RNS Number:9759K
Verizon Communications
12 April 2005
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: April 9, 2005
(Date of earliest event reported)
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VERIZON COMMUNICATIONS INC.
(Exact name of registrant as specified in its charter)
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Delaware 1-8606 23-2259884
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
1095 Avenue of the Americas
New York, New York 10036
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 395-2121
Not applicable
(Former name or former address, if changed since last report)
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
(x) Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
( ) Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
( ) Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
( ) Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Item 1.01 Entry into a Material Definitive Agreement.
On April 9, 2005, Verizon Communications Inc. (Verizon), and its wholly owned
subsidiary, ELI Acquisition, LLC (Purchaser), entered into a Stock Purchase
Agreement with Controladora de Servicios de Telecomunicaciones, S.A. de C.V.,
Global Telecom LLC, Inmobiliaria Inbursa, S.A. de C.V., Promotora Inbursa, S.A.
de C.V., Banco Inbursa, S.A. Institucion de Banca Multiple Grupo Financiero
Inbursa, Inmobiliaria para el Desarrollo de Proyectos, S.A. de C.V., Orient Star
Holdings LLC and Commercial LLC (collectively, the Sellers), pursuant to which
Purchaser will acquire from Sellers 43,447,684 shares of common stock, par value
$.01 per share, of MCI, Inc. (the MCI Common Stock), for total consideration per
share equal to $25.72 in cash. Under the Stock Purchase Agreement Verizon will
pay the Sellers an adjustment at the end of one year in an amount per share of
MCI Common Stock equal to 0.7241 times the amount by which the price of
Verizon's common stock exceeds $35.52 per share (measured over a 20-day period).
Under the Stock Purchase Agreement, the Sellers have agreed not to knowingly
take actions which would reasonably be expected to delay or prevent the
transactions contemplated by the Agreement and Plan of Merger by and between
Verizon, Purchaser and MCI, Inc. (the Merger Agreement) and have agreed to
support the transactions contemplated by the Merger Agreement.
The closing of the purchase and sale of the MCI Common Stock is subject to
customary conditions, including (i) expiration or termination of the applicable
Hart-Scott-Rodino waiting period and receipt of certain other regulatory
approvals, (ii) absence of any law or order prohibiting the closing, and (iii)
subject to certain exceptions, the accuracy of representations and warranties.
The foregoing description of the Stock Purchase Agreement does not purport to be
complete and is qualified in its entirety by reference to the Stock Purchase
Agreement, which is filed as Exhibit 2.1 hereto, and is incorporated into this
report by reference.
Item 8.01 Other Events.
Attached as an exhibit hereto is a press release dated April 9, 2005 issued by
Verizon containing information about an agreement in which Verizon has agreed to
purchase approximately 43.4 million shares of MCI, Inc. (MCI) from entities
affiliated with Carlos Slim Helu.
Item 9.01 Financial Statements and Exhibits
(c) Exhibits
Exhibit
Number Description
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2.1 Agreement dated April 9, 2005 between Verizon and entities affiliated with
Carlos Slim Helu in which Verizon has agreed to purchase approximately
43.4 million shares of MCI from the entities affiliated with Carlos Slim
Helu.
99 Press release dated April 9, 2005 issued by Verizon containing information
about an agreement in which Verizon has agreed to purchase approximately
43.4 million shares of MCI from entities affiliated with Carlos Slim Helu.
Verizon intends to file a registration statement, including a proxy statement of
MCI, and other materials with the Securities and Exchange Commission (SEC) in
connection with the proposed transaction. We urge investors to read these
documents when they become available because they will contain important
information. Investors will be able to obtain free copies of the registration
statement and proxy statement, as well as other filed documents containing
information about Verizon and MCI, at www.sec.gov, the SEC's website. Investors
may also obtain free copies of these documents at www.verizon.com/investor, or
by request to Verizon Communications Inc., Investor Relations, 1095 Avenue of
the Americas, 36th Floor, New York, NY 10036. Free copies of MCI's filings are
available at www.mci.com/about/investor_relations, or by request to MCI, Inc.,
Investor Relations, 22001 Loudoun County Parkway, Ashburn, VA 20147.
Verizon, MCI, and their respective directors, executive officers, and other
employees may be deemed to be participants in the solicitation of proxies from
MCI shareholders with respect to the proposed transaction. Information about
Verizon's directors and executive officers is available in Verizon's proxy
statement for its 2005 annual meeting of shareholders, dated March 21, 2005.
Information about MCI's directors and executive officers is available in MCI's
annual report on Form 10-K for the year ended December 31, 2003. Additional
information about the interests of potential participants will be included in
the registration statement and proxy statement and other materials filed with
the SEC.
NOTE: This document contains statements about expected future events and
financial results that are forward-looking and subject to risks and
uncertainties. For those statements, we claim the protection of the safe harbor
for forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995. The following important factors could affect future results
and could cause those results to differ materially from those expressed in the
forward-looking statements: a significant change in the timing of, or the
imposition of any government conditions to, the closing of the transaction;
actual and contingent liabilities; and the extent and timing of our ability to
obtain revenue enhancements and cost savings following the transaction.
Additional factors that may affect the future results of Verizon and MCI are set
forth in their respective filings with the Securities and Exchange Commission,
which are available at www.verizon.com/investor and
www.mci.com/about/investor_relations/sec/.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Verizon Communications Inc.
(Registrant)
Date: April 11, 2005 /s/ David H. Benson
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David H. Benson
Senior Vice President and Controller
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EXECUTION COPY
Exhibit 2.1
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of April 9, 2005 (the "Agreement"), by and
among Verizon Communications Inc. ("Parent"), Eli Acquisition, LLC (the
"Purchaser"), and Controladora de Servicios de Telecomunicaciones, S.A. de C.V.,
Global Telecom LLC, Inmobiliaria Inbursa, S.A. de C.V., Promotora Inbursa, S.A.
de C.V., Banco Inbursa, S.A. Institucion de Banca Multiple Grupo Financiero
Inbursa, Inmobiliaria para el Desarrollo de Proyectos, S.A. de C.V., Orient Star
Holdings LLC and Commercial LLC (each, a "Seller" and, collectively, the
"Sellers").
1. Purchase and Sale. (a) Each Seller agrees to sell to the Purchaser, and the
Purchaser agrees to purchase from such Seller, upon the terms and subject to the
conditions, and in reliance upon the representations, set forth herein, such
number of shares as is set forth on Schedule A hereto opposite such Seller's
name (collectively, the "Shares") of common stock, par value $.01 per share, of
MCI, Inc. ("MCI", and such common stock, the "MCI Common Stock"), for total
consideration per share equal to the sum (the "Per Share Consideration") of (i)
$25.72 in cash plus (ii) an additional cash amount of 3% per annum thereon from
and including the date hereof until and including the date of the Closing (as
defined below) (the sum of clauses (i) and (ii), the "Per Share Base Amount")
plus (iii) the Per Share Adjustment Amount (as defined below), if any.
(b) If the Average Parent Common Stock Price (as defined below) exceeds $35.52
(such excess, the "Parent Common Stock Differential"), the Per Share Adjustment
Amount shall equal the product obtained by multiplying 0.7241 by the Parent
Common Stock Differential; provided, however, that in the event that (i) the
merger contemplated by the Merger Agreement (as defined below) is consummated
prior to the Anniversary Date and (ii) but for this proviso, the Parent Common
Stock Differential would exceed $26.98, then the Parent Common Stock
Differential shall be deemed to be $26.98. If the Average Parent Common Stock
Price is less than or equal to $35.52, the Per Share Adjustment Amount shall be
zero. For purposes of this Agreement, "Average Parent Common Stock Price" shall
mean the volume weighted average of the per share trading prices of the common
stock, par value $0.10 per share, of Parent (the "Parent Common Stock"), as such
prices are reported on the NYSE Composite Transactions Tape, for each of the
twenty (20) trading days ending on the third trading day prior to the first
anniversary of the date hereof (such first anniversary, the "Anniversary Date").
On the first business day prior to the Anniversary Date, the Purchaser shall pay
to the Sellers, in immediately available funds by wire transfer to the
account(s) of the Sellers previously designated in writing, an amount equal to
the Per Share Adjustment Amount in respect of each Share sold at the Closing.
The parties intend to evidence Parent's aggregate obligation to pay the Per
Share Adjustment Amount by one or more instruments, documented in customary
form, and delivered at the Closing (the "Call Confirmations"); provided,
however, that in the event the parties do not reach agreement as to the form and
substance of such documentation, such obligation shall be evidenced solely by
this Agreement.
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(c) In the event that, prior to the Anniversary Date, (i) the number of
outstanding shares of Parent Common Stock is increased or decreased as a result
of any stock dividend, stock split, stock combination, or other similar
corporate action, (ii) there occurs any recapitalization, reclassification,
consolidation or other change in corporate structure involving Parent Common
Stock (other than issuances of Parent Common Stock or equity securities for
value), (iii) any dividend or distribution, whether of cash, securities,
property or other assets (other than any regular quarterly cash dividends with
declaration, record and payment dates consistent with past practice), is
declared in respect of any shares of Parent Common Stock, or (iv) Parent or any
of its Affiliates acquires any shares of Parent Common Stock in a pro rata
redemption or an exchange or tender offer, at a price that exceeds by more than
10% the then current market value of the Parent Common Stock, then, in each
case, the determination of the Per Share Adjustment Amount shall be equitably
adjusted to take into account such event.
(d) In the event that, prior to the Closing, the number of outstanding shares of
MCI Common Stock is increased or decreased as a result of any stock dividend,
stock split, stock combination, recapitalization, reclassification or other
change in corporate structure involving MCI Common Stock or other similar
corporate action, the number of Shares subject to this Agreement, the Per Share
Base Amount and the Per Share Adjustment Amount shall be equitably adjusted to
take into account such event. In the event that, prior to the Closing, the MCI
Common Stock is reclassified or MCI effects a consolidation, merger or other
change in corporate structure such that the Shares are no longer outstanding,
the Sellers shall in lieu of the obligation to deliver the Shares hereunder
solely be obligated to deliver any cash, securities, property or other assets
into which the Shares have been so reclassified or converted.
(e) Parent and the Purchaser agree that they shall not withhold any amounts from
the Per Share Consideration pursuant to Sections 1441, 1442 or 1445 of the
Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder, except to the extent such withholding is required as a
result of a change in law, treaty, or regulation (or the judicial or
administrative interpretation thereof) occurring after the date hereof. Parent
and the Purchaser shall be entitled to deduct and withhold from any portion of
the Per Share Consideration otherwise payable pursuant to this Agreement to any
Seller such amounts as they are required to deduct and withhold with respect to
the making of such payment under any other provision of the Internal Revenue
Code of 1986, as amended, and the rules and regulations promulgated thereunder,
or any provision of state, local or non-U.S. law. To the extent that amounts are
so withheld by Parent or the Purchaser, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the Seller in respect
of which such deduction and withholding was made by Parent or the Purchaser.
Each Seller agrees, jointly and severally, to indemnify, reimburse and hold
harmless Parent and the Purchaser with respect to any liability for failure to
withhold any amounts from payments of the Per Share Consideration, including any
taxes, interest and penalties imposed on or payable by Parent or the Purchaser
in respect of any such failure to withhold any amounts from payments of the Per
Share Consideration.
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2. Parent's and Purchaser's Representations and Warranties. Each of Parent and
the Purchaser represents and warrants to each Seller that (a) it is duly
authorized to execute and deliver this Agreement, (b) this Agreement is a valid
and binding agreement, enforceable against it in accordance with its terms, (c)
neither the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby, nor the performance of its obligations
hereunder, will (i) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation, or acceleration) under any material
contract, agreement, instrument, commitment, arrangement or understanding to
which it is a party, including, without limitation, that certain Agreement and
Plan of Merger, dated as of February 14, 2005, by and among Parent, the
Purchaser and MCI, as amended through the date hereof (the "Merger Agreement"),
and any confidentiality or non-disclosure agreement to which Parent or any of
its Affiliates, on the one hand, and MCI or any of its Affiliates, on the other
hand, are parties, (ii) require any material consent, authorization or approval
of any Person (as defined below) (other than pursuant to the HSR Act (as defined
below)), or (iii) violate or conflict with any domestic or foreign law, statute,
code, rule, regulation, writ, injunction or decree applicable to it, (d) as of
the date hereof, it is not the "beneficial owner" (as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended) of any shares of MCI
Common Stock and has no agreement, arrangement or understanding with any Person
to acquire beneficial ownership of such Person's shares of MCI Common Stock
(other than pursuant to the Merger Agreement), (e) the Purchaser has, or will
have at the applicable date or dates, all funds necessary to pay the aggregate
Per Share Consideration, (f) it understands that the Shares have not been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
nor qualified under any state securities laws, and that the Shares are being
sold pursuant to an exemption from such registration and qualification based in
part upon the representations of Parent and the Purchaser contained in this
Agreement, (g) it is familiar with the business and operations of MCI and its
subsidiaries and has been given opportunity to obtain from MCI and its
subsidiaries all information that it deems necessary regarding their business
and prospects and it acknowledges that the Sellers have made no representations
or warranties about MCI's or MCI's subsidiaries business, prospects, financial
condition or otherwise, (h) it is an "accredited investor" as such term is
defined in Rule 501(a) under the Securities Act and has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of the investment contemplated by this Agreement and it is
able to bear the economic risk of its investment in MCI (including a complete
loss of its investment), (j) it understands that it must bear the economic risk
of this investment indefinitely unless the Shares are registered pursuant to the
Securities Act or an exemption from such registration is available and unless
the disposition of the Shares is qualified under applicable state securities
laws or an exemption from such qualification is available, (i) it is acquiring
the Shares solely for its own account for investment and not with a view towards
the resale, transfer, or distribution thereof, nor with any present intention of
distributing the Shares and (k) none of the execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby, the
performance of its obligations hereunder nor any announcement with respect
thereto, will cause it or any of its Affiliates (or a "group", if any, of which
it
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or they are a part) to be deemed an "Acquiring Party" under that certain Rights
Agreement, dated as of April 20, 2004, by and between MCI and the Bank of New
York (the "Rights Agreement").
3. Sellers' Representations and Warranties. The Sellers jointly and severally
represent and warrant to Parent and the Purchaser that (a) each Seller is duly
authorized to execute and deliver this Agreement, (b) this Agreement is a valid
and binding agreement, enforceable against such Seller in accordance with its
terms, (c) each Seller has and will have at the Closing legal and valid title to
the Shares set forth opposite its name on Schedule A hereto, free and clear of
all liens and encumbrances and has all power to vote, dispose of and exercise
all other rights with respect to such Shares, subject to the terms of this
Agreement and the Letter Agreement, dated January 24, 2004, as amended on May 4,
2004, among the Sellers and the U.S. Department of Justice, (d) the sale and
delivery of the Shares to the Purchaser in accordance with the terms hereof will
vest in Purchaser legal and valid title to the Shares, free and clear of all
liens and encumbrances (other than any liens or encumbrances arising as a result
of the ownership of the Shares by the Purchaser or of arrangements entered into
by or theretofore applicable to the Purchaser), (e) neither the execution and
delivery of this Agreement, the consummation of the transactions contemplated
hereby, nor the performance of each Seller's obligations hereunder, will (i)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation, or acceleration) under any material contract, agreement,
instrument, commitment, arrangement or understanding to which such Seller is a
party, or result in the creation of a security interest, lien, charge,
encumbrance, equity or claim with respect to such Seller's Shares, (ii) require
any material consent, authorization or approval of any Person (other than
pursuant to the HSR Act) or (iii) violate or conflict with any domestic or
foreign law, statute, code, rule, regulation, writ, injunction or decree
applicable to such Seller or such Seller's Shares, (f) each Seller understands
that it must bear the economic risk of its investment in the obligations in
respect of the Per Share Adjustment Amount and/or the Call Confirmations for
their duration unless (to the extent they constitute a security) such
obligations in respect of the Per Share Adjustment Amount and/or Call
Confirmations are registered pursuant to the Securities Act or an exemption from
such registration is available and unless the disposition of the obligations in
respect of the Per Share Adjustment Amount and/or Call Confirmations is
qualified under applicable state securities laws or an exemption from such
qualification is available, (g) it is acquiring the obligations in respect of
the Per Share Adjustment Amount and/or Call Confirmations solely for its own
account for investment and not with a view towards the resale, transfer, or
distribution thereof, nor with any present intention of distributing the Call
Confirmations, (h) each Seller is an "accredited investor" as such term is
defined in Rule 501(a) under the Securities Act and has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of the investment contemplated by this Agreement and (i)
the Shares are not, and at Closing will not be, described in Section 1.897-9T(b)
of the U.S. Treasury Regulations.
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4. Certain Matters Pertaining to Confidential Information. Each Seller
represents, warrants, covenants and acknowledges as follows:
(a) Each Seller is a sophisticated investor and has the appropriate knowledge
and experience in financial and business matters to evaluate, negotiate, and
implement the sale of the Shares. Each Seller has been afforded the opportunity
to consult with such financial, investment, legal and tax experts (collectively,
the "Advisors") as such Seller deems appropriate in connection with the sale of
the Shares. Each Seller has adequate information with respect to the business,
financial affairs and prospects of MCI and its subsidiaries to evaluate the
merits and risks of the sale of the Shares and each such Seller has been
afforded the opportunity to discuss such information with its respective
Advisors. Based on such information as they have deemed appropriate, the Sellers
have made the decision to sell the Shares to the Purchaser, and have done so
independently and without reliance upon Parent, the Purchaser (or any agent or
advisor of, or any other Person or entity affiliated or associated with, Parent
or the Purchaser) for any investigation or assessment to evaluate MCI, the
Shares, the Per Share Consideration or any other matter relating to MCI or the
transactions contemplated hereby; provided, however, that nothing in this
Section 4 shall in any way limit the representations, warranties or agreements
of Parent and the Purchaser set forth in this Agreement, and each of Parent and
the Purchaser acknowledge that the Sellers are relying on such representations
and warranties.
(b) Neither Parent, the Purchaser nor any agent or advisor of, or any other
Person or entity affiliated or associated with, Parent or the Purchaser (i) has
made any representations or warranties, express or implied, of any kind to the
Sellers or their Affiliates regarding or relating to MCI, any of its Affiliates
or the Shares, or the accuracy or completeness of any information or documents
regarding MCI, any of its Affiliates or the Shares, or (ii) has any obligation
to the Sellers, express or implied, including, without limitation, fiduciary
obligations, in each case, other than the express representations, warranties
and obligations set forth in this Agreement.
(c) Each Seller acknowledges that each of Parent and the Purchaser possesses or
has access to or the benefit of material non-public information regarding MCI
and its subsidiaries ("Confidential Information") that has not been communicated
to such Seller and each Seller further acknowledges that it is proceeding with
the transactions contemplated hereby knowingly and voluntarily without access to
or the benefit of such Confidential Information.
(d) Each Seller hereby waives any and all claims it (or any Person or entity for
which it is acting as a duly authorized fiduciary or agent) may have or may
hereafter acquire against Parent or the Purchaser, or any Person or entity
affiliated or associated with Parent or the Purchaser, or any of the respective
stockholders, partners, members, managers, directors, officers, employees,
advisors, agents and representatives of Parent or the Purchaser, and any such
Person or entity, relating to any failure by any of them to
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disclose Confidential Information to such Seller in connection with the sale of
the Shares contemplated hereby.
(e) Each Seller is aware that Parent and the Purchaser are relying upon the
truth and accuracy of the foregoing representations, warranties, covenants and
acknowledgements in purchasing the Shares from such Seller.
5. Closing. The closing of the purchase and sale of the Shares contemplated
hereby (the "Closing") shall take place at the offices of Debevoise & Plimpton
LLP, 919 Third Avenue, New York, NY 10022, at 10:00 a.m. on the first business
day after the date that the conditions set forth in Section 6 and Section 7
hereof shall be satisfied or waived (other than those conditions which by their
nature will be satisfied at the Closing), or such other time, date or place as
the parties may mutually agree. At the Closing:
(a) the Sellers or one of their Affiliates will sell, transfer and deliver the
Shares, represented by certificates duly endorsed in blank or other valid
instruments of transfer; and
(b) the Purchaser will purchase the Shares and deliver to the Sellers (i) the
Per Share Base Amount in respect of each Share by wire transfer of immediately
available funds to the previously designated account(s) of the Sellers and (ii)
if agreed upon by the parties, the Call Confirmations in such separate
denominations as previously designated by the Sellers.
6. Conditions to Parent's and the Purchaser's Obligations. The obligations of
Parent and the Purchaser to consummate the purchase and sale of the Shares and
the conveyance of beneficial ownership therein as provided in this Agreement
(the "Transaction") are subject to (i) the waiting period under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), having
been terminated or expired, and all other consents and approvals from all
governmental and self-regulatory authorities necessary for the consummation of
the Transaction having been obtained, other than those other consents and
approvals the failure of which to obtain would not, individually or in the
aggregate, have a materially adverse effect on the ability of Parent and the
Purchaser to perform their respective obligations hereunder or on Parent's or
the Purchaser's ability to realize the benefits of the ownership of the Shares,
(ii) the representations and warranties of the Sellers hereunder being true when
made and being true in all material respects as of the Closing as if made at and
as of the date thereof, (iii) the Sellers having complied in all material
respects with all agreements and covenants required to be performed by them
hereunder at or prior to the Closing and (iv) there not being in effect any
injunction or other order issued by a court of competent jurisdiction or
governmental agency restraining or prohibiting the consummation of the
Transaction.
7. Conditions to the Sellers' Obligations. The obligations of the Sellers to
consummate the Transaction are subject to (i) there not being in effect any
injunction or other order issued by a court of competent jurisdiction
restraining or prohibiting the consummation of the Transaction, (ii) the
representations and warranties of Parent and
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the Purchaser hereunder being true when made and being true in all material
respects as of the Closing as if made at and as of the date thereof, (iii)
Parent and the Purchaser having complied in all material respects with all
agreements and covenants required to be performed by them hereunder at or prior
to the Closing and (iv) the applicable waiting period under the HSR Act having
been terminated or expired, and all other material consents and approvals from
all governmental and self-regulatory authorities necessary for the consummation
of the Transaction having been obtained, other than those other consents and
approvals the failure of which to obtain would not have a materially adverse
effect on the ability of the Sellers to perform their respective obligations
hereunder. Notwithstanding anything in this Agreement to the contrary, no Seller
shall be obligated to sell such Seller's Shares at the Closing unless the
Purchaser purchases all of the Shares at the Closing.
8. Certain Covenants.
(a) To the extent permitted by law, from the date hereof until the Closing, the
Sellers shall support the transactions contemplated by the Merger Agreement and
oppose any proposal made in opposition to, in competition with, or in conflict
with such transactions.
(b) None of the Sellers, nor any of their respective stockholders, partners,
members, managers, directors, officers, employees, advisors, agents and
representatives, shall (i) from the date hereof until the Closing, without the
consent of Parent, make public statements or communications with respect to the
transactions contemplated by the Merger Agreement or this Agreement, unless such
statements or communications are required by law or by obligations pursuant to
any listing agreement with or rules of any securities exchange or (ii) from the
date hereof until the Anniversary Date, knowingly take or omit to take any
action the taking or omission of which would reasonably be expected to delay
materially or to prevent the transactions contemplated by the Merger Agreement.
(c) Each Seller, Parent and the Purchaser agrees to use commercially reasonable
efforts to cause the conditions to Closing set forth herein to be satisfied as
promptly as practicable after the date hereof and to cause the Closing to occur
in accordance with the terms hereof. At any time or times from and after the
Closing, the Sellers, on the one hand, and Parent and the Purchaser, on the
other hand, shall, at the request of the other party, execute and deliver any
further instruments and documents and take all such further action as such other
may reasonably request in order to evidence or effect the intents and purposes
of the Transaction.
(d) Parent and the Purchaser shall as promptly as practical, and in any event
within ten (10) business days of the date hereof, make all necessary filings,
and thereafter make any other required submissions with respect to this
Agreement and the consummation of the transactions contemplated hereby, as
required under the HSR Act, provided, that in connection with such filings,
Parent, the Purchaser and their respective Affiliates shall offer to the U.S.
Department of Justice (the "DOJ") and, if requested by the DOJ, each such entity
will commit, to divest the Shares acquired from the Sellers in the event that
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Parent's proposed acquisition of MCI (i) is challenged successfully by the DOJ
or any other agency of the United States federal government or (ii) is
discontinued or abandoned by Parent or MCI following a government indication
that it will mount a challenge to such acquisition, or the Merger Agreement is
otherwise terminated. Parent and the Purchaser shall further offer and, if
requested by the DOJ, commit to the DOJ, that such divestiture would be
accomplished as expeditiously as practicable (consistent with Parent's and the
Purchaser's reasonable efforts to realize value and Parent's and the Purchaser's
compliance with securities laws) following the date of any such challenge or
abandonment. In addition, in connection with the filings required in connection
with the transactions contemplated hereby under the HSR Act, Parent and the
Purchaser hereby agree that any such filings shall only seek approval to cross
the "$500 million (as adjusted)" notification threshold, as defined by 16 C.F.R.
Section 801.1(h)(3) and that Parent and the Purchaser shall not seek approval to
cross the "twenty-five percent (25%) if valued at greater than $1 billion (as
adjusted)" notification threshold, as defined by 16 C.F.R. Section 801.1(h)(4).
(e) Neither Parent, the Purchaser nor any Seller will take any action that would
result in a breach of any covenant, representation or warranty or any other
obligation hereunder by such party. Each Seller agrees to notify Parent promptly
if it learns of any event that would result in a failure of the conditions set
forth in Section 6 hereof to be satisfied or that would constitute a breach of
any of its representations, warranties or covenants hereunder. Each of Parent
and the Purchaser agrees to notify the Sellers promptly if it learns of any
event that would result in a failure of the conditions set forth in Section 7
hereof to be satisfied or that would constitute a breach of its representations,
warranties or covenants hereunder.
(f) Parent will either perform or cause the Purchaser to perform, when due all
of the Purchaser's obligations under this Agreement.
(g) As of the date hereof, neither Parent nor the Purchaser is, and from the
date hereof until the Closing, neither Parent nor the Purchaser will take any
action that would result in either party or any of such party's Affiliates (or
any "group" of which it or they are a part) to be deemed, an "Acquiring Party"
under the Rights Agreement, unless such Rights Agreement has otherwise been
rendered inapplicable to Parent, the Purchaser or any such group.
(h) Parent and the Purchaser acknowledge that the certificates evidencing the
Shares will bear a legend reflecting the restrictions on the transfer of such
securities under the Securities Act.
9. Distributions. The Sellers agree that the Per Share Base Amount shall be
reduced by the amount (or, in the case of a non-cash dividend, the fair market
value) of dividends per Share declared as of any record date after the date
hereof and prior to the Closing; provided, however, that in the event any such
dividend that caused a reduction of the Per Share Base Amount shall not
ultimately be paid to or for the benefit of Sellers, the
8
--------------------------------------------------------------------------------
amount of such reduction shall be reversed or equitably adjusted to take into
account such event.
10. Indemnification. Parent agrees to reimburse each Seller, each Person, if
any, who controls such Seller and each officer, director, employee and agent of
such Seller and of any such controlling Person for out-of-pocket costs and
expenses actually incurred for counsel, experts, support costs and related
expenses in the defense of any legal action or proceeding brought by a third
party against any such party arising out of or resulting from this Agreement or
the transactions contemplated hereby, other than any such legal action or
proceeding resulting from a breach or alleged breach of any representation or
warranty or agreement of a Seller contained herein. It is expressly agreed that
Parent's aggregate liability under this Section 10 shall not exceed $15,000,000.
11. Expenses. Except as otherwise set forth herein, each of the parties hereto
shall pay its own expenses incurred in connection with this Agreement and the
transactions contemplated hereby.
12. Survival. All representations, warranties and agreements made by the
Sellers, Parent or the Purchaser in this Agreement shall survive the Closing
hereunder and any investigation at any time made by or on behalf of any party
hereto.
13. Notices. All notices, claims, requests, demands and other communications
hereunder will be in writing and will be deemed to have been duly given if
delivered or mailed (registered or certified mail, postage prepaid, return
receipt) as follows:
(a) If to Parent or the Purchaser, to:
Verizon Communications Inc.
1095 Avenue of the Americas
New York, New York 10036
Telecopier: (212) 597-2518
Attention: Corporate Secretary
with a copy to (which shall not constitute notice):
Debevoise & Plimpton LLP
919 Third Avenue
New York, New York 10022
Telecopier: (212) 909-6836
Attention: Jeffrey J. Rosen, Esq.
William D. Regner, Esq.
9
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(b) If to the Sellers, to:
c/o Telefonos de Mexico, S.A. de C.V.
Parque Via 190, Oficina 702
Col. Cuauhtemoc
CP 06599 Mexico, D.F.
Mexico
Telecopier: 52 555 592 66 87
Attention: Sergio Rodriguez Molleda
with a copy to (which shall not constitute notice):
Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, New York 10019
Telecopier: (212) 728-8111
Attention: Myron Trepper, Esq.
David K. Boston, Esq.
or such other address as the person to whom notice is to be given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
14. Specific Performance. Money damages would not be a sufficient remedy for any
breach of this Agreement by any party and, in addition to all other remedies
available under applicable law, each party shall be entitled to specific
performance and to injunctive or other equitable relief as a remedy for any such
breach. Neither Parent, the Purchaser nor any Seller will oppose the granting of
such relief and each will waive any requirement for the posting of any bond or
other security in connection therewith.
15. Termination. This Agreement may be terminated by (a) mutual agreement of the
Sellers, Parent and the Purchaser, (b) the Sellers or Parent and the Purchaser
if the Closing shall not have occurred by the date that is nine (9) months from
the date hereof; provided, however, that the right to terminate this Agreement
under this Section 15(b) shall not be available to Sellers, on the one hand, or
Parent and the Purchaser, on the other, if such parties' failure to fulfill any
obligations under this Agreement has been the primary cause of, or resulted in,
the failure of the Closing to occur before such date, (c) Parent and the
Purchaser, in the case of any material breach of this Agreement by any Seller,
(d) any Seller, in the case of any material breach of this Agreement by Parent
or the Purchaser or (e) any Seller, the Purchaser or Parent, if a court of
competent jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued a non-appealable order, decree or ruling or taken
any other action (which order, decree or ruling the parties hereto shall use
their best efforts to lift), which permanently restrains, enjoins or otherwise
prohibits the transactions contemplated by this Agreement.
10
--------------------------------------------------------------------------------
16. Definitions. As used in this Agreement, the following terms have the
respective meanings set forth below:
(a) "Affiliate" shall mean, with respect to any Person, any other Person
controlling, controlled by or under direct or indirect common control with such
Person. For the purposes of this definition, "control," when used with respect
to any specified Person, shall mean the power to direct the management and
policies of such Person, directly or indirectly, whether through ownership of
voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" shall have meanings correlative to the foregoing.
(b) "Person" shall mean an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association or joint venture or any other entity, including without limitation,
any governmental agency or entity.
17. Miscellaneous. This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto. No party to this Agreement may assign any of its
rights or obligations hereunder without the prior written consent of the other
parties, except that (i) the rights and obligations of Parent and the Purchaser
may be assigned to one or more Affiliates of Parent, but no such transfer shall
relieve Parent or the Purchaser of its obligations hereunder if such transferee
does not perform such obligations, and (ii) the rights and obligations of a
Seller may be assigned to an Affiliate of such Seller to which such Seller
simultaneously assigns such Seller's Shares, at which time such assignee will be
deemed a Seller under this Agreement and such assignee shall execute a
counterparty signature page to this Agreement, but no such transfer shall
relieve the transferring Seller of its obligations hereunder if such transferee
does not perform such obligations. This Agreement may be executed in two or more
counterparts, each of which will be deemed to be an original but all of which
together will constitute one and the same instrument. This Agreement 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. This Agreement shall be binding upon and inure solely to the benefit of
each party hereto, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any Person not a party to this Agreement any
rights, benefits or remedies of any nature whatsoever. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
(regardless of the laws that might otherwise govern under applicable New York
principles of conflicts of law). The parties hereby irrevocably submit to the
exclusive jurisdiction of the courts of the County and State of New York and the
Federal courts of the United States of America located in the County and State
of New York solely in respect of the interpretation and enforcement of the
provisions of this Agreement and in respect of the transactions contemplated
hereby, and hereby waive, and agree not to assert, as a defense in any action,
suit or proceeding for the interpretation or enforcement hereof, that it is not
subject thereto or that such action, suit or proceeding may not be brought or is
not maintainable in said courts or that the venue thereof may not be appropriate
or that this Agreement may not be enforced in
11
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or by such courts, and the parties hereto irrevocably agree that all claims with
respect to such action or proceeding shall be heard and determined in such a New
York State or Federal court.
18. Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER, (ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS
WAIVER, (iii) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 18.
12
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
parties hereto as of the date first written above.
VERIZON COMMUNICATIONS INC.
By: ----------------------------------
Name:
Title:
ELI ACQUISITION, LLC
By: ----------------------------------
Name:
Title:
CONTROLADORA DE SERVICIOS DE
TELECOMUNICACIONES, S.A. DE C.V.
By: ----------------------------------
Name:
Title:
GLOBAL TELECOM LLC
By: ----------------------------------
Name:
Title:
INMOBILIARIA INBURSA, S.A. DE C.V.
By: ----------------------------------
Name:
Title:
(Signature Page to Stock Purchase Agreement)
--------------------------------------------------------------------------------
PROMOTORA INBURSA, S.A. DE C.V.
By: ----------------------------------
Name:
Title:
BANCO INBURSA, S.A. INSTITUCION
DE BANCA MULTIPLE GRUPO FINANCIERO
INBURSA
By: ----------------------------------
Name:
Title:
INMOBILIARIA PARA EL
DESARROLLO DE PROYECTOS, S.A. DE C.V.
By: ----------------------------------
Name:
Title:
ORIENT STAR HOLDINGS LLC
By: ----------------------------------
Name:
Title:
COMMERCIAL LLC
By: ----------------------------------
Name:
Title:
(Signature Page to Stock Purchase Agreement)
--------------------------------------------------------------------------------
Schedule A
Seller
--------------------------------------------------------------------------------
Number of
Shares
---------
Controladora de Servicios de Telecomunicaciones, S.A. de C.V. 25,620,055
Global Telecom LLC 2,916,515
Inmobiliaria Inbursa, S.A. de C.V. 1,085,726
Promotora Inbursa, S.A. de C.V. 1,444,803
Banco Inbursa, S.A. Institucion de Banca Multiple Grupo
Financiero Inbursa 2,600,000
Inmobiliaria para el Desarrollo de Proyectos, S.A. de C.V. 1,856,577
Orient Star Holdings LLC 6,643,468
Commercial LLC 1,280,540
-----------
TOTAL 43,447,684
-----------
--------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE Media contacts:
April 9, 2005 Peter Thonis
212-395-2355
214-557-2285 (cell)
peter.thonis@verizon.com
Bob Varettoni
212-395-7726
robert.a.varettoni@verizon.com
Verizon to Purchase All Shares of MCI Owned by Entities
Affiliated With Carlos Slim Helu
NEW YORK - Verizon Communications Inc. (NYSE:VZ) today announced an agreement to
purchase approximately 43.4 million shares of MCI, Inc. (NASDAQ:MCIP) common
stock from eight entities affiliated with Carlos Slim Helu for $25.72 per share
in cash. The purchase, which is subject to regulatory approvals, is expected to
close in several weeks.
Under the agreement, Verizon will pay the Slim entities an adjustment at the end
of one year in an amount per MCI share equal to 0.7241 times the amount by which
the price of Verizon's common stock exceeds $35.52 per share (measured over a
20-day period). The prices for the MCI and Verizon shares were set by Verizon
and the Slim entities based upon the market prices for the stocks at the time of
the agreement.
Verizon Chairman and CEO Ivan Seidenberg said, "While this was an opportunity
for us to purchase a block of shares under unique circumstances and is an
important step forward in our acquisition of MCI, we will continue to assess the
situation as we move toward a vote by the MCI shareholders."
--------------------------------------------------------------------------------
With more than $71 billion in annual revenues, Verizon Communications Inc.
(NYSE:VZ) is one of the world's leading providers of communications services.
Verizon has a diverse work force of more than 210,000 in four business units:
Domestic Telecom serves customers based in 29 states with wireline
telecommunications services, including broadband and other services. Verizon
Wireless owns and operates the nation's most reliable wireless network, serving
43.8 million voice and data customers across the United States. Information
Services operates directory publishing businesses and provides electronic
commerce services. International includes wireline and wireless operations and
investments, primarily in the Americas and Europe. For more information, visit
www.verizon.com.
####
VERIZON'S ONLINE NEWS CENTER: Verizon news releases, executive speeches and
biographies, media contacts, high quality video and images, and other
information are available at Verizon's News Center on the World Wide Web at
www.verizon.com/news. To receive news releases by e-mail, visit the News Center
and register for customized automatic delivery of Verizon news releases.
Verizon intends to file a registration statement, including a proxy statement of
MCI, and other materials with the Securities and Exchange Commission ("SEC") in
connection with the proposed transaction. We urge investors to read these
documents when they become available because they will contain important
information. Investors will be able to obtain free copies of the registration
statement and proxy statement, as well as other filed documents containing
information about Verizon and MCI, at www.sec.gov, the SEC's website. Investors
may also obtain free copies of these documents at www.verizon.com/investor, or
by request to Verizon Communications Inc., Investor Relations, 1095 Avenue of
the Americas, 36th Floor, New York, NY 10036. Free copies of MCI's filings are
available at www.mci.com/about/investor_relations, or by request to MCI, Inc.,
Investor Relations, 22001 Loudoun County Parkway, Ashburn, VA 20147.
Verizon, MCI, and their respective directors, executive officers, and other
employees may be deemed to be participants in the solicitation of proxies from
MCI shareowners with respect to the proposed transaction. Information about
Verizon's directors and executive officers is available in Verizon's proxy
statement for its 2005 annual meeting of shareholders, dated March 21, 2005.
Information about MCI's directors and executive officers is available in MCI's
annual report on Form 10-K for the year ended December 31, 2003. Additional
information about the interests of potential participants will be included in
the registration statement and proxy statement and other materials filed with
the SEC.
NOTE: This press release contains statements about expected future events and
financial results that are forward-looking and subject to risks and
uncertainties. For those statements, we claim the protection of the safe harbor
for forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995. The following important factors could affect future results
and could cause those results to differ materially from those expressed in the
forward-looking statements: a significant change in the timing of, or the
imposition of any government conditions to, the closing of the transaction;
actual and contingent liabilities; and the extent and timing of our ability to
obtain revenue enhancements and cost savings following the transaction.
Additional factors that may affect the future results of Verizon and MCI are set
forth in their respective filings with the Securities and Exchange Commission,
which are available at www.verizon.com/investor/ and
www.mci.com/about/investor_relations/sec/.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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