AGREEMENT dated as of November 9, 1997, among BRITISH
TELECOMMUNICATIONS PLC, a public limited company incorporated
under the laws of England and Wales ("BT"), MCI COMMUNICATIONS
CORP., a Delaware corporation ("MCI"), and WORLDCOM, a Georgia
corporation ("WorldCom").
WHEREAS, BT, MCI and Tadworth Corporation, a Delaware
corporation and a wholly owned subsidiary of BT ("BT Merger Sub"), are parties
to an Agreement and Plan of Merger, dated as of November 3, 1996 (as amended by
the Amendment Agreement thereto dated as of February 14, 1997 and Amendment
Agreement No. 2 thereto dated as of August 21, 1997, the "BT/MCI Merger
Agreement") (capitalized terms used but not defined herein shall have the
meanings set forth in the BT/MCI Merger Agreement), providing for the merger of
MCI with and into BT Merger Sub;
WHEREAS, MCI, WorldCom and a wholly owned subsidiary of
WorldCom ("WorldCom Merger Sub") propose to enter into an Agreement and Plan of
Merger (the "WorldCom/MCI Merger Agreement") providing for the merger of MCI
with and into WorldCom Merger Sub (the "WorldCom/MCI Merger"), upon the terms
and subject to the conditions of the WorldCom/MCI Merger Agreement; and
WHEREAS, as of the date hereof BT owns the number of shares of
Class A Common Stock, par value $.10 per share, of MCI ("MCI Class A Common
Stock") set forth on Schedule I attached hereto (the "Subject Shares").
NOW, THEREFORE, and in consideration of the representations,
warranties, covenants and agreements contained in this Agreement, the parties
hereto agree as follows:
1. Representations and Warranties.
(a) Each party represents and warrants that such party has all
requisite power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by such party. This Agreement has been duly executed and delivered by
such party and constitutes a valid and binding obligation of such party
enforceable against such party 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. The execution and delivery of this Agreement does
not or will not, as the case may be, and the consummation of the transactions
contemplated hereby 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
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termination, amendment, 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 pursuant to:(A) any
provision of the certificate of incorporation or by-laws of such party or any
subsidiary of such party or (B) except as would not have a material adverse
effect on such party, 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 party or any subsidiary of such
party or their respective properties or assets. 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, including the European Union, is required by or with respect to such
party or any subsidiary of such party in connection with the execution and
delivery of this Agreement by such party or the consummation by such party of
the transactions contemplated hereby.
(b) BT hereby represents and warrants that BT (or a wholly
owned subsidiary of BT) is the record and beneficial owner of, and has good and
marketable title to, the Subject Shares.
2. Termination of BT/MCI Merger Agreement. BT and MCI hereby
agree that the BT/MCI Merger Agreement shall be, and hereby is, terminated,
effective immediately.
3. Fees. (a) The Alternative Transaction Fee of $450,000,000
and BT's Expenses in an amount up to $15,000,000 will be paid to BT
promptly by WorldCom in immediately available funds by 5 p.m. on Wednesday,
November 12.
(b) In the event WorldCom is required to make a payment to MCI
pursuant to Section 7.3 of the WorldCom/MCI Merger Agreement (a "Section 7.3
Payment"), WorldCom shall pay to BT $250,000,000 on the date WorldCom is
required to make the Section 7.3 Payment.
4. Covenants of BT. Until the termination of this Agreement in
accordance with Section 11, BT agrees as follows:
(a) BT hereby consents to, and at any meeting of stockholders
of MCI called to vote thereon, BT agrees to vote (or cause to be voted) the
Subject Shares (and each class thereof) in favor of, the WorldCom/MCI Merger,
the adoption by MCI of the WorldCom/MCI Merger Agreement and the approval of the
other transactions contemplated by the WorldCom/MCI Merger Agreement.
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(b) At any meeting of stockholders of MCI or at any
adjournment thereof or in any other circumstances upon which BT's vote, consent
or other approval is sought, BT shall vote (or cause to be voted) the Subject
Shares against (i) any merger agreement or merger (other than the WorldCom/MCI
Merger Agreement and the WorldCom/MCI Merger), consolidation, combination, sale
of substantial assets, reorganization, recapitalization, dissolution,
liquidation or winding up of or by MCI or any other MCI acquisition or (ii) any
amendment of the MCI Certificate of Incorporation or Bylaws or other proposal or
transaction involving MCI, or any of its subsidiaries, which amendment or other
proposal or transactions would in any manner impede, frustrate, prevent or
nullify the WorldCom/MCI Merger, the WorldCom/MCI Merger Agreement or any of the
other transactions contemplated by the WorldCom/MCI Merger Agreement.
(c) BT shall not (i) transfer (which term shall include,
without limitation, for the purposes of this Agreement, any sale, gift, pledge
or other disposition), or consent to any transfer of, any or all of the Subject
Shares or any interest therein, except pursuant to the WorldCom/MCI Merger, (ii)
enter into any contract, option or other agreement, arrangement or understanding
with respect to any or all of the Subject Shares or any interest therein, (iii)
grant any proxy, power-of-attorney or other authorization in or with respect to
the Subject Shares, except for this Agreement or (iv) deposit the Subject Shares
into a voting trust or enter into a voting agreement or arrangement with respect
to the Subject Shares; provided, however, that notwithstanding anything to the
contrary in this Agreement, the record owner of the Subject Shares may be any
wholly owned subsidiary of BT and BT shall cause any such subsidiary to perform
all the obligations of BT under this Agreement that require performance by the
record owner of the Subject Shares.
(d) BT hereby waives any rights of appraisal, or rights to
dissent from the WorldCom/MCI Merger, that it may have.
(e) During the term of this Agreement, BT shall not nor shall
it authorize or permit any officer, director, partner, employee or agent or any
investment banker, attorney or other advisor or representative of BT to,
directly or indirectly, (i) solicit, initiate or encourage the submission of any
Acquisition Proposal (other than with respect to the WorldCom/MCI Merger) or
(ii) participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes or may be
reasonably be expected to lead to, any Acquisition Proposal (other than with
respect to the WorldCom/MCI Merger).
(f) Until after the WorldCom/MCI Merger is consummated or the
WorldCom/MCI Merger Agreement is terminated, BT shall use all reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, and
to assist and
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cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the WorldCom/MCI Merger and the other transactions contemplated by
the WorldCom/MCI Merger Agreement. Without limiting the generality of the
foregoing, BT shall use all reasonable efforts to assist WorldCom and MCI in
obtaining all requisite approvals under Council Regulations (EEC) No. 406/89 and
the Communications Act of 1934, as amended; provided, however, that BT shall not
be required to take any position that would be inconsistent with, or adversely
affect, the interests of BT's other businesses.
5. Modifications to Concert Joint Venture Agreement
and Investment Agreement.
(a) WorldCom, MCI and BT hereby agree that the Modified Joint
Venture Agreement among BT, Moorgate (Twelve) Limited ("BTH"), MCI, MCI Ventures
Corporation ("Ventures"; together with BTH, the "Shareholders") and Concert
Communications Company ("Concert") (the "Joint Venture Agreement") and the
related agreements entered into thereunder shall be appropriately modified,
effective as of the consummation of the purchase of the joint venture interest
described in Section 5(b) hereof (the "Purchase Date") to reflect the provisions
set forth on Exhibit A hereto. It is understood and agreed that the parties
hereto may engage in discussions and negotiations with other parties about the
matters covered by the Joint Venture Agreement and the related agreements
(including reaching agreement with other parties with respect to distribution
arrangements not inconsistent with Exhibit A to become effective immediately
after the Purchase Date) prior to the Purchase Date with respect to possible
arrangements to become effective subsequent to, and subject to the occurrence
of, the Purchase Date.
(b) WorldCom, MCI and BT hereby agree that BT shall cause BTH
to exercise the call option set forth in Clause 30.1 of the Joint Venture
Agreement immediately following the occurrence of the Effective Time. The
parties shall commence discussions following the date hereof and shall attempt
in good faith to reach agreement as promptly as practicable as to the Relevant
Price for purposes of the exercise of such call option.
(c) WorldCom and MCI hereby agree to waive the provisions of
Section 9.12 of the Amended and Restated Investment Agreement, dated as of
January 31, 1994 (the "Investment Agreement"), between BT and MCI and the
provisions of Clause 18 of the Joint Venture Agreement to the extent necessary
to permit BT to engage in discussions and negotiations with, and enter into
agreement with, third parties for business combinations, commercial alliances or
other business ventures which might otherwise be restricted by or result in any
loss of rights pursuant to such provisions so long as the consummation of any
such transaction is conditioned upon the consummation of the WorldCom/MCI
Merger.
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(d) BT and MCI hereby agrees that, upon the termination of the
WorldCom/MCI Merger Agreement, Section 5.01 of the Investment Agreement shall
automatically be amended, without any further action by either BT or MCI, to
delete Section 5.01(a) and to reletter the remaining subsections and to delete
the phrase "From and including the fourth anniversary of the Closing Date" at
the beginning of the subsection that was Section 5.01(b) prior to such amendment
and to capitalize the word "so" that will then be first word of such subsection.
(e) BT and WorldCom will undertake in good faith to negotiate
a transition agreement in accordance with Exhibit B.
6. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned, in whole or in part, by
operation of law or otherwise, by any party without the prior written consent of
the other parties, except that any of the parties hereto may assign all of any
of its rights and obligations hereunder to any affiliate of such party, provided
that no such assignment shall relieve the assigning party of its obligations
hereunder if such assignee does not perform such obligations. 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 successors and assigns.
7. Litigation. WorldCom shall promptly withdraw its
complaint in the matter entitled WorldCom, Inc. and TC
Investments Corp. against MCI Communications Corporation et al.
and BT shall promptly withdraw the answer to such complaint filed
by it.
8. Merger Consideration. WorldCom and MCI shall not amend the
WorldCom/MCI Merger Agreement to increase the consideration payable to holders
of shares of common stock, par value $.10 per share, of MCI unless the
consideration to be paid in respect of the shares of MCI Class A Common Stock
shall increased in such amendment by a like amount per share.
9. References to BT. WorldCom and MCI each hereby agree that
any description of or reference to BT in any proxy materials, registration
statements or other disclosure document to be filed with the Securities and
Exchange Commission or to be sent to securityholders of either WorldCom or MCI
shall be reasonably acceptable to BT and its counsel and that BT and its counsel
shall be given an opportunity to review each such description or reference and
to make suggestions with respect thereto a reasonable amount of time prior to
the earlier of (i) the time such document is sent to stockholders and (ii) the
time such document is filed with the Securities and Exchange Commission. BT
shall not unreasonably withhold or delay its determination that such
descriptions or references are reasonably acceptable.
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10. Amendments to WorldCom/MCI Merger Agreement. WorldCom and
MCI shall not amend the WorldCom/MCI Merger Agreement in a manner that adversely
affects the interests of BT.
11. Termination. This Agreement shall terminate, and the
provisions hereof shall be of no further force or effect, upon the earliest to
occur of (a) the Effective Time, (b) the termination of the WorldCom/MCI Merger
Agreement pursuant to Section 7.1(a), 7.1(c) or 7.1(d) (but only with respect to
the failure to obtain the Required Parent Vote) or (c) the later to occur of (x)
September 30, 1998 or (y) termination of the WorldCom/MCI Merger Agreement
pursuant to Section 7.1(b), 7.1(d) (but only with respect to failure to obtain
the Required MCI Votes), 7.1(e) or 7.1(f). The provisions of Sections 3, 5,
6(b), 11 and 12 shall survive the termination of this Agreement.
12. General Provisions.
(a) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(b) Notices. All notices and other communications hereunder
shall be in writing and shall be deemed duly given (a) on the date of personal
delivery or, if delivered 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 BT, to
British Telecommunications plc
BT Centre
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Secretary and Chief Legal Advisor
Facsimile No.: ▇▇▇-▇▇-▇▇▇-▇▇▇▇
with copies to
Shearman & Sterling
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
Attention: W. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile No.: 011-44-171-920-9020
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b. if to MCI, to
MCI Communications Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Executive Vice President
and General Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
c. if to WorldCom, to
WorldCom, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: P. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
General Counsel
Corporate Development
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(c) Interpretation. When a reference is made in this Agreement
to a Section or Schedule, such reference shall be to a Section of or Schedule to
this Agreement unless otherwise indicated. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Wherever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation".
(d) 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
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more of the counterparts have been signed by each of the parties and delivered
to the other parties.
(e) Entire Agreement; No Third-Party Beneficiaries. This
Agreement (including the documents and instruments referred to herein) (i)
constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and (ii) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
(f) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law thereof.
13. 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 or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in a Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (i) consents to submit itself to the
personal jurisdiction of any court of the United States located in the State of
Delaware or any Delaware state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement, (ii) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court, (iii) agrees that such party
will not bring any action relating to this Agreement or the transactions
contemplated by this Agreement in any court other than a court of the United
States located in the State of Delaware or a Delaware state court and (iv)
waives any right to trial by jury with respect to any claim or proceeding
related to or arising out of this Agreement or any of the transactions
contemplated hereby.
14. Public Announcements. BT, WorldCom and MCI 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, 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.
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15. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. 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 to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be signed by their authorized signatories, all as of the date first written
above.
BRITISH TELECOMMUNICATIONS
public limited company
by /s/▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Secretary and Chief
Legal Adviser
MCI COMMUNICATIONS CORPORATION
by /s/▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: Chairman
WORLDCOM, INC.
by /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief
Executive Officer
SCHEDULE I
Number of Shares
MCI Class A Common Stock 135,998,932
Exhibit A
- The exclusive distribution rights set forth in the
Joint Venture Agreement and the Distribution Agreements shall be
terminated.
- Concert shall continue to provide services to MCI on a
nonexclusive basis to customers based in the United
States for a period of five years from the Purchase
Date in accordance with the terms of the MCI
Distribution Agreement. This is intended to enable MCI
to continue to provide services to existing customers
under the terms of its contractual obligations and to
enter into new contractual obligations with new
customers and existing customers provided that the term
of such obligations does not extend beyond the fifth
anniversary of the Purchase Date.
EXHIBIT B
Concept:
BT and WorldCom will undertake in good faith to negotiate a transition
agreement. The intent is for there to be an agreement that would go into effect
upon the consummation of the purchase by BT of MCI's joint venture interest in
Concert pursuant to BT's call option.
Purpose:
- To provide for a professional exit from the existing Concert
arrangements while satisfying the requirements of BT's and
MCI's customers before and during the exit.
- To agree the requirements (financial, operational, technical)
of making Concert more self standing and better able to
support customer and distributor requirements
- To give BT and customers comfort that during the pendency of
the merger and the post merger period underlying components
and services necessary to provide Concert service which are
sourced from MCI are available on commercially reasonably
terms despite the change in circumstances.
Structure:
A three-step process to achieve the purpose is contemplated under which the
parties would in good faith review and consider:
- What assets currently used by MCI in servicing certain
obligations to Concert should be sold to Concert.
- What assets which are used to support MCI's non-Concert
operations might be either duplicated or equitably shared.
- What certain MCI/BT relationships might also be
modified, e.g. Card.
- How MCI's role as a master distributor should be amended so as
to allow Concert to be in direct privity with MCI's
subdistributors.
- How service contracts with MCI which do not contain service
levels should be recast so that both Concert and MCI could be
more certain as to their respective rights and obligations.
MCI/WorldCom will be reimbursed on an after-tax basis for all costs incurred and
assets transferred in connection with the foregoing. Notwithstanding anything to
the contrary herein, MCI/WorldCom shall not be required to take any action that
could reasonably be expected to materially adversely affect its business,
customer relationships or the benefits anticipated to result from the merger.
Timing:
- Negotiations to be completed in 180 days post
execution of the Agreement
- The agreements would not take effect until the consummation of
the purchase by BT of MCI's joint venture interest in Concert
pursuant to BT's call option.
- If the Agreement is not executed in 180 days
despite the parties' good faith efforts, (i) the
nonexclusive distributorship referred to in
Exhibit A shall have a term of two (rather than
five) years and (ii) the transition arrangements
in the Services Agreement will be extended from
12 to 18 months for Concert.
