DISK004:[98CLG6.98CLG3726]BA3726A.;28 - About TELUS

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Stock Options The following table indicates the number of BCT.TELUS Common Shares and BCT.TELUS Non-Voting Shares that will be under option by the proposed directors and executive officers as a group and others upon the Arrangement becoming effective. Number of Number of BCT.TELUS BCT.TELUS Non-Voting Common Shares Shares under Group under Option Option Directors (1) ................................................ 274,410 91,468 Executive Officers (2) ......................................... 420,832 140,274 Others (3) .................................................. 1,529,113 509,698 Notes: (1) Includes 15 of the 16 proposed directors of BCT.TELUS referred to under the heading ‘‘Directors’’. George K. Petty’s options are included under Executive Officers. (2) Includes the eight proposed executive officers of BCT.TELUS referred to under the heading ‘‘Executive Officers’’. (3) Includes 249 additional officers and employees of BCT.TELUS and its subsidiaries, upon the Arrangement becoming effective. (4) Exercise prices will be confirmed upon the Arrangement becoming effective. See ‘‘The Effect of the Arrangement on Shareholdings — Option Exchange’’. (5) No market values of the securities under option are available as the BCT.TELUS Common Shares and BCT.TELUS Non-Voting Shares are currently not listed or posted for trading. (6) Expiry dates are not determinable as change of control provisions may trigger acceleration in certain options. Pro Forma Interest and Asset Coverage The following pro forma asset coverage ratio has been calculated as at September 30, 1998 based on BCT.TELUS pro forma unaudited combined consolidated financial information. The pro forma interest coverage ratio has been calculated based on the twelve months ended September 30, 1998. BCT.TELUS September 30, 1998 Pro Forma Interest Coverage ............................................. 5.0 Pro Forma Net Tangible Asset Coverage: Per $1,000 principal amount of long-term debt (before deduction of recorded deferred income taxes) ..................................................... 2.6 Per $1,000 principal amount of long-term debt (after deduction of recorded deferred income taxes) ..................................................... 2.6 Memorandum and Articles of BCT.TELUS This summary of the Memorandum and Articles of BCT.TELUS is qualified in its entirety by reference to the full text of such Memorandum and Articles which is attached and contained in Appendix B. Share Capital and Rights of Conversion The authorized capital of BCT.TELUS will consist of 4,000,000,000 shares divided into 1,000,000,000 Common Shares without par value, 1,000,000,000 Non-Voting Shares without par value, 1,000,000,000 First Preferred Shares without par value and 1,000,000,000 Second Preferred Shares without par value. Immediately prior to the Effective Date there will be three Common Shares issued and outstanding. One Common Share will be held by BC TELECOM and two Common Shares will be held by TELUS. These three Common Shares will be cancelled as part of the Arrangement. See ‘‘Details of the Arrangement and Related Transactions — Arrangement Steps’’. 38
The following is a summary of the material provisions of the share capital of BCT.TELUS: Common Shares and Non-Voting Shares Without Par Value. Subject to the prior rights of the holders of First Preferred Shares and Second Preferred Shares, the Common Shares and the Non-Voting Shares are entitled to participate equally with each other with respect to the payment of dividends and the right to participate in the distribution of assets of BCT.TELUS on the liquidation, dissolution or winding up of BCT.TELUS. Neither the Common Shares nor the Non-Voting Shares can be subdivided, consolidated, reclassified or otherwise changed unless the other class is changed in the same manner. The holders of the Common Shares are entitled to receive notice of, attend, be heard and vote at any general meeting of the members of BCT.TELUS on the basis of one vote per Common Share held. The holders of Non-Voting Shares are entitled to receive notice of, attend and be heard at all general meetings of the members of BCT.TELUS and are entitled to receive all notices of meetings, information circulars and other written information from BCT.TELUS that the holders of Common Shares are entitled to receive from BCT.TELUS, but are not entitled to vote at such general meetings unless otherwise required by law. See ‘‘Details of the Arrangement and Related Transactions — Comparisons between the BCCA and each of the CBCA and the ABCA’’. In order to ensure that the holders of the Non-Voting Shares can participate in any offer which is made to the holders of the Common Shares (but is not made to the holders of Non-Voting Shares on the same terms), which offer must by reason of applicable securities legislation or the requirements of a stock exchange on which the Common Shares are listed be made to all or substantially all the holders of Common Shares who are in any province of Canada to which the requirement applies (an ‘‘Exclusionary Offer’’), each holder of Non-Voting Shares will, for the purposes of the Exclusionary Offer only, be permitted to convert all or part of the Non-Voting Shares held into an equivalent number of Common Shares during the applicable conversion period. In certain circumstances (namely, the delivery of certificates, at specified times, by holders of 50% or more of the issued and outstanding Common Shares to the effect that they will not, among other things, tender to such Exclusionary Offer or make an Exclusionary Offer), these conversion rights will not come into effect. If the Telecommunications Act and the regulations thereunder are changed so that there is no restriction on any non-Canadians holding Common Shares, holders of Non-Voting Shares will have the right to convert all or part of their Non-Voting Shares into Common Shares on a one for one basis, and BCT.TELUS will have the right to require holders of Non-Voting Shares who do not make such an election to convert such shares into an equivalent number of Common Shares. BCT.TELUS will provide notice to each holder of Common Shares before a general meeting of members at which holders of Non-Voting Shares will be entitled to vote as a class. In such event, holders of Common Shares will have the right to convert all or part of their Common Shares into Non-Voting Shares on a one for one basis provided and to the extent that BCT.TELUS and its subsidiaries remain in compliance with the foreign ownership provisions of the Telecommunications Act and the regulations thereunder. The Common Shares are subject to constraints on transfer to ensure BCT.TELUS ongoing compliance with the foreign ownership provisions of the Telecommunications Act and the regulations thereunder. As well, holders of Common Shares will have the right, if approved by the Board of Directors of BCT.TELUS, to convert Common Shares into Non-Voting Shares in order that BCT.TELUS be in compliance with the foreign ownership provisions of the Telecommunications Act and the regulations thereunder. The Articles and the capital of BCT.TELUS can be amended by special resolution as defined in the Articles and BCCA. In addition, the BCCA provides for other specific matters that require approval by special resolution. See ‘‘Details of the Arrangement and Related Transactions — Comparisons between the BCCA and each of the CBCA and ABCA — Special Resolutions’’. In all other respects, each Common Share and each Non-Voting Share have the same rights and attributes. First Preferred Shares. The First Preferred Shares may be issued from time to time in one or more series, each series comprising the number of shares, and having attached thereto the designation, rights, privileges, 39
Page 1 and 2: NOTICES OF SPECIAL MEETINGS AND JOI
Page 3 and 4: Dear Shareholders of BC TELECOM Inc
Page 5 and 6: BC TELECOM Inc. NOTICE OF SPECIAL M
Page 7 and 8: SUMMARY The following is a summary
Page 9 and 10: from a financial point of view, to
Page 11 and 12: Selected Pro Forma Combined Consoli
Page 13 and 14: the Arrangement. BC TELECOM and TEL
Page 15 and 16: GLOSSARY OF TERMS ‘‘ABCA’’
Page 17 and 18: ‘‘Interim Orders’’ means th
Page 19 and 20: JOINT MANAGEMENT PROXY CIRCULAR Thi
Page 21 and 22: amendment or other matter except as
Page 23 and 24: Meeting, that the transferee’s na
Page 25 and 26: On July 24, 1998, management report
Page 27 and 28: public debt of BC TELECOM, BC TEL a
Page 29 and 30: Conclusions and Recommendation The
Page 31 and 32: Arrangement and the BC TELECOM Spec
Page 33 and 34: In connection with the TELUS Board
Page 35 and 36: Option Exchange For the BC TELECOM
Page 37 and 38: BCT.TELUS COMMUNICATIONS INC. Busin
Page 39 and 40: Key Operating Statistics The follow
Page 41 and 42: The directors’ compensation will
Page 43: espectively, and BCT.TELUS pro form
Page 47 and 48: Directors, to convert the excess vo
Page 49 and 50: Compensation and Option Agreements
Page 51 and 52: The BCCA requires court approval in
Page 53 and 54: BC TELECOM or BCT.TELUS, provided t
Page 55 and 56: action or make any announcement to
Page 57 and 58: Stentor Alliance Each of the curren
Page 59 and 60: holding corporation. The Regulation
Page 61 and 62: Depository for pickup by the holder
Page 63 and 64: governed by registered retirement s
Page 65 and 66: On November 30, 1998, the CRTC issu
Page 67 and 68: determined but the computer systems
Page 69 and 70: Act as described below, be deemed t
Page 71 and 72: Capital gains realized by an indivi
Page 73 and 74: stock options or otherwise as compe
Page 75 and 76: BC TELECOM SHAREHOLDERS RIGHTS OF D
Page 77 and 78: The above is only a summary of the
Page 79 and 80: Recent Developments Dividends On Oc
Page 81 and 82: The making of a modifying or supers
Page 83 and 84: On October 16, 1998, the last full
Page 85 and 86: TELUS CERTIFICATE The contents of t
Page 87 and 88: APPENDIX A SPECIAL RESOLUTIONS A-1
Page 89 and 90: TELUS CORPORATION SPECIAL RESOLUTIO
Page 91 and 92: APPENDIX B — ARRANGEMENT AGREEMEN
Page 93 and 94: TABLE OF CONTENTS Article Subject P
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AMENDED AND RESTATED ARRANGEMENT AG
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‘‘GTE’’ means GTE Corporati
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1.2 Interpretation Not Affected by
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in the case of Salomon Smith Barney
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5.3 Consultation BC TELECOM and TEL
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interfere with or be inconsistent w
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of Directors of such Party determin
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(v) provide notice to BC TELECOM of
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(g) in a timely and expeditious man
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or actual application by the Comp.
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statements delivered on the date of
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immediately available funds to an a
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In the event of the termination of
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10.3 Time of Essence Time shall be
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1.1 Definitions Plan of Arrangement
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‘‘Plan of Arrangement’’ or
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encumbrances) in exchange for Merge
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shares. If the foregoing calculatio
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‘‘Exchange’’) for the first
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(ii) if to a Shareholder: to the la
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SCHEDULE B REPRESENTATIONS AND WARR
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6. Disclosure. BC TELECOM has publi
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hereto and except for such failure
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date hereof, the execution and deli
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11. Insurance. Policies of insuranc
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SCHEDULE D GOVERNANCE ARRANGEMENTS
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SCHEDULE E MEMORANDUM AND ARTICLES
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Part Article Subject Page 8 BORROWI
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Part Article Subject Page 20 DIVIDE
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PROVINCE OF BRITISH COLUMBIA COMPAN
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3.3. Except as otherwise permitted
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and with such consents of members h
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9.3. The Directors may, whenever th
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this Article 10.15 shall continue n
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12.2. The remuneration of the Direc
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PART 16 PROCEEDINGS OF DIRECTORS 16
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designated at the Effective Date, u
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20.6. No dividend shall bear intere
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Shares of all series shall particip
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PART 27 COMMON SHARES AND NON VOTIN
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ight of withdrawal from the Exclusi
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27.6.1 In this Article 27.6, unless
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conversion as is such holder’s pr
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are not suspended, is reduced to no
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surrender of such certificate and a
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(b) whether or not any shareholder
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IN THE SUPREME COURT OF BRITISH COL
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11. The only persons entitled to at
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C-6 ACTION NO: A983181 VANCOUVER RE
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2. The TELUS Common Shareholders an
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evidence or material which is to be
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APPENDIX D PROCEDURE TO EXERCISE DI
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(8) Share certificate. — A dissen
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APPENDIX E PROCEDURE TO EXERCISE DI
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(8) Unless the Court otherwise orde
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APPENDIX F FAIRNESS OPINIONS F-1
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December 8, 1998 The Board of Direc
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Scope of Review In connection with
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The Fairness Opinion is given as of
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and financial condition of BC TELEC
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The board of directors of BCT (the
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(xx) representations contained in a
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Fairness of the Technology Heads of
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financial and operating contributio
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We obtained financial projections f
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the underlying value of BCT was a m
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Relationship With Interested Partie
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In preparing the Fairness Opinion,
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independent evaluation or appraisal
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APPENDIX G — INFORMATION RELATING
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BC TELECOM INC. ANNUAL INFORMATION
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major groups including Law and Regu
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telecommunications services through
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PROPERTY Property of BC TEL The pri
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The price cap plan does not have an
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• In July 1996, Stentor filed an
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anticipates that its provision of P
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• Toll contribution will remain t
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In Decisions 97-19 and 97-20, the C
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SELECTED CONSOLIDATED FINANCIAL INF
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Name and Residence Principal Occupa
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DIVIDEND REINVESTMENT AND SHARE PUR
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APPENDIX B Please refer to Manageme
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MANAGEMENT’S DISCUSSION AND ANALY
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BC TEL reported increases in equipm
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BC TEL Advanced Communications inve
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Forbearance on Long Distance Servic
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currently expect that our networks
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part due to the introduction of the
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After adjusting cash from operation
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BC TELECOM INC. AUDITED COMPARATIVE
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BC TELECOM INC. CONSOLIDATED STATEM
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BC TELECOM INC. CONSOLIDATED STATEM
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BC TELECOM INC. NOTES TO CONSOLIDAT
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Page 287 and 288:
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BC TELECOM INC. UNAUDITED INTERIM C
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What does it mean for employees? Ob
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BC TELECOM INC. CONSOLIDATED BALANC
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BC TELECOM INC. EXECUTIVE COMPENSAT
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1. Summary Compensation Table (Cont
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3. Defined Benefit Plans (Continued
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an annual 360 feedback process. The
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In the case of the outgoing Chief E
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APPENDIX H TELUS Corporation INFORM
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TELUS CORPORATION ANNUAL INFORMATIO
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NAME AND INCORPORATION OF TELUS COR
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Local Services Local services allow
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With the exception of terminal devi
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deliver all aspects of the computin
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no recovery schedule of TELUS Commu
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Forbearance In 1996 and 1997 the CR
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Competition Currently, competition
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Five Year Data SELECTED CONSOLIDATE
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DIRECTORS AND OFFICERS Directors Th
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The directors and senior management
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Revenues from other services such a
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Operations 1997 1996 Change % Opera
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Future Income Tax Asset January 1,
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Investing Activities 1997 1996 Chan
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Long distance competition was activ
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Competitive Strategy In late 1996 T
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TELUS TELUS TELUS TELUS Advertising
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Operating expenses Operating expens
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Liquidity and Capital Resources Cas
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The debt component as a proportion
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AUDITORS’ REPORT TO: THE SHAREHOL
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TELUS CORPORATION CONSOLIDATED STAT
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TELUS CORPORATION CONSOLIDATED BALA
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TELUS CORPORATION NOTES TO CONSOLID
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9. Deferred Charges TELUS CORPORATI
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Page 373 and 374:
Page 375 and 376:
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TELUS CORPORATION UNAUDITED INTERIM
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By pooling resources, the joint ven
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centre and additional staffing. Exp
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TELUS CORPORATION CONSOLIDATED STAT
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TELUS CORPORATION CONSOLIDATED BALA
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EXECUTIVE COMPENSATION SUMMARY COMP
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REPORT ON EXECUTIVE COMPENSATION Th
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PERFORMANCE GRAPH The following gra
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APPENDIX I BCT.TELUS COMMUNICATIONS
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COMPILATION REPORT To the Directors
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BCT.TELUS Communications Inc. PRO F
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BC TELECOM INC. RECLASSIFIED CONSOL
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BCT.TELUS Communications Inc. NOTES
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BCT.TELUS Communications Inc. NOTES
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LONG-TERM RELATIONSHIP AGREEMENT TH
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(b) in the case of a partnership or
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material assets or material sale of
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non-Canadian residents. GTE and Ang
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5.13 GTE Responsibility GTE agrees
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IN THE SUPREME COURT OF BRITISH COL
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IN THE COURT OF QUEEN’S BENCH OF
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DISK004:[98CLG6.98CLG3726]BA3726A.;28 - About TELUS

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