Rogers 2003 Annual Report Download - page 65

2003 Annual ReportRogers Communications Inc. 63
Cost Sharing and Services Agreements
The Company has entered into other cost sharing and services agreements with its subsidiaries in the areas of account-
ing, purchasing, human resources, real estate administration, accounts payable processing, remittance processing, payroll
processing, e-commerce, the RCI data centre and other common services and activities. Generally, these services are pro-
vided to the RCI subsidiaries by the Company and are on renewable terms of one year and may be terminated by either
party on 30 to 90 days notice. To the extent that RCI incurs expenses and makes PP&E expenditures, these costs are typi-
cally reimbursed by the Company, on a cost recovery basis, in accordance with the services provided on behalf of the
Company by RCI.
Corporate Opportunity
Rogers and Wireless have agreed under a business areas and transfer agreement that Rogers will, subject to any required
regulatory, lender or other approvals, continue to conduct all of its cellular telephone operations and related mobile
communications businesses through Wireless. Rogers believes that by conducting its cellular telephone operations and
related mobile communications business through Wireless, the potential for conflicts of interest between Wireless and
Rogers and directors or officers of Rogers who are also directors or officers of Wireless will be reduced.
Minority Shareholders Protection Agreement
The Company has entered into a shareholder protection agreement with Wireless that extends certain protections to
holders of Wireless’ Class B Restricted Voting Shares (“RWCI’s Restricted Voting Shares”). The Company has agreed with
Wireless that:
• in respect to a “going-private” transaction involving Wireless proposed by Rogers or insiders, associates or affiliates
thereof:
• a formal valuation of RWCI’s Restricted Voting Shares will be prepared by an independent valuer,
• the consideration offered per share will not be less than the value or will be within or exceed the range of values per
share arrived at in the formal valuation, and
• such transaction will be subject to approval by the majority of the minority of RWCI’s Restricted Voting Shares
(minority shareholders will exclude the Company’s affiliates); and
• in respect to an issuer bid or insider bid made by Rogers or any of its subsidiaries relating to Wireless:
• a formal valuation will be prepared by an independent valuer, and
• the consideration offered per share to holders of RWCI’s Restricted Voting Shares will not be less than 662/3% of the
value (or of the midpoint of the range of values) arrived at in the formal valuation.
The Company and Wireless have also agreed under the terms of the shareholder protection agreement that a committee
of independent directors of Wireless will be responsible for the selection of the independent valuer and will review and
report to the Board of Directors on any transaction. The Board of Directors will be required to disclose its reasonable
belief as to the desirability or fairness of the transaction to holders of RWCI’s Restricted Voting Shares.
The shareholder protection agreement provides certain instances in which a transaction is not subject to the valu-
ation and minority approval requirements, including if the price to be offered to all shareholders is arrived at through
arm’s length negotiations with a selling holder of a sizeable block of RWCI’s Restricted Voting Shares, provided such
holder had full knowledge and access to information concerning Wireless. Further, a going-private transaction will not be
subject to minority shareholder approval where 90% or more of the outstanding RWCI’s Restricted Voting Shares are held
by Rogers or its affiliates. Rogers has agreed that, so long as Rogers owns or controls shares representing 50% or more of
the voting interest of the shares of the Company, Rogers will not vote any of RWCI’s Restricted Voting Shares which it
may own or control with respect to the election of the three directors to be elected by the holders of RWCI’s Restricted
Voting Shares as a class.
The provisions of the shareholder protection agreement may not be waived or amended by Rogers or Wireless
without the approval of the majority of holders of RWCI’s Restricted Voting Shares, excluding any holder who was an
affiliate of Wireless. The rights and obligations under the shareholder protection agreement are in addition to any applic-
able requirements of law and regulatory authorities.
Arrangements between RCI Subsidiaries
Invoicing of Common Customers
Pursuant to an agreement with Cable, Wireless purchases the accounts receivables of Cable for common subscribers who
elect to receive a consolidated invoice. Wireless is compensated for costs of bad debts, billing costs and services and
other determinable costs by purchasing these receivables at a discount. The discount is based on actual costs incurred for
the services provided and is reviewed periodically. This agreement is for a term of one year.
Distribution of Wireless’ Products and Services
Cable and Wireless have entered into an agreement for the sale of the Company’s products and services through the
Rogers Video retail outlets owned by Cable. Wireless pays Cable commissions for new subscriptions equivalent to
amounts paid to third-party distributors.
Management’s Discussion and Analysis