EXHIBIT 99.1
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EXECUTION COPY
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RESTRUCTURING AGREEMENT
BY AND AMONG
AOL TIME WARNER INC.,
AT&T CORP.,
COMCAST CORPORATION
AND
THE OTHER PARTIES NAMED HEREIN
DATED AS OF AUGUST 20, 2002
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RESTRUCTURING AGREEMENT
This RESTRUCTURING AGREEMENT, dated as of August 20, 2002, is
by and among Time Warner Entertainment Company, L.P., a Delaware limited
partnership ("TWE"), AT&T Corp., a New York corporation, MediaOne of Colorado,
Inc., a Colorado corporation ("MEDIAONE OF COLORADO"), MediaOne TWE Holdings,
Inc., a Delaware corporation (the "COMPANY"), Comcast Corporation, a
Pennsylvania corporation ("COMCAST"), AT&T Comcast Corporation, a Pennsylvania
corporation, AOL Time Warner Inc., a Delaware corporation ("AOLTW"), TWI Cable
Inc., a Delaware corporation ("TWIC"), Warner Communications Inc., a Delaware
corporation ("HOLDCO"), and American Television and Communications Corporation,
a Delaware corporation ("ATC" and, collectively with Holdco, the "AOL TWE
PARTNERS"). Capitalized terms used herein and not otherwise defined shall have
the respective meanings assigned to them in Article I.
WHEREAS, the parties desire to separate the broadband assets
and business, and related liabilities, of AOLTW and its Subsidiaries from all of
AOLTW's and its Subsidiaries' other assets and businesses as set forth in this
Agreement;
WHEREAS, AOLTW's Existing TWE Partners hold all of the TWE
Partnership Interests owned directly or indirectly by the AOLTW Group;
WHEREAS, AOLTW shall, prior to the Closing, cause ATC to
transfer a portion of its TWE Partnership Interests, directly or indirectly, to
Holdco, subject to the TWE Partnership Liabilities associated with the portion
so transferred, and, following such transfer, Holdco and ATC will continue to
collectively own all of the TWE Partnership Interests, subject to all of the TWE
Partnership Liabilities, of the AOLTW Group (the "TWE TRANSFER");
WHEREAS, AOLTW shall, prior to the Closing, cause TWIC to
transfer to Holdco, directly or indirectly, all of the TWIC Broadband Assets
(other than the TWIC Delayed Transfer Assets), subject to the TWIC Broadband
Liabilities, such that, following such transfer, Holdco will, directly or
indirectly, own all of the TWIC Broadband Assets (other than the TWIC Delayed
Transfer Assets), subject to all of the TWIC Broadband Liabilities, all on terms
and conditions that are the same in all material respects to the terms and
conditions on which such Assets and Liabilities will be transferred at the
Closing to the Company pursuant to the TWIC Contribution Agreement (other than
with respect to the identity of the parties and the timing of effectiveness)
(collectively, the "INITIAL TWIC CONTRIBUTION");
WHEREAS, the parties desire to restructure TWE by causing TWE
to distribute to Holdco, in partial redemption of the TWE Partnership Interests
held by Holdco, all of the TWE Non-Broadband Assets, subject to all of the TWE
Non-Broadband Liabilities;
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WHEREAS, the parties desire to restructure and recapitalize
the Company by (a) AT&T causing the Company to incur certain Indebtedness for
borrowed money and to apply the cash proceeds of such Indebtedness to satisfy
and discharge certain then existing Indebtedness of the Company owed to MediaOne
of Colorado; (b) approving and adopting the Restated Certificate of
Incorporation of the Company; (c) MediaOne of Colorado or a Subsidiary of
MediaOne of Colorado transferring shares of Company Class B Common Stock to
AOLTW in exchange for shares of AOLTW Common Stock (the "EXCHANGE"); and (d)
Holdco contributing all of its TWE Partnership Interests, subject to its TWE
Partnership Liabilities associated with the TWE Broadband Business, and all of
the TWIC Broadband Assets (other than the TWIC Delayed Transfer Assets), subject
to all of the TWIC Broadband Liabilities, to the Company (the "HOLDCO
CONTRIBUTION") in exchange for shares of Company Class A Common Stock;
WHEREAS, the parties desire to recapitalize TWE by approving
and adopting the Amended and Restated TWE Partnership Agreement pursuant to
which, among other things, all of the then-existing TWE Partnership Interests
will be converted into new TWE partnership interests as provided in the Amended
and Restated TWE Partnership Agreement;
WHEREAS, as a condition precedent of, and inducement to, the
parties willingness to enter into this Agreement, (a) AOLTW and MediaOne of
Colorado are concurrently herewith entering into the AOLTW Registration Rights
Agreement, (b) at the Closing, MediaOne of Colorado, AOLTW and the Company will
enter into the AT&T Company Registration Rights Agreement and (c) at the
Closing, AOLTW, MediaOne of Colorado and the Company will enter into the AOLTW
Company Registration Rights Agreement;
WHEREAS, as a condition precedent of, and inducement to, the
parties' willingness to enter into this Agreement, AOLTW, Comcast and AT&T are
agreeing that, at the Closing, subject to the terms and conditions of this
Agreement, the AOLTW High Speed Data Agreement will be entered into and become
effective;
WHEREAS, it is intended that, for Federal income tax purposes,
the Exchange shall qualify as a reorganization within the meaning of Section
368(a) of the Code;
WHEREAS, it is intended that, for Federal income tax purposes,
the Holdco Contribution in exchange for Company Class A Common Stock shall
qualify as an exchange within the meaning of Section 351 of the Code; and
WHEREAS, it is intended that all of the foregoing shall be
effected on the terms and subject to the applicable conditions contained herein
and in the other Transaction Agreements.
NOW, THEREFORE, the parties hereto, intending to be legally
bound, agree as follows:
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ARTICLE I
DEFINITIONS
1.1 DEFINITIONS.
(a) The following terms, as used herein, have the
following meanings:
"1933 ACT" means the Securities Act of 1933.
"1934 ACT" means the Securities Exchange Act of 1934.
"A/N DECONSOLIDATION" means, with respect to the TWE Broadband
Business, the Assets, Liabilities and results of operations of the Selected
Business ceasing to be consolidated with the Assets, Liabilities and results of
operations of TWE as a result of the TWEAN Restructuring.
"ACQUIRE" means to directly or indirectly acquire, receive in
exchange or redemption, subscribe for, purchase (by merger, consolidation,
combination, recapitalization or other reorganization) or otherwise obtain an
interest in, by operation of law or otherwise. "ACQUISITION" has a correlative
meaning.
"AFFILIATE" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by or under common control
with such Person; PROVIDED that, for purposes of this definition, "control"
(including with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or other Equity Securities, by Contract or
otherwise; PROVIDED, FURTHER, that, solely for purposes of this definition of
Affiliate, if any Person owns all of the beneficial interests of a Disposition
Trust, such Disposition Trust (and its controlled Affiliates) will be deemed to
be controlled by such Person and any other Person who controls such Person.
"AGREEMENT" means this Restructuring Agreement, as the same
may be amended, supplemented or modified in accordance with the terms hereof.
"AMENDED AND RESTATED CERTIFICATE OF INCORPORATION" means the
Restated Certificate of Incorporation of the Company, substantially in the form
attached hereto as Exhibit A.
"AMENDED AND RESTATED TWE PARTNERSHIP AGREEMENT" means the
Amended and Restated Partnership Agreement of TWE, substantially in the form
attached hereto as Exhibit B.
"AMENDED BYLAWS" means the Amended Bylaws of the Company,
substantially in the form attached hereto as Exhibit C.
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"AOL" means America Online, Inc., a Delaware corporation.
"AOL HIGH SPEED DATA AGREEMENT" means the Internet Service
Provider Agreement, to be entered into among AOL, TWE and AT&T at the Closing,
in substantially the form attached hereto as Exhibit D, as such agreement may be
amended in accordance with Sections 8.1 and 9.1.
"AOLTW BALANCE SHEET" means the pro forma consolidated balance
sheet of AOLTW and its consolidated Subsidiaries as of June 30, 2002, as set
forth in the AOLTW 10-Q for the fiscal quarter ended June 30, 2002.
"AOLTW BALANCE SHEET DATE" means June 30, 2002.
"AOLTW BROADBAND BUSINESS" means the TWE Broadband Business
and the TWIC Broadband Business.
"AOLTW BROADBAND GROUP" means (i) TWIC and its Subsidiaries
(but only with respect to the TWIC Broadband Assets, the TWIC Broadband Business
and the TWIC Broadband Liabilities), prior to giving effect to the contribution
of TWIC Broadband Assets to, and assumption of TWIC Broadband Liabilities by,
Holdco; (ii) Holdco and its Subsidiaries (but only with respect to the TWIC
Broadband Assets, the TWIC Broadband Business and the TWIC Broadband
Liabilities); and (iii) TWE and its Subsidiaries (but only with respect to the
TWE Broadband Assets, the TWE Broadband Business and the TWE Broadband
Liabilities). Any Person in the AOLTW Broadband Group may be referred to as an
"AOLTW BROADBAND MEMBER."
"AOLTW BROADBAND PERMITTED INDEBTEDNESS" means aggregate
consolidated Net Indebtedness not in excess of an amount equal to (a) $6
billion; PLUS (b) the Indebtedness incurred by the Company pursuant to Section
2.4(a); MINUS (c) the TWE Preferred Amount; MINUS (d) the aggregate amount of
cash received by the AOLTW Broadband Group on or after the date hereof and prior
to Closing for "launch support" (i.e., payments subject to forfeiture for
failure to perform obligations under carriage arrangements that are required to
be performed by the Company or its Subsidiaries after Closing) to the extent in
excess of $20 million and net of estimated taxes arising from the receipt of
such excess amount calculated as described below; minus (e) cash and cash
equivalents received by the AOLTW Broadband Business after the date hereof from
unconsolidated joint ventures (excluding tax distributions); PLUS (f) cash and
cash equivalents disbursed to unconsolidated joint ventures in the AOLTW
Broadband Business. In addition, AOLTW Permitted Indebtedness shall be subject
to increases for acquisitions, and decreases for dispositions, of Systems from
the date hereof to Closing, in each case to the extent appropriate. In the event
of any such acquisition or disposition that impacts AOLTW Broadband Permitted
Indebtedness by more than $10 million individually or $50 million in the
aggregate, the parties will consult in good faith as to the appropriate
adjustment to be made pursuant to the foregoing sentence. To the extent income
or gain referred to in clause (d) above is recognized directly or indirectly by
TWE the estimated taxes referred to in that clause shall be the sum of TWE
Entity Level Income Taxes plus any distributions with respect to such income or
gain
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made to the partners of TWE as described in Section 2.8(b) hereof. In all other
cases, such estimate shall be at the Combined Effective Tax Rate.
"AOLTW COMMON STOCK" means Common Stock, par value $0.01 per
share, of AOLTW, or any successor securities.
"AOLTW COMPANY REGISTRATION RIGHTS AGREEMENT" means the
Registration Rights Agreement, to be entered into by and among AOLTW, MediaOne
of Colorado and the Company at the Closing, in substantially the form attached
hereto as Exhibit E.
"AOLTW DISCLOSURE LETTER" means that certain letter identified
to AT&T and Comcast as such by AOLTW in writing on the date hereof; PROVIDED,
that, for purposes of the representations and warranties contained in Sections
5.10, 5.11, 5.12, 5.13(a), 5.14 and 5.15, the AOLTW Disclosure Letter shall be
deemed to include all information disclosed by AOLTW or any of its Subsidiaries
in any public filing with the SEC on or before the third Trading Day immediately
prior to (and excluding) the first Trading Day in the Valuation Period.
"AOLTW'S EXISTING TWE PARTNERS" means ATC and Holdco.
"AOLTW GROUP" means AOLTW together with its Subsidiaries. Any
Person in the AOLTW Group is an "AOLTW Member."
"AOLTW MATERIAL ADVERSE EFFECT" means (a) a material adverse
effect on the business, financial condition, assets or results of operations of
AOLTW and its Subsidiaries (taken as a whole after giving effect to the
Transactions) excluding any such effect resulting from or arising in connection
with (i) the announcement of this Agreement; (ii) changes or conditions
generally affecting the industries in which AOLTW operates; (iii) changes in the
economy or financial markets in general; or (iv) changes in general regulatory
or political conditions or (b) any change or effect that prohibits or materially
impairs the ability of any Person to consummate the Transactions.
"AOLTW NON-BROADBAND BUSINESS" means the TWE Non-Broadband
Business, as defined in the TWE Distribution Agreement, and the TWIC
Non-Broadband Business, as defined in the TWIC Contribution Agreement.
"AOLTW NON-BROADBAND MEMBER" means any AOLTW Member other than
an AOLTW Broadband Member.
"AOLTW PARTIES" means AOLTW, TWIC, TWE, Holdco and ATC.
"AOLTW REGISTRATION RIGHTS AGREEMENT" means the Registration
Rights Agreement dated as of the date hereof by and between AOLTW and MediaOne
of Colorado.
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"AOLTW STOCK PRICE" means the simple average (rounded to the
nearest 1/10,000) of the Trading Values of AOLTW Common Stock for each Trading
Day during the Valuation Period.
"ARM'S-LENGTH TERMS" means terms that, when taken as a whole,
are substantially as favorable to the AOLTW Broadband Group as would have been
obtainable in a comparable arm's length transaction with a Person that is not
AOLTW or an Affiliate of AOLTW.
"ASSETS" means assets, properties and rights (including
goodwill), wherever located (including in the possession of vendors or other
third parties or elsewhere), whether real, personal or mixed, tangible,
intangible or contingent, in each case whether or not recorded or reflected or
required to be recorded or reflected on the books and records or financial
statements of any Person, including the following:
(a) all accounting and other books, records and files
whether in paper, microfilm, microfiche, computer tape or disc, magnetic tape or
any other form;
(b) all apparatus, computers and other electronic data
processing equipment, fixtures, machinery, equipment, furniture, office
equipment, automobiles, trucks, aircraft, rolling stock, vessels, motor vehicles
and other transportation equipment, special and general tools, test devices,
prototypes and models and other tangible personal property;
(c) all inventories of materials, parts, raw materials,
supplies, work-in-process and finished goods and products;
(d) all interests in real property of whatever nature,
including easements and rights of way, whether as owner, mortgagee or holder of
a security interest in real property, lessor, sublessor, lessee, sublessee or
otherwise, and copies of all related documentation;
(e) all interests in any capital stock or other equity
interests of any Subsidiary or any other Person, all bonds, notes, debentures or
other securities issued by any Subsidiary or any other Person, all loans,
advances or other extensions of credit or capital contributions to any
Subsidiary or any other Person and all other investments in securities of any
Person;
(f) all license agreements, leases of personal property,
open purchase orders for raw materials, supplies, parts or services, unfilled
orders for the manufacture and sale of products and other contracts, agreements
or commitments;
(g) all deposits, letters of credit and performance and
surety bonds;
(h) all written technical information, data,
specifications, research and development information, engineering drawings,
operating and maintenance manuals, and materials and analyses prepared by
consultants and other third parties;
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(i) all domestic and foreign patents, copyrights, trade
names, trademarks, service marks and registrations and applications for any of
the foregoing, mask works, trade secrets, inventions, other proprietary
information and licenses from third Persons granting the right to use any of the
foregoing;
(j) all computer applications, programs and other
software, including operating software, network software, firmware, middleware,
design software, design tools, systems documentation and instructions;
(k) all cost information, sales and pricing data,
customer prospect lists, supplier records, customer and supplier lists, records
pertaining to customers and customer accounts, customer and vendor data,
correspondence and lists, product literature, artwork, design, development and
manufacturing files, vendor and customer drawings, formulations and
specifications, quality records and reports and other books, records, studies,
surveys, reports, plans and documents;
(l) all prepaid expenses, trade accounts and other
accounts and notes receivable;
(m) all rights under contracts or agreements, all claims
or rights against any Person arising from the ownership of any Asset, all rights
in connection with any bids or offers and all claims, choses in action or
similar rights, whether accrued or contingent;
(n) all insurance proceeds and rights under insurance
policies and all rights in the nature of insurance, indemnification or
contribution;
(o) all Authorizations that have been issued by any
Governmental Authority;
(p) all cash or cash equivalents, bank accounts, lock
boxes and other deposit arrangements;
(q) copies of all documentation related to insurance
policies; and
(r) interest rate, currency, commodity or other swap,
collar, cap or other hedging or similar agreements or arrangements.
"AT&T" means AT&T Corp., a New York corporation; PROVIDED that
following consummation of the AT&T-Comcast Merger, all references to "AT&T"
shall mean AT&T Comcast and shall no longer mean AT&T Corp. but all references
to "AT&T Corp." shall continue to mean AT&T Corp.
"AT&T BROADBAND" means AT&T Broadband Corp., a Delaware
corporation and a wholly owned Subsidiary of AT&T.
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"AT&T COMCAST" means AT&T Comcast Corporation, a Pennsylvania
corporation, and in any event shall include the Ultimate Public Parent of AT&T
Broadband and Comcast following consummation of the AT&T-Comcast Merger.
"AT&T-COMCAST MERGER" means the mergers of separate
Subsidiaries of AT&T Comcast with and into Comcast and AT&T Broadband, pursuant
to the Agreement and Plan of Merger, dated as of December 19, 2001, as amended,
by and among AT&T Corp., AT&T Broadband, Comcast, AT&T Comcast, AT&T Broadband
Acquisition Corp. and Comcast Acquisition Corp. (the "AT&T COMCAST MERGER
AGREEMENT").
"AT&T COMPANY REGISTRATION RIGHTS AGREEMENT" means the
Registration Rights Agreement, to be entered into by and among the Company,
MediaOne of Colorado and AOLTW at the Closing, in substantially the form
attached hereto as Exhibit F.
"AT&T CONFIDENTIALITY AGREEMENT" means the Letter Agreement
dated August 5, 2002 between AT&T Corp. and AOLTW.
"AT&T DISCLOSURE LETTER" means that certain letter identified
to AOLTW and Comcast as such by AT&T in writing on the date hereof.
"AT&T PARTIES" means AT&T, MediaOne of Colorado and (i) on or
prior to Closing, the Company and (ii) following a Permitted AT&T Disposition,
each Permitted MOC Transferee and Permitted Company Transferee.
"AUTHORIZATION" means any waiver, amendment, consent,
approval, license, franchise, permit (including construction permits),
certificate, exemption, variance or authorization of, expiration or termination
of any waiting period requirement (including pursuant to the HSR Act) or other
action by, or notice, filing, registration, qualification, declaration or
designation with, any Person (including any Governmental Authority).
"BASIC SUBSCRIBER" means, as of any date, the aggregate of all
of the following that are receiving the lowest level of programming services
offered: (a) private residential customer accounts that are billed by individual
unit (regardless of whether such accounts are in single family homes or in
individually billed units in apartment houses and other multi-unit buildings)
(excluding "second connects" or "additional outlets," as such terms are commonly
understood in the Broadband Industry), each of which shall be counted as one
Basic Subscriber, (b) bulk xxxx residential accounts not billed by individual
unit, such as apartment houses and multi-family homes, provided each unit in
such apartment house or multi-family home shall be counted as one Basic
Subscriber and (c) commercial bulk accounts such as hotels, motels and
restaurants, provided each commercial account shall count as one Basic
Subscriber; provided that, in all such cases, Basic Subscribers shall not
include any free accounts.
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"BENEFIT PLAN" means any employee benefit plan, arrangement,
policy or program (whether or not an employee benefit plan within the meaning of
Section 3(3) of ERISA and whether or not written), including, without
limitation, any employment, consulting or deferred compensation agreement,
executive compensation, bonus, incentive, pension, profit-sharing, savings,
retirement, stock option, stock purchase or severance pay plan, any life,
health, disability or accident insurance plan or any holiday or vacation
practice, sponsored, maintained or contributed to by TWIC or any of its
Subsidiaries and which covers any employee or former employee of TWIC or any of
its Subsidiaries or with respect to which TWIC or any of its Subsidiaries has
any liability.
"BOARD" shall have the meaning set forth in Section 12.1 of
the Original Partnership Agreement.
"BROADBAND INDUSTRY" means the industries in which the TWE
Broadband Business and TWIC Broadband Business operate as of the date hereof and
as such industries develop from time to time.
"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 or executive order to close.
"CODE" means the Internal Revenue Code of 1986.
"COMBINED EFFECTIVE TAX RATE" has the meaning ascribed thereto
in the Original Partnership Agreement.
"COMCAST CONFIDENTIALITY AGREEMENT" means the Letter Agreement
dated August 5, 2002 between Comcast and AOLTW.
"COMCAST DISCLOSURE LETTER" means that certain letter
identified to AOLTW and AT&T as such by Comcast in writing on the date hereof.
"COMCAST PARTIES" means Comcast and, following the AT&T
Comcast Merger, AT&T Comcast.
"COMMUNICATIONS ACT" means the Communications Act of 1934.
"COMPANY CLASS A COMMON STOCK" means Class A Common Stock, par
value $0.01 per share, of the Company.
"COMPANY CLASS B COMMON STOCK" means Class B Common Stock, par
value $0.01 per share, of the Company.
"COMPANY COMMON STOCK" means the Company Class A Common Stock
and the Company Class B Common Stock.
"COMPANY MATERIAL ADVERSE EFFECT" means (a) a material adverse
effect on the business, financial condition, assets or results of operations of
the Company and its
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Subsidiaries (taken as a whole after giving effect to the Transactions)
excluding any such effect resulting from or arising in connection with (i) the
announcement of this Agreement; (ii) changes or conditions generally affecting
the Broadband Industry; (iii) changes in the economy or financial markets in
general; or (iv) changes in general regulatory or political conditions or (b)
any change or effect that prohibits or materially impairs the ability of any
Person to consummate the Transactions.
"COMPETITION LAW" means the Xxxxxxx Act, the Xxxxxxx Act, the
HSR Act, the Federal Trade Commission Act, the Communications Act, and all other
Laws that are designed or intended to prohibit, restrict or regulate (a)
mergers, acquisitions or other business combinations or (b) actions having the
purpose or effect of monopolization or restraint of trade or lessening of
competition.
"CONFIDENTIALITY AGREEMENTS" means the Comcast Confidentiality
Agreement and the AT&T Confidentiality Agreement and any similar confidentiality
agreement executed in connection with the Engagement Letter.
"CONTRACT" means any contract, lease, agreement, covenant,
indenture, note, security, instrument, arrangement, commitment or any other
binding understanding, whether written or oral.
"CONTRIBUTE" means to contribute, assign, transfer, convey and
deliver. "CONTRIBUTION" shall have the correlative meaning.
"DETERMINATION" shall have the meaning ascribed thereto in the
Tax Matters Agreement.
"DGCL" means the Delaware General Corporation Law.
"DIGITAL SUBSCRIBERS" means the non-equivalized, paying
customers subscribing to the digital product tier.
"DISPOSE" means to directly or indirectly sell, assign,
alienate, give, exchange, convey, transfer or otherwise dispose or monetize,
whether voluntarily or involuntarily, directly or indirectly, including through
a Subsidiary or by means of an equity offering by any such Subsidiary, and shall
include, with respect to Equity Securities or beneficial interest in any trust,
the disposition of voting or dispositive power over such Equity Securities or
beneficial trust interest. "DISPOSITION" shall have a correlative meaning.
"DISPOSITION TRUST" means, with respect to any Person, any
trust, all of the beneficial interests of which are owned by such Person,
including any such trust that was an entity other than a trust and is converted
into a trust.
"DOJ" means the Department of Justice.
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"EBITDA" means operating income plus depreciation and
amortization, in each case as determined by GAAP (and consistent with the
presentation and manner of calculation in the consolidated statement of
operations contained in TWE's SEC documents).
"ENVIRONMENTAL LAW" means any Law (including common law)
relating to pollution or the protection of public health, safety, welfare or the
pollution, protection or restoration of the environment, including Laws relating
to emissions, discharges, releases or threatened releases of Hazardous
Substances into the environment (including ambient air, surface water, ground
water or land) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances.
"EQUITY SECURITY" has the meaning ascribed to such term in
Rule 405 promulgated under the 1933 Act as in effect on the date hereof and, in
any event, shall also include (i) any capital stock of a corporation, any
partnership interest, any limited liability company interest and any other
equity interest; (ii) any security or Indebtedness having the attendant right to
vote for directors or similar representatives; (iii) any security or right
convertible into, exchangeable for, or evidencing the right to subscribe for any
such stock, equity interest, security or Indebtedness referred to in clause (i)
or (ii); (iv) any stock appreciation right, contingent value right or similar
security or right that is derivative of any such stock, equity interest,
security or Indebtedness referred to in clause (i), (ii) or (iii); and (v) any
Contract to grant, issue, award, convey or sell any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974.
"FCC" means the Federal Communications Commission.
"FCC LICENSES" means, with respect to any Person,
Authorizations issued by the FCC in connection with the business or operations
of such Person or its controlled Affiliates.
"FIVE LARGEST HBO CUSTOMER CONTRACTS" means, collectively, the
Contracts pursuant to which AOLTW Affiliates provide HBO and Cinemax programming
services to its five largest distributors of such cable programming services.
"FRANCHISE" means a written "franchise" within the meaning of
Section 602(9) of the Communications Act.
"FRANCHISING AUTHORITY" means "franchising authority" within
the meaning of Section 602(10) of the Communications Act.
"FTC" means the Federal Trade Commission.
"GAAP" means generally accepted accounting principles in the
United States in effect from time to time applied on a consistent basis (except
as may be
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otherwise indicated in the notes to the applicable financial statements or the
AOLTW Disclosure Letter).
"GOVERNMENTAL AUTHORITY" means any supranational, national,
state, municipal or local government, political subdivision or other
governmental department, court, commission, board, bureau, agency,
instrumentality, or other authority thereof, or any quasi-governmental or
private body exercising any regulatory, taxing, importing or other governmental
or quasi-governmental authority, whether domestic or foreign.
"HAZARDOUS SUBSTANCES" means (a) any "hazardous waste" as
defined by the Resource Conservation and Recovery Act of 1976 (RCRA) (42 U.S.C.
xx.xx. 6901 et seq.); (b) any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. xx.xx. 9601 et seq.) (CERCLA); (c) any substance regulated by the Toxic
Substances Control Act (TSCA) (42 U.S.C. ss. 2601 et seq.) or the Federal
Insecticide, Fungicide and Rodenticide Act (FIFRA) (7 U.S.C. ss. 136 et seq.);
(d) asbestos or asbestos-containing material of any kind or character; (e)
polychlorinated biphenyls; (f) any substances regulated under the provisions of
Subtitle I of RCRA relating to underground storage tanks; (g) any substance the
presence, use, handling, treatment, storage, release or disposal of which on
real property owned or leased by TWIC is regulated or prohibited by any
Environmental Law; and (h) any other substance which by any Environmental Law
requires special handling, reporting or notification of any Governmental
Authority in its collection, storage, release, use, treatment or disposal.
"HIGH SPEED DATA SUBSCRIBERS" means paying customers to
Internet access services at signal rates of 128 kilobits per second or above,
calculated on an equivalized basis with respect to bulk and commercial accounts.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976.
"INCOME TAXES" means any Tax which is based upon, measured by,
or calculated with respect to net income or profits (including alternative
minimum Tax).
"INDEBTEDNESS" means, with respect to any Person, (a) any
obligation of such Person (i) for borrowed money, (ii) evidenced by a bond,
note, debenture or similar instrument for value received or in settlement of
claims, (iii) under conditional sale or other title retention agreements
relating to property acquired by such Person, (iv) for the deferred purchase
price of property or services, except trade accounts payable arising in the
ordinary course of business, or (v) under any lease or similar arrangement that
would be required to be accounted for by the lessee as a capital lease in
accordance with GAAP, or (b) without duplication, any guarantee (or keepwell
agreement) by such Person of any Indebtedness of others described in clause (a);
PROVIDED, that in no event shall Indebtedness include letters of credit that are
performance or surety bonds or similar instruments issued in the ordinary course
of business or disclosed pursuant to Section 5.13(b) of the AOLTW Disclosure
Letter.
13
"INTELLECTUAL PROPERTY" means all intellectual property and
similar property rights, including but not limited to: (i) trademarks, service
marks, trade names, brand names, trade dress, designs, logos, corporate names
and other indicia of origin, whether registered or unregistered, and all
registrations and applications therefor and the goodwill associated therewith,
(ii) Internet addresses, domain names, web sites, web pages and similar rights
and items, (iii) patents, patent applications and inventions, designs and
improvements described and claimed therein, (iv) computer software programs,
including all source code, object code and documentation related thereto, (v)
trade secrets, know-how, inventions, processes, procedures, databases,
confidential business information and other proprietary information and rights,
(vi) copyrights and mask works, including all renewals and extensions thereof,
copyright registrations and applications for registration thereof, and
non-registered copyrights; and (vii) all licenses and other agreements or
permissions including the right to receive royalties, or any other
consideration, related to the property described in (i) - (vi).
"INVESTMENT BANKING FIRM" shall have the meaning ascribed
thereto in the Original Partnership Agreement, PROVIDED that such firm also has
experience in complex valuations of businesses.
"IRS" shall mean the United States Internal Revenue Service.
"JUDGMENT" means any judicial decision, judgment, writ, order,
injunction, stipulation, award or decree of any court, judge, justice or
magistrate, including any bankruptcy court or judge or the arbitrator in any
binding arbitration, and any order of or by any Governmental Authority.
"LAW" means any foreign or domestic law, statute, code,
ordinance, rule, regulation, treaty, Judgment or principles of common law or
equity (including negligence and strict liability) enacted, entered, promulgated
or applied by a Governmental Authority.
"LIABILITIES" means any and all liabilities, losses, claims,
charges, Indebtedness, demands, actions, damages, obligations, payments, costs
and expenses, bonds, indemnities and similar obligations, covenants, and other
liabilities, including all Contractual obligations, whether due or to become
due, absolute or contingent, inchoate or otherwise, matured or unmatured,
liquidated or unliquidated, accrued or unaccrued, known or unknown, determined
or determinable, whenever arising, and including those arising under any Law, in
each case, whether or not recorded or reflected or required to be recorded or
reflected on the books and records or financial statements of any Person.
"LIEN" means, with respect to any property or asset, any
mortgage, lien, pledge, charge, security interest, encumbrance or other adverse
claim of any kind in respect of such property or asset. For purposes of this
Agreement, a Person shall be deemed to own subject to a Lien any property or
asset that it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to such property or asset.
14
"LOSSES" means any actual damages, losses, penalties, costs,
expenses (including reasonable fees and disbursements of counsel), other
Liabilities and any reasonable costs incurred by a party in connection with
enforcing its rights under this Agreement.
"MASTER TRANSACTION AGREEMENT" means the Master Transaction
Agreement, dated as of August 1, 2002, by and among TWEAN, TWE, Paragon
Communications and Advance/Xxxxxxxx Partnership, including all exhibits and
other attachments thereto and all other agreements and instruments contemplated
thereby.
"MEDIAONE PROMISSORY NOTE" means the Promissory Note issued by
the Company to MediaOne of Colorado prior to the date hereof, a copy of which is
attached hereto as Exhibit G.
"NET INDEBTEDNESS" means, with respect to any Person(s), all
Indebtedness, less all cash and cash equivalents, of such Person(s). Net
Indebtedness of the AOLTW Broadband Group shall be deemed to exclude all
Indebtedness and cash and cash equivalents attributable to the Selected Business
and, for the avoidance of doubt, cash and cash equivalents of the AOLTW
Broadband Group as measured as of the Closing shall only include cash and cash
equivalents owned by the Company and its Subsidiaries as of the Closing (after
giving effect to the TWE Distribution and the TWIC Contribution).
"NON-BROADBAND INDUSTRY" means the industries in which the TWE
Non-Broadband Business operates as of the date hereof and as such industries
develop from time to time.
"NYSE" means the New York Stock Exchange.
"ORIGINAL PARTNERSHIP AGREEMENT" means the Agreement of
Limited Partnership of TWE, dated as of October 29, 1991, as amended,
supplemented or modified in accordance with the terms thereof through the date
hereof.
"PARENT" shall mean with respect to any Person, any other
Person that controls such Person directly or indirectly through any Subsidiary
of such other Person or owns directly or indirectly through any Subsidiary of
such other Person more than 50% of the outstanding common stock or outstanding
Equity Securities ordinarily entitled to vote of such Person, PROVIDED that any
Person (and each Parent of such Person) that directly or indirectly holds all of
the beneficial interests in a Disposition Trust shall be deemed to be a Parent
of such Disposition Trust and its Subsidiaries.
"PARENT AGREEMENT" means the Parent Agreement, to be entered
into by and among AOLTW, AT&T and the Company at the Closing, substantially in
the form attached hereto as Exhibit H.
15
"PARTNERSHIP INTEREST SALE AGREEMENT" means the Partnership
Interest Sale Agreement, to be entered into by and among AOLTW, MediaOne of
Colorado and the Company at the Closing, substantially in the form attached
hereto as Exhibit I.
"PASS-THROUGH ENTITY" means an entity which, for federal
income tax purposes, is treated as a partnership, disregarded entity or a
grantor trust or any entity treated similarly to any of the foregoing for
federal income tax purposes.
"PAY UNITS" means the non-equivalized number of individual pay
services subscribed to by customers.
"PERMITTED AT&T DISPOSITION" means:
(a) a Disposition by MediaOne of Colorado or a direct or
indirect wholly-owned Subsidiary of MediaOne of Colorado of its interests in TWE
or the Company to a direct or indirect wholly-owned Subsidiary (other than the
Company or any of its Subsidiaries) or Disposition Trust of MediaOne of Colorado
or any of its wholly owned Subsidiaries (each a "MOC PERMITTED TRANSFEREE" or a
"TRANSFEREE");
(b) a Disposition by the Company or a direct or indirect
wholly-owned Subsidiary of the Company of its interests in TWE to a direct or
indirect wholly-owned Subsidiary or Disposition Trust of the Company (each a
"COMPANY PERMITTED TRANSFEREE" or a "TRANSFEREE");
(c) a Disposition by MediaOne of Colorado or a direct or
indirect wholly-owned Subsidiary of MediaOne of Colorado to a MOC Permitted
Transferee or by the Company or a direct or indirect wholly owned Subsidiary of
the Company to a Company Permitted Transferee of all or part of the rights and
obligations of MediaOne of Colorado (or such Subsidiary) or the Company (or such
Subsidiary), respectively, hereunder and under the other Transaction Agreements,
in each case subject to the related obligations of such transferor thereunder;
(d) the dissolution of a Disposition Trust (or the merger
of a Disposition Trust into its immediate Parent) that is a Company Permitted
Transferee provided that the immediate Parent of such Disposition Trust complies
with (c) above as a Company Permitted Transferee; PROVIDED, FURTHER that,
subject to AOLTW's consent, not to be unreasonably withheld, such Parent may
transfer the related rights and obligations assigned to and assumed by it to its
Parent so long as after giving effect to such transfer the Company and its
Subsidiaries continue to own all their interests in TWE and all rights related
thereto, and all of its rights under the Transaction Agreements related thereto;
and
(e) the conversion of a Person that is a MOC Permitted
Transferee or a Company Permitted Transferee into a Disposition Trust of the
Company or any of its wholly owned Subsidiaries or MediaOne of Colorado or any
of its wholly owned Subsidiaries, respectively
16
PROVIDED, THAT, in each such case:
(x) the terms of any such Disposition are (i) as
described in Section 1A and 1B of the AT&T Disclosure Letter; or (ii) disclosed
to AOLTW not less than 5 Business Days prior to such Disposition and do not
adversely affect the rights or obligations of AOLTW or its Affiliates under the
Transaction Agreements (other than the Income Tax treatment of any of the
Transactions) or, except with respect to a Disposition to a Disposition Entity,
have a material risk of affecting the federal Income Tax treatment of any of the
Transactions by reason of matters relating to the Company Class A Common Stock;
(y) each Transferee expressly agrees to assume and be
bound by (to the extent applicable) the relevant obligations of the applicable
transferor (and its predecessors in interests) under the Transaction Agreements,
the Original Partnership Agreement, the Engagement Letter and the Letter
Agreements (collectively, the "APPLICABLE Agreements"), in each case to the same
extent as binds and restricts AT&T and the applicable transferor (and its
predecessors in interests) (collectively, the "TRANSFEROR OBLIGATIONS");
PROVIDED that no such Disposition shall relieve any Person of any of their
respective obligations under the Applicable Agreements; PROVIDED, FURTHER, that,
with respect to a Transferee that is a Disposition Trust, failure of such
express assumption shall not violate the requirements of this clause (y) if AT&T
and Comcast shall have used reasonable best efforts to cause each such
Disposition Trust to expressly assume and be bound by the Transferor
Obligations, and shall have in any event expressly made all Assets contributed
to such Disposition Trust subject to all Transferor Obligations. AOLTW
acknowledges that a Permitted Transferee shall be entitled to (to the extent
applicable to) the relevant rights of the applicable transferor (and its
predecessors in interest) under the Applicable Agreements. Upon any such
disposition, the parties shall amend the terms of the Transaction Agreements as
appropriate to reflect the proper parties; and
(z) any such Disposition shall be made only (i) in
connection with any consent decree entered into with, or any order of, any
Governmental Authority, in connection with the consummation of the AT&T-Comcast
Merger or the Transactions or (ii) in a manner that does not adversely affect
the AOLTW Broadband Business or the Company or any of its Subsidiaries (after
giving effect to any of the Transactions).
"PERMITTED AT&T TRANSFEREE" means a Transferee pursuant to any
Permitted AT&T Disposition.
"PERMITTED LIENS" means, with respect to Equity Securities to
be issued in the Transactions, any restrictions arising under the Transaction
Agreements or any applicable federal or state securities laws.
"PERSON" means an individual, corporation, partnership,
limited liability company, association, trust, joint venture or other entity or
organization, including a Governmental Authority.
17
"PROHIBITED ACTIVITY" means, with respect to the Valuation
Period, (a) any Acquisition or Disposition, in open market transactions, private
transactions or otherwise, during the period beginning on (and including) the
first day of the Valuation Period and ending on (and including) the last day of
the Valuation Period, of (i) any shares of AOLTW Common Stock or (ii) any
securities convertible into or exchangeable for or derivative of shares of AOLTW
Common Stock (other than, in each case, (A) shares issued or Acquired pursuant
to employee stock options granted to directors, officers or employees or (B)
sales or other Dispositions of shares by directors, officers or employees), or
(b) any other action taken intentionally for the purpose of manipulating the
price of AOLTW Common Stock during the Valuation Period.
"PURCHASE RIGHT" means any rights that any Person may have
under the terms of any Franchise to purchase all or any portion of a System
owned or operated by such Person as a result of the Transactions.
"REIMBURSEMENT AGREEMENT" means the Reimbursement Agreement,
to be entered into by and among AOLTW, the Company, Holdco, ATC and TWE at the
Closing, substantially in the form attached hereto as Exhibit J.
"RESIDUAL BUSINESS" has the meaning ascribed thereto in the
Master Transaction Agreement.
"ROAD RUNNER" means Road Runner HoldCo LLC, a Delaware limited
liability company.
"ROAD RUNNER BRAND NAME LICENSE AGREEMENT" means the Brand
Name License Agreement to be entered into by and between Holdco and Road Runner
at the Closing, in substantially the form attached hereto as Exhibit K.
"ROAD RUNNER CONSOLIDATION" means, with respect to the TWE
Broadband Business, the consolidation of the results of operations of the Road
Runner business with the results of operations of TWE as a result of the TWEAN
Restructuring.
"SEC" means the Securities and Exchange Commission.
"SELECTED BUSINESS" has the meaning ascribed thereto in the
Master Transaction Agreement.
"SPECIFIED NUMBER" means the number of shares of AOLTW Common
Stock (rounded to the nearest whole share) equal to the quotient obtained by
dividing $1.5 billion by the AOLTW Stock Price. The Specified Number shall be
appropriately adjusted, if necessary, for any dividend or other distribution,
subdivision, split or combination of shares with respect to the AOLTW Common
Stock but without duplication of any adjustment for such items made to the
Specified Price under Section 12.1(d)(ii) in the event an Acceptance Notice is
delivered.
18
"SUBSIDIARY" means, with respect to any Person, (i) any entity
of which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other body performing similar
functions are at any time directly or indirectly owned by such Person; PROVIDED
that any Disposition Trust (and any of its Subsidiaries) will be deemed to be a
Subsidiary of the Person that holds 100% of the beneficial interests therein and
of each other Person of which such first Person is a Subsidiary. For the
avoidance of doubt, Subsidiary does not include unconsolidated joint ventures.
The Residual Business shall be deemed to be a wholly-owned Subsidiary of the
AOLTW Broadband Group.
"SYSTEM" means a "cable system" within the meaning of Section
602(7) of the Communications Act.
"TAX MATTERS AGREEMENT" means the Tax Matters Agreement, to be
entered into as of the Closing, by and between AOLTW and the Company,
substantially in the form attached hereto as Exhibit L.
"TAX RETURN" shall mean any report, return or other
information (including any attached schedules or any amendments to such report,
return or other information) required to be supplied to or filed with a
Governmental Authority with respect to any Tax, including an information return,
claim for refund, amended return, declaration, or estimated Tax return, in
connection with the determination, assessment, collection or administration of
any Tax.
"TAXES" shall mean all forms of taxes, fees, imposts, levies
or other assessments whenever created or imposed, and whether of the United
States or elsewhere, imposed by a Governmental Authority (including Tax sharing
payments with respect thereto), and, without limiting the generality of the
foregoing, shall include income, gross receipts, business and occupation,
property, sales, use, license, excise, franchise, capital stock, employment,
payroll, unemployment insurance, social security, stamp, environmental, value
added, alternative or added minimum, AD VALOREM, trade, recording, withholding,
occupation or transfer tax, custom or duty or other like governmental assessment
or charge of any kind whatsoever, whether computed on a separate, consolidated,
unitary, combined or any other basis, together with any related interest,
penalties and additions imposed by any Governmental Authority.
"THIRD PARTY" means any Person other than the AT&T Parties and
their Affiliates, the AOLTW Parties and their Affiliates or the Comcast Parties
and their Affiliates.
"TIME WARNER BRAND NAME LICENSE AGREEMENT" means the Brand
Name License Agreement, to be entered into by and between AOLTW and the Company
at the Closing, in substantially the form attached hereto as Exhibit M.
"TRADING DAY" means any day on which AOLTW Common Stock is
traded on the NYSE.
19
"TRADING VALUE" means, with respect to AOLTW Common Stock on
any given Trading Day, the volume weighted trading price (rounded to the nearest
1/10,000) of AOLTW Common Stock on the NYSE, as reported by Bloomberg Financial
Markets (or such other source as AOLTW and AT&T may agree) for that Trading Day.
"TRANSACTIONS" means the transactions contemplated by the
Transaction Agreements.
"TRANSACTION AGREEMENTS" means, collectively, this Agreement,
the TWE Distribution Agreement, the Amended and Restated TWE Partnership
Agreement, the TWIC Contribution Agreement, the Tax Matters Agreement, the AOL
High Speed Data Agreement, the Parent Agreement, the AOLTW Registration Rights
Agreement, the AT&T Company Registration Rights Agreement, the AOLTW Company
Registration Rights Agreement, the Time Warner Brand Name License Agreement, the
Road Runner Brand Name License Agreement, the Reimbursement Agreement, the
Partnership Interest Sale Agreement, the MediaOne Promissory Note, the Ancillary
Agreements (as defined in the TWE Distribution Agreement), the Ancillary
Agreements (as defined in the TWIC Contribution Agreement) and any other
agreements or instruments contemplated hereunder or thereunder.
"TRANSACTION EXPENSES" means with respect to any party, all
out-of-pocket expenses (including, without limitation, all fees and expenses of
counsel, accountants, investment bankers, experts, consultants or agents to such
party or any of its Affiliates and including governmental transfer taxes,
recording fees and other similar fees and impositions) incurred by such party or
its Affiliates (or on such party's or its Affiliate's behalf) in connection with
or related to the authorization, preparation, negotiation or execution of this
Agreement, any of the other Transaction Agreements or any of the Transactions.
"TREASURY REGULATIONS" shall mean the Treasury Regulations
promulgated under the Code.
"TWEAN" means Time Warner Entertainment-Advance/Xxxxxxxx
Partnership, a New York general partnership.
"TWEAN RESTRUCTURING" means the transactions contemplated by
the Master Transaction Agreement.
"TWE BROADBAND ASSETS" has the meaning ascribed thereto in the
TWE Distribution Agreement.
"TWE BROADBAND BUSINESS" has the meaning ascribed thereto in
the TWE Distribution Agreement.
"TWE BROADBAND LIABILITIES" has the meaning ascribed thereto
in the TWE Distribution Agreement.
20
"TWE BROADBAND MEMBERS" has the meaning ascribed thereto in
the TWE Distribution Agreement.
"TWE DELAYED TRANSFER ASSETS" has the meaning ascribed thereto
in the TWE Distribution Agreement.
"TWE DISTRIBUTION AGREEMENT" means the TWE Distribution
Agreement, dated as of the date hereof, by and between TWE and Holdco.
"TWE ELIGIBLE OPTION HOLDERS" means any officer or other
employee of any TWE Broadband Member who has been issued stock options to
purchase shares of AOLTW Common Stock.
"TWE ENTITY LEVEL INCOME TAXES" shall mean Income Taxes of TWE
or any entity owned directly or indirectly, in whole or in part, by TWE to the
extent that such Income Taxes are imposed by Law on such entity and not passed
through to its owners by reason of such entity being a Pass-Through Entity.
"TWE JOINT VENTURES" means, collectively, any Person
(excluding TWEAN) in which TWE or its direct or indirect wholly owned
Subsidiaries holds Equity Securities that constitute less than 100% of the
outstanding Equity Securities issued by such Person, including those listed in
Section 5.20(a)(iii) of the AOLTW Disclosure Letter.
"TWE NON-BROADBAND ASSETS" has the meaning ascribed thereto in
the TWE Distribution Agreement.
"TWE NON-BROADBAND BUSINESS" has the meaning ascribed thereto
in the TWE Distribution Agreement.
"TWE NON-BROADBAND LIABILITIES" has the meaning ascribed
thereto in the TWE Distribution Agreement.
"TWE PARTNERS" means all of the general and limited partners
of TWE.
"TWE PARTNERSHIP INTERESTS" means, with respect to any partner
of TWE, all of the general and limited partnership interests in TWE held by such
Person and all rights and interests of such Person under the Original
Partnership Agreement.
"TWE PARTNERSHIP LIABILITIES" means, with respect to any
partner of TWE, all Liabilities of such Person (or any predecessor in interest
of such Person) relating to, arising out of, or resulting from such Person's (or
such predecessor's) capacity as a partner of TWE or otherwise incurred for the
benefit of TWE or its controlled Affiliates (including guarantees, keepwells or
similar credit support issued in respect of Liabilities of TWE or its controlled
Affiliates), including all Liabilities of such Person (or any predecessor in
interest of such Person) under the Original Partnership Agreement, other than
Liabilities for Income Taxes that are not TWE Entity Level Income Taxes.
21
"TWE PREFERRED AMOUNT" means the aggregate liquidation
preference amount of the partnership interests to be held by ATC at Closing and
after giving effect to the TWE Recapitalization; PROVIDED that the TWE Preferred
Amount shall not be less than $2.4 billion nor more than $2.6 billion.
"TWIC APPLICABLE TAXES" means Taxes which are TWIC Broadband
Liabilities (as defined in the TWIC Contribution Agreement).
"TWIC BROADBAND ASSETS" has the meaning ascribed thereto in
the TWIC Contribution Agreement.
"TWIC BROADBAND BUSINESS" has the meaning ascribed thereto in
the TWIC Contribution Agreement.
"TWIC BROADBAND LIABILITIES" has the meaning ascribed thereto
in the TWIC Contribution Agreement.
"TWIC BROADBAND MEMBERS" has the meaning ascribed thereto in
the TWIC Contribution Agreement.
"TWIC CONTRIBUTION AGREEMENT" means the TWIC Contribution
Agreement, dated as of the date hereof, by and between Holdco and the Company.
"TWIC DELAYED TRANSFER ASSETS" with respect to the Holdco
Contribution, has the meaning ascribed thereto in the TWIC Contribution
Agreement and, with respect to the Initial TWIC Contribution, has a correlative
meaning.
"TWIC ELIGIBLE OPTION HOLDERS" means any officer or other
employee of TWIC or any other TWIC Broadband Member who has been issued stock
options to purchase shares of AOLTW Common Stock.
"TWIC JOINT VENTURES" means, collectively, any Person
(excluding TWEAN) in which TWIC or its direct or indirect wholly owned
Subsidiaries holds Equity Securities that constitute less than 100% of the
outstanding Equity Securities issued by such Person, including those listed in
Section 5.27(a)(iii) of the AOLTW Disclosure Letter.
"TWIC MATERIAL ADVERSE EFFECT" means (a) a material adverse
effect on the business, financial condition, assets or results of operations of
the TWIC Broadband Business (taken as a whole after giving effect to the
Transactions), excluding any such effect resulting from or arising in connection
with (i) the announcement of this Agreement; (ii) changes or conditions
generally affecting the Broadband Industry; (iii) changes in the economy or
financial markets in general; or (iv) changes in general regulatory or political
conditions or (b) any change or effect that prohibits or materially impairs the
ability of any Person to consummate the Transactions.
22
"ULTIMATE PUBLIC PARENT" shall mean, with respect to any
Person, the Parent of such Person that (i) is required to make periodic filings
with the SEC under Section 13 or 15 of the 1934 Act with respect to its Equity
Securities and (ii) does not have a Parent that is required to make periodic
filings with the SEC under Section 13 or 15 of the 1934 Act with respect to its
Equity Securities; PROVIDED that if no Parent of such Person is so required,
then such term shall mean the Parent of such Person that is not a Subsidiary of
any other Person.
"VALUATION PERIOD" means the 15 consecutive Trading Days
ending on the fifth Trading Day immediately prior to (and excluding) the Closing
Date.
(b) Each of the following additional terms is defined in
the Section set forth opposite such term:
--------------------------------------------------------------------------------
TERMS SECTION
--------------------------------------------------------------------------------
Acceptance Notice 12.1(d)(ii)
Action 13.4
Adjustment Income 14.1(j)(v)
Affiliate Agreements 5.9
Anticipated Payments 5.9
AOL TWE Partners Preamble
AOLTW Preamble
AOLTW Issue 14.(i)(i)
AOLTW Released Parties 10.2
AOLTW Releasing Parties 10.1
AOLTW SEC Documents 5.10(a)
AOLTW Special Termination Event 12.1(d)(ii)
AT&T Disposition Notice 8.7(b)
AT&T Disposition Termination Notice 8.7(b)
AT&T Indemnification Payment 14.4(a)
AT&T Released Parties 10.1
AT&T Releasing Parties 10.2
AT&T Special Termination Event 12.1(c)(ii)
ATC Preamble
BAS 12.4(a)
Closing 2.2
Closing Date 2.2
23
--------------------------------------------------------------------------------
TERMS SECTION
--------------------------------------------------------------------------------
Comcast Preamble
Company Preamble
Company Assumed Liabilities 2.7(b)
Company Fees and Expenses 9.4
Company Indebtedness 2.4(a)
Company Indemnification Payment 14.4(a)
Company Transferred Assets 2.7(a)
Definitive Trust Terms 8.7(b)
Deviation 8.7(b)
Disposition Entity 8.7(a)
Employee Claims 13.2
End Date 12.1(b)(i)
Engagement Letter 12.4(a)
Engagement Parties 12.4(c)
ERISA Group 3.7(f)
ERISA Group Liabilities 3.7(f)
Exchange Recitals
Existing Valuation Election 12.4(c)
Existing Valuations 12.4(c)
FCC License Consents 5.4
Franchise Consents 5.4
Holdco Preamble
Holdco Contribution Recitals
Indemnification Payment 14.4(a)
Indemnified Party 13.4
Indemnifying Party 13.4
Initial TWIC Contribution Recitals
Interest 8.7(a)
ISP Termination Election 9.1(c)
Letter Agreement 12.4(a)
MediaOne of Colorado Preamble
24
--------------------------------------------------------------------------------
TERMS SECTION
--------------------------------------------------------------------------------
MediaOne Note Payment 2.4(d)
MediaOne Recapitalization 2.5(d)
New Valuation Letter 12.4(a)
Objection Notice 9.4
Original Trust Terms 8.7(a)
Pre-Approved Contract 6.1
Proceeding 14.1(i)(i)
PUC Consents 5.4(c)
Ratified Contract 6.1
Required Approvals 8.1(a)
Section 751 Income 14.1(j)(iv)
Specified Price 12.1(d)(ii)
Straddle Period 14.1(d)
Straddle Returns 14.1(f)
Survival Period 13.1(iii)
Transferred Class B Common Stock 2.6(a)
Trustee 8.7(a)
TWE Preamble
TWE Balance Sheet Date 5.17(b)
TWE Distribution 2.3
TWE Non-Wholly Owned Systems 5.20(a)(ii)
TWE Recapitalization 2.8(b)
TWE SEC Documents 5.16(a)(ii)
TWE Selected Information 5.17
TWE Systems 5.20(a)(ii)
TWE Transfer Recitals
TWE Wholly Owned Systems 5.20(a)(i)
TWIC Preamble
TWIC Balance Sheet Date 5.24(b)
TWIC Non-Wholly Owned Systems 5.27(a)(ii)
TWIC Selected Information 5.24
25
--------------------------------------------------------------------------------
TERMS SECTION
--------------------------------------------------------------------------------
TWIC Systems 5.27(a)(ii)
TWIC Wholly Owned Systems 5.27(a)(i)
WLRK 12.1(c)(ii)
(c) In this Agreement, unless otherwise specified or
where the context otherwise requires:
(i) a reference to a Recital is to the relevant
Recital to this Agreement, to a Section is to the relevant Section of this
Agreement and to an Exhibit is to the relevant Exhibit to this Agreement;
(ii) words importing any gender shall include other
genders;
(iii) words importing the singular only shall include
the plural and vice versa;
(iv) the words "include", "includes" or "including"
shall be deemed to be followed by the words "without limitation";
(v) the words "hereof", "herein", "hereunder" and
"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement, and Article, clause and Exhibit references are to
the Articles, clauses and Exhibits to this Agreement unless otherwise specified;
(vi) references to any Person or any other agreement
or document shall include such Person's successors and permitted assigns;
(vii) the parties hereto acknowledge that they have
participated jointly in the negotiation and drafting of this Agreement and, in
the event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto, and no
presumption or burden of proof shall arise favoring or disfavoring any party
hereto by virtue of the authorship of any provisions of this Agreement;
(viii) unless otherwise expressly provided herein,
any Contract or Law defined or referred to herein or in any Contract that is
referred to herein means such Contract or Law as from time to time amended,
modified or supplemented, including (in the case of a Contract) by waiver or
consent and (in the case of a Law) by succession of comparable successor Laws
and any reference in this Agreement to a Law shall be deemed to include any
rules and regulations promulgated thereunder.
(D) HEADINGS. In this Agreement the headings to Sections
are inserted for convenience only and shall not affect the construction of this
Agreement.
26
ARTICLE II
PRE-CLOSING ACTIVITIES; CLOSING; THE TRANSACTIONS
2.1 PRE-CLOSING ACTIVITIES. Prior to the Closing, AOLTW
shall cause the TWE Transfer and the Initial TWIC Contribution to occur.
2.2 THE CLOSING. The closing (the "CLOSING") of the
transactions described in Article II below shall take place at the offices of
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 at 10:00 a.m., local time, on the fifth Trading Day following the
satisfaction or waiver (and notice thereof to the parties) of the conditions
precedent set forth in Sections 11.1, 11.2 and 11.3 (other than conditions that
by their nature are to be satisfied at the Closing and will in fact be satisfied
at the Closing), or such other date as the parties shall agree. At the Closing,
AOLTW and AT&T shall execute, and shall cause their applicable Subsidiaries to
execute, all of the Transaction Agreements to which such entities are parties
that were not previously executed. At the Closing, the transactions described in
Article II below shall occur in the sequential order specified herein. The date
on which the Closing occurs is referred to as the "CLOSING DATE."
2.3 THE TWE DISTRIBUTION. At the Closing and prior to the
transactions contemplated by Section 2.5, pursuant to the TWE Distribution
Agreement, (a) TWE shall distribute, assign, transfer, convey and deliver to
Holdco (or to Subsidiaries of Holdco designated by Holdco), and Holdco (or such
Subsidiaries) shall accept from TWE, the TWE Non-Broadband Assets (other than
the TWE Delayed Transfer Assets) and (b) Holdco (and any Subsidiary of Holdco
that accepts TWE Non-Broadband Assets pursuant to clause (a) of this Section)
shall assume and agree to pay and discharge, as and when they become due, the
TWE Non-Broadband Liabilities. The transactions contemplated by clauses (a) and
(b) of the immediately preceding sentence are referred to together as the "TWE
DISTRIBUTION." The TWE Distribution shall be made in partial redemption of
AOLTW's Existing TWE Partnership Interests held by Holdco and in accordance with
the TWE Distribution Agreement and each of the TWE Partners and Comcast hereby
agrees that its execution of this Agreement shall constitute its consent and
approval of the TWE Distribution.
2.4 THE MEDIAONE NOTE PAYMENT.
(a) Prior to the Closing, MediaOne of Colorado
shall use best efforts to cause the Company to incur an amount of Indebtedness
for borrowed money sufficient to fully satisfy and discharge the MediaOne
Promissory Note and to pay the Company Fees and Expenses (the "COMPANY
INDEBTEDNESS"). The Company Indebtedness shall permit the prepayment of such
Indebtedness without penalty or premium (other than any penalty or premium that
AT&T agrees to pay) at any time on or following Closing.
(b) Immediately following the incurrence of
Indebtedness pursuant to clause (a) of this Section 2.4, the Company shall make
a cash payment to MediaOne of Colorado in an amount equal to the amount of
Indebtedness incurred
27
pursuant to clause (a) of this Section 2.4 (minus the amount of the Company Fees
and Expenses) in full satisfaction and discharge of the MediaOne Promissory
Note, which will thereupon be canceled.
(c) AT&T shall cause the amount of Indebtedness
of the Company (including any and all accrued and unpaid interest thereon) at
the Closing and immediately following the actions described in Section 2.4(b) to
be equal to $2.1 billion plus an amount equal to the Company Fees and Expenses.
(d) The transactions contemplated by clauses
(a), (b) and (c) of this Section 2.4 are referred to together as the "MEDIAONE
NOTE PAYMENT."
2.5 THE MEDIAONE RECAPITALIZATION.
(a) At the Closing and immediately following the
MediaOne Note Payment, the Company and MediaOne of Colorado shall cause the
Amended and Restated Certificate of Incorporation to be duly filed in accordance
with the DGCL with the Secretary of State of the State of Delaware. The Amended
and Restated Certificate of Incorporation shall become effective at such time as
it is duly filed with the Secretary of State of the State of Delaware and shall
continue in effect until amended in accordance with applicable Law. Pursuant to
the Amended and Restated Certificate of Incorporation, the shares of the Company
shall be reclassified into shares of Company Class A Common Stock and shares of
Company Class B Common Stock.
(b) At the Closing and concurrently with
effectiveness of the Amended and Restated Certificate of Incorporation, the
Amended Bylaws shall be approved and adopted in accordance with the DGCL. The
Amended Bylaws shall become effective immediately upon such approval and
adoption and shall continue in effect until amended in accordance with
applicable Law and the Amended and Restated Certificate of Incorporation.
(c) Subject to compliance with Section 6 of
Article V of the Amended and Restated Certificate of Incorporation (Independence
of Board of Directors) and Section 3.1 of the Parent Agreement, the Company and
MediaOne of Colorado shall take all necessary action to cause to be elected as
directors of the Company and appointed as officers of the Company as of the
Closing the persons designated as such by AOLTW reasonably in advance of the
Closing.
(d) The transactions contemplated by clauses (a),
(b) and (c) of this Section 2.5 are referred to together as the "MEDIAONE
RECAPITALIZATION."
2.6 THE EXCHANGE.
(a) At the Closing and immediately following the
MediaOne Recapitalization, AOLTW shall issue to MediaOne of Colorado a number of
shares of AOLTW Common Stock equal to the Specified Number and, in exchange
therefor, MediaOne of Colorado agrees to transfer to AOLTW 75 shares of Company
Class B Common Stock (the "TRANSFERRED CLASS B COMMON STOCK"), which shares
shall represent
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all of the issued and outstanding shares of Company Class B Common Stock
immediately after the Exchange. The Transferred Class B Common Stock to be
transferred pursuant to the preceding sentence, and the AOLTW Common Stock to be
issued pursuant to the preceding sentence, shall, when transferred or issued, as
applicable, be duly authorized, validly issued, fully paid and nonassessable,
free and clear of Liens other than Permitted Liens.
(b) In furtherance of the transfers described in
clause (a) of this Section 2.6, (i) MediaOne of Colorado shall deliver to AOLTW
certificates representing the Transferred Class B Common Stock, duly endorsed in
blank or accompanied by a duly executed stock power, in proper form for transfer
and (ii) AOLTW shall deliver to MediaOne of Colorado a certificate or
certificates in definitive form and registered in MediaOne of Colorado's name,
representing a number of shares of AOLTW Common Stock equal to the Specified
Number.
2.7 HOLDCO CONTRIBUTION.
(a) At the Closing and immediately following the
Exchange, Holdco shall Contribute to the capital of the Company (i) all of
Holdco's right, title and interest in and to all of the TWE Partnership
Interests set forth in Section 2.7 of the AOLTW Disclosure Letter, which will
constitute all of the TWE Partnership Interests held by Holdco and (ii) pursuant
to and in accordance with the TWIC Contribution Agreement, all of Holdco's
right, title and interest in and to all of the TWIC Broadband Assets (other than
TWIC Delayed Transfer Assets), in each case, free and clear of all Liens other
than the Company Assumed Liabilities (the assets described in clauses (i) and
(ii) being referred to collectively as the "COMPANY TRANSFERRED ASSETS");
(b) At the Closing and concurrently with the
contribution described in clause (a) of this Section 2.7, the Company shall
assume, and agree to pay and discharge as and when they become due (i) all of
Holdco's TWE Partnership Liabilities (after giving effect to the assumption by
Holdco of ATC's TWE Partnership Liabilities (to the extent relating to the
portion of the TWE Partnership Interests transferred by ATC to Holdco) in the
TWE Transfer) excluding TWE Partnership Liabilities relating to, arising out of
or resulting from the TWE Non-Broadband Business and (ii) the TWIC Broadband
Liabilities pursuant to the TWIC Contribution Agreement (the liabilities
described in clauses (i) and (ii) being referred to collectively as the "COMPANY
ASSUMED LIABILITIES").
(c) In furtherance of the Holdco Contribution and
the assumption of the Company Assumed Liabilities, (i) Holdco shall execute and
deliver, and shall cause its Subsidiaries to execute and deliver, such bills of
sale, stock powers, certificates of title, assignments of contracts and other
instruments of transfer, conveyance and assignment as and to the extent
necessary to evidence the Contribution of the Company Transferred Assets to the
Company and (ii) the Company shall execute and deliver, to Holdco and its
Subsidiaries such instruments of assumption and other Contracts as and to the
extent necessary to evidence the valid and effective assumption of the Company
Assumed Liabilities by the Company.
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(d) In consideration of the Holdco Contribution,
the Company shall issue to Holdco 746 shares of Company Class A Common Stock.
The Company Class A Common Stock to be issued pursuant to the preceding sentence
shall, when issued, be duly authorized, validly issued, fully paid and
nonassessable.
2.8 THE TWE RECAPITALIZATION.
(a) At the Closing and immediately following the
Holdco Contribution, the TWE Partners shall execute and deliver the Amended and
Restated TWE Partnership Agreement.
(b) Pursuant to the Amended and Restated TWE
Partnership Agreement, all of the TWE Partnership Interests existing immediately
prior thereto will be converted into the equity interests described therein (the
"TWE RECAPITALIZATION"). The parties hereby acknowledge and agree that, upon the
Closing and immediately following the TWE Recapitalization, the only outstanding
Equity Securities of TWE shall be as set forth in the Amended and Restated TWE
Partnership Agreement and all other option or similar agreements (other than the
Partnership Interest Sale Agreement) shall be null and void and be of no further
force or effect. Prior to the Closing, Tax distributions pursuant to Section 8.5
of the Original Partnership Agreement shall continue to be made in accordance
with past practice; PROVIDED, HOWEVER, that payments pursuant to such Section
8.5 shall be accelerated so that the Board's then reasonable estimate of the tax
distributions to be made if the Closing was the end of the taxable year are made
prior to the Closing; PROVIDED, FURTHER, HOWEVER, that in computing such tax
distributions the Transactions contemplated by Article II shall not be taken
into account. Each of the TWE Partners and Comcast hereby agrees that its
execution of this Agreement shall constitute its consent to and approval of the
TWE Recapitalization.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE AT&T PARTIES
Except as set forth in the AT&T Disclosure Letter, each of the
AT&T Parties represents and warrants, jointly and severally on behalf of itself
and each other AT&T Party, to each of the AOLTW Parties and Comcast Parties as
follows:
3.1 CORPORATE EXISTENCE AND POWER. Each AT&T Party 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.
3.2 CORPORATE AUTHORIZATION. The execution, delivery and
performance by each of the AT&T Parties of the Transaction Agreements to which
it is party and the consummation by each of the AT&T Parties of the Transactions
to which it is party are within their respective corporate powers and have been
duly authorized by all necessary corporate action. This Agreement constitutes,
and when executed each other Transaction Agreement will constitute, a valid and
binding agreement of the AT&T Parties that are party thereto, enforceable
against such AT&T Parties in accordance with
30
its terms, except as the same may be limited by applicable bankruptcy,
insolvency, moratorium or similar laws of general application relating to or
affecting creditors' rights or by general principles of equity.
3.3 NO VOTE REQUIRED. No vote or action of the holders of
any class or series of capital stock of AT&T (in their capacity as such holders)
is necessary to approve the Transactions Agreements or the consummation of the
Transactions.
3.4 GOVERNMENTAL AUTHORIZATION. The execution, delivery
and performance by each of the AT&T Parties of the Transaction Agreements to
which it is party and the consummation by each of the AT&T Parties of the
Transactions to which it is party require no Authorization of, by or with any
Governmental Authority, other than: (a) compliance with any applicable
requirements of the HSR Act or any other Competition Law, whether United States,
state or foreign; (b) the filing of the Restated Certificate of Incorporation
with the Secretary of State of the State of Delaware pursuant to the DGCL; (c)
compliance with any applicable requirements of the 1933 Act, the 1934 Act and
any other applicable securities laws, whether United States, state or foreign;
(d) the other Authorizations described in the AT&T Disclosure Letter; and (e)
any Authorization the absence of which, individually or in the aggregate, would
not reasonably be expected to have a Company Material Adverse Effect.
3.5 NON-CONTRAVENTION. The execution, delivery and
performance by each of the AT&T Parties of the Transaction Agreements to which
it is party and the consummation by each of the AT&T Parties of the Transactions
to which it is party do not and will not (a) contravene, conflict with or result
in any violation or breach of any provision of the certificate of incorporation,
as amended, or bylaws of AT&T or the comparable governing documents of any other
AT&T Party; (b) assuming all Authorizations referred to in Section 3.4 are
obtained or made, contravene, conflict with or result in a violation or breach
of any provision of any applicable Law; (c) require any Authorization by any
Person (other than a Governmental Authority) under, constitute a default (or an
event that, with or without notice or lapse of time or both, would constitute a
default) under, or cause or permit the termination, cancellation, acceleration,
triggering or other change of any right or obligation or the loss of any benefit
to which the Company is entitled under any provision of any Contract or
Authorization binding upon the Company; or (d) result in the creation or
imposition of any Lien on any asset or property of the Company or give rise to
any Purchase Right, other than such exceptions in the case of clauses (b), (c)
and (d) above as would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
3.6 CAPITALIZATION OF THE COMPANY. As of the date hereof,
the authorized capital stock of the Company consists of 10 shares of Common
Stock, par value $0.01 per share. As of the date hereof, there were issued and
outstanding 10 shares of such Common Stock, all of which are held by MediaOne of
Colorado free and clear of any Lien other than Permitted Liens and Liens under
the Original Partnership Agreement, and which constitute, and as of Closing
(immediately prior to the MediaOne Recapitalization) will constitute, all
outstanding Equity Securities of the Company. As of the Closing, immediately
prior to the Exchange, MediaOne of Colorado will own
31
179 shares of Class A Common Stock and 75 shares of Class B Common Stock, which
will constitute all outstanding Equity Securities of the Company. All
outstanding shares of capital stock and other Equity Securities of the Company
have been, and all shares that may be issued pursuant to this Agreement will be,
when issued in accordance with the respective terms thereof, duly authorized,
validly issued, fully paid and nonassessable, free and clear of Liens other than
Permitted Liens and Liens under the Original Partnership Agreement. There are no
outstanding Equity Securities of the Company reserved for issuance upon
conversion, exercise, exchange or redemption of any outstanding Equity
Securities or Indebtedness and there are no obligations, contingent or
otherwise, (i) of the Company or any other Person to repurchase, redeem or
otherwise Acquire any Equity Securities of the Company; or (ii) except as
provided for herein, of the Company to provide funds to, or make any investment
in (in the form of a loan, capital contribution or otherwise), or provide any
guarantee with respect to the obligations of, any other Person.
3.7 BUSINESS OF THE COMPANY.
(a) As of the date hereof and immediately prior to
the Closing, AT&T has heretofore delivered or made available to AOLTW true and
complete copies of the certificate of incorporation, as amended, and bylaws of
the Company, as in effect on the date hereof.
(b) As of the date hereof and through the time
that is immediately prior to the Closing, AT&T directly and indirectly owns all
of the outstanding Equity Securities of the Company and MediaOne of Colorado,
and as of the date hereof the Company and MediaOne of Colorado own all of the
outstanding Equity Securities of TWE, described in Section 3.7(b) of the AT&T
Disclosure Letter, in each case free and clear of all Liens other than Permitted
Liens or any Liens under the Original Partnership Agreement. The Company does
not (i) directly or indirectly own, and has never directly or indirectly owned,
any assets other than its TWE Partnership Interests and (ii) directly or
indirectly engage, and has never directly or indirectly engaged, in any business
other than holding its TWE Partnership Interests and actions taken incidental
thereto.
(c) As of the date hereof and through the time
that is immediately prior to the Closing, the Company is not a party to any
Contracts (and has never made any applications to any Franchising Authority),
other than the MediaOne Promissory Note, Contracts relating to the Company
Indebtedness, the Original Partnership Agreement, any related Contracts to which
the AOLTW Parties are party and the Transaction Agreements to which the Company
is a party; PROVIDED, that at and after Closing, all Liabilities under Contracts
related to Company Indebtedness shall be capable of being fully discharged and
satisfied without penalty or premium (other than any penalty or premium paid by
AT&T) in connection with the repayment of the Company Indebtedness.
(d) Immediately prior to the Closing, the Company
will not have, and will never have had, any employees, other than unpaid
corporate officers with
32
no entitlement to benefits or other compensation that was, is or will be a
liability of the Company.
(e) As of the date hereof and through the time
that is immediately prior to the Closing, the Company does not directly or
indirectly own, and has never directly or indirectly owned, any Intellectual
Property, other than rights to and interests in the name "MediaOne TWE Holdings,
Inc." and certain derivatives thereof.
(f) As of the date hereof and through the time
that is immediately prior to the Closing, other than the MediaOne Promissory
Note and the Company Indebtedness, the Company has no Indebtedness and no
Liabilities (excluding any Liabilities under any of the Contracts set forth in
Section 3.7(c), Liabilities for Taxes with respect to the investment in TWE or
the Company's corporate existence and any Liabilities for Taxes under Treasury
Regulation ss. 1.1502-6 or similar provisions of state, local, provincial or
foreign Law and excluding any Liabilities ("ERISA GROUP LIABILITIES") arising
either under the Code or ERISA as a result of the Company having been, at any
time on or prior to Closing, a member of a group described in Section 4001(b) of
ERISA or Section 414(b), (c), (m) or (o) of the Code (an "ERISA GROUP")), other
than in connection with the Original Partnership Agreement and the Transactions.
(g) No ERISA Group Liability has been incurred by
the Company and no ERISA Group Liability is reasonably expected to be asserted
against the Company for periods prior to the Closing.
(h) Immediately upon any Permitted AT&T
Disposition by the Company, this Section 3.7 shall automatically and without any
action by any Person be deemed to be amended so that each representation and
warranty made herein with respect to the Company shall be deemed to have also
been made with respect to each Company Permitted Transferee subject to the
exceptions set forth in Section 3.7 of the AT&T Disclosure Letter.
3.8 TAX REPRESENTATIONS.
(a) All Tax Returns that are required to be filed
by or with respect to the Company have been duly and timely filed (taking into
account extensions) or, where not so timely filed, are covered under a valid
extension that has been obtained therefor and, to the extent they relate to the
Company, are true, correct and complete in all material respects; PROVIDED, that
no representation is made with respect to the accuracy of any Tax Return filed
by TWE or with respect to any aspect of a Tax Return of the Company derived
directly from a Tax Return of TWE.
(b) All Taxes shown as due on the Company's Tax
Returns referred to in clause (a) (and subject to the proviso therein) which
relate to the Company have been paid in full.
(c) All deficiencies asserted or assessments made
with respect to the Company as a result of the examinations of any of the Tax
Returns referred to in clause (a) (without reference to the proviso contained
therein), to the extent they relate to
33
the Company, (together with any interest, additions or penalties with respect
thereto and any interest in respect of such additions or penalties) have been
paid in full.
(d) No issues with respect to the Company that
have been raised in writing to the Company or any of its Affiliates by the
relevant taxing authority in connection with the examination of any of the Tax
Returns referred to in clause (a) are pending.
(e) No extensions or waivers of statutes of
limitation have been given by or requested with respect to any Taxes of the
Company except for extensions or waivers applicable to combined, consolidated or
unitary Tax Returns which include the Company and any other AT&T Affiliate.
(f) No audit or other proceeding by any
Governmental Authority is pending or, to the knowledge of the Company,
threatened with respect to any Taxes due with respect to the Company (provided
that no representation or warranty is made with respect to any pending or
threatened audit of TWE with respect to which TWE or its general partner would
receive notice from a Governmental Authority), no Governmental Authority has
given written notice of any intention to assert any deficiency or claim for
additional Taxes with respect to the Company against the Company, in each case
other than by reason of Treasury Regulation ss. 1.1502-6 or similar provisions
of state, local, provincial or foreign Law. No written claim has been made by
any Governmental Authority in a jurisdiction where the Company does not file Tax
Returns that it is or may be subject to taxation by that jurisdiction (provided,
however, that no representation or warranty is being made with respect to a
written claim made to TWE).
(g) There are no liens, other than liens arising
with respect to the activities of TWE, for Taxes upon the assets or properties
of the Company, except for liens for Taxes not yet due and payable or being
contested in good faith by appropriate proceedings.
(h) The Company has not filed a consent under
Section 341(f) of the Code or similar provision of state, local, provincial or
foreign Law.
(i) The Company is not a party to any agreement
relating to the sharing, allocation or indemnification of Taxes, or any similar
agreement, contract or arrangement, or has any liability for Taxes of any other
Person under Treasury Regulation ss. 1.1502-6, Treasury Regulation ss. 1.1502-78
or similar provisions of state, local, provincial or foreign Law, as a
transferee or successor, by contract, or otherwise except for agreements
applicable to members of the affiliated group of which AT&T, AT&T Broadband or
AT&T Comcast is the common parent and for liability for Taxes under Treasury
Regulation ss. 1.1502-6 for the affiliated group of which AT&T, AT&T Broadband
or AT&T Comcast is the common parent.
(j) MediaOne of Colorado is not a foreign person
within the meaning of Section 1445 of the Code.
34
(k) Other than with respect to closing agreements
or private letter rulings of the IRS (or comparable rulings of any other
Governmental Authority) entered into or obtained by TWE or any such closing
agreement or ruling with respect to any combined, consolidated or unitary Tax
Return group which includes the Company and any other AT&T Affiliate which
agreement or ruling will have no binding effect on the Company after the
Closing, no closing agreement pursuant to Section 7121 of the Code or any
similar provision of Law, has been executed or entered into with respect to the
Company, and the Company is not subject to any private letter ruling of the IRS
or comparable ruling of any other Governmental Authority.
(l) The Company has not constituted a
"distributing corporation" or a "controlled corporation" (within the meaning of
Section 355(a)(1)(A) of the Code or similar provision of Law) in a distribution
of shares qualifying for tax-free treatment under Section 355 of the Code or
similar provision of Law (i) in the two years prior to the date of this
Agreement or (ii) in a distribution that could otherwise constitute part of a
"plan" or "series of related transactions" (within the meaning of Section 355(e)
of the Code or similar provision of Law) in conjunction with this acquisition.
(m) No "overall foreign loss" within the meaning
of Section 904(f) of the Code has been or shall be allocated to the Company
pursuant to Treas. Xxx.xx. 1.1502-9A(c) excluding any such overall foreign loss
that may have been allocated to the Company as a partner of TWE.
(n) The Company has owned no property and has had
no income, loss, deductions, credits or other allowances for Tax purposes other
than DE MINIMIS property or Tax items and other than relating to its partnership
interest in TWE, the Company Indebtedness and Tax items applicable to it by
virtue of the Company being a member of a combined, consolidated or unitary
group.
3.9 AT&T COMCAST MERGER. Prior to the date hereof, AT&T
has made available to AOLTW all material terms of the AT&T Comcast Merger.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMCAST PARTIES
Except as set forth in the Comcast Disclosure Letter, each of
the Comcast Parties represents and warrants, jointly and severally on behalf of
itself and each other Comcast Party, to each of the AOLTW Parties and AT&T
Parties as follows:
4.1 CORPORATE EXISTENCE AND POWER. Each Comcast Party 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.
4.2 CORPORATE AUTHORIZATION. The execution, delivery and
performance by each of the Comcast Parties of the Transaction Agreements to
which
35
it is party and the consummation by each of the Comcast Parties of the
Transactions to which it is party are within their respective corporate powers
and have been duly authorized by all necessary corporate action. This Agreement
constitutes, and when executed each other Transaction Agreement will constitute,
a valid and binding agreement of the Comcast Parties that are party thereto,
enforceable against such Comcast Parties in accordance with its terms, except as
the same may be limited by applicable bankruptcy, insolvency, moratorium or
similar laws of general application relating to or affecting creditors' rights
or by general principles of equity.
4.3 NO VOTE REQUIRED. No vote or action of the holders of
any class or series of capital stock of Comcast is necessary to approve the
Transactions Agreements or the consummation of the Transactions.
4.4 GOVERNMENTAL AUTHORIZATION. The execution, delivery
and performance by each of the Comcast Parties of the Transaction Agreements to
which it is party and the consummation by each of the Comcast Parties of the
Transactions to which it is party require no Authorization of, by or with any
Governmental Authority, other than: (a) compliance with any applicable
requirements of the 1933 Act, the 1934 Act and any other applicable securities
laws, whether United States, state or foreign; (b) the other Authorizations
described in the Comcast Disclosure Letter; and (c) any Authorization the
absence of which, individually or in the aggregate, would not reasonably be
expected to have a Company Material Adverse Effect.
4.5 NON-CONTRAVENTION. The execution, delivery and
performance by each of the Comcast Parties of the Transaction Agreements to
which it is party and the consummation by each of the Comcast Parties of the
Transactions to which it is party do not and will not (a) contravene, conflict
with or result in any violation or breach of any provision of the certificate of
incorporation, as amended, or bylaws of Comcast or the comparable governing
documents of the other Comcast Party; (b) assuming all Authorizations referred
to in Section 4.4 are obtained or made, contravene, conflict with or result in a
violation or breach of any provision of any applicable Law; (c) require any
Authorization by any Person (other than a Governmental Authority) under,
constitute a default (or an event that, with or without notice or lapse of time
or both, would constitute a default) under, or cause or permit the termination,
cancellation, acceleration, triggering or other change of any right or
obligation or the loss of any benefit to which any Comcast Party is entitled
under any provision of any Contract or Authorization binding upon any Comcast
Party; or (d) result in the creation or imposition of any Lien on any asset or
property of any Comcast Party or give rise to any Purchase Right, other than
such exceptions in the case of clauses (b), (c) and (d) above as would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE AOLTW PARTIES
Except as set forth in the AOLTW Disclosure Letter, each of
the AOLTW Parties, jointly and severally on behalf of itself and each other
AOLTW Party, represents and warrants to each of the AT&T Parties and each of the
Comcast Parties as follows:
36
5.1 CORPORATE EXISTENCE AND POWER. Each AOLTW Party is a
corporation or other entity duly formed, validly existing and in good standing
under the laws of its jurisdiction of organization and has all corporate,
partnership or other similar powers required to carry on its business as
currently conducted.
5.2 CORPORATE AUTHORIZATION. The execution, delivery and
performance by the AOLTW Parties of the Transaction Agreements to which it is
party and the consummation by each of the AOLTW Parties of the Transactions to
which it is party are within their respective corporate, partnership or other
similar powers and have been duly authorized by all necessary corporate,
partnership or similar action. This Agreement constitutes, and when executed
each other Transaction Agreement will constitute, a valid and binding agreement
of the AOLTW Parties that are party thereto, enforceable against such AOLTW
Parties in accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, moratorium or similar laws of general
application relating to or affecting creditors' rights or by general principles
of equity.
5.3 NO VOTE REQUIRED. No vote or action of the holders of
any class or series of capital stock of AOLTW (in their capacity as such
holders) is necessary to approve the Transaction Agreements or the consummation
of the Transactions.
5.4 GOVERNMENTAL AUTHORIZATION. The execution, delivery
and performance by the AOLTW Parties of the Transaction Agreements to which it
is party and the consummation by each of the AOLTW Parties of the Transactions
to which it is party require no Authorization of, by or with any Governmental
Authority, other than: (a) Authorizations required from, by or with the relevant
Franchising Authorities in respect of the Franchises for the Systems owned or
operated by TWE, TWIC, Holdco or any of their respective Subsidiaries (the
"FRANCHISE CONSENTS"); (b) Authorizations required from, by or with the FCC in
connection with a change of control and/or assignment of the holder of the FCC
Licenses of TWE, TWIC, Holdco or any of their respective Subsidiaries (the "FCC
LICENSE CONSENTS"); (c) Authorizations from state public utility commissions
having jurisdiction over the assets of TWE, TWIC, Holdco or any of their
respective Subsidiaries (the "PUC CONSENTS"); (d) compliance with any applicable
requirements of the HSR Act or any other Competition Law, whether United States,
state or foreign; (e) the filing of the Amended and Restated Certificate of
Incorporation with the Secretary of State of the State of Delaware pursuant to
the DGCL; (f) compliance with any applicable requirements of the 1933 Act, the
1934 Act and any other applicable securities laws, whether United States, state
or foreign; (g) the other Authorizations described in the AOLTW Disclosure
Letter; and (h) any Authorization the absence of which, individually or in the
aggregate, would not reasonably be expected to have a Company Material Adverse
Effect or AOLTW Material Adverse Effect.
5.5 NON-CONTRAVENTION. The execution, delivery and
performance by the AOLTW Parties of the Transaction Agreements to which it is
party and the consummation by each of the AOLTW Parties of the Transactions to
which it is party do not and will not (a) contravene, conflict with or result in
any violation or breach of any provision of the certificate of incorporation, as
amended, or bylaws of AOLTW or the
37
comparable governing documents of any other AOLTW Party; (b) assuming all
Authorizations referred to in Section 5.4 are obtained or made, contravene,
conflict with or result in a violation or breach of any provision of any
applicable Law; (c) require any Authorization by any Person (other than a
Governmental Authority) under, constitute a default (or an event that, with or
without notice or lapse of time or both, would constitute a default) under, or
cause or permit the termination, cancellation, acceleration, triggering or other
change of any right or obligation or the loss of any benefit to which any AOLTW
Party or any of their respective Subsidiaries is entitled under any provision of
any Contract or Authorization binding upon any AOLTW Party or any of their
respective Subsidiaries; or (d) result in the creation or imposition of any Lien
on any asset or property of any AOLTW Party or any of their respective
Subsidiaries or give rise to any Purchase Right, other than such exceptions in
the case of clauses (b), (c) and (d) above as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect or
AOLTW Material Adverse Effect.
5.6 TAXES.
(a) AOLTW has no present plan or intention to
cause or permit the Company to issue (x) any new class of shares that are
nonvoting or (y) additional shares of (i) Company Class B Common Stock to any
person other than to AOLTW or (ii) Company Class A Common Stock for cash for a
period of six months following the Closing, other than in connection with a
public offering, or the exercise of compensatory stock options.
(b) AOLTW has no present plan or intention to (i)
liquidate the Company, (ii) merge the Company into another corporation or (iii)
except for transfers described in Section 368(a)(2)(C) of the Code or Treas.
Reg. ss. 1.368-2(k), sell or otherwise dispose of any of the Transferred Class B
Common Stock.
(c) Neither AOLTW nor any person related to AOLTW
(within the meaning of Treasury Regulation Section 1.368-1(e)(3)) has any
present plan or intention to purchase, redeem or otherwise reacquire any of the
AOLTW stock issued in the Exchange, except for possible share repurchases from
time to time by AOLTW of its common stock if (x) any such repurchases are
undertaken for a corporate business purpose, (y) the AOLTW common stock is
widely held and publicly traded, and (z) the repurchases of AOLTW common stock
are a small percentage of its total common stock and are made in the open market
from AOLTW shareholders generally as part of its ongoing stock repurchase
program that was not created or modified in connection with the Exchange, and
will not be directed specifically to the former holders of Company stock who
received AOLTW common stock pursuant to the Exchange.
(d) Following the Closing, AOLTW intends to cause
the Company to continue the business in which it was engaged as of the Closing
or use a significant portion of the business assets it held as of the Closing in
a business, within the meaning of Treas. Reg. 1.368-1(d).
38
(e) AOLTW is not an investment company as defined
in Section 368(a)(2)(F)(iii) and (iv) of the Code.
(f) At the Closing, neither AOLTW nor any
Affiliate of AOLTW shall have entered into a legally binding underwriting
agreement with respect to a primary offering of the Company Class A Common
Stock.
(g) At the Closing, there shall be no effective
registration statement with respect to the Company Class A Common Stock.
5.7 OWNERSHIP OF TWE INTERESTS. AOLTW owns directly or
indirectly and, except as contemplated by the Transaction Agreements, will own
immediately prior to Closing all of the Equity Securities of TWE as described in
Section 5.7 of the AOLTW Disclosure Letter, free and clear of Liens other than
Permitted Liens and Liens under the Original Partnership Agreement.
5.8 SUFFICIENCY OF ASSETS.
(a) The TWE Broadband Assets and the TWIC
Broadband Assets, collectively, are all of the Assets necessary and sufficient
(and the right, title and interest of the Company and its Subsidiaries therein
(other than in respect of any TWE Delayed Transfer Assets or TWIC Delayed
Transfer Assets) immediately after Closing will be sufficient) to conduct the
AOLTW Broadband Business in all material respects as currently conducted by
AOLTW and its Subsidiaries (as permitted to be modified in accordance with
Section 6.1 hereof).
(b) AOLTW does not, directly or indirectly, own
any Systems, other than those Systems that constitute TWE Broadband Assets or
TWIC Broadband Assets.
(c) AOLTW does not, directly or indirectly, own
any Equity Securities of TWEAN or Roadrunner, other than those Equity Securities
that constitute TWE Broadband Assets or TWIC Broadband Assets.
(d) From June 30, 2002 until the date hereof, the
AOLTW Broadband Business has not Disposed of any Systems.
5.9 AOLTW - AFFILIATE AGREEMENTS. Except for Contracts
set forth in Part A of Section 5.9 of the AOLTW Disclosure Letter and except for
any Contract which does not involve required or reasonably anticipated payments
or other consideration delivered or value provided by the AOLTW Broadband
Business over the duration of such Contract ("ANTICIPATED PAYMENTS") in excess
of $25 million, no Contracts are in effect as of the date hereof that are
Affiliate Agreements. "AFFILIATE AGREEMENT" means any Contract or other
transaction between any AOLTW Broadband Member or the AOLTW Broadband Business,
on the one hand, and any AOLTW Non-Broadband Member or the AOLTW Non-Broadband
Business, on the other hand. Part A of such Section also identifies the
approximate expiration date of each Affiliate Agreement listed thereon. None of
such listed Affiliate Agreements have so called
39
"evergreen" provisions (i.e., provisions providing for automatic renewals of a
Contract without affirmative action). Except for Affiliate Agreements that,
individually and in the aggregate, do not involve in excess of $50 million of
Anticipated Payments, all Affiliate Agreements are on Arm's-Length Terms. The
Affiliate Agreements listed on Part B of such Section of the AOLTW Disclosure
Letter contain "most favored nations" clauses with respect to the terms of such
Contract taken as a whole for the benefit of the AOLTW Broadband Business. Each
Affiliate Agreement listed on Part C of such Section of the AOLTW Disclosure
Letter is on terms that, when taken as a whole, are comparable to the terms
embodied in the Five Largest HBO Customer Contracts. Prior to the date hereof,
AOLTW has provided or made available to AT&T and Comcast (or to their counsel)
complete copies of each Affiliate Agreement listed in Part A of such Section of
the AOLTW Disclosure Letter but not in Part B or C thereof (other than
programming agreements, ATDN arrangements or any others listed thereon that are
competitively sensitive).
5.10 AOLTW - SEC FILINGS.
(a) AOLTW has delivered or made available to AT&T
and Comcast: (i) AOLTW's annual report on Form 10-K for its fiscal year ended
December 31, 2001, (ii) AOLTW's proxy or information statements relating to
meetings of, or actions taken without a meeting by, AOLTW's shareholders held
since December 31, 2001, and (iii) all of AOLTW's other reports on Forms 10-Q
and 8-K filed with the SEC since December 31, 2001 (the documents referred to in
clauses (i), (ii) and (iii) above, collectively, the "AOLTW SEC DOCUMENTS").
(b) As of its filing date (or, if amended or
superseded by a filing prior to the date of this Agreement or on or prior to the
third Trading Day immediately prior to (and excluding) the first Trading Day in
the Valuation Period, then on the date of such filing), each AOLTW SEC Document
complied as to form in all material respects with the applicable requirements of
the 1934 Act.
(c) As of its filing date (or, if amended or
superseded by a filing prior to the date of this Agreement or on or prior to the
third Trading Day immediately prior to (and excluding) the first Trading Day in
the Valuation Period, then on the date of such filing), each AOLTW SEC Document
filed pursuant to the 1934 Act did not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
5.11 AOLTW - FINANCIAL STATEMENTS. The audited
consolidated financial statements and unaudited consolidated interim financial
statements of AOLTW included in the AOLTW SEC Documents fairly present, in all
material respects, in conformity with GAAP applied on a consistent basis (except
as may be indicated in the notes thereto), the consolidated financial position
of AOLTW and its consolidated Subsidiaries as of the respective dates thereof
and their consolidated results of operations and cash flows for the periods then
ended (subject to normal year-end adjustments in the case of any unaudited
interim financial statements).
40
5.12 AOLTW - ABSENCE OF CERTAIN CHANGES. Since the AOLTW
Balance Sheet Date, 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 an AOLTW Material Adverse Effect.
5.13 AOLTW - NO UNDISCLOSED MATERIAL LIABILITIES.
(a) There are no Liabilities of AOLTW or any of
its consolidated Subsidiaries, other than:
(i) Liabilities reflected in the AOLTW Balance
Sheet or in the notes thereto;
(ii) Liabilities incurred in the ordinary
course of business consistent with past practice since the AOLTW Balance Sheet
Date; or
(iii) Liabilities that, individually or in the
aggregate, have not had and would not reasonably be expected to have an AOLTW
Material Adverse Effect.
(b) Section 5.13 of the AOLTW Disclosure Letter
contains a list that is true and correct in all material respects as of July 31,
2002 of all of the following types of obligations of any of the AOLTW Broadband
Members:
(i) any obligation, whether contingent or
otherwise, as an account party on a letter of credit or under any surety bond or
similar instrument (other than those issued in the ordinary course of business);
(ii) any obligation, whether contingent or
otherwise, in respect of bankers' acceptances; and
(iii) any obligation in respect of
Indebtedness of third parties secured by (or which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on property owned or acquired by such AOLTW Broadband Member, whether
or not the Indebtedness secured thereby has been assumed.
5.14 AOLTW - COMPLIANCE WITH LAWS AND COURT ORDERS. AOLTW
and its Subsidiaries hold all Authorizations of, by or with any Governmental
Authority that are necessary for the lawful conduct of AOLTW's business as
currently conducted, except where the failure to hold any of the foregoing,
individually or in the aggregate, has not had and would not reasonably be
expected to have an AOLTW Material Adverse Effect. AOLTW and each of its
Subsidiaries are, and have been in compliance with, all Laws and Authorizations,
and, to the knowledge of AOLTW, are not under investigation with respect to and
has not been threatened to be charged with or given notice of any violation of
any Law or Authorization, except for failures to comply, investigations,
threats, and notices that, individually or in the aggregate, have not had and
would not reasonably be expected to have an AOLTW Material Adverse Effect.
41
5.15 AOLTW - LITIGATION. There is no action, suit,
investigation or proceeding pending against, or, to the knowledge of AOLTW,
threatened against or affecting, AOLTW or its Subsidiaries before any court or
arbitrator or before or by any other Governmental Authority, that, individually
or in the aggregate, would reasonably be expected to have an AOLTW Material
Adverse Effect.
5.16 TWE - SEC FILINGS.
(a) AOLTW has delivered or made available to AT&T
and Comcast: (i) TWE's annual report on Form 10-K for its fiscal years ended
December 31, 2001, and (ii) all of TWE's other reports filed on Forms 10-Q or
8-K with the SEC since December 31, 2001 (the documents referred to in clauses
(i) and (ii) above, collectively, the "TWE SEC DOCUMENTS").
(b) As of its filing date (and also, if amended or
superseded by a filing prior to the date of this Agreement or the Closing, then
on the date of such filing), each TWE SEC Document complied as to form in all
material respects with the applicable requirements of the 1934 Act.
(c) As of its filing date (and also, if amended or
superseded by a filing prior to the date of this Agreement or the Closing, then
on the date of such filing), each TWE SEC Document filed pursuant to the 1934
Act did not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.
5.17 TWE BROADBAND - SELECTED FINANCIAL INFORMATION. Set
forth on Section 5.17 of the AOLTW Disclosure Letter is, among other things, the
following unaudited financial information (the information specified below, the
"TWE SELECTED INFORMATION"):
(a) the revenues, EBITDA and operating income of
the TWE Broadband Business for the 12-month period ended December 31, 2001 and
the six-month periods ended June 30, 2001 and June 30, 2002 including pro forma
adjustments thereto that reflect the A/N Deconsolidation and the Road Runner
Consolidation; and
(b) the current assets (other than cash and cash
equivalents), current liabilities (other than any current portion of
Indebtedness) and long-term liabilities (other than any Indebtedness) of the TWE
Broadband Business, as of June 30, 2002 (the "TWE BALANCE SHEET DATE") including
Pro Forma Adjustments thereto that reflect (but are not limited to) the A/N
Deconsolidation and the Road Runner Consolidation, (i) except with respect to
Pro Forma Adjustments, to the extent such items would be reflected on a balance
sheet (other than in any notes thereto) have been prepared in accordance with
GAAP consistently applied, and (ii) with respect to pro forma adjustments (other
than any deferred tax and minority interest adjustments), have been prepared on
a basis consistent with the guidance in Article 11 of Regulation S-X promulgated
by the SEC.
42
The TWE Selected Information (other than pro forma
adjustments) was prepared in accordance with GAAP applied on a consistent basis.
Subject to the exclusion and adjustments described above (including the absence
of Indebtedness and non-current assets) and in Section 5.17 of the AOLTW
Disclosure Letter, the TWE Selected Information fairly presents in all material
respects the results of operations and financial condition of the TWE Broadband
Business for the periods and as of the dates specified therein. For the
avoidance of doubt, no representation and warranty is made with respect to any
information contained in Section 5.17 of the AOLTW Disclosure Letter other than
the TWE Selected Information.
5.18 TWE BROADBAND - ABSENCE OF CERTAIN CHANGES. From the
TWE Balance Sheet Date until the date hereof, the TWE Broadband Business has
been operated in all material respects in the ordinary course of business
consistent with past practice and, since the TWE Balance Sheet Date, there has
not been any event, occurrence or development of a state of circumstances or
facts that, individually or in the aggregate, would reasonably be expected to
have a Company Material Adverse Effect.
5.19 TWE BROADBAND - NO UNDISCLOSED MATERIAL LIABILITIES.
(a) There are no Liabilities (other than
Indebtedness) of the TWE Broadband Business, other than:
(i) Liabilities included in the TWE Selected
Information;
(ii) Liabilities incurred in the ordinary
course of business consistent with past practice since the TWE Balance Sheet
Date; or
(iii) Liabilities that, individually or in the
aggregate, would not reasonably be expected to have a Company Material Adverse
Effect.
(b) Section 5.19(b) of the AOLTW Disclosure Letter
contains a list that is true and complete in all material respects of all grants
of options to purchase AOLTW Common Stock to TWE Eligible Option Holders that
are outstanding as of the date specified on such list, including:
(x) the number of shares of AOLTW Common Stock
underlying each such grant;
(y) the exercise price of the options covered
by each such grant; and
(z) the grant and expiration date of such
options.
No additional option grants have been issued to employees of the TWE Broadband
Business since the date specified on such list and on or prior to the date
hereof.
43
5.20 TWE BROADBAND - SYSTEMS INFORMATION.
(a) As of June 30, 2002:
(i) TWE or its direct or indirect wholly owned
Subsidiaries (including, for purposes of this Section 5.20, TWEAN (but excluding
the Selected Business)) own Systems serving the localities listed in Section
5.20(a)(i) of the AOLTW Disclosure Letter (collectively, the "TWE WHOLLY OWNED
SYSTEMS").
(ii) The TWE Joint Ventures own Systems
serving the localities listed in Section 5.20(a)(ii) of the AOLTW Disclosure
Letter (collectively, the "TWE NON-WHOLLY OWNED SYSTEMS" and, together with the
TWE Wholly-Owned Systems, the "TWE Systems").
(iii) TWE or its direct or indirect wholly
owned Subsidiaries own the percentage of outstanding voting Equity Securities of
each TWE Joint Venture set forth in Section 5.20(a)(iii) of the AOLTW Disclosure
Letter.
(iv) TWE does not, directly or indirectly,
manage or operate any Systems (other than the TWIC Systems) in which it does not
hold, directly or indirectly, a beneficial or equity interest.
(v) TWE does not, directly or indirectly, own
any Systems that it (or its Affiliates) does not directly or indirectly manage
and operate, other than the Systems that are part of the Selected Business.
(vi) At least 95% of the plant miles in the
TWE Systems have been upgraded to at least 550 MHz and at least 85% of the plant
miles in the TWE Systems have been upgraded to at least 750 MHz.
(b) Section 5.20(b) of the AOLTW Disclosure Letter
sets forth a materially true and accurate and complete list, as of the July 2002
monthly report generated by TWE in the ordinary course of business, of the
number of Basic Subscribers, Pay Units, Digital Subscribers and High Speed Data
Subscribers served by the TWE Wholly Owned Systems, in the aggregate, and the
TWE Non-Wholly Owned Systems, in the aggregate.
5.21 TWE BROADBAND - COMPLIANCE WITH LAWS AND COURT
ORDERS. The TWE Broadband Members hold all Authorizations of, by or with any
Governmental Authority (including System Franchises and FCC Licenses) that are
necessary for the lawful conduct of the TWE Broadband Business as currently
conducted, except where the failure to hold any of the foregoing, individually
or in the aggregate, would not reasonably be expected to have a Company Material
Adverse Effect. Each TWE Broadband Member is, and has been in compliance with,
all Laws and Authorizations, and, to the knowledge of TWE, is not under
investigation with respect to and has not been threatened to be charged with or
given notice of any violation of any Law or Authorization, except for failures
to comply, investigations, threats, and notices that,
44
individually or in the aggregate, have not had and would not reasonably be
expected to have a Company Material Adverse Effect.
5.22 TWE BROADBAND - LITIGATION. There is no action, suit,
investigation or proceeding pending against, or, to the knowledge of AOLTW,
threatened against or affecting, the TWE Broadband Business or the TWE Broadband
Assets before any court or arbitrator or before or by any other Governmental
Authority that, individually or in the aggregate, would reasonably be expected
to have a Company Material Adverse Effect.
5.23 TWEAN RESTRUCTURING. Prior to the date hereof, TWE
has made available to AT&T and Comcast all material terms of the TWEAN
Restructuring.
5.24 TWIC - SELECTED FINANCIAL INFORMATION. Set forth on
Section 5.24 of the AOLTW Disclosure Letter is, among other things, the
following unaudited financial information (the information specified below, the
"TWIC SELECTED INFORMATION"):
(a) the revenues, EBITDA and operating income of
the TWIC Broadband Business for the 12-month period ended December 31, 2001 and
the six-month periods ended June 30, 2001 and June 30, 2002; and
(b) the current assets (other than cash and cash
equivalents), current liabilities (other than any current portion of
Indebtedness) and long-term liabilities (other than any Indebtedness) of the
TWIC Broadband Business, as of June 30, 2002 (the "TWIC BALANCE SHEET DATE")
including Pro Forma Adjustments thereto (i) except with respect to Pro Forma
Adjustments, to the extent such items would be reflected on a balance sheet
(other than in any notes thereto) have been prepared in accordance with GAAP
consistently applied, and (ii) with respect to pro forma adjustments (other than
any deferred tax and minority interest adjustments), have been prepared on a
basis consistent with the guidance in Article 11 of Regulation S-X promulgated
by the SEC.
The TWIC Selected Information (other than pro forma
adjustments) was prepared in accordance with GAAP applied on a consistent basis.
Subject to the exclusion and adjustments described above (including the absence
of Indebtedness and non-current assets) and in Section 5.24 of the AOLTW
Disclosure Letter, the TWIC Selected Information fairly presents in all material
respects the result of operations and financial condition of the TWIC Broadband
Business for the periods and as of the dates specified therein. For the
avoidance of doubt, no representation or warranty is made with respect to any
information contained in Section 5.24 of the AOLTW Disclosure Letter other than
the TWIC Selected Information.
5.25 TWIC - ABSENCE OF CERTAIN CHANGES. From the TWIC
Balance Sheet Date until the date hereof, the TWIC Broadband Business has been
operated in all material respects in the ordinary course of business consistent
with past practice and since the TWIC Balance Sheet Date, there has not been any
event, occurrence or
45
development of a state of circumstances or facts that, individually or in the
aggregate, would reasonably be expected to have a TWIC Material Adverse Effect.
5.26 TWIC - NO UNDISCLOSED MATERIAL LIABILITIES. There are
no Liabilities (other than Indebtedness) in the TWIC Broadband Business other
than:
(a) Liabilities included in the TWIC Selected
Information;
(b) Liabilities incurred in the ordinary course of
business consistent with past practice since the TWIC Balance Sheet Date; or
(c) Liabilities that, individually or in the
aggregate, would not reasonably be expected to have a TWIC Material Adverse
Effect.
5.27 TWIC - SYSTEMS INFORMATION.
(a) As of June 30, 2002:
(i) TWIC or its direct or indirect wholly
owned Subsidiaries own Systems serving the localities listed in Section
5.27(a)(i) of the AOLTW Disclosure Letter (collectively, the "TWIC WHOLLY OWNED
SYSTEMS").
(ii) The TWIC Joint Ventures own Systems
serving the localities listed in Section 5.27(a)(ii) of the AOLTW Disclosure
Letter (collectively, the "TWIC NON-WHOLLY OWNED SYSTEMS" and, together with the
TWIC Wholly-Owned Systems, the "TWIC SYSTEMS").
(iii) TWIC or its direct or indirect wholly
owned Subsidiaries own the percentage of outstanding voting Equity Securities of
each TWIC Joint Venture set forth in Section 5.27(a)(iii) of the AOLTW
Disclosure Letter.
(iv) TWIC does not, directly or indirectly,
manage or operate any Systems in which it does not hold, directly or indirectly,
a beneficial or equity interest.
(v) TWIC does not, directly or indirectly, own
any Systems (excluding Systems owned by TWEAN) that it (or its Affiliates) does
not, directly or indirectly, manage and operate.
(vi) At least 95% of the plant miles in the
TWIC Systems have been upgraded to at least 550 MHz and at least 85% of the
plant miles in the TWIC Systems have been upgraded to at least 750 MHz.
(b) Section 5.27(b) of the AOLTW Disclosure Letter
sets forth a materially true, accurate and complete list, as of the July 2002
monthly report generated by TWIC in the ordinary course of business, of the
number of Basic Subscribers, Pay Units, Digital Subscribers and High Speed Data
Subscribers served by the TWIC Wholly
47
Owned Systems, in the aggregate, and the TWIC Non-Wholly Owned Systems, in the
aggregate.
5.28 TWIC - TITLE TO TRANSFERRED ASSETS. At the Closing,
the Company and its Subsidiaries will have, good and marketable title to (or, in
the case of assets that are leased, valid leasehold interests in) the TWIC
Broadband Assets (other than the TWIC Delayed Transfer Assets) to be Contributed
to the Company at the Closing, except for such exceptions, qualifications and
limitations as would not, individually or in the aggregate, reasonably be
expected to have a TWIC Material Adverse Effect.
5.29 TWIC - LITIGATION. There is no action, suit,
investigation or proceeding pending against, or, to the knowledge of AOLTW,
threatened against or affecting, the TWIC Broadband Business or any of the TWIC
Broadband Assets before any court or arbitrator or before or by any other
Governmental Authority that, individually or in the aggregate, would reasonably
be expected to have a TWIC Material Adverse Effect.
5.30 TWIC - COMPLIANCE WITH LAWS AND COURT ORDERS. The
TWIC Broadband Business includes all Authorizations of, by or with any
Governmental Authority that are necessary for the lawful conduct of the TWIC
Broadband Business as currently conducted, except where the failure to hold any
of the foregoing, individually or in the aggregate, would not reasonably be
expected to have a TWIC Material Adverse Effect. Each TWIC Broadband Member is,
and has been in compliance with, all Laws and Authorizations, and, to the
knowledge of TWIC, is not under investigation with respect to and have not been
threatened to be charged with or given notice of any violation of any Law or
Authorization, except for failures to comply, investigations, threats, and
notices that, individually or in the aggregate, have not had and would not
reasonably be expected to have a TWIC Material Adverse Effect.
5.31 TWIC - EMPLOYEE BENEFITS. Except as would not,
individually or in the aggregate, reasonably be expected to have a TWIC Material
Adverse Effect: (i) each Benefit Plan has been maintained in substantial
compliance with its terms and with the requirements prescribed by any applicable
statutes, orders, rules and regulations, including ERISA and the Code, (ii) each
Benefit Plan that is intended to be qualified under an applicable provision of
the Code or any regulation thereunder, including Section 401(a) of the Code, is
so qualified and has been so qualified during the period since its adoption;
each trust created under any such Benefit Plan is exempt from tax and has been
so exempt since its creation and, to the knowledge of TWIC, nothing has occurred
with respect to the operation of any Benefit Plan that would cause the loss of
such qualification or exemption and (iii) the Transactions, alone or in
combination with any other triggering event, will not result in any new or
additional, or otherwise accelerate any, Liability of the Company or any of its
Subsidiaries under any Benefit Plan that would not have been a liability of TWIC
or its Subsidiaries absent the consummation of the Transactions. As of the date
hereof and as of the Initial TWIC Contribution, TWIC and its Subsidiaries, and
as of the Closing the TWIC Broadband Members, in each case employ and shall
employ no individuals other than employees who are primarily employed in
connection with the TWIC Broadband Business. As of the date hereof and
47
as of Closing, neither TWIC nor any of its Subsidiaries is a party to any
collectively bargaining agreements or sponsors, maintains or contributes to a
"multiemployer plan" (as defined in Section 3(37) of ERISA).
5.32 TWIC ENVIRONMENTAL MATTERS. The TWIC Broadband
Business complies with and has complied with all Environmental Laws, except as
would not, individually or in the aggregate, reasonably be expected to have a
TWIC Material Adverse Effect.
5.33 TWIC TAX MATTERS. Except as would not individually or
in the aggregate be reasonably expected to have a TWIC Material Adverse Effect:
(a) All Tax Returns that are required to be filed
with respect to TWIC Applicable Taxes have been duly and timely filed (taking
into account extensions) or, where not so timely filed, are covered under a
valid extension that has been obtained therefor and are true, correct and
complete in all material respects.
(b) All TWIC Applicable Taxes shown as due on the
Tax Returns referred to in clause (a) have been paid in full.
(c) All deficiencies asserted or assessments made
with respect to the TWIC Broadband Business as a result of the examinations of
any of the Tax Returns referred to in clause (a) (together with any interest,
additions or penalties with respect thereto and any interest in respect of such
additions or penalties) have been paid in full.
(d) No issues with respect to the TWIC Broadband
Business that have been raised in writing by the relevant taxing authority in
connection with the examination of any of the Tax Returns referred to in clause
(a) are pending.
(e) No written claim with respect to TWIC
Applicable Taxes has been made by any Governmental Authority in a jurisdiction
where the TWIC Broadband Business does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction.
(f) There are no liens for TWIC Applicable Taxes
upon the assets or properties of the TWIC Broadband Business, except for liens
for TWIC Applicable Taxes not yet due and payable or being contested in good
faith by appropriate proceedings.
5.34 TWIC - ELIGIBLE OPTION HOLDERS. Section 5.34 of the
AOLTW Disclosure Letter contains a list that is true and complete in all
material respects of all grants of options to purchase AOLTW Common Stock to
TWIC Eligible Option Holders that are outstanding as of the date specified on
such list, including:
(a) the number of shares of AOLTW Common Stock
underlying each such grant;
48
(b) the exercise price of the options covered by
each such grant; and
(c) the grant and expiration dates of such
options.
No additional option grants have been issued to employees of the TWIC Broadband
Business since the date specified on such list and on or prior to the date
hereof.
ARTICLE VI
COVENANTS OF AOLTW
6.1 AOLTW BROADBAND INTERIM OPERATIONS. Except as set
forth in the AOLTW Disclosure Letter or as otherwise expressly contemplated by a
Transaction Agreement, without the prior written consent of AT&T (which shall
not be unreasonably withheld), from the date hereof until the Closing, AOLTW
shall cause each of the AOLTW Broadband Members and the AOLTW Broadband Business
to conduct its business in all material respects in the ordinary course of
business consistent with past practice, including (a) using reasonable efforts
to: (i) preserve intact its present business organization; (ii) maintain its
cable plant and facilities; (iii) maintain in effect all material Authorizations
from Governmental Authorities, including all material licenses and permits that
are required for the AOLTW Broadband Group or any AOLTW Broadband Member to
conduct its business; and (iv) preserve existing relationships with its material
lenders, suppliers, customers and others having material business relationships
with it (it being understood that actions addressed and expressly permitted in
the remainder of this Section 6.1 shall be deemed not to violate the
requirements of this sentence); (b) incurring capital expenditures in the
ordinary course consistent with past practice and with respect to the remainder
of the fiscal year 2002 so that the aggregate capital expenditures incurred for
fiscal year 2002 is not less than 90% of the aggregate amount budgeted for such
fiscal year and (c) granting options only in the ordinary course of business
consistent with past practice. Except as set forth in the AOLTW Disclosure
Letter or as otherwise expressly contemplated hereby or by any of the other
Transaction Agreements, from the date hereof until the Closing, without the
prior written consent of AT&T (which shall not be unreasonably withheld), AOLTW
shall not permit any AOLTW Broadband Member to:
(i) enter into any Affiliate Agreement (or consummate
any transaction contemplated thereby) unless (A) such Affiliate Agreement (or
transaction) is on Arm's-Length Terms and (B) if such Contract (or transaction)
involves Anticipated Payments in excess of $25 million, then AOLTW will give
written notice upon entering into such Contract to AT&T and Comcast (it being
understood that such notice need not include any terms of such Contract other
than the identity of the parties and the general subject matter thereof);
PROVIDED that if such Contract (or transaction) involves Anticipated Payments in
excess of $50 million, such Contract must also be a Ratified Contract or a
Pre-Approved Contract (as defined below); PROVIDED, FURTHER, nothing contained
in this Section 6.1 shall be deemed to prohibit, restrict or invalidate any
Affiliate Agreement (or any transaction contemplated thereby) that was entered
into prior to the date hereof (treating any material amendment or any extension
or renewal of
49
any such existing Contract as a new Affiliate Agreement entered into at the time
of such amendment, extension or renewal);
(ii) issue, deliver or sell, or authorize the
issuance, delivery or sale of, any Equity Securities of any TWE Broadband Member
or any TWIC Broadband Member except as permitted pursuant to the final sentence
of Section 6.1;
(iii) except for capital expenditures, which shall be
governed by clause (b) of the introductory paragraph of this Section 6.1,
acquire any assets or business (including Equity Securities) in one or a series
of related transactions, other than (A) pursuant to agreements in effect as of
the date hereof that are disclosed in the AOLTW Disclosure Letter, (B) Systems
(or Persons primarily engaged in the business of owning, operating or managing
Systems), (C) assets used in the ordinary course of business by any AOLTW
Broadband Member in a manner that is consistent with past practice (which assets
do not constitute a business unit, division or all or substantially all of the
assets of the transferor) and (D) assets or businesses (including Equity
Securities) in related lines of business as the AOLTW Broadband Business not in
excess of $100M in the aggregate;
(iv) except as required pursuant to Contracts in
effect as of the date hereof, Dispose of any assets or business included in the
AOLTW Broadband Business in one or a series of related transactions, other than
(A) the Disposition of inventory (goods or services) in the ordinary course of
business, (B) in any transaction providing for a swap of Systems PROVIDED that
to the extent that such swap results in the AOLTW Broadband Business having
fewer subscribers, such reduction shall (to such extent) be treated as a sale
for purposes of clause (C) below, or (C) the Disposition of one or more Systems
(and related assets) having subscribers not in excess of 500,000 in the
aggregate for all such Dispositions;
(v) intentionally accelerate the receipt of cash or
cash equivalents, or intentionally delay the payment of cash or cash
equivalents, for the purpose of reducing Net Indebtedness at the Closing; or
(vi) agree or commit to do any of the foregoing.
For purposes of Section 6.1(i), "RATIFIED CONTRACT" means any
Contract that, within a reasonable period of time following the election of at
least two independent directors of the Company, is ratified by such independent
directors.
For purposes of Section 6.1(i), a "Pre-Approved Contract"
means:
(x) any programming Contract (or any material amendment
or any renewal or extension thereof) between Home Box
Office or Cinemax and the AOLTW Broadband Group with
terms that, when taken as a whole, are comparable to
the terms embodied in the Five Largest HBO Customer
Contracts at the time of such Contract, amendment,
renewal or extension; and
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(y) any programming Contract (or any material amendment
or any renewal or extension thereof) between Xxxxxx
Broadcasting System and the AOLTW Broadband Group
that contains a "most favored nations" clause for the
benefit of the AOLTW Broadband Group with respect to
the terms of such Contract taken as a whole.
Notwithstanding anything to the contrary herein, this
Agreement shall not restrict or prohibit transactions, including pursuant to
internal contributions, recapitalizations, reorganizations, mergers,
liquidations, consolidations or any other transactions, solely between and among
wholly owned Subsidiaries of the AOLTW Broadband Members so long as it does not
adversely affect the AOLTW Broadband Business or the Company or any of its
Subsidiaries (after giving effect to the Transactions).
6.2 DEBT. AOLTW shall cause the Company to have no
consolidated Net Indebtedness immediately following the Closing other than AOLTW
Broadband Permitted Indebtedness. For the avoidance of doubt, Indebtedness of
unconsolidated joint ventures described in Section 6.2 of the AOLTW Disclosure
Letter shall not be restricted by this Agreement.
6.3 TRANSACTION AGREEMENTS. Prior to or concurrently with
the Closing, each of the AOLTW Parties shall execute all Transaction Agreements
to which it is a party and shall not amend, or waive any provision of, any
Transaction Agreement to which no AT&T Party is party without the consent of
AT&T. Subject to the terms and conditions of this Agreement and the other
Transaction Agreements, each of the AOLTW Parties shall, and shall cause each of
its Subsidiaries to, comply with its respective obligations required to be
performed on or before Closing under each of the Transaction Agreements pursuant
to and in accordance with the terms hereof and thereof.
6.4 INTERIM OPERATIONS OF THE AOLTW PARTIES. Except as
set forth in the AOLTW Disclosure Letter or as otherwise expressly contemplated
by a Transaction Agreement, without the prior written consent of AT&T and
Comcast (which shall not be unreasonably withheld), from the date hereof until
the Closing, AOLTW shall not, and shall not permit any AOLTW Party to, take any
action that would, or would reasonably be expected to, prevent or materially
impair the ability of any AOLTW Party, AT&T Party or Comcast Party to consummate
the Transactions or that would, or would reasonably be expected to, make any
representation or warranty of the AOLTW Parties hereunder inaccurate in any
material respect as of the Closing. AOLTW will provide AT&T and Comcast with
drafts and at least 5 Business Days to comment on the forms of all documentation
used to effectuate the Initial TWIC Contribution.
ARTICLE VII
COVENANTS OF AT&T AND COMCAST
7.1 COMPANY INTERIM OPERATIONS. Except as set forth in
the AT&T Disclosure Letter or as otherwise expressly contemplated by a
Transaction Agreement, without the prior written consent of AOLTW and Comcast
(in each case, which shall not
51
be unreasonably withheld), from the date hereof until the Closing, (a) AT&T and
MediaOne of Colorado shall cause MediaOne TWE Holdings not to conduct any
business operations (other than its ownership of TWE Partnership Interests),
enter into any Contract, Acquire any assets or incur any Liabilities, other than
Liabilities for Taxes, ERISA Group Liabilities, the MediaOne Promissory Note or
the Company Indebtedness and the Company Fees and Expenses, (b) except pursuant
to the AT&T Comcast Merger, the spin-off transactions contemplated by the AT&T
Comcast Merger Agreement, or the other internal restructurings and transactions
in connection therewith that are solely among wholly owned Subsidiaries of AT&T
and that do not adversely affect the Company or its Subsidiaries (after giving
effect to the Transactions) (all such transactions referred to in this clause
(b) being collectively referred to as the "AT&T COMCAST TRANSACTIONS"), AT&T
shall not transfer, assign or otherwise Dispose of any Equity Securities of
MediaOne of Colorado and (c) except pursuant to a Permitted AT&T Disposition,
AT&T shall not permit (i) MediaOne of Colorado to transfer, assign or otherwise
Dispose or agree to Dispose of any Equity Securities of the Company or TWE or
(ii) the Company to transfer or otherwise Dispose or agree to Dispose of any
Equity Securities of TWE.
7.2 INTERIM OPERATIONS OF THE AT&T PARTIES. Except as set
forth in the AT&T Disclosure Letter or as otherwise expressly contemplated by a
Transaction Agreement, without the prior written consent of AOLTW and Comcast
(in each case, which shall not be unreasonably withheld), from the date hereof
until the Closing, AT&T shall not, and shall not permit any other AT&T Party to,
take any action that would, or would reasonably be expected to, prevent or
materially impair the ability of any AOLTW Party, AT&T Party or Comcast to
consummate the Transactions or that would, or would reasonably be expected to,
make any representation or warranty of the AT&T Parties hereunder inaccurate in
any material respect as of the Closing.
7.3 INTERIM OPERATIONS OF THE COMCAST PARTIES. Except as
set forth in the Comcast Disclosure Letter or as otherwise expressly
contemplated by a Transaction Agreement, without the prior written consent of
AOLTW and AT&T (in each case, which shall not be unreasonably withheld), from
the date hereof until the Closing, Comcast shall not, and shall not permit any
Comcast Party to, take any action that would, or would reasonably be expected
to, prevent or materially impair the ability of any AOLTW Party, AT&T Party or
Comcast Party to consummate the Transactions or that would, or would reasonably
be expected to, make any representation or warranty of the Comcast Parties
hereunder inaccurate in any material respect as of the Closing.
7.4 TRANSACTION AGREEMENTS. Prior to or concurrently with
the Closing, each of the AT&T Parties and each of the Comcast Parties shall
execute all Transaction Agreements to which it is a party and shall not amend,
or waive any provision of, any Transaction Agreement to which no AOLTW Party is
party without the consent of AOLTW. Subject to the terms and conditions of this
Agreement and the other Transaction Agreements, each of such parties shall, and
shall cause each of its Subsidiaries to, comply with its respective obligations
required to be performed on or before Closing under each of the Transaction
Agreements pursuant to and in accordance with the terms hereof and thereof.
Notwithstanding anything herein to the contrary, the
52
parties acknowledge that none of the AT&T Parties will be able to cause any
Disposition Trust or any of its Subsidiaries to comply with such Disposition
Trust's or such Subsidiary's obligations under any of the Transaction
Agreements. The AT&T Parties agree to use their respective reasonable best
efforts to cause such Disposition Trust or such Subsidiary to comply with its
obligations under the Transaction Agreements and will indemnify the AOLTW
Parties from any Losses arising out of its failure to so comply.
ARTICLE VIII
COVENANTS OF AT&T, AOLTW, COMCAST AND THE COMPANY
8.1 REQUIRED EFFORTS.
(a) Subject to the terms and conditions of this
Agreement, each of the parties hereto will use its respective reasonable best
efforts to promptly (i) take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable under applicable
Laws to consummate the Transactions as soon as practicable, including preparing
and filing as promptly as practicable all documentation to effect all necessary
filings, notices, petitions, statements, registrations, submissions of
information, applications and other documents, and (ii) obtain and maintain all
Authorizations as are necessary, proper or advisable in connection with the
Transactions, including, without limitation, waiver of Purchase Rights, the
Franchise Consents, PUC Consents and FCC License Consents (collectively, the
"REQUIRED APPROVALS"). The existence of the conditions set forth in Section
11.1(a), 11.1(b) and 11.1(c) shall not limit the parties' obligations pursuant
to the foregoing sentences.
(b) Notwithstanding the foregoing, nothing in this
Agreement (including Section 8.1(a)) shall require, or be deemed to require
AOLTW, AT&T or Comcast (or any of their respective Subsidiaries) to agree to or
effect any divestiture, hold separate any business or assets, or enter or agree
to enter into, or amend or agree to amend, any of its Contracts or
Authorizations (including, without limitation, Franchises and FCC Licenses) or
take or refrain from taking any other action or conduct any business in any
manner:
(i) with respect to all actions and agreements
other than any deletion or modification of any term of the AOL High Speed Data
Agreement, if doing so would, or would reasonably be likely to, individually or
in the aggregate, (A) materially adversely affect the Company (after giving
effect to the Transactions) or (B) have a meaningful adverse effect (excluding
affects by virtue of ownership interests in the Company) on AOLTW, AT&T or
Comcast, as the case may be; PROVIDED that the parties agree that the imposition
of reasonable restrictions on AT&T's (or MediaOne of Colorado's) ownership
interests (which shall be deemed to include, solely for this purpose, any
limitations or prohibitions on its exercise of voting rights) in the AOLTW
Common Stock or the Company Common Stock issued to MediaOne of Colorado
hereunder, or in TWE shall not be deemed, for purposes of this Section 8.1(b)(i)
to adversely affect the Company (after giving effect to the Transactions),
AOLTW, AT&T or Comcast, as the case may be; or
53
(ii) with respect to the AOL High Speed Data
Agreement, which has the effect of: (A) deleting or modifying any pricing or
other economic term in the AOL High Speed Data Agreement set forth on Exhibit C
thereto or in Section 4(f) thereof in a manner that is adverse to such party or
(B) deleting or modifying any of the other terms of the AOL High Speed Data
Agreement in a manner that, in the aggregate, materially adversely affects such
party's rights or obligations under the AOL High Speed Data Agreement; PROVIDED
that the parties hereby agree that the failure to include the provisions of
Sections 3(C) and 4(L) and the first paragraph of Section 20(B) of the AOL High
Speed Data Agreement shall be deemed not to adversely affect any party's rights
thereunder (it being understood that, without limiting the other obligations of
the parties under this Agreement, AT&T and Comcast shall take all reasonable and
appropriate measures to support the retention of Sections 3(C) and 4(L) and the
first paragraph of Section 20(B) in the AOL High Speed Data Agreement); or
(iii) that requires any modifications to (or
imposes a condition inconsistent with) this Agreement or the other Transaction
Agreements (other than the AOL High Speed Data Agreement) that, in the
aggregate, materially adversely affects such party.
(c) In furtherance and not in limitation of the
covenants of the parties contained in Section 8.1(a), if any administrative or
judicial action or proceeding, including any proceeding by a private party, is
instituted (or threatened to be instituted) challenging any Transaction as
violative of any Competition Law (as defined below), or if any Law is enacted,
entered, promulgated or enforced or any other course of action is taken by a
Governmental Authority which would make the Transactions illegal or would
otherwise prohibit or materially impair or delay the consummation of the
Transactions, subject to Section 8.1(b), each of AOLTW, AT&T and Comcast shall
cooperate in all respects with each other and shall (including, subject to
Section 8.1(b), by selling, holding separate or otherwise disposing of or
conducting its business in a specified manner, or agreeing to sell, hold
separate or otherwise Dispose of or conduct its business in a specified manner,
or permitting the sale, holding separate or other Disposition of any assets of
AT&T, AOLTW or their respective Subsidiaries or agreeing to modifications to the
Transaction Agreements) contest and resist any such action or proceeding and
shall use its respective reasonable best efforts to have vacated, lifted,
reversed or overturned any decree, judgment, injunction, order or other Law,
whether temporary, preliminary or permanent, that is in effect and that
prohibits, prevents or restricts consummation of the Transactions and shall use
its respective reasonable best efforts to have such Law repealed, rescinded or
made inapplicable so as to permit consummation of the Transactions.
Notwithstanding the foregoing or any other provision of this Agreement, nothing
in this Section 8.1 shall limit a party's right to terminate this Agreement
pursuant to Article XII so long as such party has up to then complied with its
obligations under this Section 8.1.
(d) Subject to applicable Law relating to the
exchange of information, each of AOLTW, AT&T and Comcast shall (i) promptly
inform the other parties of any communication received by such party (or any of
its Subsidiaries) from, or given by such party (or any of its Subsidiaries) to,
any Governmental Authority, in each
54
case regarding any of the Transactions; (ii) have the right to review in
advance, and to the extent practicable consult with the other parties on, all
the information relating to AOLTW and its Subsidiaries, AT&T and its
Subsidiaries or Comcast and its Subsidiaries, as the case may be, that appears
in any filing made with, or written materials submitted to, any Governmental
Authority with respect to the Transactions; (iii) furnish counsel for the other
parties with copies of all correspondence, filings and communications (and
memoranda setting forth the substance thereof) between them and their Affiliates
and their respective representatives, on the one hand, and any Governmental
Authority or their respective staffs, on the other hand, regarding any of the
Transactions; (iv) consult with each other, to the extent practicable, in
advance of any meeting or conference with, any Governmental Authority, and to
the extent permitted by the Governmental Authority, give the other parties the
opportunity to attend and participate in such meetings and conferences; and (v)
otherwise use its respective reasonable best efforts to cooperate in all
respects with each other in connection with any filing or submission and in
connection with any investigation or other inquiry, including any proceeding
initiated by a private party in connection with the Transactions; PROVIDED that,
notwithstanding the above, AOLTW's obligations with respect to Franchise
Consents shall be limited to briefing AT&T and Comcast from time to time upon
such party's reasonable request with respect to the status of obtaining the
Franchise Consents.
(e) In furtherance and not in limitation of the
foregoing, each of AT&T, AOLTW and Comcast agrees to make, as promptly as
practicable (and, in any event, within 30 calendar days of the date of this
Agreement), to the extent it has not already done so, all necessary filings with
applicable Governmental Authorities relating to the Transactions, and, in each
case, to supply as promptly as practicable any additional information and
documentary material that may be reasonably requested pursuant to such Laws or
by such Governmental Authorities and to use reasonable best efforts to cause the
expiration or termination of the applicable waiting periods under the HSR Act
and the receipt of any Required Approvals under such other Laws or from such
authorities as soon as practicable.
(f) In furtherance of obtaining Franchise Consents
in connection with the Transactions, the Company hereby authorizes the persons
designated in Section 8.1(f) of the AOLTW Disclosure Letter to execute and file
such forms, applications and other documents and to take such other actions as
may be necessary or appropriate by and in the name of the Company in order to
apply for and obtain such Franchise Consents; PROVIDED, HOWEVER, that AOLTW
shall not have the authority to bind the Company to any obligation that is not
conditioned on the Closing taking place and shall indemnify the Company from any
Loss arising out of any action so taken by such Persons in the event the Closing
does not occur.
8.2 PROHIBITED ACTIVITIES. The parties hereto shall not,
and shall cause their respective Affiliates, agents and representatives acting
on their behalf not to, engage in, announce an intention to engage in, or act in
concert with any Person to engage in, a Prohibited Activity.
55
8.3 PUBLIC ANNOUNCEMENTS. Prior to Closing, AT&T, Comcast
and AOLTW will consult with each other before issuing any press release or
making any public statement with respect to this Agreement, any other
Transaction Agreement or the Transactions (except to the extent the information
included therein has previously been disclosed in a release or statement
previously approved hereunder) and, except as may be required by applicable Law
or any listing agreement with any national securities exchange or quotation
system, will not issue any such press release or make any such public statement
without the prior consent of the other parties, which consent shall not be
unreasonably withheld. Notwithstanding the foregoing, any such press release or
public statement that may be required by applicable Law or any listing agreement
with any national securities exchange or quotation system may be issued without
such consent, if the party hereto making such release or statement has used its
reasonable efforts to consult with the other parties.
8.4 FURTHER ASSURANCES. In addition to any other action
required by this Agreement, subject to Section 7.4 in the case of any
Disposition Trust (and its controlled Affiliates), AOLTW, AT&T and Comcast
shall, and shall cause their respective Subsidiaries to, execute such further
instruments and documents and perform such further acts as may be reasonably
necessary, required or desirable to carry into effect the intent and purposes of
this Agreement and the other Transaction Agreements.
8.5 ACKNOWLEDGMENT REGARDING ORIGINAL PARTNERSHIP
AGREEMENT. Notwithstanding anything to the contrary contained in the Original
Partnership Agreement or in any Transaction Agreement, each of the parties
hereby acknowledges and agrees that AT&T or Comcast shall be deemed not
restricted or prohibited hereunder or thereunder from consummating any of the
transactions contemplated by the AT&T Comcast Merger Agreement or any Permitted
AT&T Transfer.
8.6 PRE-CLOSING DISCLOSURES. If at the time that all
conditions set forth in Sections 11.1, 11.2 and 11.3 are satisfied or waived
(other than the condition specified in Section 11.2(c) and other than conditions
that by their nature are to be satisfied at the Closing and will in fact be
satisfied at the Closing) AOLTW in good faith notifies AT&T and Comcast in
writing of the existence of breaches of representations and warranties made by
the AOLTW Parties in Article V (setting forth with reasonable specificity the
details of such breaches) that AOLTW acknowledges in such writing would result
in the non-satisfaction of the condition to Closing set forth in Section 11.2(c)
(with respect to Sections 5.24, 5.25, 5.26, 5.27, 5.28, 5.29, 5.30, 5.31, 5.32,
5.33 or 5.34) and, after receipt of such notice, AT&T waives such condition and
the Closing occurs, none of the AT&T Parties, the Comcast Parties, the Company
or any other Person shall have any rights hereunder (including under Section
13.3) or otherwise (including at Law) with respect to such breaches of
representations and warranties (or any Losses arising therefrom), and such
breaches of representations and warranties shall be disregarded for purposes of
Section 13.5.
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8.7 DISPOSITION CHANGES.
(a) In connection with establishing the terms of
any Disposition Trust or any Permitted AT&T Transferee upon which similar
governmental restrictions, as described below, are applied (together with any
Disposition Trust, a "DISPOSITION ENTITY") with respect to AT&T's or its
Affiliates' interest in the Company (the "INTEREST"), (i) prior to submitting
any drafts of definitive documents relating to such Disposition Entity to the
relevant Governmental Authority, AT&T and Comcast will provide AOLTW with copies
of such drafts, (ii) the parties will consult with each other and AOLTW will
(within five (5) days of receipt of such draft documents, or such shorter period
as is appropriate given the materiality of changes in such draft or the status
of the process with the relevant Governmental Authority) seek in good faith to
identify any reasonable federal Income Tax-related objections to any proposed
changes to the terms of the Disposition Entity relative to those set forth in
the Original Trust Terms (as defined below), PROVIDED, that failure to make any
such objection shall not limit AOLTW's rights hereunder and (iii) AT&T and
Comcast shall use reasonable best efforts, subject to any customary limitations
under applicable Law (including, without limitation, FCC and FTC rules), to
cause the terms governing such Disposition Entity to provide that (A) the
governing trustee of such Disposition Entity (the "TRUSTEE") will have the right
to exercise any voting rights of the Interest as described in paragraph 4 of
Section 1A of the AT&T Disclosure Letter, (B) AT&T or one or more of its
Affiliates will have the right to appoint (subject to notice to or approval of
the relevant Governmental Authority) the Trustee and any successor trustee and
(C) the Trustee will distribute to AT&T or its Affiliates all proceeds (other
than Restricted Consideration as described in Section 1A of the Disclosure
Letter and net of all fees and expenses owed to the Trustee) from any
Disposition of the Interest or of any Restricted Consideration. Notwithstanding
the foregoing, AT&T shall not be required to take any action that would
reasonably be likely to, individually or in the aggregate, have a meaningful
adverse effect (excluding effects by virtue of ownership interests in the
Company) on AT&T or Comcast, as the case may be. "ORIGINAL TRUST TERMS" means
the trust terms, insofar as material to the federal Income Tax characterization
of the trust and the Interest, set forth in Section 1A of the AT&T Disclosure
Letter.
(b) Promptly upon determination of the definitive
terms (the "DEFINITIVE TRUST TERMS") governing a Disposition Entity, AT&T shall
provide AOLTW with a copy of such definitive terms (an "AT&T DISPOSITION
NOTICE"). If there is any material deviation (it being agreed and understood
that any change in the duration, so long as the duration is no longer than seven
(7) years, of the Disposition Entity or the divestiture period of the Interest
shall not be considered a material deviation under this section) between the
Definitive Trust Terms and the Original Trust Terms (the "DEVIATION") and AOLTW
determines in its reasonable judgment (after consultation with AT&T and Comcast)
that the Deviation results in a risk (other than of a de minimus nature) of a
material adverse effect on the federal Income Tax treatment of any of the
Transactions to any AOLTW Party relative to the risk under the Original Trust
Terms then, within ten (10) days of delivery of the AT&T Disposition Notice,
AOLTW may provide AT&T with an irrevocable written notice of AOLTW's decision to
terminate this Agreement (an "AT&T DISPOSITION TERMINATION NOTICE"), which
notice shall set forth in
57
reasonable detail the legal and factual basis for AOLTW's determination, and any
failure by AOLTW to deliver an AT&T Disposition Termination Notice in accordance
with this Section 8.7 within such 10-day period shall constitute a waiver by
AOLTW of its right to terminate this Agreement pursuant to this Section 8.7.
Within ten (10) days following delivery of an AT&T Disposition Termination
Notice, AT&T shall provide AOLTW with written notice of AT&T's determination
either (i) to agree to indemnify (with contest provisions similar to those set
forth in Section 14.1(i) (but reversing the roles of AOLTW and AT&T) and subject
to Section 14.4(b)) AOLTW against any incremental Income Tax cost arising out of
an adverse effect identified in the AT&T Disposition Termination Notice to the
extent resulting from the Deviation or (ii) to terminate this Agreement, and any
failure by AT&T to deliver such written notice within such 10-day period shall
constitute a determination by AT&T to terminate this Agreement, and upon such
determination this Agreement shall automatically terminate.
ARTICLE IX
AOLTW/AT&T AGREEMENTS
9.1 High Speed Data Agreements.
(a) As an inducement to the AOLTW Parties to enter
into the Transactions, the parties hereto agree as follows:
(i) If the AT&T-Comcast Merger is consummated
prior to the Closing, then at the Closing AT&T Comcast shall, and AOLTW shall
cause AOL and TWE to, execute and deliver the AOL High Speed Data Agreement in
the form attached as Exhibit D hereto. Notwithstanding anything herein to the
contrary, the parties agree that (x) following (A) consummation of the
AT&T-Comcast Merger and prior to the Closing and (B) receipt of all required
Authorizations of Governmental Authorities in connection with the execution,
delivery and performance of, and the consummation of the transactions
contemplated by, the AOL High Speed Data Agreement; AT&T Comcast may, in its
sole discretion, elect (by delivering written notice to AOLTW) to enter into the
AOL High Speed Data Agreement and (y) promptly following such election (and in
any event within two Business Days), AT&T Comcast shall, and AOLTW shall cause
AOL and TWE to execute and deliver the AOL High Speed Data Agreement.
(ii) If the AT&T-Comcast Merger has not been
consummated on or prior to March 1, 2003 and at any time thereafter all other
conditions to the Closing are satisfied (or waived) (other than those conditions
that by their nature are to be satisfied at the Closing and will in fact be
satisfied at the Closing), then, in lieu of AT&T Comcast entering into the AOL
High Speed Data Agreement in the Existing Form, at the Closing, AT&T shall, and
AOLTW shall cause AOL and TWE to, execute and deliver the AOL High Speed Data
Agreement in the form set forth on Section 9.1(a)(ii) of the AT&T Disclosure
Letter.
(b) To the extent permitted by Law, each of AOLTW,
AT&T and Comcast agrees to begin operations implementation of the AOL High Speed
Data Agreement, as applicable (including the Technical Specifications
certification process) to
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prepare for the Initial Deployment Date within a reasonable period of time prior
to the anticipated Effective Date to permit the Deployment of the ISP Service in
the Initial Markets as soon as possible after the Effective Date (each
capitalized term used in this sentence, unless otherwise defined in this
Agreement, shall have the meaning assigned to such term in the AOL High Speed
Data Agreement.
(c) Notwithstanding anything else contained in
this Agreement or any other Transaction Agreement, at the time when all
conditions to Closing are satisfied or waived other than the execution and
delivery of the AOL High Speed Data Agreement, if an administrative or judicial
action or proceeding brought by the DOJ, the FTC or the FCC challenging or
objecting to the AOL High Speed Data Agreement shall be pending (or overtly
threatened) and any such action or proceeding shall have been commenced (and not
withdrawn) by the DOJ, the FTC or the FCC, in each case which would be
reasonably likely to result in changes or modifications to the AOL High Speed
Data Agreement to which AT&T would not be required to agree to pursuant to
Section 8.1(b)(ii) hereof then AT&T may elect at Closing, by delivery of written
notice to AOLTW, not to execute and deliver the AOL High Speed Data Agreement
and shall thereafter have no liability or obligation in respect of the AOL High
Speed Data Agreement. Upon such election (the "ISP TERMINATION ELECTION"), the
condition set forth in Section 11.3(d) shall be deemed incapable of being
satisfied and AOLTW shall have the right to terminate this Agreement pursuant to
Section 12.1(d)(iii).
9.2 INTERIM AGREEMENTS WITH RESPECT TO ORIGINAL TWE
PARTNERSHIP AGREEMENT. Each of AT&T and AOLTW hereby agrees that following the
execution of this Agreement and until Closing (or the earlier termination of
this Agreement in accordance herewith), each such party shall, and shall cause
their respective Affiliates to, refrain from Disposing of any Equity Securities
of TWE or from pursuing any registration rights under Article XIII of the
Original Partnership Agreement other than (i) transfers by AOLTW or its
Affiliates to wholly owned Subsidiaries of AOLTW or to the Company, (ii)
Permitted AT&T Transfers to Permitted AT&T Transferees and (iii) the AT&T
Comcast Transactions. AOLTW, for itself and on behalf of its Affiliates, hereby
waives its right of first refusal it under Section 11.3 of the Original
Partnership Agreement and any other transfer restrictions contained in Article
XI of the Original Partnership Agreement in each case with respect to the
Transactions, any of the AT&T Comcast Transactions or any Permitted AT&T
Transfer. AOLTW, for itself and on behalf of its Affiliates, hereby agrees that,
following the Closing, Section 5.5 of the Original Partnership Agreement shall
have no application to the businesses of AT&T Comcast and its Affiliates after
giving effect to the AT&T-Comcast Merger and the AT&T Comcast Transactions.
9.3 CERTAIN POST-CLOSING RESTRICTIONS.
(a) Neither AOLTW nor any of its Affiliates (other
than the Company or its majority owned Subsidiaries) will (i) assume or
otherwise repay the Company Indebtedness or any Indebtedness that is incurred to
refinance the Company Indebtedness or guarantee the Company Indebtedness in each
case for a period of two
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years following the Closing or (ii) guarantee any Indebtedness that is incurred
to refinance the Company Indebtedness for a period of 30 days following the
Closing.
(b) For a period of six months following the
Closing, the Company shall not, and neither AOLTW nor any of its Affiliates
shall cause or permit the Company to, (i) amend the terms of the Company Class B
Common Stock so that holders of the Company Class B Common Stock elect less than
80% of the directors of the Company, (ii) amend the terms of the Company Class A
Common Stock so that holders of the Company Class A Common Stock elect less than
the greater of (x) one-sixth of the directors of the Company or (y) one
director, (iii) issue any additional shares of Company Class B Common Stock to
any person other than AOLTW, (iv) sell or otherwise dispose of any of the
Transferred Class B Common Stock, except for transfers described in Section
368(a)(2)(C) of the Code or Treas. Reg. ss. 1.368-2(k), or (v) issue any new
class of shares that are non-voting.
(c) The Company shall not, and neither AOLTW nor
any of its Affiliates shall cause or permit the Company to (other than in
connection with the grant or exercise of compensatory stock options), (i) for a
period of six months following the Closing, issue any of the Company's stock for
cash, other than in connection with a public offering of the Company Class A
Common Stock and (ii) for a period of 90 days following the Closing, enter into
any agreement to issue the Company's stock for cash, other than in connection
with a public offering of the Company's Class A Common Stock.
9.4 COMPANY FEES AND EXPENSES. If AOLTW determines in its
good faith judgment that the terms of the Company Indebtedness at Closing are
not commercially reasonable and it notifies AT&T and Comcast in writing (the
"OBJECTION Notice") of such determination by Closing, and within 135 days of
Closing the Company refinances such Company Indebtedness, then AT&T shall, upon
notice from the Company, promptly pay the Company cash in an amount equal to all
fees, costs and expenses (including commitment fees and counsel fees) incurred
by the Company in connection with the incurrence of the Company Indebtedness
(collectively, the "COMPANY FEES AND EXPENSES"); PROVIDED that if the Objection
Notice is delivered but the Company has not closed the refinancing of the
Company Indebtedness within such 135-day period, then the Company will promptly
pay cash to AT&T Broadband equal to 50% of the Company Fees and Expenses. The
Company shall provide the definitive documents to be executed prior to Closing
containing the terms of such Company Indebtedness, including the amount of all
Company Fees and Expenses, to AOLTW at least two Business Days prior to Closing.
ARTICLE X
MUTUAL RELEASES
10.1 RELEASE BY AOLTW AND TWE. Except as provided in
Section 10.3, effective as of the Closing, each of AOLTW and TWE does hereby,
for itself and each of its wholly owned Subsidiaries and their respective
predecessors, successors and assigns, and all Persons who at any time prior to
the Closing have been
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shareholders, directors, officers, members, agents or employees of AOLTW, TWE or
any of their respective Affiliates, predecessors, successors or assigns (in each
case, in their respective capacities as such and to the extent it may legally do
so) (collectively, the "AOLTW RELEASING PARTIES"), remise, release and forever
discharge AT&T Corp., AT&T Comcast and each of their respective Subsidiaries and
Affiliates, their respective predecessors, successors and assigns, and all
Persons who at any time prior to the Closing have been shareholders, directors,
officers, members, agents or employees of AT&T Corp., AT&T Comcast or any of
their respective Subsidiaries, Affiliates, predecessors, successors or assigns
(in each case, in their respective capacities as such and to the extent it may
legally do so), and their respective heirs, executors, administrators,
predecessors, successors and assigns (collectively, the "AT&T RELEASED
PARTIES"), from any and all Liabilities whatsoever, whether at Law or in equity
(including any right of contribution), whether arising under any Contract or
agreement, by operation of Law or otherwise, existing or arising from any acts
or events occurring or failing to occur or alleged to have occurred or to have
failed to occur or any conditions existing or alleged to have existed on or
before the Closing, whether or not known as of the Closing, related to, arising
out of or resulting from the Original Partnership Agreement, the Engagement
Letter, the Letter Agreements, any transactions contemplated thereby or AT&T's
ownership, directly or indirectly, of TWE Partnership Interests, including,
without limitation, any claims under the Original Partnership Agreement. Each of
AOLTW and TWE agrees, on behalf of itself and each of the other AOLTW Releasing
Parties, that it will not, and (to the extent it may legally do so) will not
permit any AOLTW Releasing Party to, assert any claims against any AT&T Released
Party with respect to matters covered by the foregoing release.
10.2 RELEASE BY AT&T CORP. AND AT&T COMCAST. Except as
provided in Section 10.3, effective as of the Closing, each of AT&T Corp. and
AT&T Comcast does hereby, for itself and each of its wholly owned Subsidiaries
and their respective successors and assigns, and all Persons who at any time
prior to the Closing have been shareholders, directors, officers, members,
agents or employees of AT&T Corp., AT&T Comcast or any of their respective
Affiliates, predecessors, successors or assigns (in each case, in their
respective capacities as such and to the extent it may legally do so)
(collectively, the "AT&T RELEASING PARTIES"), remise, release and forever
discharge AOLTW and each of its Subsidiaries and Affiliates, their respective
predecessors, successors and assigns, and all Persons who at any time prior to
the Closing have been shareholders, directors, officers, members, agents or
employees of AOLTW or any of its Subsidiaries, Affiliates, predecessors,
successors or assigns (in each case, in their respective capacities as such and
to the extent it may legally do so), and their respective heirs, executors,
administrators, predecessors, successors and assigns (collectively, the "AOLTW
RELEASED PARTIES"), from any and all Liabilities whatsoever, whether at law or
in equity (including any right of contribution), whether arising under any
Contract or agreement, by operation of Law or otherwise, existing or arising
from any acts or events occurring or failing to occur or alleged to have
occurred or to have failed to occur or any conditions existing or alleged to
have existed on or before the Closing, whether or not known as of the Closing,
related to, arising out of or resulting from the Original Partnership Agreement,
the Engagement Letter, the Letter Agreements, any transactions contemplated
thereby or AOLTW's ownership, directly or indirectly, of TWE Partnership
61
Interests or the service of AOLTW Subsidiaries as general partners of TWE,
including, without limitation, any claims under the Original Partnership
Agreement. Each of AT&T Corp. and AT&T Comcast agrees, on behalf of itself and
each of the other AT&T Releasing Parties, that it will not, and (to the extent
it may legally do so) will not permit any AT&T Releasing Party to, assert any
claims against any AOLTW Released Party with respect to matters covered by the
foregoing release.
10.3 LIABILITIES EXCLUDED FROM RELEASE. Nothing contained
in Section 10.1 or 10.2 shall impair any right of any Person to enforce this
Agreement or any other Transaction Agreement, in each case in accordance with
its terms.
ARTICLE XI
CONDITIONS TO THE TRANSACTIONS
11.1 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The
obligations of each AT&T Party and AOLTW Party hereto to consummate the
Transactions are subject to the satisfaction (or waiver by such parties) of the
following conditions:
(a) any applicable waiting period (and any
extension thereof) under the HSR Act relating to the Transactions shall have
expired or been terminated;
(b) the FTC shall have granted any necessary
approval or taken any necessary action to permit the issuance of the AOLTW
Common Stock to MediaOne of Colorado (or one or more wholly owned Subsidiaries
of MediaOne of Colorado or to a Disposition Trust) pursuant to Section 2.6 and
the ownership of such AOLTW Common Stock by MediaOne of Colorado (or such
Subsidiaries or Disposition Trust);
(c) all FCC License Consents and other Required
Approvals of Governmental Authorities (other than Franchise Consents) shall have
been obtained, be in effect and be subject to no limitations, conditions,
restrictions or obligations, except for such consents the failure of which to
obtain would not, and such limitations, conditions, restrictions or obligations
as would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect or would otherwise be inconsistent with Section
8.1(b);
(d) no provision of any applicable Law (other than
those having only an immaterial effect and that do not impose criminal liability
or penalties) shall prohibit the consummation of the Transactions; PROVIDED that
the failure of the parties to obtain Franchise Consents shall not be considered
to prohibit the consummation of the Transactions;
(e) no court, arbitrator or other Governmental
Authority of competent jurisdiction shall have issued any order, and there shall
not be any Law restraining or prohibiting the effective operation of the
business of any of the AOLTW Parties, the AT&T Parties, the Comcast Parties or
the Company after the Closing that would, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect;
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(f) the AT&T-Comcast Merger shall have been
consummated; PROVIDED that, if the AT&T-Comcast Merger is not consummated on or
prior to March 1, 2003 and all other conditions to the Closing have been
satisfied (or waived) (other than those conditions that by their nature are to
be satisfied at the Closing and will in fact be satisfied at the Closing), then
this condition shall be automatically deemed waived by the parties; and
(g) All Franchise Consents shall not be required
or shall have been obtained, be in effect and be subject to no limitations,
conditions, restrictions or obligations, except for such Franchise Consents the
failure of which to obtain would not, and such limitations, conditions,
restrictions or obligations as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect.
11.2 FURTHER CONDITIONS TO THE OBLIGATIONS OF THE AT&T
PARTIES. The obligations of the AT&T Parties to consummate the Transactions are
subject to the satisfaction (or waiver by the AT&T Parties) of the following
further conditions:
(a) The AOLTW Parties shall have performed, in all
material respects, their obligations hereunder and under the Transaction
Agreements required to be performed by them at or prior to the Closing, and AT&T
shall have received a certificate signed by an executive officer of AOLTW to the
foregoing effect;
(b) Each of the Transaction Agreements shall have
been duly executed and delivered by each of the AOLTW Parties party to such
Transaction Agreement;
(c) Except for the representations and warranties
referred to in Section 11.2(d), (i) the representations and warranties contained
in Sections 5.1, 5.2, 5.3, 5.4, 5.5, 5.6, 5.7, 5.8, 5.9 and 5.13(b) shall be
true and correct in all material respects (except to the extent such
representation and warranty contains a materiality or Material Adverse Effect
qualification or any similar standard or qualification, in which case that
portion of such representation and warranty shall be true in all respects) at
and as of the Closing, as if made at and as of such time (other than
representations and warranties that address matters as of a certain date, which
shall be true and correct in all material respects (except to the extent such
representation and warranty contains a materiality or Material Adverse Effect
qualification or any similar standard or qualification, in which case that
portion of such representation and warranty shall be true in all respects) as of
such date); (ii) the other representations and warranties of the AOLTW Parties
contained in this Agreement or in any certificate delivered pursuant hereto,
disregarding all qualifications and exceptions contained therein relating to
materiality or Company Material Adverse Effect or TWIC Material Adverse Effect
or any similar standard or qualification, shall be true and correct at and as of
the Closing, as if made at and as of such time (other than representations and
warranties that address matters as of a certain date, which shall be true and
correct as of such date), with only such exceptions as, individually or in the
aggregate, have not had and would not reasonably be expected to have a Company
Material Adverse Effect, and (iii) AT&T shall have received a certificate signed
by an executive officer of AOLTW to the foregoing effect;
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(d) The representations and warranties contained
in Sections 5.10, 5.11, 5.12, 5.13(a), 5.14 and 5.15 of this Agreement,
disregarding all qualifications and exceptions contained therein relating to
materiality or AOLTW Material Adverse Effect or any similar standard or
qualification, shall be true and correct at and as of the Closing, as if made at
and as of such time and taking into account any additional disclosure made by
AOLTW or its Subsidiaries after the date hereof and deemed to be included in the
AOLTW Disclosure Letter pursuant to the definition thereof (other than
representations and warranties that address matters only as of a certain date,
which shall be true and correct as of such date), with only such exceptions as,
individually or in the aggregate, have not had and would not reasonably be
expected to have an AOLTW Material Adverse Effect, and AT&T shall have received
a certificate signed by an executive officer of AOLTW to the foregoing effect;
(e) The registration statement pursuant to which
shares of AOLTW Common Stock issuable hereunder will be registered pursuant to
the AOLTW Registration Rights Agreement shall have been declared effective by
the SEC (unless the SEC rules and regulations or the Staff would not permit a
re-sale shelf registration statement to be filed or declared effective prior to
issuance of such shares) and no stop order suspending the effectiveness of such
registration statement shall be in effect and no proceedings for such purpose
shall be pending before or threatened by the SEC;
(f) There shall have been no changes or proposed
changes in the Code or the Treasury Regulations or the judicial or
administrative interpretation thereof that would have a significant adverse
effect on AT&T or the Transactions;
(g) AT&T shall have received an affidavit of an
officer of Holdco sworn under penalty of perjury, setting forth Holdco's address
and federal tax identification number and stating that Holdco is not a "foreign
person" within the meaning of Section 1445 of the Code; and
(h) AT&T shall have received a certificate that,
to the knowledge of the certifying officer, the AOLTW Broadband Business has
taken or is taking all action necessary and appropriate to enforce all "most
favored nations" provisions in Affiliate Agreements pursuant to which
programming services are provided by an AOLTW Non-Broadband Business owned
directly or indirectly 75% or more by AOLTW in each case to the extent in the
best interests of the AOLTW Broadband Business (in such officer's good faith
judgment), which certificate is executed by an executive officer of the Time
Warner Cable division of AOLTW.
11.3 FURTHER CONDITIONS TO THE OBLIGATIONS OF THE AOLTW
PARTIES. The obligations of the AOLTW Parties to consummate the Transactions are
subject to the satisfaction (or waiver by the AOLTW Parties) of the following
further conditions:
(a) The AT&T Parties shall have performed, in all
material respects, their obligations hereunder required to be performed by them
at or prior to the Closing, and AOLTW shall have received a certificate signed
by an executive officer of AT&T to the foregoing effect;
64
(b) Each of the Transaction Agreements shall have
been duly executed and delivered by each of the AT&T Parties and Comcast Parties
that are parties to such Transaction Agreement;
(c) (i) The representations and warranties
contained in Sections 3.1, 3.2, 3.3, 3.4, 3.5, 3.7, 3.8, 4.1, 4.2, 4.3, 4.4 and
4.5 shall be true and correct in all material respects (except to the extent
such representation and warranty contains a materiality or Material Adverse
Effect qualification or any similar standard or qualification, in which case
that portion of such representation and warranty shall be true in all respects)
at and as of the Closing, as if made at and as of such time (other than
representations and warranties that address matters as of a certain date, which
shall be true and correct in all material respects (except to the extent such
representation and warranty contains a materiality or Material Adverse Effect
qualification or any similar standard or qualification, in which case that
portion of such representation and warranty shall be true in all respects) as of
such date); (ii) the other representations and warranties of the AT&T Parties
contained in this Agreement or in any certificate delivered pursuant hereto,
disregarding all qualifications and exceptions contained therein relating to
materiality or Company Material Adverse Effect or any similar standard or
qualification, shall be true and correct at and as of the Closing, as if made at
and as of such time (other than representations and warranties that address
matters only as of a certain date, which shall be true and correct as of such
date), with only such exceptions as, individually or in the aggregate, have not
had and would not reasonably be expected to have Company Material Adverse
Effect, and (iii) AOLTW shall have received a certificate signed by an executive
officer of AT&T and Comcast, respectively to the foregoing effect;
(d) (i) The AOL High Speed Data Agreement shall
have become effective in accordance with its terms (subject to such changes as
may be required by Section 8.1 and Section 9.1); and (ii) no administrative or
judicial action or proceeding brought by the DOJ, the FTC or the FCC challenging
or objecting to the AOL High Speed Data Agreement shall be pending (or overtly
threatened) and no such action or proceeding shall have been commenced (and not
withdrawn) by the DOJ, the FTC or the FCC, in each case which would be
reasonably likely to result in changes or modifications to the AOL High Speed
Data Agreement that AOLTW would not be required to agree to pursuant to Section
8.1(b)(ii) hereof;
(e) There shall have been no changes or proposed
changes in the Code or the Treasury Regulations or the judicial or
administrative interpretation thereof that would have a significant adverse
effect on AOLTW or the Transactions;
(f) AOLTW shall have received an affidavit of an
officer of MediaOne of Colorado sworn under penalty of perjury, setting forth
MediaOne of Colorado's address and federal tax identification number and stating
that MediaOne of Colorado is not a "foreign person" within the meaning of
Section 1445 of the Code; and
(g) Franchise Consents shall not be required or
shall have been obtained, be in effect and be subject to no limitations,
conditions, restrictions or obligations (other than those that may be required
under Section 8.1(b)) in respect of
65
Systems serving at least 90% of the aggregate number of subscribers in the AOLTW
Broadband Business.
11.4 FRUSTRATION OF CLOSING CONDITIONS. No condition set
forth in Section 11.1, 11.2 or 11.3 shall be available to any party whose
failure to fulfill its obligations under, or whose breach of any representation
or warranty in, this Agreement or any other Transaction Agreement results in or
materially contributes to the failure of such condition to be satisfied.
ARTICLE XII
TERMINATION
12.1 TERMINATION. This Agreement may be terminated and the
Transactions may be abandoned at any time prior to the Closing by action taken
by the Board of Directors of the terminating party or parties:
(a) by mutual written agreement of AOLTW and AT&T;
(b) by either AOLTW or AT&T, if:
(i) the Closing shall not have occurred on or
before June 30, 2003 (the "END DATE"); PROVIDED that the right to terminate this
Agreement pursuant to this Section 12.1(b)(i) shall not be available to any
party hereto whose breach of any provision of this Agreement or any other
Transaction Agreement results in or materially contributes to the failure of the
Closing to occur on or before the End Date; or
(ii) (A) there shall be any Law (other than
any Law having only an immaterial effect and that does not impose criminal
liability or penalties) that makes consummation of the Transactions illegal or
otherwise prohibited (provided that solely for purposes of this clause the
failure of the parties to obtain Franchise Consents shall be considered not to
make consummation of the Transactions illegal or otherwise prohibited); or (B)
any Governmental Authority (other than a Franchising Authority) having competent
jurisdiction shall have issued an order, decree or ruling or taken any other
action (which the terminating party shall have used its reasonable best efforts
to resist, resolve or lift, as applicable, in accordance with Section 8.1)
permanently restraining, enjoining or otherwise prohibiting any of the
Transactions, and such order, decree, ruling or other action shall have become
final and nonappealable; PROVIDED, HOWEVER, that the right to terminate this
Agreement under this Section 12.1(b)(ii) shall not be available to any party
whose failure to comply with Section 8.1 results in or materially contributes to
the circumstances set forth in clause (A) or (B) above existing;
(c) by AT&T if:
(i) a breach of any representation, warranty,
covenant or agreement on the part of AOLTW set forth in this Agreement shall
have occurred that would cause any of the conditions set forth in Section
11.2(a), (b), (c) or (d) not to be satisfied, and such condition shall be
incapable of being satisfied by the End Date; or
66
(ii) (A) the AT&T-Comcast Merger shall not
have been consummated by January 15, 2003; (B) AOLTW shall have received a
letter from Wachtell, Lipton, Xxxxx & Xxxx ("WLRK") to the effect that in WLRK's
judgment, based on communications with applicable Governmental Authorities and
outside FCC counsel, the transactions contemplated by this Agreement shall have
been a primary reason for the failure of the AT&T-Comcast Merger to have been
consummated prior to that time; and (C) such termination is elected by AT&T on
or prior to February 1, 2003, by written notice to the parties hereto (any such
termination an "AT&T SPECIAL TERMINATION EVENT);
(d) by AOLTW:
(i) if a breach of any representation,
warranty, covenant or agreement on the part of AT&T set forth in this Agreement
shall have occurred that would cause the condition set forth in Section 11.3(a),
(b) or (c) not to be satisfied, and such condition shall be incapable of being
satisfied by the End Date;
(ii) if the AOLTW Stock Price is less than
$6.665 as appropriately adjusted, if necessary, for any dividend or other
distribution, subdivision, split or combination of shares with respect to the
AOLTW Common Stock following the date hereof (the "SPECIFIED PRICE"); PROVIDED
that if AOLTW desires to terminate this Agreement pursuant to this Section
12.1(d)(ii) it must deliver to AT&T and Comcast an irrevocable notice of
termination pursuant to this Section 12.1(d)(ii) no later than 5:00 p.m. in New
York City on the second Trading Day following the last Trading Day in the
Valuation Period (which notice of termination will become automatically
effective at 5:00 p.m. in New York City on the fourth Trading Day following the
last Trading Day in the Valuation Period, unless, prior to such time, AT&T and
Comcast agree, in an irrevocable written notice to AOLTW (the "ACCEPTANCE
NOTICE"), to calculate the Specified Number by deeming the AOLTW Stock Price to
be equal to the Specified Price, without duplication of any adjustments for
dividends, distributions, stock splits, subdivisions or combinations (any such
termination, an "AOLTW SPECIAL TERMINATION EVENT"). If the Acceptance Notice is
delivered, there shall be no AOLTW Special Termination Event;
(iii) upon delivery of an ISP Termination
Notice; or
(iv) as provided in and subject to Section
8.7.
The party hereto desiring to terminate this Agreement pursuant
to this Section 12.1 (other than pursuant to Section 12.1(a)) shall give notice
of such termination to the other parties.
12.2 EFFECT OF TERMINATION. If this Agreement is
terminated pursuant to Section 12.1, this Agreement shall become void and of no
effect without liability of any party hereto (or any shareholder, director,
officer, employee, agent, consultant or representative of such party) to the
other parties hereto, except that (a) the agreements contained in Section 8.5,
the last two sentences of Section 9.2, this Section 12.2,
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Section 12.3, Section 12.4 and Article XV (other than Section 15.14) shall
survive the termination hereof and (b) no such termination shall relieve any
party hereto of any liability or damages resulting from any willful breach by
such party of this Agreement.
12.3 FEES AND EXPENSES. Except as otherwise provided in
this Section 12.3 and except for the Company Fees and Expenses (which shall be
paid by the Company subject to Section 9.4), and except as otherwise expressly
provided in another Transaction Agreement, all Transaction Expenses incurred by
AOLTW, AT&T Corp., Comcast (or any of their respective Affiliates) shall be paid
by AOLTW, AT&T Corp. and Comcast, respectively, in each case regardless of
whether the Transactions are consummated. Notwithstanding the foregoing, all
excise, sales, use, value added, ad valorem, transfer, documentary, filing and
other similar Taxes which may be imposed or assessed, and any other Transaction
Expenses (except for fees and expenses of counsel and financial or other
advisors) incurred by any of the AOLTW Group in connection with or related to
the Transactions shall be paid by the Company if the Closing occurs; PROVIDED
FURTHER that (a) any such Transaction Expenses consisting of fees and expenses
of counsel or financial or other advisors of the AOLTW Group shall be paid by
AOLTW and (b) any Transaction Expenses (except for fees and expenses of counsel
and financial or other advisors) of the AOLTW Group related to the TWE
Distribution, or if this Agreement is terminated, shall be paid by TWE.
12.4 TWE ARTICLE XIII RIGHTS.
(a) Subject to Section 12.4(b), if this Agreement
is terminated pursuant to Section 12.1, the parties shall promptly (and in no
event later than ten (10) Business Days after termination and in the event of an
AT&T Special Termination or AOL Special Termination, no earlier than four
Business Days following such termination) engage Banc of America Securities LLC
("BAS") to prepare and deliver a letter (the "NEW VALUATION LETTER") in form and
substance consistent with the requirements for the Article 13 Valuation Letter
set forth in the Engagement Letters, dated as of June 14, 2002, by and among
TWE, the Company, AT&T Corp., AOLTW and BAS (the "ENGAGEMENT LETTER")), in
accordance with the provisions of the Letter Agreements, dated June 14, 2002,
July 29, 2002, August 14, 2002 and the date hereof, between AOLTW and AT&T Corp.
executed in connection with such Engagement Letter (collectively the "LETTER
AGREEMENTS"); PROVIDED that the New Valuation Letter and the determinations
delivered therein shall speak as of the date of delivery of such letter.
(b) If BAS is not eligible for such engagement due
to a conflict of interest, then the parties agree to select and engage an
alternative Investment Banking Firm no later than 30 days after the date on
which it is determined by either party acting in good faith that BAS is not
eligible for such engagement. In the event that an Investment Banking Firm has
not been selected by written agreement of the parties within 30 days, either
party may submit to the American Arbitration Association, which shall select an
Investment Banking Firm within 10 Business Days. The parties shall promptly (and
in any event within 10 days) engage the alternative Investment Banking Firm so
selected on the same terms as BAS currently is engaged (with such reasonable
changes as may be requested by such firm to reflect their customary terms of
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engagement; PROVIDED that such changes do not affect the scope or subject matter
of the engagement or the determinations to be made thereunder); PROVIDED,
FURTHER, that the parties will agree to negotiate in good faith appropriate fees
for such engagement which shall be shared equally by TWE and AT&T.
(c) Notwithstanding anything to the contrary
contained herein, (a) AOLTW may, upon written notice to AT&T delivered within
three Business Days of receipt of notice by AOLTW of an AT&T Special Termination
Event, and (b) AT&T may, upon written notice to AOLTW delivered within three
Business Days of receipt of notice by AT&T of an AOLTW Special Termination
Event, elect (any such election an "EXISTING VALUATION ELECTION") to cause
AOLTW, TWE, AT&T, MediaOne of Colorado and the Company (the "ENGAGEMENT
PARTIES") to be bound by the existing Article 13 Valuation Letter dated as of
July 29, 2002 that BAS has prepared as contemplated by the Engagement Letter and
held without delivery in accordance with the Letter Agreements (the "EXISTING
VALUATIONS"). Upon an Existing Valuation Election, the Engagement Parties shall
promptly direct BAS to deliver the Existing Valuations to AT&T and AOLTW,
whereupon the determinations contained therein shall be final and binding on the
parties in accordance with the Engagement Letter and the Original Partnership
Agreement and Sections 12.4(a) and 12.4(b) above shall be of no further force or
effect. The parties hereby acknowledge and agree that nothing contained in this
Agreement (other than Section 9.2) or in any other Transaction Agreement shall
be deemed to supersede or in any way alter or amend the terms of the Letter
Agreements or the Engagement Letter.
ARTICLE XIII
SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNIFICATION
13.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS
AND AGREEMENTS. The representations and warranties of the AT&T Parties, the
Comcast Parties and the AOLTW Parties in this Agreement or in any certificate
delivered pursuant hereto will survive Closing for a period of 12 months after
the Closing; PROVIDED that notwithstanding the foregoing (i) none of the
representations and warranties contained in Section 5.10, 5.11, 5.12, 5.13,
5.14, 5.15, 5.17, 5.18, 5.19, 5.20, 5.21 or 5.22 shall survive the Closing; (ii)
all representations and warranties with respect to any Taxes (including the
representations and warranties in Sections 3.8 and 5.6) (other than the
representations and warranties in Sections 3.8(a), (b), (c), (d), (e), (f) and
(g) which will not survive the Closing and other than the representations and
warranties contained in Section 5.33 that are not related to Income Taxes which
will survive for a period of 12 months after the Closing), Environmental Law or
ERISA matters will survive until 60 days after the expiration of the applicable
statute of limitations (including any extensions) for such Taxes, Environmental
Law or ERISA matters, respectively; and (iii) the representations and warranties
contained in Section 3.7 shall survive in perpetuity. The periods of survival of
the representations and warranties prescribed by this Section 13.1 are referred
to as the "SURVIVAL PERIOD." Liabilities under representations and warranties
contained in this Agreement will expire as of the expiration of the applicable
Survival Period; PROVIDED, HOWEVER, that such expiration will not include,
extend or apply to any
69
representation or warranty, the breach of which has been asserted in a written
notice in accordance with Section 15.1 before such expiration or about which
proper notice has been given before such expiration, identifying with
specificity any facts or conditions that exist which, with the passage of time
or otherwise, could reasonably be expected to result in a breach (and describing
such potential breach in reasonable detail). The covenants and agreements in
this Agreement will survive the Closing and will continue in full force and
effect without limitation. Any representation or warranty which, pursuant
hereto, does not survive the Closing shall be from and after the Closing null
and void and of no further force or effect, to the same extent as if never made
hereunder. The parties expressly agree that the sole purpose of such
representation and warranty ceases upon the Closing.
13.2 INDEMNIFICATION BY AT&T. From and after the Closing,
AT&T will indemnify and hold harmless the Company and its Affiliates, and its
and their respective shareholders, officers, directors, partners, employees,
agents, successors and assigns and any Person claiming by or through any of
them, as the case may be, from and against any and all Losses incurred by such
indemnified parties and arising out of, relating to or resulting from (a) any
breach of any representation or warranty made by any of the AT&T Parties or,
following consummation of the AT&T-Comcast Merger, the Comcast Parties in this
Agreement or in any certificate delivered pursuant hereto, except pursuant to
Section 3.1, 3.2, 3.3, 3.4, 3.5, 3.8, 4.1, 4.2, 4.3, 4.4 or 4.5 and
disregarding, for purposes of calculating Losses, all qualifications and
exceptions contained therein relating to materiality or Company Material Adverse
Effect or any similar standard other than those contained in Section 3.7; (b)
any breach of any covenant, agreement or obligation of any of the AT&T Parties
or, following consummation of the AT&T-Comcast Merger, the Comcast Parties
contained in this Agreement; (c) without duplication of any indemnification
claims or rights arising out of clause (a) above, any claims or rights with
respect to employees, employment or any employee benefit plan or arrangement, in
each case arising out of, relating to or resulting from any occurrence,
practice, condition, action or inaction on or prior to the Closing involving the
Company, any entity that is or was, on or prior to the Closing, a member of the
Company's ERISA Group, or the predecessors of any of them, including, without
limitation Losses incurred by reason of the Company having been, at any time on
or prior to the Closing, a member of an ERISA Group (collectively, "EMPLOYEE
CLAIMS"); PROVIDED, HOWEVER, that Employee Claims shall not include any claims
or rights (i) solely in connection with employment or termination thereof of any
individual hired upon or following Closing by AOLTW or any of its Subsidiaries
or Affiliates or (ii) arising on or after Closing with respect to service on or
after the Closing under any benefit plans maintained or sponsored by such
entities; or (d) any failure of a Permitted AT&T Transferee to comply with its
obligations under any Transaction Agreement or any Applicable Agreements
(assuming, for purposes of this indemnity, that each Permitted AT&T Transferee
assumed all obligations of the transferor hereunder and thereunder).
13.3 INDEMNIFICATION BY AOLTW. From and after the Closing,
AOLTW will indemnify and hold harmless the Company and its Affiliates, and its
and their respective shareholders, officers, directors, partners, employees,
agents, successors and assigns and any Person claiming by or through any of
them, as the case may be, from
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and against any and all Losses incurred by such indemnified parties and arising
out of, relating to or resulting from (a) any breach of any representation or
warranty made by any of the AOLTW Parties in this Agreement or in any
certificate delivered pursuant hereto, except pursuant to Section 5.1, 5.2, 5.3,
5.4, 5.5 or 5.6, and disregarding, for purposes of calculating Losses, all
qualifications and exceptions contained therein (other than in Section 5.7, 5.8
or 5.9) relating to materiality or Company Material Adverse Effect or any
similar standard or (b) any breach of any covenant, agreement or obligation of
any of the AOLTW Parties contained in this Agreement (other than those contained
in Section 9.3, which shall be governed by Section 14.1(c)).
13.4 THIRD PARTY CLAIMS. Promptly after the receipt of
notice of any claim, action, suit or proceeding by any Third Party
(collectively, an "ACTION"), which Action is subject to indemnification under
Article XIII of this Agreement, the party receiving such notice (the
"INDEMNIFIED PARTY") will give reasonable written notice to the party from whom
indemnification is claimed (the "INDEMNIFYING PARTY"). Notwithstanding the
foregoing, the failure of any Indemnified Party to give notice as provided in
the preceding sentence shall not relieve the related Indemnifying Party of its
obligations under Section 13.2 or 13.3, as the case may be, except to the extent
that such Indemnifying Party is actually prejudiced by such failure. The
Indemnified Party will be entitled, at the sole expense and liability of the
Indemnifying Party, to exercise full control of the defense, compromise or
settlement of any such Action unless the Indemnifying Party, within a reasonable
time (but in no event later than 30 days) after the giving of such notice by the
Indemnified Party, (a) notifies the Indemnified Party in writing of the
Indemnifying Party's intention to assume such defense and (b) retains legal
counsel reasonably satisfactory to the Indemnified Party to conduct the defense
of such Action, in which case the Indemnifying Party will be entitled to
exercise such full control. The other Party will cooperate with the Party
assuming the defense, compromise or settlement of any such Action in accordance
with this Agreement in any manner that such Party reasonably may request. If the
Indemnifying Party so assumes the defense of any such Action, the Indemnified
Party will have the right to employ separate counsel and to participate in (but
not control) the defense, compromise or settlement of the Action, but the fees
and expenses of such counsel will be at the expense of the Indemnified Party
unless (i) the Indemnifying Party has agreed to pay such fees and expenses, (ii)
any relief other than the payment of money damages is sought against the
Indemnified Party or (iii) the Indemnified Party has been advised by its counsel
that there may be one or more defenses available to it which are different from
or additional to those available to the Indemnifying Party, and in any such case
that portion of the fees and expenses of such separate counsel that are
reasonably related to matters covered by the indemnity provided in this Article
13 will be paid by the Indemnifying Party; PROVIDED that the Indemnifying Party
shall not be obligated to pay the expenses of more than one separate counsel in
each jurisdiction for each Indemnified Party so entitled to separate counsel.
Expenses of counsel to the Indemnified Party shall be reimbursed on a current
basis by the Indemnifying Party. No Indemnified Party will settle or compromise
any such Action for which it is entitled to indemnification under this Agreement
without the prior written consent of the Indemnifying Party (not to be
unreasonably withheld), unless the Indemnifying Party has failed to undertake
control of such Action in the manner provided in this Section 13.4. No
Indemnifying Party will settle or compromise
71
any such Action in which any relief other than the payment of money damages is
sought against any Indemnified Party, unless the Indemnified Party consents in
writing to such compromise or settlement.
13.5 LIMITATIONS ON INDEMNIFICATION. Notwithstanding
anything to the contrary herein:
(a) AT&T will not be liable for indemnification
payments under Section 13.2(a) (other than with respect to Section 3.7) for any
Losses of any Person entitled to indemnification payments from AT&T under such
Section unless the amount of all such Losses for which AT&T would, but for the
provisions of this sentence, be liable exceeds, on an aggregate basis, $500
million, in which case AT&T will be liable only for such Losses that exceed $500
million. AT&T will not be liable for indemnification payments under Section
13.2(a) (other than with respect to Section 3.7) in excess of $3 billion.
(b) AOLTW will not be liable for indemnification
payments under Section 13.3(a) (other than with respect to Sections 5.7, 5.8 and
5.9) for any Losses of any Person entitled to indemnification payments from
AOLTW under such Section unless the amount of all such Losses for which AOLTW
would, but for the provisions of this sentence, be liable exceeds, on an
aggregate basis, $500 million, in which case AOLTW will be liable only for such
Losses that exceed $500 million. AOLTW will not be liable for indemnification
payments under Section 13.3(a) (other than with respect to Sections 5.7 and 5.9)
in excess of $3 billion.
13.6 PAYMENTS FOR INDEMNIFICATION AMOUNTS. Amounts payable
in respect of any Losses that are subject to the indemnification obligations
under Section 13.2 or 13.3 will be payable by the Indemnifying Party as incurred
by the Indemnified Party and will bear interest at the rate per annum publicly
announced from time to time by The Bank of New York as its prime rate plus two
percent from the date the Losses for which indemnification is sought were
incurred until the date of payment of indemnification by the Indemnifying Party.
13.7 EXCLUSIVE REMEDY. The parties hereby agree that,
after the Closing, the rights set forth in this Article 13 and Article 14 shall
be their sole and exclusive remedies against each other for any claims relating
to, arising out of or resulting from any breaches of the representations or
warranties contained in this Agreement (except those pursuant to Sections 3.1,
3.2, 3.3, 3.4, 3.5, 4.1, 4.2, 4.3, 4.4, 4.5, 5.1, 5.2, 5.3, 5.4, and 5.5.)
13.8 ENFORCEMENT. AT&T (and any Disposition Trust that is
a Permitted AT&T Transferee) shall have the right to enforce (on behalf and for
the benefit of the Company and its Affiliates) the Company's and its Affiliates'
rights to indemnification hereunder (other than pursuant to Section 13.2). The
independent directors of the Company shall have the non-exclusive right to
enforce the Company's and TWE's rights under the TWE Distribution Agreement and
the TWIC Contribution Agreement.
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ARTICLE XIV
TAX MATTERS
14.1 TAX INDEMNIFICATION.
(a) AT&T'S INDEMNIFICATION OF THE COMPANY. From
and after the Closing and without duplication, AT&T shall be liable for and
indemnify the Company for all Losses arising out of (i) all Taxes attributable
to, imposed on, or for which the Company may otherwise be liable (including,
without limitation, Taxes for which the Company may be liable under Treasury
Regulation 1.1502-6 or comparable provision of foreign, state, local or
provincial Law) for events occurring or periods ending on or before the Closing
and, with respect to any taxable year or period beginning before and ending
after the Closing, the portion of such taxable year ending on and including the
Closing including, in each case, the Transactions; and (ii) any breach of
representation or warranty set forth in Section 3.8 of this Agreement. Media One
of Colorado shall be entitled to any refund of Taxes of the Company received for
such periods net of Taxes payable by the Company with respect to the receipt or
accrual thereof and the Company shall cause such refund, net of any Taxes
imposed on such refund amount, to be paid to Media One of Colorado promptly
following any receipt thereof by the Company.
(b) THE COMPANY'S INDEMNIFICATION OF AT&T. From
and after the Closing and without duplication, the Company shall be liable for
and indemnify AT&T and its Affiliates for the Taxes of the Company attributable
to periods (or portions thereof) ending after the Closing other than those for
which the Company is indemnified by Media One of Colorado under Section 14.1(a)
of this Agreement. From and after the Closing, the Company shall be entitled to
any refund of Taxes of the Company other than those refunds described in Section
14.1(a) and AT&T shall cause such refund, net of any Taxes imposed on such
refund amount, to be paid to the Company promptly following any receipt thereof
by Media One of Colorado.
(c) AOLTW'S INDEMNIFICATION OF AT&T. From and
after the Closing, AOLTW shall be liable for and indemnify and hold harmless
AT&T and its Affiliates from and against all Losses incurred by such indemnified
parties and arising out of, relating to or resulting from any breach of (i) any
representation or warranty made by any of the AOLTW Parties in Section 5.6 of
this Agreement or (ii) any covenant, agreement or obligation of any of the AOLTW
Parties contained in Section 9.3 of this Agreement.
(d) TAXES FOR STRADDLE PERIOD. For purposes of
subsections (a) and (b) of this Section 14.1, whenever it is necessary to
determine the liability for Taxes of the Company for a portion of a taxable year
or period that begins before and ends after the Closing (the "STRADDLE PERIOD"),
and for any Tax period, the Tax for which is determined by the income of the
period that begins before and ends after the Closing, (i) the determination of
all Taxes of the Company that are either (x) based upon or related to income or
receipts, or (y) imposed in connection with any sale, transfer or assignment or
any deemed sale, transfer or assignment of property (real or personal, tangible
or
73
intangible), for the portion of the year or period ending on, and the portion of
the year or period beginning after, the Closing generally shall be determined by
assuming that the Company had a taxable year or period which ended at the close
of the Closing, except that exemptions, allowances or deductions that are
calculated on an annual basis, such as the deduction for depreciation, shall be
apportioned on a time basis, and (ii) the determination of Taxes (other than
those described in clause (i) above) that are imposed on a periodic basis with
respect to the business or assets of the Company or otherwise measured by the
level of any item of the Company for the portion of the year or period ending
on, and the portion of the year or period beginning after, the Closing shall be
determined by multiplying the amount of such Taxes for the entire Straddle
Period (or, in the case of such Taxes determined on an arrears basis, the amount
of such Taxes for the immediately preceding Tax period) by a fraction the
numerator of which is the number of calendar days in the portion of the Straddle
Period ending on the Closing and the denominator of which is the number of
calendar days in the entire Straddle Period.
(e) CARRYBACKS. Following the Closing, whether or
not the Company waives the right to carryback any Tax losses, credits or similar
items attributable to the Company from a taxable year or period that begins
after the Closing to a taxable year or period that ends on or before the
Closing, no payment with respect to such carrybacks shall be due from AT&T.
(f) TAX RETURNS. AT&T shall prepare (or cause to
be prepared) in the ordinary course of business and consistent with past
practice (unless otherwise required by Law) to the extent they relate to the
Company and timely file or cause to be filed when due all Tax Returns that are
required to be filed by or with respect to the Company for taxable years or
periods ending on or before the Closing and shall pay when due any Taxes due in
respect of such Tax Returns. The Company shall prepare (or cause to be prepared)
and file or cause to be filed when due all Tax Returns that are required to be
filed by or with respect to the Company for taxable years or periods ending
after the Closing and shall remit any Taxes due in respect of such Tax Returns,
and, with respect to Tax Returns that are required to be filed by or with
respect to the Company for Straddle Periods ("STRADDLE RETURNS"), such Straddle
Returns shall be prepared in the ordinary course of business and consistent with
past practice (unless otherwise required by a Law). The Company shall permit
AT&T to review and comment on each Straddle Return, and shall make such
revisions to such Tax Returns as are reasonably requested by AT&T. AT&T shall
permit the Company to review and comment on each Tax Return filed by MediaOne of
Colorado (or caused to be filed by Media One of Colorado) after the date hereof
for taxable years or periods ending on or before the Closing pursuant to this
Section 14.1(f) to the extent they relate to the Company. The Company or AT&T,
as applicable, shall pay to the other as agent an amount equal to the Taxes for
which the payor is liable pursuant to Section 14.1 but which are payable with
Tax Returns to be filed by the payee at least 10 days prior to the due date for
the filing of such Tax Returns. In the case of any Tax Return with respect to
which the Company or AT&T (as the case may be) is permitted to review and
comment pursuant to this Section 14.1(f), in the event the parties cannot agree
on any Tax item covered in any such Tax Return, the parties shall negotiate in
good faith to resolve such dispute. In the event the parties cannot reach
agreement regarding such dispute within ten (10) days of the date on which one
party
74
notifies the other of its disagreement, such dispute shall be resolved by
submitting the same to a national accounting firm that does not have a material
relationship with either party.
(g) CONTEST PROVISIONS. The Company shall have
sole and exclusive control over any Tax audit or administrative or court
proceeding related to Taxes imposed with respect to the Company other than with
respect to Tax Returns with respect to periods ending on or before the Closing.
AT&T shall promptly notify the Company in writing upon receipt by MediaOne of
Colorado or any of its Affiliates of written notice of any pending or threatened
federal, state, local, provincial or foreign Tax audits or assessments with
respect to the activities or income of the Company which may affect the tax
liabilities of the Company for which AT&T would be required to indemnify the
Company under Section 14.1(a) or for which the Company would be required to
indemnify AT&T and its Affiliates under Section 14.1(b). Thereafter, from time
to time, MediaOne of Colorado shall promptly notify the Company in the event any
issue arises in connection with any such audits or assessments that relate
specifically to the Company. The Company shall promptly notify AT&T in writing
upon receipt by the Company or any of its Affiliates of written notice of any
pending or threatened federal, state, local, provincial or foreign Tax audits or
assessments which may affect the tax liabilities of the Company for which AT&T
would be required to indemnify the Company pursuant to Section 14.1(a). The
Company shall not be relieved of its obligations to indemnify MediaOne of
Colorado if AT&T fails to timely deliver the written notice described above
except to the extent the Company is actually prejudiced thereby. AT&T shall not
be relieved of its obligations to indemnify the Company if the Company fails to
timely deliver the written notice described above except to the extent AT&T is
actually prejudiced thereby. For the avoidance of doubt, AT&T shall have the
right to represent the Company interests in, manage, contest, litigate,
compromise and settle any Income Tax audit or administrative or court proceeding
relating to taxable years or periods ending on or before the Closing and to
employ counsel of its choice at its expense; PROVIDED that AT&T shall provide
prompt written notice to the Company that a Determination has been made with
respect to any such audit or administrative or court proceeding and the Company
shall have such rights as described in Section 14.1(h) hereof with respect to
such matter. The Company shall be entitled to participate in the relevant
portions of such audit or administrative or court proceeding to the extent
reasonably practicable and at its own expense. AT&T shall be entitled to
participate at its expense in the defense of any claim for Income Taxes for a
year or period ending after the Closing which may be the subject of
indemnification by AT&T pursuant to Section 14.1(a). The Company may not agree
to settle any Income Tax claim for the portion of the year or period ending on
the Closing which may be the subject of indemnification by AT&T under Section
14.1(a) without the prior written consent of AT&T, which consent shall not be
unreasonably withheld.
(h) Within thirty (30) days after the Company
receives a notice described in Section 14.1(g) hereof from AT&T, the Company may
provide written notice to AT&T that it believes the Determination with respect
to the audit or administrative or court proceeding is reasonably expected to
materially adversely impact the Company for a tax period or periods ending after
the Closing, in which case the
75
Company may seek a determination of the disputed item or items by a national
accounting firm that does not have a material relationship with either party.
The national accounting firm selected shall determine, and shall provide notice
to AT&T and the Company stating, whether the Determination is a fair and
appropriate outcome and whether the Determination has materially adversely
impacted the Company. If the national accounting firm determines that the
Determination is not a fair and appropriate outcome and is reasonably expected
to materially adversely impact the Company for a tax period or periods ending
after the Closing, AT&T shall indemnify the Company to the extent that the
disputed item or items are reasonably expected to materially adversely impact
the Company, as determined by the national accounting firm.
(i) CONTEST PROVISIONS WITH RESPECT TO SECTION
14.1(C).
(i) Subject to Section 14(g), AT&T shall have
sole and exclusive control over any Tax audit or administrative or court
proceeding relating to AT&T's Tax Returns (a "PROCEEDING"); PROVIDED, HOWEVER,
that AOLTW shall have such participation rights as set forth in this paragraph
(h) to the extent any such Proceeding relates to a tax issue, the resolution of
which may give rise to a claim for Losses arising from a breach of the
representations and warranties contained in Section 5.6 of this Agreement or a
breach of the covenants contained in Section 9.3 of this Agreement (an "AOLTW
ISSUE"). AT&T shall provide notice to AOLTW within thirty (30) days after an
AOLTW Issue is raised by a Governmental Authority in connection with any
Proceeding; PROVIDED, HOWEVER, that AOLTW shall not be relieved of its
obligations to indemnify AT&T in respect of any Loss arising out of the Exchange
if AT&T fails to timely deliver the written notice required to be given under
this paragraph (i) except to the extent AOLTW is actually prejudiced by such
failure.
(ii) AOLTW shall have the right to (x) be
present at any meeting or any Proceeding (or portion thereof) which relates
solely to an AOLTW Issue, (y) review and comment on any written submissions by
AT&T with respect to a Proceeding to the extent such submissions relate to an
AOLTW Issue (which comments will be considered in good faith by AT&T), and (z)
prepare for submission to AT&T written materials with respect to an AOLTW Issue
which will be reviewed and considered in good faith by AT&T; PROVIDED that AT&T
shall continue to have the sole and exclusive right to determine whether or not
such materials will be submitted in the Proceeding. AT&T shall take reasonable
steps to cause the AOLTW Issue to be considered in isolation from other issues
in the Proceeding to the extent reasonably feasible.
(iii) AT&T shall have the sole and exclusive
right to settle, compromise and/or concede any Proceeding; PROVIDED, however,
that AT&T must provide notice to AOLTW setting forth in reasonable detail the
proposed settlement insofar as it relates to an AOLTW Issue.
(iv) AOLTW shall pay its own costs in respect
of its participation, as described in this paragraph (h).
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(v) In any dispute with respect to a claim by
AT&T under Section 14.1(c) the appropriateness of the conduct of the parties in
the Proceeding, including any settlement thereof, shall be taken into account.
(j) SPECIAL TAX DISTRIBUTION.
(i) If at any time, and from time to time,
after the date of the Closing, the cumulative amount of Section 751 Income
exceeds $ 300,000,000, then TWE shall pay to the Company and the Company shall
pay to Media One of Colorado or TWE shall pay to MediaOne of Colorado an amount
equal to the product of (y) the amount of such excess and (z) 50% of the
Combined Effective Tax Rate, as defined in Annex A of the Original Partnership
Agreement, for the year in which the Closing occurs, reduced by any amounts
previously so paid under this Section 14.1(i)(i). The parties agree that each
such payment shall be treated as a distribution by TWE (i) to the Company and by
the Company to Media One of Colorado in each case occurring immediately prior to
the Exchange or (ii) to MediaOne of Colorado occurring immediately prior to the
Exchange, as applicable.
(ii) If at any time, and from time to time,
after the date of the Closing, the cumulative amount of Adjustment Income,
exceeds $300,000,000, then TWE shall pay to the Company and the Company shall
pay to Media One of Colorado an amount equal to the product of (y) the amount of
such excess and (z) 50% of the Combined Effective Tax Rate, as defined in Annex
A of the Original Partnership Agreement, for the year in which the Closing
occurs, reduced by any amounts previously so paid hereunder. The parties agree
that each such payment shall be treated as a distribution by TWE to the Company
and by the Company to Media One of Colorado in each case occurring immediately
prior to the Exchange.
(iii) Appropriate and equitable adjustments
shall be made hereunder in the event that subsequent to any payment or
distribution hereunder there is a reduction in Section 751 Income or Adjustment
income.
(iv) "SECTION 751 INCOME" means the aggregate
of the Company's and MediaOne of Colorado's share of income arising under
Section 751 of the Code as a result of the Transactions and "ADJUSTMENT INCOME"
means any adjustment occurring after the Closing resulting from any Tax audit or
court proceeding or the filing of any amended Tax return of TWE to the Company's
share of the taxable income of TWE for all periods or portions thereof ending on
or before the date of the Closing, but determined without regard to the
Transactions.
(v) The fact and the amount of any liability
to make any payment or distribution under this Section 14.1(i) shall be
determined exclusively by reference to the filing of a Tax Return by TWE or a
Determination arrived at in connection with any Tax audit or other proceeding of
TWE conducted by TWE or its Tax Matters Partner and without regard to any other
proceeding, including any separate audit or other proceeding conducted by AT&T.
AT&T shall have the right to attend all meetings and conferences between the TWE
Tax Matters Partner and representatives of
77
any Governmental Authority in connection with any such audit and to attend any
hearing, trial or other proceedings arising in connection therewith; provided
that the TWE Tax Matters Partner shall have the sole and exclusive right to
control an audit or other proceeding and to settle, compromise and/or concede
any matter therein. TWE shall give AT&T reasonable notice in advance of any such
meeting, conference or other proceeding and shall provide AT&T with all
information that AT&T may reasonably request from time to time in connection
with the foregoing.
(vi) After the Closing, TWE (or its Tax
Matters Partner) shall file its Tax Returns consistent with past practice,
except to the extent required by Law.
(vii) AT&T shall pay its own costs in respect
of its participation, as described in this paragraph (j).
(viii) Nothing in any Transaction Agreement
shall prevent AT&T and its Affiliates (including MediaOne of Colorado and, for
all periods or portions thereof ending on or before the Closing, the Company)
from electing to take positions that are inconsistent with Tax Returns of TWE
and not to be bound by any settlement or closing agreement entered into by TWE
and any Governmental Authority; PROVIDED, that AT&T shall promptly notify TWE of
any such action and shall keep TWE reasonably informed of the progress of any
audit or other proceeding relating thereto.
14.2 ASSISTANCE AND COOPERATION. After the Closing, each
of AT&T, AOLTW and the Company shall:
(a) assist (and cause their respective Affiliates
to assist) the other party in preparing any Tax Returns or reports which such
other party is responsible for preparing and filing in accordance with this
Article 14;
(b) cooperate fully in preparing for any audits
of, or disputes with government authorities regarding, any Tax Returns of the
Company;
(c) make available to the other party and to any
government authority, as reasonably requested, all information, records, and
documents relating to Taxes of the Company;
(d) furnish the other party with copies of all
written correspondence received from any government authority in connection with
any Tax audit or written information request with respect to any taxable period
for which the other party may have a liability under this Article 14; and
(e) cooperate in good faith to minimize the amount
of Section 751 Income, if any, recognized by TWE and its partners, including,
without limitation, pursuant to an agreement similar to that described in Treas.
Reg. Section 1.751-1(g) Example (3)(c) specifying the particular items of
property (if any) deemed exchanged.
78
Notwithstanding the above, a party shall not be relieved of
its obligations to indemnify the other party if the other party fails to comply
with this Section 14.2 except to the extent that such indemnitor is actually
prejudiced thereby.
14.3 MISCELLANEOUS.
(a) Any Tax sharing agreement or arrangement to
which the Company is a party shall be terminated prior to the Closing.
(b) Payment by an indemnitor of any amount due to
an indemnitee under Section 14.1 shall be made within ten (10) days following
written notice by the indemnitee that payment of such amounts to the appropriate
government authority or other applicable third party is due by the indemnitee,
provided that the indemnitor shall not be required to make any payment earlier
than five (5) business days before it is due to the appropriate government
authority or applicable third party.
(c) All amounts required to be paid pursuant to
Section 14.1 shall be paid promptly in immediately available funds by wire
transfer to a bank account designated by the indemnified party.
14.4 TAX EFFECTS OF INDEMNIFICATION.
(a) For all Tax purposes (unless required by a
change in applicable Tax Law or good faith resolution of a contest) the parties
hereto agree to treat, and to cause their respective affiliates to treat any
payment (i) to the Company by AT&T pursuant to an indemnification, reimbursement
or refund obligation provided for in this Agreement (an "AT&T INDEMNIFICATION
PAYMENT"), or (ii) to MediaOne of Colorado by the Company pursuant to an
indemnification, reimbursement or refund obligation provided for in this
Agreement excluding any amount payable under Section 14.1(j) (a "COMPANY
INDEMNIFICATION PAYMENT" and, collectively with any AT&T Indemnification
Payment, an "INDEMNIFICATION PAYMENT") as (x) with respect to an AT&T
Indemnification Payment, a contribution by MediaOne of Colorado to the Company
occurring immediately prior to the Exchange, and (y) with respect to a Company
Indemnification Payment, a distribution by the Company to MediaOne of Colorado
occurring immediately prior to the Exchange.
(b) The amount of any Loss for which
indemnification is provided under this Agreement (for the avoidance of doubt,
not including any amount payable under Section 14.1(j)) shall be (i) increased
to take account of the net Tax cost, if any, incurred by the indemnitee arising
from the receipt or accrual of an Indemnification Payment hereunder (grossed up
for such increase) and (ii) reduced to take account of the net Tax benefit, if
any, realized by the indemnitee arising from incurring or paying such Loss. In
computing the amount of any such Tax cost or benefit, the indemnitee shall be
deemed to recognize all other items of income, gain, loss, deduction or credit
before recognizing any item arising from the receipt or accrual of any
Indemnification Payment hereunder or incurring or paying any indemnified Loss.
Any Indemnification Payment hereunder shall initially be made without regard to
this Section 14.4(b) and shall be
79
increased or reduced to reflect any such net Tax cost (including gross-up) or
net Tax benefit only after the indemnitee has actually realized such cost or
benefit. For purposes of this Agreement, an indemnitee shall be deemed to have
"actually realized" a net Tax cost or a net Tax benefit to the extent that, and
at such time as, the amount of Taxes payable by such indemnitee is increased
above or reduced below, as the case may be, the amount of Taxes that such
indemnitee would be required to pay but for the receipt or accrual of the
Indemnification Payment or the incurrence or payment of such Loss. The amount of
any increase or reduction hereunder shall be adjusted to reflect any adjustment
with respect to the indemnitee's liability for Taxes, and payments between the
parties hereto to reflect such adjustment shall be made. In the event that the
parties disagree regarding the appropriate application of this Section 14.4(b),
such disagreement shall be resolved by submitting the same to a national
accounting firm that does not have a material relationship with either party.
14.5 CONSISTENT TAX TREATMENT. The parties intend
that the transaction described in Section 2.6 hereof will qualify as a
reorganization within the meaning of Section 368(a)(1) of the Code and that the
transaction described in Section 2.7 hereof shall constitute an exchange within
the meaning of Section 351 of the Code of the Company Transferred Assets in
exchange for stock of the Company and the assumption of liabilities by the
Company. The parties further intend that following the transactions contemplated
hereby, TWE shall continue to qualify as a partnership for federal income tax
purposes, and that the interests in TWE held by the Company, ATC and Media One
of Colorado shall constitute partnership interests therein. The parties agree
for all Tax purposes (unless required by a change in applicable tax Law or a
good faith resolution of a contest) to treat the transactions described herein
in the foregoing manner.
14.6 EXPENSES. Notwithstanding anything to the
contrary herein, all fees and expenses with respect to any dispute,
disagreement, determination or other matter referred to a national accounting
firm pursuant to Article 14, regardless of which party has referred such
dispute, disagreement, determination or other matter to such national accounting
firm, shall be borne equally by the parties thereto.
ARTICLE XV
MISCELLANEOUS
15.1 NOTICES. All notices, requests and other
communications to any party hereto shall be in writing (including facsimile
transmission) and shall be given,
if to AOLTW or any other AOLTW Party AOL Time Warner Inc.
or the Company following the Closing, to: 00 Xxxxxxxxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Executive Vice President
and General Counsel
Fax: (000) 000-0000
80
With a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
Fax: (000) 000-0000
if to AT&T or any other AT&T Party AT&T Corp.
prior to closing of the AT&T-Comcast 000 Xxxxx Xxxxx Xxxxxx
Merger, to: Xxxxxxx Xxxxx, Xxx Xxxxxx 00000
Attention: Corporate Secretary
Fax: (000) 000-0000
With a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Fax: (000) 000-0000
if to Comcast or any other Comcast Party, or if to Comcast Corporation
AT&T or any other AT&T Party after closing of the 0000 Xxxxxx Xxxxxx
AT&T-Comcast Merger, to: Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: General Counsel
Fax: (000) 000-0000
With a copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
or such other address or facsimile number as such party hereto may hereafter
specify for such purpose by notice to the other parties hereto. All such
notices, requests and other communications shall be deemed received on the date
of receipt by the recipient thereof if received prior to 5 p.m. on a Business
Day, in the place of receipt. Otherwise, any such notice, request or
communication shall be deemed not to have been received until the next
succeeding Business Day in the place of receipt.
15.2 TREATMENT OF ADVANCE-XXXXXXXX AND CONTENT BUSINESSES.
Notwithstanding anything to the contrary contained in this Agreement or in any
other Transaction Agreement, the parties acknowledge and agree that, for all
purposes of this Agreement and the other Transaction Agreements: (i) the
ownership and operation of
81
TWEAN is currently in the process of being restructured, (ii) the assets,
Liabilities and results of operations of the Selected Business shall not be
deemed to be consolidated with those of TWE and none of the Company, any of the
parties hereto or any of their respective Subsidiaries shall have any rights or
responsibilities therefor, except to the extent contemplated by the Master
Transaction Agreement, (iii) no Indebtedness, cash or cash equivalents
attributable to the Selected Business shall be included in the calculations of
AOLTW Broadband Permitted Indebtedness and (iv) no party makes any
representation, warranty or covenant with respect to the TWEAN Restructuring or
the Selected Business (except pursuant to Section 5.23). In addition, the AOLTW
Parties make no representation or warranty and, except as expressly provided
herein or in any of the other Transaction Agreements, no covenant with respect
to the TWE Non-Broadband Business.
15.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties contained herein and in any certificate or other
writing delivered pursuant hereto shall not survive the Closing or the
termination of this Agreement, except as provided under Article XIII.
15.4 AMENDMENTS; NO WAIVERS.
(a) Subject to applicable Law, any provision of
this Agreement may be amended or waived prior to the Closing if, but only if,
such amendment or waiver is in writing and is signed, in the case of an
amendment, by all parties hereto or, in the case of a waiver, by each party
against whom the waiver is to be effective.
(b) No failure or delay by any party hereto in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by Law.
15.5 SUCCESSORS AND ASSIGNS. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; PROVIDED that no party hereto may
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the consent of the other parties hereto; PROVIDED, that
the AT&T Parties may assign their rights and obligations hereunder in a
Permitted AT&T Disposition to any Permitted AT&T Transferee.
15.6 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, without
regard to the conflicts of law rules of the State of New York.
15.7 JURISDICTION. Any suit, action or proceeding seeking
to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby shall be
brought in any federal court located in the State of New York or any New York
state court, and each of the parties hereby
82
consents to the exclusive jurisdiction of such courts (and of the appropriate
appellate courts therefrom) in any such suit, action or proceeding and
irrevocably waives, to the fullest extent permitted by Law, any objection that
it may now or hereafter have to the laying of the venue of any such suit, action
or proceeding in any such court or that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient form. Process in
any such suit, action or proceeding may be served on either party hereto
anywhere in the world, whether within or without the jurisdiction of any such
court. Without limiting the foregoing, each party hereto agrees that service of
process on such party as provided in Section 15.1 shall be deemed effective
service of process on such party.
15.8 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
15.9 DISCLAIMER OF REPRESENTATIONS AND WARRANTIES. EXCEPT
AS MAY EXPRESSLY BE SET FORTH HEREIN OR IN ANY OTHER TRANSACTION AGREEMENT, (A)
NONE OF THE PARTIES HERETO OR ANY OTHER PERSON MAKES ANY REPRESENTATION OR
WARRANTY OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE
TRANSACTIONS (INCLUDING ANY CONSENTS OR APPROVALS REQUIRED IN CONNECTION
THEREWITH) OR THE BUSINESS, ASSETS, CONDITION OR PROSPECTS (FINANCIAL OR
OTHERWISE) OF, OR ANY OTHER MATTER INVOLVING, THE ASSETS, BUSINESSES OR
LIABILITIES OF TWE, TWIC, HOLDCO, THE COMPANY OR THE AOLTW BROADBAND GROUP; (B)
ALL OF THE ASSETS TO BE RETAINED OR TRANSFERRED OR THE LIABILITIES TO BE
RETAINED, ASSUMED OR TRANSFERRED IN ACCORDANCE WITH THE TRANSACTION AGREEMENTS
SHALL BE TRANSFERRED OR ASSUMED ON AN "AS IS, WHERE IS BASIS," AND ALL IMPLIED
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A SPECIFIC PURPOSE OR OTHERWISE ARE
HEREBY EXPRESSLY DISCLAIMED, AND (C) NONE OF THE PARTIES HERETO OR ANY OTHER
PERSON MAKES ANY REPRESENTATION OR WARRANTY WITH RESPECT TO ANY INFORMATION,
DOCUMENTS OR MATERIAL MADE AVAILABLE IN CONNECTION WITH THE TRANSACTIONS OR THE
ENTERING INTO OF THE TRANSACTION AGREEMENTS. NOTWITHSTANDING ANYTHING TO THE
CONTRARY HEREIN, THE AT&T PARTIES ARE NOT DISCLAIMING ANY RIGHTS IT MAY HAVE IN
ITS CAPACITY AS A SHAREHOLDER OF AOLTW COMMON STOCK, TO THE SAME EXTENT AS IF
THE SHARES RECEIVED HEREUNDER WERE INSTEAD PURCHASED ON THE OPEN MARKET, UNDER
APPLICABLE SECURITIES LAWS, INCLUDING SECTION 10(b) OF THE 1934 ACT AND RULE
10b-5 PROMULGATED THEREUNDER DURING THE PERIOD BEGINNING ON THE CLOSING AND
ENDING ON THE 90TH DAY FOLLOWING THE CONTINUED EFFECTIVENESS OF THE SHELF
REGISTRATION STATEMENT CONTEMPLATED BY THE AOLTW REGISTRATION RIGHTS AGREEMENT
AND AOLTW EXPRESSLY ACKNOWLEDGES THAT THE AT&T PARTIES SHALL BE
83
ENTITLED TO ANY RIGHTS AND REMEDIES PROVIDED BY SUCH SECTION 10(b) OF THE 1934
ACT AND SUCH RULE AS IF THE AT&T PARTIES HAD SO PURCHASED SUCH SHARES ON THE
OPEN MARKET PROVIDED THAT THE AT&T PARTIES ASSERT SUCH RIGHT OR REMEDY ON OR
BEFORE SUCH 90TH DAY.
15.10 COUNTERPARTS; EFFECTIVENESS. This Agreement may be
signed in counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument. This
Agreement shall become effective when each party hereto shall have received a
counterpart hereof signed by the other parties hereto.
15.11 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES.
(a) This Agreement, together with the
Confidentiality Agreements and the other Transaction Agreements, constitutes the
entire agreement between the parties with respect to the subject matter hereof
and thereof and supersedes all prior agreements and understandings, both oral
and written, between the parties with respect to such subject matter.
(b) This Agreement shall be binding upon and inure
solely to the benefit of each party hereto and their respective successors and
assigns, and, nothing in this Agreement, express or implied, is intended to or
shall confer upon any other Person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
15.12 EFFECT OF AT&T-COMCAST MERGER.
(a) Upon consummation of the AT&T-Comcast Merger,
the parties hereto acknowledge and agree that all of AT&T Corp.'s rights and
obligations hereunder and under the other Transaction Agreements, including,
without limitation, the AT&T Disclosure Letter, (other than the rights and
obligations of AT&T Corp. under Article X) will automatically and without any
further action of any of the parties hereto be assigned to and assumed by AT&T
Comcast and AT&T Comcast will replace AT&T Corp. as a party thereto and AT&T
Corp. shall be automatically released from any and all of its obligations, and
shall automatically forfeit all of its rights, under this Agreement and other
Transaction Agreements other than those contained in Article X hereof. Each of
the parties hereto shall execute and deliver all instruments reasonably
requested by any party hereto to evidence such release and termination.
(b) In the event that the AT&T-Comcast Merger
Agreement is terminated without a closing occurring thereunder, Comcast and AT&T
Comcast shall automatically be released from any and all of their obligations
under this Agreement and the other Transaction Agreements and all of Comcast's
and AT&T Comcast's rights hereunder and thereunder shall terminate and each of
Comcast and AT&T Comcast shall (on behalf of itself and its Affiliates) release
AOLTW and its Affiliates from all claims and obligations hereunder or thereunder
and all of the Transactions. Each of the parties
84
hereto shall execute and deliver all instruments reasonably requested by any
party hereto to evidence such release and termination. This Agreement shall
remain in full force and effect in accordance with its terms notwithstanding any
termination of the AT&T-Comcast Merger Agreement, and all references to Comcast
or AT&T Comcast herein shall be deemed eliminated or reformed as appropriate to
effectuate the intent of Section 11.1(f).
15.13 SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is determined by a court of competent jurisdiction
or other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner adverse to any party hereto. Upon such a
determination, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner so that the transactions contemplated hereby
may be consummated as originally contemplated to the fullest extent possible.
15.14 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to enforce specifically the performance
of the terms and provisions hereof in any federal court located in the State of
New York or any New York state court, in addition to any other remedy to which
they are entitled at Law or in equity.
15.15 LETTERS. Each of AOLTW, AT&T and Comcast has set
forth information in the AOLTW Disclosure Letter, the AT&T Disclosure Letter and
the Comcast Disclosure Letter, respectively, in a section thereof that
corresponds to the Section of this Agreement to which it relates. A matter set
forth in one section of either Disclosure Letter need not be set forth in any
other section thereof so long as its relevance to the later section of the
Disclosure Letter or Section of this Agreement is readily apparent on the face
of the information disclosed in the Disclosure Letter. The fact that any item of
information is disclosed in a Disclosure Letter shall not be construed to mean
that such information is required to be disclosed by this Agreement. Such
information and the dollar thresholds set forth herein shall not be used as a
basis for interpreting the terms "material" or "Material Adverse Effect" or
other similar terms in this Agreement except as otherwise expressly set forth in
such Disclosure Letter.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the undersigned have executed, or have
caused to be executed, this Agreement on the date first written above.
TIME WARNER ENTERTAINMENT COMPANY, L.P.
By: Warner Communications Inc.,
its general partner
By: /s/ Xxxxxxx X. Xxxx
-------------------------------
Name: Xxxxxxx X. Xxxx
Title: Senior Vice President
AOL TIME WARNER INC.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
WARNER COMMUNICATIONS INC.
By: /s/ Xxxxxxx X. Xxxx
-------------------------------
Name: Xxxxxxx X. Xxxx
Title: Senior Vice President
AMERICAN TELEVISION AND COMMUNICATIONS
CORPORATION
By: /s/ Xxxxxxx X. Xxxx
-------------------------------
Name: Xxxxxxx X. Xxxx
Title: Senior Vice President
AT&T CORP.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice Chairman
MEDIAONE OF COLORADO, INC.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Authorized Signatory
MEDIAONE TWE HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Authorized Signatory
COMCAST CORPORATION
By: /s/ Xxxxxx X. Pick
-------------------------------
Name: Xxxxxx X. Pick
Title: Senior Vice President
AT&T COMCAST CORPORATION
By: /s/ Xxxxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Executive Vice President
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS....................................................................3
1.1 Definitions....................................................................3
ARTICLE II PRE-CLOSING ACTIVITIES; CLOSING; THE TRANSACTIONS.............................26
2.1 Pre-Closing Activities........................................................26
2.2 The Closing...................................................................26
2.3 The TWE Distribution..........................................................26
2.4 The MediaOne Note Payment.....................................................26
2.5 The MediaOne Recapitalization.................................................27
2.6 The Exchange..................................................................27
2.7 Holdco Contribution...........................................................28
2.8 The TWE Recapitalization......................................................29
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE AT&T PARTIES............................29
3.1 Corporate Existence and Power.................................................29
3.2 Corporate Authorization.......................................................29
3.3 No Vote Required..............................................................30
3.4 Governmental Authorization....................................................30
3.5 Non-contravention.............................................................30
3.6 Capitalization of the Company.................................................30
3.7 Business of the Company.......................................................31
3.8 Tax Representations...........................................................32
3.9 AT&T Comcast Merger...........................................................34
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMCAST PARTIES.........................34
4.1 Corporate Existence and Power.................................................34
4.2 Corporate Authorization.......................................................34
4.3 No Vote Required..............................................................35
4.4 Governmental Authorization....................................................35
4.5 Non-contravention.............................................................35
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE AOLTW PARTIES...........................35
5.1 Corporate Existence and Power.................................................36
5.2 Corporate Authorization.......................................................36
5.3 No Vote Required..............................................................36
5.4 Governmental Authorization....................................................36
5.5 Non-Contravention.............................................................36
5.6 Taxes.........................................................................37
5.7 Ownership of TWE Interests....................................................38
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5.8 Sufficiency of Assets.........................................................38
5.9 AOLTW - Affiliate Agreements..................................................38
5.10 AOLTW - SEC Filings...........................................................39
5.11 AOLTW - Financial Statements..................................................39
5.12 AOLTW - Absence of Certain Changes............................................40
5.13 AOLTW - No Undisclosed Material Liabilities...................................40
5.14 AOLTW - Compliance with Laws and Court Orders.................................40
5.15 AOLTW - Litigation............................................................41
5.16 TWE - SEC Filings.............................................................41
5.17 TWE Broadband - Selected Financial Information................................41
5.18 TWE Broadband - Absence of Certain Changes....................................42
5.19 TWE Broadband - No Undisclosed Material Liabilities...........................42
5.20 TWE Broadband - Systems Information...........................................43
5.21 TWE Broadband - Compliance with Laws and Court Orders.........................43
5.22 TWE Broadband - Litigation....................................................44
5.23 TWEAN Restructuring...........................................................44
5.24 TWIC - Selected Financial Information.........................................44
5.25 TWIC - Absence of Certain Changes.............................................44
5.26 TWIC - No Undisclosed Material Liabilities....................................45
5.27 TWIC - Systems Information....................................................45
5.28 TWIC - Title to Transferred Assets............................................46
5.29 TWIC - Litigation.............................................................46
5.30 TWIC - Compliance with Laws and Court Orders..................................46
5.31 TWIC - Employee Benefits......................................................46
5.32 TWIC Environmental Matters....................................................47
5.33 TWIC Tax Matters..............................................................47
5.34 TWIC - Eligible Option Holders................................................47
ARTICLE VI COVENANTS OF AOLTW............................................................48
6.1 AOLTW Broadband Interim Operations............................................48
6.2 Debt..........................................................................50
6.3 Transaction Agreements........................................................50
6.4 Interim Operations of the AOLTW Parties.......................................50
ARTICLE VII COVENANTS OF AT&T AND COMCAST.................................................50
7.1 Company Interim Operations....................................................50
7.2 Interim Operations of the AT&T Parties........................................51
7.3 Interim Operations of the Comcast Parties.....................................51
7.4 Transaction Agreements........................................................51
ARTICLE VIII COVENANTS OF AT&T, AOLTW, COMCAST AND THE COMPANY.............................52
8.1 Required Efforts..............................................................52
8.2 Prohibited Activities.........................................................54
8.3 Public Announcements..........................................................55
8.4 Further Assurances............................................................55
8.5 Acknowledgment Regarding Original Partnership Agreement.......................55
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8.6 Pre-Closing Disclosures.......................................................55
8.7 Disposition Changes...........................................................56
ARTICLE IX AOLTW/AT&T AGREEMENTS.........................................................57
9.1 High Speed Data Agreements....................................................57
9.2 Interim Agreements with respect to Original TWE Partnership Agreement.........58
9.3 Certain Post-Closing Restrictions.............................................58
9.4 Company Fees and Expenses. ..................................................59
ARTICLE X MUTUAL RELEASES...............................................................59
10.1 Release by AOLTW and TWE......................................................59
10.2 Release by AT&T Corp. and AT&T Comcast........................................60
10.3 Liabilities Excluded from Release.............................................61
ARTICLE XI CONDITIONS TO THE TRANSACTIONS................................................61
11.1 Conditions to the Obligations of Each Party...................................61
11.2 Further Conditions to the Obligations of the AT&T Parties.....................62
11.3 Further Conditions to the Obligations of the AOLTW Parties....................63
11.4 Frustration of Closing Conditions.............................................65
ARTICLE XII TERMINATION...................................................................65
12.1 Termination...................................................................65
12.2 Effect of Termination.........................................................66
12.3 Fees and Expenses.............................................................67
12.4 TWE Article XIII Rights.......................................................67
ARTICLE XIII SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION...................68
13.1 Survival of Representations, Warranties, Covenants and Agreements.............68
13.2 Indemnification by AT&T.......................................................69
13.3 Indemnification by AOLTW......................................................69
13.4 Third Party Claims............................................................70
13.5 Limitations on Indemnification................................................71
13.6 Payments for Indemnification Amounts..........................................71
13.7 Exclusive Remedy..............................................................71
13.8 Enforcement...................................................................71
ARTICLE XIV TAX MATTERS...................................................................72
14.1 Tax Indemnification...........................................................72
14.2 Assistance and Cooperation....................................................77
14.3 Miscellaneous.................................................................78
14.4 Tax Effects of Indemnification................................................78
14.5 Consistent Tax Treatment......................................................79
14.6 Expenses......................................................................79
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ARTICLE XV MISCELLANEOUS.................................................................79
15.1 Notices.......................................................................79
15.2 Treatment of Advance-Xxxxxxxx and Content Businesses..........................80
15.3 Survival of Representations and Warranties....................................81
15.4 Amendments; No Waivers........................................................81
15.5 Successors and Assigns........................................................81
15.6 Governing Law.................................................................81
15.7 Jurisdiction..................................................................81
15.8 WAIVER OF JURY TRIAL..........................................................82
15.9 DISCLAIMER OF REPRESENTATIONS AND WARRANTIES..................................82
15.10 Counterparts; Effectiveness...................................................83
15.11 Entire Agreement; No Third Party Beneficiaries................................83
15.12 Effect of AT&T-Comcast Merger.................................................83
15.13 Severability..................................................................84
15.14 Specific Performance..........................................................84
15.15 Letters.......................................................................84
Exhibits
A - Certificate of Incorporation
B - TWE Partnership Agreement
C - Bylaws
D - AOL High Speed Data Agreement
E - AOLTW Company Registration Rights
F - AT&T Company Registration Rights
G - MediaOne Promissory Note
H Parent Agreement
I - Partnership Interest Sale Agreement
J - Reimbursement Agreement
K - Road Runner Brand Name License
L - Tax Matters Agreement
M - Time Warner Brand Name License
iv
