Execution Copy
SHARE ISSUANCE AGREEMENT
dated as of
May 18, 2001
between
COMCAST PC INVESTMENTS INC.,
and
AT&T CORP.
TABLE OF CONTENTS
PAGE
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ARTICLE 1
DEFINITIONS
Section 1.01. Definitions 1
ARTICLE 2
ISSUANCE AND DELIVERY
Section 2.01. Issuance and Delivery 2
Section 2.02. Closing 3
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF COMCAST PC
Section 3.01. Corporate Existence and Power 3
Section 3.02. Corporate Authorization 3
Section 3.03. Governmental Authorization 3
Section 3.04. Noncontravention 3
Section 3.05. Litigation 4
Section 3.06. Private Placement 4
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF AT&T
Section 4.01. Corporate Existence and Power 4
Section 4.02. Corporate Authorization 5
Section 4.03. Governmental Authorization 5
Section 4.04. Capital Stock 5
Section 4.05. Share Authorization; Ownership 5
Section 4.06. Noncontravention 5
Section 4.07. Litigation 6
Section 4.08. Cox Put Settlement 6
ARTICLE 5
COVENANTS OF COMCAST PC
Section 5.01. Notices of Certain Events 6
Section 5.01. Sales of AT&T Shares 6
ARTICLE 6
COVENANTS OF AT&T
Section 6.01. Notices of Certain Events 7
ARTICLE 7
MUTUAL COVENANTS
Section 7.01. Reasonable Efforts; Further Assurances 7
Section 7.02. Certain Filings 7
Section 7.03. Public Announcements 8
Section 7.04. Restrictive Legend on Certificates 8
Section 7.05. Tax Matters 8
ARTICLE 8
CONDITIONS TO CLOSING
Section 8.01. Conditions to Obligations of the Parties 9
Section 8.02. Conditions to Obligation of AT&T 9
Section 8.03. Conditions to Obligation of Comcast PC 9
ARTICLE 9
SURVIVAL; INDEMNIFICATION
Section 9.01. Survival 10
Section 9.02. Indemnification 10
Section 9.03. Procedures 10
ARTICLE 10
TERMINATION
Section 10.01. Grounds for Termination 11
Section 10.02. Effect of Termination 11
ARTICLE 11
MISCELLANEOUS
Section 11.01. Notices 12
Section 11.02. Amendments and Waivers 13
Section 11.03. Expenses 13
Section 11.04. Successors and Assigns 13
Section 11.05. Governing Law 13
Section 11.06. Jurisdiction 13
Section 11.07. Waiver of Jury Trial 13
Section 11.08. Counterparts; Third Party Beneficiaries 14
Section 11.09. Captions 14
SHARE ISSUANCE AGREEMENT
AGREEMENT dated as of May 18, 2001 among Comcast PC Investments Inc., a
Delaware corporation with its offices located at 0000 X. Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000 ("Comcast PC") and AT&T Corp., a New York corporation
with its offices located at 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxx Xxxxx, Xxx Xxxxxx
00000 ("AT&T").
R E C I T A L :
WHEREAS, on March 28, 2000 AT&T, Comcast Corporation ("Comcast"), Xxx
Communications, Inc. ("Cox"), At Home Corporation, and certain of their
respective subsidiaries entered into a letter agreement (the "Letter
Agreement"), including term sheets attached thereto as Annexes A, B and C
(collectively, the "Term Sheets"); and
WHEREAS, Comcast PC and AT&T desire to enter into this Share Issuance
Agreement pursuant to which, upon the terms and subject to the conditions herein
set forth, AT&T will issue to Comcast PC the AT&T Shares, and the Comcast Put
(as defined below) shall thereupon be deemed fully satisfied;
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.01. Definitions. (a) The following terms, as used herein, have
the following meanings:
"Affiliate" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with such Person.
"AT&T Common Stock" means AT&T common stock, par value $1.00 per share,
listed on the New York Stock Exchange under the symbol "T".
"AT&T Shares" means the number of shares of AT&T Common Stock determined as
set forth in Exhibit A hereto.
"Closing Date" means the date of the Closing.
"Comcast Put" means the rights and obligations, between and among Comcast,
AT&T and their respective Affiliates, as set forth in Section 1 of Term Sheet
Annex A to the Letter Agreement.
"Cox Put" means the rights and obligations, between and among Cox, AT&T and
their respective Affiliates, as set forth in Section 1 of Term Sheet Annex A to
the Letter Agreement.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended.
"Letter Agreement" has the meaning set forth in the Recital.
"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 the purposes of this Agreement, a
Person shall be deemed to own subject to a Lien any property or asset which 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.
"1933 Act" means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
"1934 Act" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
"Person" means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Put Satisfaction Letter" means the letter agreement between AT&T, Comcast,
Comcast Online Communications, Inc., Comcast Cable Communications, Inc. and
Comcast PC, substantially in the form attached as Exhibit B hereto.
"Registration Rights Agreement" means the Registration Rights Agreement
between AT&T and Comcast PC, substantially in the form attached as Exhibit C
hereto.
"Term Sheets" has the meaning set forth in the Recital.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
Certificate 7.04
Closing 2.02
Closing Price 7.05
Damages 9.02
Indemnified Party 9.03
Indemnifying Party 9.03
Warranty Breach 9.02
ARTICLE 2
ISSUANCE AND DELIVERY
Section 2.01. Issuance and Delivery. Upon the terms and subject to the
conditions of this Agreement, AT&T agrees to issue and deliver to Comcast PC,
and Comcast PC agrees to accept from AT&T, the AT&T Shares at the Closing. The
AT&T Shares shall be issued and delivered in exchange for cancellation of and in
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full satisfaction of the Comcast Put. The AT&T Shares shall be delivered as
provided in Section 2.02.
Section 2.02. Closing. The closing (the "Closing") of the issuance of the
AT&T Shares hereunder shall take place at the offices of Wachtell, Lipton, Xxxxx
& Xxxx, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, as promptly as practicable, but in no
event later than 5 business days, after satisfaction of the conditions set forth
in Article 8, or at such other time or place as the parties may agree; provided
that, if the Closing would occur subsequent to the record date for determining
holders of AT&T Common Stock entitled to receive shares of common stock of AT&T
Wireless Services, Inc. in the spin-off of that entity from AT&T, then the
Closing shall occur no earlier than the sixth New York Stock Exchange trading
day subsequent to such record date. At the Closing AT&T shall deliver to Comcast
PC not more than four certificates for the AT&T Shares registered in the name of
Comcast PC and in such denominations as Comcast PC shall request in writing not
later than three full business days prior to the Closing Date with any transfer
taxes payable in connection with the transfer of the AT&T Shares to Comcast PC
duly paid.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF COMCAST PC
Comcast PC represents and warrants to AT&T as of the date hereof and as of
the Closing Date that:
Section 3.01. Corporate Existence and Power. Comcast PC is a corporation
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all corporate powers and all material
governmental licenses, authorizations, permits, consents and approvals required
to carry on its business as now conducted. Comcast PC is an indirect, wholly
owned subsidiary of Comcast.
Section 3.02. Corporate Authorization. The execution, delivery and
performance by Comcast PC of this Agreement and the consummation of the
transactions contemplated hereby are within Comcast PC's corporate powers and
have been duly authorized by all necessary corporate action on the part of
Comcast PC. Assuming due execution by AT&T, this Agreement constitutes a valid
and binding agreement of Comcast PC.
Section 3.03. Governmental Authorization. The execution, delivery and
performance by Comcast PC of this Agreement and the consummation of the
transactions contemplated hereby require no action by or in respect of, or
filing with, any governmental body, agency or official, other than (i)
compliance with any applicable requirements of the HSR Act; (ii) compliance with
any applicable requirements of the 1933 Act; and (iii) compliance with any
applicable requirements of the 1934 Act.
Section 3.04. Noncontravention. The execution, delivery and performance by
Comcast PC of its obligations under this Agreement will
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not, assuming compliance with the matters referred to in Section 3.03,
contravene any provision of applicable law or the certificate of incorporation
or by-laws of Comcast PC or any agreement or other instrument binding upon
Comcast PC or any of its subsidiaries, that is material to Comcast PC and its
subsidiaries, taken as a whole, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over Comcast PC or any of
its subsidiaries, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by Comcast PC of its obligations under this Agreement.
Section 3.05. Litigation. As of the date of this Agreement, there is no
action, suit, investigation or proceeding (or any basis therefor) pending
against, or to the knowledge of Comcast PC, threatened against or affecting
Comcast PC or its properties before any court or arbitrator or any governmental
body, agency or official, or which in any manner challenges or seeks to prevent,
enjoin, alter or materially delay the transactions contemplated by this
Agreement.
Section 3.06. Private Placement. (a) Comcast PC is acquiring the AT&T
Shares solely for the purpose of investment for Comcast PC's own account, not as
a nominee or agent, and not with a view to, or for offer or sale in connection
with, any distribution thereof in any transaction which would be in violation of
the securities laws of the United States of America or any state thereof.
Comcast PC has no contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participation to any third person with respect
to any of the AT&T Shares. Comcast PC understands that the AT&T Shares have not
been registered under the 1933 Act by reason of a specific exemption from the
registration provisions of the 1933 Act which depends upon, among other things,
the bona fide nature of the investment intent as expressed herein.
(b) Comcast PC has sufficient knowledge and experience in financial and
business matters so as to be capable of evaluating the merits and risks of its
investment in the AT&T Shares and Comcast PC is capable of bearing the economic
risks of such investment, including a complete loss of its investment in the
AT&T Shares.
(c) Comcast PC understands that the AT&T Shares may not be sold,
transferred or otherwise disposed of without registration under the 1933 Act, or
the availability of an exemption therefrom, and that in the absence of an
effective registration statement covering such stock or an available exemption
from registration, such AT&T Shares must be held indefinitely. Comcast PC
understands that AT&T is under no obligation to register the AT&T Shares issued
and delivered hereunder except as provided in the Registration Rights Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF AT&T
AT&T represents and warrants to Comcast PC as of the date hereof and as of
the Closing Date that:
Section 4.01. Corporate Existence and Power. AT&T has been duly
incorporated, is validly existing as a corporation
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in good standing under the laws of the jurisdiction of its incorporation, has
the corporate power and authority to own its property and to conduct its
business as currently conducted and is duly qualified to transact business and
is in good standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not have
a material adverse effect on AT&T and its subsidiaries, taken as a whole.
Section 4.02. Corporate Authorization. The execution, delivery and
performance by AT&T of this Agreement and the consummation of the transactions
contemplated hereby are within AT&T's corporate powers and have been duly
authorized by all necessary corporate action on the part of AT&T. Assuming the
due execution by Comcast PC, this Agreement constitutes a valid and binding
agreement of AT&T.
Section 4.03. Governmental Authorization. The execution, delivery and
performance by AT&T of this Agreement and the consummation of the transactions
contemplated hereby require no action by or in respect of, or filing with, any
governmental body, agency or official, other than (i) compliance with any
applicable requirements of the HSR Act; (ii) compliance with any applicable
requirements of the 1933 Act; and (iii) compliance with any applicable
requirements of the 1934 Act.
Section 4.04. Capital Stock. The authorized capital stock of AT&T conforms
as to legal matters to the description thereof contained in the Registration
Statement on Form S-4 of AT&T filed on April 19, 2001, as amended or
supplemented to the date hereof.
Section 4.05. Share Authorization; Ownership. (a) The AT&T Shares have been
duly authorized and, when issued and delivered in accordance with the terms of
this Agreement, will be validly issued, fully paid and non-assessable, and the
issuance of such AT&T Shares will not be subject to any preemptive or similar
rights.
(b) AT&T will transfer and deliver to Comcast PC at the Closing valid title
to the AT&T Shares free and clear of any Lien and any other limitation or
restriction (including any restriction on the right to vote, sell or otherwise
dispose of the AT&T Shares, other than restrictions arising under applicable
law).
Section 4.06. Noncontravention. The execution and delivery by AT&T of, and
the performance by AT&T of its obligations under, this Agreement will not,
assuming compliance with the matters referred to in Section 4.03, contravene any
provision of applicable law or the certificate of incorporation or by-laws of
AT&T or any agreement or other instrument binding upon AT&T or any of its
subsidiaries that is material to AT&T and its subsidiaries, taken as a whole, or
any judgment, order or decree of any governmental body, agency or court having
jurisdiction over AT&T or any of its subsidiaries, and no consent, approval,
authorization or order of, or qualification with, any governmental body or
agency is required for the performance by AT&T of its obligations under this
Agreement.
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Section 4.07. Litigation. As of the date of this Agreement, there is no
action, suit, investigation or proceeding (or any basis therefor) pending
against, or to the knowledge of AT&T, threatened against AT&T, which in any
manner challenges or seeks to prevent, enjoin, alter or materially delay the
transactions contemplated by this Agreement.
Section 4.08. Cox Put Settlement. In connection with the full satisfaction
of the Cox Put, AT&T or a subsidiary of AT&T has or will deliver 75,000,000
shares of AT&T Common Stock to Cox or a subsidiary of Cox, and neither Cox nor
any of its Affiliates will receive or have received in addition thereto any
assets, cash, or securities or rights to acquire assets, cash, or securities in
connection with the satisfaction of the Cox Put.
ARTICLE 5
COVENANTS OF COMCAST PC
Comcast PC agrees that:
Section 5.01. Notices of Certain Events. Comcast PC shall promptly notify
AT&T of:
(a) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions
contemplated by this Agreement; and
(c) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge threatened against, relating to or involving
or otherwise affecting Comcast PC that cause or could reasonably be
expected to cause the condition set forth in Section 8.01(b) not to be
fulfilled, or is of a type that would have been required to be disclosed
pursuant to Section 3.05 of this Agreement had it existed on the date of
this Agreement.
Section 5.02. Sales of AT&T Shares. Comcast PC shall not sell, transfer or
otherwise dispose of any AT&T Shares except in a manner fully consistent with
its representations contained in Section 3.06 and otherwise in full compliance
with the terms and conditions of this Agreement and the provisions of applicable
law.
ARTICLE 6
COVENANTS OF AT&T
AT&T agrees that:
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Section 6.01. Notices of Certain Events. AT&T shall promptly notify Comcast
PC of:
(a) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions
contemplated by this Agreement; and
(c) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge threatened against, relating to or involving
or otherwise affecting AT&T that cause or could reasonably be expected to
cause the condition set forth in Section 8.01(b) not to be fulfilled, or is
of a type that would have been required to be disclosed pursuant to Section
4.07 of this Agreement had it existed on the date of this Agreement.
ARTICLE 7
MUTUAL COVENANTS
The parties hereto agree that:
Section 7.01. Reasonable Efforts; Further Assurances. Subject to the terms
and conditions of this Agreement, AT&T and Comcast PC will use all reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary or desirable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement as promptly as
practicable. Comcast PC and AT&T agree to execute and deliver such other
documents, certificates, agreements and other writings and to take such other
actions as may be necessary or desirable in order to consummate or implement
expeditiously the transactions contemplated by this Agreement.
Section 7.02. Certain Filings. (a) Comcast PC and AT&T shall cooperate with
one another (i) in determining whether any action by or in respect of, or filing
with, any governmental body, agency, official or authority is required, or any
actions, consents, approvals or waivers are required to be obtained from parties
to any material contracts, in connection with the consummation of the
transactions contemplated by this Agreement and (ii) in taking such actions or
making any such filings, furnishing information required in connection therewith
and seeking timely to obtain any such actions, consents, approvals or waivers.
(b) In furtherance and not in limitation of the foregoing, each party
hereto agrees (i) to make an appropriate filing of a Notification and Report
Form pursuant to the HSR Act with respect to the transactions contemplated
hereby as promptly as practicable after the date hereof, (ii) to supply as
promptly as practicable any additional information and documentary material that
may be requested pursuant to the HSR Act and (iii) to use all reasonable efforts
to take
7
all other actions necessary, proper or advisable to cause the expiration or
termination of the waiting period under the HSR Act as promptly as practicable.
Section 7.03. Public Announcements. The parties agree to consult with each
other before issuing any press release or making any public statement with
respect to this Agreement or the transactions contemplated hereby and, except
for any press releases and public statements the making of which may be required
by applicable law or any listing agreement with any national securities
exchange, will not issue any such press release or make any such public
statement prior to such consultation.
Section 7.04. Restrictive Legend on Certificates. Comcast PC agrees to the
imprinting, so long as required by law, of a legend on all certificates
representing AT&T Shares received at the consummation of the transactions
contemplated by this Agreement (each such certificate, a "Certificate") to the
following effect:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
The legend set forth above may be removed if and when the AT&T Shares
represented by a Certificate are disposed of pursuant to an effective
registration statement under the Securities Act or upon the selling party's
receipt of an opinion of counsel, in form and substance and from counsel
reasonably satisfactory to AT&T and its counsel, confirming that any sale or
transfer of the shares represented by the Certificate will not require
registration of such shares under the Securities Act or under any blue sky or
similar laws. In such event, the holder of any Certificate may exchange it for a
new certificate, without legend, representing the same number of shares as were
represented by the Certificate so exchanged, and AT&T shall promptly issue and
deliver such new certificate upon receipt of the Certificate, which shall
thereupon be cancelled.
Section 7.05. Tax Matters. Each of AT&T and Comcast PC agree, unless
otherwise required pursuant to a determination under Section 1313 of the
Internal Revenue Code of 1986, as amended, to treat as income and amount
realized (in the case of Comcast PC) and deduction (in the case of AT&T), in
each case for U.S. federal income tax purposes, an amount equal to the Closing
Price multiplied by the number of AT&T Shares delivered to Comcast PC at the
Closing, and to not take any position inconsistent therewith. The term "Closing
Price" means the average of the high and low sales prices for shares of AT&T
Common Stock on the Closing Date, or, if the Closing occurs before the opening
of trading on the Closing Date, on the trading day immediately preceding the
Closing Date.
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ARTICLE 8
CONDITIONS TO CLOSING
Section 8.01. Conditions to Obligations of the Parties. The obligations of
AT&T and Comcast PC to consummate the Closing are subject to the satisfaction of
the following conditions:
(a) Any applicable waiting period under the HSR Act relating to the
transactions contemplated hereby shall have expired or been terminated.
(b) No provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Closing.
(c) All actions by or in respect of or filings with any governmental
body,
agency, official or authority required to permit the consummation of
the Closing shall have been taken, made or obtained.
(d) The Put Satisfaction Letter shall have been entered into by AT&T,
Comcast, Comcast Cable Communications, Inc., Comcast Online Communications,
Inc. and Comcast PC.
Section 8.02. Conditions to Obligation of AT&T. The obligation of AT&T to
consummate the Closing is subject to the satisfaction of the following further
conditions:
(a) (i) Comcast PC shall have performed in all material respects all
of its obligations hereunder required to be performed by it on or prior to
the Closing Date, (ii) the representations and warranties Comcast PC
contained in this Agreement and in any certificate or other writing
delivered by Comcast PC pursuant hereto (A) that are qualified by
materiality or material adverse effect shall be true at and as of the
Closing Date as if made at and as of such date, and (B) that are not
qualified by materiality or material adverse effect shall be true in all
material respects at and as of the Closing Date as if made at and as of
such date, and (iii) AT&T shall have received a certificate signed by a
duly authorized officer of Comcast PC to the foregoing effect.
Section 8.03. Conditions to Obligation of Comcast PC. The obligation of
Comcast PC to consummate the Closing is subject to the satisfaction of the
following further conditions:
(a) (i) AT&T shall have performed in all material respects all of its
obligations hereunder required to be performed by it at or prior to the
Closing Date, (ii) the representations and warranties of AT&T contained in
this Agreement and in any certificate or other writing delivered by AT&T
pursuant hereto (A) that are qualified by materiality or material adverse
effect shall be true at and as of the Closing Date as if made at and as of
such date, and (B) that are not qualified by materiality or material
adverse effect shall be true in all material respects at and as of the
Closing Date as if made at and as of such
9
date and (iii) Comcast PC shall have received a certificate signed by a
duly authorized officer of AT&T to the foregoing effect.
(b) The Registration Rights Agreement shall have been, or concurrently
with the Closing shall be, entered into by AT&T.
ARTICLE 9
SURVIVAL; INDEMNIFICATION
Section 9.01. Survival. The covenants, agreements, representations and
warranties of the parties hereto contained in this Agreement or in any
certificate or other writing delivered pursuant hereto or in connection herewith
shall survive the Closing until the first anniversary of the Closing Date;
provided that the representations and warranties contained in Sections 3.06 and
4.05 shall survive indefinitely. Notwithstanding the preceding sentence, any
covenant, agreement, representation or warranty in respect of which indemnity
may be sought under this Agreement shall survive until the termination pursuant
to the preceding sentence, if notice of the inaccuracy or breach thereof giving
rise to such right of indemnity shall have been given to the party against whom
such indemnity may be sought prior to such time.
Section 9.02. Indemnification. (a) Comcast PC hereby indemnifies AT&T and
its Affiliates against and agrees to hold each of them harmless from any and all
damage, loss, liability and expense (including, without limitation, reasonable
expenses of investigation and reasonable attorneys' fees and expenses in
connection with any action, suit or proceeding) ("Damages") incurred or suffered
by AT&T or any Affiliate of AT&T arising out of any misrepresentation or breach
of warranty (each such misrepresentation and breach of warranty a "Warranty
Breach") or breach of covenant or agreement made or to be performed by Comcast
PC pursuant to this Agreement.
(b) AT&T hereby indemnifies Comcast PC and its Affiliates against and
agrees to hold each of them harmless from any and all Damages incurred or
suffered by Comcast PC or any of its Affiliates arising out of any Warranty
Breach or breach of covenant or agreement made or to be performed by AT&T
pursuant to this Agreement.
Section 9.03. Procedures. The party seeking indemnification under Section
9.02 (the "Indemnified Party") agrees to give prompt notice to the party against
whom indemnity is sought (the "Indemnifying Party") of the assertion of any
claim, or the commencement of any suit, action or proceeding in respect of which
indemnity may be sought under such Section and will provide the Indemnifying
Party such information with respect thereto that the Indemnifying Party may
reasonably request. The Indemnifying Party may at the request of the Indemnified
Party participate in and control the defense (or, in the case of any alleged
Warranty Breach relating to Section 3.06 or 4.05, shall be entitled to assume
and control the defense) of any such suit, action or proceeding at its own
expense. The Indemnifying Party shall not be liable under Section 9.02 for any
settlement effected without its consent of any claim, litigation or proceeding
in respect of which indemnity may be sought hereunder.
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ARTICLE 10
TERMINATION
Section 10.01. Grounds for Termination. This Agreement may be terminated at
any time prior to the Closing:
(a) by mutual written agreement of Comcast PC and AT&T;
(b) by either Comcast PC or AT&T if the Closing shall not have been
consummated on or before September 30, 2001;
(c) by either Comcast PC or AT&T if there shall be any law or
regulation that makes consummation of the transactions contemplated hereby
illegal or otherwise prohibited or if consummation of the transactions
contemplated hereby would violate any nonappealable final order, decree or
judgment of any court or governmental body having competent jurisdiction;
(d) by either Comcast PC or AT&T if there has been a material
misrepresentation or breach of covenant or other obligation hereunder on
the part of AT&T (in the case of termination by Comcast PC) or Comcast PC
(in the case of termination by AT&T) which misrepresentation or breach has
the effect of making any condition to obligations hereunder of the party
seeking termination incapable of being fulfilled and is either incurable
or, if curable, is not cured within 30 days of the date notice of such
misrepresentation or breach is received by the other party; or
(e) automatically upon termination of the Letter Agreement (in whole,
or as to Comcast) in accordance with its terms.
The party desiring to terminate this Agreement pursuant to clauses 10.01(b),
10.01(c) or 10.01(d) shall give notice of such termination to the other party.
Section 10.02. Effect of Termination. If this Agreement is terminated as
permitted by Section 10.01, such termination shall be without liability of
either party (or any stockholder, director, officer, employee, agent, consultant
or representative of such party) to the other party to this Agreement; provided
that nothing herein shall relieve any party for its willful breach or willful
failure to perform, in which case such party shall be liable for any Damages
suffered by the other party as a result of such party's willful breach or
willful failure to perform. If this Agreement is terminated as permitted by
Section 10.01, other than Section 10.01(e), such termination shall affect only
this Agreement and shall not affect any other arrangements, or agreements among
the parties, including without limitation the parties' rights and obligations
under the Letter Agreement. The provisions of Sections 11.03, 11.05, 11.06 and
11.07 shall survive any termination hereof pursuant to Section 10.01.
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ARTICLE 11
MISCELLANEOUS
Section 11.01. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including facsimile transmission) and
shall be given,
if to Comcast PC, to:
Comcast PC Investments Inc.
0000 X. Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 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, Esq.
Fax: (000) 000-0000
if to AT&T, to:
AT&T Corp.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Vice President - Law and 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. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
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. in the
place of receipt and such day is 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.
12
Section 11.02. Amendments and Waivers. (a) Any provision of this Agreement
may be amended or waived if, but only if, such amendment or waiver is in writing
and is signed, in the case of an amendment, by each party to this Agreement, or
in the case of a waiver, by the party against whom the waiver is to be
effective.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section 11.03. Expenses. All costs and expenses incurred in connection with
this Agreement shall be paid by the party incurring such cost or expense.
Section 11.04. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party hereto.
Section 11.05. Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of New York, without regard to
the conflicts of law rules of such state.
Section 11.06. Jurisdiction. Except as otherwise expressly provided in this
Agreement, the parties hereto agree that 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 the United States District Court for the Southern District of New
York or any New York State court sitting in New York City, so long as one of
such courts shall have subject matter jurisdiction over such suit, action or
proceeding, and that any cause of action arising out of this Agreement shall be
deemed to have arisen from a transaction of business in the State of New York,
and each of the parties hereby irrevocably consents to the 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 which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 11.01 shall be deemed
effective service of process on such party.
Section 11.07. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF
13
OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 11.08. Counterparts; Third Party Beneficiaries. This Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received a counterpart hereof signed by the other party hereto. No
provision of this Agreement is intended to confer upon any Person other than the
parties hereto any rights or remedies hereunder.
Section 11.09. Captions. The captions herein are included for convenience
of reference only and shall be ignored in the construction or interpretation
hereof.
14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
AT&T CORP.
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Mergers & Acquisitions
Vice President
Assistant Treasurer
COMCAST PC INVESTMENTS INC.
By: /s/ Xxxxxxxx X. Xxxx
-----------------------------------
Name: Xxxxxxxx X. Xxxx
Title: Vice President
[Signature Page to Share Issuance Agreement]
Exhibit A
Determination of the Number of AT&T Shares
The number of AT&T Shares shall be determined in accordance with Part One of
this Exhibit if the Closing Date is on or before the date on which AT&T
distributes (the "Distribution Date") shares of AWS Common Stock (as defined
below) to holders of AT&T Common Stock (as defined below). The grid that is set
forth below is illustrative. The number of AT&T Shares shall be determined in
accordance with Part Two of this Exhibit if the Closing Date is after the
Distribution Date.
Part One
"ATHM Price" means the average of the daily high and low sales prices of shares
of At Home Corporation Series A common stock, par value $.01 per share, traded
under the symbol "ATHM" on the Nasdaq National Market, for the period of ten
consecutive trading days immediately prior to the Closing Date.
"AT&T Common Stock" means the common stock, par value $1.00 per share, of AT&T
Corp. traded under the symbol "T" on the New York Stock Exchange.
"AWS Common Stock" means the common stock, par value $.01 per share, of AWS.
"T Price" means the average of the daily high and low sales prices of shares of
AT&T Common Stock, for the period of ten consecutive trading days immediately
prior to the Closing Date. If the Closing Date is subsequent to the record date
(the "Record Date") for determining holders of AT&T Common Stock entitled to
receive shares of AWS Common Stock in the spin-off of AT&T Wireless Services,
Inc. ("AWS"), then the high and low sales prices of AT&T Common Stock used for
any such day after the Record Date and on or before the Distribution Date shall
be the daily high and low sales prices of AT&T Common Stock "with due bills" as
reported on the New York Stock Exchange, as opposed to "ex-dividend".
"Adjustment Ratio T Price With Due Bills" means the average of the daily high
and low sales prices of shares of AT&T Common Stock "with due bills" on the New
York Stock Exchange for a period equal to the number of trading days that fall
after the Record Date and before the Closing Date; provided that, in the event
that more than 10 trading days fall after the Record Date and before the Closing
Date, the averaging period for the purpose of determining the Adjustment Ratio T
Price With Due Bills shall be the 10 trading days immediately preceding the
Closing Date; and provided, further, that if the average daily trading volume of
AT&T Common Stock "with due bills" for the trading days to be included in the
calculation of Adjustment Ratio T Price With Due Bills is less than 10% of the
average daily trading volume on the New York Stock Exchange of AT&T Common Stock
for the 20 trading days up to and including the Record Date, then the Adjustment
Ratio T Price With Due Bills shall be the sum of (A) the Adjustment Ratio T
Price Ex-Dividend (as defined below) and (B) the Wireless Tracking Stock Price
(as defined below). This definition shall only be applicable if the Closing Date
is after the Record Date and on or before the Distribution Date.
"Adjustment Ratio T Price Ex-Dividend" means the average of the daily high and
low sales prices of shares of AT&T Common Stock "ex-dividend" on the New York
Stock Exchange for a period equal to the number of trading days that fall after
the Record Date and before the Closing Date; provided that, in the event that
more than 10 trading days fall after the Record Date and before the Closing
Date, the averaging period for the purpose of determining the Adjustment Ratio T
Price Ex-Dividend shall be the 10 trading days immediately preceding the Closing
Date; and provided, further, that if the average daily trading volume of AT&T
Common Stock "ex-dividend" for the trading days to be included in the
calculation of Adjustment Ratio T Price Ex-Dividend is less than 10% of the
average daily trading volume on the New York Stock Exchange of AT&T Common Stock
for the 20 trading days up to and including the Record Date, then the Adjustment
Ratio T Price Ex-Dividend shall be the difference between (A) the Adjustment
Ratio T Price With Due Bills and (B) the Wireless Tracking Stock Price. This
definition shall only be applicable if the Closing Date is after the Record Date
and on or before the Distribution Date.
"Spin-off Distribution Ratio" means the number of shares (or fraction of a share
of) AWS Common Stock to be distributed to holders of AT&T Common Stock in the
spin-off for each share of AT&T Common Stock held on the Record Date.
"Wireless Tracking Stock" means AT&T Wireless Group tracking stock trading on
the New York Stock Exchange under the symbol "AWE".
"Wireless Tracking Stock Price" means (A) the average of the daily high and low
sales prices of shares of Wireless Tracking Stock for the period of the trading
days that fall after the Record Date and before the Closing Date, provided that,
in the event that more than 10 trading days fall after the Record Date and
before the Closing Date, the averaging period for the purposes of determining
the Wireless Tracking Stock Price shall be the 10 trading days immediately
preceding the Closing Date, multiplied by (B) the Spin-off Distribution Ratio.
If the ratio at which Wireless Tracking Stock is converted into shares of AWS
common stock in the spin-off is not 1:1 as currently anticipated, then the
Wireless Tracking Stock Price computed in accordance with the preceding sentence
shall be adjusted appropriately.
Definitional Note: references to "with due bills" and/or "ex-dividend" refer to
the presence or absence of a right to receive, for each share of AT&T Common
Stock the fraction of a share, or number of shares, of AWS Common Stock to be
distributed to holders of AT&T Common Stock on the Record Date in connection
with the spin-off of AWS from AT&T.
(continued)
Comcast PC Put Settlement Share Delivery Calculation
(figures in millions except per share amounts and percentages)
Assumptions
Comcast PC % of Benefits ("Benefit %") 52.5%
Comcast PC # of Puts ("Puts") 31.3
Tax Rate 35%
ATHM Price Calculated as described above
T Price Calculated as described above
AT&T Shares Issuable in Gross Settlement
("Gross Settlement Shares") 69.4
Comcast PC Tax Basis per ATHM Share
("Tax Basis") $2.00
Calculation of Put Intrinsic Value ->
Put Intrinsic Value = (Gross Settlement Shares * T Price) - (Puts * ATHM Price)
Calculation of AT&T Shares Deliverable (Unadjusted) ->
After Tax Benefit to Comcast PC = Benefit % * [(Put Intrinsic Value * Tax Rate)
+ (Tax Basis * Puts * Tax Rate)]
Pre-Tax Value Delivered to Comcast PC = [After Tax Benefit to Comcast PC -
(Tax Basis * Puts * Tax Rate)] / (1 - Tax Rate)
Value of Excess T Shares = Pre-Tax Value Delivered to Comcast PC - (ATHM Price *
Puts)
Excess T Shares = Value of Excess T Shares / T Price
Total Unadjusted Shares Deliverable = Gross Settlement Shares + Excess T Shares
Calculation of Adjustment Ratio
In the event the Closing Date is subsequent to the Record Date, the Unadjusted
Shares Deliverable should be multiplied by the following Adjustment Ratio to
compensate Comcast for the distribution of AWS Common Stock to holders of AT&T
Common Stock as of the Record Date.
Adjustment Ratio = Adjustment Ratio T Price With Due Bills / Adjustment Ratio T
Price Ex-Dividend
Calculation of Total Adjusted Shares Deliverable
Total Adjusted Shares Deliverable = Total Unadjusted Shares Deliverable *
Adjustment Ratio
Total Unadjusted Shares Deliverable: Illustrative Grid
(figures in millions)
Assumptions
Put Price per Share: $48.00
At Home Avg. Price: $6.55 Total Shares Deliverable (Unadjusted)
AT&T Avg. Price: $21.62 T Stock Price
$20.00 $21.00 $21.78 $23.00 $24.00 $25.00
---------------------------------------------------------
Tax Rate: 35.0% $3.00 82.17 82.49 82.72 83.05 83.30 83.53
$3.50 81.16 81.54 81.80 82.18 82.47 82.73
Comcast PC Basis per ATHM $4.00 80.16 80.58 80.88 81.31 81.63 81.93
ATHM Share: $2.00 Stock $4.50 79.16 79.63 79.96 80.44 80.80 81.12
Price ----------
$5.05 78.06 78.58 78.95 79.48 79.88 80.24
----------
Comcast PC Puts: 31.3M $5.50 77.16 77.72 78.12 78.70 79.13 79.52
Gross Put Value: $1,500M $6.00 76.15 76.76 77.20 77.83 78.29 78.72
Base Case AT&T Shares $6.50 75.15 75.81 76.28 76.96 77.46 77.92
Issued: 69.4M
Comcast PC % of Benefits: 52.5%
Part Two
If the Closing Date is after the Distribution Date, the number of AT&T Shares
deliverable shall be determined based upon an equitable calculation which AT&T
and Comcast PC shall negotiate in good faith to which AT&T and Comcast PC shall
reasonably agree. AT&T and Comcast PC agree that the equitable calculation shall
gross-up the number of AT&T Shares deliverable to Comcast PC to take into
account the distribution of shares AWS Common Stock on the Distribution Date, in
a manner intended to be consistent with the methodology, principles and
magnitude of result reflected in Part One.
17
Exhibit B
Comcast Corporation
Comcast Cable Communications, Inc.
Comcast Online Communications, Inc.
Comcast PC Investments Inc.
May 18, 2001
AT&T Corp.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxx, Xxx Xxxxxx 00000
Re: Put Satisfaction
Ladies and Gentlemen:
Reference is hereby made to (i) the letter agreement dated as of March 28,
2000 among AT&T Corp. ("AT&T"), Comcast Corporation ("Comcast"), Xxx
Communication, Inc., At Home Corporation and certain of their respective
subsidiaries, including the term sheets attached thereto as Annexes A, B and C
and (ii) the share issuance agreement dated as of May 18, 2001 (the "Share
Issuance Agreement") between Comcast PC Investments Inc. ("Comcast PC") and
AT&T . Capitalized terms used herein and not otherwise defined have the
meanings ascribed to them in the Share Issuance Agreement. In consideration of
AT&T's agreement to enter into the Share Issuance Agreement, and other good and
valuable consideration, the sufficiency of which is hereby acknowledged, the
parties executing this letter agree as follows:
Each of Comcast, Comcast Cable Communications, Inc., Comcast Online
Communications, Inc. and Comcast PC (together with their respective
subsidiaries, the "Comcast Parties") agrees and acknowledges that upon delivery
by AT&T to Comcast PC of the AT&T Shares pursuant to Section 2.01 of the Share
Issuance Agreement, AT&T and its subsidiaries shall be deemed to have satisfied
the Comcast Put in full and none of the Comcast Parties shall have any claim or
right against AT&T or any of its subsidiaries as a result of the former
existence of the Comcast Put (including with respect to any shares of capital
stock of At Home Corporation that any of the Comcast Parties may hold or
retain).
AT&T agrees and acknowledges that upon delivery by AT&T to Comcast PC
of the AT&T Shares pursuant to Section 2.01 of the Share Issuance Agreement,
the Comcast Parties shall be deemed to have satisfied any obligations they may
have in connection with the Comcast Put and neither AT&T nor any of its
subsidiaries shall have any claim or right against the Comcast Parties as a
result of the former existence of the Comcast Put (including with respect to
any shares of capital stock of At Home Corporation that any of the Comcast
Parties may hold or retain).
For the avoidance of doubt, the parties hereto acknowledge and agree
(1) the provisions of the two immediately preceding paragraphs shall be of no
effect unless and until AT&T delivers the AT&T Shares to Comcast PC pursuant to
Section 2.01 of the Share Issuance Agreement and (2) if the Share Issuance
Agreement is terminated this letter shall have no effect and the Comcast Put
shall remain outstanding and in effect in accordance with its terms and the
terms of the Letter Agreement.
(signature page follows)
If the foregoing is in accordance with your understanding, please indicate
your agreement by signing below, at which time this letter will constitute a
binding agreement between us.
Very truly yours,
COMCAST CORPORATION
By:
-----------------------------------
Name:
Title:
COMCAST ONLINE COMMUNICATIONS, INC.
By:
-----------------------------------
Name:
Title:
COMCAST CABLE COMMUNICATIONS, INC.
By:
-----------------------------------
Name:
Title:
COMCAST PC INVESTMENTS INC.
By:
-----------------------------------
Name:
Title:
Accepted and agreed as of the date
first above written:
AT&T CORP.
By:
-----------------------------------
Name:
Title:
