Exhibit 2.6
EXCHANGE AGREEMENT
dated as of
December 7, 2001
between
MICROSOFT CORPORATION
and
COMCAST CORPORATION
TABLE OF CONTENTS
PAGE
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ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions..................................................................................... 1
ARTICLE 2
MOST FAVORED NATIONS
SECTION 2.01. Representations................................................................................. 8
SECTION 2.02. Most Favored Nations............................................................................ 8
SECTION 2.03. Amendments, Etc................................................................................. 11
SECTION 2.04. Dispute Resolution.............................................................................. 11
ARTICLE 3
EXCHANGE; ALTERNATIVE TRANSACTION
SECTION 3.01. Exchange........................................................................................ 11
SECTION 3.02. Exchange Closing................................................................................ 12
SECTION 3.03. Unwind of Exchange.............................................................................. 12
SECTION 3.04. Alternative Transaction......................................................................... 12
SECTION 3.05. Alternative Transaction Closing................................................................. 13
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF COMCAST
SECTION 4.01. Corporate Existence and Power................................................................... 13
SECTION 4.02. Corporate Authorization......................................................................... 14
SECTION 4.03. Authorization................................................................................... 14
SECTION 4.04. Noncontravention................................................................................ 14
SECTION 4.05. Valid Issuance.................................................................................. 14
SECTION 4.06. Ownership of Parent............................................................................. 15
SECTION 4.07. Capitalization.................................................................................. 15
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF MICROSOFT
SECTION 5.01. Corporate Existence and Power................................................................... 15
SECTION 5.02. Corporate Authorization......................................................................... 16
SECTION 5.03. Authorization................................................................................... 16
SECTION 5.04. Noncontravention................................................................................ 16
SECTION 5.05. Ownership of QUIPS.............................................................................. 16
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SECTION 5.06. Tax Representation.............................................................................. 16
ARTICLE 6
COVENANTS OF COMCAST
SECTION 6.01. Commitment of AT&T.............................................................................. 17
SECTION 6.02. Exchange Closing................................................................................ 17
SECTION 6.03. Alternative Transaction Closing................................................................. 17
SECTION 6.04. Registration Statement; Blue Sky Laws........................................................... 17
SECTION 6.05. Listing of Stock................................................................................ 18
SECTION 6.06. Merger Documentation............................................................................ 18
SECTION 6.07. Share Issuances................................................................................. 18
SECTION 6.08. AT&T Broadband Business......................................................................... 18
SECTION 6.09. Notification of Excluded Shares................................................................. 18
ARTICLE 7
COVENANTS OF MICROSOFT
SECTION 7.01. Closing......................................................................................... 19
SECTION 7.02. Ownership of QUIPS.............................................................................. 19
SECTION 7.03. Confidentiality................................................................................. 19
SECTION 7.04. Lockup.......................................................................................... 20
SECTION 7.05. Tax Matters..................................................................................... 20
ARTICLE 8
ADDITIONAL COVENANTS
SECTION 8.01. Reasonable Best Efforts; Further Assurances..................................................... 21
SECTION 8.02. Certain Filings................................................................................. 21
SECTION 8.03. Public Announcements............................................................................ 21
SECTION 8.04. Notice of Certain Events........................................................................ 21
SECTION 8.05. Indemnity....................................................................................... 22
SECTION 8.06. Limitation Of Liability......................................................................... 22
SECTION 8.07. Set-Top Box Commitment.......................................................................... 23
ARTICLE 9
CONDITIONS TO CLOSING
SECTION 9.01. Conditions to Obligation of Microsoft: Exchange Closing......................................... 23
SECTION 9.02. Conditions to Obligation of Microsoft: Alternative Transaction Closing.......................... 25
SECTION 9.03. Conditions to Obligation of AT&T and Comcast: Exchange Closing.................................. 27
SECTION 9.04. Conditions to Obligation of Comcast: Alternative Transaction Closing............................ 28
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ARTICLE 10
TERMINATION
SECTION 10.01. Grounds for Termination........................................................................ 28
SECTION 10.02. Effect of Termination.......................................................................... 29
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. Notices........................................................................................ 29
SECTION 11.02. Amendments and Waivers......................................................................... 30
SECTION 11.03. Expenses....................................................................................... 30
SECTION 11.04. Assignment..................................................................................... 31
SECTION 11.05. Governing Law.................................................................................. 31
SECTION 11.06. Counterparts; Third Party Beneficiaries........................................................ 31
SECTION 11.07. Entire Agreement............................................................................... 31
SECTION 11.08. Captions....................................................................................... 31
SECTION 11.09. Severability................................................................................... 31
SECTION 11.10. Survival....................................................................................... 31
Exhibit A: Representations, Warranties and Covenants to be Made by
AT&T and Parent
Exhibit B: Set-Top Box Commitment
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EXCHANGE AGREEMENT
AGREEMENT dated as of December 7, 2001 (this "AGREEMENT") between
Microsoft Corporation, a Washington corporation ("MICROSOFT"), and Comcast
Corporation, a Pennsylvania corporation ("COMCAST").
WHEREAS, Microsoft T-Holdings, Inc., a Nevada corporation and wholly
owned subsidiary of Microsoft ("MICROSOFT T"), is the record owner of
$5,000,000,000 aggregate liquidation preference amount of 5% Convertible
Quarterly Income Preferred Securities (the "QUIPS") of AT&T Finance Trust I, a
Delaware business trust (the "ISSUER TRUST");
WHEREAS, Comcast intends to enter into the Merger Agreement pursuant
to which, among other things, the Mergers will be effected;
WHEREAS, in the event Comcast enters into and consummates the Merger
Agreement, each of Microsoft and Comcast desires to effect the Closing, whereby
either (i) Microsoft will exchange the QUIPS for shares of AT&T Broadband Common
Stock held by AT&T or (ii) Comcast will make an alternative payment to
Microsoft, in each case upon the terms and subject to the conditions hereinafter
set forth;
WHEREAS, in the event the Closing is consummated, each of Microsoft
and Comcast desires to effect certain commercial arrangements between Microsoft
and each of Comcast and AT&T Broadband, as more particularly set forth herein;
and
WHEREAS, concurrent with the execution of this Agreement and as an
inducement to enter into this Agreement, Microsoft and Comcast have entered into
the Set-Top Box Commitment;
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and undertakings contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01.Definitions. (a) The following terms, as used herein,
have the following meanings:
"ACCESS SLOT" shall have the meaning specified in Section 2.02(a).
"ACCESS AGREEMENT" shall have the meaning specified in Section
2.02(c).
"ADJUSTMENT AMOUNT" means the product of (a) 5,000,000 multiplied by
(b) a fraction, the numerator of which is the number of Excluded Shares and the
denominator of which is 110,000,000.
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Person at any time during the period for which the determination of
affiliation is being made. For purposes of this definition and the definitions
of Controlled Affiliate and Subsidiary, the term "control" (including the
correlative meanings of the terms "controlled by" and "under common control
with"), as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of management policies
of such Person, whether through ownership of voting securities or by contract or
otherwise.
"ALTERNATIVE PAYMENT" shall mean (a) the product of the Share Price
and 115,000,000 less (b) $3.8 billion, but in no event less than 0.
"ALTERNATIVE TRANSACTION" shall have the meaning specified in Section
3.04
"ALTERNATIVE TRANSACTION CLOSING" shall have the meaning specified in
Section 3.05.
"ALTERNATIVE TRANSACTION NOTICE" shall have the meaning specified in
Section 3.04(a).
"AT&T" means AT&T Corp., a New York corporation.
"AT&T BROADBAND" means AT&T Broadband Corp., a New York corporation.
"AT&T BROADBAND BUSINESS" means the interest of AT&T or any of its
subsidiaries in all of the businesses and assets reflected in the combined
financial statements of the AT&T Broadband Group, dated December 31, 2000, as
attached to the Preliminary Proxy Statement of AT&T dated May 11, 2001, except
for assets disposed of in the ordinary course of business.
"AT&T BROADBAND COMMON STOCK" means the Common Stock, the par value
of which shall be determined prior to Closing, of AT&T Broadband.
"AT&T BROADBAND MERGER" means the merger of AT&T Broadband Merger Sub
with an entity comprised of substantially all of the AT&T Broadband Business.
"AT&T BROADBAND MERGER SUB" means AT&T Merger Sub, a New York
corporation and wholly owned subsidiary of Parent.
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"AT&T COMMON STOCK" means the Common Stock, par value $1.00 per
share, of AT&T.
"AT&T COMMUNICATIONS BUSINESS" means all of the business and assets
of AT&T and its subsidiaries except for such businesses and assets as are
included in the AT&T Broadband Business.
"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.
"CLOSING" means either the Exchange Closing or the Alternative
Transaction Closing.
"CLOSING DATE" means the date of the Closing.
"CODE" means the Internal Revenue Code of 1986, as amended.
"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.
"COMCAST MERGER" means the merger of Comcast Merger Sub with and into
Comcast.
"COMCAST MERGER SUB" means Comcast Merger Sub, a Pennsylvania
corporation and wholly owned subsidiary of Parent.
"COMCAST SUBSIDIARY" means a Subsidiary of Comcast.
"CONTROLLED AFFILIATE" means, with respect to any Person, any other
Person directly or indirectly controlled by such Person.
"DEBENTURES" means the 5% Junior Convertible Subordinated Debentures
due 2029 of AT&T.
"DISTRIBUTION" means the distribution by AT&T to holders of AT&T
Common Stock of all of the outstanding shares of AT&T Broadband Common Stock, as
will be provided by the Separation and Distribution Agreement.
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"EFFECTIVE TIME" means the effective time of the Mergers.
"EXCHANGE" shall have the meaning specified in Section 3.01.
"EXCHANGE CLOSING" shall have the meaning specified in Section 3.02.
"EXCHANGE CONDITION" shall have the meaning specified in Section
3.04(a).
"EXCHANGE RATIO" means a fraction, the numerator of which is one and
the denominator of which is the sum of (i) the number of shares of Parent Class
A Common Stock, if any, into which one share of AT&T Broadband Common Stock will
be converted pursuant to the Merger Agreement by virtue of the AT&T Broadband
Merger plus (ii) the number of shares of Parent Class C Common Stock, if any,
into which one share of AT&T Broadband Common Stock will be converted pursuant
to the Merger Agreement by virtue of the AT&T Broadband Merger plus (iii) the
number of shares of Parent Class A Special Common Stock into which one share of
AT&T Broadband Common Stock will be converted pursuant to the Merger Agreement
by virtue of the AT&T Broadband Merger.
"EXCHANGE SHARES" shall have the meaning specified in Section 3.01.
"EXCLUDED SHARES" means Parent Shares in such number up to
110,000,000 as Comcast shall determine in its absolute discretion on the date of
execution of the Merger Agreement.
"GUARANTEE AGREEMENT" means the Guarantee Agreement, dated as of June
16, 1999, between AT&T, as guarantor, and The Bank of New York, as guarantee
trustee, relating to the Issuer Trust.
"GOVERNMENTAL AUTHORITY" means any United States federal, state or
local, foreign or supranational governmental body, agency, official or
authority.
"HSD SERVICE" shall have the meaning specified in Section 2.02(c).
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"INDENTURE" means the Indenture, dated as of June 16, 1999, between
AT&T and The Bank of New York as trustee, relating to the Debentures.
"IRS" means the United States Internal Revenue Service.
"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 Person.
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"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.
"MERGER AGREEMENT" means the Agreement and Plan of Merger, to be
entered into by and among AT&T, Comcast and the other parties referred to
therein, providing for the Mergers and the transactions contemplated in
connection therewith.
"MERGERS" means the AT&T Broadband Merger and the Comcast Merger
effected pursuant to the terms of the Merger Agreement.
"MFN PERIOD" shall have the meaning specified in Section 2.02(a).
"MICROSOFT ACCESS AGREEMENT" shall have the meaning specified in
Section 2.02(a).
"MSN" shall have the meaning specified in Section 2.02.
"NASDAQ" means the Nasdaq Stock Market.
"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.
"OPTION FORMULA" means a fraction the numerator of which is the
option value of the upside and downside retained by Microsoft based on the
length of the hedging transaction or series of transactions entered into and the
denominator of which is the sum of the option value of a call option and the
option value of a put option, each with a strike price equal to the value of the
stock at the time the hedging transaction or the last of a series of
transactions is entered into and with a term equal to the length of the
transaction or series of transactions.
"OTHER THIRD PARTY AGREEMENT" shall have the meaning specified in
Section 2.02(a).
"PARENT" means AT&T Comcast Corporation, a Pennsylvania corporation;
provided, that for purposes of Article 2, "Parent" shall be deemed to include
Parent and all of Parent's subsidiaries.
"PARENT CLASS A COMMON STOCK" means the Class A Common Stock, par
value $1.00 per share, of Parent.
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"PARENT CLASS A SPECIAL COMMON STOCK" means the Class A Special
Common Stock, par value $1.00 per share, of Parent.
"PARENT CLASS B COMMON STOCK" means the Class B Common Stock, par
value $1.00 per share, of Parent.
"PARENT CLASS C COMMON STOCK" means the Class C Common Stock, par
value $1.00 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 or the
Parent Class C Common Stock.
"PARENT PARTIES" shall have the meaning specified in Section 2.02(a).
"PARENT SHARES" means shares of Parent Common Stock received by
Microsoft or Microsoft T-Holdings as the result of the conversion of Exchange
Shares in the AT&T Broadband Merger.
"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.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of June 16, 1999, between AT&T and Microsoft.
"REGISTRATION STATEMENT" means the registration statement on Form S-4
or any amendment or supplement thereto pursuant to which the shares of Parent
Common Stock issuable in the Mergers will be registered with the SEC.
"RESTRICTED SHARES" means the Parent Shares less the Excluded Shares.
"SEC" means the United States Securities and Exchange Commission.
"SECURITIES EXCHANGE" means the national securities exchange or
quotation system selected by the parties to the Merger Agreement for the listing
of the Parent Common Stock to be issued in the Mergers or reserved for issuance
as provided in the Merger Agreement.
"SEPARATION AND DISTRIBUTION AGREEMENT" means the Separation and
Distribution Agreement, to be entered into by and between AT&T and AT&T
Broadband providing for the spin-off of AT&T Broadband to the shareholders of
AT&T.
"SET-TOP BOX COMMITMENT" means the Term Sheet, dated December 3,
2001, between Microsoft and Comcast Cable Communications, Inc., attached as
Exhibit B hereto.
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"SHARE PRICE" means the average closing share price of the Comcast
Class A Special Common Stock as reported on Nasdaq for the ten (10) consecutive
trading days ending five (5) trading days following the date of execution of the
Merger Agreement.
"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.
"TAXABLE TRANSACTION LOSS" shall have the meaning specified in
Section 8.05.
"TEST" shall have the meaning specified in Section 2.02(c).
"THIRD PARTY" shall have the meaning specified in Section 2.02(a).
"THIRD PARTY ACCESS AGREEMENT" shall have the meaning specified in
Section 2.02(a).
"THIRD PARTY ACCESS AGREEMENT DATE" shall have the meaning specified
in Section 2.02(a).
"THRESHOLD PERCENTAGE" shall have the meaning specified in Section
2.02(c).
"TRANSACTION AGREEMENTS" means this Agreement, the Merger Agreement,
the Separation and Distribution Agreement, and any other agreements entered into
by Comcast, AT&T or their Affiliates in connection with the Mergers or the
Distribution.
"TRANSACTIONS" means the transactions contemplated in connection with
the Transaction Agreements.
"TRUST AGREEMENT" means the Trust Agreement, dated as of June 16,
1999, among AT&T, 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.
(b) The following definitional provisions shall apply to this
Agreement:
(i) The words "hereof", "herein", and "hereunder" and
words of similar import, when used in this Agreement, shall refer to
this Agreement as a whole and not to any particular provision of this
Agreement.
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(ii) The terms defined in the singular shall have a
comparable meaning when used in the plural, and vice versa.
(iii) The terms "Dollars" and "$" shall mean United States
Dollars.
(iv) References herein to a specific Section, Subsection,
Exhibit or Schedule shall refer, respectively, to Sections,
Subsections, Exhibits or Schedules of this Agreement, unless the
express context otherwise requires.
(v) Wherever the word "include," "includes," or
"including" is used in this Agreement, it shall be deemed to be
followed by the words "without limitation."
ARTICLE 2
MOST FAVORED NATIONS
SECTION 2.01. Representations. Microsoft represents as of the date
hereof that The Microsoft Network ("MSN") is a business unit within Microsoft.
Comcast represents as of the date hereof that Comcast has not entered into an
Access Agreement or an agreement that would be an Access Agreement but for its
containing terms and conditions that provide for access on an exclusive basis.
Comcast warrants that the Parent Parties will hold and control all cable network
properties of Comcast, the AT&T Broadband Business, and their respective
Affiliates, as of the Closing Date.
SECTION 2.02. Most Favored Nations.
(a) If: (i) the Closing has occurred; and (ii) MSN remains a business
unit, or otherwise is an Affiliate, of Microsoft (for the purposes of this
Article 2, to the extent that MSN becomes an Affiliate of Microsoft, use of the
term "Microsoft" shall be deemed to include MSN) at all times from the date
hereof through the Third Party Access Agreement Date; then Parent agrees that
if, at any time during the period from the date hereof through the fifth
anniversary of the Closing Date (the "MFN PERIOD"), Parent or any of its
Affiliates (collectively, the "PARENT PARTIES") enters into an Access Agreement
(a "THIRD PARTY ACCESS AGREEMENT") with a third party other than Microsoft or
any of its Controlled Affiliates (a "THIRD PARTY") (each date a Third Party
Access Agreement is entered into referred to herein as a "THIRD PARTY ACCESS
AGREEMENT DATE"), then within ten (10) Business Days of each Third Party Access
Agreement Date (provided the Closing has previously occurred) or within ten (10)
days of the Closing Date (if one or more Third Party Access Agreement Dates have
preceded the Closing Date), whichever then is applicable, the Parent Party will
provide Microsoft with an Access Agreement (the "MICROSOFT ACCESS AGREEMENT")
with the relevant Parent Parties on the same terms and conditions (including
with
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respect to: (I) the specific cable system or systems, for which access is
provided and the specific dates on which access is provided; and (II) any rights
to sell or market the products or services of any Parent Party in conjunction
with the sale or marketing of the HSD Service in question), as those contained
in the Third Party Access Agreement in question (provided that if more than one
Third Party Access Agreement Date has preceded the Closing Date, then such offer
will give Microsoft the right to enter into any such Third Party Access
Agreement as it elects); provided that: (1) if the terms and conditions
contained in any other agreement (an "OTHER THIRD PARTY AGREEMENT") between a
Parent Party and the Third Party in question (or any of such Third Party's
Affiliates) provided consideration to the Third Party in question (or any of
such Third Party's Affiliates) for entering into the Third Party Access
Agreement in question, then the terms and conditions of the Microsoft Access
Agreement offered to Microsoft will be modified by the Parent Party as required
to include the economic benefits of such consideration (net of any consideration
provided to any Parent Party under any such Other Third Party Agreements); (2)
if any terms and conditions of the Third Party Access Agreement in question are
dependent on the unique characteristics of the Third Party in question or its
assets (or of its Affiliates or their assets) or the identity of specific cable
systems of the Parent Parties, and therefore cannot reasonably apply to or be
complied with by Microsoft (or its Affiliates), the Microsoft Access Agreement
offered to Microsoft will be modified by the Parent Party as required to provide
Microsoft with economic and non-economic terms and conditions that can apply to
or be complied with by Microsoft and which, taken as a whole, are no less
favorable and no more burdensome to Microsoft than those applicable to the Third
Party in question under the Third Party Access Agreement in question; (3) if the
effectiveness of a right or benefit of the Third Party in question under the
Third Party Access Agreement in question, or if the price or other economic
consideration payable by the Third Party in question for a specified level of
service or other right or benefit, is conditioned upon volume-based commitments
or volume-based performance by the Third Party in question, then the terms and
conditions of the Microsoft Access Agreement offered to Microsoft will be
modified by the Parent Party as required to make such effectiveness or economic
consideration available to Microsoft without meeting the volume-based commitment
or volume-based performance in question, if it both (x) makes at least the
Threshold Percentage of the volume-based commitment or volume-based performance
in question, and (y) makes the Parent Party whole for any actual out-of-pocket
costs incurred as a result of providing the right or benefit based on
volume-based commitments or volume-based performance of Microsoft that are less
than 100% of that contained in the Third Party Access Agreement in question; and
(4) Parent will include with such notice: (x) a statement indicating the number,
based upon the then current technical capacity of the infrastructure of the
cable system or cable systems in question, of Access Agreements (in addition to
the Third Party Access Agreement in question) that can be entered into with
respect to the cable system or cable systems in which access is provided under
the Third Party Access Agreement in question (an "ACCESS SLOT"); and (y) a
certification from its chief financial officer
9
that the terms and conditions of the Microsoft Access Agreement offered to
Microsoft are in compliance with the terms hereof; and provided further that, if
Microsoft has previously entered into an Access Agreement with the Parent Party
that is in effect at the time of such offer, then the Microsoft Access Agreement
(if accepted by Microsoft pursuant to subsection (b) below) will replace and
supercede such existing Access Agreement when the Microsoft Access Agreement is
entered into. Provided the Closing has occurred, no Parent Party will enter
into: (A) any exclusive Access Agreement during the MFN Period; or (B) a Third
Party Access Agreement with AOL Time Warner, Inc. or any of its Affiliates if no
Access Slots would be available to Microsoft, or any Parent Party would
otherwise be prevented from complying with the obligations of this Article, as a
result of entering into such Third Party Access Agreement.
(b) Microsoft will have the right, at any time during a period of
ninety (90) days following the date Microsoft received the proposed Microsoft
Access Agreement from a Parent Party, to exercise such right by signing the
proposed Microsoft Access Agreement in the form offered to Microsoft in whole
only. If Microsoft does not sign the proposed Microsoft Access Agreement within
the initial thirty (30) days (excluding the period of any dispute resolution
undertaken pursuant to Section 2.04) following receipt of such proposed
agreement, the Parent Party will be permitted to initiate service under the
Third Party Access Agreement, notwithstanding the provisions of Section
2.02(a)(I). If within ninety (90) Business Days (excluding the period of any
dispute resolution undertaken pursuant to Section 2.04) following Microsoft's
receipt of the proposed Microsoft Access Agreement, Microsoft has not signed
such Microsoft Access Agreement, Microsoft will be deemed to have elected not to
exercise such right.
(c) The term "ACCESS AGREEMENT" means an agreement providing for a
Person to have non-exclusive access to any of the cable system infrastructure of
a Parent Party for the purpose of the third party's provision of a high-speed
Internet access service (and related services) to residential customers through
a personal computer or similar device (but not through the Comcast set-top box)
(an "HSD SERVICE"), but excluding any terms and conditions of such agreement
that are in respect of Test activities. The term "TEST" means a bona fide test
(i.e., non-commercial deployment) of any one or more aspects of the HSD Service
in question in a cable system or systems within a limited geography for a
limited period of time. Notwithstanding the foregoing, Comcast agrees that if a
Parent Party provides a Test to AOL Time Warner, Inc. or any Affiliate, the
Parent Party will provide to Microsoft a Test on a basis equal and comparable
(including with respect to Test market characteristics) as those provided to AOL
Time Warner, Inc. and its Affiliates, except that the Parent Party shall not be
required to provide Test to Microsoft in the identical geographic market as the
Test provided to AOL Time Warner, Inc. or its Affiliates. The term "THRESHOLD
PERCENTAGE" means 20% during the first year of the Microsoft Access Agreement,
22.5% during the second year thereof, 25% during the third year thereof, 27.5%
during the fourth year thereof, and 30% during the fifth year thereof and
thereafter.
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SECTION 2.03. Amendments, Etc. In the event that a Parent Party and
Microsoft have entered into a Microsoft Access Agreement and during the MFN
Period a Parent Party and a Third Party enter into an amendment, renewal or
other modification of a Third Party Access Agreement that is favorable to the
Third Party in question, then the terms and conditions of such amendment,
renewal or modification (including any that are less favorable to the Third
Party in question) will be offered by such Parent Party to Microsoft on the same
basis as is set forth in Section 2.02 with respect to the Microsoft Access
Agreement.
SECTION 2.04. Dispute Resolution. If any dispute or disagreement
between the parties in connection with Section 2.02 or Section 2.03 cannot be
resolved through good faith negotiations within thirty (30) days of notification
of such dispute, the parties agree to resolve such dispute or disagreement by a
fast track arbitration procedure under which they will each select an
independent arbitrator with appropriate technical experience through Judicial
Arbitration Mediation Services with no prior or existing business relationship
with the parties or any of their Affiliates, which arbitrators will jointly
select a third arbitrator meeting the foregoing qualifications. The arbitration
will be held in New York and will be conducted in accordance with the American
Arbitration Association rules for commercial arbitration. Each party shall be
permitted to conduct discovery in accordance with the Federal Rules of Civil
Procedure. The arbitrator will hear each party's presentation within ten (10)
days of such selection and will rule within five (5) Business Days following the
conclusion of such presentation by the parties. Such ruling shall be binding and
non-appealable. Each party shall bear its own costs, including attorney's fees,
and the costs of the arbitration shall be borne equally by the parties. The
Party prevailing at arbitration shall be entitled to collect attorney fees.
ARTICLE 3
EXCHANGE; ALTERNATIVE TRANSACTION
SECTION 3.01. Exchange. Subject to Section 3.04, and upon the terms
and subject to the conditions set forth in Sections 9.01 and 9.03, at the
Exchange Closing Microsoft shall deliver or shall cause to be delivered to AT&T
a certificate or certificates representing the QUIPS, in exchange for the
delivery by AT&T of a certificate or certificates representing that number of
shares of AT&T Broadband Common Stock held by AT&T which is equal to the product
of (a) 115,000,000 minus the Adjustment Amount multiplied by (b) the Exchange
Ratio (the "EXCHANGE SHARES"), in each case free and clear of all Liens. By
operation of the transactions described in the foregoing sentences (the
"EXCHANGE"), Microsoft shall transfer to AT&T all legal right, title and
interest in the QUIPS and AT&T shall transfer to Microsoft all legal right,
title and interest in the Exchange Shares.
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SECTION 3.02. Exchange Closing. The closing (the "EXCHANGE CLOSING")
of the Exchange shall take place concurrently with the Distribution following
the satisfaction of all the conditions set forth in Sections 9.01 and 9.03, at
the place, on the date and at the time designated by Comcast in a written notice
which shall be delivered to Microsoft no fewer than three (3) Business Days
prior to the Closing Date.
SECTION 3.03. Unwind of Exchange. In the event that, at any time
beginning forty-eight (48) hours after the Exchange Closing and ending on the
date Comcast shall have provided notice to Microsoft that it does not intend to
effect the Mergers, the Mergers shall not have been effected, at the option of
Microsoft the Exchange shall be unwound on the second Business Day following
delivery of notice by Microsoft or Comcast, as the case may be, as follows: AT&T
shall transfer and assign the QUIPS to Microsoft T-Holdings in exchange for the
transfer and assignment by Microsoft T-Holdings to AT&T of the Exchange Shares.
SECTION 3.04. Alternative Transaction. (a) In the event that, at any
time beginning ten (10) calendar days following the execution of the Merger
Agreement and ending on the date of the closing of the Mergers, AT&T has not (i)
agreed to effect the Exchange and, if necessary, the unwind of the Exchange as
provided in this Agreement and (ii) become a party to this Agreement (the
"EXCHANGE CONDITION"), Microsoft shall have the right to require Comcast to
effect the Alternative Transaction by providing an irrevocable written notice
(the "ALTERNATIVE TRANSACTION NOTICE") to such effect to Comcast. In the event
the Exchange Condition has occurred, upon provision of the Alternative
Transaction Notice Microsoft shall have no obligation to effect, and shall not
be entitled or permitted to effect, the Exchange and Microsoft shall, at such
time and in the manner reasonably requested by Comcast, (i) consent to the
transfers and assignments described in Section 3.04(b) and (ii) execute and
cause to be executed such amendments or supplements to the Trust Agreement, the
Indenture and any document or agreement executed in connection therewith, and
any such other instruments as are consistent with the terms and conditions of
this Agreement and are reasonably necessary to give effect to such transfers and
assignments;
(a) Comcast shall cause the Merger Agreement to provide that (i) in
the event that the Exchange Condition has occurred (A) AT&T, prior to the
Distribution, will: (1) transfer the Trust Common Securities from AT&T to AT&T
Broadband; (2) assign to AT&T Broadband all of AT&T's rights and obligations
pursuant to the Trust Agreement, the Guarantee, the Registration Rights
Agreement and the Indenture (including, without limitation, all of AT&T's rights
and obligations with respect to (x) the Trust Common Securities, (y) the QUIPS
and (z) the Debentures) and the parties hereto agree that such assignment shall
be sufficient to relieve AT&T of any and all obligations with respect to the
Trust Agreement, the Guarantee, the Registration Rights Agreement, the
Indenture, the Trust Common Securities, the QUIPS and the Debentures; (B)
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notwithstanding any provision of Section 12.2 of the Indenture, as a result of
the transfer and assignments described in this Section 3.04(b), adjust the
Conversion Price (as defined in the Indenture) in the same manner, and to the
same effect, as if the transfers and assignments described in this Section
3.04(b) had not taken place and, instead, the AT&T Communications Business had
been distributed to the holders of AT&T Common Stock, and (C) execute and cause
to be executed such amendments or supplements to the Trust Agreement, the
Indenture, the Guarantee, the Registration Rights Agreement and any document or
agreement executed in connection therewith, and any such other instruments as
are consistent with the terms and conditions of this Agreement and are
reasonably necessary to give effect to or reflect the transfers, assignments and
adjustments described in, and the intent of, this Section 3.04(b); and (ii)
Microsoft shall be a third-party beneficiary of AT&T's obligations set forth in
clause (1) of this Section 3.04(b).
SECTION 3.05. Alternative Transaction Closing.
(a) In the event the Exchange Condition has occurred, the closing
(the "ALTERNATIVE TRANSACTION CLOSING") of the Alternative Transaction shall
take place concurrently with the closing of the Mergers following the
satisfaction of all the conditions set forth in Sections 9.02 and 9.04, at the
place, on the date and at the time designated by Comcast in a written notice
which shall be delivered to Microsoft no fewer than three (3) Business Days
prior to the Closing Date. At the Alternative Transaction Closing Comcast shall
make the Alternative Payment to Microsoft by wire transfer of immediately
available funds (the "ALTERNATIVE TRANSACTION");
(b) Upon the delivery of an Alternative Transaction Notice, Sections
5.06, 6.04, 6.05, 6.07, 7.02, 7.04, 7.05, 8.05 and 8.06 hereof shall terminate
and shall have no further force and effect and no liability shall arise to any
party hereof with respect to such terminated provisions. For the avoidance of
doubt, following the delivery of an Alternative Transaction Notice, no party to
this Agreement shall be obligated to, and no party shall be entitled or
permitted to, effect the Exchange pursuant to this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF COMCAST
Comcast represents and warrants to Microsoft as of the date hereof
and as of the Closing that:
SECTION 4.01. Corporate Existence and Power. Comcast is a corporation
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all corporate powers required to carry on
its business as currently conducted.
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SECTION 4.02. Corporate Authorization. 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 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.
SECTION 4.03. Authorization. The execution, delivery and performance
by Comcast of this Agreement require no action by or in respect of, or filing
with, any governmental or non-governmental body, agency or official or any other
Person other than (i) the consent of AT&T to the Exchange and the transactions
contemplated by Section 3.04; (ii) compliance with any applicable requirements
of the HSR Act; (iii) compliance with any applicable requirements of the 1933
Act, the 1934 Act, and any other applicable securities laws, whether United
States, state or foreign; (iv) such actions by or in respect of, or filings
with, any governmental or non-governmental body, agency or official or any other
Person as are required to complete the Mergers and which shall have been
obtained or completed, as applicable, prior to Closing; and (v) any other
actions or filings that are immaterial to the consummation of the transactions
contemplated hereby.
SECTION 4.04. Noncontravention. The execution, delivery and
performance of this Agreement by Comcast do not and will not (i) violate the
articles of incorporation or bylaws of Comcast, (ii) assuming compliance with
the matters referred to in Section 4.03, violate any applicable law, rule,
regulation, judgment, injunction, order or decree, except for any such
violations which would not be material to the transactions contemplated hereby
or (iii) conflict with, or result in a violation or breach of any provision of,
or constitute a default (or an event which, with the giving of notice, the
passage of time, or both, or otherwise, would constitute a default) under or a
termination of, or entitle any party (with the giving of notice, the passage of
time, or both, or otherwise) to terminate, accelerate, modify or call a default
under, any of the terms, conditions or provisions of any note, bond, debenture,
mortgage, indenture, guarantee, deed of trust, intellectual property or other
license, contract, permit, license, agreement, lease or other instrument to
which Comcast or any of its Controlled Affiliates is a party or by which its
assets or properties may be affected, or result in the creation of any Lien upon
any of the properties or assets of Comcast or any of its Controlled Affiliates,
which in each case would be material to the transactions contemplated hereby.
SECTION 4.05. Valid Issuance.
(a) The Exchange Shares, when issued and delivered in the manner
contemplated by this Agreement, will be duly and validly issued, fully paid,
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nonassessable and free and clear of all Liens or any restrictions on the
transfer thereof (other than restrictions on transfer under applicable
securities laws).
(b) The Parent Shares, when issued and delivered in accordance with
the terms of the Merger Agreement, will be duly and validly issued, fully paid,
nonassessable and free and clear of all Liens or any restrictions on the
transfer thereof (other than restrictions on transfer under applicable
securities laws).
SECTION 4.06. Ownership of Parent. The Parent Shares will represent
more than 4.5% of the outstanding shares of capital stock of Parent immediately
following consummation of the Mergers, on a fully-diluted basis.
SECTION 4.07. Capitalization. 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 October 31, 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) 913,741,189 shares of Comcast Class A Special
Common Stock (inclusive of shares issued pursuant to the Comcast Employee Stock
Purchase Plan and exclusive of all shares of restricted stock granted under any
compensatory plan or arrangements), (4) options to purchase an aggregate of
55,779,734 shares of Comcast Class A Special Common Stock (of which options to
purchase an aggregate of 16,853,169 shares of Comcast Class A Special Common
Stock were exercisable), (5) phantom shares, stock units, stock 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 6,793,483 shares of Comcast Class A Special Common
Stock and (6) no shares of preferred stock. As of October 31, 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.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF MICROSOFT
Microsoft represents and warrants to Comcast as of the date hereof
and as of the Closing that:
SECTION 5.01. Corporate Existence and Power. Microsoft is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation.
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SECTION 5.02. Corporate Authorization. The execution, delivery and
performance by Microsoft of this Agreement and the consummation by Microsoft of
the transactions contemplated hereby are within Microsoft's corporate powers and
have been duly authorized by all necessary corporate action on the part of
Microsoft. This Agreement constitutes a valid and binding agreement of
Microsoft, enforceable against Microsoft 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.
SECTION 5.03. Authorization. The execution, delivery and performance
by Microsoft of this Agreement require no action by or in respect of, or filing
with, any governmental or non-governmental body, agency or official or any other
Person other than (i) the consent of AT&T to the Exchange and to the
transactions contemplated by Section 3.04; (ii) compliance with any applicable
requirements of the HSR Act; (iii) compliance with any applicable requirements
of the 1933 Act, the 1934 Act, and any other applicable securities laws, whether
United States, state or foreign; and (iv) any other actions or filings that are
immaterial to the consummation of the transactions contemplated hereby.
SECTION 5.04. Noncontravention. The execution, delivery and
performance of this Agreement by Microsoft do not and will not (i) violate the
certificate of incorporation, bylaws or any other governing organization
documents of Microsoft, or, (ii) assuming compliance with the matters referred
to in Section 5.03, violate any applicable law, rule, regulation, judgment,
injunction, order or decree, except for any such violations which would not have
a material adverse effect on the ability of Microsoft to consummate the
transactions contemplated hereby.
SECTION 5.05. Ownership of QUIPS. Microsoft T-Holdings is the lawful
record holder of the QUIPS. Microsoft acquired the QUIPS on June 16, 1999 and
neither Microsoft nor Microsoft T-Holdings has entered into any promissory note,
installment purchase contract or other obligation in connection with the
acquisition of the QUIPS other than such obligation as is not subject to the
payment of any further consideration of any kind. Either Microsoft or Microsoft
T-Holdings has held the QUIPS since their acquisition from the Issuer Trust,
without transfer, exchange, conversion, pledge or disposition of any kind.
SECTION 5.06. Tax Representation. (a) Microsoft has no current plan
or intention to sell, transfer or otherwise dispose of any Restricted Shares; it
being understood that the foregoing is not intended to preclude Microsoft from,
and Microsoft is expressly permitted at any time to enter into any agreement,
arrangement or understanding with respect to any transaction that would not (i)
require or permit (unless at the time such transaction is entered into, it is
not more likely than not that the transaction will be physically settled)
physical settlement in shares of Parent Common Stock received by Microsoft in
the AT&T Broadband Merger (including, without limitation, cash-settled options
with
16
respect to Parent Common Stock) or (ii) result in a sale or constructive sale
for U.S. federal income tax purposes.
(b) For purposes of this Section 5.06 and Section 7.04, any
transaction or series of transactions (1) with a term no longer than five years
pursuant to which Microsoft retains an economic interest equal to the first 20%
of the risk of loss or opportunity for gain or an economically equivalent
combination of risk of loss and opportunity for gain and (2) for which the
fraction obtained as a result of the Option Formula is greater than or equal to
one-fifth shall not be treated as a constructive sale.
(c) For purposes of this Section 5.06 and Section 7.04, Microsoft
shall not be prohibited from entering into any stock lending transactions
pursuant to Section 1058 of the Code with respect to Parent Common Stock,
provided that Microsoft does not directly lend, or reach any understanding with
any counterparty or any third party other than the counterparty to lend, Parent
Common Stock to a counterparty to a hedging transaction or transactions with
respect to any Restricted Shares held by Microsoft.
ARTICLE 6
COVENANTS OF COMCAST
Comcast agrees that:
SECTION 6.01. Commitment of AT&T. Comcast shall use its reasonable
best efforts to cause AT&T to agree to effect the Exchange and, if necessary,
the unwind of the Exchange as provided in this Agreement. Microsoft shall be a
third party beneficiary of such agreement. Comcast shall further use its
reasonable best efforts to cause AT&T to become a party to this Agreement, bound
by the obligations and entitled to the benefits arising therefrom, as soon as
practicable following the date hereof.
SECTION 6.02. Exchange Closing. At the Exchange Closing, if any,
Comcast shall (a) deliver the certificate required pursuant to Section 9.01(l)
and (b) cause its counsel to deliver the opinion required pursuant to Section
9.01(p).
SECTION 6.03. Alternative Transaction Closing. At the Alternative
Transaction Closing, if any, Comcast shall (a) deliver the certificate required
pursuant to Section 9.02(h) and (b) cause appropriate counsel to deliver the
opinions required pursuant to Section 9.02(j), Section 9.02(k) and Section
9.02(l).
SECTION 6.04. Registration Statement; Blue Sky Laws. Comcast shall
use its reasonable best efforts to cause a Registration Statement to become
effective with respect to the Parent Shares, and shall make all other necessary
filings pursuant to the 1933 Act, the 1934 Act and applicable state "blue sky"
laws, prior to the Exchange Closing, if any.
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SECTION 6.05. Listing of Stock. Comcast shall use its reasonable best
efforts to cause the shares of Parent Common Stock to be issued in connection
with the Mergers (other than shares of Parent Class B Common Stock) to be
approved for listing on the Securities Exchange prior to the Exchange Closing,
if any, subject to official notice of issuance.
SECTION 6.06. Merger Documentation.
(a) Without the prior written consent of Microsoft (which consent
shall not be unreasonably withheld), Comcast shall not agree or otherwise
consent to the inclusion in the Transaction Agreements of any term, or, upon
execution and delivery of the Merger Agreement, to any amendment, supplement or
other modification of any term of the Transaction Agreements, and shall not
grant any waivers, consents or approvals thereunder, if any such amendment,
supplement or other modification, or waiver, consent or approval would, or would
reasonably be expected to, (i) conflict with, or result in a violation or breach
of any provision of, this Agreement, the Set-Top Box Commitment or any
definitive agreement entered into pursuant thereto, or any Microsoft Access
Agreement or (ii) be materially adverse to Microsoft in the context of
Microsoft's rights in or obligations under, or reasonably expected benefits
from, the Transactions in a manner or to an extent that is materially different
or disproportionate to the effect of such action on all other shareholders of
AT&T Broadband or of Parent.
(b) Comcast agrees to respond to any reasonable request for
information by Microsoft relating to the Transactions and to keep Microsoft
reasonably apprised of any material development with respect to the
Transactions.
SECTION 6.07. Share Issuances. From the date hereof until the
Closing, Comcast shall not (i) amend its certificate of incorporation or by-laws
so as to alter the rights of the holders of any class of its capital stock; or
(ii) split, combine or reclassify its outstanding shares of capital stock.
SECTION 6.08. AT&T Broadband Business. Upon consummation of the
Mergers, AT&T Broadband shall include substantially all of the AT&T Broadband
Business.
SECTION 6.09. Notification of Excluded Shares. Comcast shall provide
Microsoft with written notification of the number of Excluded Shares within one
(1) Business Day following the date of execution of the Merger Agreement.
ARTICLE 7
COVENANTS OF MICROSOFT
Microsoft agrees that:
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SECTION 7.01. Closing. (a) At the Exchange Closing, Microsoft shall
(i) deliver the certificate required pursuant to Section 9.03(f) and (ii) cause
its counsel to deliver the opinion required pursuant to Section 9.03(g).
(a) At the Alternative Transaction Closing, if any, Microsoft shall
(i) deliver the certificate required pursuant to Section 9.04(g) and (ii) cause
its counsel to deliver the opinion required pursuant to Section 9.04(h).
SECTION 7.02. Ownership of QUIPS. From the date hereof to the Closing
or, if earlier, the date on which this Agreement is terminated in accordance
with its terms, Microsoft will not, without the consent of Comcast, (a) sell,
assign, pledge, transfer, or otherwise dispose of the QUIPS (or any portion
thereof) or (b) enter into any transaction or series of transactions as a result
of which any Person would acquire, or have the right to acquire, directly or
indirectly, the QUIPS (or any portion thereof), unless such transaction or
series of transactions shall be contingent upon the execution of an agreement or
agreements by a third party (other than Comcast) to acquire substantially all of
the AT&T Broadband Business.
SECTION 7.03. Confidentiality. (a) Microsoft and its Affiliates will
hold, and will use their best efforts to cause their respective officers,
directors, employees, accountants, counsel, consultants, advisors and agents to
hold, in confidence, unless compelled to disclose by judicial or administrative
process or by other requirements of law or national stock exchange or quotation
system, all confidential documents and information concerning Comcast or any of
its Affiliates, the Transactions, AT&T or any of its Affiliates, except to the
extent that such information can be shown to have been (i) previously known on a
nonconfidential basis by Microsoft, (ii) in the public domain through no fault
of Microsoft or (iii) later acquired by Microsoft from sources other than
Comcast or AT&T or any of their respective Affiliates not known by Microsoft to
be bound by any confidentiality obligation; provided, that Microsoft may
disclose such information to its officers, directors, employees, accountants,
counsel, consultants, advisors and agents in connection with the transactions
contemplated by this Agreement so long as such Persons are informed by Microsoft
of the confidential nature of such information and are directed by Microsoft to
treat such information confidentially. Microsoft shall be responsible for any
failure to treat such information confidentially by such Persons. The obligation
of Microsoft and its Affiliates to hold any such information in confidence shall
be satisfied if they exercise the same care with respect to such information as
they would take to preserve the confidentiality of their own similar
information. Microsoft agrees that it shall not and it shall cause its
Affiliates not to use any confidential documents or information for any purpose
other than in connection with the transactions contemplated by this Agreement.
If this Agreement is terminated, Microsoft and its Affiliates will, and will use
their best efforts to cause their respective officers, directors, employees,
accountants, counsel, consultants, advisors and agents to, destroy or deliver to
Comcast or AT&T, as applicable, upon request, all documents and other materials,
and all copies thereof, obtained
19
by Microsoft or on its behalf from Comcast or AT&T or any of their respective
Affiliates, in connection with this Agreement that are subject to such
confidence.
(a) In the event Microsoft or anyone to whom Microsoft transmits
confidential information is requested or required (by oral questions,
interrogatories, requests for information or documents, subpoenas, civil
investigative demand or similar process) to disclose any such information,
Microsoft will provide Comcast and AT&T with prompt notice so that Comcast or
AT&T, as applicable, may seek a protective order or other appropriate remedy
and/or waive Microsoft's compliance with the provisions of this Section. In the
event that such protective order or other remedy is not obtained sufficiently
promptly so as not to adversely affect Microsoft or those of its officers,
directors, employees, accountants, counsel, consultants, advisors and agents as
to whom the information has been requested or required, or Comcast or AT&T, as
applicable, waives Microsoft's compliance with the provisions of this Agreement,
Microsoft will furnish only that portion of such information that Microsoft is
advised by counsel is legally required and will exercise Microsoft's reasonable
efforts to obtain reliable assurance that confidential treatment will be
accorded such information.
SECTION 7.04. Lockup. For a period beginning on the date hereof and
ending six (6) months after the Closing Date Microsoft shall not (i) enter into
any agreement, arrangement or understanding with respect to, or (ii) have any
negotiations concerning, any transaction or series of transactions as a result
of which any Person would acquire, or have the right to acquire, directly or
indirectly, from Microsoft any Restricted Shares. The foregoing is not intended
to preclude Microsoft from, and Microsoft is expressly permitted at any time to
enter into any agreement, arrangement or understanding with respect to or have
substantial negotiations concerning any transaction or series of transactions
that would not (i) require or permit (unless at the time such transaction is
entered into, it is not more likely than not that the transaction will be
physically settled) physical settlement in shares of Parent Common Stock
received by Microsoft in the AT&T Broadband Merger (including, without
limitation, cash-settled options with respect to Parent Common Stock) or (ii)
result in a sale or constructive sale for U.S. federal income tax purposes.
SECTION 7.05. Tax Matters. Microsoft shall cooperate, including,
without limitation, by making to the IRS a representation to the effect that
Microsoft has no current plan or intention to sell, transfer or otherwise
dispose of Parent Common Stock received by Microsoft in the AT&T Broadband
Merger, to the extent reasonably requested by Comcast or AT&T with respect to
any application by Comcast or AT&T for a ruling by the IRS with respect to the
Mergers, the Distribution or the transactions contemplated in connection
therewith.
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ARTICLE 8
ADDITIONAL COVENANTS
SECTION 8.01. Reasonable Best Efforts; Further Assurances. Subject to
the terms and conditions of this Agreement and without prejudice to Microsoft's
right to enter into any other transaction with respect to AT&T, AT&T Broadband
or the AT&T Broadband Business (subject to Sections 7.02, 7.03, and 7.04), the
parties hereto will use their reasonable best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary or
desirable under applicable laws and regulations to consummate the transactions
contemplated by this Agreement; it being understood that, notwithstanding
anything to the contrary contained in this Agreement, Microsoft shall only have
an obligation to take any action or refrain from taking any action under this
Agreement (except as provided in Article 2 or in Sections 7.02, 7.03, 7.04 or
8.03) when both the Merger Agreement is executed and there is no definitive
agreement in existence between AT&T and any third party (other than Comcast)
involving the acquisition of substantially all of the AT&T Broadband Business
and it being further understood that notwithstanding the occurrence of the
Exchange Condition, until such time as Microsoft has provided Comcast with the
Alternative Transaction Notice, Comcast shall continue to be obligated under
this Section 8.01 with respect to the Exchange. The parties hereto agree to
execute and deliver such other documents, certificates, agreements and other
writings and to take such other actions as may be necessary in order to
consummate the transactions contemplated by this Agreement.
SECTION 8.02. Certain Filings. The parties hereto shall cooperate
with one another (i) in determining whether any action by or in respect of, or
filing with, any governmental body, agency, official or authority is required,
or any actions, consents, approvals or waivers are required to be obtained from
parties to any material contracts, in connection with the consummation of the
transactions contemplated by this Agreement and (ii) in taking such actions or
making any such filings, furnishing information required in connection therewith
and seeking timely to obtain any such actions, consents, approvals or waivers.
SECTION 8.03. Public Announcements. Prior to the public announcement
by AT&T and Comcast of the execution of the Merger Agreement, the parties hereto
agree to 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 prior to such consultation.
Following the Closing, the parties agree to consult with each other before
issuing any press release or making any public filing that describes any terms
of this Agreement.
SECTION 8.04. Notice of Certain Events. Each of the parties hereto
shall promptly notify the other parties of:
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(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
earlier to occur of the termination of this Agreement and Closing; 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 8.04
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
SECTION 8.05. Indemnity. Comcast shall indemnify and hold harmless
Microsoft against any claim by, and Microsoft will have no liability to,
Comcast, AT&T or any shareholder of AT&T, Comcast or Parent for any loss arising
as a result of (i) the Distribution failing to qualify (including, without
limitation, under Section 355(e) of the Code) as a tax-free spin-off under
Section 355 of the Code or (ii) either the AT&T Broadband Merger or the Comcast
Merger failing to qualify either as a tax-free transaction under Section 351 of
the Code or as a reorganization under Section 368 of the Code (any such loss, a
"TAXABLE TRANSACTION LOSS"), except to the extent such failure to so qualify is
the direct result of a breach by Microsoft of Section 7.04 or the failure of the
representation in Section 5.06 to be true.
SECTION 8.06. Limitation Of Liability. Notwithstanding anything to
the contrary contained herein, in the event that Microsoft breaches Section
7.04, Microsoft's liability shall be limited as follows: (a) if by reason of any
action by Comcast, AT&T or their respective Affiliates, the Distribution or the
Mergers would be treated as a taxable transaction without regard to any breach
by Microsoft of Section 7.04 or any failure of the representation in Section
5.06 to be true, then Microsoft shall have no liability hereunder and (b) if any
action by Comcast, AT&T or their respective Affiliates would not, in the absence
of the breach of Section 7.04 or any failure of the representation in Section
5.06 to be true, have resulted in the Distribution or the Mergers being treated
as a taxable transaction, Microsoft's liability as a result of such breach shall
be apportioned with each such other Person as is appropriate to reflect the
relative fault of Microsoft and each such other Person, and Microsoft shall have
liability hereunder only with respect to its apportioned amount. Notwithstanding
any provision herein to the contrary, (i) Microsoft shall have no liability to
any Person
22
prior to the date of a determination by the Internal Revenue Service or, if such
determination is appealed, the date of a final determination by a court or other
competent authority, that the Distribution does not qualify for tax-free
treatment under Section 355 of the Code and (ii) Microsoft shall have no
liability under this Agreement with respect to transactions relating to Excluded
Shares.
SECTION 8.07. Set-Top Box Commitment. The parties agree to exercise
good faith in the negotiation and execution of a definitive technology agreement
substantially consistent with the intent and terms of the Set-Top Box Commitment
and further agree that, until such definitive technology agreement has been
executed and delivered, the terms of the Set-Top Box Commitment shall be
binding.
ARTICLE 9
CONDITIONS TO CLOSING
SECTION 9.01. Conditions to Obligation of Microsoft: Exchange
Closing. The obligation of Microsoft to consummate the Exchange Closing is
subject to the satisfaction of the following conditions:
(a) the Merger Agreement shall have been executed and delivered by
the parties thereto and shall provide that, at the Effective Time, each share of
Comcast Common Stock shall by virtue of the Comcast Merger be converted into the
right to receive one share of Parent Common Stock;
(b) AT&T shall have, by written instrument in form and substance
reasonably satisfactory to Microsoft: (i) become a party to this Agreement and
(ii) directly or by reference to this Agreement made (A) representations and
warranties substantially identical to those contained in Article 1 of Exhibit A
to this Agreement and (B) the covenants contained in Article 3 of Exhibit A.
(c) Parent shall have, by written instrument in form and substance
reasonably satisfactory to Microsoft: (i) become a party to this Agreement and
(ii) directly or by reference to this Agreement made (A) representations and
warranties substantially identical to those contained in Article 2 of Exhibit A
to this Agreement and (B) the covenants contained in Article 4 of Exhibit A.
(d) no material provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the consummation of the
Exchange or the Mergers;
(e) except as provided in Section 9.01(f), all conditions to the
Mergers shall have been satisfied or waived in accordance with the Merger
Agreement and this Agreement and Microsoft shall be reasonably satisfied that
the Mergers will occur immediately following the Closing;
23
(f) (i) The Merger Agreement shall contain a representation and
warranty by AT&T substantially to the effect that, since December 31, 2000, (A)
the business of AT&T Broadband and its Subsidiaries has been conducted in the
ordinary course of business consistent with past practice and (B) there has not
been 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 any AT&T Broadband Material Adverse Effect (as such term shall be
defined in the Merger Agreement) and (ii) the condition to the Mergers set forth
in the Merger Agreement with respect to the truth of the representation and
warranty described in clause (i)(B) shall have been satisfied and not waived.
(g) any applicable waiting period under the HSR Act relating to the
Exchange shall have expired or been terminated;
(h) Comcast, AT&T and Parent shall each have performed in all
material respects all of their respective obligations hereunder required to be
performed by them on or prior to the Exchange Closing;
(i) 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;
(j) the shares of Parent Common Stock to be issued in the Mergers
(other than the shares of Parent Class B Common Stock) shall have been approved
for listing on the Securities Exchange, subject to official notice of issuance;
(k) the representations and warranties of Comcast, AT&T and Parent
contained in this Agreement or otherwise made pursuant to this Agreement shall
in each case, if specifically qualified by materiality, be true and correct and,
if not so qualified, be true and correct in all material respects at and as of
the Closing Date, as if made at and as of such date (except to the extent such
representations and warranties expressly relate to an earlier date, in which
case such representations and warranties shall be true and correct on and as of
such earlier date);
(l) Comcast shall have delivered to Microsoft a certificate dated the
Closing Date, signed by an officer of Comcast, certifying that the condition set
forth in Section 9.01(k) with respect to representations and warranties of
Comcast has been satisfied;
(m) AT&T shall have delivered to Microsoft a certificate dated the
Closing Date, signed by an officer of AT&T, certifying that the condition set
forth in Section 9.01(k) with respect to representations and warranties of AT&T
has been satisfied;
24
(n) Parent shall have delivered to Microsoft a certificate dated the
Closing Date, signed by an officer of Parent, certifying that the condition set
forth in Section 9.01(k) with respect to representations and warranties of
Parent has been satisfied;
(o) AT&T shall have delivered to Microsoft an opinion of counsel
reasonably acceptable to Microsoft, with respect to the due incorporation, due
authorization, non-contravention and capitalization of AT&T Broadband and the
validity of the Exchange Shares;
(p) Comcast shall have delivered to Microsoft an opinion reasonably
acceptable to Microsoft from Davis Polk & Wardwell, special counsel to Comcast,
with respect to the valid and binding nature of this Agreement and of each of
the Transaction Agreements;
(q) the Board of Directors of Comcast shall have received an opinion
from each of Morgan Stanley & Co. Incorporated, J.P. Morgan Securities Inc. and
Merrill, Lynch, Pierce, Fenner & Smith Incorporated, its financial advisors in
connection with the Transactions, substantially to the effect that, as of the
date of the Merger Agreement, 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, or
a comparable opinion substantially to the same effect;
(r) the Board of Directors of AT&T shall have received an opinion
from each of Credit Suisse First Boston and Goldman Sachs & Co., its financial
advisors in connection with the Transactions, substantially to the effect that,
as of the date of the Merger Agreement, the consideration to be received by the
holders of the AT&T Common Stock in the AT&T Broadband Merger is fair to such
holders, or a comparable opinion substantially to the same effect; and
(s) upon consummation of the Distribution, AT&T Broadband shall
include substantially all of the AT&T Broadband Business.
SECTION 9.02. Conditions to Obligation of Microsoft: Alternative
Transaction Closing. The obligation of Microsoft to consummate the Alternative
Transaction Closing is subject to the satisfaction of the following conditions:
(a) the Merger Agreement shall have been executed and delivered by
the parties thereto and shall provide that AT&T will, prior to the Distribution,
effect the transfer, assignments and adjustments described in Section 3.04;
(b) no material provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the consummation of the
Alternative Transaction or the Mergers;
25
(c) Parent shall have, by written instrument in form and substance
reasonably satisfactory to Microsoft: (i) become a party to this Agreement and
(ii) directly or by reference to this Agreement made (A) representations and
warranties substantially identical to those contained in Sections 2.01, 2.02 and
2.03 of Exhibit A and (B) the covenants contained in Sections 4.01 and 4.04 of
Exhibit A;
(d) except as provided in Section 9.02(e), all conditions to the
Mergers shall have been satisfied or waived in accordance with the Merger
Agreement and this Agreement and Microsoft shall be reasonably satisfied that
the Mergers will occur immediately following the Closing;
(e) (i) The Merger Agreement shall contain a representation and
warranty by AT&T substantially to the effect that, since December 31, 2000, (A)
the business of AT&T Broadband and its Subsidiaries has been conducted in the
ordinary course of business consistent with past practice and (B) there has not
been 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 any AT&T Broadband Material Adverse Effect (as such term shall be
defined in the Merger Agreement) and (ii) the condition to the Mergers set forth
in the Merger Agreement with respect to the truth of the representation and
warranty described in clause (i)(B) shall have been satisfied and not waived.
(f) Comcast and Parent shall each have performed in all material respects all of
their respective obligations hereunder required to be performed by them on or
prior to the Alternative Transaction Closing;
(g) the representations and warranties of Comcast and Parent
contained in this Agreement or otherwise made pursuant to this Agreement (in the
case of Comcast, without regard to those provided by Sections 4.05, 4.06 and
4.07) shall in each case, if specifically qualified by materiality, be true and
correct and, if not so qualified, be true and correct in all material respects
at and as of the Closing Date, as if made at and as of such date (except to the
extent such representations and warranties expressly relate to an earlier date,
in which case such representations and warranties shall be true and correct on
and as of such earlier date);
(h) Comcast shall have delivered to Microsoft a certificate dated the
Closing Date, signed by an officer of Comcast, certifying that the condition set
forth in Section 9.02(g) with respect to the representations and warranties of
Comcast has been satisfied;
(i) Parent shall have delivered to Microsoft a certificate dated the
Closing Date, signed by an officer of Parent, certifying that the condition set
forth in Section 9.02(g) with respect to the representations and warranties of
Parent has been satisfied;
26
(j) Comcast shall have delivered to Microsoft an opinion of counsel
reasonably acceptable to Microsoft, with respect to the due incorporation, due
authorization and non-contravention of Comcast;
(k) Comcast shall have delivered to Microsoft an opinion reasonably
acceptable to Microsoft from Davis Polk & Wardwell, special counsel to Comcast,
with respect to the valid and binding nature of this Agreement;;
(l) Comcast shall have delivered, or caused to be delivered, to
Microsoft an opinion of counsel reasonably acceptable to Microsoft, with respect
to the due incorporation, due authorization and non-contravention of AT&T
Broadband;
(m) upon consummation of the Distribution, AT&T Broadband shall
include substantially all of the AT&T Broadband Business; and
(n) the transfers, assignments and other transactions contemplated by
Section 3.04 hereof shall have been effected.
SECTION 9.03. Conditions to Obligation of AT&T and Comcast: Exchange
Closing. The obligation of AT&T to consummate the Exchange Closing, and any
obligation of Comcast with respect to the Exchange Closing, are each subject to
the satisfaction of the following conditions:
(a) the Merger Agreement shall have been executed and delivered by
the parties thereto;
(b) all conditions to the Mergers shall have been satisfied or waived
in accordance with the Merger Agreement and Comcast shall be reasonably
satisfied that the Mergers will occur;
(c) any applicable waiting period under the HSR Act relating to the
Exchange shall have expired or been terminated;
(d) Microsoft shall have performed in all material respects all of
its obligations hereunder required to be performed by it at or prior to the
Exchange Closing Date;
(e) the representations and warranties of Microsoft contained in this
Agreement shall be true in all material respects at and as of the Closing Date,
as if made at and as of such date;
(f) Comcast shall have received a certificate signed by an
appropriate officer of Microsoft certifying that the condition set forth in
Section 9.03(e) with respect to representations and warranties of Comcast has
been satisfied; and
27
(g) Microsoft shall have delivered to Comcast an opinion reasonably
acceptable to Comcast from Sullivan & Cromwell, special counsel to Microsoft,
with respect to the valid and binding nature of this Agreement.
SECTION 9.04. Conditions to Obligation of Comcast: Alternative
Transaction Closing. The obligation of Comcast to consummate the Alternative
Transaction Closing is subject to the satisfaction of the following conditions:
(a) the Merger Agreement shall have been executed and delivered by
the parties thereto;
(b) an Exchange Condition shall have occurred and Microsoft shall
have delivered an Alternative Transaction Notice;
(c) 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 Alternative Transaction;
(d) all conditions to the Mergers shall have been satisfied or waived
in accordance with the Merger Agreement and Comcast shall be reasonably
satisfied that the Mergers will occur;
(e) Microsoft shall have performed in all material respects all of
its applicable obligations hereunder required to be performed by it at or prior
to the Alternative Transaction Closing;
(f) the representations and warranties of Microsoft contained in this
Agreement (without regard to those provided in Section 5.06) shall be true in
all material respects at and as of the Closing Date, as if made at and as of
such date;
(g) Comcast shall have received a certificate signed by an
appropriate officer of Microsoft certifying that the condition set forth in
Section 9.04(f) has been satisfied; and
(h) Microsoft shall have delivered to Comcast an opinion reasonably
acceptable to Comcast from Sullivan & Cromwell, special counsel to Microsoft,
with respect to the valid and binding nature of this Agreement.
ARTICLE 10
TERMINATION
SECTION 10.01. Grounds for Termination. This Agreement may be
terminated by either Comcast or Microsoft at any time prior to the Closing if:
(a) the Merger Agreement shall have been terminated for any reason in
accordance with its terms;
28
(b) consummation of the transactions contemplated hereby would
violate any nonappealable final order, decree or judgment of any court or
governmental body having competent jurisdiction;
(c) the Mergers shall not have been consummated on or prior to March
1, 2003; or
(d) the Merger Agreement shall not have been executed on or prior to
June 30, 2002.
The party desiring to terminate this Agreement pursuant to Section
10.01 shall give notice of such termination to the other party.
SECTION 10.02. Effect of Termination. If this Agreement is terminated
as permitted by Section 10.01, such termination shall be without liability of
either party (or any stockholder, director, officer, employee, agent, consultant
or representative of such party) to the other party to this Agreement; provided,
that if such termination shall result from the willful (a) failure of either
party to fulfill a condition to the performance of the obligations of the other
party, (b) failure to perform a covenant of this Agreement or (c) breach by
either party hereto of any representation or warranty or agreement contained
herein, such party shall be fully liable for any and all damages, loss,
liability and expense including, without limitation, reasonable expenses of
investigation and reasonable attorneys' fees and expenses in connection with any
action, suit or proceeding, incurred or suffered by the other party as a result
of such failure or breach. The provisions of Section 7.03, Section 11.01,
Section 11.03 and Section 11.05 shall survive any termination hereof pursuant to
Section 10.01. The termination hereunder shall have no effect on the Set-Top Box
Commitment.
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing and shall be deemed
duly given, effective (i) three Business Days later, if sent by registered or
certified mail, return receipt requested, postage prepaid, (ii) when sent if
sent by telecopier or fax, provided that the telecopy or fax is promptly
confirmed by telephone confirmation thereof, (iii) when served, if delivered
personally to the intended recipient, and (iv) one Business Day later, if sent
by overnight delivery via a national courier service, and in each case,
addressed,
if to Microsoft, to:
Microsoft Corporation
One Microsoft Way
Redmond, WA 98053
29
Attention: Deputy General Counsel
Finance & Operations
Fax: (425) 936-7329
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
Attention: Alexandra D. Korry, Esq.
Fax: (212) 558-3588
if to Comcast, to:
Comcast Corporation
1500 Market Street
East Tower - 35th Floor
Philadelphia, PA 19102-2148
Attention: General Counsel
Fax: (215) 981-7744
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Dennis S. Hersch, Esq.
Fax: (212) 450-4800
Any party may change the address to which notices or other communications
hereunder are to be delivered by giving the other party notice in the manner
herein set forth.
SECTION 11.02. Amendments and Waivers. Any provision of this
Agreement may be amended or waived if, but only if, such amendment or waiver is
in writing and is signed, in the case of an amendment, by each party to this
Agreement, or in the case of a waiver, by the party against whom the waiver is
to be effective. No failure or delay by any party 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.
SECTION 11.03. Expenses. All costs and expenses incurred in
connection with this Agreement shall be paid by the party incurring such cost or
expense.
30
SECTION 11.04. Assignment. The rights and obligations of the parties
hereunder cannot be assigned or delegated except with the express written
permission of all of the parties hereto.
SECTION 11.05. Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of New York, without regard to
the conflicts of law rules of such State.
SECTION 11.06. Counterparts; Third Party Beneficiaries. This
Agreement may be signed in any number of 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 each other party
hereto. No provision of this Agreement is intended to confer upon any Person
other than the parties hereto and their respective indemnified parties,
successors and permitted assigns, any rights or remedies hereunder.
SECTION 11.07. Entire Agreement. Except for the letter dated November
29, 2001 from Comcast to Microsoft, this Agreement (including any Exhibits
hereto) constitutes the entire agreement between the parties with respect to the
subject matter of this Agreement and supersedes all prior agreements and
understandings, both oral and written, between the parties with respect to the
subject matter of this Agreement.
SECTION 11.08. Captions. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
SECTION 11.09. Severability. The provisions of this Agreement shall
be deemed severable and the invalidity or unenforceability of any provision
shall not affect the validity or enforceability of the other provisions hereof.
If any provision of this Agreement, or the application thereof to any person or
entity or any circumstance, is invalid or unenforceable, (a) a suitable and
equitable provision shall be substituted therefor in order to carry out, so far
as may be valid and enforceable, the intent and purpose of such invalid or
unenforceable provision and (b) the remainder of this Agreement and the
application of such provision to other persons, entities or circumstances shall
not be affected by such invalidity or unenforceability, nor shall such
invalidity or unenforceability affect the validity or enforceability of such
provision, or the application thereof, in any other jurisdiction.
SECTION 11.10. Survival. All representations and warranties contained
in this Agreement and all claims with respect thereto shall terminate upon the
expiration of 10 months after the Closing Date, except that the representations
and warranties contained in Sections 4.01, 4.02, 4.03, 4.05, 5.01, 5.02, 5.03,
and 5.05, any representations and warranties made by AT&T pursuant to this
Agreement that are substantially identical to those contained in Sections 1.01,
1.02, 1.03 and
31
1.05 of Exhibit A, and any representations and warranties made by Parent
pursuant to this Agreement that are substantially to those contained in Sections
2.01, 2.02, 2.03 and 2.04 of Exhibit A, shall survive forever; provided, that in
the event notice of any claim for indemnification under Section Section 11.10
hereof shall have been given (within the meaning of Section Section 11.01)
within the applicable survival period, the representations and warranties that
are the subject of such indemnification claim shall survive with respect to such
claim until such time as such claim is finally resolved.
32
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.
MICROSOFT CORPORATION
By: /s/ Richard P. Emerson
--------------------------
Name: Richard P. Emerson
Title: Senior Vice President, Corporate
Development and Strategy
COMCAST CORPORATION
By: /s/ Brian L. Roberts
--------------------------
Name: Brian L. Roberts
Title: President
33
EXHIBIT A
REPRESENTATIONS, WARRANTIES AND COVENANTS
TO BE MADE BY AT&T AND PARENT
ARTICLE 1
REPRESENTATIONS AND WARRANTIES
AT&T represents and warrants to Microsoft as of the date hereof and
as of the Closing that:
Section 1.01. Corporate Existence and Power. AT&T is a corporation
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all corporate powers required to carry on
its business as currently conducted.
SECTION 1.02. Corporate Authorization. The execution, delivery and
performance by AT&T of this Agreement and the consummation by AT&T of the
transactions contemplated hereby are within AT&T's corporate powers and have
been duly authorized by all necessary corporate action on the part of AT&T. This
Agreement constitutes a valid and binding agreement of AT&T, enforceable against
AT&T 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.
SECTION 1.03. Authorization. The execution, delivery and performance
by AT&T of this Agreement require no action by or in respect of, or filing with,
any governmental or non-governmental body, agency or official or any other
Person other than (i) compliance with any applicable requirements of the HSR
Act; (ii) compliance with any applicable requirements of the 1933 Act, the 1934
Act, and any other applicable securities laws, whether United States, state or
foreign; (iii) such actions by or in respect of, or filings with, any
governmental or non-governmental body, agency or official or any other Person as
are required to complete the Mergers and which shall have been obtained or
completed, as applicable, prior to Closing; and (iv) any other actions or
filings that are immaterial to the consummation of the transactions contemplated
hereby.
SECTION 1.04. Noncontravention. The execution, delivery and
performance of this Agreement by AT&T do not and will not (i) violate the
certificate of incorporation, bylaws or other governing organizational documents
of AT&T, (ii) assuming compliance with the matters referred to in Section 1.03,
violate any applicable law, rule, regulation, judgment, injunction, order or
decree, except for any such violations which would not be material to the
transactions
contemplated hereby or (iii) conflict with, or result in a violation or breach
of any provision of, or constitute a default (or an event which, with the giving
of notice, the passage of time, or both, or otherwise, would constitute a
default) under or a termination of, or entitle any party (with the giving of
notice, the passage of time, or both, or otherwise) to terminate, accelerate,
modify or call a default under, any of the terms, conditions or provisions of
any note, bond, debenture, mortgage, indenture, guarantee, deed of trust,
intellectual property or other license, contract, permit, license, agreement,
lease or other instrument to which AT&T or any of its Controlled Affiliates is a
party or by which its assets or properties may be affected, or result in the
creation of any Lien upon any of the properties or assets of AT&T or any of its
Controlled Affiliates, which in each case would be material to the transactions
contemplated hereby.
SECTION 1.05. Authorization of Exchange Shares. Any Exchange Shares
transferred by AT&T to Microsoft shall, at the time of the Closing, have been
duly authorized by all requisite corporate action of AT&T Broadband and shall,
when delivered in accordance with the terms of this Agreement, be validly issued
and outstanding, fully paid and nonassessable, free and clear of any Liens and
not subject to preemptive or other similar rights of the stockholders of AT&T
Broadband.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to Microsoft as of the date hereof and
as of the Closing.
SECTION 2.01. Corporate Existence And Power. Parent is a corporation
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all corporate powers required to carry on
its business as currently conducted.
SECTION 2.02. Authorization. The execution, delivery and performance
by Parent of this Agreement require no action by or in respect of, or filing
with, any governmental or non-governmental body, agency or official or any other
Person other than (i) compliance with any applicable requirements of the HSR
Act; (ii) compliance with any applicable requirements of the 1933 Act, the 1934
Act, and any other applicable securities laws, whether United States, state or
foreign; (iii) such actions by or in respect of, or filings with, any
governmental or non-governmental body, agency or official or any other Person as
are required to complete the Mergers and which shall have been obtained or
completed, as applicable, prior to Closing; and (iv) any other actions or
filings that are immaterial to the consummation of the transactions contemplated
hereby.
SECTION 2.03. Noncontravention. The execution, delivery and
performance of this Agreement by Parent do not and will not (i) violate the
35
certificate of incorporation, bylaws or other governing organizational documents
of Parent, (ii) assuming compliance with the matters referred to in Section
2.03, violate any applicable law, rule, regulation, judgment, injunction, order
or decree, except for any such violations which would not be material to the
transactions contemplated hereby or (iii) conflict with, or result in a
violation or breach of any provision of, or constitute a default (or an event
which, with the giving of notice, the passage of time, or both, or otherwise,
would constitute a default) under or a termination of, or entitle any party
(with the giving of notice, the passage of time, or both, or otherwise) to
terminate, accelerate, modify or call a default under, any of the terms,
conditions or provisions of any note, bond, debenture, mortgage, indenture,
guarantee, deed of trust, intellectual property or other license, contract,
permit, license, agreement, lease or other instrument to which Parent or any of
its Controlled Affiliates is a party or by which its assets or properties may be
affected, or result in the creation of any Lien upon any of the properties or
assets of Parent or any of its Controlled Affiliates, which in each case would
be material to the transactions contemplated hereby.
SECTION 2.04. Authorization of Parent Shares. Any Parent Shares to be
received by Microsoft as the result of the conversion of Exchange Shares in the
AT&T Broadband Merger shall, at the Effective Time, have been duly authorized by
all requisite corporate action of Parent and shall, when delivered in accordance
with the terms of the Merger Agreement, be validly issued and outstanding, fully
paid and nonassessable, free and clear of any Liens and not subject to
preemptive or other similar rights of the stockholders of Parent.
SECTION 2.05. Anti-takeover. Except for obligations, restrictions or
requirements that are generally applicable to all holders of Parent Common Stock
(without regard to the number of shares held), or as provided in Section 7.04 of
the Agreement, the receipt, holding, transfer and exercise of rights of the
Parent Common Stock in the AT&T Broadband Merger will not (i) subject Microsoft
or any of its Affiliates to any obligations under Pennsylvania law, the
governing organizational documents of Parent or any agreement of the Parent
(other than this Agreement or the Transaction Agreements) in respect of Parent
or any of its shareholders, (ii) restrict Microsoft or any of its Affiliates
from engaging in any transaction with Parent, its Subsidiaries or its
shareholders or (iii) subject Microsoft or any of its Affiliates to any higher
vote or other requirement in respect of any transaction with Parent, its
Subsidiaries or its shareholders. To the extent applicable, Parent has taken all
action necessary or advisable to render irrevocably inapplicable, subject to the
Closing, to Microsoft and its Affiliates any anti-takeover provision of
Pennsylvania law contained in the organizational documents of Parent.
36
ARTICLE 3
COVENANTS OF AT&T
AT&T agrees that:
SECTION 3.01. Ownership of AT&T Broadband Common Stock. AT&T shall,
at the time of the Closing, be the record holder of a sufficient number of
shares of AT&T Broadband Common Stock to effect the Exchange, and shall hold
such stock free and clear of all Liens.
SECTION 3.02. Closing. At the Closing, AT&T shall (a) effect the
Exchange, (b) deliver the certificate required pursuant to Section 9.01(m) of
the Agreement and (c) cause its counsel to deliver the opinion required pursuant
to Section 9.01(o) of the Agreement.
SECTION 3.03. Registration Statement; Blue Sky Laws. AT&T shall use
its reasonable best efforts to cause a Registration Statement to become
effective with respect to the Parent Shares, and shall make all other necessary
filings pursuant to the 1933 Act, the 1934 Act and applicable state "blue sky"
laws, prior to the Closing.
SECTION 3.04. Listing of Stock. AT&T shall use its reasonable best
efforts to cause the shares of Parent Common Stock to be issued in connection
with the Mergers (other than shares of Parent Class B Common Stock) to be
approved for listing on the Securities Exchange prior to Closing, subject to
official notice of issuance.
ARTICLE 4
COVENANTS OF PARENT
Parent agrees that:
SECTION 4.01. Closing. (a) At the Exchange Closing, if any, Parent
shall deliver the certificate required pursuant to Section 9.01(n) of the
Agreement and (b) at the Alternative Transaction Closing, if any, Parent shall
deliver the certificate required pursuant to Section 9.02(i).
SECTION 4.02. Registration Statement; Blue Sky Laws. Parent shall use
its reasonable best efforts to cause a Registration Statement to become
effective with respect to the Parent Shares, and shall make all other necessary
filings pursuant to the 1933 Act, the 1934 Act and applicable state "blue sky"
laws, prior to the Closing.
SECTION 4.03. Listing of Stock. Parent shall use its reasonable best
efforts to cause the shares of Parent Common Stock to be issued in connection
with the Mergers (other than shares of Parent Class B Common Stock) to be
approved for
37
listing on the Securities Exchange prior to Closing, subject to official notice
of issuance.
SECTION 4.04. Best Efforts. Parent shall use its reasonable best
efforts to effect the transactions set forth in Section 3.04 of this Agreement.
38