January 28, 2002
Global Crossing Ltd.
Seven Giralda Farms
Madison, NJ 07940
U.S.A.
Attention: John J. Legere, Chief Executive Officer
Dear Mr. Legere:
This letter agreement sets forth our understanding concerning proposed
equity investments by Hutchison Whampoa Limited ("HWL") and Singapore
Technologies Telemedia Pte Ltd. ("STT") or their designees, respectively, in
Global Crossing Ltd. ("GCL") pursuant to a plan of reorganization under
chapter 11, title 11 of the United States Code and related proceedings in other
jurisdictions (the "Plan") involving the restructuring of the debt and equity
of GCL and its subsidiaries other than Asia Global Crossing Ltd. (the
"Transaction"). This letter agreement is not intended to be a solicitation of
any acceptance of the Plan. Any such solicitation shall be sought in accordance
with applicable law and as contemplated by the attached Annex A.
In consideration of the mutual agreements and understandings
set forth herein, the parties hereto hereby agree as follows:
1. Transaction; Buyer Protection Order; Expense Reimbursement.
(i) GCL, HWL and STT hereby confirm their mutual intention to
continue to pursue the Transaction as contemplated by and subject to the terms
and conditions set forth in Annex A.
(ii) The provisions of Section 1 of the Exclusivity Letter dated
January 21, 2002 among the parties (the "Exclusivity Letter") shall continue
until the commencement by GCL of a case under Chapter 11 of the United States
Code, notwithstanding the provisions of Section 2 of the Exclusivity Letter.
(iii) Each of the parties agrees to be bound by the provisions set
forth under the headings "Expenses", "Buyer Protection Order" and "Governing
Law" contained in Annex A.
(iv) Upon the date of this letter agreement and simultaneously with
the execution hereof, GCL shall pay or procure payment of US$1,900,000 to HWL
and US$1,900,000 to STT, by wire transfer to bank accounts designated by HWL
and STT, respectively, in reimbursement of actual fees and expenses reasonably
incurred by them, their
2
respective financial advisors, accountants and legal counsel in respect of
their work on the Transaction to date as contemplated by the provisions set
forth under the heading "Expenses" contained in Annex A. This letter agreement
shall become effective upon receipt by HWL and STT of the sums set forth
above.
2. Representations and Warranties. Each party represents and
warrants, severally and not jointly, to the other parties that (i) such party
has the full power and authority to enter into, execute and deliver this letter
agreement and perform the obligations contained herein; (ii) the execution and
delivery by such party of this letter agreement and the performance by such
party of its obligations contemplated in this letter agreement have been duly
authorized by all necessary corporate or other action of such party; and (iii)
the execution, delivery and performance of this letter agreement by such party
will not conflict with or result in any material breach or violation of any of
the terms and conditions of, or constitute (with notice or lapse of time or
both) a default under, any instrument, contract or other agreement to which
such party is a party or by which such party is bound.
3. Confidentiality. The parties agree to be bound by the
confidentiality terms set forth in Annex A. If and to the extent that the
confidentiality terms set forth in Annex A expressly contravene the provisions
of the Non-Disclosure Agreements previously executed by HWL and GCL or STT
and GCL, as the case may be, the provisions contained in Annex A shall govern.
4. Conditions. Except as set forth in clauses (ii) to (iv) of
paragraph 1 above, any obligations of the parties regarding the Transaction
shall be subject to the conditions set forth in Annex A, including without
limitation the negotiation and execution of definitive documentation concerning
the Transaction.
5. Miscellaneous. The terms set forth in this letter agreement
and Annex A are a part of a comprehensive agreement, each element of which is
an integral aspect of the Transaction and, as such, are non-severable.
6. Governing Law. This letter agreement shall be governed by and
construed in accordance with the internal laws of the State of New York and
any applicable provision of the Bankruptcy Code, without regard to the
principles of conflict of laws that would provide for application of another
law.
7. Concerning Remedies. Each of the parties acknowledges and
agrees that no failure or delay in exercising any right, power or privilege
hereunder will operate as a waiver thereof, nor will any single or partial
exercise thereof preclude any other right, power or privilege hereunder.
8. Entire Agreement; Amendments; Counterparts. This letter
agreement, Annex A, the Exclusivity Letter, the Non-Disclosure Agreement dated
as of June 25, 2001 between HWL and GCL, as amended, and the Non-Disclosure
Agreement dated August 23, 2001, as amended, between STT and GCL set forth the
entire agreement among GCL on the one hand, and HWL or STT or both, on the
other hand, with respect to the subject matter hereof. This letter agreement
may be amended only by the express written consent of each of the parties.
3
This letter agreement may be executed in counterparts, each of which when taken
together shall constitute an original of this letter agreement. Each of the
parties agrees and acknowledges that this letter agreement does not contain
all matters upon which agreement must be reached in order for the Transaction
to be consummated.
9. Third Party Beneficiaries. Except as specifically set forth or
referred to in this letter agreement, nothing herein is intended or shall be
construed to confer upon any person or entity other than the parties hereto
and their successors and assigns, any rights or remedies under or by reason of
this letter agreement.
10. Notices. All notices, other communications or documents provided
for or permitted to be given hereunder shall be made in writing and shall be
given either personally by hand-delivery, by facsimile transmission, by mailing
the same in a sealed envelope, registered first-class mail, postage prepaid,
return receipt requested, or by reputable courier guaranteeing overnight
delivery:
(a) if to GCL, to
Global Crossing Ltd.
Seven Giralda Farms
Madison, NJ 07940
U.S.A.
Attention: Company Secretary
Fax: (1 973) 410-8583
(b) if to HWL, to:
Hutchison Whampoa Limited
22nd Floor
Hutchison House
10 Harcourt Road, Central
Hong Kong
Attention: The Company Secretary
Fax: (852) 2128-1778
(c) if to STT, to:
Singapore Technologies Telemedia Pte Ltd.
51 Cuppage Road
#10-11/17, StarHub Centre
Singapore 229469
Attention: Vice President, Legal
Fax: (65) 720-7277
Each party, by written notice given to each other in accordance with this
paragraph 11 may change the address to which notices, other communications or
documents are to be sent to such party. All notices, other communications or
documents shall be deemed to have been duly given: (i) at the time delivered
by hand, if personally delivered; (ii) when receipt is acknowledged
4
orally by addressee or by machine confirmation of transmission, if by facsimile
transmission; (iii) five business days after having been deposited in the
mail, postage prepaid, if mailed by first class air mail; and (iv) on the
first business day with respect to which a reputable air courier guarantees
delivery; provided, however, that notices of a change of address shall be
effective only upon receipt.
If this letter agreement correctly sets forth our understanding,
please so acknowledge by signing below and returning a signed copy of the
letter agreement to HWL at +852-2128-1778 and to STT at +65-720-7277.
Very truly yours,
HUTCHISON WHAMPOA LIMITED
By: /s/ Susan Chow
-----------------------------
Name: Susan Chow
Title: Deputy Group Managing
Director
SINGAPORE TECHNOLOGIES TELEMEDIA
PTE LTD.
By: /s/ Lee Theng Kiat
-----------------------------
Name: Lee Theng Kiat
Title: President and Chief
Executive Officer
Accepted and Agreed to as of the
date set forth above:
GLOBAL CROSSING LTD
By: /s/ John J. Legere
-----------------------------
Name: John J. Legere
Title: Chief Executive Officer
CONFIDENTIAL
SUMMARY OF TERMS
Company Global Crossing Ltd. ("GCL")(all references to GCL refer
to GCL on a consolidated basis, including all shares of
Asia Global Crossing Ltd. ("AGC") held by GCL but
excluding the operations, assets and liabilities of AGC
and its subsidiaries).
New Investors Hutchison Whampoa Ltd. ("HWL") and Singapore Technologies
Telemedia Pte Ltd ("STT") and such other entities as HWL
and STT may designate in accordance with the provisions
set forth under the heading "New Investors Designations
and Determinations".
Form of Investment A combination of newly issued GCL common shares and
convertible preferred stock ("Senior Convertible Preferred
Stock"), such that the New Investors shall own 79% of the
equity of GCL pro forma for the GCL Restructuring (as
defined below), assuming conversion of the Senior
Convertible Preferred Stock but subject to pro rata
dilution for the exercise of all options authorized under
the Management Plan (as defined below under "GCL
Restructuring") as of the closing date of the GCL
Restructuring (the "Closing Date").
Aggregate
Investment Amount US$750 million in cash. See "GCL Restructuring" below for
other terms.
Use of Proceeds Proceeds from the transaction will be utilized by GCL to
fund its business on an ongoing basis and the GCL
Restructuring.
Terms of Senior Convertible Preferred Stock
-------------------------------------------
Dividends 8.0% cumulative, payable at GCL's option either in cash
and/or in kind. Cash payments may be accrued if required
by New Exit Financing covenants.
Ranking The Senior Convertible Preferred Stock will rank senior to
all other capital stock of GCL.
Conversion The Senior Convertible Preferred Stock may be converted,
in whole or in part, at the option of the holder at any
time and from time to time, into such number of common
shares as will result in ownership by the New Investors,
when combined with the New Investors' purchase of shares
hereunder, of 79% of the equity of GCL as of the Closing
Date (assuming conversion of the Senior Convertible
Preferred Stock but subject to pro rata dilution for the
exercise of all options authorized under the Management
Plan as of the Closing Date). The conversion price of the
Senior Convertible Preferred Stock will be subject to
customary anti-dilution adjustments.
Optional
Redemption None
Optional Change
of Control
Redemption None
Change in Control If GCL becomes subject to a change of control, each holder
Put of the Senior Convertible Preferred Stock will have the
right to require GCL to purchase all or a part of such
securities at 101% of the liquidation preference of an
amount to be agreed, plus any accrued and unpaid dividends
to the date of repurchase.
Voting Rights The Senior Convertible Preferred Stock will vote on an
as-converted basis with the common stock.
The holders of the Senior Convertible Preferred Stock will
have a class voting right with respect to any amendment to
the terms of the Senior Convertible Preferred Stock.
So long as a New Investor beneficially owns a specified
minimum percentage (to be agreed) of GCL's outstanding
common shares (for the avoidance of doubt the common
shares issuable upon conversion of any shares of Senior
Convertible Preferred Stock owned by such New Investor
shall be deemed for this purpose only to be beneficially
owned by such New Investor), the approval of such New
Investor holding Senior Convertible Preferred Stock shall
be required for certain major corporate actions of GCL or
actions of GCL in respect of major corporate actions of
AGC, including any of the following: (i) appointing or
replacing GCL's chief executive officer; (ii) any material
acquisitions or dispositions; (iii) any mergers,
consolidations or reorganizations; (iv) any issuances of
equity securities (other than enumerated exceptions); (v)
incurrence of indebtedness in excess of specified amounts;
(vi) capital expenditures in excess of specified amounts;
(vii) commencement of bankruptcy or other insolvency
proceedings; and (viii) certain affiliate transactions.
Other Terms of Investment
-------------------------
Transferability No contractual restrictions on the transferability of the
common shares or Senior Convertible Preferred Stock.
Board
Representation GCL's board of directors (the "Board") shall be
restructured to include no more than 10 members. The New
Investors shall designate at least 8 members of the Board,
including the Chairman. The New Investors' designees shall
be appointed Chairman of each of the Executive Committee,
Nominating Committee, Compensation Committee and Audit
Committee, subject to applicable stock exchange
regulations.
New Investors'
Conditions to
Closing The several obligations of each New Investor to complete
the transaction contemplated hereby will be subject to the
fulfillment to the satisfaction, in the reasonable
judgment of such New Investor, of conditions customary for
transactions of this nature and other agreed conditions,
including: (i) the concurrent completion of the GCL
Restructuring (excluding clauses (vii) and (viii)
thereof); (ii) financial status and business prospects of
AGC,
2
including status with respect to a restructuring of the
debt of AGC and its subsidiaries if deemed necessary by
the New Investors, to be cceptable to the New Investors;
(iii) approvals shall have been obtained from all U.S. and
non-U.S. government entities, including the U.S. Federal
Communications Commission, the U.S. Department of Justice
and the U.S. Federal Trade Commission (or applicable
waiting periods shall have expired); (iv) the absence of
any material adverse change in the business, prospects,
properties, assets, liabilities, operations or conditions
(financial or otherwise) of GCL from and after a date to
be specified in the Purchase Agreement, other than as
previously disclosed to and accepted by the New Investors
as of the date the Purchase Agreement is executed; (v) to
the extent the New Investors determine it is necessary,
the amendment of any applicable "change of control"
provisions in any agreements or arrangements of GCL which
would otherwise be triggered by this transaction; (vi) as
of the last day of each of GCL's first three fiscal
quarters of 2002, GCL shall have satisfied the minimum
Service Revenues and Service EBITDA performance targets
set forth on Schedule 1 for such quarter and as of the
last day of GCL's 2002 third quarter, GCL shall have (A)
satisfied the minimum cumulative IRU revenue performance
target set forth on Schedule 1 for such 9 month period and
(B) not exceeded the maximum cumulative Cash Capital
Expenditure performance target (as adjusted) set forth on
Schedule 1 for such 9 month period; (vii) management
employment arrangements on terms satisfactory to the New
Investors, including equity-based compensation and
retention packages, to be structured and agreed with key
management personnel consistent with the Management Plan
(defined herein); (viii) the requisite amendment of
certain contracts of GCL and its affiliates (to be
identified by the New Investors to GCL as of the date of
the Purchase Agreement) to eliminate the application of
the non-compete provisions therein to the New Investors
and their affiliates to the satisfaction of the New
Investors; (ix) GCL having complied with all covenants and
conditions set forth in the documentation relating to the
DIP Financing (as defined below), except to the extent
noncompliance with respect thereto is either cured by GCL
or waived by the DIP lender(s); (x) GCL having taken all
such action as may be necessary or appropriate to
facilitate the listing of the new equity issued in
connection with the GCL Restructuring on a US national
stock exchange promptly after the Closing Date provided
that this condition shall be deemed satisfied if a listing
cannot be effected because the New Investors do not
consent to any modification to any of the terms set forth
herein needed to effect such listing; (xi) GCL having made
each of the filings with respect to the GCL Restructuring
specified in Schedule 2 hereto in accordance with the
timetable set forth therein (the "Restructuring
Timetable") and the events specified in Schedule 2 hereto
having occurred substantially in accordance with the
Restructuring Timetable and (xii) GCL having complied with
all other applicable pre-closing covenants and customary
representations and warranties.
GCL's Conditions The obligation of GCL to complete the transaction
to Closing contemplated hereby will be subject to the fulfillment to
the satisfaction, in the
3
reasonable judgment of GCL, of conditions customary for
transactions of this nature and other agreed conditions,
including the New Investors having complied with all
applicable pre-closing covenants and customary
representations and warranties.
GCL Restructuring GCL shall conduct a restructuring and recapitalization
through a Chapter 11 plan of reorganization and such
concurrent proceedings under the laws of jurisdictions
outside the United States as may be necessary to give full
effect to such restructuring and recapitalization
(collectively, the "GCL Restructuring"). The terms of the
GCL Restructuring must be acceptable to the New Investors,
including:
(i) US$800 million in new debt securities to be
distributed to existing GCL creditors;
(ii) 21% of the share capital of GCL (assuming
conversion of the Senior Convertible Preferred Stock
but subject to pro rata dilution for the exercise of
all options authorized under the Management Plan as
of the Closing Date) to be distributed to existing
GCL creditors;
(iii) US$300 million in cash to be distributed to existing
GCL creditors;
(iv) All of GCL's existing bank debt, bond debt and
claims relating to entities having filed for
bankruptcy protection to be eliminated in exchange
for the consideration set forth above;
(v) New Exit Financing (as described below) to be
arranged by GCL;
(vi) Elimination of all existing preferred and common
shares and other equity interests;
(vii) HWL to surrender its existing convertible preferred
and invest new cash of US$375 million in exchange
for a combination of new Senior Convertible
Preferred Stock and common shares as described in
the heading "Form of Investment";
(viii) STT to invest new cash of US$375 million to
subscribe for a combination of new Senior
Convertible Preferred Stock and common shares as
described in the heading "Form of Investment";
(ix) Net working capital of GCL (cash plus receivables
minus payables) of at least US$1.0 billion,
including a minimum cash balance of GCL of at least
US$700 million as of September 30, 2002, as
reflected in a pro forma balance sheet giving effect
to the GCL Restructuring as of such date to be
agreed (the "Pro Forma Balance Sheet"), subject to
adjustments to be agreed upon if the Closing Date
occurs before or after September 30, 2002;
(x) Post-restructuring liabilities of GCL, including
taxes, not to exceed a cap to be specified in the
Pro Forma Balance Sheet, subject to adjustments to
be agreed upon if the
4
Closing Date occurs before or after September 30,
2002; and
(xi) Establishment of a new GCL compensation plan (the
"Management Plan") providing for equity-based
compensation to management of GCL in an amount of
up to 10% of the fully diluted common equity of GCL
as of the Closing Date. At the Closing Date, an
allocation shall be made under the Management Plan
of a target level of 5% of the common equity as of
such date at an exercise price equal to the per
share buy-in price of the New Investors on the
Closing Date and with a vesting schedule to be
determined at the time of the grant.
New Exit
Financing New debt financing in an amount of not less than US$350
million to be arranged by GCL on terms acceptable to the
New Investors.
Amendments
to Bye-Laws Reorganized GCL's Bye-Laws shall be amended in a manner
acceptable to the New Investors, including amendments to:
(i) The voting and transfer provisions;
(ii) Provide for the rights set forth herein under Right
of First Offer and under Board Representation; and
(iii) Confer on the New Investors rights consistent with
those contemplated hereby.
Pre-closing
Covenants GCL shall (i) continue to operate its business in the
ordinary course prior to the closing, (ii) make
information available to the New Investors, (iii) give the
New Investors reasonable access to GCL's management
personnel and premises and periodically update the New
Investors on material business developments and (iv)
consult with the New Investors on all matters outside of
the ordinary course of business related to its business,
strategy, financing and restructuring prior to closing,
including without limitation matters relating to the
restructuring of AGC.
GCL shall provide the New Investors with advance copies of
all material pleadings to be filed in the Chapter 11 cases
and related legal proceedings to the extent intended to
effectuate the Restructuring Timetable, which pleadings
shall be reasonably acceptable to New Investors.
Each of GCL and the New Investors shall cooperate with the
other parties hereto and take all actions and make all
filings necessary to obtain the consent, approval or
authorization of all U.S. and non-U.S. government entities
necessary or appropriate in connection with the GCL
Restructuring and with the investments in GCL of the
respective New Investors. In addition, the Purchase
Agreement shall provide that each of GCL and the New
Investors shall covenant and agree to use their respective
reasonable efforts to consummate and make effective the
transactions contemplated hereby (including satisfying any
conditions to closing which are its responsibility).
5
After the entry of the Buyer Protection Order, the New
Investors will seek and promptly apply for all applicable
regulatory approvals (other than such regulatory approvals
which are not legally feasible to pursue prior to the
execution of binding documentation).
Registration
Rights Customary registration rights with respect to all common
shares owned by the New Investors in reorganized GCL,
including common shares acquired in this transaction and
issued upon conversion of the Senior Convertible Preferred
Stock.
Right of First
Offer Subject to certain exceptions to be agreed, the New
Investors will have a right to invest pro rata in
post-restructuring equity securities offerings of
Reorganized GCL, whether or not for cash.
Conditions to
Signing Definitive
Documentation Signing of the definitive documentation will be subject to
(i) negotiation of definitive documentation acceptable to
GCL and the New Investors, (ii) compliance by GCL and the
New Investors with all the pre-closing covenants and
conditions set forth herein (as if all such covenants and
conditions were binding on GCL), (iii) the terms of the
GCL Restructuring to be supported by the agents for the
banks and the statutory creditors committee by no later
than the Auction date (as referenced in Schedule 2); (iv)
availability of debtor-in-possession financing for GCL of
no less than US$150 million on terms satisfactory to New
Investors (the "DIP Financing"); (v) satisfaction of the
New Investors with respect to the status of AGC and the
status of any AGC restructuring; and (vi) the completion
of due diligence satisfactory to the New Investors.
Documentation Documentation to be entered into between GCL and the New
Investors will include a Purchase Agreement containing
representations, warranties, covenants and closing
conditions acceptable to the parties. Attached as exhibits
to the Purchase Agreement will be an agreed upon form of
the following documents: (i) new Bye-laws, (ii) a
Registration Rights Agreement and (iii) a certificate of
designations relating to the Senior Convertible Preferred
Stock. The definitive documentation shall provide that all
decisions, approvals or designations of a party hereto may
be made (or withheld) in the sole and absolute discretion
of such party, except to the extent that another standard
expressly governs.
Back-End Date If the Closing Date does not occur by September 30, 2002,
the New Investors and GCL shall each have the discretion
to terminate the transaction provided that if, on such
date, the only unsatisfied condition to closing is
obtaining a requisite regulatory approval, such date shall
be extended to December 31, 2002.
Expenses GCL shall reimburse the New Investors for all their
actual, reasonable, documented out-of-pocket costs and
expenses (including, without limitation, the fees and
expenses of counsel, advisors and accountants) incurred in
connection with the transaction contemplated hereby (i) up
to an aggregate maximum amount of US$3.8 million
immediately upon the execution of the
6
letter of intent relating to this Term Sheet and (ii)
until termination of the contemplated transaction, those
additional reasonable, actual, documented, out of pocket
costs and expenses (excluding any success fees) payable as
follows: GCL shall pay the monthly retainer payments of
Goldman Sachs & Co. and Merrill Lynch (Singapore) Pte.
Ltd. in the amounts of US$150,000 and US$150,000,
respectively. In addition, each month, the attorneys and
accountants of the New Investors shall submit fee
statements to GCL, counsel for the agents for the banks,
The Office of the United States Trustee and counsel to any
statutory creditors committee. If GCL receives no
objection within 10 business days of receipt of such fee
statement, GCL shall pay the invoiced fees and expenses.
If an objection is so received, GCL shall only pay the
undisputed amount pending court resolution of such
dispute. The total costs and expenses payable pursuant to
such clause (ii) shall not exceed US$10 million in the
aggregate. In addition, it is contemplated that as part of
the GCL Restructuring success fees would be payable by
Reorganized GCL to advisors of HWL and STT on the Closing
Date.
Buyer Protection
Order By the relevant date specified in Schedule 2, GCL shall
file a motion in all applicable courts (including Bermuda
if necessary) seeking an order (the "Buyer Protection
Order") that will establish hearings and deadlines
consistent with the Restructuring Timetable and approve
(i) the expense reimbursement specified in clause (ii)
under "Expenses" above, (ii) a break-up fee to the New
Investors in an aggregate amount equal to US$40 million in
the event that GCL accepts or approves, or a court
approves or orders, any proposal (any such proposal, an
"Alternative Transaction") that provides for one or more
third parties (A) to acquire in one or a series of related
transactions all or substantially all of the assets of GCL
or (B) to make a comparable investment in GCL or sponsor
or be an economic co-proponent of a plan of reorganization
of GCL and (iii) the other binding provisions of this Term
Sheet. The break-up fee will be payable when the
Alternative Transaction closes provided that if an
Alternative Transaction is approved by the court but
ultimately does not close, the New Investors shall be
entitled to a break-up fee in an aggregate amount equal to
US$20 million, payable on the effective date of GCL's plan
of reorganization. No break-up fee will be owed if either
of the New Investors terminates the transaction for any
reason (other than as a result of (i) an Alternative
Transaction, (ii) GCL willfully fails to comply with the
conditions to Closing for the purposes of delaying or
precluding the closing of the transaction or (iii) such
termination results from a failure to adhere to the
Restructuring Timetable that is not attributable to the
New Investors and an Alternative Transaction is approved
by the court within 90 days of such missed deadline). A
break-up fee payable under the circumstances described in
clause (iii) immediately above shall only be payable out
of the proceeds payable at closing of such Alternative
Transaction.
Confidentiality Until the date on which GCL files a motion seeking
approval of the Buyer Protection Order, GCL and the New
Investors agree to keep this Term Sheet confidential
pursuant to their previous
7
confidentiality undertakings with respect to the potential
transaction, provided that GCL may disclose this Term
Sheet to its bank lenders, its bond/note holders and any
statutory creditors committee, and their respective
advisors, provided such parties have agreed to keep this
Term Sheet confidential, provided that GCL concurrently
with such disclosure informs the New Investors of the
identity of the person to whom this Term Sheet is being
disclosed. Notwithstanding the foregoing, the New
Investors and GCL may each issue a press release relating
to this Term Sheet disclosing (i) the names of the New
Investors and GCL, (ii) the aggregate US$750 million cash
investment by the New Investors and (iii) such other items
as may be mutually agreed by the parties.
New Investors
Designations and
Determinations HWL and STT may designate other entities as New Investors
provided that, notwithstanding such designation (i) HWL
and STT acting directly or through one or more affiliates
shall each invest an amount that exceeds the amount
invested by any other New Investors and (ii) no entity
shall be designated that adversely effects the timing of
the Closing of the transaction or the ability to obtain
regulatory approval for the consummation of the Closing.
Notwithstanding anything to the contrary contained herein,
(i) in each case where this Term Sheet or the definitive
documents contemplated hereby provides for the New
Investors to provide a decision or their approval,
consent, waiver or judgment, such decision, approval,
consent, waiver or judgment shall be solely provided by
HWL and STT (and shall specifically exclude any of their
permitted designees), (ii) the parties further acknowledge
that HWL and STT shall negotiate and approve all
definitive agreements contemplated hereby without the
participation of any additional investor and (iii) if HWL
or STT designates any other entity to participate in the
transaction in accordance with the terms hereof, either
(A) such entity shall be financially capable of performing
its obligations to GCL under the definitive documents
(including its obligations to fund its portion of the
Investment Amount on the Closing Date), as reasonably
determined by GCL, or (B) HWL or STT, as the case may be,
shall remain obligated to perform any such obligations not
performed by such designee.
Governing
Law This Term Sheet shall be governed by and construed in
accordance with the laws of the State of New York.
Non-binding Term
Sheet This Term Sheet except for the provisions relating to
Expenses, Buyer Protection Order, Confidentiality and
Governing Law above (which provisions are intended and
agreed to be fully binding), is intended as an indication
of interest for discussion purposes only and is not
intended to be and does not constitute a legally binding
obligation of any party hereto. No person or entity shall
rely upon anything in this Term Sheet and no person or
entity shall have any right, benefit or remedy of any
nature by reason of this Term Sheet.
8
Schedule 1
----------
Performance Targets
-------------------
(US$ millions) For Quarters ended 2002
Q1 Q2 Q3 9 months
-- -- -- --------
Minimum
Service Revenue $722 $677 $658
Service EBITDA (105) (68) (49)
Cumulative IRU's $65
Q1 Q2 Q3 9 months
-- -- -- --------
Maximum $242(1)
Cumulative Cash
CapEx
---------------
(1) Plus increases for CapEx associated with Service Revenue and IRU Sales
that are incrementally higher than projected.
9
Schedule 2
----------
Restructuring Timetable
-----------------------
Time
(Days after
commencement of
Chapter 11 cases) Action
----------------- ------
+7 Filing of motion seeking approval of Buyer Protection
Order
+45 Approval of Buyer Protection Order; Application(s) for
regulatory approvals
+90 Deadline for submission of qualified bids1
+110 Auction, if qualified bids submitted ("Auction")
+125 Filing of draft plan and disclosure statement
+160 Approval of draft disclosure statement, start of
solicitation of votes on plan
+205 Confirmation of plan
+230 Effective date of plan (Closing Date), subject to
receipt of any consent, approval or authorization of
any government entity; closing of the new exit
financing
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1 "Qualified bids" to be defined as bids providing for (i) distributions
to creditors of no less value than the amounts described above in
the GCL Restructuring after taking into account any requisite payment of
a break-up fee to the New Investors as a result thereof plus a customary
bidding increment and (ii) a reasonable level of liquidity available
to Reorganized GCL on the Closing Date. If there are no qualified bids
submitted, the remaining timetable can be accelerated.