EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
dated as of
December 19, 2001
by and among
AT&T CORP.,
AT&T BROADBAND CORP.,
COMCAST CORPORATION,
AT&T BROADBAND ACQUISITION CORP.,
COMCAST ACQUISITION CORP.
and
AT&T COMCAST CORPORATION
TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions....................................................2
ARTICLE 2
PARENT AND MERGER SUBS
SECTION 2.01. Organization of Parent........................................24
SECTION 2.02. Directors and Officers of Parent..............................24
SECTION 2.03. Organization of Merger Subs...................................24
SECTION 2.04. Actions of Comcast and AT&T...................................24
SECTION 2.05. Rights Plan...................................................25
ARTICLE 3
THE MERGERS
SECTION 3.01. The AT&T Broadband Merger.....................................25
SECTION 3.02. The Comcast Merger............................................25
SECTION 3.03. Certificate and Articles of Incorporation; Bylaws.............26
SECTION 3.04. Directors and Officers of the Surviving Corporations..........26
SECTION 3.05. Alternative Structure.........................................27
ARTICLE 4
CONVERSION OF SECURITIES
SECTION 4.01. Conversion of Securities......................................27
SECTION 4.02. Exchange of Certificates......................................31
SECTION 4.03. Section 355(e) Top-up.........................................39
SECTION 4.04. Additional Payment............................................40
SECTION 4.05. Additional Exchange Arrangements..............................41
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF COMCAST
SECTION 5.01. Corporate Existence and Power.................................42
SECTION 5.02. Corporate Authorization.......................................42
SECTION 5.03. Governmental Authorization....................................42
SECTION 5.04. Non-contravention.............................................43
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SECTION 5.05. Capitalization................................................43
SECTION 5.06. Subsidiaries..................................................44
SECTION 5.07. SEC Filings...................................................45
SECTION 5.08. Financial Statements..........................................46
SECTION 5.09. Information Supplied..........................................46
SECTION 5.10. Absence of Certain Changes....................................46
SECTION 5.11. No Undisclosed Material Liabilities...........................47
SECTION 5.12. Compliance with Laws and Court Orders.........................47
SECTION 5.13. Litigation....................................................47
SECTION 5.14. Finders' Fees.................................................48
SECTION 5.15. Opinion of Financial Advisor..................................48
SECTION 5.16. Taxes.........................................................48
SECTION 5.17. Tax Opinions..................................................49
SECTION 5.18. Employee Benefit Plans and Labor Matters......................49
SECTION 5.19. Environmental Matters.........................................52
SECTION 5.20. Intellectual Property.........................................52
SECTION 5.21. Contracts.....................................................53
SECTION 5.22. Vote Required.................................................54
SECTION 5.23. Antitakeover Statutes; Charter and Bylaw Provisions...........54
SECTION 5.24. AT&T Securities...............................................54
SECTION 5.25. Transactions with Affiliates..................................54
SECTION 5.26. Investments...................................................54
SECTION 5.27. No Approval Rights............................................55
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF AT&T
SECTION 6.01. Corporate Existence and Power.................................55
SECTION 6.02. Corporate Authorization.......................................55
SECTION 6.03. Governmental Authorization....................................56
SECTION 6.04. Non-contravention.............................................57
SECTION 6.05. Capitalization................................................57
SECTION 6.06. AT&T Broadband and AT&T Broadband Subsidiaries................59
SECTION 6.07. SEC Filings...................................................60
SECTION 6.08. Financial Statements..........................................61
SECTION 6.09. Information Supplied..........................................61
SECTION 6.10. Absence of Certain Changes....................................62
SECTION 6.11. No Undisclosed Material Liabilities...........................62
SECTION 6.12. Compliance with Laws and Court Orders.........................63
SECTION 6.13. Litigation....................................................63
SECTION 6.14. Finders' Fees.................................................63
SECTION 6.15. Opinion of Financial Advisor..................................64
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SECTION 6.16. Taxes.........................................................64
SECTION 6.17. Tax Opinions..................................................65
SECTION 6.18. Employee Benefit Plans and Labor Matters......................65
SECTION 6.19. Environmental Matters.........................................67
SECTION 6.20. Intellectual Property.........................................68
SECTION 6.21. Contracts.....................................................69
SECTION 6.22. AT&T Shareholder Vote.........................................70
SECTION 6.23. Antitakeover Statutes.........................................70
SECTION 6.24. Comcast Securities............................................70
SECTION 6.25. TWE; At Home..................................................70
SECTION 6.26. Intercompany Transactions.....................................72
SECTION 6.27. Sufficiency of Transferred Assets.............................72
SECTION 6.28. Investments...................................................73
ARTICLE 7
COVENANTS OF COMCAST
SECTION 7.01. Comcast Interim Operations....................................73
SECTION 7.02. Comcast Shareholders' Meeting; Proxy Material.................77
SECTION 7.03. Voting Agreement..............................................78
ARTICLE 8
COVENANTS OF AT&T
SECTION 8.01. AT&T Broadband Interim Operations.............................78
SECTION 8.02. AT&T Shareholders' Meeting; Proxy Material....................85
SECTION 8.03. No Solicitation...............................................86
SECTION 8.04. Ancillary Agreements..........................................88
SECTION 8.05. Neutrality Agreement..........................................89
SECTION 8.06. Broadband Employees...........................................89
SECTION 8.07. AT&T Post-Signing Equity Awards...............................90
SECTION 8.08. Redemption of TCI Pacific Preferred Stock.....................90
SECTION 8.09. Note Consent Process..........................................90
ARTICLE 9
COVENANTS OF AT&T, COMCAST AND PARENT
SECTION 9.01. Best Efforts..................................................91
SECTION 9.02. Joint Proxy Statement; Registration Statement.................92
SECTION 9.03. Public Announcements..........................................93
SECTION 9.04. Further Assurances............................................93
SECTION 9.05. Access to Information.........................................94
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SECTION 9.06. Tax-free Transactions.........................................94
SECTION 9.07. Affiliates....................................................94
SECTION 9.08. Governance and Other Matters..................................95
SECTION 9.09. Notices of Certain Events.....................................95
SECTION 9.10. Section 16 Matters............................................96
SECTION 9.11. Director and Officer Liability................................96
SECTION 9.12. Listing of Stock..............................................97
SECTION 9.13. Employee Matters..............................................98
SECTION 9.14. Employment Agreements........................................100
SECTION 9.15. Interim Finance Committee....................................100
SECTION 9.16. TOPRS........................................................101
SECTION 9.17. Consideration................................................102
SECTION 9.18. QUIPS........................................................102
SECTION 9.19. Index Stock..................................................105
SECTION 9.20. Use of Name and Logo.........................................105
SECTION 9.21. Exchange Agreement...........................................106
SECTION 9.22. Significant Excepted Transactions............................107
SECTION 9.23. Comcast's AT&T Stock..........................................108
ARTICLE 10
CONDITIONS TO THE MERGERS
SECTION 10.01. Conditions to the Obligations of Each Party..................109
SECTION 10.02. Conditions to the Obligations of AT&T........................111
SECTION 10.03. Conditions to the Obligations of Comcast.....................112
ARTICLE 11
TERMINATION
SECTION 11.01. Termination..................................................113
SECTION 11.02. Effect of Termination........................................114
SECTION 11.03. Fees and Expenses............................................115
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. Notices......................................................117
SECTION 12.02. Survival.....................................................118
SECTION 12.03. Amendments; No Waivers.......................................119
SECTION 12.04. Successors and Assigns.......................................119
SECTION 12.05. Governing Law................................................119
SECTION 12.06. Jurisdiction.................................................119
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SECTION 12.07. WAIVER OF JURY TRIAL.........................................120
SECTION 12.08. Counterparts; Effectiveness..................................120
SECTION 12.09. Entire Agreement; No Third Party Beneficiaries...............120
SECTION 12.10. Severability.................................................120
SECTION 12.11. Specific Performance.........................................121
SECTION 12.12. Schedules....................................................121
EXHIBITS AND SCHEDULES
Exhibit A - Form of Support Agreement
Exhibit B - Form of Rule 145 Affiliate Letter
Exhibit C - Form of Separation and Distribution Agreement
Exhibit D-1 - Form of Parent Charter (Preferred Structure)
Exhibit D-2 - Term Sheet for Parent Charter (Alternative Structure)
Exhibit D-3 - Form of Parent Bylaws
Exhibit D-4 - Form of Comcast Articles Amendment
Exhibit E - AT&T Broadband Financial Statements (12/31/00 and 9/30/01)
Exhibit F - Admission Agreement AT&T Disclosure Schedule Comcast
Disclosure Schedule
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of December 19,
2001, by and among AT&T Corp., a New York corporation ("AT&T"), AT&T Broadband
Corp., a Delaware corporation and a wholly owned subsidiary of AT&T ("AT&T
Broadband"), Comcast Corporation, a Pennsylvania corporation ("Comcast"), AT&T
Comcast Corporation, a Pennsylvania corporation ("Parent"), AT&T Broadband
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Parent ("AT&T Broadband Merger Sub"), and Comcast Acquisition Corp., a
Pennsylvania corporation and a wholly owned subsidiary of Parent ("Comcast
Merger Sub").
WHEREAS, AT&T Broadband is a newly formed wholly owned subsidiary of AT&T
that will hold, directly or indirectly, all of the assets and liabilities of
the AT&T Broadband Group in accordance with the terms and conditions of the
Separation and Distribution Agreement (as defined below);
WHEREAS, the Boards of Directors of AT&T, AT&T Broadband and Comcast and
each of the other parties hereto have approved this Agreement and deem it
advisable and in the best interests of their respective shareholders to
consummate the transactions contemplated hereby on the terms and conditions set
forth herein;
WHEREAS, immediately prior to the execution and delivery of this
Agreement, as a condition and inducement to AT&T's willingness to enter into
this Agreement, each of Sural LLC ("Comcast Shareholder"), Mr. Brian L.
Roberts, Comcast and Parent has executed and delivered to AT&T the support
agreement, dated as of the date hereof, in the form attached as Exhibit A (the
"Support Agreement");
WHEREAS, it is intended that, for United States federal income tax
purposes, the Mergers (as defined below) shall qualify as tax-free exchanges
described in Section 351 of the Internal Revenue Code of 1986, as amended (the
"Code"), and the rules and regulations promulgated thereunder;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. (a) The following terms, as used herein, have
the following meanings:
"1933 Act" means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
"1934 Act" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
"A Shareholder Approval" means the approval, by a majority of the votes
cast, of the holders of the Comcast Class A Common Stock (voting as a class at
a meeting at which a quorum is present) of this Agreement and the transactions
contemplated by this Agreement and the Articles Amendment.
"Additional Commercial Agreements" has the meaning set forth in the
Separation and Distribution Agreement.
"Admission Agreement" means the Instrument of Admission, in the form
attached hereto as Exhibit F, pursuant to which AT&T and Parent will become
parties to the Exchange Agreement.
"Affiliate" means, with respect to any Person, any other Person, directly
or indirectly, controlling, controlled by, or under common control with such
Person.
"Aggregate Former Employee Broadband Option Amount" means:
(a) if the AT&T Common Stock trades "ex-distribution" or "when issued (to
give effect to the Distribution)" on the NYSE on or immediately prior to the
Distribution Date, the excess of (i) the product of the aggregate number of
shares of AT&T Broadband Common Stock subject to Broadband Options granted
pursuant to Section 5.3(b) of the Employee Benefits Agreement, multiplied by
the Broadband Common Stock Value (as defined in the Employee Benefits
Agreement), over (ii) the aggregate exercise price of such Broadband Options;
and
(b) if the AT&T Common Stock does not trade "ex-distribution" or "when
issued (to give effect to the Distribution)" on the NYSE on or immediately
prior to the Distribution Date, the product of
(i) a fraction, the numerator or which is the product of the Comcast
Stock Price multiplied by the Preliminary Exchange Ratio, and the
denominator of which is the AT&T Closing Stock Value; times
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(ii) the excess of (i) the product of the aggregate number of shares
of AT&T Common Stock subject to unexercised AT&T Options held by Former
Employees (both as defined in the Employee Benefits Agreement) immediately
prior to the Distribution Date, times the AT&T Closing Stock Value, over
(ii) the aggregate exercise price of such AT&T Options.
"Ancillary Agreements" has the meaning set forth in the Separation and
Distribution Agreement.
"AOL" means AOL Time Warner Inc., a Delaware corporation.
"Articles Amendment" mean the articles of amendment to the articles of
incorporation of Comcast in the form attached as Exhibit D-4.
"At Home" means At Home Corporation, a Delaware corporation and/or its
bankruptcy estate, as the case may be.
"AT&T 10-K" means AT&T's annual report on Form 10-K for the fiscal year
ended December 31, 2000.
"AT&T Balance Sheet" means the consolidated balance sheet of AT&T and its
consolidated Subsidiaries as of December 31, 2000 and the footnotes thereto, as
set forth in the AT&T 10-K.
"AT&T Broadband Acquisition Proposal" means any offer or proposal for, or
any indication of interest in (i) a merger, consolidation, share exchange,
business combination, reorganization, recapitalization or other similar
transaction involving AT&T, the AT&T Broadband Group, AT&T Broadband or any
AT&T Significant Broadband Subsidiary, (ii) the acquisition, directly or
indirectly, of (A) an equity interest representing greater than 25% of the
voting securities of AT&T, the AT&T Broadband Group, AT&T Broadband or any AT&T
Significant Broadband Subsidiary or (B) assets, securities or ownership
interests representing an amount equal to or greater than 25% of the
consolidated assets or EBITDA generating power of the AT&T Broadband Group, or
(iii) any transaction (x) the entering into or the consummation of which would
reasonably be expected to be inconsistent in any material respect with the
consummation of the transactions contemplated by this Agreement and the other
Transaction Agreements, on the terms set forth in this Agreement and the other
Transaction Agreements, as the case may be, or (y) that would reasonably be
expected to prevent or materially delay, impede or adversely affect the
consummation of the transactions contemplated by this Agreement and the other
Transaction Agreements other than (X) in the case of (i) or (ii), (I) the
transactions contemplated by this Agreement,
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(II) transactions permitted pursuant to Section 8.01 or (III) transactions that
would not directly or indirectly (other than indirectly by virtue of the
ownership of securities of AT&T) include any of the businesses, assets or
liabilities of, or materially affect the business of, AT&T (to the extent
relating to the AT&T Broadband Group), the AT&T Broadband Group, AT&T Broadband
or any AT&T Broadband Subsidiary and (Y) in the case of (i), (ii) or (iii), a
transaction that does not involve the AT&T Broadband Group, AT&T Broadband or
any AT&T Broadband Subsidiary (except to the extent relating to (A) the
transactions contemplated by this Agreement and the other Transaction
Agreements or (B) a spin-off of the AT&T Broadband Group substantially pro rata
to the holders of AT&T Common Stock not in connection with any other
transaction involving the AT&T Broadband Group) that in any such case is
consistent in all material respects with the consummation of the transactions
contemplated by this Agreement and the other Transaction Agreements, on the
terms set forth in this Agreement and the other Transaction Agreements, as the
case may be; provided that each of the parties to such transaction agrees that
AT&T and AT&T Broadband shall honor the terms and conditions of this Agreement
(any transaction referred to in this clause (Y), an "Excepted Transaction").
"AT&T Broadband Assets" has the meaning set forth in the Separation and
Distribution Agreement.
"AT&T Broadband Balance Sheet" means the unaudited combined balance sheet
of the AT&T Broadband Group as of September 30, 2001 and the footnotes thereto,
as attached as Exhibit E.
"AT&T Broadband Balance Sheet Date" means September 30, 2001.
"AT&T Broadband Business" has the meaning set forth in the Separation and
Distribution Agreement.
"AT&T Broadband Common Stock" means the Common Stock, par value $0.01 per
share, of AT&T Broadband, which, subject to the terms of the Separation and
Distribution Agreement, will be distributed on a one-for-one basis on the
Distribution Date to holders of shares of AT&T Common Stock.
"AT&T Broadband Entities" has the meaning set forth in the Separation and
Distribution Agreement.
"AT&T Broadband Financial Statements" means the unaudited combined
financial statements of the AT&T Broadband Group as of and for the periods
ending December 31, 2000 and September 30, 2001 and the footnotes thereto, as
attached as Exhibit E.
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"AT&T Broadband Group" has the meaning set forth in the Separation and
Distribution Agreement.
"AT&T Broadband Material Adverse Effect" means a material adverse effect
on the financial condition, assets or results of operations of the AT&T
Broadband Group, taken as a whole, excluding any such effect resulting from or
arising in connection with (i) changes or conditions generally affecting the
industries in which the AT&T Broadband Group (including AT&T Broadband and all
the AT&T Broadband Subsidiaries) operate, (ii) changes in general economic,
regulatory or political conditions, or (iii) the announcement of this Agreement
or of the transactions contemplated hereby.
"AT&T Broadband Subsidiary" has the meaning set forth in the Separation
and Distribution Agreement.
"AT&T Closing Stock Value" has the meaning set forth in the Employee
Benefits Agreement.
"AT&T Common Stock" means the Common Stock, par value $1.00 per share, of
AT&T.
"AT&T Communications Business" has the meaning set forth in the Exchange
Agreement.
"AT&T Communications Group" has the meaning set forth in the Separation
and Distribution Agreement.
"AT&T Confidentiality Agreement" means the confidentiality letter
agreement, dated September 28, 2001, as amended, by and between AT&T and
Comcast providing for, among other things, confidential treatment of
information provided by AT&T to Comcast.
"AT&T Disclosure Schedule" means the AT&T disclosure schedule delivered to
Comcast concurrently herewith.
"AT&T Employees" has the meaning set forth in the Separation and
Distribution Agreement.
"AT&T ESPP" means the AT&T Employee Stock Purchase Plan.
"AT&T Exchangeable Preferred Stock" has the meaning set forth in the
definition of Exchange Amount.
"AT&T Group" means AT&T together with the AT&T Subsidiaries.
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"AT&T Registration Rights Agreement" means the Registration Rights
Agreement dated as of June 11, 2001 between Comcast PC Investments Inc. and
AT&T.
"AT&T Significant Broadband Subsidiary" means any AT&T Broadband
Subsidiary that would have constituted a "significant subsidiary" (within the
meaning of Rule 1-02 of Regulation S-X of the SEC) of the AT&T Broadband Group
as of December 31, 2000 if, as of such date, the AT&T Broadband Group were a
reporting company under the 1934 Act; provided that for purposes hereof, the
phrase "EBITDA" will be substituted for the phrase "income from continuing
operations before income taxes, extraordinary items and cumulative effect of a
change in accounting principle" in Rule 1-02(w)(3).
"AT&T Significant Subsidiary" means any AT&T Subsidiary that would
constitute a "significant subsidiary" (within the meaning of Rule 1-02 of
Regulation S-X of the SEC) as of December 31, 2000; provided that for purposes
hereof, the phrase "EBITDA" will be substituted for the phrase "income from
continuing operations before income taxes, extraordinary items and cumulative
effect of a change in accounting principle" in Rule 1-02(w)(3).
"AT&T Subsidiary" means a Subsidiary of AT&T; provided that
notwithstanding the Distribution, AT&T Broadband and the AT&T Broadband
Subsidiaries will be treated as AT&T Subsidiaries through the Effective Time
but not thereafter.
"Average Class A Price" means the average (rounded to the nearest
1/10,000) of the Trading Values for the 10 Trading Days randomly selected by
lot by AT&T and Comcast from the Trading Days occurring during the Pricing
Period, which 10 Trading Days shall be the same as the 10 Trading Days used to
calculate the Average Class A Special Price.
"Average Class A Special Price" means the average (rounded to the nearest
1/10,000) of the Trading Values for the 10 Trading Days randomly selected by
lot by AT&T and Comcast from the Trading Days occurring during the Pricing
Period.
"Average Class C Price" means the average (rounded to the nearest
1/10,000) of the Trading Values for the 10 Trading Days randomly selected by
lot by AT&T and Comcast from the Trading Days occurring during the Pricing
Period, which 10 Trading Days shall be the same as the 10 Trading Days used to
calculate the Average Class A Special Price.
"Benefit Arrangement" means, with respect to any Person, any employment,
severance or similar contract or arrangement (whether or not
6
written) or any plan, policy, fund, program or arrangement or contract
providing for compensation, bonus, profit-sharing, stock option, or other
stock-related rights or other forms of incentive or deferred compensation,
vacation benefits, insurance coverage (including any self-insured
arrangements), health or medical benefits, disability benefits, workers'
compensation, supplemental unemployment benefits, severance benefits and
post-employment or retirement benefits (including compensation, pension,
health, medical or life insurance or other benefits) that (i) is not an
Employee Plan, (ii) is entered into, maintained, administered or contributed to
or required to be contributed to, as the case may be, by such Person or any of
its Affiliates and (iii) covers any employee or former employee of such Person
or any of its Subsidiaries employed in the United States.
"Broadband Benefit Arrangement" means a Benefit Arrangement that is a
Broadband Benefit Plan as defined in the Employee Benefits Agreement.
"Broadband Deferred Compensation Plan" means a Deferred Compensation Plan
that is a Broadband Plan as defined in the Employee Benefits Agreement.
"Broadband Employee" has the meaning set forth in the Employee Benefits
Agreement, except that for purposes of this Agreement, "Broadband Employee"
shall include any Broadband Transferee, and for purposes of Section 9.13,
"Broadband Employee" shall not include any current or former non-employee
director of AT&T Broadband with respect to service as a director.
"Broadband Employee Plan" means an Employee Plan that is a Broadband
Benefit Plan as defined in the Employee Benefits Agreement.
"Broadband International Plan" means an International Plan that is a
Broadband Benefit Plan as defined in the Employee Benefits Agreement.
"Broadband Options" has the meaning set forth in the Employee Benefits
Agreement.
"Broadband Pension Plan" means a Pension Plan that is a Broadband Benefit
Plan as defined in the Employee Benefits Agreement.
"Broadband Transferee" has the meaning set forth in the Employee Benefits
Agreement.
"Broadband Value" means the product of the Exchange Ratio multiplied by
the average (rounded to the nearest 1/10,000) of the Trading Values of Comcast
Class A Common Stock for the 10 Combined Trading Days randomly selected by lot
by AT&T and Comcast from the Combined Trading Days
7
occurring during the 20 consecutive Combined Trading Days following the Closing
Date.
"Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
close.
"Class A Liberty Media Group Common Stock" means the Class A Liberty Media
Group Common Stock, par value $1.00 per share, of AT&T.
"Class B Liberty Media Group Common Stock" means the Class B Liberty Media
Group Common Stock, par value $1.00 per share, of AT&T.
"Closing Date" means the date on which the Effective Time occurs.
"Combined Trading Day" means any day which is both a Trading Day and a
NYSE Trading Day.
"Comcast 10-Q" means Comcast's annual report on Form 10-Q for the fiscal
quarter ended September 30, 2001.
"Comcast Affiliate" means an Affiliate of Comcast.
"Comcast Balance Sheet" means the unaudited consolidated balance sheet of
Comcast and its consolidated Subsidiaries as of September 30, 2001 and the
footnotes thereto, as set forth in the Comcast 10-Q.
"Comcast Balance Sheet Date" means September 30, 2001.
"Comcast Benefit Arrangements" means the Benefit Arrangements of Comcast
or any Comcast Subsidiary.
"Comcast Class A Common Stock" means the Class A Common Stock, par value
$1.00 per share, of Comcast.
"Comcast Class A Special Common Stock" means the Class A Special Common
Stock, par value $1.00 per share, of Comcast.
"Comcast Class B Common Stock" means the Class B Common Stock, par value
$1.00 per share, of Comcast.
"Comcast Common Stock" means the Comcast Class A Common Stock, the Comcast
Class A Special Common Stock and the Comcast Class B Common Stock.
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"Comcast Confidentiality Agreement" means the confidentiality letter
agreement, dated September 28, 2001, as the same may be amended from time to
time, by and between AT&T and Comcast providing for, among other things,
confidential treatment of information provided by Comcast to AT&T.
"Comcast Deferred Compensation Plan" means a Deferred Compensation Plan of
Comcast or any Comcast Affiliate for the benefit of any current or former
employee or director of Comcast or any Comcast Subsidiary.
"Comcast Disclosure Schedule" means the Comcast disclosure schedule
delivered to AT&T concurrently herewith.
"Comcast Employee Plan" means an Employee Plan of Comcast or any Comcast
Subsidiary.
"Comcast ESPP" means the Comcast Employee Stock Purchase Plan.
"Comcast Group" means Comcast together with the Comcast Subsidiaries.
"Comcast International Plan" means an International Plan of Comcast or any
Comcast Subsidiary.
"Comcast Material Adverse Effect" means a material adverse effect on the
financial condition, assets or results of operations of the Comcast Group taken
as a whole, excluding any such effect resulting from or arising in connection
with (i) changes or conditions generally affecting the industries in which
Comcast and the Comcast Subsidiaries, operate, (ii) changes in general
economic, regulatory or political conditions, or (iii) the announcement of this
Agreement or of the transactions contemplated hereby.
"Comcast Pension Plan" means a Pension Plan of Comcast or any of its ERISA
Affiliates.
"Comcast Significant Subsidiary" means any Comcast Subsidiary that would
constitute a "significant subsidiary" (within the meaning of Rule 1-02 of
Regulation S-X of the SEC) as of December 31, 2000; provided that for purposes
hereof, the phrase "EBITDA" will be substituted for the phrase "income from
continuing operations before income taxes, extraordinary items and cumulative
effect of a change in accounting principle" in Rule 1-02(w)(3).
"Comcast Stock Price" means the average (rounded to the nearest 1/10,000)
of the Trading Values of Comcast Class A Common Stock for the five consecutive
Trading Days immediately preceding the Distribution Date.
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"Comcast Subsidiary" means a Subsidiary of Comcast.
"Communications Act" means the Communications Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Communications Value" means the average (rounded to the nearest 1/10,000)
of the Trading Values of AT&T Common Stock for the 10 Combined Trading Days
randomly selected by lot by AT&T and Comcast from the Combined Trading Days
occurring during the 20 consecutive Combined Trading Days following the Closing
Date, which shall be the same 10 Combined Trading Days as used for the
calculation of Broadband Value.
"Confidentiality Agreements" means the AT&T Confidentiality Agreement and
the Comcast Confidentiality Agreement.
"Debentures" means the 5% Junior Convertible Subordinated Debentures due
2029 of AT&T.
"Deferred Compensation Plan" means, with respect to any Person, any plan,
agreement or arrangement that (i) is described under Sections 4(b)(5) or
401(a)(1) of ERISA (or similar plan covering one or more non-employee directors
of a Person), (ii) is maintained, administered or contributed to or required to
be contributed to or required to be contributed to by such Person or any of its
Affiliates and (iii) covers any current or former employee or director of such
Person or any of its Subsidiaries.
"DGCL" means the Delaware General Corporation Law.
"Distribution" has the meaning set forth in the Separation and
Distribution Agreement.
"Distribution Date" has the meaning set forth in the Separation and
Distribution Agreement.
"Dividend Stock" has the meaning set forth in the definition of Exchange
Amount.
"EBITDA" means operating income plus depreciation plus amortization, in
each case as determined in accordance with GAAP.
"Employee Benefits Agreement" has the meaning set forth in the Separation
and Distribution Agreement.
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"Employee Plan" means, with respect to any Person, any "employee benefit
plan" (as defined in Section 3(3) of ERISA) that (i) is subject to any
provision of ERISA, (ii) is maintained, administered or contributed to or
required to be contributed to by such Person or any of its Affiliates and (iii)
covers any employee or former employee of such Person or any of its
Subsidiaries.
"Environmental Laws" means any United States federal, state or local,
foreign or supranational law (including common law), treaty, judicial decision,
regulation, rule, judgment, order, decree, injunction, permit or governmental
restriction or requirement or any agreement with any Governmental Authority or
other third party, relating to human health and safety, the environment or to
pollutants, contaminants, wastes or chemicals or any toxic, radioactive,
ignitable, corrosive, reactive or otherwise hazardous substances, wastes or
materials.
"Environmental Permits" means, with respect to any Person, all permits,
licenses, franchises, certificates, approvals and other similar authorizations
of any Governmental Authority relating to or required by Environmental Laws and
affecting, or relating in any way to, the business of such Person or any of its
Subsidiaries as currently conducted.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" of any Person means any other Person that, together with
such Person, would be treated as a single employer under Section 414 of the
Code.
"Excepted Transaction" has the meaning set forth in the definition of AT&T
Broadband Acquisition Proposal.
"Exchange Agreement" means the Exchange Agreement dated as of December 7,
2001 between Comcast and Microsoft.
"Exchange Amount" means an amount "K" where "K" is derived from the
following equation:
K = (T x (B + C))/C
provided that in no event shall K exceed the product of 10.0%
multiplied by the total number of shares of AT&T Common Stock that
would be outstanding immediately after giving effect to the exchange
of the AT&T Exchangeable Preferred Stock.
11
The variables used to calculate K pursuant to the foregoing formula are
defined as follows:
"T" is the number of shares of AT&T Common Stock held by Comcast
and any Comcast Subsidiary immediately prior to the Distribution.
"B" is the Broadband Value.
"C" is the Communications Value.
"Exchange Date" has the meaning set forth in Section 9.23.
"Exchange Ratio" means the value, "X", as defined below (and rounded to
the nearest 1/10,000). The purpose of the Exchange Ratio is to determine the
number of shares of Parent Common Stock that will be delivered in exchange for
each outstanding share of AT&T Broadband Common Stock at the Effective Time,
and to adjust for the value of certain employee options and stock appreciation
rights to be assumed by Parent as of the Effective Time.
"X" is defined according to the following formula:
1,235,000,000 - (I+F)/C
-----------------------
X = O
The variables used in calculating X pursuant to the foregoing formula are
defined as follows:
"C" is the Comcast Stock Price.
"O" is (i) the number of shares of AT&T Broadband Common Stock
outstanding immediately prior to the AT&T Broadband Merger excluding
any shares issued pursuant to the QUIPS Exchange and any shares held
by any wholly owned AT&T Broadband Subsidiary plus (ii) the number of
shares, if any, of AT&T Common Stock in respect of which rights
pursuant to Section 910 of the NYBCL have purportedly been exercised
and not withdrawn. For purposes of this definition and for the
avoidance of doubt, any restricted shares of AT&T Broadband Common
Stock that have been awarded prior to the date of this Agreement and
not forfeited prior to the Closing Date shall be considered
"outstanding", regardless of whether an election has been made with
respect to such shares pursuant to Section 83(b) of the Code.
12
"I" is the aggregate "in-the-money" amount for all unexercised
AT&T Stock Options outstanding as of the date of this Agreement and
held by Broadband Employees immediately prior to the Closing Date
whose exercise price, as of the Closing Date, is less than the AT&T
Closing Stock Value, calculated with respect to each such AT&T Stock
Option as the product of:
(A) the excess of the AT&T Closing Stock Value over the exercise
price, as of the Closing Date, for such option, times
(B) the number of shares of AT&T Common Stock subject to such
option.
For this purpose, a stock appreciation right with respect to AT&T
Common Stock shall be treated as an AT&T Stock Option. In addition,
for purposes of this definition, AT&T Stock Options granted after the
date hereof shall be disregarded.
"F" means the aggregate "in-the-money" amount for AT&T Stock
Options held by Former Employees (as defined in the Employee Benefits
Agreement) to the extent converted into options to purchase AT&T
Broadband Common Stock, calculated as equal to the Aggregate Former
Employee Broadband Option Amount.
"Expense Agreement" means the Expense Agreement dated as of June 16, 1999
between AT&T and the Issuer Trust.
"FCC" means the United States Federal Communications Commission.
"Franchise" means a written "franchise" (within the meaning of Section
602(8) of the Communications Act).
"Franchising Authority" means "franchising authority" (within the meaning
of Section 602(9) of the Communications Act).
"Guarantee Agreement" means the Guarantee Agreement dated as of June 16,
1999 between AT&T, as Guarantor, and The Bank of New York, as Guarantor
Trustee, relating to the Issuer Trust.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
13
"Indebtedness" has the meaning set forth in the Separation and
Distribution Agreement.
"Indenture" means the Indenture dated as of June 16, 1999, as amended or
supplemented, between AT&T and The Bank of New York, as Trustee, relating to
the Debentures.
"Independent Person" has the meaning set forth in the Parent Charter.
"Index" means the Standard and Poors' 500 Index.
"Interim Finance Committee" means the committee described in Section 9.15.
"International Plan" means, with respect to any Person, any employment,
severance or similar contract or arrangement (whether or not written) or any
plan, policy, fund, program or arrangement or contract providing for severance,
insurance coverage (including any self-insured arrangements), workers'
compensation, disability benefits, supplemental unemployment benefits, vacation
benefits, pension or retirement benefits or for deferred compensation,
profit-sharing, bonuses, stock options, stock appreciation rights or other
forms of incentive compensation or post-retirement insurance, compensation or
benefits that (i) is not an Employee Plan or a Benefit Arrangement, (ii) is
entered into, maintained, administered or contributed to or required to be
contributed to by such Person or any of its Affiliates and (iii) covers any
employee or former employee of such Person or any of its Subsidiaries.
"IRS" means the United States Internal Revenue Service.
"Issuer Trust" means AT&T Finance Trust I, a Delaware business trust.
"K/A Price Differential" means the number equal to the excess, if any, of
(i) the quotient obtained by dividing (A) the Average Class A Special Price by
(B) the Average Class A Price over (ii) 1; provided that the K/A Price
Differential shall in no event be less than 0 or more than .03.
"K/C Price Differential" means the number equal to the excess, if any, of
(i) the quotient obtained by dividing (A) the Average Class A Special Price by
(B) the Average Class C Price over (ii) 1; provided that the K/C Price
Differential shall in no event be less than 0 or more than .03.
"knowledge" means, with respect to any fact, the conscious awareness of
such fact by an "executive officer" (as defined under the 1933 Act) of the
relevant
14
Person or, in the case of AT&T, any Person who would be considered an
"executive officer" (as so defined) of the AT&T Broadband Group.
"Lien" means, with respect to any property or asset, any mortgage, lien,
pledge, charge, security interest, encumbrance or other adverse claim of any
kind in respect of such property or asset. For purposes of this Agreement, a
Person shall be deemed to own subject to a Lien any property or asset that it
has acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such property or asset.
"Mergers" means the AT&T Broadband Merger and the Comcast Merger.
"Microsoft" means Microsoft Corporation, a Washington corporation.
"Multiemployer Plan" means each Employee Plan that is a "multiemployer
plan" (as defined in Section 3(37) of ERISA).
"Nasdaq" means The Nasdaq Stock Market.
"Note Consent" means, with regard to any given series of securities issued
under the Notes Indenture, the receipt of the irrevocable consent to the
transactions contemplated by the Separation and Distribution Agreement of the
holders of at least a majority in aggregate principal amount of such series.
"Notes Indenture" means the Indenture dated as of September 7, 1990, as
amended or supplemented, between American Telephone & Telegraph Company and The
Bank of New York, as trustee.
"NYSE" means the New York Stock Exchange.
"NYSE Trading Day" means any day on which securities of AT&T are traded on
the NYSE.
"NYSE Trading Value" means, with respect to any equity security on any
given NYSE Trading Day, the volume weighted average trading price (rounded to
the nearest 1/10,000) of such security on the NYSE, as reported by Bloomberg
Financial Markets (or such other source as AT&T and Comcast shall agree in
writing) for that NYSE Trading Day.
"NYBCL" means the New York Business Corporation Law.
"Parent Class A Common Stock" means the Class A Common Stock, par value
$0.01 per share, of Parent.
15
"Parent Class A Special Common Stock" means the Class A Special Common
Stock, par value $0.01 per share, of Parent.
"Parent Class B Common Stock" means the Class B Common Stock, par value
$0.01 per share, of Parent.
"Parent Class C Common Stock" means the Class C Common Stock, par value
$0.01 per share, of Parent.
"Parent Common Stock" means the Parent Class A Common Stock, the Parent
Class A Special Common Stock, the Parent Class B Common Stock and the Parent
Class C Common Stock.
"Parent Indexed Stock" means the class of Parent Common Stock that is
included in the Index on the first Trading Day after the Effective Time.
"Parent Material Adverse Effect" means a material adverse effect on the
financial condition, assets or results of operations of the AT&T Broadband
Group and the Comcast Group, taken as a whole, excluding any such effect
resulting from or arising in connection with (i) changes or conditions
generally affecting the industries in which the AT&T Broadband Group and the
Comcast Group operate, (ii) changes in general economic, regulatory or
political conditions or (iii) the announcement of this Agreement or of the
transactions contemplated hereby.
"PBCL" means the Pennsylvania Business Corporation Law of 1988.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" means, with respect to any Person, any plan (other than a
Multiemployer Plan) that is subject to Title IV of ERISA and is maintained,
administered or contributed to or required to be contributed to by such Person
or any of its ERISA Affiliates.
"Person" means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Preliminary Exchange Ratio" is defined as follows:
1,235,000,000 - I/C
-------------------
X = O
where "I", "C" and "O" have the same meanings as in the definition of Exchange
Ratio.
16
"Pricing Period" means the 20 consecutive Trading Days commencing on the
first full Trading Day after the later to occur of (i) the fifth Trading Day
after the first date on which Standard & Poors' reweights the Index in respect
of the transactions contemplated hereby and (ii) the 30th calendar day after
the Closing Date; provided that in no event shall the Pricing Period commence
later than the first full Trading Day occurring after the 45th calendar day
after the Closing Date.
"Primary Commercial Agreements" has the meaning set forth in the
Separation and Distribution Agreement.
"Primary Transaction Agreements" has the meaning set forth in the
Separation and Distribution Agreement.
"PrISMs Contracts" means each of the PrISM Variable Prepaid Forward
Securities Contracts dated as of December 1, 2000 among AT&T, TCI Lenfest, Inc.
and Morgan Guaranty Trust Company of New York, relating to shares of Comcast
Class A Special Common Stock.
"QUIPS" means the 5% Convertible Quarterly Income Preferred Securities
issued pursuant to the Trust Agreement.
"QUIPS Exchange" means the issuance of shares of AT&T Broadband Common
Stock in exchange for the QUIPS pursuant to the Exchange Agreement.
"Record Date" has the meaning set forth in the Separation and Distribution
Agreement.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of June 16, 1999 between AT&T and Microsoft.
"SAILS Contracts" means the SAILS Mandatorily Exchangeable Securities
Contracts dated as of October 27, 2000, November 6, 2000 and November 10, 2000
among AT&T, TCI Lenfest, Inc., Credit Suisse First Boston International and
Credit Suisse First Boston Corporation, relating to shares of Comcast Class A
Special Common Stock.
"SEC" means the United States Securities and Exchange Commission.
"Senior Notes" means any of the securities issued pursuant to the
Indenture dated as of November 21, 2001 between AT&T and The Bank of New York,
as Trustee.
"Separation" has the meaning set forth in the Separation and Distribution
Agreement.
17
"Separation and Distribution Agreement" means the Separation and
Distribution Agreement dated as of the date hereof by and between AT&T and AT&T
Broadband, in the form attached as Exhibit C.
"Significant Excepted Transaction" means any Excepted Transaction
providing for the sale or disposition of at least 50% of the AT&T
Communications Group.
"Specified AT&T SEC Documents" means each of (i) AT&T's annual report on
Form 10-K for its fiscal year ended December 31, 2000, (ii) AT&T's quarterly
reports on Form 10-Q filed since December 31, 2000, (iii) AT&T's periodic
reports on Form 8-K filed since December 31, 2000, (iv) AT&T's proxy statement
relating to its 2001 annual meeting of shareholders and (v) AT&T's preliminary
proxy statement filed on July 3, 2001 regarding, among other things, the
creation of a tracking stock reflecting the AT&T Broadband Group.
"Specified Comcast SEC Documents" means each of (i) Comcast's annual
report on Form 10-K for its fiscal year ended December 31, 2000, (ii) Comcast's
quarterly reports on Form 10-Q filed since December 31, 2000, (iii) Comcast's
periodic reports on Form 8-K filed since December 31, 2000 and (iv) Comcast's
proxy statement relating to its 2001 annual meeting of shareholders.
"Subsidiary" means, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other body performing similar functions
are at any time, directly or indirectly, owned by such Person.
"Subsidiary Trusts"means (i) TCI Communications Financing I, (ii) TCI
Communications Financing II, (iii) TCI Communications Financing IV, (iv)
MediaOne Finance Trust I, (v) MediaOne Finance Trust II, (vi) MediaOne Finance
Trust III, (vii) MediaOne Financing A and (viii) MediaOne Financing B, each a
Delaware business trust.
"Surviving Corporations" means the AT&T Broadband Surviving Corporation
and the Comcast Surviving Corporation.
"System" means a "cable television system" (within the meaning of Section
602(7) of the Communications Act).
"T-Holdings" means AT&T Broadband T-Holdings, Inc. (f/k/a TCI Telephony
Holdings, Inc ), a Delaware corporation.
"Tax Sharing Agreement" has the meaning set forth in the Separation and
Distribution Agreement.
18
"TOPRS" means (i) the 8.72% Trust Originated Preferred Securities of TCI
Communications Financing I; (ii) the 10% Trust Preferred Securities of TCI
Communications Financing II; (iii) the 9.72% Trust Preferred Securities of TCI
Communications Financing IV; (iv) the 9.50% Trust Originated Preferred
Securities of MediaOne Finance Trust II; (v) the 9.04%Trust Originated
Preferred Securities of MediaOne Finance Trust III; (vi) the 7.96% Trust
Originated Preferred Securities of MediaOne Financing A; and (vii) the 8.25%
Trust Originated Preferred Securities of MediaOne Financing B.
"Trading Day" means any day on which securities of Comcast or Parent are
traded on Nasdaq.
"Trading Value" means, with respect to any equity security on any given
Trading Day, the volume weighted trading price (rounded to the nearest
1/10,000) of such security on Nasdaq, as reported by Bloomberg Financial
Markets (or such other source as AT&T and Comcast shall agree in writing) for
that Trading Day.
"Transaction Agreements" means this Agreement, the Support Agreement and
each of the Ancillary Agreements.
"Trust Agreement" means the Trust Agreement dated as of June 16, 1999
among AT&T, as Depositor, The Bank of New York, as Property Trustee, The Bank
of New York (Delaware), as Delaware Trustee, and the administrative trustees
named therein, relating to the Issuer Trust.
"Trust Common Securities" means the common securities of the Issuer Trust
issued pursuant to the Trust Agreement.
"TWE" means Time Warner Entertainment Company, L.P., a Delaware limited
partnership.
"TWE Option" means the option of MediaOne of Colorado, Inc. to purchase up
to an additional 8.5% participating percentage share in TWE pursuant to the TWE
Option Agreement.
"TWE Option Agreement" means the Option Agreement, dated as of September
15, 1993, by and between TWE and US West, Inc.
"TWE Partnership Agreement" means the Agreement of Limited Partnership
dated as of October 29, 1991, as amended.
"TWE Subsidiary" means a Subsidiary of TWE.
19
"Wireless Group Common Stock" means the Wireless Group Common Stock, par
value $1.00 per share, of AT&T.
(b) Each of the following additional terms is defined in the Section set
forth opposite such term:
Term Section
351 Transactions................................................ 9.06(a)
Agreement....................................................... Preamble
AT&T............................................................ Preamble
AT&T Broadband.................................................. Preamble
AT&T Broadband Merger........................................... 3.01(a)
AT&T Broadband Merger Sub....................................... Preamble
AT&T Broadband Rule 145 Affiliate............................... 9.07(a)
AT&T Broadband Surviving Corporation............................ 3.01(a)
AT&T Broadband Surviving Corporation
Common Stock.................................................... 4.01(a)
AT&T Converted SARs............................................. 4.02(g)
AT&T Converted Stock Options.................................... 4.02(g)
AT&T Converted Equity Awards.................................... 4.02(g)
AT&T Equity Awards.............................................. 4.02(g)
AT&T Franchise Consents......................................... 6.03
AT&T Intellectual Property...................................... 6.20
AT&T License Consents........................................... 6.03
AT&T Marks...................................................... 9.20(a)
AT&T PUC Consents............................................... 6.03
AT&T SARs....................................................... 4.02(g)
AT&T SEC Documents.............................................. 6.07(a)
AT&T Securities................................................. 6.05(b)
AT&T Shareholders' Approval..................................... 6.22
AT&T Shareholders' Meeting...................................... 5.09
AT&T Stock Options.............................................. 4.02(g)
AT&T Subsidiary Preferred Stock................................. 6.05(a)
20
Term Section
AT&T Superior Proposal.......................................... 8.03(b)
AT&T Termination Fee............................................ 11.03(d)
Certificates.................................................... 4.02(b)
Code............................................................ Recitals
Comcast......................................................... Preamble
Comcast Converted Equity Awards................................. 4.02(h)
Comcast Converted Stock Options................................. 4.02(h)
Comcast Equity Awards........................................... 4.02(h)
Comcast Franchise Consents...................................... 5.03
Comcast Intellectual Property................................... 5.20
Comcast License Consents........................................ 5.03
Comcast Merger.................................................. 3.02(a)
Comcast Merger Sub.............................................. Preamble
Comcast PUC Consents............................................ 5.03
Comcast Rule 145 Affiliate...................................... 9.07(b)
Comcast SEC Documents........................................... 5.07(a)
Comcast Securities.............................................. 5.05(b)
Comcast Shareholder............................................. Preamble
Comcast Shareholders' Approval.................................. 5.22
Comcast Shareholders' Meeting................................... 5.09
Comcast Stock Options........................................... 4.02(h)
Comcast Surviving Corporation................................... 3.03
Comcast Surviving Corporation Common Stock...................... 4.01(b)
Comcast Termination Fee......................................... 11.03(b)
Common Stock Trust.............................................. 4.02(e)
DE Certificate of Merger........................................ 3.01(b)
Effective Time.................................................. 3.01(b)
End Date........................................................ 11.01(b)
Excess Shares................................................... 4.02(e)
Exchange Agent.................................................. 4.02(a)
Exchange Fund................................................... 4.02(a)
21
Term Section
Financing....................................................... 9.15
Franchise Consents.............................................. 6.03(a)
GAAP............................................................ 5.08
Governmental Authority.......................................... 5.03
Indemnified Losses.............................................. 7.04(a)
Indemnified Person.............................................. 7.04(a)
Joint Proxy Statement........................................... 5.09
K/A Security.................................................... 4.04(a)
K/C Security.................................................... 4.04(b)
Letter of Credit................................................ 9.16(d)
License Consents................................................ 6.03
Mandatory Residual Conditions................................... 8.02(a)
Neutrality Agreement............................................ 8.05
Original Award.................................................. 4.02(g)
PA Articles of Merger........................................... 3.02(b)
Parent.......................................................... Preamble
Parent Charter.................................................. 2.01
PUC Consents.................................................... 6.03
Qualified Holders............................................... 4.03(c)
QUIPS Failure Date.............................................. 9.18(a)
QUIPS Fair Market Value......................................... 9.18(f)
QUIPS Transfer.................................................. 9.18(j)
Purchase Rights................................................. 9.01(a)
Registration Statement.......................................... 5.09
S-8............................................................. 4.02(g)
Series E Preferred Stock........................................ 6.05(a)
Successor Plan.................................................. 9.13(b)
Support Agreement............................................... Recitals
Tax Returns..................................................... 5.16
Taxes ....................................................... 5.16
TCI Pacific Preferred Stock..................................... 6.05(a)
22
Term Section
Transferred Broadband Employees................................. 9.13(a)
Transferred Comcast Employees................................... 9.13(a)
TWE Contracts................................................... 6.25
Warrants........................................................ 6.05(a)
Wireless Preferred Stock........................................ 6.05(a)
(c) Interpretation. In this Agreement, unless otherwise specified or where
the context otherwise requires:
(i) a reference to a Recital is to the relevant Recital to this
Agreement, to a Section is to the relevant Section of this Agreement and
to an Exhibit is to the relevant Exhibit to this Agreement;
(ii) words importing any gender shall include other genders;
(iii) words importing the singular only shall include the plural and
vice versa;
(iv) the words "include", "includes" or "including" shall be deemed
to be followed by the words "without limitation";
(v) the words "hereof", "herein" and "herewith" and words of similar
import shall, unless otherwise stated, be construed to refer to this
Agreement as a whole and not to any particular provision of this
Agreement, and Article, clause and Exhibit references are to the Articles,
clauses and Exhibits to this Agreement unless otherwise specified;
(vi) references to any party hereto or any other agreement or
document shall include such party's successors and permitted assigns; and
(vii) the parties hereto have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the parties hereto, and no presumption or burden of
proof shall arise favoring or disfavoring any party hereto by virtue of
the authorship of any provisions of this Agreement.
(d) Headings. In this Agreement the headings to Sections are inserted for
convenience only and shall not affect the construction of this Agreement.
23
ARTICLE 2
PARENT AND MERGER SUBS
SECTION 2.01. Organization of Parent. Comcast and AT&T have caused Parent
to be organized under the laws of the Commonwealth of Pennsylvania. The
authorized capital stock of Parent consists of 100 shares of Common Stock, par
value $0.01 per share, of which one share has been issued to Comcast and one
share has been issued to AT&T. Comcast and AT&T shall take, and shall cause
Parent to take, all requisite action to cause (i) if the A Shareholder Approval
is obtained, the articles of incorporation of Parent (the "Parent Charter") to
be in the form of Exhibit D-1 at the Effective Time, (ii) if the A Shareholder
Approval is not obtained, the Parent Charter to be on the terms set forth in
Exhibit D-2 at the Effective Time and (iii) whether or not the A Shareholder
Approval is obtained, the bylaws of Parent to be in the form of Exhibit D-3 at
the Effective Time.
SECTION 2.02. Directors and Officers of Parent. Prior to the Effective
Time, the directors and officers of Parent shall consist of equal numbers of
representatives of Comcast and AT&T as designated and elected by Comcast and
AT&T. Comcast and AT&T shall take all requisite action to cause the directors
and officers of Parent as of the Effective Time to be as provided in Section
9.08.
SECTION 2.03. Organization of Merger Subs. Parent has caused AT&T
Broadband Merger Sub and Comcast Merger Sub to be organized for the sole
purpose of effectuating the Mergers. The authorized capital stock of AT&T
Broadband Merger Sub consists of 100 shares of Common Stock, par value $0.01
per share, all of which shares have been issued to Parent at a price of $1.00
per share. The authorized capital stock of Comcast Merger Sub consists of 100
shares of Common Stock, par value $0.01 per share, all of which shares have
been issued to Parent at a price of $1.00 per share.
SECTION 2.04. Actions of Comcast and AT&T. Comcast and AT&T, as the
holders of all the outstanding shares of Parent capital stock, have approved
and adopted this Agreement and the transactions contemplated hereby and have
caused Parent, as the sole stockholder of each of the Merger Subs, to approve
and adopt this Agreement and the transactions contemplated hereby. Each of
Comcast and AT&T shall cause Parent to perform its obligations under this
Agreement, and Parent shall cause the Merger Subs to perform their respective
obligations under this Agreement.
24
SECTION 2.05. Rights Plan. Parent shall adopt a shareholder rights plan,
effective as of the Effective Time, on the terms and conditions set forth in
the Comcast Disclosure Schedule.
ARTICLE 3
THE MERGERS
SECTION 3.01. The AT&T Broadband Merger. (a) At the Effective Time, AT&T
Broadband Merger Sub shall be merged with and into AT&T Broadband (the "AT&T
Broadband Merger") in accordance with the DGCL and upon the terms set forth in
this Agreement, whereupon the separate existence of AT&T Broadband Merger Sub
shall cease and AT&T Broadband shall be the surviving corporation (the "AT&T
Broadband Surviving Corporation").
(b) As soon as practicable (and, in any event, within five Business Days)
after satisfaction or, to the extent permitted hereunder, waiver of all
conditions to the Mergers set forth in Article 10, other than conditions that
by their nature are to be satisfied at the Effective Time and will in fact be
satisfied at the Effective Time, a certificate of merger shall be duly
prepared, executed and acknowledged by AT&T Broadband Merger Sub and AT&T
Broadband and thereafter delivered to and filed with the Secretary of State of
the State of Delaware pursuant to the DGCL (the "DE Certificate of Merger").
The AT&T Broadband Merger shall become effective at the Effective Time. As used
herein, the term "Effective Time" means such time as is mutually agreeable to
Comcast and AT&T on the date of filing of the DE Certificate of Merger, or on
such other date or time as may be agreed by Comcast and AT&T. The Separation
shall occur on the Closing Date prior to the Distribution which shall occur at
the close of business in New York, New York on the Closing Date. With the
consent of Comcast, which consent shall not be unreasonably withheld, AT&T may
effect the Separation and/or the Distribution on different dates or different
times than provided for in the preceding sentence.
(c) From and after the Effective Time, the AT&T Broadband Surviving
Corporation shall possess all the rights, powers, privileges and franchises,
and be subject to all of the obligations, liabilities, restrictions and
disabilities, of AT&T Broadband Merger Sub and AT&T Broadband, all as provided
under the DGCL.
SECTION 3.02. The Comcast Merger. (a) At the Effective Time, Comcast
Merger Sub shall be merged with and into Comcast (the "Comcast Merger") in
accordance with the PBCL, and upon the terms set forth in this Agreement,
whereupon the separate existence of Comcast Merger Sub shall cease and
25
Comcast shall be the surviving corporation (the "Comcast Surviving
Corporation").
(b) As soon as practicable (and, in any event, within five Business Days)
after satisfaction or, to the extent permitted hereunder, waiver of all
conditions to the Mergers set forth in Article 10, other than conditions that
by their nature are to be satisfied at the Effective Time and will in fact be
satisfied at the Effective Time, an articles of merger shall be duly prepared,
executed and acknowledged by Comcast Merger Sub and Comcast and thereafter
delivered to and filed with the Department of State of the Commonwealth of
Pennsylvania pursuant to the PBCL (the "PA Articles of Merger"). The Comcast
Merger shall become effective at the Effective Time.
(c) From and after the Effective Time, the Comcast Surviving Corporation
shall possess all the rights, powers, privileges and franchises, and be subject
to all of the obligations, liabilities, restrictions and disabilities, of
Comcast Merger Sub and Comcast, all as provided under the PBCL.
SECTION 3.03. Certificate and Articles of Incorporation; Bylaws. The
certificate of incorporation of AT&T Broadband in effect at the Effective Time
shall be the certificate of incorporation of the AT&T Broadband Surviving
Corporation and the bylaws of AT&T Broadband Merger Sub in effect at the
Effective Time shall be the bylaws of the AT&T Broadband Surviving Corporation,
in each case, until amended in accordance with applicable law. Immediately
prior to the Effective Time, if the A Shareholder Approval shall have been
obtained, Comcast shall file the Articles Amendment with the Department of
State of the Commonwealth of Pennsylvania pursuant to the PBCL. The articles of
incorporation of Comcast in effect at the Effective Time shall be the articles
of incorporation of the Comcast Surviving Corporation and the bylaws of Comcast
Merger Sub in effect at the Effective Time shall be the bylaws of the Comcast
Surviving Corporation, in each case, until amended in accordance with
applicable law.
SECTION 3.04. Directors and Officers of the Surviving Corporations. From
and after the Effective Time, until successors are duly elected or appointed
and qualified in accordance with applicable law, (a) the directors of AT&T
Broadband Merger Sub at the Effective Time shall be the directors of the AT&T
Broadband Surviving Corporation, (b) the officers of AT&T Broadband at the
Effective Time shall be the officers of the AT&T Broadband Surviving
Corporation, (c) the directors of Comcast Merger Sub at the Effective Time
shall be the directors of the Comcast Surviving Corporation and (d) the
officers of Comcast at the Effective Time shall be the officers of the Comcast
Surviving Corporation.
26
SECTION 3.05. Alternative Structure. From the date hereof until the
Effective Time, each of AT&T and Comcast agrees that, at the request of the
other party, it will consider in good faith amending the terms of this
Agreement to the extent necessary to provide for a structure or a sequencing of
the Mergers that is more tax efficient or otherwise more advantageous than the
structure and sequencing provided by Articles 2 and 3 and is not adverse to the
other party.
ARTICLE 4
CONVERSION OF SECURITIES
SECTION 4.01. Conversion of Securities. (a) If the A Shareholder Approval
shall have been obtained, at the Effective Time, by virtue of the AT&T
Broadband Merger and without any action on the part of any of the parties
hereto or the holders of any of the following securities:
(i) Each issued and outstanding share of capital stock of AT&T
Broadband Merger Sub shall be converted into and become one fully paid and
nonassessable share of Common Stock, par value $.01 per share, of the AT&T
Broadband Surviving Corporation ("AT&T Broadband Surviving Corporation
Common Stock").
(ii) Each share of AT&T Broadband Common Stock held in the treasury
of AT&T Broadband immediately prior to the Effective Time shall be
canceled and retired without any conversion thereof, and no payment shall
be made with respect thereto.
(iii) Subject to Sections 4.02(e), 4.03(a) and 4.04(a), each issued
and outstanding share of AT&T Broadband Common Stock that is issued and
outstanding immediately prior to the Effective Time (excluding any shares
of AT&T Broadband Common Stock canceled pursuant to Section 4.01(a)(ii))
shall be converted into the right to receive the Exchange Ratio of a fully
paid and nonassessable share of Parent Class A Common Stock. As of the
Effective Time, all such shares of AT&T Broadband Common Stock shall no
longer be outstanding and shall automatically be canceled and retired and
shall cease to exist, and each owner of any such shares of AT&T Broadband
Common Stock shall cease to have any rights with respect thereto, except
the right to receive certificates representing the shares of Parent Common
Stock, any cash in lieu of fractional shares of Parent Common Stock and
any dividends or distributions to the extent provided in Section 4.02(c)
to be issued or paid in consideration therefor, without interest.
27
(b) If the A Shareholder Approval shall have been obtained, at the
Effective Time, by virtue of the Comcast Merger and without any action on the
part of any of the parties hereto or the holders of any of the following
securities:
(i) Each issued and outstanding share of capital stock of Comcast
Merger Sub shall be converted into and become a number of fully paid and
nonassessable shares of Common Stock, par value $.01 per share, of the
Comcast Surviving Corporation ("Comcast Surviving Corporation Common
Stock") such that all of such shares of Comcast Surviving Corporation
Common Stock, together with the shares of Comcast Surviving Corporation
Common Stock issuable upon conversion of the shares of Comcast Common
Stock held by Comcast Shareholder pursuant to Section 4.01(e), equal 100
shares of Comcast Surviving Corporation Common Stock.
(ii) Each share of Comcast Common Stock held in the treasury of
Comcast immediately prior to the Effective Time shall be canceled and
retired without any conversion thereof, and no payment shall be made with
respect thereto.
(iii) Subject to Sections 4.01(e) and 4.02(e), each issued and
outstanding share of Comcast Class A Common Stock, Comcast Class B Common
Stock and Comcast Class A Special Common Stock that is issued and
outstanding immediately prior to the Effective Time (excluding any of such
shares of Comcast Common Stock canceled pursuant to Section 4.01(b)(ii))
shall be converted into the right to receive one fully paid and
nonassessable share of Parent Class A Common Stock, Parent Class B Common
Stock and Parent Class A Special Common Stock, respectively. As of the
Effective Time, all such shares of Comcast Common Stock shall no longer be
outstanding and shall automatically be canceled and retired and shall
cease to exist, and each holder of a Certificate representing any such
shares of Comcast Common Stock shall cease to have any rights with respect
thereto, except the right to receive, upon the surrender of such
Certificates, certificates representing the shares of Parent Common Stock,
any cash in lieu of fractional shares of Parent Common Stock and any
dividends or distributions to the extent provided in Section 4.02(c) to be
issued or paid in consideration therefor upon surrender of such
Certificate in accordance with Section 4.02, without interest.
(c) If the A Shareholder Approval shall not have been obtained, at the
Effective Time, by virtue of the AT&T Broadband Merger and without any action
on the part of any of the parties hereto or the holders of any of the following
securities:
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(i) Each issued and outstanding share of capital stock of AT&T
Broadband Merger Sub shall be converted into and become one fully paid and
nonassessable share of AT&T Broadband Surviving Corporation Common Stock.
(ii) Each share of AT&T Broadband Common Stock held in the treasury
of AT&T Broadband immediately prior to the Effective Time shall be
canceled and retired without any conversion thereof, and no payment shall
be made with respect thereto.
(iii) Subject to Sections 4.02(e), 4.03(b) and 4.04(b), each issued
and outstanding share of AT&T Broadband Common Stock that is issued and
outstanding immediately prior to the Effective Time (excluding any shares
of AT&T Broadband Common Stock canceled pursuant to Section 4.01(c)(ii))
shall be converted into the right to receive the Exchange Ratio of a fully
paid and nonassessable share of Parent Class C Common Stock. As of the
Effective Time, all such shares of AT&T Broadband Common Stock shall no
longer be outstanding and shall automatically be canceled and retired and
shall cease to exist, and each owner of any such shares of AT&T Broadband
Common Stock shall cease to have any rights with respect thereto, except
the right to receive certificates representing the shares of Parent Common
Stock, any cash in lieu of fractional shares of Parent Common Stock and
any dividends or distributions to the extent provided in Section 4.02(c)
to be issued or paid in consideration therefor, without interest.
(d) If the A Shareholder Approval shall not have been obtained, at the
Effective Time, by virtue of the Comcast Merger and without any action on the
part of any of the parties hereto or the holders of any of the following
securities:
(i) Each issued and outstanding share of capital stock of Comcast
Merger Sub shall be converted into and become a number of fully paid and
nonassessable shares of Comcast Surviving Corporation Common Stock such
that all of such shares of Comcast Surviving Corporation Common Stock,
together with the shares of Comcast Surviving Corporation Common Stock
issuable upon conversion of the shares of Comcast Common Stock held by
Comcast Shareholder pursuant to Section 4.01(e), equal 100 shares of
Comcast Surviving Corporation Common Stock.
(ii) Each share of Comcast Common Stock held in the treasury of
Comcast immediately prior to the Effective Time shall be canceled and
29
retired without any conversion thereof, and no payment shall be made with
respect thereto.
(iii) Subject to Sections 4.01(e) and 4.02(e), each issued and
outstanding share of Comcast Class A Common Stock, Comcast Class B Common
Stock and Comcast Class A Special Common Stock that is issued and
outstanding immediately prior to the Effective Time (excluding any of such
shares of Comcast Common Stock canceled pursuant to Section 4.01(d)(ii))
shall be converted into the right to receive one fully paid and
nonassessable share of Parent Class A Common Stock, Parent Class B Common
Stock and Parent Class A Special Common Stock, respectively. As of the
Effective Time, all such shares of Comcast Common Stock shall no longer be
outstanding and shall automatically be canceled and retired and shall
cease to exist, and each holder of a Certificate representing any such
shares of Comcast Common Stock shall cease to have any rights with respect
thereto, except the right to receive, upon the surrender of such
Certificates, certificates representing the shares of Parent Common Stock,
any cash in lieu of fractional shares of Parent Common Stock and any
dividends or distributions to the extent provided in Section 4.02(c) to be
issued or paid in consideration therefor upon surrender of such
Certificate in accordance with Section 4.02, without interest.
(e) In lieu of receiving the consideration payable pursuant to Section
4.01(b) or 4.01(d) upon conversion of its shares of Comcast Common Stock in the
Comcast Merger, Comcast Shareholder (or any successor by merger to Comcast
Shareholder) may elect to merge with Parent immediately prior to the Effective
Time in a transaction in which the members of Comcast Shareholder (or such
successor), in exchange for all of their outstanding membership or other equity
interests in Comcast Shareholder (or such successor), would receive in the
aggregate the same consideration that Comcast Shareholder (or such successor)
would have received pursuant to Section 4.01(b) or 4.01(d), as the case may be,
upon conversion of its shares of Comcast Common Stock in the Comcast Merger. If
Comcast Shareholder (or such successor) elects to effect the foregoing merger,
then at the time of such merger (i) Comcast Shareholder (or such successor)
shall have no assets other than shares of Comcast Common Stock and no
liabilities other than possible de minimis liabilities, (ii) each issued and
outstanding share of Comcast Common Stock owned by Comcast Shareholder (or such
successor) shall be converted into and become a number of fully paid and
nonassessable shares of Comcast Surviving Corporation Common Stock such that
all of such shares of Comcast Surviving Corporation Common Stock, together with
the shares of Comcast Surviving Corporation Common Stock issuable upon
conversion of the shares of Comcast Merger Sub capital stock pursuant to
Section 4.01(b)(i) or 4.01(d)(i), as the case may be, equal 100 shares of
Comcast Surviving Corporation
30
Common Stock and (iii) Comcast Shareholder shall provide an indemnity that is
reasonably satisfactory to AT&T and Comcast pursuant to which one or more
members of Comcast Shareholder (which shall include at a minimum any member or
members (on a joint and several basis) who acquire the shares of Parent Class B
Common Stock pursuant to the merger contemplated by this Section 4.01(e))
agrees to indemnify Parent in respect of any liabilities (including tax
liabilities) of Comcast Shareholder or arising in connection with the
transactions under this Section 4.01(e).
(f) If, between the date of this Agreement and the Effective Time, the
outstanding shares of Comcast Common Stock, AT&T Common Stock or AT&T Broadband
Common Stock shall have been changed into a different number of shares, by
reason of any stock dividend (other than to create the number of shares of AT&T
Broadband Common Stock necessary to effect the Distribution and, if the QUIPS
Exchange occurs, the QUIPS Exchange or otherwise as a result of the Separation
and Distribution), subdivision, split or combination of shares, the
consideration payable pursuant to Section 4.01 will, if appropriate, be
correspondingly adjusted to reflect such stock dividend, subdivision, split or
combination of shares.
(g) For purposes of Sections 4.01(a)-(d), (i) any share of Comcast Common
Stock held by any Comcast Subsidiary will not be treated as a share of Comcast
Common Stock held in the treasury of Comcast and (ii) any share of AT&T
Broadband Common Stock held by any AT&T Broadband Subsidiary will not be
treated as a share of AT&T Broadband Common Stock held in treasury of AT&T
Broadband.
SECTION 4.02. Exchange of Certificates. (a) Exchange Agent. At or prior to
the Effective Time, Parent shall deposit with a bank or trust company jointly
designated by AT&T and Comcast (the "Exchange Agent"), for the benefit of the
holders of shares of AT&T Broadband Common Stock and Comcast Common Stock, for
exchange in accordance with this Article 4, through the Exchange Agent,
certificates representing the shares of Parent Common Stock (such shares of
Parent Common Stock, together with any dividends or other distributions to the
extent provided in Section 4.02(c), the "Exchange Fund") issuable pursuant to
Section 4.01 in exchange for outstanding shares of AT&T Broadband Common Stock
and Comcast Common Stock.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates that immediately prior to the Effective Time
represented outstanding shares of AT&T Broadband Common Stock or Comcast Common
Stock (the "Certificates"), other than shares to be canceled or retired or
converted into AT&T Broadband Surviving Corporation Common stock or Comcast
31
Surviving Corporation Common Stock in each case in accordance with Section
4.01, (i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent, and shall be in such form
and have such other provisions as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates representing shares of Parent Common Stock. Upon surrender of
a Certificate for cancellation to the Exchange Agent, together with such letter
of transmittal, duly executed, and such other documents as may reasonably be
required by the Exchange Agent, the holder of such Certificate shall be
entitled to receive in exchange therefor a certificate representing that number
of whole shares of Parent Common Stock that such holder has the right to
receive pursuant to the provisions of this Article 4, cash in lieu of any
fractional shares of Parent Common Stock to the extent provided in Section
4.02(e) and any dividends or distributions to the extent provided in Section
4.02(c), and the Certificate so surrendered shall forthwith be canceled. In the
event of a transfer of ownership of AT&T Broadband Common Stock or Comcast
Common Stock that is not registered in the transfer records of AT&T Broadband
or Comcast, as the case may be, a certificate representing the proper number of
shares of Parent Common Stock may be issued to a Person other than the Person
in whose name the Certificate so surrendered is registered if such Certificate
shall be properly endorsed or otherwise be in proper form for transfer and the
Person requesting such payment shall pay any transfer or other taxes required
by reason of the issuance of shares of Parent Common Stock to a Person other
than the registered holder of such Certificate or establish to the satisfaction
of Parent that such tax has been paid or is not applicable. Until surrendered
as contemplated by this Section 4.02, each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon such
surrender the certificate representing the appropriate number of whole shares
of Parent Common Stock, cash in lieu of any fractional shares of Parent Common
Stock to the extent provided in Section 4.02(e) and any dividends and
distributions to the extent provided in Section 4.02(c). No interest will be
paid or will accrue on any cash payable in lieu of any fractional shares of
Parent Common Stock. Any amounts payable or deliverable pursuant to this
Agreement shall be subject to and made net of applicable withholding taxes to
the extent such taxes are imposed under applicable law as determined by Parent
in its reasonable discretion. To the extent that amounts are so withheld, those
amounts shall be treated for all purposes as having been paid to the holders of
AT&T Broadband Common Stock or Comcast Common Stock, as the case may be, in
respect of which the deduction and withholding was made.
(c) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions with respect to Parent Common Stock with a record date
after the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of Parent Common Stock represented
thereby, and no
32
cash payment in lieu of fractional shares shall be paid to any such holder
pursuant to Section 4.02(e) until the surrender of such Certificate in
accordance with this Article 4. Subject to the effect of applicable law,
following surrender of any such Certificate, there shall be paid to the holder
of the certificate representing whole shares of Parent Common Stock issued in
exchange therefor, without interest, (i) at the time of such surrender, the
amount of any cash payable in lieu of a fractional share of Parent Common Stock
to which such holder is entitled pursuant to Section 4.02(e) and the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of Parent Common Stock and
(ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to such
surrender and a payment date subsequent to such surrender payable with respect
to such whole shares of Parent Common Stock.
(d) No Further Ownership Rights in AT&T Broadband Common Stock or Comcast
Common Stock. All shares of Parent Common Stock issued upon the surrender for
exchange of Certificates in accordance with the terms of this Article 4
(including any cash paid pursuant to Section 4.02(c) or 4.02(e)) shall be
deemed to have been issued (and paid) in full satisfaction of all rights
pertaining to the shares of AT&T Broadband Common Stock or Comcast Common
Stock, as the case may be, theretofore represented by such Certificates, and
there shall be no further registration of transfers on the stock transfer books
of the applicable Surviving Corporation, of the shares of AT&T Broadband Common
Stock or Comcast Common Stock, as the case may be, that were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to Parent or the Exchange Agent for any reason, they
shall be canceled and exchanged as provided in this Article 4, except as
otherwise provided by applicable law. Certificates surrendered for exchange by
any Person who is a Rule 145 Affiliate shall not be exchanged until Parent has
received written undertakings from such Person in the form attached as Exhibit
B.
(e) No Fractional Shares. (i) No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the surrender for
exchange of Certificates, and such fractional share interests shall not entitle
the owner thereof to vote or to any rights of a shareholder of Parent.
(ii) As promptly as practicable following the Effective Time, the
Exchange Agent shall determine the excess of (A) the number of shares of
Parent Common Stock delivered to the Exchange Agent by Parent pursuant to
Section 4.02(a) over (B) the aggregate number of whole shares of Parent
Common Stock to be distributed to holders of the Certificates pursuant to
Section 4.02(b) (such excess, the "Excess Shares"). As soon as practicable
after the Effective Time, the Exchange Agent, as agent for the holders of
the Certificates, shall sell the Excess Shares at
33
then-prevailing prices on Nasdaq, all in the manner provided in Section
4.02(e)(iii).
(iii) The sale of the Excess Shares by the Exchange Agent shall be
executed on Nasdaq, and shall be executed in round lots to the extent
practicable. The proceeds from such sale or sales available for
distribution to the holders of Certificates shall be reduced by the
compensation payable to the Exchange Agent and the expenses incurred by
the Exchange Agent, in each case, in connection with such sale or sales of
the Excess Shares, including all related commissions, transfer taxes and
other out-of-pocket transaction costs. Until the net proceeds of such sale
or sales have been distributed to the holders of the Certificates, the
Exchange Agent shall hold such proceeds in trust for the holders of the
Certificates (the "Common Stock Trust"). The Exchange Agent shall
determine the portion of the Common Stock Trust to which each holder of a
Certificate shall be entitled, if any, by multiplying the amount of the
aggregate net proceeds comprising the portion of the Common Stock Trust
attributable to the relevant class of Parent Common Stock by a fraction,
the numerator of which is the amount of the fractional share interest in
such class of Parent Common Stock to which such holder of a Certificate is
entitled and the denominator of which is the aggregate amount of
fractional share interests to which all holders of the Certificates are
entitled.
(iv) As soon as practicable after the determination of the amount of
cash, if any, to be paid to holders of Certificates in lieu of any
fractional share interests, the Exchange Agent shall make available such
amounts, without interest, to such holders of Certificates that have
surrendered their Certificates in accordance with this Article 4.
(f) Termination of Exchange Fund and Common Stock Trust. Any portion of
the Exchange Fund and Common Stock Trust that remains undistributed to the
holders of Certificates for one year after the Effective Time shall be
delivered to Parent, upon demand, and any holders of Certificates who have not
theretofore complied with this Article 4 shall thereafter look only to Parent
for payment of their claim for Parent Common Stock, any cash in lieu of
fractional shares of Parent Common Stock, and any dividends or other
distributions with respect to Parent Common Stock.
(g) AT&T Stock Options and Other AT&T Equity-Based Awards. (i) At the
Effective Time, all options to purchase, and stock appreciation rights with
respect to, shares of AT&T Broadband Common Stock ("AT&T Stock Options" and
"AT&T SARs", respectively) that are outstanding and unexercised as of the
Effective Time shall cease to represent rights with respect to shares of AT&T
Broadband Common Stock and shall be converted automatically into options to
34
purchase, or stock appreciation rights with respect to, shares of Parent
Indexed Stock ("AT&T Converted Stock Options" and "AT&T Converted SARs",
respectively) and Parent shall assume each such AT&T Converted Stock Option and
AT&T Converted SAR, on the same terms and conditions as applied to such AT&T
Stock Option or AT&T SAR immediately before the Effective Time (including
without limitation any vesting as a result of the consummation of the
transactions contemplated hereby); provided, however, that, from and after the
Effective Time, (A) the number of shares of Parent Indexed Stock subject to
such AT&T Converted Stock Option or AT&T Converted SAR, as applicable, shall be
equal to the number of shares, rounded to the nearest whole share, of Parent
Indexed Stock whose fair market value, immediately after the Effective Time, is
equal to (a) minus (b), where "(a)" is the aggregate fair market value,
determined immediately prior to the Distribution using the AT&T Closing Stock
Value, of the AT&T Common Stock subject to the original option or stock
appreciation right (the "Original Award") with respect to which such AT&T Stock
Option or AT&T SAR was issued pursuant to the Employee Benefits Agreement; and
"(b)," in the case of a Broadband Employee, is zero, and in the case of a
Former Employee is the aggregate fair market value, determined immediately
after the Distribution using the AT&T Opening Stock Value (as such term is
defined in the Employee Benefits Agreement), of the AT&T Common Stock subject
to the "adjusted AT&T Option" into which the Original Award was partially
converted pursuant to Section 5.3(b) of the Employee Benefits Agreement; and
(B) the per share exercise price under such AT&T Converted Stock Option or AT&T
Converted SAR, as applicable, as of the Effective Time, shall be adjusted by
dividing the aggregate exercise price of the Original Award relating to such
AT&T Stock Option or AT&T SAR, as applicable (less, in the case of a Former
Employee, the aggregate exercise price of the relevant "adjusted AT&T Option"
referred to in (A) above), by the number of shares of Parent Indexed Stock to
which such AT&T Converted Stock Option or AT&T Converted SAR is subject,
rounded to the nearest one-hundredth of a cent. Notwithstanding the foregoing,
the number of shares and the per share exercise price of each AT&T Converted
Stock Option that is, as of the Effective Time, after giving effect to any
vesting as a result of the transactions contemplated hereby, an "incentive
stock option" (as defined in Section 422 of the Code) and each related AT&T
Converted SAR, if any, shall be adjusted in accordance with the requirements of
Section 424 of the Code. Accordingly, with respect to any incentive stock
options, fractional shares shall be rounded down to the nearest whole number of
shares, and, where necessary, the per share exercise price shall be rounded up
to the nearest cent. For purposes of this Section 4.02, the fair market value
of a share of Parent Indexed Stock shall be determined using the opening
per-share price of Parent Indexed Stock as listed on Nasdaq as of the opening
of trading on the first Trading Day following the Effective Time; provided,
however, that if the Effective Time occurs at a time when Nasdaq is open for
trading, fair market value shall be determined using the price at which Parent
Indexed Stock trades as of the moment
35
immediately after the Effective Time; provided, further, that if the Effective
Time occurs prior to the opening of trading on Nasdaq, the fair market value
shall be determined using the price at which the Parent Indexed Stock first
trades after the opening of trading on this day.
(ii) At the Effective Time, all shares of AT&T Broadband restricted
stock outstanding as of the Effective Time shall be converted
automatically into the right to receive Parent Common Stock on the terms
and conditions set forth in the applicable sections of this Article 4 and
all other equity based awards based upon shares of AT&T Broadband Common
Stock (collectively, the "AT&T Equity Awards") outstanding as of the
Effective Time shall be converted automatically into equivalent awards
based upon shares of Parent Indexed Stock (collectively, the "AT&T
Converted Equity Awards"), and on the same terms and conditions as applied
to such AT&T Equity Award immediately before the Effective Time (including
without limitation any vesting as a result of the consummation of the
transactions contemplated hereby); provided, however, that from and after
the Effective Time, the number of shares of Parent Indexed Stock subject
to such AT&T Converted Equity Award shall be equal to the number of shares
of Parent Indexed Stock whose fair market value, immediately after the
Effective Time, is equal to the aggregate fair market value, determined
immediately prior to the Distribution using the AT&T Closing Stock Value,
of the AT&T Common Stock subject to the original equity based award with
respect to which such AT&T Equity Award was issued pursuant to the
Employee Benefits Agreement.
(iii) At or prior to the Effective Time, Parent shall reserve for
issuance the number of shares of Parent Indexed Stock necessary to satisfy
Parent's obligations under this Section 4.02(g). No later than five
Business Days after the Effective Time, Parent shall file with the SEC a
registration statement on Form S-8 (or other appropriate form) (an "S-8")
under the 1933 Act with respect to the shares of Parent Indexed Stock
subject to AT&T Converted Stock Options, AT&T Converted SARs and AT&T
Converted Equity Awards issued pursuant to this Section 4.02(g), and shall
use all reasonable best efforts to maintain the effectiveness of the
applicable S-8 and current status of the prospectus related to the
applicable S-8, as well as comply with any applicable state securities or
"blue sky" laws, for so long as any such AT&T Converted Stock Options,
AT&T Converted SARs and/or AT&T Converted Equity Awards remain
outstanding.
(h) Comcast Stock Options. (i) At the Effective Time, all options to
purchase shares of Comcast Class A Special Common Stock ("Comcast
36
Stock Options") granted by Comcast or any Comcast Subsidiary pursuant to the
terms of any stock option or incentive plan and held, as of the Effective Time,
by and employee of Comcast of any Comcast Subsidiary (or any beneficiary
thereof) shall cease to represent rights to purchase shares of Comcast Class A
Special Common Stock and shall be converted automatically into options to
purchase ("Comcast Converted Stock Options"), on the same terms and conditions
as applied to such Comcast Stock Option immediately prior to the Effective
Time, that number of shares of Parent Indexed Stock, rounded to the nearest
whole share, whose fair market value, immediately after the Effective Time, is
equal to the aggregate fair market value, determined immediately prior to the
Effective Time, of the Comcast Class A Special Common Stock subject to such
Comcast Stock Option, at a per share exercise price equal to the aggregate
exercise price of such Comcast Stock Option divided by the number of shares of
Parent Indexed Common Stock to which such Comcast Converted Stock Option is
subject. Notwithstanding the foregoing, the number of shares and the per share
exercise price of each Comcast Converted Stock Option that is, as of the
Effective Time, an "incentive stock option" (as defined in Section 422 of the
Code) and each related Comcast Converted SAR, if any, shall be adjusted in
accordance with the requirements of Section 424 of the Code. Accordingly, with
respect to any incentive stock options, fractional shares shall be rounded down
to the nearest whole number of shares, and, where necessary, the per share
exercise price shall be rounded up to the nearest cent.
(ii) At the Effective Time, all shares of Comcast restricted stock
outstanding as of the Effective Time shall be converted automatically into
the right to receive Parent Common Stock on the terms and conditions set
forth in the applicable sections of this Article 4 and all other equity
based awards based upon shares of Comcast Class A Special Common Stock
(collectively, the "Comcast Equity Awards") shall be converted
automatically into equivalent awards based upon shares of Parent Indexed
Stock (collectively, the "Comcast Converted Equity Awards"), and on the
same terms and conditions as applied to such Comcast Equity Award
immediately prior to the Effective Time. The number of shares of Parent
Indexed Stock subject to such Comcast Converted Equity Award shall be the
number of shares of Parent Indexed Stock, rounded to the nearest share,
whose fair market value, immediately after the Effective Time, is equal to
the aggregate fair market value, determined immediately prior to the
Effective Time, of the shares of Comcast Common Stock that were subject to
such Comcast Equity Award.
(iii) At or prior to the Effective Time, Parent shall reserve for
issuance the number of shares of Parent Indexed Stock necessary to satisfy
37
Parent's obligations under this Section 4.02(h). No later than five
Business days after the Effective Time, Parent shall file with the SEC an
S-8 under the 1933 Act with respect to the shares of Parent Indexed Stock
subject to the Comcast Converted Stock Options and Comcast Converted
Equity Awards issued pursuant to this Section 4.02(h), and shall use
reasonable best efforts to maintain the effectiveness of the applicable
S-8 and current status of the prospectus related to the applicable S-8, as
well as comply with any applicable state securities or "blue sky" laws,
for so long as any such Comcast Converted Stock Options and/or Comcast
Converted Equity Awards remain outstanding.
(i) No Liability. None of the parties hereto or the Exchange Agent shall
be liable to any Person in respect of any shares of Parent Common Stock (or
dividends or distributions with respect thereto) or cash from the Exchange Fund
or the Common Stock Trust delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. If any Certificates
shall not have been surrendered prior to any date on which any shares of Parent
Common Stock, any cash in lieu of fractional shares of Parent Common Stock or
any dividends or other distributions with respect to Parent Common Stock in
respect of such Certificate would otherwise escheat to or become the property
of any Governmental Authority, any such shares, cash, dividends or other
distributions in respect of such Certificate shall, to the extent permitted by
applicable law, become the property of Parent, free and clear of all claims or
interest of any Person previously entitled thereto.
(j) Investment of Exchange Fund and Common Stock Trust. The Exchange Agent
shall invest any cash included in the Exchange Fund and Common Stock Trust, as
directed by Parent, on a daily basis; provided that no such investment or loss
thereon shall affect the amounts payable or the timing of the amounts payable
to AT&T Broadband or Comcast shareholders pursuant to this Article 4. Any
interest and other income resulting from such investments shall be paid to
Parent.
(k) Lost Certificates. If any Certificate is lost, stolen or destroyed,
upon the making of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed and executing an indemnity
reasonably satisfactory to Parent (and, if required by Parent in the case of a
Certificate representing more than 1,000 shares, the posting by such Person of
a bond, in such reasonable amount as Parent may direct, as indemnity) against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent will issue, in exchange for such lost, stolen or destroyed
Certificate and in respect of the shares of AT&T Broadband Common Stock or
Comcast Common Stock, as the case may be, formerly represented by such lost
Certificate, a certificate representing that number of whole shares of Parent
Common Stock that such holder has the right to
38
receive pursuant to the provisions of this Article 4, cash in lieu of any
fractional shares of Parent Common Stock to the extent provided in Section
4.02(e) and any dividends or distributions to the extent provided in Section
4.02(c).
(l) Notwithstanding anything to the contrary contained in Section 4.02,
Comcast and AT&T shall mutually agree upon an arrangement whereby holders of
shares of AT&T Broadband Common Stock shall not be required to deliver
Certificates to the Exchange Agent prior to receiving a certificate
representing the shares of Parent Common Stock into which their shares of AT&T
Broadband Common Stock have been converted in accordance with Section 4.01, any
cash in lieu of fractional shares payable to such holder pursuant to Section
4.02(e) or dividends or other distributions on their shares of Parent Common
Stock. Under such arrangements, the parties shall instruct the Exchange Agent
(i) not to mail to any such holder of AT&T Broadband Common Stock the
transmittal materials referred to in Section 4.02(b) and (ii) to deliver the
appropriate merger consideration to each such holder of AT&T Broadband Common
Stock as soon as reasonably practicable after the Effective Time. The parties
shall cooperate to agree upon procedures to effect book entry transfers in
respect of the foregoing.
(m) If (i) any holder of AT&T Common Stock does not receive shares of AT&T
Broadband Common Stock in the Distribution in respect of such holder's shares
of AT&T Common Stock because such holder has purported to exercise rights
pursuant to Section 910 of the NYBCL in respect of such holder's shares of AT&T
Common Stock and (ii) such rights are subsequently invalidated or such holder
subsequently withdraws his purported exercise of such rights, then Parent shall
deliver to such holder at such time the merger consideration payable pursuant
to this Article 4 in respect of the shares of AT&T Broadband Common Stock
issuable in the Distribution in respect such holder's shares of AT&T Common
Stock.
SECTION 4.03. Section 355(e) Top-up. (a) In the event that the A
Shareholder Approval has been obtained and if, but for a disparity in the per
share value of the Parent Class A Common Stock and the Parent Class A Special
Common Stock, the Qualified Holders would have received a number of shares of
Parent Common Stock pursuant to Section 4.01(a)(iii) at the Effective Time that
represents more than 50% of the total value of all shares of Parent Common
Stock, Parent shall issue additional shares of Parent Common Stock to the same
holders of record of AT&T Broadband Common Stock in an amount sufficient to
ensure that Qualified Holders will be treated as holding at the Effective Time
more than 50% of the value of all shares of Parent Common Stock; provided,
however, that Parent shall not be obligated to issue additional shares pursuant
to this Section 4.03(a) to the extent that AT&T has issued shares in breach of
Section 8.01(v) of this Agreement.
39
(b) In the event that the A Shareholder Approval has not been obtained and
if, but for a disparity in the per share value of the Parent Class C Common
Stock and the Parent Class A Special Common Stock, the Qualified Holders would
have received a number of shares of Parent Common Stock pursuant to Section
4.01(c)(iii) at the Effective Time that represents more than 50% of the total
value of all shares of Parent Common Stock, Parent shall issue additional
shares of Parent Common Stock to the same holders of record of AT&T Broadband
Common Stock in an amount sufficient to ensure that Qualified Holders will be
treated as holding at the Effective Time more than 50% of the value of all
shares of Parent Common Stock; provided, however, that Parent shall not be
obligated to issue additional shares pursuant to this Section 4.03(b) to the
extent that AT&T has issued shares in breach of Section 8.01(v) of this
Agreement.
(c) For purposes of this Section 4.03, (i) "Qualified Holders" shall mean
the holders of AT&T Broadband Common Stock other than holders that receive such
shares "pursuant to a plan or series of related transactions" with the
Distribution (within the meaning of Section 355(e) of the Code) and (ii) the
total value of all shares of Parent Common Stock shall be determined in
accordance with Section 4.03 of the Comcast Disclosure Schedule.
SECTION 4.04. Additional Payment. (a) In the event that the A Shareholder
Approval has been obtained and prior to the Effective Time Standard and Poors'
has not committed that the Parent Class A Common Stock will be included in the
Index immediately after the Effective Time, then in addition to the
consideration payable pursuant to Section 4.01(a)(iii), each holder of shares
of AT&T Broadband Common Stock shall be entitled to receive, in exchange for
each of such holder's shares, a non-transferable security (the "K/A Security")
entitling the holder to the rights described in the next sentence. Each holder
of a K/A Security shall be entitled to receive from Parent, in exchange for and
in full satisfaction of such holder's rights under such K/A Security, a number
of shares of Parent Class A Common Stock equal to the product of (i) the
Exchange Ratio and (ii) the K/A Price Differential; provided that if the Parent
Class A Common Stock is included in the Index at any time prior to the end of
the Pricing Period, all rights under the K/A Security shall immediately
terminate. The number of shares of Parent Class A Common Stock issuable
pursuant to the preceding sentence (if any) in respect of each K/A Security
will be reduced by the number of shares of Parent Class A Common Stock
previously issued pursuant to Section 4.03(a) (if any) in respect of each share
of AT&T Broadband Common Stock.
(b) In the event that the A Shareholder Approval has not been obtained and
prior to the Effective Time Standard and Poors' has not committed that the
Parent Class C Common Stock will be included in the Index immediately after the
Effective Time, then in addition to the consideration payable pursuant to
Section
40
4.01(c)(iii), each holder of shares of AT&T Broadband Common Stock shall be
entitled to receive, in exchange for each of such holder's shares, a non-
transferable security (the "K/C Security") entitling the holder to the rights
described in the next sentence. Each holder of a K/C Security shall be entitled
to receive from Parent, in exchange for and in full satisfaction of such
holder's rights under such K/C Security, a number of shares of Parent Class C
Common Stock equal to the product of (i) the Exchange Ratio and (ii) the K/C
Price Differential; provided that if the Parent Class C Common Stock is
included in the Index at any time prior to the end of the Pricing Period, all
rights under the K/C Security shall immediately terminate. The number of shares
of Parent Class C Common Stock issuable pursuant to the preceding sentence (if
any) in respect of each K/C Security will be reduced by the number of shares of
Parent Class C Common Stock previously issued pursuant to Section 4.03(b) (if
any) in respect of each share of AT&T Broadband Common Stock.
SECTION 4.05. Additional Exchange Arrangements. In the event that any
additional shares of Parent Common Stock will be issued pursuant to Section
4.03, Parent will enter into arrangements with the Exchange Agent (which
arrangements will be comparable to the arrangements described in Section 4.02
and will be mutually agreed upon by Comcast and AT&T) providing for the
delivery to the applicable holders of shares of Parent Common Stock of such
additional shares of Parent Common Stock as soon as reasonably practicable
after such additional shares become payable pursuant to Section 4.03. In the
event that any K/A Securities or K/C Securities will be issued pursuant to
Section 4.04, or any additional shares of Parent Common Stock will be issued in
respect of any K/A Securities or K/C Securities pursuant to Section 4.04,
Parent will enter into arrangements with the Exchange Agent (which arrangements
will be comparable to the arrangements described in Section 4.02 and will be
mutually agreed upon by Comcast and AT&T) providing for the delivery to the
applicable Persons of such Securities or such additional shares of Parent
Common Stock as soon as reasonably practicable after such Securities or
additional shares become payable pursuant to Section 4.04.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF COMCAST
Except as set forth in the Comcast Disclosure Schedule, regardless of
whether the relevant Section herein refers to the Comcast Disclosure Schedule,
or in the Specified Comcast SEC Documents filed prior to the date hereof,
Comcast represents and warrants to AT&T as follows:
41
SECTION 5.01. Corporate Existence and Power. Comcast is a corporation duly
incorporated, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania and has all corporate powers required to carry on
its business as currently conducted. Comcast is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction where
such qualification is necessary, except for those jurisdictions where failure
to be so qualified, individually or in the aggregate, has not had and would not
reasonably be expected to have a Comcast Material Adverse Effect. Comcast has
heretofore delivered or made available to AT&T true and complete copies of the
articles of incorporation and bylaws of Comcast as currently in effect.
SECTION 5.02. Corporate Authorization. (a) The execution, delivery and
performance by Comcast of this Agreement and the consummation by Comcast of the
transactions contemplated hereby are within Comcast's corporate powers and,
except for the Comcast Shareholders' Approval, have been duly authorized by all
necessary corporate action on the part of Comcast. This Agreement constitutes a
valid and binding agreement of Comcast, enforceable against Comcast in
accordance with its terms, except (i) as the same may be limited by applicable
bankruptcy, insolvency, moratorium or similar laws of general application
relating to or affecting creditors' rights and (ii) for the limitations imposed
by general principles of equity.
(b) At a meeting duly called and held, Comcast's Board of Directors has
unanimously (i) determined that this Agreement and the transactions
contemplated hereby is fair to and in the best interests of Comcast
shareholders; (ii) approved and adopted this Agreement and the transactions
contemplated hereby; and (iii) resolved to recommend adoption of this Agreement
by Comcast shareholders.
SECTION 5.03. Governmental Authorization. The execution, delivery and
performance by Comcast of this Agreement and the consummation by Comcast of the
transactions contemplated hereby require no action by or in respect of, or
filing with, any United States federal, state or local, foreign or
supranational governmental body, agency, official or authority (a "Governmental
Authority"), other than (a) notices to, or consents or waivers from, the
relevant Franchising Authorities in respect of the Franchises for the Systems
owned and operated by Comcast or the Comcast Subsidiaries (the "Comcast
Franchise Consents"), and the FCC in connection with a change of control and/or
assignment of the holder of the FCC licenses of Comcast and the Comcast
Subsidiaries ("Comcast License Consents"); (b) notices to, consents or waivers
from the state public service and public utilities commissions having
jurisdiction over the assets of Comcast and the Comcast Subsidiaries ("Comcast
PUC Consents"); (c) the filing of the PA Articles of Merger pursuant to the
PBCL and appropriate documents with the relevant authorities of other states in
which Comcast is qualified to do business; (d) compliance with any applicable
requirements of the HSR Act; (e) compliance
42
with any applicable requirements of the 1933 Act, the 1934 Act, and any other
applicable securities laws, whether United States state or foreign; and (f) any
actions or filings the absence of which, individually or in the aggregate,
would not reasonably be expected to have a Comcast Material Adverse Effect or
prohibit or materially impair or delay the ability of Comcast to consummate the
transactions contemplated by this Agreement.
SECTION 5.04. Non-contravention. The execution, delivery and performance
by Comcast of this Agreement and the consummation by Comcast of the
transactions contemplated hereby do not and will not (a) contravene, conflict
with, or result in any violation or breach of any provision of the articles of
incorporation or bylaws of Comcast; (b) assuming compliance with the matters
referred to in Section 5.03, contravene, conflict with or result in a violation
or breach of any provision of any applicable law, statute, ordinance, rule,
regulation, judgment, injunction, order, or decree; (c) assuming compliance
with the matters referred to in Section 5.03, require any consent or other
action by any Person under, constitute a default (or an event that, with or
without notice or lapse of time or both, would constitute a default) under, or
cause or permit the termination, cancellation, acceleration, triggering or
other change of any right or obligation or the loss of any benefit to which
Comcast or any Comcast Subsidiary is entitled under (i) any provision of any
agreement or other instrument binding upon Comcast or any Comcast Subsidiary or
any of their respective assets or properties or (ii) any license, franchise,
permit, certificate, approval or other similar authorization held by, or
affecting, or relating in any way to, the assets, properties or business of,
Comcast or any Comcast Subsidiary; or (d) result in the creation or imposition
of any Lien on any asset or property of Comcast or any Comcast Subsidiary,
other than such exceptions in the case of clauses (b), (c) and (d) above as
would not, individually or in the aggregate, reasonably be expected to have a
Comcast Material Adverse Effect or prohibit or materially impair or delay the
ability of Comcast to consummate the transactions contemplated hereby.
SECTION 5.05. Capitalization. (a) The authorized capital stock of Comcast
consists of (i) 200,000,000 shares of Comcast Class A Common Stock, (ii)
50,000,000 shares of Comcast Class B Common Stock, (iii) 2,500,000,000 shares
of Comcast Class A Special Common Stock and (iv) 20,000,000 shares of preferred
stock. As of the close of business on November 30, 2001, there were outstanding
(1) 21,829,422 shares of Comcast Class A Common Stock, (2) 9,444,375 shares of
Comcast Class B Common Stock, (3) 913,778,527 shares of Comcast Class A Special
Common Stock (inclusive of shares issued pursuant to the Comcast ESPP but
exclusive of all shares of restricted stock granted under any compensatory plan
or arrangements), (4) Comcast Stock Options to purchase an aggregate of
55,853,196 shares of Comcast Class A Special Common Stock (of which options to
purchase an aggregate of 16,822,181 shares of Comcast Class A Special Common
Stock were exercisable), (5) phantom shares, stock units, stock
43
appreciation rights, other stock-based awards or other deferred stock awards
issued under any stock option, compensation or deferred compensation plan or
arrangement with respect to an aggregate of 6,808,916 shares of Comcast Class A
Special Common Stock and (6) no shares of preferred stock. As of November 30,
2001, no shares of Comcast Common Stock were held in trust or in treasury. All
outstanding shares of capital stock of Comcast have been, and all shares that
may be issued pursuant to any compensatory plan or arrangement will be, when
issued in accordance with the respective terms thereof, duly authorized,
validly issued, fully paid and nonassessable.
(b) Except as set forth in this Section 5.05 and for changes since
November 30, 2001 resulting from the exercise of Comcast Stock Options and the
vesting of Comcast Equity Awards outstanding on such date, including, for the
avoidance of doubt, options to purchase stock under the Comcast ESPP (and the
grant or award of Comcast Stock Options and Comcast Equity Awards in the
ordinary course of business and the exercise thereof, including, for the
avoidance of doubt, options to purchase stock under the Comcast ESPP), there
are no outstanding (i) shares of capital stock or voting securities of Comcast,
(ii) securities of Comcast or any Comcast Subsidiary convertible into or
exchangeable for shares of capital stock or voting securities of Comcast or
(iii) options or other rights to acquire from Comcast or any Comcast
Subsidiary, or other obligations of Comcast or any Comcast Subsidiary to issue,
any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of Comcast. There are no
outstanding obligations of Comcast or any Comcast Subsidiary to repurchase,
redeem or otherwise acquire any of the securities referred to in clause (i),
(ii) or (iii) above (collectively, the "Comcast Securities").
SECTION 5.06. Subsidiaries. (a) Each Comcast Subsidiary is a corporation
or other legal entity duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization and has all corporate,
partnership or other similar powers required to carry on its business as
currently conducted, other than such exceptions as, individually or in the
aggregate, have not had and would not reasonably be expected to have a Comcast
Material Adverse Effect. Each Comcast Subsidiary is duly qualified to do
business as a foreign corporation or other foreign legal entity and is in good
standing in each jurisdiction where such qualification is necessary, other than
such exceptions as, individually or in the aggregate, have not had and would
not reasonably be expected to have a Comcast Material Adverse Effect. Section
5.06(a) of the Comcast Disclosure Schedule sets forth a list of all Comcast
Significant Subsidiaries and their respective jurisdictions of organization.
(b) All of the outstanding capital stock of, or other voting securities or
ownership interests in, each Comcast Significant Subsidiary is owned by
44
Comcast, directly or indirectly, free and clear of any Lien and free of any
other limitation or restriction (including any restriction on the right to
vote, sell or otherwise dispose of such capital stock or other voting
securities or ownership interests). There are no outstanding (i) securities of
Comcast or any Comcast Subsidiary convertible into or exchangeable for shares
of capital stock or other voting securities or ownership interests in any
Comcast Significant Subsidiary or (ii) options or other rights to acquire from
Comcast or any Comcast Subsidiary, or other obligations of Comcast or any
Comcast Subsidiary to issue, any capital stock, or other voting securities or
ownership interests in, or any securities convertible into or exchangeable for
any capital stock or other voting securities or ownership interests in, any
Comcast Significant Subsidiary. There are no outstanding obligations of Comcast
or any Comcast Significant Subsidiary to repurchase, redeem or otherwise
acquire any of the items referred to in clauses (i) and (ii) above.
SECTION 5.07. SEC Filings. (a) Comcast has delivered or made available to
AT&T (i) Comcast's annual reports on Form 10-K for its fiscal years ended
December 31, 2000, 1999 and 1998, (ii) Comcast's proxy or information
statements relating to meetings of, or actions taken without a meeting by,
Comcast shareholders held since December 31, 1998, and (iii) all of Comcast's
other reports, statements, schedules and registration statements filed with the
SEC since December 31, 1998 (the documents referred to in clauses (i), (ii) and
(iii) above, collectively, the "Comcast SEC Documents").
(b) As of its filing date (and, if amended or superceded by a filing prior
to the date of this Agreement or the Effective Time, then on the date of such
filing), each Comcast SEC Document complied as to form in all material respects
with the applicable requirements of the 1933 Act and the 1934 Act, as the case
may be.
(c) As of its filing date (and, if amended or superceded by a filing prior
to the date of this Agreement or the Effective Time, then on the date of such
filing), each Comcast SEC Document filed pursuant to the 1934 Act did not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of
the circumstances under which they were made, not misleading.
(d) Each Comcast SEC Document that is a registration statement, as amended
or supplemented, if applicable, filed pursuant to the 1933 Act, as of the date
such registration statement or amendment became effective, did not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading.
45
SECTION 5.08. Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of Comcast
included in the Comcast SEC Documents fairly present, in all material respects,
in conformity with United States generally accepted accounting principles
("GAAP") applied on a consistent basis (except as may be indicated in the notes
thereto), the consolidated financial position of Comcast and its consolidated
Subsidiaries as of the respective dates thereof and their consolidated results
of operations and cash flows for the periods then ended (subject to normal
year-end adjustments in the case of any unaudited interim financial
statements).
SECTION 5.09. Information Supplied. The information supplied by Comcast
for inclusion or incorporation in the registration statement on Form S-4 or any
amendment or supplement thereto pursuant to which shares of Parent Common Stock
(and any K/A Securities or K/C Securities) issuable in the Mergers will be
registered with the SEC (the "Registration Statement") shall not at the time
the Registration Statement is declared effective by the SEC contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. The
information supplied by Comcast for inclusion in the joint proxy
statement/prospectus or any amendment or supplement thereto (the "Joint Proxy
Statement") to be sent to Comcast shareholders in connection with their meeting
to consider this Agreement and the Comcast Merger (the "Comcast Shareholders'
Meeting") and to be sent to AT&T shareholders in connection with their meeting
to consider this Agreement and the AT&T Broadband Merger (the "AT&T
Shareholders' Meeting") shall not, on the date the Joint Proxy Statement is
first mailed to the shareholders of each of Comcast and AT&T, at the time of
the Comcast Shareholders' Meeting, at the time of the AT&T Shareholders'
Meeting or at the Effective Time, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
SECTION 5.10. Absence of Certain Changes. Since the Comcast Balance Sheet
Date, the business of Comcast and the Comcast Subsidiaries has been conducted
in the ordinary course of business consistent with past practices, and there
has not been (i) any event, occurrence or development of a state of
circumstances or facts that, individually or in the aggregate, has had or would
reasonably be expected to have a Comcast Material Adverse Effect or (ii) any
action, event, occurrence or transaction that would have been prohibited by
clause (iii), (iv), (vii), (viii) or (ix) of Section 7.01 if this Agreement had
been in effect at the time thereof or any agreement, arrangement or commitment
in respect of any action, event, occurrence or transaction that would have been
prohibited by the
46
foregoing clauses of Section 7.01 if this Agreement had been in effect at the
time thereof.
SECTION 5.11. No Undisclosed Material Liabilities. There are no
liabilities or obligations of Comcast or any Comcast Subsidiary of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, and there is no existing condition, situation or set of
circumstances that would reasonably be expected to result in such a liability
or obligation, other than:
(a) liabilities or obligations disclosed and provided for in the Comcast
Balance Sheet or in the notes thereto;
(b) liabilities or obligations incurred since the Comcast Balance Sheet
Date in the ordinary course of business of the Comcast Group consistent with
past practice;
(c) liabilities or obligations under commercial transactions and
agreements in accordance with their terms or arising in compliance with
applicable laws, statutes, ordinances, rules or regulations; or
(d) liabilities or obligations that, individually or in the aggregate,
have not had and would not reasonably be expected to have a Comcast Material
Adverse Effect.
SECTION 5.12. Compliance with Laws and Court Orders. Comcast and the
Comcast Subsidiaries hold all licenses, franchises, certificates, consents,
permits, qualifications and authorizations from all Governmental Authorities
necessary for the lawful conduct of their business, except where the failure to
hold any of the foregoing, individually or in the aggregate, has not had and
would not reasonably be expected to have a Comcast Material Adverse Effect.
Comcast and each of the Comcast Subsidiaries are, and have been in compliance
with, and to the knowledge of Comcast, are not under investigation with respect
to and have not been threatened to be charged with or given notice of any
violation of, any such license, franchise, certificate, consent, permit,
qualification or authorization, or any applicable law, statute, ordinance,
rule, regulation, judgment, injunction, order or decree, except for failures to
comply or violations that, individually or in the aggregate, have not had and
would not reasonably be expected to have a Comcast Material Adverse Effect.
SECTION 5.13. Litigation. There is no action, suit, investigation or
proceeding (or any basis therefor) pending against, or, to the knowledge of
Comcast, threatened against or affecting, Comcast, any Comcast Subsidiary or
any of their respective assets or properties before any court or arbitrator or
before or
47
by any other Governmental Authority, that, individually or in the aggregate,
would reasonably be expected to have a Comcast Material Adverse Effect.
SECTION 5.14. Finders' Fees. Except for Morgan Stanley & Co. Incorporated,
J.P. Morgan Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated
and Quadrangle Group, whose fees will be paid by Comcast, there is no
investment banker, broker, finder or other intermediary that has been retained
by or is authorized to act on behalf of Comcast or any Comcast Subsidiary who
might be entitled to any fee or commission in connection with the transactions
contemplated by this Agreement and the other Transaction Agreements. A copy of
Comcast's engagement agreement with each of Morgan Stanley & Co. Incorporated,
J.P. Morgan Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated
and Quadrangle Group has been provided to AT&T.
SECTION 5.15. Opinion of Financial Advisor. Comcast has received an
opinion of each of Morgan Stanley & Co. Incorporated, J.P. Morgan Securities
Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, financial advisors to
Comcast, to the effect that, as of the date hereof, the conversion ratios in
the Comcast Merger applicable to the holders of Comcast Common Stock, in the
aggregate, are fair, from a financial point of view, to the Comcast
shareholders, taken together.
SECTION 5.16. Taxes. Except as would not, individually or in the
aggregate, reasonably be expected to have a Comcast Material Adverse Effect,
(a) all Comcast and Comcast Subsidiary Tax Returns required to be filed on or
before the Effective Time with any taxing authority by, or with respect to,
Comcast and the Comcast Subsidiaries have been or will be timely filed (taking
into account extensions) and are or will be correct in all respects (other than
with respect to Taxes for which adequate reserves are reflected on the Comcast
Balance Sheet); (b) Comcast and the Comcast Subsidiaries have timely paid or
will timely pay all Taxes shown as due and payable on the Comcast Tax Returns
that have been or will be so filed, and, as of the time of filing, the Comcast
Tax Returns correctly reflected the facts regarding the income, business,
assets, operations, activities and the status of Comcast and the Comcast
Subsidiaries (other than with respect to Taxes for which adequate reserves are
reflected on the Comcast Balance Sheet); (c) Comcast and the Comcast
Subsidiaries have made provision for all Taxes payable by Comcast and the
Comcast Subsidiaries for which no Comcast Tax Return has yet been filed; (d)
there is no action, suit, proceeding, audit or claim currently proposed or
pending against or with respect to Comcast or any Comcast Subsidiary in respect
of any Tax where there is a reasonable possibility of an adverse determination;
(e) the United States federal income Tax Returns of Comcast and the Comcast
Subsidiaries have been examined and settled with the IRS (or the applicable
statutes of limitation for the assessment of United States federal income Taxes
for such periods have expired) for all years through 1993;
48
(f) no extension of the statute of limitations on the assessment of any Taxes
has been granted by Comcast or any Comcast Subsidiary and is currently in
effect; (g) except for complete and accurate copies of Tax sharing agreements
and amendments thereto made available to AT&T prior to the execution of this
Agreement and listed in Section 5.16 of the Comcast Disclosure Schedule, no
agreements relating to the allocation or sharing of Taxes exist between Comcast
and/or any of the Comcast Subsidiaries, on the one hand, and a third party, on
the other hand; and (h) there are no Liens for Taxes on any of the assets of
Comcast or any Comcast Subsidiary except Liens for current Taxes not yet due
and payable. "Taxes" means (i) any and all taxes, charges, fees, levies or
other assessments, including all net income, gross income, gross receipts,
excise, stamp, real or personal property, ad valorem, withholding, social
security (or similar), unemployment, occupation, use, service, service use,
license, net worth, payroll, franchise, severance, transfer, recording,
employment, premium, windfall profits, environmental, customs duties, capital
stock, profits, disability, sales, registration, value added, alternative or
add-on minimum, estimated or other taxes, assessments or charges imposed by any
Governmental Authority and any interest, penalties, or additions to tax
attributable thereto, (ii) liability for the payment of any amount imposed on
any Person of the type described in clause (i) as a result of being or having
been before the Effective Time a member of an affiliated, consolidated,
combined or unitary group and (iii) any liability for the payment of any amount
imposed on any Person of the type described in (i) as a result of any existing
express or implied indemnification agreement or arrangement. "Tax Returns"
means any return, report, form or similar statement required to be filed with
respect to any Tax (including any attached schedules), including any
information return, claim for refund, amended return or declaration of
estimated Tax.
SECTION 5.17. Tax Opinions. Neither Comcast nor any Comcast Subsidiary has
taken any action or knows of any facts or circumstances relating to Comcast or
any Comcast Subsidiary that would prevent (i) the ruling or opinion referred to
in Section 10.01(j) from being obtained or (ii) Davis Polk & Wardwell from
delivering the opinion referred to in Section 10.03(b) as of the date hereof.
SECTION 5.18. Employee Benefit Plans and Labor Matters. Except as have not
had and would not reasonably be expected to have, individually or in the
aggregate, a Comcast Material Adverse Effect:
(a) Section 5.18(a) of the Comcast Disclosure Schedule contains a true and
complete list, as of the date hereof, of all Comcast Employee Plans and all
Comcast Benefit Arrangements. Copies of each Comcast Employee Plan and each
Comcast Benefit Arrangement (and, if applicable, related trust agreements) and
all amendments thereto have been made available to AT&T as of the date hereof,
together with the three most recent annual reports (Form 5500, including,
49
if applicable, Schedule B thereto) and the most recent actuarial valuation
report prepared in connection with an y Comcast Employee Plan.
(b) Neither Comcast nor any ERISA Affiliate nor any predecessor thereof
sponsors, maintains or contributes to any Comcast Employee Plan subject to
Title IV of ERISA. Neither Comcast nor any ERISA Affiliate has any liability
under Title IV of ERISA.
(c) As of September 30, 2001, the aggregate unfunded liability of Comcast
and any Comcast Subsidiary in respect of all Comcast Deferred Compensation
Plans, computed using reasonable actuarial assumptions and determined as if all
benefits under such plans were vested and payable as of such date, did not
exceed $180 million.
(d) Neither Comcast or any Comcast Subsidiary has any liability with
respect of post-retirement health, medical or life insurance benefits for
retired, former or current employees of Comcast or the Comcast Subsidiaries
except as required to avoid excise tax under Section 4980B of the Code.
(e) Each Comcast Employee Plan that is intended to be qualified under
Section 401(a) of the Code is so qualified and a favorable determination letter
is currently in effect for each such Comcast Employee Plan. To the knowledge of
Comcast, no fact or circumstance exists giving rise to a material likelihood
that such Comcast Employee Plan would not be treated as qualified by the
Internal Revenue Service.
(f) There is no contract, plan or arrangement (written or otherwise)
covering any employee or former employee of Comcast or any Comcast Subsidiary
that, individually or in the aggregate, could give rise to the payment of any
amount by Comcast or any Comcast Subsidiary that would not be deductible
pursuant to the terms of Sections 162(m) or 280G of the Code.
(g) Comcast has made available to AT&T, as of the date hereof, a true and
complete list and copies of each material Comcast International Plan, other
than plans mandated by applicable law. According to the actuarial assumptions
and valuations most recently used for the purpose of funding each Comcast
International Plan (or, if the same has no such assumptions and valuations or
is unfunded, according to actuarial assumptions and valuations in use by the
PBGC on the date hereof), as of December 31, 2000, the total amount or value of
the funds available under such Comcast International Plan to pay benefits
accrued thereunder or segregated in respect of such accrued benefits, together
with any reserve or accrual with respect thereto, exceeded the present value of
all benefits (actual or contingent) accrued as of such date of all participants
and past
50
participants therein in respect of which Comcast or any Comcast Subsidiary has
or would have after the Effective Time any obligation.
(h) Each Comcast Employee Plan, Comcast Benefit Arrangement and Comcast
International Plan has been maintained in compliance with its terms and with
the requirements prescribed by all applicable laws, statutes, orders, rules and
regulations (including any special provisions relating to registration or
qualification where such plan was intended to be so registered or qualified)
and has been maintained in good standing with applicable Governmental
Authorities.
(i) There has been no amendment to, written interpretation or announcement
(whether or not written) by Comcast or any of its Affiliates relating to, or
change in employee participation coverage under, a Comcast Employee Plan,
Comcast Benefit Arrangement or Comcast International Plan which would increase
materially the expense of maintaining such plan above the level of expense
incurred in respect thereof for the fiscal year ended December 31, 2000.
(j) No employee or former employee or independent contractor of Comcast or
any Comcast Subsidiary will become entitled to any bonus, retirement,
severance, job security or similar benefit or enhanced or increased such
benefit (including acceleration of vesting or exercise of an incentive award)
as a result of the transactions contemplated hereby (either alone or together
with any other event).
(k) Section 5.18(k) of the Comcast Disclosure Schedule sets forth a list
of all collective bargaining agreements to which Comcast or any of the Comcast
Subsidiaries is a party. Neither Comcast nor any of the Comcast Subsidiaries is
involved in or, to the knowledge of Comcast, threatened with any labor dispute,
work stoppage, labor strike, slowdown or grievance. To the knowledge of
Comcast, there is no organizing effort or representation question at issue with
respect to any collective bargaining unit of Comcast or any of the Comcast
Subsidiaries, or any employee of Comcast or any of the Comcast Subsidiaries.
(l) There are no pending or threatened claims (other than claims for
benefits in the ordinary course), lawsuits or arbitrations that have been
asserted or instituted, and, to the knowledge of Comcast, no set of
circumstances exists that may reasonably give rise to a claim or lawsuit,
against any of the Comcast Benefit Arrangements, the Comcast Employee Plans and
the Comcast International Plans, any fiduciaries thereof with respect to their
duties thereto or the assets of any of the trusts thereunder, that could
reasonably be expected to result in any material liability of Comcast or any of
the Comcast Subsidiaries to the PBGC, the United States Department of Treasury,
the United States Department of Labor, any foreign governmental authority, any
Multiemployer Plan, any of the Comcast
51
Benefit Arrangements, the Comcast Employee Plans and the Comcast International
Plans, any participant therein, or any other Person.
SECTION 5.19. Environmental Matters. (a) Except as have not had and would
not reasonably be expected to have, individually or in the aggregate, a Comcast
Material Adverse Effect:
(i) no notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has been filed,
no penalty has been assessed, and no investigation, action, claim, suit,
proceeding or review is pending or, to the knowledge of Comcast,
threatened by any Governmental Authority or other Person relating to or
arising out of any Environmental Law;
(ii) Comcast is and has been in compliance with all Environmental
Laws and all Environmental Permits; and
(iii) there are no liabilities of Comcast or any Comcast Subsidiary
of any kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise arising under or relating to any Environmental
Law, and there are no facts, conditions, situations or set of
circumstances that would reasonably be expected to result in, or be the
basis for, any such liability.
(b) There have been no environmental investigations, studies, audits,
tests, reviews or other analyses conducted of which Comcast has knowledge in
relation to the current or prior business of Comcast or any Comcast Subsidiary
or any property or facility now or previously owned or leased by Comcast or any
Comcast Subsidiary that reveal matters that, individually or in the aggregate,
have had, or would reasonably be expected to have, a Comcast Material Adverse
Effect.
(c) For purposes of this Section 5.19, the terms "Comcast" and "Comcast
Subsidiary" shall include any entity that is, in whole or in part, a
predecessor of Comcast or any Comcast Subsidiary.
SECTION 5.20. Intellectual Property. With such exceptions as, individually
or in the aggregate, have not had, and would not reasonably be expected to
have, a Comcast Material Adverse Effect, each of Comcast and the Comcast
Subsidiaries owns or has a valid license or other right to use each trademark,
service mark, trade name, invention, patent, trade secret, copyright, know-how
(including any registrations or applications for registration of any of the
foregoing) or any other similar type of proprietary intellectual property right
(collectively, the "Comcast Intellectual Property") necessary to carry on its
52
business substantially as currently conducted. Neither Comcast nor any Comcast
Subsidiary has received any notice of infringement of or conflict with, and, to
Comcast's knowledge, there are no infringements of or conflicts with, the
rights of any Person with respect to the use of any Comcast Intellectual
Property in the conduct of Comcast's business that, in either such case,
individually or in the aggregate, have had or would reasonably be expected to
have, a Comcast Material Adverse Effect.
SECTION 5.21. Contracts. Neither Comcast nor any of the Comcast
Subsidiaries is a party to or bound by (a) any "material contract" (as defined
in Item 601(b)(10) of Regulation S-K of the SEC) or any agreement, contract or
commitment that would be such a "material contract" but for the exception for
contracts entered into in the ordinary course of business or (b) any
non-competition agreement or any other agreement or obligation that materially
limits or will materially limit Comcast or any of the Comcast Subsidiaries (or,
after the Mergers, Parent, AT&T Broadband or any of the AT&T Broadband
Subsidiaries) from engaging in the business of providing telephony, data
transmission services, cable television or programming content. With such
exceptions as, individually or in the aggregate, have not had, and would not
reasonably be expected to have, a Comcast Material Adverse Effect, (i) each of
the contracts, agreements and commitments of Comcast and the Comcast
Subsidiaries is valid and in full force and effect and (ii) neither Comcast nor
any of the Comcast Subsidiaries has violated any provision of, or committed or
failed to perform any act that, with or without notice, lapse of time, or both,
would constitute a default under the provisions of any such contract, agreement
or commitment. To the knowledge of Comcast, no counterparty to any such
contract, agreement or commitment has violated any provision of, or committed
or failed to perform any act that, with or without notice, lapse of time, or
both would constitute a default or other breach under the provisions of, such
contract, agreement or commitment, except for defaults or breaches that,
individually or in the aggregate, have not had, and would not reasonably be
expected to have, a Comcast Material Adverse Effect. Neither Comcast nor any
Comcast Subsidiary is a party to, or otherwise a guarantor of or liable with
respect to (including pursuant to any keepwell agreement), (i) any material
interest rate, currency or other swap or derivative transaction (other than
those entered into in the ordinary course of business solely for hedging
purposes) or (ii) any Indebtedness of any other Person except a wholly owned
Comcast Subsidiary. Neither Comcast nor any Comcast Subsidiary is a party to
any joint venture or partnership agreement pursuant to which it is obligated to
make capital contributions in excess of (x) $25,000,000 during the current or
any succeeding calendar year or (y) $100,000,000 during the remaining term of
such agreement. Subject to applicable confidentiality restrictions, Comcast has
provided or made available to AT&T prior to the date hereof a copy of each
agreement of the type described in clause
53
(a) or (b) in the first sentence of this Section 5.21, in clause (i) or (ii) of
the second preceding sentence of this Section 5.21 or in the immediately
preceding sentence.
SECTION 5.22. Vote Required. (a) The only vote of the holders of any class
or series of capital stock of Comcast necessary to approve and adopt this
Agreement and the transactions contemplated hereby is the affirmative vote of
the holders of shares of Comcast Common Stock representing a majority of the
votes cast by such holders ("Comcast Shareholders' Approval"), except that the
A Shareholder Approval is required in order to effect the provisions hereof
that are expressly subject to obtaining the A Shareholder Approval. Assuming
Comcast Shareholder (or its successor) votes to approve and adopt this
Agreement and the transactions contemplated hereby in accordance with the terms
of the Support Agreement, no vote or consent of any other holder of any class
or series of capital stock of Comcast will be required to approve and adopt
this Agreement and the transactions contemplated hereby, except that the A
Shareholder Approval is required in order to effect the provisions hereof that
are expressly subject to obtaining the A Shareholder Approval.
SECTION 5.23. Antitakeover Statutes; Charter and Bylaw Provisions. (a)
Comcast has taken all action necessary to exempt the Comcast Merger and this
Agreement and the transactions contemplated hereby from the restrictions of
Section 2555 of the PBCL or otherwise to make such provisions inapplicable to
this Agreement and the transactions contemplated hereby, and, accordingly,
neither of Section 2555 of the PBCL nor any other antitakeover or similar
statute or regulation applies or purports to apply to any such transactions. No
other "control share acquisition", "fair price", "moratorium" or other
antitakeover laws or regulations enacted under any United States federal, state
or local or foreign laws apply to this Agreement or any of the transactions
contemplated hereby.
SECTION 5.24. AT&T Securities. Neither Comcast nor any Comcast Subsidiary
owns any AT&T Securities.
SECTION 5.25. Transactions with Affiliates. Except as set forth in Section
5.25 of the Comcast Disclosure Schedule, none of Comcast or any Comcast
Subsidiary is a party (and since December 31, 2000 none of Comcast or any
Comcast Subsidiary has been a party) to any material business arrangement or
business relationship with any Comcast Affiliate (other than another member of
the Comcast Group), and no Comcast Affiliate (other than another member of the
Comcast Group) owns (or has owned since such date) any material property or
right, tangible or intangible, that is used in the business of any member of
the Comcast Group.
SECTION 5.26. Investments. Section 5.26 of the Comcast Disclosure Schedule
sets forth a list of each material investment of Comcast or any Comcast
54
Subsidiary in any Person (other than a Subsidiary). Neither Comcast nor any
Comcast Subsidiary has any material liability in respect of any such
investment.
SECTION 5.27. No Approval Rights. Comcast has not granted any third party
any right to approve any waiver that Comcast may elect to grant to AT&T under
Section 8.01(xiii).
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF AT&T
Except as set forth (i) in the AT&T Disclosure Schedule, regardless of
whether the relevant Section herein refers to the AT&T Disclosure Schedule, or
(ii) (except with respect to Sections 6.08(c), 6.26, 6.27 and 6.28) in the
Specified AT&T SEC Documents filed prior to the date hereof (to the extent the
relevance of any disclosure in any of such Specified AT&T SEC Documents to the
AT&T Broadband Group is reasonably apparent on the face of such disclosure),
AT&T represents and warrants to Comcast as follows:
SECTION 6.01. Corporate Existence and Power. Each of AT&T and the AT&T
Subsidiaries that is or will be a party to a Transaction Agreement is a
corporation or other entity duly incorporated or formed, validly existing and
in good standing under the laws of the state of its incorporation or formation
and has all corporate or other powers required to carry on its business as
currently conducted. Each of AT&T and the AT&T Subsidiaries that is or will be
a party to a Transaction Agreement is duly qualified to do business and is in
good standing in each jurisdiction where such qualification is necessary,
except for those jurisdictions where failure to be so qualified, individually
or in the aggregate, has not had and would not reasonably be expected to have
an AT&T Broadband Material Adverse Effect. AT&T has heretofore delivered or
made available to Comcast true and complete copies of the certificate of
incorporation, bylaws or other organizational document of AT&T and each AT&T
Subsidiary that is or will be a party to a Transaction Agreement, as currently
in effect.
SECTION 6.02. Corporate Authorization. (a) The execution, delivery and
performance by AT&T and the AT&T Subsidiaries of the Transaction Agreements to
which they are or will be party and the consummation by AT&T and the AT&T
Subsidiaries of the transactions contemplated hereby and thereby are within
AT&T's and the AT&T Subsidiaries' corporate or other powers and, except for the
AT&T Shareholders' Approval, have been duly authorized by all necessary
corporate action on the part of AT&T and the AT&T Subsidiaries. Each
Transaction Agreement to which AT&T or any AT&T Subsidiary is or will be a
party constitutes or will when executed constitute a valid and binding
55
agreement of AT&T and each AT&T Subsidiary that is a party thereto, enforceable
against AT&T and each such AT&T Subsidiary in accordance with its terms, except
(i) as the same may be limited by applicable bankruptcy, insolvency, moratorium
or similar laws of general application relating to or affecting creditors'
rights and (ii) for the limitations imposed by general principles of equity.
(b) At meetings duly called and held, AT&T's Board of Directors and AT&T
Broadband's Board of Directors unanimously (i) determined that this Agreement
and the transactions contemplated hereby are fair to and in the best interests
of AT&T shareholders and AT&T Broadband shareholders, respectively; (ii)
approved and adopted this Agreement and the transactions contemplated hereby;
and (iii) resolved to recommend adoption of this Agreement by AT&T shareholders
(subject to Section 8.02(b)) and AT&T Broadband shareholders, respectively.
(c) At meetings duly called and held, each of AT&T's Board of Directors
and AT&T Broadband's Board of Directors unanimously approved the Separation and
the Distribution pursuant to the Separation and Distribution Agreement. AT&T
and AT&T Broadband have entered into the Separation and Distribution Agreement.
(d) AT&T, as sole shareholder of AT&T Broadband as of the date hereof, has
adopted this Agreement and the transactions contemplated hereby, including the
AT&T Broadband Merger.
SECTION 6.03. Governmental Authorization. The execution, delivery and
performance by AT&T and the AT&T Subsidiaries of the Transaction Agreements to
which they are or will be party and the consummation by AT&T and the AT&T
Subsidiaries of the transactions contemplated hereby and thereby require no
action by or in respect of, or filing with, any Governmental Authority, other
than (a) notices to, consents or waivers from, the relevant Franchising
Authorities in respect of the Franchises for the Systems owned and operated by
AT&T or the AT&T Subsidiaries (the "AT&T Franchise Consents" and, together with
the Comcast Franchise Consents, the "Franchise Consents")), and the FCC in
connection with a change of control and/or assignment of the holder of the FCC
licenses and social contracts of AT&T or the AT&T Subsidiaries (the "AT&T
License Consents" and, together with the Comcast License Consents, the "License
Consents"); (b) notices to, consents or waivers from the state public service
and public utilities commissions having jurisdiction over the assets of AT&T
and the AT&T Subsidiaries (the "AT&T PUC Consents" and, together with the
Comcast PUC Consents, the "PUC Consents"); (c) the filing of the DE Certificate
of Merger pursuant to the DGCL and appropriate documents with the relevant
authorities of other states in which AT&T is qualified to do business; (d)
56
compliance with any applicable requirements of the HSR Act; (e) compliance with
any applicable requirements of the 1933 Act, the 1934 Act and any other
applicable securities laws, whether United States state or foreign; (f)
notices, consents, waivers, approvals and filings necessary in connection with
the Separation and set forth on Section 6.03 of the AT&T Disclosure Schedule;
and (g) any actions or filings the absence of which, individually or in the
aggregate, would not reasonably be expected to have an AT&T Broadband Material
Adverse Effect or prohibit or materially impair or delay the ability of AT&T
and the AT&T Subsidiaries to consummate the transactions contemplated by this
Agreement and the other Transaction Agreements.
SECTION 6.04. Non-contravention. The execution, delivery and performance
by AT&T and the AT&T Subsidiaries of the Transaction Agreements to which they
are or will be party and the consummation by AT&T and the AT&T Subsidiaries of
the transactions contemplated hereby and thereby do not and will not (a)
contravene, conflict with, or result in any violation or breach of any
provision of the certificate of incorporation, bylaws or other organizational
document of AT&T or any AT&T Subsidiary; (b) assuming compliance with the
matters referred to in Section 6.03, contravene, conflict with or result in a
violation or breach of any provision of any applicable law, statute, ordinance,
rule, regulation, judgment, injunction, order or decree; (c) assuming
compliance with the matters referred to in Section 6.03, require any consent or
other action by any Person under, constitute a default (or an event that, with
or without notice or lapse of time or both, would constitute a default) under,
or cause or permit the termination, cancellation, acceleration, triggering or
other change of any right or obligation or the loss of any benefit to which
AT&T or any AT&T Subsidiary is entitled under (i) any provision of any
agreement or other instrument binding upon AT&T or any AT&T Subsidiary or any
of their respective assets or properties or (ii) any license, franchise,
permit, certificate, approval or other similar authorization held by, or
affecting, or relating in any way to, the assets, properties or business of
AT&T or any AT&T Subsidiary; or (d) result in the creation or imposition of any
Lien on any asset or property of AT&T or any AT&T Subsidiary, other than such
exceptions in the case of clauses (b), (c) and (d) above as would not,
individually or in the aggregate, reasonably be expected to have an AT&T
Broadband Material Adverse Effect or prohibit or materially impair or delay the
ability of AT&T or any AT&T Subsidiary to consummate the transactions
contemplated by any of the Transaction Agreements.
SECTION 6.05. Capitalization. (a) The authorized capital stock of AT&T
consists of (i) 16,400,000,000 shares of Common Stock, of which (A)
6,000,000,000 shares have been designated AT&T Common Stock, (B) 4,000,000,000
shares have been designated Class A Liberty Media Group Common Stock, (C)
400,000,000 shares have been designated Class B Liberty Media Group Common
Stock and (D) 6,000,000,000 shares have been designated
57
Wireless Group Common Stock, and (ii) 100,000,000 shares of preferred stock,
$1.00 par value per share, of which (A) 1,500,000 shares have been designated
Wireless Group Preferred Tracking Stock ("Wireless Preferred Stock"), (B)
1,000,000 shares have been designated Series E Convertible Preferred Stock
("Series E Preferred Stock") and (C) 2,000,000 shares have been designated
Subsidiary Exchangeable Preferred Stock ("AT&T Subsidiary Preferred Stock"). As
of the close of business on November 30, 2001, there were outstanding (1)
3,540,410,643 shares of AT&T Common Stock (exclusive of all shares of
restricted stock granted under any compensatory plans or arrangements), (2) no
shares of Class A Liberty Media Group Common Stock, (3) no shares of Class B
Liberty Media Group Common Stock, (4) no shares of Wireless Group Common Stock,
(5) AT&T Stock Options to purchase an aggregate of 313,598,348 shares of AT&T
Common Stock (of which options to purchase an aggregate of approximately
170,242,786 shares of AT&T Common Stock were exercisable), (6) phantom shares,
stock units, stock appreciation rights or other stock-based awards issued under
any stock option, compensation or deferred compensation plan or arrangement
with respect to an aggregate of 12,492,305 shares of AT&T Common Stock, (7)
52,808,000 shares of AT&T Common Stock reserved for issuance under the Warrants
issued pursuant to the Warrant Agreement dated as of June 16, 1999 between AT&T
and The Bank of New York, as Warrant Agent (the "Warrants"), (8) 88,015,773
shares of AT&T Common Stock issuable upon conversion of the QUIPS, (9)
52,347,844 shares of AT&T Common Stock reserved for issuance upon exchange (and
shares of AT&T Common Stock issuable upon redemption in accordance with the
terms thereof) of the Class A Senior Cumulative Exchangeable Preferred Stock of
TCI Pacific Communications, Inc. (the "TCI Pacific Preferred Stock"), (10) no
shares of Wireless Preferred Stock, (11) no shares of Series E Preferred Stock,
(12) 759,792 shares of AT&T Subsidiary Preferred Stock held by AT&T Broadband
Subsidiaries that are directly or indirectly wholly owned Subsidiaries of AT&T
and (13) 94,163 shares of AT&T Subsidiary Preferred Stock held by T-Holdings
and/or one of its Subsidiaries. As of November 30, 2001, 851,782,532 shares of
AT&T Common Stock were held in treasury. No shares of AT&T Common Stock are
held by any Subsidiary of AT&T. All outstanding shares of capital stock of AT&T
have been, and all shares that may be issued pursuant to any compensatory plan
or arrangement will be, when issued in accordance with the respective terms
thereof, duly authorized, validly issued, fully paid and nonassessable.
(b) Except as set forth in this Section 6.05 and for changes since
November 30, 2001 resulting from the exercise of AT&T Stock Options, AT&T SARs
and AT&T Equity Awards outstanding on such date, including, for the avoidance
of doubt, options to purchase stock under the AT&T ESPP (and the grant or award
of AT&T Stock Options, AT&T SARs and AT&T Equity Awards in the ordinary course
of business and the exercise thereof, including, for the
58
avoidance of doubt, options to purchase stock under the AT&T ESPP) or resulting
from the exercise or conversion of the Warrants or the QUIPS, or the exchange
or redemption of the TCI Pacific Preferred Stock, or as otherwise expressly
contemplated hereby or by the Transaction Agreements, there are no outstanding
(i) shares of capital stock or voting securities of AT&T, (ii) securities of
AT&T or any AT&T Subsidiary convertible into or exchangeable for shares of
capital stock or voting securities of AT&T or (iii) options or other rights to
acquire from AT&T or any AT&T Subsidiary, or other obligations of AT&T or any
AT&T Subsidiary to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of
AT&T. There are no outstanding obligations of AT&T or any AT&T Subsidiary to
repurchase, redeem or otherwise acquire any of the securities referred to in
clause (i), (ii) or (iii) above (collectively, the "AT&T Securities").
SECTION 6.06. AT&T Broadband and AT&T Broadband Subsidiaries. (a) Each of
AT&T Broadband and the AT&T Broadband Subsidiaries is a corporation or other
legal entity duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization and has all corporate, partnership or
other similar powers required to carry on its business as currently conducted,
other than such exceptions as, individually or in the aggregate, have not had
and would not reasonably be expected to have an AT&T Broadband Material Adverse
Effect. Each of AT&T Broadband and the AT&T Broadband Subsidiaries is duly
qualified to do business as a foreign corporation or other foreign legal entity
and is in good standing in each jurisdiction where such qualification is
necessary, other than such exceptions as, individually or in the aggregate,
have not had and would not reasonably be expected to have an AT&T Broadband
Material Adverse Effect. Section 6.06(a) of the AT&T Disclosure Schedule sets
forth a list of all AT&T Significant Broadband Subsidiaries and their
respective jurisdictions of organization.
(b) All of the outstanding capital stock of, or other voting securities or
ownership interests in, AT&T Broadband is (as of the date hereof) and will be
(immediately prior to the Distribution) directly owned by AT&T, free and clear
of any Lien and free of any other limitation or restriction (including any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other voting securities or ownership interests). All of the
outstanding capital stock of, or other voting securities or ownership interests
in, each AT&T Significant Broadband Subsidiary is, as of the date hereof, owned
by AT&T and will, at the Effective Time, be owned by AT&T Broadband, directly
or indirectly, free and clear of any Lien and free of any other limitation or
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock or other voting securities or ownership
interests). There are no outstanding (i) securities of AT&T or any AT&T
Subsidiary convertible into or exchangeable for shares of capital stock or
other voting securities or ownership interests in AT&T Broadband
59
or any AT&T Significant Broadband Subsidiary or (ii) options or other rights to
acquire from AT&T or any AT&T Subsidiary, or other obligations of AT&T or any
AT&T Subsidiary to issue, any capital stock or other voting securities or
ownership interests in, or any securities convertible into or exchangeable for
any capital stock or other voting securities or ownership interests in, AT&T
Broadband or any AT&T Significant Broadband Subsidiary. Except for the TCI
Pacific Preferred Stock, there are no outstanding obligations of AT&T or any
AT&T Subsidiary to repurchase, redeem or otherwise acquire any of the items
referred to in clauses (i) and (ii) above.
(c) At the time of the Distribution, subject to Section 4.01 of the
Separation and Distribution Agreement, the issued and outstanding capital stock
of AT&T Broadband will consist of a number of shares of AT&T Broadband Common
Stock equal to the number of then outstanding shares of AT&T Common Stock. In
the Distribution, subject to Section 4.01 of the Separation and Distribution
Agreement, AT&T will distribute to each holder of AT&T Common Stock one share
of AT&T Broadband Common Stock per share of AT&T Common Stock. All of the
shares of AT&T Broadband Common Stock have been or will be prior to the
Effective Time duly authorized and validly issued and fully paid and
nonassessable. After giving effect to the Distribution, subject to Section 4.01
of the Separation and Distribution Agreement, neither AT&T nor any AT&T
Subsidiary will own any shares of AT&T Broadband Common Stock or any other
capital stock or other equity interest in AT&T Broadband.
SECTION 6.07. SEC Filings. (a) AT&T has delivered or made available to
Comcast (i) AT&T's annual reports on Form 10-K for its fiscal years ended
December 31, 2000, 1999 and 1998, (ii) AT&T's proxy or information statements
relating to meetings of, or actions taken without a meeting by, AT&T
shareholders held since December 31, 1998, and (iii) all of AT&T's other
reports, statements, schedules and registration statements filed with the SEC
since December 31, 1998 (the documents referred to in clauses (i), (ii) and
(iii) above, collectively, the "AT&T SEC Documents").
(b) As of its filing date (and, if amended or superceded by a filing prior
to the date of this Agreement or the Effective Time, then on the date of such
filing), each AT&T SEC Document complied as to form in all material respects
with the applicable requirements of the 1933 Act and the 1934 Act, as the case
may be.
(c) As of its filing date (and, if amended or superceded by a filing prior
to the date of this Agreement or the Effective Time, then on the date of such
filing), each AT&T SEC Document filed pursuant to the 1934 Act did not contain
any untrue statement of a material fact or omit to state any material fact
necessary
60
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
(d) Each AT&T SEC Document that is a registration statement, as amended or
supplemented, if applicable, filed pursuant to the 1933 Act, as of the date
such registration statement or amendment became effective, did not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading.
SECTION 6.08. Financial Statements. (a) The audited consolidated financial
statements and unaudited consolidated interim financial statements of AT&T
included in the AT&T SEC Documents fairly present, in all material respects, in
conformity with GAAP applied on a consistent basis (except as may be indicated
in the notes thereto), the consolidated financial position of AT&T and its
consolidated Subsidiaries as of the respective dates thereof and their
consolidated results of operations and cash flows for the periods then ended
(subject to normal year-end adjustments in the case of any unaudited interim
financial statements).
(b) The unaudited combined financial statements and unaudited combined
interim financial statements of the AT&T Broadband Group are attached as
Exhibit E, and subject to and reflecting the assumptions set forth in the notes
thereto, fairly present, in all material respects, in conformity with GAAP
applied on a consistent basis (except as may be indicated in the notes
thereto), the combined financial position of the AT&T Broadband Group as of the
respective dates thereof and its combined results of operations and cash flows
for the periods then ended (subject to normal year-end adjustments in the case
of any unaudited interim financial statements).
(c) Except as set forth in Section 6.08(c) of the AT&T Disclosure
Schedule, the financial statements as of and for the period ending September
30, 2001 attached as Exhibit E reflect in all material respects the
transactions contemplated by the Ancillary Agreements as if such agreements had
been in effect during the nine month period covered by such financial
statements. Section 6.08(c) of the AT&T Disclosure Schedule describes all
material allocations and charges relating to affiliated and intercompany
transactions used in connection with the preparation of the financial
statements attached as Exhibit E.
SECTION 6.09. Information Supplied. The information supplied by AT&T for
inclusion or incorporation in the Registration Statement shall not at the time
the Registration Statement is declared effective by the SEC contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. The
information
61
supplied by AT&T for inclusion in the Joint Proxy Statement shall not, on the
date the Joint Proxy Statement is first mailed to the shareholders of each of
Comcast and AT&T, at the time of the Comcast Shareholders' Meeting, at the time
of the AT&T Shareholders' Meeting or at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.
SECTION 6.10. Absence of Certain Changes. Since the AT&T Broadband Balance
Sheet Date, and except as expressly contemplated hereby or by the Transaction
Agreements, the business of the AT&T Broadband Group, AT&T (to the extent
relating to the AT&T Broadband Group), AT&T Broadband and the AT&T Broadband
Subsidiaries has been conducted for the benefit of the AT&T Broadband Group (it
being understood that since the AT&T Broadband Balance Sheet Date the AT&T
Communications Group has been conducted for the benefit of the AT&T
Communications Group and that the interests of the AT&T Broadband Group and the
AT&T Communications Group may not have coincided) and in the ordinary course of
business consistent with past practices, and there has not been (i) any event,
occurrence or development of a state of circumstances or facts that,
individually or in the aggregate, has had or would reasonably be expected to
have an AT&T Broadband Material Adverse Effect or (ii) any action, event,
occurrence or transaction that would have been prohibited by clause (iii),
(iv), (vii), (viii), (ix) or (xviii) of Section 8.01 if this Agreement had been
in effect at the time thereof or any agreement, arrangement or commitment in
respect of any action, event, occurrence or transaction that would have been
prohibited by the foregoing clauses of Section 8.01 if this Agreement had been
in effect at the time thereof.
SECTION 6.11. No Undisclosed Material Liabilities. There are no
liabilities or obligations of the AT&T Broadband Group, AT&T (to the extent
relating to the AT&T Broadband Group), AT&T Broadband or any AT&T Broadband
Subsidiary of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, and there is no existing condition,
situation or set of circumstances that would reasonably be expected to result
in such a liability or obligation, other than:
(a) liabilities or obligations disclosed and provided for in the AT&T
Broadband Balance Sheet or in the notes thereto;
(b) liabilities or obligations incurred since the AT&T Broadband Balance
Sheet Date in the ordinary course of business of the AT&T Broadband Group
consistent with past practice;
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(c) liabilities or obligations under commercial transactions and
agreements in accordance with their terms or arising in compliance with
applicable laws, statutes, ordinances, rules or regulations; or
(d) liabilities or obligations that, individually or in the aggregate,
have not had and would not reasonably be expected to have an AT&T Broadband
Material Adverse Effect.
SECTION 6.12. Compliance with Laws and Court Orders. Except as set forth
in Section 6.12 of the AT&T Disclosure Schedule, AT&T (to the extent relating
to the AT&T Broadband Group), AT&T Broadband and the AT&T Broadband
Subsidiaries hold all licenses, franchises, certificates, consents, permits,
qualifications and authorizations from all Governmental Authorities necessary
for the lawful conduct of their business, except where the failure to hold any
of the foregoing, individually or in the aggregate, has not had and would not
reasonably be expected to have an AT&T Broadband Material Adverse Effect. AT&T
(to the extent relating to the AT&T Broadband Group), AT&T Broadband and each
of the AT&T Broadband Subsidiaries are, and have been in compliance with, and
to the knowledge of AT&T, are not under investigation with respect to and have
not been threatened to be charged with or given notice of any violation of, any
such license, franchise, certificate, consent, permit, qualification or
authorization or any applicable law, statute, ordinance, rule, regulation,
judgment, injunction, order or decree, except for failures to comply or
violations that, individually or in the aggregate, have not had and would not
reasonably be expected to have an AT&T Broadband Material Adverse Effect.
SECTION 6.13. Litigation. There is no action, suit, investigation or
proceeding (or any basis therefor) pending against, or, to the knowledge of
AT&T, threatened against or affecting AT&T, the AT&T Broadband Group or any
AT&T Subsidiary, or any of their respective assets or properties before any
court or arbitrator or before or by any other Governmental Authority, that,
individually or in the aggregate, would reasonably be expected to have an AT&T
Broadband Material Adverse Effect.
SECTION 6.14. Finders' Fees. Except for Credit Suisse First Boston and
Goldman Sachs & Co., whose fees, subject to Section 11.03(a), will be paid by
AT&T Broadband, there is no investment banker, broker, finder or other
intermediary that has been retained by or is authorized to act on behalf of
AT&T or any AT&T Subsidiary who might be entitled to any fee or commission in
connection with the transactions contemplated by this Agreement and the other
Transaction Agreements. A copy of AT&T's engagement agreement with each of
Goldman Sachs & Co. and Credit Suisse First Boston have been provided to
Comcast.
63
SECTION 6.15. Opinion of Financial Advisor. AT&T has received an opinion
of each of Credit Suisse First Boston and Goldman, Sachs & Co., financial
advisors to AT&T, to the effect that, as of the date hereof, the exchange ratio
in the AT&T Broadband Merger is fair, from a financial point of view, to the
shareholders of AT&T who will become shareholders of AT&T Broadband pursuant to
the Separation and Distribution Agreement (other than Comcast and its
Affiliates).
SECTION 6.16. Taxes. Except as would not, individually or in the
aggregate, reasonably be expected to have an AT&T Broadband Material Adverse
Effect, (a) all AT&T and AT&T Subsidiary Tax Returns required to be filed on or
before the Effective Time with any taxing authority by, or with respect to,
AT&T and the AT&T Subsidiaries have been or will be timely filed (taking into
account extensions) and are or will be correct in all respects (other than with
respect to Taxes for which adequate reserves are reflected on the AT&T Balance
Sheet and, to the extent related to the AT&T Broadband Group, AT&T Broadband or
an AT&T Broadband Subsidiary, on the AT&T Broadband Balance Sheet); (b) AT&T
and the AT&T Subsidiaries have timely paid or will timely pay all Taxes shown
as due and payable on the AT&T Tax Returns that have been or will be so filed,
and, as of the time of filing, the AT&T Tax Returns correctly reflected the
facts regarding the income, business, assets, operations, activities and the
status of AT&T and the AT&T Subsidiaries (other than with respect to Taxes for
which adequate reserves are reflected on the AT&T Balance Sheet and, to the
extent related to the AT&T Broadband Group, AT&T Broadband or an AT&T Broadband
Subsidiary, on the AT&T Broadband Balance Sheet); (c) AT&T and the AT&T
Subsidiaries have made provision for all Taxes payable by AT&T and the AT&T
Subsidiaries for which no AT&T Tax Return has yet been filed; (d) there is no
action, suit, proceeding, audit or claim currently proposed or pending against
or with respect to AT&T or any AT&T Subsidiary in respect of any Tax where
there is a reasonable possibility of an adverse determination; (e) the United
States federal income Tax Returns of AT&T and the AT&T Subsidiaries have been
examined and settled with the IRS (or the applicable statutes of limitation for
the assessment of United States federal income Taxes for such periods have
expired) for all years through 1992; (f) no extension of the statute of
limitations on the assessment of any Taxes has been granted by AT&T or any AT&T
Subsidiary and is currently in effect; (g) except for complete and accurate
copies of Tax sharing agreements and amendments thereto made available to
Comcast prior to the execution of this Agreement and listed in Section 6.16 of
the AT&T Disclosure Schedule, no agreements relating to the allocation or
sharing of Taxes exist between AT&T and/or any of the AT&T Subsidiaries, on the
one hand, and a third party, on the other hand; and (h) there are no Liens for
Taxes on any of the assets of AT&T or any AT&T Subsidiary except Liens for
current Taxes not yet due and payable.
64
SECTION 6.17. Tax Opinions. Neither AT&T nor any AT&T Subsidiary has taken
any action or knows of any facts or circumstances relating to AT&T or any AT&T
Subsidiary that would prevent (i) the ruling or opinion referred to in Section
10.01(j) from being obtained or (ii) Wachtell, Lipton, Rosen & Katz from
delivering the opinion referred to in Section 10.02(b) as of the date hereof.
SECTION 6.18. Employee Benefit Plans and Labor Matters. Except as have not
had and would not reasonably be expected to have, individually or in the
aggregate, an AT&T Broadband Material Adverse Effect:
(a) Section 6.18(a) of the AT&T Disclosure Schedule contains a true and
complete list, as of the date hereof, of all Broadband Employee Plans and all
Broadband Benefit Arrangements. Copies of each Broadband Employee Plan and
Broadband Benefit Arrangement (and, if applicable, related trust agreements)
and all amendments thereto have been made available to Comcast as of the date
hereof, together with the three most recent annual reports (Form 5500
including, if applicable, Schedule B thereto) and the most recent actuarial
valuation report prepared in connection with any Broadband Employee Plan.
(b) No "accumulated funding deficiency" (as defined in Section 412 of the
Code) has been incurred with respect to any Broadband Employee Plan subject to
such Section 412 of the Code, whether or not waived. No "reportable event"
(within the meaning of Section 4043 of ERISA) for which the 30-day notice
period has not been waived, and no event described in Section 4062 or 4063 of
ERISA, has occurred in connection with any Broadband Employee Plan. Neither
AT&T nor any ERISA Affiliate of AT&T has (i) engaged in, or is a successor or
parent corporation to an entity that has engaged in, a transaction described in
Sections 4069 or 4212(c) of ERISA or (ii) incurred, or reasonably expects to
incur prior to the Effective Time, (A) any liability under Title IV of ERISA
arising in connection with the termination of, or a complete or partial
withdrawal from, any plan covered or previously covered by Title IV of ERISA or
(B) any liability under Section 4971 of the Code that in either case could
become a liability of Parent, AT&T Broadband, any AT&T Broadband Subsidiary,
Comcast, any Comcast Subsidiary, or any of their respective ERISA Affiliates
after the Effective Time. No Broadband Employee Plan is a Multiemployer Plan.
(c) As of June 30, 2001, the fair market value of the assets of each
Broadband Pension Plan (excluding for these purposes any accrued but unpaid
contributions) exceeded the present value of the pension benefit obligations
accrued under such Broadband Pension Plan calculated pursuant to SFAS No. 87,
"Employers' Accounting for Pensions". As of September 30, 2001, the aggregate
unfunded liability of AT&T and any AT&T Subsidiary in respect of all Broadband
Deferred Compensation Plans, computed using reasonable actuarial
65
assumptions and determined as if all benefits under such plans were vested and
payable as of such date, did not exceed $132 million.
(d) Neither AT&T, AT&T Broadband nor any AT&T Broadband Subsidiary has any
liability with respect of post-retirement health, medical or life insurance
benefits for retired, former or current Broadband Employees except as to
required to avoid excise tax under Section 4980B of the Code.
(e) Each Broadband Employee Plan that is intended to be qualified under
Section 401(a) of the Code is so qualified and a favorable determination letter
is currently in effect for each such Broadband Employee Plan. To the knowledge
of AT&T, no fact or circumstance exists giving rise to a material likelihood
that such Broadband Employee Plan would not be treated as qualified by the
Internal Revenue Service.
(f) There is no contract, plan or arrangement (written or otherwise)
covering any Broadband Employee that, individually or in the aggregate, could
give rise to the payment of any amount by AT&T Broadband or any of the AT&T
Broadband Subsidiaries that would not be deductible pursuant to the terms of
Sections 162(m) or 280G of the Code.
(g) AT&T has made available to Comcast, as of the date hereof, a true and
complete list and copies of each material Broadband International Plan, other
than plans mandated by applicable law.
(h) Each Broadband Employee Plan, Broadband Benefit Arrangement and
Broadband International Plan has been maintained in compliance with its terms
and with the requirements prescribed by all applicable laws, statutes, orders,
rules and regulations (including any special provisions relating to
registration or qualification where such plan was intended to be so registered
or qualified) and has been maintained in good standing with applicable
Governmental Authorities.
(i) There has been no amendment to, written interpretation or announcement
(whether or not written) by AT&T or any of its Affiliates relating to, or
change in employee participation coverage under, a Broadband Employee Plan,
Broadband Benefit Arrangement or Broadband International Plan which would
increase materially the expense of maintaining such plan above the level of
expense incurred in respect thereof for the fiscal year ended December 31,
2000.
(j) No Broadband Employee, former Broadband Employee or independent
contractor of AT&T Broadband or any of the AT&T Broadband Subsidiaries, will
become entitled to any bonus, retirement, severance, job security or similar
benefit or enhanced such benefit (including acceleration of
66
vesting or exercise of an incentive award) as a result of the transactions
contemplated hereby (either alone or together with any other event).
(k) Section 6.18(k) of the AT&T Disclosure Schedule sets forth a list of
all collective bargaining agreements to which AT&T Broadband or any of the AT&T
Broadband Subsidiaries is a party or otherwise covering any employee of AT&T
Broadband or any of the AT&T Broadband Subsidiaries. None of AT&T, AT&T
Broadband nor any of the AT&T Broadband Subsidiaries is involved in, or to the
knowledge of AT&T, threatened with any labor dispute, work stoppage, labor
strike, slowdown or grievance relating to the AT&T Broadband Group. To the
knowledge of AT&T, there is no organizing effort or representation question at
issue with respect to any collective bargaining unit of AT&T Broadband or any
of the AT&T Broadband Subsidiaries or any employee of AT&T Broadband or any of
the AT&T Broadband Subsidiaries.
(l) There are no pending or threatened claims (other than claims for
benefits in the ordinary course), lawsuits or arbitrations that have been
asserted or instituted, and, to the knowledge of AT&T, no set of circumstances
exists that may reasonably give rise to a claim or lawsuit, against any of the
Broadband Benefit Arrangements, the Broadband Employee Plans and the Broadband
International Plans, any fiduciaries thereof with respect to their duties
thereto or the assets of any of the trusts thereunder, that could reasonably be
expected to result in any material liability of AT&T or any of the AT&T
Subsidiaries to the PBGC, the United States Department of Treasury, the United
States Department of Labor, any foreign governmental authority, any
Multiemployer Plan, any of the Broadband Benefit Arrangements, the Broadband
Employee Plans and the Broadband International Plans, any participant therein,
or any other Person.
SECTION 6.19. Environmental Matters. (a) Except as have not had and would
not reasonably be expected to have, individually or in the aggregate, an AT&T
Broadband Material Adverse Effect:
(i) no notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has been filed,
no penalty has been assessed, and no investigation, action, claim, suit,
proceeding or review is pending or, to the knowledge of AT&T, threatened
by any Governmental Authority or other Person with respect to AT&T (to the
extent relating to the AT&T Broadband Group), AT&T Broadband, any AT&T
Broadband Subsidiary or the AT&T Broadband Group relating to or arising
out of any Environmental Law;
(ii) each member of AT&T (to the extent relating to the AT&T
Broadband Group), AT&T Broadband, the AT&T Broadband Subsidiaries
67
and the AT&T Broadband Group is and has been in compliance with all
Environmental Laws and all Environmental Permits; and
(iii) there are no liabilities of AT&T (to the extent relating to the
AT&T Broadband Group), AT&T Broadband, the AT&T Broadband Subsidiaries or
the AT&T Broadband Group of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise arising under
or relating to any Environmental Law, and there are no facts, conditions,
situations or set of circumstances that would reasonably be expected to
result in, or be the basis for, any such liability.
(b) There have been no environmental investigations, studies, audits,
tests, reviews or other analyses conducted of which AT&T has knowledge in
relation to the current or prior business of the AT&T Broadband Group, AT&T (to
the extent relating to the AT&T Broadband Group), AT&T Broadband or any AT&T
Broadband Subsidiary or any property or facility now or previously owned or
leased by the AT&T Broadband Group, AT&T (to the extent relating to the AT&T
Broadband Group), AT&T Broadband or any AT&T Broadband Subsidiary that reveal
matters that, individually or in the aggregate, have had, or would reasonably
be expected to have, an AT&T Broadband Material Adverse Effect.
(c) For purposes of this Section 6.19, the terms "AT&T Broadband Group",
"AT&T (to the extent relating to the AT&T Broadband Group)", "AT&T Broadband"
and "AT&T Broadband Subsidiary" shall include any entity that is, in whole or
in part, a predecessor of the AT&T Broadband Group, AT&T (to the extent
relating to the AT&T Broadband Group), AT&T Broadband or any AT&T Broadband
Subsidiary.
SECTION 6.20. Intellectual Property. The Transaction Agreements, taken as
a whole, including the Separation and Distribution Agreement and the assets
transferred thereby, the Intellectual Property Agreement (as defined in the
Separation and Distribution Agreement) and the intellectual property licenses
granted thereby and the other Ancillary Agreements and all services furnished
thereby provide sufficient rights in or access to intellectual property owned
by AT&T to enable the AT&T Broadband Group, without violating such AT&T
intellectual property, to conduct its business immediately after the Effective
Time in all material respects as that business was conducted by the AT&T
Broadband Group immediately prior to the Effective Time. Neither AT&T nor any
AT&T Subsidiary has received any notice of infringement of or conflict with,
and, to AT&T's knowledge, there are no infringements of or conflicts with, the
rights of any Person with respect to the use of any trademark, service mark,
trade name, invention, patent, trade secret, copyright, know-how (including any
registrations or applications for registration of any of the foregoing) or any
other similar type of
68
proprietary intellectual property right that, in either such case, individually
or in the aggregate, have had or would reasonably be expected to have, an AT&T
Broadband Material Adverse Effect.
SECTION 6.21. Contracts. Except as set forth in Section 6.21 of the AT&T
Disclosure Schedule and except as may relate to TWE or At Home, neither AT&T
(to the extent relating to the AT&T Broadband Group), AT&T Broadband nor any of
the AT&T Broadband Subsidiaries is a party to or bound by (a) any "material
contract" (as defined in Item 601(b)(10) of Regulation S-K of the SEC) or any
agreement, contract or commitment that would be such a "material contract" but
for the exception for contracts entered into in the ordinary course of
business, (b) any non-competition agreement or any other agreement or
obligation that materially limits or will materially limit AT&T Broadband, the
AT&T Broadband Group or the AT&T Broadband Subsidiaries (or, after the Mergers,
Parent, Comcast or any of the Comcast Subsidiaries) from engaging in the
business of providing telephony, data transmission services, cable television
or programming content, or (c) any agreement, contract or commitment to which
Liberty Media Corporation, AT&T Wireless or any of their respective
Subsidiaries is a party that is material to or not in the ordinary course of
business of the AT&T Broadband Group. With such exceptions as, individually or
in the aggregate, have not had, and would not reasonably be expected to have,
an AT&T Broadband Material Adverse Effect and except as may relate to TWE or At
Home, (i) each of the contracts, agreements and commitments of the AT&T
Broadband Group, AT&T (to the extent relating to the AT&T Broadband Group),
AT&T Broadband and the AT&T Broadband Subsidiaries is valid and in full force
and effect and (ii) neither the AT&T Broadband Group, AT&T (to the extent
relating to the AT&T Broadband Group), AT&T Broadband nor any of the AT&T
Broadband Subsidiaries has violated any provision of, or committed or failed to
perform any act that, with or without notice, lapse of time, or both, would
constitute a default under the provisions of, any such contract, agreement or
commitment. To the knowledge of AT&T, no counterparty to any such contract,
agreement or commitment has violated any provision of, or committed or failed
to perform any act that, with or without notice, lapse of time, or both would
constitute a default or other breach under the provisions of such contract,
agreement or commitment, except for defaults or breaches that, individually or
in the aggregate, have not had, or would not reasonably be expected to have, an
AT&T Broadband Material Adverse Effect. Except as set forth in Section 6.21 of
the AT&T Disclosure Schedule and except as may relate to TWE or At Home,
neither AT&T (to the extent relating to the AT&T Broadband Group), the AT&T
Broadband Group, AT&T Broadband nor any AT&T Broadband Subsidiary is a party
to, or otherwise a guarantor of or liable with respect to (including pursuant
to any keepwell agreement), (i) any material interest rate, currency or other
swap or derivative transaction (other than those entered into in the ordinary
course of business solely for hedging purposes) or (ii) any Indebtedness of any
other Person
69
except a wholly owned AT&T Broadband Subsidiary. Except as set forth in Section
6.21 of the AT&T Disclosure Schedule and except as may relate to TWE or At
Home, neither AT&T (to the extent relating to the AT&T Broadband Group), the
AT&T Broadband Group, AT&T Broadband nor any AT&T Broadband Subsidiary is a
party to any joint venture or partnership agreement pursuant to which it is
obligated to make capital contributions in excess of (x) $25,000,000 during the
current or any succeeding calendar year or (y) $100,000,000 during the
remaining term of such agreement. Subject to applicable confidentiality
restrictions, AT&T has provided or made available to Comcast prior to the date
hereof a copy of each agreement of the type described in clause (a), (b) or (c)
of the first sentence of this Section 6.21, in clause (i) or (ii) of the second
preceding sentence of this Section 6.21 or in the immediately preceding
sentence.
SECTION 6.22. AT&T Shareholder Vote. Assuming the receipt of the
affirmative vote of the holders of a majority of the outstanding shares of AT&T
Common Stock (the "AT&T Shareholders' Approval"), which the parties acknowledge
is a condition to the obligations of the parties to effect the Separation,
Distribution and Mergers, no other vote of the holders of any class or series
of capital stock of AT&T will be necessary to approve and adopt this Agreement
and the transactions contemplated hereby, including the Distribution. The only
vote of the holders of any class or series of capital stock of any AT&T
Subsidiary necessary to approve and adopt this Agreement and the transactions
contemplated hereby, including the AT&T Broadband Merger, is the affirmative
vote of the holders of a majority of the outstanding shares of AT&T Broadband
Common Stock, which vote has previously been obtained.
SECTION 6.23. Antitakeover Statutes. AT&T Broadband has taken all action
necessary to exempt the AT&T Broadband Merger and this Agreement and the
transactions contemplated hereby from the restrictions of Section 203 of the
DGCL or otherwise to make such provisions inapplicable to this Agreement and
the transactions contemplated hereby, and, accordingly, neither Section 203 of
the DGCL nor any other antitakeover or similar statute or regulation applies or
purports to apply to any such transactions. No other "control share
acquisition", "fair price", "moratorium" or other antitakeover laws or
regulations enacted under any United States federal, state or local or foreign
laws apply to this Agreement or any of the transactions contemplated hereby.
SECTION 6.24. Comcast Securities. Neither AT&T nor any of the AT&T
Subsidiaries owns any Comcast Securities.
SECTION 6.25. TWE; At Home. (a) Section 6.25(a) of the AT&T Disclosure
Schedule sets forth a list of each material agreement, contract or commitment
to which AT&T or any AT&T Subsidiary of AT&T is a party that
70
amends the TWE Partnership Agreement or any related agreement or that
materially affects the rights or obligations of AT&T (to the extent relating to
the AT&T Broadband Group), AT&T Broadband, the AT&T Broadband Group or the AT&T
Broadband Subsidiaries with respect to TWE or any TWE Subsidiary or that was
entered into in connection with or relates to AT&T's TWE interest (the "TWE
Contracts"). None of AT&T (to the extent relating to the AT&T Broadband Group),
AT&T Broadband or any of the AT&T Broadband Subsidiaries has violated any
material provision of, or committed or failed to perform any act that, with or
without notice, lapse of time, or both, would constitute a default under any
material provision of, any such material contract, agreement or commitment or
the TWE Partnership Agreement, except for defaults or breaches that,
individually or in the aggregate, have not had, or would not reasonably be
expected to have, an AT&T Broadband Material Adverse Effect. The AT&T Broadband
Group owns a Class A Partnership Interest consisting of (x) a Common
Sub-Account, entitling the AT&T Broadband Group to a Participating Percentage
Share of 25.51% and (y) an A Sub-Account, each as described in Article VII of
the TWE Partnership Agreement and as adjusted pursuant to Article VIII of the
TWE Partnership Agreement (capitalized terms used in this sentence and not
defined have the meanings set forth in the TWE Partnership Agreement). The
registration rights provisions of Article 13 of the TWE Partnership Agreement
are enforceable in accordance with their terms and subject to the conditions
thereof, except (i) as the same may be limited by applicable bankruptcy,
insolvency, moratorium or similar laws of general application relating to or
affecting creditors' rights and (ii) for the limitations imposed by general
principles of equity. AT&T has provided or made available to Comcast prior to
the date hereof a copy of each TWE Contract.
(b) Section 6.25(b) of the AT&T Disclosure Schedule sets forth a list of
each material agreement, contract or commitment between At Home and its
Subsidiaries, on the one hand, and AT&T (to the extent relating to the AT&T
Broadband Group other than At Home and its Subsidiaries), the AT&T Broadband
Group (other than At Home and its Subsidiaries), AT&T Broadband or any of the
AT&T Broadband Subsidiaries (other than At Home and its Subsidiaries), on the
other hand, that is not described by any of the following: (i) it has been
rejected in bankruptcy proceedings, (ii) it has been filed with the SEC by At
Home, AT&T or AT&T Broadband, LLC (or its predecessor) or (iii) Comcast or any
of its Subsidiaries is a party thereto or to a comparable agreement, contract
or commitment. None of AT&T or any of its Subsidiaries (other than At Home and
its Subsidiaries) has violated any provision of, or committed or failed to
perform any act that, with or without notice, lapse of time or both, would
constitute a default under any provision of, any such material contract,
agreement or commitment, except for defaults or breaches that, individually or
in the aggregate, have not had, or would not reasonably be expected to have, an
AT&T Broadband Material Adverse Effect. AT&T has provided or made available to
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Comcast prior to the date hereof a copy of each agreement of the type described
in the first sentence of this Section 6.25(b).
SECTION 6.26. Intercompany Transactions. (a) Except as described in
Section 6.26(a) of the AT&T Disclosure Schedule, since December 31, 1999
through the date hereof there have been no material transactions (including
allocations) between the AT&T Broadband Group, on the one hand, and the AT&T
Communications Group, on the other hand.
(b) Except as described in Section 6.26(b) of the AT&T Disclosure
Schedule, since the AT&T Broadband Balance Sheet Date through the date hereof
there have been no material transactions (including allocations) between any
AT&T Broadband Entity, on the one hand, and any member of the AT&T
Communications Group, on the other hand.
SECTION 6.27. Sufficiency of Transferred Assets. (a) Except as set forth
in Section 6.27(a) of the AT&T Disclosure Schedule (and other than the Delayed
Transfer Assets (as defined in the Separation and Distribution Agreement) that
are AT&T Broadband Assets), as of the Effective Time, no material AT&T
Broadband Assets will be owned or held by AT&T or any AT&T Subsidiary. Assuming
consummation of the transactions contemplated by the Separation and
Distribution Agreement and assuming the availability of any assets and services
contemplated to be made available to the AT&T Broadband Group pursuant to the
terms of the Ancillary Agreements, (i) the assets reflected on the unaudited
combined balance sheet of the AT&T Broadband Group as of December 31, 2000
attached as Exhibit E were sufficient in all material respects to conduct the
business of the AT&T Broadband Group in the manner reflected in the AT&T
Broadband Financial Statements and (ii) at the Effective Time, the AT&T
Broadband Assets will be sufficient for the conduct of the business of the AT&T
Broadband Group as it is being operated immediately prior to the Separation.
Assuming the condition set forth in Section 10.01(l) is satisfied with respect
to all outstanding Indebtedness issued under the Notes Indenture, neither
Parent, nor AT&T Broadband nor any AT&T Broadband Subsidiary will be required
to guarantee or otherwise become liable for any material Indebtedness or
liability of AT&T (to the extent not relating to the AT&T Broadband Group) or
any AT&T Subsidiary (other than AT&T Broadband or any AT&T Broadband
Subsidiary) as a result of the Separation or Distribution.
(b) Since December 31, 2000, (i) no material assets have been transferred
from AT&T (to the extent relating to the AT&T Broadband Group), AT&T Broadband,
any AT&T Broadband Subsidiary or the AT&T Broadband Group to AT&T (to the
extent not relating to the AT&T Broadband Group) or any AT&T Subsidiary other
than AT&T Broadband or any AT&T Broadband Subsidiary, other than the assets set
forth in Section 6.27(b) of the AT&T
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Disclosure Schedule and (ii) no material liabilities have been assumed by AT&T
(to the extent relating to the AT&T Broadband Group), AT&T Broadband, any AT&T
Broadband Subsidiary or the AT&T Broadband Group from AT&T (to the extent not
relating to the AT&T Broadband Group) or any AT&T Subsidiary other than AT&T
Broadband or any AT&T Broadband Subsidiary, other than the liabilities set
forth in Section 6.27 of the AT&T Disclosure Schedule.
(c) The investments set forth in Section 6.27(c) of the AT&T Disclosure
Schedule (or the net proceeds therefrom) constitute assets of one or more of
the AT&T Broadband Subsidiaries.
SECTION 6.28. Investments. Section 6.28 of the AT&T Disclosure Schedule
sets forth a list of each material investment of AT&T (to the extent relating
to the AT&T Broadband Group), the AT&T Broadband Group, AT&T Broadband or any
AT&T Broadband Subsidiary. Neither AT&T nor any AT&T Subsidiary has any
material liability in respect of any such investment.
ARTICLE 7
COVENANTS OF COMCAST
SECTION 7.01. Comcast Interim Operations. Except as set forth in the
Comcast Disclosure Schedule, or as otherwise expressly contemplated hereby,
from the date hereof until the Effective Time, Comcast shall, and shall cause
each of the Comcast Subsidiaries to, conduct its business in all material
respects in the ordinary course of business consistent with past practice and
use all reasonable efforts to: (a) preserve intact its present business
organization; (b) keep available the services of its key officers and key
employees; (c) maintain in effect all material foreign and United States
federal, state and local licenses, approvals and authorizations, including all
material licenses and permits that are required for Comcast or any Comcast
Subsidiary to carry on its business; and (d) preserve existing relationships
with its material lenders, suppliers and others having material business
relationships with it so that the business of Comcast and the Comcast
Subsidiaries shall not be impaired in any material respect at the Effective
Time. Without limiting the generality of the foregoing, except as set forth in
the Comcast Disclosure Schedule or as otherwise expressly contemplated hereby
and except as prohibited by law, from the date hereof until the Effective Time,
without the prior written consent of AT&T, such consent not to be unreasonably
withheld, Comcast shall not, nor shall it permit any Comcast Subsidiary to:
(i) amend its articles of incorporation or bylaws or other applicable
governing instruments;
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(ii) amend any material term of any of its outstanding securities;
(iii) split, combine, subdivide or reclassify any shares of its
capital stock or other equity interests or declare, set aside or pay any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, or redeem,
repurchase or otherwise acquire or offer to redeem, repurchase, or
otherwise acquire any of its securities, except for cash dividends paid by
any Comcast Subsidiary to Comcast or any wholly owned Comcast Subsidiary;
(iv) adopt a plan or agreement of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other material reorganization (other than a merger or consolidation
between wholly owned Comcast Subsidiaries);
(v) issue, deliver or sell, or authorize the issuance, delivery or
sale of, any shares of any class of its capital stock or other equity
interests or any securities convertible into or exercisable for, or any
rights, warrants or options to acquire, any such capital stock or other
equity interests, other than (A) the issuance of shares of capital stock
or other equity interests (or derivative securities therefor) by a Comcast
Subsidiary that is not a Comcast Significant Subsidiary, (B) the issuance
of shares of Comcast Common Stock upon the exercise of Comcast Stock
Options or options to purchase Comcast Common Stock under the Comcast ESPP
or upon the settlement of Comcast Equity Awards outstanding as of the date
hereof in accordance with their current terms or (C) the granting of
Comcast Stock Options, Comcast Equity Awards and options to purchase
Comcast Common Stock under the Comcast ESPP in the ordinary course of
business and consistent with past practices and the issuance of shares of
Comcast Common Stock upon the exercise or settlement thereof;
(vi) incur any capital expenditures, except as set forth in the
Comcast Disclosure Schedule;
(vii) except for capital expenditures, which shall be governed by
Section 7.01(vi), acquire (by merger, consolidation, acquisition of stock
or assets or otherwise), directly or indirectly, any assets, other than
(A) pursuant to agreements in effect as of the date hereof, (B) assets
used in the ordinary course of business of Comcast and the Comcast
Subsidiaries, in a manner that is consistent with past practice, (C)
assets having a fair market value not exceeding $100,000,000 in any one
transaction or series of related transactions or $500,000,000 in the
aggregate, or (D) in the case of cable swaps and similar transactions
where the primary consideration for the acquired assets are cable
properties, assets having a fair market
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value not exceeding $100,000,000 in any one transaction or series of
related transactions or $500,000,000 in the aggregate;
(viii) other than pursuant to agreements in effect as of the date
hereof and other than in the ordinary course of business, sell, lease,
license, encumber or otherwise transfer any assets other than (A) assets
having a fair market value not exceeding $100,000,000 in any one
transaction or series of related transactions or $500,000,000 in the
aggregate, or (B) in the case of cable swaps and similar transactions
where the primary consideration for the disposed of assets are cable
properties, assets having a fair market value not exceeding $100,000,000
in any one transaction or series of related transactions or $500,000,000
in the aggregate;
(ix) incur, assume or guarantee any Indebtedness, other than in the
ordinary course of business;
(x) make any loan, advance or capital contributions to or investment
in any Person other than (A) loans, advances or capital contributions to
or investments in any wholly owned Comcast Subsidiary, (B) pursuant to
agreements in effect as of the date hereof or (C) loans, advances or
capital contributions to joint ventures or Affiliates of Comcast or the
Comcast Subsidiaries pursuant to Schedule 7.01(x) of the Comcast
Disclosure Schedules or as required by agreements currently in effect
relating to such joint ventures or Affiliates;
(xi) except for capital expenditures, which shall be governed by
Section 7.01(vi), engage in or enter into any transaction or commitment,
enter into any contract or agreement, or relinquish or amend in any
material respect any contract or other right, for the provision of goods
or services or the use of facilities (including any programming agreement,
any agreement with any vendor for the purchase of equipment, any agreement
for the provision by one or more third parties of telephone, data or other
services through the facilities of one or more of the Systems of Comcast
or any of the Comcast Subsidiaries or any agreement providing for access
to, or the right to use, the facilities of one or more of the Systems of
Comcast or any of the Comcast Subsidiaries) that is (A) material to
Comcast and the Comcast Subsidiaries, taken as a whole, or (B) that
provides for payments in excess of $50,000,000 per agreement (or
$100,000,000 for all agreements for similar goods or services);
(xii) enter into or amend in any material respect any joint venture,
partnership or other similar venture that is material to Comcast and the
Comcast Subsidiaries, taken as a whole;
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(xiii) enter into any agreement or arrangement that materially limits
or otherwise materially restricts Comcast, any Comcast Subsidiary or any
of their respective Affiliates or any successor thereto, or that could,
after the Effective Time, materially limit or restrict Parent, AT&T, any
AT&T Subsidiary or any of their Affiliates, from engaging in any material
business;
(xiv) except as required pursuant to existing written, binding
agreements or as otherwise required by law, (A) enter into any commitment
to provide any severance or termination pay to (or amend any existing
arrangement with) any director, officer or employee of Comcast or any
Comcast Subsidiary, (B) increase the benefits payable under any existing
severance or termination pay policy or employment agreement (other than as
may be increased by function of the existing terms of any such policy or
agreement), (C) other than in the ordinary course of business consistent
with past practice, enter into any employment, deferred compensation or
other similar agreement (or amend any such existing agreement) with any
director or officer of Comcast or any Comcast Subsidiary, (D) establish,
adopt or amend (except as required by applicable law) any collective
bargaining (except to the extent it would contain economic terms that are
not materially less favorable to Comcast or any Comcast Subsidiary than
the terms of existing arrangements), bonus, profit-sharing, thrift,
pension, retirement, deferred compensation, compensation, stock option,
restricted stock or other benefit plan or arrangement covering any
director, officer or employee of Comcast or any Comcast Subsidiary, except
that Comcast and the Comcast Subsidiaries may amend any such existing
agreement or plan or adopt a successor plan or arrangement to the extent
mandated by applicable law or to the extent that such amendment would not
result in a more than a de minimis increase in the costs or liabilities
under such agreement or plan, (E) other than in the ordinary course of
business consistent with past practice, or as required by any agreement in
effect as of the date hereof, increase the compensation, bonus or other
benefits payable to any director, officer or employee of Comcast or any
Comcast Subsidiary or (F) amend the terms of any outstanding Comcast Stock
Option, Comcast SAR or Comcast Equity Award; provided that the foregoing
shall not in any way restrict Comcast or any of its Subsidiaries from
taking any action (including granting any stay bonuses and paying or
providing other compensation pursuant to retention plans or similar
arrangements) on reasonable commercial terms that Comcast determines is
reasonably necessary or desirable in order to retain or attract any
officers or employees to the extent that the aggregate cost of such
actions, grants or payments does not
76
exceed the amount set forth in Section 7.01(xiv) of the Comcast Disclosure
Schedule;
(xv) launch any new channels, except as necessary to comply with any
requirement of any Governmental Authority and except pursuant to pending
agreements in effect as of the date hereof;
(xvi) change (A) its methods of accounting or accounting practices in
any material respect, except as required by changes in GAAP or by law, or
(B) its fiscal year;
(xvii) settle any litigation, investigation, arbitration, proceeding
or other claim if Comcast or any of the Comcast Subsidiaries would be
required to pay in excess of $25,000,000 or if such settlement would
otherwise be material to the Comcast Group taken as a whole;
(xviii) other than in the ordinary course of business and consistent
with past practice, make any material Tax election or enter into any
settlement or compromise of any material Tax liability;
(xix) (A) fail to comply with its obligations under the Exchange
Agreement and the Set-Top Box Commitment (as defined in the Exchange
Agreement) or (B) amend or waive any provision of the Exchange Agreement
except for such amendments or waivers as would not adversely affect AT&T
or delay or adversely affect consummation of the transactions contemplated
hereby;
(xx) engage in any transaction of a type described in Section 5.25 or
take any action that would reasonably be expected to make any
representation or warranty of Comcast hereunder inaccurate in any material
respect at the Effective Time;
(xxi) take any action that would, or would reasonably be expected to,
prevent, impair or materially delay the ability of AT&T or Comcast or any
of their respective Subsidiaries to consummate the transactions
contemplated by this Agreement and the other Transaction Agreements; or
(xxii) agree or commit to do any of the foregoing; provided that the
limitations set forth in Sections 7.01(i) through 7.01(xix) shall not
apply to any transaction between Comcast and any wholly owned Comcast
Subsidiary or between any wholly owned Comcast Subsidiaries.
SECTION 7.02. Comcast Shareholders' Meeting; Proxy Material. (a) Comcast
shall cause the Comcast Shareholders' Meeting to be duly called and
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held as soon as reasonably practicable (taking into consideration all relevant
factors, including delays due to complications of preparing required pro forma
and other financial statements) for the purpose of voting on the approval and
adoption of this Agreement and the transactions contemplated by this Agreement,
including the Comcast Merger. In connection with the Comcast Shareholders'
Meeting, Comcast will (i) use its reasonable best efforts to obtain the Comcast
Shareholders' Approval and the A Shareholder Approval and (ii) otherwise comply
with all legal requirements applicable to the Comcast Shareholders' Meeting.
(b) Comcast's Board of Directors shall recommend approval and adoption of
this Agreement and the transactions contemplated by this Agreement, including
the Comcast Merger, by Comcast shareholders.
SECTION 7.03. Voting Agreement. Comcast agrees to vote, and to cause each
of the Comcast Subsidiaries to vote, any shares of AT&T Common Stock with
respect to which Comcast or such Comcast Subsidiary may have any voting power
in favor of the Mergers, the Separation, the Distribution and the other
transactions contemplated hereby.
ARTICLE 8
COVENANTS OF AT&T
SECTION 8.01. AT&T Broadband Interim Operations. Except as set forth in
the AT&T Disclosure Schedule or as otherwise expressly contemplated hereby or
by any of the Ancillary Agreements, from the date hereof until the Effective
Time, AT&T shall, to the extent relating to the AT&T Broadband Group, and shall
cause each of the AT&T Broadband Group, AT&T Broadband and the AT&T Broadband
Subsidiaries to, conduct its business in all material respects for the benefit
of the AT&T Broadband Group (it being understood that the AT&T Communications
Group will be conducted for the benefit of the AT&T Communications Group and
that the interests of the AT&T Broadband Group and the AT&T Communications
Group may not coincide) and in the ordinary course of business consistent with
past practice and use all reasonable efforts to: (a) preserve intact its
present business organization; (b) keep available the services of its key
officers and key employees; (c) maintain in effect all material foreign and
United States federal, state and local licenses, approvals and authorizations,
including all material licenses and permits that are required for the AT&T
Broadband Group, AT&T (to the extent relating to the AT&T Broadband Group),
AT&T Broadband or any AT&T Broadband Subsidiary to carry on its business; and
(d) preserve existing relationships with its material lenders, suppliers and
others having material business relationships with it so that the business of
the
78
AT&T Broadband Group, AT&T (to the extent relating to the AT&T Broadband
Group), AT&T Broadband and the AT&T Broadband Subsidiaries shall not be
impaired in any material respect at the Effective Time. Without limiting the
generality of the foregoing, except as set forth in the AT&T Disclosure
Schedule or as otherwise expressly contemplated hereby or by any of the
Ancillary Agreements and except as prohibited by law, from the date hereof
until the Effective Time, without the prior written consent of Comcast, such
consent not to be unreasonably withheld, AT&T shall not, nor shall it permit
the AT&T Broadband Group, AT&T Broadband or any AT&T Broadband Subsidiary to:
(i) amend its certificate of incorporation or bylaws or other
applicable governing instruments;
(ii) amend any material term of any of its outstanding securities
(other than debt securities of AT&T except to the extent relating to the
AT&T Broadband Group);
(iii) split, combine, subdivide or reclassify any shares of its
capital stock or other equity interests or declare, set aside or pay any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, or redeem,
repurchase or otherwise acquire or offer to redeem, repurchase, or
otherwise acquire any of its securities or any securities of AT&T
Broadband or any AT&T Broadband Subsidiary, except for (A) the regular
quarterly dividend of AT&T and other dividends or distributions thereon
not involving the assets or securities of the AT&T Broadband Group, AT&T
Broadband or any of the AT&T Broadband Subsidiaries, (B) cash dividends
paid by any AT&T Broadband Subsidiary to AT&T Broadband or another AT&T
Broadband Subsidiary, (C) the exchange or redemption of the TCI Pacific
Preferred Stock in accordance with the terms thereof, (D) repurchases or
other acquisitions of any shares of capital stock of AT&T; provided that
none of the assets used to pay for such repurchases or other acquisitions
are assets of the AT&T Broadband Group; or (E) the creation and issuance
of any class of tracking stock of AT&T that is designed to reflect the
financial performance of any of AT&T's businesses other than the AT&T
Broadband Group;
(iv) adopt a plan or agreement of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other material reorganization (other than a merger or consolidation
between wholly owned AT&T Broadband Subsidiaries) other than in connection
with any Excepted Transaction;
79
(v) issue, deliver or sell, or authorize the issuance, delivery or
sale of, any shares of any class of its capital stock or other equity
interests or any securities convertible into or exercisable for, or any
rights, warrants or options to acquire, any such capital stock or other
equity interests, other than (A) the issuance of shares of AT&T Common
Stock upon the exercise of AT&T Stock Options, AT&T SARs or options to
purchase AT&T Common Stock under the AT&T ESPP or upon the settlement of
AT&T Equity Awards outstanding as of the date hereof in accordance with
their current terms, (B) the granting of AT&T Stock Options, AT&T SARs,
AT&T Equity Awards and options to purchase AT&T Common Stock under the
AT&T ESPP in the ordinary course of business and consistent with past
practice and the issuance of shares of AT&T Common Stock upon the exercise
or settlement thereof, (C) the granting of AT&T Stock Options and AT&T
Equity Awards that are not exercisable prior to the Distribution and that
will become options or equity awards, as applicable, solely with respect
to AT&T Common Stock following the Distribution, (D) the issuance of
shares of AT&T Common Stock pursuant to any instruments, agreements or
other arrangements contemplated by Section 6.05 or the Schedules thereto
and outstanding as of the date hereof or (E) 275 million shares of AT&T
Common Stock as set forth in Section 6.05(b) of the AT&T Disclosure
Schedule in accordance with Section 8.01(v) of the AT&T Disclosure
Schedule;
(vi) incur any capital expenditures in respect of the AT&T Broadband
Group, except as set forth in the AT&T Disclosure Schedule;
(vii) except for capital expenditures in respect of the AT&T
Broadband Group, which shall be governed by Section 8.01(vi), acquire (by
merger, consolidation, acquisition of stock or assets or otherwise),
directly or indirectly, any assets in respect of the AT&T Broadband Group,
other than (A) pursuant to agreements in effect as of the date hereof, (B)
assets used in the ordinary course of business of the AT&T Broadband
Group, AT&T (to the extent relating to the AT&T Broadband Group), AT&T
Broadband and the AT&T Broadband Subsidiaries, in a manner that is
consistent with past practice, (C) assets having a fair market value not
exceeding $100,000,000 in any one transaction or series of related
transactions or $500,000,000 in the aggregate, or (D) in the case of cable
swaps and similar transactions where the primary consideration for the
acquired assets are cable properties, assets having a fair market value
not exceeding $100,000,000 in any one transaction or series of related
transactions or $500,000,000 in the aggregate;
(viii) except for the sale of the interest in TWE, which shall be
governed by Section 8.01(xiii), and other than pursuant to agreements in
80
effect as of the date hereof and other than in the ordinary course of
business, sell, lease, license, encumber or otherwise transfer any assets
other than (A) assets having a fair market value not exceeding
$100,000,000 in any one transaction or series of related transactions or
$500,000,000 in the aggregate or (B) in the case of cable swaps and
similar transactions where the primary consideration for the disposed of
assets are cable properties, assets having a fair market value not
exceeding $100,000,000 in any one transaction or series of related
transactions or $500,000,000 in the aggregate;
(ix) incur, assume or guarantee any Indebtedness, other than (A)
borrowings from AT&T or any AT&T Subsidiary on the terms set forth in
Schedule 8.01(ix) either in the ordinary course of business or to
refinance Indebtedness at maturity, (B) any transactions by AT&T and its
wholly owned Subsidiaries that do not involve the AT&T Broadband Group,
AT&T Broadband or any of the AT&T Broadband Subsidiaries, (C) Indebtedness
incurred as contemplated by Section 9.18 or (D) as approved by the Interim
Finance Committee;
(x) make any loan, advance or capital contributions to or investment
in any Person other than (A) loans, advances or capital contributions to
or investments in AT&T Broadband or any wholly owned AT&T Broadband
Subsidiary on terms set forth in Section 6.27(b) of the AT&T Disclosure
Schedule, (B) loans or advances to AT&T or any AT&T Subsidiary on terms
set forth in Section 6.27(b) of the AT&T Disclosure Schedule, (C) pursuant
to agreements in effect as of the date hereof, (D) any transactions by
AT&T and its wholly owned Subsidiaries that do not involve the AT&T
Broadband Group, AT&T Broadband and the AT&T Broadband Subsidiaries, or
(E) loans, advances or capital contributions to joint ventures or
Affiliates of the AT&T Broadband Group as required by agreements currently
in effect relating to such joint ventures or Affiliates or as contemplated
by Schedule 8.01(x);
(xi) except for capital expenditures in respect of the AT&T Broadband
Group, which shall be governed by Section 8.01(vi), engage in or enter
into any transaction or commitment, enter into any contract or agreement,
or relinquish or amend in any material respect any contract or other
right, in each case in respect of the AT&T Broadband Group, for the
provision of goods or services or the use of facilities (including any
programming agreement, any agreement with any vendor for the purchase of
equipment, any agreement for the provision by one or more third parties of
telephone, data or other services through the facilities of one or more of
the Systems of AT&T or any of the AT&T Subsidiaries or any agreement
providing for access to, or the right to use, the facilities of one or
more of
81
the Systems of AT&T or any of the AT&T Subsidiaries) that is (A) material
to the AT&T Broadband Group, taken as a whole, or (B) that provides for
payments in excess of $50,000,000 per agreement (or $100,000,000 for all
agreements for similar goods or services);
(xii) enter into or amend in any material respect any joint venture,
partnership or other similar venture that is material to the AT&T
Broadband Group, taken as a whole;
(xiii) (A) enter into any material agreement or arrangement in
connection with or relating to its interest in TWE or amend or modify in
any material respect any of the TWE Contracts (other than incidental
agreements necessary to implement the transactions contemplated by clauses
(B) and (C) below of this Section 8.01(xiii) such as underwriting
agreements, engagement letters and similar agreements), (B) exercise
(other than on a cashless basis) the TWE Option under the TWE Option
Agreement or (C) sell all or part of its interest in TWE except solely for
cash or pursuant to Section 13.1 of the TWE Partnership Agreement;
provided that AT&T has kept Comcast reasonably apprised of the status of
the related process;
(xiv) enter into any agreement or arrangement that materially limits
or otherwise materially restricts the AT&T Broadband Group, AT&T (to the
extent relating to the AT&T Broadband Group), AT&T Broadband, any AT&T
Broadband Subsidiary or any of their respective Affiliates (other than
AT&T (to the extent not relating to the AT&T Broadband Group) and the AT&T
Subsidiaries other than AT&T Broadband and the AT&T Broadband
Subsidiaries) or any successor thereto, or that could, after the Effective
Time, materially limit or restrict Parent, Comcast, any Comcast Subsidiary
or any of their Affiliates, from engaging in any material business;
(xv) except as required pursuant to existing written, binding
agreements, as otherwise required by law or as expressly provided in the
Employee Benefits Agreement, (A) enter into any commitment to provide any
severance or termination pay to (or amend any existing arrangement with)
any director, officer or employee of AT&T, AT&T Broadband or any AT&T
Broadband Subsidiary, (B) increase the benefits payable under any existing
severance or termination pay policy or employment agreement (other than as
may be increased by function of the existing terms of any such policy or
agreement), (C) other than in the ordinary course of business consistent
with past practice, enter into any employment, deferred compensation or
other similar agreement (or amend any such existing agreement) with any
director or officer of AT&T, AT&T
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Broadband or any AT&T Broadband Subsidiary, (D) establish, adopt or amend
(except as required by applicable law) any collective bargaining (except
to the extent it would contain economic terms that are not materially less
favorable to AT&T, AT&T Broadband or any AT&T Broadband Subsidiary than
the terms of existing arrangements), bonus, profit-sharing, thrift,
pension, retirement, deferred compensation, compensation, stock option,
restricted stock or other benefit plan or arrangement covering any
director, officer or employee of AT&T, AT&T Broadband or any AT&T
Broadband Subsidiary, except that AT&T, AT&T Broadband and the AT&T
Broadband Subsidiaries may amend any such existing agreement or plan or
adopt a successor plan or arrangement to the extent mandated by applicable
law or to the extent that such amendment would not result in more than a
de minimis increase in the costs or liabilities under such agreement or
plan, (E) other than in the ordinary course of business consistent with
past practice or as required by any agreement in effect as of the date
hereof, increase the compensation, bonus or other benefits payable to any
director, officer or employee of AT&T, AT&T Broadband or any AT&T
Broadband Subsidiary or (F) amend the terms of any outstanding AT&T Stock
Option, AT&T SAR or AT&T Equity Award; provided that the foregoing shall
not in any way restrict AT&T or any of its wholly owned Subsidiaries from
entering into or amending commitments, contracts, plans or other
arrangements of the types referred to in clauses (A) through (F) above to
the extent that AT&T Broadband and the AT&T Broadband Subsidiaries are not
bound thereby and the AT&T Broadband Group is not affected thereby and
provided further that the foregoing shall not in any way restrict AT&T or
any of its Subsidiaries from taking any action (including granting any
stay bonuses and paying or providing other compensation pursuant to
retention plans or similar arrangements) on reasonable commercial terms
that AT&T determines is reasonably necessary or desirable in order to
retain or attract any officers or employees as set forth in Schedule
8.01(xv) to the extent that the aggregate cost of such actions, grants or
payments does not exceed the amount set forth in Section 8.01(xv) of the
AT&T Disclosure Schedule;
(xvi) launch any new channels, except as necessary to comply with any
requirement of any Governmental Authority and except pursuant to pending
agreements in effect as of the date hereof;
(xvii) change (A) its methods of accounting or accounting practices
in any material respect, except as required by changes in GAAP or by law,
or (B) its fiscal year;
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(xviii) except as set forth on Section 8.01(xviii) of the AT&T
Disclosure Schedule, enter into or engage in any transaction with, or
transfer any assets to, or assume any liabilities of, AT&T (in its
capacity other than as part of the AT&T Broadband Group) or any of the
AT&T Subsidiaries (other than AT&T Broadband or any of the AT&T Broadband
Subsidiaries) other than non-material transactions on arm's-length terms
in the ordinary course of business;
(xix) except as set forth on Section 8.01(xix) of the AT&T Disclosure
Schedule, settle any litigation, investigation, arbitration, proceeding or
other claim if the AT&T Broadband Group would be required to pay in excess
of $25,000,000 or such settlement would otherwise be material to the AT&T
Broadband Group;
(xx) other than in the ordinary course of business and consistent
with past practice, make any material Tax election or enter into any
settlement or compromise of any material Tax liability;
(xxi) fail to comply with its obligations under the Exchange
Agreement;
(xxii) amend or waive any provision of any of the PrISMs Contracts or
SAILS Contracts, make any payment in settlement of any of such contracts
or terminate any of such contracts; provided that immediately prior to the
Effective Time each of such contracts will be amended as set forth in
Section 8.01(xxi) of the AT&T Disclosure Schedule if the counterparty to
such contract consents to such amendment;
(xxiii) (A) permit T-Holdings or any of its Subsidiaries to incur any
liabilities or (B) take any action that would reasonably be expected to
make any representation or warranty of AT&T hereunder or of AT&T or any
AT&T Subsidiary under any of the other Transaction Agreements inaccurate
in any material respect at the Effective Time;
(xxiv) take any action that would, or would reasonably be expected
to, prevent, impair or materially delay the ability of AT&T or Comcast or
any of their respective Subsidiaries to consummate the transactions
contemplated by this Agreement and the other Transaction Agreements; or
(xxv) agree or commit to do any of the foregoing; provided that the
limitations set forth in Sections 8.01(i) through 8.01(xxii) shall not
apply to any transaction between AT&T Broadband and any wholly owned AT&T
Broadband Subsidiary or between AT&T (to the extent not relating to the
AT&T Broadband Group) and any wholly owned AT&T
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Subsidiaries (other than AT&T Broadband and any AT&T Broadband
Subsidiaries) and provided, further, that the limitations set forth in
Sections 8.01(i) through 8.01(xxii) shall not be deemed to in any way
apply to or prohibit any Excepted Transaction or any transaction by or
involving AT&T and its wholly owned Subsidiaries if AT&T (to the extent
relating to the AT&T Broadband Group), the AT&T Broadband Group, AT&T
Broadband and the AT&T Broadband Subsidiaries are not bound thereby, such
transaction does not involve AT&T (to the extent relating to the AT&T
Broadband Group), the AT&T Broadband Group, AT&T Broadband or any of the
AT&T Broadband Subsidiaries and such transaction would not otherwise
adversely affect the transactions contemplated hereby in any material
respect. In no event will AT&T enter into, or permit the AT&T Broadband
Group, AT&T Broadband or any AT&T Broadband Subsidiary to enter into, any
agreement or contract that would bind or purport to bind, Parent or any of
its Affiliates (other than AT&T Broadband and the AT&T Broadband
Subsidiaries) after the Effective Time.
SECTION 8.02. AT&T Shareholders' Meeting; Proxy Material. (a) Subject to
applicable law, AT&T shall cause the AT&T Shareholders' Meeting to be duly
called and held as soon as reasonably practicable (taking into consideration
all relevant factors, including delays due to complications of preparing
required pro forma and other financial statements) for the purpose of voting on
the approval and adoption of this Agreement and the transactions contemplated
by this Agreement; provided, however, that if within five days of the time the
parties are notified by the SEC that it is willing to declare the Registration
Statement effective any conditions shall exist (such conditions, the "Mandatory
Residual Conditions") such that, as a result of the AT&T Shareholders' Approval
being obtained, the holders of the Senior Notes would be entitled to require
AT&T or any of its Affiliates to repurchase all or any portion of the Senior
Notes, then AT&T shall be entitled to delay the calling of the AT&T
Shareholders' Meeting until such time as the Mandatory Residual Conditions no
longer exist. In connection with the AT&T Shareholders' Meeting, AT&T will (i)
subject to Section 8.02(b), use its reasonable best efforts to obtain the AT&T
Shareholders' Approval and (ii) otherwise comply with all legal requirements
applicable to AT&T Shareholders' Meeting.
(b) Except as provided below, AT&T's Board of Directors shall recommend
approval and adoption of this Agreement and the transactions contemplated by
this Agreement by AT&T shareholders. AT&T's Board of Directors shall be
permitted to withdraw, or modify in a manner adverse to Comcast, its
recommendation to AT&T shareholders only if (i) AT&T has complied with the
terms of Section 8.03, including the requirement in Section 8.03(d) that it
notify Comcast promptly after its receipt of any AT&T Broadband
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Acquisition Proposal; (ii) AT&T's Board of Directors determines in good faith
by a majority vote, after consulting with AT&T's outside counsel, that it must
take such action to comply with its fiduciary duties under applicable law; and
(iii) AT&T shall have delivered to Comcast a prior written notice advising
Comcast that it intends to take such action and describing its reasons for
taking such action (such notice to be delivered not less than two Business Days
prior to the time such action is taken). Unless this Agreement shall have been
terminated in accordance with its terms, subject to applicable law, AT&T shall
submit this Agreement to AT&T shareholders at the AT&T Shareholders' Meeting
even if AT&T's Board of Directors determines at any time after the date hereof
that it is no longer advisable or recommends that AT&T shareholders reject it.
SECTION 8.03. No Solicitation. (a) From the date hereof until the
termination hereof, AT&T will not, and will cause the AT&T Subsidiaries and the
officers, directors, employees, investment bankers, attorneys, accountants,
consultants or other agents, representatives or advisors of AT&T and the AT&T
Subsidiaries not to, directly or indirectly (i) take any action to solicit,
initiate, facilitate or encourage the submission of any AT&T Broadband
Acquisition Proposal; (ii) subject to Section 8.03(e), engage in any
discussions or negotiations with, or disclose any non-public information
relating to AT&T (to the extent relating to the AT&T Broadband Group), the AT&T
Broadband Group, AT&T Broadband or any AT&T Broadband Subsidiary or afford
access to the properties, books or records of AT&T (to the extent relating to
the AT&T Broadband Group), the AT&T Broadband Group, AT&T Broadband or any AT&T
Broadband Subsidiary to, any Person who is known by AT&T to be considering
making, or has made, an AT&T Broadband Acquisition Proposal; (iii)(A) amend or
grant any waiver or release under any standstill agreement, agreement
restricting a party from engaging in negotiations or discussions with other
parties or any similar agreement with respect to any class of equity securities
of AT&T (other than in connection with an Excepted Transaction) or with respect
to the AT&T Broadband Group or any of its material assets or (B) approve any
transaction, or approve of any Person becoming an "Interested Shareholder",
under Section 912 of the NYBCL or Section 203 of the DGCL; or (iv) enter into
any agreement with respect to an AT&T Broadband Acquisition Proposal (other
than a confidentiality agreement as described below).
(b) Notwithstanding the provisions of Section 8.03(a) or any other
provision of this Agreement, prior to the AT&T Shareholders' Meeting, AT&T may,
in response to an unsolicited bona fide AT&T Broadband Acquisition Proposal
that AT&T's Board of Directors determines in good faith, by majority vote,
after consultation with its financial advisors and outside legal counsel, would
reasonably be expected to lead to an AT&T Superior Proposal, furnish
confidential or nonpublic information and access to, and engage in discussions
and negotiate with, such Person making such proposal; provided that prior to
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taking any of such actions, (i) AT&T has complied with the terms of this
Section 8.03, including the requirement in Section 8.03(d) that it notify
Comcast promptly after its receipt of any AT&T Broadband Acquisition Proposal,
(ii) the AT&T Board of Directors determines in good faith, by majority vote,
after consultation with AT&T's outside legal counsel that it must take such
action to comply with its fiduciary duties under applicable law and (iii) such
Person making such proposal executes a confidentiality agreement with terms no
less favorable in the aggregate to AT&T than those contained in the AT&T
Confidentiality Agreement. "AT&T Superior Proposal" means an unsolicited, bona
fide AT&T Broadband Acquisition Proposal that AT&T's Board of Directors
determines in good faith, after consultation with its financial advisors and
outside legal counsel and taking into account all the terms and conditions of
the AT&T Broadband Acquisition Proposal, including the likelihood and timing of
consummation of the AT&T Broadband Acquisition Proposal (including, without
limitation, the likelihood of obtaining financing and receiving necessary
regulatory approvals), would be more favorable to the holders of AT&T Common
Stock than the transactions provided for in this Agreement.
(c) Nothing contained in this Agreement shall prevent AT&T's Board of
Directors from complying with Rule 14e-2 and Rule 14d-9 under the 1934 Act with
regard to an AT&T Broadband Acquisition Proposal; provided that AT&T's Board of
Directors shall not recommend that AT&T shareholders tender their shares in
connection with a tender offer, except to the extent AT&T's Board of Directors
by a majority vote determines in its good faith judgment that such a
recommendation is required to comply with the fiduciary duties of AT&T's Board
of Directors under applicable law, after consulting with outside legal counsel.
(d) AT&T will notify Comcast promptly (but in no event later than 24
hours) after receipt by AT&T (or any of its advisors) of any AT&T Broadband
Acquisition Proposal, or of any request for non-public information relating to
AT&T (to the extent relating to the AT&T Broadband Group), the AT&T Broadband
Group, AT&T Broadband or any AT&T Broadband Subsidiary or for access to the
properties, books or records of AT&T (to the extent relating to the AT&T
Broadband Group), the AT&T Broadband Group, AT&T Broadband or any AT&T
Broadband Subsidiary by any Person who is known to be considering making, or
has made, an AT&T Broadband Acquisition Proposal. AT&T shall provide such
notice orally and in writing and shall identify the Person making, and the
terms and conditions of, any such AT&T Broadband Acquisition Proposal,
indication or request. AT&T shall keep Comcast fully informed, on a prompt
basis (but in any event no later than 24 hours), of the status and details of
any such AT&T Broadband Acquisition Proposal, indication or request. AT&T
shall, and shall cause the AT&T Subsidiaries and the directors, employees and
other agents of AT&T and the AT&T Subsidiaries to, cease immediately and cause
to be terminated all activities, discussions or negotiations, if any, with any
Persons
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conducted prior to the date hereof with respect to any AT&T Broadband
Acquisition Proposal. This Section 8.03(d) shall not apply with respect to any
Excepted Transaction; provided that if an agreement is entered into with
respect to an Excepted Transaction that would reasonably be expected to delay
the transactions contemplated hereby, AT&T shall promptly thereafter notify
Comcast of such agreement and provide Comcast with information it may
reasonably request relating to such Excepted Transaction to the extent it is
relevant to the transactions contemplated hereby.
(e) Notwithstanding anything in Section 8.03 to the contrary, in
connection with discussions or negotiations relating to a proposed Excepted
Transaction, AT&T may (i) disclose non-public information relating to AT&T (to
the extent relating to the AT&T Broadband Group), the AT&T Broadband Group,
AT&T Broadband or any AT&T Broadband Subsidiary and (ii) afford access to the
properties, books or records of AT&T (to the extent relating to the AT&T
Broadband Group), the AT&T Broadband Group, AT&T Broadband or any AT&T
Broadband Subsidiary, in the case of (i) and (ii), to the Person or Persons
with whom AT&T is engaged in such discussions or negotiations relating to such
proposed transaction; provided that (x) such Person or Persons (A) are not
known by AT&T to be considering making, or to have made, an AT&T Broadband
Acquisition Proposal and (B) execute a confidentiality agreement with AT&T
Broadband with confidentiality terms no less favorable than those in the AT&T
Confidentiality Agreement pursuant to which such Person or Persons agree to
hold any information relating to AT&T (to the extent relating to the AT&T
Broadband Group), the AT&T Broadband Group, AT&T Broadband and any AT&T
Broadband Subsidiary confidential and (y) such disclosure and such access are
limited to that reasonably necessary in connection with such proposed
transaction.
SECTION 8.04. Ancillary Agreements. Subject to the terms and conditions of
this Agreement, the Separation and Distribution Agreement and the other
Ancillary Agreements, AT&T shall, and shall cause each of its Subsidiaries
(which, after the Effective Time, shall not include any of the AT&T Broadband
Entities) to, comply with its respective obligations under the Separation and
Distribution Agreement and the other Ancillary Agreements pursuant to and in
accordance with the terms thereof. No provision of the Separation and
Distribution Agreement or any of the other Ancillary Agreements may be amended
or waived prior to the Effective Time without the prior written consent of
Comcast, except that the Primary Commercial Agreements and the Additional
Commercial Agreements may be amended or waived in the ordinary course of
business without the prior written consent of Comcast if such amendment or
waiver would not be adverse in any material respect to AT&T (to the extent
relating to the AT&T Broadband Group), the AT&T Broadband Group, AT&T Broadband
or any of the AT&T Broadband Subsidiaries. None of the Separation
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and Distribution Agreement and the other Ancillary Agreements may be terminated
prior to the Effective Time without the prior written consent of Comcast. The
AT&T Broadband Group shall not grant any consent or approval under the
Separation and Distribution Agreement or any of the other Ancillary Agreements
prior to the Effective Time without the prior written concurrence of Comcast,
except that the AT&T Broadband Group may grant a consent or approval under any
Primary Commercial Agreement or Additional Commercial Agreement in the ordinary
course of business if such consent or approval would not be adverse in any
material respect to AT&T (to the extent relating to the AT&T Broadband Group),
the AT&T Broadband Group, AT&T Broadband or any of the AT&T Broadband
Subsidiaries. Any agreements entered into or documents executed pursuant to the
Primary Transaction Agreements shall be reasonably acceptable to Comcast. Prior
to the Effective Time, all determinations by the AT&T Broadband Group under the
Separation and Distribution Agreement or any of the other Ancillary Agreements
will be made for the benefit of the AT&T Broadband Group and, in the event of
any discretion as to terms, such terms shall be no less favorable to the AT&T
Broadband Group than arm's-length terms.
SECTION 8.05. Neutrality Agreement. Notwithstanding any other provision of
this Agreement, AT&T shall not renew, extend or modify the Neutrality and
Consent Election Agreement (the "Neutrality Agreement") among AT&T, the
Communications Workers of America and the International Brotherhood of
Electrical Workers, such that such agreement, as so renewed, extended or
modified, will apply to or otherwise bind or purport to apply to or otherwise
bind, after the Effective Time, AT&T Broadband, any of the AT&T Broadband
Subsidiaries, Parent, Comcast or any of the Comcast Subsidiaries, either as a
matter of contract or term or condition of employment. AT&T shall not enter
into any other agreement or arrangement with respect to the same or similar
matters as the matters covered by the Neutrality Agreement if such agreement or
arrangement would apply to or otherwise bind or purport to apply to or
otherwise bind, after the Effective Time, AT&T Broadband, any of the AT&T
Broadband Subsidiaries, Parent, Comcast or any of the Comcast Subsidiaries,
either as a matter of contract or term or condition of employment.
SECTION 8.06. Broadband Employees. Prior to the Effective Time, AT&T
shall, and shall cause each of its Subsidiaries to, use reasonable best efforts
so that, immediately prior to the Effective Time, (i) all individuals (other
than Broadband Transferees) who are then primarily employed (whether actively
or then on an approved leave of absence) in connection with the AT&T Broadband
Business will be employed, as of the Effective Time, by the AT&T Broadband
Group and (ii) the AT&T Broadband Group will employ no individuals other than
those referred to in clause (i) of this Section 8.06 and the Broadband
Transferees;
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provided that no transfers required to implement this Section 8.06 shall result
in any severance liabilities to AT&T Broadband.
SECTION 8.07. AT&T Post-Signing Equity Awards. With respect to any options
to purchase shares of AT&T Common Stock and any other equity-based awards based
upon shares of AT&T Common Stock granted by AT&T or any of its Subsidiaries
from the date hereof until the Effective Time, AT&T shall provide in the
agreements evidencing such awards that the transactions contemplated by this
Agreement or any of the other Transaction Agreements shall not constitute a
"Change in Control" for purposes of triggering accelerated vesting of the
awards; provided that if any employee who receives such an award is terminated
after the Effective Time under conditions entitling him to receive "Change in
Control Severance Benefits" under Appendix 2 of the AT&T Broadband Severance
Plan, the equity awards held by such employee shall become immediately vested
upon termination of employment and, if subject to exercise, shall remain
exercisable for the full extent of the original term of the award.
SECTION 8.08. Redemption of TCI Pacific Preferred Stock. Prior to the
Effective Time, AT&T shall cause TCI Pacific Communications, Inc. (i) to call
for redemption all of the outstanding shares of TCI Pacific Preferred Stock and
(ii) to the extent any of such shares are not exchanged for shares of AT&T
Common Stock prior to the applicable redemption date, to redeem all of such
shares remaining outstanding in exchange for shares of AT&T Common Stock, in
the case of each of (i) and (ii), in accordance with the terms of the
certificate of designation for the TCI Pacific Preferred Stock. The shares of
AT&T Common Stock used to effect the foregoing redemption or exchange shall be
provided by AT&T to TCI Pacific Communications, Inc. without payment of any
consideration or charge by TCI Pacific Communications, Inc. or the AT&T
Broadband Group.
SECTION 8.09. Note Consent Process. AT&T will consult with Comcast in
connection with actions taken by AT&T in furtherance of satisfaction of the
condition specified in Section 10.01(l). AT&T will conduct such actions in a
manner reasonably designed to minimize the cost and expenses incurred in
connection with satisfaction of such condition. The parties agree that AT&T may
obtain Note Consents or otherwise satisfy the condition set forth in Section
10.01(l) by a one-time cash payment of a consent fee, through a coupon increase
or a combination thereof and that any costs and expenses incurred in connection
therewith (as calculated pursuant to Section 11.03) shall be shared pursuant to
Section 11.03(a)(iv). AT&T shall not be required to take any action other than
those referred to in the preceding sentence in order to satisfy the condition
set forth in Section 10.01(l) unless Comcast agrees that the costs and expenses
incurred in connection therewith shall be shared on the basis set forth in
Section 11.03(a)(iv).
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ARTICLE 9
COVENANTS OF AT&T, COMCAST AND PARENT
SECTION 9.01. Best Efforts. (a) Subject to the terms and conditions of
this Agreement, each of the parties hereto will use its best efforts to
promptly (i) take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate the Mergers and the other transactions contemplated
hereby as soon as practicable, including preparing and filing as promptly as
practicable all documentation to effect all necessary filings, notices,
petitions, statements, registrations, submissions of information, applications
and other documents and (ii) obtain and maintain all approvals, consents,
registrations, permits, authorizations and other confirmations required to be
obtained from any third Person that are necessary, proper or advisable to
consummate the Mergers and the other transactions contemplated hereby;
provided, that the parties' obligations to obtain the License Consents and the
expiration (without either the Department of Justice or the Federal Trade
Commission obtaining any injunction or other relief that prevents the
consummation of the transactions contemplated hereby) or termination of the
applicable waiting periods under the HSR Act shall be unconditional and shall
not be qualified by best efforts. Consistent with its obligations under the
preceding sentence, Comcast and AT&T will commit to and implement divestitures,
hold separate or similar transactions or actions with respect to assets or
businesses of the Comcast Group and the AT&T Broadband Group, which commitments
and implementations may, at Comcast's or AT&T's option, be conditioned upon and
effective as of the Effective Time. No party hereto shall, directly or
indirectly, extend any waiting period under the HSR Act or enter into any
agreement with a Governmental Authority to delay or to not consummate the
Mergers or the other transactions contemplated by this Agreement, except with
the prior written consent of the other parties. The parties' actions with
respect to this paragraph shall be reasonable and reasonably calculated to
facilitate consummation of the Mergers by the End Date. Subject to applicable
law relating to the exchange of information, Comcast and AT&T shall have the
right to review in advance, and to the extent practicable each will consult the
other on, all the information relating to Comcast and the Comcast Subsidiaries
or AT&T and the AT&T Broadband Subsidiaries, as the case may be, that appears
in any filing made with, or written materials submitted to, any third party
and/or any Governmental Authority in connection with the Mergers and the other
transactions contemplated hereby. Prior to the date hereof, each of Comcast and
AT&T has provided to the other a list of all material Franchise Consents of
such party, all material License Consents of such party, all material PUC
Consents of such party and all rights that any Person may have under the terms
of such party's material Franchises to purchase all or any portion of a System
owned and operated by such party as a result of the transactions contemplated
hereby ("Purchase Rights"). Within 45 calendar days of the date of this
Agreement, each of
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Comcast and AT&T shall provide to the other a supplemental list of all of such
party's other Franchise Consents, License Consents, PUC Consents and Purchase
Rights.
(b) In furtherance and not in limitation of the foregoing, each of AT&T
and Comcast agrees to (i) make an appropriate filing of a Notification and
Report Form pursuant to the HSR Act with respect to the Mergers and the other
transactions contemplated hereby as promptly as practicable (and, in any event,
within 45 calendar days of the date of this Agreement), (ii) supply as promptly
as practicable any additional information and documentary material that may be
requested pursuant to the HSR Act and (iii) complete the review process under
the HSR Act to permit the consummation of the Mergers and the other
transactions contemplated hereby, including causing the expiration or
termination of the applicable waiting periods under the HSR Act as soon as
practicable.
SECTION 9.02. Joint Proxy Statement; Registration Statement. (a) As
promptly as practicable after the date hereof (and, in any event, within 60
calendar days of the date of this Agreement) the parties hereto shall prepare
and file the Joint Proxy Statement and the Registration Statement (in which the
Joint Proxy Statement will be included) with the SEC. AT&T and Comcast shall
use their reasonable best efforts to cause the Registration Statement to become
effective under the 1933 Act as soon after such filing as practicable and to
keep the Registration Statement effective as long as is necessary to consummate
the Mergers. The Joint Proxy Statement shall include the recommendation of each
of the Board of Directors of Comcast and AT&T in favor of approval and adoption
of this Agreement and the applicable Merger, except to the extent the Board of
Directors of AT&T shall have withdrawn or modified its approval or
recommendation of this Agreement as permitted by Section 8.02(b). Comcast and
AT&T each shall use its reasonable best efforts to cause the Joint Proxy
Statement to be mailed to its respective shareholders as promptly as
practicable after the Registration Statement becomes effective. Each of Comcast
and AT&T shall promptly provide copies, consult with each other and prepare
written responses with respect to any written comments received from the SEC
with respect to the Joint Proxy Statement and the Registration Statement and
advise one another of any oral comments received from the SEC. The Registration
Statement and the Joint Proxy Statement shall comply as to form in all material
respects with the rules and regulations promulgated by the SEC under the 1933
Act and the 1934 Act, respectively.
(b) AT&T and Comcast shall make all necessary filings with respect to the
Mergers and the transactions contemplated hereby under the 1933 Act and the
1934 Act and applicable state "blue sky" laws and the rules and regulations
thereunder. Each party hereto will advise the other parties, promptly after it
receives notice thereof, of the time when the Registration Statement has become
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effective or any supplement or amendment has been filed, the issuance of any
stop order, the suspension of the qualification of the Parent Common Stock
issuable in connection with the Mergers for offering or sale in any
jurisdiction, or any request by the SEC for amendment of the Joint Proxy
Statement or the Registration Statement or comments thereon and responses
thereto or requests by the SEC for additional information. No amendment or
supplement to the Joint Proxy Statement or the Registration Statement shall be
filed without the approval of both AT&T and Comcast, which approval shall not
be unreasonably withheld or delayed. If, at any time prior to the Effective
Time, any information relating to AT&T or Comcast, or any of their respective
Affiliates, officers or directors should be discovered by AT&T or Comcast that
should be set forth in an amendment or supplement to the Registration Statement
or the Joint Proxy Statement so that such documents would not include any
misstatement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading, the party hereto that discovers such information
shall promptly notify the other parties hereto and an appropriate amendment or
supplement describing such information shall be promptly filed with the SEC
and, to the extent required by law, disseminated to the shareholders of AT&T
and Comcast.
SECTION 9.03. Public Announcements. So long as this Agreement is in
effect, Comcast and AT&T will consult with each other before issuing any press
release or making any public statement with respect to this Agreement or the
transactions contemplated hereby and, except as may be required by applicable
law or any listing agreement with any national securities exchange or quotation
system, will not issue any such press release or make any such public statement
without the prior consent of the other, which consent shall not be unreasonably
withheld. Notwithstanding the foregoing, any such press release or public
statement that may be required by applicable law or any listing agreement with
any national securities exchange or quotation system may be issued without such
consent, if the party hereto making such release or statement has used its
reasonable best efforts to consult with the other parties.
SECTION 9.04. Further Assurances. At and after the Effective Time, the
officers and directors of the applicable Surviving Corporation will be
authorized to execute and deliver, in the name and on behalf of AT&T Broadband
or Comcast, as the case may be, any deeds, bills of sale, assignments or
assurances and to take and do, in the name and on behalf of AT&T Broadband or
Comcast, as the case may be, any other actions and things to vest, perfect or
confirm of record in such Surviving Corporation, any and all right, title and
interest in, to and under any of the rights, properties or assets of AT&T
Broadband or Comcast, as the case may be, acquired or to be acquired by such
Surviving Corporation, as a result of or in connection with the applicable
Merger.
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SECTION 9.05. Access to Information. From the date hereof until the
Effective Time or earlier termination of this Agreement and subject to
applicable law and the Confidentiality Agreements, each of Comcast and AT&T
shall (a) give to the other and the other's legal counsel, financial advisors,
auditors and other authorized representatives reasonable access during normal
business hours to the offices, properties, books and records of such party and
its Subsidiaries, (b) furnish to the other and the other's counsel, financial
advisors, auditors and other authorized representatives such financial and
operating data and other information as such Persons may reasonably request and
(c) instruct its employees, legal counsel, financial advisors, auditors and
other authorized representatives to cooperate with the other in such other
party's investigation. Any investigation pursuant to this Section 9.05 shall be
conducted in a manner as not to interfere unreasonably with the conduct of the
business of the party being investigated. No information or knowledge obtained
in any investigation pursuant to this Section 9.05 shall affect or be deemed to
modify any representation or warranty made by any party hereunder. Each party
hereto will hold such information that is non-public in confidence in
accordance with the provisions of the applicable Confidentiality Agreement.
SECTION 9.06. Tax-free Transactions. (a) Prior to the Effective Time, each
party hereto shall use its best efforts to cause the Mergers to qualify as
tax-free exchanges described in Section 351 of the Code ("351 Transactions"),
and will not take any action reasonably likely to cause the Mergers not to so
qualify.
(b) Prior to the Effective Time, each party hereto shall use its best
efforts to (i) cause the Separation and Distribution to qualify as tax-free
transactions pursuant to Sections 355 and 368(a) of the Code, and will not take
any action reasonably likely to cause the Separation and Distribution not to so
qualify and (ii) ensure that the Mergers will not cause the Separation and
Distribution to fail to be qualified as tax-free transactions pursuant to
Sections 355 and 368(a) of the Code.
(c) Each party hereto shall use its best efforts to obtain (i) the ruling
or opinion referred to in Section 10.01(j) and (ii) the opinions referred to in
Sections 10.02(b) and 10.03(b).
SECTION 9.07. Affiliates. (a) Within 30 days following the date of this
Agreement, AT&T shall deliver to Comcast a letter identifying all known Persons
who may be deemed affiliates of AT&T Broadband under Rule 145 of the 1933 Act
(an "AT&T Rule 145 Affiliate"). AT&T shall use its reasonable best efforts to
obtain and deliver to Comcast a written agreement from each AT&T Broadband Rule
145 Affiliate as soon as practicable and, in any event, at least 30 days prior
to the Effective Time, substantially in the form attached as Exhibit B.
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(b) Within 30 days following the date of this Agreement, Comcast shall
deliver to AT&T a letter identifying all known Persons who may be deemed
affiliates of Comcast under Rule 145 of the 1933 Act (an "Comcast Rule 145
Affiliate"). Comcast shall use its reasonable best efforts to obtain and
deliver to AT&T a written agreement from each Comcast Rule 145 Affiliate as
soon as practicable and, in any event, at least 30 days prior to the Effective
Time, substantially in the form attached as Exhibit B.
SECTION 9.08. Governance and Other Matters. Parent shall take all actions
necessary so that at the Effective Time the Parent Board of Directors shall
consist of 12 directors, five (5) of whom shall be existing Comcast directors
designated by Comcast, five (5) of whom shall be existing AT&T directors
designated by AT&T and two (2) of whom shall be Independent Persons jointly
designated by Comcast and AT&T. Except as set forth on the Comcast Disclosure
Schedule or the AT&T Disclosure Schedule, the individuals designated to be
members of the Parent Board of Directors shall be mutually agreed by Comcast
and AT&T. The senior officers of Parent at the Effective Time shall be
designated by the chief executive officer of Comcast in consultation with the
chief executive officer of AT&T. Until Parent's 2005 annual meeting of
shareholders, Parent shall maintain an executive office in the New York City
metropolitan area. The headquarters for Parent shall initially be in
Philadelphia, Pennsylvania.
SECTION 9.09. Notices of Certain Events. Each of Comcast and AT&T shall
promptly notify the other of:
(a) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the
transactions contemplated hereby;
(b) any notice or other communication from any Governmental Authority in
connection with the transactions contemplated hereby;
(c) the occurrence, or nonoccurrence, of any event the occurrence, or
nonoccurrence, of which would reasonably be expected to cause any
representation or warranty contained herein to be untrue or inaccurate in any
material respect at any time during the period commencing on the date hereof
and ending at the Effective Time; and
(d) any failure of such party to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section
9.09 shall not limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
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SECTION 9.10. Section 16 Matters. Prior to the Effective Time, Comcast,
AT&T and AT&T Broadband shall take all such actions as may be required to cause
any (i) dispositions of AT&T Common Stock or AT&T Broadband Common Stock
(including derivative securities with respect to AT&T Common Stock or AT&T
Broadband Common Stock) or Comcast Common Stock (including derivative
securities with respect to Comcast Common Stock) or (ii) acquisitions of Parent
Common Stock (including derivative securities with respect to Parent Common
Stock) resulting from the transactions contemplated by this Agreement by each
individual who is subject to the reporting requirements of Section 16(a) of the
1934 Act with respect to AT&T, AT&T Broadband or Comcast, or will become
subject to such reporting requirements with respect to Parent, to be exempt
under Rule 16b-3 promulgated under the 1934 Act.
SECTION 9.11. Director and Officer Liability. (a) Parent shall indemnify
and hold harmless and advance expenses to the present and former officers and
directors of AT&T, the AT&T Subsidiaries, AT&T Broadband, the AT&T Broadband
Subsidiaries, Comcast and the Comcast Subsidiaries, and each individual who
prior to the Effective Time becomes an officer or director of AT&T, an AT&T
Subsidiary, AT&T Broadband, an AT&T Broadband Subsidiary, Comcast or a Comcast
Subsidiary (each an "Indemnified Person"), in respect of acts or omissions by
them in their capacities as such occurring at or prior to the Effective Time
(including for acts or omissions occurring in connection with this Agreement
and the consummation of the transactions contemplated hereby) to the maximum
extent permitted by law ("Indemnified Losses"); provided that notwithstanding
the foregoing Parent shall have no obligation to indemnify and hold harmless
and advance expenses to any Indemnified Person in respect of acts or omissions
of such Indemnified Person that occurred while such Indemnified Person was
acting in a capacity for AT&T and its Subsidiaries other than in connection
with either the AT&T Broadband Group or this Agreement and the transactions
contemplated hereby; provided, further, that AT&T shall indemnify and hold
harmless Parent for 50% of any Indemnified Losses arising out of acts or
omissions of the AT&T officers and directors in connection with this Agreement
and the consummation of the transactions contemplated hereby. Without limiting
the generality of the foregoing, the Indemnified Losses shall include
reasonable costs of prosecuting a claim under this Section 9.11(a). Parent
shall periodically advance or reimburse each Indemnified Person for all
reasonable fees and expenses of counsel constituting Indemnified Losses as such
fees and expenses are incurred; provided that such Indemnified Person shall
agree to promptly repay to Parent the amount of any such reimbursement if it
shall be judicially determined by judgment or order not subject to further
appeal or discretionary review that such Indemnified Person is not entitled to
be indemnified by Parent in connection with such matter. In the event that
Parent sells, transfers or leases all or substantially all of its assets
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or is not a surviving corporation in any merger, consolidation or other
business combination in which it may enter with any Person, Parent shall, as a
condition of any such transaction, cause such purchaser or such surviving
corporation, as the case may be, to assume Parent's obligations under this
Section 9.11 upon the consummation of any such transaction.
(b) For six years after the Effective time, Parent shall provide or shall
cause each of the Surviving Corporations to provide officers' and directors'
liability insurance in respect of acts or omissions occurring prior to the
Effective Time (including for acts or omissions occurring in connection with
this Agreement and the consummation of the transactions contemplated hereby),
covering each such Indemnified Person (but, in the case of officers and
directors of AT&T and its Subsidiaries, only in respect of acts or omissions of
such person acting in connection with the AT&T Broadband Group or this
Agreement and the transactions contemplated hereby) currently covered by the
officers' and directors' liability insurance policy of AT&T or Comcast, as the
case may be, on terms with respect to coverage and amount (including with
respect to the payment of attorneys' fees) no less favorable than those of such
policy in effect on the date hereof; provided that, if the aggregate annual
premiums for such insurance during such period shall exceed 300% of the per
annum rate of premium paid by either AT&T or Comcast as of the date hereof for
such insurance, then Parent shall provide or cause to be provided a policy for
the applicable individuals with the best coverage as shall then be available at
300% of such rate (it being agreed that in the event that Parent or its
Affiliate shall pay premiums in excess of such rate in order to cover directors
or officers of one such entity, it shall pay premiums at such higher rate to
cover directors or officers of the other such entity).
(c) The rights of each Indemnified Person and his or her heirs and legal
representatives under this Section 9.11 shall be in addition to any rights such
Indemnified Person may have under the certificate of incorporation or bylaws of
AT&T, any AT&T Subsidiary, AT&T Broadband, any AT&T Broadband Subsidiary,
Comcast or any Comcast Subsidiary, or under the PBCL, the NYBCL, the DGCL or
any other applicable law.
SECTION 9.12. Listing of Stock. Comcast and Parent shall use their
respective reasonable best efforts to cause the shares of Parent Class A Common
Stock and the Parent Class A Special Common Stock (and, if applicable, Parent
Class C Common Stock) to be issued in connection with the Mergers and reserved
for issuance in connection with the AT&T Stock Options, the AT&T Equity Awards,
the Comcast Options and the Comcast Equity Awards to be approved for listing on
Nasdaq subject to official notice of issuance.
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SECTION 9.13. Employee Matters. (a) Parent shall and shall cause its
Subsidiaries (including the AT&T Broadband Surviving Corporation and the
Comcast Surviving Corporation) to:
(i) honor the terms of all Broadband Employee Plans and Broadband
Benefit Arrangements, and to pay or provide, or cause its Subsidiaries to
pay or provide, the benefits required thereunder, recognizing that the
consummation of the transactions contemplated hereby will constitute a
"change in control" for purposes of the Broadband Employee Plans and
Broadband Benefit Arrangements that include a provision for modifications
to benefits in the event of a "change in control";
(ii) until December 31, 2003 (the "Benefits Maintenance Period"),
with respect to Broadband Employees (other than those subject to
collective bargaining obligations or agreements), provide a level of
aggregate employee benefits and compensation, taking into account all
Employee Plans and Benefit Arrangements and other programs sponsored or
maintained by AT&T and the AT&T Subsidiaries listed in Section 6.18(a) of
the AT&T Disclosure Schedule to the extent they remain in effect, but
excluding any severance, separation, or similar plan, program, policy or
arrangement ("Severance Plans") that is substantially comparable in the
aggregate to the aggregate employee benefits and compensation provided,
with respect to service to AT&T Broadband or any of the AT&T Broadband
Subsidiaries, to the Broadband Employees immediately prior to the
Effective Time (excluding benefits provided under any Severance Plans);
and
(iii) until December 31, 2003, continue, without any change adverse
to Broadband Employees, each severance plan identified in Section 6.18(a)
of the AT&T Disclosure Schedule (the "AT&T Severance Plans").
(b) If Broadband Employees are included in any Employee Plan, Benefit
Arrangement or International Plan sponsored or maintained by Parent or any of
its Subsidiaries following the Effective Time, the Broadband Employees shall
receive credit for service with AT&T and the AT&T Subsidiaries and their
predecessors prior to the Effective Time to the same extent and for the same
purposes thereunder as such service was counted under similar predecessor
Employee Plans and Benefit Arrangements for all purposes (except that, with
respect to benefit accrual, such service shall not be counted to the extent
that it would result in a duplication of benefits and shall not be counted for
purposes of benefit accrual under any defined benefit plan); provided, however,
that service with respect to Broadband Employees subject to collective
bargaining agreements
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or obligations shall be determined under such collective bargaining agreements
or obligations. Notwithstanding the foregoing, as soon as practicable after the
Benefits Maintenance Period, Broadband Employees who satisfy eligibility
requirements shall be allowed to participate in any retirement medical or life
insurance benefit plan then sponsored or maintained by Parent or any of its
Subsidiaries. If Broadband Employees or their dependents are included in any
medical, dental or health plan (a "Successor Plan") other than the plan or
plans in which they participated immediately prior to the Effective Time (a
"Prior Plan"), any such Successor Plan shall not include any restrictions or
limitations with respect to pre-existing condition exclusions or any
actively-at-work requirements (except to the extent such exclusions were
applicable under any similar Prior Plan at the Effective Time) and any eligible
expenses incurred by any Broadband Employee and his or her covered dependents
during the portion of the plan year of such Prior Plan ending on the date such
employee's participation in such Successor Plan begins shall be taken into
account under such Successor Plan for purposes of satisfying all deductible,
coinsurance and maximum out-of-pocket requirements applicable to such Broadband
Employee and his or her covered dependents for the applicable plan year as if
such amounts had been paid in accordance with such Successor Plan. Without
limiting the generality of the foregoing, for purposes of determining severance
pay and benefits under any applicable Broadband Severance Plan or other
Severance Plan covering a Broadband Employee at or after the Effective Time,
each Broadband Employee shall receive credit for service prior to the Effective
Time with AT&T and the AT&T Subsidiaries and their predecessors to the same
extent and for the same purposes as such service was counted under the
applicable Broadband Severance Plans as in effect before the Effective Time, as
well as for service from and after the Effective Time with Parent and ay of its
Subsidiaries (including the AT&T Broadband Surviving Corporation and the
Comcast Surviving Corporation).
(c) As soon as practicable after the Effective Time, Parent shall offer a
one-time grant of options to purchase a number of shares of Parent Common Stock
equal to 300 multiplied by the Exchange Ratio to each full-time employee of
Parent or any of its Subsidiaries (including, for the avoidance of doubt, each
Broadband Employee).
(d) Except as otherwise specifically set forth above, nothing contained
herein shall be construed as requiring Parent or any of its Subsidiaries to
continue any specific Employee Plan or Benefit Arrangement, or to continue the
employment of any specific person; provided, however, that any changes that
Parent or any of its Subsidiaries may make to any such Employee Plan or Benefit
Arrangement are permitted by the terms of the applicable Employee Plan or
Benefit Arrangement and under any applicable law.
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SECTION 9.14. Employment Agreements. Parent shall offer to enter into an
employment agreement, effective as of the Effective Time, with each of Mr.
Brian L. Roberts, Mr. Ralph J. Roberts and Mr. C. Michael Armstrong, in each
case on substantially the same terms as his existing employment agreement with
Comcast or AT&T, as the case may be, except that (a) "Parent" shall be
substituted for "Comcast" or "AT&T", as the case may be, wherever such term
appears in his existing employment agreement, (b) such additional concomitant
adjustments as may be necessary to reflect the foregoing shall be made, (c)
such additional changes to reflect the provisions with respect to governance
set forth in the Parent Charter shall be made and (d) the term of the
employment agreement shall be extended to terminate no earlier than the date of
the annual meeting of shareholders of Parent in 2005.
SECTION 9.15. Interim Finance Committee. (a) The parties agree promptly to
establish an Interim Finance Committee, comprised of Lawrence S. Smith (or if
he is unavailable to serve, another senior officer of Comcast appointed by
Comcast) and Charles Noski (or if he is unavailable to serve, another senior
officer of AT&T Broadband appointed by AT&T) for the purpose of engaging in
financial planning for AT&T Broadband. The Interim Finance Committee will seek
to arrange financing (the "Financing") in an amount sufficient to (a) pay to
AT&T at the Effective Time an amount equal to any Indebtedness owed by any AT&T
Broadband Entity to AT&T or any of its Subsidiaries (other than any AT&T
Broadband Entity) at such time (including, if applicable, the intercompany
Indebtedness referred to in Section 9.18), (b) refinance any of the TOPRS that
will be called for redemption at the Effective Time or shortly thereafter and
(c) provide appropriate cash reserves to fund the operations of AT&T Broadband
after the Effective Time, including the costs and expenses of AT&T Broadband
under Section 11.03(a). In the event the Interim Finance Committee agrees upon
the Financing, Comcast shall use its reasonable best efforts to arrange for the
Financing on the terms agreed by the Interim Finance Committee. In the event
Comcast is unable to obtain the Financing so agreed upon by the Interim Finance
Committee or the Interim Finance Committee does not agree upon the Financing,
Comcast shall arrange for a senior credit facility with a term not exceeding
five years to provide the Financing. The Interim Finance Committee may consult
with financial advisors to the extent it deems necessary or advisable.
(b) The Interim Finance Committee shall also have responsibility for
monitoring AT&T's progress in obtaining the Note Consents and in taking other
actions in furtherance of the satisfaction of the condition specified in
Section 10.01(l). At the request of AT&T, the Interim Finance Committee shall
give due consideration to any request made by AT&T that Comcast share in costs
and expenses incurred by AT&T in connection with an exchange offer, a tender
offer, a defeasance or other action proposed by AT&T in furtherance of
satisfaction of
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the condition specified in Section 10.01(l). After such consideration, the
Interim Finance Committee shall deliver a recommendation to Comcast of the
portion (if any) of the costs and expenses that the Interim Finance Committee
reasonably believes represents Comcast's equitable share of the costs and
expenses that would be incurred in connection with such action. Comcast shall
give due consideration to the recommendation of the Interim Finance Committee
but shall have no obligation to pay AT&T for any of such costs and expenses
unless Comcast expressly consents thereto in writing. Any expenses that Comcast
so expressly consents to pay shall, to the extent incurred, be treated as costs
of obtaining Note Consents for purposes of this Section 9.15(b) and Section
11.03(a). The costs and expenses of obtaining the Note Consents shall be paid
for by AT&T except as provided in Section 11.03(a).
SECTION 9.16. TOPRS. (a) Subject to Section 9.16(d), at the Effective
Time, Parent shall (i) call for redemption each series of TOPRS that is
redeemable in accordance with its terms at the Effective Time and as to which
AT&T has guaranteed the obligations of the applicable Subsidiary Trust, issuer
or other obligor, (ii) cause AT&T to be released from any such guarantee of the
obligations of the applicable Subsidiary Trust, issuer or other obligor in
respect of such series or (iii) comply with Section 9.16(d) with respect to
such series.
(b) Subject to Section 9.16(d), with respect to any series of TOPRS that
is not redeemable in accordance with its terms at the Effective Time and as to
which AT&T has guaranteed the obligations of the applicable Subsidiary Trust,
issuer or other obligor, Parent shall (i) redeem, or cause to be redeemed, such
series of TOPRS on the earliest date on which such TOPRS may be redeemed in
accordance with their terms, (ii) cause AT&T to be released from any such
guarantee of the obligations of the applicable Subsidiary Trust, issuer or
other obligor on such date in respect of such series or (iii) comply with
Section 9.16(d) with respect to such series on such date.
(c) The parties shall reasonably cooperate prior to the Effective Time in
connection with the transactions contemplated by this Section 9.16.
(d) If Parent does not comply with its obligations under Section
9.16(a)(i) or (ii) or Section 9.16(b)(i) or (ii), then with respect to each
series as to which it has failed to so comply, it will post, or cause to be
posted at the applicable time set forth above, a letter of credit from a United
States financial institution reasonably acceptable to AT&T containing the terms
contemplated hereby and otherwise in form and substance reasonably acceptable
to AT&T (including any renewals thereof, the "Letter of Credit"). The term of
the initial Letter of Credit shall be no less than one year. Prior to the 60
days prior to the expiration of any Letter of Credit, Parent shall renew or
extend, or cause to be renewed or extended, the Letter of Credit for at least
one additional year. AT&T
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shall be entitled to draw under any Letter of Credit if AT&T makes any payment
in respect of its guarantees relating to the TOPRS or if any Letter of Credit
is not renewed at least 60 days prior to the expiration thereof on the terms
contemplated by this Section. The face amount of each Letter of Credit shall at
all times be no less than the combined monetary liabilities under guarantees
with respect to the principal amount of notes held by the applicable trust of
all series of TOPRS as to which Parent has not complied with Section 9.16(a)(i)
or (ii) or Section 9.16(b)(i) or (ii) above and as to which AT&T has guaranteed
(A) the obligations of the applicable Subsidiary Trust, issuer or other obligor
with respect to such unredeemed TOPRS and (B) the obligations of AT&T
Broadband, LLC or MediaOne Group, Inc., as applicable, as "Sponsor" pursuant to
the declaration of trust applicable to the issuing Subsidiary Trust. The
obligation of Parent to post, or cause to be posted, the Letter of Credit shall
terminate with respect to any portion of the TOPRS with respect to which any
guarantee of AT&T is fully, irrevocably and unconditionally released and
discharged, whether as a result of refinancing or otherwise. Upon the posting,
if any, of the Letter of Credit, Parent shall provide AT&T with copies of all
documentation relating to such Letter of Credit and all such documentation
shall be in form and substance reasonably satisfactory to AT&T.
SECTION 9.17. Consideration. AT&T and Comcast acknowledge and agree that
the grant by AT&T Broadband of the rights pursuant to Section 2.11 of the
Separation and Distribution Agreement and the assumption by AT&T Broadband of
the deferred tax liability pursuant to Section 3.7(f) of the Tax Sharing
Agreement constitute a portion of the consideration payable in respect of the
AT&T Broadband Group's interest in TWE.
SECTION 9.18. QUIPS. (a) If on the date that would otherwise be the
Closing Date the QUIPS Exchange does not occur (such date, the "QUIPS Failure
Date"), then subject to Section 9.18(c), the Closing Date shall be delayed as
provided in this Section 9.18. Following the QUIPS Failure Date, AT&T and
Comcast will use their commercially reasonable efforts to consummate the QUIPS
Exchange. If Microsoft thereafter agrees to consummate the QUIPS Exchange, then
subject to the QUIPS Exchange occurring on the Closing Date, the Closing Date
shall occur on the earliest date practicable or, if on such date all conditions
to the Mergers set forth in Article 10, other than conditions that by their
nature are to be satisfied at the Effective Time, are not satisfied or (to the
extent permissible) waived, on the earliest date after such date on which all
such conditions are satisfied or (to the extent permissible) waived unless this
Agreement is previously terminated in accordance with its terms.
(b) In the event that the Closing Date does not occur within thirty (30)
days of the QUIPS Failure Date, AT&T may for a period of fifteen (15) calendar
days commencing on such 30th day elect to terminate this Agreement by giving
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two Business Days' written notice to Comcast of its intent to terminate this
Agreement pursuant to this Section 9.18(b). Notwithstanding the foregoing,
AT&T's notice to terminate this Agreement pursuant to this Section 9.18(b)
shall not be effective if, prior to the expiration of such two Business Day
period, Comcast delivers a written notice pursuant to and in accordance with
the second sentence of Section 9.18(c) (which notice complies with the proviso
thereof), unless Comcast fails to close within 60 days of the QUIPS Failure
Date, in which event AT&T shall be entitled to terminate this Agreement.
(c) If the Closing Date has not occurred pursuant to Section 9.18(a) and
AT&T has not effectively terminated this Agreement pursuant to Section 9.18(b),
Comcast shall have the right to delay the consummation of the Mergers and the
other transactions contemplated by this Agreement until the date that is one
hundred eighty (180) calendar days after the QUIPS Failure Date. At any time
prior to the expiration of the 180 calendar day period referred to in the
preceding sentence, Comcast may elect to consummate the Mergers and the other
transactions contemplated by this Agreement on ten (10) Business Days' written
notice to AT&T in which event the Closing Date shall occur on the date
specified by Comcast in its notice or, if on such date all conditions to the
Mergers set forth in Article 10, other than conditions that by their nature are
to be satisfied at the Effective Time, are not satisfied or (to the extent
permissible) waived, on the earliest date after such date on which all such
conditions are satisfied or (to the extent permissible) waived; provided that
if Comcast delivers a notice pursuant to this Section 9.18(c) prior to the
second Business Day occurring after the forty-fifth calendar day after the
QUIPS Failure Date, Comcast must specify a date in its notice that is no later
than the sixtieth day after the QUIPS Failure Date. Notwithstanding the
foregoing, the Closing Date shall occur no later than the date that is one
hundred eighty (180) calendar days after the QUIPS Failure Date or, if on such
date all conditions to the Mergers set forth in Article 10, other than
conditions that by their nature are to be satisfied at the Effective Time, are
not satisfied or (to the extent permissible) waived, on the earliest date after
such date on which all such conditions are satisfied or (to the extent
permissible) waived.
(d) If at any time during the 180 calendar day period specified above, it
appears reasonably unlikely that the QUIPS Exchange shall occur, AT&T and
Comcast will use their commercially reasonable efforts to obtain, on terms
reasonably acceptable to Comcast and AT&T, the consent of Microsoft to the
QUIPS Transfer. If Microsoft consents to the QUIPS Transfer in accordance with
the preceding sentence and on any Closing Date specified or determined pursuant
to Section 9.18(c) the QUIPS Exchange does not occur, the QUIPS Transfer shall
be effected on such Closing Date.
(e) On any Closing Date specified or determined pursuant to Section
9.18(c), if neither the QUIPS Exchange nor the QUIPS Transfer occurs, AT&T
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Broadband will, immediately prior to the Separation on such Closing Date, issue
a note to AT&T representing Indebtedness in an amount equal to the QUIPS Fair
Market Value as determined as set forth below in Section 9.18(f) in exchange
for cash proceeds equal to such amount and AT&T Broadband will immediately
after receipt of such cash proceeds dividend such cash proceeds to AT&T, as
holder of all of the AT&T Broadband Common Stock.
(f) Within 10 (ten) Business Days after the QUIPS Failure Date, each of
AT&T and Comcast shall deliver to the other an appraisal conducted by an
investment banking firm of nationally recognized standing of the fair market
value of the QUIPS at such time. If the higher of the two appraisals is not
greater than 110% of the lower of the two appraisals, then the average of the
two appraisals shall be deemed to be the fair market value of the QUIPS. If the
higher of the two appraisals is greater than 110% of the lower of the two
appraisals, then the two investment banking firms shall promptly select a third
investment banking firm of nationally recognized standing acceptable to Comcast
and AT&T and shall cause such firm to deliver within ten (10) Business Days of
the delivery of the initial appraisals an appraisal of the fair market value of
the QUIPS. In the event such third appraisal is required pursuant to the
immediately preceding sentence, the fair market value of the QUIPS as
determined by such third appraisal shall be averaged with the initial appraisal
that was closer in value to such third appraisal and such average shall be
deemed to be the fair market value of the QUIPS. The fair market value of the
QUIPS as determined pursuant to this Section 9.18(f) is referred to herein as
the "QUIPS Fair Market Value" and shall be determined without regard to accrued
and unpaid interest on the QUIPS.
(g) Notwithstanding any other provision of this Agreement, if the Closing
Date is delayed pursuant to this Section 9.18, the End Date shall be extended
for the aggregate period of the delay; provided that the End Date shall in no
event be extended pursuant to this Section 9.18(g) for a period exceeding one
hundred eighty-five (185) calendar days after the QUIPS Failure Date.
(h) In the event that the QUIPS Exchange and the QUIPS Transfer do not
occur, AT&T Broadband shall have no liability in respect of the QUIPS other
than as provided in Section 5.03(e) of the Separation and Distribution
Agreement and subject to Section 9.18(e).
(i) AT&T and Comcast acknowledge and agree that in the event of an
Exchange Closing (as defined in the Exchange Agreement), notwithstanding
anything to the contrary in the Indenture or in the Trust Agreement, interest
in respect of the Debentures and Distributions (as defined in the Exchange
Agreement) in respect of the QUIPS shall accrue up to and including the day
immediately prior to, and shall be payable on, the date of the Exchange
Closing.
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(j) For purposes of this Section 9.18, "QUIPS Transfer" means the
following actions: (i) the execution by AT&T Broadband of documents and
agreements identical in form, substance and economic effect to the holder of
QUIPS to the existing QUIPS transaction documents (including, but not limited
to, the Trust Agreement, the Trust Common Securities, the Indenture, the
Debentures, the Guarantee Agreement, the Expense Agreement and the Registration
Rights Agreement and any documents or agreements executed in connection
therewith or delivered pursuant thereto, but excluding any such documents or
provisions of such documents relating to the warrants issued to Microsoft in
connection with the sale of the QUIPS or relating to commercial transactions
entered into in connection with the issuance of the QUIPS), except such
differences as are required to reflect the identity of AT&T Broadband (rather
than AT&T) as party to each thereof and except that Article 12 of Indenture
will provide that, prior to the Mergers, the Debentures will be convertible
into AT&T Broadband Common Stock and following the Mergers, the Debentures will
be convertible into shares of Parent Common Stock, in each case, at a
conversion price appropriately adjusted for the Distribution and the Mergers,
(ii) the delivery by AT&T Broadband of all such replacement QUIPS transaction
documents other than the replacement Trust Common Securities to AT&T or its
designee and retention by AT&T Broadband of the replacement Trust Common
Securities, (iii) the delivery by AT&T or AT&T's designee of all such
replacement QUIPS transaction documents received from AT&T Broadband to
Microsoft in exchange for transfer by Microsoft to AT&T of the existing QUIPS
transaction documents and the release of AT&T and its subsidiaries in full from
any obligations under any of such agreements and the termination of all rights
of Microsoft thereunder other than the documents and rights relating to the
warrants issued to Microsoft by AT&T in connection with the sale of the QUIPS
and (iv) the termination of any further liability of the AT&T Broadband Group
in respect of the QUIPS; all of the foregoing to be on terms reasonably
satisfactory to AT&T and AT&T Broadband.
SECTION 9.19. Index Stock. Each of Parent, Comcast and AT&T agrees to use
its reasonable best efforts to cause (i) if the A Shareholder Approval is
obtained, the Parent Class A Common Stock to be included in the Index at the
Effective Time or as promptly thereafter as possible or (ii) if the A
Shareholder Approval is not obtained, the Parent Class C Common Stock to be
included in the Index at the Effective Time or as promptly thereafter as
possible.
SECTION 9.20. Use of Name and Logo. (a) For a period of 180 calendar days
after the Closing Date, each of Parent and its Subsidiaries will be granted a
limited, non-exclusive, non-transferable, royalty-free license to use the
trademarks, trade names, service marks, service names, logos and other indicia
of origin of AT&T or any of its Subsidiaries (the "AT&T Marks") to the same
extent, and in the same manner as, used at the Effective Time; provided that
each of Parent and its Subsidiaries will exercise commercially reasonable
efforts to
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remove all AT&T Marks from the AT&T Broadband Assets as soon as reasonably
practicable, and in any event within 180 calendar days, following the Closing
Date. After 180 calendar days following the Closing Date, Parent and its
Subsidiaries shall have no further rights or licenses to use any of the AT&T
Marks in connection with any products or services.
(b) During the 180 calendar day period provided above, Parent and its
Subsidiaries shall ensure that any products or services being provided in
connection with the AT&T Marks are provided in accordance with standards of
quality equal to or greater than the standards of quality relating to products
and services which AT&T and its Subsidiaries provided under the AT&T Marks
immediately prior to the Effective Time. AT&T may conduct during regular
business hours and with ten (10) calendar days prior notice an examination of
products and services being provided by Parent or its Subsidiaries under the
AT&T Marks at Parent's facilities to determine compliance of such products and
services with the applicable standards of quality. If such products and
services shall, in the reasonable opinion of AT&T, fail to conform with such
standards of quality AT&T shall so notify Parent. Upon such notification Parent
and its Subsidiaries shall have a reasonable time within which to conform with
the standards of quality.
(c) Notwithstanding the foregoing, nothing in this Section 9.20 will
require any of Parent and its Subsidiaries to remove or discontinue using any
such name or mark that is affixed to converters or other items already
installed in or to be used in customer homes or properties and neither Parent
nor any of its Subsidiaries will have any liability in respect thereof;
provided that at the first time Parent or its Subsidiaries shall have access to
such converters or other items (e.g., for repair or replacement), Parent or its
Subsidiaries shall completely obliterate or affix a label that completely
obscures any AT&T Mark on such converters or other items.
SECTION 9.21. Exchange Agreement. Concurrently with the execution of this
Agreement, AT&T and Parent are executing the Admission Agreement pursuant to
which AT&T and Parent are (i) agreeing to effect the Exchange and, if
necessary, the unwind of the QUIPS Exchange, as provided in the Exchange
Agreement, (ii) becoming parties to the Exchange Agreement and (iii) making the
representations and warranties referred to in Sections 9.01(b) and 9.01(c),
respectively, thereof. AT&T will provide information to Comcast in order to
permit Comcast to satisfy its obligations under Section 6.06(b) of the Exchange
Agreement, subject to applicable pre-existing third party confidentiality
restrictions and subject to applicable law. AT&T and Parent agree that
Microsoft will be a third party beneficiary of the first sentence of this
Section 9.21.
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SECTION 9.22. Significant Excepted Transactions. (a) AT&T may enter into
an agreement relating to a Significant Excepted Transaction but only if such
agreement would not reasonably be expected to result in a delay in the
consummation of the transactions contemplated by this Agreement past the End
Date; provided that, in such event, at the request of Comcast, the End Date
shall be extended by the reasonably expected period of delay in the
consummation of the transactions contemplated by this Agreement caused by such
Significant Excepted Transaction up to 60 days.
(b) If AT&T proposes to enter into an agreement relating to a Significant
Excepted Transaction that would reasonably be expected to result in a delay in
the consummation of the transactions contemplated by this Agreement past the
End Date but which would not reasonably be expected to result in a delay in the
consummation of the transactions contemplated by this Agreement to a date that
is more than sixty (60) calendar days after the End Date, then at the request
of AT&T, AT&T and Comcast will use commercially reasonable efforts to obtain
the consent of Microsoft to extend the date specified in Section 10.01(c) of
the Exchange Agreement to the date after the End Date (which date shall be no
later than sixty (60) calendar days after the End Date) on which it is
reasonably anticipated that the transactions contemplated by this Agreement may
be consummated if AT&T were to enter into the proposed agreement relating to
the Significant Excepted Transaction. If Microsoft does not agree to so extend
the date specified in Section 10.01(c) of the Exchange Agreement, AT&T may not
enter into the proposed agreement relating to the Significant Excepted
Transaction. If Microsoft does agree to so extend such date, AT&T may enter
into the proposed agreement relating to the Significant Excepted Transaction;
provided that AT&T agrees to pay and be responsible for any costs, expenses or
fees payable in connection with obtaining the consent of Microsoft to so extend
such date and to indemnify AT&T Broadband from any such costs, expenses or
fees. In the event AT&T enters into the agreement relating to the Significant
Excepted Transaction, the End Date shall be extended to the same date that
Microsoft has agreed to extend the date specified in Section 10.01(c) of the
Exchange Agreement but in no event more than 60 days after the prior End Date.
(c) AT&T may not enter into any agreement relating to a Significant
Excepted Transaction that would reasonably be expected to result in a delay in
the consummation of the transactions contemplated by this Agreement to a date
that is more than sixty (60) calendar days after the End Date.
(d) For purposes of this Section 9.22, the reasonably expected delay in
the consummation of the transactions contemplated by this Agreement that would
result from a Significant Excepted Transaction shall be determined as of the
date that AT&T would propose to enter into an agreement relating to a
Significant Excepted Transaction.
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SECTION 9.23. Comcast's AT&T Stock. (a) (i) Prior to the Distribution
Date, AT&T shall designate a series of preferred shares, par value $1.00 per
share, of AT&T as the "Series K Exchangeable Preferred Stock" (the "AT&T
Exchangeable Preferred Stock"). The AT&T Exchangeable Preferred Stock issued in
accordance with Section 9.23(a)(ii) shall in the aggregate be mandatorily
exchangeable on the twenty-third (23rd) Combined Trading Day following the
Closing Date (the "Exchange Date") into a number of shares of AT&T Common Stock
equal to the Exchange Amount (as adjusted to account for any stock split,
dividend, reclassification, recapitalization, stock combination or similar
event the record date for which is after the Record Date and on or before the
Exchange Date; provided that, in the event AT&T declares a stock dividend the
record date for which is the Distribution Date (other than the Distribution),
then (x) in lieu of shares of AT&T Common Stock the AT&T Exchangeable Preferred
Stock shall instead be exchangeable into a combination of AT&T Common Stock
and, for each such share of AT&T Common Stock, such shares of stock as are
distributed upon each share of AT&T Common Stock in such stock dividend (the
"Dividend Stock") and (y) the number of shares of AT&T Common Stock and
Dividend Stock for which the shares of AT&T Exchangeable Preferred Stock shall
be exchangeable shall be determined according to a formula based upon the
formula provided in the definition of "Exchange Amount," appropriately adjusted
to account for such stock dividend by including the Trading Value or NYSE
Trading Value, as the case may be, of such Dividend Stock in such formula), it
being understood that the 10% limitation set forth in the definition of
Exchange Amount shall apply to each class of stock to be issued in the
exchange. Subject to the foregoing, the AT&T Exchangeable Preferred Stock shall
have such rights, preferences and limitations as AT&T and Comcast shall
mutually agree prior to the date that is two Business Days prior to the Record
Date.
(ii) Immediately prior to the Record Date, Comcast shall exchange or
cause to be exchanged each share of AT&T Common Stock held by Comcast or
by any Comcast Subsidiary for one share of AT&T Exchangeable Preferred
Stock and AT&T and Comcast shall make customary representations and
warranties in connection therewith.
(b) If immediately after giving effect to the mandatory exchange on the
Exchange Date pursuant to Section Section 9.23(a)(i), Comcast and the Comcast
Subsidiaries own more than 5% of the outstanding shares of AT&T Common Stock,
Comcast agrees that it will sell or cause to be sold such excess shares within
one year after the Exchange Date. Prior to the time that such excess shares are
sold, Comcast agrees that it will vote or cause to be voted such excess shares
on all matters submitted to shareholders of AT&T in the same proportion as all
other holders of such stock vote on such matter. In the event that, as of the
Exchange Date, all of the excess shares could not be sold under Rule 144 under
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the 1933 Act within three months of the Exchange Date, AT&T shall provide
customary registration rights in respect of such excess shares. The provisions
of this Section 9.23(b) shall also apply to any Dividend Stock.
(c) AT&T shall not effect any stock dividend the record date for which is
between the date following the Record Date and the Exchange Date, inclusive.
(d) The shares of AT&T Common Stock (and Dividend Stock, if any) issued on
exchange of the AT&T Exchangeable Preferred Stock shall be considered
Registrable Securities (as defined in the AT&T Registration Rights Agreement),
but subject to the last sentence of such definition.
ARTICLE 10
CONDITIONS TO THE MERGERS
SECTION 10.01. Conditions to the Obligations of Each Party. The
obligations of each party hereto to consummate the Mergers are subject to the
satisfaction of the following conditions:
(a) the Comcast Shareholders' Approval shall have been obtained;
(b) the AT&T Shareholders' Approval shall have been obtained;
(c) any applicable waiting period under the HSR Act relating to the
Mergers or the other transactions contemplated hereby shall have expired or
been terminated;
(d) no material provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the consummation of the
Mergers or the other transactions contemplated hereby;
(e) the Registration Statement shall have been declared effective and no
stop order suspending the effectiveness of the Registration Statement shall be
in effect and no proceedings for such purpose shall be pending before or
threatened by the SEC;
(f) the shares of Parent Common Stock to be issued in the Mergers (other
than the shares of Parent Class B Common Stock) or reserved for issuance in
connection with the Mergers pursuant to Section 9.12 shall have been approved
for listing on Nasdaq, subject to official notice of issuance;
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(g) all License Consents, Franchise Consents, PUC Consents and other
consents and waivers, including waivers of all Purchase Rights, shall have been
obtained, be in effect and be subject to no limitations, conditions,
restrictions or obligations, except for such consents the failure of which to
obtain would not, and such limitations, conditions, restrictions or obligations
as would not, individually or in the aggregate, reasonably be expected to have
a Comcast Material Adverse Effect or an AT&T Broadband Material Adverse Effect;
(h) no court, arbitrator or other Governmental Authority shall have issued
any order, and there shall not be any statute, rule or regulation restraining
or prohibiting the effective operation of the business of Parent or the AT&T
Broadband Group, AT&T Broadband and the AT&T Broadband Subsidiaries or Comcast
and the Comcast Subsidiaries after the Effective Time that would, individually
or in the aggregate, reasonably be expected to have a Comcast Material Adverse
Effect or an AT&T Broadband Material Adverse Effect;
(i) the Separation and the Distribution shall have been completed in
accordance in all material respects with the terms of the Separation and
Distribution Agreement such that, among other things, immediately prior to the
Effective Time, AT&T Broadband and the AT&T Broadband Subsidiaries are no
longer AT&T Subsidiaries;
(j) AT&T shall have obtained a supplemental private letter ruling or
rulings from the IRS, in form and substance reasonably satisfactory to AT&T and
Comcast, on the basis of submissions to the IRS which are reasonably
satisfactory to AT&T and Comcast (provided that Comcast shall not be entitled
to review those portions of any submission to the IRS that contain (1)
information that relates to the AT&T Communications Business (as defined in the
Separation and Distribution Agreement) or (2) information disclosure of which
to Comcast could (A) violate a confidentiality or similar agreement between
AT&T or one of the AT&T Subsidiaries and another Person or (B) have a
significant adverse effect on AT&T or any of its businesses), which shall be in
effect on the Closing Date, to the effect that (x) the Separation and
Distribution qualify as tax-free transactions pursuant to Sections 355 and
368(a) of the Code, (y) the Mergers will not cause the Separation and
Distribution to fail to be qualified as a tax-free transaction pursuant to
Section 355 of the Code and (z) the Separation and Distribution will not cause
the distribution by AT&T of all of the common stock of AT&T Wireless Services,
Inc. or of Liberty Media Corporation to fail to qualify as tax- free
transactions pursuant to Sections 355 and 368(a) of the Code. In lieu of
obtaining the supplemental private letter ruling from the IRS described in the
immediately preceding sentence, AT&T and Comcast may mutually agree to obtain
an opinion to the same effect from tax counsel of a nationally recognized
reputation mutually acceptable to AT&T and Comcast in form and substance
reasonably satisfactory to AT&T and Comcast, on the basis of certain facts,
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representations and assumptions set forth in such opinion, dated the Closing
Date. In rendering the opinion described in the preceding sentence, such tax
counsel may request and shall be entitled to rely upon certain documentation,
including customary representations of officers of AT&T and Comcast;
(k) each of the Transaction Agreements shall have been executed and
delivered by each of the parties thereto; and
(l) AT&T shall (i) have obtained Note Consents (which shall be in full
force and effect), or defeased, purchased or acquired Indebtedness (or any
combination of the foregoing), in respect of at least 90% in aggregate
principal amount of the securities outstanding as of the date of this Agreement
issued under the Notes Indenture and (ii) not have issued after the date of
this Agreement any securities under the Notes Indenture if consummation of the
Distribution or the other transactions contemplated hereby would or may require
a consent of the holders of such securities.
SECTION 10.02. Conditions to the Obligations of AT&T. The obligations of
AT&T to consummate the AT&T Broadband Merger are subject to the satisfaction of
the following further conditions:
(a) (i) Comcast shall have performed in all material respects all of its
obligations hereunder required to be performed by it at or prior to the
Effective Time, (ii) the representations and warranties of Comcast contained in
Sections 5.02, 5.03, 5.05, 5.08, 5.22 and 5.25 shall be true in all material
respects at and as of the Effective Time, as if made at and as of such time
(other than representations and warranties that address matters only as of a
certain date, which shall be true and correct as of such date), (iii) the other
representations and warranties of Comcast contained in this Agreement and in
any certificate or other writing delivered by Comcast pursuant hereto,
disregarding all qualifications and exceptions contained therein relating to
materiality or a Comcast Material Adverse Effect or any similar standard or
qualification, shall be true and correct at and as of the Effective Time, as if
made at and as of such time (other than representations or warranties that
address matters only as of a certain date, which shall be true and correct as
of such date), with only such exceptions as, individually or in the aggregate,
have not had and would not reasonably be expected to have a Comcast Material
Adverse Effect and (iv) AT&T shall have received a certificate signed by an
executive officer of Comcast to the foregoing effect;
(b) AT&T shall have received an opinion of Wachtell, Lipton, Rosen & Katz
in form and substance reasonably satisfactory to AT&T, on the basis of certain
facts, representations and assumptions set forth in such opinion, dated the
Closing Date, to the effect that the Mergers will be treated for United States
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federal income tax purposes as 351 Transactions. In rendering such opinion,
Wachtell, Lipton, Rosen & Katz may require and shall be entitled to rely upon
certain documentation, including customary representations of officers of
Comcast and AT&T; and
(c) Comcast Shareholder (or its successor) shall have performed in all
material respects its obligations under the Support Agreement, and the Support
Agreement shall be in full force and effect.
SECTION 10.03. Conditions to the Obligations of Comcast. The obligations
of Comcast to consummate the Comcast Merger are subject to the satisfaction of
the following further conditions:
(a) (i) AT&T shall have performed in all material respects all of its
obligations hereunder required to be performed by it at or prior to the
Effective Time, (ii) the representations and warranties of AT&T contained in
Sections 6.02, 6.03, 6.05, 6.06(b), 6.06(c), 6.08, 6.22, 6.26 and 6.27 of this
Agreement shall be true in all material respects at and as of the Effective
Time, as if made at and as of such time (other than representations and
warranties that address matters only as of a certain date, which shall be true
and correct as of such date), (iii) the other representations and warranties of
AT&T contained in this Agreement and in any certificate or other writing
delivered by AT&T pursuant hereto disregarding all qualifications and
exceptions contained therein relating to materiality or AT&T Broadband Material
Adverse Effect or any similar standard or qualification shall be true at and as
of the Effective Time, as if made at and as of such time (other than
representations and warranties that address matters only as of a certain date,
which shall be true and correct as of such date), with only such exceptions as,
individually or in the aggregate, have not had and would not reasonably be
expected to have an AT&T Broadband Material Adverse Effect and (iv) Comcast
shall have received a certificate signed by an executive officer of AT&T to the
foregoing effect; and
(b) Comcast shall have received an opinion of Davis Polk & Wardwell in
form and substance reasonably satisfactory to Comcast, on the basis of certain
facts, representations and assumptions set forth in such opinion, dated the
Closing Date, to the effect that the Mergers will be treated for United States
federal income tax purposes as a 351 Transactions, In rendering such opinion,
Davis Polk & Wardwell may require and shall be entitled to rely upon certain
documentation, including customary representations of officers of Comcast and
AT&T.
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ARTICLE 11
TERMINATION
SECTION 11.01. Termination. This Agreement may be terminated and the
Mergers may be abandoned at any time prior to the Effective Time
(notwithstanding any approval of this Agreement by the shareholders of Comcast
or AT&T or AT&T Broadband):
(a) by mutual written agreement of Comcast and AT&T;
(b) by either Comcast or AT&T, if:
(i) the Mergers have not been consummated on or before March 1, 2003
(the "End Date"); provided, further, that the right to terminate this
Agreement pursuant to this Section 11.01(b)(i) shall not be available to
any party hereto whose breach of any provision of this Agreement results
in the failure of the Mergers to be consummated by the End Date;
(ii) (A) there shall be any material law or regulation that makes
consummation of the Mergers or any of the other material transactions
contemplated hereby illegal or otherwise prohibited or (B) any judgment,
injunction, order or decree of any court or other Governmental Authority
having competent jurisdiction enjoining the parties hereto from
consummating the Mergers or any of the other material transactions
contemplated hereby is entered and such judgment, injunction, order or
decree shall have become final and non-appealable;
(iii) the Comcast Shareholders' Approval shall not have been obtained
at the Comcast Shareholders' Meeting (or any adjournment or postponement
thereof); or
(iv) the AT&T Shareholders' Approval shall not have been obtained at
the AT&T Shareholders' Meeting (or any adjournment or postponement
thereof);
(c) by AT&T if:
(i) Comcast's Board of Directors shall have failed to call the
Comcast Shareholders' Meeting in accordance with Section 7.02(a), or shall
have breached its obligation under Section 7.02(b);
(ii) a breach of any representation, warranty, covenant or agreement
on the part of Comcast set forth in this Agreement shall have occurred
that would cause the condition set forth in Section 10.02(a) not to
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be satisfied, and such condition shall be incapable of being satisfied by
the End Date;
(iii) AT&T shall have failed to call the AT&T Shareholders' Meeting
pursuant to the exercise of its delay rights under Section 8.02(a) for a
period of 120 calendar days from the date the SEC has notified the parties
of its willingness to declare the Registration Statement effective; or
(iv) AT&T shall have the right to terminate this Agreement pursuant
to Section 9.18(b), but subject to the provisions of Section 9.18(b);
(d) by Comcast if:
(i) AT&T's Board of Directors shall have failed to recommend or
withdrawn, or modified in a manner adverse to Comcast, its approval or
recommendation of this Agreement, or shall have failed to call the AT&T
Shareholders' Meeting in accordance with Section 8.02(a) (or AT&T's Board
of Directors resolves to do any of the foregoing);
(ii) AT&T shall have willfully and materially breached any of its
obligations under Section 8.02(b) or 8.03;
(iii) a breach of any representation, warranty, covenant or agreement
on the part of AT&T set forth in this Agreement shall have occurred that
would cause the condition set forth in Section 10.03(a) not to be
satisfied, and such condition shall be incapable of being satisfied by the
End Date; or
(iv) AT&T shall have failed to call the AT&T Shareholders' Meeting
pursuant to the exercise of its delay rights under Section 8.02(a) for a
period of 90 calendar days from the date the SEC has notified the parties
of its willingness to declare the Registration Statement effective.
The party hereto desiring to terminate this Agreement pursuant to this
Section 11.01 (other than pursuant to Section 11.01(a)) shall give notice of
such termination to the other parties.
SECTION 11.02. Effect of Termination. If this Agreement is terminated
pursuant to Section 11.01, this Agreement shall become void and of no effect
without liability of any party hereto (or any shareholder, director, officer,
employee, agent, consultant or representative of such party) to the other
parties hereto, except that (a) the agreements contained in this Section 11.02,
in the Confidentiality Agreements (subject to the terms thereof), and in
Section 11.03
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shall survive the termination hereof and (b) no such termination shall relieve
any party hereto of any liability or damages resulting from any intentional
breach by such party of a covenant or other agreement included in this
Agreement or any knowing breach of a representation or warranty included in
this Agreement.
SECTION 11.03. Fees and Expenses. (a) Except as otherwise provided in this
Section 11.03, all costs and expenses incurred in connection with this
Agreement and the other Transaction Agreements shall be paid by the party
incurring such cost or expense whether or not the Mergers are consummated.
Notwithstanding the foregoing, (i) AT&T shall pay any costs and expenses
incurred by AT&T Broadband or any AT&T Broadband Subsidiary in connection with
this Agreement and the other Transaction Agreements that are in excess of $120
million (exclusive of any costs and expenses incurred by AT&T Broadband or any
AT&T Broadband Subsidiary as described in clauses (ii), (iii), (iv) and (v) of
this sentence), (ii) AT&T Broadband shall pay any costs and expenses incurred
in connection with any financing arrangements entered into by AT&T Broadband as
contemplated by Section 9.15, (iii) AT&T Broadband shall pay any costs and
expenses (to the extent not paid by Parent) incurred in connection with the
actions contemplated by Section 9.16, (iv) AT&T Broadband shall pay 50% of any
costs and expenses incurred by AT&T or any of its Subsidiaries in connection
with obtaining the Note Consents (through either a one-time cash payment of a
consent fee or through a coupon increase or a combination thereof) that are in
excess of $50 million, subject to and as determined in accordance with Sections
11.03(b) and 11.03(c), and (v) AT&T (other than any AT&T Broadband Entity) and
Comcast each shall pay 50% of any fees and expenses, other than attorneys' and
accounting fees and expenses, incurred in relation to the printing, filing and
mailing of the Registration Statement and the Joint Proxy Statement.
(b) The costs of obtaining the Note Consents shall include (i) any
transaction costs paid in obtaining the Note Consents (including, without
limitation, the costs, expenses and commissions of any solicitation agent,
counsel, financial advisors and underwriters, any printing and mailing costs,
any SEC filing fees, rating agency fees and any costs of the trustee under the
Notes Indenture for which AT&T or any Affiliate thereof is responsible) plus
(ii)(A) the amount of any one-time cash payment made to obtain a Note Consent,
and (B) with respect to an increase in the coupon on any of the series of
securities issued under the Notes Indenture in connection with obtaining a Note
Consent, the amount equal to the excess of the present value of the increased
coupon on such series of securities over the present value of the coupon on
such series of securities immediately prior to the increase of the coupon, in
each case calculated based on "market convention" (e.g., calculated on a 30/360
day basis in the case of a domestic fixed rate note and on an actual/360 day
basis in the case of a floating rate note, etc.) using a discount rate equal to
the Market Rate (determined as specified below in Section 11.03(c)). The
amounts described in clauses (i) and
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(ii) of the immediately preceding sentence shall be reduced by the amount of
any present or future tax benefit to AT&T as a result of making any payments of
such amounts. Such tax benefit shall be calculated by multiplying the payment
giving rise to the tax benefit by the highest combined federal, state and local
marginal corporate tax rate in effect as of the Effective Time and, in the case
of any future tax benefit, by discounting such future tax benefit at the Market
Rate.
(c) The Market Rate shall be determined by mutual agreement of AT&T and
Comcast. In the event AT&T and Comcast cannot reach agreement within five (5)
calendar days of the date of determination (as set forth below), the Market
Rate shall be determined by a process in which AT&T and Comcast will mutually
appoint four broker/dealer firms of national reputation to determine the then-
current market yield for each impacted series of securities. After each firm
has determined the then-current market yield for each impacted series of
securities, the arithmetic average of the four rates will be the Market Rate.
In determining each such Market Rate, the impacted series of securities shall
be deemed to be securities of AT&T, after giving effect to the Separation,
Distribution and the Mergers. Any determination of Market Rate pursuant to this
Section 11.03(c) shall be final and binding. Each of AT&T and Comcast shall
bear the fees and expenses of the broker/dealer firms which it appoints in
making such determinations. The Market Rate shall be determined in the case of
clause (ii)(B) of Section 11.03(b) as of the settlement date of the
transaction.
(d) If this Agreement is terminated pursuant to Section 11.01(b)(iii) or
11.01(c)(i), Comcast shall pay to AT&T a termination fee of $1.5 billion in
cash (without duplication) (the "Comcast Termination Fee").
(e) If this Agreement is terminated pursuant to Section 11.01(d)(i) or
11.01(d)(ii), AT&T shall pay to Comcast a termination fee of $1.5 billion in
cash (without duplication) (the "AT&T Termination Fee").
(f) If (i) this Agreement is terminated pursuant to Section 11.01(b)(iv),
(ii) after the date hereof and prior to the AT&T Shareholders' Meeting, an AT&T
Broadband Acquisition Proposal is made or continued or renewed by any Person
and not withdrawn prior to the AT&T Shareholders' Meeting and (iii) within one
year of the AT&T Shareholders' Meeting, either (A) AT&T or any AT&T Subsidiary
enters into an agreement with any Person with respect to an AT&T Broadband
Acquisition Proposal, that provides for (I) transfer or issuance of securities
representing more than 50% of the equity or voting interests in AT&T or the
AT&T Broadband Group or 75% of the equity or voting interests in any AT&T
Significant Broadband Subsidiary, (II) a merger, consolidation,
recapitalization or another transaction resulting in the issuance of cash or
securities of any Person (other than a reincorporation or a holding company
merger that results in the AT&T shareholders owning all of the equity interests
in
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the surviving corporation) to AT&T shareholders in exchange for more than 50%
of the equity or voting interests in AT&T or the AT&T Broadband Group or 75% of
the equity or voting interests in any AT&T Significant Broadband Subsidiary or
(III) transfer of assets, securities or ownership interests representing more
than 50% of the consolidated assets or EBITDA generating power of AT&T or the
AT&T Broadband Group or 75% of the consolidated assets or EBITDA generating
power of any AT&T Significant Broadband Subsidiary or (B) any Person commences
a tender offer that results in the acquisition by the Person making the tender
offer of a majority of the AT&T Common Stock, then AT&T shall pay to Comcast
the AT&T Termination Fee.
(g) Any payment of the Comcast Termination Fee or AT&T Termination Fee
pursuant to this Section 11.03 shall be made within one Business Day after
termination of this Agreement, except that any payment of the AT&T Termination
Fee pursuant to Section 11.03(f) shall be paid within one Business Day after it
becomes payable. Any payment of the Comcast Termination Fee or AT&T Termination
Fee shall be made by wire transfer of immediately available funds. If any party
hereto fails to pay to the other parties promptly any fee or expense due
hereunder (including the Comcast Termination Fee or AT&T Termination Fee), the
defaulting party shall pay the costs and expenses (including legal fees and
expenses) in connection with any action, including the prosecution of any
lawsuit or other legal action, taken to collect payment, together with interest
on the amount of any unpaid fee at the publicly announced prime rate of The
Bank of New York in New York City from the date such fee was required to be
paid to the date it is paid.
(h) Notwithstanding any other provision of this Agreement, any payment by
AT&T of the AT&T Termination Fee or any payment by Comcast of the Comcast
Termination Fee, in each case pursuant to Section 11.03, shall relieve (i) AT&T
and AT&T Broadband or (ii) Comcast, as the case may be, from any further
liability or damages under any provision of this Agreement (other than Section
11.03(a)) or in connection with this Agreement and the transactions
contemplated hereby.
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. Notices. All notices, requests and other communications to
any party hereto shall be in writing (including facsimile transmission) and
shall be given,
if to AT&T, to:
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AT&T Corp.
295 North Maple Avenue
Basking Ridge, New Jersey 07920
Attention: Marilyn J. Wasser
Fax: (908) 953-8360
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Richard D. Katcher
Steven A. Rosenblum
Stephanie J. Seligman
Fax: (212) 403-2000
if to Comcast or Merger Sub, to:
Comcast Corporation
1500 Market Street
Philadelphia, Pennsylvania 19102
Attention: General Counsel
Fax: (215) 981-7794
with a copy to
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Dennis S. Hersch
William L. Taylor
Fax: (212) 450-4800
or such other address or facsimile number as such party hereto may hereafter
specify for such purpose by notice to the other parties hereto. All such
notices, requests and other communications shall be deemed received on the date
of receipt by the recipient thereof if received prior to 5 p.m. on a Business
Day, in the place of receipt. Otherwise, any such notice, request or
communication shall be deemed not to have been received until the next
succeeding Business Day in the place of receipt.
SECTION 12.02. Survival. The representations and warranties contained
herein and in any certificate or other writing delivered pursuant hereto shall
not survive the Effective Time or the termination of this Agreement. The AT&T
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Confidentiality Agreement shall terminate at the Effective Time. The covenants
and agreements herein that relate to actions to be taken at or after the
Effective Time shall survive the Effective Time.
SECTION 12.03. Amendments; No Waivers. (a) Subject to applicable law, any
provision of this Agreement may be amended or waived prior to the Effective
Time if, but only if, such amendment or waiver is in writing and is signed, in
the case of an amendment, by each of the parties hereto or, in the case of a
waiver, by each party against whom the waiver is to be effective; provided
that, after the adoption of this Agreement by the shareholders of Comcast or
AT&T, no such amendment or waiver shall be made or given that requires the
approval of the shareholders of Comcast or AT&T, respectively, unless such
required approval is obtained.
(b) No failure or delay by any party hereto in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 12.04. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that no party hereto may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other parties hereto.
SECTION 12.05. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to the conflicts of law rules of the State of New York.
SECTION 12.06. Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby shall
be brought in any federal court located in the State of New York or any New
York state court, and each of the parties hereto hereby consents to the
exclusive jurisdiction of such courts (and of the appropriate appellate courts
therefrom) in any such suit, action or proceeding and irrevocably waives, to
the fullest extent permitted by law, any objection that it may now or hereafter
have to the laying of the venue of any such suit, action or proceeding in any
such court or that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient form. Process in any such suit,
action or proceeding may be served on either party hereto anywhere in the
world, whether within or without the jurisdiction of any such court. Without
limiting the foregoing, each party hereto agrees that service of
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process on such party as provided in Section 12.01 shall be deemed effective
service of process on such party.
SECTION 12.07. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
SECTION 12.08. Counterparts; Effectiveness. This Agreement may be signed
in counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument. This Agreement
shall become effective when each party hereto shall have received a counterpart
hereof signed by the other parties hereto.
SECTION 12.09. Entire Agreement; No Third Party Beneficiaries. (a) This
Agreement, and the other Transaction Agreements, together with the
Confidentiality Agreements, constitute the entire agreement between the parties
hereto with respect to the subject matter of this Agreement and supersede all
prior agreements and understandings, both oral and written, between the parties
hereto with respect to the subject matter of this Agreement.
(b) 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 other Person any right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement, other than
Sections 4.01(e), 9.08, 9.11 and 9.14, the first sentence of Section 9.21 and
the last sentence of Section 12.03(a) (which is intended to be for the benefit
of the Persons covered thereby). AT&T shall be entitled to enforce the
provisions of Sections 4.03, 4.04 and 4.05 after the Effective Time.
SECTION 12.10. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party hereto.
Upon such a determination, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner so that the transactions
contemplated hereby be consummated as originally contemplated to the fullest
extent possible.
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SECTION 12.11. Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
or to enforce specifically the performance of the terms and provisions hereof
in any federal court located in the State of New York or any New York state
court, in addition to any other remedy to which they are entitled at law or in
equity.
SECTION 12.12. Schedules. Each of Comcast and AT&T has set forth
information in its respective disclosure schedule in a section thereof that
corresponds to the portion of the Section of this Agreement to which it
relates. A matter set forth in one section of the disclosure schedule need not
be set forth in any other section of the disclosure schedule so long as its
relevance to the latter section of the disclosure schedule or Section of the
Agreement is apparent on the face of the information disclosed in the
disclosure schedule. The fact that any item of information is disclosed in a
disclosure schedule shall not be construed to mean that such information is
required to be disclosed by this Agreement. Such information and the dollar
thresholds set forth herein shall not be used as a basis for interpreting the
terms "material" or "Material Adverse Effect" or other similar terms in this
Agreement, except as otherwise expressly set forth in such disclosure
schedules.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
AT&T CORP.
By: /s/ C. Michael Armstrong
-----------------------------------
Name: C. Michael Armstrong
Title: Chairman and Chief
Executive Officer
AT&T BROADBAND CORP.
By: /s/ Raymond E. Liguori
-----------------------------------
Name: Raymond E. Liguori
Title: President
COMCAST CORPORATION
By: /s/ Ralph J. Roberts
-----------------------------------
Name: Ralph J. Roberts
Title: Chairman
AT&T COMCAST CORPORATION
By: /s/ Brian L. Roberts
-----------------------------------
Name: Brian L. Roberts
Title: President
AT&T BROADBAND ACQUISITION
CORP.
By: /s/ Brian L. Roberts
-----------------------------------
Name: Brian L. Roberts
Title: President
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COMCAST ACQUISITION CORP.
By: /s/ Brian L. Roberts
-----------------------------------
Name: Brian L. Roberts
Title: President
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