Exhibit 2.6
COMPOSITE COPY(1)
EXCHANGE AGREEMENT
dated as of
December 7, 2001
between
MICROSOFT CORPORATION
and
COMCAST CORPORATION
--------------------------------------------------------------------------------
(1) Reflects amendments enacted by Amendment No. 1 to the Exchange
Agreement, dated as of March 11, 2002.
TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINITIONS
Section 1.01. Definitions......................................................................1
ARTICLE 2
MOST FAVORED NATIONS
Section 2.01. Representations..................................................................9
Section 2.02. Most Favored Nations............................................................10
Section 2.03. Amendments, Etc.................................................................12
Section 2.04. Dispute Resolution..............................................................12
ARTICLE 3
EXCHANGE; ALTERNATIVE TRANSACTION
Section 3.01. Exchange........................................................................13
Section 3.02. Exchange Closing................................................................13
Section 3.03. Unwind of Exchange..............................................................13
Section 3.04. Alternative Transaction.........................................................14
Section 3.05. Alternative Transaction Closing.................................................15
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF COMCAST
Section 4.01. Corporate Existence and Power...................................................15
Section 4.02. Corporate Authorization.........................................................15
Section 4.03. Authorization...................................................................15
Section 4.04. Noncontravention................................................................16
Section 4.05. Valid Issuance..................................................................16
Section 4.06. Ownership of Parent.............................................................16
Section 4.07. Capitalization..................................................................17
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF MICROSOFT
Section 5.01. Corporate Existence and Power...................................................17
Section 5.02. Corporate Authorization.........................................................17
Section 5.03. Authorization...................................................................17
Section 5.04. Noncontravention................................................................18
Section 5.05. Ownership of QUIPS..............................................................18
PAGE
Section 5.06. Tax Representation..............................................................18
ARTICLE 6
COVENANTS OF COMCAST
Section 6.01. Commitment of AT&T..............................................................19
Section 6.02. Exchange Closing................................................................19
Section 6.03. Alternative Transaction Closing.................................................19
Section 6.04. Registration Statement; Blue Sky Laws...........................................19
Section 6.05. Listing of Stock................................................................19
Section 6.06. Merger Documentation............................................................20
Section 6.07. Share Issuances.................................................................20
Section 6.08. AT&T Broadband Business.........................................................20
Section 6.09. Notification of Excluded Shares.................................................20
ARTICLE 7
COVENANTS OF MICROSOFT
Section 7.01. Closing.........................................................................20
Section 7.02. Ownership of QUIPS..............................................................21
Section 7.03. Confidentiality.................................................................21
Section 7.04. Lockup..........................................................................22
Section 7.05. Tax Matters.....................................................................22
ARTICLE 8
ADDITIONAL COVENANTS
Section 8.01. Reasonable Best Efforts; Further Assurances.....................................23
Section 8.02. Certain Filings.................................................................23
Section 8.03. Public Announcements............................................................23
Section 8.04. Notice of Certain Events........................................................23
Section 8.05. Indemnity.......................................................................24
Section 8.06. Limitation Of Liability.........................................................24
Section 8.07. Set-Top Box Commitment..........................................................25
ARTICLE 9
CONDITIONS TO CLOSING
Section 9.01. Conditions to Obligation of Microsoft: Exchange Closing.........................25
Section 9.02. Conditions to Obligation of Microsoft: Alternative Transaction Closing..........27
Section 9.03. Conditions to Obligation of AT&T and Comcast: Exchange Closing..................29
Section 9.04. Conditions to Obligation of Comcast: Alternative Transaction Closing............30
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ARTICLE 10
TERMINATION
PAGE
Section 10.01. Grounds for Termination........................................................30
Section 10.02. Effect of Termination..........................................................31
ARTICLE 11
MISCELLANEOUS
Section 11.01. Notices........................................................................31
Section 11.02. Amendments and Waivers.........................................................32
Section 11.03. Expenses.......................................................................32
Section 11.04. Assignment.....................................................................33
Section 11.05. Governing Law..................................................................33
Section 11.06. Counterparts; Third Party Beneficiaries........................................33
Section 11.07. Entire Agreement...............................................................33
Section 11.08. Captions.......................................................................33
Section 11.09. Severability...................................................................33
Section 11.10. Survival.......................................................................33
ARTICLE 12
COMMON STOCK EXCHANGE
Section 12.01. Merger Agreement Amendment.....................................................34
Section 12.02. Transfer Exchange..............................................................34
Section 12.03. Supplemental Exchange..........................................................35
Section 12.04. Limitations On Common Stock Exchange Rights....................................36
Section 12.05. Common Stock Exchange Notice...................................................36
Section 12.06. Third Party Transferee Exchange................................................37
Section 12.07. Common Stock Exchange Procedures...............................................37
Section 12.08. Common Stock Exchange Closing..................................................39
Section 12.09. Restricted Shares..............................................................39
Section 12.10. Registration Of Exchange Voting Shares.........................................39
Section 12.11. Conditions to Obligations of Parent; Supplemental Exchange Closing and
Microsoft Transfer Exchange Closing............................................40
Section 12.12. Conditions to Obligations of Parent: Third Party Transferee Exchange Closing..40
Section 12.13. Obligations of AT&T............................................................40
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"), Comcast
Corporation, a Pennsylvania corporation ("COMCAST") and pursuant to an
Instrument of Admission dated as of December 19, 2001, AT&T Corp., a New York
corporation ("AT&T") and AT&T Comcast Corporation, a Pennsylvania corporation
("AT&T 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.
"COMMON STOCK EXCHANGE" means a Transfer Exchange or a Supplemental
Exchange.
"COMMON STOCK EXCHANGE CLOSING" has the meaning specified in Section
12.07(c).
"COMMON STOCK EXCHANGE CLOSING DATE" has the meaning specified in
Section 12.08.
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"COMMON STOCK EXCHANGE NOTICE" has the meaning specified in Section
12.05(a).
"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.
"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.
"EXCHANGE VOTING SHARES" means the shares of Parent Voting Stock
delivered to Microsoft (or any of its Affiliates) in a Supplemental Exchange or
a Microsoft Transfer Exchange or to a Third Party Transferee in a Third Party
Transferee Exchange.
"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.
"GOVERNMENTAL AUTHORITY" means any United States federal, state or
local, foreign or supranational governmental body, agency, official or
authority.
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"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.
"HSD SERVICE" shall have the meaning specified in Section 2.02(c).
"HSR ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ 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 ▇▇▇▇ ▇▇▇) of the
relevant Person.
"LIEN" means, with respect to any property or asset, any mortgage,
lien, pledge, charge, security interest, encumbrance, restriction on transfer
(other than restrictions on transfer under applicable securities laws or the
restrictions on transfer applicable to Parent Common Stock under this Agreement)
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).
"MICROSOFT TRANSFER EXCHANGE" has the meaning specified in Section
12.02.
"MICROSOFT TRANSFER EXCHANGE CLOSING" has the meaning specified in
Section 12.07(b).
"MSN" shall have the meaning specified in Section 2.02.
5
"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
Comcast and Parent and all of the subsidiaries of Comcast and Parent.
"PARENT CLASS A COMMON STOCK" means the Class A Common Stock, par value
$1.00 per share, of Parent.
"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 PARTY" means Parent or any Affiliate of Parent, provided that
before the Effective Time neither AT&T nor any of AT&T's Affiliates (excluding
any Person that is an Affiliate of AT&T solely by virtue of AT&T's ownership of
Parent capital stock) shall be, and after the Effective Time, neither AT&T nor
any of its Affiliates at that time shall be, Parent Parties.
6
"PARENT SHARES" means shares of Parent Common Stock received by
Microsoft or Microsoft T-Holdings by virtue of the conversion of Exchange Shares
in the AT&T Broadband Merger.
"PARENT VOTING STOCK" means the class of voting Parent Common Stock to
be received by holders of AT&T Broadband Common Stock by virtue of the AT&T
Broadband Merger pursuant to the Merger Agreement, which class shall either be
Parent Class A Common Stock or Parent Class C Common Stock.
"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.
"REMAINING SUBSTITUTION SHARES" has the meaning specified in Section
12.04.
"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.
"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
7
majority of the board of directors or other body performing similar functions
are at any time, directly or indirectly, owned by such Person.
"SUBSTITUTION SHARES" has the meaning specified in Section 12.01.
"SUPPLEMENTAL EXCHANGE" has the meaning specified in Section 12.03.
"SUPPLEMENTAL EXCHANGE CLOSING" has the meaning specified in Section
12.07(a).
"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).
"THIRD PARTY TRANSFER" has the meaning specified in Section 12.02.
"THIRD PARTY TRANSFEREE" has the meaning specified in Section 12.02.
"THIRD PARTY TRANSFEREE EXCHANGE" has the meaning specified in Section
12.02.
"THIRD PARTY TRANSFEREE EXCHANGE CLOSING" has the meaning specified in
Section 12.07(c).
"THIRD PARTY TRANSFEREE EXCHANGE NOTICE" has the meaning specified in
Section 12.06.
"THRESHOLD PERCENTAGE" shall have the meaning specified in Section
2.02(c).
"TOTAL VOTING POWER" means the total voting power of issued and
outstanding Parent capital stock.
"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.
8
"TRANSACTIONS" means the transactions contemplated in connection with
the Transaction Agreements.
"TRANSFER EXCHANGE" has the meaning specified in Section 12.02.
"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.
(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 neither Comcast nor any of its
Affiliates has, and, to Comcast's knowledge, neither AT&T nor any Subsidiary of
AT&T has (with respect to the AT&T Broadband Business) 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
9
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"), any Parent Party enters into
or is bound by (or, upon consummation of the Mergers, any Parent Party is party
to or is bound by) 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 respect to the relevant Parent
Parties on the same terms and conditions (including with respect to: (I) the
specific cable system or systems, applications and functionality 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 or all 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
10
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 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 with respect to the same cable system or
systems, applications and functionality 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. No Parent Party will enter
into or be bound by: (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 during the MFN Period 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 or being bound by
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, so long as the proposed Microsoft Access Agreement complies with the
provisions of this Article II. 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
11
proposed agreement, the Parent Party will be permitted to initiate service under
the Third Party Access Agreement, unless Microsoft has informed the relevant
Parent Party that in its view the proposed Microsoft Access Agreement does not
comply with the provisions of this Article II, in which event the dispute
resolution provisions shall apply. 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, unless Microsoft has informed
the relevant Parent Party that in its view the proposed Microsoft Access
Agreement does not comply with the provisions of this Article II, in which event
the dispute resolution provisions shall apply.
(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 (including following the Mergers) 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 other device permitting
access to the Internet through facilities of any Parent Party (including
following the Mergers), including, without limitation, through a gaming device
or home gateway (but not through a cable TV 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.
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 the applicable 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
12
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.
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
13
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. 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;
(b) 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)
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,
14
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.
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,
15
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,
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 or the restrictions on transfer explicitly set forth herein).
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.
16
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.
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,
17
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) Neither Microsoft nor Microsoft T
has any 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 (or any wholly owned Subsidiary of Microsoft) from, and
Microsoft (and each wholly owned Subsidiary of 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 (or by any wholly owned Subsidiary of
Microsoft) in the AT&T Broadband Merger or in a Common Stock Exchange
(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.
(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 (and/or the wholly owned Subsidiary of Microsoft that is party
to such transaction or series of transactions) 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
18
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, neither
Microsoft nor any wholly owned Subsidiary of Microsoft shall be prohibited from
entering into any stock lending transactions pursuant to Section 1058 of the
Code with respect to Parent Common Stock, provided that neither Microsoft nor
any wholly owned Subsidiary of Microsoft directly lends, or reaches 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 or by any wholly owned Subsidiary of 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.
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.
19
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:
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).
(b) 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).
20
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 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.
(b) 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,
21
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 neither Microsoft nor any wholly
owned Subsidiary of Microsoft shall (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 (other
than a wholly owned Subsidiary of Microsoft) would acquire, or have the right to
acquire, directly or indirectly, from Microsoft (or from any wholly owned
Subsidiary of Microsoft) any Restricted Shares. The foregoing is not intended to
preclude Microsoft (or any wholly owned Subsidiary of Microsoft) from, and
Microsoft (and each wholly owned Subsidiary of 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 (or by a wholly owned Subsidiary of Microsoft) in the AT&T
Broadband Merger or in a Common Stock Exchange (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.
22
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:
23
(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
24
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;
25
(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;
26
(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 ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇, 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, ▇.▇. ▇▇▇▇▇▇ Securities Inc. and
Merrill, Lynch, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ 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;
27
(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;
28
(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 ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇, 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
29
(g) Microsoft shall have delivered to Comcast an opinion reasonably
acceptable to Comcast from ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, 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 ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, 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;
30
(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
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
31
Attention: Deputy General Counsel
Finance & Operations
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
if to Comcast, to:
Comcast Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ Tower B 35th Floor
Philadelphia, PA 19102-2148
Attention: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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.
32
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
33
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.
ARTICLE 12
COMMON STOCK EXCHANGE
Section 12.01. Merger Agreement Amendment. Comcast, AT&T and Parent agree
to cause the Merger Agreement to be amended such that, notwithstanding any other
provision of this Agreement or of the Merger Agreement, in the event that the
shares of Parent Voting Stock to be received by Microsoft (together with its
Affiliates) by virtue of the AT&T Broadband Merger would, when combined with any
other Parent capital stock received by Microsoft (together with its Affiliates)
in the Comcast Merger, exceed 4.95% of Total Voting Power at the Effective Time
(or, if any additional shares of Parent Voting Stock are delivered pursuant to
Section 4.03 or 4.04 of the Merger Agreement, at the time of such delivery), in
lieu of that number of such shares of Parent Voting Stock accounting for such
excess Microsoft shall instead, by virtue of the AT&T Broadband Merger (or of
such delivery of Parent Voting Stock pursuant to Section 4.03 or 4.04 of the
Merger Agreement), receive an equivalent number of shares of Parent Class A
Special Common Stock (such shares, the "SUBSTITUTION SHARES"). The provisions of
such amendment that give effect to this Section 12.01 shall be subject to the
consent of Microsoft, which consent shall not be unreasonably withheld.
Section 12.02. Transfer Exchange. In the event Microsoft (or any of its
Affiliates) proposes to transfer, in a transaction otherwise in compliance with
the terms hereof (including, without limitation, Section 7.04), shares of Parent
Class A Special Common Stock to a third party that is not an Affiliate of
Microsoft (a "THIRD PARTY TRANSFER"), Microsoft (or such Affiliate) shall be
entitled to: (i) cause Parent promptly to exchange such shares of Parent Class A
Special Common Stock for an equivalent number (as adjusted to reflect stock
dividends, subdivisions, splits or combinations, in each case having a record
date after the Effective Time) of shares of Parent Voting Stock (such exchange,
a "MICROSOFT TRANSFER EXCHANGE"), with such shares of Parent Voting Stock to be
delivered directly to the transferee (the "THIRD PARTY TRANSFEREE") upon closing
of such Third Party Transfer or (ii) provide the Third Party Transferee with the
right to cause Parent to exchange such shares of Parent Class A Special Common
Stock for an equivalent number (as adjusted to reflect stock dividends,
subdivisions, splits or combinations, in each case having a record date after
the Effective Time)
34
of shares of Parent Voting Stock (such exchange, a "THIRD PARTY TRANSFEREE
EXCHANGE" and, together with any Microsoft Transfer Exchange, a "TRANSFER
EXCHANGE"); provided, that in no event shall Parent be obliged to effect a
Transfer Exchange of a number of shares of Parent Class A Special Common Stock
that is greater than the number of Remaining Substitution Shares.
Section 12.03. Supplemental Exchange. (a) If after the Effective Time, for
any reason, the percentage of Total Voting Power represented by shares of Parent
voting capital stock held by Microsoft (together with its Affiliates) is less
than 4.95%, then Microsoft (and/or any of its Affiliates) shall be entitled,
subject to Section 12.03(c), to exchange shares of Parent Class A Special Common
Stock on a one-for-one basis (as adjusted to reflect stock dividends,
subdivisions, splits or combinations, in each case having a record date after
the Effective Time) for shares of Parent Voting Stock (a "SUPPLEMENTAL
EXCHANGE") in an amount equal to the lesser of: (x) the number of Remaining
Substitution Shares and (y) such number of shares of Parent Class A Special
Common Stock the exchange of which would restore the percentage of Total Voting
Power represented by shares of Parent voting capital stock held by Microsoft
(together with its Affiliates) to 4.95%. For the avoidance of doubt, in the
event of any tender or exchange offer for shares of Parent Voting Stock, any
shares validly tendered by Microsoft (or any of its Affiliates) in connection
with such tender or exchange offer shall not be considered "held" by Microsoft
(or such Affiliate(s)) for purposes of determining whether Microsoft and its
Affiliates are entitled to effect a Supplemental Exchange (and the number of
shares permitted to be exchanged in connection therewith); provided, that in the
event such tender or exchange offer is not completed and the shares so tendered
are returned to Microsoft (or such Affiliate(s)), such tendered and returned
shares shall again be considered "held" by Microsoft (or such Affiliate) and any
Supplemental Exchange previously completed in connection with such tender or
exchange offer and involving such tendered and returned shares shall be unwound,
in a manner consistent with the terms and conditions of this Agreement, to the
extent necessary such that the percentage of Parent voting capital stock held by
Microsoft (together with its Affiliates) does not exceed, as the result of such
tendered shares being returned, 4.95% of Total Voting Power.
(b) Parent shall, from time to time as reasonably requested by Microsoft,
notify Microsoft of the percentage of Total Voting Power represented by shares
of Parent voting capital stock then held by Microsoft (together with its
Affiliates) and the number of Remaining Substitution Shares as of such date. Not
later than ten (10) Business Days prior to the record date for any annual or
special meeting of Parent shareholders, and as promptly as practicable (but in
no event more than five (5) Business Days) after the commencement of any tender
offer, exchange offer, consent or proxy solicitation, or any other similar event
with respect to any Parent voting capital stock, Parent will notify Microsoft of
the percentage of Total Voting Power represented by shares of Parent voting
capital
35
stock then held by Microsoft (together with its Affiliates) and the number of
Remaining Substitution Shares as of such date.
(c) For so long as the number of Remaining Substitution Shares is
greater than zero, and subject to Section 12.03(a), Microsoft (and/or its
Affiliates) shall be entitled to effect (i) one Supplemental Exchange prior to
(or prior to consummation of, as applicable) each annual or special meeting of
Parent shareholders, tender or exchange offer or other event referred to in
Section 12.03(b) and (ii) such additional Supplemental Exchanges from time to
time as Microsoft shall in its sole discretion request (provided that Microsoft
shall not be entitled to make more than one such request during any period of
120 calendar days). Any concurrent Supplemental Exchanges by Microsoft and any
Affiliate(s) of Microsoft shall constitute one Supplemental Exchange for
purposes of the foregoing.
Section 12.04. Limitations On Common Stock Exchange Rights. (a) In no
event shall Parent be obliged to exchange shares of Parent Class A Special
Common Stock for shares of Parent Voting Stock in any Transfer Exchange or
Supplemental Exchange in an amount greater than the excess of (a) the number of
Substitution Shares issued pursuant to the Merger Agreement minus (b) the number
of shares of Parent Class A Special Common Stock exchanged by Microsoft (and/or
its Affiliates) or a third party transferee in all prior Transfer Exchanges or
Supplemental Exchanges (such excess, as adjusted to reflect stock dividends,
subdivisions, splits or combinations, in each case having a record date after
the Effective Time, the "REMAINING SUBSTITUTION SHARES"); provided, that such
numbers shall be adjusted to the extent appropriate to account for any stock
dividend, subdivision, split or combination of shares, in each case having a
record date after the Effective Time.
(b) The right to exchange shares of Parent Class A Special Common Stock
for shares of Parent Voting Stock in a Transfer Exchange or Supplemental
Exchange shall terminate at such time as the number of Remaining Substitution
Shares equals zero.
Section 12.05. Common Stock Exchange Notice. (a) In order to exercise its
rights pursuant to this Article 12, Microsoft shall provide Parent with written
notice of its intent to exercise such rights (a "COMMON STOCK EXCHANGE NOTICE").
In the event Microsoft intends to effect a Supplemental Exchange, such Common
Stock Exchange Notice shall be given not less than three (3) Business Days prior
to the closing date for such Supplemental Exchange. In the event Microsoft
intends to effect, or to provide a Third Party Transferee with the right to
effect, a Transfer Exchange, such Common Stock Exchange Notice shall be given
not less than three (3) Business Days prior to the closing of the related Third
Party Transfer.
(b) Each Common Stock Exchange Notice shall state the number of shares of
Parent Class A Special Common Stock Microsoft (and/or its Affiliates)
36
intends to exchange or transfer, as applicable, and, in the case of a
Supplemental Exchange or a Microsoft Transfer Exchange, the place, date and time
designated for the applicable Common Stock Exchange Closing.
(c) In the case of a Transfer Exchange, such Common Stock Exchange Notice
shall include the name of the proposed Third Party Transferee, the place, date
and time designated for completion of the subject Third Party Transfer (which in
the event of a Microsoft Transfer Exchange, shall be the same place, date and
time designated for the Microsoft Transfer Exchange Closing), and an election by
Microsoft either to effect a Microsoft Transfer Exchange or to grant the Third
Party Transferee the right to effect a Third Party Transferee Exchange. The
Third Party Transferee so identified in a Common Stock Exchange Notice shall be
a third party beneficiary of Microsoft's right under this Article 12 to cause
Parent to effect a Transfer Exchange, and of the obligation of Parent to effect
such Transfer Exchange, in the manner described in such Common Stock Exchange
Notice.
Section 12.06. Third Party Transferee Exchange. In the event Microsoft
delivers to Parent a Common Stock Exchange Notice containing an election by
Microsoft to grant the Third Party Transferee the right to effect a Third Party
Transferee Exchange, then upon and subject to the completion of the related
Third Party Transfer, the Third Party Transferee identified in such Common Stock
Exchange Notice shall be entitled to effect such Third Party Transferee Exchange
upon no less than three (3) Business Days' written notice (a "THIRD PARTY
TRANSFEREE EXCHANGE NOTICE"), with such notice delivered within ten (10) days
following the completion of the related Third Party Transfer. Each Third Party
Transferee Exchange Notice shall specify the number of shares of Parent Class A
Special Common Stock to be exchanged by the Third Party Transferee and the
place, date and time for the Third Party Transferee Exchange Closing.
Section 12.07. Common Stock Exchange Procedures. (a) At the closing of a
Supplemental Exchange (a "SUPPLEMENTAL EXCHANGE CLOSING"), Microsoft shall
deliver or cause to be delivered to Parent a certificate or certificates
representing the number of shares of Parent Class A Special Common Stock to be
exchanged, free and clear of all Liens, in exchange for the delivery by Parent
of (i) a certificate or certificates representing an equivalent number (as
adjusted to reflect stock dividends, subdivisions, splits or combinations, in
each case having a record date after the Effective Time) of shares of Parent
Voting Stock, free and clear of all Liens and (ii) a certificate signed by a
duly authorized officer of Parent to the effect that the shares of Parent Voting
Stock are validly issued and outstanding, fully paid and nonassessable, free and
clear of all Liens and not subject to preemptive or other similar rights of the
stockholders of Parent.
(b) At the closing of a Microsoft Transfer Exchange (a "MICROSOFT TRANSFER
EXCHANGE CLOSING"), Microsoft shall deliver or cause to be delivered to Parent a
certificate or certificates representing the number of shares of Parent Class A
Special Common Stock to be exchanged, free and clear of all Liens, in
37
exchange for the delivery by Parent to the Third Party Transferee of (i) a
certificate or certificates representing an equivalent number (as adjusted to
reflect stock dividends, subdivisions, splits or combinations, in each case
having a record date after the Effective Time) of shares of Parent Voting Stock,
free and clear of all Liens and (ii) a certificate signed by a duly authorized
officer of Parent to the effect that the shares of Parent Voting Stock are
validly issued and outstanding, fully paid and nonassessable, free and clear of
all Liens and not subject to preemptive or other similar rights of the
stockholders of Parent. Each certificate so surrendered for exchange shall be
accompanied by an instrument of transfer to the Third Party Transferee, in form
reasonably satisfactory to Parent, duly executed by the holder or the holder's
duly authorized attorney.
(c) At the closing of a Third Party Transferee Exchange (a "THIRD PARTY
TRANSFEREE EXCHANGE CLOSING" and, together with any Supplemental Exchange
Closing and any Microsoft Transfer Exchange Closing, a "COMMON STOCK EXCHANGE
CLOSING"), the Third Party Transferee shall deliver or cause to be delivered to
Parent a certificate or certificates representing the number of shares of Parent
Class A Special Common Stock to be exchanged, free and clear of all Liens, in
exchange for the delivery by Parent to the Third Party Transferee of (i) a
certificate or certificates representing an equivalent number (as adjusted to
reflect stock dividends, subdivisions, splits or combinations, in each case
having a record date after the Effective Time) of shares of Parent Voting Stock,
free and clear of all Liens and (ii) a certificate signed by a duly authorized
officer of Parent to the effect that the shares of Parent Voting Stock are
validly issued and outstanding, fully paid and nonassessable, free and clear of
all Liens and not subject to preemptive or other similar rights of the
stockholders of Parent.
(d) In the event that the certificate or certificates delivered to Parent
pursuant to Section 12.07(a), (b) or (c) represent(s) a number of shares of
Parent Class A Special Common Stock in excess of that number of shares of Parent
Class A Special Common Stock intended to be exchanged at the applicable Common
Stock Exchange Closing, then in addition to the certificates representing
Exchange Voting Shares that Parent is required to deliver pursuant to such
Section, Parent shall also deliver to the exchanging party, free and clear of
all Liens, a certificate or certificates representing such excess number of
shares of Parent Class A Special Common Stock.
(e) Each Common Stock Exchange shall be deemed to have been effected
immediately prior to the close of business on the applicable Common Stock
Exchange Closing Date unless the parties otherwise agree. The Person in whose
name or names any certificate or certificates for shares of Parent Voting Stock
are deliverable pursuant to Section 12.07(a), (b) or (c), as applicable, shall
be deemed to have become the holder of record of the shares of Parent Voting
Stock represented thereby at such time on such date. Upon the surrender of
certificates representing shares of Parent Class A Special Common Stock, such
shares of Parent Class A Special Common Stock shall no longer be deemed to be
outstanding and all rights of a holder with respect to such shares shall
38
immediately terminate except the right of Microsoft (in the case of a
Supplemental Exchange) or of the Third Party Transferee (in the case of a
Transfer Exchange) to receive shares of Parent Voting Stock pursuant to the
terms of this Agreement and the right to receive shares of Parent Class A
Special Common Stock pursuant to Section 12.07(d).
(f) Parent shall pay any and all issuance, delivery and transfer taxes in
respect of the issuance or delivery of shares of Parent Voting Stock upon a
Common Stock Exchange Closing. Parent shall not, however, be required to pay any
tax in respect of any transfer involved in the issuance or delivery of shares of
Parent Voting Stock in a name other than that of the holder of the Parent Class
A Special Common Stock so exchanged (including, without limitation, in a
Transfer Exchange), and no such issuance or delivery shall be made unless and
until the Person requesting such issuance or delivery has paid to Parent the
amount of any such tax or has established to Parent's satisfaction that such tax
has been paid.
Section 12.08. Common Stock Exchange Closing. Delivery of certificates in
the manner provided in Section 12.07 shall be made: (a) in the case of a
Supplemental Exchange or a Microsoft Transfer Exchange, following the
satisfaction of all the conditions set forth in Section 12.11, at the place, on
the date and at the time designated by Microsoft in its Common Stock Exchange
Notice; or (b) in the case of a Third Party Transferee Exchange, following the
satisfaction of all conditions set forth in Section 12.12, at the place, on the
date and at the time designated by the Third Party Transferee in its Third Party
Transferee Exchange Notice Each date designated for a Common Stock Exchange
Closing is referred to herein as a "COMMON STOCK EXCHANGE CLOSING DATE."
Section 12.09. Restricted Shares. For the avoidance of doubt, (a) to the
extent that shares of Parent Common Stock received by Microsoft or by any wholly
owned Subsidiary of Microsoft in the AT&T Broadband Merger are Restricted
Shares, any shares of Parent Common Stock received upon exchange of such
Restricted Shares in a Supplemental Exchange shall likewise be deemed Restricted
Shares for purposes of this Agreement and (b) any shares of Parent Common Stock
to be received by Microsoft or any wholly owned Subsidiary of Microsoft in a
Common Stock Exchange shall be subject to the transfer restrictions contained in
Section 7.04.
Section 12.10. Registration Of Exchange Voting Shares. Comcast, AT&T and
Parent shall cause all shares of Parent Class A Special Common Stock to be
received by Microsoft (and/or its Affiliates) by virtue of the Mergers to be
fully registered under applicable securities laws. Unless Microsoft or the Third
Party Transferee effecting a Common Stock Exchange is an affiliate (as such term
is used in Rule 144 under the ▇▇▇▇ ▇▇▇) of Parent, Parent will use commercially
reasonable best efforts to ensure that any Common Stock Exchange qualifies for
an exemption from registration under the 1933 Act and other applicable
securities laws and that the Exchange Voting Shares issued in such exchange are
not
39
restricted securities (as such term is used in Rule 144 under the 1933 Act). In
the event such Exchange Voting Shares would be restricted securities (other than
as a result of Microsoft being an affiliate of Parent), Parent will grant
customary registration rights under the 1933 Act in respect of any Remaining
Substitution Shares (or the Exchange Voting Shares issued in such Common Stock
Exchange). Any such registration rights shall have terms substantially identical
to the registration rights granted by Comcast to Microsoft pursuant to Exhibit B
to the Stock Purchase Agreement dated as of June 8, 1997 between Comcast and
Microsoft, with appropriate modifications, including, without limitation, that
(i) such registration rights shall be available immediately after the grant
thereof, notwithstanding the two-year holding period contemplated by Section
2.01(a) of such Exhibit B; (ii) the minimum amount of registrable securities in
connection with any exercise of such registration rights shall be $25,000,000,
unless such registration is in respect of all Remaining Substitution Shares; and
(iii) for purposes of the rights of Parent set forth in Section 2.01(e) of such
Exhibit B, the amount to be paid by Parent shall be determined by reference to
the average closing price of the Parent Voting Stock rather than the Parent
Class A Special Common Stock.
Section 12.11. Conditions to Obligations of Parent; Supplemental Exchange
Closing and Microsoft Transfer Exchange Closing. The obligation of Parent to
consummate the closing of any Supplemental Exchange or Microsoft Transfer
Exchange is subject to the satisfaction of the following conditions:
(a) no material provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the consummation of such
Supplemental Exchange or Microsoft Transfer Exchange; and
(b) in the case of a Supplemental Exchange, Microsoft shall have delivered
to Parent a certificate, signed by an officer of Microsoft, certifying as to the
number of shares of each class or series of Parent voting capital stock that
will be held by Microsoft (together with its Affiliates) upon consummation of
such Supplemental Exchange.
Section 12.12. Conditions to Obligations of Parent: Third Party Transferee
Exchange Closing. The obligation of Parent to consummate the closing of any
Third Party Transferee Exchange is subject to the satisfaction of the condition
that no material provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of such Third Party
Transferee Exchange.
Section 12.13. Obligations of AT&T. For the avoidance of doubt, AT&T shall
have no obligation under this Article 12 other than the obligation to cause the
Merger Agreement to be amended as provided in Section 12.01 and the obligation
set forth in the first sentence of Section 12.10.
40
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/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President, Corporate
Development and Strategy
COMCAST CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
As of December 19, 2001:
AT&T CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President -- Law and
Secretary
AT&T COMCAST CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
41
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
42
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
43
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.
44
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
45
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.
46