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.
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(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
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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
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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
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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
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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,
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however, that BT shall not be required to take any position that would be
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inconsistent with, or adversely affect, the interests of BT's other businesses.
5. Modifications to Concert Joint Venture Agreement and Investment
---------------------------------------------------------------
Agreement.
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(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,
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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
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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
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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
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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.
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(a) Amendments. This Agreement may not be amended except by an
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instrument in writing signed by each of the parties hereto.
(b) Notices. All notices and other communications hereunder shall be
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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
00 Xxxxxxx Xxxxxx
Attention: Xxxxx X. Xxxxx
Secretary and Chief Legal Advisor
Facsimile No.: 000-00-000-0000
with copies to
Shearman & Sterling
000 Xxxxxxxxxxx
Xxxxxx XX0X 0XX
Xxxxxxx
Attention: W. Xxxxxxx Xxxxxxxx
Facsimile No.: 011-44-171-920-9020
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b. if to MCI, to
MCI Communications Corporation
0000 Xxxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxx Xxxxxxxx, Esq.
Executive Vice President
and General Counsel
Facsimile No.: (000) 000-0000
with copies to
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx III, Esq.
Facsimile No.: (000) 000-0000
c. if to WorldCom, to
WorldCom, Inc.
00000 Xxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xx. Xxxxx, XX 00000
Attention: P. Xxxxx Xxxxxxxxx, Esq.
General Counsel
Corporate Development
Facsimile No.: (000) 000-0000
with copies to
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxxx, Esq.
Xxxxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
(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
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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
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(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
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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
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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
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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.
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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/ Xxxxx Xxxxx
_______________________________
Name: Xxxxx Xxxxx
Title: Secretary and Chief Legal Advisor
MCI COMMUNICATIONS CORPORATION
by /s/ Xxxx X. Xxxxxxx, Xx.
_______________________________
Name: Xxxx X. Xxxxxxx, Xx.
Title: Chairman
WORLDCOM, INC.
by /s/ Xxxxxxx X. Xxxxxx
_______________________________
Name: Xxxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
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SCHEDULE I
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Number of Shares
----------------
MCI Class A Common Stock 135,998,932
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Exhibit A
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- 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.
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EXHIBIT B
Concept:
BT and WorldCom will undertake in good faith to negotiate a transition
agreement. The intent is for there to be an agreement that would go into effect
upon the consummation of the purchase by BT of MCI's joint venture interest in
Concert pursuant to BT's call option.
Purpose:
. To provide for a professional exit from the existing Concert
arrangements while satisfying the requirements of BT's and MCI's
customers before and during the exit.
. To agree the requirements (financial, operational, technical) of
making Concert more self standing and better able to support customer
and distributor requirements
. To give BT and customers comfort that during the pendency of the
merger and the post merger period underlying components and services
necessary to provide Concert service which are sourced from MCI are
available on commercially reasonably terms despite the change in
circumstances.
Structure:
A three-step process to achieve the purpose is contemplated under which the
parties would in good faith review and consider:
. What assets currently used by MCI in servicing certain obligations to
Concert should be sold to Concert.
. What assets which are used to support MCI's non-Concert operations
might be either duplicated or equitably shared.
. What certain MCI/BT relationships might also be modified, e.g. Card.
. How MCI's role as a master distributor should be amended so as to
allow Concert to be in direct privity with MCI's subdistributors.
. How service contracts with MCI which do not contain service levels
should be recast so that
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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:
. Negotiations to be completed in 180 days post execution of the
Agreement
. The agreements would not take effect until the consummation of the
purchase by BT of MCI's joint venture interest in Concert pursuant to
BT's call option.
. If the Agreement is not executed in 180 days despite the parties' good
faith efforts, (i) the nonexclusive distributorship referred to in
Exhibit A shall have a term of two (rather than five) years and (ii)
the transition arrangements in the Services Agreement will be extended
from 12 to 18 months for Concert.
