Exhibit 2.1
Conformed Copy
AGREEMENT AND PLAN OF MERGER
dated as of
May 6, 1999
by and among
AT&T CORP.,
METEOR ACQUISITION INC.
and
MEDIAONE GROUP, INC.
TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS
SECTION 1.1. Definitions ................................................ 1
ARTICLE 2
THE MERGER
SECTION 2.1. The Merger ................................................. 9
SECTION 2.2. Articles of Incorporation and Bylaws of the Surviving
Corporation .............................................. 9
SECTION 2.3. Directors and Officers of the Surviving
Corporation............................................... 10
ARTICLE 3
CONVERSION OF SECURITIES
SECTION 3.1. Conversion of Securities ................................... 10
SECTION 3.2. Surrender and Payment ...................................... 14
SECTION 3.3. Dissenting Shares .......................................... 17
SECTION 3.4. Stock Options .............................................. 18
SECTION 3.5. Fractional Shares .......................................... 20
SECTION 3.6. Withholding Rights ......................................... 20
SECTION 3.7. Lost Certificates .......................................... 21
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF MEDIAONE
SECTION 4.1. Corporate Existence and Power .............................. 21
SECTION 4.2. Corporate Authorization..................................... 21
SECTION 4.3. Governmental Authorization.................................. 22
SECTION 4.4. Non-contravention .......................................... 22
SECTION 4.5. Capitalization ............................................. 23
SECTION 4.6. Subsidiaries ............................................... 24
SECTION 4.7. SEC Filings ................................................ 24
SECTION 4.8. Financial Statements ....................................... 25
SECTION 4.9. Information Supplied ....................................... 25
SECTION 4.10. Absence of Certain Changes ................................. 25
SECTION 4.11. No Undisclosed Material Liabilities ........................ 25
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SECTION 4.12. Compliance with Laws and Court Orders ...................... 26
SECTION 4.13. Litigation ................................................. 26
SECTION 4.14. Finders' Fees .............................................. 26
SECTION 4.15. Opinion of Financial Advisor ............................... 26
SECTION 4.16. Taxes ...................................................... 27
SECTION 4.17. Tax Opinions ............................................... 27
SECTION 4.18. Employee Benefit Plans and Labor Matters ................... 27
SECTION 4.19. Environmental Matters ...................................... 29
SECTION 4.20. Intellectual Property ...................................... 30
SECTION 4.21. Contracts .................................................. 30
SECTION 4.22. TWE ........................................................ 31
SECTION 4.23. Vote Required .............................................. 31
SECTION 4.24. Antitakeover Statutes, Rights Agreement and Charter
Provisions ............................................... 31
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF AT&T
SECTION 5.1. Corporate Existence and Power .............................. 32
SECTION 5.2. Corporate Authorization .................................... 32
SECTION 5.3. Governmental Authorization ................................. 33
SECTION 5.4. Non-contravention .......................................... 33
SECTION 5.5. Capitalization ............................................. 33
SECTION 5.6. Subsidiaries ............................................... 34
SECTION 5.7. SEC Filings ................................................ 35
SECTION 5.8. Financial Statements ....................................... 35
SECTION 5.9. Information Supplied ....................................... 36
SECTION 5.10. Absence of Certain Changes ................................. 36
SECTION 5.11. No Undisclosed Material Liabilities ........................ 36
SECTION 5.12. Compliance with Laws and Court Orders ...................... 36
SECTION 5.13. Litigation ................................................. 37
SECTION 5.14. Finders' Fees .............................................. 37
SECTION 5.15. Taxes ...................................................... 37
SECTION 5.16. Tax Opinions ............................................... 38
SECTION 5.17. Employee Benefit Plans and Labor Matters ................... 38
SECTION 5.18. Environmental Matters ...................................... 39
SECTION 5.19. Intellectual Property ...................................... 40
SECTION 5.20. Contracts .................................................. 40
SECTION 5.21. MediaOne Securities ........................................ 41
SECTION 5.22. No Vote Required ........................................... 41
SECTION 5.23. Merger Sub ................................................. 41
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ARTICLE 6
COVENANTS OF MEDIAONE
SECTION 6.1. MediaOne Interim Operations ................................ 42
SECTION 6.2. MediaOne Stockholders' Meeting; Proxy Material ............. 45
SECTION 6.3. No Solicitation ............................................ 45
SECTION 6.4. Redemption of Preferred Stock .............................. 46
SECTION 6.5. Channel Launches ........................................... 47
ARTICLE 7
COVENANTS OF AT&T
SECTION 7.1. AT&T Interim Operations .................................... 47
SECTION 7.2. Director and Officer Liability ............................. 48
SECTION 7.3. Listing of Stock ........................................... 49
SECTION 7.4. AT&T Board of Directors .................................... 49
SECTION 7.5. Employee Matters ........................................... 49
SECTION 7.6. Designation of Preferred Stock ............................. 51
ARTICLE 8
COVENANTS OF AT&T AND MEDIAONE
SECTION 8.1. Best Efforts ............................................... 51
SECTION 8.2. Proxy Statement; Registration Statement .................... 52
SECTION 8.3. Public Announcements ....................................... 53
SECTION 8.4. Further Assurances ......................................... 53
SECTION 8.5. Access to Information ...................................... 54
SECTION 8.6. Notices of Certain Events .................................. 54
SECTION 8.7. Tax-free Reorganization .................................... 54
SECTION 8.8. Affiliates ................................................. 55
SECTION 8.9. TWE Termination Notice ..................................... 55
SECTION 8.10. Assumption of Certain Obligations .......................... 55
ARTICLE 9
CONDITIONS TO THE MERGER
SECTION 9.1. Conditions to the Obligations of Each Party ................ 55
SECTION 9.2. Conditions to the Obligations of AT&T and Merger Sub ....... 56
SECTION 9.3. Conditions to the Obligations of MediaOne .................. 57
ARTICLE 10
TERMINATION
SECTION 10.1. Termination ................................................ 58
SECTION 10.2. Effect of Termination ...................................... 59
SECTION 10.3. Fees and Expenses .......................................... 59
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ARTICLE 11
MISCELLANEOUS
SECTION 11.1. Notices .................................................... 61
SECTION 11.2. Survival of Representations and Warranties ................. 62
SECTION 11.3. Amendments; No Waivers ..................................... 62
SECTION 11.4. Successors and Assigns ..................................... 62
SECTION 11.5. Governing Law .............................................. 62
SECTION 11.6. Jurisdiction ............................................... 62
SECTION 11.7. WAIVER OF JURY TRIAL ....................................... 63
SECTION 11.8. Counterparts; Effectiveness ................................ 63
SECTION 11.9. Entire Agreement ........................................... 63
SECTION 11.10. Captions ................................................... 63
SECTION 11.11. Severability ............................................... 63
SECTION 11.12. Specific Performance ....................................... 63
SECTION 11.13. Schedules .................................................. 64
EXHIBITS AND SCHEDULES
Exhibit A -- Form of MediaOne Rule 145 Affiliate Letter
MediaOne Disclosure Schedule
AT&T Disclosure Schedule
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of May 6, 1999 by and among AT&T
Corp., a New York corporation ("AT&T"), Meteor Acquisition Inc., a Delaware
corporation wholly owned by AT&T ("Merger Sub"), and MediaOne Group, Inc., a
Delaware corporation ("MediaOne").
WHEREAS, the respective Boards of Directors of AT&T, Merger Sub and
MediaOne have approved this Agreement, and deem it advisable and in the best
interests of their respective stockholders to consummate the merger of MediaOne
with and into Merger Sub on the terms and conditions set forth herein; and
WHEREAS, it is intended that, for federal income tax purposes, the Merger
shall qualify as a reorganization within the meaning of the provisions of
Section 368(a) of the Internal Revenue Code of 1986 (the "Code");
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1. Definitions. (a) The following terms, as used herein,
have the following meanings:
"Acquisition Proposal" means any offer or proposal for, or any indication
of interest in (i) a merger, consolidation, share exchange, business
combination, reorganization, recapitalization or other similar transaction
involving MediaOne or any MediaOne Significant Subsidiary or (ii) the
acquisition, directly or indirectly, of (A) an equity interest representing
greater than 25% of the voting securities of MediaOne or any MediaOne
Significant Subsidiary or (B) assets, securities or ownership interests
representing an amount equal to or greater than 25% of the consolidated assets
or earning power of the MediaOne Group, other than the transactions contemplated
by this Agreement or permitted pursuant to Section 6.1 hereof.
"Affiliate" means, with respect to any Person, any other Person directly
or indirectly controlling, controlled by, or under common control with such
Person; provided, however, that Liberty Media, @Home and any Affiliates of
Liberty Media, @Home or of any of their respective Subsidiaries shall not be
treated as Affiliates of AT&T or of any of AT&T's Subsidiaries or Affiliates for
purposes of this Agreement.
"@Home" means At Home Corporation, a Delaware corporation.
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"AT&T Balance Sheet" means the Consolidated Balance Sheet of AT&T and its
consolidated subsidiaries as of December 31, 1998 and the footnotes thereto, as
set forth in the AT&T 10-K.
"AT&T Balance Sheet Date" means December 31, 1998.
"AT&T Common Stock" means the Common Stock, par value $1.00 per share, of
AT&T.
"AT&T Group" means AT&T and the AT&T Subsidiaries.
"AT&T Material Adverse Effect" means a material adverse effect on the
financial condition, assets or results of operations of AT&T and the AT&T
Subsidiaries, taken as a whole, excluding any such effect resulting from or
arising in connection with (i) this Agreement, the transactions contemplated
hereby or the announcement thereof, (ii) changes or conditions generally
affecting the industries in which AT&T and the AT&T Subsidiaries operate or
(iii) changes in general economic, regulatory or political conditions.
"AT&T Price" means the volume weighted average per share sales price of
the AT&T Common Stock for all sales on the NYSE during the 20-trading day period
ending three trading days prior to the Effective Time.
"AT&T Significant Subsidiary" means any AT&T Subsidiary that would
constitute a "significant subsidiary" within the meaning of Rule 1-02 of
Regulation S-X of the SEC as of December 31, 1998 (but including
Tele-Communications, Inc. as if it had been an AT&T Subsidiary as of December
31, 1998).
"AT&T Subsidiary" means any entity of which securities or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at any time,
directly or indirectly, owned by AT&T; provided, however, that Liberty Media,
@Home and their respective Subsidiaries shall not be treated as Subsidiaries of
AT&T or any of AT&T's other Subsidiaries for purposes of this Agreement.
"AT&T 10-K" means AT&T's annual report on Form 10-K for the fiscal year
ended December 31, 1998.
"Benefit Arrangement" means, with respect to any Person, any employment,
severance or similar contract or arrangement (whether or not written) providing
for compensation, bonus, profit-sharing, stock option, or other stock-related
rights or other forms of incentive or deferred compensation, vacation benefits,
insurance coverage (including any self-insured arrangements), health or medical
benefits, disability benefits, workers' compensation, supplemental unemployment
benefits, severance benefits and post-employment or retirement benefits
(including compensation, pension, health, medical or life insurance or other
benefits) that (i) is not an Employee Plan, (ii) is entered into, maintained,
administered or contributed to, as the case may be, by such Person or any of its
Affiliates and (iii) covers any employee or former employee of such Person or
any of its Subsidiaries employed in the United States. "MediaOne Benefit
Arrangements" means the Benefit Arrangements of MediaOne or the MediaOne
Subsidiaries and
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"AT&T Benefit Arrangements" means the Benefit Arrangements of AT&T or the AT&T
Subsidiaries.
"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.
"Confidentiality Agreement" means the confidentiality letter agreement
dated April 26, 1999 between AT&T and MediaOne.
"Deferred Compensation Plan" means, with respect to any Person, any plan,
agreement or arrangement that (i) is described under Sections 4(b)(5) or
401(a)(1) of ERISA (or similar plan covering one or more non-employee directors
of a Person), (ii) is maintained, administered or contributed to or required to
be contributed to by such Person or any of its Affiliates and (iii) covers any
current or former employee or director of such Person or any of its
Subsidiaries. "MediaOne Deferred Compensation Plan" means a Deferred
Compensation Plan of MediaOne or any MediaOne Affiliate for the benefit of any
current or former employee or director of MediaOne or any MediaOne Subsidiary
and "AT&T Deferred Compensation Plan" means a Deferred Compensation Plan of AT&T
or any AT&T Affiliate for the benefit of any current or former employee or
director of AT&T or any AT&T Subsidiary.
"Delaware Law" means the General Corporation Law of the State of
Delaware.
"Employee Plan" means, with respect to any Person, any "employee benefit
plan", as defined in Section 3(3) of ERISA, that (i) is subject to any provision
of ERISA, (ii) is maintained, administered or contributed to by such Person or
any of its Affiliates and (iii) covers any employee or former employee of such
Person or any of its Subsidiaries. "MediaOne Employee Plan" means an Employee
Plan of MediaOne or any of the MediaOne Subsidiaries and "AT&T Employee Plan"
means an Employee Plan of AT&T or any of the AT&T Subsidiaries.
"Environmental Laws" means any federal, state, local or foreign law
(including, without limitation, common law), treaty, judicial decision,
regulation, rule, judgment, order, decree, injunction, permit or governmental
restriction or requirement or any agreement with any Governmental Authority or
other third party, relating to human health and safety, the environment or to
pollutants, contaminants, wastes or chemicals or any toxic, radioactive,
ignitable, corrosive, reactive or otherwise hazardous substances, wastes or
materials.
"Environmental Permits" means, with respect to any Person, all permits,
licenses, franchises, certificates, approvals and other similar authorizations
of any Governmental Authority relating to or required by Environmental Laws and
affecting, or relating in any way to, the business of such Person or any of its
Subsidiaries as currently conducted.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" of any entity means any other entity that, together with
such entity, would be treated as a single employer under Section 414 of the
Code.
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"FCC" means the Federal Communications Commission.
"Franchise" means a written "franchise" within the meaning of Section
602(8) of the Communications Act.
"Franchising Authority" means "franchising authority" within the meaning
of Section 602(9) of the Communications Act.
"FTC Consent Order" means the consent agreement and order by and among the
Federal Trade Commission, Xxxxxx Broadcasting System, Inc., Time Warner Inc.,
Tele-Communications, Inc. and Liberty Media Corporation published in 61 FR
50301.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976.
"International Plan" means, with respect to any Person, any employment,
severance or similar contract or arrangement (whether or not written) or any
plan, policy, fund, program or arrangement or contract providing for severance,
insurance coverage (including any self-insured arrangements), workers'
compensation, disability benefits, supplemental unemployment benefits, vacation
benefits, pension or retirement benefits or for deferred compensation,
profit-sharing, bonuses, stock options, stock appreciation rights or other forms
of incentive compensation or post-retirement insurance, compensation or benefits
that (i) is not an Employee Plan or a Benefit Arrangement, (ii) is entered into,
maintained, administered or contributed to by such Person or any of its
Affiliates and (iii) covers any employee or former employee of such Person or
any of its Subsidiaries. "MediaOne International Plan" means an International
Plan of MediaOne or any of the MediaOne Subsidiaries and "AT&T International
Plan" means an International Plan of AT&T or any of the AT&T Subsidiaries.
"Knowledge" means, with respect to any fact, the conscious awareness of
such fact by an executive officer (as defined under the 0000 Xxx) of the
relevant Person.
"Liberty Media" means Liberty Media Corporation, a Delaware corporation,
and its successors and assigns, and each other corporation constituting part of
the Liberty Media Group as defined in AT&T's certificate of incorporation.
"Lien" means, with respect to any property or asset, any mortgage, lien,
pledge, charge, security interest, encumbrance or other adverse claim of any
kind in respect of such property or asset. For purposes of this Agreement, a
Person shall be deemed to own subject to a Lien any property or asset that it
has acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such property or asset.
"MediaOne Balance Sheet" means the Consolidated Balance Sheets of
MediaOne and its consolidated subsidiaries as of December 31, 1998 and the
footnotes thereto set forth in the MediaOne 10-K.
"MediaOne Balance Sheet Date" means December 31, 1998.
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"MediaOne Common Stock" means Common Stock, par value $0.01 per share, of
MediaOne.
"MediaOne Franchises" means Franchises for the MediaOne Systems.
"MediaOne Group" means MediaOne and the MediaOne Subsidiaries.
"MediaOne Material Adverse Effect" means a material adverse effect on the
financial condition, assets or results of operations of the MediaOne Group taken
as a whole, excluding any such effect resulting from or arising in connection
with (A) this Agreement, the transactions contemplated hereby or the
announcement thereof, (B) changes or conditions generally affecting the
industries in which MediaOne, the MediaOne Subsidiaries, TWE and the TWE
Subsidiaries, operate or (C) changes in general economic, regulatory or
political conditions.
"MediaOne 1999 Rights Agreement" means the Rights Agreement dated as of
April 6, 1999 between MediaOne and State Street Bank and Trust Company, as
Rights Agent.
"MediaOne Significant Subsidiary" means any MediaOne Subsidiary that would
constitute a "significant subsidiary" within the meaning of Rule 1-02 of
Regulation S-X of the SEC as of December 31, 1998; provided that for purposes
hereof, the phrase "earnings before interest, taxes, depreciation and
amortization" will be substituted for the phrase "income from continuing
operations before income taxes, extraordinary items and cumulative effect of a
change in accounting principle" in Rule 1-02(w)(3).
"MediaOne Social Contract" means the agreement dated August 3, 1995
between the FCC and Continental Cablevision, Inc., and the related FCC
authorization dated July 3, 1997.
"MediaOne Subsidiary" means any entity of which securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions are at any
time, directly or indirectly, owned by MediaOne. For the avoidance of doubt, (i)
neither TWE nor Telewest Communications plc will be treated as MediaOne
Subsidiaries and (ii) Mercury Personal Communications will be treated as a
MediaOne Subsidiary for so long as MediaOne owns, directly or indirectly, not
less than a 50% interest therein.
"MediaOne Systems" means the Systems owned and operated by MediaOne or any
MediaOne Subsidiary in the United States.
"MediaOne 10-K" means MediaOne's annual report on Form 10-K for the fiscal
year ended December 31, 1998.
"Multiemployer Plan" means each Employee Plan that is a multiemployer
plan, as defined in Section 3(37) of ERISA.
"Nasdaq" means The Nasdaq National Market.
"NYSE" means The New York Stock Exchange, Inc.
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"1933 Act" means the Securities Act of 1933.
"1934 Act" means the Securities Exchange Act of 1934.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" means, with respect to any Person, any plan (other than a
Multiemployer Plan) that is subject to Title IV of ERISA and is maintained,
administered or contributed to or required to be contributed to by such Person
or any of its ERISA Affiliates. "MediaOne Pension Plan" means a Pension Plan of
MediaOne or any of its ERISA Affiliates and "AT&T Pension Plan" means a Pension
Plan of AT&T or any of its ERISA Affiliates.
"Person" means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"SEC" means the Securities and Exchange Commission.
"Subsidiary" means, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at any time directly or indirectly owned by such Person.
"System" means a "cable television system" within the meaning of Section
602(7) of the Communications Act.
"TW" means Time Warner Inc., a Delaware corporation.
"TWE" means Time Warner Entertainment Company, L.P., a Delaware limited
partnership.
"TWE Agreements" means the TWE Partnership Agreement, together with any
related agreements between MediaOne or any MediaOne Subsidiary, on the one hand,
and TW or any Subsidiary of TW, on the other hand.
"TWE Partnership Agreement" means the Agreement of Limited Partnership
dated as of October 29, 1991, as amended.
"TWE Subsidiary" means any entity of which securities or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at any time directly
or indirectly owned by TWE.
"U S WEST" means U S WEST, Inc., a Delaware corporation.
Any reference in this Agreement to a statute shall be to such statute, as
amended from time to time, and to the rules and regulations promulgated
thereunder.
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(b) Each of the following terms is defined in the Section set
forth opposite such term:
Section
Additional Amount........................... 3.1(c)
Adjusted Option............................. 3.4(c)
AT&T........................................ Preamble
AT&T Benefit Arrangements................... 1.1(a)
AT&T Common Stock........................... 5.5(a)
AT&T Employee Plan.......................... 1.1(a)
AT&T Intellectual Property.................. 5.20
AT&T International Plan..................... 1.1(a)
AT&T SEC Documents.......................... 5.7(a)
AT&T Securities............................. 5.5(b)
AT&T Series C Preferred Stock............... 3.1(e)
AT&T Series D Preferred Stock............... 3.1(e)
AT&T Series E Preferred Stock.............. 3.1(e)
Benefits Maintenance Period................. 7.6(a)
Cash Election............................... 3.1(c)
Cash Election Consideration................. 3.1(c)
Cash Election Fraction...................... 3.4(c)
Cash Election Proration Factor.............. 3.1(h)
Cash Election Top-Up Amount................. 3.1(h)
Certificates................................ 3.2(a)
Certificate of Merger....................... 2.1(b)
Code........................................ Preamble
Comcast..................................... 4.2(c)
Comcast Merger Agreement.................... 4.2(c)
Common Stock Consideration.................. 3.1(c)
Dissenting Shares 3.3
Effective Time.............................. 2.1(b)
Election Deadline........................... 3.2(a)
Election Form............................... 3.2(a)
End Date.................................... 10.1(b)
Exchange Agent.............................. 3.2(a)
Exchange Fund............................... 3.2(a)
Franchise Consents.......................... 4.3
GAAP........................................ 4.8
Governmental Authority...................... 4.3
Indemnified Losses.......................... 7.3(a)
Indemnified Person.......................... 7.3(a)
IRS......................................... 4.16
Liberty Media Class A Common Stock.......... 5.5(a)
Liberty Media Class B Common Stock.......... 5.5(a)
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Section
License Consents............................ 4.3
Maximum Share Amount........................ 3.1(f)
MediaOne.................................... Preamble
MediaOne Benefit Arrangements............... 1.1(a)
MediaOne Common Holders..................... 3.2(b)
MediaOne Employee Plan...................... 1.1(a)
MediaOne Intellectual Property.............. 4.20
MediaOne International Plan................. 1.1(a)
MediaOne Rule 145 Affiliate................. 8.8
MediaOne SEC Documents...................... 4.7(a)
MediaOne Securities......................... 4.5(b)
MediaOne Series A Preferred Stock........... 4.5(a)
MediaOne Series C Holders................... 3.2(b)
MediaOne Series C Preferred Stock........... 3.1(e)
MediaOne Series D Holders................... 3.2(b)
MediaOne Series D Preferred Stock........... 3.1(e)
MediaOne Series E Holders................... 3.2(b)
MediaOne Series E Preferred Stock........... 3.1(e)
MediaOne Series F Preferred Stock........... 4.5(a)
MediaOne Stockholders' Meeting.............. 4.9
MediaOne Stockholders' Approval............. 4.23
MediaOne Stock Option....................... 3.4(a)
Merger...................................... 2.1(a)
New Director................................ 7.4
Proxy Statement............................. 4.9
Purchase Rights............................. 8.1(a)
Registration Statement...................... 4.9
Reimbursement Payment....................... 10.3(b)
Series C Certificates....................... 3.2(a)
Series C Consideration...................... 3.1(e)
Series D Certificates....................... 3.2(a)
Series D Consideration...................... 3.1(e)
Series E Certificates....................... 3.2(a)
Series E Consideration...................... 3.1(e)
Social Contract Consent..................... 4.3
Spinoff..................................... 9.2(c)
Standard Election........................... 3.1(e)
Standard Election Consideration............. 3.1(c)
Standard Election Fraction.................. 3.4(a)
Standard Election Top-Up Amount............. 3.1(c)
Standstill Agreement........................ 6.3(a)
Stock Election.............................. 3.1(c)
Stock Election Consideration................ 3.1(c)
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Section
Stock Election Proration Factor............. 3.1(g)
Stock Election Top-Up Amount................ 3.1(c)
Stock Option Cash Election Consideration.... 3.4(a)
Stock Option Standard Election Consideration 3.4(a)
Stock Option Stock Election Consideration... 3.4(a)
Successor Plan.............................. 7.6(b)
Surviving Corporation....................... 2.1(a)
Tax Returns................................. 4.16
Taxes....................................... 4.16
Termination Fee............................. 10.3(c)
Termination Notice Election................. 8.9
Third Party................................. 6.3(a)
Transferred Employees....................... 7.6(a)
368 Reorganization.......................... 8.7(a)
U S WEST Agreements......................... 8.10
ARTICLE 2
THE MERGER
SECTION 2.1. The Merger. (a) At the Effective Time, MediaOne shall be
merged (the "Merger") with and into Merger Sub in accordance with Delaware Law
and upon the terms set forth in this Agreement, whereupon the separate existence
of MediaOne shall cease and Merger Sub shall be the surviving corporation (the
"Surviving Corporation").
(b) As soon as practicable (and, in any event, within five
Business Days) after satisfaction or, to the extent permitted hereunder, waiver
of all conditions to the Merger set forth in Article 9, other than conditions
that by their nature are to be satisfied at the Effective Time and will in fact
be satisfied at the Effective Time, a certificate of merger shall be duly
prepared, executed and acknowledged by MediaOne and Merger Sub and thereafter
delivered to the Secretary of State of Delaware for filing pursuant to Delaware
Law. Such certificate of merger shall be referred to herein as the "Certificate
of Merger". The Merger shall become effective at such time (the "Effective
Time") as the Certificate of Merger is duly filed with such Secretary of State
of Delaware (or at such later time as may be agreed by MediaOne and AT&T and
specified in the Certificate of Merger).
(c) From and after the Effective Time, the Surviving Corporation
shall possess all the rights, powers, privileges and franchises and be subject
to all of the obligations, liabilities, restrictions and disabilities of
MediaOne and Merger Sub, all as provided under Delaware Law.
SECTION 2.2. Articles of Incorporation and Bylaws of the Surviving
Corporation. The articles of incorporation of Merger Sub in effect at the
Effective Time shall be
9
the articles of incorporation of the Surviving Corporation and the bylaws of
Merger Sub in effect at the Effective Time shall be the bylaws of the Surviving
Corporation, in each case until amended in accordance with applicable law.
SECTION 2.3. Directors and Officers of the Surviving Corporation.
From and after the Effective Time, until successors are duly elected or
appointed and qualified in accordance with applicable law, (i) the directors of
Merger Sub at the Effective Time shall be the directors of the Surviving
Corporation and (ii) the officers of Merger Sub at the Effective Time shall be
the officers of the Surviving Corporation.
ARTICLE 3
CONVERSION OF SECURITIES
SECTION 3.1. Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Merger Sub, AT&T,
MediaOne or the holders of any of the following securities:
(a) Each share of MediaOne Common Stock and each share of
MediaOne Series C Preferred Stock, MediaOne Series D Preferred Stock and
MediaOne Series E Preferred Stock held in the treasury of MediaOne or owned by
AT&T immediately prior to the Effective Time shall be canceled and extinguished
without any conversion thereof and no payment shall be made with respect
thereto.
(b) Each issued and outstanding share of common stock, par value
$.01 per share, of Merger Sub immediately prior to the Effective Time shall be
converted into one validly issued, fully paid and non-assessable share of common
stock of the Surviving Corporation, and the Surviving Corporation shall be a
wholly owned subsidiary of AT&T.
(c) Subject to the provisions of Sections 3.1(g), (h) and (i) and
to Sections 3.3 and 3.5, each share of MediaOne Common Stock that is issued and
outstanding immediately prior to the Effective Time (excluding any share of
MediaOne Common Stock canceled pursuant to Section 3.1(a)) shall be converted,
at the election of the holder thereof in accordance with the procedures set
forth herein, into one of the following (as adjusted pursuant to the provisions
of this Section 3.1, the "Common Stock Consideration"), and the associated
preferred stock purchase rights, issued pursuant to the MediaOne 1999 Rights
Agreement, shall be terminated:
(i) for each such share of MediaOne Common Stock with respect to
which an election to receive only AT&T Common Stock has been effectively
made and not revoked or lost pursuant to Sections 3.2(a) (a "Stock
Election"), the right to receive (A) 1.4912 shares of AT&T Common Stock
and (B) an amount in cash (the "Stock Election Top-Up Amount"), if any,
without interest except as provided in Section 3.2(b), rounded to the
nearest cent, equal to 1.4912 times the excess, if any, of $57.00 over the
AT&T Price; provided, however, that in no event shall such amount in cash
exceed $8.50 (collectively, the "Stock Election Consideration");
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(ii) for each such share of MediaOne Common Stock with respect to
which an election to receive only cash has been effectively made and not
revoked or lost pursuant to Section 3.2(a) (a "Cash Election"), the right
to receive $85 in cash, without interest except as set forth in Section
3.2(b) (the "Cash Election Consideration"); and
(iii) for each such share of MediaOne Common Stock other than
shares as to which a Stock Election or a Cash Election has been made, the
right to receive (A) .95 of a share of AT&T Common Stock, (B) $30.85 in
cash, without interest except as set forth in Section 3.2(b), and (C) an
additional amount in cash (the "Standard Election Top-Up Amount"), if any,
without interest except as set forth in Section 3.2(b), rounded to the
nearest cent, equal to .95 times the excess, if any, of $57.00 over the
AT&T Price; provided, however, that in no event shall such additional
amount in cash exceed $5.42 (collectively, the "Standard Election
Consideration").
(d) If between the date of this Agreement and the Effective Time
the outstanding shares of AT&T Common Stock shall have been changed into a
different number of shares, by reason of any stock dividend, subdivision, split
or combination of shares, the Stock Election Consideration and the Standard
Election Consideration, and the consideration to be paid pursuant to Sections
3.1(g) and 3.1(h), will be correspondingly adjusted to reflect such stock
dividend, subdivision, split or combination of shares.
(e) Each person who, at the Effective Time, is a record holder of
shares of MediaOne Common Stock (other than holders of shares of MediaOne Common
Stock to be canceled as set forth in Section 3.1(a) or Dissenting Shares) shall
have the right to submit an Election Form specifying the number of shares of
MediaOne Common Stock that such person desires to have converted into the right
to receive AT&T Common Stock and cash, if any, pursuant to the Stock Election,
the number of shares of MediaOne Common Stock that such person desires to have
converted into the right to receive cash pursuant to the Cash Election, and the
number of shares of MediaOne Common Stock that such person desires to have
converted into the right to receive the Standard Election Consideration (a
"Standard Election"). Any such record holder who fails properly to submit an
Election Form on or prior to the Election Deadline in accordance with the
procedures set forth in Section 3.2(a) shall be deemed to have made a Standard
Election.
(f) The aggregate number of shares of AT&T Common Stock to be
issued in the Merger or to become subject to issuance upon exercise of Adjusted
Options or conversion of AT&T Series D Preferred Stock or AT&T Series E
Preferred Stock shall equal .95 times the sum of (i) the total number of shares
of MediaOne Common Stock issued and outstanding immediately prior to the
Effective Time, other than shares to be canceled pursuant to Section 3.1(a) and
Dissenting Shares, and (ii) the total number of shares of MediaOne Common Stock
issuable upon exercise of MediaOne Stock Options or conversion of MediaOne
Series D Preferred Stock or MediaOne Series E Preferred Stock outstanding
immediately prior to the Effective Time (the "AT&T Share Issuance Number"). If
between the date of this Agreement and the Effective Time the outstanding shares
of AT&T Common Stock shall have been changed into a different number of shares,
by reason of any stock dividend, subdivision, split or combination of shares,
the AT&T Share Issuance Number will be correspondingly adjusted to
11
reflect such stock dividend, subdivision, split or combination of shares. The
AT&T Share Issuance Number shall also be subject to adjustment as set forth in
Section 3.1(i).
(g) In the event that the number of shares of AT&T Common Stock
to be issued in the Merger or to become subject to issuance upon exercise of
Adjusted Options or conversion of AT&T Series D Preferred Stock or AT&T Series E
Preferred Stock would exceed the AT&T Share Issuance Number based on the
elections of the holders of MediaOne Common Stock (together with the elections
of holders of MediaOne Stock Options and the conversion adjustments applicable
to the MediaOne Series D Preferred Stock and MediaOne Series E Preferred Stock),
(i) all shares of MediaOne Common Stock subject to a Cash Election or a Standard
Election will be converted into the right to receive the Cash Election
Consideration or the Standard Election Consideration, as the case may be, and
(ii) each share of MediaOne Common Stock subject to a Stock Election will be
converted into the right to receive (A) a number of shares of AT&T Common Stock
equal to 1.4912 times the Stock Election Proration Factor, (B) an amount of
cash, without interest except as set forth in Section 3.2(b), equal to (1) $85
multiplied by (2) one minus the Stock Election Proration Factor, and (C) an
additional amount of cash, if any, without interest except as set forth in
Section 3.2(b), rounded to the nearest cent, equal to 1.4912 times the Stock
Election Proration Factor times the excess, if any, of $57.00 over the AT&T
Price; provided, however, that in no event shall such additional amount in cash
exceed $8.50 times the Stock Election Proration Factor. The "Stock Election
Proration Factor" means a fraction (x) the numerator of which is the AT&T Share
Issuance Number minus the aggregate number of shares of AT&T Common Stock to be
issued in the Merger pursuant to the Standard Elections or to become subject to
issuance upon exercise of Adjusted Options or conversion of AT&T Series D
Preferred Stock or AT&T Series E Preferred Stock pursuant to elections
corresponding to the Standard Elections made by holders of MediaOne Stock
Options, MediaOne Series D Preferred Stock and MediaOne Series E Preferred
Stock, and (y) the denominator of which is the number of shares of AT&T Common
Stock that, but for this paragraph (g), would have been issued in the Merger
pursuant to the Stock Elections or become subject to issuance upon exercise of
Adjusted Options or conversion of AT&T Series D Preferred Stock or AT&T Series E
Preferred Stock pursuant to elections corresponding to the Stock Elections made
by holders of MediaOne Stock Options, MediaOne Series D Preferred Stock and
MediaOne Series E Preferred Stock.
(h) In the event that the number of shares of AT&T Common Stock
to be issued in the Merger or to become subject to issuance upon exercise of
Adjusted Options or conversion of AT&T Series D Preferred Stock or AT&T Series E
Preferred Stock would be less than the AT&T Share Issuance Number based on the
elections of the holders of MediaOne Common Stock (together with the elections
of holders of MediaOne Stock Options and the conversion adjustments applicable
to the MediaOne Series D Preferred Stock and MediaOne Series E Preferred Stock),
(i) all shares of MediaOne Common Stock subject to a Stock Election or a
Standard Election will be converted into the right to receive the Stock Election
Consideration or the Standard Election Consideration, as the case may be, and
(ii) each share of MediaOne Common Stock subject to a Cash Election will be
converted into the right to receive (A) a number of shares of AT&T Common Stock
equal to the Cash Election Proration Factor, (B) an amount of cash, without
interest except as set forth in Section 3.2(b), equal to (1) $85
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multiplied by (2) (x) one minus (y) the Cash Election Proration Factor divided
by 1.4912, and (C) an additional amount of cash (the "Cash Election Top-Up
Amount"), if any, without interest except as set forth in Section 3.2(b),
rounded to the nearest cent, equal to the Cash Election Proration Factor times
the excess, if any, of $57.00 over the AT&T Price; provided, however, that in no
event shall such additional amount in cash exceed $5.70 times the Cash Election
Proration Factor. The "Cash Election Proration Factor" means a fraction (x) the
numerator of which is the AT&T Share Issuance Number minus the aggregate number
of shares of AT&T Common Stock to be issued in the Merger pursuant to the Stock
Elections and the Standard Elections or to become subject to issuance upon
exercise of Adjusted Options or conversion of AT&T Series D Preferred Stock or
AT&T Series E Preferred Stock pursuant to elections corresponding to the Stock
Elections and the Standard Elections made by holders of MediaOne Stock Options,
MediaOne Series D Preferred Stock and MediaOne Series E Preferred Stock, and (y)
the denominator of which is the number of shares of MediaOne Common Stock
subject to the Cash Elections or elections corresponding to the Cash Elections
made by holders of MediaOne Stock Options, MediaOne Series D Preferred Stock and
MediaOne Series E Preferred Stock.
(i) In the event that either the condition set forth in Section
9.2(b) or the condition set forth in Section 9.3(b) is not satisfied but would
be capable of being satisfied if the AT&T Share Issuance Number were increased,
and all other conditions set forth in Article 9 have been satisfied (or, with
respect to conditions to be satisfied at the Effective Time, will in fact be
satisfied), then the AT&T Share Issuance Number shall be increased to the extent
necessary to permit the satisfaction of the conditions set forth in each of
Sections 9.2(b) and 9.3(b) and, if required by law or the rules of the NYSE,
AT&T will use its reasonable best efforts to obtain the requisite approval of
its shareholders for the issuance of a number of shares of AT&T Common Stock
equal to the revised AT&T Share Issuance Number (and MediaOne will use its
reasonable best efforts to obtain the requisite approval of its shareholders for
this Agreement and the Merger based on such revised AT&T Share Issuance Number,
if approval based on such revision is necessary); provided that if, prior to any
such required shareholder approval, the conditions set forth in Sections 9.2(b)
and 9.3(b) become capable of being satisfied without revision of the AT&T Share
Issuance Number, the AT&T Share Issuance Number shall not be revised and the
Merger will be completed as promptly as practicable (subject to continued
satisfaction of the conditions set forth in Article 9).
(j) At the Effective Time:
(i) except as otherwise provided in Section 3.1(a) or
Section 3.3, each share of Series C Cumulative Redeemable Preferred Stock,
par value $1.00 per share, of MediaOne (the "MediaOne Series C Preferred
Stock") outstanding immediately prior to the Effective Time shall be
converted into the right to receive one share of the corresponding series
(the "AT&T Series C Preferred Stock") of preferred stock of AT&T (the
"Series C Consideration") that shall have terms that are identical to those
of the MediaOne Series C Preferred Stock; provided that (A) as a result of
the Merger, the issuer thereof shall be AT&T rather than MediaOne and (B)
AT&T's obligations to pay full quarterly dividends in respect of shares of
AT&T Series C Preferred Stock (from the
13
date of the last dividend paid on the MediaOne Series C Preferred Stock)
shall commence on the first dividend payment date that occurs following the
Effective Time;
(ii) except as otherwise provided in Section 3.1(a), each share of
Series D Convertible Preferred Stock, par value $1.00 per share, of
MediaOne (the "MediaOne Series D Preferred Stock") outstanding immediately
prior to the Effective Time shall be converted into the right to receive
one share of the corresponding series (the "AT&T Series D Preferred
Stock") of preferred stock of AT&T (the "Series D Consideration") that
shall have terms that are identical to those of the MediaOne Series D
Preferred Stock; provided that (A) as a result of the Merger, the issuer
thereof shall be AT&T rather than MediaOne, (B) AT&T's obligations to pay
full quarterly dividends in respect of shares of AT&T Series D Preferred
Stock (from the date of the last dividend paid on the MediaOne Series D
Preferred Stock) shall commence on the first dividend payment date that
occurs following the Effective Time and (C) the AT&T Series D Preferred
Stock shall initially be convertible into cash and a number of shares of
AT&T Common Stock calculated in accordance with Section 3.7 of the
Certificate of Designations relating thereto (subject to proration
adjustments consistent with the provisions of Sections 3.1(g) and (h));
and
(iii) except as otherwise provided in Section 3.1(a) or Section
3.3, each share of Series E Convertible Preferred Stock, par value $1.00
per share, of MediaOne (the "MediaOne Series E Preferred Stock")
outstanding immediately prior to the Effective Time shall be converted
into the right to receive one share of the corresponding series (the "AT&T
Series E Preferred Stock") of preferred stock of AT&T (the "Series E
Consideration") that shall have terms that are identical to those of the
MediaOne Series E Preferred Stock; provided that (A) as a result of the
Merger, the issuer thereof shall be AT&T rather than MediaOne, (B) AT&T's
obligations to pay full quarterly dividends in respect of shares of AT&T
Series E Preferred Stock (from the date of the last dividend paid on the
MediaOne Series E Preferred Stock) shall commence on the first dividend
payment date that occurs following the Effective Time and (C) the
conversion rate for the MediaOne Series E Preferred Stock shall be fixed
as set forth in the Certificate of Designations relating thereto (subject
to proration adjustments consistent with Sections 3.1(g) and (h)).
SECTION 3.2. Surrender and Payment. (a) Prior to the Effective
Time, AT&T shall appoint an agent (the "Exchange Agent") for the purpose of (i)
exchanging certificates representing shares of MediaOne Common Stock (the
"Common Certificates") for the Common Stock Consideration, (ii) exchanging
certificates representing shares of MediaOne Series C Preferred Stock (the
"Series C Certificates") for the Series C Consideration, (iii) exchanging
certificates representing shares of MediaOne Series D Preferred Stock (the
"Series D Certificates") for the Series D Consideration and (iv) exchanging
certificates representing shares of MediaOne Series E Preferred Stock (the
"Series E Certificates")," and together with the Common Certificates, the Series
C Certificates and the Series D Certificates, the "Certificates") for the Series
E Consideration. At the Effective Time, AT&T will deposit with the Exchange
Agent (i) the Common Stock Consideration to be paid in respect of shares of
MediaOne Common Stock, (ii) the Series C Consideration to be paid in respect of
shares of MediaOne Series C Preferred Stock, (iii) the Series D Consideration to
be paid in respect of shares of
14
MediaOne Series D Preferred Stock, (iv) the Series E Consideration to be paid in
respect of shares of MediaOne Series E Preferred Stock and (v) cash in an amount
required to be paid pursuant to Section 3.5. The Common Stock Consideration,
Series C Consideration, Series D Consideration, Series E Consideration and cash
referred to in items (i) through (v) are referred to herein as the "Exchange
Fund". Upon receipt, the Exchange Agent will invest the cash portion of the
Exchange Fund in United States government securities maturing at the Election
Deadline or such other investments as AT&T and MediaOne may mutually agree.
Promptly after the Effective Time, AT&T will send, or will cause the Exchange
Agent to send, (A) to each holder of shares of MediaOne Common Stock, MediaOne
Series C Preferred Stock, MediaOne Series D Preferred Stock or MediaOne Series E
Preferred Stock at the Effective Time, a letter of transmittal and instructions
(which shall specify that the delivery shall be effected, and risk of loss and
title shall pass, only upon proper delivery of the Certificates to the Exchange
Agent) for use in such exchange, and (B) to each holder of shares of MediaOne
Common Stock, an election form (the "Election Form") providing for such holders
to make the Standard Election, the Cash Election or the Stock Election. Any
Standard Election (other than a deemed Standard Election), Cash Election or
Stock Election shall be validly made only if the Exchange Agent shall have
received by 5:00 p.m., New York City time, on a date (the "Election Deadline")
to be mutually agreed upon by AT&T and MediaOne (which date shall not be later
than the twentieth Business Day after the Effective Time), an Election Form
properly completed and executed (with the signature or signatures thereon
guaranteed to the extent required by the Election Form) by such holder
accompanied by such holder's Common Certificates, or by an appropriate guarantee
of delivery of such Common Certificates from a member of any registered national
securities exchange or of the National Association of Securities Dealers, Inc.
or a commercial bank or trust company in the United States as set forth in such
Election Form. Any holder of MediaOne Common Stock who has made an election by
submitting an Election Form to the Exchange Agent may at any time prior to the
Election Deadline change such holder's election by submitting a revised Election
Form, properly completed and signed that is received by the Exchange Agent prior
to the Election Deadline. Any holder of MediaOne Common Stock may at any time
prior to the Election Deadline revoke his election and withdraw his Common
Certificates deposited with the Exchange Agent by written notice to the Exchange
Agent received by the close of business on the day prior to the Election
Deadline. AT&T will make similar election forms available to the appropriate
holders of shares of MediaOne Series D Preferred Stock (if such shares have not
been redeemed) and MediaOne Series E Preferred Stock in the manner contemplated
by the certificates of designations for such shares to permit such holders to
make comparable elections with respect to the conversion adjustments for such
shares. AT&T shall have the right to make rules (which will be described in the
Election Form), not inconsistent with the terms of this Agreement, governing the
validity of Election Forms and the manner and extent to which Standard
Elections, Cash Election or Stock Elections are to be taken into account in
making the determinations prescribed by Sections 3.1(g) and 3.1(h).
(b) Upon surrender to the Exchange Agent of its Certificate,
together with a properly completed letter of transmittal, (i) each holder of
shares of MediaOne Common Stock (the "MediaOne Common Holders") will be entitled
to receive promptly after the Election Deadline the Common Stock Consideration
in respect of the shares of MediaOne Common Stock represented by its
Certificate; (ii) each holder of shares of MediaOne Series C Preferred Stock
15
(the "MediaOne Series C Holders") will be entitled to receive the Series C
Consideration in respect of the shares of MediaOne Series C Preferred Stock
represented by its Certificate; (iii) each holder of shares of MediaOne Series D
Preferred Stock (the "MediaOne Series D Holders") will be entitled to receive
the Series D Consideration in respect of the shares of MediaOne Series D
Preferred Stock represented by its Certificate and (iv) each holder of shares of
MediaOne Series E Preferred Stock (the "MediaOne Series E Holders") will be
entitled to receive the Series E Consideration in respect of the shares
represented by its Certificate. In addition, each such MediaOne Common Holder,
MediaOne Series C Holder, MediaOne Series D Holder and MediaOne Series E Holder
will be entitled to receive any dividends and distributions payable pursuant to
Section 3.2(f) and, in the case of MediaOne Common Holders and holders of
MediaOne Stock Options, such holder's pro rata share, if any, based on the cash
portion of the Common Stock Consideration to be received by such holder, of the
interest or other return earned on the cash portion of the Exchange Fund from
the Effective Time until the Election Deadline. Until so surrendered, each such
Certificate shall represent after the Effective Time, for all purposes, only the
right to receive the Common Stock Consideration, the Series C Consideration, the
Series D Consideration or the Series E Consideration, as the case may be.
(c) If any portion of the Common Stock Consideration, the Series
C Consideration, the Series D Consideration or the Series E Consideration is to
be paid to a Person other than the Person in whose name the Certificate so
surrendered is registered, it shall be a condition to such payment that such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and that the Person requesting such payment shall pay to the Exchange
Agent any transfer or other taxes required as a result of such payment to a
Person other than the registered holder of such Certificate, or establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(d) After the Effective Time, there shall be no further
registration of transfers of shares of MediaOne Common Stock, MediaOne Series C
Preferred Stock, MediaOne Series D Preferred Stock or MediaOne Series E
Preferred Stock. If, after the Effective Time, Certificates are presented to the
Surviving Corporation, they shall be canceled and exchanged for the Common Stock
Consideration, the Series C Consideration, the Series D Consideration or the
Series E Consideration provided for, and in accordance with the procedures set
forth, in this Article 3.
(e) Any portion of the Exchange Fund made available to the
Exchange Agent pursuant to Section 3.2(a) that remains unclaimed by the MediaOne
Common Holders, MediaOne Series C Holders, MediaOne Series D Holders and
MediaOne Series E Holders one year after the Effective Time shall be returned to
AT&T, upon demand, and any such holder who has not exchanged its shares for the
Common Stock Consideration, the Series C Consideration, the Series D
Consideration or the Series E Consideration in accordance with this Section 3.2
prior to that time shall thereafter look only to AT&T for payment of such
consideration, any dividends and distributions in respect of such shares, and,
if applicable, the pro rata share, if any, of the interest or other return
earned on the cash portion of the Exchange Fund from the Effective Time until
the Election Deadline, in each case without any interest thereon.
Notwithstanding the foregoing, AT&T shall not be liable to any MediaOne Common
Holder, MediaOne Series C
16
Holder, MediaOne Series D Holder or MediaOne Series E Holder for any amounts
paid to a public official pursuant to applicable abandoned property, escheat or
similar laws. Any amounts remaining unclaimed by the MediaOne Common Holders,
MediaOne Series C Holders, MediaOne Series D Holders and MediaOne Series E
Holders five years after the Effective Time (or such earlier date, immediately
prior to such time when the amounts would otherwise escheat to or become
property of any Governmental Authority) shall become, to the extent permitted by
applicable law, the property of AT&T free and clear of any claims or interest of
any Person previously entitled thereto.
(f) No dividends or other distributions with respect to any AT&T
Securities constituting part of the Common Stock Consideration, the Series C
Consideration, the Series D Consideration or the Series E Consideration and, in
the case of the Common Certificates, no cash payment in lieu of fractional
shares as provided in Section 3.5, shall be paid to the holder of any
unsurrendered Certificates until such Certificates are surrendered as provided
in Section 3.2(b). Following such surrender, there shall be paid, without
interest, to the Person in whose name such AT&T Securities have been registered,
(i) at the time of such surrender, (A) in the case of Common Certificates, the
amount of any cash payable in lieu of fractional shares to which such Person is
entitled pursuant to Section 3.5, and (B) the amount of all dividends or other
distributions with a record date after the Effective Time previously paid or
payable on the date of such surrender, with respect to such AT&T Securities, and
(ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to
surrender, and with a payment date subsequent to surrender, payable with respect
to such AT&T Securities.
(g) Any portion of the Common Stock Consideration, Series C
Consideration or the Series E Consideration made available to the Exchange Agent
pursuant to Section 3.2(a) to pay for shares of MediaOne Common Stock, MediaOne
Series C Preferred Stock or MediaOne Series E Preferred Stock for which
appraisal rights have been perfected shall be returned to AT&T upon demand.
SECTION 3.3. Dissenting Shares. Notwithstanding Section 3.1,
shares of MediaOne Common Stock, MediaOne Series C Preferred Stock and MediaOne
Series E Preferred Stock outstanding immediately prior to the Effective Time and
held by a holder who has not voted in favor of the Merger and has demanded
appraisal for such shares in accordance with Delaware Law ("Dissenting Shares")
shall not be converted into a right to receive the Common Stock Consideration,
the Series C Consideration or the Series E Consideration, as the case may be,
unless such holder fails to perfect, withdraws or otherwise loses its right to
appraisal. If, after the Effective Time, such holder fails to perfect, withdraws
or loses its right to appraisal, such shares shall be treated as if they had
been converted as of the Effective Time into a right to receive the Common Stock
Consideration, the Series C Consideration or the Series E Consideration, as the
case may be. MediaOne shall give AT&T prompt notice of any demands received by
MediaOne for appraisal of shares, and AT&T shall have the right to participate
in all negotiations and proceedings with respect to such demands. Except with
the prior written consent of AT&T, MediaOne shall not make any payment with
respect to, or settle or offer to settle, any such demands.
17
SECTION 3.4. Stock Options. (a) Each outstanding option to purchase
shares of MediaOne Common Stock granted under any stock option or compensation
plans or arrangements (a "MediaOne Stock Option"), whether or not exercisable or
vested, that is outstanding immediately prior to the Effective Time, shall be
converted, at the election of the holder thereof, in accordance with the
procedures set forth in this Section 3.4. Each holder may elect, with respect to
each of such holder's MediaOne Stock Options, to make a Stock Election, a Cash
Election, or a Standard Election. Subject to the provisions of paragraphs (b),
(c) and (d) of this Section 3.4:
(i) each MediaOne Stock Option subject to a Cash Election will
be converted into, for each share underlying such MediaOne Stock Option,
(A) the Cash Election Consideration minus (B) the per share exercise price
of the MediaOne Stock Option (the "Stock Option Cash Election
Consideration");
(ii) each MediaOne Stock Option subject to a Standard Election
will be converted into, for each share underlying such MediaOne Stock
Option, (A) an option to purchase .95 of a share of AT&T Common Stock at
an exercise price equal to (1) the per share exercise price of the
MediaOne Stock Option multiplied by (2) a fraction, the numerator of which
is $54.15 and the denominator of which is $85 (the "Standard Election
Fraction"), minus (3) the Standard Election Top-Up Amount, if any, divided
by (4) .95, and (B) $30.85 in cash, without interest except as set forth
in Section 3.2(b), minus the product of (1) the per share exercise price
of the MediaOne Stock Option and (2) one minus the Standard Election
Fraction (the "Stock Option Standard Election Consideration"); and
(iii) each MediaOne Stock Option subject to a Stock Election will
be converted into, for each share underlying the MediaOne Stock Option, an
option to receive 1.4912 shares of AT&T Common Stock at an exercise price
equal to (A) the per share exercise price of the MediaOne Stock Option
minus the Stock Election Top-Up Amount, if any, divided by 1.4912 (the
"Stock Option Stock Election Consideration").
(b) To the extent that the consideration to be paid in the
Merger is adjusted pursuant to Section 3.1(g):
(i) each MediaOne Stock Option subject to a Cash Election will be
converted into, for each share underlying such MediaOne Stock Option, the
Stock Option Cash Election Consideration;
(ii) each MediaOne Stock Option subject to a Standard Election
will be converted into, for each share underlying such MediaOne Stock
Option, the Stock Option Standard Election Consideration; and
(iii) each MediaOne Stock Option subject to a Stock Election will
be converted into, for each share underlying such MediaOne Stock Option,
(A) an option to purchase a number of shares of AT&T Common Stock equal to
1.4912 multiplied by the Stock Election Proration Factor, at an exercise
price equal to (1) the per share exercise price of the MediaOne Stock
Option multiplied by the Stock Election Proration Factor, minus (2) the
Stock Election Top-Up Amount, if any, multiplied by the Stock Election
Proration Factor, divided by (3) 1.4912 multiplied by the Stock Election
18
Proration Factor, and (B) an amount of cash, without interest except as
set forth in Section 3.2(b), equal to (1) $85 multiplied by one minus the
Stock Election Proration Factor, minus (2) the per share exercise price of
the MediaOne Stock Option multiplied by one minus the Stock Election
Proration Factor.
(c) To the extent that the consideration to be paid in the
Merger is adjusted pursuant to Section 3.1 (h):
(i) each MediaOne Stock Option subject to a Stock Election will be
converted into, for each share underlying such MediaOne Stock Option, the
Stock Option Stock Election Consideration;
(ii) each MediaOne Stock Option subject to a Standard Election
will be converted into, for each share underlying such MediaOne Stock
Option, the Stock Option Standard Election Consideration; and
(iii) each MediaOne Stock Option subject to a Cash Election will
be converted into, for each share underlying such MediaOne Stock Option,
(A) an option to purchase a number of shares of AT&T Common Stock equal to
the Cash Election Proration Factor, at an exercise price equal to (1) the
per share exercise price of the MediaOne Stock Option multiplied by (2) a
fraction (the "Cash Election Fraction"), the numerator of which is the
Cash Election Proration Factor and the denominator of which is 1.4912,
minus (3) the Cash Election Top-Up Amount, if any, divided by (4) the Cash
Election Proration Factor, and (B) an amount of cash, without interest
except as set forth in Section 3.2(b), equal to (1) $85 multiplied by one
minus the Cash Election Fraction, minus (2) the per share exercise price
of the MediaOne Stock Option multiplied by one minus the Cash Election
Fraction.
The options to purchase shares of AT&T Common Stock referred to in this Section
are hereinafter referred to as "Adjusted Options."
(d) To the extent that the provisions of this Section 3.4 would
require the payment to any holder of a MediaOne Stock Option of a positive cash
amount, such amount, net of any applicable withholding taxes, shall be paid as
promptly as practicable following the determination thereof. To the extent that
the provisions of this Section 3.4 would require the payment to any holder of a
MediaOne Stock Option of a negative cash amount, then such amount shall not be
paid by or to the holder of such MediaOne Stock Option; instead such amount
shall be divided (i) in the case of paragraphs (a)(ii), (b)(ii) and (c)(ii)
above, by .95, (ii) in the case of paragraph (b)(iii) above, by 1.4912 times the
Stock Election Proration Factor, and (iii) in the case of paragraph (c)(iii)
above, by the Cash Election Proration Factor, and in each case the resulting
amount shall be added to the per share exercise price of such holder's Adjusted
Options with respect to which such calculation was performed.
(e) Holders of MediaOne Stock Options will be provided with
election forms and given the opportunity to make such elections in the same
manner as holders of shares of MediaOne Common Stock are provided with Election
Forms and given the opportunity to make
19
Stock Elections, Cash Elections and Standard Elections. Any holder of a MediaOne
Stock Option who does not make such an election on or prior to the Election
Deadline will be deemed to have elected the Standard Election Consideration.
(f) Any fractional share of AT&T Common Stock resulting from an
aggregation of all the shares of a holder subject to MediaOne Stock Options
shall be rounded up to the nearest whole share.
(h) AT&T shall take such actions as are necessary for the
assumption of the MediaOne Stock Options pursuant to this Section 3.4 and any
obligations to issue MediaOne Common Stock under the existing terms of any other
plans, agreements or arrangements of MediaOne covering any current or former
employee or director of MediaOne or any MediaOne Subsidiary, including the
reservation, issuance and listing of AT&T Common Stock as is necessary to
effectuate the transactions contemplated by this Section 3.4. Similarly,
MediaOne shall take all actions required to be taken by it to effectuate such
assumption. AT&T shall prepare and file with the SEC a registration statement on
Form S-8 (or any other appropriate form) or a post-effective amendment to a
registration statement previously filed under the 1933 Act, with respect to the
shares of AT&T Common Stock subject to the Adjusted Options and, where
applicable, shall use its reasonable best efforts to have such registration
statement declared effective as soon as practicable following the Effective Time
and to maintain the effectiveness of such registration statement covering such
Adjusted Options (and to maintain the current status of the prospectus contained
therein) for so long as such Adjusted Options remain outstanding. With respect
to those individuals, if any, who, subsequent to the Effective Time, will be
subject to the reporting requirements under Section 16(a) of the 1934 Act, where
applicable, AT&T shall use all reasonable efforts to administer any Adjusted
Options issued pursuant to this Section 3.4 in a manner that complies with Rule
16b-3 promulgated under the 1934 Act to the extent that the MediaOne Stock
Option in respect of which such Adjusted Option has been issued complied with
such rule prior to the Merger.
SECTION 3.5. Fractional Shares. No fractional shares of AT&T Common
Stock shall be issued in the Merger. All fractional shares of AT&T Common Stock
that a holder of shares of MediaOne Common Stock would otherwise be entitled to
receive as a result of the Merger shall be aggregated and if a fractional share
results from such aggregation, such holder shall be entitled to receive, in lieu
thereof, an amount in cash without interest determined by multiplying the
closing sale price of a share of AT&T Common Stock on the NYSE on the trading
day immediately preceding the Effective Time by the fraction of a share of AT&T
Common Stock to which such holder would otherwise have been entitled.
SECTION 3.6. Withholding Rights. AT&T shall be entitled to deduct
and withhold from the consideration otherwise payable to any Person pursuant to
this Article 3 such amounts as it is required to deduct and withhold with
respect to the making of such payment under any provision of federal, state,
local or foreign tax law. If AT&T so withholds amounts, such amounts shall be
treated for all purposes of this Agreement as having been paid to the MediaOne
Common Holder, the MediaOne Series C Holder, the MediaOne Series D Holder or
20
the MediaOne Series E Holder, as the case may be, in respect of which AT&T made
such deduction and withholding.
SECTION 3.7. Lost Certificates. If any Certificate is lost, stolen
or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and executing an
indemnity reasonably satisfactory to AT&T (and, if required by AT&T in the case
of a Certificate representing more than 1,000 shares (100 shares in the case of
the MediaOne Series D Preferred Stock), the posting by such Person of a bond, in
such reasonable amount as AT&T may direct, as indemnity) against any claim that
may be made against it with respect to such Certificate, the Exchange Agent will
issue, in exchange for such lost, stolen or destroyed Certificate, (i) the
Common Stock Consideration to be paid in respect of the shares of MediaOne
Common Stock represented by such Certificate, (ii) the Series C Consideration to
be paid in respect of the shares of MediaOne Series C Preferred Stock
represented by such Certificate, (iii) the Series D Consideration to be paid in
respect of the shares of MediaOne Series D Preferred Stock represented by such
Certificate, or (iv) the Series E Consideration to be paid in respect of the
shares of MediaOne Series E Preferred Stock represented by such Certificate, as
the case may be. In addition, such Person will be entitled to receive any
amounts payable pursuant to Section 3.2(f).
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF MEDIAONE
Except as set forth in the MediaOne Disclosure Schedule or as disclosed in
the MediaOne SEC Documents filed prior to the date hereof, MediaOne represents
and warrants to AT&T and Merger Sub as follows:
SECTION 4.1 Corporate Existence and Power. MediaOne is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all corporate powers required to carry on
its business as now conducted. MediaOne is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where such
qualification is necessary, except for those jurisdictions where failure to be
so qualified, individually or in the aggregate, has not had and would not be
reasonably expected to have a MediaOne Material Adverse Effect. MediaOne has
heretofore delivered or made available to AT&T true and complete copies of the
certificate of incorporation and bylaws of MediaOne as currently in effect.
SECTION 4.2. Corporate Authorization. (a) The execution, delivery
and performance by MediaOne of this Agreement and the consummation by MediaOne
of the transactions contemplated hereby are within MediaOne's corporate powers
and, except for the required approval of MediaOne's stockholders of this
Agreement, have been duly authorized by all necessary corporate action on the
part of MediaOne. This Agreement constitutes a valid and binding agreement of
MediaOne, enforceable against MediaOne in accordance with its terms, except (i)
as the same may be limited by applicable bankruptcy, insolvency, moratorium or
21
similar laws of general application relating to or affecting creditors' rights,
and (ii) for the limitations imposed by general principles of equity.
(b) At a meeting duly called and held, MediaOne's Board of
Directors has unanimously: (i) determined that this Agreement and the
transactions contemplated hereby are advisable and fair to and in the best
interests of MediaOne's stockholders; (ii) approved and adopted this Agreement
and the transactions contemplated hereby; and (iii) resolved (subject to Section
6.2(b)) to recommend approval and adoption of this Agreement by its
stockholders.
(c) The Agreement and Plan of Merger, dated as of March 22, 1999
(the "Comcast Merger Agreement"), by and between MediaOne and Comcast
Corporation ("Comcast") has been duly terminated by MediaOne pursuant to Section
10.1(d)(iii) thereof.
SECTION 4.3. Governmental Authorization. The execution, delivery
and performance by MediaOne of this Agreement and the consummation by MediaOne
of the transactions contemplated hereby require no action by or in respect of,
or filing with, any governmental body, agency, official or authority, domestic
or foreign (a "Governmental Authority"), other than: (i) notices to, or consents
or waivers from, the relevant Franchising Authorities in respect of the MediaOne
Franchises (the "Franchise Consents"), and the FCC in connection with a change
of control and/or assignment of the holder of the FCC licenses of MediaOne and
the MediaOne Subsidiaries ("License Consents"); (ii) any filings as may be
required with the FCC or any Governmental Authority to obtain its consent to the
assumption by AT&T or Merger Sub of the MediaOne Social Contract (the "Social
Contract Consent"); (iii) the filing of a certificate of merger with respect to
the Merger with the Delaware Secretary of State and appropriate documents with
the relevant authorities of other states in which MediaOne is qualified to do
business; (iv) compliance with any applicable requirements of the HSR Act; (v)
compliance with any applicable requirements of the 1933 Act, 1934 Act, and any
other applicable securities laws, whether state or foreign; and (vii) any
actions or filings the absence of which, individually or in the aggregate, would
not be reasonably expected to have a MediaOne Material Adverse Effect or
materially impair or delay the ability of MediaOne to consummate the
transactions contemplated by this Agreement.
SECTION 4.4. Non-contravention. The execution, delivery and
performance by MediaOne of this Agreement and the consummation by MediaOne of
the transactions contemplated hereby do not and will not (i) contravene,
conflict with, or result in any violation or breach of any provision of the
certificate of incorporation or bylaws of MediaOne; (ii) assuming compliance
with the matters referred to in Section 4.3, contravene, conflict with or result
in a violation or breach of any provision of any applicable law, statute,
ordinance, rule, regulation, judgment, injunction, order, or decree; (iii)
require any consent or other action by any Person under, constitute a default
(or an event that, with or without notice or lapse of time or both, would
constitute a default) under, or cause or permit the termination, cancellation,
acceleration, triggering or other change of any right or obligation or the loss
of any benefit to which MediaOne or any MediaOne Subsidiary is entitled under
(A) any provision of any agreement or other instrument binding upon MediaOne or
any MediaOne Subsidiary or (B) any license, franchise, permit, certificate,
approval or other similar authorization held by, or affecting, or
22
relating in any way to, the assets or business of, MediaOne or any MediaOne
Subsidiary; or (iv) result in the creation or imposition of any Lien on any
asset of MediaOne or any MediaOne Subsidiary, other than such exceptions in the
case of clauses (ii), (iii) and (iv) as would not be, individually or in the
aggregate, reasonably expected to have a MediaOne Material Adverse Effect or
materially impair or delay the ability of MediaOne to consummate the
transactions contemplated by this Agreement.
SECTION 4.5. Capitalization. (a) The authorized capital stock of
MediaOne consists of 2,000,000,000 shares of MediaOne Common Stock and
200,000,000 shares of Preferred Stock, par value $1.00 per share, of which (i)
10,000,000 shares have been designated Series A Junior Participating Cumulative
Preferred Stock (the "MediaOne Series A Preferred Stock"), (ii) 50,000 shares
have been designated MediaOne Series C Preferred Stock, (iii) 20,000,000 shares
have been designated MediaOne Series D Preferred Stock, (iv) 1,000,000 shares
have been designated MediaOne Series E Preferred Stock and (v) 2,000,000 shares
have been designated Series F Junior Participating Cumulative Preferred Stock
(the "MediaOne Series F Preferred Stock") and reserved for issuance upon the
exercise of rights distributed to holders of MediaOne Common Stock pursuant to
the MediaOne 1999 Rights Agreement. As of the close of business on April 29,
1999, there were outstanding (i) 605,466,754 shares of MediaOne Common Stock
(inclusive of all shares of restricted stock granted under any compensatory
plans or arrangements), (ii) MediaOne Stock Options to purchase an aggregate of
29,126,981 shares of MediaOne Common Stock (of which options to purchase an
aggregate of 9,907,524 shares of MediaOne Common Stock were exercisable), (iii)
phantom shares or stock units issued under any stock option, compensation or
deferred compensation plan or arrangement with respect to an aggregate of
339,703 shares of MediaOne Common Stock, (iv) no shares of MediaOne Series A
Preferred Stock, (iv) 50,000 shares of MediaOne Series C Stock, (vi) 19,999,478
shares of MediaOne Series D Preferred Stock (which are convertible, subject to
the terms and conditions thereof, into 39,609,366 shares of MediaOne Common
Stock), (vii) 996,562 shares of MediaOne Series E Preferred Stock and (viii) no
shares of MediaOne Series F Preferred Stock. All outstanding shares of capital
stock of MediaOne have been, and all shares that may be issued pursuant to any
compensatory plan or arrangement will be, when issued in accordance with the
respective terms thereof, duly authorized, validly issued, fully paid and
nonassessable.
(b) Except as set forth in this Section 4.5 and for changes since
April 29, 1999 resulting from the exercise of employee stock options outstanding
on such date (and the grant or award of employee stock options in the ordinary
course of business and the exercise thereof) and the conversion of MediaOne
Series D Preferred Stock outstanding on such date, there are no outstanding (i)
shares of capital stock or voting securities of MediaOne, (ii) securities of
MediaOne convertible into or exchangeable for shares of capital stock or voting
securities of MediaOne or (iii) options or other rights to acquire from
MediaOne, or other obligation of MediaOne to issue any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of MediaOne. There are no outstanding obligations of MediaOne
or any MediaOne Subsidiary to repurchase, redeem or otherwise acquire any of the
securities referred to in clauses (i), (ii) and (iii) above (collectively, the
"MediaOne Securities").
23
SECTION 4.6. Subsidiaries. (a) Each MediaOne Subsidiary is a
corporation or other legal entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and has all
corporate, partnership or other similar powers required to carry on its business
as now conducted, other than such exceptions as, individually or in the
aggregate, have not had and would not be reasonably expected to have a MediaOne
Material Adverse Effect. Each MediaOne Subsidiary is duly qualified to do
business as a foreign corporation or other foreign legal entity and is in good
standing in each jurisdiction where such qualification is necessary, with such
exceptions, individually or in the aggregate, as have not had and would not be
reasonably expected to have a MediaOne Material Adverse Effect. The MediaOne
Disclosure Schedule sets forth a list of all MediaOne Significant Subsidiaries
and their respective jurisdictions of organization and identifies MediaOne's
(direct or indirect) percentage ownership interest therein.
(b) All of the outstanding capital stock of, or other voting
securities or ownership interests in, each MediaOne Significant Subsidiary, is
owned by MediaOne, directly or indirectly, free and clear of any Lien and free
of any other limitation or restriction (including any restriction on the right
to vote, sell or otherwise dispose of such capital stock or other voting
securities or ownership interests). There are no outstanding (i) securities of
MediaOne or any MediaOne Subsidiary convertible into or exchangeable for shares
of capital stock or other voting securities or ownership interests in any
MediaOne Significant Subsidiary or (ii) options or other rights to acquire from
MediaOne or any MediaOne Subsidiary, or other obligation of MediaOne or any
MediaOne Subsidiary to issue any capital stock, or other voting securities or
ownership interests in, or any securities convertible into or exchangeable for
any capital stock or other voting securities or ownership interests in, any
MediaOne Significant Subsidiary. There are no outstanding obligations of
MediaOne or any MediaOne Significant Subsidiary to repurchase, redeem or
otherwise acquire any of the items referred to in clauses (i) and (ii) above.
SECTION 4.7. SEC Filings. (a) MediaOne has delivered or made
available to AT&T: (i) MediaOne's annual report on Form 10-K for its fiscal year
ended December 31, 1997 and the MediaOne 10-K; (ii) its proxy or information
statements relating to meetings of, or actions taken without a meeting by, the
stockholders of MediaOne held since December 31, 1997; and (iii) all of its
other reports, statements, schedules and registration statements filed with the
SEC since December 31, 1997 (the documents referred to in this Section 4.7(a),
collectively, the "MediaOne SEC Documents").
(b) As of its filing date, each MediaOne SEC Document complied as
to form in all material respects with the applicable requirements of the 1933
Act and the 1934 Act, as the case may be.
(c) As of its filing date, each MediaOne SEC Document filed
pursuant to the 1934 Act did not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading.
24
(d) Each MediaOne SEC Document that is a registration statement,
as amended or supplemented, if applicable, filed pursuant to the 1933 Act, as of
the date such registration statement or amendment became effective, did not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading.
SECTION 4.8. Financial Statements. The audited consolidated
financial statements and unaudited consolidated interim financial statements of
MediaOne included in the MediaOne SEC Documents fairly present, in all material
respects, in conformity with generally accepted accounting principles ("GAAP")
applied on a consistent basis (except as may be indicated in the notes thereto),
the consolidated financial position of MediaOne and its consolidated
Subsidiaries as of the dates thereof and their consolidated results of
operations and cash flows for the periods then ended (subject to normal year-end
adjustments in the case of any unaudited interim financial statements).
SECTION 4.9. Information Supplied. The information supplied by
MediaOne for inclusion or incorporation in the registration statement on Form
S-4 or any amendment or supplement thereto pursuant to which shares of AT&T
Common Stock issuable in the Merger will be registered with the SEC (the
"Registration Statement") shall not at the time the Registration Statement is
declared effective by the SEC contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The information supplied by MediaOne for
inclusion in the proxy statement/prospectus or any amendment or supplement
thereto (the "Proxy Statement") to be sent to the stockholders of MediaOne in
connection with their meeting to consider this Agreement and the Merger (the
"MediaOne Stockholders' Meeting") shall not, on the date the Proxy Statement is
first mailed to the stockholders of MediaOne or at the time of the MediaOne
Stockholders' Meeting or at the Effective Time, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
SECTION 4.10. Absence of Certain Changes. Since the MediaOne
Balance Sheet Date, the business of MediaOne and the MediaOne Subsidiaries has
been conducted in the ordinary course consistent with past practices and there
has not been:
(a) any event, occurrence or development of a state of
circumstances or facts which, individually or in the aggregate, has had or
would be reasonably expected to have a MediaOne Material Adverse Effect; or
(b) any action, event, occurrence or transaction that would have
been prohibited by clause (a), (b), (c), (d), (f), (i) or (q) of the second
sentence of Section 6.1 (or committed to do any of the foregoing) if this
Agreement had been in effect as of the time thereof.
SECTION 4.11. No Undisclosed Material Liabilities. There are no
liabilities or obligations of MediaOne or any MediaOne Subsidiary of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, and there is no existing condition,
25
situation or set of circumstances that could be reasonably expected to result in
such a liability or obligation, other than:
(a) liabilities or obligations disclosed and provided for in
the MediaOne Balance Sheet or in the notes thereto or in MediaOne SEC
Documents filed prior to the date hereof or in the MediaOne 10-K;
(b) liabilities or obligations incurred in the ordinary course
of business consistent with past practice since the MediaOne Balance Sheet
Date; and
(c) liabilities or obligations that, individually or in the
aggregate have not had and would not be reasonably expected to have a
MediaOne Material Adverse Effect.
SECTION 4.12. Compliance with Laws and Court Orders. MediaOne and
the MediaOne Subsidiaries hold all licenses, franchises, certificates, consents,
permits, qualifications and authorizations from all Governmental Authorities
necessary for the lawful conduct of their business, except where the failure to
hold any of the foregoing, individually or in the aggregate, has not had and
would not be reasonably expected to have a MediaOne Material Adverse Effect.
MediaOne and each of the MediaOne Subsidiaries are and have been in compliance
with, and to the knowledge of MediaOne, are not under investigation with respect
to and have not been threatened to be charged with or given notice of any
violation of, any such license, franchise, certificate, consent, permit,
qualification or authorization, applicable law, statute, ordinance, rule,
regulation, judgment, injunction, order or decree, except for failures to comply
or violations that, individually or in the aggregate, have not had and would not
be reasonably expected to have a MediaOne Material Adverse Effect.
SECTION 4.13. Litigation. There is no action, suit, investigation
or proceeding (or any basis therefor) pending against, or, to the knowledge of
MediaOne, threatened against or affecting, MediaOne or any MediaOne Subsidiary
or any of their respective properties before any court or arbitrator or before
or by any other Governmental Authority, that, individually or in the aggregate,
would be reasonably expected to have a MediaOne Material Adverse Effect.
SECTION 4.14. Finders' Fees. Except for Xxxxxx Brothers Inc. and
Xxxxx & Co., Incorporated, there is no investment banker, broker, finder or
other intermediary that has been retained by or is authorized to act on behalf
of MediaOne or any MediaOne Subsidiary who might be entitled to any fee or
commission from AT&T, any of the AT&T Subsidiaries, MediaOne or any of the
MediaOne Subsidiaries in connection with the transactions contemplated by this
Agreement. A copy of Xxxxxx Brothers Inc. engagement agreement has been provided
to AT&T.
SECTION 4.15. Opinion of Financial Advisor. MediaOne has received
an opinion of Xxxxxx Brothers Inc., financial advisor to MediaOne, to the effect
that, as of May 6, 1999, from a financial point of view, the Common Stock
Consideration is fair to the holders of MediaOne Common Stock.
26
SECTION 4.16. Taxes. Except as set forth in the MediaOne Balance
Sheet (including the notes thereto) and except as would not be, individually or
in the aggregate, reasonably expected to have a MediaOne Material Adverse
Effect, (i) all MediaOne Tax Returns required to be filed with any taxing
authority by, or with respect to, MediaOne and the MediaOne Subsidiaries have
been filed in accordance with all applicable laws; (ii) MediaOne and the
MediaOne Subsidiaries have timely paid all Taxes shown as due and payable on the
MediaOne Tax Returns that have been so filed, and, as of the time of filing, the
MediaOne Tax Returns correctly reflected the facts regarding the income,
business, assets, operations, activities and the status of MediaOne and the
MediaOne Subsidiaries (other than Taxes which are being contested in good faith
and for which adequate reserves are reflected on the MediaOne Balance Sheet);
(iii) MediaOne and the MediaOne Subsidiaries have made provision for all Taxes
payable by MediaOne and the MediaOne Subsidiaries for which no MediaOne Tax
Return has yet been filed; (iv) the charges, accruals and reserves for Taxes
with respect to MediaOne and the MediaOne Subsidiaries reflected on the MediaOne
Balance Sheet are adequate under GAAP to cover the Tax liabilities accruing
through the date thereof; (v) there is no action, suit, proceeding, audit or
claim now proposed or pending against or with respect to MediaOne or any
MediaOne Subsidiary in respect of any Tax where there is a reasonable
possibility of an adverse determination; (vi) the federal income Tax Returns of
MediaOne and the MediaOne Subsidiaries have been examined and settled with the
Internal Revenue Service (the "IRS") (or the applicable statutes of limitation
for the assessment of federal income Taxes for such periods have expired) for
all years through 1987; and (vii) there are no material Liens or encumbrances
for Taxes on any of the assets of MediaOne or any MediaOne Subsidiary except
liens for current Taxes not yet due. For purposes of this Agreement, "Taxes"
shall mean any and all taxes, charges, fees, levies or other assessments,
including, without limitation, all net income, gross income, gross receipts,
excise, stamp, real or personal property, ad valorem, withholding, social
security (or similar), unemployment, occupation, use, service, service use,
license, net worth, payroll, franchise, severance, transfer, recording,
employment, premium, windfall profits, environmental (including taxes under
Section 59A of the Code), customs duties, capital stock, profits, disability,
sales, registration, value added, alternative or add-on minimum, estimated or
other taxes, assessments or charges imposed by any federal, state, local or
foreign governmental entity and any interest, penalties, or additions to tax
attributable thereto. For purposes of this Agreement, "Tax Returns" shall mean
any return, report, form or similar statement required to be filed with respect
to any Tax (including any attached schedules), including, without limitation,
any information return, claim for refund, amended return or declaration of
estimated Tax.
SECTION 4.17. Tax Opinions. There are no facts or circumstances
relating to MediaOne or, to the knowledge of MediaOne, U S WEST, that would
prevent Weil, Gotshal & Xxxxxx LLP from delivering the opinion referred to in
Section 9.3(c) as of the date hereof.
SECTION 4.18. Employee Benefit Plans and Labor Matters.
Except as have not had and would not be reasonably expected to have,
individually or in the aggregate, a MediaOne Material Adverse Effect:
(a) The MediaOne Disclosure Schedule contains a true and complete
list, as of the date hereof, of all MediaOne Employee Plans and all MediaOne
Benefit Arrangements.
27
Copies of each MediaOne Employee Plan and each MediaOne Benefit Arrangement
(and, if applicable, related trust agreements) and all amendments thereto and
written interpretations thereof have been made available to AT&T as of the date
hereof or will have been made available to AT&T within thirty days after the
date hereof, together with the three most recent annual reports (Form 5500
including, if applicable, Schedule B thereto) and the most recent actuarial
valuation report prepared in connection with any MediaOne Employee Plan.
(b) No "accumulated funding deficiency," as defined in Section
412 of the Code, has been incurred with respect to any MediaOne Employee Plan
subject to such Section 412, whether or not waived. No "reportable event" within
the meaning of Section 4043 of ERISA, and no event described in Section 4062 or
4063 of ERISA has occurred in connection with any MediaOne Employee Plan.
Neither MediaOne nor any ERISA Affiliate of MediaOne has (i) engaged in, or is a
successor or parent corporation to an entity that has engaged in, a transaction
described in Sections 4069 or 4212(c) of ERISA or (ii) incurred, or reasonably
expects to incur prior to the Effective Time (A) any liability under Title IV of
ERISA arising in connection with the termination of, or a complete or partial
withdrawal from, any plan covered or previously covered by Title IV of ERISA or
(B) any liability under Section 4971 of the Code that in either case could
become a liability of MediaOne, any MediaOne Subsidiary, AT&T or any of their
ERISA Affiliates after the Effective Time. If a "complete withdrawal" by
MediaOne and all of its ERISA Affiliates were to occur as of the Effective Time
with respect to all Multiemployer Plans, none of MediaOne, any MediaOne
Subsidiary or any of their ERISA Affiliates would incur any withdrawal liability
under Title IV of ERISA.
(c) As of December 31, 1998, the fair market value of the assets
of each MediaOne Pension Plan (excluding for these purposes any accrued but
unpaid contributions) exceeded the present value of all benefits accrued under
such MediaOne Pension Plan determined on a termination basis using the
assumptions established by the PBGC as in effect on such date. As of December
31, 1998, the aggregate unfunded liability of MediaOne and any MediaOne
Subsidiary in respect of all MediaOne Deferred Compensation Plans, computed
using reasonable actuarial assumptions and determined as if all benefits under
such plans were vested and payable as of such date, did not exceed $53,000,000.
(d) Each MediaOne Employee Plan that is intended to be qualified
under Section 401(a) of the Code is the subject of a favorable qualification
determination letter issued by the IRS and to MediaOne's knowledge each such
MediaOne Employee Plan is so qualified.
(e) There is no contract, plan or arrangement (written or
otherwise) covering any employee or former employee of MediaOne or any MediaOne
Subsidiary that, individually or collectively, could give rise to the payment of
any amount that would not be deductible pursuant to the terms of Sections 162(m)
or 280G of the Code.
(f) MediaOne has made available to AT&T as of the date hereof, or
will have made available to AT&T within thirty days after the date hereof, a
list and copies of each MediaOne International Plan. According to the actuarial
assumptions and valuations most recently used for the purpose of funding each
MediaOne International Plan (or, if the same has
28
no such assumptions and valuations or is unfunded, according to actuarial
assumptions and valuations in use by the PBGC on the date hereof), as of
December 31, 1998 the total amount or value of the funds available under such
MediaOne International Plan to pay benefits accrued thereunder or segregated in
respect of such accrued benefits, together with any reserve or accrual with
respect thereto, exceeded the present value of all benefits (actual or
contingent) accrued as of such date of all participants and past participants
therein in respect of which MediaOne or any MediaOne Subsidiary has or would
have after the Effective Time any obligation. From and after the Effective Time,
AT&T and its Affiliates will get the full benefit of any such funds, accruals or
reserves for the benefit of covered employees.
(g) As of December 31, 1998, the aggregate amount of the
accumulated post-retirement benefit obligation under all MediaOne Employee
Plans, MediaOne Benefit Arrangements and MediaOne International Plans, as
determined in accordance with Statement of Financial Accounting Standards No.
106, did not exceed $25,000,000.
(h) Each MediaOne Employee Plan, MediaOne Benefit Arrangement and
MediaOne International Plan has been maintained in compliance with its terms and
with the requirements prescribed by any and all applicable statutes, orders,
rules and regulations (including any special provisions relating to registration
or qualification where such Plan was intended so to be so registered or
qualified) and has been maintained in good standing with applicable regulatory
authorities.
(i) No employee or former employee of MediaOne or any MediaOne
Subsidiary will become entitled to any bonus, retirement, severance, job
security or similar benefit or enhanced such benefit (including acceleration of
vesting or exercise of an incentive award) as a result of the transactions
contemplated hereby (either alone or together with any other event).
(j) Neither MediaOne nor any of the MediaOne Subsidiaries is a
party to any collective bargaining agreement. Neither MediaOne nor any of the
MediaOne Subsidiaries is involved in or threatened with any labor dispute, work
stoppage, labor strike, slowdown or grievance. To the knowledge of MediaOne,
there is no organizing effort or representation question at issue with respect
to any employee of MediaOne or any of the MediaOne Subsidiaries.
SECTION 4.19. Environmental Matters. (a) Except as have not
had and would not be reasonably expected to have, individually or in the
aggregate, a MediaOne Material Adverse Effect:
(A) no notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has been
filed, no penalty has been assessed, and no investigation, action,
claim, suit, proceeding or review (or any basis therefor) is pending
or, to the knowledge of MediaOne, is threatened by any Governmental
Authority or other Person relating to or arising out of any
Environmental Law;
29
(B) MediaOne is and has been in compliance with all
Environmental Laws and all Environmental Permits; and
(C) there are no liabilities of or relating to MediaOne or
any MediaOne Subsidiary of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise arising
under or relating to any Environmental Law and there are no facts,
conditions, situations or set of circumstances that could reasonably
be expected to result in or be the basis for any such liability.
(b) There have been no environmental investigations, studies,
audits, tests, reviews or other analyses conducted of which MediaOne has
knowledge in relation to the current or prior business of MediaOne or any
MediaOne Subsidiary or any property or facility now or previously owned or
leased by MediaOne or any MediaOne Subsidiary that reveal matters that,
individually or in the aggregate, have had or would reasonably be expected to
have a MediaOne Material Adverse Effect.
(c) For purposes of this Section 4.19, the terms MediaOne and
MediaOne Subsidiary shall include any entity that is, in whole or in part, a
predecessor of MediaOne or any MediaOne Subsidiary.
SECTION 4.20. Intellectual Property. With such exceptions as,
individually or in the aggregate, have not had and would not be reasonably
expected to have a MediaOne Material Adverse Effect, each of MediaOne and the
MediaOne Subsidiaries own or have a valid license to use each trademark, service
xxxx, trade name, invention, patent, trade secret, copyright, know-how
(including any registrations or applications for registration of any of the
foregoing) or any other similar type of proprietary intellectual property right
(collectively, the "MediaOne Intellectual Property") necessary to carry on its
business substantially as currently conducted. Neither MediaOne nor any MediaOne
Subsidiary has received any notice of infringement of or conflict with, and to
MediaOne's knowledge, there are no infringements of or conflicts with, the
rights of any Person with respect to the use of any MediaOne Intellectual
Property that, in either such case, individually or in the aggregate, have had
or would be reasonably expected to have, a MediaOne Material Adverse Effect.
SECTION 4.21. Contracts. Neither MediaOne nor any of the MediaOne
Subsidiaries is a party to or bound by (i) any "material contract" (as such term
is defined in Item 601(b)(10) of Regulation S-K of the SEC) or any agreement,
contract or commitment that would be such a "material contract" but for the
exception for contracts entered into in the ordinary course of business, (ii)
any non-competition agreement or any other agreement or obligation which
materially limits or will materially limit MediaOne or any of the MediaOne
Subsidiaries from engaging in the business of providing cable television,
telephony or data transmission services in the United States or the business of
providing programming content in the United States, the United Kingdom or Japan,
(iii) any agreement, contract or commitment to which TW or any of its Affiliates
is a party that amends the TWE Partnership Agreement or any related agreement or
affects the rights or obligations of MediaOne or any MediaOne Subsidiary with
30
respect to TWE or any TWE Subsidiary or (iv) any material agreement, contract or
commitment to which U S WEST or any of its Affiliates is a party that is not in
the ordinary course of business of MediaOne and the MediaOne Subsidiaries. With
such exceptions as, individually or in the aggregate, have not had, and would
not be reasonably expected to have, a MediaOne Material Adverse Effect, (x) each
of the contracts, agreements and commitments of the MediaOne and the MediaOne
Subsidiaries is valid and in full force and effect and (y) neither MediaOne nor
any of the MediaOne Subsidiaries has violated any provision of, or committed or
failed to perform any act which, with or without notice, lapse of time, or both,
would constitute a default under the provisions of any such contract, agreement
or commitment. To the knowledge of MediaOne, no counterparty to any such
contract, agreement or commitment has violated any provision of, or committed or
failed to perform any act which, with or without notice, lapse of time, or both
would constitute a default or other breach under the provisions of, such
contract, agreement or commitment, except for defaults or breaches which,
individually or in the aggregate, have not had, or would not reasonably be
expected to have, a MediaOne Material Adverse Effect. Neither MediaOne nor any
MediaOne Subsidiary is a party to, or otherwise a guarantor of or liable with
respect to, any interest rate, currency or other swap or derivative transaction,
other than any such transactions which are not material to the business of the
MediaOne Group. MediaOne has provided or made available to AT&T a copy of each
agreement described in item (i), (ii), (iii) or (iv) above.
SECTION 4.22. TWE. MediaOne, directly or indirectly, owns a 25.51%
priority capital and residual equity interest in TWE as described in the TWE
Partnership Agreement. As of the date hereof, to the knowledge of MediaOne,
there are no facts or circumstances with respect to TWE or the TWE Subsidiaries
that, individually or in the aggregate, have had or would be reasonably expected
to have a material adverse effect on MediaOne's investment in TWE.
SECTION 4.23. Vote Required. The only vote of the holders of any
class or series of capital stock of MediaOne necessary to approve this Agreement
and the transactions contemplated hereby is the affirmative vote of the holders
of a majority of the outstanding shares of MediaOne Common Stock (the "MediaOne
Stockholders' Approval").
SECTION 4.24. Antitakeover Statutes, Rights Agreement and Charter
Provisions. (a) MediaOne has taken all action necessary to exempt the Merger and
this Agreement and the transactions contemplated hereby from the restrictions of
Section 203 of Delaware Law, and, accordingly, neither such Section nor any
other antitakeover or similar statute or regulation applies or purports to apply
to any such transactions. No other "control share acquisition," "fair price,"
"moratorium" or other antitakeover laws or regulations enacted under U.S. state
or federal laws apply to this Agreement or any of the transactions contemplated
hereby.
(b) The Amended and Restated Rights Agreement dated as of October
31, 1995 between MediaOne and State Street Bank and Trust Company, as Rights
Agent, and the rights issued thereunder, have expired in accordance with their
terms and have no further force or effect.
31
(c) MediaOne and the MediaOne Board have taken all necessary
action to (i) render the MediaOne 1999 Rights Agreement inapplicable to the
Merger and the other transactions contemplated by this Agreement, (ii) provide
that (A) neither AT&T nor any AT&T Subsidiary shall be deemed an Acquiring
Person (as defined in the MediaOne 1999 Rights Agreement) as a result of this
Agreement or any of the transactions contemplated hereby, (B) no Distribution
Date (as defined in the MediaOne 1999 Rights Agreement) shall be deemed to have
occurred as a result of this Agreement or the consummation of any of the
transactions contemplated hereby and (C) the rights issuable pursuant to the
MediaOne 1999 Rights Agreement will not separate from the shares of MediaOne
Common Stock, as a result of the approval, execution or delivery of this
Agreement or the consummation of the transactions contemplated hereby.
(d) MediaOne and the MediaOne Board have taken all necessary
action to approve this Agreement and the transactions contemplated hereby for
purposes of Article IX of the certificate of incorporation of MediaOne.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF AT&T
Except as set forth in the AT&T Disclosure Schedule or as disclosed
in the AT&T SEC Documents filed prior to the date hereof, each of AT&T and
Merger Sub represents and warrants to MediaOne that:
SECTION 5.1 Corporate Existence and Power. Each of AT&T and Merger
Sub is a corporation duly incorporated and subsisting under the laws of its
jurisdiction of incorporation and has all corporate powers required to carry on
its business as now conducted. Each of AT&T and Merger Sub is duly qualified to
do business as a foreign corporation and is in good standing in each
jurisdiction where such qualification is necessary except for those
jurisdictions where failure to be so qualified, individually or in the
aggregate, has not had and would not be reasonably expected to have an AT&T
Material Adverse Effect. AT&T has heretofore delivered or made available to
MediaOne true and complete copies of the certificate of incorporation and bylaws
of AT&T, as currently in effect.
SECTION 5.2. Corporate Authorization. (a) The execution, delivery
and performance by AT&T and Merger Sub and the consummation by AT&T and Merger
Sub of the transactions contemplated hereby are within the corporate powers of
AT&T and Merger Sub, and have been duly authorized by all necessary corporate
action. This Agreement constitutes a valid and binding agreement of each of AT&T
and Merger Sub enforceable against each of AT&T and Merger Sub in accordance
with its terms, except (i) as the same may be limited by applicable bankruptcy,
insolvency, moratorium or similar laws of general application relating to or
affecting creditors' rights, and (ii) for the limitations imposed by general
principles of equity.
(b) AT&T's Board of Directors, at a meeting duly called and held,
has (i) determined that this Agreement and the transactions contemplated hereby
are fair to and in the
32
best interests of AT&T's stockholders and (ii) approved this Agreement and the
transactions contemplated hereby.
SECTION 5.3. Governmental Authorization. The execution, delivery
and performance by AT&T and Merger Sub of this Agreement and the consummation by
AT&T and Merger Sub of the transactions contemplated hereby require no action by
or in respect of, or filing with, any Governmental Authority, other than: (i)
the Franchise Consents and the License Consents; (ii) the Social Contract
Consent; (iii) the filing of a certificate of merger with respect to the Merger
with the Delaware Secretary of State and appropriate documents with the relevant
authorities of other states in which AT&T is qualified to do business; (iv) the
filing with the Secretary of State of the State of New York of certificates of
designations creating the AT&T Series C Preferred Stock, the AT&T Series D
Preferred Stock and the AT&T Series E Preferred Stock; (v) compliance with any
applicable requirements of the HSR Act; (vi) compliance with any applicable
requirements of the 1933 Act, the 1934 Act and any other applicable securities
laws, whether state or foreign; and (vii) any actions or filings the absence of
which, individually or in the aggregate, would not be reasonably expected to
have an AT&T Material Adverse Effect or materially impair or delay the ability
of AT&T to consummate the transactions contemplated by this Agreement.
SECTION 5.4. Non-contravention. The execution, delivery and
performance by AT&T and Merger Sub of this Agreement and the consummation by
AT&T and Merger Sub of the transactions contemplated hereby do not and will not
(i) contravene, conflict with, or result in any violation or breach of any
provision of the certificate of incorporation or bylaws of AT&T or Merger Sub;
(ii) assuming compliance with the matters referred to in Section 5.3,
contravene, conflict with or result in a violation or breach of any provision of
any law, rule, regulation, judgment, injunction, order or decree; (iii) require
any consent or other action by any Person under, constitute a default under (or
an event that, with or without notice or lapse of time or both, would constitute
a default), or cause or permit the termination, cancellation, acceleration,
triggering or other change of any right or obligation or the loss of any benefit
to which AT&T or any of the AT&T Subsidiary is entitled under (A) any provision
of any agreement or other instrument binding upon AT&T or any AT&T Subsidiary or
(B) any license, franchise, permit, certificate, approval or other similar
authorization held by, or affecting, or relating in any way to, the assets or
business of AT&T or any AT&T Subsidiary; (iv) result in the creation or
imposition of any Lien on any asset of AT&T or any AT&T Subsidiary; or (v)
assuming MediaOne does not have any right(s), present or contingent, to hold
voting or nonvoting interest(s), equity interest(s), and/or beneficial
ownership(s) in the capital stock of TW, contravene, conflict with, or result in
any violation or breach of any provision of the FTC Consent Order, other than
such exceptions in the case of clauses (ii), (iii), (iv) and (v) as would not
be, individually or in the aggregate, reasonably expected to have an AT&T
Material Adverse Effect or materially impair the ability of AT&T to consummate
the transactions contemplated by this Agreement.
SECTION 5.5. Capitalization. (a) The authorized capital stock of
AT&T consists of (i) 6 billion shares of Common Stock, par value $1.00 per share
(the "AT&T Common Stock"), (ii) 2.5 billion shares of Class A Liberty Media
Group Common Stock, par value $1.00 per share (the "Liberty Media Class A Common
Stock "), (iii) 250 million shares of
33
Class B Liberty Media Group Common Stock, par value $1.00 per share (the
"Liberty Media Class B Common Stock"), and (iv) 100 million shares of preferred
stock, $1.00 par value per share. As of the close of business on April 16, 1999,
there were outstanding (i) 3,181,898,645 shares of AT&T Common Stock, (ii)
employee and non-employee director stock options to purchase an aggregate of
approximately 155 million shares of AT&T Common Stock (of which options to
purchase an aggregate of approximately 50 million shares of AT&T Common Stock
were exercisable), and (iii) no shares of AT&T Preferred Stock. All outstanding
shares of capital stock of AT&T have been duly authorized and validly issued and
are fully paid and nonassessable.
(b) Except as set forth in this Section 5.5 and for changes since
April 16, 1999 resulting from (x) the exercise of employee and non-employee
director stock options outstanding on such date (and the grant or award of
employee and non-employee director stock options in the ordinary course of
business and the exercise thereof), and (y) the issuance of shares of AT&T
Common Stock pursuant to publicly announced transactions, there are as of the
date of this Agreement no outstanding (i) shares of capital stock or voting
securities of AT&T (in each case, other than shares of Liberty Media Class A
Common Stock or Liberty Media Class B Common Stock), (ii) securities of AT&T
convertible into or exchangeable for shares of capital stock or voting
securities of AT&T (in each case, other than shares of Liberty Media Class A
Common Stock or Liberty Media Class B Common Stock) or (iii) options or other
rights to acquire from AT&T or other obligations of AT&T to issue, any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of AT&T (in each case, other than shares of
Liberty Media Class A Common Stock or Liberty Media Class B Common Stock). There
are as of the date of this Agreement no outstanding obligations of AT&T or any
AT&T Subsidiary to repurchase, redeem or otherwise acquire any of the securities
referred to in clause (i), (ii) or (iii) above (collectively, the "AT&T
Securities").
(c) The AT&T Securities to be issued as part of the Common Stock
Consideration, the Series C Consideration, Series D Consideration and Series E
Consideration (or upon exercise of Adjusted Options) have been duly authorized
and, when issued and delivered in accordance with the terms of this Agreement
(or the Adjusted Options, as the case may be), will have been validly issued and
will be fully paid and nonassessable and the issuance thereof is not subject to
any preemptive or other similar right. Prior to the Effective Time, AT&T will
reserve for issuance the AT&T Common Stock to be issued upon exercise of the
Adjusted Options.
SECTION 5.6. Subsidiaries. (a) Each AT&T Subsidiary is a
corporation or other legal entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, has all corporate
partnership or other similar powers required to carry on its business as now
conducted other than such exceptions as, individually or in the aggregate, have
not had and would not reasonably be expected to have an AT&T Material Adverse
Effect. Each AT&T Subsidiary is duly qualified to do business as a foreign
corporation or other foreign legal entity and is in good standing in each
jurisdiction where such qualification is necessary, with such exceptions,
individually or in the aggregate, as have not had and would
34
not be reasonably expected to have an AT&T Material Adverse Effect. The AT&T
Disclosure Schedule sets forth a list of all AT&T Significant Subsidiaries.
(b) All of the outstanding capital stock of, or other voting
securities or ownership interests in, each AT&T Significant Subsidiary is owned
by AT&T, directly or indirectly, free and clear of any Lien and free of any
other limitation or restriction (including any restriction on the right to vote,
sell or otherwise dispose of such capital stock or other voting securities or
ownership interests). There are no outstanding (i) securities of AT&T or any
AT&T Subsidiary convertible into or exchangeable for shares of capital stock or
other voting securities or ownership interests in any AT&T Significant
Subsidiary or (ii) options or other rights to acquire from AT&T or any AT&T
Subsidiary, or other obligations of AT&T or any AT&T Subsidiary to issue, any
capital stock or other voting securities or ownership interests in, or any
securities convertible into or exchangeable for any capital stock or other
voting securities or ownership interests in, any AT&T Significant Subsidiary.
There are no outstanding obligations of AT&T or any AT&T Significant Subsidiary
to repurchase, redeem or otherwise acquire any of the securities referred to in
clauses (i) or (ii) above.
SECTION 5.7. SEC Filings. (a) AT&T has delivered or made available
to MediaOne (i) AT&T's annual reports on Form 10-K for its fiscal years ended
December 31, 1998, 1997 and 1996, (ii) its proxy or information statements
relating to meetings of, or actions taken without a meeting by AT&T's
stockholders held since December 31, 1997, and (iii) all of its other reports,
statements, schedules and registration statements filed with the SEC since
December 31, 1997 (the documents referred to in this Section 5.7(a),
collectively, the "AT&T SEC Documents").
(b) As of its filing date, each AT&T SEC Document complied as to
form in all material respects with the applicable requirements of the 1933 Act
and 1934 Act, as the case may be.
(c) As of its filing date, each AT&T SEC Document filed pursuant
to the 1934 Act did not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
(d) Each AT&T SEC Document that is a registration statement, as
amended or supplemented, if applicable, filed pursuant to the 1933 Act, as of
the date such registration statement or amendment became effective, did not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading.
SECTION 5.8. Financial Statements. The audited consolidated
financial statements and unaudited consolidated interim financial statements of
AT&T included in the AT&T SEC Documents fairly present, in all material
respects, in conformity with GAAP applied on a consistent basis (except as may
be indicated in the notes thereto), the consolidated financial position of AT&T
and its consolidated Subsidiaries as of the dates thereof and their consolidated
35
results of operations and cash flows for the periods then ended (subject to
normal year-end adjustments in the case of any unaudited interim financial
statements).
SECTION 5.9. Information Supplied. The information supplied by AT&T
for inclusion in the Registration Statement shall not at the time the
Registration Statement is declared effective by the SEC contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The information
supplied by AT&T for inclusion in the Proxy Statement to be sent to the
stockholders of MediaOne in connection with the MediaOne Stockholders' Meeting
shall not, on the date the Proxy Statement is first mailed to the stockholders
of MediaOne or at the time of the MediaOne Stockholders' Meeting or at the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
SECTION 5.10. Absence of Certain Changes. Since the AT&T Balance
Sheet Date, the business of AT&T and the AT&T Subsidiaries has been conducted in
the ordinary course consistent with past practices. Since the AT&T Balance Sheet
Date, there has not been:
(a) any event, occurrence or development of a state of
circumstances or facts which, individually or in the aggregate, has had or
would be reasonably expected to have an AT&T Material Adverse Effect; or
(b) any action, event, occurrence or transaction that would
have been prohibited by Section 7.1 if this Agreement had been in effect
as of the time thereof.
SECTION 5.11. No Undisclosed Material Liabilities. There are no
liabilities or obligations of AT&T or any AT&T Subsidiary of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, and there is no existing condition, situation or set of circumstances
that could be reasonably expected to result in such a liability or obligation,
other than:
(a) liabilities or obligations disclosed and provided for in
the AT&T Balance Sheet or in the notes thereto or in the AT&T SEC
Documents filed prior to the date hereof;
(b) liabilities or obligations incurred in the ordinary
course of business consistent with past practice since the AT&T Balance
Sheet Date; or
(c) liabilities or obligations that, individually or in the
aggregate have not had and would not be reasonably expected to have an
AT&T Material Adverse Effect.
SECTION 5.12. Compliance with Laws and Court Orders. AT&T and the
AT&T Subsidiaries hold all licenses, franchises, certificates, consents,
permits, qualifications and authorizations from all Governmental Authorities
necessary for the lawful conduct of their business, except where the failure to
hold any of the foregoing, individually or in the aggregate,
36
has not had and would not be reasonably expected to have an AT&T Material
Adverse Effect. AT&T and each of the AT&T Subsidiaries are, and have been in
compliance with, and to the knowledge of AT&T, are not under investigation with
respect to and have not been threatened to be charged with or given notice of
any violation of, any such license, franchise, certificate, consent, permit,
qualification or authorization, applicable law, statute, ordinance, rule,
regulation, judgment, injunction, order or decree, except for failures to comply
or violations that, individually or in the aggregate, have not had and would not
be reasonably expected to have an AT&T Material Adverse Effect.
SECTION 5.13. Litigation. There is no action, suit, investigation
or proceeding (or any basis therefor) pending against, or, to the knowledge of
AT&T, threatened against or affecting, AT&T, any AT&T Subsidiary, or any of
their respective properties before any court or arbitrator or before or by any
other Governmental Authority, that, individually or in the aggregate, would be
reasonably expected to have an AT&T Material Adverse Effect.
SECTION 5.14. Finders' Fees. Except for Xxxxxxx Xxxxx & Co., Credit
Suisse First Boston, and Xxxxxxx Xxxxx & Co., whose fees will be paid by AT&T,
as of the date hereof there is no investment banker, broker, finder or other
intermediary that has been retained by or is authorized to act on behalf of AT&T
or any AT&T Subsidiary who might be entitled to any fee or commission from AT&T
or any of the AT&T Subsidiaries upon consummation of the transactions
contemplated by this Agreement.
SECTION 5.15. Taxes. Except as set forth in the AT&T Balance Sheet
(including the notes thereto) and except as would not be, individually or in the
aggregate, reasonably expected to have an AT&T Material Adverse Effect: (i) all
AT&T Tax Returns required to be filed with any taxing authority by, or with
respect to, AT&T and the AT&T Subsidiaries have been filed in accordance with
all applicable laws; (ii) AT&T and the AT&T Subsidiaries have timely paid all
Taxes shown as due and payable on the AT&T Tax Returns that have been so filed,
and, as of the time of filing, the AT&T Tax Returns correctly reflected the
facts regarding the income, business, assets, operations, activities and the
status of AT&T and the AT&T Subsidiaries (other than Taxes which are being
contested in good faith and for which adequate reserves are reflected on the
AT&T Balance Sheet); (iii) AT&T and the AT&T Subsidiaries have made provision
for all Taxes payable by AT&T and the AT&T Subsidiaries for which no AT&T Tax
Return has yet been filed; (iv) the charges, accruals and reserves for Taxes
with respect to AT&T and the AT&T Subsidiaries reflected on the AT&T Balance
Sheet are adequate under GAAP to cover the Tax liabilities accruing through the
date thereof; (v) there is no action, suit, proceeding, audit or claim now
proposed or pending against or with respect to AT&T or any AT&T Subsidiary in
respect of any Tax where there is a reasonable possibility of an adverse
determination; (vi) the federal income Tax Returns of AT&T and the AT&T
Subsidiaries have been examined and settled with the IRS (or the applicable
statutes of limitation for the assessment of federal income Taxes for such
periods have expired) for all years through 1989; and (vii) there are no
material Liens or encumbrances for Taxes on any of the assets of AT&T or any
AT&T Subsidiary except liens for current Taxes not yet due.
37
SECTION 5.16. Tax Opinions. There are no facts or circumstances
relating to AT&T that would prevent Wachtell, Lipton, Xxxxx & Xxxx from
delivering the opinion referred to in Section 9.2(c) as of the date hereof.
SECTION 5.17. Employee Benefit Plans and Labor Matters.
Except as have not and would not be reasonably expected to have, individually
or in the aggregate, an AT&T Material Adverse Effect:
(a) If MediaOne requests, copies of each AT&T Employee Plan and
each AT&T Benefit Arrangements (and, if applicable, related trust agreements)
and all amendments thereto and written interpretations thereof will be made
available to MediaOne within thirty days after the date hereof, together with
the three most recent annual reports (Form 5500 including, if applicable,
Schedule B thereto) and the most recent actuarial valuation report prepared in
connection with any AT&T Employee Plan.
(b) No "accumulated funding deficiency," as defined in Section
412 of the Code, has been incurred with respect to any AT&T Employee Plan
subject to such Section 412, whether or not waived. No "reportable event" within
the meaning of Section 4043 of ERISA, and no event described in Section 4062 or
4063 of ERISA has occurred in connection with any AT&T Employee Plan. Neither
AT&T nor any ERISA Affiliate of AT&T has (i) engaged in, or is a successor or
parent corporation to an entity that has engaged in, a transaction described in
Sections 4069 or 4212(c) of ERISA or (ii) incurred, or reasonably expects to
incur prior to the Effective Time (A) any liability under Title IV of ERISA
arising in connection with the termination of, or a complete or partial
withdrawal from, any plan covered or previously covered by Title IV of ERISA or
(B) any liability under Section 4971 of the Code that in either case could
become a liability of AT&T, any AT&T Subsidiary, MediaOne or any of their ERISA
Affiliates after the Effective Time. If a "complete withdrawal" by AT&T and all
of its ERISA Affiliates were to occur as of the Effective Time with respect to
all Multiemployer Plans, none of AT&T, any AT&T Subsidiary or any of their ERISA
Affiliates would incur any withdrawal liability under Title IV of ERISA.
(c) As of December 31, 1998, the fair market value of the assets
of each AT&T Pension Plan (excluding for these purposes any accrued but unpaid
contributions) exceeded the present value of the pension benefit obligations
under such AT&T Pension Plan calculated pursuant to SFAS No. 84, "Employers'
Accounting for Pensions." As of December 31, 1998, the aggregate unfunded
liability of AT&T and any AT&T Subsidiary in respect of all AT&T Deferred
Compensation Plans, computed using reasonable actuarial assumptions and
determined as if all benefits under such plans were vested and payable as of
such date, did not exceed $335 million.
(d) Each AT&T Employee Plan that is intended to be qualified
under Section 401(a) of the Code is the subject of a favorable qualification
determination letter issued by the IRS and to AT&T's knowledge each such AT&T
Employee Plan is so qualified.
(e) There is no contract, plan or arrangement (written or
otherwise) covering any employee or former employee of AT&T or any AT&T
Subsidiary that, individually or
38
collectively, could give rise to the payment of any amount contingent on the
transactions contemplated hereby that would not be deductible pursuant to the
terms of Sections 162(m) or 280G of the Code.
(f) If MediaOne requests, AT&T will make available to MediaOne,
within thirty days after the date hereof, a list and copies of each material
AT&T International Plan. According to the actuarial assumptions and valuations
most recently used for the purpose of funding each AT&T International Plan (or,
if the same has no such assumptions and valuations or is unfunded, according to
actuarial assumptions and valuations in use by the PBGC on the date hereof), as
of December 31, 1998 the total amount or value of the funds available under such
AT&T International Plan to pay benefits accrued thereunder or segregated in
respect of such accrued benefits, together with any reserve or accrual with
respect thereto, exceeded the present value of all benefits (actual or
contingent) accrued as of such date of all participants and past participants
therein in respect of which AT&T or any AT&T Subsidiary has or would have after
the Effective Time any obligation. From and after the Effective Time, MediaOne
and its Affiliates will get the full benefit of any such funds, accruals or
reserves.
(g) As of December 31, 1998, the aggregate amount of the
accumulated post-retirement benefit obligation under all AT&T Employee Plans,
AT&T Benefit Arrangements and AT&T International Plans, as determined in
accordance with the Statement of Financial Accounting Standards No. 106, did not
exceed $5.2 billion.
(h) Each AT&T Employee Plan, AT&T Benefit Arrangement and AT&T
International Plan has been maintained in compliance with its terms and with the
requirements prescribed by any and all applicable statutes, orders, rules and
regulations (including any special provisions relating to registration or
qualification plans where such Plan was intended so to be so registered or
qualified) and has been maintained in good standing with applicable regulatory
authorities.
(i) No employee or former employee of AT&T or any AT&T Subsidiary
will become entitled to any bonus, retirement, severance, job security or
similar benefit or enhanced such benefit (including acceleration of vesting or
exercise of an incentive award) as a result of the transactions contemplated
hereby (either alone or together with any other event).
(j) Neither AT&T nor any of the AT&T Subsidiaries is involved in
or threatened with any labor dispute, work stoppage, labor strike, slowdown or
grievance.
SECTION 5.18. Environmental Matters. (a) Except as have not
had and would not be reasonably expected to have, individually or in the
aggregate, an AT&T Material Adverse Effect:
(i) no notice, notification, demand, request for
information, citation, summons or order has been received, no complaint
has been filed, no penalty has been assessed, and no investigation,
action, claim, suit, proceeding or review (or any basis therefor) is
pending or, to the knowledge of AT&T, is threatened by any Governmental
Authority or other Person relating to or arising out of any Environmental
Law;
39
(ii) AT&T is and has been in compliance with all
Environmental Laws and all Environmental Permits; and
(iii) there are no liabilities of or relating to AT&T or any
AT&T Subsidiary of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise arising under or relating
to any Environmental Law and there are no facts, conditions, situations or
set of circumstances that could reasonably be expected to result in or be
the basis for any such liability.
(b) There have been no environmental investigations, studies,
audits, tests, reviews or other analyses conducted of which AT&T has knowledge
in relation to the current or prior business of AT&T or any AT&T Subsidiary or
any property or facility now or previously owned or leased by AT&T or any AT&T
Subsidiary that reveal matters that, individually or in the aggregate, have had
or would reasonably be expected to have an AT&T Material Adverse Effect.
(c) For purposes of this Section 5.18, the terms AT&T and AT&T
Subsidiary shall include any entity that is, in whole or in part, a predecessor
of AT&T or any AT&T Subsidiary.
SECTION 5.19. Intellectual Property. With such exceptions as,
individually or in the aggregate, have not had and would not be reasonably
expected to have an AT&T Material Adverse Effect, to AT&T's knowledge, each of
AT&T and the AT&T Subsidiaries own or have a valid license or other right to use
each trademark, service xxxx, trade name, invention, patent, trade secret,
copyright, know-how (including any registrations or applications for
registration or applications for any of the foregoing) or any other similar type
of proprietary intellectual property right (collectively, the "AT&T Intellectual
Property") necessary to carry on its business substantially as conducted as of
the Effective Time. To AT&T's knowledge, neither AT&T nor any AT&T Subsidiary
has received any notice of infringement of or conflict with, and to AT&T's
knowledge, there are no infringements of or conflicts with, the rights of any
Person with respect to the use of any AT&T Intellectual Property in the conduct
of AT&T's business substantially as conducted as of the Effective Time that, in
either such case, individually or in the aggregate, have had or would be
reasonably expected to have, an AT&T Material Adverse Effect.
SECTION 5.20. Contracts. (a) Neither AT&T nor any of the AT&T
Subsidiaries is a party to or bound by (i) any "material contract" (as such term
is defined in Item 601(b)(10) of Regulation S-K of the SEC) or any agreement,
contract or commitment that would be such a "material contract" but for the
exception for contracts entered into in the ordinary course of business, or (ii)
any non-competition agreement or any other agreement or obligation which limits
or will limit AT&T or the AT&T Subsidiaries from engaging in the business of
providing cable television, telephony or data transmission services in the
United States or the business of providing programming content, other than any
such non-competition agreements or other agreements or obligations which,
individually or in the aggregate, do not have, and would not reasonably be
expected to have, an AT&T Material Adverse Effect. With such exceptions as,
individually or in the aggregate, have not had, and would not reasonably be
expected to have, an
40
AT&T Material Adverse Effect, (i) each of the contracts, agreements and
commitments of AT&T and the AT&T Subsidiaries is valid and in full force and
effect and (ii) neither AT&T nor any of the AT&T Subsidiaries has violated any
provision of, or committed or failed to perform any act which, with or without
notice, lapse of time, or both, would constitute a default under the provisions
of, any such contract, agreement or commitment. To the knowledge of AT&T, no
counterparty to any such contract, agreement or commitment has violated any
provision of, or committed or failed to perform any act which, with or without
notice, lapse of time, or both would constitute a default or other breach under
the provisions of such contract, agreement or commitment, except for defaults or
breaches which, individually or in the aggregate, have not had, or would not
reasonably be expected to have, an AT&T Material Adverse Effect. Neither AT&T
nor any AT&T Subsidiary is a party to, or otherwise a guarantor of or liable
with respect to, any interest rate, currency or other swap or derivative
transaction, other than any such transactions which are not material to the
business of AT&T and the AT&T Subsidiaries, taken as a whole. AT&T has provided
or made available to MediaOne a copy of each agreement of the type described in
item (i) or (ii) above.
(b) As of the date of this Agreement, neither AT&T nor any AT&T
Subsidiary is a party to any contract, agreement, understanding or commitment,
whether oral or written, with Xxxx X. Xxxxxxxxx, Xx., or with TW or its
Subsidiaries, with respect to the Merger or the transactions contemplated by
this Agreement, except, in the case of Xx. Xxxxxxxxx, as disclosed in his
Schedule 13D relating to his ownership of MediaOne Common Stock.
SECTION 5.21. MediaOne Securities. Neither AT&T nor any of
the AT&T Subsidiaries owns any securities of MediaOne.
SECTION 5.22. No Vote Required. Unless the AT&T Share Issuance
Number is increased pursuant to Section 3.1(i), and assuming the accuracy of the
representations set forth in Section 4.5 and MediaOne's compliance with the
covenants set forth in Section 6.1, no vote of the holders of any class or
series of capital stock of AT&T is necessary to approve this Agreement and the
transactions contemplated hereby.
SECTION 5.23. Merger Sub. Merger Sub was formed by AT&T solely for
the purpose of engaging in the transactions contemplated hereby. As of the date
hereof and as of the Effective Time, (a) Merger Sub is and will be a wholly
owned subsidiary of AT&T and (b) except for obligations and liabilities incurred
in connection with its incorporation or organization and the transactions
contemplated hereby, Merger Sub has not and will not have incurred, directly or
indirectly, any obligations or liabilities or engaged in any business or
activities or entered into any agreements or arrangements with any Person. At no
time prior to the Effective Time will Merger Sub own any material assets other
than an amount of cash necessary to incorporate Merger Sub and to pay the
expenses of the Merger attributable to Merger Sub if the Merger is consummated.
41
ARTICLE 6
COVENANTS OF MEDIAONE
MediaOne agrees that:
SECTION 6.1 MediaOne Interim Operations. Except as set forth in the
MediaOne Disclosure Schedule or as otherwise expressly contemplated hereby,
without the prior written consent of AT&T, from the date hereof until the
Effective Time, MediaOne shall, and shall cause each of the MediaOne
Subsidiaries to, conduct its business in all material respects in the ordinary
course consistent with past practice and use all reasonable efforts to: (i)
preserve intact its present business organization; (ii) keep available the
services of its key officers and key employees; (iii) maintain in effect all
material foreign, federal, state and local licenses, approvals and
authorizations, including, without limitation, all material licenses and permits
that are required for MediaOne or any MediaOne Subsidiary to carry on its
business and (iv) preserve existing relationships with its material partners,
lenders, suppliers and others having material business relationships with it so
that the business of MediaOne and the MediaOne Subsidiaries shall not be
impaired in any material respect at the Effective Time. Without limiting the
generality of the foregoing, except as set forth in the MediaOne Disclosure
Schedule or as otherwise expressly contemplated by this Agreement, from the date
hereof until the Effective Time, without the prior written consent of AT&T,
MediaOne shall not, nor shall it permit any MediaOne Subsidiary to:
(a) amend its articles of incorporation or by-laws or other
applicable governing instrument;
(b) amend any material term of any of its outstanding
securities;
(c) split, combine, subdivide or reclassify any shares of its
capital stock or other equity interests or declare, set aside or pay any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, or redeem, repurchase or
otherwise acquire or offer to redeem, repurchase, or otherwise acquire any of
its securities or any securities of MediaOne or any MediaOne Subsidiary, except
for (i) regular dividends on outstanding preferred stock or trust preferred
securities pursuant to the terms of such securities and (ii) dividends paid by
any MediaOne Subsidiary that is, directly or indirectly, wholly owned by
MediaOne;
(d) adopt a plan or agreement of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
material reorganization (other than a merger or consolidation between wholly
owned MediaOne Subsidiaries);
(e) issue, deliver or sell, or authorize the issuance, delivery
or sale of, any shares of its capital stock of any class or other equity
interests or any securities convertible into or exercisable for, or any rights,
warrants or options to acquire, any such capital stock or other equity
interests, other than (i) the issuance of shares of MediaOne Common Stock upon
the exercise of stock options in accordance with their present terms, (ii)
issuances pursuant to the
42
conversion of convertible securities outstanding on the date hereof and (iii)
the granting of options to acquire shares of MediaOne Common Stock in accordance
with Section 6.1(n) of the MediaOne Disclosure Schedule;
(f) incur any capital expenditures except as set forth in the
MediaOne Disclosure Schedule;
(g) except for capital expenditures, which shall be governed by
clause (f), acquire (by merger, consolidation, acquisition of stock or assets or
otherwise), directly or indirectly, any assets, other than (i) pursuant to
agreements in effect as of the date hereof, (ii) assets used in the ordinary
course of business of MediaOne and the MediaOne Subsidiaries in a manner that is
consistent with past practice or (iii) assets having a fair market value not
exceeding $25,000,000 in the aggregate;
(h) other than pursuant to agreements in effect as of the date
hereof, sell, lease, license, encumber or otherwise transfer any domestic assets
having a fair market value exceeding $25,000,000 in any one transaction or
series of related transactions or $100,000,000 in the aggregate;
(i) incur, assume or guarantee any indebtedness for borrowed
money other than in the ordinary course of business and in amounts and on
terms consistent with past practices;
(j) make any loan, advance or capital contributions to or
investment in any Person other than loans, advances or capital contributions
to or investments in its wholly owned Subsidiaries;
(k) except for capital expenditures, which shall be governed by
clause (f), engage in or enter into any transaction or commitment, enter into
any contract or agreement, or relinquish or amend in any material respect any
contract or other right, in any case, (i) material to the MediaOne Group, taken
as a whole, other than transactions and commitments in the ordinary course of
business consistent with past practices and those contemplated by this Agreement
or (ii) other than in the ordinary course of business consistent with past
practices and other than programming agreements, for the provision of goods or
services that provides for payments in excess of $25,000,000 per agreement (or
$100,000,000 for all agreements for similar goods or services);
(l) after May 5, 1999, enter into any new programming agreement
unless it has used all commercially reasonable efforts to include within such
agreement a provision permitting it to terminate such agreement without penalty
at the Effective Time if the counterparty thereto has a programming agreement
with AT&T or any AT&T Subsidiary;
(m) enter into any commitment, agreement or arrangement for the
acquisition of high speed modems or digital set-top boxes in quantities
exceeding MediaOne's expected needs for such modems and boxes through June 30,
2001;
43
(n) amend in any material respects the TWE Partnership Agreement
or enter into or amend any material agreement with TW or its Affiliates with
respect to TWE or any TWE Subsidiary, or (except as prohibited by the TWE
Partnership Agreement, as required by the fiduciary duties of MediaOne to the
TWE Partnership or as an exercise by MediaOne of its rights with respect to the
TWE Management Committee) waive or exercise any material rights with respect to
TWE or any TWE Subsidiary or consent to any material transaction by or with
respect to TWE or any TWE Subsidiary;
(o) enter into any agreement or arrangement that materially
limits or otherwise materially restricts MediaOne, any MediaOne Subsidiary or
any of their respective Affiliates or any successor thereto or that could, after
the Effective Time, materially limit or restrict AT&T, any AT&T Subsidiary, the
Surviving Corporation or any of their Affiliates, from engaging in the business
of providing cable television, telephony or data transmission services anywhere
in the world or the business of providing programming content in the United
States, the United Kingdom or Japan;
(p) except as required pursuant to existing written, binding
agreements or as otherwise mandated by law as of the date hereof (i) enter into
any commitment to provide any severance or termination pay to (or amend any
existing arrangement with) any director, officer or employee of MediaOne or any
MediaOne Subsidiary, (ii) increase the benefits payable under any existing
severance or termination pay policy or employment agreement (other than as may
be increased by function of the existing terms of any such policy or agreement),
(iii) enter into any employment, deferred compensation or other similar
agreement (or amend any such existing agreement) with any director, officer or
employee of MediaOne or any MediaOne Subsidiary, (iv) establish, adopt or amend
(except as required by applicable law) any collective bargaining, bonus,
profit-sharing, thrift, pension, retirement, deferred compensation,
compensation, stock option, restricted stock or other benefit plan or
arrangement covering any director, officer or employee of MediaOne or any
MediaOne Subsidiary, except that MediaOne and the MediaOne Subsidiaries may
amend any such existing agreement or plan or adopt a successor plan or
arrangement to the extent mandated by applicable law or to the extent that such
amendment would not result in a more than de minimis increase in the costs or
liabilities under such agreement or plan, (v) other than in the ordinary course
of business consistent with past practice or as required by any agreement in
effect as of the date hereof, increase the compensation, bonus or other benefits
payable to any director, officer or employee of MediaOne or any MediaOne
Subsidiary or (vi) amend the terms of any outstanding option to purchase shares
in MediaOne Common Stock;
(q) change (i) its methods of accounting or accounting
practices in any material respect, except as required by concurrent changes
in U.S. GAAP or by law or (ii) its fiscal year;
(r) enter into or amend in any material respect (i) any material
joint venture, partnership or other similar arrangement, (ii) any agreement for
the provision by one or more third parties of telephony, data or other services
through the facilities of one or more of the MediaOne Systems, which is
exclusive or which cannot be terminated as of the Effective Time
44
without any penalty, or (iii) any agreement providing for the right to use the
facilities of one or more of the MediaOne Systems, which is exclusive or which
cannot be terminated within two years of the Effective Time without any penalty;
(s) settle, or propose to settle, any litigation,
investigation, arbitration, proceeding or other claim that is material to the
MediaOne Group taken as a whole;
(t) other than in the ordinary course of business consistent
with past practice, make any material tax election or enter into any
settlement or compromise of any material tax liability;
(u) take any action that would make any representation or
warranty of MediaOne hereunder inaccurate in any material respect at the
Effective Time; or
(v) agree or commit to do any of the foregoing; provided that the
limitations set forth in clauses 6.1(a) through 6.1(v) shall not apply to any
transaction between MediaOne and any MediaOne Subsidiary that is wholly owned by
MediaOne or between any such wholly owned MediaOne Subsidiaries.
SECTION 6.2. MediaOne Stockholders' Meeting; Proxy Material. (a)
MediaOne shall cause the MediaOne Stockholders' Meeting to be duly called and
held as soon as reasonably practicable for the purpose of voting on the approval
and adoption of this Agreement and the Merger. In connection with such meeting,
MediaOne will (i) subject to Section 6.2(b), use its best efforts to obtain the
necessary approvals by its stockholders of this Agreement and the transactions
contemplated hereby and (ii) otherwise comply with all legal requirements
applicable to such meeting.
(b) Except as provided below, the Board of Directors of MediaOne
shall recommend approval and adoption of this Agreement and the Merger by
MediaOne's stockholders. The Board of Directors of MediaOne shall be permitted
to withdraw, or modify in a manner adverse to AT&T, its recommendation to its
stockholders, but only if (i) the Board of Directors determines in good faith by
a majority vote, on the basis of the advice of MediaOne's outside counsel, that
it must take such action to comply with its fiduciary duties under applicable
law; and (ii) MediaOne shall have delivered to AT&T a prior written notice
advising AT&T that it intends to take such action and describing its reasons for
taking such action (such notice to be delivered not less than two days prior to
the time such action is taken). Unless this Agreement is previously terminated
in accordance with Article 10, MediaOne shall submit this Agreement to its
stockholders at the MediaOne Stockholders' Meeting even if the MediaOne Board of
Directors determines at any time after the date hereof that is no longer
advisable or recommends that the MediaOne stockholders reject it.
SECTION 6.3. No Solicitation. (a) From the date hereof until the
termination hereof, MediaOne will not, and will cause the MediaOne Subsidiaries
and the officers, directors, employees, investment bankers, attorneys,
accountants, consultants or other agents or advisors of MediaOne and the
MediaOne Subsidiaries not to, directly or indirectly: (i) take any action to
solicit, initiate, facilitate or encourage the submission of any Acquisition
Proposal; (ii) other than
45
in the ordinary course of business and not related to an Acquisition Proposal,
engage in any discussions or negotiations with, or disclose any non-public
information relating to MediaOne or any MediaOne Subsidiary or afford access to
the properties, books or records of MediaOne or any MediaOne Subsidiary to, any
Person who is known by MediaOne to be considering making, or has made, an
Acquisition Proposal; (iii) (A) amend or grant any waiver or release under any
standstill or similar agreement with respect to any class of equity securities
of MediaOne (a "Standstill Agreement"), (B) to the fullest extent permitted by
Delaware Law, amend or grant any waiver or release or approve any transaction or
redeem rights under the MediaOne 1999 Rights Agreement, (C) approve any
transaction under Section 203 of the Delaware Law or Article IX of the MediaOne
certificate of incorporation or (D) approve of any Person's becoming an
"interested stockholder" under Section 203 of Delaware Law or (iv) enter into
any agreement with respect to an Acquisition Proposal. Notwithstanding the
foregoing, MediaOne shall, if requested by AT&T, (1) release TW and its
Subsidiaries from their standstill obligations under the TWE Agreements to the
extent necessary to permit AT&T and TW to discuss a potential restructuring of
the TWE Agreements to be effective following the Effective Time or other matters
in connection with the Merger and the transactions contemplated hereby and (2)
release Xxxx X. Xxxxxxxxx, Xx. from his standstill obligations to the extent
necessary to permit AT&T and Xx. Xxxxxxxxx to work together in the
implementation and completion of the Merger and the transactions contemplated
thereby. Nothing contained in this Agreement shall prevent the Board of
Directors of MediaOne from complying with Rule 14e-2 and Rule 14d-9 under the
1934 Act with regard to an Acquisition Proposal; provided that the Board of
Directors of MediaOne shall not recommend that the stockholders of MediaOne
tender their shares in connection with a tender offer except to the extent the
Board of Directors of MediaOne by a majority vote determines in its good faith
judgment that such a recommendation is required to comply with the fiduciary
duties of the Board of Directors of MediaOne to shareholders under applicable
law, after receiving the advice of outside legal counsel.
(b) MediaOne will notify AT&T promptly (but in no event later
than 24 hours) after receipt by MediaOne (or any of its advisors) of any
Acquisition Proposal, or of any request (other than in the ordinary course of
business and not related to an Acquisition Proposal) for non-public information
relating to MediaOne or any of the MediaOne Subsidiaries or for access to the
properties, books or records of MediaOne or any MediaOne Subsidiary by any
Person who is known to be considering making, or has made, an Acquisition
Proposal. MediaOne shall provide such notice orally and in writing and shall
identify the Person making, and the terms and conditions of, any such
Acquisition Proposal, indication or request. MediaOne shall keep AT&T fully
informed, on a prompt basis (but in any event no later than 24 hours), of the
status and details of any such Acquisition Proposal, indication or request.
MediaOne shall, and shall cause the MediaOne Subsidiaries and the directors,
employees and other agents of MediaOne and the MediaOne Subsidiaries to, cease
immediately and cause to be terminated all activities, discussions or
negotiations, if any, with any Persons conducted prior to the date hereof with
respect to any Acquisition Proposal.
SECTION 6.4. Redemption of Preferred Stock. As promptly as it is
permitted to do so under the terms thereof, MediaOne will call for redemption
and redeem the MediaOne
46
Series C Preferred Stock and the MediaOne Series D Preferred Stock in accordance
with the terms thereof.
SECTION 6.5. Channel Launches. MediaOne agrees to consult
with AT&T regarding its plans and overall strategy for channel launches.
ARTICLE 7
COVENANTS OF AT&T
AT&T agrees that:
SECTION 7.1 AT&T Interim Operations. Except as set forth in the
AT&T Disclosure Schedule or as otherwise expressly contemplated hereby, without
the prior consent of MediaOne, from the date hereof until the Effective Time,
AT&T shall, and shall cause each of the AT&T Subsidiaries to, conduct their
business in all material respects in the ordinary course consistent with past
practice and use all reasonable efforts to (i) preserve intact its present
business organization, (ii) keep available the services of its key officers and
key employees, (iii) maintain in effect all material foreign, federal, state and
local licenses, approvals and authorizations, including, without limitation, all
material licenses and permits that are required for AT&T or any AT&T Subsidiary
to carry on its business and (iv) preserve existing relationships with its
material partners, lenders, suppliers and others having material business
relationships with it so that the business of AT&T and the AT&T Subsidiaries
shall not be impaired in any material respect at the Effective Time. Without
limiting the generality of the foregoing, except as set forth in the AT&T
Disclosure Schedule or as otherwise expressly contemplated by this Agreement,
from the date hereof until the Effective Time, without the prior written consent
of MediaOne, AT&T shall not, nor shall it permit any AT&T Subsidiary to:
(a) amend AT&T's articles of incorporation or by-laws;
(b) amend any material terms of the shares of AT&T Common
Stock;
(c) split, combine, subdivide or reclassify any shares of AT&T
Common Stock or declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
AT&T Common Stock, except for (i) regular quarterly cash dividends, (ii) regular
dividends on any future series of preferred stock pursuant to the terms of such
securities, or (iii) dividends paid by any AT&T Subsidiary to AT&T or any AT&T
Subsidiary that is, directly or indirectly, wholly owned by AT&T;
(d) take any action that would or would reasonably be expected
to prevent, impair or materially delay the ability of MediaOne or AT&T to
consummate the transactions contemplated by this Agreement;
(e) change (i) its methods of accounting or accounting
practices in any material respect except as required by concurrent changes in
U.S. GAAP or by law or (ii) its fiscal year;
47
(f) enter into or acquire any new line of business that (i) is
material to the AT&T Group taken as a whole and (ii) is not strategically
related to the current business or operations of AT&T and the AT&T
Subsidiaries;
(g) incur indebtedness outside of the ordinary course or for
acquisitions unless, in the reasonable judgment of AT&T, such incurrence is not
reasonably likely to result in the rating accorded AT&T's senior debt by Xxxxx'x
Investor's Service and Standard & Poor's Rating Services to be non-investment
grade;
(h) engage in any (i) merger, consolidation, share exchange,
business combination, reorganization, recapitalization or other similar
transaction unless the shareholders of AT&T prior to such transaction own,
directly or indirectly, a majority of the equity interests in the surviving or
resulting corporation, (ii) transaction as a result of which any third party
acquires, directly or indirectly, an equity interest representing greater than
25% of the voting securities of AT&T or any AT&T Significant Subsidiary or (iii)
disposition, directly or indirectly, of assets, securities or ownership
interests representing 10% or more of the basic cable subscribers of the AT&T
Group, other than the transactions contemplated by this Agreement or permitted
pursuant to Section 7.1 hereof or asset swaps (unless such asset swaps, together
with other dispositions, result in a 10% decrease in the basic cable subscribers
of the AT&T Group);
(i) take any action that would make any representation or
warranty of AT&T hereunder inaccurate in any material respect at the
Effective Time; or
(j) agree or commit to do any of the foregoing.
SECTION 7.2. Director and Officer Liability. (a) AT&T shall, or
shall cause the Surviving Corporation to, indemnify and hold harmless and
advance expenses to the present and former officers, directors and employees of
MediaOne and the MediaOne Subsidiaries, and each person who prior to the
Effective Time becomes an officer, director or employee of MediaOne (each an
"Indemnified Person"), in respect of acts or omissions by them in their
capacities as such occurring at or prior to the Effective Time (including,
without limitation, for acts or omissions occurring in connection with this
Agreement and the consummation of the transactions contemplated hereby) to the
same extent provided under MediaOne's certificate of incorporation and bylaws in
effect on the date hereof ("Indemnified Losses"); provided that such
indemnification shall be subject to any limitation imposed from time to time
under applicable law. Without limiting the generality of the foregoing, the
Indemnified Losses shall include reasonable costs of prosecuting a claim under
this Section 7.2(a). AT&T shall, or shall cause the Surviving Corporation to,
periodically advance or reimburse each Indemnified Person for all reasonable
fees and expenses of counsel constituting Indemnified Losses as such fees and
expenses are incurred; provided that such Indemnified Person shall agree to
promptly repay to AT&T or the Surviving Corporation the amount of any such
reimbursement if it shall be judicially determined by judgment or order not
subject to further appeal or discretionary review that such Indemnified Person
is not entitled to be indemnified by AT&T or the Surviving Corporation in
connection with such matter. In the event that AT&T sells, transfers or leases
all or substantially all of its assets or is not a surviving corporation in any
merger, consolidation or
48
other business combination in which it may enter with any Person, AT&T shall, as
a condition of any such transaction, cause such purchaser or such surviving
corporation, as the case may be, to assume AT&T's and the Surviving
Corporation's obligations under this Section 7.2 upon the consummation of any
such transaction.
(b) For six years after the Effective Time, AT&T shall, or shall
cause the Surviving Corporation to, provide officers' and directors' liability
insurance in respect of acts or omissions occurring prior to the Effective Time
(including, without limitation, for acts or omissions occurring in connection
with this Agreement and the consummation of the transactions contemplated
hereby) covering each such Indemnified Person currently covered by MediaOne's
officers' and directors' liability insurance policy on terms with respect to
coverage and amount (including with respect to the payment of attorney's fees)
no less favorable than those of such policy in effect on the date hereof (which
policy has been provided by MediaOne to AT&T); provided that if the aggregate
annual premiums for such insurance during such period shall exceed 300% of the
per annum rate of premium paid by MediaOne as of the date hereof for such
insurance, then AT&T shall, or shall cause the Surviving Corporation to, provide
a policy with the best coverage as shall then be available at 300% of such rate.
(c) The rights of each Indemnified Person and its heirs and legal
representatives under this Section 7.2 shall be in addition to any rights such
Person may have under the certificate of incorporation or bylaws of MediaOne or
any MediaOne Subsidiary, or under Delaware Law or any other applicable laws.
These rights shall survive consummation of the Merger and are intended to
benefit, and shall be enforceable by, each Indemnified Person.
SECTION 7.3. Listing of Stock. AT&T shall use its best efforts to
cause (i) the shares of AT&T Common Stock and AT&T Series D Preferred Stock to
be issued in connection with the Merger and reserved for issuance in connection
with the Adjusted Options to be approved for listing on the NYSE, subject to
official notice of issuance, and (ii) the securities of MediaOne and the
MediaOne Subsidiaries that are listed on the NYSE to continue to be listed on
the NYSE following the Merger.
SECTION 7.4. AT&T Board of Directors. Immediately prior to the
Effective Time, the Board of Directors of AT&T will take all necessary action to
expand the size of its Board of Directors by at least one member and to appoint
to the AT&T Board, as of the Effective Time, one current member of the MediaOne
Board selected by AT&T who agrees to serve in that capacity (the "New
Director"). From the Effective Time until and including the second annual
meeting of the stockholders of AT&T taking place after the Effective Time, the
Board of Directors of AT&T will nominate the New Director for reelection to the
AT&T Board of Directors at each subsequent annual or special meeting of the
stockholders of AT&T at which the New Director's term expires. The provisions of
this Section 7.4 shall survive the consummation of the Merger and are intended
to benefit, and shall be enforceable by, the New Director.
SECTION 7.5. Employee Matters. (a) AT&T shall and shall
cause the AT&T Subsidiaries to:
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(i) honor the terms of all MediaOne Employee Plans,
MediaOne Benefit Arrangements and MediaOne International Plans, and cause
the Surviving Corporation and its Subsidiaries to pay the benefits
required under the terms of such plans and arrangements, in each case
subject to Section 7.5(c);
(ii) until December 31, 2001 (the "Benefits Maintenance
Period"), with respect to employees of MediaOne or any of MediaOne
Subsidiaries at the Effective Time ("Transferred Employees"), provide a
level of employee benefits and aggregate compensation which is
substantially comparable in the aggregate to the level of employee
benefits and aggregate compensation provided by MediaOne and MediaOne
Subsidiaries as of the Effective Time (other than the benefits provided
under any severance or termination benefit plans and arrangements of
MediaOne or any MediaOne Subsidiary);
(iii) until the second anniversary of the Effective Time,
continue, without any adverse change, each MediaOne and MediaOne
Subsidiary Severance Plan identified as such in the MediaOne Disclosure
Schedule (as amended in accordance with Section 6.1(p) of the MediaOne
Disclosure Schedule); and
(iv) until the fifth anniversary of the Effective Time (and
for the life of certain individuals as identified in the MediaOne
Disclosure Schedule), continue without adverse change the existing retiree
medical, dental and life insurance benefit plan coverage for Transferred
Employees and the retired employees of MediaOne and the employees and
retired employees of Time Warner Telecom who participate in the MediaOne
Pension Plan and are eligible to participate in the MediaOne retiree
welfare benefit plans, each of whom are currently, or during such period
will become, eligible to receive such benefits.
(b) If Transferred Employees are included in any benefit plan or
arrangement of AT&T or the AT&T Subsidiaries, including without limitation, any
plan or arrangement providing vacation benefits, the Transferred Employees shall
receive credit for service prior to the Effective Time with MediaOne and the
MediaOne Subsidiaries and their predecessors to the same extent such service was
counted under similar MediaOne Employee Plans, MediaOne Benefit Arrangements and
MediaOne International Plans for purposes of determining eligibility to
participate and vesting and benefit accrual (except that with respect to benefit
accrual, such service shall not be counted to the extent that it would result in
a duplication of benefits). If Transferred Employees or their dependents are
included in any medical, dental or health plan other than the plan or plans they
participated in at the Effective Time (a "Successor Plan"), any such Successor
Plan shall not include pre-existing condition exclusions, except to the extent
such exclusions were applicable under any similar MediaOne Employee Plan at the
Effective Time.
(c) Except as otherwise specifically set forth above, nothing
contained herein shall be construed as requiring AT&T or any AT&T Subsidiary to
continue any specific Employee Plan, Benefit Arrangement or International Plan,
or to continue the employment of any specific person, provided, however, that
any changes that AT&T or any AT&T Subsidiary may make to any such Employee Plan,
Benefit Arrangement or International Plan are permitted by the terms of the
applicable Employee Plan, Benefit Arrangement or International Plan and under
any applicable law.
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(d) The provisions of Section 7.5(a), as they relate solely to
the individual Change of Control Agreements set forth in Section 4.18(i) of the
MediaOne Disclosure Schedule and the severance agreements for the specified
individuals set forth in Section 6.01(p)(3)(a) of the MediaOne Disclosure
Schedule, are intended to be for the benefit of, and shall be enforceable by,
each Transferred Employee who has entered into such a Change of Control
Agreement or severance agreement (but only with respect to those provisions
applicable to such Transferred Employee), their heirs and personal
representatives. To the extent that benefits under such Change of Control
Agreements or severance agreements are not paid by the Surviving Corporation and
its Subsidiaries, AT&T shall pay or provide for the payment of such benefits.
SECTION 7.6. Designation of Preferred Stock. Prior to the
Effective Time, AT&T shall duly file with the Secretary of State of the State of
New York certificates of designation creating the AT&T Series C Preferred Stock,
the AT&T Series D Preferred Stock and the AT&T Series E Preferred Stock;
provided that, if no shares of MediaOne Series C Preferred Stock, MediaOne
Series D Preferred Stock or MediaOne Series E Preferred Stock remain
outstanding, AT&T shall not be required to file a certificate of designation for
the corresponding series of its preferred stock.
ARTICLE 8
COVENANTS OF AT&T AND MEDIAONE
The parties hereto agree that:
SECTION 8.1 Best Efforts. (a) Subject to the terms and conditions
of this Agreement, AT&T will use its best efforts to promptly (i) take, or cause
to be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate the
transactions contemplated by this Agreement as soon as practicable, including,
without limitation, preparing and filing as promptly as practicable all
documentation to effect all necessary filings, notices, petitions, statements,
registrations, submissions of information, applications and other documents,
(ii) obtain and maintain all approvals, consents, registrations, permits,
authorizations and other confirmations required to be obtained from any third
party that are necessary, proper or advisable to consummate the Merger and the
other transactions contemplated by this Agreement and (iii) obtain and maintain
waivers of all Purchase Rights (as defined below); provided that AT&T's
obligation to obtain the License Consents and the expiration or termination of
the applicable waiting periods under the HSR Act shall be unconditional and
shall not be qualified by best efforts (regardless of whether fulfillment of
such obligation would have a MediaOne Material Adverse Effect or an AT&T
Material Adverse Effect). The existence of the conditions set forth in Sections
9.1(b), (c), (g) and (h) shall not limit AT&T's obligations pursuant to the
foregoing sentence or relieve AT&T of any liability or damages that may result
from its breach of its obligations under this Section 8.1 (nor limit MediaOne's
obligations pursuant to the following sentence or relieve MediaOne of any
liability or damages that may result from its breach of its obligations under
this Section 8.1). In connection with the foregoing, MediaOne will cooperate
with and assist AT&T, and, with respect to matters that are within MediaOne's
power or control, will use its best efforts to
51
promptly (i) take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate the transactions contemplated by this Agreement as
soon as practicable, including, without limitation, preparing and filing as
promptly as practicable all documentation to effect all necessary filings,
notices, petitions, statements, registrations, submissions of information,
applications and other documents, (ii) obtain and maintain all approvals,
consents, registrations, permits, authorizations and other confirmations
required to be obtained from any third party that are necessary, proper or
advisable to consummate the Merger and the other transactions contemplated by
this Agreement and (iii) obtain and maintain waivers of all Purchase Rights. At
AT&T's request, MediaOne will commit to and implement any divestiture, hold
separate or similar transaction or action with respect to any asset or business
of the MediaOne Group, which commitment and implementation may, at MediaOne's
option, be conditioned upon and effective as of the Effective Time. Subject to
applicable laws relating to the exchange of information, MediaOne and AT&T shall
have the right to review in advance, and to the extent practicable each will
consult the other on, all the information relating to MediaOne and the MediaOne
Subsidiaries or AT&T and the AT&T Subsidiaries, as the case may be, that appears
in any filing made with, or written materials submitted to, any third party
and/or any Governmental Authority in connection with the Merger and the other
transactions contemplated by this Agreement. MediaOne has provided to AT&T a
list of all Franchise Consents, all License Consents and all rights that any
Person may have under the terms of the MediaOne Franchises to purchase all or
any portion of a MediaOne System as a result of the transactions contemplated
hereby ("Purchase Rights").
(b) In furtherance and not in limitation of the foregoing, each
of AT&T and MediaOne agrees to (i) make an appropriate filing of a Notification
and Report Form pursuant to the HSR Act with respect to the transactions
contemplated hereby as promptly as practicable and in any event within ten
Business Days of the date hereof, (ii) supply as promptly as practicable any
additional information and documentary material that may be requested pursuant
to the HSR Act and (iii) complete the review process under the HSR Act to permit
the consummation of the Merger including, but not limited to, causing the
expiration or termination of the applicable waiting periods under the HSR Act as
soon as practicable.
SECTION 8.2. Proxy Statement; Registration Statement. (a) As
promptly as practicable after the execution of this Agreement, MediaOne shall
prepare and file the Proxy Statement with the SEC, and AT&T shall prepare and
file the Registration Statement (in which the Proxy Statement will be included)
with the SEC. AT&T and MediaOne shall use their reasonable best efforts to cause
the Registration Statement to become effective under the 1933 Act as soon after
such filing as practicable and to keep the Registration Statement effective as
long as is necessary to consummate the Merger. The Proxy Statement shall include
the recommendation of the Board of Directors of MediaOne in favor of approval
and adoption of this Agreement and the Merger, except to the extent the Board of
Directors of MediaOne shall have withdrawn or modified its approval or
recommendation of this Agreement as permitted by Section 6.2(b). MediaOne shall
use its reasonable best efforts to cause the Proxy Statement to be mailed to its
stockholders as promptly as practicable after the Registration Statement becomes
effective. The parties shall promptly provide copies, consult with each other
and prepare written
52
responses with respect to any written comments received from the SEC with
respect to the Proxy Statement and the Registration Statement and advise one
another of any oral comments received from the SEC. The Registration Statement
and the Proxy Statement shall comply as to form in all material respects with
the rules and regulations promulgated by the SEC under the 1933 Act and the 1934
Act, respectively.
(b) AT&T and MediaOne shall make all necessary filings with
respect to the Merger and the transactions contemplated thereby under the 1933
Act and the 1934 Act and applicable state blue sky laws and the rules and
regulations thereunder. Each party will advise the other, promptly after it
receives notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, the issuance of any
stop order, the suspension of the qualification of the AT&T Common Stock
issuable in connection with the Merger for offering or sale in any jurisdiction,
or any request by the SEC for amendment of the Proxy Statement or the
Registration Statement or comments thereon and responses thereto or requests by
the SEC for additional information. No amendment or supplement to the Proxy
Statement or the Registration Statement shall be filed without the approval of
both parties hereto, which approval shall not be unreasonably withheld or
delayed. If at any time prior to the Effective Time, any information relating to
AT&T or MediaOne, or any of their respective Affiliates, officers or directors,
should be discovered by AT&T or MediaOne that should be set forth in an
amendment or supplement to the Registration Statement or the Proxy Statement, so
that such documents would not include any misstatement of a material fact or
omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, the party
which discovers such information shall promptly notify the other parties hereto
and an appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by law, disseminated to
the stockholders of AT&T and MediaOne.
SECTION 8.3. Public Announcements. So long as this Agreement is in
effect, MediaOne and AT&T will consult with each other before issuing any press
release or making any public statement with respect to this Agreement or the
transactions contemplated hereby and, except as may be required by applicable
law or any listing agreement with any national securities exchange, will not
issue any such press release or make any such public statement without the prior
consent of the other party, which consent shall not be unreasonably withheld.
Notwithstanding the foregoing, any such press release or public statement as may
be required by applicable law or any listing agreement with any national
securities exchange or Nasdaq may be issued without such consent, if the party
making such release or statement has used its reasonable efforts to consult with
the other party.
SECTION 8.4. Further Assurances. At and after the Effective Time,
the officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of MediaOne, any deeds, bills of
sale, assignments or assurances and to take and do, in the name and on behalf of
MediaOne, any other actions and things to vest, perfect or confirm of record in
the Surviving Corporation any and all right, title and interest in, to and under
any of the rights, properties or assets of MediaOne acquired or to be acquired
by the Surviving Corporation as a result of, or in connection with, the Merger.
53
SECTION 8.5. Access to Information. From the date hereof until the
Effective Time or earlier termination of this Agreement and subject to
applicable law and the Confidentiality Agreement, each of MediaOne and AT&T
shall (i) give to the other party and the other party's counsel, financial
advisors, auditors and other authorized representatives reasonable access during
normal business hours to the offices, properties, books and records of such
party and its Subsidiaries (and, in the case of MediaOne, to the offices,
properties, books and records of TWE and the TWE Subsidiaries to the extent it
is reasonably able to provide such access), (ii) furnish to the other party and
the other party's counsel, financial advisors, auditors and other authorized
representatives such financial and operating data and other information as such
Persons may reasonably request and (iii) instruct its employees, counsel,
financial advisors, auditors and other authorized representatives to cooperate
with the other party in such other party's investigation. Any investigation
pursuant to this Section 8.5 shall be conducted in such manner as not to
interfere unreasonably with the conduct of the business of the other party. No
information or knowledge obtained in any investigation pursuant to this Section
8.5 shall affect or be deemed to modify any representation or warranty made by
any party hereunder. Each party will hold such information which is non-public
in confidence in accordance with the provisions of the Confidentiality
Agreement.
SECTION 8.6. Notices of Certain Events. Each of MediaOne
and AT&T shall promptly notify the other of:
(a) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any Governmental
Authority in connection with the transactions contemplated by this Agreement;
(c) the occurrence, or non-occurrence, of any event the
occurrence, or non-occurrence, of which would be reasonably expected to cause
any representation or warranty contained herein to be untrue or inaccurate in
any material respect at any time during the period commencing on the date hereof
and ending at the Effective Time; and
(d) any failure of such party to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 8.6 shall not limit or otherwise affect the remedies available hereunder
to the party receiving such notice.
SECTION 8.7. Tax-free Reorganization. (a) Prior to the Effective
Time, each party shall use its best efforts to cause the Merger to qualify as a
reorganization within the meaning of the provisions of Section 368(a) of the
Code ("368 Reorganization"), and will not take any action reasonably likely to
cause the Merger not to so qualify. AT&T shall not take, or cause MediaOne to
take, any action after the Effective Time reasonably likely to cause the Merger
not to qualify as a 368 Reorganization.
54
(b) Each party shall use its best efforts to obtain the opinions
referred to in Sections 9.2(b), 9.2(c), 9.3(b), and 9.3(c).
SECTION 8.8. Affiliates. (a) Within 30 days following the date of
this Agreement, MediaOne shall deliver to AT&T a letter identifying all known
Persons who may be deemed affiliates of MediaOne under Rule 145 of the 1933 Act
(a "MediaOne Rule 145 Affiliate"). MediaOne shall use its best efforts to obtain
a written agreement from each MediaOne Rule 145 Affiliate as soon as practicable
and, in any event, at least 30 days prior to the Effective Time, substantially
in the form of Exhibit A hereto.
SECTION 8.9. TWE Termination Notice. At any time after the date
upon which the MediaOne Stockholders' Approval shall have been obtained, AT&T
may elect by written notice (a "Termination Notice Election") to have MediaOne
give a Termination Notice (as defined in Section 5.5(f) of the TWE Partnership
Agreement). In addition, MediaOne may exercise a Termination Notice Election at
any time after the 90th day after the date hereof. If either party exercises a
Termination Notice Election, then within five days of the date of such election,
MediaOne shall give the Termination Notice in accordance with the TWE
Agreements. Notwithstanding the foregoing, if AT&T and MediaOne agree (which
agreement will not be unreasonably withheld) that delivery of a Termination
Notice is not necessary for the completion of the Merger and that completion of
the Merger without the delivery of a Termination Notice would not have a
MediaOne Material Adverse Effect or an AT&T Material Adverse Effect, then
MediaOne will not give the Termination Notice.
SECTION 8.10. Assumption of Certain Obligations. At the Effective
Time, the Surviving Corporation shall assume all of MediaOne's rights and
obligations under all of the agreements to which MediaOne is a party as of the
Effective Time, including without limitation, the Separation Agreement between
MediaOne and U S WEST dated as of June 5, 1998, the Employee Matters Agreement
between MediaOne and U S WEST dated as of June 5, 1998, and the Tax Sharing
Agreement between MediaOne and U S WEST dated as of June 5, 1998 (collectively,
the "U S WEST Agreements") and shall execute such instruments of assumption as
may be reasonably required under the terms of the U S WEST Agreements and such
other agreements. At the Effective Time, AT&T shall guarantee the performance by
the Surviving Corporation of its obligations under the U S WEST Agreements.
ARTICLE 9
CONDITIONS TO THE MERGER
SECTION 9.1. Conditions to the Obligations of Each Party. The
obligations of MediaOne, AT&T and Merger Sub to consummate the Merger are
subject to the satisfaction of the following conditions:
(a) the MediaOne Stockholders' Approval shall have been
obtained;
(b) any applicable waiting period under the HSR Act relating
to the Merger shall have expired or been terminated;
55
(c) no provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the consummation of the
Merger;
(d) the Registration Statement shall have been declared effective
and no stop order suspending the effectiveness of the Registration Statement
shall be in effect and no proceedings for such purpose shall be pending before
or threatened by the SEC;
(e) the shares of AT&T Common Stock to be issued in the Merger
shall have been approved for listing on the NYSE, subject to official notice
of issuance;
(f) if a Termination Notice has been delivered, one year (or such
shorter period, if any, to which TW agrees) shall have elapsed from the date
upon which MediaOne delivers a Termination Notice to TW;
(g) (i) all License Consents shall have been obtained and be in
effect, except for such License Consents the failure to obtain would not,
individually or in the aggregate, be reasonably expected to have an AT&T
Material Adverse Effect (after giving effect to the Merger), and (ii) all Social
Contract Consents, Franchise Consents and other consents and waivers, including
waivers of all Purchase Rights, shall have been obtained, be in effect and be
subject to no limitations, conditions, restrictions or obligations, except for
such consents the failure to obtain would not, and such limitations, conditions,
restrictions or obligation as would not, individually or in the aggregate, be
reasonably expected to have a MediaOne Material Adverse Effect; and
(h) no court, arbitrator or Governmental Authority shall have
issued any order, and there shall not be any statute, rule or regulation
restraining or prohibiting the effective operation of the business of AT&T and
the AT&T Subsidiaries or MediaOne and the MediaOne Subsidiaries after the
Effective Time that would be reasonably expected to have an AT&T Material
Adverse Effect (after giving effect to the Merger).
SECTION 9.2. Conditions to the Obligations of AT&T and Merger Sub.
The obligations of AT&T and Merger Sub to consummate the Merger are subject to
the satisfaction of the following further conditions:
(a) (i) MediaOne shall have performed in all material respects
all of its obligations hereunder required to be performed by it at or prior to
the Effective Time, (ii) the representations and warranties of MediaOne
contained in this Agreement and in any certificate or other writing delivered by
MediaOne pursuant hereto, disregarding all qualifications and exceptions
contained therein relating to materiality or a MediaOne Material Adverse Effect
or any similar standard or qualification, shall be true and correct at and as of
the Effective Time, as if made at and as of such time (other than
representations or warranties that address matters only as of a certain date
which shall be true and correct as of such date), with only such exceptions as,
individually or in the aggregate, have not had and would not be reasonably
expected to have MediaOne Material Adverse Effect, and (iii) AT&T shall have
received a certificate signed by an executive officer of MediaOne to the
foregoing effect;
56
(b) AT&T shall have received an opinion of Wachtell, Lipton,
Xxxxx & Xxxx in form and substance reasonably satisfactory to AT&T, on the basis
of certain facts, representations and assumptions set forth in such opinion,
dated the Effective Time, to the effect that the Merger will be treated for
federal income tax purposes as a 368 Reorganization and that each of AT&T,
Merger Sub and MediaOne will be a party to the reorganization within the meaning
of Section 368(b) of the Code. In rendering such opinion, such counsel shall be
entitled to rely upon certain documentation including representations of
officers of MediaOne and AT&T; and
(c) AT&T shall have received an opinion of Wachtell, Lipton,
Xxxxx & Xxxx dated the Effective Time to the effect that the Merger pursuant to
this Agreement should not cause the spinoff of U S WEST on June 12, 1998 (the
"Spinoff") to fail to be qualified as a tax-free transaction under Section
355(a) and (c) of the Code. In rendering such opinion, Wachtell, Lipton, Xxxxx &
Xxxx shall be entitled to rely upon certain documentation, including
representations of officers of MediaOne and AT&T.
SECTION 9.3. Conditions to the Obligations of MediaOne. The
obligations of MediaOne to consummate the Merger are subject to the satisfaction
of the following further conditions:
(a) (a) (i) Each of AT&T and Merger Sub shall have performed in
all material respects all of its obligations hereunder required to be performed
by it at or prior to the Effective Time, (ii) the representations and warranties
of each of AT&T and Merger Sub contained in this Agreement and in any
certificate or other writing delivered by AT&T pursuant hereto disregarding all
qualifications and exceptions contained therein relating to materiality or AT&T
Material Adverse Effect or any similar standard or qualification shall be true
at and as of the Effective Time as if made at and as of such time (other than
representations and warranties that address matters only as of a certain date,
which shall be true as of such date), with only such exceptions as, individually
or in the aggregate, have not had and would not be reasonably expected to have
an AT&T Material Adverse Effect and (iii) MediaOne shall have received a
certificate signed by an executive officer of AT&T to the foregoing effect; and
(b) MediaOne shall have received an opinion of Weil, Gotshal &
Xxxxxx LLP in form and substance reasonably satisfactory to MediaOne, on the
basis of certain facts, representations and assumptions set forth in such
opinion, dated the Effective Time, to the effect that the Merger will be treated
for federal income tax purposes as a 368 Reorganization and that each of AT&T,
Merger Sub and MediaOne will be a party to the reorganization within the meaning
of Section 368(b) of the Code. In rendering such opinion, such counsel shall be
entitled to rely upon certain documentation including representations of
officers of MediaOne and AT&T.
(c) MediaOne shall have received an opinion of Weil, Gotshal &
Xxxxxx LLP dated the Effective Time to the effect that the Merger pursuant to
this Agreement should not cause the Spinoff to fail to be qualified as a
tax-free transaction under Section 355(a) and (c) of
57
the Code. In rendering such opinion Weil, Gotshal & Xxxxxx LLP shall be entitled
to rely upon certain documentation, including representations of officers of
MediaOne and AT&T.
ARTICLE 10
TERMINATION
SECTION 10.1. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time
(notwithstanding any approval of this Agreement by the stockholders of
MediaOne):
(a) by mutual written agreement of MediaOne and AT&T;
(b) by either MediaOne or AT&T, if:
(i) the Merger has not been consummated on or before March
31, 2000 (the "End Date"); provided that if (A) the Effective Time has not
occurred by March 31, 2000 by reason of the non-satisfaction of any of the
conditions set forth in Sections 9.1(b), 9.1(c), 9.1(f), 9.1(g) and 9.1(h)
and (B) all other conditions in Article 9 have theretofore been satisfied
or waived or are then capable of being promptly satisfied, the End Date
will be September 30, 2000; provided further that if (1) the Effective
Time has not occurred by September 30, 2000 by reason of the
non-satisfaction of the condition set forth in Section 9.1(f) and (2) all
other conditions in Article 9 have theretofore been satisfied or waived or
are then capable of being promptly satisfied, the End Date will be
December 31, 2000; and provided further that the right to terminate this
Agreement pursuant to this Section 10.1(b)(i) shall not be available to
any party whose breach of any provision of this Agreement results in the
failure of the Merger to be consummated by the End Date;
(ii) (A) there shall be any law or regulation that makes
consummation of the Merger illegal or otherwise prohibited or (B) any
judgment, injunction, order or decree of any court or other Governmental
Authority having competent jurisdiction enjoining MediaOne and AT&T from
consummating the Merger is entered and such judgment, injunction, order or
decree shall have become final and non-appealable; or
(iii) MediaOne Stockholders' Approval shall not have been
obtained at the MediaOne Stockholders' Meeting (or any adjournment or
postponement thereof).
(c) by AT&T if:
(i) the Board of Directors of MediaOne shall have failed to
recommend or withdrawn, or modified in a manner adverse to AT&T, its
approval or recommendation of this Agreement, or shall have failed to call
the MediaOne Stockholders' Meeting in accordance with Section 6.2(a) (or
the Board of Directors of MediaOne resolves to do any of the foregoing);
58
(ii) MediaOne shall have willfully and materially breached
any of its obligations under Sections 6.2(b) or 6.3; or
(iii) a breach of any representation, warranty, covenant or
agreement on the part of MediaOne set forth in this Agreement shall have
occurred that would cause the condition set forth in Section 9.2(a) not to
be satisfied, and such condition shall be incapable of being satisfied by
the End Date; or
(d) by MediaOne, if a breach of any representation, warranty,
covenant or agreement on the part of AT&T set forth in this Agreement shall have
occurred that would cause the condition set forth in Section 9.3(a) not to be
satisfied, and such condition shall be incapable of being satisfied by the End
Date.
The party desiring to terminate this Agreement pursuant to this Section
10.1 (other than pursuant to Section 10.1(a)) shall give notice of such
termination to the other party.
SECTION 10.2. Effect of Termination. If this Agreement is
terminated pursuant to Section 10.1, this Agreement shall become void and of no
effect without liability of any party (or any stockholder, director, officer,
employee, agent, consultant or representative of such party) to the other
parties hereto, except that (a) the agreements contained in this Section 10.2,
in Section 10.3 and in the Confidentiality Agreement (other than paragraph 7
thereof) shall survive the termination hereof and (b) no such termination shall
relieve any party of any liability or damages resulting from any breach by such
party of this Agreement.
SECTION 10.3. Fees and Expenses. (a) Except as otherwise provided
in this Section 10.3, all costs and expenses incurred in connection with this
Agreement shall be paid by the party incurring such cost or expense whether or
not the Merger is consummated; provided that MediaOne and AT&T shall share
equally all fees and expenses, other than attorneys' and accounting fees and
expenses, incurred in relation to the printing and filing of the Registration
Statement and the Proxy Statement.
(b) If this Agreement is terminated, other than (i) pursuant to
Section 10.1(a), Section 10.1(b)(ii) (unless termination under Section
10.1(b)(ii) is a result of a judgment, injunction, order or decree arising from
a private action that is not an antitrust action), Section 10.1(b)(iii) (except
as otherwise provided in paragraph (d) below), or Section 10.1(d), (ii) as a
result of a failure to satisfy any of the conditions set forth in Sections
9.1(b), (c), (g) and (h) (except, in the case of Sections 9.1(c) and (h), a
failure resulting from a judgment, injunction, order or decree arising from a
private action that is not an antitrust action), or (iii) as a result of a
failure to satisfy the condition set forth in Section 9.3(a) or otherwise as a
result of AT&T's breach of this Agreement, MediaOne will pay to AT&T a
reimbursement payment of $1,500,000,000 in cash, together with interest thereon,
at a rate equal to the London Interbank Offered Rate plus .15%, from the date
hereof to the date such payment is due pursuant to this Agreement (collectively,
the "Reimbursement Payment"), reflecting reimbursement of the amounts advanced
by AT&T to MediaOne on the date hereof and used by MediaOne to pay the
termination fee to Comcast under the Comcast Merger Agreement (which advance
will be evidenced by a note that, in the event of termination of this Agreement,
will be repaid only on the
59
terms set forth in this Section 10.3 with respect to the Reimbursement Payment,
and that will survive the consummation of the Merger if the Merger is
completed). For the avoidance of doubt, in the event the Reimbursement Payment
is not paid when due, interest on the Reimbursement Payment shall be paid
thereon from the due date to the date of payment pursuant to the provisions of
Section 10.3(e) and not pursuant to the provisions of this Section 10.3(b).
(c) If this Agreement is terminated pursuant to Section
10.1(c)(i) or Section 10.1(c)(ii), MediaOne shall pay to AT&T a termination fee
of $1,600,000,000 in cash (the "Termination Fee"), which shall be in addition to
the Reimbursement Payment paid pursuant to Section 10.3(b).
(d) If (A) this Agreement is terminated pursuant to Section
10.1(b)(iii), (B) after the date hereof and prior to the MediaOne Stockholders'
Meeting, an Acquisition Proposal is made or continued or renewed by any Person
(including Comcast) and not withdrawn prior to such meeting and (C) within one
year of the MediaOne Stockholders' Meeting, either (1) MediaOne or any MediaOne
Subsidiary enters into an agreement with any Person with respect to an
Acquisition Proposal which provides for (x) transfer or issuance of securities
representing more than 50% of the equity or voting interests in MediaOne, (y) a
merger, consolidation, recapitalization or another transaction resulting in the
issuance of cash or securities of any Person (other than a reincorporation or a
holding company merger that results in the MediaOne stockholders owning all of
the equity interests in the surviving corporation) to MediaOne stockholders in
exchange for more than 50% of the equity or voting interests in MediaOne, or (z)
transfer of assets, securities or ownership interests representing more than 50%
of the consolidated assets or earning power of the MediaOne Group, or (2) any
Person commences a tender offer that results in the acquisition by the Person
making the tender offer of a majority of the MediaOne Common Stock, then
MediaOne shall pay to AT&T both the Reimbursement Payment and the Termination
Fee.
(e) Any payment of the Reimbursement Payment and the Termination
Fee pursuant to this Section 10.3 shall be made within one Business Day after
termination of this Agreement except that any payment of the Reimbursement
Payment and the Termination Fee pursuant to Section 10.3(d) shall be paid within
one Business Day after it becomes payable. Any payment of the Reimbursement
Payment and the Termination Fee shall be made by wire transfer of immediately
available funds. If one party fails to pay to the other promptly any fee or
expense due hereunder (including the Reimbursement Payment or the Termination
Fee), the defaulting party shall pay the costs and expenses (including legal
fees and expenses) in connection with any action, including the prosecution of
any lawsuit or other legal action, taken to collect payment, together with
interest on the amount of any unpaid fee at the publicly announced prime rate of
The Bank of New York in New York City from the date such fee was required to be
paid to the date it is paid.
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ARTICLE 11
MISCELLANEOUS
SECTION 11.1. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including facsimile
transmission) and shall be given,
if to AT&T or Merger Sub, 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
Fax: (000) 000-0000
if to MediaOne, to:
MediaOne Group, Inc.
000 Xxxxxxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Fax: (000) 000-0000
with copies to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx
Xxxxx Xxxxxx
Fax: (000) 000-0000
and
00
Xxxxxxxxxx, Xxxxxxxxxx & Xxxx
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Block
Fax: (000) 000-0000
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5 p.m. on a Business Day,
in the place of receipt. Otherwise, any such notice, request or communication
shall be deemed not to have been received until the next succeeding Business Day
in the place of receipt.
SECTION 11.2. Survival of Representations and Warranties. The
representations and warranties contained herein and in any certificate or other
writing delivered pursuant hereto shall not survive the Effective Time or the
termination of this Agreement, except as provided under Section 10.2.
SECTION 11.3. Amendments; No Waivers. (a) Subject to applicable
law, any provision of this Agreement may be amended or waived prior to the
Effective Time if, but only if, such amendment or waiver is in writing and is
signed, in the case of an amendment, by each party to this Agreement or, in the
case of a waiver, by each party against whom the waiver is to be effective;
provided that, after the adoption of this Agreement by the stockholders of
MediaOne, no such amendment or waiver shall be made or given that requires the
approval of the stockholders of MediaOne unless the required approval is
obtained.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 11.4. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of each other party hereto.
SECTION 11.5. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of
Delaware, without regard to the conflicts of law rules of such State.
SECTION 11.6. Jurisdiction. Any suit, action or proceeding seeking
to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby shall be
brought in any federal court located in the State of Delaware or any Delaware
state court, and each of the parties hereby consents to the exclusive
jurisdiction of such courts (and of the appropriate appellate courts therefrom)
in any such suit,
62
action or proceeding and irrevocably waives, to the fullest extent permitted by
law, any objection that it may now or hereafter have to the laying of the venue
of any such suit, action or proceeding in any such court or that any such suit,
action or proceeding brought in any such court has been brought in an
inconvenient form. Process in any such suit, action or proceeding may be served
on 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 11.1 shall be deemed
effective service of process on such party.
SECTION 11.7. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION 11.8. Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto. No
provision of this Agreement is intended to confer any rights, benefits,
remedies, obligations or liabilities hereunder upon any Person other than the
parties hereto and their respective successors and assigns except as provided in
Sections 7.2, 7.4 and 7.5.
SECTION 11.9. Entire Agreement. This Agreement, together with the
Confidentiality Agreement (other than paragraph 7 thereof, which shall terminate
upon execution of this Agreement), constitutes the entire agreement between the
parties with respect to the subject matter of this Agreement and supersedes all
prior agreements and understandings, both oral and written, between the parties
with respect to the subject matter of this Agreement.
SECTION 11.10. Captions. The captions herein are included
for convenience of reference only and shall be ignored in the construction or
interpretation hereof.
SECTION 11.11. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon such
a determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner so that the transactions contemplated hereby be
consummated as originally contemplated to the fullest extent possible.
SECTION 11.12. Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
or to enforce specifically the performance of the terms and provisions hereof in
any federal court located in the State of Delaware or any Delaware state court,
in addition to any other remedy to which they are entitled at law or in equity.
63
SECTION 11.13. Schedules. Each of MediaOne and AT&T has set forth
information in its respective Disclosure Schedule in a section thereof that
corresponds to the section of this Agreement to which it relates. A matter set
forth in one section of the Disclosure Schedules need not be set forth in any
other section of the Disclosure Schedule so long as its relevance to the latter
section of the Disclosure Schedule or section of the Agreement is apparent on
the face of the information disclosed in the Disclosure Schedule. The fact that
any item of information is disclosed in a Disclosure Schedule to this Agreement
shall not be construed to mean that such information is required to be disclosed
by this Agreement. Such information and the dollar thresholds set forth herein
shall not be used as a basis for interpreting the terms "material" or "Material
Adverse Effect" or other similar terms in this Agreement except as otherwise
expressly set forth in such Disclosure Schedules.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
AT&T CORP.
By: /s/ C. Xxxxxxx Xxxxxxxxx
---------------------------------
Name: C. Xxxxxxx Xxxxxxxxx
Title: Chairman and Chief
Executive Officer
METEOR ACQUISITION INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
MEDIAONE GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President, Chief
Executive Officer
and Chairman
65
