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
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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 termination,
amendment, cancelation 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.
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(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.
(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
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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 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
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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.
(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.
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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.
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
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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
81 Newgate Street
Attention: Colin R. Green
Secretary and Chief Legal Advisor
Facsimile No.: 011-44-171-6135
with copies to
Shearman & Sterling
199 Bishopsgate
London EC2M 3TY
England
Attention: W. Jeffrey Lawrence
Facsimile No.: 011-44-171-920-9020
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b. if to MCI, to
MCI Communications Corporation
1801 Pennsylvania Avenue, NW
Washington, D.C. 20006
Attention: Michael Salsbury, Esq.
Executive Vice President and General
Counsel
Facsimile No.: (202) 887-3353
with copies to
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Philip T. Ruegger III, Esq.
Facsimile No.: (212) 455-2502
c. if to WorldCom, to
WorldCom, Inc.
10777 Sunset Office Drive
Suite 330
St. Louis, MO 63127
Attention: P. Bruce Borghardt, Esq.
General Counsel Corporate
Development
Facsimile No.: (314) 909-4101
with copies to
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Attention: Allen Finkelson, Esq.
Robert A. Kindler, Esq.
Facsimile No.: (212) 474-3700
(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'.
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(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 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
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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.
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/ Colin R. Green
-----------------------------------
Name: Colin R. Green
Title: Secretary and Chief
Legal Advisor
MCI COMMUNICATIONS CORPORATION
by
/s/ Bert C. Roberts, Jr.
-----------------------------------
Name: Bert C. Roberts, Jr.
Title: Chairman
WORLDCOM, INC.
by
/s/ Bernard J. Ebbers
-----------------------------------
Name: Bernard J. Ebbers
Title: President and Chief
Executive Officer
SCHEDULE I
Number of Shares
----------------
MCI Class A Common Stock 135,998,932
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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:
o 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.
o To agree the requirements (financial, operational, technical)
of making Concert more self standing and better able to
support customer and distributor requirements.
o 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:
o What assets currently used by MCI in servicing certain
obligations to Concert should be sold to Concert.
o What assets which are used to support MCI's non-Concert
operations might be either duplicated or equitably shared.
o What certain MCI/BT relationships might also be modified, e.g.
Card.
o 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.
o How service contracts with MCI which do not contain service
levels should be recast so that
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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:
o Negotiations to be completed in 180 days post execution of the
Agreement.
o 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.
o 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.
Agreement - British Telecommunications PLC, MCI Communications Corp. and WorldCom
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