EXHIBIT 2B-1
BCE INC.
Bureau 3700
1000, rue de la Gauchetiere Ouest
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇
February 15, 2000
TELEGLOBE INC.
TO: THE PERSONS LISTED ON SCHEDULE A HERETO
Dear Sirs/Mesdames:
This letter sets out the terms and conditions upon which BCE Inc. ("BCE" or
the "Offeror") has agreed to make a public offer as described below to acquire
all the common shares in the capital of Teleglobe Inc. (the "Company") not
already owned by it or its affiliates (the "Common Shares").
This letter also sets out the terms and conditions of the agreements of
each member of the ▇▇▇▇▇▇ Group (as such term is defined in Schedule A)
(collectively, the "Sellers") (i) to support the Offer as described below, (ii)
to exercise all options (collectively, "Options") which such Seller may have to
acquire Common Shares and which are listed on Schedule A beside such Seller's
name and that are vested and in-the-money at the Expiry Time (as defined herein)
("In-the-Money Options"), (iii) to deposit under the Offer or cause to be
deposited under the Offer all the Common Shares listed on Schedule A beside such
Seller's name and all Common Shares issuable on the exercise of all In-the-Money
Options, and (iv) to surrender all Options that are not In-the-Money Options in
exchange for options to purchase BCE Shares which vest on the same terms as the
surrendered options and with the number of BCE Shares into which such options
are exercisable being based on the Share Exchange Ratio. The Common Shares
listed on Schedule A and the Common Shares issuable pursuant to In-the-Money
Options listed on Schedule A are hereinafter collectively referred to as the
"Subject Shares". The ▇▇▇▇▇▇ Group acknowledges that the Offeror has entered
into a similar agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and related parties (the "▇▇▇▇▇▇
Group"), a copy of which has been provided to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ on behalf of the
▇▇▇▇▇▇ Group.
BCE has also entered into a support agreement (the "Support Agreement")
with the Company which, among other things, sets forth the terms and conditions
upon which the Company has agreed to support the Offer. A copy of the Support
Agreement has been provided to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ on behalf of the ▇▇▇▇▇▇ Group.
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1. Offer for Securities of the Company
(a) The Offeror agrees to make, subject to the terms and conditions hereof,
a public offer for all of the outstanding Common Shares (the "Offer"). The Offer
will be made to the holders of all the issued and outstanding Common Shares on
the basis of (the "Consideration"), for each Common Share, that portion (the
"Share Exchange Ratio") of a common share in the capital of BCE (a "BCE Share")
determined as follows:
(i) in the event the closing of the Nortel Transaction (as
hereinafter defined) occurs prior to the First Take-Up Date (as
hereinafter defined), the ratio (expressed to three decimal
places with amounts less than 0.0005 being rounded down and
amounts equal to or greater than 0.0005 being rounded up, in each
case to the nearest one-thousandth of a BCE Share) obtained by
dividing (A) Cdn.$48.41 by (B) the weighted average trading price
of the BCE Shares on The Toronto Stock Exchange (the "TSE") for
the ten trading days ending on the fifth business day immediately
preceding the day on which BCE first takes up Common Shares under
the Offer (the "First Take-Up Date"), such weighted average
trading price being referred to as the "BCE Weighted Average
Trading Price"; and
(ii) in the event the closing of the Nortel Transaction (as
hereinafter defined) has not been completed or is terminated
prior to the First Take-Up Date, 0.30 of a BCE Share per Common
Share.
(b) The Share Exchange Ratio specified in paragraph (a)(i) above shall be
subject to a minimum of 0.85 of a BCE Share per Common Share and a maximum of
0.97 of a BCE Share per Common Share. The Offer shall be subject only to the
conditions set forth on Schedule B hereto.
(c) The Offer will be made in accordance with applicable securities
legislation in Canada, the United States and other jurisdictions where
registered shareholders ("Shareholders") of the Company are located and shall be
open for acceptance until a time that is not earlier than 12:01 a.m. (local
time) on the 21st business day after the day (the "Mailing Date") that the Offer
is mailed to Shareholders or such later time and date as may be required by
applicable law, subject to the right of the Offeror in its sole discretion to
extend the period during which Common Shares may be deposited under the Offer
(the time at which the Offer, as it may be extended, expires being referred to
as the "Expiry Time"). Subject to subsection 7(b), the Offeror shall take up and
pay for the Subject Shares within 120 days of the Mailing Date.
(d) BCE will announce (the "Public Announcement") its intention to acquire
the Common Shares promptly following approval of this agreement by its Board of
Directors and approval of the Support Agreement by its Board of Directors and
the Company's Board of Directors, and will mail the Offer and accompanying
take-over bid circular as soon as reasonably practicable following the
distribution
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to BCE's shareholders of most of its interest in Nortel Networks Corporation, as
announced on January 26, 2000 (the "Nortel Transaction") but, in any event, by
5:00 p.m. (Montreal time) on July 31, 2000, (such time on such date being
referred to herein as the "Latest Mailing Time"); provided, however, that if the
mailing of the Offer is delayed by (x) an injunction or order made by a court or
regulatory authority of competent jurisdiction or (y) the Offeror not having
obtained any regulatory waiver, consent or approval which is necessary to permit
the Offeror to mail the Offer or to take-up and pay for any Common Shares
tendered under the Offer, then, provided that such injunction or order is being
contested or appealed or such regulatory waiver, consent or approval is being
actively sought, as applicable, the Latest Mailing Time shall be extended for a
period ending on the earlier of November 30, 2000 and the fifth business day
following the date on which such injunction or order ceases to be in effect or
such waiver, consent or approval is obtained, as applicable. For greater
certainty, subject to subsection 3(a), the mailing of the Offer is not
conditional upon completion of the Nortel Transaction.
(e) Each Seller acknowledges and agrees that the Offeror may, in its sole
discretion, modify or waive any term or condition of the Offer; provided,
however, that the Offeror will not, without the prior consent of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
on behalf of the ▇▇▇▇▇▇ Group, decrease the consideration per Common Share,
change the form of consideration payable under the Offer (other than to add
additional consideration), decrease the number of Common Shares sought under the
Offer, impose additional conditions to the Offer, or otherwise vary the Offer in
a manner which is adverse to the Shareholders, it being understood that any
modification or variation which adversely affects the tax consequences which
would apply to a Seller in respect of the Offer shall be deemed to adversely
affect Shareholders.
2. Agreement to Tender
This agreement when signed and delivered by each Seller to the Offeror will
constitute the agreement of each Seller, among other things, (i) to irrevocably
accept the Offer, (ii) validly to tender and cause to be tendered and to cause
all acts and things to be done to tender the Subject Shares (including
exercising all In-the-Money Options) beneficially owned by such Seller under the
Offer on the terms and conditions set out herein; and (iii) to surrender all
Options that are not In-the-Money Options in exchange for options to purchase
BCE Shares based on the Share Exchange Ratio and to enter into such agreements
as the Offeror may reasonably request to evidence same.
Each Seller agrees that if the Offeror makes the Offer on or prior to the
Termination Date (as defined in subsection 7(a)) containing no material
conditions other than the conditions set out in Schedule B, such Seller shall
forthwith thereafter and in any event not later than the close of business on
the fifth business day following the Mailing Date, deposit or cause to be
deposited all of the Subject Shares in accordance with the terms of the Offer,
and deposit or cause to be deposited any Common Shares acquired upon exercise of
options after the date hereof and prior to the Expiry Time of the Offer, and
thereafter such Seller shall not withdraw or permit such shares to be withdrawn
from the Offer. The Offeror will take up and pay for the Subject Shares
deposited under the Offer in accordance with the terms
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of the Offer within the periods required by law and upon the conditions of the
Offer having been satisfied or waived. Subject to subsection 7(b), if the
Subject Shares have not been taken up and paid for by the Offeror prior to the
close of business on the 120th day following the Mailing Date, then each Seller
may withdraw from the Offer the Subject Shares held by such Seller and, if such
Subject Shares are then withdrawn from the Offer, this agreement shall be
terminated in respect of such Seller and shall be of no further force or effect
in respect of such Seller, but this agreement shall continue in full force and
effect with respect to all the Sellers who do not withdraw their Subject Shares.
To the extent that any Seller shall not have complied with the preceding
two paragraphs (or, if applicable, the provisions of the following paragraph)
with respect to any Subject Shares, the Offeror shall have, in addition to any
other remedies it may have, the option to acquire all of such Subject Shares for
the Consideration for each Subject Share for which such option is exercised.
Such option may be exercised by the Offeror for a period of 90 days following
the Expiry Time.
For greater certainty, for the purposes of this agreement, the term
"Subject Shares" shall refer to all the Common Shares which the Sellers are
required to tender under the Offer pursuant to the terms of this agreement, as
well as all shares or other securities which the Subject Shares may be converted
into, exchanged for or otherwise changed into pursuant to any transaction
involving the Company prior to the acquisition of the Subject Shares by the
Offeror, and shall also include any and all distributions of cash, securities or
other property made on such shares on or after the date hereof, excluding
quarterly dividends paid by the Company in the ordinary course and consistent
with past practice.
3. Other Conditions to Making the Offer
The Offeror shall not be required to make the Offer unless:
(a) the Offeror shall have determined prior to March 14, 2000, acting
reasonably, that the Offer would not have an impact on the grant
of a favourable tax ruling with respect to the Nortel
Transaction;
(b) (i) the Company shall have entered into an agreement with the
Offeror on terms and conditions satisfactory to the Offeror
providing for the support of the Offer by the Company and its
Board of Directors, a prohibition on the solicitation of
competing proposals and the payment of customary break-up fees in
specified circumstances (the "Support Agreement") and (ii) the
Support Agreement shall not have been terminated;
(c) no circumstance, fact, change, event or occurrence caused by a
person other than BCE or any of its affiliates shall have
occurred that would render it impossible for one or more
conditions set out on Schedule B hereto to be satisfied; and
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(d) no cease trade order, injunction or other prohibition at law
shall exist against the Offeror making the Offer or taking up or
paying for any Common Shares to be deposited under the Offer.
The foregoing conditions are for the sole benefit of the Offeror and may be
waived by it in whole or in part in its sole discretion.
4. Covenants of the Sellers
(a) Each Seller agrees that, during the period commencing on the date
hereof and continuing until the earlier of (i) the Termination Date and (ii) the
Expiry Time:
(i) except to the extent permitted hereunder, it will not take
any act, directly or indirectly, which may in any way
adversely affect the success of the Offer or the purchase of
any Common Shares under the Offer, but, subject to section 9
or unless such a vote would be contrary to other provisions
of this agreement, otherwise may continue to vote its
Subject Shares as it sees fit;
(ii) it will immediately cease and cause to be terminated any
existing discussions with any parties (other than BCE) with
respect to any Acquisition Proposal (as defined below); and
(iii) it will not directly or indirectly, make, solicit, initiate
or encourage inquiries from or submission of proposals or
offers from any other person, corporation, partnership or
other business organization whatsoever (including any of its
officers or employees) relating to any liquidation,
dissolution, recapitalization, merger, amalgamation or
acquisition or purchase of all or a material portion of the
assets of, or any equity interest (including Common Shares)
in, the Company or any of its subsidiaries or other similar
transaction or business combination involving the Company or
any of its subsidiaries (any such proposal or offer, an
"Acquisition Proposal"), or participate in any discussions
or negotiations regarding, or furnish to any other person
any information with respect to, or otherwise cooperate in
any way with, or assist or participate in, facilitate or
encourage, any effort or attempt by any other person to do
or seek to do any of the foregoing;
provided, however, that the foregoing shall not prevent a Seller who is a member
of the Board of Directors of the Company (the "Board of Directors") from
responding in his capacity as a director to any bona fide written Acquisition
Proposal made by a third party to the Company or the Board of Directors after
the date hereof, providing information to such third party or taking any action
referred to in (i) above in his capacity as a director of the Company if, acting
in good faith and upon the advice of the legal and financial advisors
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of the Board of Directors where appropriate, the failure to do so would be
inconsistent with such Seller's fiduciary duties as a member of the Board of
Directors. For greater certainty, each such Seller acknowledges that the proviso
to this subsection 4(a) shall not affect such Seller's obligation to tender (and
not withdraw) the Subject Shares to the Offer pursuant to the terms and
conditions of this agreement.
If any Seller receives any Acquisition Proposal or any inquiry concerning
an Acquisition Proposal (including an offer or invitation to enter into
discussions), such Seller will promptly notify the Offeror in writing and
provide to the Offeror all relevant details relating thereto, including, without
limitation, the price proposed to be paid in connection with such Acquisition
Proposal and the form of consideration to be paid; provided, however, that no
Seller shall be required to disclose to the Offeror any such Acquisition
Proposal or any matter relating thereto if such Acquisition Proposal was made to
the Company or its Board of Directors and such Seller was informed of such
Acquisition Proposal in his or her capacity as a member of the Board of
Directors and, acting in good faith and upon the advice of the legal and
financial advisors of the Board of Directors where appropriate, disclosure
thereof by such Seller to the Offeror would be inconsistent with such Seller's
fiduciary duties as a member of the Board of Directors.
(b) Each Seller agrees that during the period commencing on the date hereof
and continuing until the earlier of (i) the Termination Date and (ii) the Expiry
Time:
(i) it will use its reasonable best efforts in its capacity as a
shareholder, and, if applicable, as a director subject to
his fiduciary duties, to ensure that the business and
affairs of the Company and its subsidiaries are operated in
the ordinary course in substantially the same manner as
conducted prior to the date hereof; and
(ii) it shall not sell, transfer or encumber in any way any
Subject Shares or Options owned by it or relinquish or
modify its right to vote any Subject Shares or any other
securities of the Company.
(c) Each Seller agrees that, except as required by applicable law, such
Seller will not prior to the public announcement by the Offeror of the terms of
the Offer, directly or indirectly, disclose to any person, firm or corporation
the existence of the terms and conditions of this agreement, or the possibility
of the Offer being made or any terms or conditions or other information
concerning any possible offer to be made for the Common Shares.
(d) Each Seller covenants and agrees to use their reasonable best efforts
to cause ▇▇▇▇ ▇. ▇▇▇▇▇ to be appointed as Chairman of the Board of Directors and
to have ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ appointed as co-Chief Executive Officers
of the Company upon ▇▇▇▇▇▇▇ ▇▇▇▇▇▇' resignation.
(e) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ agrees that from and after the date hereof to and
including February 15, 2002, he shall be available to participate in a minimum
of 20 presentations per year regarding the
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Company's business with management of Teleglobe or its subsidiaries, to
potential and existing external independent representatives, which services
shall be provided in accordance with the consulting agreement (the "▇▇▇▇▇▇
Consulting Agreement") dated September 14, 1999 between ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and the
Company and certain of its subsidiaries. The Offeror hereby acknowledges and
agrees that it is the intention of the parties that the ▇▇▇▇▇▇ Consulting
Agreement shall continue in full force and effect after the date hereof.
(f) Upon the purchase by the Offeror of the Subject Shares, the ▇▇▇▇▇▇
Group acknowledges that BCE shall be entitled to designate all members of the
Board of Directors currently designated as Excel Directors (as defined in the
articles of the Company), and any committees thereof and the ▇▇▇▇▇▇ Group shall,
upon request by BCE, but subject to applicable law, promptly use their best
efforts to (i) expand the Board of Directors, (ii) secure the resignations of
such number of directors, (iii) cause the Excel Directors to nominate as
directors of the Company and/or (iv) take all other action (including voting as
directors of the Company), in each case as is necessary to enable BCE's
designees to be elected or appointed to the Board of Directors and to cause
BCE's designees to be so elected or appointed.
(g) (i) Each Seller agrees to execute and jointly file with the Offeror, an
election pursuant to section 85 of the Income Tax Act (Canada) (the "Canadian
Income Tax Act") in which election such Seller will elect the cost amount of the
Subject Shares which shall be such Seller's proceeds of disposition and the
Offeror's cost of the Common Shares exchanged for BCE Shares, provided such
amount is within the limits prescribed by section 85 of the Canadian Income Tax
Act. Such Seller shall provide the Offeror with the completed election form no
later than January 15, 2001. The Offeror will execute any completed election
form received and file the form with the appropriate tax authority.
(ii) BCE agrees to indemnify and save harmless the ▇▇▇▇▇▇ Group from any
losses, damages, liabilities, costs, expenses, taxes, interest and penalties
(including, without limitation, reasonable legal and other professional fees and
disbursements) ("Losses") resulting from the ▇▇▇▇▇▇ Group's agreement to file an
election under section 85 of the Tax Act pursuant to this subsection 4(g).
(iii) In the event that any member of the ▇▇▇▇▇▇ Group (an "Indemnified
Party") shall become aware of any claim, proceeding or other matter (a "Claim")
in respect of which BCE agreed to indemnify the Indemnified Party pursuant to
this agreement, the Indemnified Party shall promptly give written notice thereof
to BCE. Such notice shall specify with reasonable particularity (to the extent
that the information is available) the factual basis for the Claim and the
amount of the Claim, if known. If, through the fault of the Indemnified Party,
BCE does not receive notice of any Claim in time to contest effectively the
determination of any liability susceptible of being contested, BCE shall be
entitled to set off against the amount claimed by the Indemnified Party the
amount of any Losses incurred by BCE resulting directly from the Indemnified
Party's failure to give such notice on a timely basis.
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(iv) Following receipt of notice from the Indemnified Party of the
Claim, BCE shall have 60 days to make such investigation of the Claim as is
considered necessary or desirable. For the purpose of such investigation, the
Indemnified Party shall make available to BCE the information relied upon by the
Indemnified Party to substantiate the Claim, together with all such other
information as BCE may reasonably request. If both parties agree at or prior to
the expiration of such 60-day period (or any mutually agreed upon extension
thereof) to the validity and amount of such Claim, BCE shall immediately pay to
the Indemnified Party the full agreed upon amount of the Claim.
(v) BCE shall pay to the Indemnified Party all amounts for which BCE is
liable pursuant to this subsection 4(g) promptly after the Indemnified Party
incurs the Loss in respect of which such liability arises.
5. Representations and Warranties of Each Seller
Each Seller by its acceptance hereof represents and warrants as follows and
acknowledges that the Offeror is relying upon such representations and
warranties in connection with entering into this agreement and the purchase by
the Offeror of the Subject Shares:
(a) such Seller is the beneficial owner of the Subject Shares and Options
listed on Schedule A thereto beside such Seller's name and such Seller
is the registered owner of such Subject Shares and Options (or the
nominee of such Seller identified in Schedule A) or will become the
registered owner of such Subject Shares not later than the time at
which they are tendered to the Offer;
(b) except as disclosed in writing to BCE, (i) such Seller has the sole
right to sell and vote (to the extent permitted by the attributes of
such shares or pursuant to applicable law, regulation or policy) all
the Subject Shares held by such Seller and (ii) all the Subject Shares
and Options held by such Seller are now, and at the time at which the
Offeror takes up and pays for the Subject Shares will be, beneficially
owned by such Seller with a good and marketable title thereto, free
and clear of any and all mortgages, liens, charges, restrictions,
security interests, adverse claims, pledges, encumbrances and demands
of any nature or kind whatsoever (collectively, "Encumbrances") and
are and will be issued and outstanding as fully paid and
non-assessable shares in the capital of the Company. To the extent
that any Subject Shares are subject to Encumbrances, the Seller is not
in breach of any covenant, term or condition of any agreement or
instrument pursuant to which such Encumbrance was created or granted;
(c) except as disclosed in writing to BCE, no person, firm or corporation
has any agreement or option, or any right or privilege (whether by
law, pre-emptive or contractual) capable of becoming an agreement or
option, for the purchase, acquisition or transfer from such
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Seller of any of the Subject Shares or Options owned by such Seller or
any interest therein or right thereto, except the Offeror pursuant
hereto;
(d) except as disclosed in writing to BCE, none of the execution and
delivery by such Seller of this agreement or the completion of the
transactions contemplated hereby or the compliance by such Seller with
such Seller's obligations hereunder will result in a breach of: (i) if
such Seller is a corporation, the constating documents of such Seller;
or (ii) any agreement or instrument to which such Seller is a party or
by which such Seller or any of such Seller's property or assets are
bound;
(e) if a corporation, such Seller is a validly subsisting corporation and
has all necessary corporate power and authority to execute and deliver
the agreement resulting from its acceptance hereof and to perform its
obligations hereunder;
(f) this agreement has been duly executed and delivered by such Seller and
constitutes a valid and binding obligation of such Seller enforceable
against such Seller in accordance with its terms, except as may be
limited by bankruptcy, insolvency and other laws affecting the
enforcement of creditors' rights generally and subject to the
qualification that equitable remedies may only be granted in the
discretion of a court of competent jurisdiction;
(g) (i) the only securities of the Company beneficially owned, directly or
indirectly, by such Seller are the Subject Shares and Options listed
on Schedule A hereto beside such Seller's name, (ii) except for the
Options listed on Schedule A hereto, such Seller has no agreement or
option, or right or privilege (whether by law, pre-emptive or
contractual) capable of becoming an agreement or option, for the
purchase or acquisition by such Seller or transfer to such Seller of
additional securities of the Company and (iii) such Seller will not
purchase other than as permitted hereunder or obtain any agreement or
right to purchase any additional securities of the Company from and
including the date hereof up to and including the time at which the
Offeror takes up and pays for the Subject Shares;
(h) such Seller has no claim against the Company or any of its
subsidiaries at the date of this agreement and will not have any claim
against the Company or any of its subsidiaries by reason of the
entering into of this agreement, the completion of the Offer or the
completion of the Alternative Transactions; provided however that the
foregoing shall not prejudice the rights of such Seller under this
agreement, the Offer, the Alternative Transactions, the ▇▇▇▇▇▇
Consulting Agreement or the termination agreement and general release
dated as of September 14, 1999 between ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and the Company
and certain of its subsidiaries, and true and complete copies of the
▇▇▇▇▇▇ Consulting Agreement have been provided to BCE prior to the
date hereof;
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(i) (i) such Seller has full knowledge of and access to information
concerning the Company and its securities such that the underlying
value of the Company was a material factor considered by such Seller
in entering into this agreement, (ii) in agreeing to the price to be
paid pursuant to the Offer, there are no non-financial factors or
factors peculiar to such Seller which have been considered relevant to
such Seller in assessing such price or that had the effect of reducing
the price that would otherwise have been considered acceptable to such
Seller and (iii) such Seller had no knowledge of any material
non-public information in respect of the Company or the Common Shares
which was not disclosed generally and that, if disclosed, could
reasonably have been expected to affect the consideration payable
under this agreement; and
(j) except for ▇▇▇▇▇▇ Brothers and RBC Dominion Securities Inc., no
broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission, or to the reimbursement of any of
its expenses, in connection with the Offer or any similar transaction
based upon arrangements made by or on behalf of the Seller.
6. Representations, Warranties and Covenants of BCE
(a) BCE represents and warrants as follows and acknowledges that each
Seller is relying upon such representations and warranties in connection with
the sale to the Offeror of the Subject Shares:
(i) BCE is a validly subsisting corporation incorporated under the laws of
Canada and, subject to approval of this agreement and the Offer by its
Board of Directors, has all necessary corporate power and authority to
execute and deliver this agreement and to purchase the Subject Shares
and to perform its obligations hereunder;
(ii) this agreement has been duly executed and delivered by and on behalf
of BCE and constitutes a valid and binding obligation of BCE
enforceable against BCE in accordance with its terms, except as may be
limited by bankruptcy, insolvency and other laws affecting the
enforcement of creditors' rights generally and subject to the
qualification that equitable remedies may only be granted in the
discretion of a court of competent jurisdiction;
(iii) documents or information filed by BCE under applicable securities
laws since and including January 1, 1999 to and including the date
hereof, including the annual report to shareholders and annual
information form of BCE, in each case, for the fiscal year ended
December 31, 1998, (collectively, the "BCE Public Documents"), did
not, as of their respective dates, contain any untrue statement of a
material fact relating to BCE and its subsidiaries and their
respective businesses
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or omit to state a material fact required to be stated therein or
necessary to make the statements relating to BCE and its subsidiaries
and their respective businesses therein, in light of the circumstances
under which they were made, not misleading; and
(iv) except as disclosed in the BCE Public Documents, since January 1, 1999
to and including the date hereof: (a) BCE and its subsidiaries have
conducted their respective businesses only in the usual, ordinary and
regular course and consistent with past practice; (b) no liability or
obligation of any nature (whether absolute, accrued, contingent or
otherwise) which has had or is reasonably likely to have a material
adverse effect on the business, operations (including results of
operations), assets, properties or condition (financial or otherwise)
of BCE and its subsidiaries taken as a whole (a "BCE Material Adverse
Effect"), has been incurred; and (c) there has not been any event
which has had or is reasonably likely to have a BCE Material Adverse
Effect.
(b) BCE covenants and agrees that it will, as soon as reasonably
practicable following the entering into of the Support Agreement with the
Company, actively and diligently pursue all regulatory and other approvals and
consents necessary to consummate the Offer and, in conjunction with the Company,
to use reasonable commercial efforts to make as soon as reasonably practicable
following the date hereof all necessary registrations and filings to obtain
same.
7. Termination Date; Extensions
(a) Subject to Section 9 hereof, if the Offer has not been made by the
Offeror on or before the date contemplated by section 1(d) hereof (the
"Termination Date"), this agreement shall terminate without further obligation
of the parties hereunder; provided, however, that any such termination shall not
prejudice the rights of a party as a result of a breach by any other party of
its obligations hereunder.
(b) Notwithstanding any other provision of this agreement, if any action to
be taken hereunder (including the taking up of Common Shares under the Offer) is
delayed by reason of (i) an injunction or order made by a court or regulatory
authority of competent jurisdiction or (ii) any regulatory waiver, consent or
approval which is necessary to the taking of such action not having been
obtained, then provided that such injunction or order is being contested or
appealed or such regulatory waiver, consent or approval is being actively
sought, as applicable, the time stipulated herein for the taking of such action
shall be automatically extended for a period ending on the earlier of (i) May
31, 2001 and (ii) the fifth business day following the date on which such
injunction or order ceases to be in effect or such waiver, consent or approval
is obtained, as applicable.
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8. Further Assurances
Subject to the terms and conditions herein, each of the Sellers and BCE
agrees to use commercially 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 the transactions
contemplated by this agreement and the Offer, including using commercially
reasonable efforts (i) to obtain all necessary consents, approvals and
authorizations as are required to be obtained under any federal, provincial or
foreign law or regulations with respect to this agreement or the Offer; (ii) to
lift or rescind any injunction or restraining order or other order adversely
affecting the parties' ability to consummate the transactions contemplated
hereby or by the Offer; and (iii) to fulfill all conditions and satisfy all
provisions of this agreement and the Offer.
9. Change in Nature of Transaction
(a) The Offeror and the Sellers have determined that it is necessary and
desirable to proceed with alternative forms of transactions (the "Alternative
Transactions") whereby the Offeror (or an affiliate of the Offeror) is
effectively to acquire Common Shares on economic terms which, in relation to the
holders of Common Shares, are at least equivalent to the Offer (including from a
tax perspective). The description of the steps of the Alternative Transactions
and related matters are set out in Schedule C attached hereto. Each Seller
agrees to support the completion of the Alternative Transactions as specified in
Schedule C.
(b) In the event of any proposed Alternative Transaction, the references in
this agreement to the Offer shall be deemed to refer to such Alternative
Transaction and all terms, covenants, representations and warranties of this
agreement shall be and shall be deemed to have been made in the context of such
Alternative Transaction, mutatis mutandis.
10. General
(a) The Offeror acknowledges and agrees that the covenants, representations
and warranties of each Seller made in this agreement are made by such Seller
solely in such Seller's capacity as a holder of Subject Shares and Options, and
not, to the extent applicable, in such Seller's capacity as an officer, director
or employee of the Company unless otherwise expressly provided for.
(b) Each Seller hereby agrees that it shall be jointly and severally liable
to the Offeror for the non-performance or breach by the other Sellers of the
covenants, representations and warranties of the other Sellers provided
hereunder. For greater certainty, the failure of any Seller to comply with such
Seller's obligations hereunder, or the inaccuracy of any representation or
warranty made by any Seller, shall not in any way relieve any other Seller who
is in compliance with such Seller's obligations hereunder.
- 13 -
(c) The agreement contemplated by acceptance of this letter shall become
effective in respect of each Seller upon its execution and delivery by such
Seller.
(d) All notices, requests, demands and other communications hereunder shall
be in writing and shall be delivered in person or transmitted by telecopy or
similar means of recorded electronic communication to, in the case of any
Seller, the address and/or facsimile of the Seller as shown on Schedule A, and,
in the case of the Offeror, Bureau 3700, 1000, rue de la Gauchetiere Ouest,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, Attention: Chief Legal Officer, Facsimile: (514)
870-4877 (with a facsimile copy to ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇, Attention: J-P.
Bisnaire, Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇) or such other address as may be designated
in writing hereafter, in the same manner, by such person. Any such notice or
other communication shall be deemed to have been given and received on the day
on which it was delivered or transmitted (or, if such day is not a business day,
on the next following business day) provided that it is delivered or transmitted
during normal business hours, failing which it shall be deemed to have been
given and received on the next business day.
(e) This agreement sets forth the entire agreement and understanding of the
parties hereto in respect of the transactions contemplated hereby. There are no
warranties, representations, terms, conditions or collateral agreements,
expressed, implied or statutory, between the Sellers and the Offeror other than
as expressly set forth in this agreement. This agreement and the rights
hereunder are not transferable or assignable by any Seller or the Offeror
without the prior written consent of the other except that the Offeror may
assign its rights and obligations under this agreement to any of its affiliates,
but no such assignment shall relieve the Offeror of its obligations hereunder.
(f) The representations and warranties set forth in this agreement shall
survive the purchase of the Subject Shares and, notwithstanding such purchase,
shall continue in full force and effect for the benefit of the party to whom
such representations and warranties are given.
(g) If any provision of this agreement is determined to be void or
unenforceable, in whole or in part, it shall be severable from all other
provisions hereof and shall be deemed not to affect or impair the validity of
any other provision hereof and each such provision is deemed to be separate and
distinct.
(h) This agreement and the rights and obligations of the parties hereto
shall be governed by and construed in accordance with the laws of the Province
of Quebec and the parties irrevocably attorn to the exclusive jurisdiction of
the courts of the Province of Quebec.
(i) Time shall be of the essence of this agreement.
(j) This agreement may be executed by facsimile and in counterparts, each
of which shall be deemed to be an original but all of which together shall
constitute one and the same agreement.
- 14 -
(k) Each party hereto shall pay the fees, costs and expenses of their
respective financial, legal, auditing and other professional and other advisors
incurred in connection with the preparation, execution and delivery of this
agreement and all documents and instruments executed or prepared pursuant hereto
and any other costs and expenses whatsoever and howsoever incurred and shall
indemnify the other parties from and against any and all claims for "finders" or
"agency" fees relating to the transactions contemplated hereby.
(l) The parties hereto have expressly requested that this agreement and the
schedules thereto be drafted in the English language. Les parties a la presente
ont expressement demande que cette entente ainsi que les cedules s'y rattachant
soient redigees dans la langue anglaise.
----------
If the foregoing accurately reflects the terms and conditions of our
agreement, would you kindly indicate your acceptance hereof by signing, dating
and returning to BCE the enclosed duplicate original of this agreement by
facsimile or otherwise by no later than 5:00 p.m. (Montreal time) on February
15, 2000, failing which this offer shall be null and void.
BCE INC.
by_____________________________
Irrevocably accepted and agreed to this 15th day of February, 2000.
WITNESS: )
)
)
) ------------------------------------
) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
)
)
) ------------------------------------
) ▇▇▇▇▇▇ FAMILY TRUST,
) by its sole trustee, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
)
)
) ------------------------------------
) ▇▇▇▇ ▇. ▇▇▇▇▇▇ CHILDREN'S TRUST,
) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ CHILDREN'S
) TRUST and KAT CHILDREN'S TRUST II,
) by their sole trustee, ▇▇▇▇▇▇ ▇▇▇▇▇▇
)
)
▇▇▇▇▇ ▇▇▇▇▇▇ INVESTMENT
PARTNERSHIP, LTD., by its general
partner ▇▇▇▇▇▇ ENTERPRISES LLC
by __________________________________
Name:
Title:
SCHEDULE A
Name of Seller Number of Number of Common
-------------- Common Shares Shares under Option
------------- -------------------
1. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, 13,559,693 175,000
in his personal capacity
2. ▇▇▇▇▇▇ Family Trust 21,802,531 Nil
- Separate Trust Estate of
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
3. ▇▇▇▇▇▇ Family Trust 6,154,448 Nil
- Community Property
4. ▇▇▇▇▇ ▇▇▇▇▇▇ Investment 3,500,000 Nil
Partnership, Ltd.
5. ▇▇▇▇ ▇. ▇▇▇▇▇▇ Children's 72,421 Nil
Trust
6. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 72,421 Nil
Children's Trust
7. KAT Children's Trust II 640,283 Nil
All at the following address:
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇
The persons identified above are collectively referred to as the "▇▇▇▇▇▇ Group".
SCHEDULE B
CONDITIONS OF THE OFFER
Notwithstanding any other provision of the agreement to which this schedule
is attached, the Offeror shall have the right to withdraw the Offer and not take
up and pay for any Common Shares deposited under the Offer unless all of the
following conditions are satisfied or waived by the Offeror at or prior to the
Expiry Time:
(a) all requisite regulatory approvals, reviews or decisions (including,
without limitation, those of any stock exchanges or securities or
other regulatory authorities) to the consummation of the Offer shall
have been obtained or concluded on terms satisfactory to the Offeror,
acting reasonably;
(b) (i) no act, action, suit or proceeding shall have been threatened or
taken before or by any domestic or foreign court or tribunal or
governmental agency or other regulatory authority or administrative
agency or commission or by any elected or appointed public official or
private person (including, without limitation, any individual,
corporation, firm, group or other entity) in Canada or elsewhere,
whether or not having the force of law, and (ii) no law, regulation or
policy shall have been proposed, enacted, promulgated or applied:
(A) to cease trade, enjoin, prohibit or impose material limitations
or conditions on the purchase by or the sale to the Offeror of
the Common Shares or any of them or the right of the Offeror to
own or exercise full rights of ownership of the Common Shares or
any of them; or
(B) which, if the Offer were consummated, (x) would require the
Company or any of its subsidiaries to dispose of a material
asset, impose material limitations or conditions on the business
or operations of the Company and its subsidiaries, or impose
material fines or penalties on the Company or any of its
subsidiaries and (y) such disposition, limitations, fines or
penalties would reasonably be expected to have a Company Material
Adverse Effect or a BCE Material Adverse Effect;
(c) either (i) the Commissioner under the Competition Act (Canada) shall
have issued an advance ruling certificate ("ARC") under section 102 of
the Competition Act in respect of the Offer and shall not have
subsequently withdrawn or purported to have withdrawn such ARC prior
to the Offeror's acquisition of Common Shares pursuant to the Offer or
have stated or otherwise indicated that he has obtained new
information as a result of which he is no longer satisfied that he
would not have sufficient grounds on which to apply to the Competition
Tribunal under section 92 of the Competition Act with respect to the
Offers; or (ii) the applicable waiting period under section 123 of the
Competition Act shall have expired, and the Competition Commissioner
or his authorized representative shall have
- 2 -
advised the Offeror (on terms and in a form satisfactory to the
Offeror) that the Commissioner does not intend to make an application
under section 92 of the Competition Act in respect of the Offer and
neither the Commissioner nor any of his representatives shall have
rescinded or amended such advice;
(d) any applicable waiting period under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, and under any other applicable foreign
competition laws, shall have expired;
(e) there shall not exist any prohibition at law against the Offeror
making the Offer or taking up and paying for any Common Shares
deposited under the Offer;
(f) there shall not exist and shall not have occurred (or, if there does
exist or shall have previously occurred, there shall not have been
disclosed, generally or to the Offeror in writing) any change that has
a Company Material Adverse Effect (as such term is defined in the
Support Agreement) which results, directly or indirectly, from:
(i) any act or action taken or not taken by the Company at or prior
to the entering into of the Support Agreement; or
(ii) any act or action taken or not taken by the Company which has
been approved by the Board of Directors in circumstances where
the BCE nominees to the Board of Directors have voted against;
(g) the Offeror shall not have become aware of any untrue statement of a
material fact in the Company Public Documents (as such term is defined
in the Support Agreement), or an omission to state a material fact
that is required to be stated or that is necessary to make a statement
not misleading therein the light of the circumstances in which it was
made, in either case that is adverse to the Company; and
(h) (i) the Company shall not have breached in any material respect any of
its covenants contained in the Support Agreement (other than a breach
resulting from any act or action (or act or action not taken) that has
been approved by the Chairman of the Board) and (ii) the
representations and/or warranties of the Company contained in the
Support Agreement shall have been, as at the date made, true and
correct or, if not already qualified by a materiality concept, true
and correct in all material respects.
The foregoing conditions are for the exclusive benefit of the Offeror and
may be asserted by the Offeror at any time, regardless of the circumstances
giving rise to such assertion, including any action or inaction by the Offeror.
The Offeror may waive any of the foregoing conditions in whole or in part at any
time and from time to time, both before and after the Expiry Time, without
prejudice to any other rights which the Offeror may have. The failure by the
Offeror at any time to exercise any of the foregoing rights
- 3 -
will not be deemed a waiver of any such right and each such right will be deemed
an ongoing right which may be asserted at any time and from time to time. Any
determination by the Offeror concerning the events described in the conditions
to the Offer will be final and binding upon all parties.
SCHEDULE C
ALTERNATIVE TRANSACTION/ALTERNATIVE OFFER
Plan of Arrangement
The Offeror acknowledges and agrees that it is the intention of the parties
that the acquisition of Common Shares by the Offeror (the "Acquisition") be
effected in a manner that permits both Canadian and United States Shareholders
to dispose of their Common Shares on a tax-deferred rollover basis (a "Tax
Deferred Basis"). In order to achieve the foregoing objective, it is proposed
that the Acquisition be effected pursuant to a Plan of Arrangement (the "Plan of
Arrangement") under section 192 of the Canada Business Corporations Act ("CBCA")
in a manner to permit Shareholders to obtain a rollover for Canadian income tax
purposes under section 85.1, or, where the Shareholder elects, under section 85,
of the Canadian Income Tax Act and any applicable provincial tax legislation
(collectively, "Canadian Income Tax Legislation") and to permit Shareholders to
obtain a tax-free rollover for United States tax purposes pursuant to section
368(a)(1)(B) of the United States Internal Revenue Code (a "B Reorganization").
The Offeror and the ▇▇▇▇▇▇ Group agree to cooperate to consummate the Plan of
Arrangement pursuant to a B Reorganization for United States tax purposes.
Proposed Steps
Pursuant to the Plan of Arrangement, the following steps would be
undertaken:
1. The common shares of the Company would be reorganized whereby ▇▇▇▇ Canada
would exchange a portion of its common shares for a new class of fully
participating subordinate voting shares ("Subordinate Voting Shares")
representing a 3.5% equity interest carrying a one-tenth vote per share so
that ▇▇▇▇ Canada and all other affiliates of BCE, together with the Third
Series Preferred Shares, hold less than 20% of the voting power attaching
to shares of the Company.
2. The Third Series Preferred Shares would be amended to add a one-tenth vote
per share.
3. All outstanding Common Shares (other than common shares and Subordinate
Voting Shares owned by ▇▇▇▇ Canada) would be exchanged for BCE Shares at
the Share Exchange Ratio.
4. The Holdco Election would only be available to Canadian Shareholders of the
Company if the making of the Holdco Election by any such Shareholders would
not adversely impact the tax consequences to United States Shareholders or
to the Offeror (other than in respect of the effect on the Offeror of the
difference in tax treatment in respect of section 85 or section 85.1 of the
Canadian Income Tax Act and other Canadian Income Tax Legislation) under
the Plan of Arrangement.
- 2 -
5. The BCE Shares will be issued to United States Shareholders pursuant to the
provisions of section 3(a)(10) of the United States Securities Act of 1933,
as amended.
Shareholder Votes
1. A special meeting (the "Special Meeting") of the holders of common shares
and Third Series Preferred Shares would be held to vote on the Plan of
Arrangement. Subject to the terms and conditions of this agreement, each
Seller agrees (i) to vote in favour of the Plan of Arrangement, (ii)
deliver to the Offeror no later than ten days prior to the date of the
meeting a duly executed proxy, which proxy shall be irrevocable, in favour
of the Offeror voting in favour of the Alternative Transaction, and (iii)
not to exercise any rights of dissent provided under section 190 of the
CBCA in connection with the Plan of Arrangement.
2. The Interim Order obtained from the Court would provide that in order for
the Plan of Arrangement to proceed, the Plan of Arrangement must (i) be
approved by two-thirds of the votes cast by the holders of common shares
present or represented by proxy at the Special Meeting, including Common
Shares held by BCE and its affiliates, and (ii) receive minority approval
as required by relevant Canadian securities rules or policies, which would
exclude, among others, votes cast by BCE and its affiliates.
3. The Interim Order would provide only that a vote of the Third Series
Preferred Shares be held at the Special Meeting, not that the Plan of
Arrangement must be approved by the Third Series Preferred Shares.
Court Approval
o The Plan of Arrangement would be implemented following the grant
by the Court of a Final Order under section 192 of the CBCA.
o Assuming the Plan of Arrangement is approved by the requisite votes of
the common shares (including minority approval), but the Plan of
Arrangement does not receive a favourable vote of the holders of the
Third Series Preferred Shares, the Court would be asked in the Final
Order to approve all steps of the Plan of Arrangement in any event.
Alternative Offer
(a) In the event that (i) the ▇▇▇▇▇▇ Group determines, acting in good faith
and based on third party tax advice, that the Plan of Arrangement may not be
effected on a Tax Deferred Basis for United States income tax purposes, (ii) the
▇▇▇▇▇▇ Group determines, acting in good faith and based on third party tax
advice, that the Plan of Arrangement may not be effected on a Tax Deferred Basis
for Canadian income tax purposes, or (iii) the Plan of Arrangement is not
approved by the requisite votes of the common shares
- 3 -
or the Court does not grant the Final Order, the Acquisition would then be made
by way of an offer (the"Alternative Offer") made by BCE and/or a direct or
indirect wholly-owned subsidiary of BCE (collectively, the "Offeror") to the
holders of any and all of the outstanding Common Shares to acquire all of the
outstanding Common Shares on the basis of, for each Common Share, that portion
(the "Alternative Share Exchange Ratio") determined as follows:
(i) in the event the closing of the Nortel Transaction occurs prior to the
First Take-Up Date, Cdn.$0.25 plus that portion of a BCE Share
(expressed to three decimal places with amounts less than 0.0005 being
rounded down and amounts equal to or greater than 0.0005 being rounded
up, in each case to the nearest one-thousandth of a BCE Share) as is
equal to the ratio obtained by dividing (A) Cdn.$48.16 (being
Cdn.$48.41 less Cdn.$0.25) by (B) the BCE Weighted Average Trading
Price; and
(ii) in the event the closing of the Nortel Transaction has not been
completed or is terminated prior to the First Take-Up Date, Cdn.$0.25
plus 0.299 of a BCE Share per Common Share.
(b) The Alternative Share Exchange Ratio specified in paragraph (a)(i)
above shall be subject to a minimum of 0.85 of a BCE Share per Common Share and
a maximum of 0.97 of a BCE Share per Common Share.
(c) Shareholders may elect to receive cash in lieu of BCE Shares for up to
20% of their consideration for all or part of their Common Shares based upon the
BCE Weighted Average Trading Price.
(d) The Offeror agrees to execute and jointly file with each Shareholder
who so requests an election pursuant to section 85 of the Canadian Income Tax
Act and Canadian Income Tax Legislation in which election such Shareholder will
be entitled to elect the amount which shall be such Shareholder's proceeds of
disposition and the Offeror's cost of the Common Shares exchanged for BCE
Shares, provided such amount is within the limits prescribed by Canadian Income
Tax Legislation and provided that such Shareholder shall be responsible for
preparing the appropriate tax election form and providing the Offeror with a
letter representing to the Offeror that such Shareholder either (i) is a
resident of Canada for purposes of the Canadian Income Tax Legislation and is
not exempt from tax or (ii) is a non-resident of Canada, the Common Shares are
taxable Canadian property to such Shareholder and the Shareholder is not exempt
from Canadian tax on any gain such Shareholder would realize on a disposition of
the Common Shares. Such Shareholder shall provide the Offeror with the completed
election form no later than January 15, 2001. The Offeror will execute any
completed election form received and return such form by mail to the Shareholder
within 30 days of receipt thereof. The Shareholder shall be solely responsible
for filing the form with the appropriate tax authority.
- 4 -
(e) The Alternative Offer would be made within 15 days following the
earliest of (i) the date of the Special Meeting, if the holders of common shares
fail to approve the Plan of Arrangement, (ii) the date of the court hearing on
the Final Order, if the Final Order approving the Plan of Arrangement is not
obtained or (iii) a determination referred to in paragraph (a) being made by the
Sellers.
(f) The Alternative Offer would not be subject to a minimum tender
condition.
(g) The Alternative Offer would contain the conditions contemplated by
Schedule B and otherwise be in conformity, mutatis mutandis, with the provisions
of this agreement.
(h) For certainty, Shareholders would be entitled to make the Holdco
Election under the Alternative Offer and the Offeror agrees to execute and file
the tax election contemplated by paragraph (d) above in respect of any such
Holdco Election.
