EXHIBIT 2.2
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SEPARATION AND DISTRIBUTION AGREEMENT
by and between
AT&T Corp.
and
AT&T Broadband Corp.
Dated as of December 19, 2001
TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions.....................................................2
ARTICLE 2
THE SEPARATION
SECTION 2.01. Transfer of Assets and Assumption of Liabilities..............26
SECTION 2.02. Disclaimer of Representations and Warranties..................29
SECTION 2.03. Other Ancillary Agreements....................................29
SECTION 2.04. Termination of Agreements.....................................30
SECTION 2.05. Documents Relating to Transfer of Real Property Interests and
Tangible Property Located Thereon.............................31
SECTION 2.06. Documents Relating to Other Transfers of Assets and Assumption
of Liabilities................................................32
SECTION 2.07. Governmental Approvals and Consents...........................33
SECTION 2.08. Novation of AT&T Broadband Liabilities........................34
SECTION 2.09. Novation of AT&T Communications Liabilities...................35
SECTION 2.10. Joint Purchasing Arrangements.................................36
SECTION 2.11. TWE Arrangements..............................................37
ARTICLE 3
FINANCIAL RESTRUCTURING
SECTION 3.01. Liability Management..........................................37
SECTION 3.02. Repayment of Intracompany Indebtedness........................38
SECTION 3.03. Note Consents.................................................38
ARTICLE 4
THE DISTRIBUTION
SECTION 4.01. The Distribution..............................................38
SECTION 4.02. Actions Prior to the Distribution.............................39
SECTION 4.03. Timing of the Distribution....................................40
PAGE
ARTICLE 5
MUTUAL RELEASES; INDEMNIFICATION
SECTION 5.01. Release of Pre-Closing Claims.................................42
SECTION 5.02. Indemnification by AT&T.......................................44
SECTION 5.03. Indemnification by AT&T Broadband.............................45
SECTION 5.04. Indemnification Obligations Net of Insurance Proceeds and Other
Amounts.......................................................46
SECTION 5.05. Procedures for Indemnification of Third Party Claims..........47
SECTION 5.06. Additional Matters............................................48
SECTION 5.07. Remedies Cumulative...........................................49
SECTION 5.08. Survival of Indemnities.......................................49
ARTICLE 6
INSURANCE AND CERTAIN OTHER MATTERS
SECTION 6.01. Insurance Matters.............................................49
SECTION 6.02. Certain Post-Distribution Transactions and Related Matters....51
SECTION 6.03. Procedure for Indemnification for Tax Liabilities.............54
SECTION 6.04. Other Transactions............................................57
ARTICLE 7
EXCHANGE OF INFORMATION; CONFIDENTIALITY
SECTION 7.01. Agreement for Exchange of Information.........................59
SECTION 7.02. Ownership of Information......................................59
SECTION 7.03. Compensation for Providing Information........................59
SECTION 7.04. Record Retention..............................................60
SECTION 7.05. Limitation of Liability.......................................60
SECTION 7.06. Other Agreements Providing for Exchange of Information........60
SECTION 7.07. Production of Witnesses; Records; Cooperation.................60
SECTION 7.08. Confidentiality...............................................62
SECTION 7.09. Protective Arrangements.......................................62
ARTICLE 8
FURTHER ASSURANCES AND ADDITIONAL COVENANTS
SECTION 8.01. Further Assurances............................................63
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PAGE
ARTICLE 9
TERMINATION
SECTION 9.01. Termination...................................................64
SECTION 9.02. Effect of Termination.........................................64
ARTICLE 10
DISPUTE RESOLUTION AND ARBITRATION
SECTION 10.01. Agreement to Arbitrate.......................................64
SECTION 10.02. Reasonable Best Efforts to Resolve Disputes; Mediation.......65
SECTION 10.03. Demand for Arbitration.......................................65
SECTION 10.04. Arbitration Panel............................................66
SECTION 10.05. Commencement and Place of Arbitration........................66
SECTION 10.06. Arbitration Hearings.........................................66
SECTION 10.07. Arbitration Decision.........................................67
SECTION 10.08. Discovery and Related Matters................................67
SECTION 10.09. Arbitration Panel's Authority................................67
SECTION 10.10. Confidentiality..............................................68
SECTION 10.11. Certain Additional Matters...................................68
SECTION 10.12. Limited Court Actions........................................68
SECTION 10.13. Continuity of Performance and Remaining Obligations..........69
SECTION 10.14. Law Governing Arbitration Procedures.........................70
SECTION 10.15. Non-applicability of Article.................................70
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. Counterparts; Entire Agreement; Corporate Power..............70
SECTION 11.02. Governing Law................................................71
SECTION 11.03. Jurisdiction.................................................71
SECTION 11.04. Waiver of Jury Trial.........................................72
SECTION 11.05. Assignability................................................72
SECTION 11.06. AT&T Restructuring...........................................72
SECTION 11.07. Third Party Beneficiaries....................................72
SECTION 11.08. Notices......................................................73
SECTION 11.09. Severability.................................................74
SECTION 11.10. Expenses.....................................................74
SECTION 11.11. Headings.....................................................75
SECTION 11.12. Waivers of Default...........................................75
SECTION 11.13. Specific Performance.........................................75
SECTION 11.14. Amendments...................................................75
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PAGE
SECTION 11.15. Late Payments................................................75
SECTION 11.16. Interpretation...............................................75
EXHIBITS
Exhibit A AT&T Communications Financial Statements
Exhibit B Corporate Name Agreement
Exhibit C Employee Benefits Agreement
Exhibit D Intellectual Property Agreement
Exhibit E Interim Services and Systems Replication Agreement
Exhibit F Patent Assignment
Exhibit G Tax Sharing Agreement
Exhibit H Trademark and Service Xxxx Agreement
Annex I TWE Consideration
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SEPARATION AND DISTRIBUTION AGREEMENT
THIS SEPARATION AND DISTRIBUTION AGREEMENT, dated as of December 19,
2001, is by and between AT&T Corp., a New York corporation ("AT&T"), and AT&T
Broadband Corp., a Delaware corporation ("AT&T Broadband"). Capitalized terms
used herein and not otherwise defined shall have the respective meanings
assigned to them in Article 1.
WHEREAS, the Board of Directors of AT&T has determined that it is in
the best interests of AT&T and its shareholders to separate AT&T's
communications and broadband businesses into independent businesses and to
subsequently merge AT&T Broadband with a wholly owned subsidiary of AT&T Comcast
Corporation, a Pennsylvania corporation, pursuant to the Merger Agreement (as
defined below);
WHEREAS, in furtherance of the foregoing, upon the terms and subject to
the conditions set forth in this Agreement, AT&T will transfer the AT&T
Broadband Assets to AT&T Broadband and its Subsidiaries and cause AT&T Broadband
and its Subsidiaries to assume the AT&T Broadband Liabilities, all as more fully
described in this Agreement and the other Ancillary Agreements;
WHEREAS, upon the terms and subject to the conditions set forth in this
Agreement, following the Separation, AT&T will distribute all of the AT&T
Broadband Common Stock to shareholders of AT&T and, if the QUIPS Exchange is
completed (as defined below), to Microsoft Corporation, a Washington
corporation, or an affiliate thereof ("Microsoft"), all as more fully described
in this Agreement;
WHEREAS, for federal income tax purposes, it is intended that the
Separation and Distribution constitute a tax-free reorganization under the Code;
and
WHEREAS, it is appropriate and desirable to set forth the principal
corporate transactions required to effect the Separation and the Distribution
and certain other agreements that will govern certain matters relating to the
Separation and the Distribution and the relationship of AT&T and AT&T Broadband
and their respective Subsidiaries following the Distribution.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. DEFINITIONS. For the purpose of this Agreement the following
terms shall have the following meanings:
"ACTION" means any demand, action, suit, countersuit, arbitration, inquiry,
proceeding or investigation by or before any federal, state, local, foreign or
international Governmental Authority or any arbitration or mediation tribunal.
"ADDITIONAL COMMERCIAL AGREEMENTS" has the meaning set forth in the
definition of Ancillary Agreements.
"AFFILIATE" of any Person means a Person that controls, is controlled
by, or is under common control with such Person; provided, however, that for
purposes of this Agreement, no member of either the AT&T Broadband Group or the
AT&T Communications Group shall be deemed to be an Affiliate of any member of
the other Group and no employee plan or employee plan trust shall be deemed an
Affiliate of any employer or of any Affiliate of any employer. As used herein,
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such entity, whether
through ownership of voting securities or other interests, by contract or
otherwise.
"AGENT" means the distribution agent to be appointed by AT&T to distribute
to shareholders of AT&T the shares of AT&T Broadband Common Stock pursuant to
the Distribution.
"AGREEMENT" means this Separation and Distribution Agreement, including all
of the Schedules and Exhibits hereto.
"AMERICAN RIDGE" means American Ridge Insurance Company, a Vermont
corporation.
"ANCILLARY AGREEMENTS" means (i) this Agreement, the Corporate Name
Agreement, the Tax Sharing Agreement, the Employee Benefits Agreement, the
Intellectual Property Agreement, the Patent Assignment, the Trademark and
Service Xxxx Assignment (the agreements referred to in this clause (i), the
"PRIMARY TRANSACTION AGREEMENTS"), (ii) those agreements and documents listed in
Items 1-23 on Schedule 2.4(b)(ii)(A) (the agreements referred to in this clause
(ii), as they may be amended as provided in Schedule 2.4(b)(ii)(B), the "PRIMARY
COMMERCIAL AGREEMENTS") and (iii) any agreement, commitment or understanding
that any of the Primary Commercial Agreements contemplates will be entered into
or made after the date hereof; PROVIDED THAT the relevant Primary
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Commercial Agreement specifically sets forth all material terms of such
agreement, commitment or understanding (the agreements, commitments and
understandings referred to in this clause (iii) are referred to herein as the
"ADDITIONAL COMMERCIAL AGREEMENTS").
"APPLICABLE DEADLINE" has the meaning set forth in Section 10.03.
"ARBITRATION DEMAND NOTICE" has the meaning set forth in Section 10.03.
"ARBITRATION PANEL" has the meaning set forth in Section 10.05.
"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
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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;
(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, choices 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 licenses (including radio and similar licenses), permits, approvals
and authorizations that have been issued by any Governmental Authority;
(p) all cash or cash equivalents, bank accounts, lock boxes and other
deposit arrangements;
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(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" has the meaning set forth in the Preamble.
"AT&T BROADBAND" has the meaning set forth in the Preamble.
"AT&T BROADBAND ACTION" has the meaning set forth in Section 6.02(d).
"AT&T BROADBAND ASSETS" means:
(a) except as set forth on Schedule 1.14(a), any Assets reflected in the
AT&T Broadband Balance Sheet, unless disposed of to third parties after the date
thereof (and, in the case of any such Assets disposed of after the date thereof,
the proceeds from such disposal);
(b) any Assets acquired after the date of the AT&T Broadband Balance Sheet
by AT&T or any of its Subsidiaries utilizing AT&T Broadband Assets;
(c) any AT&T Broadband Contracts;
(d) any capital stock or other ownership interests in AT&T Broadband
Entities;
(e) AT&T's interest in Western Range;
(f) any AT&T Broadband Real Property;
(g) any Assets that are expressly contemplated by this Agreement or any
other Ancillary Agreement (or the Schedules hereto or thereto) as Assets to be
retained by or assigned to any member of the AT&T Broadband Group;
(h) any governmental licenses, permits, franchises, approvals, certificates
and other governmental authorizations held in the name of AT&T or any of its
Subsidiaries that are primarily related to the AT&T Broadband Business (to the
extent any of the foregoing would be required to be transferred pursuant hereto,
such items will be AT&T Broadband Assets only to the extent they are
transferable upon the receipt of any relevant Consent), except for any
intrastate telephony licenses, permits, franchises, approvals, certificates or
other governmental authorizations that are used in the AT&T Communications
Business;
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(i) the Assets of T-Holdings and its Subsidiaries to be purchased by AT&T
Broadband pursuant to Section 2.01(f);
(j) any Assets underlying any of the monetizations that are AT&T Broadband
Liabilities;
(k) any Assets listed or described on Schedule 1.14(k); and
(l) any Assets that are not AT&T Communications Assets specified in clauses
(a) through (k) of the definition of AT&T Communications Assets and that are
used or held for use primarily in connection with the AT&T Broadband Business
(it being agreed that (i) any Assets owned by AT&T or any of its controlled
Affiliates immediately prior to March 9, 1999 shall be deemed primarily used or
held for use in connection with the AT&T Communications Business and (ii) Assets
that were paid for, built or otherwise directly or indirectly acquired for
consideration (as reflected in current and historic financial records, including
subsidiary ledgers, journals and other financial books and records) by a Group
shall be deemed to be primarily used or held for use by the Group that most
recently so paid for or so built or acquired them).
AT&T Broadband Assets shall not in any event include any (i) Assets reflected on
the AT&T Communications Balance Sheet, except for those Assets specified in
clauses (b), (d), (e), (f), (g), (i), (j) and (k) of the definition of AT&T
Broadband Assets or (ii) Assets that as of the Distribution Date are Leased
Assets (as defined in the Local Network Connectivity Services Agreement).
Subject to the foregoing sentence, in the event that any Asset is included
in both the definition of "AT&T Broadband Asset" and "AT&T Communications Asset"
then (i) if it is specifically referred to in a definition or schedule or
otherwise (including in any of the Ancillary Agreements), it shall be treated in
accordance with such specific reference and (ii) otherwise it shall be treated
as an AT&T Broadband Asset or AT&T Communications Asset based upon whether it is
used or held for use primarily in connection with the AT&T Broadband Business or
primarily in connection with the AT&T Communications Business; PROVIDED THAT for
purposes hereof Assets that were paid for, built or otherwise directly or
indirectly acquired for consideration (as reflected in current and historic
financial records, including subsidiary ledgers, journals and other financial
books and records) by a Group shall be deemed to be primarily used or held for
use by the Group that most recently so paid for or so built or acquired them.
"AT&T Broadband Balance Sheet" means the balance sheet dated as of December
31, 2000 included in the AT&T Broadband Financial Statements.
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"AT&T BROADBAND BUSINESS" means the business of the AT&T Broadband Group.
"AT&T BROADBAND COMMON STOCK" means the common stock, par value $0.01 per
share, of AT&T Broadband.
"AT&T BROADBAND CONTRACTS" means the following contracts and agreements to
which AT&T or any of its Subsidiaries is a party or by which it or any of its
Subsidiaries or any of their respective Assets is bound, whether or not in
writing, except for any such contract or agreement that is expressly
contemplated to be assigned to or retained by AT&T or any member of the AT&T
Communications Group pursuant to any provision of this Agreement or any other
Ancillary Agreement:
(a) any contract or agreement entered into in the name of, or expressly on
behalf of, any AT&T Broadband Entity, except to the extent clearly relating to
the AT&T Communications Group and except for any At Home Contract;
(b) any contract or agreement that relates primarily to the AT&T Broadband
Business other than any At Home Contract;
(c) any rights and obligations of the AT&T Broadband Group under any At
Home Contract;
(d) any note, indenture, contract, agreement, mortgage or other instrument
representing Indebtedness or other Liabilities that are in either such case AT&T
Broadband Liabilities;
(e) any contract or agreement that is expressly contemplated pursuant to
this Agreement or any of the other Ancillary Agreements to be assigned or
transferred to or retained by AT&T Broadband or any member of the AT&T Broadband
Group;
(f) any guarantee, indemnity, representation, warranty or other Liability
of any member of the AT&T Communications Group in respect of any other AT&T
Broadband Contract, any AT&T Broadband Liability or the AT&T Broadband Business;
(g) any contract or agreement listed or described on Schedule 1.18(g),
including in the case of commitment or similar contracts or agreements,
contracts or agreements to the extent indicated on such Schedule;
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(h) any letter of credit, surety bond, swap, foreign exchange or other
instrument or contract primarily relating to the AT&T Broadband Group, together
with any letters of credit, surety bonds, swaps, foreign exchange or other such
instruments or contracts that were entered into in connection with Indebtedness
of the AT&T Broadband Group; and
(i) all monetizations listed or described on Schedule 1.18(i).
With respect to any contract or agreement that relates in material part to both
the AT&T Broadband Group and the AT&T Communications Group, the parties will
cooperate in good faith to apportion the rights and obligations thereunder to
the AT&T Broadband Group and the AT&T Communications Group, and to treat such
contract or agreement as an AT&T Broadband Contract to the extent relating to
the AT&T Broadband Group and an AT&T Communications Contract to the extent
relating to the AT&T Communications Group.
"AT&T BROADBAND ENTITIES" means AT&T Broadband and each of the AT&T
Broadband Subsidiaries.
"AT&T BROADBAND FINANCIAL STATEMENTS" has the meaning set forth in the
Merger Agreement.
"AT&T BROADBAND GROUP" means the direct or indirect interest of AT&T
(either itself or through direct or indirect Subsidiaries, or any of their
predecessors or successors) in (a) all of the businesses, Assets and Liabilities
reflected in the AT&T Broadband Financial Statements; (b) the other Assets and
Liabilities (contingent or otherwise) of AT&T and its Subsidiaries primarily
related to businesses, assets and liabilities described in clause (a) and all
net income, net losses, Assets and Liabilities arising in respect thereof after
the date of the AT&T Broadband Financial Statements; (c) all Assets, Liabilities
and businesses acquired after the date of the AT&T Broadband Financial
Statements by the AT&T Broadband Group or utilizing cash or other Assets
referred to in clauses (a) or (b); and (d) any business or operations that were
terminated, divested or discontinued by any AT&T Broadband Entity, including US
West, Inc. and its Subsidiaries (and their respective predecessors and
successors), or that are listed or described on Schedule 1.21(d); and (e) the
businesses, Assets and Liabilities listed or described on Schedule 1.21(e);
PROVIDED THAT the AT&T Broadband Group shall not include (x) any Assets disposed
of to any third party or otherwise transferred to any third party from the AT&T
Broadband Group after the date of the AT&T Broadband Financial Statements (but
it shall include any net proceeds thereof) or (y) any businesses, Liabilities or
Assets of, or the capital stock or other ownership interests in, T-Holdings
and its Subsidiaries, other than the Assets purchased pursuant to Section
2.01(f) and any Liabilities of T-Holdings
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and its Subsidiaries as of the Distribution Date. Notwithstanding the foregoing,
when this Agreement refers to "a member of the AT&T Broadband Group" or similar
language clearly referring to a Person, it means any one of the AT&T Broadband
Entities.
"AT&T BROADBAND INDEMNITEES" has the meaning set forth in Section 5.02.
"AT&T BROADBAND LIABILITIES" means:
(a) any Liabilities reflected on the AT&T Broadband Balance Sheet, subject
to any discharge of such Liabilities subsequent to the date of the AT&T
Broadband Balance Sheet;
(b) any Liabilities that are expressly contemplated by this Agreement or
any other Ancillary Agreement (or the Schedules hereto or thereto) as
Liabilities to be retained or assumed by AT&T Broadband or any other member of
the AT&T Broadband Group, subject to discharge of such Liabilities subsequent to
the date of the AT&T Broadband Balance Sheet, and all agreements, obligations
and Liabilities of any member of the AT&T Broadband Group under this Agreement
or any of the other Ancillary Agreements;
(c) any Liabilities of any AT&T Broadband Entity and any Liabilities as of
the Distribution Date of T-Holdings or any of its Subsidiaries;
(d) any Liabilities relating to, arising out of or resulting from any AT&T
Broadband Contract, excluding, for the avoidance of doubt, any Liabilities of
any member of the AT&T Communications Group as a party (for the benefit of the
AT&T Communications Group) under any At Home Contract;
(e) any Liabilities incurred after the date of the AT&T Broadband Balance
Sheet by any AT&T Broadband Entity;
(f) except to the extent arising from any breach by any member of the AT&T
Communications Group after the Distribution Date of any covenant or agreement
entered into in connection with the separation, divestiture or termination of
LMC and its Subsidiaries, or as otherwise expressly contemplated by any other
Ancillary Agreement, any Liabilities to the extent arising out of, relating to
or resulting from LMC and its Subsidiaries, any commercial or other agreements
or arrangements primarily relating to the AT&T Broadband Group and involving LMC
or any of its Subsidiaries or the ownership of any securities of any such
entity;
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(g) (i) any Liabilities relating to, arising out of, or resulting from any
Actions primarily related to, arising out of or resulting from the AT&T
Broadband Business, including those listed or described on Schedule 1.23(g),
(ii) 50% of the excess of any Liability related to, arising out of or resulting
from any Specified Matter (including any legal or other fees incurred as a
result of, or with respect to, any Specified Matter) over any amount AT&T
receives from AWS in respect thereof, (iii) 50% of any Liability related to,
arising out of or resulting from any At Home Matter (including any legal or
other fees incurred as a result of, or with respect to, any At Home Matter) and
(iv) 50% of any Liability related to, arising out of or resulting from the
Separation or the Distribution or any proposed transaction involving AT&T
Broadband following the Distribution (including any legal or other fees incurred
as a result of, or with respect to, any such Liability and including any
Liability AT&T may have under Section 910 of the NYBCL in connection with the
Distribution) (the transactions specified in clause (iv), the "SPECIFIED
TRANSACTIONS");
(h) any Liabilities, including any employee-related Liabilities and
Environmental Liabilities, primarily relating to, arising out of or resulting
from:
(i) the AT&T Broadband Group, including the operation of the AT&T
Broadband Business, as conducted at any time prior to, on or after the
Distribution Date (including any Liability relating to, arising out of or
resulting from any act or failure to act by any director, officer,
employee, agent or representative (whether or not such act or failure to
act is or was within such Person's authority));
(ii) the operation of any business conducted by any member of the AT&T
Broadband Group at any time after the Distribution Date (including any
Liability relating to, arising out of or resulting from any act or failure
to act by any director, officer, employee, agent or representative (whether
or not such act or failure to act is or was within such Person's
authority)); or
(iii) any AT&T Broadband Assets (including any AT&T Broadband
Contracts and any AT&T Broadband Real Property);
in any such case whether arising before, on or after the Distribution Date.
(i) any of the monetizations set forth on Schedule 1.23(i);
(j) any Liabilities listed or described on Schedule 1.23(j); and
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(k) any Liability arising from or relating to any terminated, divested or
discontinued business (or the termination, divestiture or discontinuation
thereof) of the AT&T Broadband Group.
In the event that any Liability is included in both the definition of "AT&T
Broadband Liability" and "AT&T Communications Liability" then (i) if it is
specifically referred to in a definition or schedule or otherwise (including in
any of the Ancillary Agreements), it shall be treated in accordance with such
specific reference and (ii) otherwise it shall be treated as an AT&T Broadband
Liability or AT&T Communications Liability to the extent it relates to the AT&T
Broadband Business or the AT&T Communications Business, respectively.
"AT&T BROADBAND MATERIAL ADVERSE EFFECT" has the meaning set forth in the
Merger Agreement.
"AT&T BROADBAND MERGER" has the meaning set forth in the Merger Agreement.
"AT&T BROADBAND REAL PROPERTY" means all right, title and interest in real
property, wherever located, held in the name of AT&T Broadband or any AT&T
Broadband Entity; PROVIDED THAT AT&T Broadband Real Property does not include
rights, title or interests (whether fee, leasehold or otherwise) in any AT&T
Communications Real Property.
"AT&T BROADBAND SUBSIDIARIES" means those entities set forth on Schedule
1.19 and their respective Subsidiaries but excluding AT&T Broadband T-Holdings,
Inc. (formerly TCI Telephony Holdings, Inc.) and its Subsidiaries.
"AT&T BROADBAND'S SHARE" has the meaning set forth in Section 6.04(b).
"AT&T COMMON STOCK" means the common stock, par value $1.00 per share, of
AT&T.
"AT&T COMMUNICATIONS ACTION" has the meaning set forth in Section 6.02(d).
"AT&T COMMUNICATIONS ASSETS" means:
(a) any Assets reflected in the AT&T Communications Balance Sheet, unless
disposed of to third parties after the date thereof (and, in the case of any
such Assets disposed of after the date thereof, the proceeds from such
disposal);
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(b) any Assets acquired after the date of the AT&T Communications Balance
Sheet by AT&T or any of its Subsidiaries utilizing AT&T Communications Assets;
(c) any AT&T Communications Contracts;
(d) any capital stock or other ownership interests in any member of the
AT&T Communications Group (other than AT&T) (unless disposed of after the date
thereof);
(e) AT&T's interest in Concert and American Ridge;
(f) any AT&T Communications Real Property;
(g) any Assets that are expressly contemplated by this Agreement or any
other Ancillary Agreement (or any Schedule hereto or thereto) to be retained by
or assigned to AT&T or any other member of the AT&T Communications Group;
(h) (i) any governmental licenses, permits, franchises, approvals,
certificates, consents and other governmental authorizations held in the name of
AT&T or any of its Subsidiaries that are primarily related to the AT&T
Communications Business and (ii) any intrastate telephony licenses, permits,
franchises, approvals, certificates or other governmental authorizations that
are used in the AT&T Communications Business (in the case of (i) or (ii), to the
extent any of the foregoing would be required to be transferred pursuant hereto,
such items will be AT&T Communications Assets only to the extent they are
transferable upon receipt of any relevant Consent);
(i) AT&T's shares of AWS;
(j) any Assets listed or described on Schedule 1.28(j);
(k) any Assets that as of the Distribution Date are Leased Assets (as
defined in the Local Network Connectivity Services Agreement); and
(l) any Assets that are not AT&T Broadband Assets specified in clauses (a)
through (k) of the definition of AT&T Broadband Assets and that are used or held
for use primarily in connection with the AT&T Communications Business (it being
agreed that (i) any Assets owned by AT&T or any of its controlled Affiliates
immediately prior to March 9, 1999 shall be deemed primarily used or held for
use in connection with the AT&T Communications Business and (ii) Assets that
were paid for, built or otherwise directly or indirectly
12
acquired for consideration (as reflected in current and historic financial
records, including subsidiary ledgers, journals and other financial books and
records) by a Group shall be deemed to be primarily used or held for use by the
Group that most recently so paid for or so built or acquired them).
AT&T Communications Assets shall not in any event include any Assets reflected
on the AT&T Broadband Balance Sheet, except for those Assets specified in
clauses (b), (d), (e), (f), (g), (i), (j) and (k) of the definition of AT&T
Communications Assets.
Subject to the foregoing sentence, in the event that any Asset is included in
both the definition of "AT&T Broadband Asset" and "AT&T Communications Asset"
then (i) if it is specifically referred to in a definition or schedule or
otherwise (including in any of the Ancillary Agreements), it shall be treated in
accordance with such specific reference and (ii) otherwise it shall be treated
as an AT&T Broadband Asset or AT&T Communications Asset based upon whether it is
used or held for use primarily in connection with the AT&T Broadband Business or
primarily in connection with the AT&T Communications Business; PROVIDED THAT for
purposes hereof Assets that were paid for, built or otherwise directly or
indirectly, acquired for consideration (as reflected in current and historic
financial records, including subsidiary ledgers, journals and other financial
books and records) by a Group shall be deemed to be primarily used or held for
use by the Group that most recently so paid for or so built or acquired them.
"AT&T COMMUNICATIONS BALANCE SHEET" means the consolidated balance sheet
dated as of December 31, 2000 included within the AT&T Communications Financial
Statements.
"AT&T COMMUNICATIONS BUSINESS" means the business of the AT&T
Communications Group.
"AT&T COMMUNICATIONS CONTRACTS" means any contract or agreements to which
AT&T or any of its Subsidiaries is a party or by which it or any of its
Subsidiaries or any of their respective Assets is bound, whether or not in
writing, except for any AT&T Broadband Contract, including (a) any contract or
agreement listed on Schedule 1.31(a), (b) any rights and obligations of any
member of the AT&T Communications Group as a party (for the benefit of the AT&T
Communications Group) under any At Home Contract, (c) any letter of credit,
surety bond, swap, foreign exchange or other instrument or contract not
primarily relating to the AT&T Broadband Group, together with any letters of
credit, surety bonds, swaps, foreign exchange or other such instruments or
contracts that were entered into in connection with Indebtedness of the AT&T
Communications Services Group, (d) any note, indenture, contract, agreement,
13
mortgage or other instrument representing Indebtedness or other Liabilities that
are in either such case AT&T Communications Liabilities, (e) any contract or
agreement that is expressly contemplated pursuant to this Agreement or any of
the other Ancillary Agreements to be assigned or transferred to or retained by
AT&T or any other member of the AT&T Communications Group, (f) any guarantee,
indemnity, representation, warranty or other Liability of any member of the AT&T
Broadband Group in respect of any other AT&T Communications Contract, any AT&T
Communications Liability or the AT&T Communications Business, and (g) any
contract or agreement entered into in the name of, or expressly on behalf of,
any member of the AT&T Communications Group (other than AT&T), except to the
extent clearly relating to the AT&T Broadband Group. With respect to any
contract or agreement that relates in material part to both the AT&T Broadband
Group and the AT&T Communications Group, the parties will cooperate in good
faith to apportion the rights and obligations thereunder to the AT&T Broadband
Group and the AT&T Communications Group, and to treat such contract or agreement
as an AT&T Broadband Contract to the extent relating to the AT&T Broadband Group
and an AT&T Communications Contract to the extent relating to the AT&T
Communications Group.
"AT&T COMMUNICATIONS FINANCIAL STATEMENTS" means the consolidated balance
sheets, income statements, statements of cash flow and other financial
statements of AT&T Communications as of and for the period ending December 31,
2000, attached hereto as Exhibit A.
"AT&T COMMUNICATIONS GROUP" means the direct or indirect interest of AT&T
(either itself or through direct or indirect subsidiaries, or any of their
predecessors or successors) in (a) all businesses (including terminated,
divested or discontinued businesses and operations), Assets and Liabilities
(contingent or otherwise), other than the AT&T Broadband Group, and (b) any
terminated, divested or discontinued businesses not specified in the definition
(or related schedules) of AT&T Broadband Group. Notwithstanding the foregoing,
when this Agreement refers to "a member of the AT&T Communications Group" or
similar language clearly referring to a Person, it means any one of AT&T or its
Subsidiaries other than the AT&T Broadband Entities.
"AT&T COMMUNICATIONS LIABILITIES" means (without duplication):
(a) any Liabilities reflected on the AT&T Communications Balance Sheet,
subject to any discharge of such Liabilities subsequent to the date of the AT&T
Communications Balance Sheet;
(b) any Liabilities that are expressly contemplated by this Agreement or
any other Ancillary Agreement (or the Schedules hereto or thereto) as
14
Liabilities to be retained or assumed by AT&T or any member of the AT&T
Communications Group, subject to discharge of such Liabilities subsequent to the
date of the AT&T Communications Balance Sheet, and all agreements, obligations
and Liabilities of any member of the AT&T Communications Group under this
Agreement or any of the other Ancillary Agreements;
(c) any Liabilities of any member of the AT&T Communications Group (other
than AT&T), excluding, for the avoidance of doubt, any Liabilities as of the
Distribution Date of T-Holdings or any of its Subsidiaries and including, for
the avoidance of doubt, any Liabilities of T-Holdings or any of its Subsidiaries
arising after the Distribution Date;
(d) any Liabilities relating to, arising out of or resulting from any AT&T
Communications Contract, excluding, for the avoidance of doubt, any Liabilities
under any At Home Contract except for Liabilities of any member of the AT&T
Communications Group as a party (for the benefit of the AT&T Communications
Group) under any At Home Contract;
(e) any Liabilities incurred after the date of the AT&T Communications
Balance Sheet by any member of the AT&T Communications Group;
(f) any Liabilities relating to, arising out of or resulting from any
Actions except (i) those primarily related to, arising out of or resulting from
the AT&T Broadband Business (including those listed on Schedule 1.23(g)) or as
expressly set forth herein, (ii) 50% of the excess of any Liability related to,
arising out of or resulting from any Specified Matter (including any legal or
other fees incurred as a result of, or with respect to, any Specified Matter)
over any amount AT&T receives from AWS in respect thereof, (iii) 50% of any
Liability related to, arising out of or resulting from any At Home Matter
(including any legal or other fees incurred as a result of, or with respect to,
any At Home Matter) and (iv) 50% of any Liability related to, arising out of or
resulting from the Specified Transactions (including any legal or other fees
incurred as a result of, or with respect to, any such Liability and including
any Liability AT&T may have under Section 910 of the NYBCL in connection with
the Distribution);
(g) any Liabilities, including any employee-related Liabilities and
Environmental Liabilities, primarily relating to, arising out of or resulting
from:
(i) the AT&T Communications Group, including the operation of the AT&T
Communications Business, as conducted at any time prior to, on or after the
Distribution Date (including any Liability relating to, arising out of or
resulting from any act or failure to act by any director,
15
officer, employee, agent or representative (whether or not such act or
failure to act is or was within such Person's authority));
(ii) the operation of any business conducted by any member of the AT&T
Communications Group at any time after the Distribution Date (including any
Liability relating to, arising out of or resulting from any act or failure
to act by any director, officer, employee, agent or representative (whether
or not such act or failure to act is or was within such Person's
authority)); or
(iii) any AT&T Communications Assets (including any AT&T
Communications Contracts, any AT&T Communications Real Property and any
Leased Assets (except with respect to any Liabilities of the lessees under
the applicable leases));
in any such case whether arising before, on or after the Distribution Date;
(h) any Liability arising from or relating to any terminated, divested or
discontinued business (or the termination, divestiture or discontinuation
thereof) of the AT&T Communications Group;
(i) any Liability arising from any breach by any member of the AT&T
Communications Group after the Distribution Date of any covenant or agreement
entered into in connection with the separation, divestiture or termination of
LMC and its Subsidiaries; and
(j) any other direct or indirect Liabilities of AT&T or any of its
Subsidiaries that do not otherwise constitute AT&T Broadband Liabilities.
In the event that any Liability is included in both the definition of "AT&T
Broadband Liability" and "AT&T Communications Liability" then (i) if it is
specifically referred to in a definition or schedule or otherwise (including in
any of the Ancillary Agreements), it shall be treated in accordance with such
specific reference and (ii) otherwise it shall be treated as an AT&T Broadband
Liability or AT&T Communications Liability to the extent it relates to the AT&T
Broadband Business or the AT&T Communications Business, respectively.
"AT&T COMMUNICATIONS REAL PROPERTY" means all right, title and interest in
real property, wherever located, of AT&T or any of its Subsidiaries (other than
any AT&T Broadband Entity), including: (a) all land (the "LAND") owned by AT&T
or any of its Subsidiaries (other than any AT&T Broadband Entity), including all
buildings, structures and other improvements now or hereafter located thereon
(the "OWNED REAL PROPERTY"), (b) all real property
16
leased, subleased or otherwise occupied by AT&T or any of its Subsidiaries
(other than any AT&T Broadband Entity) (the "LEASED REAL PROPERTY" and
together with the Owned Real Property, the "REAL PROPERTY"), (c) all
easements, licenses, permits, rights of way, reservations, privileges and
other estates and rights of AT&T or any of its Subsidiaries (other than any
AT&T Broadband Entity) either in gross or appurtenant pertaining to such
Real Property or to any other real property, (d) all right, title and
interest of AT&T or any of its Subsidiaries (other than any AT&T Broadband
Entity) in and to all strips and gores, all alleys adjoining land, and the
land lying in the bed of any street, road or avenue, opened or proposed, in
front of or adjoining the Land to the center line thereof, and all right,
title and interest of AT&T or any of its Subsidiaries (other than any AT&T
Broadband Entity) in and to any award made or to be made in lieu thereof
and in and to any unpaid award for any taking by condemnation or any
damages to the Owned Real Property by reason of any change of grade of any
street, road or avenue, (e) all right, title and interest of AT&T or any of
its Subsidiaries (other than any AT&T Broadband Entity) in and to the
airspace above the Owned Real Property (and the rights to use such
airspace) and any transferable development or similar rights appurtenant to
the Owned Real Property by allocation under applicable laws, by zoning lot
merger or otherwise and (f) all rights, licenses, easements, leases,
indefeasible rights of use, title, attachment rights, authorizations and
other rights pertaining to poles, conduits and cable held by AT&T or any of
its Subsidiaries (other than any AT&T Broadband Entity).
"AT&T COMMUNICATIONS' SHARE" has the meaning set forth in Section 6.04(b).
"AT&T INDEMNITEES" has the meaning set forth in Section 5.03.
"AT&T MATERIAL ADVERSE EFFECT" means a material adverse effect on the
financial condition, assets or results of operations of the AT&T Communications
Group, taken as a whole, excluding any such effect resulting from or arising in
connection with (i) changes or conditions generally affecting the industries in
which the AT&T Communications Group operates, (ii) changes in general economic,
regulatory or political conditions, or (iii) the announcement of this Agreement
or of the transactions contemplated hereby.
"AT&T MEETING" has the meaning set forth in Section 4.02(a).
"AT&T SUBSIDIARY PREFERRED STOCK" has the meaning set forth in the Merger
Agreement.
"AT HOME" means At Home Corporation, a Delaware corporation and/or its
bankruptcy estate, as applicable.
17
"AT HOME CONTRACTS" means any contracts or agreements between At Home or
any of its Subsidiaries, on the one hand, and any member of the AT&T
Communications Group (for the benefit of the AT&T Communications Group), on the
other hand.
"AT HOME MATTERS" means (i) the currently pending lawsuits styled XXXXX
XXXX, XXXXX XXXXX AND XXXXXX XXXX, XX. V. AT HOME CORPORATION, ET AL. (Case No.
418233, Superior Court of California, San Mateo County), and IN RE: AT HOME
CORPORATION STOCKHOLDERS' LITIGATION (Master File No. 413094, Superior Court of
California, San Mateo County), and any other shareholder claims or lawsuits or
claims or lawsuits by At Home alleging any breach of fiduciary or contractual
duties by AT&T or any of its Affiliates relating to At Home or its Subsidiaries
prior to the Effective Time, including any such claim or lawsuit against any
officers, directors or employees of AT&T or any of its Subsidiaries whether in
their capacity as a director, officer or employee of At Home or its Subsidiaries
or otherwise, and (ii) any claims or lawsuits by At Home, creditors of At Home
or its Subsidiaries, either previously or subsequently filed, concerning
activities prior to the Effective Time, including any lawsuit or claim asserting
that AT&T or any of its Subsidiaries (other than At Home or its Subsidiaries)
breached contractual or fiduciary obligations to At Home or its Subsidiaries,
received a fraudulent conveyance from At Home or its Subsidiaries, or is liable
for any Liability of At Home or any of its Subsidiaries, and including any such
claim or lawsuit against any officers, directors or employees of AT&T or any of
its Subsidiaries whether in their capacity as a director, officer or employee of
At Home or its Subsidiaries or otherwise.
"AWS" means AT&T Wireless Services, Inc., a Delaware corporation.
"BUSINESS DAY" means a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
close.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMCAST" means Comcast Corporation, a Pennsylvania corporation.
"COMMISSION" means the Securities and Exchange Commission.
"CONCERT" means Concert B.V.
"CONSENTS" means any consents, waivers or approvals from, or notification
requirements to, any third parties, other than Governmental Approvals.
18
"CPR" means the Center for Public Resources.
"CORPORATE NAME AGREEMENT" means the Corporate Name Agreement by and
between AT&T and AT&T Comcast Corporation, in the form attached hereto as
Exhibit B.
"DELAYED TRANSFER ASSETS" means any AT&T Broadband Assets that this
Agreement or any other Ancillary Agreement provides or contemplates are to be
transferred after the Distribution Date, including Assets that require a Consent
or Governmental Approval to transfer, which Consent or Governmental Approval is
not obtained on or prior to the Distribution Date.
"DELAYED TRANSFER LIABILITIES" means any AT&T Broadband Liabilities that
are expressly provided in this Agreement to be assumed after the Distribution
Date upon the removal of legal impediments or the receipt of Consents or
Governmental Approvals necessary for the transfer of such AT&T Broadband
Liabilities.
"DISPUTE DATE" has the meaning set forth in Section 6.03(c).
"DISTRIBUTION" means the distribution by AT&T to the holders of AT&T Common
Stock and, if the QUIPS Exchange is completed, to the holders of the QUIPS of
all of the outstanding shares of AT&T Broadband Common Stock on the Distribution
Date in accordance with Article 4.
"DISTRIBUTION DATE" means the date on which the Distribution occurs.
"DISTRIBUTION REGISTRATION STATEMENT" has the meaning set forth in Section
4.02(b).
"EFFECTIVE TIME" has the meaning set forth in the Merger Agreement.
"EMPLOYEE BENEFITS AGREEMENT" means the Employee Benefits Agreement by and
between AT&T and AT&T Broadband, in the form attached hereto as Exhibit C.
"ENVIRONMENTAL LAW" has the meaning set forth in the Merger Agreement.
"ENVIRONMENTAL LIABILITIES" means all Liabilities relating to, arising out
of or resulting from any Environmental Law or contract or agreement relating to
environmental, health or safety matters (including all removal, remediation or
cleanup costs, investigatory costs, governmental response costs, natural
resources
19
damages, property damages, personal injury damages, costs of compliance with any
settlement, judgment or other determination of Liability and indemnity,
contribution or similar obligations) and all costs and expenses (including
allocated costs of in-house counsel and other personnel), interest, fines,
penalties or other monetary sanctions in connection therewith.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated thereunder.
"EXCHANGE AGREEMENT" has the meaning set forth in the Merger Agreement.
"GAAP" has the meaning set forth in the Merger Agreement.
"GOVERNMENTAL APPROVALS" means any notices, reports or other filings to be
made, or any consents, registrations, approvals, permits or authorizations to be
obtained from, any Governmental Authority.
"GOVERNMENTAL AUTHORITY" has the meaning set forth in the Merger Agreement.
"GROUP" means the AT&T Broadband Group or the AT&T Communications Group, as
the context requires.
"INDEBTEDNESS" means, with respect to any Person, (a) any obligation of
such Person (i) for borrowed money, (ii) evidenced by a note, debenture or
similar instrument (including a purchase money obligation) given in connection
with the acquisition of any property or assets, including securities, (iii) for
the deferred purchase price of property or services, except trade accounts
payable arising in the ordinary course of business, or (iv) 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; (b) any guarantee (or keepwell
agreement) by such Person of any indebtedness of others described in the
preceding clause (a); and (c) all obligations to reimburse any bank or other
Person for amounts paid under a letter of credit or similar instrument. For
purposes of clarification, (x) Indebtedness includes, without duplication,
obligations (or guarantees of obligations) related to preferred securities
issued by a wholly owned trust Subsidiary and (y) Indebtedness (in the case of
AT&T Broadband, any AT&T Broadband Entity or any member of the AT&T Broadband
Group) includes the monetizations set forth on Schedule 1.23(i).
"INDEMNIFYING PARTY" has the meaning set forth in Section 5.04(a).
20
"INDEMNITEE" has the meaning set forth in Section 5.04(a).
"INDEMNITY PAYMENT" has the meaning set forth in Section 5.04(a).
"INFORMATION" means information, whether or not patentable or
copyrightable, in written, oral, electronic or other tangible or intangible
forms, stored in any medium, including studies, reports, records, books,
contracts, instruments, surveys, discoveries, ideas, concepts, know-how,
techniques, designs, specifications, drawings, blueprints, diagrams, models,
prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes,
computer programs or other software, marketing plans, customer names,
communications by or to attorneys (including attorney-client privileged
communications), memos and other materials prepared by attorneys or under their
direction (including attorney work product), and other technical, financial,
employee or business information or data.
"INSURANCE POLICIES" means the insurance policies written by insurance
carriers other than American Ridge or Western Range under which, prior to the
Distribution Date, AT&T and/or AT&T Broadband or one or more of their
Subsidiaries or Affiliates (or their respective officers or directors) are
insured parties, excluding insurance policies funding Benefit Plans (as defined
in the Employee Benefits Agreement) (which are addressed in the Employee
Benefits Agreement).
"INSURANCE PROCEEDS" means those monies:
(a) received by an insured from an insurance carrier other than American
Ridge or Western Range; or
(b) paid by an insurance carrier other than American Ridge or Western Range
on behalf of an insured;
in any such case net of any applicable premium adjustments (including reserves
and retrospectively rated premium adjustments) and net of any costs or expenses
(including allocated costs of in-house counsel and other personnel) incurred in
the collection thereof.
"INTELLECTUAL PROPERTY AGREEMENT" means the Intellectual Property Agreement
by and between AT&T and AT&T Broadband, in the form attached hereto as Exhibit
D.
"IRS" means the U.S. Internal Revenue Service.
"ISSUING PARTY" has the meaning set forth in Section 6.02(c).
21
"LIABILITIES" means any and all losses, claims, charges, debts, demands,
Actions, damages, obligations, payments, costs and expenses, bonds, indemnities
and similar obligations, covenants, controversies, promises, omissions,
guarantees, make whole agreements and similar obligations, and other
liabilities, including all contractual obligations, whether absolute or
contingent, inchoate or otherwise, matured or unmatured, liquidated or
unliquidated, accrued or unaccrued, known or unknown, whenever arising, and
including those arising under any law, rule, regulation, Action, threatened or
contemplated Action (including the costs and expenses of demands, assessments,
judgments, settlements and compromises relating thereto and attorneys' fees and
any and all costs and expenses (including allocated costs of in-house counsel
and other personnel), whatsoever reasonably incurred in investigating, preparing
or defending against any such Actions or threatened or contemplated Actions),
order or consent decree of any Governmental Authority or any award of any
arbitrator or mediator of any kind, and those arising under any contract,
commitment or undertaking, including those arising under this Agreement or any
other Ancillary Agreement (other than the Tax Sharing Agreement) or incurred by
a party hereto or thereto in connection with enforcing its rights to
indemnification hereunder or thereunder, 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; PROVIDED, HOWEVER, that Liabilities shall
not include any liabilities for (i) Taxes based on, measured by or calculated
with respect to net income or profits or (ii) Non-Income Taxes covered by
Section 3.6 of the Tax Sharing Agreement.
"LMC" means Liberty Media Corporation, a Delaware corporation.
"LOCAL NETWORK CONNECTIVITY SERVICES AGREEMENT" means the Local Network
Connectivity Services Agreement dated as of January 1, 2001, as amended, between
AT&T and AT&T Broadband, LLC, a Delaware limited liability company.
"MERGERS" has the definition set forth in the Merger Agreement.
"MERGER AGREEMENT" means the Agreement and Plan of Merger dated as of
December 19, 2001 by and among AT&T, Comcast and the other parties referred to
therein.
"MICROSOFT" has the meaning set forth in the Recitals.
"MICROSOFT QUIPS CLAIM" has the meaning set forth in Section 5.02(e).
"NON-INCOME TAXES" has the meaning set forth in the Tax Sharing Agreement.
22
"NOTIFIED ACTION" has the meaning set forth in Section 6.02(c).
"NYBCL" means the Business Corporation Law of the State of New York.
"OTHER PARTY" has the meaning set forth in Section 6.02(c).
"PARENT COMMON STOCK" has the meaning set forth in the Merger Agreement.
"PATENT ASSIGNMENT" means the Patent Assignment by and between AT&T and
AT&T Broadband, LLC, a Delaware limited liability company, in the form attached
hereto as Exhibit F.
"PERSON" means an individual, a general or limited partnership, a
corporation, a trust, a joint venture, an unincorporated organization, a limited
liability entity, any other entity and any Governmental Authority.
"PRIMARY COMMERCIAL AGREEMENTS" has the meaning set forth in the definition
of Ancillary Agreements.
"PRIMARY INDEMNITY CLAIM" has the meaning set forth in Section 6.04(b).
"PRIMARY TRANSACTION AGREEMENTS" has the meaning set forth in the
definition of Ancillary Agreements.
"PRIME RATE" means the rate that The Bank of New York (or any successor
thereto or other major money center commercial bank agreed to by the parties
hereto) announces from time to time as its prime lending rate, as in effect from
time to time.
"PROPOSED ACQUISITION TRANSACTION" has the meaning set forth in Section
6.02(b).
"PROXY STATEMENT" has the meaning set forth in Section 4.02(a).
"QUIPS" has the meaning set forth in the Merger Agreement.
"QUIPS EXCHANGE" has the meaning set forth in the Merger Agreement.
"QUIPS FAIR MARKET VALUE" has the meaning set forth in the Merger
Agreement.
23
"QUIPS TRANSFER" has the meaning set forth in the Merger Agreement.
"REAL PROPERTY INSTRUMENTS" has the meaning set forth in Section 2.05(a).
"RECORD DATE" means the close of business on such date as is mutually
agreed upon by the parties.
"REGISTRATION STATEMENT CLAIM" has the meaning set forth in Section
5.02(d).
"REGISTRATION STATEMENTS" means the Distribution Registration Statement and
all other filings by AT&T, AT&T Broadband or any of their respective Affiliates
with the Commission or any comparable state or foreign body made in connection
with the transactions contemplated by this Agreement or any other Ancillary
Agreement.
"REPRESENTATION LETTER" means the representation letter and any other
materials (including the ruling request and the related supplemental submissions
to the IRS) delivered or deliverable by AT&T and others in connection with the
rendering by tax counsel and the issuance by the IRS of the Tax Opinions/Rulings
that shall be in form and substance reasonably satisfactory to AT&T and AT&T
Broadband.
"RESTRUCTURING TRANSACTION" has the meaning set forth in Section 2.01(h).
"SCHEDULED DEBT" has the meaning set forth in Section 3.01.
"SECURITIES ACT" means the Securities Act of 1933, as amended, together
with the rules and regulations promulgated thereunder.
"SECURITY INTEREST" means any mortgage, security interest, pledge, lien,
charge, claim, option, right to acquire, voting or other restriction,
right-of-way, covenant, condition, easement, encroachment, restriction on
transfer or other encumbrance of any nature whatsoever.
"SEPARATION" means the transfer of the AT&T Broadband Assets to AT&T
Broadband and the assumption by AT&T Broadband of the AT&T Broadband
Liabilities, all as more fully described in this Agreement and the other
Ancillary Agreements.
24
"SEPARATION TRANSACTIONS" has the meaning set forth in the Separation and
Distribution Agreement dated as of June 4, 2001 by and between AT&T and AWS.
"SPECIFIED MATTER" has the meaning set forth in the Separation and
Distribution Agreement, dated as of June 4, 2001, by and between AT&T and AWS.
"SPECIFIED TRANSACTIONS" has the meaning set forth in clause (g) of the
definition of AT&T Broadband Liabilities.
"SPIN-OFF DISQUALIFICATION" means (a) the Separation and Distribution
failing to qualify under the provisions of Sections 355, 361(c) and 368(a)(1)(D)
of the Code, or (b) the shares of AT&T Broadband failing to qualify as
"qualified property" for purposes of Section 355(c)(2) or 361(c) of the Code by
reason of Section 355(e) of the Code.
"SPLIT-OFF" has the meaning set forth in the Ninth Supplement to the
Inter-Group Agreement dated as of June 14, 2001 by and among AT&T and the
Liberty Media Parties (as defined therein).
"SUBSEQUENT TAX OPINION/RULING" has the meaning set forth in Section
6.02(c).
"SUBSIDIARY" has the meaning set forth in the Merger Agreement.
"SUBSIDIARY PREFERRED STOCK EXCHANGE" has the meaning set forth in Section
4.01(d).
"TAX OPINIONS/RULINGS" has the meaning set forth in Section 6.02(b).
"TAX RELATED LOSSES" has the meaning set forth in Section 6.02(d).
"TAX SHARING AGREEMENT" means the Tax Sharing Agreement by and between AT&T
and AT&T Broadband, in the form attached hereto as Exhibit G.
"TAXES" has the meaning set forth in the Tax Sharing Agreement.
"THIRD PARTY CLAIM" has the meaning set forth in Section 5.05(a).
"THIRD PARTY TAX CLAIM" has the meaning set forth in Section 6.03(a).
25
"T-HOLDINGS" means AT&T Broadband T-Holdings, Inc. (f/k/a TCI Telephony
Holdings, Inc.), a Delaware corporation.
"TOPRS" has the meaning set forth in the Merger Agreement.
"TRADEMARK AND SERVICE XXXX AGREEMENT" means the Trademark and Service Xxxx
Agreement by and among AT&T, AT&T Broadband, LLC, a Delaware limited liability
company, and MediaOne Group, Inc., a Delaware corporation, in the form attached
hereto as Exhibit H.
"TRANSACTION DISQUALIFICATION" has the meaning set forth in Section
6.04(a).
"TWE OPTION" has the meaning set forth in the Merger Agreement.
"UNDERPAYMENT RATE" has the meaning set forth in Section 6.03(c).
"WESTERN RANGE" means Western Range Insurance Company, a Vermont
corporation.
ARTICLE 2
THE SEPARATION
SECTION 2.01. TRANSFER OF ASSETS AND ASSUMPTION OF LIABILITIES. (a) Subject
to Section 4.03, on or prior to the Distribution Date, AT&T will assign,
transfer, convey and deliver to AT&T Broadband, and agrees to cause its
applicable Subsidiaries to assign, transfer, convey and deliver to AT&T
Broadband, and AT&T Broadband will accept from AT&T and its applicable
Subsidiaries, all of AT&T's and its applicable Subsidiaries' respective right,
title and interest in all AT&T Broadband Assets, other than the Delayed Transfer
Assets.
(b) Subject to Section 4.03, on or prior to the Distribution Date, AT&T
Broadband will assume and agree faithfully to perform and fulfill all the AT&T
Broadband Liabilities that are not already Liabilities of an AT&T Broadband
Subsidiary, other than the Delayed Transfer Liabilities, in accordance with
their respective terms. AT&T Broadband shall be responsible for all AT&T
Broadband Liabilities that are not already Liabilities of an AT&T Broadband
Subsidiary, regardless of when or where such Liabilities arose or arise, or
whether the facts on which they are based occurred prior to, on or subsequent to
the date hereof, regardless of where or against whom such Liabilities are
asserted or determined
26
(including any AT&T Broadband Liabilities arising out of claims made by AT&T's,
or AT&T Broadband's, respective directors, officers, employees, agents,
Subsidiaries or Affiliates against any member of the AT&T Broadband Group or the
AT&T Communications Group) or whether asserted or determined prior to the date
hereof, and regardless of whether arising from or alleged to arise from
negligence, recklessness, violation of law, fraud or misrepresentation by any
member of the AT&T Broadband Group or the AT&T Communications Group or any of
their respective directors, officers, employees, agents, Subsidiaries or
Affiliates. For the avoidance of doubt, but subject to Section 5.03 including
the indemnification obligations thereunder with respect to Liabilities described
in clause (g) of the definition of AT&T Broadband Liabilities, AT&T Broadband is
not itself agreeing to assume any Liabilities of At Home or its Subsidiaries.
(c) Subject to Section 4.03, on or prior to the Distribution Date, AT&T
will assume and agree faithfully to perform and fulfill all the AT&T
Communications Liabilities that are not already Liabilities of AT&T or any of
its Subsidiaries (other than any AT&T Broadband Entity) in accordance with their
respective terms. AT&T shall be responsible for all AT&T Communications
Liabilities that are not already Liabilities of an AT&T Subsidiary (other than
any AT&T Broadband Entity), regardless of when or where such Liabilities arose
or arise, or whether the facts on which they are based occurred prior to, on or
subsequent to the date hereof, regardless of where or against whom such
Liabilities are asserted or determined (including any AT&T Communications
Liabilities arising out of claims made by AT&T's, or AT&T Broadband's,
respective directors, officers, employees, agents, Subsidiaries or Affiliates
against any member of the AT&T Broadband Group or the AT&T Communications Group)
or whether asserted or determined prior to the date hereof, and regardless of
whether arising from or alleged to arise from negligence, recklessness,
violation of law, fraud or misrepresentation by any member of the AT&T Broadband
Group or the AT&T Communications Group or any of their respective directors,
officers, employees, agents, Subsidiaries or Affiliates.
(d) Each of the parties hereto agrees that the Delayed Transfer Assets will
be assigned, transferred, conveyed and delivered, and the Delayed Transfer
Liabilities will be assumed, in accordance with the terms of the agreements that
provide for such assignment, transfer, conveyance and delivery, or such
assumption, after the date of this Agreement.
(e) In the event that at any time or from time to time (whether prior to or
after the Distribution Date) any party hereto (or any member of such party's
respective Group) shall receive or otherwise possess any Asset that is allocated
to any other Person pursuant to this Agreement or any other Ancillary Agreement,
such party shall promptly transfer, or cause to be transferred, such Asset to
27
the Person so entitled thereto. Prior to any such transfer, the Person receiving
or possessing such Asset shall hold such Asset in trust for any such other
Person.
(f) Prior to the transactions described in Section 2.01(a)-(c), (i) AT&T
shall contribute $18 million in cash to AT&T Broadband, (ii) AT&T shall cause
T-Holdings and its Subsidiaries to sell all of their respective Assets that are
used or held for use primarily in the AT&T Broadband Business to AT&T Broadband
for $18 million in cash and (iii) AT&T Broadband shall purchase from T-Holdings
and its Subsidiaries for $18 million in cash all of such Assets. Prior to the
time that AT&T Broadband LLC becomes a Subsidiary of AT&T Broadband, AT&T shall
cause AT&T Broadband LLC to distribute all of the outstanding shares of
T-Holdings to AT&T.
(g) The provisions of this Section 2.01 and the definition of AT&T
Broadband Asset do not apply to any intellectual property, including any
Software, Proprietary Information, Materials (as such terms are defined in the
Intellectual Property Agreement), copyrights, inventions, patents, patent
applications, trade secrets and other technology to the extent it is allocated
in the Intellectual Property Agreement, except for transfers made pursuant to
the Patent Assignment.
(h) Anything in this Agreement to the contrary notwithstanding, if either
AT&T or Comcast reasonably believes that the amount of income that would
otherwise be required to be recognized under Treasury Regulations Section
1.1502-13 or 1.1502-19 by reason of the Distribution may be reduced or
eliminated as a result of one or more restructuring transactions consummated
prior to the Distribution, then the parties shall negotiate in good faith to
reach agreement regarding such restructuring transaction. Notwithstanding
anything in the preceding sentence, AT&T shall be permitted to effect, at its
own expense, any restructuring transaction under this paragraph; PROVIDED THAT
(i) Comcast shall be afforded reasonable notice and opportunity to comment upon
plans to effect any such transaction, and (ii) such transaction shall not result
in the failure of any AT&T Broadband Asset that was intended under this
Agreement to be transferred to or held by any member of the AT&T Broadband Group
to be so transferred or held, unless (A) such asset consists of the capital
stock or other ownership interest in an AT&T Broadband Subsidiary the assets of
which will be transferred, on or prior to the Distribution Date, to another
member of the AT&T Broadband Group or (B) Comcast consents to such transaction,
such consent not to be unreasonably withheld; PROVIDED, FURTHER, that AT&T shall
indemnify Comcast for any increased Tax liability or other costs to Comcast or
any AT&T Broadband Entity resulting from such transactions. Comcast agrees to
reasonably cooperate with AT&T in connection with transactions described in this
paragraph (h).
28
SECTION 2.02. DISCLAIMER OF REPRESENTATIONS AND WARRANTIES. EXCEPT AS MAY
EXPRESSLY BE SET FORTH HEREIN, IN ANY OTHER ANCILLARY AGREEMENT OR REAL PROPERTY
INSTRUMENT OR IN THE MERGER AGREEMENT, (A) NONE OF AT&T, AT&T BROADBAND OR ANY
OTHER PERSON MAKES ANY REPRESENTATION OR WARRANTY OF ANY KIND WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY
(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 AT&T, AT&T
BROADBAND, THE AT&T COMMUNICATIONS GROUP OR THE AT&T BROADBAND GROUP; (B) ALL OF
THE ASSETS TO BE RETAINED OR TRANSFERRED OR THE LIABILITIES TO BE RETAINED,
ASSUMED OR TRANSFERRED IN ACCORDANCE WITH THIS AGREEMENT 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 AT&T, AT&T BROADBAND OR ANY OTHER PERSON
MAKES ANY REPRESENTATION OR WARRANTY WITH RESPECT TO ANY INFORMATION, DOCUMENTS
OR MATERIAL MADE AVAILABLE IN CONNECTION WITH THE SEPARATION, THE DISTRIBUTION
OR THE MERGER OR THE ENTERING INTO OF THIS AGREEMENT OR THE MERGER AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY. EACH PARTY HERETO AGREES AND
ACKNOWLEDGES THAT THE REPRESENTATIONS AND WARRANTIES IN THE MERGER AGREEMENT
SHALL NOT SURVIVE THE EFFECTIVE TIME. AT&T UNDERSTANDS AND AGREES THAT NO AT&T
BROADBAND ENTITY SHALL HAVE ANY LIABILITY TO AT&T OR ANY OTHER PERSON FOR
MONETARY DAMAGES FOR ANY BREACH BY SUCH AT&T BROADBAND ENTITY PRIOR TO THE
EFFECTIVE TIME OF THIS AGREEMENT OR ANY OTHER ANCILLARY AGREEMENT OR REAL
PROPERTY INSTRUMENT.
SECTION 2.03. OTHER ANCILLARY AGREEMENTS. On or prior to the Distribution
Date, each of AT&T and AT&T Broadband will execute and deliver or cause to be
executed and delivered all Ancillary Agreements to which it or any of its
Subsidiaries is a party. At the request of Comcast or AT&T, on or prior to the
Distribution Date, AT&T and AT&T Broadband will execute and deliver the Interim
Services and Systems Replication Agreement, in the form attached hereto as
Exhibit E. Pursuant to the terms of such agreement, AT&T or AT&T Broadband, as
the case may be, will provide to AT&T Broadband or AT&T, as
29
the case may be, such mutually agreed services as may be set forth on the
schedules to such Agreement, such schedules to be on terms mutually agreed
between Comcast and AT&T. If AT&T and AT&T Broadband enter into such agreement,
such agreement will be considered an Ancillary Agreement. Except to the extent
set forth therein, Article 11 of this Agreement shall apply to any Ancillary
Agreement (other than the Tax Sharing Agreement).
SECTION 2.04. TERMINATION OF AGREEMENTS. (a) Except as set forth in Section
2.04(b), as of the Distribution Date, AT&T and each member of the AT&T
Communications Group, on the one hand, and AT&T Broadband and each member of the
AT&T Broadband Group, on the other hand, shall terminate any and all agreements,
arrangements, commitments or understandings, whether or not in writing, between
or among AT&T and/or any member of the AT&T Communications Group, on the one
hand, and AT&T Broadband and/or any member of the AT&T Broadband Group, on the
other hand, effective as of the Distribution Date. No such terminated agreement,
arrangement, commitment or understanding (including any provision thereof that
purports to survive termination) shall be of any further force or effect after
the Distribution Date. Each party shall, at the reasonable request of any other
party, take, or cause to be taken, such other actions as may be necessary to
effect the foregoing.
(b) The provisions of Section 2.04(a) shall not apply to any of the
following agreements, arrangements, commitments or understandings (or to any of
the provisions thereof):
(i) this Agreement and the other Ancillary Agreements (and each other
agreement or instrument expressly contemplated by this Agreement or any
other Ancillary Agreement to be entered into by any of the parties hereto
or any of the members of their respective Groups);
(ii) any agreements, arrangements, commitments or understandings
listed or described on Schedule 2.04(b)(ii)(A); PROVIDED that the
agreements set forth in Schedule 2.04(b)(ii)(B) shall be amended on the
Distribution Date as set forth on such Schedule;
(iii) any agreements, arrangements, commitments or understandings
listed or described on Schedule 2.04(b)(iii) to which any Person other than
the parties hereto and their respective wholly owned Affiliates is a party
(it being understood that to the extent that the rights and obligations of
the parties and the members of their respective Groups under any such
agreements, arrangements, commitments or understandings constitute AT&T
Broadband Assets or AT&T Broadband Liabilities, they shall be assigned
pursuant to Section 2.01);
30
(iv) any intercompany accounts payable or accounts receivable arising
in the ordinary course of business and accrued as of the Distribution Date
that are reflected in the books and records of the parties or otherwise
documented in writing in accordance with past practices (regardless of
whether such intercompany accounts payable or accounts receivable accrued
under an agreement, arrangement, commitment or understanding that
terminated pursuant to Section 2.04(a)); PROVIDED THAT, subject to Section
3.02, AT&T or AT&T Broadband, as the case may be, will pay or cause to be
paid such intercompany accounts payable promptly when due;
(v) except as otherwise provided in the Tax Sharing Agreement, any
written Tax sharing or Tax allocation agreements to which any member of any
Group is a party;
(vi) any agreements, arrangements, commitments or understandings
listed or described on Schedule 2.04(b)(vi) to which any non-wholly owned
Subsidiary or Affiliate of AT&T or AT&T Broadband, as the case may be, is a
party (it being understood that directors' qualifying shares or similar
interests will be disregarded for purposes of determining whether a
Subsidiary is wholly owned);
(vii) any agreements, arrangements, commitments or understandings that
(A) either any Ancillary Agreement or any other agreement, arrangement,
commitment or understanding that pursuant to the terms of this Section is
not to be terminated as of the Distribution Date contemplates will be
entered into or made on or after the date hereof or (B) are otherwise
necessary to implement the transactions contemplated by any of the
foregoing clauses or that implement term sheets contemplated by any of the
foregoing clauses on terms not materially less advantageous to any member
of the AT&T Broadband Group; PROVIDED THAT each of the agreements,
arrangements, commitments or understandings referred in this clause (vii)
must be in form and substance reasonably satisfactory to Comcast; and
(viii) any other agreements, arrangements, commitments or
understandings that this Agreement or any other Ancillary Agreement
expressly contemplates will survive the Distribution Date.
SECTION 2.05. DOCUMENTS RELATING TO TRANSFER OF REAL PROPERTY INTERESTS
AND TANGIBLE PROPERTY LOCATED THEREON. (a) To the extent necessary, in
furtherance of the assignment, transfer and conveyance of AT&T
31
Communications Real Property and the assumption of the related AT&T
Communications Liabilities pursuant to Section 2.01(a) and 2.01(b), on or prior
to the Distribution Date each of AT&T and AT&T Broadband, or their applicable
Subsidiaries, will execute and deliver such deeds, lease assignments and
assumptions, leases, subleases and sub-subleases as may be necessary to effect
the transactions contemplated by this Agreement, including this Section 2.05
(collectively, the "REAL PROPERTY INSTRUMENTS"). Real Property Instruments will
be on mutually acceptable terms.
(b) Except as otherwise expressly provided in this Agreement or any other
Ancillary Agreement and except for AT&T Broadband Assets, all leasehold
improvements, fixtures, furniture, office equipment, servers, private branch
exchanges, artwork and other tangible property (other than equipment subject to
capital or operating equipment leases, which will be transferred or retained
based on whether the associated capital or operating equipment lease is or is
not an AT&T Broadband Contract or as otherwise provided herein) located as of
the date hereof on any AT&T Communications Real Property shall be transferred to
a member of the AT&T Communications Group.
(c) Schedule 2.05(c) sets forth a list of AT&T Communications Real Property
currently used in connection with both the AT&T Communications Business and the
AT&T Broadband Business and that following the Distribution Date will be leased
or subleased by members of the AT&T Communications Group to members of the AT&T
Broadband Group, on terms and for the transition period reflected in Schedule
2.05(c).
(d) Schedule 2.05(d) sets forth a list of AT&T Broadband Real Property
currently used in connection with both the AT&T Communications Business and the
AT&T Broadband Business and that following the Distribution Date will be leased
or subleased by AT&T Broadband or any of the AT&T Broadband Entities to members
of the AT&T Communications Group, on terms and for the transition period
reflected in Schedule 2.05(d).
SECTION 2.06. DOCUMENTS RELATING TO OTHER TRANSFERS OF ASSETS AND
ASSUMPTION OF LIABILITIES. In furtherance of the assignment, transfer and
conveyance of AT&T Broadband Assets and the assumption of AT&T Broadband
Liabilities pursuant to Sections 2.01(a) and 2.01(b), on or prior to the
Distribution Date, (a) AT&T 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 transfer, conveyance and assignment of all of AT&T's and its Subsidiaries'
right, title and interest in and to the AT&T Broadband Assets to AT&T Broadband
and (b) AT&T Broadband
32
shall execute and deliver, to AT&T and its respective Subsidiaries such bills of
sale, stock powers, certificates of title, assumptions of contracts and other
instruments of assumption, as and to the extent necessary to evidence the valid
and effective assumption by AT&T Broadband of the AT&T Broadband Liabilities
that are not already Liabilities of an AT&T Broadband Entity; provided that any
instruments executed and delivered pursuant to this Section 2.06 shall be in
form and substance reasonably satisfactory to Comcast.
SECTION 2.07. GOVERNMENTAL APPROVALS AND CONSENTS. (a If and to the extent
that the valid, complete and perfected transfer or assignment to AT&T Broadband
of any AT&T Broadband Assets (or from the AT&T Broadband Group of any AT&T
Communications Assets held by any member of such Group) would be a violation of
applicable laws or require any Consent or Governmental Approval in connection
with the Separation or the Distribution, then the transfer or assignment to or
from the AT&T Communications Group, as the case may be, of such AT&T Broadband
Assets or AT&T Communications Assets, respectively, shall be automatically
deemed deferred and any such purported transfer or assignment shall be null and
void until such time as all legal impediments are removed and/or such Consents
or Governmental Approvals have been obtained. Notwithstanding the foregoing, any
such Transferred Asset shall be deemed an Asset of the transferee AT&T
Communications Group or the AT&T Broadband Group, as applicable, for purposes of
determining whether any Liability is a Liability of the AT&T Communications
Group or the AT&T Broadband Group.
(b) If the transfer or assignment of any Asset intended to be transferred
or assigned hereunder is not consummated prior to or at the Distribution Date,
whether as a result of the provisions of Section 2.07(a) or for any other
reason, then the Person retaining such Asset shall thereafter hold such Asset
for the use and benefit, insofar as reasonably possible, of the Person entitled
thereto (at the expense of the Person entitled thereto). In addition, the Person
retaining such Asset shall take such other actions as may be reasonably
requested by the Person to whom such Asset is to be transferred in order to
place such Person, insofar as reasonably possible, in the same position as if
such Asset had been transferred as contemplated hereby and so that all the
benefits and burdens relating to such AT&T Broadband Asset (or such AT&T
Communications Asset, as the case may be), including possession, use, risk of
loss, potential for gain, and dominion, control and command over such Asset, are
to inure from and after the Distribution Date to the AT&T Broadband Group (or
the AT&T Communications Group, as the case may be). To the extent permitted by
law and to the extent otherwise permissible in light of any required Consent
and/or Governmental Approval, the AT&T Broadband Group shall be entitled to, and
shall be responsible for, the management of any AT&T Broadband Asset not yet
transferred to it as a result of
33
this Section 2.07(b) and the parties agree to use reasonable commercial efforts
to cooperate and coordinate with respect thereto.
(c) If and when the Consents and/or Governmental Approvals, the absence of
which caused the deferral of transfer of any Asset pursuant to Section 2.07(a),
are obtained, the transfer of the applicable Asset shall be effected in
accordance with the terms of this Agreement and/or the other applicable
Ancillary Agreement.
(d) The Person retaining an Asset due to the deferral of the transfer of
such Asset shall not be obligated, in connection with the foregoing, to expend
any money unless the necessary funds are advanced by the Person entitled to the
Asset, other than reasonable out-of-pocket expenses, attorneys' fees and
recording or similar fees, all of which shall be promptly reimbursed by the
Person entitled to such Asset.
SECTION 2.08. NOVATION OF AT&T BROADBAND LIABILITIES. (a) Each of AT&T and
AT&T Broadband, at the reasonable written request of the other, shall use its
reasonable commercial efforts to obtain, or to cause to be obtained, any
release, consent, substitution, approval or amendment required to novate and
assign all obligations under agreements, leases, licenses and other obligations
or Liabilities of any nature whatsoever that constitute AT&T Broadband
Liabilities, or to obtain in writing the unconditional release of all parties to
such arrangements other than any member of the AT&T Broadband Group, so that, in
any such case, the members of the AT&T Broadband Group will be solely
responsible for such Liabilities; PROVIDED, HOWEVER, that none of AT&T, AT&T
Broadband or any of their respective Subsidiaries shall be obligated to pay any
consideration or surrender, release or modify any rights or remedies therefor to
any third party from whom such releases, consents, approvals, substitutions and
amendments are requested except as specifically set forth in the Merger
Agreement or elsewhere in this Agreement.
(b) If AT&T or AT&T Broadband is unable to obtain, or to cause to be
obtained, any such required release, consent, substitution, approval or
amendment, the applicable member of the AT&T Communications Group shall continue
to be bound by such agreements, leases, licenses and other obligations and,
unless not permitted by law or the terms thereof, AT&T Broadband shall, as agent
or subcontractor for such member of the AT&T Communications Group, pay, perform
and discharge fully all the obligations or other Liabilities of such member of
the AT&T Communications Group thereunder from and after the date hereof. AT&T
Broadband shall indemnify each AT&T Indemnitee and hold it harmless against any
Liabilities arising in connection therewith. AT&T shall cause each member of the
AT&T Communications Group, without further consideration, to
34
pay and remit, or cause to be paid or remitted, to AT&T Broadband or the
applicable member of the AT&T Broadband Group promptly all money, rights and
other consideration received by it or any member of the AT&T Communications
Group in respect of such performance. If and when any such release, consent,
substitution, approval or amendment shall be obtained or such agreement, lease,
license or other rights or obligations shall otherwise become assignable or able
to be novated, AT&T shall promptly assign, or cause to be assigned, all its
rights, obligations and other Liabilities thereunder or any rights, obligations
or other Liabilities of any member of the AT&T Communications Group to AT&T
Broadband or to another member of the AT&T Broadband Group without payment of
further consideration and AT&T Broadband, without the payment of any further
consideration, shall, or shall cause such other member of the AT&T Broadband
Group to, assume such rights and obligations. Notwithstanding the foregoing,
unless AT&T shall so elect, AT&T Broadband shall assume all Liabilities of any
nature whatsoever that would constitute AT&T Broadband Liabilities as of the
Distribution Date, except for Liabilities of another member of the AT&T
Broadband Group.
SECTION 2.09. NOVATION OF AT&T COMMUNICATIONS LIABILITIES. (a) Each of AT&T
and AT&T Broadband, at the reasonable written request of the other, shall use
its reasonable commercial efforts to obtain, or to cause to be obtained, any
release, consent, substitution, approval or amendment required to novate and
assign all obligations under agreements, leases, licenses and other obligations
or Liabilities of any nature whatsoever that constitute AT&T Communications
Liabilities, or to obtain in writing the unconditional release of all parties to
such arrangements other than any member of the AT&T Communications Group, so
that, in any such case, the members of the AT&T Communications Group will be
solely responsible for such Liabilities; provided, however, that none of AT&T,
AT&T Broadband or any of their respective Subsidiaries shall be obligated to pay
any consideration or surrender, release or modify any rights or remedies
therefor to any third party from whom such releases, consents, approvals,
substitutions and amendments are requested except as specifically set forth in
the Merger Agreement or elsewhere in this Agreement.
(b) If AT&T or AT&T Broadband is unable to obtain, or to cause to be
obtained, any such required release, consent, approval, substitution or
amendment, the applicable member of the AT&T Broadband Group shall continue to
be bound by such agreements, leases, licenses and other obligations and, unless
not permitted by law or the terms thereof, AT&T shall, as agent or subcontractor
for such member of the AT&T Broadband Group, pay, perform and discharge fully
all the obligations or other Liabilities of such member of the AT&T Broadband
Group thereunder from and after the date hereof. AT&T shall indemnify each AT&T
Broadband Indemnitee and hold each of them harmless against any
35
Liabilities arising in connection therewith. AT&T Broadband shall cause each
member of the AT&T Broadband Group, without further consideration, to pay and
remit, or cause to be paid or remitted, to AT&T or the applicable member of the
AT&T Communications Group promptly all money, rights and other consideration
received by it or any member of the AT&T Broadband Group in respect of such
performance. If and when any such release, consent, substitution approval or
amendment shall be obtained or such agreement, lease, license or other rights or
obligations shall otherwise become assignable or able to be novated, AT&T
Broadband shall promptly assign, or cause to be assigned, all its rights,
obligations and other Liabilities thereunder or any rights, obligations or other
Liabilities of any member of the AT&T Broadband Group to AT&T or to another
member of the AT&T Communications Group without payment of further consideration
and AT&T, without the payment of any further consideration, shall, or shall
cause such other member of the AT&T Communications Group to, assume such rights
and obligations. Notwithstanding the foregoing, unless AT&T Broadband shall so
elect, AT&T shall assume all Liabilities of any nature whatsoever that would
constitute AT&T Communications Liabilities as of the Distribution Date, except
for Liabilities of another member of the AT&T Communications Group.
SECTION 2.10. JOINT PURCHASING ARRANGEMENTS. (a) In the case of existing
purchasing agreements that prior to the Distribution Date provide the AT&T
Broadband Group and the AT&T Communications Group with volume discounts, subject
to applicable law, the parties agree to use their respective reasonable best
efforts so that, to the extent permitted under the terms of such existing
agreements, after the Distribution Date, each Group shall continue to be able to
make purchases and obtain the benefits of the volume discounts. In the case of
any other such contracts, subject to applicable law, the parties will cooperate
reasonably in seeking modifications to such contracts or alternative or
substitute arrangements so that, to the extent practicable after the
Distribution Date, each Group shall continue to be able to make purchases and
obtain the benefits of the volume discounts. Notwithstanding the foregoing, but
subject to the terms of any AT&T Broadband Contract or AT&T Communications
Contract, none of AT&T, AT&T Broadband or their respective Subsidiaries shall be
required to commit to any additional purchases or other obligations, make any
payments or waive any rights in order to effect the foregoing. Each party hereby
agrees to indemnify and hold harmless the other party, and if applicable, the
other party's Subsidiaries, with respect to any losses or claims arising from
such first party's, or such first party's Subsidiaries', own purchases,
commitments or other obligations under any such contracts.
(b) Until December 31, 2003, subject to applicable law, the parties will
use reasonable commercial efforts to cooperate with each other and, as
applicable,
36
with each other's Subsidiaries, to coordinate and combine their purchases in
cases where they purchase common supplies or use the same supplier, in each case
to the extent permitted by law from time to time. It is the intent of the
parties that this coordination and cooperation will be focused on achieving more
favorable pricing and terms for such supplies and from such suppliers by
aggregating the combined purchases of the parties and their Subsidiaries.
Notwithstanding the foregoing, no party shall be obligated to make, or cause its
Subsidiaries to make, any specific purchases or to use any specific supplier
except to the extent (i) it or one of its Subsidiaries has previously committed
to make a specific purchase or to use a specific supplier, or (ii) subsequent to
the date of this Agreement, it or one of its Subsidiaries makes a commitment for
a specific purchase or to use a specific supplier. Each party will be
responsible for its own and its Subsidiaries' commitments and its own and its
Subsidiaries' purchases and other obligations made under any common or shared
contracts with suppliers and will, in respect of such commitments, purchases or
other obligations, indemnify and hold harmless the other party and the other
party's Subsidiaries that use such contracts.
SECTION 2.11. TWE ARRANGEMENTS. The parties agree to the terms set forth in
Annex I with respect to the partnership interests in TWE held, as of the date
hereof, by MediaOne TWE Holdings, Inc., an AT&T Broadband Entity, and the TWE
Option held by Media One of Colorado, Inc..
ARTICLE 3
FINANCIAL RESTRUCTURING
SECTION 3.01. LIABILITY MANAGEMENT. The Indebtedness included on the AT&T
Broadband Balance Sheet consists of the Indebtedness to third parties (the
"SCHEDULED DEBT") and Indebtedness to members of the AT&T Communications Group.
Prior to the Distribution Date, the Indebtedness of the AT&T Broadband Group
shall consist only of (i) the Scheduled Debt, Indebtedness to third parties
reflected on the September 30, 2001 balance sheet included in the AT&T Broadband
Financial Statements and the third party Indebtedness identified in Item 3 of
Schedule 6.11 to the Merger Agreement (unless any such Indebtedness shall have
been discharged) (ii) Indebtedness of the members of the AT&T Broadband Group to
members of the AT&T Communications Group and (iii) such other debt as shall have
been approved by the Interim Finance Committee. On the Distribution Date, the
AT&T Broadband Entities may incur additional Indebtedness to parties (other than
to members of the AT&T Communications Group) in an amount sufficient to (i) pay
in full at the Effective Time to AT&T an amount equal to the Indebtedness owed
by any member of the AT&T Broadband Group to any member of the AT&T
Communications Group, (ii) refinance the
37
TOPRS that may be called for redemption at the Effective Time or shortly
thereafter and (iii) provide appropriate cash reserves to fund the operations of
the AT&T Broadband Entities after the Effective Time. Such Indebtedness shall be
incurred in accordance with Section 9.15 of the Merger Agreement.
SECTION 3.02. REPAYMENT OF INTRACOMPANY INDEBTEDNESS. AT&T Broadband agrees
that it will pay to AT&T, at the Effective Time and in connection with the
transfer of assets and liabilities hereunder to AT&T Broadband, an amount of
cash equal to the total Indebtedness of all members of the AT&T Broadband Group
to any member of the AT&T Communications Group, and AT&T agrees to contribute
(or cause its subsidiaries to contribute) such Indebtedness to the capital of
AT&T Broadband. AT&T agrees that it will repay or cause to repaid at the
Effective Time any Indebtedness of any member of the AT&T Communications Group
to any member of the AT&T Broadband Group. AT&T also agrees that it will repay
or cause to be repaid at the Effective Time any intercompany receivables owed by
AT&T or any AT&T Subsidiary (other than any AT&T Broadband Entity) to Western
Ridge.
SECTION 3.03. NOTE CONSENTS. Subject to the terms and conditions of the
Merger Agreement, AT&T and AT&T Broadband shall each use its reasonable best
efforts to obtain the irrevocable consent to the transactions contemplated
hereby of the holders of at least a majority in aggregate principal amount of
each series of securities at the time outstanding issued under the Indenture,
dated as of September 7, 1990, between American Telephone & Telegraph Company
and The Bank of New York, as trustee.
ARTICLE 4
THE DISTRIBUTION
SECTION 4.01. THE DISTRIBUTION. (a) Subject to Section 4.03, on or prior to
the Record Date, AT&T will deliver to the Agent for the benefit of holders of
record of AT&T Common Stock on the Record Date, a single stock certificate,
endorsed by AT&T in blank, representing the shares of AT&T Broadband Common
Stock issuable in the Distribution (which, together with the shares to be issued
pursuant to the Exchange Agreement, shall constitute all of the shares of AT&T
Broadband Common Stock outstanding as of the Distribution Date), and shall cause
the transfer agent for the shares of AT&T Common Stock to instruct the Agent to
hold in trust (pending conversion of such shares of AT&T Broadband Common Stock
into shares of Parent Common Stock pursuant to the AT&T Broadband Merger) the
appropriate number of such shares of AT&T Broadband Common Stock (as set forth
in Section 4.01(b)) for each such holder or designated
38
transferee or transferees of such holder. For avoidance of doubt, AT&T will not
be considered a holder of record of AT&T Common Stock as of the Record Date with
respect to any shares of AT&T Common Stock held in its treasury.
(b) Subject to Section 4.03, each holder of AT&T Common Stock on the Record
Date (or such holder's designated transferee or transferees) will be entitled to
receive in the Distribution a number of shares of AT&T Broadband Common Stock
equal to the number of shares of AT&T Common Stock held by such holder on the
Record Date; PROVIDED, that no holder of AT&T Common Stock having purported to
exercise rights pursuant to Section 910 of the NYBCL in respect of such holder's
shares of AT&T Common Stock shall be entitled to receive AT&T Broadband Common
Stock in the Distribution.
(c) AT&T Broadband and AT&T, as the case may be, will provide to the Agent
all share certificates and any information reasonably required in order to
complete the Distribution on the basis specified above.
(d) Immediately prior to the Record Date, each of the AT&T Broadband
Subsidiaries, in exchange (the "SUBSIDIARY PREFERRED STOCK EXCHANGE") for all of
the shares of AT&T Subsidiary Preferred Stock held by such AT&T Broadband
Subsidiary immediately prior to the Subsidiary Preferred Stock Exchange, will
receive from AT&T a number of shares of AT&T Broadband Common Stock (or, if AT&T
and AT&T Broadband agree, shares of another class of AT&T Broadband Stock) that
has a value equal to the value of the shares of AT&T Subsidiary Preferred Stock
so exchanged.
(e) At the time of the Distribution, AT&T and AT&T Broadband will comply
with their obligations under the Exchange Agreement, including through the
transfer of shares of AT&T Broadband Common Stock from AT&T to Microsoft as
described therein.
(f) If the QUIPS Transfer is to occur, AT&T Broadband and AT&T will effect
the QUIPS Transfer.
(g) Each of AT&T, and AT&T Broadband agrees that in the event that any
holder of shares of AT&T Common Stock purports to exercise any appraisal rights
pursuant to Section 910 of the NYBCL, the parties will cooperate to
appropriately adjust the provisions hereof.
SECTION 4.02. ACTIONS PRIOR TO THE DISTRIBUTION. (a) As promptly as
reasonably practicable after the execution of this Agreement, subject to the
provisions of the Merger Agreement, AT&T shall prepare and file with the
Commission a proxy statement (the "PROXY STATEMENT") to be sent to
39
shareholders of AT&T in connection with their meeting to consider the
Distribution (the "AT&T MEETING"), it being understood that the AT&T Meeting may
be combined with any other meeting of shareholders regarding a possible business
combination involving the AT&T Broadband Group.
(b) As promptly as reasonably practicable after the execution of this
Agreement, subject to the provisions of the Merger Agreement and if required by
applicable law to effect the Distribution, AT&T and AT&T Broadband shall
prepare, and AT&T Broadband shall file with the Commission a registration
statement on Form S-1 or S-4 or any amendment or supplement thereto pursuant to
which shares of AT&T Broadband issuable in the Distribution will be registered
with the Commission (the "DISTRIBUTION REGISTRATION STATEMENT"). If the
Distribution Registration Statement is required by applicable law to be filed
with the Commission to effect the Distribution, AT&T and AT&T Broadband shall
use their reasonable best efforts to cause the Distribution Registration
Statement to become effective under the Exchange Act as soon after such filing
as reasonably practicable and to keep the Distribution Registration Statement
effective as long as is necessary to consummate the Distribution.
(c) AT&T and AT&T Broadband shall take all such actions as are reasonably
necessary or appropriate under the federal or state securities or blue sky laws
of the United States (and any comparable laws under any foreign jurisdiction) in
connection with the Distribution.
SECTION 4.03. TIMING OF THE DISTRIBUTION. AT&T shall consummate the
Separation and Distribution as soon as practicable (and, in any event, within
five Business Days) after satisfaction (or waiver to the extent permissible) of
all of the conditions to the Separation and the Distribution specified below
(other than conditions that by their nature are to be satisfied at the time of
the Distribution or the Mergers and will in fact be satisfied at such time). The
Separation shall occur on the Distribution Date prior to the Distribution which
shall occur at a time to be mutually agreed on the Distribution Date. With the
consent of Comcast, which consent shall not be unreasonably withheld, AT&T may
effect the Separation and/or the Distribution on different dates or different
times than provided for in the preceding sentence. The obligation of AT&T to
consummate the Separation and the Distribution and the other transactions
contemplated by this Agreement is subject to the satisfaction (or waiver to the
extent permissible) of the following conditions:
(a) If required by applicable law to effect the Distribution, the
Distribution Registration Statement shall have been filed and declared effective
by the Commission, and there shall be no stop-order in effect with respect
thereto;
40
(b) The actions and filings with regard to material federal or state
securities and blue sky laws of the United States (and any comparable laws under
any foreign jurisdictions) described in Section 4.02(c) shall have been taken
and, where applicable, become effective or been accepted;
(c) Any Governmental Approvals and Consents including those listed on
Schedule 4.03(c) necessary to consummate the Distribution in the manner
contemplated by this Agreement shall have been obtained and be in full force and
effect, except for such Governmental Approvals and Consents the failure of which
to obtain would not, individually or in the aggregate, reasonably be expected to
have an AT&T Broadband Material Adverse Effect or an AT&T Material Adverse
Effect;
(d) All conditions to permit the Distribution to qualify as a tax-free
distribution to AT&T, AT&T Broadband and shareholders of AT&T shall, to the
extent applicable as of the time of the Distribution, be satisfied and there
shall be no event or condition that is likely to cause any of such conditions
not to be satisfied as of the time of the Distribution or thereafter;
(e) No order, injunction or decree issued by any court or agency of
competent jurisdiction or other material legal restraint or prohibition
preventing the consummation of the Separation or the Distribution or any of the
other transactions contemplated by this Agreement or any other Ancillary
Agreement shall be in effect and the Separation and Distribution shall be in
compliance in all material respects with applicable law;
(f) This Agreement shall not have been terminated;
(g) The supplemental private letter ruling or rulings from the IRS or the
opinion described in Section 10.01(j) of the Merger Agreement shall have been
obtained and shall continue in effect;
(h) The Distribution shall have been approved by the affirmative vote of
shareholders holding a majority of the voting power of the issued and
outstanding shares of AT&T Common Stock at the AT&T Meeting; and
(i) The conditions specified in Sections 10.01 and 10.02 (other than
Section 10.01(i)) of the Merger Agreement shall have been satisfied (or waived
to the extent permissible).
The foregoing conditions are for the sole benefit of AT&T and shall not give
rise to or create any duty on the part of AT&T or the Board of Directors of AT&T
to waive or not waive any such condition.
41
ARTICLE 5
MUTUAL RELEASES; INDEMNIFICATION
SECTION 5.01. RELEASE OF PRE-CLOSING CLAIMS. (a) Except as provided in
Section 5.01(c), effective as of the Distribution Date, AT&T shall, for itself
and each other wholly owned member of the AT&T Communications Group (other than
any member of the AT&T Broadband Group) and their respective successors and
assigns, and all shareholders, directors, officers, members, agents or employees
of any wholly owned member of the AT&T Communications Group (in each case, in
their respective capacities as such), remise, release and forever discharge each
of AT&T Broadband and the respective wholly owned members of the AT&T Broadband
Group (other than any member of the AT&T Communications Group), their respective
successors and assigns, and all shareholders, directors, officers, members,
agents or employees of any wholly owned member of the AT&T Broadband Group (in
each case, in their respective capacities as such), and their respective heirs,
executors, administrators, successors and assigns, 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 Distribution Date, whether
or not known as of the Distribution Date, including in connection with the
transactions and all other activities to implement either the Separation or the
Distribution.
(b) Except as provided in Section 5.01(c), effective as of the Distribution
Date, AT&T Broadband shall, for itself and each other wholly owned member of the
AT&T Broadband Group (other than any member of the AT&T Communications Group)
and their respective successors and assigns, and all shareholders, directors,
officers, members, agents or employees of any wholly owned member of the AT&T
Broadband Group (in each case, in their respective capacities as such), remise,
release and forever discharge each of AT&T and the respective wholly owned
members of the AT&T Communications Group (other than any member of the AT&T
Broadband Group), their respective successors and assigns, and all shareholders,
directors, officers, members, agents or employees of any wholly owned member of
the AT&T Communications Group (in each case, in their respective capacities as
such), and their respective heirs, executors, administrators, successors and
assigns, 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 Distribution Date, whether or not known as of the
42
Distribution Date, including in connection with the transactions and all other
activities to implement either the Separation or the Distribution.
(c) Nothing contained in Section 5.01(a) or 5.01(b) shall impair any right
of any Person to enforce this Agreement, any other Ancillary Agreement or any
agreements, arrangements, commitments or understandings that are specified in
Section 2.04(b) or the applicable Schedules thereto not to terminate as of the
Distribution Date, in each case in accordance with its terms. Nothing contained
in Section 5.01(a) or 5.01(b) shall release any Person from:
(i) any Liability provided in or resulting from any agreement among
any members of the AT&T Broadband Group or the AT&T Communications Group
that is specified in Section 2.04(b) or the applicable Schedules thereto as
not to terminate as of the Distribution Date, or any other Liability
specified in such Section 2.04(b) as not to terminate as of the
Distribution Date;
(ii) any Liability, contingent or otherwise, assumed, transferred,
assigned or allocated to the Group of which such Person is a member in
accordance with, or any other Liability of any member of any Group under,
this Agreement or any other Ancillary Agreement;
(iii) any Liability arising from or relating to the sale, lease,
construction, provision, or receipt of goods, property or services
purchased, obtained or used in the ordinary course of business by a member
of one Group from a member of any other Group prior to the Distribution
Date;
(iv) any Liability for payment for goods, services or property
purchased, obtained or used in the ordinary course of business by a member
of one Group from a member of any other Group prior to the Distribution
Date or any related refund claims; or
(v) any Liability the release of which would result in the release of
any Person other than a Person released pursuant to this Section 5.01;
PROVIDED THAT the parties agree not to bring suit or permit any of their
Subsidiaries to bring suit against any Person with respect to any Liability
to the extent that such Person would be released with respect to such
Liability by this Section 5.01 but for the provisions of this clause (v).
(d) AT&T shall not make, and shall not permit any member of the AT&T
Communications Group to make, any claim or demand, or commence any Action
asserting any claim or demand, including any claim of contribution or any
43
indemnification, against AT&T Broadband or any wholly owned member of the AT&T
Broadband Group, or any other Person released pursuant to Section 5.01(a), with
respect to any Liabilities released in respect of such Person pursuant to
Section 5.01(a). AT&T Broadband shall not make, and shall not permit any member
of the AT&T Broadband Group to make, any claim or demand, or commence any Action
asserting any claim or demand, including any claim of contribution or any
indemnification, against AT&T or any wholly owned member of the AT&T
Communications Group, or any other Person released pursuant to Section 5.01(b),
with respect to any Liabilities in respect of such Person released pursuant to
Section 5.01(b).
(e) At any time, at the request of any other party, each party shall cause
each member of its respective Group to execute and deliver releases reflecting
the provisions of this Section 5.01.
SECTION 5.02. INDEMNIFICATION BY AT&T. Except as provided in Section 5.04,
following the Distribution Date, AT&T shall indemnify, defend and hold harmless
AT&T Broadband, each member of the AT&T Broadband Group and each of their
respective directors, officers and employees, and each of the heirs, executors,
successors and assigns of any of the foregoing (collectively, the "AT&T
BROADBAND INDEMNITEES"), from and against any and all Liabilities (or in the
case of subsection (d), 50% of any and all Liabilities) of the AT&T Broadband
Indemnitees relating to, arising out of or resulting from any of the following
items (without duplication):
(a) the failure of AT&T or any other member of the AT&T Communications
Group or any other Person to pay, perform or otherwise promptly discharge any
AT&T Communications Liabilities, or AT&T Communications Contract, in accordance
with their respective terms, whether prior to or after the Distribution Date or
the date hereof;
(b) the AT&T Communications Business, any AT&T Communications Asset or any
AT&T Communications Contract (except to the extent such Liabilities arise out of
any breach by AT&T or any of its Subsidiaries prior to the Distribution Date of
any AT&T Communications Contract entered into in connection with the separation,
divestiture or termination of LMC and its Subsidiaries);
(c) any breach by AT&T or any member of the AT&T Communications Group of
this Agreement or any of the other Ancillary Agreements; and
(d) any untrue statement or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact required to be
stated therein
44
or necessary to make the statements therein not misleading, with respect to all
information contained in any Registration Statement (any Action relating to the
matters set forth in this Section 5.02(d) or Section 5.03(d), a "REGISTRATION
STATEMENT CLAIM").
SECTION 5.03. INDEMNIFICATION BY AT&T BROADBAND. Except as provided in
Section 5.04, following the Distribution Date, AT&T Broadband shall indemnify,
defend and hold harmless AT&T, each member of the AT&T Communications Group and
each of their respective directors, officers and employees, and each of the
heirs, executors, successors and assigns of any of the foregoing (collectively,
the "AT&T INDEMNITEES"), from and against any and all Liabilities (or in the
case of subsection (d), 50% of any and all Liabilities) of the AT&T Indemnitees
relating to, arising out of or resulting from any of the following items
(without duplication):
(a) the failure of AT&T Broadband or any other member of the AT&T Broadband
Group or any other Person to pay, perform or otherwise promptly discharge any
AT&T Broadband Liabilities, or AT&T Broadband Contract, in accordance with their
respective terms, whether prior to or after the Distribution Date or the date
hereof;
(b) the AT&T Broadband Business, any AT&T Broadband Asset or any AT&T
Broadband Contract;
(c) any breach by AT&T Broadband or any member of the AT&T Broadband Group
of this Agreement or any of the other Ancillary Agreements;
(d) any untrue statement or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, with respect
to all information contained in any Registration Statement; and
(e) if neither the QUIPS Exchange nor the QUIPS Transfer occurs, any
Liabilities relating to, arising out of or resulting from any Actions commenced
by Microsoft claiming that the transactions contemplated hereby or by the Merger
Agreement violate the terms of the QUIPS; PROVIDED THAT for purposes hereof, in
the event that AT&T is required to repay the QUIPS as a result of such Action,
the indemnified Liability hereunder in respect of such repayment shall be
reduced by the amount of the QUIPS Fair Market Value plus any accrued interest
on the QUIPS since the date as of which the QUIPS Fair Market Value was
determined (any such Action, a "MICROSOFT QUIPS CLAIM").
45
Notwithstanding the foregoing, AT&T Broadband shall have no obligation to
indemnify, defend and hold harmless any AT&T Indemnitee from and against any
Liabilities arising out of any breach by At Home or any of its Subsidiaries of
any At Home Contract.
SECTION 5.04. INDEMNIFICATION OBLIGATIONS NET OF INSURANCE PROCEEDS AND
OTHER AMOUNTS. (a) The parties intend that any indemnification or reimbursement
obligation pursuant to this Article 5 will be net of Insurance Proceeds that
actually reduce the amount of the Liability. Accordingly, the amount which any
party (an "INDEMNIFYING PARTY") is required to pay to any Person entitled to
indemnification hereunder (an "INDEMNITEE") will be reduced by any Insurance
Proceeds theretofore actually recovered by or on behalf of the Indemnitee in
reduction of the related Liability. If an Indemnitee receives a payment (an
"INDEMNITY PAYMENT") required by this Agreement from an Indemnifying Party in
respect of any Liability and subsequently receives Insurance Proceeds, then the
Indemnitee will pay to the Indemnifying Party an amount equal to the excess of
the Indemnity Payment received over the amount of the Indemnity Payment that
would have been due if the Insurance Proceeds had been received, realized or
recovered before the Indemnity Payment was made.
(b) An insurer who would otherwise be obligated to defend or make payment
in response to any claim shall not be relieved of the responsibility with
respect thereto or, solely by virtue of the indemnification provisions hereof,
have any subrogation rights with respect thereto, it being expressly understood
and agreed that no insurer or any other third party shall be entitled to a
"windfall" (i.e., a benefit it would not be entitled to receive in the absence
of the indemnification provisions) by virtue of the indemnification provisions
hereof.
(c) With respect to all policies of insurance with insurance companies
other than American Ridge and Western Range, the parties agree to act in good
faith and to use their reasonable best efforts to preserve and maximize the
insurance benefits due to be provided thereunder and to cooperate with one
another as necessary to permit each other to access or obtain the benefits under
those policies, provided, however, that nothing in this Section 5.04 shall be
construed to prevent any party or any other Person from asserting claims for
insurance benefits or accepting insurance benefits provided by the policies. The
parties agree to exchange information upon reasonable request of the other party
regarding requests that they have made for insurance benefits, notices of
claims, occurrences and circumstances that they have submitted to the insurance
companies or other entities managing the policies, responses they have received
from those insurance companies or entities, including any payments they have
received from the insurance companies and any agreements by the insurance
companies to make payments, and any other information that the parties may need
46
to determine the status of the insurance policies and the continued availability
of benefits thereunder.
SECTION 5.05. PROCEDURES FOR INDEMNIFICATION OF THIRD PARTY CLAIMS. (a) If
an Indemnitee shall receive notice or otherwise learn of the assertion by a
Person (including any Governmental Authority) who is not a member of the AT&T
Broadband Group or the AT&T Communications Group of any claim or of the
commencement by any such Person of any Action (collectively, a "THIRD PARTY
CLAIM") with respect to which an Indemnifying Party may be obligated to provide
indemnification to such Indemnitee pursuant to Section 5.02 or 5.03, or any
other Section of this Agreement or any Ancillary Agreement (except as otherwise
provided therein), such Indemnitee shall give such Indemnifying Party written
notice thereof promptly after becoming aware of such Third Party Claim. Any such
notice shall describe the Third Party Claim in reasonable detail.
Notwithstanding the foregoing, the failure of any Indemnitee to give notice as
provided in this Section 5.05(a) shall not relieve the related Indemnifying
Party of its obligations under this Article 5, except to the extent that such
Indemnifying Party is actually prejudiced by such failure to give notice.
(b) An Indemnifying Party may elect to defend (and, unless the Indemnifying
Party has specified any reservations or exceptions, to seek to settle or
compromise), at such Indemnifying Party's own expense (including allocated costs
of in-house counsel and other personnel) and by such Indemnifying Party's own
counsel, any Third Party Claim. Within 30 days after the receipt of notice from
an Indemnitee in accordance with Section 5.05(a) (or sooner, if the nature of
such Third Party Claim so requires), the Indemnifying Party shall notify the
Indemnitee of its election whether the Indemnifying Party will assume
responsibility for defending such Third Party Claim, which election shall
specify any reservations or exceptions. After notice from an Indemnifying Party
to an Indemnitee of its election to assume the defense of a Third Party Claim,
such Indemnitee shall have the right to employ separate counsel and to
participate in (but not control) the defense, compromise, or settlement thereof,
but the fees and expenses of such counsel shall be the expense of such
Indemnitee, except as set forth in the next sentence. In the event that the
Indemnifying Party has elected to assume the defense of the Third Party Claim
but has specified and continues to assert, any reservations or exceptions in
such notice, then, in any such case, the reasonable fees and expenses of one
separate counsel for all Indemnitees shall be borne by the Indemnifying Party.
(c) If an Indemnifying Party elects not to assume responsibility for
defending a Third Party Claim, or fails to notify an Indemnitee of its election
as provided in Section 5.05(b), such Indemnitee may defend such Third Party
Claim
47
at the cost and expense (including allocated costs of in-house counsel and other
personnel) of the Indemnifying Party.
(d) Unless the Indemnifying Party has failed to assume the defense of the
Third Party Claim in accordance with the terms of this Agreement, no Indemnitee
may settle or compromise any Third Party Claim without the consent of the
Indemnifying Party.
(e) No Indemnifying Party shall consent to any settlement of the Third
Party Claim without the consent of the Indemnitee if the effect thereof is to
permit any injunction, declaratory judgment, other order or other nonmonetary
relief to be entered, directly or indirectly, against any Indemnitee.
(f) The provisions of Section 5.05 and Section 5.06 shall not apply to
Taxes (which are covered by the Tax Sharing Agreement) or to matters covered by
Sections 6.02 and 6.03.
(g) Notwithstanding anything in this Agreement to the contrary, and subject
to any applicable provision of the AWS separation agreements, if either party is
named in any Action relating to any At Home Matter, Specified Matter, Specified
Transaction or Registration Statement Claim, that party shall be entitled to
assume and control its own defense and to employ its own counsel. Neither party
shall settle any such Action without the consent of the other party (which
consent will not be unreasonably withheld). All legal and other fees (including
allocated cost of in-house counsel and other personnel) incurred in connection
therewith shall be divided 50/50 between AT&T and AT&T Broadband.
SECTION 5.06. ADDITIONAL MATTERS. (a) Any claim on account of a Liability
that does not result from a Third Party Claim shall be asserted by written
notice given by the Indemnitee to the related Indemnifying Party. Such
Indemnifying Party shall have a period of 30 days after the receipt of such
notice within which to respond thereto. If such Indemnifying Party does not
respond within such 30-day period, such Indemnifying Party shall be deemed to
have refused to accept responsibility to make payment. If such Indemnifying
Party does not respond within such 30-day period or rejects such claim in whole
or in part, such Indemnitee shall be free to pursue such remedies as may be
available to such party as contemplated by this Agreement and the other
Ancillary Agreements.
(b) In the event of payment by or on behalf of any Indemnifying Party to
any Indemnitee in connection with any Third Party Claim, such Indemnifying Party
shall be subrogated to and shall stand in the place of such Indemnitee as to any
events or circumstances in respect of which such Indemnitee may have any
48
right, defense or claim relating to such Third Party Claim against any claimant
or plaintiff asserting such Third Party Claim or against any other person but
only to the extent related to such payment. Such Indemnitee shall cooperate with
such Indemnifying Party in a reasonable manner, and at the cost and expense
(including allocated costs of in-house counsel and other personnel) of such
Indemnifying Party, in prosecuting any subrogated right, defense or claim.
(c) In the event of an Action in which the Indemnifying Party is not a
named defendant, if either the Indemnitee or Indemnifying Party shall so
request, the parties shall endeavor to substitute the Indemnifying Party for the
named defendant, if at all practicable. If such substitution or addition cannot
be achieved for any reason or is not requested, the named defendant shall allow
the Indemnifying Party to manage the Action as set forth in this Section 5.06
and the Indemnifying Party shall fully indemnify the named defendant against all
reasonable costs of defending the Action (including court costs, sanctions
imposed by a court, attorneys' fees, experts' fees and all other external
expenses, and the allocated costs of in-house counsel and other personnel), the
costs of any judgment or settlement, and the cost of any interest or penalties
relating to any judgment or settlement.
SECTION 5.07. REMEDIES CUMULATIVE. The remedies provided in this Article 5
shall be cumulative and shall not preclude assertion by any Indemnitee of any
other rights or the seeking of any and all other remedies against any
Indemnifying Party.
SECTION 5.08. SURVIVAL OF INDEMNITIES. The rights and obligations of each
of AT&T, AT&T Broadband and their respective Indemnitees under this Article 5
shall survive the sale or other transfer by any party of any Assets or
businesses or the assignment by it of any Liabilities.
ARTICLE 6
INSURANCE AND CERTAIN OTHER MATTERS
SECTION 6.01. INSURANCE MATTERS. (a) The parties intend that both AT&T and
AT&T Broadband and each other member of the AT&T Communications Group and the
AT&T Broadband Group, after the Distribution Date, shall be
successors-in-interest to and retain all rights and interest (whether known,
unknown, contingent or otherwise) that each has as of the Distribution Date
under any Insurance Policy issued to and/or providing coverage to AT&T, as it
existed immediately prior to the Distribution Date, or any of its Subsidiaries
or Affiliates, and any agreements related to such Insurance Policies executed
and delivered
49
prior to the Distribution Date, including any rights or interests each has, as
an insured, named insured, or additional named insured, Subsidiary, Affiliate,
division or department, to avail itself of any benefit under any such Insurance
Policy or any such agreement related to such policy as in effect prior to the
Distribution Date. The provisions of this Agreement are not intended to relieve
any insurer of any Liability under any policy. Notwithstanding the foregoing, no
member of the AT&T Broadband Group or the AT&T Communications Group shall be
deemed to have made any representation or warranty as to the availability of any
Insurance Policy or the rights and benefits provided thereunder.
(b) This Agreement shall not be considered as an attempted assignment (if
such an assignment would be prohibited or would otherwise adversely affect the
rights of the insured parties under such policies) of any rights or interest
under any policy of insurance or as a contract of insurance and shall not be
construed to waive any right or remedy of any member of the AT&T Broadband Group
or the AT&T Communications Group in respect of any Insurance Policy or any other
contract or policy of insurance.
(c) Each of AT&T and AT&T Broadband does hereby, for itself and each other
member of the AT&T Communications Group and the AT&T Broadband Group, agree
that, as and to the extent necessary to give effect to Section 6.01(a), it will
assign any chose in action, claim, right or benefit under an Insurance Policy.
(d) AT&T Broadband does hereby, for itself and each other member of the
AT&T Broadband Group, agree that from and after the Distribution Date, AT&T
Broadband and each other member of the AT&T Broadband Group releases any and all
insurance or other claims that it may have against American Ridge and
Subsidiaries of American Ridge, whether known or unknown.
(e) AT&T does hereby, for itself and each other member of the AT&T
Communications Group, agree that (i) no member of the AT&T Broadband Group or
any AT&T Broadband Indemnitee shall have any Liability whatsoever as a result of
the insurance policies and practices of AT&T and its Affiliates as in effect or
undertaken at any time prior to the Distribution Date, including as a result of
the level or scope of any such insurance, the creditworthiness of any insurance
carrier, the terms and conditions of any policy, the adequacy or timeliness of
any notice to any insurance carrier with respect to any claim or potential claim
or otherwise and (ii) from and after the Distribution Date, AT&T and each other
member of the AT&T Communications Group releases any and all insurance or other
claims that it may have against Western Range and Subsidiaries of Western Range,
whether known or unknown.
50
(f) Each of AT&T and AT&T Broadband does hereby, for itself and each other
member of the AT&T Communications Group and the AT&T Broadband Group, agree that
all duties and obligations under any Insurance Policy, including the fulfillment
of any conditions and the payment of any deductibles, retentions, co-insurance
payment or retrospective premiums, that correspond in any way with or may be
necessary to perfect, preserve or maintain an insured's right to obtain benefits
under that Insurance Policy, will be performed by the insured that is seeking
the benefits, subject to the indemnification provisions of Article 5. In the
event members of both Groups have claims under a given policy, any deductibles,
retentions, co-insurance payments, retrospective premiums, caps, limitations on
average and similar items will be appropriately allocated between such parties
based on the recoveries they would have obtained in the absence of such items.
SECTION 6.02. CERTAIN POST-DISTRIBUTION TRANSACTIONS AND RELATED MATTERS.
(a) Each of AT&T and AT&T Broadband agrees that, until 12 months after the date
of the Distribution, it will (i) maintain its status as a company engaged in the
active conduct of a trade or business and (ii) not engage in any transaction
that would result in it ceasing to be a company engaged in the active conduct of
a trade or business, as defined in Section 355(b) of the Code.
(b) Each of AT&T and AT&T Broadband further agrees that, until 25 months
after the date of the Distribution, it will not, except as expressly
contemplated by this Agreement or the Merger Agreement, (i) enter into any
Proposed Acquisition Transaction or, to the extent AT&T or AT&T Broadband, as
the case may be, has the right to prohibit any Proposed Acquisition Transaction,
permit any Proposed Acquisition Transaction to occur (whether by (A) redeeming
rights under a shareholders rights plan, (B) finding a tender offer to be a
"permitted offer" under any such plan or otherwise causing any such plan to be
inapplicable or neutralized with respect to any Proposed Acquisition
Transaction, or (C) approving any Proposed Acquisition Transaction, whether for
purposes of any interested shareholder statute, any "fair price" or other
provision of its respective charter or bylaws or otherwise), (ii) liquidate or
partially liquidate, (iii) in a single transaction or series of related
transactions, sell or transfer all or substantially all of the assets of AT&T or
the assets of the AT&T Broadband Group that were transferred to AT&T Broadband
prior to the Distribution, as the case may be, (iv) redeem or otherwise
repurchase (directly or through an Affiliate) any of its stock, (v) enter into
any transaction or series of transactions as a result of which any Person would
acquire, or have the right to acquire, from AT&T or AT&T Broadband, as the case
may be, or one of their respective Affiliates, a number of shares of stock that
would comprise more than 5% of (A) the value of all outstanding shares of stock
of as of the date of such transaction, or in the case of a series of
transactions, the date of the last
51
transaction of such series, or (B) the voting power of the issued and
outstanding shares of stock as of the date of such transaction, or in the case
of a series of transactions, the date of the last transaction of such series or
(vi) take any other action or actions (including any action or transaction that
would be inconsistent with any representation made in the Tax Opinions/Rulings)
that in the aggregate (and taking into account any other transactions described
in this subparagraph (b)) would be reasonably likely to have the effect of
causing or permitting one or more Persons to acquire directly or indirectly
stock representing a 50 percent or greater interest (within the meaning of
Section 355(e) of the Code) in AT&T or AT&T Broadband or otherwise jeopardize
the non-recognition of taxable gain or loss for U.S. federal income tax purposes
to AT&T, AT&T Affiliates and shareholders of AT&T in connection with the
Separation and Distribution, unless prior to taking any such action set forth in
the foregoing clauses (i) through (vi), AT&T (with respect to AT&T Broadband)
and AT&T Broadband (with respect to AT&T) has determined, in its sole and
absolute discretion, which discretion shall be exercised in good faith solely to
preserve the tax-free status of the Separation and Distribution, that such
action or actions would not result in a Spin-Off Disqualification. Anything in
the preceding sentence to the contrary notwithstanding, a transaction described
in clauses (i) through (vi) of the preceding sentence shall not require the
determination of the other party in the event that as of the date immediately
preceding such transaction there has not been issued and, when taken together
with the shares to be issued pursuant to the transaction, there will not be
issued, directly or indirectly, pursuant to a Proposed Acquisition Transaction
or otherwise, including as a consequence of the Merger Agreement, taking into
account for such purpose all share transactions which would be taken into
account under Section 355(e) of the Code assuming all such issuances were
considered to be "part of a plan or series of related transactions" with the
Distribution number of shares in excess of 30 percent of (A) the value of all
outstanding shares of stock as of the date of such transaction, or in the case
of a series of transactions, the date of the last transaction of such series, or
(B) the voting power of the issued and outstanding shares of stock as of the
date of such transaction, or in the case of a series of transactions, the date
of the last transaction of such series. "PROPOSED ACQUISITION TRANSACTION" means
a transaction or series of transactions as a result of which AT&T or AT&T
Broadband would merge or consolidate with any other Person or pursuant to which
any Person or any group of related Persons would acquire, or have the right to
acquire, directly or indirectly, from one or more holders of outstanding shares
of stock of a number of shares of stock that would comprise more than 5% of (A)
the value of all outstanding shares of stock as of the date of such transaction,
or in the case of a series of transactions, the date of the last transaction of
such series, or (B) the voting power of the issued and outstanding shares of
stock as of the date of such transaction, or in the case of a series of
transactions, the date of the last transaction of such series. "TAX
OPINIONS/RULINGS" means, collectively,
52
the opinions of tax counsel and the rulings by the IRS deliverable to AT&T in
connection with the transactions contemplated by this Agreement.
(c) If one party (the "ISSUING PARTY") notifies the other (the "OTHER
PARTY") that it desires to take one of the actions described in clauses (i)
through (vi) of Section 6.02(b) (the "NOTIFIED ACTION") and the Other Party
declines to exercise its discretion pursuant to Section 6.02(b) to permit the
Issuing Party to take such Notified Action, the Issuing Party, in its reasonable
discretion, may elect to seek a Subsequent Tax Opinion/Ruling that would permit
the Issuing Party to take the Notified Action, and the Other Party shall
cooperate in connection with such efforts; PROVIDED, HOWEVER, that the
reasonable costs and expenses of obtaining any such Subsequent Tax
Opinion/Ruling shall be borne by the Issuing Party. "SUBSEQUENT TAX
OPINION/RULING" means either (i) an unqualified opinion of counsel jointly
selected by the Issuing Party and the Other Party confirming that, as a
consequence of the consummation of the Notified Action, no income, gain or loss
for U.S. federal income tax purposes will be recognized by AT&T, the
shareholders or former shareholders of AT&T, or any AT&T Affiliate with respect
to the Separation and Distribution or (ii) an IRS private letter ruling to the
same effect that, after reasonable due diligence conducted by the Other Party,
are in form and substance reasonably satisfactory to the Other Party.
(d) Notwithstanding anything to the contrary herein or any provision of the
Tax Sharing Agreement to the contrary, if there is a determination (as defined
in Section 1313 of the Code) that a Spin-Off Disqualification has occurred, then
AT&T Broadband shall indemnify and hold harmless AT&T and each member of the
consolidated group of which AT&T is a member from and against one half of all
Tax Related Losses imposed upon or incurred by AT&T or any member of its group
as a result of the Spin-Off Disqualification; PROVIDED, HOWEVER, that AT&T
Broadband shall indemnify and hold harmless AT&T and each member of the
consolidated group of which AT&T is a member from and against any and all Tax
Related Losses imposed upon or incurred by AT&T or any member of its group as a
result of the Spin-Off Disqualification if such Spin-Off Disqualification would
not have occurred but for an AT&T Broadband Action and; PROVIDED, FURTHER, that
AT&T Broadband shall have no obligation to indemnify AT&T or any member of the
consolidated group of which AT&T is a member if the Spin-Off Disqualification
would not have occurred but for an AT&T Communications Action. "AT&T BROADBAND
ACTION" means (i) any transaction with respect to the stock or assets of AT&T
Broadband that occurs after the Distribution, (ii) AT&T Broadband's failure to
maintain its status as a company engaged in the active conduct of a trade or
business, and (iii) the failure of any representation made by AT&T Broadband
with respect to AT&T Broadband or the AT&T Broadband Business, and the plans,
proposals, intentions and policies of AT&T Broadband after the Separation and
Distribution in connection with a Subsequent
53
Tax Opinion/Ruling to be true and correct in all material respects. "AT&T
COMMUNICATIONS ACTION" means (i) any transaction with respect to the stock or
assets of AT&T that occurs after the Distribution, (ii) AT&T's failure to
maintain its status as a company engaged in the active conduct of a trade or
business, and (iii) the failure of any representation made by AT&T with respect
to AT&T or the AT&T Communications Business and the plans, proposals, intentions
and policies of AT&T after the Separation and Distribution in connection with
the Tax Opinions/Rulings or a Subsequent Tax Opinion/Ruling to be true and
correct in all material respects. The delivery of any Subsequent Tax
Opinion/Ruling shall not affect either party's rights and obligations with
respect to indemnification under this Section 6.02(d). "TAX RELATED LOSSES"
means (A) all federal, state and local Taxes (including interest and penalties
thereon) imposed pursuant to any settlement, final determination, judgment or
otherwise; (B) all accounting, legal and other professional fees, and court
costs incurred in connection with such taxes; and (C) all costs and expenses
that may result from adverse tax consequences to AT&T (including all costs,
expenses and damages associated with shareholder litigation or controversies)
payable by AT&T or AT&T Affiliates.
SECTION 6.03. PROCEDURE FOR INDEMNIFICATION FOR TAX LIABILITIES. (a) If
AT&T receives notice of the assertion of any claim, suit, arbitration, inquiry,
proceeding or investigation by or before any court, governmental or other
regulatory or administrative agency or commission or any arbitration tribunal
asserted by a Person other than AT&T or any AT&T Affiliate or AT&T Broadband or
any AT&T Broadband Affiliate that gives rise to a right of indemnification
hereunder (a "THIRD PARTY TAX CLAIM") with respect to which AT&T Broadband may
be obligated under Section 6.02(d) to provide indemnification, AT&T shall give
AT&T Broadband notice thereof (together with a copy of such Third Party Tax
Claim, process or other legal pleading) promptly after becoming aware of such
Third Party Tax Claim; PROVIDED, HOWEVER, that the failure of AT&T to give
notice as provided in this Section shall not relieve AT&T Broadband of its
obligations under Section 6.02(d), except to the extent that AT&T Broadband is
actually prejudiced by such failure to give notice. Such notice shall describe
such Third-Party Tax Claim in reasonable detail.
(b) (i) Notwithstanding any provision to the contrary contained in the Tax
Sharing Agreement, AT&T and AT&T Broadband shall jointly control the defense of,
and cooperate with each other with respect to defending, any Third Party Tax
Claim with respect to which AT&T Broadband may be obligated under Section
6.02(d) to provide indemnification; PROVIDED THAT AT&T Broadband shall forfeit
such joint control right with respect to a particular Third Party Tax Claim if
AT&T Broadband or any AT&T Broadband Affiliate makes any public statement or
filing, or takes any action (including, but not limited to, the filing of any
54
submission or pleading, or the giving of a deposition or production of
documents, in any administrative or court proceeding) in connection with such
Third Party Tax Claim that is inconsistent in a material respect with any
representation or warranty made by AT&T Broadband in the Agreement, the Tax
Opinions/Rulings, the Representation Letter or a Subsequent Tax Opinion/Ruling
and; PROVIDED, FURTHER, that AT&T shall forfeit such joint control right with
respect to a particular Third Party Tax Claim if AT&T or any AT&T Affiliate
makes any public statement or filing, or takes any action (including, but not
limited to, the filing of any submission or pleading, or the giving of a
deposition or production of documents, in any administrative or court
proceeding) in connection with such Third Party Tax Claim that is inconsistent
in a material respect with any representation or warranty made by AT&T in the
Agreement, the Tax Opinions/Rulings, the Representation Letter or a Subsequent
Tax Opinion/Ruling.
(ii) AT&T and AT&T Broadband shall exercise their rights to jointly control
the defense of any such Third Party Tax Claim solely for the purpose of
defeating such Third Party Tax Claim and, unless required by applicable law,
neither AT&T nor AT&T Broadband shall make any statements or take any actions
that could reasonably result in the shifting of liability for any Tax Related
Losses arising out of such Third Party Tax Claim from the party making such
statement or taking such action (or any of its Affiliates) to the other party
(or any of its Affiliates).
(iii) Statements made or actions taken by either AT&T or AT&T Broadband in
connection with the defense of any such Third Party Tax Claim shall not
prejudice the rights of such party in any subsequent action or proceeding
between the parties.
(iv) If either AT&T or AT&T Broadband fails to jointly defend any such
Third Party Tax Claim, the other party shall solely defend such Third Party Tax
Claim and the party failing to jointly defend shall use commercially reasonable
efforts to cooperate with the other party in its defense of such Third Party Tax
Claim; PROVIDED, HOWEVER, that neither party may compromise or settle any such
Third Party Tax Claim without the prior written consent of the other party,
which consent shall not be unreasonably withheld or delayed. All costs and
expenses of either party in connection with, and during the course of, the joint
control of the defense of any such Third Party Tax Claim shall be initially paid
by the party that incurs such costs and expenses. Such costs and expenses shall
be reallocated and reimbursed in accordance with the respective indemnification
obligations of the parties at the conclusion of the defense of such Third Party
Tax Claim.
(c) (i) If there is a determination (as defined in Section 1313 of the
Code) that a Spin-Off Disqualification has occurred, AT&T and AT&T Broadband
shall
55
attempt in good faith to resolve any disagreement with respect to whether there
is an indemnification obligation pursuant to Section 6.02(d). If the parties
cannot agree by the tenth Business Day following the determination (the "DISPUTE
DATE"), then the liability shall initially be determined as follows: Within 20
days of the Dispute Date, AT&T and AT&T Broadband shall each appoint one
arbitrator. The two arbitrators so appointed shall appoint a third arbitrator
within 30 days of the Dispute Date. If either party shall fail to appoint an
arbitrator within such 20-day period, the arbitration shall be conducted by the
sole arbitrator appointed by the other party. Whether selected by AT&T, AT&T
Broadband or otherwise, each arbitrator selected to resolve such dispute shall
be a tax attorney who is generally recognized in the tax community as a
qualified and competent tax practitioner with experience in the tax area
involved in the issue to be resolved. Such arbitrators shall be empowered to
determine initially whether or not AT&T Broadband is required to indemnify AT&T
pursuant to Section 6.02(d) hereunder. Each of AT&T and AT&T Broadband shall
bear 50% of the aggregate expenses of the arbitrators (or sole arbitrator). The
decision of the arbitrators shall be rendered no later than 90 days from the
Dispute Date.
(ii) On the tenth Business Day following the determination that there has
been a Spin-Off Disqualification, if AT&T Broadband agrees that it has an
indemnification obligation, AT&T Broadband shall pay in full any amount due and
payable to AT&T pursuant to Section 6.02(d), together with interest calculated
at the Underpayment Rate from the date of the determination that there was a
Spin-Off Disqualification through the date of payment. If AT&T Broadband and
AT&T disagree as to whether an indemnity obligation is due, and the arbitration
process concludes that AT&T Broadband is liable, AT&T Broadband shall pay any
amount that would be due and payable to AT&T if AT&T were entitled to indemnity
pursuant to Section 6.02(d), together with interest on such amount calculated at
the Underpayment Rate from the date of the determination that there was a
Spin-Off Disqualification through the date of the payment. "UNDERPAYMENT RATE"
shall mean the annual rate of interest described in Section 6621(c) of the Code
for large corporate underpayments of income Tax (or similar provision of state
or local income Tax law, as applicable), as determined from time to time.
(iii) If pursuant to a final nonappealable order of a court of competent
jurisdiction, it is determined that AT&T Broadband is obligated to pay and has
not paid amounts payable to AT&T pursuant to Section 6.02(d) or that amounts
paid by AT&T Broadband to AT&T should not have been paid, AT&T Broadband shall
pay to AT&T the balance due, or AT&T shall repay to the excess amount paid, in
either event within five days of the final determination of liability or
overpayment, together with interest at the Underpayment Rate calculated (A) from
the date of the determination that there was a Spin-Off Disqualification in the
case
56
of a payment to be made by AT&T Broadband or (B) from the date of payment by
AT&T Broadband to AT&T in the case of a repayment to be made by AT&T. All
payments pursuant to this Section 6.03(c) shall be made by wire transfer to the
bank account designated by AT&T or AT&T Broadband, as the case may be, for such
purpose.
SECTION 6.04. OTHER TRANSACTIONS. (a) Notwithstanding any provision of the
Tax Sharing Agreement to the contrary, AT&T Broadband shall indemnify and hold
harmless AT&T and each member of the consolidated group of which AT&T is a
member from and against one half of all Tax Related Losses imposed upon or
incurred by AT&T or any member of its group as a result of (i) the Separation
Transactions or the Split-Off failing to qualify as tax-free transactions under
the provisions of Sections 355, 361(c) and 368(a)(1)(D) of the Code, or (ii) the
shares of AWS or LMC failing to qualify as "qualified property" for purposes of
Section 355(c)(2) or 361(c) of the Code by reason of the application of Section
355(e) of the Code (each such failure, a "TRANSACTION DISQUALIFICATION");
PROVIDED, HOWEVER, AT&T Broadband shall indemnify and hold harmless AT&T and
each member of the consolidated group of which AT&T is a member from and against
any and all Tax Related Losses imposed upon or incurred by AT&T or any member of
its group as a result of the Transaction Disqualification if such Transaction
Disqualification would not have occurred but for an AT&T Broadband Action and;
PROVIDED, FURTHER, that, AT&T Broadband shall have no obligation to indemnify
AT&T or any member of the consolidated group of which AT&T is a member if the
Transaction Disqualification would not have occurred but for an AT&T
Communications Action.
(b) Any indemnity payment required to be made by AT&T Broadband under
Section 6.04(a) as a result of a Transaction Disqualification shall be net of
AT&T Broadband's Share of any indemnification that AT&T is entitled to receive
from AWS or LMC, as the case may be, as a result of such Transaction
Disqualification (a "PRIMARY INDEMNITY CLAIM"). AT&T, at AT&T Broadband's
direction and expense, shall use reasonable efforts to pursue and collect AT&T
Broadband's Share of a Primary Indemnity Claim from AWS or LMC, as the case may
be, prior to seeking indemnification from AT&T Broadband for such amount. In the
event that AT&T has not received indemnification with respect to AT&T
Broadband's Share of a Primary Indemnity Claim at least five days prior to the
date on which AT&T is required to make a payment that gives rise to such claim,
AT&T shall be entitled to demand payment of AT&T Broadband's Share of a Primary
Indemnity Claim from AT&T Broadband, PROVIDED that AT&T Broadband shall have no
obligation to pay AT&T Broadband's Share of a Primary Indemnity Claim unless
AT&T has (i) provided AT&T Broadband with information in reasonable detail
describing its efforts to pursue and collect such Primary Indemnity Claim and
(ii) afforded
57
AT&T Broadband the opportunity to take reasonable efforts on behalf of AT&T, at
AT&T Broadband's expense, to pursue and collect such Primary Indemnity Claim.
"AT&T BROADBAND'S SHARE" means (i) 100% in the event the Transaction
Disqualification is attributable to an AT&T Broadband Action or (ii) 50%
otherwise. If AT&T Broadband makes payment to AT&T in respect of an amount for
which AT&T has a Primary Indemnity Claim, AT&T shall assign AT&T Broadband's
Share of such Primary Indemnity Claim to AT&T Broadband and shall cooperate, at
AT&T Broadband's direction and expense, with AT&T Broadband in prosecuting such
claim. If AT&T receives a payment required by Section 6.04(a) from AT&T
Broadband and subsequently receives a payment with respect to a Primary
Indemnity Claim that was not previously taken into account, in whole or in part,
in determining the amount of AT&T Broadband's payment to AT&T, then AT&T will
pay to AT&T Broadband an amount equal to the excess of the payment made by AT&T
Broadband over the amount of the payment that AT&T Broadband would have been
required to make if payment under the Primary Indemnity Claim had been received
by AT&T before payment was made by AT&T Broadband.
(c) If there is a determination (as defined in Section 1313 of the Code)
that a Transaction Disqualification has occurred and the parties cannot agree
whether such a Transaction Disqualification would not have occurred but for an
AT&T Communications Action or an AT&T Broadband Action, as the case may be, the
procedures set forth in Section 6.03(c) shall apply.
(d) In the event that, in connection with a Transaction Disqualification
that is attributable to an AT&T Broadband Action, AT&T has any rights against or
obligations to AWS or LMC that are substantially similar to those set forth in
Section 6.03, (i) AT&T shall assign such rights and obligations to AT&T
Broadband, if at all practicable, or (ii) if such assignment cannot be achieved
for any reason, AT&T shall exercise such rights and perform such obligations at
the direction of AT&T Broadband and AT&T Broadband shall indemnify AT&T for all
associated costs. Such costs shall be reallocated and reimbursed in accordance
with the respective indemnification obligations as determined under Section
6.04(c). If a Transaction Disqualification is not attributable to an AT&T
Communications Action or an AT&T Broadband Action, such rights and obligations
shall, to the extent practicable, be exercised and performed jointly and all
associated costs shall be shared equally.
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ARTICLE 7
EXCHANGE OF INFORMATION; CONFIDENTIALITY
SECTION 7.01. AGREEMENT FOR EXCHANGE OF INFORMATION. (a) Each of AT&T
and AT&T Broadband, on behalf of the AT&T Communications Group and the AT&T
Broadband Group, respectively, agrees to provide, or cause to be provided, to
each other Group, at any time before or after the Distribution Date, as soon as
reasonably practicable after written request therefor, any Information in the
possession or under the control of such respective Group that the requesting
party reasonably needs (i) to comply with reporting, disclosure, filing or other
requirements imposed on the requesting party (including under applicable
securities or Tax laws) by a Governmental Authority having jurisdiction over the
requesting party, (ii) for use in any other judicial, regulatory,
administrative, Tax or other proceeding or in order to satisfy audit,
accounting, claims, regulatory, litigation, Tax or other similar requirements,
or (iii) to comply with its obligations under this Agreement or any other
Ancillary Agreement; PROVIDED, HOWEVER, that in the event that any party
determines that any such provision of Information could be commercially
detrimental, violate any law or agreement, or waive any attorney-client
privilege, the parties shall take all reasonable measures to permit the
compliance with such obligations in a manner that avoids any such harm or
consequence. AT&T and AT&T Broadband intend that any transfer of Information
that would otherwise be within the attorney-client privilege shall not operate
as a waiver of any potentially applicable privilege.
(b) After the date hereof, each of AT&T and AT&T Broadband shall maintain
in effect adequate systems and controls to the extent necessary to enable the
members of the other Group to satisfy their respective reporting, accounting,
audit and other obligations.
SECTION 7.02. OWNERSHIP OF INFORMATION. Any Information owned by one Group
that is provided to a requesting party pursuant to Section 7.01 shall be deemed
to remain the property of the providing party. Unless specifically set forth
herein, nothing contained in this Agreement shall be construed as granting or
conferring rights of license or otherwise in any such Information.
SECTION 7.03. COMPENSATION FOR PROVIDING INFORMATION. The party requesting
such Information agrees to reimburse the other party for the reasonable costs,
if any, of creating, gathering and copying such Information, to the extent that
such costs are incurred for the benefit of the requesting party. Except as may
be otherwise specifically provided elsewhere in this Agreement or in any other
agreement between the parties, such costs shall be computed in accordance with
the providing party's standard methodology and procedures.
59
SECTION 7.04. RECORD RETENTION. To facilitate the possible exchange of
Information pursuant to this Article 7 and other provisions of this Agreement
after the Distribution Date, the parties agree to use their reasonable best
efforts to retain all Information in their respective possession or control on
the Distribution Date in accordance with their respective record retention
policies. No party will destroy, or permit any of its Subsidiaries to destroy,
any Information that the other party may have the right to obtain pursuant to
this Agreement prior to the third anniversary of the date hereof without first
using its reasonable best efforts to notify the other party of the proposed
destruction and giving the other party the opportunity to take possession of
such information prior to such destruction; PROVIDED, HOWEVER, that in the case
of any Information relating to Taxes or to Environmental Liabilities, such
period shall be extended to the expiration of the applicable statute of
limitations (giving effect to any extensions thereof). Moreover, no party will
destroy, or permit any of its Subsidiaries to destroy, any policies of insurance
(or records related to such insurance policies) without first using its
reasonable best efforts to notify the other party of the proposed destruction
and giving the other party reasonable opportunity to take possession of such
information prior to such destruction, if it is possible that the other party
may be able to obtain coverage under such policies. (The foregoing includes
"occurrence"-based liability policies, which continue to cover liability for
alleged harm during their policy period, even if no claim is made based on such
alleged harm until after the end of the policy period.)
SECTION 7.05. LIMITATION OF LIABILITY. No party shall have any liability to
any other party in the event that any Information exchanged or provided pursuant
to this Agreement that is an estimate or forecast, or that is based on an
estimate or forecast, is found to be inaccurate, in the absence of willful
misconduct by the party providing such Information. No party shall have any
liability to any other party if any Information is destroyed after reasonable
best efforts by such party to comply with the provisions of Section 7.04.
SECTION 7.06. OTHER AGREEMENTS PROVIDING FOR EXCHANGE OF INFORMATION. The
rights and obligations granted under this Article 7 are subject to any specific
limitations, qualifications or additional provisions on the sharing, exchange or
confidential treatment of Information set forth in any Ancillary Agreement.
SECTION 7.07. PRODUCTION OF WITNESSES; RECORDS; COOPERATION. (a) After the
Distribution Date, except in the case of an adversarial Action by one party
against the other party (which shall be governed by such discovery rules as may
be applicable thereto), each party hereto shall take all reasonable steps to
make available to the other party, upon written request, the former, current and
future directors, officers, employees, other personnel and agents of its
respective Group (whether as witnesses or otherwise) and any books, records or
other documents
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within its control or which it otherwise has the ability to make available, to
the extent that any such person (giving consideration to business demands of
such directors, officers, employees, other personnel and agents) or books,
records or other documents may reasonably be required in connection with any
Action (including preparation for such Action) in which the requesting party may
from time to time be involved, regardless of whether such Action (or preparation
for such action) is a matter with respect to which indemnification may be sought
hereunder. The requesting party shall bear all costs and expenses (including
allocated costs of in-house counsel and other personnel) in connection
therewith.
(b) If an Indemnifying Party chooses to defend or to seek to compromise or
settle any Third Party Claim, or if any party chooses or is required to
prosecute, pursue, otherwise evaluate or defend any Action, the other parties
shall cooperate in such defense, settlement or compromise, or such prosecution,
evaluation or pursuit, as the case may be.
(c) Without limiting the foregoing, the parties shall cooperate and consult
to the extent reasonably necessary with respect to any Actions.
(d) Without limiting any provision of this Section 7.07, each of the
parties agrees to cooperate, and to cause each member of its respective Group to
cooperate, with each other in the defense of any infringement or similar claim
with respect to any intellectual property and shall not claim to acknowledge, or
permit any member of its respective Group to claim to acknowledge, the validity
or infringing use of any intellectual property of a third Person in a manner
that would hamper or undermine the defense of such infringement or similar
claim.
(e) The obligation of the parties to make available former, current and
future directors, officers, employees, other personnel and agents pursuant to
this Section 7.07 is intended to be interpreted in a manner so as to facilitate
cooperation and shall include the obligation to make available inventors and
other officers without regard to whether such individual or the employer of such
individual could assert a possible business conflict (subject to the exception
set forth in the first sentence of Section 7.07(a)). Without limiting the
foregoing, each party agrees that (i) neither it nor any member of its
respective Group will take adverse action against any employee of its Group
based on such employee's provision of assistance or information to the other
party pursuant to Section 7.07(a) and (ii) to the extent relevant and necessary,
neither it nor any member of its respective Group will enforce any
confidentiality agreement against an employee of its Group that would otherwise
prevent or hinder such employee from cooperating or providing information to a
requesting party pursuant to Section 7.07(a).
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(f) In connection with any matter contemplated by this Section 7.07, the
parties will enter into a mutually acceptable joint defense agreement so as to
maintain to the extent practicable any applicable attorney-client privilege or
work product immunity of either Group.
SECTION 7.08. CONFIDENTIALITY. (a) Subject to Section 7.09, each of AT&T
and AT&T Broadband, on behalf of itself and its respective Group, agrees to
hold, and to cause its respective directors, officers, employees, agents,
accountants, counsel and other advisors and representatives to hold, in strict
confidence, with at least the same degree of care that applies to its own
confidential and proprietary information pursuant to policies in effect at the
relevant time, all Information concerning the other Group that is either in its
possession (including Information in its possession prior to any of the date
hereof, or the Distribution Date) or furnished by the other Group or its
respective directors, officers, employees, agents, accountants, counsel and
other advisors and representatives at any time pursuant to this Agreement, any
other Ancillary Agreement or otherwise, and shall not use any such Information
other than for such purposes as shall be expressly permitted hereunder or
thereunder, except, in each case, to the extent that such Information has been
(i) in the public domain through no fault of such party or such party's Group or
any of their respective directors, officers, employees, agents, accountants,
counsel and other advisors and representatives, (ii) later lawfully acquired
from other sources by such party (or such party's Group), which sources are not
themselves bound by a confidentiality obligation, or (iii) independently
generated without reference to any proprietary or confidential Information of
the other party.
(b) Each party agrees not to release or disclose, or permit to be released
or disclosed, any such Information concerning the other Group to any other
Person, except its directors, officers, employees, agents, accountants, counsel
and other advisors and representatives who need to know such Information (who
shall be advised of their obligations hereunder with respect to such
Information), except in compliance with Section 7.09. Without limiting the
foregoing, when any Information is no longer needed for the purposes
contemplated by this Agreement or any other Ancillary Agreement, each party will
promptly after request of the other party either return to the other party all
Information in a tangible form (including all copies thereof and all notes,
extracts or summaries based thereon) or certify to the other party that it has
destroyed such Information (and such copies thereof and such notes, extracts or
summaries based thereon).
SECTION 7.09. PROTECTIVE ARRANGEMENTS. In the event that any party or any
of its Subsidiaries either determines on the advice of its counsel that it is
required to disclose any Information concerning the other Group pursuant to
applicable law or receives any demand under lawful process or from any
62
Governmental Authority to disclose or provide Information concerning the other
Group that is subject to the confidentiality provisions hereof, such party shall
notify the other party of such disclosure at least five days prior to disclosing
or providing such Information and shall cooperate at the expense of the
requesting party in seeking any reasonable protective arrangements requested by
such other party. Subject to the foregoing, after a court of competent
jurisdiction has had an opportunity to rule on such protective arrangements, the
Person that received such request may thereafter disclose or provide Information
to the extent required by such law (as so advised by counsel) or by lawful
process or such Governmental Authority.
ARTICLE 8
FURTHER ASSURANCES AND ADDITIONAL COVENANTS
SECTION 8.01. FURTHER ASSURANCES. (a) In addition to the actions
specifically provided for elsewhere in this Agreement, the other Ancillary
Agreements and the Merger Agreement, but subject to the provisions hereof and
thereof, each of the parties hereto shall use its reasonable best efforts, prior
to, on and after the Distribution Date, to take, or cause to be taken, all
actions, and to do, or cause to be done, all things, reasonably necessary,
proper or advisable under applicable laws, regulations and agreements to
consummate and make effective the transactions contemplated by this Agreement,
the other Ancillary Agreements and the Merger Agreement.
(b) Without limiting the foregoing, prior to, on and after the Distribution
Date, each party hereto shall cooperate with the other party, and without any
further consideration, to execute and deliver, or use its reasonable best
efforts to cause to be executed and delivered, all instruments, including
instruments of conveyance, assignment and transfer, and to make all filings
with, and to obtain all consents, approvals or authorizations of, any
Governmental Authority or any other Person under any permit, license, agreement,
indenture or other instrument (including any Consents or Governmental
Approvals), and to take all such other actions as such party may reasonably be
requested to take by any other party hereto from time to time, consistent with
the terms of this Agreement, the other Ancillary Agreements and the Merger
Agreement, in order to effectuate the provisions and purposes of this Agreement,
the other Ancillary Agreements and the Merger Agreement and the transfers of the
AT&T Broadband Assets and the assignment and assumption of the AT&T Broadband
Liabilities and the other transactions contemplated hereby and thereby.
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(c) On or prior to the Distribution Date, AT&T and AT&T Broadband in their
respective capacities as direct and indirect shareholders of their respective
Subsidiaries, shall each ratify any actions that are reasonably necessary or
desirable to be taken by AT&T and AT&T Broadband or any other Subsidiary of
AT&T, as the case may be, to effectuate the transactions contemplated by this
Agreement.
ARTICLE 9
TERMINATION
SECTION 9.01. TERMINATION. This Agreement may be terminated by AT&T prior
to the Distribution Date at any time following termination of the Merger
Agreement in accordance with its terms.
SECTION 9.02. EFFECT OF TERMINATION. In the event of any termination of
this Agreement prior to the Distribution Date, no party to this Agreement (or
any of its directors or officers) shall have any Liability or further obligation
to any other party with respect to this Agreement.
ARTICLE 10
DISPUTE RESOLUTION AND ARBITRATION
SECTION 10.01. AGREEMENT TO ARBITRATE. Except as otherwise specifically
provided in this Agreement (including, without limitation, in Article 6,
concerning Third Party Tax Claims) or in any other Ancillary Agreement, the
procedures set forth in this Article 10 shall apply to all disputes,
controversies or claims (whether sounding in contract, tort or otherwise) that
may arise out of or relate to, or arise under or in connection with this
Agreement or any other Ancillary Agreement, or the transactions contemplated
hereby or thereby (including all actions taken in furtherance of the
transactions contemplated hereby or thereby on or prior to the date hereof), or
the commercial or economic relationship of the parties relating hereto or
thereto, between or among any member of the AT&T Broadband Group, or the AT&T
Communications Group. Each party agrees on behalf of itself and each member of
its respective Group that the procedures set forth in this Article 10 shall be
the sole and exclusive remedy in connection with any dispute, controversy or
claim relating to any of the foregoing matters and irrevocably waives any right
to commence any Action in or before any Governmental Authority, except as
expressly provided in Sections 10.11(c) and 10.12 and except to the extent
provided under the Federal Arbitration Act in the case of judicial
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review of arbitration results or awards. Each party on behalf of itself and each
member of its respective Group irrevocably waives any right to any trial by jury
with respect to any claim, controversy or dispute set forth in the first
sentence of this Section 10.01. The parties agree that claims filed pursuant to
this Article 10 may seek direct damages but in no event for such claims shall
either party be liable to the other for any incidental, special, reliance,
consequential or any other indirect damages or losses (including lost profits or
revenues).
SECTION 10.02. REASONABLE BEST EFFORTS TO RESOLVE DISPUTES; MEDIATION. It
is the intent of the parties to use their respective reasonable best efforts to
negotiate and resolve expeditiously any dispute, controversy or claim between or
among them that may arise from time to time on a mutually acceptable negotiated
basis. The parties may, by mutual consent, retain a mediator to aid in any
attempt to informally negotiate resolution of any dispute, although any opinion
expressed by a mediator shall be strictly advisory and shall not be binding on
the parties, nor shall any opinion expressed by the mediator be admissible in
any arbitration proceedings. Costs of a mediation shall be borne equally by the
parties involved in the matter, except that each party shall be responsible for
its own expenses. Mediation is not a prerequisite to a demand for arbitration
under Section 10.03.
SECTION 10.03. DEMAND FOR ARBITRATION. At any time before the Applicable
Deadline, any party involved in the dispute, controversy or claim may make a
written demand (the "ARBITRATION DEMAND NOTICE") that the dispute be resolved by
binding arbitration, which Arbitration Demand Notice shall be given to the
parties to the dispute, controversy or claim in the manner set forth in Section
11.08. Such Arbitration Demand Notice shall describe in reasonable detail the
facts surrounding such dispute, controversy or claim and the basis of such
party's claim for relief pursuant to this Article. Except as may be expressly
provided in any Ancillary Agreement, any Arbitration Demand Notice must be
asserted within one year after the later of the occurrence of the act or event
giving rise to the underlying claim or the date on which such act or event was,
or should have been, in the exercise of reasonable due diligence, discovered by
the party asserting the claim (as applicable and as it may in a particular case
be specifically extended by the parties in writing, the "APPLICABLE DEADLINE";
PROVIDED that in no event will the Applicable Deadline occur with respect to any
matter before the first anniversary of the Distribution). Any discussions,
negotiations or mediations between the parties pursuant to this Agreement or
otherwise will not toll the Applicable Deadline unless expressly agreed in
writing by the parties. Each of the parties agrees on behalf of itself and each
member of its Group that if an Arbitration Demand Notice with respect to a
dispute, controversy or claim is not given prior to the expiration of the
Applicable Deadline, as between or among the parties and the members of their
Groups, such dispute, controversy or claim will be barred. Subject to Sections
10.11(c) and 10.12, upon delivery of an Arbitration
65
Demand Notice prior to the Applicable Deadline, the dispute, controversy or
claim shall be decided by an Arbitration Panel in accordance with the rules set
forth in this Article 10.
SECTION 10.04. ARBITRATION PANEL. When an Arbitration Demand Notice is
given, the parties involved in the dispute, controversy or claim shall attempt
to select a sole arbitrator satisfactory to all such parties. In the event the
parties are not able jointly to select a sole arbitrator, such parties shall
each appoint an arbitrator within 30 days after delivery of the Arbitration
Demand Notice. Only one arbitrator may be appointed for the AT&T Broadband Group
and the AT&T Communications Group, respectively. In the event that a sole
arbitrator is not selected, the two chosen arbitrators, within 30 days after the
appointment of the later of them to be appointed, will in turn choose a third
arbitrator, and the three arbitrators thus chosen will constitute the
arbitration panel.
SECTION 10.05. COMMENCEMENT AND PLACE OF ARBITRATION. The sole arbitrator
or arbitration panel (as applicable, the "ARBITRATION PANEL") will meet within
30 days of the last appointment to commence the arbitration, which period may be
extended upon the agreement of the arbitrators. The Arbitration Panel will set a
time for the hearing of the matter, which will commence no later than 90 days
after the date of the last appointment. The place of any arbitration hereunder
will be as agreed upon by the parties, or, if the parties are unable to agree,
as set by the Arbitration Panel.
SECTION 10.06. ARBITRATION HEARINGS. The matter shall be presented to the
Arbitration Panel at a hearing by means of written submissions of memoranda and
verified witness statements, filed simultaneously, and responses, if necessary
in the judgment of the arbitrator or both the parties. If the Arbitration Panel
deems it to be appropriate for a fair resolution of the dispute, live
cross-examination or direct examination may be permitted. The Arbitration Panel
shall actively manage the arbitration with a view to achieving a just, speedy
and cost-effective resolution of the dispute, claim or controversy. The
arbitration hearing will be no longer than 30 full hearing days, unless in the
judgment of the Arbitration Panel the matter is complex and sophisticated and
thereby requires a longer time; PROVIDED, HOWEVER, that such hearing shall in
any event be completed within 180 calendar days. The Arbitration Panel may set
time and other limits on the presentation of each party's case, its memoranda or
other submissions, and may refuse to receive any proffered evidence, that the
Arbitration Panel finds to be cumulative, unnecessary, irrelevant or of low
probative nature. Except as otherwise set forth herein, any arbitration
hereunder will be conducted in accordance with the CPR Rules for
Non-Administered Arbitration of Business Disputes then prevailing (except that
the arbitration will not be conducted under the auspices of the CPR and the fee
schedule of the CPR will not apply). To the
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extent that the provisions of this Agreement and the prevailing rules of the CPR
conflict, the provisions of this Agreement shall govern.
SECTION 10.07. ARBITRATION DECISION. The final decision of the Arbitration
Panel will be rendered in writing to the parties not later than 60 days after
the last hearing date, unless otherwise agreed by the parties in writing. The
decision of the Arbitration Panel will be final and binding on the parties, and
judgment thereon may be had and will be enforceable in any court having
jurisdiction over the parties. Arbitration awards will bear interest at an
annual rate of the Prime Rate plus 2% per annum.
SECTION 10.08. DISCOVERY AND RELATED MATTERS. Any party involved in the
applicable dispute may request limited document production from the other party
or parties of specific and expressly relevant documents. Any such discovery
shall be conducted expeditiously, and it is intended that discovery shall be
limited as compared to the provisions of the Federal Rules of Civil Procedure.
Depositions shall not occur except by consent of the parties or by order of the
Arbitration Panel. Disputes concerning the document production or other
discovery will be determined by written agreement of the parties involved in the
applicable dispute or, failing such agreement, will be referred to the
Arbitration Panel for resolution. All discovery requests will be subject to the
proprietary rights and rights of privilege of the parties, and the Arbitration
Panel will adopt procedures to protect such rights and to maintain the
confidential treatment of the arbitration proceedings (except as may be required
by law). Subject to the foregoing, the Arbitration Panel shall have the power to
issue subpoenas to compel the production of documents relevant to the dispute,
controversy or claim.
SECTION 10.09. ARBITRATION PANEL'S AUTHORITY. The Arbitration Panel shall
have full power and authority to determine issues of arbitrability and to
interpret or construe the applicable provisions of this Agreement or any other
Ancillary Agreement and to fashion appropriate remedies for breaches of this
Agreement (including interim or permanent injunctive relief); PROVIDED THAT the
Arbitration Panel shall not have any right or authority (i) in excess of the
authority a court having jurisdiction over the parties and the controversy or
dispute would have absent these arbitration provisions; (ii) to award
incidental, special, reliance, consequential, or other indirect damages
(including lost profits or revenues); (iii) to award punitive or treble damages;
or (iv) to modify the terms of this Agreement. It is the intention of the
parties that in rendering a decision, the Arbitration Panel give effect to the
applicable provisions of this Agreement and the other Ancillary Agreements and
follow applicable law (it being understood and agreed that this sentence shall
not give rise to a right of judicial review of the arbitrator's award).
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SECTION 10.10. CONFIDENTIALITY. Except as required by law, the parties
agree that the existence and contents of the entire arbitration, including the
award, shall be deemed a compromise of a dispute under Rule 408 of the Federal
Rules of Evidence, shall not be discoverable in any proceeding, shall not be
admissible in any court (except for the enforcement thereof) or arbitration and
shall not bind or collaterally estop either party with respect to any claim or
defense asserted by any third party. Except as required by law, the parties
shall hold, and shall cause their respective officers, directors, employees,
agents and other representatives to hold, the existence, content and result of
the arbitration or any mediation in confidence in accordance with the provisions
of Article 7 and except as may be required in order to enforce any award. Each
of the parties shall request that any mediator or arbitrator comply with such
confidentiality requirement.
SECTION 10.11. CERTAIN ADDITIONAL MATTERS. (a) If a party fails or refuses
to appear at and participate in an arbitration hearing after due notice, the
arbitrator may hear and determine the controversy upon evidence produced by the
appearing party.
(b) Arbitration costs will be borne equally by each party involved in the
matter, except that each party will be responsible for its own attorneys' fees
and other costs and expenses, including the costs of witnesses selected by such
party.
(c) Prior to the time at which the Arbitration Panel are appointed, any
party may seek one or more temporary restraining orders in a court of competent
jurisdiction if necessary in order to preserve and protect the status quo.
Neither the request for, or grant or denial of, any such temporary restraining
order shall be deemed a waiver of the obligation to arbitrate as set forth
herein and the Arbitration Panel may dissolve, continue or modify any such
order.
(d) In the event that at any time any member of the Arbitration Panel shall
fail to serve as an arbitrator for any reason, the appropriate party or the two
party-selected arbitrators, as the case may be, shall select a new arbitrator,
in accordance with the procedures set forth in Section 10.04. The extent, if
any, to which testimony previously given shall be repeated or may be relied upon
based on the stenographic record (if there is one), shall be determined by the
replacement arbitrator.
SECTION 10.12. LIMITED COURT ACTIONS. (a) Notwithstanding anything herein
to the contrary, in the event that any party reasonably determines the amount in
controversy in any dispute, controversy or claim (or any series of related
disputes, controversies or claims) under this Agreement or any other Ancillary
Agreement is, or is reasonably likely to be, in excess of $100 million and if
such party desires to commence an Action in lieu of complying with the
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arbitration provisions of this Article 10, such party shall so state in its
Arbitration Demand Notice. If the other parties to the arbitration disagree
about whether the amount in controversy exceeds $100 million, the Arbitration
Panel selected pursuant to Section 10.04 shall decide the issue. The Arbitration
Panel shall set a date no later than ten days after the date of its appointment
for submissions by the parties with respect to such issue. There shall be no
discovery in connection with such issue. The Arbitration Panel shall render its
decision on such issue within five days of such date so set by the Arbitration
Panel. The parties agree that any statute of limitations applicable to the
dispute, controversy or claim before the Arbitration Panel shall be tolled
during the pendency of the decision described in the immediately preceding
sentence. In the event that the Arbitration Panel determines that the amount in
controversy is or is reasonably likely to be in excess of $100 million, the
provisions of Sections 10.05, 10.06, 10.07, 10.08, and 10.14 shall not apply,
and within 15 days of such decision, any party to the arbitration may elect in
lieu of arbitration, to commence an Action with respect to such dispute,
controversy or claim (or such series of related disputes, controversies or
claims) in any court of competent jurisdiction returned to in Section 11.03. If
the Arbitration Panel does determines that the amount in controversy is not in
excess of $100 million, the provisions of this Article 10 (including with
respect to time periods) shall apply as if no determinations were sought or made
pursuant to this Section 10.12(a).
(b) In the event that an arbitration award in excess of $100 million is
issued in any arbitration proceeding commenced hereunder, any party may, within
60 days after the date of such award, submit the dispute, controversy or claim
(or series of related disputes, controversies or claims) giving rise thereto to
a court of competent jurisdiction, regardless of whether such party or any other
party sought to commence an Action in lieu of proceeding with arbitration in
accordance with Section 10.12(a). In such event, the applicable court may elect
to rely on the record developed in the arbitration or, if it determines that it
would be advisable in connection with the matter, allow the parties to seek
additional discovery or to present additional evidence. Each party shall be
entitled to present arguments to the court with respect to whether any such
additional discovery or evidence shall be permitted and with respect to all
other matters relating to the applicable dispute, controversy or claim (or
series of related disputes, controversies or claims).
SECTION 10.13. CONTINUITY OF PERFORMANCE AND REMAINING OBLIGATIONS. Unless
otherwise agreed in writing, the parties will continue to provide service and
honor all other commitments under this Agreement and each other Ancillary
Agreement during the course of dispute resolution pursuant to the provisions of
this Article 10 with respect to all matters not subject to such dispute,
controversy or claim.
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SECTION 10.14. LAW GOVERNING ARBITRATION PROCEDURES. The interpretation of
the provisions of this Article 10, only insofar as they relate to the agreement
to arbitrate and any procedures pursuant thereto, shall be governed by the
Federal Arbitration Act and other applicable federal law. In all other respects,
the interpretation of this Agreement shall be governed as set forth in Section
11.02.
SECTION 10.15. NON-APPLICABILITY OF ARTICLE. Notwithstanding anything
herein to the contrary, this Article 10 shall not apply to any dispute,
controversy or claim or to any other matter whatsoever arising under Section
6.02 or 6.03, the Tax Sharing Agreement, any other Tax sharing agreement or any
Third Party Tax Claims or to any other matter relating to Taxes. This Article
similarly shall not apply to the extent provided in any other Ancillary
Agreement.
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. COUNTERPARTS; ENTIRE AGREEMENT; CORPORATE POWER. (a) This
Agreement and each other Ancillary Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party.
(b) This Agreement, and the other Ancillary Agreements and the Exhibits,
Schedules and Appendices hereto and thereto contain the entire agreement between
the parties with respect to the subject matter hereof or thereof, supersede all
previous agreements, negotiations, discussions, writings, understandings,
commitments and conversations with respect to such subject matter and there are
no agreements or understandings between the parties other than those set forth
or referred to herein or therein.
(c) AT&T represents on behalf of itself and each of its Subsidiaries (other
than the AT&T Broadband Entities) and AT&T Broadband represents on behalf of
itself and each other AT&T Broadband Entity:
(i) each such Person is a corporation or other entity duly
incorporated or formed, validly existing and in good standing under the
laws of the state of its incorporation or formation, has all corporate or
other similar powers required to carry on its business as currently
conducted and is duly qualified to do business and is in good standing in
each jurisdiction where such qualification is necessary, except for those
70
jurisdictions where failure to be so qualified, individually or in the
aggregate, has not had and would not reasonably be expected to have an AT&T
Material Adverse Effect or an AT&T Broadband Material Adverse Effect,
respectively;
(ii) each such Person has the requisite corporate or other power and
authority and has taken all corporate or other similar action necessary in
order to execute, deliver and perform each of this Agreement and each other
Ancillary Agreements to which it is a party and to consummate the
transactions contemplated hereby and thereby; and
(iii) this Agreement and each other Ancillary Agreement to which any
such Person is a party has been duly executed and delivered by such Person
and constitutes a valid and binding agreement of such Person enforceable in
accordance with the terms thereof.
(d) Each party hereto acknowledges that it and each other party hereto is
executing certain of the Ancillary Agreements by facsimile, stamp or mechanical
signature. Each party hereto expressly adopts and confirms each such facsimile,
stamp or mechanical signature made in its respective name as if it were a manual
signature, agrees that it will not assert that any such signature is not
adequate to bind such party to the same extent as if it were signed manually and
agrees that at the reasonable request of any other party hereto at any time it
will as promptly as reasonably practicable cause each such Ancillary Agreement
to be manually executed (any such execution to be as of the date of the initial
date thereof).
SECTION 11.02. GOVERNING LAW. This Agreement and, unless expressly provided
therein, each other Ancillary Agreement, shall be governed by and construed and
interpreted in accordance with the laws of the State of New York, irrespective
of the choice of laws principles of the State of New York, as to all matters,
including matters of validity, construction, effect, enforceability, performance
and remedies.
SECTION 11.03. 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, any of the other Ancillary Agreements or the
transactions contemplated hereby or thereby 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 or out of any of the other
Ancillary Agreements shall be deemed to have arisen from a transaction of
business in the State of New
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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 11.06 shall
be deemed effective service of process on such party.
SECTION 11.04. 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, ANY OF THE OTHER ANCILLARY
AGREEMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
SECTION 11.05. ASSIGNABILITY. Except as set forth in any Ancillary
Agreement, this Agreement and each other Ancillary Agreement shall be binding
upon and inure to the benefit of the parties hereto and thereto, respectively,
and their respective successors and assigns; PROVIDED, HOWEVER, that no party
hereto or thereto may assign its respective rights or delegate its respective
obligations under this Agreement or any other Ancillary Agreement without the
express prior written consent of each of the other parties hereto or thereto.
SECTION 11.06. AT&T RESTRUCTURING. AT&T and AT&T Broadband recognize that
AT&T is contemplating creating a tracking stock with respect to its consumer
services business. Subject to AT&T's obligations under the Merger Agreement,
including Section 9.06(b) thereof, nothing in this Agreement shall prevent the
creation by AT&T of any tracking stock with respect to such business or
otherwise. In the event of the creation of such a tracking stock, (i) references
in this Agreement to AT&T Common Stock shall be adjusted as necessary to
accommodate the existence of such tracking stock and (ii) AT&T may, but is not
required to, distribute all or a portion of the shares of such tracking stock in
the Distribution. In the event any such tracking stock is distributed in
connection with the Distribution, Article 4 shall be revised to appropriately
account for such distribution. Any adjustment or revision pursuant to the
preceding sentence shall be reasonably satisfactory to Comcast.
SECTION 11.07. THIRD PARTY BENEFICIARIES. Except for Comcast, which prior
to any termination of this Agreement shall be a third party beneficiary of
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AT&T Broadband's rights under to this Agreement and each other Ancillary
Agreement, and except for the indemnification rights under this Agreement of any
AT&T Indemnitee or AT&T Broadband Indemnitee in their respective capacities as
such, and except as specifically provided in the Employee Benefits Agreement,
(i) the provisions of this Agreement and each other Ancillary Agreement are
solely for the benefit of the parties and are not intended to confer upon any
Person except the parties any rights or remedies hereunder, and (ii) there are
no third party beneficiaries of this Agreement or any other Ancillary Agreement
and neither this Agreement nor any other Ancillary Agreement shall provide any
third person with any remedy, claim, liability, reimbursement, claim of action
or other right in excess of those existing without reference to this Agreement
or any other Ancillary Agreement.
SECTION 11.08. NOTICES. All notices or other communications under this
Agreement or any other Ancillary Agreement shall be in writing and shall be
deemed to be duly given when (a) delivered in person or (b) deposited in the
United States mail or private express mail, postage prepaid, addressed as
follows:
If to AT&T, to: AT&T Corp.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxxxx
Xxxxxxxxx X. Xxxxxxxx
Fax: (000) 000-0000
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If to AT&T BROADBAND, to: AT&T Broadband Corp.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
with a copy to:
Comcast Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: General Counsel
Fax: (000) 000-0000
and:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
Any party may, by notice to the other party, change the address to which such
notices are to be given.
SECTION 11.09. SEVERABILITY. If any provision of this Agreement or any
other Ancillary Agreement or the application thereof to any Person or
circumstance is determined by a court of competent jurisdiction to be invalid,
void or unenforceable, the remaining provisions hereof or thereof, or the
application of such provision to Persons or circumstances or in jurisdictions
other than those as to which it has been held invalid or unenforceable, shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated thereby, so long as the economic or legal substance of the
transactions contemplated hereby or thereby, as the case may be, is not affected
in any manner adverse to any party. Upon such determination, the parties shall
negotiate in good faith in an effort to agree upon such a suitable and equitable
provision to effect the original intent of the parties.
SECTION 11.10. EXPENSES. The provisions of Sections 11.03(a)-(c) of the
Merger Agreement are hereby incorporated by reference.
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SECTION 11.11. HEADINGS. The Article, Section and paragraph headings
contained in this Agreement and in the other Ancillary Agreements are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement or any other Ancillary Agreement.
SECTION 11.12. WAIVERS OF DEFAULT. Waiver by any party of any default by
the other party of any provision of this Agreement or any other Ancillary
Agreement shall not be deemed a waiver by the waiving party of any subsequent or
other default, nor shall it prejudice the rights of the other party.
SECTION 11.13. SPECIFIC PERFORMANCE. In the event of any actual or
threatened default in, or breach of, any of the terms, conditions and provisions
of this Agreement or any other Ancillary Agreement, the party or parties who are
or are to be thereby aggrieved shall have the right to specific performance and
injunctive or other equitable relief of its rights under this Agreement or such
other Ancillary Agreement, in addition to any and all other rights and remedies
at law or in equity, and all such rights and remedies shall be cumulative. The
parties agree that the remedies at law for any breach or threatened breach,
including monetary damages, are inadequate compensation for any loss and that
any defense in any action for specific performance that a remedy at law would be
adequate is waived. Any requirements for the securing or posting of any bond
with such remedy are waived.
SECTION 11.14. AMENDMENTS. No provisions of this Agreement or any other
Ancillary Agreement shall be deemed waived, amended, supplemented or modified by
any party, unless such waiver, amendment, supplement or modification is in
writing and signed by the authorized representative of the party against whom
such waiver, amendment, supplement or modification it is sought to be enforced.
SECTION 11.15. LATE PAYMENTS. Except as expressly provided to the contrary
in this Agreement or in any other Ancillary Agreement, any amount not paid when
due pursuant to this Agreement or any other Ancillary Agreement (and any amounts
billed or otherwise invoiced or demanded and properly payable that are not paid
within 30 days of such xxxx, invoice or other demand) shall accrue interest at a
rate per annum equal to the Prime Rate plus 2%.
SECTION 11.16. INTERPRETATION. Words in the singular shall be held to
include the plural and vice versa and words of one gender shall be held to
include the other genders as the context requires. The terms "hereof," "herein,"
and "herewith" and words of similar import herein (or in any Ancillary
Agreement) shall, unless otherwise stated, be construed to refer to this
Agreement (or the applicable other Ancillary Agreement) taken as a whole
(including all of the
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Schedules, Exhibits and Appendices hereto and thereto) and not to any particular
provision of this Agreement (or such other Ancillary Agreement). Article,
Section, Exhibit, Schedule and Appendix references are to the Articles,
Sections, Exhibits, Schedules and Appendices to this Agreement (or the
applicable other Ancillary Agreement) unless otherwise specified. The word
"including" and words of similar import when used in this Agreement (or the
applicable other Ancillary Agreement) means "including, without limitation,"
unless the context otherwise requires or unless otherwise specified. The word
"or" shall not be exclusive. Unless expressly stated to the contrary in this
Agreement or in any other Ancillary Agreement, all references to "the date
hereof," "the date of this Agreement," "hereby" and "hereupon" and words of
similar import shall all be references to December 19, 2001 (or the date of
which the relevant Ancillary Agreement is first entered into, as the case may
be) regardless of any amendment or restatement hereof (or thereof). References
to a "member" of either Group shall be held to include any corporation or other
Person within the definition of such Group. References to "legal fees" shall
include allocated costs of in-house counsel. The parties hereto 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.
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IN WITNESS WHEREOF, the parties have caused this Separation and
Distribution Agreement to be executed by their duly authorized representatives.
AT&T CORP.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President--Law
and Secretary
AT&T BROADBAND CORP.
By: /s/ Xxxxxx X. Xxxx
--------------------------------
Name: Xxxxxx X. Xxxx
Title: Vice President and
Assistant Secretary
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