and between Frontier Corporation, a New York corporation ("Issuer"), and Global Crossing Ltd., a company formed under the laws of Bermuda ("Grantee"). WHEREAS, Issuer, Grantee and GCF Acquisition Corp., a New York corporation ("Sub"), which is a direct wholly owned subsidiary of Grantee, propose to enter into an Agreement and Plan of Merger, dated as of the date hereof (the "Merger Agreement"; capitalized terms used but not defined herein shall have the meanings set forth in the Merger Agreement), providing for, among other things, a merger (the "Merger") of Sub with and into Issuer . WHEREAS, as a condition and inducement to Grantee's willingness to enter into the Merger Agreement, Grantee has requested that Issuer agree, and Issuer has agreed, to grant Grantee the Option (as defined below). NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein and in the Merger Agreement, Issuer and Grantee agree as follows: 1. Grant of Option. Subject to the terms and conditions set forth --------------- herein, Issuer hereby grants to Grantee an irrevocable option (the "Option") to purchase up to 34,291,944 shares (the "Option Shares") of common stock, par value $1.00 per share, of Issuer (the "Shares") (being 19.9% of the number of Shares outstanding on the date hereof before such issuance), together with the associated purchase rights (the "Rights") under the Rights Agreement, dated as of April 9, 1995, as amended from time to time, between Issuer and First National Bank of Boston, as Rights Agent (references to the Option Shares shall be deemed to include the associated Rights), at a purchase price of $62.00 per Option Share (such price, as adjusted if applicable, the "Purchase Price"). The number of Option Shares that may be received upon the exercise of the Option and the Purchase Price are subject to adjustment as set forth herein. 2. Exercise of Option. (a) If not in material breach of the Merger ------------------ Agreement, Grantee may exercise the Option, in whole or in part, at any time or from time to time following the occurrence of a Purchase Event (as defined below); provided that, except as otherwise provided herein, the Option shall terminate and be of no further force and effect upon the earliest to occur of (i) the Effective Time, (ii) 15 months after the first occurrence of a Purchase Event (or if, at the expiration of such 15-months after the first occurrence of a Purchase Event, the Option cannot be exercised by reason of any applicable judgment, decree, order, law or regulation, 10 business days after such impediment to exercise shall have been removed, but in no event under this clause (ii) later than the second anniversary of the date hereof), (iii) termination of the Merger Agreement under circumstances which do not and cannot result in Grantee's becoming entitled to receive the Termination Fee from Issuer pursuant to Section 7.2(b) of the Merger Agreement; or (iv) 12 months after the termination of the Merger Agreement under circumstances which could result in Grantee's becoming entitled to receive the Termination Fee from Issuer pursuant to Section 7.2(b)(ii) or 7.2(b)(iv), unless during such 12-month period, a Purchase Event shall occur. The termination of the Option shall not affect any rights hereun der which by their terms extend beyond the date of such termination. (b) As used herein, a "Purchase Event" means the termination of the Merger Agreement under any circumstance which would or could entitle Grantee to receive the Termination Fee from Issuer pursuant to Section 7.2(b) of the Merger Agreement; provided, that if the Merger Agreement is terminated under circum stances which could result in Grantee's becoming entitled to receive the Termination Fee from Issuer pursuant to Section 7.2(b)(ii) or 7.2(b)(iv) a Purchase Event shall not occur unless and until Issuer shall have entered into a definitive agreement with a third party with respect to an Acquisition Proposal or an Acquisition Proposal shall have been consummated during the 12 months following such termination of the Merger Agreement. (c) In the event Grantee wishes to exercise the Option, it shall send to Issuer a written notice (the date of which being herein referred to as the "Notice Date") specifying (i) the total number of Option Shares it intends to purchase pursuant to such exercise and (ii) a place and date not earlier than three business days nor later than 20 business days from such Notice Date for the closing of such purchase (a "Closing"; and the date of such Closing, a "Closing Date"); provided that such closing shall be held only if (A) such purchase would not otherwise violate or cause the violation of applicable law (including the HSR Act), (B) no law, rule or regulation shall have been adopted or promulgated, and no temporary restraining order, preliminary or permanent injunction or other order, decree or ruling issued by a court or other governmental authority of competent jurisdiction shall be in effect, which prohibits delivery of such Option Shares (and the parties hereto shall use their reasonable best efforts to have any such order, injunction, decree or ruling vacated or reversed) and (C) any prior notification to or approval of any other regulatory authority in the United States or elsewhere required in connection with such purchase shall have been made or obtained. If the Closing cannot be consummated by reason of a restriction set forth in clause (A), (B) or (C) above, notwithstanding the provisions of Section 2(a), the Closing shall be held within 10 business days following the elimination of such restriction. 3. Payment and Delivery of Certificates. On each Closing Date, ------------------------------------ Grantee shall pay to Issuer in immediately available funds by wire transfer to a bank account designated by Issuer an amount equal to the Purchase Price multiplied by the Option Shares to be purchased on such Closing Date. (b) At each Closing, simultaneously with the delivery of immedi ately available funds as provided in Section 3(a), Issuer shall deliver to Grantee a certificate or certificates representing the Option Shares to be purchased at such Closing, which Option Shares shall be free and clear of all liens, charges or encum brances ("Liens"), and Grantee shall deliver to Issuer a letter agreeing that Grantee shall not offer to sell or otherwise dispose of such Option Shares in violation of applicable law or the provisions of this Agreement. (c) Certificates for the Option Shares delivered at each Closing shall be endorsed with a restrictive legend which shall read substantially as follows: THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF MARCH 16, 1999. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN REQUEST THEREFOR. It is understood and agreed that (i) the reference to restrictions arising under the Securities Act in the above legend shall be removed by delivery of substitute certificate(s) without such reference if Grantee shall have delivered to Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel in form and substance reasonably satisfactory to Issuer and its counsel, to the effect that such legend is not required for purposes of the Securities Act and (ii) the reference to restrictions pursuant to this Agreement in the above legend shall be removed by delivery of substitute certificate(s) without such reference if the Option Shares evidenced by certificate(s) containing such reference have been sold or transferred in compliance with the provisions of this Agreement under circumstances that do not require the retention of such reference. 4. Authorized Stock. Issuer hereby represents and warrants to ---------------- Grantee that Issuer has taken all necessary corporate and other action to authorize and reserve and to permit it to issue, at all times from the date hereof until the obligation to deliver Shares upon the exercise of the Option terminates, will have reserved for issuance, upon exercise of the Option, Shares necessary for Grantee to exercise the Option, and Issuer will take all necessary corporate action to authorize and reserve for issuance all additional Shares or other securities which may be issued pursuant to Section 6 upon exercise of the Option. The Shares to be issued upon due exercise of the Option, including all additional Shares or other securities which may be issuable upon exercise of the Option pursuant to Section 6, upon issuance pursu ant hereto, shall be duly and validly issued, fully paid and nonassessable, and shall be delivered free and clear of all Liens, including any preemptive rights of any shareholder of Issuer. 5. Purchase Not for Distribution. Grantee hereby represents and ----------------------------- warrants to Issuer that any Option Shares or other securities acquired by Grantee upon exercise of the Option will not be taken with a view to the public distribution thereof and will not be transferred or otherwise disposed of except in a transaction registered or exempt from registration under the Securities Act. 6. Adjustment upon Changes in Capitalization, etc. In the event of ----------------------------------------------- any change in Shares by reason of reclassification, recapitalization, stock split, split-up, combination, exchange of shares, stock dividend, dividend, dividend payable in any other securities, or any similar event, the type and number of Shares or securities subject to the Option, and the Purchase Price therefor (including for purposes of repurchase thereof pursuant to Section 7), shall be adjusted appropri ately, and proper provision shall be made in the agreements governing such transac tion, so that Grantee shall receive upon exercise of the Option the number and class of shares or other securities or property that Grantee would have received in respect of Shares if the Option had been exercised immediately prior to such event or the record date therefor, as applicable. If any additional Shares are issued after the date of this Agreement (other than pursuant to an event described in the immediately preceding sentence), the number of Shares subject to the Option shall be adjusted so that immediately prior to such issuance, it equals 19.9% of the number of Shares then issued and outstanding. 7. Repurchase of Option and Option Shares. (a) Notwithstanding the -------------------------------------- provisions of Section 2(a), at any time commencing upon the first occurrence of a Repurchase Event (as defined below) and ending 12 months thereafter, Issuer (or any successor entity thereof) shall: (i) at the request of Grantee, repurchase from Grantee the Option (if and to the extent not previously exercised or terminated) at a price equal to the excess, if any, of (x) the Applicable Price (as defined below) as of the Section 7 Request Date (as defined below) for a Share over (y) the Purchase Price (subject to adjustment pursuant to Section 6), multiplied by the number of Shares with respect to which the Option has not been exercised (the "Option Repurchase Price"); and ----------------------- (ii) at the request of an owner of Option Shares from time to time, repurchase all but not less than all of the Option Shares owned directly or indirectly by such owner at a price equal to the Applicable Price as of the Section 7 Request Date multiplied by the number of Option Shares owned directly or indirectly by such owner (the "Option Share Repurchase Price"). ----------------------------- (b) Notwithstanding the provisions of Section 2(a), at any time following the occurrence of a Purchase Event, Issuer (or any successor entity thereof) may, at its election, repurchase the Option (if and to the extent not previously exercised or terminated) or all but not less than all of the Option Shares at the Option Repurchase Price or the Option Share Repurchase Price, as the case may be. (c) In connection with any exercise of rights under this Section 7, Issuer shall, within 10 business days after the Section 7 Request Date, pay the Option Repurchase Price or Option Share Repurchase Price, as the case may be, in immedi ately available funds, and Grantee or such owner, as the case may be, shall surrender to Issuer the Option or the Option Shares, as the case may be. (d) For purposes of this Agreement, the following terms have the following meanings: (i) "Applicable Price", as of any date, means the highest of (A) the ---------------- highest price per Share paid pursuant to a tender offer or exchange offer for Shares after the date hereof and on or prior to such date, (B) the highest price per Share to be paid by any third party for Shares or the consideration per Share to be received by holders of Shares, in each case pursuant to an agreement for an Acquisi tion Proposal with Issuer entered into on or prior to such date or (C) the highest closing price per Share as reported on the New York Stock Exchange Inc. ("NYSE") Composite Tape or if the Shares are not listed on the NYSE, the highest bid price per Share as quoted on the National Association of Securities Dealers Automated Quotations System or, if the Shares are not quoted thereon, on the principal trading market on which such Shares are traded as reported by a recognized source during the 60 business days preceding such date. If the consideration to be offered, paid or received pursuant to either of the foregoing clauses (A) or (B) shall be other than in cash, the value of such consideration shall be determined in good faith by an inde pendent nationally recognized investment banking firm selected by Grantee and reasonably acceptable to Issuer. (ii) A "Repurchase Event" occurs when the Termination Fee is paid or ---------------- becomes due and payable to Grantee from Issuer pursuant to Section 7(b) of the Merger Agreement. (iii) "Section 7 Request Date" means the date on which Issuer, Grantee ---------------------- or an owner of Option Shares, as the case may be, exercises its rights under this Section. 8. Registration Rights. Issuer shall, if requested by Grantee or any ------------------- owner of: Option Shares (collectively with Grantee, the "Owners") at any time ------ and from time to time within two years of the first exercise of the Option, as expedi tiously as possible prepare and file up to two registration statements under the Securities Act if such registration is necessary in order to permit the sale or other disposition of any or all shares of securities that have been acquired by or are issuable to such Owners upon exercise of the Option in accordance with the intended method of sale or other disposition stated by such Owners, including a "shelf" registration statement under Rule 415 under the Securities Act or any successor provision, and Issuer shall use all reasonable efforts to qualify such shares or other securities under any applicable state securities laws. Issuer shall use all reasonable efforts to cause each such registration statement to become effective, to obtain all consents or waivers of other parties which are required therefor and to keep such registration statement effective for such period not in excess of 180 days from the day such registration statement first becomes effective as may be reasonably neces sary to effect such sale or other disposition. The obligations of Issuer hereunder to file a registration statement and to maintain its effectiveness may be suspended for one or more periods of time not exceeding 30 days in the aggregate if the Board of Directors of Issuer shall have determined that the filing of such registration statement or the maintenance of its effectiveness would require disclosure of nonpublic information that would materially and adversely affect Issuer. Any registration statement prepared and filed under this Section 8, and any sale covered thereby, shall be at Issuer's expense except for underwriting discounts or commissions, brokers' fees and the reasonable fees and disbursements of Owners' counsel related thereto. The Owners shall provide all information reasonably requested by Issuer for inclusion in any registration statement to be filed hereunder. If during the time period referred to in the first sentence of this Section 8 Issuer effects a registration under the Securities Act of Shares for its own account or for any other stockholders of Issuer (other than on Form S-4 or Form S-8, or any successor form), it shall allow the Owners the right to participate in such registration, and such participation shall not affect the obligation of Issuer to effect two registration statements for the Owners under this Section 8; provided that, if the managing underwriters of such offering advise Issuer in writing that in their opinion the number of Shares requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the offering price, Issuer and the Owners shall each reduce on a pro rata basis the Shares to be included therein on their respective behalf. In connection with any registration pursuant to this Section 8, Issuer and the Owners shall provide each other and any underwriter of the offering with customary repre sentations, warranties, covenants, indemnification and contribution in connection with such registration. 9. Listing; Reasonable Best Efforts. (a) If Shares or any other -------------------------------- securities to be acquired upon exercise of the Option are then listed on the NYSE or any other securities exchange or market, Issuer, upon the request of any Owner, will promptly file an application to list the Shares or other securities to be acquired upon exercise of the Options on the NYSE or such other securities exchange or market and will use its reasonable best efforts to obtain approval of such listing as soon as practicable. (b) Issuer will use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advise under applicable laws and regulations to permit the exercise of the Option or the Substitute Option in accordance with the terms and conditions hereof, as soon as practicable after the date hereof, including making any appropriate filing pursuant to the HSR Act and any other applicable law, supplying as promptly as practicable any additional information and documentary material that may be requested pursuant to the HSR Act and any other applicable law, and taking all other actions necessary to cause the expiration or termination of the applicable waiting periods under the HSR Act as soon as practicable. 10. Limitation of Grantee Profit. (a) Notwithstanding any other provision ---------------------------- herein, in no event shall Grantee's Total Profit (as defined below) exceed $275 million (the "Maximum Profit") and, if it otherwise would exceed such amount, --------------- Grantee, at its sole discretion, shall either (i) reduce the number of Shares subject to the Option, (ii) deliver to Issuer for cancellation Shares (or other securities into which such Option Shares are converted or exchanged), (iii) pay cash to Issuer, or (iv) any combination of the foregoing, so that Grantee's actually realized Total Profit shall not exceed the Maximum Profit after taking into account the foregoing actions. (b) For purposes of this Agreement, "Total Profit" shall mean: (i) the ------------ aggregate amount of (A) any excess of (x) the net cash amounts received by Grantee pursuant to a sale of Option Shares (or securities into which such shares are converted or exchanged) (including amounts paid to Grantee in respect of Option Shares repurchased by Issuer pursuant to Section 7) over (y) the Grantee's aggregate purchase price for such Option Shares (or other securities), plus (B) any amounts received by Grantee on the repurchase of the Option by Issuer pursuant to Section 7, plus (C) any Termination Fee received by Grantee pursuant to Section 7.2(b) of the Merger Agreement, minus (ii) the amounts of any cash previously paid by Grantee to Issuer pursuant to this Section 10 plus the value of the Option Shares (or other securities) previously delivered by Grantee to Issuer for cancellation pursuant to this Section 10. (c) Notwithstanding any other provision of this Agreement, nothing in this Agreement shall affect the ability of Grantee to receive, nor relieve Issuer's obligation to pay, the Termination Fee provided for in Section 7.2(b) of the Merger Agreement; provided that if and to the extent the Total Profit received by Grantee would exceed the Maximum Profit following receipt of such payment, Grantee shall be obligated to comply with the terms of Section 10(a) within 20 days of the latest of (i) the date of receipt of such payment, (ii) the date of receipt of cash by Grantee pursuant to the sale of Option Shares (or securities into which such Option Shares are converted or exchanged) (including amounts paid to Grantee in respect of Option Shares repurchased by Issuer pursuant to Section 7) and (iii) the date of receipt of cash from the repurchase of the Option by Issuer pursuant to Section 7. (d) For purposes of Section 10(a) and clause (ii) of Section 10(b), the value of any Option Shares delivered by Grantee to Issuer shall be the Applicable Value. 11. Loss, Theft, Etc. of Agreement. This Agreement (and the Option ------------------------------ granted hereby) is exchangeable, without expense, at the option of Grantee, upon presentation and surrender of this Agreement at the principal office of Issuer for other Agreements providing for Options of different denominations entitling the holder thereof to purchase in the aggregate the same number of Shares purchasable hereunder. The terms "Agreement" and "Option" as used herein include any other Agreements and related Options for which this Agreement (and the Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Agreement, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like tenor and date. Any such new Agreement executed and delivered shall constitute an additional contractual obligation on the part of Issuer, whether or not the Agreement so lost, stolen, destroyed or mutilated shall at any time be enforceable by anyone. 12. Miscellaneous. ------------- (a) Expenses. Except as otherwise provided in Section 9 hereof or in -------- the Merger Agreement, each of the parties hereto shall bear and pay all expenses incurred by it or on its behalf in connection with the transactions contemplated hereunder, including fees and expenses of its own financial consultants, investment bankers, accountants and counsel. (b) Waiver and Amendment. Any provision of this Agreement may be -------------------- waived at any time by the party that is entitled to the benefits of such provision. This Agreement may not be modified, amended, altered or supplemented except upon the execution and delivery of a written agreement executed by the parties hereto. (c) Entire Agreement; No Third-Party Beneficiary; Severability. Except ---------------------------------------------------------- as otherwise set forth in the Merger Agreement, this Agreement, together with the Merger Agreement (a) constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof and (b) is not intended to confer upon any person other than the parties hereto any rights or remedies hereunder. If any term, provi sion, covenant or restriction of this Agreement is held by a court of competent jurisdiction or a federal or state regulatory agency to be invalid, void or unenforce able, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. If for any reason such court or regulatory agency determines that the Option does not permit Grantee to acquire, or does not require Issuer to repurchase, the full number of Shares as provided in Sections 2 and 7, as adjusted pursuant to Section 6, it is the express intention of Issuer to allow Grantee to acquire or to require Issuer to repurchase such lesser number of Shares as may be permissible without any amendment or modification hereof. (d) Governing Law. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ------------- ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED THEREIN. (e) Descriptive Headings. The descriptive headings contained herein -------------------- are for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. (f) Notices. All notices and other communications hereunder shall be ------- in writing and shall be deemed given as set forth in Section 8.2 of the Merger Agreement. (g) Counterparts. This Agreement and any amendments hereto may be ------------ executed in two counterparts, each of which shall be considered one and the same agreement and shall become effective when both counterparts have been signed by each of the parties and delivered to the other party, it being understood that both parties need not sign the same counterpart. (h) Assignment. Grantee may not, without the prior written consent of ---------- Issuer (which shall not be unreasonably withheld), assign this Agreement to any other person. This Agreement shall not be assignable by Issuer except by operation of law. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. (i) Representations and Warranties. The representations and ------------------------------ warranties contained in Sections 3.1(a) and 3.2(a) of the Merger Agreement, and, to the extent they relate to this Stock Option Agreement, in Sections 3.1(b), (c), (f) and (g) of the Merger Agreement, are incorporated herein by reference. (j) Further Assurances. In the event of any exercise of the Option by ------------------ Grantee, Issuer and Grantee shall execute and deliver all other documents and instruments and take all other action that may be reasonably necessary in order to consummate the transactions provided for by such exercise. (k) Enforcement. The parties agree that irreparable damage would ----------- occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms. It is accordingly agreed that the parties shall be entitled to specific performance of the terms hereof, this being in addition to any other remedy to which they are entitled at law or in equity. Both parties further agree to waive any requirement for the securing or posting of any bond in connection with the obtaining of any such equitable relief and that this provision is without prejudice to any other rights that the parties hereto may have for any failure to perform this Agreement. (l) Captions. The Article, Section and paragraph captions herein are -------- for convenience only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof. (m) Confidentiality Agreement. Issuer hereby waives the restric tions ------------------------- on Grantee's acquisition of Shares contained in the Confidentiality Agreement to the extent necessary to permit Grantee to exercise the Option and purchase the Option Shares as herein provided. IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option Agreement to be signed by their respective officers thereunto duly autho rized, all as of March 16, 1999. GLOBAL CROSSING LTD. By: Thomas J. Casey --------------- Name: Thomas J. Casey Title: Vice Chairman FRONTIER CORPORATION By: /s/ Joseph P. Clayton --------------------- Name: Joseph P. Clayton Title: Chief Executive Officer EX-10.2 4 VOTING AGREEMENT EXHIBIT 10.2 VOTING AGREEMENT VOTING AGREEMENT dated as of March 16, 1999 (this "AGREEMENT") among those shareholders of Global Crossing Ltd, a company formed under the laws of Bermuda ("GLOBAL"), listed on Exhibit A (each a "SHAREHOLDER," and collectively, the "SHAREHOLDERS"), Frontier Corporation, a New York corporation (together with its successors and assigns, "FRONTIER"), and, as to Section 2 only, Global. A. Each Shareholder beneficially owns shares of Common Stock, par value $.01 per share, of Global (the "GLOBAL COMMON STOCK") set forth opposite such shareholder's name on Exhibit A. All such shares, together with any other shares of capital stock of Global such Shareholder hereinafter acquires, are referred to as the "SUBJECT SHARES"; PROVIDED that any such share shall cease to be a "Subject Share" from and after the time that such share is transferred pursuant to Section 2 and ceases to be subject to the Voting Documents (as defined below) in accordance with the terms of Section 2. B. Global, GCF Acquisition Corp., a New York corporation ("MERGER SUB"), and Frontier are, simultaneously with the execution hereof, entering into an Agreement and Plan of Merger, dated as of March 16, 1999 (the "MERGER AGREEMENT"), providing for, among other things, the merger of Merger Sub with and into Frontier (the "MERGER"). Terms not otherwise defined in this Agreement have the meanings stated in the Merger Agreement. C. The Board of Directors of Global has approved an amendment to the Memorandum of Association of Global to increase the number of authorized shares of Global Common Stock and the transactions contemplated by the Merger Agreement including the Merger and the Alternative Merger. D. The Shareholders and Frontier desire to enter into this Agreement to provide for, among other things, (1) the obligation of the Shareholders to vote their respective Subject Shares and any other shares of Global Common Stock which each Shareholder has the right to vote at the Global Shareholders Meeting (or an Early Global Meeting) (the "Voting Shares") to approve the Share Issuance, the Global Charter Amendment and, if applicable, the Alternative Merger and (2) certain restrictions on the sale or other transfer of the record ownership or the beneficial ownership, or both, of the Subject Shares by the Shareholders until the termination of this Agreement. This Agreement and all other agreements, instruments and other documents executed and delivered by the Shareholders in connection with this Agreement are collectively referred to as the "VOTING DOCUMENTS." E. Each Shareholder acknowledges that Frontier is entering into the Merger Agreement in reliance on the representations, warranties, covenants and other agreements of the Shareholders set forth in this Agreement and would not enter into the Merger Agreement if the Shareholders did not enter into this Agreement. AGREEMENT The parties agree as follows: SECTION 1. COVENANTS OF THE SHAREHOLDERS (a) VOTING. Until the day following the termination of this Agreement, 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 and Voting Shares then 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 held by such Shareholders and all Voting Shares to approve the Share Issuance and the Global Charter Amendment and any action required in furtherance thereof and of the Merger and, if applicable, the Alternative Merger, and against any action which would reasonably be expected to result in a failure of the conditions described in Section 6.3 of the Merger Agreement to be satisfied. (b) NO INCONSISTENT AGREEMENTS. Until the day following the termination of this Agreement, 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. (c) REVIEW OF MERGER AGREEMENT. Each Shareholder acknowledges receipt and review of a copy of the Merger Agreement. SECTION 2. TRANSFER OF SUBJECT SHARES. During the term of this Agreement, each Shareholder shall not transfer record ownership or beneficial ownership, or both, of any Subject Shares except in each case to the extent permitted below and notwithstanding anything else contained herein, at no time will the shares of Global Common Stock subject to this Agreement be less than the Required Global Vote. Each and any Shareholder may transfer record ownership or beneficial ownership, or both, of any Subject Shares, and such shares shall cease to be subject to the Voting Documents; PROVIDED, that (x) if, as a result of such transfer, less than 51% of the Combined Voting Power would be subject to the Voting Documents, then the Person to whom record ownership or beneficial ownership, or both, of such shares shall be transferred shall execute and deliver to Frontier an agreement reason ably acceptable to Frontier by which such transferee agrees that such shares shall be Subject Shares that are subject to the Voting Documents and agrees to be bound by Sections 1, 2 and 4 of this Agreement with respect to such shares, (y) in any event, on the record date for the meeting of the shareholders of Global at which the Share Issuance and the Global Charter Amendment or any other transaction contemplated by the Merger Agreement including, if applicable, the Alternative Merger, shall be presented for their approval or with respect to any written consent in lieu thereof, the Subject Shares shall, in the aggregate, constitute at least 51% of the Combined Voting Power, and (z) such Shareholder complies with the notice provisions and receives notice from Global that such transfer is approved as described below. If a Shareholder (the "Transferring Shareholder") desires to transfer (the "Proposed Transfer") any Subject Shares it should deliver written notice (the "Proposed Transfer Notice") to the Chief Financial Officer or other appropriate official of Global as designated by the Chief Financial Officer (the "Designated Officer") no later than 10:00 a.m. Eastern Time on the day of the Proposed Transfer. The Designated Officer shall within five business days of receipt of the Proposed Transfer Notice use reasonable efforts to approve the transfer ("Transfer Approval") only if the Designated Officer determines that the Proposed Transfer will not cause less than 51% of the Combined Voting Power to be subject to the Voting Documents. When determining whether to approve a Proposed Transfer, in whole or in part, pursuant to the preceding sentence, the Designated Officer shall evaluate the Proposed Transfer Notice on a first come, first serve basis unless more than one Proposed Transfer Notice is received that proposes to transfer Subject Shares on the same date, in which case, if such Proposed Transfers cannot be approved to the full extent of the Subject Shares covered thereby, but can be approved to a lesser extent, the Designated Officer shall approve such Proposed Transfers based on a pro rata allocation of the Subject Shares comprising such Proposed Transfers. Promptly upon receipt of a Proposed Transfer Notice (but in no event later than two (2) business days prior to the delivery of the Transfer Approval), the Designated Officer shall notify the Chief Financial Officer of Frontier of the Proposed Transfer and provide a calculation showing the percentage of the Combined Voting Power that will be represented by the shares of Global Common Stock subject to the Voting Agreement after giving effect to such Proposed Transfer. If the Designated Officer determines that he or she can grant a Transfer Approval, such Designated Officer shall deliver written notice of such Transfer Approval by facsimile to the Transferring Share holder with a copy to the Chief Financial Officer of Frontier. Notwithstanding the foregoing, in no event shall any Transferring Shareholder be permitted to transfer any Subject Shares (other than in compliance with clause (x)) without receiving a Transfer Approval. 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 limitations, the "beneficial ownership" of such Subject Shares (as determined pursuant to Regulation 13D-G under the Exchange Act). Notwithstanding anything set forth in this Agreement to the contrary, and in addition to any restrictions otherwise set forth herein, during the period during which the Average Price is to be determined for purposes of calculating the Exchange Ratio, each Shareholder shall not (and shall not announce an intention to) (1) acquire any Global Common Stock in the open market, (2) sell any shares of Global Common Stock, (3) take any other action prohibited under Regulation M promulgated under the Securities Act or (4) make any announcement which would reason ably be expected to have the effect of resulting in a change in the trading prices of the Global Common Stock. SECTION 3. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS. Each Shareholder severally represents and warrants to Frontier as follows: (a) EXISTENCE AND POWER. Each Shareholder that is a corpora tion (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 each Voting Document to which it is or may become a party. (b) AUTHORIZATION; CONTRAVENTION. The execution and delivery by each Shareholder of each Voting Document and the performance by it of its obligations under each Voting Document have, (1) in the case of each Share holder 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 Share holder, the Subject Shares or any of such Shareholder's other properties or assets. (c) BINDING EFFECT. Each applicable Voting Document constitutes, or when executed and delivered by each Shareholder will constitute 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. 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 and in accordance with the terms thereof. 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. No Shareholder has appointed or granted any proxy which is still effective with respect to its Subject Shares. 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 Shareholders Meeting at which the Share Issuance and the Global Charter Amendment and, if applicable, the Alternative Merger, shall be presented for approval, each Shareholder will have sole voting power or power to direct the vote of all such Shareholder's 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 any Voting Document or the performance by any party of its obligations under any Voting Document. 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 Frontier at its address stated in Section 8.2 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 Frontier in exercising any right, power or privilege under any Voting Document 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 or further exercise of the right, power or privilege or the exercise of any other right, power or privilege. The rights and remedies provided in the Voting Documents 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 the Voting Documents and the transactions contemplated hereby and thereby and the fact that Frontier would not have an adequate remedy at law for money damages in the event that any obligation under any Voting Document is not performed in accordance with its terms, each of the Shareholders therefore agrees that Frontier shall be entitled to specific enforcement of the terms of each Voting Document in addition to any other remedy to which Frontier may be entitled, at law or in equity. (c) AMENDMENTS, ETC. No amendment, modification, termination, or waiver of any provision of any Voting Document, and no consent to any departure by any of the Shareholders or Frontier from any provision of any Voting Document, shall be effective unless it shall be in writing and signed and delivered by all the Shareholders and Frontier, 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 BENEFICIA RIES. (1) No party shall assign any of its rights or delegate any of its obligations under any Voting Document. 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 obliga tion under any Voting Document. (2) The provisions of each Voting Document 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. Each Voting Document 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 without regard to principles of conflicts of laws. (f) SEVERABILITY OF PROVISION. If any term or other provi sion of any Voting Document is invalid, illegal or incapable of being enforced by any law or public policy, all other terms and provisions of such Voting Document shall nevertheless remain in full force and effect so long as the economic or legal sub stance 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 such Voting Document 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) HEADINGS AND REFERENCES. Article and section headings in any Voting Document are included for the convenience of reference only and do not constitute a part of the Voting Document for any other purpose. References to parties, express beneficiaries, articles and sections in any Voting Document are references to parties to or the express beneficiaries and sections of the Voting Document, as the case may be, unless the context shall require otherwise. Any of the terms defined in this Agreement may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. The use in this Agreement of the word "include" or "including," when following any general statement, term or matter, shall not be construed to limit such statement, term, or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not nonlimiting language (such as "without limitation" or "but not limited to" or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest possible scope of such general statement, term or matter. (h) ENTIRE AGREEMENT. The Voting Documents embody the entire agreement and understanding of the Shareholders and Frontier, and supersede all prior agreements or understandings, with respect to the subject matters of the Voting Documents. (i) SURVIVAL. Except as otherwise specifically provided in any Voting Document, each representation, warranty or covenant of a party contained in any Voting Document 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 any Voting Document. (j) SUBMISSION TO JURISDICTION; WAIVERS. Each Share holder and Frontier 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 Frontier 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 Frontier 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 any Voting Document, (a) any claim that it is not personally subject to the jurisdic tion of the above-named courts for any reason other than the failure to serve process in accordance with this Section 4(j), (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) such Voting Document, or the subject matter hereof or thereof, may not be enforced in or by such courts. This Agreement does not involve less than $250,000 and the parties intend that Section 5-1401 of the New York General Obligations will apply to this Agreement. (k) WAIVER OF JURY TRIAL. Each party, and each express beneficiary of a Voting Document as a condition of its right to enforce or defend any right under or in connection with such Voting Document, waives any right to a trial by jury in any Action to enforce or defend any right under any Voting Document and agrees that any Action shall be tried before a court and not before a jury. (l) TERMINATION. Frontier may terminate this Agreement at any time upon written notice to each Shareholder. Unless terminated earlier by Frontier or by mutual agreement of the parties, this Agreement shall terminate upon the first to occur of (i) consummation of the Merger, (ii) the termination of the Merger Agreement pursuant to Section 7.1 thereof or (iii) the full and irrevocable satisfaction of the condition set forth in Section 6.1(a) of the Merger Agreement with respect to both the Merger and the Alternative Merger. (m) COUNTERPARTS. This Agreement may be signed in any number of counterparts, each of which shall be an originals, with the same effect as if all signatures were on the same instrument. IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date first written above. FRONTIER CORPORATION By: /s/ Joseph P. Clayton --------------------- Name: Joseph P. Clayton Title: Chief Executive Officer /s/ Abbott L. Brown ------------------- BROWN LIVING TRUST RIDGESTONE CORP. By: /s/ Abbott L. Brown ------------------- /s/ Barry Porter ---------------- GALENIGHT CORP. By: /s/ Barry Porter ----------------- CONTINENTAL CASUALTY CORP. CONTINENTAL CASUALTY CORP. DESIGNATED HIGH YIELD By: /s/ Hillel Weinberger --------------------- GLOBAL CROSSING TRUST 1998 By: /s/ Hillel Weinberger --------------------- Hillel Weinberg, as Trustee GLOBAL CROSSING PARTNERS By: /s/ Hillel Weinberger --------------------- As general partner CIBC WG ARGOSY MERCHANT FUND 3, LP CIBC WOOD GUNDY CAPITAL (SFC) INC. CO-INVESTMENT MERCHANT FUND, LLC GLOBAL CROSSING LTD., LDC By: /s/ Jay R. Bloom ---------------- /s/ David L. Lee ---------------- DAVID AND ELLEN LEE FAMILY TRUST By: /s/ David Lee ------------- David Lee, Trustee SAN PASQUAL CORP. By: /s/ David Lee ------------- /s/ Gary Winnick ---------------- PACIFIC CAPITAL GROUP By: /s/ Gary Winnick ---------------- GKW UNIFIED HOLDINGS, LLC By: Pacific Capital Group, Inc. Manager By: /s/ Gary Winnick ---------------- /s/ Lodwrick Cook ----------------- MRCo, Inc. By: /s/ Michael R. Steed -------------------- As to Section 2 only GLOBAL CROSSING LTD. By: /s/ Thomas J. Casey ------------------- Name: Thomas J. Casey Title: Vice Chairman EXHIBIT A Post Split Shares 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 Total CIBC (including CIBC WG Argosy Merchant Fund 3, LP, CIBC Wood Gundy Capital (SFC) Inc., Co-Investment Merchant Fund, LLC and Global Crossing Ltd., LDC) 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-99.1 5 JOINT PRESS RELEASE EXHIBIT 99.1 FOR IMMEDIATE RELEASE - --------------------- GLOBAL CROSSING AND FRONTIER ANNOUNCE $11.2 BILLION MERGER Accelerates Creation Of First Owned & Operated Global Internet Protocol-Based Network ______________________________________________________________________________ HAMILTON, BERMUDA and ROCHESTER, NY, March 17, 1999 - Global Crossing Ltd. (NASDAQ: GBLX), the owner and operator of the world's first independent global fiber optic network, and Frontier Corporation (NYSE: FRO), one of the country's leading providers of facilities-based integrated communications and Internet services, today announced that they have signed a definitive merger agreement for a transaction currently valued at approximately $11.2 billion based on yesterday's closing price of Global Crossing shares. The combination of the two companies will create the first owned and operated global Internet Protocol- based fiber optic network able to provide customers with integrated worldwide Internet, data, long distance, local telephone and conferencing services. Based on announced networks, the combination will have 71,000 route miles, over 1 million fiber miles, and offer ultra-high bandwidth to 159 cities in 20 countries. It will offer global voice, web hosting, private line, ATM and Internet services. Under the terms of the transaction, which has been unanimously approved by the boards of directors of both companies, Frontier shareholders will receive Global Crossing common shares valued at $62 per Frontier share, subject to certain "collar" provisions. Based on current market prices, the merged company will be approximately two-thirds owned by current Global Crossing shareholders and one-third owned by current Frontier shareholders. The transaction is expected to qualify as a tax free reorganization to the Frontier shareholders and is expected to be accounted for as a purchase. Upon closing, the transaction is expected to be immediately accretive to Global Crossing's operating cash flow. On a pro forma basis, the companies' combined current market value is nearly $30 billion, with combined annual sales in excess of $4 billion; earnings before interest, taxes, depreciation and amortization (EBITDA) of more than $1 billion; and over 8,500 employees. "Merging with Frontier will enable us to greatly accelerate our aggressive growth strategy," said Robert Annunziata, Chief Executive Officer of Global Crossing. "We will now have a strong U.S. infrastructure to complement the IP- based fiber network we are building in Europe, Japan, Mexico, and Central and South America. These are two complementary companies with no overlap, and together we will be ideally positioned to meet the exploding demand for bandwidth to handle Internet, data, video and voice transmissions, and produce outstanding value for our customers, shareholders and employees. We will have many unique assets and capabilities, a compelling financial profile, outstanding combined management and an addressable market totaling approximately $450 billion. Frontier's GlobalCenter Internet web hosting business is one of the jewels in Frontier's crown and we are committed to extending its services globally." "This merger creates a global IP powerhouse with unprecedented capacity and scope, and is a natural progression for Frontier's future," said Joseph P. Clayton, Frontier Chief Executive Officer. "By leveraging our combined network assets, integrated services and support systems, the combined company will be in a unique position to capitalize on the booming global Internet business." Clayton will become a Vice Chairman of Global Crossing. Rolla P. Huff, who has been named Frontier President and Chief Operating Officer, will become President and Chief Operating Officer of Global Crossing's North American operations. Four Frontier directors will join the Global Crossing Board of Directors. Frontier's local operations in New York State will continue to be managed out of Rochester, NY, and the transaction is expected to be transparent to Frontier's other local properties. Annunziata added, "Frontier will give us an up-and-running high-speed U.S. fiber network providing long distance and local connectivity, a wide range of data and Internet services and extensive sales and support capabilities. This will jump start Global Crossing into the next phase in our strategic development - - fully integrated retail services, both business and residential, on a global basis in the years ahead." The transaction is subject to approval by shareholders of both companies, expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, Federal Communications Commission and other regulatory approvals, and customary closing conditions. It is expected that the transaction will be completed in the third quarter of 1999. The number of Global Crossing shares to be received by Frontier shareholders will be adjusted to produce a value of $62 per Frontier share, as long as Global Crossing shares trade within a range of $34.56 to $56.78 per share (the "collar") during a pricing period prior to closing. Outside the collar, Frontier shareholders will receive a fixed number of Global Crossing shares, 1.0919 shares at the top end of the collar and 1.7939 shares at the bottom of the collar. In connection with the transaction, Frontier has granted Global Crossing an option to acquire up to 19.9% of its outstanding shares at $62 per share as well as a break-up fee if the merger is terminated for certain reasons. Shareholders of Global Crossing representing more than a majority of the voting power of the Company have agreed to vote in favor of the merger. Merrill Lynch & Co., Salomon Smith Barney, Inc. and Chase Securities, Inc. served as financial advisers to Global Crossing, and Morgan Stanley Dean Witter served as financial adviser to Frontier. Skadden, Arps, Slate, Meagher & Flom served as legal adviser to Global Crossing and Simpson Thacher & Bartlett served as legal adviser to Frontier. About Frontier Frontier Corporation is one of the leading providers of integrated communications services -- including Internet, IP and data applications, long distance, and local telephone -- to business customers nationwide. Frontier's self-healing, optical network provides customers with faster transmission speeds, greater bandwidth capacity and unrivaled reliability. Frontier provides local phone service in 32 states and the District of Columbia. About Global Crossing Global Crossing is building and operating the world's most advanced global fiber optic platform for data, voice, video and Internet transmissions. The Global Crossing network will span four continents and address 80 percent of the world's international traffic. Global Crossing's operations are headquartered in Hamilton, Bermuda, with holding company headquarters in Los Angeles, and offices in New York City; Morristown, New Jersey; San Francisco; Miami; London; Amsterdam; and Buenos Aires. # # # Statements made in this press release that state either companies' or managements' intentions, beliefs, expectations or predictions for the future are forward-looking statements. It is important to note that both companies' actual results could differ materially from those projected in such forward-looking statements. Information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in each companies' filings with the U.S. Securities and Exchange Commission (SEC). Copies of these filings may be obtained by contacting either company or the SEC.
CONTACTS: Global Crossing Frontier Investors: Jensen Chow, on March 17th, 212/687/8080, Investors: Kirsten J. Sullivan, 716/777-6179 after March 17th, 310/385-5283 Media: Michele D. Sadwick, 716/777-6021 jchow@globalcrossing.com (pager 888/857-0606) ------------------------------------- Jim Collins, 716/777-6950 Media: Tom Goff, on March 17th, 212/687/8080 (pager 888/857-1091) after March 17th, 310/385-5231 General, 716/777-7702 tgoff@globalcrossing.com ------------------------------------- George Sard/David Reno/Heather Reeves Sard Verbinnen & Co. 212/687-8080
EX-99.2 6 ANALYST PRESENTATION DATED 3/17/99 EXHIBIT 99.2 Global Crossing Frontier Communications Robert Annunziata Joseph Clayton Chief Executive Officer Chief Executive Officer [GLOBAL CROSSING LOGO] [FRONTIER COMMUNICATIONS LOGO] The New Global Crossing [GLOBAL CROSSING LOGO] International Fiber Optic Network - --Connecting Continents - --European Terrestrial - --Japanese Terrestrial - --South American Terrestrial plus [FRONTIER COMMUNICATIONS LOGO] - --U.S. Fiber Optic Network - --Data and Internet - --Long Distance - --Local Connectivity equals World's Most Advanced Global IP-Based Fiber Network [GLOBAL CROSSING LOGO] [FRONTIER COMMUNICATIONS LOGO] 2 The Transaction . Stock-for-Stock Merger - Global Crossing Retains 2/3 . $62 per Frontier Share ($11.2 billion) . Collar: Exchange ratio adjusts to maintain $62 if Global Crossing stock is between $34.56 and $56.78 . Tax-free Reorganization . Purchase Accounting is Expected [GLOBAL CROSSING LOGO] [FRONTIER COMMUNICATIONS LOGO] 3 A Powerful Combination . Accelerates Global Strategy . Expands Addressable Market . High Growth Financial Profile . Management Maximizing Asset Value . Seamless Global Connectivity Addressing $450 billion Market [GLOBAL CROSSING LOGO] [FRONTIER COMMUNICATIONS LOGO] 4 Accelerates Global Strategy [World map showing coverage of currently announced Global Crossing systems with "Growth" indicated for undeveloped areas of Europe and Asia.] [GLOBAL CROSSING LOGO] [FRONTIER COMMUNICATIONS LOGO] 5 Frontier National Network - Geographical [United States map showing coverage of Frontier National Network.] [Legend containing the following information:] Base Network - 24 Fibers, 13,054 Network Miles Southeast Build - 12 Fibers, 2,985 Network Miles Northwest Network Swap (WTCI) - 1,660 Network Miles Western Network Swap (Enron) - 1,896 Network Miles [GLOBAL CROSSING LOGO] [FRONTIER COMMUNICATIONS LOGO] 6 Pan European Crossing . Ultra-high Capacity . 6,900 Route Miles . 387,000 Fiber Miles . RFS Phase I - December 1999 . RFS Phase II - 2000 . Connect key European Cities to Global Crossing Network [Map of Europe showing coverage of Pan European Crossing system and connections to Atlantic Crossing system.] [GLOBAL CROSSING LOGO] [FRONTIER COMMUNICATIONS LOGO] 7 Global Access Limited (Japan) . Ultra-high capacity . 800 Route Miles Terrestrial . Connect key Japanese cities to Global Crossing Network . RFS in Q1 2000 [Map of Japan showing coverage of Global Access Limited system and connections to Pacific Crossing system.] [GLOBAL CROSSING LOGO] [FRONTIER COMMUNICATIONS LOGO] 8 Accelerates Global Strategy . Global Bandwidth: U.S. Fiber Completes Core Network . Sales Infrastructure: Service and Billing Platforms Enable New Revenue Sources . Expertise: Data and Internet Assets Create New Global Products . Customers: New Service Delivery to Carriers and End Users . Connectivity: Local Assets Provide Core [GLOBAL CROSSING LOGO] [FRONTIER COMMUNICATIONS LOGO] 9 Forecasts of Internet Growth... [Bar graphs showing the following information from 1997-2002:] 36% growth* in Internet users worldwide 75% growth* in Intranet market 103% growth* in electronic commerce Source: International Data Corporation and Forrester Research, 1998; *growth based on compound annual growth rates [GLOBAL CROSSING LOGO] [FRONTIER COMMUNICATIONS LOGO] 10 Addressable Market Explodes [GLOBAL CROSSING LOGO] $4 billion plus [FRONTIER COMMUNICATIONS LOGO] $100 billion equals NEW GLOBAL CROSSING Global Bandwidth and Services $450 million Sources: ITU, Tom Soja & Associates, Yankee Group and Company Estimates [GLOBAL CROSSING LOGO] [FRONTIER COMMUNICATIONS LOGO] 11 Global Fiber Network*
Global Frontier New Global Crossing Communications Crossing -------------------------------------------------------- Route Miles 51,000 20,000 71,000 Fiber Miles 740,000 348,000 1,088,000 Countries On Network 18 1 19 Cities On Network 39 120 159 Total Investment in Announced $4.4 billion $1.1 billion $5.5 billion System
_____________________ * Based on Announced Networks [GLOBAL CROSSING LOGO] [FRONTIER COMMUNICATIONS LOGO] 12 Global Data Capabilities . Ultra-High Bandwidth to 159 Cities --US: 120 --Europe: 24 --Japan: 3 --South America: 12 . Web Hosting and Internet Services . IP, ATM and Frame Relay [GLOBAL CROSSING LOGO] [FRONTIER COMMUNICATIONS LOGO] 13 [GLOBAL CROSSING LOGO] [FRONTIER COMMUNICATIONS LOGO] 14 Network Assets Leverage Bandwidth . Coast-to-Coast OC-48 Optical IP Network . National ATM and Frame Relay Network . CLEC Operations in 32 States and Washington D.C. . Switch-based CLEC in 36 Tier One Markets . NOC's in Detroit and Cleveland . Customer-Focused Call Centers . Web-enabled Billing and Support Systems [UCOMMAND LOGO] [GLOBAL CROSSING LOGO] [FRONTIER COMMUNICATIONS LOGO] 15 Web Hosting and Internet Services Frontier GlobalCenter . 9 Media Distribution Centers . 300 Top Internet Brands . 54 billion Hits per Month . $75 M Revenue Runrate . greater than 100% Growth Rate [Drawing illustrating flow of digital distribution via Frontier GlobalCenter.] [GLOBAL CROSSING LOGO] [FRONTIER COMMUNICATIONS LOGO] 16 National Frame Relay Network [Map of United States and related legend showing coverage of Frontier National Frame Relay Network.] [GLOBAL CROSSING LOGO] [FRONTIER COMMUNICATIONS LOGO] 17 National ATM Network [Map of United States and related legend showing coverage of Frontier National ATM Network.] [GLOBAL CROSSING LOGO] [FRONTIER COMMUNICATIONS LOGO] 18 National IP Network [Map of United States and related legend showing coverage of Frontier National IP Network.] [GLOBAL CROSSING LOGO] [FRONTIER COMMUNICATIONS LOGO] 19 Integrated Services . U.S. Revenues = $1.9 billion . Commercial + Wholesale = 87% [Pie chart containing the following information:] Commercial -- 53% Wholesale -- 34% Consumer -- 13% Source: Frontier Estimates [GLOBAL CROSSING LOGO] [FRONTIER COMMUNICATIONS LOGO] 20 Premier Carrier Services . World-class Back Office Capabilities -- Billing -- Provisioning -- Fraud Control . World-wide Data/Internet Capabilities . Competitive Cost Structure . Early Market Entrance in Europe, Japan and South America [GLOBAL CROSSING LOGO] [FRONTIER COMMUNICATIONS LOGO] 21 Local Assets Provide Connectivity Core . Local Access Lines --NY: 650,000 --Total: 1,034,000 --1998 EBITDA Margin: 52% . CLEC Operations --200,000 Lines --50% Growth Rate --Operating in Markets Addressing 70% of U.S. Business Market . Cellular Partnership with Bell Atlantic --2.1 million Proportionate POPs [GLOBAL CROSSING LOGO] [FRONTIER COMMUNICATIONS LOGO] 22 Global Customer Base [Logos of over 15 indicative customers of Global Crossing.] [GLOBAL CROSSING LOGO] [FRONTIER COMMUNICATIONS LOGO] 23 Global Customer Base [Logos of over 30 indicative customers of Frontier Communications.] [GLOBAL CROSSING LOGO] [FRONTIER COMMUNICATIONS LOGO] 24 [GLOBAL CROSSING LOGO] [FRONTIER COMMUNICATIONS LOGO] 25 Compelling Financial Profile Revenues Cash Flow Growth Value -------- ---------- ------ ----- New Adjusted Growth in Adjusted Combined Enterprise Global Crossing EBITDA EBITDA Value greater than $ 4 billion greater than $ 1 billion greater than 30% $30 billion
[GLOBAL CROSSING LOGO] [FRONTIER COMMUNICATIONS LOGO] 26 Global Bandwidth Products Drive Growth [Graph comparing expected growth in Adjusted EBITDA from 1998-2003 based upon LEC, Integrated Services and International Bandwidth segments.] [GLOBAL CROSSING LOGO] [FRONTIER COMMUNICATIONS LOGO] 27 Combination Offers Substantial Synergies . Speed to Market for Global Bandwidth . Increased Market Share Through Integrated Service Offering . Avoided Cost of Infrastructure . Avoided Costs for Off-Net Capacity [GLOBAL CROSSING LOGO] [FRONTIER COMMUNICATIONS LOGO] 28 Combination Offers Substantial Synergies NPV Over 10 Years ($ Millions) U.S Backhaul $509 International Hand-off $126 PAC Restoration $71 Back-office Infrastructure $46 SG&A Savings $129 Interest Expense $27 Taxes $208 US Services Sales Force $112 Total $1,228 [GLOBAL CROSSING LOGO] [FRONTIER COMMUNICATIONS LOGO] 29 Announced Projects Fully Financed [World map showing coverage of currently announced Global Crossing systems (AC- 1, PC-1, MAC, PAC, PEC and GAL).] [GLOBAL CROSSING LOGO] [FRONTIER COMMUNICATIONS LOGO] 30 Capacity to Fund Future Initiatives [World map showing coverage of currently announced Global Crossing systems (AC- 1, PC-1, MAC, PAC, PEC and GAL), together with arrows indicating potential growth in undeveloped sections of Asia, Europe, Africa and North America.] [GLOBAL CROSSING LOGO] [FRONTIER COMMUNICATIONS LOGO] 31 The New Global Crossing [GLOBAL CROSSING LOGO] World's Most Advanced Global IP-Based Fiber Network [FRONTIER COMMUNICATIONS LOGO] . Accelerates Global Strategy . Expands Addressable Market . High Growth Financial Profile . Management Maximizing Asset Value . Seamless Global Connectivity Addressing $450 billion Market [GLOBAL CROSSING LOGO] [FRONTIER COMMUNICATIONS LOGO] 32 [GLOBAL CROSSING LOGO] [FRONTIER COMMUNICATIONS LOGO] 33 -----END PRIVACY-ENHANCED MESSAGE-----