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EXHIBIT 2.1
OFFER AGREEMENT
between
Esprit Telecom Group plc
and
Global TeleSystems Group Inc.
Strictly Private & Confidential
[XXXXXXX & XXXXXXX LETTERHEAD]
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THIS AGREEMENT is made 8 December 1998
BETWEEN
(1) GLOBAL TELESYSTEMS GROUP INC. ("GTS") of 0000 Xxxxxxxx Xxxxx, Xxxxx Xxxxx,
00xx Xxxxx, XxXxxx XX 00000, XXX; and
(2) ESPRIT TELECOM GROUP PLC ("Esprit") of Xxxxxxx Xxxxx, Xxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxxx XX0 0XX.
IT IS AGREED AS FOLLOWS:
1. THE OFFER
Reference is made to the press announcement in the form of the draft attached
hereto (the "Press Announcement") setting out the terms and conditions upon
which Bear Xxxxxxx will, on behalf of GTS, make an offer (the "Offer") to
acquire the whole of the issued and to be issued share capital of Esprit Telecom
Group plc excluding any such share capital owned by GTS or any subsidiary of GTS
on the date that the Offer is made.
2. DEFINITIONS
In this Agreement, unless the context otherwise requires:
(A) "Offer":
(1) means any offer or offers that may be made by or on behalf
of GTS to acquire:
(a) the whole of the share capital of Esprit in issue at
the date on which the Offer is made (including any
securities in Esprit attributable to or derived from
such share capital, but excluding any such share
capital owned on such date by GTS or any subsidiary of
GTS); and
(b) any share capital of Esprit allotted while the Offer
remains open for acceptance, or before such earlier
date as GTS may, subject to the City Code, determine,
whether pursuant to the exercise of conversion or
subscription rights or otherwise; and
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(2) extends to any new, increased, extended or revised
offer or offers by or on behalf of GTS, provided that
in any such case the terms of such offer or offers are,
in the opinion of Bear Xxxxxxx, with the agreement of
Esprit's financial advisers appointed for the purposes
of Rule 3 of the City Code provided such agreement is
not unreasonably withheld or delayed (but without
hereby creating any duty of care owed by Bear Xxxxxxx,
except to GTS or by Esprit's financial advisers, except
to Esprit) no less favourable to shareholders of Esprit
than the terms set out in the Press Announcement or the
Offer Document;
(B) save as referred to above words defined in the Press
Announcement have the same meaning herein.
3. RELEASE OF PRESS ANNOUNCEMENT
GTS and Esprit each irrevocably consent to the issue of the Press Announcement
incorporating references to them and to this Agreement subject to any amendments
which may be agreed between them or their financial advisers. They also each
consent to the issue of the Offer Document, incorporating references to them,
and to this Agreement, substantially similar to those references contained in
the Press Announcement. Each understands that this Agreement will be made
available for public inspection.
4. COVENANTS
4.1 Esprit hereby agrees with GTS that:
(A) at all times after the date hereof and until the Offer shall have
lapsed or been withdrawn, Esprit shall refrain from:
(1) soliciting, procuring or initiating; or
(2) (subject to the fiduciary duties of the directors of Esprit)
engaging in,
directly or indirectly any discussions or negotiations with any third
party, involving any other offer by any third party for all or any
part of the issued share capital of Esprit or involving the
acquisition outside the ordinary course of business (as carried on to
the date hereof) of, or any business combination involving, Esprit or
any of its subsidiaries or any shares of Esprit or any material part
of the shares or assets of Esprit or any of its subsidiaries or in
each case any interest therein (each an "Esprit Transaction");
(B) at all times from the date hereof until the Offer shall have
lapsed or been withdrawn, Esprit shall, so far as is consistent
with the fiduciary duties of its directors, refrain from:
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(1) (save as required by Rule 20.2 of the City Code in which
case only that information strictly required to be provided
shall be disclosed and only on the basis of an undertaking
as to confidentiality substantially similar to that given by
GTS) providing any information in relation to, or
facilitating or cooperating with in any way, any Esprit
Transaction; or
(2) communicating with any person in relation to or discussing
with any person the terms of the Offer or any matter
relating thereto without the prior consent of GTS provided
that this shall not apply to any communications or
discussions with Esprit's professional advisers who
appreciate the need for and requirements as to
confidentiality in relation to the Offer or to
communications or discussions limited to information set out
in the Press Announcement or any other document or
announcement published with the consent of GTS in connection
with the Offer or otherwise in the public domain;
(C) Esprit confirms that it is not in discussions with any third
party in relation to any Esprit Transaction;
(D) subject to the satisfaction of the pre-conditions to the posting
of the Offer Document and subject to the fiduciary duties of the
directors of Esprit, so far as Esprit is reasonably able to do
so, it will procure that such information (other than information
of a commercially sensitive nature the disclosure of which may
prejudice Esprit) as GTS or its advisers reasonably request in
relation to Esprit and its subsidiaries and their respective
businesses will be supplied to GTS as soon as practicable
following any such request and Esprit will procure that to the
extent it is able to procure the same, Esprit and its
subsidiaries will provide GTS and its advisers with access to
such of the books and financial and other records of Esprit and
its subsidiaries as GTS may reasonably require in order to
satisfy itself as to the business, finances and affairs of Esprit
and its subsidiaries;
(E) from the date hereof and until the date on which the offer lapses
or is withdrawn, Esprit will not take any action which would
require shareholder approval under Rule 21 of the City Code
without the prior consent of GTS such consent not to be
unreasonably withheld or delayed. For the purposes of this
paragraph 4.1(E) GTS hereby consents to the issue of shares by
Esprit upon the exercise of options under the Esprit Share Option
Schemes; the grant of options, in the normal course of business,
pursuant to such Esprit Share Option Schemes; the issue of shares
by Esprit in connection with pre-existing contractual
obligations and in connection with any proposed acquisition by
Esprit of which GTS is currently aware;
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(F) if GTS believes on reasonable grounds that circumstances exist
which would lead to any of the conditions of the Offer not being
satisfied, Esprit shall use all reasonable endeavours to ensure
that (at all reasonable times following the release of the Press
Announcement and before the Offer becomes unconditional in all
respects or lapses) GTS and its advisers are provided with such
information regarding the Wider Esprit Group as GTS reasonably
requires to enable GTS to establish whether or not the relevant
condition is satisfied provided that any information so provided
shall be provided without liability on the part of any director
or officer of Esprit to GTS or Esprit or otherwise;
(G) as soon as practicable after the date hereof, Esprit shall
deliver to GTS a letter identifying all persons it believes are
"affiliates" of Esprit for the purposes of the US Securities Act
of 1933, as amended or for the purposes of qualifying the Offer
and the transactions contemplated thereby for pooling of
interests accounting treatment under Opinion 16 of the Accounting
Principles Board and applicable SEC rules and regulations. Esprit
shall use its best efforts to cause each such person, save for
those "affiliates" of Esprit that have entered into certain
Registration Rights Agreements concurrently herewith, to deliver
to GTS by the close of the Offer a written undertaking in
customary form.
4.2 GTS agrees with Esprit as follows:
(A) subject to their fiduciary duties under applicable law, the board of
directors of GTS will recommend to the stockholders of GTS that they
vote in favour of the issuance of GTS shares necessary to complete the
Offer and the acquisition by GTS of Esprit at any meeting of
stockholders convened for such purpose, or any adjournment thereof;
(B) the level of directors' and officers' liability cover currently
provided to the directors and officers of Esprit will be maintained,
provided that GTS may substitute therefor policies of at least the
same coverage and amounts containing terms and conditions which afford
substantially the same coverage to the insured as the insurance
currently maintained by Esprit for a period of six years after the
Offer becomes wholly unconditional, and such level of cover for the
directors and officers of Esprit shall be maintained (in the form of
liability insurance or otherwise) notwithstanding any of the directors
or officers of Esprit ceasing to be a director or officer;
(C) GTS shall use its best efforts to cause all persons who may be
"affiliates" of GTS for the purposes of qualifying the Offer and the
transactions contemplated thereby for pooling of interests accounting
treatment under Opinion 16 of the Accounting Principles Board and
applicable SEC rules and regulations to comply with applicable holding
periods;
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(D) that it will not amend the memorandum or articles of association of
Esprit in a manner that would be adverse to the directors and officers
of Esprit. In the event that the employment of such directors or
officers is transferred by GTS to any member of the Wider GTS Group,
or substantially all of Esprit's assets are transferred, GTS shall
ensure that any director or officer of Esprit (current or former)
affected by such action is afforded no lower level of indemnity by GTS
in respect of his or her office than he or she currently enjoys;
(E) GTS undertakes that it will not, directly or indirectly, commence or
solicit indications of interest or make any proposals with respect to
(in each case, written or otherwise), any exchange or similar offer
or, except as contemplated by (F) below, propose any amendments with
respect to the Esprit Telecom Bonds or the related indentures until
pre-condition (A) to the Offer set out in paragraph 1 to Appendix 1 of
the Press Announcement (the "Consent Pre-Condition") has been waived
or satisfied;
(F) GTS undertakes to solicit, on behalf of Esprit and in good faith,
amendments to the indentures governing the Esprit Telecom Bonds
necessary to satisfy the Consent Pre-Condition (and no other
amendments) on terms and conditions and pursuant to documents
reasonably satisfactory to Esprit and its advisers and after
consulting with Esprit as to the terms and conditions of such
solicitation (after having provided Esprit and its advisers with a
reasonable opportunity to review and discuss the same); provided that
in no event shall Esprit be obliged to pay any amounts in respect
thereof prior to the time that the Offer is declared wholly
unconditional (and then only if the same would not violate any
applicable law); and
(G) that GTS will use all reasonable efforts to file a registration
statement with the SEC, EASDAQ and any other relevant authority in
connection with the GTS Shares to be issued pursuant to the Offer and
have such registration statement declared effective or otherwise
approved as promptly as is reasonably practicable and that the Offer
Document will be posted promptly thereafter.
4.3 Esprit and GTS undertake with each other as follows:
(A) each of Esprit and GTS shall use all reasonable efforts to take, or
cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions
contemplated by the Offer and the satisfaction of the conditions set
out in Appendix 1 to the Press Announcement, including using its
reasonable efforts to obtain all necessary or advisable waivers,
consents or approvals of third parties required in order to preserve
material contractual relationships of GTS,
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Esprit and their respective subsidiaries, all necessary or appropriate
waivers, consents and approvals from the SEC and the Panel to effect
all necessary registrations, filings and submissions and to lift any
injunction or other legal bar to the Offer (and, in such case, to
proceed with the Offer as expeditiously as possible);
(B) without limitation to the foregoing, each of GTS and Esprit
undertakes:
(1) to make members of management available to the extent reasonably
necessary to facilitate the successful completion of the Offer
and (to the extent agreed) the refinancing or amendment of the
existing financing facilities of Esprit, including participation
in meetings with investors and shareholders;
(2) to provide all reasonable assistance as may be required to
satisfy the pre-conditions to the posting of the Offer Document
and the conditions of the Offer;
(C) GTS and Esprit will each provide such information and do such acts as
may be reasonably necessary to prepare and expedite the posting of the
Offer Document and, in particular, but without prejudice to the
generality of the foregoing will each provide all necessary
information regarding their respective companies and their
subsidiaries and the interests of their respective directors in the
share capital of each company and options over such share capital
which is required to be contained therein in order to comply with the
requirements of the City Code, US Securities Law or any other
applicable law or regulation;
(D) all costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party
incurring such expenses, except that those expenses incurred in
connection with printing and filing the Offering Circular/Proxy
Statement/Prospectus, and all expenses incurred in connection with
satisfying the Consent Pre-Condition shall be borne by GTS;
(E) to comply with GTS's obligations to participants in the Esprit Share
Option Schemes under Rule 15 of the City Code, GTS will offer
participants the opportunity to roll over their options to acquire
Esprit Shares into options to acquire GTS shares substantially on (and
in accordance with) the terms of the existing Esprit Share Option
Schemes ("the Rollover Offer") and on the same exchange ratio as the
Offer. Subject to the taxation effects of the Rollover Offer for
participants in the Esprit Share Option Schemes being no less
favourable than the taxation effects of exercising options and
accepting the Offer, Esprit agrees that no amendments will be made to
the Esprit Share Option Schemes and no consents given which would have
the effect of allowing participants to
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exercise options in circumstances where they are currently not
entitled to do so. Where Esprit believes that such taxation effects
would be materially adverse to participants, it will consult with GTS
with a view to agreeing (at GTS's option) either that participants
will be able to exercise options in circumstances where they are
currently not able to do so in order that they can accept the Offer or
GTS providing an appropriate indemnity against such adverse taxation
effects;
(F) each of GTS and Esprit agree to use their reasonable best efforts to
avoid taking any action that would prevent the transactions
contemplated by the Offer receiving "pooling of interests" treatment
for financial accounting purposes (including, in the case of GTS,
approving any transfer or disposition of shares by any shareholders of
Esprit unless Esprit's independent auditors have advised Esprit that
such transfer or disposition would not prevent the transactions
contemplated by the offer from receiving "pooling of interests"
treatment for financial accounting purposes). Each of GTS and Esprit
further agrees that in the event they become aware of any event or
circumstance that would reasonably be expected to prevent the
transactions contemplated by the Offer receiving "pooling of
interests" treatment, they shall each use their reasonable best
efforts to remedy such event or circumstance so as to permit such
"pooling of interests" treatment.
5. LAW AND JURISDICTION
5.1 This Agreement is governed by, and construed in accordance with,
English law.
5.2 In relation to any legal action or proceedings to enforce this
Agreement or arising out of or in connection with this Agreement
("Proceedings") the parties irrevocably submit to the jurisdiction of
the English courts and waive any objection to Proceedings in such
courts on the grounds of venue or on the grounds that the Proceedings
have been brought in an inconvenient forum.
6. CONDITIONS
6.1 Notwithstanding any other provision hereof, this Agreement and GTS's
obligation to make the Offer, are conditional upon:
(A) the release of the Press Announcement at or before 9.00 a.m. on
08 December 1998; and
(B) irrevocable undertakings, in a form acceptable to GTS, being
received in respect of not less than 50.1% of the issued ordinary
shares of Esprit prior to the release of the Press Announcement.
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6.2 If these conditions shall not have been satisfied by such time and
date this Agreement shall automatically lapse and be of no further
force or effect and no party hereto shall have any claim against the
other save in respect of any antecedent breach of its terms.
7. MISCELLANEOUS
7.1 No failure or delay by either party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise thereof preclude any other or further
exercise of any right, power or privilege hereunder. The parties agree
that any breach of this Agreement is likely to cause substantial harm
to the other and that money damages might not be a sufficient remedy
for any breach of this Agreement and that the other will be entitled
to specific performance and injunctive relief as remedies for any such
breach. Such remedies shall not be deemed to be the exclusive remedies
for a breach of this Agreement but shall be in addition to all other
remedies available at law or equity.
7.2 The covenants of Esprit set forth herein shall supersede any
obligation that Esprit may have to GTS under the second paragraph on
page 4 of the Confidentiality Agreement dated October 15, 1998 between
GTS and Esprit (the "Confidentiality Agreement") relating to a
Takeover Proposal (as such term is defined in the Confidentiality
Agreement).
8. LAPSING
This Agreement shall automatically lapse and be of no further force or effect
and no party hereto shall have any claim against the other save in respect of
any antecedent breach of its terms, in the event that:
(A) precondition (A) to the Offer set out in Paragraph 1 of Appendix
1 of the Press Announcement (relating to the Esprit Telecom
Bonds) shall not have been satisfied or waived on or before 29
January 1999;
(B) the Offer Document is not despatched on or before 15 April 1999;
(C) GTS announces that any of the pre-conditions to the Offer set out
in paragraph 1 of Appendix 1 to the Press Announcement has not
been satisfied and that it has not been and will not be waived;
or
(D) the Offer is not declared wholly unconditional on or before the
60th day after the Offer Document is despatched or, if later, the
date to which the Initial Offer Period is extended pursuant to
paragraph 7(G) of the Shareholders' Irrevocable.
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9. EXECUTION
This Agreement may be executed in more than one part.
IN WITNESS whereof this Agreement has been signed on behalf of the parties the
day and year first above written.
XXXXXX XXXXXX
for
Global TeleSystems Group, Inc.
XXX XXXXXXX
for
Esprit Telecom Group plc
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