1
EXHIBIT 8
AMENDMENT AGREEMENT ▇▇. ▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇. ▇, dated as of August 21, 1997 (this "Amendment
Agreement No. 2"), among BRITISH TELECOMMUNICATIONS plc, a public limited
company incorporated under the laws of England and Wales ("BT"), MCI
COMMUNICATIONS CORPORATION, a Delaware corporation ("MCI"), and TADWORTH
CORPORATION, a Delaware corporation and a wholly owned subsidiary of BT
("Merger Sub").
W I T N E S S E T H :
---------------------
WHEREAS, BT, MCI and Merger Sub are parties to an Agreement and Plan of
Merger, dated as of November 3, 1996, as amended by the Amendment Agreement,
dated as of February 14, 1997, among BT, MCI and Merger Sub (as so amended, the
"Merger Agreement"; terms defined in the Merger Agreement and not otherwise
defined herein being used herein as therein defined);
WHEREAS, the Boards of Directors of BT, MCI and Merger Sub have determined
that it is appropriate to amend the Merger Agreement as set forth in this
Amendment Agreement No. 2;
WHEREAS, Section 7.3 of the Merger Agreement provides that the Merger
Agreement may be amended by the parties thereto, 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 stockholders of
MCI or BT, 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 stockholders without such further approval; and
WHEREAS, BT, MCI and Merger Sub have determined that it is appropriate to
seek the approval (i) of the Merger Agreement, as amended by this Amendment
Agreement No. 2, by the stockholders of MCI and (ii) of the Merger and the
Share Authorization (as hereinafter defined) on the terms of the Merger
Agreement, as so amended, by the shareholders of BT;
NOW THEREFORE, in consideration of the premises and for other valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto
hereby agree as follows:
2
2
ARTICLE I
AMENDMENTS TO THE MERGER AGREEMENT
SECTION 1.01. Amendment to Preamble. The Preamble to the Merger
Agreement is hereby amended by deleting the phrase "(this 'Agreement')" in its
entirety and inserting in lieu thereof the phrase "(as amended by the Amendment
Agreement and Amendment Agreement No. 2, this 'Agreement')".
SECTION 1.02. Amendment to Section 1.2. Section 1.2 of the Merger
Agreement is hereby amended by deleting the first sentence thereof in its
entirety and inserting in lieu thereof the following:
"The closing of the Merger (the 'Closing') will take place on the
first Business Day after the later of (i) the approval and adoption
of this Agreement by the stockholders of MCI and (ii) satisfaction
or waiver (subject to applicable law) of the other conditions
(excluding conditions that, by their terms, cannot be satisfied
until the Closing Date) set forth in Article VI (the 'Closing
Date'), unless another time or date is agreed to in writing by the
parties hereto."
SECTION 1.03. Amendments to Section 1.8.
(a) Section 1.8(b) of the Merger Agreement is hereby amended by deleting
the phrase "0.54 BT ADSs" in its entirety and inserting in lieu thereof the
phrase "0.375 BT ADSs".
(b) Section 1.8(b) of the Merger Agreement is hereby further amended by
deleting the phrase "$6.00 in cash" in its entirety and inserting in lieu
thereof the phrase "$7.75 in cash".
(c) Section 1.8(c) of the Merger Agreement is hereby amended by deleting
the second and third sentences thereof in their entirety and inserting in lieu
thereof the following:
"Holders of BT ADSs to be issued in the Merger shall not be
entitled to receive any interim or final dividends (the '1998
Dividends') payable by BT on the BT Ordinary Shares in respect of
its financial year ending March 31, 1998 (normally paid in February
and September of each year, respectively), which, in the aggregate,
shall not exceed 20 ▇▇▇▇▇ per BT Ordinary Share. BT shall, in
respect of the 1998 Dividends, notify the LSE to ▇▇▇▇ the BT
Ordinary Shares 'ex-dividend' in the Stock Exchange Daily Official
List and cause the record date to occur on a date prior to the
Effective Time."
3
3
SECTION 1.04. Amendments to Section 3.1.
(a) The first sentence of Section 3.1 of the Merger Agreement is hereby
amended by deleting the phrase "by MCI to BT at or prior to the execution of
this Agreement" in its entirety and inserting in lieu thereof the phrase "on
behalf of MCI to counsel for BT prior to the execution of Amendment Agreement
No. 2".
(b) Section 3.1(b) of the Merger Agreement is hereby amended by deleting
clause (i) thereof in its entirety and inserting in lieu thereof the following:
"(i) As of August 19, 1997, the authorized capital
stock of MCI consisted of (A) 2,000,000,000 shares of MCI
Common Stock, of which 558,420,209 shares were outstanding,
(B) 500,000,000 shares of MCI Class A Common Stock, of which
135,998,932 shares were outstanding and (C) 50,000,000 shares
of designated preferred stock, of which 10,000,000 shares of
Series E Junior Participating Preferred Stock have been
designated and reserved for issuance upon exercise of the
rights (the 'Rights') distributed to the holders of MCI Common
Stock pursuant to the Rights Agreement dated as of September
30, 1994 between MCI and Mellon Bank, N.A., as rights agent
(the 'Rights Agreement'). Since August 19, 1997 to the date
of Amendment Agreement No. 2, there have been no issuances of
shares of the capital stock of MCI or any other securities of
MCI other than issuances of shares pursuant to options or
rights outstanding as of August 19, 1997 under the MCI Benefit
Plans. All issued and outstanding shares of the capital stock
of MCI are duly authorized, validly issued, fully paid and
nonassessable, and no class of capital stock (other than MCI
Class A Common Stock) is entitled to preemptive rights. There
were outstanding as of August 19, 1997 no options, warrants or
other rights to acquire capital stock from MCI other than (w)
options representing in the aggregate the right to purchase
80,543,486 shares of MCI Common Stock under the 1989 MCI Stock
Option Plan, the MCI 1988 Directors' Stock Option Plan and the
MCI 1979 Stock Option Plan (collectively, the 'MCI Stock
Option Plans'), (x) rights to purchase an aggregate of
13,325,073 shares of MCI Common Stock under the ESPP, (y)
incentive stock units ("ISUs") representing the right to
receive 5,570,012 shares of MCI Common Stock (of which
3,105,000 such shares are contingent upon consummation of the
Merger) under the 1989 MCI Stock Option Plan and (z) rights to
purchase an aggregate of 2,047,087 shares of MCI Common Stock
under the MCI 401K Plan. No options or warrants or other
rights to acquire capital stock from MCI have been issued or
granted since August 19, 1997 to the date of Amendment
Agreement No. 2."
4
4
(c) Section 3.1(c)(i) of the Merger Agreement is hereby amended by
deleting the phrase ", voting separately as a class," in its entirety and
inserting in lieu thereof the phrase ", voting together as a single class,".
(d) Section 3.1(e)(ii) of the Merger Agreement is hereby amended by
deleting the text thereof in its entirety and inserting in lieu thereof the
following:
"(A) The information supplied or to be supplied by MCI for
inclusion in the Super Class 1 Shareholder Circular and listing
particulars and any related supplementary listing particulars under
Part IV of the Financial Services ▇▇▇ ▇▇▇▇ of the United Kingdom,
as amended (the 'FSA') (together, the 'BT Disclosure Document')
will, on the date any part of the BT Disclosure Document is
published by BT and at the time of the BT Shareholder Meeting,
include all such information within the knowledge of each of the
directors of MCI (or which it would be reasonable for them to
obtain by making enquiries) as investors and their professional
advisers reasonably require and expect to find, for the purpose of
making an informed assessment of the assets and liabilities,
financial position, profits and losses and prospects of BT and of
the rights attaching to the securities to which the BT Disclosure
Document relates.
(B) To the extent it is agreed by MCI and BT or is otherwise
required that any financial forecasts for MCI are to be included in
such listing particulars or supplementary listing particulars, MCI
shall take such steps as may be necessary to provide such forecasts
as are required by the listing rules of the LSE or otherwise to
comply with such listing rules, including, without limitation,
providing reports on such forecasts in accordance with such listing
rules. To the extent that any financial forecasts for Concert are
to be included in such listing particulars or supplementary listing
particulars, MCI shall cooperate fully with BT to enable BT to
provide such forecasts in compliance with the listing rules of the
LSE, including, without limitation, providing reports on such
forecasts in accordance with such listing rules.
(C) Responsibility for the completeness and accuracy of the
information and forecasts provided by MCI pursuant to paragraphs
(A) and (B) above contained in the BT Disclosure Document shall be
the responsibility of and shall be accepted by those directors and
proposed directors of BT who are currently directors or employees
of MCI (other than BT representatives who are directors of MCI)."
(e) Section 3.1(j)(i) of the Merger Agreement is hereby amended by (i)
deleting the phrase "; (B) since December 31, 1995 to the date of this
Agreement," in its entirety and inserting in lieu thereof the phrase "and (B)
since December 31, 1995 to the date of Amendment Agreement No. 2," and (ii)
deleting in its entirety the portion of such section beginning from the phrase
"; and (C)" through the end of such section.
5
5
(f) Section 3.1(1) of the Merger Agreement is hereby amended by deleting
the phrase "the affirmative vote of the holders of a majority of the
outstanding shares of MCI Class A Common Stock each voting as a separate class
(the 'Required MCI Votes'), are the only votes" in its entirety and inserting
in lieu thereof the phrase "MCI Class A Common Stock, voting together as a
single class (the 'Required MCI Votes'), is the only vote".
(g) Section 3.1(q) of the Merger Agreement is hereby amended by deleting
the phrase "the date of this Agreement" in its entirety and inserting in lieu
thereof the phrase "the date of Amendment Agreement No. 2".
SECTION 1.05. Amendments to Section 3.2.
(a) The first sentence of Section 3.2 of the Merger Agreement is hereby
amended by deleting the phrase "by BT to MCI at or prior to the execution of
this Agreement" in its entirety and inserting in lieu thereof the phrase "on
behalf of BT to counsel for MCI prior to the execution of Amendment Agreement
No. 2".
(b) Section 3.2(b) of the Merger Agreement is hereby amended by deleting
clause (i) thereof in its entirety and the inserting in lieu thereof the
following:
"(i) As of June 30, 1997, the authorized share capital
of BT consisted of (A) 10,500,000,000 BT Ordinary Shares, of
which 6,397,492,440 shares had been issued and (B) one Special
Rights Redeemable Preference Share of Pounds Sterling 1 (the
'Special Share'), which had been issued and was held by Her
Majesty's Government of the United Kingdom ('U.K.
Government'). Since June 30, 1997 to the date of Amendment
Agreement No. 2, there have been no issuances of shares of BT
or any other equity securities of BT other than issuances of
shares pursuant to options or rights outstanding as of such
date to subscribe or purchase BT Ordinary Shares. All issued
shares of BT are duly authorized, validly issued and fully
paid, and no class of share is entitled to preemptive rights,
save as provided by Section 89 Companies ▇▇▇ ▇▇▇▇ of the
United Kingdom (the 'Companies Act'). There were outstanding
as of June 30, 1997 no options, warrants or other rights to
acquire share capital from BT other than options representing,
in the aggregate, the right to subscribe or purchase
278,871,883 BT Ordinary Shares. No options or warrants or
other rights to acquire share capital from BT have been issued
or granted since June 30, 1997 to the date of Amendment
Agreement No. 2."
(c) Section 3.2(c)(i) of the Merger Agreement is hereby amended by
deleting the phrase "of the Merger by the Required BT Vote" in its entirety and
inserting in lieu thereof the phrase "by the shareholders of BT as described in
Section 3.2(k)".
6
6
(d) Section 3.2(e)(ii) of the Merger Agreement is hereby amended by (i)
inserting, immediately after the phrase "Section 146", the phrase "and Section
147" and (ii) adding, as the last two sentences thereof, the following:
"To the extent that any financial forecasts for BT are to be
included in any part of such BT Disclosure Document, BT shall take
such steps as may be necessary to provide such forecasts as are
required by the listing rules of the LSE or otherwise to comply
with such listing rules, including, without limitation, providing
reports on such forecasts in accordance with such listing rules.
To the extent that any financial forecasts for Concert are to be
included in any part of such BT Disclosure Document, BT shall
cooperate fully with MCI to enable MCI to provide such forecasts in
compliance with the listing rules of the LSE, including, without
limitation, providing reports on such forecasts in accordance with
such listing rules. Responsibility for the completeness and
accuracy of the information and forecasts provided by BT pursuant
to this Section 3.2(e)(ii) contained in the BT Disclosure Document
shall be the responsibility of and shall be accepted by the
directors of BT (other than MCI representatives who are directors
of BT)."
(e) Section 3.2(j)(i) of the Merger Agreement is hereby amended by (i)
deleting the phrase "; (B) since March 31, 1996 to the date of this Agreement,"
in its entirety and inserting in lieu thereof the phrase "and (B) since March
31, 1996 to the date of Amendment Agreement No. 2," and (ii) deleting in its
entirety the portion of such section beginning from the phrase "; and (C)"
through the end of such section.
(f) Section 3.2(k) of the Merger Agreement is hereby amended by deleting
the text thereof in its entirety and inserting in lieu thereof the following:
"The affirmative vote of not less than a majority of such members of
BT as (being entitled to do so) vote at the BT Shareholder Meeting
is the only vote or approval of the holders of any class of BT
shares necessary to approve the Merger on the terms of this
Agreement, including to increase the authorized share capital of BT
by the creation of sufficient new BT Ordinary Shares to give effect
to the terms of the Merger and to authorize the directors of BT
generally and unconditionally to allot such new BT Ordinary Shares
(the 'Share Authorization'). The affirmative vote of three-fourths
of such members of BT as (being entitled to do so) vote at the BT
Shareholder Meeting is the only vote or approval of the holders of
any class of BT shares necessary to approve (i) the amendment of the
Articles of Association of BT as described in Section 5.2, (ii) the
purchase by BT of BT Ordinary Shares as described in Section 5.16
and (iii) the change of BT's name to Concert plc as described in
Section 5.17(a)."
(g) Section 3.2 of the Merger Agreement is hereby further amended by
adding the following new paragraph (q) at the end thereof:
7
7
"(q) Special Share. BT has delivered to MCI a true and
correct copy of a letter, dated 15 July 1997, from The Rt Hon
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MP advising BT that the U.K. Government is
willing to redeem the Special Share."
SECTION 1.06. Amendments to Section 4.2(b).
(a) Section 4.2(b)(i) of the Merger Agreement is hereby amended by
deleting the phrase "and (C) BT" in its entirety and inserting in lieu thereof
the phrase ", (C) BT".
(b) Section 4.2(b)(i) of the Merger Agreement is hereby further amended by
inserting, immediately following the phrase "35 ▇▇▇▇▇ per BT Ordinary Share
(net)", the phrase "and (D) BT may declare the 1998 Dividends, which, in the
aggregate, shall not exceed 20 ▇▇▇▇▇ per BT Ordinary Share, provided that,
notwithstanding the exception in Section 4.2(b)(i)(D), BT shall, in respect of
the 1998 Dividends, notify the LSE to ▇▇▇▇ the BT Ordinary Shares 'ex-dividend'
in the Stock Exchange Daily Official List and cause the record date to occur on
a date prior to the Effective Time".
SECTION 1.07. Amendments to Section 5.1.
(a) Section 5.1(a) of the Merger Agreement is hereby amended by deleting
in their entirety the first three sentences thereof and inserting in lieu
thereof the following:
"As soon as practicable following the date of Amendment Agreement
No. 2, MCI and BT shall prepare the Proxy Statement/Prospectus.
MCI shall, in cooperation with BT, file the Proxy
Statement/Prospectus with the SEC as its preliminary Proxy
Statement and BT shall, in cooperation with MCI, prepare and file
with the SEC an amendment to the Form F-4, in which the Proxy
Statement/Prospectus will be included as BT's prospectus. BT,
Merger Sub and MCI shall together prepare and file an appropriate
amendment to the Transaction Statement on Schedule 13E-3 (the
'Schedule 13E-3') previously filed in connection with the
transactions contemplated by this Agreement at the time of the
filing of the preliminary Proxy Statement."
(b) Section 5.1(a) of the Merger Agreement is hereby further amended by
inserting, immediately preceding the period at the end of the penultimate
sentence thereof, the phrase "following the date of Amendment Agreement No. 2".
(c) Section 5.1(b) of the Merger Agreement is hereby amended by (i)
inserting, immediately after the phrase "to the stockholders of MCI", the
phrase "prior to the MCI Stockholders Meeting" and (ii) deleting the phrase
"following the date of this Agreement" in clause (i) thereof in its entirety
and inserting in lieu thereof the phrase "following the date of Amendment
Agreement No. 2".
8
8
(d) Section 5.1(b) of the Merger Agreement is hereby further amended by
adding, as the last sentence thereof, the following:
"BT agrees to vote all shares of MCI Common Stock and MCI Class A
Common Stock which it owns of record or beneficially in favor of
the approval and adoption of this Agreement at the MCI Stockholders
Meeting."
(e) Section 5.1(c) of the Merger Agreement is hereby amended by (i)
deleting the phrase "Unless otherwise required pursuant to the applicable
fiduciary duties of the Board of Directors of BT to the shareholders of BT (as
determined in good faith by the Board of Directors of BT based upon the advice
of counsel), (i)" in its entirety, (ii) deleting the phrase "following the date
of this Agreement" in clause (i) thereof in its entirety and inserting in lieu
thereof the phrase "following the date of Amendment Agreement No. 2", (iii)
deleting the phrase "Required BT Vote with respect to the Merger" in clause (i)
thereof in its entirety and inserting in lieu thereof the phrase "approval by
the shareholders of BT of the Merger on the terms of this Agreement" and (iv)
deleting the number "(ii)".
(f) Section 5.1(c) of the Merger Agreement is hereby further amended by
adding, as the last sentence thereof, the following:
"BT and MCI agree, subject to the fiduciary duties of their
respective boards of directors, to cooperate with each other and to
otherwise use all reasonable good faith efforts to secure the
support and affirmative vote of BT's shareholders in favor of
approval of the Merger and the Share Authorization contemplated by
this Agreement at the BT Shareholder Meeting."
(g) Section 5.1(d) of the Merger Agreement is hereby amended by deleting
the phrase "after the date of this Agreement" in clause (i) thereof in its
entirety and inserting in lieu thereof the phrase "after the date of Amendment
Agreement No. 2".
SECTION 1.08. Amendment to Section 5.2(b). Section 5.2(b) of the Merger
Agreement is hereby amended by deleting the phrase "and to amend" in its
entirety and inserting in lieu thereof the phrase "and BT shall take all
reasonable steps to amend".
SECTION 1.09. Amendments to Section 5.8.
(a) The second sentence of Section 5.8(b) of the Merger Agreement is
hereby amended by deleting the phrase "(y) the aggregate exercise price for the
shares of MCI Common Stock subject to such MCI Stock Option divided by (z) the
number of BT ADSs deemed to be subject to such MCI Stock Option" in its
entirety and inserting in lieu thereof the phrase "the per-share exercise price
specified in such MCI Stock Option divided by the Conversion Ratio, rounded, if
necessary, down to the nearest whole cent".
9
9
(b) The third sentence of Section 5.8(b) of the Merger Agreement is hereby
amended by deleting the number "0.54" in its entirety and inserting in lieu
thereof the number "0.375".
(c) Section 5.8(c) of the Merger Agreement is hereby amended by (i)
inserting the phrase "(other than any such option which has been converted from
an MCI Stock Option held by an individual who is a resident of Canada for tax
purposes)" after the phrase "pursuant to the terms of Section 5.8(b)" and (ii)
deleting in its entirety the portion of such section from the beginning of the
first proviso contained therein through the end of such section and inserting
in lieu thereof the following:
"provided, however, that any such dividend equivalents shall be
credited to a bookkeeping account in the name of the option holder
and shall be paid to such option holder (with interest at the prime
rate as published by Chase Manhattan Bank, N.A.) upon the earliest
of (i) the exercise of the related option (or if elected by such
option holder, in accordance with the further deferral of such
dividend equivalents under the terms of MCI's deferred compensation
program); (ii) the expiration of the period of exercisability of
the related option following the termination of the option holder's
employment (to the extent of the exercisability of the option at
such time); or (iii) the expiration of the option; provided
further, however, that any such dividend equivalents that are
credited to such a bookkeeping account in respect of any option
which have not been paid to an option holder in accordance with
clause (i), (ii) or (iii) of the immediately preceding proviso
shall be forfeited upon the forfeiture of such option in accordance
with its terms."
(d) Section 5.8(d) of the Merger Agreement is hereby amended by deleting
the phrase "0.54 restricted BT ADSs" in its entirety and inserting in lieu
thereof the phrase "0.375 restricted BT ADSs".
(e) Section 5.8(e) of the Merger Agreement is hereby amended by deleting
the phrase "0.54 BT ADSs" in its entirety and inserting in lieu thereof the
phrase "0.375 BT ADSs".
SECTION 1.10. Amendment to Section 5.11. Section 5.11 of the Merger
Agreement is hereby amended by (i) inserting the letter "(a)" immediately prior
to the first sentence thereof and (ii) adding the following at the end thereof:
"(b) In the event that (i) BT or MCI shall terminate this Agreement
pursuant to Section 7.1(d) due to the failure of BT's
shareholders to approve the Merger or the Share Authorization
on the terms of this Agreement or (ii) BT fails to effect the
Merger notwithstanding that all the conditions to the
obligation of BT to effect the Merger set forth in Sections
6.1 and 6.2 shall have been satisfied or shall have been
capable of being satisfied at
10
10
the scheduled Closing Date (each of the events described in
clauses (i) and (ii), an 'Indemnification Event'), BT hereby
agrees, subject to the terms and conditions of this Agreement,
to indemnify and hold harmless MCI and the directors, officers
and employees of MCI (each, an 'Indemnified Party') from and
against any loss, claim, damage, liability or action (each, a
'Loss') actually incurred by them by reason of claims asserted
by third parties insofar as such Loss arises out of or results
from the execution, delivery and performance of Amendment
Agreement No. 2 and the transactions contemplated thereby or
the failure to consummate such transactions as a result of
such Indemnification Event.
(c) An Indemnified Party shall give BT written notice of any
claim, assertion, event or proceeding which such Indemnified
Party has determined could give rise to any Loss as to which
such Indemnified Party may request indemnification hereunder,
within 10 days of such determination, stating the nature and
amount of the Loss, if known; provided, however, that the
failure to notify BT within such period shall not relieve BT
from its obligations under Section 5.11(b) unless BT shall
have been materially prejudiced thereby. BT shall have the
right to control and assume the defense of any such claim or
proceeding, at its own expense and through counsel of its own
choosing. If BT elects to assume the defense of any such
claim or proceeding, such Indemnified Party may participate in
such defense, but in such case the expenses of such
Indemnified Party shall be paid by such Indemnified Party. As
an express condition to BT's obligations under Section
5.11(b), MCI and each such Indemnified Party shall, and MCI
shall cause its respective directors, officers, employees,
agents and affiliates to, cooperate with BT in such defense,
and shall provide BT with access to and make available to BT
all witnesses, records, material and information relating to
any such claim, assertion, event or proceeding in the
possession or under the control of MCI or such Indemnified
Party, or any such director, officer, employee, agent or
affiliate, as BT or its counsel may reasonably request. BT
shall reimburse such Indemnified Party for all the reasonable
out-of-pocket expenses of such Indemnified Party in connection
therewith. If BT elects to direct the defense of any such
claim or proceeding, such Indemnified Party shall not settle,
pay or permit to be settled or paid any part of any claim or
demand arising therefrom, unless BT consents in writing to
such settlement or payment or unless BT, subject to the
penultimate sentence of this Section 5.11(c), withdraws from
the defense of such claim or proceeding. If BT shall fail to
undertake any such defense, such Indemnified Party shall have
the right to undertake the defense or settlement thereof, at
BT's expense. If such Indemnified Party assumes the defense
of any such claim or proceeding pursuant to this Section
5.11(c) and proposes to settle such
11
11
claim or proceeding prior to a final judgment thereon or to
forego appeal with respect thereto, then such Indemnified
Party shall give BT prompt written notice thereof and BT shall
have the right to participate in the settlement or assume or
reassume the defense of such claim or proceeding. BT further
agrees that it shall not, without the consent of such
Indemnified Party, settle any pending or threatened claim or
proceeding subject to indemnification by BT under this Section
5.11 unless such settlement includes a provision
unconditionally releasing such Indemnified Party from any Loss
subject to indemnification by BT under this Section 5.11.
(d) BT and MCI hereby agree that, subject to the terms and
conditions of this Agreement, BT will promptly indemnify each
Indemnified Party for any Loss or cause the payment under any
policy of insurance, including, without limitation, the
policies of directors and officers' liability insurance and
fiduciary liability insurance maintained by MCI which may
apply to any Loss, to be promptly made to each Indemnified
Party for any Loss. BT and MCI agree that BT shall be
subrogated to the rights of MCI against any insurer,
including, without limitation, any insurer issuing the
policies of directors and officers' liability insurance and
fiduciary liability insurance maintained by MCI which may
apply to any Loss, with respect to any payments made by BT to
any Indemnified Party for any Loss. MCI agrees to continue to
maintain in full force and effect all such policies of
insurance which it currently maintains. MCI and each
Indemnified Party shall take all actions as may be reasonably
requested by BT to seek coverage under any policy of
insurance.
SECTION 1.11. Amendment to Article V. Article V of the Merger Agreement
is hereby amended by adding the following as a new Section 5.19 at the end
thereof:
"5.19. No Burdensome Conditions. Each of the parties hereto
hereby agrees that (i) no MCI Burdensome Condition or Combined
Company Burdensome Condition has been imposed by any Governmental
Entity in connection with any Required Regulatory Approval that has
been obtained, declared or filed or that has occurred prior to the
date of Amendment Agreement No. 2 and (ii) no BT Burdensome
Condition or Combined Company Burdensome Condition has been imposed
by any Governmental Entity in connection with any Regulatory
Approval Required that has been obtained, declared or filed or that
has occurred prior to the date of Amendment Agreement No. 2."
SECTION 1.12. Amendments to Section 6.1.
(a) Section 6.1(a) of the Merger Agreement is hereby amended by deleting
in clause (ii) thereof the phrase "this Agreement and all transactions
contemplated hereby
12
12
(including the Merger and the share repurchase authorization referred to in
Section 5.16)" in its entirety and inserting in lieu thereof the phrase "the
Merger and the Share Authorization on the terms of this Agreement".
(b) Section 6.1(c) of the Merger Agreement is hereby amended by deleting
the text thereof in its entirety and inserting in lieu thereof the following:
"Consent Decree. The proposed Modified Final Judgment
substantially as filed by the United States Department of Justice
on July 7, 1997 in United States v. MCI Communications Corp. and
BT Forty-Eight Co., Civ. No. 94-1317 (TFH) (D.D.C.), shall have
been approved and entered by the court without the imposition of
any MCI Burdensome Condition, BT Burdensome Condition or Combined
Company Burdensome Condition."
(c) Section 6.1(d) of the Merger Agreement is hereby amended by inserting,
immediately after the phrase "the Closing Date", the phrase "and which does not
impose or seek to impose any MCI Burdensome Condition, BT Burdensome Condition
or Combined Company Burdensome Condition".
(d) Section 6.1 of the Merger Agreement is hereby further amended by
deleting in their entirety paragraphs (h) and (i) thereof.
(e) Section 6.1 of the Merger Agreement is hereby further amended by
redesignating paragraph (j) thereof as paragraph (h) thereof.
SECTION 1.13. Amendments to Section 6.2.
(a) Section 6.2(a) of the Merger Agreement is hereby amended by deleting
the text thereof in its entirety and inserting in lieu thereof the following:
"Each of the representations and warranties of MCI set forth in this
Agreement that is qualified as to materiality shall have been true
and correct on the date of Amendment Agreement No. 2 and shall, to
the best knowledge of MCI after due inquiry, be true and correct on
and as of the Closing Date as if made on and as of the Closing Date
(other than (i) representations and warranties which address matters
only as of a certain date, which shall be true and correct as of
such certain date, (ii) representations and warranties set forth in
Section 3.1(j)(i), which shall not be untrue or incorrect as of the
date of Amendment Agreement No. 2 as a result of any knowing and
intentional or willful omission from, or misstatement in, the MCI
Disclosure Schedule by MCI and (iii) the MCI Limited
Representations, which shall be true and correct as of the date of
Amendment Agreement No. 2), and each of the representations and
warranties of MCI that is not so qualified shall have been true and
correct in all material respects on the
13
13
date of Amendment Agreement No. 2 and shall, to the best knowledge
of MCI after due inquiry, be true and correct in all material
respects on and as of the Closing Date as if made on and as of the
Closing Date (other than (i) representations and warranties which
address matters only as of a certain date, which shall be true and
correct in all material respects as of such certain date, (ii)
representations and warranties set forth in Section 3.1(j)(i),
which shall not be untrue or incorrect in any material respect as
of the date of Amendment Agreement No. 2 as a result of any knowing
and intentional or willful omission from, or misstatement in, the
MCI Disclosure Schedule by MCI and (iii) the MCI Limited
Representations, which shall be true and correct in all material
respects as of the date of Amendment Agreement No. 2), and BT shall
have received a certificate of the chief executive officer and the
chief financial officer of MCI to such effect. For purposes of
this Section 6.2(a), 'MCI Limited Representations' means the
representations and warranties contained in Section 3.1(d)(ii),
Section 3.1(f) (other than the last sentence of Section 3.1(f)),
Section 3.1(g), Sections 3.1(h)(iv) and (v), the last sentence of
Section 3.1(n)(i), Sections 3.1(o)(iii) and (iv) (other than the
representations and warranties set forth in the first sentence of
Section 3.1(o)(iv) confirming that MCI has made available to BT
certain collective bargaining and other union contracts) and
Section 3.1(r).
(b) Section 6.2(f) of the Merger Agreement is hereby amended by deleting
it in its entirety.
SECTION 1.14. Amendments to Section 6.3.
(a) Section 6.3(a) of the Merger Agreement is hereby amended by deleting
the text thereof in its entirety and inserting in lieu thereof the following:
"Each of the representations and warranties of BT and Merger Sub set
forth in this Agreement that is qualified as to materiality shall
have been true and correct on the date of Amendment Agreement No. 2
and shall, to the best knowledge of BT after due inquiry, be true
and correct on and as of the Closing Date as if made on and as of
the Closing Date (other than (i) representations and warranties
which address matters only as of a certain date, which shall be true
and correct as of such certain date, (ii) representations and
warranties set forth in Section 3.2(j)(i), which shall not be untrue
or incorrect as of the date of Amendment Agreement No. 2 as a result
of any knowing and intentional or willful omission from, or
misstatement in, the BT Disclosure Schedule by BT and (iii) the BT
Limited Representations, which shall be true and correct as of the
date of Amendment Agreement No. 2), and each of the representations
and warranties of each of BT and Merger Sub that is not so qualified
shall have been true and correct in all material respects on the
date of Amendment Agreement No. 2 and shall, to the best knowledge
of BT after due inquiry, be true and correct in all material
respects on and as of the Closing
14
14
Date as if made on and as of the Closing Date (other than (i)
representations and warranties which address matters only as of a
certain date, which shall be true and correct in all material
respects as of such certain date, (ii) representations and
warranties set forth in Section 3.2(j)(i), which shall not be untrue
or incorrect in any material respect as of the date of Amendment
Agreement No. 2 as a result of any knowing and intentional or
willful omission from, or misstatement in, the BT Disclosure
Schedule by BT and (iii) the BT Limited Representations, which shall
be true and correct in all material respects as of the date of
Amendment Agreement No. 2), and MCI shall have received a
certificate of the chief executive officer and the chief financial
officer of BT to such effect. For purposes of this Section 6.3(a),
'BT Limited Representations' means the representations and
warranties contained in Section 3.2(d)(ii), Section 3.2(f) (other
than the last sentence of such Section 3.2(f)), Section 3.2(g),
Sections 3.2(h)(iv) and (v), the last sentence of Section 3.2(l)(i),
Sections 3.2(m)(i) and (ii) (other than the first sentence of
Section 3.2(m)(ii)) and Section 3.2(p)."
(b) Section 6.3(e) of the Merger Agreement is hereby amended by deleting
it in its entirety.
SECTION 1.15. Amendment to Section 7.1.
(a) Section 7.1(b) of the Merger Agreement is hereby amended by deleting
the text thereof in its entirety and inserting in lieu thereof the following:
"By either MCI or BT if the Effective Time shall not have occurred
on or before December 31, 1997 (the "Termination Date"); provided,
however, 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 has been the cause of,
or resulted in, the failure of the Effective Time to occur on or
before the Termination Date; and provided, further, that if on the
Termination Date any condition to the Closing set forth in Section
6.1, 6.2 or 6.3 shall not have been fulfilled, then the party whose
condition has not been fulfilled may extend the Termination Date to
April 30, 1998."
(b) Section 7.1(d) of the Merger Agreement is hereby amended by deleting
the phrase "or the other transactions contemplated hereby" in its entirety and
substituting in lieu thereof the phrase "and, in the case of BT, the Share
Authorization".
(c) Section 7.1(e) of the Merger Agreement is hereby amended by (i)
inserting immediately after the word "shall" in each of clauses (i) and (ii)
the phrase "prior to the MCI Stockholders Meeting or the BT Shareholder
Meeting, as the case may be,".
15
15
(d) Sections 7.1(g) is hereby amended by deleting the date "October 31,
1997" in its entirety and substituting in lieu thereof the date "December 31,
1997".
(e) Sections 7.1(h) is hereby amended by deleting the date "October 31,
1997" in its entirety and substituting in lieu thereof the date "December 31,
1997".
SECTION 1.16. Amendments to Section 7.2.
(a) Section 7.2(a) of the Merger Agreement is hereby amended (i) by
inserting, immediately after the phrase "Section 5.10,", the phrase "Sections
5.11(b), (c) and (d)," and (ii) adding the following at the end thereof:
"In the event, after the approval of the Merger and the Share
Authorization by the shareholders of BT at the BT Shareholder
Meeting, BT fails to effect the Merger notwithstanding that all the
conditions to the obligation of BT to effect the Merger set forth
in Sections 6.1 and 6.2 of this Agreement shall have been satisfied
or shall have been capable of being satisfied at the scheduled
Closing Date, BT agrees that if it is found liable for such breach
arising out of such failure, MCI shall be entitled to damages of no
less than $450 million.".
(b) Section 7.2 of the Merger Agreement is hereby further amended by
deleting Sections 7.2(b) through (d) in their entirety and replacing them with
the following:
"(b) BT and MCI agree that (i) if MCI shall terminate this Agreement
pursuant to Section 7.1(e) and, at the time of the occurrence
of the circumstance permitting termination pursuant to such
Section, there shall exist an Acquisition Proposal with respect
to BT or (ii) if BT shall terminate this Agreement pursuant to
Section 7.1(f), then BT shall pay to MCI an amount equal to the
sum of (w) $450,000,000 (the 'Alternative Transaction Fee') and
(x) all of MCI's Expenses up to an amount equal to $15,000,000
(the 'Expense Amount'). BT and MCI agree that, if MCI shall
terminate this Agreement pursuant to Section 7.1(e) in
circumstances in which the Alternative Transaction Fee is not
payable under this paragraph (b), then BT shall pay to MCI an
amount equal to the sum of (y) $150,000,000 (the 'Termination
Fee') and (z) all of MCI's Expenses up to an amount equal to
the Expense Amount.
(c) BT and MCI agree that (i) if BT shall terminate this Agreement
pursuant to Section 7.1(e) and, at the time of the occurrence
of the circumstances permitting termination pursuant to such
Section, there shall exist an Acquisition Proposal with respect
to MCI or (ii) if MCI shall terminate this Agreement pursuant
to Section 7.1(f), then MCI shall pay to BT an amount equal to
the sum of (w) the Alternative Transaction Fee and (x) all
16
16
of BT's Expenses up to an amount equal to the Expense Amount.
BT and MCI agree that, if BT shall terminate this Agreement
pursuant to Section 7.1(e) in circumstances in which the
Alternative Transaction Fee is not payable, then MCI shall
pay to BT an amount equal to the sum of (y) the Termination
Fee and (z) all of BT's Expenses up to an amount equal to the
Expense Amount.
(d) BT and MCI agree that if BT or MCI shall terminate this
Agreement pursuant to Section 7.1(d) due to the failure of
BT's shareholders to approve the Merger or the Share
Authorization on the terms of this Agreement, then BT shall
pay to MCI as liquidated damages an amount equal to $750
million. Notwithstanding anything in this Agreement
(including, without limitation, Section 8.11) to the
contrary, the payment of any amount pursuant to this Section
7.2(d) shall constitute liquidated damages in full and
complete satisfaction of, and shall be MCI's sole and
exclusive remedy for, any loss, liability, damage or claim
arising out of or in connection with any such termination of
this Agreement or the facts and circumstances resulting in
such termination or otherwise related thereto or otherwise
arising out of or in connection with this Agreement.
(e) The Alternative Transaction Fee required to be paid
pursuant to Section 7.2(b)(ii) or 7.2(c)(ii), as applicable,
shall be made prior to, and shall be a pre-condition to
effectiveness of termination of this Agreement pursuant to
such Sections. Any other payment required to be made
pursuant to Section 7.2(b), (c) or (d) shall be made to the
party entitled to receive such payment not later than two
Business Days after termination of this Agreement. Payment
of Expenses pursuant to Section 7.2(b) or (c) shall be made
not later than two Business Days after delivery to the other
party of notice of demand for payment and an itemization
setting forth in reasonable detail all Expenses of the party
entitled to receive payment (which itemization may be
supplemented and updated from time to time by such party
until the 60th day after such party delivers such notice of
demand for payment). All payments under this Section 7.2
shall be made by wire transfer of immediately available funds
to an account designated by the party entitled to receive
payment."
17
17
SECTION 1.17. Amendments to Section 8.3.
(a) Section 8.3 of the Merger Agreement is hereby amended by adding the
following as the penultimate sentence thereof:
"The phrase 'the date of Amendment Agreement No. 2' shall be deemed
to refer to August 21, 1997."
(b) Section 8.3 of the Merger Agreement is hereby amended by deleting the
phrase "as represented by MCI under Section 3.1(b)" in its entirety and
inserting in lieu thereof the number "646,008,346", and by inserting, preceding
the phrase "Section 4.1(c)", the word "to".
SECTION 1.18. Amendment to Section 8.12. Section 8.12 of the Merger
Agreement is hereby amended by inserting, immediately preceding clause (a)
thereof, the following:
"(aaa) 'Amendment Agreement' means the Amendment Agreement, dated
as of February 14, 1997, among BT, MCI and Merger Sub.
(aa) 'Amendment Agreement No. 2' means Amendment Agreement No. 2,
dated as of August 21, 1997, among BT, MCI and Merger Sub."
SECTION 1.19. Amendment of Exhibit 5.2(a). Exhibit 5.2(a) to the Merger
Agreement is hereby amended by adding the following paragraph at the end
thereof:
"In addition to the preceding persons, BT, MCI and Merger Sub agree
that a representative of Telefonica de Espana, S.A. ('Telefonica')
may be appointed to the Board of Directors of BT pursuant to the
agreements contemplated in the Framework Agreement, dated April 18,
1997, among Telefonica, T.I. Telefonica Internacional de Espana,
S.A., BT and MCI. BT, MCI and Merger Sub agree that if a
representative of Telefonica is appointed to the Board of Directors
of BT, then BT will be entitled to designate an additional
independent non-executive director to the Board of Directors of
BT."
ARTICLE II
ADDITIONAL AGREEMENTS
SECTION 2.01. Preparation of Amended and Restated Merger Agreement. The
parties hereby agree to (a) cause their counsel to prepare an amended and
restated Merger Agreement as promptly as practicable after the date hereof,
which amendment and restatement shall incorporate the amendments to the Merger
Agreement contained in this Amendment Agreement No. 2, and
18
18
(b) execute and deliver such amended and restated Merger Agreement as promptly
as practicable after its preparation.
SECTION 2.02. Waiver of Covenants of BT. MCI hereby acknowledges and
agrees that:
(a) any issuance of shares by BT pursuant to the Share Exchange Agreement
contemplated in the Framework Agreement, dated April 18, 1997, among Telefonica
de Espana, S.A. ("Telefonica"), T.I. Telefonica Internacional de Espana, S.A.,
BT and MCI (the "Framework Agreement") will not breach the covenant of BT set
forth in Section 4.2(c) of the Merger Agreement or count against the limits
specified in such section;
(b) any investment by BT or any of its affiliates in (i) shares of
Portugal Telecom, S.A. ("PT") as contemplated by the Strategic Alignment
Agreement, dated April 14, 1997, among PT, BT and MCI (the "Strategic Alignment
Agreement") or (ii) shares of Telefonica pursuant to the Share Exchange
Agreement contemplated in the Framework Agreement, will not breach the covenant
of BT set forth in Section 4.2(e) of the Merger Agreement or count against the
limits specified in such section; and
(c) any disposition by BT of its interests in Airtel Moviles, S.A. or BT
Telecomunicaciones, S.A. will not breach the covenant of BT set forth in
Section 4.2(f) of the Merger Agreement.
SECTION 2.03. Waiver of Covenants of MCI. Each of BT and Merger Sub
hereby acknowledge and agree that:
(a) any investment by MCI or any of its affiliates in (i) shares of PT as
contemplated by the Strategic Alignment Agreement, (ii) the Pan Am joint
venture pursuant to the Pan Am Joint Venture Agreement contemplated in the
Framework Agreement, or (iii) systems integration joint ventures pursuant to
the Systems Integration Agreement or the Telecommunications Systems Integration
Agreement contemplated in the Framework Agreement, will not breach the covenant
of MCI set forth in Section 4.1(e) of the Merger Agreement or count against the
limits specified in such section; and
(b) any disposition by MCI of any of its interests in Avantel, S.A. as
contemplated in the Framework Agreement will not breach the covenant of MCI set
forth in Section 4.1(f) of the Merger Agreement.
ARTICLE III
GENERAL PROVISIONS
SECTION 3.01. Authority; Effect on Merger Agreement.
19
19
(a) Each party hereto has all requisite corporate power and authority to
enter into this Amendment Agreement No. 2 and, subject to (i) the adoption of
the Merger Agreement (as amended by this Amendment Agreement No. 2) at the MCI
Stockholders Meeting by the requisite vote of the holders of MCI Common Stock
and of MCI Class A Common Stock, voting together as a single class, and (ii)
the approval by the shareholders of BT as described in Section 3.2(k), to
consummate the transactions contemplated by the Merger Agreement (as amended by
this Amendment Agreement No. 2). The execution and delivery of this Amendment
Agreement No. 2 and the consummation of the transactions contemplated by the
Merger Agreement (as amended by this Amendment Agreement No. 2) have been duly
authorized by all necessary corporate actions on the part of each of the
parties, subject in the case of the consummation of the Merger to the adoption
of the Merger Agreement (as amended by this Amendment Agreement No. 2) at the
MCI Stockholders Meeting by the stockholders of MCI and subject to the approval
by the shareholders of BT of the Merger and the Merger Agreement (as amended by
this Amendment Agreement No. 2). This Amendment Agreement No. 2 has been duly
executed and delivered by each party and constitutes a valid and binding
agreement of each 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 equitable 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) Except as amended hereby, the provisions of the Merger Agreement are
and shall remain in full force and effect.
SECTION 3.02. Counterparts. This Amendment Agreement No. 2 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 parties, it
being understood that all parties need not sign the same counterpart.
SECTION 3.03. Entire Agreement; No Third Party Beneficiaries.
(a) This Amendment Agreement No. 2 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.
(b) This Amendment Agreement No. 2 shall be binding upon and inure solely
to the benefit of each party hereto, and nothing in this Amendment Agreement
No. 2, 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 Amendment Agreement No. 2.
SECTION 3.04. Governing Law. This Amendment Agreement No. 2 shall be
governed by and construed in accordance with the laws of the State of New York.
20
20
SECTION 3.05. Severability. If any term or other provision of this
Amendment Agreement No. 2 is invalid, illegal or incapable of being enforced by
any law or public policy, all other terms and provisions of this Amendment
Agreement No. 2 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 Amendment Agreement No. 2 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.
SECTION 3.06. Restrictive Trade Practices. Notwithstanding any other
provisions of this Amendment Agreement No. 2, each party declares that it shall
not give effect, and shall procure that none of its Subsidiaries shall give
effect, to any restriction or restrictions contained in this Amendment
Agreement No. 2 which cause this Amendment Agreement No. 2 to be registrable
under the Restrictive Trade Practices Act 1976 until one day after particulars
of this Amendment Agreement No. 2 shall have been furnished to the Director
General of Fair Trading. For the purposes of this Section 3.06, "Amendment
Agreement No. 2" shall include any other agreement which, together with this
Amendment Agreement No. 2, may form part of an agreement for the purposes of
the Restrictive Trade Practices ▇▇▇ ▇▇▇▇.
SECTION 3.07. Submission to Jurisdiction; Waivers. Each of BT and MCI
irrevocably agrees that any legal action or proceeding with respect to this
Amendment Agreement No. 2 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 Supreme Court of the State of New York in
New York County or in the United States District Court for the Southern
District of New York, and each of BT and MCI hereby irrevocably submits with
regard to any such action or proceeding for itself and in respect to its
property, generally and unconditionally, to the nonexclusive jurisdiction of
the aforesaid courts. Each of BT and MCI hereby irrevocably waives, and agrees
not to assert, by way of motion, as a defense, counterclaim or otherwise, in
any action or proceeding with respect to this Amendment Agreement ▇▇. ▇, (▇)
▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, (▇) 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 3.07, (c) 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 (d) to the fullest extent permitted by
applicable law, that (i) the suit, action or proceeding in any such court is
brought in an inconvenient forum, (ii) the venue of such suit, action or
proceeding is improper and (iii) this Amendment Agreement No. 2, or the subject
matter hereof, may not be enforced in or by such courts.
21
21
SECTION 3.08. Waiver of Jury Trial. Each of the parties hereto
irrevocably and unconditionally waives trial by jury in any legal action or
proceeding relating to this Amendment Agreement No. 2 or the transactions
contemplated hereby and for any counterclaim therein.
IN WITNESS WHEREOF, BT, MCI and Merger Sub have caused this Amendment
Agreement No. 2 to be signed by their respective officers thereunto duly
authorized, all as of the date first above written.
BRITISH TELECOMMUNICATIONS plc
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Secretary and Chief Legal Adviser
MCI COMMUNICATIONS CORPORATION
ATTEST BY: By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
_________________________ Title: Chief Executive Officer
TADWORTH CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President