[COMPOSITE COPY REFLECTING
FIRST AMENDMENT]
ASSET EXCHANGE AGREEMENT
dated as of August 11, 2000
among
AT&T CORP. AND THE AT&T PARTIES,
on the one hand
and
COMCAST CORPORATION AND THE COMCAST PARTIES,
on the other hand
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Table of Contents
Page
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1. DEFINITIONS...........................................................1
1.1. 1992 Cable Act...............................................1
1.2. Affiliate....................................................1
1.3. Agreement....................................................1
1.4. Assets.......................................................1
1.5. AT&T Assets..................................................2
1.6. AT&T Entities................................................2
1.7. AT&T Required Consents.......................................2
1.8. AT&T's Cable Business........................................2
1.9. Basic Services...............................................3
1.10. Books and Records............................................3
1.11. Business Day.................................................3
1.12. Cable Act....................................................3
1.13. Cable Business...............................................3
1.14. Closing......................................................3
1.15. Closing Time.................................................3
1.16. Comcast Assets...............................................3
1.17. Comcast Entities.............................................4
1.18. Comcast Required Consents....................................4
1.19. Comcast's Cable Business.....................................4
1.20. Communications Act...........................................4
1.21. Contract.....................................................4
1.22. Deposits.....................................................4
1.23. Documented Employee Performance Case.........................4
1.24. Environmental Law............................................5
1.25. Equivalent Basic Subscriber..................................5
1.26. ERISA........................................................6
1.27. ERISA Affiliate..............................................6
1.28. Expanded Basic Services......................................6
1.29. FCC..........................................................6
1.30. Financial Statements.........................................6
1.31. Governmental Authority.......................................6
1.32. Hazardous Substances.........................................7
1.33. Hired Employee...............................................7
1.34. Hiring Party.................................................7
1.35. HSR Act......................................................7
1.36. Intellectual Property........................................7
1.37. Judgment.....................................................7
1.38. Knowledge....................................................7
1.39. Leased Property..............................................8
1.40. Legal Requirement............................................8
1.41. Lien.........................................................8
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1.42. Litigation...................................................8
1.43. Losses.......................................................8
1.44. MVPD.........................................................8
1.45. Net Transferee Party.........................................8
1.46. Net Transferor Party.........................................8
1.47. Net Working Capital Adjustment Amount Transferee Party.......9
1.48. Net Working Capital Adjustment Amount Transferor Party.......9
1.49. OSHA.........................................................9
1.50. Other Employees..............................................9
1.51. Other Intangibles............................................9
1.52. Other Real Property Interests................................9
1.53. Owned Property...............................................9
1.54. Parent.......................................................9
1.55. Parties......................................................9
1.56. Pay TV.......................................................9
1.57. Permitted Liens..............................................9
1.58. Person......................................................10
1.59. Required Consents...........................................10
1.60. Senior Managers.............................................10
1.61. Service Area................................................10
1.62. Six-Month Date..............................................10
1.63. System......................................................10
1.64. Systems Contracts...........................................10
1.65. Systems Franchises..........................................10
1.66. Systems Licenses............................................10
1.67. Tangible Personal Property..................................11
1.68. Taxes.......................................................11
1.69. Third Party.................................................11
1.70. Transaction Documents.......................................11
1.71. Transfer Taxes..............................................11
1.72. Transferable Service Area...................................11
1.73. Transferee..................................................11
1.74. Transferor..................................................11
1.75. Other Definitions...........................................11
1.76. Usage.......................................................15
2. EXCHANGE.............................................................15
2.1. Definition of Parties and Systems...........................15
2.2. Exchange of Assets..........................................16
2.3. Method of Exchange..........................................17
2.4. Cooperation in Structuring Exchange.........................17
3. CONSIDERATION........................................................18
3.1. Calculation of Values; Payment of Additional
Consideration...............................................18
3.2. Working Capital Adjustment..................................22
3.3. Determination of Working Capital Adjustment Amount..........23
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3.4. Determination of Final System Values and Working
Capital Adjustment Amounts..................................23
3.5. Allocation of Value.........................................24
4. ASSUMED LIABILITIES AND EXCLUDED ASSETS..............................24
4.1. AT&T Assumed Obligations and Liabilities....................24
4.2. AT&T Excluded Assets........................................25
4.3. Comcast Assumed Obligations and Liabilities.................26
4.4. Comcast Excluded Assets.....................................27
5. COMCAST CORPORATION'S REPRESENTATIONS AND WARRANTIES.................29
5.1. Organization and Qualification..............................29
5.2. Authority and Validity......................................29
5.3. No Conflict; Required Consents..............................29
5.4. Assets......................................................30
5.5. Comcast Systems Franchises, Comcast Systems Licenses,
Comcast Systems Contracts and Comcast Other Real
Property Interests..........................................31
5.6. Real Property...............................................34
5.7. Environmental...............................................34
5.8. Compliance with Legal Requirements..........................36
5.9. Intellectual Property.......................................38
5.10. Financial Statements........................................39
5.11. Absence of Certain Changes or Events........................39
5.12. Litigation..................................................39
5.13. Tax Returns; Other Reports..................................39
5.14. Employment Matters..........................................40
5.15. Comcast Systems Information.................................41
5.16. Taxpayer Identification Number..............................42
5.17. Finders and Brokers.........................................42
5.18. Related-Party Transactions..................................42
5.19. Bonds.......................................................42
5.20. Undisclosed Material Liabilities............................42
5.21. Comcast Designated LLCs.....................................42
6. AT&T CORP.'S REPRESENTATIONS AND WARRANTIES..........................43
6.1. Organization and Qualification..............................43
6.2. Authority and Validity......................................43
6.3. No Conflict; Required Consents..............................44
6.4. Assets......................................................44
6.5. AT&T Systems Franchises, AT&T Systems Licenses,
AT&T Systems Contracts and AT&T Other Real Property
Interests...................................................45
6.6. Real Property...............................................48
6.7. Environmental...............................................48
6.8. Compliance with Legal Requirements..........................50
6.9. Intellectual Property.......................................52
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6.10. Financial Statements........................................53
6.11. Absence of Certain Changes or Events........................53
6.12. Litigation..................................................53
6.13. Tax Returns; Other Reports..................................54
6.14. Employment Matters..........................................54
6.15. AT&T Systems Information....................................55
6.16. Taxpayer Identification Number..............................56
6.17. Finders and Brokers.........................................56
6.18. Related-Party Transactions..................................56
6.19. Bonds.......................................................56
6.20. Undisclosed Material Liabilities............................56
6.21. AT&T Designated LLCs........................................57
7. ADDITIONAL COVENANTS.................................................57
7.1. Access to Premises and Records..............................57
7.2. Continuity and Maintenance of Operations; Certain
Deliveries and Notice......................................57
7.3. Employees...................................................60
7.4. Leased Vehicles; Other Capital Leases.......................66
7.5. Required Consents; Franchise Renewal........................66
7.6. Title Commitments and Surveys...............................69
7.7. HSR Act Notification........................................69
7.8. Sales and Transfer Taxes....................................70
7.9. Programming.................................................70
7.10. Retention of Books and Records..............................70
7.11. Use of Name and Logo........................................71
7.12. Transitional Billing Services...............................71
7.13. Confidentiality and Publicity...............................71
7.14. Bulk Transfer...............................................72
7.15. Lien Searches...............................................72
7.16. Reasonable Best Efforts; Further Assurances.................72
7.17. Cooperation as to Rates.....................................73
7.18. Cooperation as to Late Fee Cases............................74
7.19. Distant Broadcast Signals...................................75
7.20. Offers......................................................75
7.21. [Intentionally Omitted].....................................75
7.22. Cooperation with Financial Statements.......................75
7.23 Accounts Payable and Franchise Fees.........................76
7.24. Termination of Certain Affiliate Contracts..................76
7.25 Capital Management Committee................................76
7.26 INET........................................................76
8. CONDITIONS PRECEDENT.................................................76
8.1 [Intentionally Omitted]....................................76
8.2. Conditions to Comcast's Obligations.........................76
8.3. Conditions to AT&T's Obligations............................77
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9. THE CLOSING..........................................................79
9.1. The Closing; Time and Place.................................79
9.2. AT&T's Delivery Obligations.................................79
9.3. Comcast's Delivery Obligations..............................80
10. TERMINATION AND DEFAULT..............................................81
10.1. Termination Events..........................................81
10.2. Effect of Termination.......................................82
11. SURVIVAL; INDEMNIFICATION............................................82
11.1. Indemnification by the AT&T Entities........................82
11.2. Indemnification by the Comcast Entities.....................82
11.3. Third Party Claims..........................................83
11.4. Limitations on Indemnification..............................84
11.5. Payments for Indemnification Amounts........................85
11.6. Exclusive Remedy............................................85
12. MISCELLANEOUS PROVISIONS.............................................85
12.1. Parties Obligated and Benefited.............................85
12.2. Notices.....................................................86
12.3. Right to Specific Performance...............................87
12.4. Waiver......................................................87
12.5. Captions....................................................87
12.6. Governing Law...............................................87
12.7. Time........................................................87
12.8. Late Payments...............................................87
12.9. Counterparts................................................87
12.10. Entire Agreement............................................87
12.11. Severability................................................88
12.12. Construction................................................88
12.13. Expenses....................................................88
12.14. Risk of Loss................................................88
12.15. Tax Consequences............................................89
12.16. Jurisdiction................................................89
12.17. Waiver of Jury Trial........................................89
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ASSET EXCHANGE AGREEMENT
THIS ASSET EXCHANGE AGREEMENT (this "Agreement") is made as of August
11, 2000, by and among AT&T CORP. and the AT&T Parties (as defined below), on
the one hand, and COMCAST CORPORATION and the Comcast Parties (as defined
below), on the other hand.
RECITALS
A. AT&T Corp. and Comcast Corporation have entered into a letter
agreement, dated May 4, 1999, as amended, providing for, among other things, an
exchange of cable television systems (the "Letter Agreement").
B. The purpose of this Agreement is to set forth the definitive
terms upon which such exchange will take place.
C. AT&T Corp., MediaOne Group, Inc. ("MediaOne Group") and Meteor
Acquisition, Inc. ("Meteor") entered into an Agreement and Plan of Merger, dated
as of May 6, 1999, pursuant to which MediaOne Group merged with and into Meteor
on June 15, 2000.
AGREEMENTS
In consideration of the covenants and agreements set forth herein and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereby agree as follows:
1. DEFINITIONS. In addition to the terms defined elsewhere in this
Agreement, the following capitalized terms or terms otherwise defined in this
Article 1 shall have the meanings set forth below:
1.1. 1992 Cable Act. The Cable Television Consumer Protection and
Competition Act of 1992, as amended, and the rules and regulations promulgated
thereunder.
1.2. Affiliate. With respect to any Person, any other Person
controlling, controlled by or under common control with such Person. As used in
this Agreement, "control" means the ownership, directly or indirectly, of voting
securities representing the right generally to elect a majority of the directors
(or similar officials) of a Person or the possession, by contract or otherwise,
of the authority to direct the management and policies of a Person. For purposes
of this Agreement (except Section 6.18), At Home Corporation and its
subsidiaries and Liberty Media Corporation and its subsidiaries will not be
treated as Affiliates of the AT&T Entities.
1.3. Agreement. This Asset Exchange Agreement, as it may be amended
from time to time.
1.4. Assets. The AT&T Assets or the Comcast Assets, as the context
requires.
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1.5. AT&T Assets. All of the AT&T Parties' or their Affiliates' right,
title and interest in the assets, privileges, contracts, licenses, permits,
franchises, authorizations, rights, interests, claims and other properties, real
and personal, tangible and intangible, of every type and description, (a)
primarily held for, primarily used in or primarily necessary for, AT&T's Cable
Business, (b) in which any AT&T Party or its Affiliate has any right, title or
interest and (c) that are not AT&T Excluded Assets, including the following
items that are within the foregoing definition:
(1) Tangible Personal Property ("AT&T Tangible Personal
Property");
(2) Owned Property ("AT&T Owned Property");
(3) Leased Property ("AT&T Leased Property");
(4) Other Real Property Interests ("AT&T Other Real Property
Interests");
(5) Systems Franchises ("AT&T Systems Franchises");
(6) Systems Licenses ("AT&T Systems Licenses");
(7) Systems Contracts ("AT&T Systems Contracts");
(8) Books and Records ("AT&T Books and Records");
(9) Other Intangibles ("AT&T Other Intangibles"); and
(10) AT&T Designated LLC Interests.
1.6. AT&T Entities. AT&T Corp. and the AT&T Parties.
1.7. AT&T Required Consents. Any and all consents, authorizations and
approvals under or in connection with the AT&T Assets (including the AT&T
Systems Franchises, the AT&T Systems Licenses and the AT&T Systems Contracts) or
any Contract, Lien or Legal Requirement by which any AT&T Party, any of its
Affiliates or their respective Assets are bound, required (a) for each AT&T
Party to transfer its Assets to the applicable Comcast Parties pursuant to this
Agreement, (b) for the applicable Comcast Parties to operate the AT&T Systems,
and to own, lease, use and operate the AT&T Assets and the AT&T Systems at the
places and in the manner in which the AT&T Assets are used and the AT&T Systems
are operated as of the date of this Agreement and as of the Closing, (c) for the
applicable Comcast Parties to assume and perform the AT&T Systems Franchises,
the AT&T Systems Licenses, the AT&T Systems Contracts and the Comcast Assumed
Obligations and Liabilities, or (d) for the representations set forth in Section
6.3 to be true as if made at Closing disregarding any exceptions thereto set
forth on Schedule 6.3 and disregarding the Material Adverse Effect exception set
forth therein.
1.8. AT&T's Cable Business. The cable television business and related
or ancillary businesses (including advertising sales and the provision of
Internet, wireline telephony and high-speed data services) conducted by the AT&T
Parties and their Affiliates through or in connection with the AT&T Systems.
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1.9. Basic Services. The lowest tier of service offered to subscribers
of a System.
1.10. Books and Records. All engineering records, files, data,
drawings, blueprints, schematics, reports, lists, plans and processes, and all
other files of correspondence, lists, records and reports, including those
concerning subscribers and prospective subscribers of the applicable Systems,
signal and program carriage and dealings with Governmental Authorities with
respect to the applicable Systems, including all reports filed with respect to
the applicable Systems with the FCC and statements of account filed with respect
to the applicable Systems with the U.S. Copyright Office, but excluding all
documents, reports and records relating to the System Employees.
1.11. Business Day. Any day other than a Saturday, Sunday or a day on
which the banking institutions in New York, New York or Denver, Colorado are
required to be closed.
1.12. Cable Act. The Cable Communications Policy Act of 1984, as
amended, and the rules and regulations promulgated thereunder.
1.13. Cable Business. AT&T's Cable Business or Comcast's Cable
Business, as the context requires.
1.14. Closing. The closing of the Swap contemplated by this Agreement.
1.15. Closing Time. 11:59 p.m., local time at the place of the Closing,
on the Closing Date.
1.16. Comcast Assets. All of the Comcast Parties' or their Affiliates'
right, title and interest in the assets, privileges, contracts, licenses,
permits, franchises, authorizations, rights, interests, claims and other
properties, real and personal, tangible and intangible, of every type and
description, (a) primarily held for, primarily used in, or primarily necessary
for, Comcast's Cable Business, (b) in which any Comcast Party or its Affiliate
has any right, title or interest and (c) that are not Comcast Excluded Assets,
including the following items that are within the foregoing definition:
(1) Tangible Personal Property ("Comcast Tangible Personal
Property");
(2) Owned Property ("Comcast Owned Property");
(3) Leased Property ("Comcast Leased Property");
(4) Other Real Property Interests ("Comcast Other Real Property
Interests");
(5) Systems Franchises ("Comcast Systems Franchises");
(6) Systems Licenses ("Comcast Systems Licenses");
(7) Systems Contracts ("Comcast Systems Contracts");
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(8) Books and Records ("Comcast Books and Records");
(9) Other Intangibles ("Comcast Other Intangibles"); and
(10) Comcast Designated LLC Interests.
1.17. Comcast Entities. Comcast Corporation and the Comcast Parties.
1.18. Comcast Required Consents. Any and all consents, authorizations
and approvals under or in connection with the Comcast Assets (including the
Comcast Systems Franchises, Comcast Systems Licenses and Comcast Systems
Contracts) or any Contract, Lien or Legal Requirement by which any Comcast
Party, any of its Affiliates or their respective Assets are bound, required (a)
for each Comcast Party to transfer its Assets to the applicable AT&T Parties
pursuant to this Agreement, (b) for the applicable AT&T Parties to operate the
Comcast Systems, and to own, lease, use and operate the Comcast Assets and the
Comcast Systems at the places and in the manner in which the Comcast Assets are
used and the Comcast Systems are operated as of the date of this Agreement and
as of the Closing, (c) for the applicable AT&T Parties to assume and perform the
Comcast Systems Franchises, the Comcast Systems Licenses, the Comcast Systems
Contracts and the AT&T Assumed Obligations and Liabilities, or (d) for the
representations set forth in Section 5.3 to be true as if made at Closing
disregarding any exceptions thereto set forth on Schedule 5.3 and disregarding
the Material Adverse Effect exception set forth therein.
1.19. Comcast's Cable Business. The cable television business and
related or ancillary businesses (including advertising sales and the provision
of Internet, wireline telephony and high-speed data services) conducted by the
Comcast Parties and their Affiliates through or in connection with the Comcast
Systems.
1.20. Communications Act. The Communications Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
1.21. Contract. Any contract, mortgage, deed of trust, bond, indenture,
lease, license, note, franchise, certificate, option, warrant, right or other
instrument, document, obligation or agreement, whether written or oral.
1.22. Deposits. With respect to any System, all monies which are on
deposit with Third Parties as of the Closing Time for the account of a
Transferor, or as security for such party's performance of its obligations
(other than (i) any deposits which are AT&T or Comcast Excluded Assets and (ii)
other deposits to the extent the benefit of which will not be available to a
Transferee following the Closing), including deposits on real property leases
and deposits for utilities.
1.23. Documented Employee Performance Case. Any Other Employee who has
(a) received a written performance warning during the period beginning six (6)
months before the date hereof and ending on the Closing Date, (b) had any active
involvement in a formal performance monitoring program during the period
beginning six (6) months before the date hereof and ending on the Closing Date
or (c) been designated by Transferee as a possible
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Documented Employee Performance Case after its review of the personnel records
during the period beginning six (6) months before the date hereof and ending on
the Closing Date.
1.24. Environmental Law. Any Legal Requirement relating to pollution or
the protection of human health and safety or the environment, including CERCLA,
OSHA and RCRA.
1.25. Equivalent Basic Subscriber. An active customer for Basic
Services either in a single household, a commercial establishment or in a
multi-unit dwelling (including a hotel unit); provided, however, that the number
of customers in a multi-unit dwelling or commercial establishment that obtains
service on a "bulk-rate" basis shall be determined by dividing the gross
bulk-rate billings for both (i) Basic Services and (ii) Expanded Basic Services
(but not billings from new product tiers ("Enhanced Services"), a la carte tiers
(including pay per view services), premium services, installation or other
non-recurring charges, converter rental, or from any outlet or connection other
than such customer's first or from any pass-through charges for sales Taxes,
line-itemized franchise fees, late fees, fees charged by the FCC and the like)
attributable to such multi-unit dwelling or commercial establishment during the
most recent billing period ended prior to the date of calculation (but excluding
billings in excess of a single month's charge) by the predominant retail rate
charged in that franchise area by a System (or headend, as applicable) as of May
4, 1999 to individual households for combined Basic Services and Expanded Basic
Services (excluding Enhanced Services, a la carte tiers (including pay per view
services), premium services, installation or other nonrecurring charges,
converter rental, or from any outlet or connection other than such customer's
first or from any pass-through charges for sales Taxes, line-itemized franchise
fees, late fees, fees charged by the FCC and the like). Notwithstanding the
foregoing, for purposes of this definition, (A) the number of customers of a
Comcast Entity for a multi-unit dwelling or commercial establishment receiving
Basic Services, but not Expanded Basic Services and/or Enhanced Services, that
obtains such Basic Services on a "bulk-rate" basis shall be determined by
dividing the gross bulk-rate billings for Basic Services (but not billings from
Expanded Basic Services, Enhanced Services, a la carte tiers (including pay per
view services), premium services, installation or other non-recurring charges,
converter rental, or from any outlet or connection other than such customer's
first or from any pass-through charges for sales Taxes, line itemized franchise
fees, late fees, fees charged by the FCC and the like) attributable to such
multi-unit dwelling or commercial establishment during the most recent billing
period ended prior to the date of calculation (but excluding billings in excess
of a single month's charge) by the predominant retail rate charged in that
franchise area by a System (or headend, as applicable) as of May 4, 1999 to
individual households for Basic Services (excluding Expanded Basic Services,
Enhanced Services, a la carte tiers (including pay per view services), premium
services, installation or other non-recurring charges, converter rental, or from
any outlet or connection other than such customer's first or from any
pass-through charges for sales Taxes, line-itemized franchise fees, late fees,
fees charged by the FCC and the like); provided that the alternative method of
calculation set forth in this clause (A) shall be applied to the extent such
method results in no more than 1,000 Equivalent Basic Subscribers and,
thereafter, the method set forth in the previous sentence shall apply to the
remaining gross bulk-rate billings for the multi-unit dwellings or commercial
establishments of the Comcast Entities that are receiving Basic Services, but
not Expanded Basic Services and/or Enhanced Services; and (B) in cases where the
Comcast Entity has Basic Services, Expanded Basic Services and Enhanced Services
in a franchise area, the number of customers for each multi-unit dwelling or
commercial
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establishment in such franchise area shall be determined by dividing the gross
bulk-rate billings for such multi-unit dwelling or commercial establishment for
(i) Basic Services, (ii) Expanded Basic Services and (iii) Enhanced Services
(but not billings from a la carte tiers (including pay per view services),
premium services, installation or other non-recurring charges, converter rental,
or from any outlet or connection other than such customer's first or from any
pass-through charges for sales Taxes, line-itemized franchise fees, late fees,
fees charged by the FCC and the like) attributable to such multi-unit dwelling
or commercial establishment during the most recent billing period ended prior to
the date of calculation (but excluding billings in excess of a single month's
charge) by the predominant retail rate charged in that franchise area by a
System (or headend, as applicable) as of May 4, 1999 to individual households
for the combined Basic Services, Expanded Basic Services and Enhanced Services
being provided to such multi-unit dwelling or commercial establishment
(excluding a la carte tiers (including pay per view services), premium services,
installation or other non-recurring charges, converter rental, or from any
outlet or connection other than such customer's first or from any pass-through
charges for sales Taxes, line-itemized franchise fees, late fees, fees charged
by the FCC and the like). For purposes of this definition, an "active customer"
shall mean any person, commercial establishment or multi-unit dwelling at any
given time that is paying for and receiving Basic Services (or Basic Services
and one or more other services) from a System. For purposes of this definition,
an "active customer" does not include any person, commercial establishment or
multi-unit dwelling that, as of the date of calculation, has never paid in full
the applicable System's regular basic monthly subscription rate for Basic
Services (excluding installation or other nonrecurring charges) without discount
(other than discounts offered pursuant to selling or marketing campaigns or
promotional activities engaged in by such System in the ordinary course of
business, consistent with past practices, and other than bulk accounts paying
the contract rate) for at least one month.
1.26. ERISA. The Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder and published
interpretations with respect thereto.
1.27. ERISA Affiliate. As to any Person, any trade or business, whether
or not incorporated, which, together with such Person, would be deemed a single
employer within the meaning of Section 4001 of ERISA.
1.28. Expanded Basic Services. Any video programming provided over a
cable television system, regardless of service tier, other than Basic Services
and Pay TV.
1.29. FCC. The U.S. Federal Communications Commission.
1.30. Financial Statements. The AT&T Financial Statements or the
Comcast Financial Statements, as the context requires.
1.31. Governmental Authority. The United States of America, any state,
commonwealth, territory or possession of the United States of America and any
political subdivision or quasi-governmental authority of any of the same,
including any court, tribunal, quasi-governmental authority, department,
commission, board, bureau, agency, body, county, municipality, province, parish,
or other instrumentality of any of the foregoing.
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1.32. Hazardous Substances. Any pollutant, contaminant, chemical,
industrial, toxic, or hazardous substance, material or waste that is regulated
under, or forms the basis for liability under, any Environmental Law, including
(a) any petroleum or petroleum compounds (refined or crude), derivatives,
byproducts or other hydrocarbons, flammable substances, explosives, radioactive,
toxic, ignitable, corrosive or reactive materials or any other materials or
pollutants which pose a significant hazard or potential significant hazard to
the environment or Persons; (b) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act of 1976 as amended on or prior to the Closing
Date, and the rules and regulations promulgated thereunder ("RCRA") (42 U.S.C.
Section 6901); (c) any "hazardous substance" as defined by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 as amended on or
prior to the Closing Date, and the rules and regulations promulgated thereunder
("CERCLA") (42 U.S.C. Section 9601 et seq.); (d) any substance regulated by the
Toxic Substances Control Act (42 U.S.C. Section 2601 et seq.) or the
Insecticide, Fungicide and Rodenticide Act (7 U.S.C. Section 136 et seq.), each,
as amended on or prior to the Closing Date, and the rules and regulations
promulgated thereunder; (e) asbestos or asbestos-containing material of any kind
or character; (f) polychlorinated biphenyls; (g) any substances regulated under
the provisions of Subtitle I of RCRA relating to underground storage tanks; (h)
any materials or substances designated as "hazardous substances" pursuant to the
Clean Water Act, and the rules and regulations promulgated thereunder (33 U.S.C.
Section 1251 et seq.); (i) any substance the presence, use, handling, treatment,
storage or disposal of which is regulated or prohibited by any Environmental
Law; and (j) any other substance which by any Environmental Law requires special
handling, reporting or notification of any Governmental Authority in its
collection, storage, use, treatment or disposal.
1.33. Hired Employee. Any System Employee who is offered and accepts
employment by the Transferee or its Affiliate pursuant to Section 7.3.
1.34. Hiring Party. Each entity that employs a Hired Employee as of the
Closing Date pursuant to Section 7.3.
1.35. HSR Act. The Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
1.36. Intellectual Property. Any (a) trademarks, trade dress, trade
names, service marks, logos and other similar proprietary rights, (b) domain
names, (c) copyrights, (d) patents and patentable know-how, inventions and
processes, and (e) any other intellectual property rights, and any registrations
for or applications for registration of any of the foregoing.
1.37. Judgment. Any judgment, writ, order, injunction, award or decree
of any court, judge, justice or magistrate, including any bankruptcy court or
judge or the arbitrator in any binding arbitration, and any order of or by any
Governmental Authority.
1.38. Knowledge. With respect to any System, the actual knowledge of a
particular matter of the general manager of the System or the actual knowledge
of managers or officers of AT&T Corp. (or any of its subsidiaries that are
Affiliates) or Comcast Corporation (or any of its subsidiaries that are
Affiliates), as the context requires, senior to such general manager.
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"Comcast's Knowledge" means Knowledge with respect to the Comcast Systems.
"AT&T's Knowledge" means Knowledge with respect to the AT&T Systems.
1.39. Leased Property. Leaseholds of real property or, as the context
requires, the real property demised under such leaseholds.
1.40. Legal Requirement. Applicable common law and any statute,
ordinance, code or other law, rule, regulation, order, restriction, judicial
decision, judgment, decree, permit, technical or other written standard,
requirement or procedure enacted, adopted, promulgated, applied or followed by
any Governmental Authority, including any Judgment and any written agreement
with any Governmental Authority other than a Systems Franchise.
1.41. Lien. With respect to any property or asset, any security
interest, security agreement, financing statement filed with any Governmental
Authority, conditional sale, capital lease or other title retention agreement
relating to such property or asset, any lease, consignment or bailment given for
purposes of security, any mortgage, lien (including any lien for Taxes),
indenture, pledge, option, charge, encumbrance, adverse interest, constructive
trust or other trust, claim, attachment, or exception to, defect in, or other
condition adversely affecting title or other ownership interest (including
reservations, rights of entry, possibilities of reverter, encroachments,
protrusions, easements, rights-of-way, rights of first refusal, restrictive
covenants, leases and licenses) of any kind, which constitutes an interest in or
claim against property, whether arising pursuant to any Legal Requirement,
Systems License, Systems Franchise, Systems Contract or otherwise.
1.42. Litigation. Any claim, action, suit, proceeding, arbitration,
investigation, hearing or any other similar activity or procedure that could
reasonably be expected to result in a Judgment.
1.43. Losses. Any claims, losses, liabilities, damages, penalties,
costs and expenses, including interest that may be imposed in connection
therewith, reasonable expenses of investigation, reasonable fees and
disbursements of counsel and other experts, and, as applicable, the cost to any
Person making a claim or seeking indemnification under this Agreement with
respect to funds expended by such Person by reason of the occurrence of any
event or the existence or assertion of any Liens (other than Permitted Liens)
with respect to which indemnification is sought or by reason of its enforcing
its rights hereunder.
1.44. MVPD. Any Person who makes available for purchase, by subscribers
or customers, multiple channels of video programming.
1.45. Net Transferee Party. A Party with respect to which (x) the sum
of the System Values for the Systems such Party is transferring to another Party
is less than (y) the sum of the System Values for the Systems such Party is
receiving from such other Party.
1.46. Net Transferor Party. A Party with respect to which (x) the sum
of the System Values for the Systems such Party is transferring to another Party
is greater than (y) the sum of the System Values for the Systems such Party is
receiving from such other Party.
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1.47. Net Working Capital Adjustment Amount Transferee Party. A Party
with respect to which (x) the sum of the Working Capital Adjustment Amount for
the Systems such Party is transferring to another Party is less than (y) the sum
of the Working Capital Adjustment Amount for the Systems such Party is receiving
from such other Party.
1.48. Net Working Capital Adjustment Amount Transferor Party. A Party
with respect to which (x) the sum of the Working Capital Adjustment Amount for
the Systems such Party is transferring to another Party is greater than (y) the
sum of the Working Capital Adjustment Amount for the Systems such Party is
receiving from such other Party.
1.49. OSHA. Occupational Safety and Health Act.
1.50. Other Employees. All Employees of the Systems, including term
employees, who are not Senior Managers.
1.51. Other Intangibles. All intangible assets, other than the Systems
Franchises, the Systems Licenses and the Systems Contracts, including subscriber
lists, claims (excluding any claims to the extent relating to the applicable
AT&T Excluded Assets or Comcast Excluded Assets), and Intellectual Property.
1.52. Other Real Property Interests. Easements and rights of access
(other than those relating to multiple dwelling units) and other interests in
real property.
1.53. Owned Property. Fee interests in real property and all towers and
other improvements thereon and appurtenances thereto.
1.54. Parent. AT&T Corp. or Comcast Corporation, as the context
requires.
1.55. Parties. The Comcast Entities and the AT&T Entities.
1.56. Pay TV. Premium programming services selected by and sold to
subscribers on a per-channel or per-program basis.
1.57. Permitted Liens. (a) Liens for Taxes, assessments and
governmental charges, in each case, not yet due and payable or being contested
in good faith (and for which adequate accruals or reserves, if any, have been
established), (b) customary zoning laws or ordinances or any similar Legal
Requirements, (c) customary rights reserved to any Governmental Authority to
regulate the affected property, (d) Liens described on Schedule 6.4.1 (with
respect to AT&T's Cable Business) and on Schedule 5.4.1 (with respect to
Comcast's Cable Business), all of which Liens (except for those marked with an
asterisk (*) on such Schedules or otherwise agreed by the Parties in writing)
will be terminated, released or, in the case of the rights of first refusal
listed on such Schedules, waived, as appropriate, at or prior to the Closing,
(e) as to Leased Property or Tangible Personal Property that is leased, (i) the
interests of the lessors thereof and (ii) any Lien granted by any lessor to
secure indebtedness of such lessor, (f) Liens arising from Comcast Assumed
Obligations and Liabilities or AT&T Assumed Obligations and Liabilities, as the
case may be, (g) as to Owned Property and Other Real Property Interests, any
Lien (other than Liens securing indebtedness or arising out of the obligation to
pay money) that does not and would not reasonably be expected to, individually
or in the aggregate with other Liens (other than Permitted
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Liens in clauses (a)-(f) above and clause (h) below), interfere with the right
or ability to own, use, enjoy or operate the Owned Property or Other Real
Property Interests in the manner currently used or operated or materially
detract from their value, and (h) any inchoate materialmen's, mechanics',
workmen's, repairmen's or other like Liens arising in the ordinary course of
business; provided that "Permitted Liens" will not include any Lien (other than
any Lien described in clause (e) above) which could prevent or materially
interfere with the conduct of the business of the affected System.
1.58. Person. Any natural person, Governmental Authority, corporation,
general or limited partnership, limited liability company, joint venture, trust,
association or unincorporated entity of any kind.
1.59. Required Consents. The AT&T Required Consents or the Comcast
Required Consents, as the context requires.
1.60. Senior Managers. Employees who are managers or senior to managers
and all employees located at the Findlay location.
1.61. Service Area. With respect to any System, any geographic area in
which the owner of such System is authorized to provide cable television service
pursuant to a System Franchise or provides cable television service in which a
System Franchise is not required pursuant to applicable Legal Requirements.
1.62. Six-Month Date. The date that is six months after the Closing
Date.
1.63. System. Any of the AT&T Systems or the Comcast Systems, as the
context requires.
1.64. Systems Contracts. All Contracts (other than Systems Franchises
and Systems Licenses), including lease agreements for Tangible Personal
Property, pole line or joint line agreements, underground conduit agreements,
crossing agreements, retransmission consent agreements, multiple dwelling, bulk
billing or commercial service agreements, Contracts with ServiceCo LLC and/or At
Home Corporation or any of their Affiliates, Contracts documenting Leased
Property and Other Real Property Interests, capital leases, must-carry
elections, system specific programming agreements or signal supply agreements,
agreements with community groups or similar Third Parties, partnership, joint
venture or other similar agreements or arrangements, agreements relating to the
provision of telephone or high-speed data services, and any advertising
interconnect agreements.
1.65. Systems Franchises. Franchises, permits and similar
authorizations issued by franchising authorities, and all rights and benefits to
the extent pertaining thereto, including the rights and benefits arising under
Section 626 of the Cable Act to the extent applicable to a Systems Franchise.
1.66. Systems Licenses. Intangible cable television channel
distribution rights, cable television relay service ("CARS"), business radio and
other licenses, earth station registrations, authorizations, consents or permits
issued by the FCC or any other Governmental Authority (other than the Systems
Franchises), and all rights and benefits to the extent pertaining thereto.
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1.67. Tangible Personal Property. All tangible personal property,
including towers (other than towers on Owned Property that are fixtures thereon
and a part thereof), tower equipment, aboveground and underground cable,
distribution systems, headend amplifiers, line amplifiers, microwave equipment,
converters, testing equipment, motor vehicles, office equipment, computers and
billing equipment, furniture, fixtures, supplies, inventory and other physical
assets, and petty cash that is remaining and to be transferred with the
applicable System.
1.68. Taxes. Levies and assessments of any kind or nature imposed by
any Governmental Authority, including all income, sales, use, ad valorem, value
added, franchise, severance, net or gross proceeds, withholding, payroll,
employment, excise or property taxes and levies, assessments or other payments
required to be made to any state abandoned property administrator or other
public official pursuant to an abandoned property, escheat or similar law (an
"Escheat Payment"), together with any interest thereon and any penalties,
additions to tax or additional amounts applicable thereto.
1.69. Third Party. Any Person other than AT&T Corp. and its Affiliates
or Comcast Corporation and its Affiliates.
1.70. Transaction Documents. All instruments and documents described in
Sections 9.2 and 9.3 that are executed and delivered by or on behalf of AT&T
Corp., any AT&T Party, Comcast Corporation or any Comcast Party in connection
with this Agreement or the transactions contemplated hereby.
1.71. Transfer Taxes. Any transfer, sales, use, excise and similar
Taxes, but not any Taxes measured by or based on gross or net income.
1.72. Transferable Service Area. A Service Area with respect to which:
(i) either (a) no franchise or similar authorization is required or issued for
the provision of cable television service in such Service Area, (b) no Required
Consent is necessary for the transfer of any System Franchise for such Service
Area in connection with the consummation of the transactions contemplated by
this Agreement, or (c) if a Required Consent is necessary for the transfer of
any System Franchise for such Service Area in connection with the consummation
of the transactions contemplated by this Agreement, an effective consent or
approval reasonably acceptable to the applicable Transferee has been obtained
(and is in effect) or shall be deemed to have been obtained and (ii) any Comcast
System Options or AT&T System Options are not exercisable after transfer in
respect of the transactions contemplated by this Agreement and the Transaction
Documents.
1.73. Transferee. An AT&T Party or a Comcast Party, as applicable,
insofar as the term refers to a Party to this Agreement that will receive Assets
from another Party to this Agreement.
1.74. Transferor. An AT&T Party or a Comcast Party, as applicable,
insofar as the term refers to a Party to this Agreement that will transfer
Assets to another Party to this Agreement.
1.75. Other Definitions. The following other terms have the meanings
set forth in the Sections indicated in the table below:
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Term Section
---- -------
Action 11.3
Additional Consideration 3.1.2
Additional System 3.1.3(b)
Additional System Notice 3.1.3(b)
Agent's Fees 5.17
Agreement Recitals
ALTA 7.6(i)
Antitrust Division 7.7
Appraised System Subscriber Cap 3.1.1
Appraised Systems 3.1.1
Appraiser 3.5
Approved Leave of Absence 7.3.3
Arbitrator 3.4.2
AT&T Assumed Obligations and Liabilities 4.1
AT&T Books and Records 1.5(8)
AT&T Cap 11.4(a)
AT&T DC System 3.1.1
AT&T Designated Assets 2.2
AT&T Designated Liabilities 2.2
AT&T Designated LLCs 2.2
AT&T Designated LLC Interests 2.2
AT&T Excluded Assets 4.2
AT&T Excluded Liabilities 4.3
AT&T Financial Statements 6.10
AT&T Leased Property 1.5(3)
AT&T Matching Franchise 7.5.5(b)
AT&T Minimum Damage Requirement 11.4(a)
AT&T 90% Threshold 8.2.5(a)
AT&T Other Intangibles 1.5(9)
AT&T Other Real Property Interests 1.5(4)
AT&T Owned Property 1.5(2)
AT&T Party 2.1.2
AT&T Plans 6.14.2
AT&T Retained Franchise 7.5.5(a)
AT&T System Employee 6.14.3
AT&T System Option 6.5.4
AT&T Systems 2.1.2
AT&T Systems Contracts 1.5(7)
AT&T Systems Franchises 1.5(5)
AT&T Systems Licenses 1.5(6)
AT&T Tangible Personal Property 1.5(1)
AT&T's Knowledge 1.38
@Home Common Stock 3.1.3(a)
@Home Value 3.1.3(a)
CARS 1.66
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Term Section
---- -------
CERCLA 1.32
Class Systems 7.18.1(a)
Closing Date 9.1
Code 2.3
Comcast Assumed Obligations and Liabilities 4.3
Comcast Books and Records 1.16(8)
Comcast Cap 11.4(b)
Comcast Chicago System 3.1.1
Comcast Designated Assets 2.2
Comcast Designated Liabilities 2.2
Comcast Designated LLCs 2.2
Comcast Designated LLC Interests 2.2
Comcast Excluded Assets 4.4
Comcast Excluded Liabilities 4.1
Comcast Financial Statements 5.10
Comcast Leased Property 1.16(3)
Comcast Matching Franchise 7.5.5(a)
Comcast Minimum Damage Requirement 11.4(b)
Comcast 90% Threshold 8.3.5(a)
Comcast Other Intangibles 1.16(9)
Comcast Other Real Property Interests 1.16(4)
Comcast Owned Property 1.16(2)
Comcast Party 2.1.2
Comcast Plans 5.14.2
Comcast Retained Franchise 7.5.5(b)
Comcast System Employee 5.14.3
Comcast System Option 5.5.4
Comcast Systems 2.1.2
Comcast Systems Contracts 1.16(7)
Comcast Systems Franchises 1.16(5)
Comcast Systems Licenses 1.16(6)
Comcast Tangible Personal Property 1.16(1)
Comcast's Knowledge 1.38
Confidential Information 7.13.1
Control 1.2
Controlling Party 11.3
Cost of Service Election 5.8.4
Disclosing Party 7.1
Enhanced Services 1.25
Escheat Payment 1.68
Exchange Groups 2.3(a)
fair market value 3.1.4
Final Report 3.4.1
FTC 7.7
GAAP 1.76
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Term Section
---- -------
Indemnified Party 11.3
Indemnifying Party 11.3
Inspecting Party 7.1(a)
List 7.3.3
Letter Agreement Recital A
M1 Hired Employee 7.3.11
Matching Franchise 7.5.5(a)
Material Adverse Effect 5.1
Material AT&T Systems Contracts 6.5.1
Material Comcast Systems Contracts 5.5.1
MediaOne Group Recital C
Meteor Recital C
Net Payor 3.1.3
Non-Controlling Party 11.3
Overall Adjustment Amount 3.1.3
Overbuilt 3.1.4
Overbuilt Systems 3.1.1
POFS 7.5.3(b)
Prime Rate 11.5
RCRA 1.32
Representatives 7.13.1
Retained Employees 7.3.1
Retained Franchise 7.5.5(a)
Settlement Agreement 7.18.1(a)
Severance Benefits 7.3.9
Split-Off Agreement 8.1
Subscriber Cap 3.1.1
Surveys 7.6(ii)
Swap 2.1.1
System Employees 7.3.1
System Employee on Leave Status 7.3.3
System Value 3.1.1
System Value Preliminary Report 3.1.2
Taking 12.14
Tax Action 11.3
TCI 3.1.1
Title Commitments 7.6(i)
Title Company 7.6(i)
Title Defect 7.6(ii)
Transferee Parent 7.3.1
Transferor Parent 7.3.1
Transitional Billing Services 7.12
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Term Section
---- -------
WARN 5.14.1
Working Capital Adjustment Amount 3.2
Working Capital Preliminary Report 3.3
1.76. Usage. The definitions in this Article 1 shall apply equally to
both the singular and plural forms of the terms defined. Whenever the context
may require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. All references herein to Articles, Sections, Exhibits and
Schedules shall be deemed to be references to Articles and Sections of, and
Exhibits and Schedules to, this Agreement unless the context shall otherwise
require. All Exhibits and Schedules attached hereto shall be deemed incorporated
herein as if set forth in full herein and, unless otherwise defined therein,
each term used in any Exhibit or Schedule shall have the meaning ascribed to
such term in this Agreement. The words "include," "includes" and "including"
shall be deemed to be followed by the phrase "without limitation." The words
"hereof," "herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement unless the context shall otherwise require.
Reference to any Comcast Party's Assets or Comcast's Cable Business will be
deemed to refer to the portion of the Comcast Assets or Comcast's Cable Business
owned or operated by such Comcast Party. Reference to any AT&T Party's Assets or
AT&T's Cable Business will be deemed to refer to the portion of the AT&T Assets
or AT&T's Cable Business owned or operated by such AT&T Party. Unless otherwise
expressly provided herein, any agreement, instrument or statute defined or
referred to herein or in any agreement or instrument that is referred to herein
means such agreement, instrument or statute as from time to time amended,
modified or supplemented, including (in the case of agreements or instruments)
by waiver or consent and (in the case of statutes) by succession of comparable
successor statutes and references to all attachments thereto and instruments
incorporated therein. All accounting terms not otherwise defined in this
Agreement will have the meanings ascribed to them under generally acceptable
accounting principles as in effect from time to time in the United States
("GAAP").
2. EXCHANGE.
2.1. Definition of Parties and Systems.
2.1.1. Basic Transaction Structure. It is understood that,
pursuant to the terms and conditions of this Agreement, the relevant parties
will exchange the cable television systems set forth in Schedule 2.1.1 (the
"Swap").
2.1.2. Parties to this Agreement. On the date hereof, each wholly
owned or majority owned subsidiary of AT&T Corp. and each wholly owned or
majority owned subsidiary of Comcast Corporation that owns any cable television
system set forth on Schedule 2.1.1 is a party to this Agreement and shall be
referred to herein as an "AT&T Party" or a "Comcast Party", respectively. The
cable television systems listed on such Schedules that are owned by any AT&T
Party shall be referred to herein as "AT&T Systems" and those owned by any
Comcast Party shall be referred to herein as "Comcast Systems". Entities may,
after the date
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hereof, be added to or deleted from the foregoing definitions, as set forth in
the following provisions of this Section 2.1 and Section 2.2.
Any AT&T Party that is currently or becomes the owner of an AT&T
System shall be permitted prior to the Closing Time to transfer (whether
directly or indirectly or by operation of law) such System to another wholly
owned or majority owned entity of AT&T Corp., and, in such event, the subsequent
owner of such System shall become a party to this Agreement by executing a
signature page hereto and shall thereafter be treated as an AT&T Party
hereunder. Similarly, any Comcast Party that is currently or becomes the owner
of a Comcast System shall be permitted prior to the Closing Time to transfer
(whether directly or indirectly or by operation of law) such System to another
wholly owned or majority owned entity of Comcast Corporation, and in such event,
the subsequent owner of such System shall become a party to this Agreement by
executing a signature page hereto and shall thereafter be treated as a Comcast
Party hereunder.
2.2. Exchange of Assets. Upon the terms and subject to the conditions
set forth in this Agreement, at the Closing the AT&T Parties and the Comcast
Parties agree to exchange simultaneously all of the right, title and interest of
the AT&T Parties in, to and under the AT&T Assets for all of the right, title
and interest of the Comcast Parties in, to and under the Comcast Assets, in each
case free and clear of all Liens (except Permitted Liens); provided, however,
that this Agreement shall not constitute an agreement to assign any Asset or any
claim or right or any benefit arising thereunder or resulting therefrom without
the consent of a Third Party thereto if such assignment without such consent
would constitute a breach or other contravention of such Asset or in any way
adversely affect the rights of the Transferee thereunder.
Notwithstanding the foregoing paragraph, the Parties agree that in lieu
of the Comcast Parties transferring to the AT&T Parties at Closing the Comcast
Assets located in the States of Colorado, California and Georgia (the "Comcast
Designated Assets") and in lieu of the AT&T Parties assuming the AT&T Assumed
Obligations and Liabilities with respect to the Comcast Designated Assets (the
"Comcast Designated Liabilities"), the following will apply: Immediately prior
to the Closing, the Comcast Parties will transfer to one or more limited
liability companies (collectively, the "Comcast Designated LLCs") all of the
Comcast Designated Assets and the applicable Comcast Designated LLC will assume
all of the applicable Comcast Designated Liabilities, all on terms and
conditions satisfactory to the AT&T Parties. At the Closing, the Comcast Parties
will transfer to the applicable AT&T Parties 100% of the limited liability
company interests in each Comcast Designated LLC (collectively, "Comcast
Designated LLC Interests"), free and clear of all Liens. Except as the context
may otherwise require, the term "Comcast Parties" as used in this Agreement
shall include the Comcast Designated LLCs. Prior to Closing, the Comcast Parties
will cause the Comcast Designated LLCs to comply with the covenants in this
Agreement as if they were Comcast Parties.
Notwithstanding the first paragraph of this Section 2.2, the parties
agree that in lieu of the AT&T Parties transferring to the Comcast Parties at
Closing the AT&T Assets located in the States of Maryland and New Jersey (the
"AT&T Designated Assets") and in lieu of the Comcast Parties assuming the
Comcast Assumed Obligations and Liabilities with respect to the AT&T Designated
Assets (the "AT&T Designated Liabilities"), the following will apply:
Immediately prior to the Closing, the AT&T Parties will transfer to one or more
limited liability
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companies (collectively, the "AT&T Designated LLCs") all of the AT&T Designated
Assets and the applicable AT&T Designated LLC will assume all of the applicable
AT&T Designated Liabilities, all on terms and conditions satisfactory to the
Comcast Parties. At the Closing, the AT&T Parties will transfer to the
applicable Comcast Parties 100% of the limited liability company interests in
each AT&T Designated LLC (collectively, "AT&T Designated LLC Interests"), free
and clear of all Liens. Except as the context may otherwise require, the term
"AT&T Parties" as used in this Agreement shall include the AT&T Designated LLCs.
Prior to Closing, the AT&T Parties will cause the AT&T Designated LLCs to comply
with the covenants in this Agreement as if they were AT&T Parties.
Each Parent will cause any entity that owns any Asset, but that is not
a Party to this Agreement, to transfer such Asset to the appropriate Transferor
prior to Closing, provided, however, that if such Asset could not be the subject
of a like-kind exchange, then, in lieu of the foregoing provision, such Parent
may cause such entity to transfer such Asset at Closing to a Transferee or other
entity designated by the other Parent. If an entity that is not a Party owns or
receives transfer of any Assets, the applicable Parent will cause such entity to
comply with the obligations, covenants and terms of this Agreement in respect of
such Assets as if such entity was a Party to this Agreement.
Notwithstanding the first paragraph of this Section 2.2, the parties
agree that the Comcast Party which would otherwise receive transfer of the AT&T
DC System in the Swap may designate a limited liability company that is
wholly-owned by such Comcast Party to be the Transferee of the AT&T DC System
(and the AT&T Assets and Comcast Assumed Obligations and Liabilities related
thereto).
2.3. Method of Exchange. Notwithstanding anything to the contrary in
this Agreement, but subject to Sections 2.4 and 7.5.5, the exchange shall occur
in accordance with the match-ups and in the manner set forth on Schedule 2.3 and
no Party shall take any action inconsistent with the terms of such writing or
Schedule. The exchange is to occur as follows: (a) the AT&T Tangible Personal
Property and the Comcast Tangible Personal Property are being exchanged each for
the other in "Exchange Groups" (as defined under Internal Revenue Regulations
Sections 1.1031(a)-2 and 1.1031(j)-1(b)(2)); (b) the AT&T Owned Property, AT&T
Leased Property and AT&T Other Real Property Interests and the Comcast Owned
Property, Comcast Leased Property and Comcast Other Real Property Interests are
being exchanged each for the other; and (c) the AT&T Systems Contracts, AT&T
Systems Franchises, AT&T Systems Licenses and AT&T Other Intangibles and the
Comcast Systems Contracts, Comcast Systems Franchises, Comcast Systems Licenses
and Comcast Other Intangibles are being exchanged each for the other, in each
case to the maximum extent permitted by Section 1031 of the Internal Revenue
Code of 1986, as amended, and the rules and regulations promulgated thereunder
(the "Code").
2.4. Cooperation in Structuring Exchange. Subject to Section 7.5.5(c),
the Parties agree to use all reasonable efforts to structure the Swap in such a
way that to the extent reasonably possible such exchange will be a Tax-free
exchange of like-kind assets for all Parties under Section 1031 of the Code,
including assignment of the Parties' rights under this Agreement to a "qualified
intermediary" engaged by one or more of the Parties to effectuate a deferred
like-kind exchange under Section 1031 of the Code. The Parties will cooperate in
good
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faith to minimize any adverse Tax effect on the Parties in connection with such
exchange, including by identifying the entities that will be party to each
transfer contemplated in the Swap, so as to minimize the Taxes resulting from
the Swap. Without limiting the foregoing, the Parties agree that their intent is
to transfer all of the Systems, to the maximum extent possible, in transactions
qualifying as Tax-free exchanges of property pursuant to Section 1031 of the
Code, and the Parties will cooperate reasonably and in good faith to structure
the transfers of the Systems and payment under Sections 3.1.2 and 3.1.3 in a
manner that achieves this intent.
3. CONSIDERATION. Each Party hereto agrees as follows:
3.1. Calculation of Values; Payment of Additional Consideration.
3.1.1. For the purposes of this Agreement, the gross value of the
Assets comprising each System (the "System Value") for each System set forth on
Schedule 3.1.1-A shall equal (a) $4,591 multiplied by (b) the number of
Equivalent Basic Subscribers served by such System as of the month-end prior to
the Closing Date (or, in the case of any System located in Florida and any
franchise area located in Long Beach Island, New Jersey, the average number of
Equivalent Basic Subscribers in such System or area for the 12-month period
ending on the month-end prior to the Closing Date, calculated by (x) adding
together the number of Equivalent Basic Subscribers in such System at the end of
each of the 13 months ending on the month-end prior to the Closing Date and (y)
dividing that aggregate number by thirteen); provided that with respect to each
such System the number of Equivalent Basic Subscribers in such System shall not
exceed the number (the "Subscriber Cap") set forth for such System in Schedule
3.1.1-A (subject to apportionment, if applicable, pursuant to Section 7.5.5(c)).
For purposes of the application of the provisions regarding the Subscriber Cap,
Schedule 3.1.1-A treats the non-Overbuilt franchise areas within the MediaOne
Group Detroit, Michigan System and the TCI Detroit, Michigan System as a single
System.
Notwithstanding the foregoing, for purposes of this Agreement,
the System Value for the Comcast System located in the City of Chicago, Illinois
(the "Comcast Chicago System") and the System Value for the AT&T System located
in the City of Washington, D.C. (the "AT&T DC System" and together with the
Comcast System, collectively, the "Appraised Systems") shall equal (a) $3,260
with respect to the AT&T DC System and $4,113 with respect to the Comcast
Chicago System multiplied by (b) the number of Equivalent Basic Subscribers
served by such Appraised System as of the month-end prior to the Closing Date;
provided that with respect to each Appraised System the number of Equivalent
Basic Subscribers in such Appraised System shall not exceed the number (the
"Appraised System Subscriber Cap") set forth for such System in Schedule 3.1.1-B
(subject to apportionment, if applicable, pursuant to Section 7.5.5.(c)). For
purposes of this Agreement, the System Value for each of the franchise areas
within the MediaOne Group, Detroit, Michigan System and the Tele-Communications,
Inc. ("TCI") Detroit, Michigan System set forth on Schedule 3.1.1-C (each of
which is Overbuilt) shall be as set forth on Schedule 3.1.1-C (the "Overbuilt
Systems").
3.1.2. At least ten (10) Business Days prior to the Closing, each
of AT&T Corp. and Comcast Corporation shall deliver to the other a report (a
"System Value Preliminary Report"), certified as to completeness and accuracy by
an authorized officer of such Parent showing in reasonable detail for each
System to be transferred by its Affiliates, and on a System-
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by-System basis, a good faith preliminary determination of the System Value,
together with appropriate documents substantiating the estimates proposed in its
System Value Preliminary Report. Based on such System Value Preliminary Reports,
with respect to each Net Transferee Party, such Net Transferee Party shall at
the Closing make a payment to the Net Transferor Party of an amount in cash (but
subject to Section 3.1.3 as to the form and recipient of payment) equal to the
difference between (x) the sum of the System Values for the Systems such Net
Transferor is transferring to such Net Transferee Party and (y) the sum of the
System Values for the Systems such Net Transferee Party is transferring to such
Net Transferor Party. Any such cash payment will be made by federal wire
transfer of immediately available funds pursuant to wiring instructions which
wiring instructions shall be delivered by such Net Transferor Party at least
five (5) Business Days prior to Closing. Such cash payments will be made first
by the AT&T Parties and thereafter by the Comcast Parties. Any consideration
payable by a Party pursuant to this Section 3.1.2 shall be referred to herein as
"Additional Consideration".
3.1.3. Within seven (7) Business Days prior to Closing, the
Parties shall determine the difference, if any, between the aggregate amount of
Additional Consideration and Working Capital Adjustment Amounts that will be
paid at Closing by the AT&T Parties, on the one hand, and by the Comcast
Parties, on the other hand. Such difference shall be referred to herein as the
"Overall Adjustment Amount" and the Parties responsible for paying such
difference shall be referred to herein collectively as the "Net Payor".
Notwithstanding anything to the contrary in Section 2.4, it is the intention of
the Parties that the Net Payor be permitted to pay the Overall Adjustment Amount
in one or more of the forms of payment listed below, at the election of the Net
Payor. To effect such result, payments to be made pursuant to Sections 3.1.2 and
3.3 by a Party that is part of the Net Payor group may, to the extent of the
Overall Adjustment Amount, be made by transfer and delivery of one or more of
the forms of payment listed below, in lieu of cash. The Parent receiving the
Overall Adjustment Amount will determine which of its Transferees will receive
such alternative forms of payment. The alternative forms of payment are:
(a) Series A Common Stock, par value $0.01 per share, of At Home
Corporation ("@Home Common Stock") free and clear of all Liens, together with
such instruments of transfer and certifications as to title and other customary
and appropriate documentation and instruments as the receiving Parties shall
reasonably require. For purposes of payment of the Overall Adjustment Amount,
such @ Home Common Stock shall be valued at $50.02 per share (the "@Home
Value"). In the event that, after June 30, 1999 and prior to the date of
Closing, (i) @ Home Corporation shall issue any shares of @ Home Common Stock as
a stock dividend or distribution to the holders of @ Home Common Stock, or split
or combine such securities or make any cash dividend or distribution on @ Home
Common Stock (other than normal quarterly cash dividends as the same may be
adjusted from time to time in the ordinary course consistent with past
practice), the @ Home Value in effect immediately prior to such dividend,
distribution, stock split or other change shall be appropriately adjusted to
reflect such dividend, distribution, stock split or other change, (ii) the @
Home Common Stock is changed into other securities, then the Net Payor shall
deliver hereunder, in lieu of @ Home Common Stock, the kind and amount of
securities that it received in respect of such @ Home Common Stock, (iii)
additional securities (other than @ Home Common Stock) are issued or other
property is distributed in respect of the @ Home Common Stock, then the Net
Payor shall deliver hereunder the @ Home Common Stock and the additional
securities issued or property
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distributed in respect thereof and (iv) any other change in the @ Home Common
Stock occurs, appropriate adjustment will be made in respect of such change; and
(b) the assets and liabilities of other cable television systems
reasonably acceptable to the receiving parties; provided, however, that such
election shall be made as promptly as practicable after the date hereof based on
the Parties' best estimate of the Overall Adjustment Amount, but in no event
shall such election delay the Closing by more than sixty (60) days. If the
Parties agree on one or more cable television systems to be so transferred as
Additional Consideration (any such system, an "Additional System"), each entity
owning any such Additional System shall become a party to this Agreement (if it
has not previously become a party hereto) by executing a signature page hereto.
The Parent owning the Additional System will use commercially reasonable efforts
to seek promptly the consent or approval of the applicable Governmental
Authority to the transfer of any franchise or license of an Additional System
contemplated by this Agreement. If the entity that owns an Additional System is
not already a party hereto, then, effective on the date of such execution, (x)
such Additional System shall be treated as an AT&T System or a Comcast System,
as the case may be, under this Agreement and valued in accordance with the first
sentence of Section 3.1.1 (including a Subscriber Cap based on the number of
Equivalent Basic Subscribers of such Additional System as of April 30, 1999),
(y) such entity shall be treated as an AT&T Party or a Comcast Party, as the
case may be, under this Agreement and, as such, shall be bound as of such date
by any covenants or obligations hereunder applicable thereto, and (z) the Parent
shall be deemed as of such date to make the representations and warranties set
forth in Section 5 or Section 6, as the case may be, as to such entity, such
Additional System and the related Assets with such exceptions as are set forth
in a schedule delivered on such execution date. If the entity that owns an
Additional System is already a party to this Agreement, then, effective on the
date the receiving Parent gives notice in writing (an "Additional System
Notice") that such additional cable television system is reasonably acceptable,
(x) such Additional System shall be treated as an AT&T System or a Comcast
System, as the case may be, under this Agreement and valued in accordance with
the first sentence of Section 3.1.1 (including a Subscriber Cap based on the
number of Equivalent Basic Subscribers of such Additional System as of April 30,
1999), (y) such entity, as an AT&T Party or a Comcast Party, as the case may be,
with respect to such Additional System, shall be bound as of such date by any
covenants or obligations hereunder applicable thereto and (z) the Parent shall
be deemed as of such date to make the representations and warranties set forth
in Section 5 or Section 6, as the case may be, as to such Additional System, the
related Assets and such entity with such exceptions as are set forth in a
schedule delivered on the date of the Additional System Notice. For purposes of
determining whether the condition set forth in Section 8.2.1 or Section 8.3.1
has been satisfied, (i) any misstatements, omissions or inaccuracies in such
representations and warranties as of the Closing Date, and any scheduled
exceptions thereto, shall be taken into account and (ii) the obligations,
agreements and covenants of a Comcast Party or an AT&T Party, as applicable,
will be deemed to have applied to such entity effective as of the date hereof.
With respect to each cable television system that becomes a System pursuant to
this Section 3.1.3(b), the parties shall agree in good faith as to the items to
be included on Schedules 4.2 (or otherwise to be an AT&T Excluded Asset) and 4.4
(or otherwise to be a Comcast Excluded Asset), and on Schedules 5.3 and 6.3
(including those items to be marked with an asterisk (*) therein) and, except as
otherwise agreed in writing, such items will be consistent with the items on
those Schedules as of the date hereof. All arrangements regarding the transfer
of an Additional System shall be reasonably acceptable to the Parents.
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3.1.4. On or after May 4, 2001, Comcast Corporation may elect to
have the System Value redetermined for any franchise area within the MediaOne
Group, Detroit, Michigan System or the TCI Detroit, Michigan System set forth on
Schedule 3.1.1-C that is indicated on such Schedule to be Overbuilt including as
of such date. Comcast Corporation shall make such election by giving notice to
AT&T Corp. on or before June 2, 2001. Such notice shall list the applicable
franchise areas to be redetermined and include information regarding the extent
to which Comcast believes that each such franchise area is Overbuilt.
In the event that Comcast Corporation timely gives such notice to
AT&T Corp., within thirty (30) days thereafter, AT&T Corp. and Comcast
Corporation each shall select an appraiser who shall be a nationally recognized
appraiser of cable systems. The appraisers shall determine and provide in
writing to AT&T Corp. and Comcast Corporation within sixty (60) days thereafter
their respective appraisals of the fair market value for each such franchise
area. Such reappraisal shall take into account the same factors as set forth in
Section 3.1.1 as of May 4, 1999, with the sole exception being that the facts
relating to the Overbuilt status thereof shall be those existing as of the date
of such reappraisal. With respect to each such franchise area, (a) if the higher
of the two appraisals is not more than ten percent (10%) higher than the lower
appraisal, the fair market value of such franchise area shall be deemed to be
the average of the values in the two appraisals, and (b) if the higher of the
two appraisals is more than ten percent (10%) higher than the lower appraisal,
the two appraisers shall select a third appraiser with similar qualifications
(whose fees and expenses shall be shared equally by the Parents) within ten (10)
days after delivery of their appraisals. The third appraiser shall determine,
and provide in writing to AT&T Corp. and Comcast Corporation within sixty (60)
days thereafter his or her appraisal of the fair market value for such franchise
area. The fair market value of such franchise area shall be deemed to be the
average of (a) the value in the third appraisal, and (b) the value that one of
the first two appraisals that is closest in amount to the value in the third
appraisal. The prior System Value for each of the MediaOne Group Detroit,
Michigan System and the TCI Detroit, Michigan System shall be adjusted for the
redetermined fair market value of any Overbuilt franchise area therein. If the
redetermined System Value for such Systems is less than the System Value
previously determined pursuant to Section 3.1.1, within ten (10) Business Days
thereafter, AT&T Corp. shall pay by wire transfer of immediately available funds
an amount equal to such difference, together with interest thereon calculated
from the Closing Date through the payment date at the Prime Rate.
For purposes of this Agreement, "fair market value," as
determined by any appraiser pursuant to Section 3.1.4 shall mean the value for
each Appraised System that would be negotiated in an arm's-length free-market
tax-free transaction between a willing seller and a willing buyer, neither of
whom is under undue pressure or compulsion to complete the transaction, taking
into account all relevant factors, including the $4,591 per Equivalent Basic
Subscriber value provided in the first sentence of Section 3.1.1 for Systems
other than the Appraised Systems and the Overbuilt Systems, but excluding
current assets, all long-term indebtedness classified as such in accordance with
GAAP (and the portion thereof classified as current in accordance with GAAP) and
other liabilities arising prior to sale. For purposes of this Agreement,
"Overbuilt" means that, with respect to a franchise area within a System, as of
the relevant date (a) a Person other than the owner of such System holds a
franchise or other similar operating authority (whenever acquired) to build a
cable system in such franchise area, and (b) either such Person has engaged in
pre-construction or construction activities (whether or not
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construction is complete or any customers have been or are being served) or such
Person has served any customers.
3.2. Working Capital Adjustment. A working capital adjustment amount
shall be calculated for each System on a System-by-System basis as follows,
which adjustments will be made without duplication of any amount (in each case,
the "Working Capital Adjustment Amount"). The Working Capital Adjustment Amount
for each System shall initially be zero and shall be increased by the amount of
current assets (other than inventory) being transferred to the Transferee with
respect to such System and decreased by the amount of liabilities being
transferred to the Transferee with respect to such System as of the Closing
Time. Current assets shall include, but are not limited to, petty cash, prepaid
expenses, funds of the Transferor on deposit with Third Parties to the extent
being transferred to the Transferee (other than those that are or relate to AT&T
Excluded Assets or Comcast Excluded Assets or the benefit of which will not be
available to the Transferee following Closing), and accounts receivable, and
liabilities shall include, but are not limited to, accrued expenses (including
accrued real and personal property taxes, but not other Taxes, and including
copyright fees or non-programming license fees or charges), unearned income and
advance payments (including subscriber prepayments and deposits for converters,
encoders, cable television service and related sales) and interest, if any,
required to be paid on advance payments, in each case, related to the Cable
Business conducted through such System, all as determined in accordance with
GAAP, to reflect the principle that all expenses and income attributable to the
Cable Business for the period through and including the Closing Time are for the
account of the Party owning such System, and all expenses and income
attributable to the Cable Business for the period after the Closing Time are for
the account of the Party receiving such System. The Party owning such System
will receive no credit for (i) the portion of any account receivable resulting
from cable, telephony or internet service sales that is sixty (60) days or more
past due as of the Closing Date (cash received subsequent to the billing cutoff
prior to the Closing Time will be applied to the active aged receivables on a
pro-rata basis), (ii) the portion of any national agency account receivable
resulting from advertising sales that is 120 days or more past due as of the
Closing Date, (iii) any non-national agency account receivable resulting from
advertising sales any portion of which is ninety (90) days or more past due as
of the Closing Date, (iv) accounts receivable from customers whose accounts are
inactive as of the Closing Date, or (v) any accounts receivable that have not
arisen from a bona fide transaction in the ordinary course of business. For
purposes of making "past due" calculations under this Section 3.2, the billing
statements of a System will be deemed to be due and payable on the first day of
the period during which the service is provided to which such billing statements
relate. Notwithstanding the foregoing, no adjustment will be made for any items
of income or expense to the extent related to AT&T Excluded Assets, Comcast
Excluded Assets, AT&T Excluded Liabilities or Comcast Excluded Liabilities. In
furtherance of the foregoing, the Working Capital Adjustment Amount for each
System shall be decreased without duplication by the economic value of vacation
time pursuant to Section 7.3.8(a) to the extent earned as of the Closing Time
and permitted to be taken after the Closing Time by the System Employees
employed at such System who (i) become employees of the Party receiving such
System, or an Affiliate of such Party, upon the Closing or (ii) will become
employees of the Party receiving such System, or an Affiliate of such Party,
after being released from a leave of absence in accordance with Section 7.3.1.
It is understood that the Working Capital Adjustment Amount will not reflect any
intercompany receivables or payables, long-term debt (including the current
portion thereof) or related accrued interest, minority interests, preferred
stock, accrued
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programming expense, accounts payable, franchise fees or deferred taxes, as
these items will not be transferred with the Systems.
3.3. Determination of Working Capital Adjustment Amount. At least ten
(10) Business Days prior to the Closing, each of AT&T Corp. and Comcast
Corporation shall deliver to the other a report (the "Working Capital
Preliminary Report"), certified as to completeness and accuracy by an authorized
officer of such Party showing in reasonable detail for each of their Systems,
and on a System-by-System basis, a good faith preliminary determination of the
adjustments referred to in Section 3.2 and the aggregate Working Capital
Adjustment Amount, together with appropriate documents substantiating the
estimates proposed in its Working Capital Preliminary Report. Based on such
Working Capital Preliminary Reports, with respect to each Net Working Capital
Adjustment Amount Transferee Party, such Net Working Capital Adjustment Amount
Transferee Party shall at the Closing make a payment to the Net Working Capital
Adjustment Amount Transferor Party of an amount in cash (but subject to Section
3.1.3 as to the form and recipient of payment) equal to the difference between
(x) the sum of the Working Capital Adjustment Amount for the Systems such Net
Working Capital Adjustment Amount Transferor Party is transferring to such Net
Working Capital Adjustment Amount Transferee Party and (y) the sum of the
Working Capital Adjustment Amount for the Systems such Net Working Capital
Adjustment Amount Transferee Party is transferring to such Net Working Capital
Adjustment Amount Transferor Party. Any such cash payment will be made by
federal wire transfer of immediately available funds pursuant to wiring
instructions which wiring instructions shall be delivered by such Net Working
Capital Adjustment Amount Transferor Party at least five (5) Business Days prior
to Closing. Such cash payments will be made first by the AT&T Parties and
thereafter by the Comcast Parties.
3.4. Determination of Final System Values and Working Capital
Adjustment Amounts.
3.4.1. Within ninety (90) days after the Closing, each of AT&T
Corp. and Comcast Corporation will deliver to the other a report (the "Final
Report"), certified in a manner similar to the certifications required for
Preliminary Reports, showing in full detail for each System transferred by its
Affiliates, and on a System-by-System basis, AT&T Corp.'s or Comcast
Corporation's, as the case may be, final determination of the System Value and
Working Capital Adjustment Amount for such System, which may include any
adjustments that were not calculated as of the Closing Time or which are
corrective of any estimated adjustments contained in the Preliminary Report,
together with appropriate documents substantiating the determinations proposed
in its Final Report. Each Parent will provide the other Parent with reasonable
access to all records that such Parent has in its or its Affiliates possession
and that are necessary for the other Parent to prepare its Final Report.
3.4.2. Within sixty (60) days after receipt of the Final Report
from the other Parent, each of AT&T Corp. and Comcast Corporation will give the
other written notice of such Parent's objections, if any, to the other Parent's
Final Report. The Parents shall negotiate in good faith for a period of thirty
(30) days, or such longer period of time as agreed by the Parents, to resolve
any disputed items. If, after such thirty (30) day period (as extended, if
applicable), the Parents fail so to resolve such disputed items, the Parents
shall submit all then-outstanding disputed items for resolution by a national
accounting firm acceptable to each Parent (or, if
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the Parents cannot agree, an arbitrator appointed by the American Arbitration
Association) (the "Arbitrator"). As to each item in dispute, the Arbitrator's
decision must be within the range of values proposed by the Parents. The
Arbitrator shall render a decision within thirty (30) days after its selection,
which decision shall be final and binding on the Parties hereto. Comcast
Corporation and AT&T Corp. shall share equally the expenses of the Arbitrator.
Once a final determination of all disputed amounts is reached,
the Parents will determine whether any adjusting payments need to be made, on a
Transferor/Transferee basis, to make the actual payments made at the Closing
consistent with the amounts each Transferor should have transferred at the
Closing based on the final determination of the System Values and the Working
Capital Adjustment Amounts. Any such adjusting payments shall be paid, together
with interest thereon calculated from the Closing Date through the date of
payment at the Prime Rate, within three (3) Business Days after the final
determination of all disputed amounts by federal wire transfers of immediately
available funds pursuant to wiring instructions that shall be delivered by the
Parties receiving payment at least five (5) Business Days prior to the date of
such payment.
3.5. Allocation of Value. Following the Closing, the Parents agree to
jointly hire an appraiser (the "Appraiser") to prepare, not later than ninety
(90) days after the Closing, a written report regarding the value to be
allocated to the tangible and intangible personal property included in the
Assets pursuant to Internal Revenue Service regulations relating to like-kind
exchanges of assets under Section 1031 of the Code. The fees of the Appraiser
will be split equally between the Parents. The Parents agree that, for purposes
of Sections 1031 and 1060 of the Code, each will report the transactions
contemplated by this Agreement in accordance with the values determined by the
Appraiser. Each Parent promptly will give the other notice of any disallowance
or challenge of asset values by the Internal Revenue Service or any state or
local Tax authority.
4. ASSUMED LIABILITIES AND EXCLUDED ASSETS.
4.1. AT&T Assumed Obligations and Liabilities. At the Closing and
effective as of the Closing Time, each AT&T Party that is a Transferee will
assume and after the Closing Time, such AT&T Party will pay, discharge and
perform (as and to the extent the applicable Transferor is obligated to do so)
the following (collectively, the "AT&T Assumed Obligations and Liabilities")
with respect to each Comcast System transferred to such AT&T Party: (a) those
obligations and liabilities accruing after the Closing Time under or with
respect to the Comcast Assets assigned and transferred to such AT&T Party at the
Closing, except for obligations and liabilities arising from or relating to any
breach or default under any of the foregoing occurring on or prior to the
Closing Time; (b) those obligations and liabilities of the Transferor for
subscriber prepayments and deposits related to such Comcast System existing at
the Closing Time only to the extent such amounts were used to decrease the
Working Capital Adjustment Amount with respect to such System pursuant to
Section 3.2; (c) other obligations and liabilities of the Transferor only to the
extent that such obligations and liabilities were used to decrease the Working
Capital Adjustment Amount with respect to such Comcast System pursuant to
Section 3.2; and (d) all other obligations and liabilities to the extent
relating to the period after the Closing Time and arising out of such AT&T
Party's ownership, use or operation of the Comcast Assets (including those items
listed or described on Schedule 4.4) or its operation of, or the
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conduct of business through, such Comcast System after the Closing (including
with respect to late fees that may be charged by such AT&T Party after the
Closing to subscribers of such Comcast System), except to the extent that such
obligations or liabilities relate to any Comcast Excluded Asset. Except for the
AT&T Assumed Obligations and Liabilities, all obligations and liabilities of the
Comcast Parties or arising out of or relating to the Comcast Assets, the Comcast
Systems or Comcast's Cable Business, including all long-term indebtedness
classified as such in accordance with GAAP (and the portion thereof classified
as current in accordance with GAAP) will remain and be the obligations and
liabilities solely of the Comcast Parties ("Comcast Excluded Liabilities").
Except to the extent reflected in the Working Capital Adjustment, the Comcast
Excluded Liabilities shall include any obligation, liability or claims relating
to or arising pursuant to (t) any Comcast Excluded Asset, (u) any breach or
default under any Comcast Asset occurring on or before the Closing Time, (v)
both any Environmental Law and actions to the extent relating to the period on
or prior to the Closing Time (including matters disclosed or required to be
disclosed in Schedule 5.7), (w) Taxes, franchise fees, intercompany payables and
any other accounts payables, in each case incurred in or attributable to periods
or portions thereof ending on or prior to the Closing Time, (x) refunds of
rates, charges or late fees with respect to periods through and including the
Closing Time, (y) Litigation commenced, or to the extent related to the period,
on or prior to the Closing Time, or (z) credit, loan or other agreements
pursuant to which the Comcast Parties have created, incurred, assumed or
guaranteed indebtedness for borrowed money or under which any Lien securing such
indebtedness has been or may be imposed on any Comcast Asset. No Comcast
Excluded Liability shall be taken into account in calculating the Working
Capital Adjustment Amount.
4.2. AT&T Excluded Assets. Except as set forth on Schedule 4.2 or on
Schedule 6.4.4(g), for purposes of this Agreement the term "AT&T Excluded
Assets" means all:
(a) programming Contracts (including music programming
Contracts), cable guide Contracts, master Contracts to which the AT&T Parties or
one or more of their Affiliates are parties (such as master retransmission
consent agreements, master multiple dwelling unit agreements, master billing,
master collection and similar master agreements) retransmission consent
agreements, and local programming agreements (other than any such local
programming agreement listed in Schedule 6.4.4(g));
(b) AT&T Plans;
(c) insurance policies and rights and claims thereunder, except
as set forth in Section 12.14;
(d) bonds, letters of credit, surety instruments and other
similar items;
(e) except for petty cash to the extent transferred to the
Transferee or as set forth in Section 12.14, cash and cash equivalents,
including cash relating to subscriber prepayments and deposits, and notes
receivable;
(f) subject to Section 7.11, Intellectual Property held by the
AT&T Parties or any of their Affiliates;
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(g) subscriber billing Contracts and related equipment if not
owned by the AT&T Parties or any of their Affiliates;
(h) assets, rights or properties of the AT&T Parties or their
Affiliates used or held for use other than primarily in connection with the AT&T
Systems;
(i) except for (1) accounts receivable, (2) any other claim,
right or interest to the extent reflected in the Working Capital Adjustment
Amount and (3) as set forth in Section 12.14, claims, rights, and interest in
and to any refunds of, or amounts credited against, Taxes or fees of any nature,
or other claims against Third Parties, relating to the operation of the AT&T
Systems prior to the Closing Time;
(j) account books of original entry, general ledgers, financial
records and personnel files and records used in connection with the AT&T
Systems;
(k) capital and vehicle leases;
(l) advertising sales agency or representation Contracts
providing any Third Party or Affiliate of AT&T Corp. the right to sell available
advertising time for an AT&T System other than any such Contract listed on
Schedule 6.4.4(g);
(m) proprietary software of the AT&T Parties or any Affiliate of
AT&T Corp. and licenses relating to Third Party software and maintenance
agreements with respect thereto;
(n) Contracts for any fiber or fiber capacity lease or use
arrangements that provide to any Third Party or Affiliate of AT&T Corp. the
right to use any fiber or capacity of an AT&T System, other than those listed in
Schedule 6.4.4(g);
(o) Contracts for Internet access or on-line service arrangements
that provide to any Third Party or Affiliate of AT&T Corp. the right to use the
transmission capacity of an AT&T System to provide Internet access or other
on-line services over such AT&T System, other than those listed in Schedule
6.4.4(g); and
(p) Contracts and related accounts receivable for providing DMX
service to commercial accounts via direct broadcast satellite;
(q) intercompany receivables; and
(r) Contracts and/or assets specifically described in Schedule
4.2(r).
4.3. Comcast Assumed Obligations and Liabilities. At the Closing and
effective as of the Closing Time, each Comcast Party that is a Transferee will
assume and, after the Closing Time, such Comcast Party will pay, discharge and
perform (as and to the extent the applicable Transferor is obligated to do so)
the following (collectively, the "Comcast Assumed Obligations and Liabilities")
with respect to each AT&T System transferred to such Comcast Party: (a) those
obligations and liabilities accruing after the Closing Time under or with
respect to the AT&T Assets assigned and transferred to such Comcast Party at the
Closing, except for obligations and liabilities arising from or relating to any
breach or default under any of the
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foregoing occurring on or prior to the Closing Time; (b) those obligations and
liabilities of the Transferor for subscriber prepayments and deposits related to
such AT&T System existing at the Closing Time only to the extent such amounts
were used to decrease the Working Capital Adjustment Amount with respect to such
System pursuant to Section 3.2; (c) other obligations and liabilities of the
Transferor only to the extent that such obligations and liabilities were used to
decrease the Working Capital Adjustment Amount with respect to such AT&T System
pursuant to Section 3.2; and (d) all other obligations and liabilities to the
extent relating to the period after the Closing Time and arising out of such
Comcast Party's ownership, use or operation of the AT&T Assets (including those
items listed or described on Schedule 4.2) or its operation of, or the conduct
of business through, such AT&T System after the Closing (including with respect
to late fees that may be charged by such Comcast Party after the Closing to
subscribers of such AT&T System), except to the extent that such obligations or
liabilities relate to any AT&T Excluded Asset. Except for the Comcast Assumed
Obligations and Liabilities, all obligations and liabilities of the AT&T Parties
or arising out of or relating to the AT&T Assets, the AT&T Systems or AT&T's
Cable Business, including all long-term indebtedness classified as such in
accordance with GAAP (and the portion thereof classified as current in
accordance with GAAP) will remain and be the obligations and liabilities solely
of the AT&T Parties ("AT&T Excluded Liabilities"). Except to the extent
reflected in the Working Capital Adjustment, the AT&T Excluded Liabilities shall
include any obligation, liability or claims relating to or arising pursuant to
(t) any AT&T Excluded Asset, (u) any breach or default under any AT&T Asset
occurring on or before the Closing Time, (v) both any Environmental Law and
actions to the extent relating to the period on or prior to the Closing Time
(including matters disclosed or required to be disclosed in Schedule 6.7), (w)
Taxes, franchise fees, intercompany payables and any other accounts payables, in
each case incurred in or attributable to periods or portions thereof ending on
or prior to the Closing Time, (x) refunds of rates, charges or late fees with
respect to periods through and including the Closing Time, (y) Litigation
commenced, to the extent related to the period, on or prior to the Closing Time,
or (z) credit, loan or other agreements pursuant to which the AT&T Parties have
created, incurred, assumed or guaranteed indebtedness for borrowed money or
under which any Lien securing such indebtedness has been or may be imposed on
any AT&T Asset. No AT&T Excluded Liability shall be taken into account in
calculating the Working Capital Adjustment Amount.
4.4. Comcast Excluded Assets. Except as set forth on Schedule 4.4 or
on Schedule 5.4.4(g)), for purposes of this Agreement the term "Comcast Excluded
Assets" means all:
(a) programming Contracts (including music programming
Contracts), cable guide Contracts, master Contracts to which the Comcast Parties
and one or more of their Affiliates are parties (such as master retransmission
consent agreements, master multiple dwelling unit agreements, master billing,
master collection and similar master agreements) and retransmission consent
agreements; and local programming agreements (other than any such local
programming agreement listed in Schedule 5.4.4(g);
(b) Comcast Plans;
(c) insurance policies and rights and claims thereunder, except
as set forth in Section 12.14;
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(d) bonds, letters of credit, surety instruments and other
similar items;
(e) except for petty cash to the extent transferred to the
Transferee or as set forth in Section 12.14, cash and cash equivalents,
including cash relating to subscriber prepayments and deposits, and notes
receivable;
(f) subject to Section 7.11, Intellectual Property held by the
Comcast Parties or any of their Affiliates;
(g) subscriber billing Contracts and related equipment if not
owned by the Comcast Parties or any of their Affiliates;
(h) assets, rights or properties of the Comcast Parties or their
Affiliates used or held for use other than primarily in connection with the
Comcast Systems;
(i) except for (1) accounts receivable, (2) any other claim,
right or interest to the extent reflected in the Working Capital Adjustment
Amount and (3) as set forth in Section 12.14, claims, rights, and interest in
and to any refunds of, or amounts credited against, Taxes or fees of any nature,
or other claims against Third Parties, relating to the operation of the Comcast
Systems prior to the Closing Time;
(j) account books of original entry, general ledgers, financial
records and personnel files and records used in connection with the Comcast
Systems;
(k) capital and vehicle leases;
(l) advertising sales agency or representation Contracts
providing any Third Party or Affiliate of Comcast Corporation, the right to sell
available advertising time for a Comcast System other than any such Contract
listed on Schedule 5.4.4(g);
(m) proprietary software of the Comcast Parties or any Affiliate
of Comcast Corporation and licenses relating to Third Party software and
maintenance agreements with respect thereto;
(n) Contracts for any fiber or fiber capacity lease or use
arrangements that provide to any Third Party or Affiliate of Comcast
Corporation, the right to use any fiber or capacity of a Comcast System, other
than those listed in Schedule 5.4.4(g);
(o) Contracts for Internet access or on-line service arrangements
that provide to any Third Party or Affiliate of Comcast Corporation the right to
use the transmission capacity of a Comcast System to provide Internet access or
other on-line services over such Comcast System, other than those listed in
Schedule 5.4.4(g); and
(p) Contracts and related accounts receivable for providing DMX
service to commercial accounts via direct broadcast satellite;
(q) intercompany receivables; and
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(r) Contracts and/or assets specifically described in Schedule
4.4(r).
5. COMCAST CORPORATION'S REPRESENTATIONS AND WARRANTIES.
Comcast Corporation represents and warrants to the AT&T Entities as set
forth in this Article 5 as of the date hereof.
5.1. Organization and Qualification. Each of the Comcast Entities is a
corporation duly organized, validly existing, and in good standing under the
laws of its jurisdiction of incorporation, a general partnership that has been
duly formed and is validly existing under the laws of its jurisdiction of
formation, or a limited liability company that has been duly formed and is
validly existing under the laws of its jurisdiction of formation. Each Comcast
Party has all requisite power and authority to own, lease and use the Comcast
Assets owned, leased or used by it and to conduct its Cable Business as it is
currently being conducted by it. Each of the Comcast Parties is duly qualified
to do business and is in good standing under the laws of each jurisdiction in
which the ownership, leasing or use of the Comcast Assets owned, leased or used
by it or the nature of its activities in connection with its Comcast Systems
makes such qualification necessary, except for such matters as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. For purposes of this Agreement, "Material Adverse Effect" means,
as the context requires, a material adverse effect on the business, assets,
financial condition or results of operations of (a) AT&T's Cable Business, taken
as a whole (excluding such effects to the extent relating to liabilities or
assets to be retained by any AT&T Entity under this Agreement), or (b) Comcast's
Cable Business, taken as a whole (excluding such effects to the extent relating
to liabilities or assets to be retained by any Comcast Entity under this
Agreement), in each case, without giving effect to the transactions contemplated
by this Agreement or the announcement thereof or changes in conditions that are
applicable to the cable television industry in general.
5.2. Authority and Validity. Each Comcast Entity has all requisite
corporate or partnership power and authority to execute and deliver, to perform
its obligations under, and to consummate the transactions contemplated by, this
Agreement and the Transaction Documents to which it is a party. The execution
and delivery by each Comcast Entity of, its performance under and its
consummation of the transactions contemplated by, this Agreement and the
Transaction Documents to which such Comcast Entity is a party have been duly and
validly authorized by all action by or on behalf of such Comcast Entity. This
Agreement has been, and when executed and delivered by each Comcast Entity the
Transaction Documents to which such Comcast Entity is a party will be, duly and
validly executed and delivered by such Comcast Entity and the valid and binding
obligations of such Comcast Entity, enforceable against such Comcast Entity in
accordance with their terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to the enforcement of creditors' rights generally
or by principles governing the availability of equitable remedies.
5.3. No Conflict; Required Consents. Except as set forth on Schedule
5.3, and assuming the expiration or earlier termination of the waiting period
under the HSR Act has occurred, the execution and delivery by each Comcast
Entity of, its performance under and its consummation of the transactions
contemplated by, this Agreement and the Transaction
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Documents to which such Comcast Entity is a party do not and will not: (a)
conflict with or violate any provision of the organizational documents of such
Comcast Entity; (b) violate any provision of any Legal Requirement; (c) require
any consent, approval or authorization of, or filing of any certificate, notice,
application, report or other document with, any Governmental Authority or other
Person; or (d) (i) without regard to requirements of notice, lapse of time or
elections of other Persons or any combination thereof, conflict with, violate,
result in a breach of or constitute a default under, (ii) permit or result in
the termination, suspension or modification of, (iii) result in the acceleration
of (or give any Person the right to accelerate) the performance of any Comcast
Entity under, or (iv) otherwise adversely affect the rights or obligations of
any Comcast Entity under, any Comcast Systems Contract, Comcast Systems
Franchise or Comcast Systems License, or (e) result in the creation or
imposition of any Lien upon any Comcast Asset, subject to such exceptions for
purposes of clauses (b), (c), (d) and (e) as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect or a
material adverse effect on the ability of the Comcast Entities to perform their
obligations under this Agreement or the Transaction Documents.
5.4. Assets.
5.4.1. Except as described in Schedule 5.4.1, Comcast Corporation
owns, directly or indirectly, all of the equity interests in the Comcast
Parties. The Comcast Parties have good, marketable title to (or, in the case of
Assets that are leased, valid leasehold interests in) all of the material
Comcast Assets, free and clear of all Liens, except Permitted Liens. Except as
described on Schedule 5.4.1 and except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, the Comcast
Tangible Personal Property (which for this purpose shall include all towers on
Comcast Owned Property) is in good operating condition and repair (ordinary wear
and tear and routine failures excepted), and is usable and adequate for the
operation of Comcast's Cable Business.
5.4.2. Subject to Sections 7.5.4(b) and 7.5.5 and except for
items included in the Comcast Excluded Assets, (i) the Comcast Assets constitute
in all material respects all the assets of the Comcast Entities and their
Affiliates primarily held for, used in or necessary for Comcast's Cable Business
and (ii) the right, title and interest therein to be transferred pursuant to
this Agreement will be sufficient to permit the AT&T Parties in all material
respects (a) to conduct Comcast's Cable Business as it is being conducted and in
compliance with all Legal Requirements, (b) to operate the Comcast Systems as
they are being operated and in compliance with all applicable Legal
Requirements, and (c) to perform all the AT&T Assumed Obligations and
Liabilities.
5.4.3. Except as described on Schedule 5.4.3, and other than
direct broadcast satellite and satellite master antenna television: (i) no cable
television system or other MVPD other than a Comcast System is operating in any
areas in which the Comcast Systems currently provide cable television service;
(ii) no local franchising authority for a community in which any Comcast System
is operating has awarded a cable television franchise or other similar operating
authority to any Person other than a Comcast Party; and (iii) to Comcast's
Knowledge, no MVPD has applied for a franchise or other similar operating
authority to serve any such community.
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5.4.4. All of the material Comcast Tangible Personal Property is
listed on Schedule 5.4.4(a). All of the Comcast Owned Property is listed on
Schedule 5.4.4(b). All of the Comcast Leased Property is listed on Schedule
5.4.4(c). All of the Comcast Other Real Property Interests are listed on
Schedule 5.4.4(d). All of the Comcast System Franchises are listed on Schedule
5.4.4(e). All of the Comcast System Licenses are listed on Schedule 5.4.4(f).
All of the material Comcast System Contracts are listed on Schedule 5.4.4(g).
5.5. Comcast Systems Franchises, Comcast Systems Licenses, Comcast
Systems Contracts and Comcast Other Real Property Interests.
5.5.1. Except as described on Schedules 5.5.4(c), 5.4.4(d),
5.4.4(e), 5.4.4(f) and Schedule 5.4.4(g), or, in the case of Section 5.5.1(g),
as separately provided by Comcast Corporation to AT&T Corp., and except for the
Comcast Excluded Assets, no Comcast Entity is bound or affected by any of the
following that relate primarily or in whole to Comcast's Cable Business:
(a) leases of real property or material personal property,
including all capital leases;
(b) franchises and similar authorizations or permits for the
construction or operation of cable television systems, or Systems Contracts of
substantially equivalent effect;
(c) licenses, authorizations, consents or permits of the FCC;
(d) licenses, authorizations, consents or permits of any other
Governmental Authority;
(e) crossing agreements, easements or rights-of-way;
(f) pole line or joint line agreements or underground conduit
agreements;
(g) bulk service, commercial service or multiple dwelling unit
agreements (except access agreements for buildings that are not bulk billed);
(h) any must-carry elections or retransmission consents relating
to the Comcast Systems or Comcast Assets;
(i) Contracts which would be binding upon any System post-Closing
with any Comcast Entity or any of their Affiliates;
(j) system specific programming agreements or signal supply
agreements;
(k) agreements with the FCC or any other Governmental Authority
relating to the operation or construction of the Comcast Systems that are not
fully reflected in the Comcast Systems Franchises, or any agreements with
community groups or similar Third Parties restricting or limiting the types of
programming that may be shown on any of the Comcast Systems;
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(l) partnership, joint venture or other similar agreements or
arrangements;
(m) any agreement that limits the freedom of the Comcast Parties
to compete in any line of business or with any Person or in any area or which
would so limit the freedom of the AT&T Parties after the Closing;
(n) any Systems Contract relating to the use of the Comcast
Assets to provide, or the provision by the Comcast Systems of, telephone or
high-speed data services;
(o) any advertising interconnect agreements;
(p) any agreement with any Comcast System Employee; or
(q) any Systems Contract that is not the subject matter of any
other clause of this Section 5.5.1 which (i) will remain effective for more than
one year after Closing, (ii) contemplates payments by or to any Comcast Party
exceeding $150,000 under any single contract or the termination or expiration of
which would reasonably be expected to have a Material Adverse Effect or (iii) is
otherwise material to the Comcast Systems.
All of the foregoing types of Systems Contracts are referred to as the "Material
Comcast Systems Contracts."
5.5.2. Schedules 5.4.4(e) and 5.4.4(f) list all of the Comcast
Systems Franchises and all Comcast Systems Licenses, respectively. Complete and
correct copies of the Comcast Systems Franchises, all Comcast Systems Licenses
issued by the FCC and any other material Comcast Systems Licenses have been
provided to AT&T Corp. Except as set forth on Schedule 5.5.2, the Comcast
Systems Franchises contain all of the commitments and obligations of the Comcast
Entities to the applicable Governmental Authority granting such Comcast Systems
Franchises with respect to the construction, ownership and operation of the
Comcast Systems, including any commitment to any local franchising authority to
make any material expenditure or capital addition or betterment to any of the
Comcast Systems or Comcast Assets that will not be fulfilled or satisfied prior
to the Closing Time. The Comcast Systems Franchises and Comcast Systems Licenses
are currently in full force and effect, are not in default and are valid under
all applicable Legal Requirements according to their terms. No event has
occurred that, with notice or lapse of time or both, would constitute a breach,
violation or default by any Comcast Entity, and to Comcast's Knowledge, no event
has occurred that, with notice or lapse of time or both, would constitute a
breach, violation or default by any other Person, of any material obligations
under any of the Comcast Systems Franchises or Comcast Systems Licenses, and
would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Except for routine filings with Governmental
Authorities or as described on Schedule 5.5.2, there are no material
applications relating to any Comcast Systems Franchise or Comcast Systems
License pending before any Governmental Authority. Since January 1, 1999, no
Systems Franchise of any Comcast Party or Comcast Systems License of any Comcast
Party has been surrendered or has otherwise terminated without the issuance of a
replacement Comcast Systems Franchise or Comcast Systems License, respectively.
There is no legal action, governmental proceeding or investigation pending or,
to Comcast's Knowledge, threatened to terminate, suspend or modify any Comcast
Systems Franchise or Comcast Systems License.
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Except as set forth in Schedule 5.5.2, each Comcast System is operating pursuant
to a valid franchise or similar authorization or permit issued by the
appropriate Governmental Authority in every market in which such System is
supplying cable television service. Prior to the date hereof, Comcast
Corporation has provided a list to AT&T Corp. of the date on which each Comcast
System Franchise will expire. Such list is correct and accurate in all material
respects. No Comcast Entity has received, nor does it have notice that it will
receive, from any Governmental Authority a preliminary assessment that a Comcast
Systems Franchise should not be renewed as provided in Section 626(c)(1) of the
Cable Act. Neither any Comcast Entity nor any Governmental Authority has
commenced or requested the commencement of an administrative proceeding
concerning the renewal of a Comcast Systems Franchise as provided in Section
626(c)(1) of the Cable Act. The Comcast Parties have timely filed notices of
renewal in accordance with the Cable Act with all Governmental Authorities with
respect to each of the Comcast Systems Franchises expiring within 36 months of
the date of this Agreement. Such notices of renewal have been filed pursuant to
the formal renewal procedures established by Section 626(a) of the Cable Act.
Except as set forth on Schedule 5.5.2 and except for such matters as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, the Comcast Systems are being operated in material compliance
with the terms and conditions of all Comcast Systems Franchises and Comcast
Systems Licenses and other applicable requirements of all Governmental
Authorities (including the FCC and the United States Copyright Office) relating
to such Comcast Systems Franchises and Comcast Systems Licenses, including all
requirements for notification, filing, reporting, posting and maintenance of
logs and records.
5.5.3. Comcast Corporation has delivered to AT&T Corp. true and
complete copies of all Material Comcast Systems Contracts, including any
amendments thereto (or, in the case of oral Contracts that are Material Comcast
Systems Contracts, true and complete written summaries thereof) and each
document evidencing or insuring ownership of the Comcast Owned Property. Except
as described on Schedule 5.5.3 and except for such matters as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, (i) each Comcast Entity has fulfilled when due, or has taken all
action necessary to enable it to fulfill when due, all of such Comcast Entity's
obligations under each of its Material Comcast Systems Contracts, (ii) to
Comcast's Knowledge, there has not occurred any default (without regard to
requirements of notice, lapse of time, elections of other Persons or any
combination thereof) by any Person of any material obligations under any
Material Comcast Systems Contracts and (iii) to Comcast Corporation's knowledge,
the Material Comcast Systems Contracts, are valid and binding agreements of the
applicable third party to the Material Comcast Systems Contracts and assuming
that the Material Comcast Systems Contracts are valid and binding agreements on
the applicable third party, the Material Comcast Systems Contracts are valid and
binding agreements of the applicable Comcast Party and are in full force and
effect.
5.5.4. Except as disclosed on Schedule 5.5.4, none of the Comcast
Systems or material Comcast Assets are subject to any purchase option, right of
first refusal or similar arrangement which would be triggered by the sale,
transfer or other disposition of such Systems or Assets (a "Comcast System
Option").
5.5.5. Set forth on Schedule 5.5.5 is each lease for vehicles and
each capital lease that in either case would be a Comcast Asset but for the
effect of Section 7.4.
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5.6. Real Property. All the Comcast Owned Property, Comcast Leased
Property and material Comcast Other Real Property Interests are described on
Schedules 5.4.4(b), 5.4.4(c) and 5.4.4(d). Except for ordinary wear and tear and
routine repairs or as set forth on Schedule 5.6 or for such matters as would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, all of the improvements, leasehold improvements and the premises
of the Comcast Owned Property and the premises demised under the leases and
other documents evidencing the Comcast Leased Property are in reasonable
operating condition and repair and are suitable for the purposes used. Except
for such matters as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, each parcel of Comcast Owned
Property and each parcel of Comcast Leased Property (a) has access to and over
public streets or private streets or property for which a Comcast Party has a
valid right of ingress and egress, (b) except as set forth on Schedules
5.4.4(b), 5.4.4(c) and 5.4.4(d), conforms in its current use, occupancy and
operation to all zoning requirements without reliance upon a variance issued by
a Governmental Authority or a classification of the parcel in question as a
nonconforming use, (c) conforms in all respects in its current use, occupancy
and operation to all restrictive covenants, if any, or other Liens affecting all
or part of such parcel, and (d) is available for immediate use in the conduct of
the business or operations of the Comcast Systems. There are no pending
condemnation, expropriation, eminent domain or similar proceedings of which any
Comcast Entity has received notice, or, to Comcast's Knowledge, affecting, in
any material respect, all or any portion of the Comcast Owned Property, Comcast
Leased Property or material Comcast Other Real Property Interests.
5.7. Environmental.
5.7.1. Except as described on Schedule 5.7 and except for such
matters as would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect, each Comcast Entity has obtained or caused to
be obtained all permits necessary for its operations to comply with
Environmental Laws and is in compliance with the terms of such permits and all
Environmental Laws insofar as they relate to the Comcast Assets. Except as
described on Schedule 5.7 and except for such matters as would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect,
no Comcast Entity has received any notice of or has Knowledge of (i) any release
or threatened release of any Hazardous Substances from or on or relating to
activities or operations conducted on the Comcast Owned Property or the Comcast
Leased Property or any property previously owned, leased or operated by such
Comcast Party in connection with Comcast's Cable Business or the Comcast Assets,
or (ii) any liability under, or any violation of, any Environmental Laws or
permits in connection with Comcast's Cable Business or Comcast Assets. Except as
described on Schedule 5.7 and except for such matters as would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect,
no Comcast Entity has received any notice of, and has no Knowledge of, any
events, conditions, circumstances, activities, practices or incidents (including
the presence, use, generation, manufacture, disposal, release or threatened
release of any Hazardous Substances from or on the Comcast Owned Property or
Comcast Leased Property or any property previously owned, leased or operated by
such Comcast Party in connection with Comcast's Cable Business or the Comcast
Assets) which could interfere with or prevent compliance with any Environmental
Law, or which are reasonably likely to give rise or have given rise to any
liability, whether accrued, contingent, absolute, determined, determinable or
otherwise under any Environmental Law, in each case, in connection with the
Comcast
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Owned Property or Comcast Leased Property or any property previously owned,
leased or operated by such Comcast Party in connection with Comcast's Cable
Business or the Comcast Assets.
5.7.2. Except as described on Schedule 5.7 and except for such
matters as would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect (a) no aboveground or underground storage
tanks are currently or have been located on any Comcast Owned Property or
Comcast Leased Property, (b) no Comcast Owned Property or Comcast Leased
Property has been used at any time as a gasoline service station or any other
facility for storing, pumping, dispensing or producing gasoline or any other
petroleum products or wastes; and (c) no polychlorinated biphenyls, radioactive
material, lead, asbestos-containing material, incinerator, sump, surface
impoundment, lagoon, landfill, septic, wastewater treatment or other disposal
system are or have been present at, on or under any Comcast Owned Property or
Comcast Leased Property or any property now or previously owned, leased or
operated by such Comcast Party in connection with Comcast's Cable Business or
the Comcast Assets.
5.7.3. Except as described on Schedule 5.7 and except for such
matters as would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect, no Hazardous Substance has been discharged,
disposed of, dumped, injected, pumped, deposited, spilled, leaked, emitted, or
released at, on or under any Comcast Owned Property or Comcast Leased Property
or any other property now or previously owned, leased or operated by any Comcast
Party in connection with Comcast's Cable Business or the Comcast Assets. Except
as described on Schedule 5.7, no Comcast Owned Property or Comcast Leased
Property and no property now or previously owned, leased or operated by any
Comcast Party in connection with Comcast's Cable Business or the Comcast Assets,
nor any property to which Hazardous Substances located on or resulting from the
use of any Comcast Owned Property or Comcast Leased Property or operations of
any Comcast Party have been transported, nor any property to which any Comcast
Party has, directly or indirectly, transported or arranged for the
transportation of any Hazardous Substances is listed or, to Comcast's Knowledge,
proposed for listing on the National Priorities List promulgated pursuant to
CERCLA, or CERCLIS (as defined in CERCLA) or on any similar federal, state,
local or foreign list of sites requiring investigation or cleanup.
5.7.4. Complete and correct copies of (a) all studies, reports,
surveys or other similar written materials in any Comcast Entity's possession or
to which any Comcast Entity has access relating to environmental matters at, on,
under or affecting the Comcast Owned Property or Comcast Leased Property or
otherwise relating to the Comcast Cable Business or Comcast Assets, including
the presence or alleged presence of Hazardous Substances, (b) all notices (other
than general notices made by general publication) in any Comcast Entity's
possession or to which any Comcast Entity has access that were received from any
Governmental Authority having the power to administer or enforce any
Environmental Laws relating to current or past ownership, use or operation of
the Comcast Owned Property or Comcast Leased Property or activities at the
Comcast Owned Property or Comcast Leased Property, and (c) all notices and
related materials in any Comcast Entity's possession or to which any Comcast
Entity has access relating to any Litigation related to any Comcast System
concerning any Environmental Law or written allegation by any private Third
Party concerning any Environmental Law and any
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Comcast System have been provided to AT&T Corp. (other than those materials
constituting attorney-client privileged communications).
5.7.5. Except as set forth on Schedule 5.7.5, as of the date
hereof none of the Comcast Owned Property or Comcast Leased Property or Comcast
Other Real Property Interests is located in New Jersey or Connecticut.
5.8. Compliance with Legal Requirements.
5.8.1. Except as set forth on Schedule 5.8 and except for such
matters as would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect, the operation of the Comcast Systems and
Comcast's Cable Business as currently conducted does not violate or infringe any
applicable Legal Requirements (other than Legal Requirements described in
Sections 5.7, 5.8.3 and 5.8.4, as to which the representations and warranties
set forth in those subsections will apply) or the grounding requirements of the
National Electrical Safety Code. Except as set forth on Schedule 5.8 and except
for such matters as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, no Comcast Entity has received any
notice of, and to Comcast's Knowledge there is not, any violation by any of the
Comcast Systems of any Legal Requirement applicable to the installation,
ownership and operation of the Comcast Systems as currently conducted.
5.8.2. Except as set forth on Schedule 5.8, and except to the
extent that it would not reasonably be expected to have a Material Adverse
Effect, without limiting the generality of the foregoing, since such Comcast
Party's acquisition of such Comcast Systems: there have been submitted to the
FCC all required filings, including cable television registration statements,
annual reports and aeronautical frequency usage notices and all regulatory fees
that are required under the rules and regulations of the FCC; the operation of
the Comcast Systems has been and is in compliance with the rules and regulations
of the FCC, and no Comcast Entity has received any notice from the FCC of any
violation of its rules and regulations; each Comcast Entity is and since 1991
has been certified as in compliance with the FCC's equal employment opportunity
rules and has received no written notices with respect to non-compliance with
such rules; the Comcast Systems are in compliance with all signal leakage
criteria prescribed by the FCC and all required FCC Forms 320 for the Comcast
Systems have been filed for the last two reporting periods, and all such Forms
320 show "passing" or "satisfactory" signal leakage scores. Each Comcast System
holds all licenses, registrations or permits from the FCC for business radio,
satellite, earth station receiving facilities and CARS or private fixed service
microwave facilities that are necessary or appropriate to carry on the business
of such Comcast System as conducted on the date hereof. Each Comcast System has
provided all required subscriber privacy notices to new subscribers at the time
of installation, and to all subscribers on an annual basis, and the Comcast
Systems have taken commercially reasonable steps to prevent unauthorized access
to personally identifiable information. The Comcast Systems have provided all
customer notices required by the Communications Act, including notices of
customer service, availability of Basic Services and equipment compatibility. No
Comcast System has received any request for commercial leased access with
respect to such Comcast System within the past 120 days, except for those
requests set forth on Schedule 5.8. There are no complaints or other proceedings
instituted before the FCC concerning commercial leased access, program access or
any other aspect of the Comcast Systems' operations, except as set forth on
Schedule 5.8. Each Comcast
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Entity has used commercially reasonable efforts to comply in all material
respects with any customer service standards applicable to it with respect to
the Comcast Systems. No Comcast Entity has received written notice with respect
to the Comcast Systems from any Governmental Authority to establish customer
service standards with respect to the Comcast Systems that exceed the FCC
standards promulgated pursuant to the Cable Act, except as set forth on Schedule
5.8. For each relevant semi-annual reporting period since such Comcast Party's
acquisition of such Comcast System, such Comcast Party has timely filed with the
United States Copyright Office all required Statements of Account in true and
correct form, has paid when due all required copyright royalty fee payments in
correct amount relating to such Comcast System's carriage of television
broadcast signals, and is otherwise in compliance with the requirements of the
compulsory license described in Section 111 of the Copyright Act and all
applicable rules and regulations of the Copyright Office. Except as set forth on
Schedule 5.8 and except for such matters as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, the Comcast
Entities have no Knowledge, with respect to any Comcast System acquired by any
Comcast Party since January 1, 1994, of any previous owner's failure to comply
with the copyright licensing requirements with respect to any Comcast System or
any written claim or inquiry from any Person that questions such Comcast
System's failure to comply. Comcast Corporation has delivered to AT&T Corp.
copies of all reports, filings and correspondence made or filed with the FCC or
pursuant to the FCC rules and regulations for the past year with respect to the
Comcast Systems, and all reports, filings and correspondence made or filed with
the United States Copyright Office or pursuant to United States Copyright Office
rules and regulations for the past three years with respect to the Comcast
Systems.
5.8.3. Except as set forth on Schedule 5.8 and as otherwise
provided in this Section 5.8.3 and except for rate regulation (which is
addressed under Section 5.8.4), each of the owners of the Comcast Systems has
complied with the provisions of the Cable Act and the 1992 Cable Act as such
Legal Requirements relate to the operation of the Comcast Systems, except for
such matters as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Except for such matters as would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, with respect to the Comcast Systems, each of the owners of the
Comcast Systems has complied in all respects with the must-carry and
retransmission consent provisions of the 1992 Cable Act including (i) duly and
timely notifying "local commercial television stations" of inadequate signal
strength or increased copyright liability, if applicable, (ii) to the extent
required, duly and timely notifying non-commercial educational stations of the
location of its Comcast Systems' principal headends, (iii) duly and timely
notifying subscribers of changes in the channel alignment on its Comcast
Systems, (iv) duly and timely notifying "local commercial and non-commercial
television stations" of the broadcast signals carried on Comcast Systems and
their channel positions, (v) maintaining the requisite public file identifying
broadcast signal carriage, (vi) carrying the broadcast signals after December
31, 1996, on its Comcast Systems for all "local commercial television stations"
which are entitled to must-carry status and, if required, up to two "qualified
low power stations", (vii) complying with applicable channel placement
obligations and (viii) obtaining retransmission consents for all broadcast
signals carried on its Comcast Systems after December 31, 1996, except for the
non-exempt signals carried pursuant to a must-carry election and for signals
carried with implied consent while conducting negotiations for the renewal of
expired retransmission consent agreements. No must-carry complaint is pending
against any Comcast System at the FCC, nor, to Comcast's Knowledge, is any
threatened except as set forth on
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Schedule 5.8. Comcast Corporation has delivered to AT&T Corp. copies of any
pending petitions any Comcast Entity has on file with the FCC, including
requests for market modifications or petitions for special relief or any market
modification requests or special relief petitions affecting any Comcast System
that have been served on any Comcast Entity. The FCC has not issued any decision
with respect to a must-carry complaint finding any Comcast System in violation
of the must-carry rules, except as set forth on Schedule 5.8. Each Comcast
System has complied with all written requests which it has received for network
nonduplication, syndicated exclusivity and sports blackout protection which are
applicable to such Comcast System.
5.8.4. The owners of the Comcast Systems have used commercially
reasonable efforts to establish rates charged and a la carte packages provided
to subscribers of the Comcast Systems that are currently allowable under the
rules and regulations promulgated by the FCC under the 1992 Cable Act, and any
authoritative interpretation thereof, to the extent such rates (on any tier) are
presently subject to regulation or, as of the date such rates were implemented,
were subject to regulation, by any Governmental Authority. Notwithstanding the
foregoing, no Comcast Entity makes any representation or warranty that either
the rates charged to subscribers or the a la carte packages provided are
allowable under any rules and regulations of the FCC, or any authoritative
interpretation thereof, promulgated after the date of the Closing. Comcast
Corporation has delivered to AT&T Corp. complete and correct copies of all FCC
Forms 328, 329, 393, 1200, 1205, 1210, 1215, 1220 and 1240 and any other FCC
rate forms filed with the local franchising authority and/or the FCC with
respect to the Comcast Systems (and will deliver, as soon as available, all such
FCC forms that are prepared with respect to the Comcast Systems), copies of all
correspondence with any Governmental Authority relating to rate regulation
generally or specific rates charged to subscribers to the Comcast Systems (FCC
Form 329) or certifications to regulate rates (FCC Form 328), including copies
of any complaints filed with the FCC with respect to any rates charged to
subscribers of the Comcast Systems which are pending at the FCC, and any
documentation supporting an exemption from the rate regulation provisions of the
1992 Cable Act claimed with respect to the Comcast Systems. Except as set forth
on Schedule 5.8, no Comcast Entity has made any election with respect to any
cost-of-service proceeding conducted in accordance with Part 76.922 of Title 47
of the Code of Federal Regulations or any similar proceeding (a "Cost of Service
Election") with respect to any Comcast Systems.
5.8.5. Except as set forth on Schedule 5.8, all necessary FAA
approvals have been obtained and all necessary FCC tower registrations have been
filed with respect to the height and location of towers used in connection with
the operation of the Comcast Systems, and such towers are being operated in
compliance in all material respects with applicable FCC and FAA rules. The
ownership, height (with and without appurtenances), location (address, latitude,
longitude and ground elevation), structure type and FCC call signs of each tower
used in connection with the operation of the Comcast Systems are correctly
described on Schedule 5.8. To the extent applicable, Comcast Corporation has
delivered to AT&T Corp. true and correct copies of the FAA final determinations
and FCC registrations for all such towers.
5.9. Intellectual Property. Except as set forth on Schedule 5.9, to
Comcast's Knowledge, the Comcast Systems and Comcast's Cable Business have been
operated in such a manner so as not to violate or infringe upon the rights, or
give rise to any rightful claim of any
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Person for copyright, trademark, service mark, patent or license or other
intellectual property right infringement.
5.10. Financial Statements. With respect to each Comcast System,
Comcast Corporation has delivered to AT&T Corp. correct and complete copies of
(a) an unaudited system balance sheet and related unaudited system statement of
operations for and as of the year ended December 31, 1999 and (b) an unaudited
system balance sheet as of June 30, 2000, and a related unaudited system
statement of operations for the six-month period then ended (collectively, the
"Comcast Financial Statements"). The Comcast Financial Statements are management
reports that fairly present, in all material respects, such Comcast System's
financial position and results of operations as of the dates and for the periods
indicated, subject to normal adjustments, allocations and accruals (none of
which will be material to the financial position or operating results of the
systems) and exclusive of the final allocation of Comcast's purchase price to
acquire Systems from Prime Communications, LLC, Rogers Communications, Inc., and
the E.W. Scripps Company. Such purchase price allocations would primarily effect
franchise costs, property and equipment, depreciation and amortization.
5.11. Absence of Certain Changes or Events. Except as set forth on
Schedule 5.11, since May 4, 1999, there has been no (i) Material Adverse Effect,
nor has any event or events (other than any affecting the cable television
industry generally) occurred that, individually or in the aggregate, would
reasonably be expected to result in a Material Adverse Effect, and (ii) material
change in accounting principles or practices with respect to the Comcast Cable
Business or revaluation of the Comcast Assets for financial reporting, property
tax or other purposes. From May 4, 1999 to the date of this Agreement, Comcast's
Cable Business has been conducted only in the usual, regular and ordinary course
and no Comcast Party has taken any actions that would cause the transactions
contemplated hereby to fail to qualify as a like-kind exchange under Section
1031 of the Code, except as disclosed on Schedule 5.11, except where the failure
to conduct business in such manner would not have a Material Adverse Effect or a
material adverse effect on the ability of the Comcast Entities to perform their
obligations under this Agreement and except where such conduct out of the
ordinary course was effected to carry out and comply with this Agreement.
5.12. Litigation. Except as set forth on Schedule 5.12: (a) there is no
Litigation pending against any Comcast Entity or any of its Affiliates, nor has
any Comcast Entity received any notice of, and to Comcast's Knowledge there is
no, threatened Litigation and (b) there is not in existence any Judgment
requiring any Comcast Entity or any of its Affiliates to take any action of any
kind with respect to the Comcast Assets or the operation of any Comcast Systems,
or to which any Comcast Entity (with respect to the Comcast Systems), any of the
Comcast Systems or Comcast Assets are subject or by which they are bound or
affected, in the case of either clause (a) or (b), that would reasonably be
expected to (i) have a Material Adverse Effect or a material adverse effect on
the ability of the Comcast Entities to perform their obligations under this
Agreement, or (ii) result in the modification, revocation, termination,
suspension or other limitation of any Comcast Systems Franchises, Comcast
Systems Licenses or Material Comcast Systems Contracts.
5.13. Tax Returns; Other Reports. The Comcast Entities have duly and
timely filed in correct form all federal, state, local and foreign Tax returns
and other Tax reports required to be
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filed, and have timely paid all Taxes that have become due and payable, whether
or not so shown on any such return or report, the failure of which to be filed
or paid could affect or result in the imposition of a Lien upon the Comcast
Assets or create any transferee liability or other liability upon any AT&T
Entity, except such amounts as are being contested diligently and in good faith
and for failures to file or pay which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Except as
set forth on Schedule 5.13, no Comcast Entity has received any notice of
deficiency, assessment or audit, or proposed deficiency, assessment or audit
from any taxing Governmental Authority which could affect, or result in the
imposition of a Lien upon, any Comcast Assets or transferee liability or other
liability upon any AT&T Entity. Except as described on Schedule 5.13, there are
no pending or ongoing Tax audits relating to the Comcast Systems, and no Comcast
Entity has received any Tax audit notice with respect thereto.
5.14. Employment Matters.
5.14.1. Except to the extent that any noncompliance would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, the Comcast Entities have complied in all material respects with
all applicable Legal Requirements relating to the employment of labor, including
the Worker Adjustment and Retraining Notification Act (29 U.S.C. Section 2101),
et seq. ("WARN"), continuation coverage requirements with respect to group
health plans and those relating to wages, hours, collective bargaining,
unemployment insurance, workers' compensation, equal employment opportunity,
age, sex, race and disability discrimination, immigration control and the
payment and withholding of Taxes.
5.14.2. For purposes of this Agreement, "Comcast Plans" means
each employee benefit plan (as defined in Section 3(3) of ERISA) or benefit
arrangement, including each pension or welfare benefit plan, employment
agreement, incentive compensation arrangement or multiemployer plan (as defined
in Section 3(37) of ERISA) with respect to which the Comcast Entities or any of
their ERISA Affiliates has any liability or in which any employees or agents, or
any former employees or agents, of the Comcast Entities or any of their ERISA
Affiliates participate. The Comcast Plans in which any Comcast System Employee
(as defined in Section 5.14.3) participates are set forth on Schedule 5.14.
Except to the extent that any violation would not reasonably be expected to have
a Material Adverse Effect, none of the Comcast Entities, any of their ERISA
Affiliates, any Comcast Plan other than a multiemployer plan (as defined in
Section 3(37) of ERISA), or to the Knowledge of Comcast or any of its ERISA
Affiliates, any Comcast Plan that is a multiemployer plan (as defined in Section
3(37) of ERISA) is in violation of any provision of ERISA or the Code. No
material (i) "reportable event" described in Sections 4043(c)(1), (2), (3), (5),
(6), (7), (10) and (13) of ERISA, (ii) non-exempt "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code), (iii) "accumulated
funding deficiency" (as defined in Section 302 of ERISA) or (iv) "withdrawal
liability" (as determined under Section 4201 et seq. of ERISA) has occurred or
exists and is continuing with respect to any Comcast Plan other than a
multiemployer plan (as defined in Section 3(37) of ERISA), or to the Knowledge
of Comcast or any of its ERISA Affiliates, any Comcast Plan that is a
multiemployer plan (as defined in Section 3(37) of ERISA). After the Closing,
none of the AT&T Entities or any of their ERISA Affiliates will be required,
under ERISA, the Code or any collective bargaining agreement to establish,
maintain or continue any Comcast Plan currently maintained by the Comcast
Entities or any of their ERISA Affiliates.
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Since May 4, 1999, there has been no change in the benefits or level of
compensation provided to Comcast System Employees that would materially increase
the cost of operating the Comcast Systems.
5.14.3. Except as set forth on Schedule 5.14, there are no
collective bargaining agreements applicable to any Person employed by any
Comcast Entity who primarily renders services in connection with the Comcast
Systems (a "Comcast System Employee") and no Comcast Entity has a duty to
bargain with any labor organization with respect to any such person. Except as
set forth on Schedule 5.14, there are not pending any unfair labor practice
charges against any Comcast Entity, any demand for recognition or any other
request or demand from a labor organization for representative status with
respect to any Comcast System Employee. Except as described on Schedule 5.14, no
Comcast Entity has any employment agreements, either written or oral, with any
Comcast System Employee. Each of the employment agreements listed on Schedule
5.14 is terminable at will without payment or penalty, and none of such
agreements requires any Comcast Entity, or will require any AT&T Entity or any
of its Affiliates, to employ any Person after the Closing.
5.15. Comcast Systems Information. Schedule 5.15 sets forth a true and
accurate description in all material respects of the following information as of
the date of this Agreement unless otherwise specified:
(a) as of the date set forth in the Schedule, the approximate
number of miles of co-axial plant and fiber plant, and aerial and underground
and the technical capacity of such plant expressed in MHZ, included in the
Comcast Assets;
(b) (i) as of April 30, 1999, the number of Equivalent Basic
Subscribers served by each Comcast System (other than the Comcast System located
in Florida) and (ii) for any Comcast System located in Florida, the average
number of Equivalent Basic Subscribers in such System for the 12-month period
ending on April 30, 1999, calculated by (x) adding together the number of
Equivalent Basic Subscribers in such System at the end of each of the 13 months
ending April 30, 1999 and (y) dividing that aggregate number by 13;
(c) a description of the Basic Services, the Expanded Basic
Services, Pay TV and a la carte services available from each Comcast System, and
the rates charged by the applicable Comcast Party therefor, including all rates,
tariffs and other charges for cable television or other services provided by
each Comcast System;
(d) the stations and signals carried by each such Comcast System
and the channel position of each such signal and station, and whether each
station carried is carried pursuant to a retransmission or must-carry consent;
and
(e) the cities, towns, villages, boroughs and counties served by
each Comcast System.
To Comcast's Knowledge, (i) the information about the Comcast Chicago
System provided by the Comcast Entities to the appraisers for purposes of
determining the value set forth in the second paragraph of Section 3.1.1 was
true and correct in all material respects and
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(ii) nothing was omitted from such information that would have been material to
such appraisers' analysis.
5.16. Taxpayer Identification Number. The U.S. Taxpayer Identification
Numbers for the Comcast Parties are set forth on Schedule 5.16.
5.17. Finders and Brokers. No Comcast Entity and no Affiliate of any
Comcast Entity has entered into any Contract with any Person that will result in
the obligation of AT&T Corp. or any of its Affiliates to pay any finder's fees,
investment banker, brokerage or agent's commissions or other like payments
(collectively, "Agent's Fees") in connection with the negotiations leading to
this Agreement or the consummation of the transactions contemplated hereby.
5.18. Related-Party Transactions. Set forth on Schedule 5.18 are the
Contracts, agreements, arrangements or understandings as of the date hereof
between any Comcast Entity and any of such Comcast Entity's Affiliates included
in or related to the Comcast Assets or the Comcast Systems. Schedule 5.18 shall
include as of the date hereof all matters in which a Comcast Party is a party to
any business arrangement or business relationship with any of its Affiliates.
Except as otherwise provided in Sections 7.5.4(b) or 7.5.5 and except for the
Comcast Excluded Assets, no Affiliate of any Comcast Entity owns any property or
right, tangible or intangible, that is used principally in the business or
operations of the Comcast Systems.
5.19. Bonds. Schedule 5.19 contains a list of all franchise,
construction, fidelity, performance or other bonds, security accounts, escrow
accounts, guarantees and copies of all letters of credit posted by Comcast
Corporation or its Affiliates in connection with the Comcast Systems or Comcast
Assets.
5.20. Undisclosed Material Liabilities. There are no liabilities of or
relating to the Comcast Systems or the Comcast Assets of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable or otherwise,
and there is no existing condition, situation or set of circumstances which
would reasonably be expected to result in such a liability, other than:
(a) liabilities disclosed on Schedule 5.20;
(b) liabilities disclosed in the Comcast Financial Statements or
the notes thereto;
(c) liabilities arising in the ordinary course of business since
May 4, 1999; and
(d) other liabilities which, individually or in the aggregate,
are not reasonably likely to have a Material Adverse Effect on Comcast's Cable
Business.
5.21. Comcast Designated LLCs. The Comcast Designated LLC Interests
constitute 100% of the equity interests in the Comcast Designated LLCs. The
Comcast Designated LLC Interests have been duly authorized, validly issued and
fully paid. Except as set forth in this Section, there are outstanding (a) no
securities of the Comcast Designated LLCs convertible into
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or exchangeable for equity interests of the Comcast Designated LLCs, and (b) no
options or other rights to acquire and no obligation of the Comcast Designated
LLCs to issue any equity interests.
A Comcast Entity is the holder of record and the beneficial owner of
the Comcast Designated LLC Interests, free and clear of any Lien and any other
limitation or restriction (including any restriction on the right to sell, vote
or otherwise dispose of the Comcast Designated LLC Interests) and at the Closing
such Comcast Entity will transfer and deliver to the applicable AT&T Entity or
Entities valid title to the Comcast Designated LLC Interests free and clear of
any Lien and any such limitation or restriction.
Each Comcast Designated LLC has no assets, no employees and no
liabilities of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable, or otherwise, and there is no existing condition,
situation or set of circumstances which could reasonably be expected to result
in such a liability, in each case, other than the Comcast Designated Assets,
Hired Employees and the Comcast Designated Liabilities transferred to such
Comcast Designated LLC immediately prior to the Closing. Each Comcast Designated
LLC has engaged in no activities or business other than (i) customary activities
in connection with its organization and (ii) the transactions contemplated
hereby.
6. AT&T CORP.'S REPRESENTATIONS AND WARRANTIES.
AT&T Corp. represents and warrants to the Comcast Entities as set forth
in this Article 6 as of the date hereof.
6.1. Organization and Qualification. Each of the AT&T Entities is a
corporation duly organized, validly existing, and in good standing under the
laws of its jurisdiction of incorporation, a general partnership that has been
duly formed and is validly existing under the laws of its jurisdiction of
formation, or a limited liability company that has been duly formed and is
validly existing under the laws of its jurisdiction of formation. Each AT&T
Party has all requisite power and authority to own, lease and use the AT&T
Assets owned, leased or used by it and to conduct its Cable Business as it is
currently being conducted by it. Each of the AT&T Parties is duly qualified to
do business and is in good standing under the laws of each jurisdiction in which
the ownership, leasing or use of the AT&T Assets owned, leased or used by it or
the nature of its activities in connection with its AT&T Systems makes such
qualification necessary, except for such matters as would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
6.2. Authority and Validity. Each AT&T Entity has all requisite
corporate, partnership or limited liability company power and authority to
execute and deliver, to perform its obligations under, and to consummate the
transactions contemplated by, this Agreement and the Transaction Documents to
which it is a party. The execution and delivery by each AT&T Entity of, its
performance under and its consummation of the transactions contemplated by, this
Agreement and the Transaction Documents to which such AT&T Entity is a party
have been duly and validly authorized by all action by or on behalf of such AT&T
Entity. This Agreement has been, and when executed and delivered by each AT&T
Entity the Transaction Documents to which such AT&T Entity is a party will be,
duly and validly executed and delivered by such
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AT&T Entity and the valid and binding obligations of such AT&T Entity,
enforceable against such AT&T Entity in accordance with their terms, except as
the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect relating to the
enforcement of creditors' rights generally or by principles governing the
availability of equitable remedies.
6.3. No Conflict; Required Consents. Except as set forth on Schedule
6.3, and assuming the expiration or earlier termination of the waiting period
under the HSR Act has occurred, the execution and delivery by each AT&T Entity
of, its performance under and its consummation of the transactions contemplated
by, this Agreement and the Transaction Documents to which such AT&T Entity is a
party do not and will not: (a) conflict with or violate any provision of the
organizational documents of such AT&T Entity; (b) violate any provision of any
Legal Requirement; (c) require any consent, approval or authorization of, or
filing of any certificate, notice, application, report or other document with,
any Governmental Authority or other Person; or (d) (i) without regard to
requirements of notice, lapse of time or elections of other Persons or any
combination thereof, conflict with, violate, result in a breach of or constitute
a default under, (ii) permit or result in the termination, suspension or
modification of, (iii) result in the acceleration of (or give any Person the
right to accelerate) the performance of any AT&T Entity under, or (iv) otherwise
adversely affect the rights or obligations of any AT&T Entity under, any AT&T
Systems Contract, AT&T Systems Franchise or AT&T Systems License; or (e) result
in the creation or imposition of any Lien upon any AT&T Asset, subject to such
exceptions for purposes of clauses (b), (c), (d) and (e) as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect or a material adverse effect on the ability of the AT&T Entities
to perform their obligations under this Agreement or the Transaction Documents.
6.4. Assets.
6.4.1. Except as described in Schedule 6.4.1, AT&T Corp. owns,
directly or indirectly, all of the equity interests in the AT&T Parties. The
AT&T Parties have good, marketable title to (or, in the case of Assets that are
leased, valid leasehold interests in) all of the material AT&T Assets, free and
clear of all Liens, except Permitted Liens. Except as described on Schedule
6.4.1 and except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, the AT&T Tangible Personal Property
(which for this purpose shall include all towers on AT&T Owned Property) is in
good operating condition and repair (ordinary wear and tear and routine failures
excepted), and is usable and adequate for the operation of AT&T's Cable
Business.
6.4.2. Subject to Sections 7.5.4(b) and 7.5.5 and except for
items included in the AT&T Excluded Assets, (i) the AT&T Assets constitute in
all material respects all the assets of the AT&T Entities and their Affiliates
primarily held for, used in or necessary for AT&T's Cable Business and (ii) the
right, title and interest therein to be transferred pursuant to this Agreement
will be sufficient to permit the Comcast Parties in all material respects (a) to
conduct AT&T's Cable Business as it is being conducted and in compliance with
all Legal Requirements, (b) to operate the AT&T Systems as they are being
operated and in compliance with all applicable Legal Requirements, and (c) to
perform all the Comcast Assumed Obligations and Liabilities.
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6.4.3. Except as described on Schedule 6.4.3, and other than
direct broadcast satellite and satellite master antenna television: (i) no cable
television system or other MVPD other than an AT&T System is operating in any
areas in which the AT&T Systems currently provide cable television service; (ii)
no local franchising authority for a community in which any AT&T System is
operating has awarded a cable television franchise or other similar operating
authority to any Person other than an AT&T Party; and (iii) to AT&T's Knowledge,
no MVPD has applied for a franchise or other similar operating authority to
serve any such community.
6.4.4. All of the material AT&T Tangible Personal Property is
listed on Schedule 6.4.4(a). All of the AT&T Owned Property is listed on
Schedule 6.4.4(b). All of the AT&T Leased Property is listed on Schedule
6.4.4(c). All of the AT&T Other Real Property Interests are listed on Schedule
6.4.4(d). All of the AT&T System Franchises are listed on Schedule 6.4.4(e). All
of the AT&T System Licenses are listed on Schedule 6.4.4(f). All of the material
AT&T System Contracts are listed on Schedule 6.4.4(g).
6.5. AT&T Systems Franchises, AT&T Systems Licenses, AT&T Systems
Contracts and AT&T Other Real Property Interests.
6.5.1. Except as described on Schedules 6.5.4(c), 6.4.4(d),
6.4.4(e), 6.4.4(f) and Schedule 6.4.4(g), or, in the case of Section 6.5.1(g),
as separately provided by AT&T Corp. to Comcast Corporation and except for the
AT&T Excluded Assets, no AT&T Entity is bound or affected by any of the
following that relate primarily or in whole to AT&T's Cable Business:
(a) leases of real property or material personal property,
including all capital leases;
(b) franchises and similar authorizations or permits for the
construction or operation of cable television systems, or Systems Contracts of
substantially equivalent effect;
(c) licenses, authorizations, consents or permits of the FCC;
(d) licenses, authorizations, consents or permits of any other
Governmental Authority;
(e) crossing agreements, easements or rights-of-way;
(f) pole line or joint line agreements or underground conduit
agreements;
(g) bulk service, commercial service or multiple dwelling unit
agreements (except access agreements for buildings that are not bulk billed);
(h) any must-carry elections or retransmission consents relating
to the AT&T Systems or AT&T Assets;
(i) Contracts which would be binding upon any System post-Closing
with any AT&T Entity, ServiceCo LLC and/or At Home Corporation or Liberty Media
Corporation or any of their Affiliates;
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(j) system specific programming agreements or signal supply
agreements;
(k) agreements with the FCC or any other Governmental Authority
relating to the operation or construction of the AT&T Systems that are not fully
reflected in the AT&T Systems Franchises, or any agreements with community
groups or similar Third Parties restricting or limiting the types of programming
that may be shown on any of the AT&T Systems;
(l) partnership, joint venture or other similar agreements or
arrangements;
(m) any agreement that limits the freedom of the AT&T Parties to
compete in any line of business or with any Person or in any area or which would
so limit the freedom of the Comcast Parties after the Closing;
(n) any Systems Contract relating to the use of the AT&T Assets
to provide, or the provision by the AT&T Systems of, telephone or high-speed
data services;
(o) any advertising interconnect agreements;
(p) any agreement with any AT&T System Employee; or
(q) any Systems Contract that is not the subject matter of any
other clause of this Section 6.5.1 which (i) will remain effective for more than
one year after Closing, (ii) contemplates payments by or to any AT&T Party
exceeding $150,000 under any single contract or the termination or expiration of
which would reasonably be expected to have a Material Adverse Effect or (iii) is
otherwise material to the AT&T Systems.
All of the foregoing types of Systems Contracts are referred to as the "Material
AT&T Systems Contracts".
6.5.2. Schedules 6.4.4(e) and 6.4.4(f) list all of the AT&T
Systems Franchises and all AT&T Systems Licenses, respectively. Complete and
correct copies of the AT&T Systems Franchises, all AT&T Systems Licenses issued
by the FCC and any other material AT&T Systems Licenses have been provided to
Comcast Corporation. Except as set forth on Schedule 6.5.2, the AT&T Systems
Franchises contain all of the commitments and obligations of the AT&T Entities
to the applicable Governmental Authority granting such AT&T Systems Franchises
with respect to the construction, ownership and operation of the AT&T Systems,
including any commitment to any local franchising authority to make any material
expenditure or capital addition or betterment to any of the AT&T Systems or AT&T
Assets that will not be fulfilled or satisfied prior to the Closing Time. The
AT&T Systems Franchises and AT&T Systems Licenses are currently in full force
and effect, are not in default and are valid under all applicable Legal
Requirements according to their terms. No event has occurred that, with notice
or lapse of time or both, would constitute a breach, violation or default by any
AT&T Entity, and to AT&T's Knowledge, no event has occurred that, with notice or
lapse of time or both, would constitute a breach, violation or default by any
other Person, of any material obligations under any of the AT&T Systems
Franchises or AT&T Systems Licenses, and would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Except for
routine filings with Governmental Authorities or as described on Schedule 6.5.2,
there are no material
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applications relating to any AT&T Systems Franchise or AT&T Systems License
pending before any Governmental Authority. Since January 1, 1999, no Systems
Franchise of any AT&T Party or AT&T Systems License of any AT&T Party has been
surrendered or has otherwise terminated without the issuance of a replacement
AT&T Systems Franchise or AT&T Systems License, respectively. There is no legal
action, governmental proceeding or investigation pending or, to AT&T's
Knowledge, threatened to terminate, suspend or modify any AT&T Systems Franchise
or AT&T Systems License. Except as set forth in Schedule 6.5.2, each AT&T System
is operating pursuant to a valid franchise or similar authorization or permit
issued by the appropriate Governmental Authority in every market in which such
System is supplying cable television service. Prior to the date hereof, AT&T
Corp. has provided a list to Comcast Corporation of the date on which each AT&T
System Franchise will expire. Such list is correct and accurate in all material
respects. No AT&T Entity has received, nor does it have notice that it will
receive, from any Governmental Authority a preliminary assessment that an AT&T
Systems Franchise should not be renewed as provided in Section 626(c)(1) of the
Cable Act. Neither any AT&T Entity nor any Governmental Authority has commenced
or requested the commencement of an administrative proceeding concerning the
renewal of an AT&T Systems Franchise as provided in Section 626(c)(1) of the
Cable Act. The AT&T Parties have timely filed notices of renewal in accordance
with the Cable Act with all Governmental Authorities with respect to each of the
AT&T Systems Franchises expiring within 36 months of the date of this Agreement.
Such notices of renewal have been filed pursuant to the formal renewal
procedures established by Section 626(a) of the Cable Act. Except as set forth
on Schedule 6.5.2 and except for such matters as would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect, the
AT&T Systems are being operated in material compliance with the terms and
conditions of all AT&T Systems Franchises and AT&T Systems Licenses and other
applicable requirements of all Governmental Authorities (including the FCC and
the United States Copyright Office) relating to such AT&T Systems Franchises and
AT&T Systems Licenses, including all requirements for notification, filing,
reporting, posting and maintenance of logs and records.
6.5.3. AT&T Corp. has delivered to Comcast Corporation true and
complete copies of all Material AT&T Systems Contracts, including any amendments
thereto (or, in the case of oral Contracts that are Material AT&T Systems
Contracts, true and complete written summaries thereof) and each document
evidencing or insuring ownership of the AT&T Owned Property. Except as described
on Schedule 6.5.3 and except for such matters as would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect, (i)
each AT&T Entity has fulfilled when due, or has taken all action necessary to
enable it to fulfill when due, all of such AT&T Entity's obligations under each
of its Material AT&T Systems Contracts, (ii) to AT&T's Knowledge, there has not
occurred any default (without regard to requirements of notice, lapse of time,
elections of other Persons or any combination thereof) by any Person of any
material obligations under any Material AT&T Systems Contracts and (iii) to AT&T
Corp.'s knowledge, the Material AT&T Systems Contracts are valid and binding
agreements of the applicable third party to the Material AT&T Systems Contracts
and assuming that the Material AT&T Systems Contracts are valid and binding
agreements on the applicable third party, the Material AT&T Systems Contracts
are valid and binding agreements of the applicable AT&T Party and are in full
force and effect.
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6.5.4. Except as disclosed on Schedule 6.5.4, none of the AT&T
Systems or material AT&T Assets are subject to any purchase option, right of
first refusal or similar arrangement which would be triggered by the sale,
transfer or other disposition of such Systems or Assets (an "AT&T System
Option").
6.5.5. Set forth on Schedule 6.5.5 is each lease for vehicles and
each capital lease that in either case would be an AT&T Asset but for the effect
of Section 7.4.
6.6. Real Property. All the AT&T Owned Property, AT&T Leased Property
and material AT&T Other Real Property Interests are described on Schedules
6.4.4(b), 6.4.4(c) and 6.4.4(d). Except for ordinary wear and tear and routine
repairs or as set forth on Schedule 6.6 or for such matters as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, all of the improvements, leasehold improvements and the premises
of the AT&T Owned Property and the premises demised under the leases and other
documents evidencing the AT&T Leased Property are in reasonable operating
condition and repair and are suitable for the purposes used. Except for such
matters as would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect, each parcel of AT&T Owned Property and each
parcel of AT&T Leased Property (a) has access to and over public streets or
private streets or property for which an AT&T Party has a valid right of ingress
and egress, (b) except as set forth on Schedules 6.4.4(b), 6.4.4(c) and
6.4.4(d), conforms in its current use, occupancy and operation to all zoning
requirements without reliance upon a variance issued by a Governmental Authority
or a classification of the parcel in question as a nonconforming use, (c)
conforms in all respects in its current use, occupancy and operation to all
restrictive covenants, if any, or other Liens affecting all or part of such
parcel, and (d) is available for immediate use in the conduct of the business or
operations of the AT&T Systems. There are no pending condemnation,
expropriation, eminent domain or similar proceedings of which any AT&T Entity
has received notice, or, to AT&T's Knowledge, affecting, in any material
respect, all or any portion of the AT&T Owned Property, AT&T Leased Property or
material AT&T Other Real Property Interests.
6.7. Environmental.
6.7.1. Except as described on Schedule 6.7 and except for such
matters as would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect, each AT&T Entity has obtained or caused to be
obtained all permits necessary for its operations to comply with Environmental
Laws and is in compliance with the terms of such permits and all Environmental
Laws insofar as they relate to the AT&T Assets. Except as described on Schedule
6.7 and except for such matters as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, no AT&T Entity has
received any notice of or has Knowledge of (i) any release or threatened release
of any Hazardous Substances from or on or relating to activities or operations
conducted on the AT&T Owned Property or the AT&T Leased Property or any property
previously owned, leased or operated by such AT&T Party in connection with
AT&T's Cable Business or the AT&T Assets, or (ii) any liability under, or any
violation of, any Environmental Laws or permits in connection with AT&T's Cable
Business or AT&T Assets. Except as described on Schedule 6.7 and except for such
matters as would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect, no AT&T Entity has received any notice of,
and has no Knowledge of, any events,
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conditions, circumstances, activities, practices or incidents (including the
presence, use, generation, manufacture, disposal, release or threatened release
of any Hazardous Substances from or on the AT&T Owned Property or AT&T Leased
Property or any property previously owned, leased or operated by such AT&T Party
in connection with AT&T's Cable Business or the AT&T Assets) which could
interfere with or prevent compliance with any Environmental Law, or which are
reasonably likely to give rise or have given rise to any liability, whether
accrued, contingent, absolute, determined, determinable or otherwise under any
Environmental Law, in each case, in connection with the AT&T Owned Property or
AT&T Leased Property or any property previously owned, leased or operated by
such AT&T Party in connection with AT&T's Cable Business or the AT&T Assets.
6.7.2. Except as described on Schedule 6.7 and except for such
matters as would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect (a) no aboveground or underground storage
tanks are currently or have been located on any AT&T Owned Property or AT&T
Leased Property, (b) no AT&T Owned Property or AT&T Leased Property has been
used at any time as a gasoline service station or any other facility for
storing, pumping, dispensing or producing gasoline or any other petroleum
products or wastes; and (c) no polychlorinated biphenyls, radioactive material,
lead, asbestos-containing material, incinerator, sump, surface impoundment,
lagoon, landfill, septic, wastewater treatment or other disposal system are or
have been present at, on or under any AT&T Owned Property or AT&T Leased
Property or any property now or previously owned, leased or operated by such
AT&T Party in connection with AT&T's Cable Business or the AT&T Assets.
6.7.3. Except as described on Schedule 6.7 and except for such
matters as would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect, no Hazardous Substance has been discharged,
disposed of, dumped, injected, pumped, deposited, spilled, leaked, emitted, or
released at, on or under any AT&T Owned Property or AT&T Leased Property or any
other property now or previously owned, leased or operated by any AT&T Party in
connection with AT&T's Cable Business or the AT&T Assets. Except as described on
Schedule 6.7, no AT&T Owned Property or AT&T Leased Property and no property now
or previously owned, leased or operated by any AT&T Party in connection with
AT&T's Cable Business or the AT&T Assets, nor any property to which Hazardous
Substances located on or resulting from the use of any AT&T Owned Property or
AT&T Leased Property or operations of any AT&T Party have been transported, nor
any property to which any AT&T Party has, directly or indirectly, transported or
arranged for the transportation of any Hazardous Substances is listed or, to
AT&T's Knowledge, proposed for listing on the National Priorities List
promulgated pursuant to CERCLA, or CERCLIS (as defined in CERCLA) or on any
similar federal, state, local or foreign list of sites requiring investigation
or cleanup.
6.7.4. Complete and correct copies of (a) all studies, reports,
surveys or other similar written materials in any AT&T Entity's possession or to
which any AT&T Entity has access relating to environmental matters at, on, under
or affecting the AT&T Owned Property or AT&T Leased Property or otherwise
relating to the AT&T Cable Business or AT&T Assets, including the presence or
alleged presence of Hazardous Substances, (b) all notices (other than general
notices made by general publication) in any AT&T Entity's possession or to which
any AT&T Entity has access that were received from any Governmental Authority
having the power to administer or enforce any Environmental Laws relating to
current or past ownership, use or
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operation of the AT&T Owned Property or AT&T Leased Property or activities at
the AT&T Owned Property or AT&T Leased Property, and (c) all notices and related
materials in any AT&T Entity's possession or to which any AT&T Entity has access
relating to any Litigation related to any AT&T System concerning any
Environmental Law or written allegation by any private Third Party concerning
any Environmental Law and any AT&T System have been provided to Comcast
Corporation (other than those materials constituting attorney-client privileged
communications).
6.7.5. Except as set forth on Schedule 6.7.5, as of the date
hereof none of the AT&T Owned Property or AT&T Leased Property or AT&T Other
Real Property Interests is located in New Jersey or Connecticut.
6.8. Compliance with Legal Requirements.
6.8.1. Except as set forth on Schedule 6.8 and except for such
matters as would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect, the operation of the AT&T Systems and AT&T's
Cable Business as currently conducted does not violate or infringe any
applicable Legal Requirements (other than Legal Requirements described in
Sections 6.7, 6.8.3 and 6.8.4, as to which the representations and warranties
set forth in those subsections will apply) or the grounding requirements of the
National Electrical Safety Code. Except as set forth on Schedule 6.8 and except
for such matters as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, no AT&T Entity has received any
notice of, and to AT&T's Knowledge there is not, any violation by any of the
AT&T Systems of any Legal Requirement applicable to the installation, ownership
and operation of the AT&T Systems as currently conducted.
6.8.2. Except as set forth on Schedule 6.8, and except to the
extent that it would not reasonably be expected to have a Material Adverse
Effect, without limiting the generality of the foregoing, since such AT&T
Party's acquisition of such AT&T Systems: there have been submitted to the FCC
all required filings, including cable television registration statements, annual
reports and aeronautical frequency usage notices and all regulatory fees that
are required under the rules and regulations of the FCC; the operation of the
AT&T Systems has been and is in compliance with the rules and regulations of the
FCC, and no AT&T Entity has received any notice from the FCC of any violation of
its rules and regulations; each AT&T Entity is and since 1991 has been certified
as in compliance with the FCC's equal employment opportunity rules and has
received no written notices with respect to non-compliance with such rules; the
AT&T Systems are in compliance with all signal leakage criteria prescribed by
the FCC and all required FCC Forms 320 for the AT&T Systems have been filed for
the last two reporting periods, and all such Forms 320 show "passing" or
"satisfactory" signal leakage scores. Each AT&T System holds all licenses,
registrations or permits from the FCC for business radio, satellite, earth
station receiving facilities and CARS or private fixed service microwave
facilities that are necessary or appropriate to carry on the business of such
AT&T System as conducted on the date hereof. Each AT&T System has provided all
required subscriber privacy notices to new subscribers at the time of
installation, and to all subscribers on an annual basis, and the AT&T Systems
have taken commercially reasonable steps to prevent unauthorized access to
personally identifiable information. The AT&T Systems have provided all customer
notices required by the Communications Act, including notices of customer
service, availability of Basic Services and
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equipment compatibility. No AT&T System has received any request for commercial
leased access with respect to such AT&T System within the past 120 days, except
for those requests set forth on Schedule 6.8. There are no complaints or other
proceedings instituted before the FCC concerning commercial leased access,
program access or any other aspect of the AT&T Systems' operations, except as
set forth on Schedule 6.8. Each AT&T Entity has used commercially reasonable
efforts to comply in all material respects with any customer service standards
applicable to it with respect to the AT&T Systems. No AT&T Entity has received
written notice with respect to the AT&T Systems from any Governmental Authority
to establish customer service standards with respect to the AT&T Systems that
exceed the FCC standards promulgated pursuant to the Cable Act, except as set
forth on Schedule 6.8. For each relevant semi-annual reporting period since such
AT&T Party's acquisition of such AT&T System, such AT&T Party has timely filed
with the United States Copyright Office all required Statements of Account in
true and correct form, has paid when due all required copyright royalty fee
payments in correct amount relating to such AT&T System's carriage of television
broadcast signals, and is otherwise in compliance with the requirements of the
compulsory license described in Section 111 of the Copyright Act and all
applicable rules and regulations of the Copyright Office. Except as set forth on
Schedule 6.8 and except for such matters as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, the AT&T
Entities have no Knowledge, with respect to any AT&T System acquired by any AT&T
Party since January 1, 1994, of any previous owner's failure to comply with the
copyright licensing requirements with respect to any AT&T System or any written
claim or inquiry from any Person that questions such AT&T System's failure to
comply. AT&T Corp. has delivered to Comcast Corporation copies of all reports,
filings and correspondence made or filed with the FCC or pursuant to the FCC
rules and regulations for the past year with respect to the AT&T Systems, and
all reports, filings and correspondence made or filed with the United States
Copyright Office or pursuant to United States Copyright Office rules and
regulations for the past three years with respect to the AT&T Systems.
6.8.3. Except as set forth on Schedule 6.8 and as otherwise
provided in this Section 6.8.3 and except for rate regulation (which is
addressed under Section 6.8.4), each of the owners of the AT&T Systems has
complied with the provisions of the Cable Act and the 1992 Cable Act as such
Legal Requirements relate to the operation of the AT&T Systems, except for such
matters as would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. Except for such matters as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, with respect to the AT&T Systems, each of the owners of the AT&T
Systems has complied in all respects with the must-carry and retransmission
consent provisions of the 1992 Cable Act including (i) duly and timely notifying
"local commercial television stations" of inadequate signal strength or
increased copyright liability, if applicable, (ii) to the extent required, duly
and timely notifying non-commercial educational stations of the location of its
AT&T Systems' principal headends, (iii) duly and timely notifying subscribers of
changes in the channel alignment on its AT&T Systems, (iv) duly and timely
notifying "local commercial and non-commercial television stations" of the
broadcast signals carried on AT&T Systems and their channel positions, (v)
maintaining the requisite public file identifying broadcast signal carriage,
(vi) carrying the broadcast signals after December 31, 1996, on its AT&T Systems
for all "local commercial television stations" which are entitled to must-carry
status and, if required, up to two "qualified low power stations", (vii)
complying with applicable channel placement obligations and (viii) obtaining
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retransmission consents for all broadcast signals carried on its AT&T Systems
after December 31, 1996, except for the non-exempt signals carried pursuant to a
must-carry election and for signals carried with implied consent while
conducting negotiations for the renewal of expired retransmission consent
agreements. No must-carry complaint is pending against any AT&T System at the
FCC, nor, to AT&T's Knowledge, is any threatened except as set forth on Schedule
6.8. AT&T Corp. has delivered to Comcast Corporation copies of any pending
petitions any AT&T Entity has on file with the FCC, including requests for
market modifications or petitions for special relief or any market modification
requests or special relief petitions affecting any AT&T System that have been
served on any AT&T Entity. The FCC has not issued any decision with respect to a
must-carry complaint finding any AT&T System in violation of the must-carry
rules, except as set forth on Schedule 6.8. Each AT&T System has complied with
all written requests which it has received for network nonduplication,
syndicated exclusivity and sports blackout protection which are applicable to
such AT&T System.
6.8.4. The owners of the AT&T Systems have used commercially
reasonable efforts to establish rates charged and a la carte packages provided
to subscribers of the AT&T Systems that are currently allowable under the rules
and regulations promulgated by the FCC under the 1992 Cable Act, and any
authoritative interpretation thereof, to the extent such rates (on any tier) are
presently subject to regulation or, as of the date such rates were implemented,
were subject to regulation, by any Governmental Authority. Notwithstanding the
foregoing, no AT&T Entity makes any representation or warranty that either the
rates charged to subscribers or the a la carte packages provided are allowable
under any rules and regulations of the FCC, or any authoritative interpretation
thereof, promulgated after the date of the Closing. AT&T Corp. has delivered to
Comcast Corporation complete and correct copies of all FCC Forms 328, 329, 393,
1200, 1205, 1210, 1215, 1220 and 1240 and any other FCC rate forms filed with
the local franchising authority and/or the FCC with respect to the AT&T Systems
(and will deliver, as soon as available, all such FCC forms that are prepared
with respect to the AT&T Systems), copies of all correspondence with any
Governmental Authority relating to rate regulation generally or specific rates
charged to subscribers to the AT&T Systems (FCC Form 329) or certifications to
regulate rates (FCC Form 328), including copies of any complaints filed with the
FCC with respect to any rates charged to subscribers of the AT&T Systems which
are pending at the FCC, and any documentation supporting an exemption from the
rate regulation provisions of the 1992 Cable Act claimed with respect to the
AT&T Systems. Except as set forth on Schedule 6.8, no AT&T Entity has made a
Cost of Service Election with respect to any AT&T Systems.
6.8.5. Except as set forth on Schedule 6.8, all necessary FAA
approvals have been obtained and all necessary FCC tower registrations have been
filed with respect to the height and location of towers used in connection with
the operation of the AT&T Systems, and such towers are being operated in
compliance in all material respects with applicable FCC and FAA rules. The
ownership, height (with and without appurtenances), location (address, latitude,
longitude and ground elevation), structure type and FCC call signs of each tower
used in connection with the operation of the AT&T Systems are correctly
described on Schedule 6.8. To the extent applicable, AT&T Corp. has delivered to
Comcast Corporation true and correct copies of the FAA final determinations and
FCC registrations for all such towers.
6.9. Intellectual Property. Except as set forth on Schedule 6.9, to
AT&T's Knowledge, the AT&T Systems and AT&T's Cable Business have been operated
in such a
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manner so as not to violate or infringe upon the rights, or give rise to any
rightful claim of any Person for copyright, trademark, service mark, patent or
license or other intellectual property right infringement.
6.10. Financial Statements. With respect to each AT&T System, AT&T
Corp. has delivered to Comcast Corporation correct and complete copies of (a) an
unaudited system balance sheet and related unaudited system statement of
operations for and as of the year ended December 31, 1999 and (b) an unaudited
system balance sheet as of June 30, 2000, and a related unaudited system
statement of operations for the six-month period then ended (collectively, the
"AT&T Financial Statements"). The AT&T Financial Statements are management
reports that fairly present, in all material respects, such AT&T System's
financial position and results of operations as of the dates and for the periods
indicated, subject to normal adjustments, allocations and accruals (none of
which will be material to the financial position or operating results of the
systems) and exclusive of the final allocation of AT&T's purchase price to
acquire TCI and MediaOne. Such purchase price allocations would primarily effect
franchise costs, property and equipment, depreciation and amortization. Audited
financial statements as of and for the year ended December 31, 1998 have been
provided for the District Cablevision Limited Partnership (the Washington DC
system).
6.11. Absence of Certain Changes or Events. Except as set forth on
Schedule 6.11, since May 4, 1999, there has been no (i) Material Adverse Effect,
nor has any event or events (other than any affecting the cable television
industry generally) occurred that, individually or in the aggregate, would
reasonably be expected to result in a Material Adverse Effect, and (ii) material
change in accounting principles or practices with respect to the AT&T Cable
Business or revaluation of the AT&T Assets for financial reporting, property tax
or other purposes. From May 4, 1999 to the date of this Agreement, AT&T's Cable
Business has been conducted only in the usual, regular and ordinary course and
no AT&T Party has taken any actions that would cause the transactions
contemplated hereby to fail to qualify as a like-kind exchange under Section
1031 of the Code, except as disclosed on Schedule 6.11, except where the failure
to conduct business in such manner would not have a Material Adverse Effect or a
material adverse effect on the ability of the AT&T Entities to perform their
obligations under this Agreement and except where such conduct out of the
ordinary course was effected to carry out and comply with this Agreement.
6.12. Litigation. Except as set forth on Schedule 6.12: (a) there is no
Litigation pending against any AT&T Entity or any of its Affiliates, nor has any
AT&T Entity received any notice of, and to AT&T's Knowledge there is no,
threatened Litigation and (b) there is not in existence any Judgment requiring
any AT&T Entity or any of its Affiliates to take any action of any kind with
respect to the AT&T Assets or the operation of any AT&T Systems, or to which any
AT&T Entity (with respect to the AT&T Systems), any of the AT&T Systems or AT&T
Assets are subject or by which they are bound or affected, in the case of either
clause (a) or (b), that would reasonably be expected to (i) have a Material
Adverse Effect or a material adverse effect on the ability of the AT&T Entities
to perform their obligations under this Agreement, or (ii) result in the
modification, revocation, termination, suspension or other limitation of any
AT&T Systems Franchises, AT&T Systems Licenses or Material AT&T Systems
Contracts.
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6.13. Tax Returns; Other Reports. The AT&T Entities have duly and
timely filed in correct form all federal, state, local and foreign Tax returns
and other Tax reports required to be filed, and have timely paid all Taxes that
have become due and payable, whether or not so shown on any such return or
report, the failure of which to be filed or paid could affect or result in the
imposition of a Lien upon the AT&T Assets or create any transferee liability or
other liability upon any Comcast Entity, except such amounts as are being
contested diligently and in good faith and for failures to file or pay which
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Except as set forth on Schedule 6.13, no AT&T Entity
has received any notice of deficiency, assessment or audit, or proposed
deficiency, assessment or audit from any taxing Governmental Authority which
could affect, or result in the imposition of a Lien upon, any AT&T Assets or
transferee liability or other liability upon any Comcast Entity. Except as
described on Schedule 6.13, there are no pending or ongoing Tax audits relating
to the AT&T Systems, and no AT&T Entity has received any Tax audit notice with
respect thereto.
6.14. Employment Matters.
6.14.1. Except to the extent that any noncompliance would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, the AT&T Entities have complied in all material respects with
all applicable Legal Requirements relating to the employment of labor, including
WARN, continuation coverage requirements with respect to group health plans and
those relating to wages, hours, collective bargaining, unemployment insurance,
workers' compensation, equal employment opportunity, age, sex, race and
disability discrimination, immigration control and the payment and withholding
of Taxes.
6.14.2. For purposes of this Agreement, "AT&T Plans" means each
employee benefit plan (as defined in Section 3(3) of ERISA) or benefit
arrangement, including each pension or welfare benefit plan, employment
agreement, incentive compensation arrangement or multiemployer plan (as defined
in Section 3(37) of ERISA) with respect to which the AT&T Entities or any of
their ERISA Affiliates has any liability or in which any employees or agents, or
any former employees or agents, of the AT&T Entities or any of their ERISA
Affiliates participate. The AT&T Plans in which any AT&T System Employee (as
defined in Section 6.14.3) participates are set forth on Schedule 6.14. Except
to the extent that any violation would not reasonably be expected to have a
Material Adverse Effect, none of the AT&T Entities, any of their ERISA
Affiliates, any AT&T Plan other than a multiemployer plan (as defined in Section
3(37) of ERISA), or to the Knowledge of AT&T or any of its ERISA Affiliates, any
AT&T Plan that is a multiemployer plan (as defined in Section 3(37) of ERISA) is
in violation of any provision of ERISA or the Code. No material (i) "reportable
event" described in Sections 4043(c)(1), (2), (3), (5), (6), (7), (10) and (13)
of ERISA, (ii) non-exempt "prohibited transaction" (as defined in Section 406 of
ERISA or Section 4975 of the Code), (iii) "accumulated funding deficiency" (as
defined in Section 302 of ERISA) or (iv) "withdrawal liability" (as determined
under Section 4201 et seq. of ERISA) has occurred or exists and is continuing
with respect to any AT&T Plan other than a multiemployer plan (as defined in
Section 3(37) of ERISA), or to the Knowledge of AT&T or any of its ERISA
Affiliates, any AT&T Plan that is a multiemployer plan (as defined in Section
3(37) of ERISA). After the Closing, none of the Comcast Entities or any of their
ERISA Affiliates will be required, under ERISA, the Code or any collective
bargaining agreement to establish, maintain or continue any
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AT&T Plan currently maintained by the AT&T Entities or any of their ERISA
Affiliates. Since May 4, 1999, there has been no change in the benefits or level
of compensation provided to AT&T System Employees that would materially increase
the cost of operating the AT&T Systems.
6.14.3. Except as set forth on Schedule 6.14, there are no
collective bargaining agreements applicable to any Person employed by any AT&T
Entity who primarily renders services in connection with the AT&T Systems (an
"AT&T System Employee") and no AT&T Entity has a duty to bargain with any labor
organization with respect to any such person. Except as set forth on Schedule
6.14, there are not pending any unfair labor practice charges against any AT&T
Entity, any demand for recognition or any other request or demand from a labor
organization for representative status with respect to any AT&T System Employee.
Except as described on Schedule 6.14, no AT&T Entity has any employment
agreements, either written or oral, with any AT&T System Employee. Each of the
employment agreements listed on Schedule 6.14 is terminable at will without
payment or penalty and none of such agreements requires any AT&T Entity, or will
require any Comcast Entity or any of its Affiliates, to employ any Person after
the Closing.
6.15. AT&T Systems Information. Schedule 6.15 sets forth a true and
accurate description in all material respects of the following information as of
the date of this Agreement unless otherwise specified:
(a) as of the date set forth in the Schedule, the approximate
number of miles of co-axial plant and fiber plant, and aerial and underground
and the technical capacity of such plant expressed in MHZ, included in the AT&T
Assets;
(b) (i) as of April 30, 1999, the number of Equivalent Basic
Subscribers served by each AT&T System (other than the AT&T Systems in the
Philadelphia DMA and Florida), including the non-Overbuilt Systems in Detroit,
Michigan, the Overbuilt franchise areas within MediaOne Group Detroit, Michigan
System and the Overbuilt franchise areas within the TCI Detroit, Michigan
System, (ii) for the AT&T System located in Florida, the average number of
Equivalent Basic Subscribers in such System for the 12-month period ending on
April 30, 1999, calculated by (x) adding together the number of Equivalent Basic
Subscribers in such System at the end of each of the 13 months ending April 30,
1999 and (y) dividing that aggregate number by 13 and (iii) the aggregate of (A)
for the franchise areas located in the Philadelphia DMA (other than the
franchise areas located in Long Beach Island, New Jersey), the aggregate number
of Equivalent Basic Subscribers in such franchise areas as of April 30, 1999
plus (B) for the franchise areas located in Long Beach Island, New Jersey, the
average number of Equivalent Basic Subscribers in such areas for the 12-month
period ending on April 30, 1999 calculated by (x) adding together the number of
Equivalent Basic Subscribers in such areas at the end of each of the 13 months
ending April 30, 1999 and (y) dividing that aggregate number by 13;
(c) a description of the Basic Services, the Expanded Basic
Services, Pay TV and a la carte services available from each AT&T System, and
the rates charged by the applicable AT&T Party therefor, including all rates,
tariffs and other charges for cable television or other services provided by
each AT&T System;
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(d) the stations and signals carried by each such AT&T System and
the channel position of each such signal and station, and whether each station
carried is carried pursuant to a retransmission or must-carry consent; and
(e) the cities, towns, villages, boroughs and counties served by
each AT&T System.
To AT&T's Knowledge, (i) the information about the AT&T Washington,
D.C. System and the AT&T Detroit, Michigan System provided by the AT&T Entities
to the appraisers for purposes of determining the value set forth in the second
paragraph of Section 3.1.1 was true and correct in all material respects and
(ii) nothing was omitted from such information that would have been material to
such appraisers' analysis.
6.16. Taxpayer Identification Number. The U.S. Taxpayer Identification
Numbers for the AT&T Parties are set forth on Schedule 6.16.
6.17. Finders and Brokers. No AT&T Entity and no Affiliate of any AT&T
Entity has entered into any Contract with any Person that will result in the
obligation of Comcast Corporation or any of its Affiliates to pay any Agent's
Fees in connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby.
6.18. Related-Party Transactions. Set forth on Schedule 6.18 are the
Contracts, agreements, arrangements or understandings as of the date hereof
between any AT&T Entity and any of such AT&T Entity's Affiliates included in or
related to the AT&T Assets or the AT&T Systems. Schedule 6.18 shall include as
of the date hereof all matters in which an AT&T Party is a party to any business
arrangement or business relationship with any of its Affiliates. Except as
otherwise provided in Sections 7.5.4(b) or 7.5.5 and except for the AT&T
Excluded Assets, no Affiliate of any AT&T Entity owns any property or right,
tangible or intangible, that is used principally in the business or operations
of the AT&T Systems.
6.19. Bonds. Schedule 6.19 contains a list of all franchise,
construction, fidelity, performance or other bonds, security accounts, escrow
accounts, guarantees and copies of all letters of credit posted by AT&T Corp. or
its Affiliates in connection with the AT&T Systems or AT&T Assets.
6.20. Undisclosed Material Liabilities. There are no liabilities of or
relating to the AT&T Systems or the AT&T Assets of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, and there
is no existing condition, situation or set of circumstances which would
reasonably be expected to result in such a liability, other than:
(a) liabilities disclosed on Schedule 6.20;
(b) liabilities disclosed in the AT&T Financial Statements or the
notes thereto;
(c) liabilities arising in the ordinary course of business since
May 4, 1999; and
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(d) other liabilities which, individually or in the aggregate,
are not reasonably likely to have a Material Adverse Effect on AT&T's Cable
Business.
6.21. AT&T Designated LLCs. The AT&T Designated LLC Interests
constitute 100% of the equity interests in the AT&T Designated LLCs. The AT&T
Designated LLC Interests have been duly authorized, validly issued and fully
paid. Except as set forth in this Section, there are outstanding (a) no
securities of the AT&T Designated LLCs convertible into or exchangeable for
equity interests of the AT&T Designated LLCs, and (b) no options or other rights
to acquire and no obligation of the AT&T Designated LLCs to issue any equity
interests.
An AT&T Entity is the holder of record and the beneficial owner of the
AT&T Designated LLC Interests, free and clear of any Lien and any other
limitation or restriction (including any restriction on the right to sell, vote
or otherwise dispose of the AT&T Designated LLC Interests) and at the Closing
such AT&T Entity will transfer and deliver to the applicable Comcast Entity or
Entities valid title to the AT&T Designated LLC Interests free and clear of any
Lien and any such limitation or restriction.
Each AT&T Designated LLC has no assets, no employees and no liabilities
of any kind whatsoever, whether accrued, contingent, absolute, determined,
determinable, or otherwise, and there is no existing condition, situation or set
of circumstances which could reasonably be expected to result in such a
liability, in each case, other than the AT&T Designated Assets, Hired Employees
and the AT&T Designated Liabilities transferred to such AT&T Designated LLC
immediately prior to the Closing. Each AT&T Designated LLC has engaged in no
activities or business other than (i) customary activities in connection with
its organization and (ii) the transactions contemplated hereby.
7. ADDITIONAL COVENANTS.
7.1. Access to Premises and Records. Between the date of this
Agreement and the Closing, each Parent and its Affiliates party to this
Agreement (collectively, the "Disclosing Party") (a) will give to the other
Parent and its Affiliates party to this Agreement (collectively, the "Inspecting
Party") and their counsel, accountants and other representatives reasonable
access during normal business hours and upon reasonable advance notice to all
the premises and books and records of the Disclosing Party's Cable Business
(including all account books of original entry, general ledgers and financial
records) and to all of its Assets and the personnel engaged in the management or
operation of its Systems; (b) will furnish to the Inspecting Party and such
representatives all such documents, financial information and other information
regarding the Disclosing Party's Cable Business and its Assets as the Inspecting
Party from time to time reasonably may request; and (c) instruct the management
employees, counsel, accountants and other authorized representatives of the
Disclosing Party to cooperate reasonably with the Inspecting Party in its
investigation of such Systems; provided that no investigation will affect or
limit the scope of any of the representations, warranties, covenants and
indemnities of the Disclosing Party in this Agreement or in any Transaction
Document or limit liability for any breach of any of the foregoing.
7.2. Continuity and Maintenance of Operations; Certain Deliveries and
Notice. Except as set forth on Schedule 7.2 or as the other Parent may otherwise
consent in writing
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(which consent shall not unreasonably be withheld), between the date of this
Agreement and the Closing, each Transferor with respect to its Cable Business,
Systems and Assets:
7.2.1. will conduct its Cable Business in good faith and operate
its Systems only in the usual, regular and ordinary course, including making
capital expenditures, completing ongoing and planned line extensions, placing
conduit or cable in new developments, commencing and continuing planned
upgrades, fulfilling installation requests, completing disconnection work orders
and disconnecting and discontinuing service to customers whose accounts are
delinquent, and (a) use its reasonable best efforts to preserve its current
business intact in all material respects, including preserving existing
relationships with franchising authorities, suppliers, customers and others
having business dealings with its Systems, (b) use its reasonable best efforts
to keep available the services of its employees and agents taken as a whole,
providing services in connection with its Cable Business, but will be under no
obligation to incur costs to do so, (c) not, outside of the ordinary course of
business consistent with normal salary reviews, grant or agree to grant an
increase in the rate of compensation of, or any increase in any severance,
profit sharing, retirement, deferred compensation, insurance or other
compensation or benefits for, such Transferor's System employees, except as a
result of amendments or modifications to employee compensation and benefit plans
and programs of the Transferor's Parent which benefit broad classes of such
Parent's employees generally, (d) make customary marketing, advertising and
promotional expenditures with respect to its Cable Business, and (e) use its
commercially reasonable efforts to operate its Cable Business in material
compliance with all Legal Requirements;
7.2.2. will maintain its Assets in good operating repair, order
and condition, ordinary wear and tear excepted; will maintain equipment and
inventory for its Systems at normal historical levels consistent with its past
practices (as adjusted to account for abnormally high inventory levels related
to periodic rebuild activity); will maintain, in full force and effect, policies
of insurance with respect to its Cable Business in such amounts and with respect
to such risks as are currently in effect for its Systems; and will maintain its
books, records and accounts with respect to its Assets and the operation of its
Systems in the usual, regular and ordinary manner on a basis consistent with its
past practices;
7.2.3. will not: (a) enter into, amend, modify, terminate, renew,
suspend or abrogate any Contract with an Affiliate, which Contract would be
binding upon any System post-Closing; (b) enter into, amend, modify, terminate,
renew, suspend or abrogate any Contract with ServiceCo LLC or At Home
Corporation or Liberty Media Corporation or any of their Affiliates, to the
extent it relates to any System, which Contract would be binding upon any System
post-Closing; (c) other than in the ordinary course of business, amend, modify,
terminate, renew, suspend or abrogate in any material respect any Material
Comcast Systems Contract or Material AT&T Systems Contract (other than a Systems
Franchise or Systems License); or other than in the ordinary course of business,
amend, modify, terminate, renew, suspend or abrogate any Comcast Systems
Franchise or AT&T Systems Franchise or Comcast Systems License or AT&T Systems
License; or (d) other than in the ordinary course of business consistent with
past practices engage in any material transaction with respect to its Cable
Business;
7.2.4. will not take any actions that would cause the
transactions contemplated hereby to fail to qualify as a like-kind exchange
under Section 1031 of the Code;
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7.2.5. will promptly deliver to the other Parent, as reasonably
available, (i) true and complete copies of all monthly statements of income and
such other financial statements, subscriber counts, management reports and other
operational data regularly prepared with respect to its Systems or the operation
of its Cable Business for the period from January 1, 2000, through the Closing
and (ii) such financial information as may be reasonably requested by such other
Party in connection with the qualification, reporting and record-keeping
requirements under Section 1031 of the Code (and the revenue regulations
thereunder) with respect to the exchange pursuant to Section 1031 of the Code;
7.2.6. will give or cause to be given to the other Parent, as
soon as reasonably possible but in any event prior to the date of submission to
the appropriate Governmental Authority, to the extent practicable, (i) copies of
all FCC Forms 1200, 1205, 1210, 1215, 1220, 1225, 1235 and 1240 or any other FCC
forms required to be filed with any Governmental Authority under the 1992 Cable
Act with respect to rates and prepared with respect to any of its Systems and
(ii) copies of all copyright returns to be filed in connection with any of its
Systems; and before such Forms or returns are filed, the Parties will consult in
good faith concerning the contents thereof;
7.2.7. will duly and timely file a valid notice of renewal under
Section 626 of the Cable Act with the appropriate Governmental Authority with
respect to any System Franchise included among its Assets that will expire
within 36 months after any date between the date of the Agreement and the
Closing Date;
7.2.8. will promptly, after obtaining Knowledge thereof, notify
the other Parent of any fact, circumstance, event or action by it or otherwise
the existence, occurrence or taking of which would reasonably be expected to
result in the condition set forth in Section 8.2.1 or the condition set forth in
Section 8.3.1, as applicable, not being satisfied on the Closing, and will use
its reasonable best efforts to remedy the same to the extent such remedy is
within the reasonable control of the Transferor, and to satisfy such condition
to the other Parties' obligation to consummate the transactions contemplated by
this Agreement;
7.2.9. will use its reasonable best efforts to challenge and
contest any Litigation brought against or otherwise involving such Transferor
that could reasonably be expected to result in the imposition of Legal
Requirements that could reasonably be expected to cause the conditions to the
Closing not to be satisfied;
7.2.10. will not sell, assign, transfer or otherwise dispose of
any of its Assets, except in the ordinary course of business and except for (i)
the disposition of obsolete or worn-out equipment, or (ii) dispositions with
respect to which such Assets are replaced with current or long term assets, as
the case may be, of at least equal fair market value;
7.2.11. will not enter into any Contract or commitment of any
kind which would be binding on the Transferee of its Systems after the Closing
and which (i) would involve an aggregate expenditure or receipt in excess of
$1,000,000 in any case; (ii) would be outside the ordinary course of business
and which would have a term in excess of one year unless terminable without
payment or penalty upon 30 days' (or less) notice; (iii) would limit the freedom
of the Transferee or any of its Affiliates to compete in any line of business or
with any Person or in any
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area; (iv) would be outside the ordinary course of business and which is a
must-carry election or retransmission consent; (v) relates to the use of the
Transferor's Assets to provide, or the provision by the Transferor's Systems of,
telephone or high-speed data services; or (vi) is not on arm's-length terms;
7.2.12. except as disclosed in writing to the other Parent prior
to the date hereof, will not make any Cost of Service Election or hardship
election under the rules and regulations adopted under the 1992 Cable Act;
7.2.13. will not mortgage, pledge or subject to any material Lien
that would survive the Closing (other than Permitted Liens) any of its Assets or
Systems;
7.2.14. will not enter into any local or System-specific
programming agreement relating to its Systems or Assets;
7.2.15. will not add or delete any channels from any System, or
change the channel lineup in any System or commit to do so in the future, except
as set forth in Schedule 7.2.17(a), with respect to Comcast Systems, and
Schedule 7.2.17(b), with respect to AT&T Systems;
7.2.16. will not agree to do anything that would violate the
foregoing; and
7.2.17. will cause its appropriate Affiliates to be bound by and
comply with the provisions of this Section 7.2 to the extent such Affiliates
own, operate or manage any of the AT&T Assets, AT&T Systems, Comcast Assets or
Comcast Systems, as the case may be.
7.3. Employees.
7.3.1. No later than September 15, 2000, which date may be
amended by mutual agreement of the parties, the Parent of each Transferor (in
such capacity, the "Transferor Parent") shall provide to the other Parent (in
such capacity, the "Transferee Parent") a list of all of the employees of the
Transferor Parent and its Affiliates who are AT&T Systems Employees or Comcast
Systems Employees (collectively for each Transferor Parent, its "System
Employees") by work location as of a recent date, showing the original hire
date, the then-current positions, the rates of compensation, rate type (hourly
or salary), schedule hours per week, whether the System Employee is subject to
an employment agreement or a collective bargaining agreement or is represented
by a labor organization, and if the employee is a term employee or Senior
Manager. The list shall also indicate which of such System Employees such
Transferor Parent or such Transferor Parent's Affiliates desires to retain as
employees (the "Retained Employees"). The receiving party shall maintain such
list in strict confidence. Such list shall be updated as necessary to reflect
new hires or other personnel changes.
7.3.2. Each Transferor Parent agrees, and shall cause such
Transferor Parent's appropriate Affiliates, to cooperate in all reasonable
respects with the Transferee Parent to allow the Transferee Parent or such
Transferee Parent's Affiliates to evaluate the Transferor Parent's System
Employees including the right to review personnel files and the right to
interview such System Employees during normal working hours so long as such
interviews are conducted after notice to the Transferor Parent and do not
unreasonably interfere with the Transferor Parent's
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operations and such investigations and interviews do not violate any law or
contract. Each Parent will cooperate on the timing of such evaluation and
interviews but agree that such evaluation will begin no earlier than the date
the relevant Transferor Parent delivers the list required of such Transferor
Parent pursuant to Section 7.3.1. Each Transferor Parent shall use its
reasonable commercial efforts to resolve (or to cause its Affiliates to resolve)
at its own expense each Documented Employee Performance Case.
7.3.3. Each Transferee Parent or such Transferee Parent's
Affiliates shall make written offers of employment commencing immediately after
the Closing (or immediately after termination of employment as provided below
for Employees on Approved Leave of Absence) to all Other Employees of the
Transferor Parent, excluding Retained Employees, employees on long-term
disability as of the Closing Date, and excluding any employee whose employment
was previously terminated for cause by the Transferor Parent or an Affiliate of
such Transferor Parent. Each Transferee Parent or such Transferee Parent's
Affiliates may, but is not required to, make employment offers to the Senior
Managers of the Transferor Parent. Each Parent agrees that, no later than
November 10, 2000 (which date may be amended by mutual consent of the Parties),
each Transferee Parent shall give the other a list of Employees (still employed
by the Transferor Parent at the time) (each a "List") to whom each Transferee
Parent or such Transferee Parent's Affiliates intends to offer employment prior
to making such offer. Each Transferee Parent or such Transferee Parent's
Affiliates may, if it wishes, and subject to applicable law, condition any offer
of employment upon the System Employee being in active service on the Closing
Date, System Employee's passing a pre-employment drug screening test, the
completion of a satisfactory background check, and resolution of any Documented
Employee Performance Case identified pursuant to Section 7.3.2, provided,
however, that the determination of whether a Documented Employee Performance
Case has been resolved shall be made in the sole discretion of the Transferee
Parent or such Transferee Parent's Affiliates offering employment. The
Transferee Parent requesting such examination shall bear the expense of such
examination but the Transferor Parent shall, upon reasonable notice, cooperate
in the scheduling of such examinations so long as the examinations do not
unreasonably interfere with the Transferor Parent's operations. Each Transferee
Parent or such Transferee Parent's Affiliates shall offer each such Employee on
the applicable List employment with substantially similar responsibilities, at a
geographic location within a 35-mile radius of such Employee's primary place of
employment (with the exception of the Findlay, Ohio employees of the AT&T
Parties, whose offer may be outside such 35-mile radius) and base compensation
at least equal to the employee's base compensation as of the Closing Date,
provided, however, that each Transferee Parent or such Transferee Parent's
Affiliates will offer each such Employee employee benefits and total cash
compensation that, in each case, are no less favorable than the employee
benefits and total cash compensation, respectively, that such Transferee Parent
or such Transferee Parent's Affiliates provides for its similarly situated
employees with comparable experience and length of service. As of the Closing
Date, neither Transferee Parent nor its Affiliates shall have any obligation to
the Transferor Parent, its Affiliates or to the Transferor Parent's System
Employees, with regard to any Senior Manager and Other Employees the Transferee
Parent has determined, based on such evaluations prior to Closing, not to hire.
Notwithstanding any of the foregoing, from the date hereof until the Closing,
each Party agrees not to solicit for employment that would commence prior to the
Closing Date (other than through advertisements directed at the relevant general
population), without the written consent of the other, any Senior Manager. Each
Parent and each of its Affiliates agrees, for a period of one year from the
Closing Date, not
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to solicit the performance of services by any Retained Employee or Hired
Employee; provided, however, that the foregoing provision will not prevent any
Person from hiring any Retained Employee or Hired Employee as a result of
placing general advertisements in trade journals, newspapers or similar
publications which are not directed at such Retained Employees or Hired
Employees. In the case of any System Employee (other than a Retained Employee)
who is on Approved Leave of Absence as of the Closing Date (a "System Employee
on Leave Status") whom the Transferee Parent or its Affiliates desires to hire,
such Transferee Parent or its Affiliate shall employ such System Employee on
Leave Status conditioned upon the Employee's return to active service within
sixteen (16) weeks after the Closing Date or, if earlier, on the first Business
Day following expiration of the Employee's Approved Leave of Absence. Until such
date of return to active service, a System Employee on Leave Status shall not be
considered a Hired Employee under this Agreement. For purposes of this
Agreement, employees on "Approved Leave of Absence" means employees absent from
work on the Closing Date and unable to perform their regular job duties by
reason of illness or injury under approved plans or policies of the employer
(other than employee's absence for less than ten (10) days due to short term
illness or injury not requiring written approval by the employer) or otherwise
absent from work under approved or unpaid leave policies of employer.
7.3.4. As of the Closing Date, each Transferor shall be
responsible for, and shall cause to be discharged and satisfied in full, all
amounts due and owing to each of its System Employees with respect to and in
accordance with the terms of all compensation or benefit plans or arrangements,
including, without limitation, any salaries, commissions, deferred compensation,
severance, insurance, pension, profit sharing, disability payment, medical,
holiday, sick pay, accrued and unused vacation in excess of the amount the
applicable Transferee or its Affiliates assume pursuant to this Section 7.3, and
payments under any incentive compensation or bonus agreement, in each case,
which has accrued prior to the Closing Date (and, for System Employees on Leave
Status, until their termination by the Transferor, or its appropriate Affiliate,
or their employment by the Transferee, or its appropriate Affiliate, as set
forth in Section 7.3.3). In addition, each Transferor shall retain all
liabilities and obligations associated with its employees, including Systems
Employees, who are not employed by the applicable Transferee or its Affiliate.
7.3.5. After the Closing Date, each Transferor shall cause each
of its former employees who becomes a Hired Employee of the Transferee to be
permitted to elect to receive a distribution of the full account balances of
such former employee under any Code Section 401(k) plan maintained by such
Transferor or its Affiliate, and the Transferee shall in each case permit to the
extent allowed by Code Section 402(c) the Hired Employee to roll over any
amounts so distributed in cash into a Code Section 401(k) plan maintained by the
Transferee or its Affiliate.
7.3.6. Except as expressly stated to the contrary herein, all
claims and obligations under, pursuant to or in connection with any welfare,
medical, insurance, disability or other employee benefit plans of a Parent or
any Affiliate or arising under any Legal Requirement affecting employees of such
Parent or any Affiliate to the extent arising before the Closing Date will
remain the responsibility of such Parent, or the appropriate Affiliate, whether
or not such employees are hired by the other Parent or any of its Affiliates as
of or after the Closing. Neither Parent will have or assume any obligation or
liability under or in connection with any such plan of the other Parent or any
Affiliate of the other Parent. For purposes of this Agreement, the
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following claims and liabilities shall be deemed to be incurred as follows: (i)
medical, dental and/or prescription drug benefits when the treatment is
provided, except with respect to such benefits provided in connection with a
continuous period of hospitalization, which shall be deemed to be arising at the
time of admission to the hospital; (ii) life, accidental death and dismemberment
and business travel accident insurance benefits and workers' compensation
benefits, upon the death, disability or accident giving rise to such benefits;
and (iii) salary continuation or other short-term disability benefits, or
long-term disability, upon commencement of the disability giving rise to such
benefit. Each Transferor shall promptly satisfy any legal obligation with
respect to continuation of group health coverage required pursuant to Section
4980B of the Code or Section 601, et seq., of ERISA. In regard to any System
Employee on Leave Status, all liability for benefit coverage of such Employee,
and liability for payment of benefits, shall remain that of the Transferor, or
its appropriate Affiliate, until such Employee becomes an employee of the
Transferee or its Affiliate after the Closing pursuant to Section 7.3.3.
7.3.7. Each Parent, or such Parent's appropriate Affiliate, will
remain solely responsible for, and will indemnify and hold harmless the other
Parent and its Affiliates from and against all Losses arising from or with
respect to, all salaries, commissions, deferred compensation, severance,
insurance, pension, profit sharing, disability payment, medical, sick pay,
holiday, vacation (except for accrued vacation time and sick time included in
the calculation of such Party's Working Capital Adjustment Amount), medical,
holiday, continuation coverage and other compensation or benefits to which its
employees may be entitled, whether or not such employees may be hired by the
other Parent or any Affiliate of the other Parent, to the extent arising from
their employment by such Parent or any Affiliate of such Parent on or prior to
the Closing Date, the termination of their employment on or prior to the Closing
Date, the consummation of the transactions contemplated hereby or pursuant to
any applicable Legal Requirement or otherwise to the extent arising from their
employment prior to the Closing Date (and, for System Employees on Leave Status,
until their termination by the Transferor, or its appropriate Affiliate, or
their employment by the Transferee, or its appropriate Affiliate, as set forth
in Section 7.3.1). Any liability under WARN with regard to any employee
terminated on or prior to the Closing Date, or not hired by the other Parent or
its Affiliates on or after the Closing Date, shall, as a matter of contract
between the parties, be the responsibility of the Parent or such Parent's
Affiliates by which the employee was employed prior to the Closing Date. Each
Parent and such Parent's Affiliates shall cooperate with the other Parent and
such Parent's Affiliates, if requested, in the giving of WARN notices on behalf
of the other Parent.
7.3.8. (a) Notwithstanding anything to the contrary herein, each
Hiring Party shall:
(i) upon receipt of a schedule showing the vacation
and sick balances and value of such balances of each Hired
Employee, which schedule shall be delivered by each Transferor to
the applicable Transferee within 10 days after the Closing,
credit each Hired Employee the amount of vacation and sick time
permitted to be accrued by similarly situated employees of the
Hiring Party in accordance with the Hiring Party's standard
practices (to a maximum of four weeks for vacation and seven (7)
days for sick time) accrued and unused by him or her as a System
Employee of the Transferor through and including the Closing
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Date to the extent the Transferor's Working Capital Adjustment
Amount is decreased pursuant to Section 3.2; provided, however,
that, if any Hired Employee has accrued vacation and sick time in
excess of the amount so credited by the Hiring Party, then the
Transferor shall, and shall cause its appropriate Affiliate to,
pay to such employee any amount due to such employee in respect
of such excess and the Hiring Party shall not assume any
liability or obligation in respect of such excess;
(ii) give each Hired Employee credit for such Hired
Employee's past service with the Transferor Parent and such
Transferor Parent's Affiliates as of the Closing Date (including
past service with any prior owner or operator of the other
Parent's Systems or Cable Business) (A) for purposes of
eligibility to participate in the employee welfare benefit plans
in which such Hiring Party participates to the same extent as
similarly situated employees of such Hiring Party and their
dependents are permitted to participate; and (B) in the case of
the Comcast Parties, for purposes of eligibility to participate,
vesting and benefit accrual under any post-retirement medical or
life insurance benefit plan which such Comcast Party maintains or
in which such Comcast Party participates;
(iii) give each Hired Employee credit for such Hired
Employee's past service with the Transferor Parent and such
Transferor Parent's Affiliates as of the Closing Date (including
past service with any prior owner or operator of such other
Parent's Systems or Cable Business) for purposes of eligibility
for participation and vesting under the 401(k) plan, or any other
retirement plan and stock plan in which such Hiring Party
participates to the same extent as other similarly situated
employees of such Hiring Party;
(iv) give each Hired Employee credit for such Hired
Employee's past service with the Transferor Parent as of the
Closing Date (including past service with any prior owner or
operator of such other Parent's Systems or Cable Business) for
any waiting periods under the employee benefit plans, including
any group health and disability plans, in which such Hiring Party
participates, to the same extent as similarly situated employees
of such Hiring Party, except to the extent such employees were
subject to such limitations under the employee benefit plans of
such Transferor Parent or any Affiliate of such Transferor
Parent; and not subject any Hired Employees to any limitations on
benefits for any preexisting conditions provided that the
treatment is covered under such Hiring Party's or Affiliate of
such Hiring Party's group health plans; and
(v) credit each Hired Employee under any group health
plan for any deductible amount previously met by such Hired
Employee as of the Closing Date under any of the group health
plans of the Transferor Parent or any of such Transferor Parent's
Affiliates for the plan year in which the transfer of employment
occurs.
(b) Notwithstanding anything set forth in Section 7.3.8(a), the
Transferee Parent and its Affiliates shall have no obligation to System
Employees of the Transferor Parent
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or its Affiliate who are Employees on Leave Status until they become employees
of the Transferee Parent and its Affiliate pursuant to Section 7.3.3.
7.3.9. Except with respect to term employees listed on Schedule
7.3.9 who become Hired Employees, if a Hiring Party discharges any Hired
Employee without cause within 180 days after the Closing, then such Hiring Party
shall pay severance benefits to such Hired Employee in accordance with the
Transferor's severance benefit plan (the "Severance Benefits") at the Closing
Date and counting the period of employment with the Transferor Parent and the
Hiring Party for purposes of calculating benefits under such plan on the Closing
Date; provided, however, that if a Hiring Party discharges any Hired Employee
who was an "Other Employee" without cause within 60 days after Closing, then the
Transferor Parent shall reimburse the Hiring Party for the Severance Benefits.
Following such 180-day period, such Hired Employee shall be covered under the
Hiring Party's severance benefit plan counting the period of employment with the
Transferor Parent and its affiliates and the Hiring Party for purposes of
calculating benefits under such plan on the Closing Date. In the case of each
Transferor Parent, Schedule 7.3.9 sets forth the terms of such severance benefit
plan in effect on the date hereof, and such Transferor Parent will promptly
notify the Hiring Party of any changes in the terms of such plan occurring
between the date hereof and the Closing Date. Each Transferor Parent agrees that
between the date of this Agreement and the Closing Date, such Party will not
increase the benefits provided under such severance plan, except as a result of,
and consistent with, increases made by AT&T Broadband, LLC, MediaOne Group, Inc.
or Comcast Cable Communications, Inc., as applicable on a company-wide basis in
the benefits provided under its severance plans. For purposes of this Section
7.3.9, "cause" shall have the meaning set forth in the Hiring Party's employment
policies, procedures or agreements applicable to such Hiring Party's employees
who are situated similarly to the discharged Hired Employee.
7.3.10. If a Parent or its Affiliate has, or acquires, a duty to
bargain with any labor organization in respect of the System Employees prior to
the Closing Date, then such Parent will (i) give prompt written notice of such
fact or development to the other Parent, including notice of the date and place
of any negotiating sessions as they are planned or contemplated and permit the
other Parent to have a representative present at all negotiating sessions with
such labor organization and at all meetings preparatory thereto (including
making the other Parent's representative a representative of its delegation if
required by the labor organization), and (ii) not, without the other Parent's
written consent, enter into any Contract with such labor organization that binds
or purports to bind the other Parent or its Affiliates, including any successor
clause or other clause that would have this purpose or effect. Except with
respect to AT&T Corp.'s NCE Agreement, each Parent or its affiliated Transferors
acknowledge and agree that the other Parent and its affiliated Transferees have
not agreed to be bound, and will not be bound, without an explicit assumption of
such liability or responsibility by the other Parent, by any provision of any
collective bargaining agreement or similar Contract with any labor organization
to which such Parent or any of such affiliated Transferors is or may become
bound.
7.3.11. Notwithstanding anything set forth in this Section 7,
with respect to any Hired Employee who was formerly an employee of MediaOne
Group ("M1 Hired Employee"), the Comcast Entity who hires such M1 Hired Employee
shall additionally: (a) not, prior to January 1, 2002, increase the employee
contribution level, under employee welfare benefit plans,
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above the level required while such M1 Hired Employee was a MediaOne employee
and (b) if such Comcast Entity discharges any M1 Hired Employee without cause
before June 15, 2002, then such Comcast Entity shall pay severance benefits to
such M1 Hired Employee in accordance with the Severance Benefit in effect for
such M1 Hired Employee set forth in Schedule 7.3.11 and counting the period of
employment with the other Parent and its affiliates and the hiring Comcast
Entity for purposes of calculating benefits under such plan on the Closing Date;
provided, however, that if a Comcast Entity discharges any M1 Hired Employee who
was an "Other Employee" without cause within 60 days of Closing, then AT&T Corp.
shall reimburse Comcast Corporation, for the Severance Benefits paid to such M1
Hired Employee.
7.3.12. Nothing in this Section 7.3 or elsewhere in this
Agreement shall be deemed to make any employee of either Parent or its
Affiliates a third party beneficiary of this Agreement.
7.3.13. The parties agree to cooperate with each other and to
exchange all information required to implement the provisions of this Section
7.3.
7.4. Leased Vehicles; Other Capital Leases. Each Transferor will pay
the remaining balances on any leases for vehicles or capital leases that would
be included in its Assets but for the effect of this Section 7.4, and will
deliver title to such vehicles and other Tangible Personal Property included
among its Assets, free and clear of all Liens (other than Permitted Liens), to
the receiving Transferee at the Closing.
7.5. Required Consents; Franchise Renewal.
7.5.1. Each Transferor will use its commercially reasonable
efforts to (i) obtain in writing, as promptly as possible and at its expense,
all of the Required Consents, other than consents in connection with multiple
dwelling unit agreements, required to be obtained by such Transferor in
connection with the transactions contemplated by this Agreement, and deliver to
the other Parent copies of such Required Consents and such other consents,
authorizations or approvals promptly after they are obtained by such Transferor,
and (ii) give any required written notice in connection with the transactions;
provided that each Transferor will afford the other Parent the opportunity to
review, and comment on the form of letter or application proposed to request the
Required Consent or form of written notice prior to delivery to the Person whose
consent is sought or to whom such notification is required. All documents
delivered or filed with any Governmental Authority or any Person by or on behalf
of such Transferor pursuant to this Section 7.5.1, when so delivered or filed,
will be correct, current and complete in all material respects. Each Party will
cooperate with the other Parties to obtain all Required Consents and no Party
shall intentionally take any action or steps that would prejudice or jeopardize
the obtaining of any Required Consent.
7.5.2. No Transferor will accept or agree or accede to any
modifications or amendments to, or the imposition of any condition to the
transfer of, any of the System Franchises, System Licenses or System Contracts
of such Transferor's Cable Business that are not reasonably acceptable to the
other Parent. Notwithstanding the foregoing, each Party will cooperate with the
other Parties and use commercially reasonable efforts to complete, execute and
deliver, or cause to be completed, executed and delivered, to the appropriate
Governmental
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Authority, a FCC Form 394 to the extent not previously filed with respect to
each System Franchise included among the Assets within thirty (30) days after
the date of this Agreement. Without the prior consent of the other Parent, no
Transferor shall agree with any Governmental Authority to extend or to toll the
time limits applicable to such Governmental Authority's consideration of any FCC
Form 394 filed with such Governmental Authority.
7.5.3. Notwithstanding the provisions of Sections 7.5.1 and
7.5.2, no Transferor will have any further obligation to obtain Required
Consents: (a) with respect to license agreements relating to pole attachments
where the licensing authority will not consent to an assignment of such license
agreement but requires that the Transferee enter into a new agreement with such
licensing authority on terms that are not materially less favorable in the
aggregate to the Transferee, in which case the Transferee shall use its
commercially reasonable efforts to enter into such agreement prior to the
Closing or as soon as practicable thereafter, and the Transferor will cooperate
with and assist the Transferee in obtaining such agreements; (b) for any
business radio license or any private operational fixed service ("POFS")
microwave license which would reasonably be expected to be obtained within 120
days after the Closing and so long as a conditional temporary authorization (for
a business radio license) or a special temporary authorization (for a POFS
license) is obtained by the Transferee under FCC rules with respect thereto; (c)
with respect to Contracts evidencing Leased Property, if, with the consent of
the other Parent, the Transferor obtains and makes operational prior to the
Closing substitute Leased Property that is, and that is leased on terms that
are, reasonably satisfactory to the other Parent; (d) with respect to Contracts
evidencing leased Tangible Personal Property that is material to its Cable
Business, if, with the consent of the other Parent, such Transferor obtains and
makes operational prior to the Closing substitute Tangible Personal Property
that is reasonably satisfactory to the other Parent.
7.5.4. (a) Upon the written request of the Transferee, if and to
the extent that any Required Consents (except Required Consents for the transfer
of Systems Franchises, which shall be governed by Section 7.5.5) have not been
obtained on or prior to the Closing (whether or not any Party shall have waived
satisfaction of the condition to the Closing set forth in Section 8.2.5 or
Section 8.3.5), subsequent to the Closing, each Transferor will continue to use
commercially reasonable efforts to obtain in writing, as promptly as possible,
such Required Consents required to be obtained by such Transferor and will
deliver copies of the same, reasonably satisfactory in form and substance, to
the other Parent. The obligations set forth in this Section 7.5.4 will survive
the Closing.
(b) If any Required Consent (except Required Consents for the
transfer of Systems Franchises, which shall be governed by Section 7.5.5) shall
not have been obtained prior to Closing, the affected Transferor and Transferee
will cooperate in a mutually agreeable arrangement under which, to the extent
practicable and permitted by such agreement and applicable law, such Transferee
will obtain the benefits and be responsible for the obligations in accordance
with this Agreement in respect of such Asset or any claim or right or any
benefit arising thereunder the assignment of which without the consent of the
Third Party thereto would constitute a breach or other contravention of such
Asset or in any way adversely affect the rights of such Transferee thereunder,
including sub-contracting, sub-licensing, or sub-leasing to such Transferee, or
under which such Transferor will enforce for the benefit of such Transferee,
with such Transferee assuming such Transferor's obligations, any and all rights
of such Transferor
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against the Third Party in question. Such Transferor will promptly pay to such
Transferee, when received, all monies received by such Transferor in respect of
any such Asset or any claim or right or any benefit arising thereunder and such
Transferee shall promptly pay or perform any obligations in respect of any such
Asset.
7.5.5. If the conditions set forth in Sections 8.2.5(a) and
8.3.5(a) are satisfied and there remain Service Areas of the AT&T Systems or the
Comcast Systems that are not, as of the Closing Time, Transferable Service
Areas, then the following shall occur:
(a) With respect to each AT&T Systems Franchise for which a
Required Consent has not been obtained as of the Closing Time (including any
Assets that are primarily held for, used in, or necessary for AT&T's Cable
Business in the relevant franchise area and related liabilities, an "AT&T
Retained Franchise"), the Parties will negotiate in good faith to reach
agreement on a Comcast Systems Franchise (including any Comcast Assets that are
primarily held for, used in, or necessary for Comcast's Cable Business in the
franchise area and related liabilities, a "Comcast Matching Franchise") that is,
to the greatest extent possible, like kind to such AT&T Retained Franchise for
purposes of Section 1031 of the Code and the applicable exchange, and such
Comcast Matching Franchise shall be retained by the applicable Comcast Party,
while the corresponding AT&T Retained Franchise is retained by the applicable
AT&T Party. A Comcast Matching Franchise may also be a Comcast Retained
Franchise. For purposes of this Section 7.5.5, a "Retained Franchise" means
either an AT&T Retained Franchise or a Comcast Retained Franchise or both, as
the context requires, and a "Matching Franchise" means either an AT&T Matching
Franchise or a Comcast Matching Franchise or both, as the context requires.
(b) With respect to each Comcast Systems Franchise for which a
Required Consent has not been obtained as of the Closing Time (including any
Assets that are primarily held for, used in, or necessary for Comcast's Cable
Business in the relevant franchise area and related liabilities, a "Comcast
Retained Franchise"), the Parties will negotiate in good faith to reach
agreement on an AT&T Systems Franchise (including any AT&T Assets that are
primarily held for, used in or necessary for AT&T's Cable Business in the
franchise area and related liabilities, an "AT&T Matching Franchise") that is,
to the greatest extent possible, like kind to such Comcast Retained Franchise
for purposes of Section 1031 of the Code and the applicable exchange, and such
AT&T Matching Franchise shall be retained by the applicable AT&T Party, while
the corresponding Comcast Retained Franchise is retained by the applicable
Comcast Party. An AT&T Matching Franchise may also be an AT&T Retained
Franchise.
(c) The Parties shall cooperate, negotiate in good faith and
enter into mutually acceptable arrangements on commercially reasonable terms to
address all issues and concerns regarding each Retained Franchise and Matching
Franchise and related matters, including (i) the terms on which the appropriate
Party, from and after the Closing Date, would provide to the Party that retains
such Retained Franchise and Matching Franchise such signal delivery, management
and other support services as may be necessary or appropriate due to the
existence of such Retained Franchise and Matching Franchise, (ii) the terms
regarding the transfer of such Retained Franchise and Matching Franchise to the
appropriate Party after the receipt of all Required Consents applicable to such
Retained Franchise and Matching Franchise, (iii) determination and payment of
the Additional Consideration and Working Capital
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Adjustment Amount with respect to such Retained Franchise and Matching Franchise
at the time of such transfer (rather than at Closing) consistent with provisions
of this Agreement, (iv) with respect to the period prior to such transfer or in
the event transfer is not made because Required Consents are not obtained, the
terms regarding other arrangements to achieve substantially the same division of
economic benefits and burdens as between the parties as would have resulted if
the transfer had taken place at Closing, (v) the possible revision of Schedule
2.3 to reduce the taxes payable as a result of the transactions hereunder and
(vi) apportionment of the Subscriber Cap among the franchise areas in any System
that contains a Retained Franchise or a Matching Franchise based on the number
of Equivalent Basic Subscribers in each such franchise area as set forth on
Schedule 5.15.1(b) or Schedule 6.15.1(b), as the case may be, provided that any
such matter is mutually acceptable to both Parents.
7.5.6. No Party shall be required to make any payment (other than
customary filing and similar fees) to a Person from whom consent is sought in
order to obtain such consent and no Party shall be obligated to reimburse any
other Party for any payment so made.
7.6. Title Commitments and Surveys. Each Transferee will have the
option to obtain, at its own expense, (i) commitments of title insurance ("Title
Commitments") issued by a nationally recognized title insurance company selected
by such Transferee (the "Title Company") and containing policy limits and other
terms reasonably acceptable to such Transferee, and photocopies of all recorded
items described as exceptions therein committing to insure fee or leasehold
title in such Transferee to each parcel of Owned Property or Leased Property to
be transferred to such Transferee hereunder, by American Land Title Association
("ALTA") (1992) owner's or lessee's policies of title insurance, and (ii)
current ALTA as-built surveys of each such parcel as is necessary to obtain the
title insurance to be issued pursuant to the Title Commitments with the standard
printed exceptions relating to survey matters deleted (the "Surveys"), certified
to the Transferee and the Title Company issuing a Title Commitment. If a
Transferee notifies a Transferor within twenty (20) days after the date of this
Agreement or, if later, of its receipt of both the Title Commitments and the
Surveys of any Lien (other than a Permitted Lien) or other matter affecting
title to such Owned Property or Leased Property which prevents or materially
interferes with (or presents a material risk of preventing or interfering with)
the use of any such parcel for the purposes for which it is currently used or
operated (each a "Title Defect"), such Transferor will, at its own expense,
exercise commercially reasonable efforts to remove or, with the consent of the
Transferee, cause the Title Company to commit to insure over, each such Title
Defect prior to the Closing.
7.7. HSR Act Notification. If any event (including the passage of
time) occurs which subjects the transactions contemplated by this Agreement to
any further requirements under the HSR Act, then as promptly as practicable, the
Comcast Parties and the AT&T Parties will each complete and file, or cause to be
completed and filed, at its own cost and expense, any notification and report
required to be filed under the HSR Act with respect to the transactions
contemplated by this Agreement, and each such filing shall request early
termination of the waiting period imposed by the HSR Act. The Parties shall use
their respective commercially reasonable efforts to respond, as promptly as
reasonably practicable, to any inquiries received from the Federal Trade
Commission (the "FTC") and the Antitrust Division of the Department of Justice
(the "Antitrust Division") for additional information or documentation, and to
respond, as promptly as reasonably practicable, to all inquiries and requests
received from any
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other Governmental Authority in connection with antitrust matters. The Parties
shall use their respective commercially reasonable efforts to overcome any
objections which may be raised by the FTC, the Antitrust Division or any other
Governmental Authority having jurisdiction over antitrust matters. Each Party
shall (i) promptly notify the other Party of any written communication to that
Party from the FTC, the Antitrust Division, any State Attorney General or any
other Governmental Authority and, subject to applicable law, permit the other
Party to review in advance any proposed written communication to any of the
foregoing; (ii) not agree to participate in any substantive meeting or
discussion with any Governmental Authority in respect of any filings,
investigation or inquiry concerning this Agreement or the transactions
contemplated hereby unless it consults with the other Party in advance and, to
the extent permitted by such Governmental Authority, gives the other Party the
opportunity to attend and participate thereat; and (iii) furnish the other Party
with copies of all correspondence, filings, and communications (and memoranda
setting forth the substance thereof) between them and their Affiliates and their
respective representatives on the one hand, and any Government Authority or
members or their respective staffs on the other hand, with respect to this
Agreement and the transactions contemplated hereby. Notwithstanding the
foregoing, no Party shall be required to make any significant change in the
operations or activities of the business (or any material assets employed
therein) of such Party or any of its Affiliates or the Cable Business to be
acquired by such Party if a Party determines in good faith that such change
would be materially adverse to the operations or activities of the business (or
any material assets employed therein) of such Party or any of its Affiliates
having significant assets, net worth or revenue.
7.8. Sales and Transfer Taxes. Comcast and AT&T shall each,
respectively, pay one-half of (i) all Transfer Taxes arising from or payable by
reason of the transfer of any of the AT&T Assets or any of the Comcast Assets
and (ii) all Transfer Taxes or assessments, and any transfer fees and similar
assessments for or under Systems Franchises, Systems Licenses and Systems
Contracts, arising from or payable by reason of the conveyance of the AT&T
Assets or the Comcast Assets. The Parties agree to use all reasonable efforts,
subject to Section 2.4, to structure the Swap in such a manner as to minimize
the Transfer Taxes payable in connection therewith. The Parties agree to use all
reasonable efforts to reduce the amount of material Transfer Taxes payable by
each Party. Notwithstanding the foregoing, all Transfer Taxes or assessments,
and transfer fees and similar assessments arising from or payable by reason of
any internal restructuring implemented by any Party prior to the Closing will be
borne by such Party.
7.9. Programming. Each Transferor will execute and deliver letters
substantially in the form attached as Exhibit 7.9 as may be reasonably requested
by Transferee to Persons that are parties to such Transferor's programming
agreements.
7.10. Retention of Books and Records. Following the Closing, each
Transferor shall give access to the receiving Transferee, its Parent, counsel,
accountants and other authorized representatives during normal business hours to
such Transferor's materials, books, records and documents which relate to the
operations of such Transferor's Cable Business prior to the Closing Time as may
be reasonably necessary in connection with any legitimate purpose (including the
preparation of tax reports and returns and the preparation of financial
statements). Such access will be subject to the generally applicable document
retention policies of such Transferor (provided that each Transferor will use
commercially reasonable efforts not to destroy any such records without first
notifying the Transferee and giving the Transferee the opportunity
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to make copies), shall be subject to reasonable advance written notice, will be
conducted in a manner that is not disruptive of such Transferor's business and
will be subject to any other reasonable limitations imposed by such Transferor.
The Transferee shall have the right to make copies of such materials at its own
expense.
7.11. Use of Name and Logo. For a period of 180 days after the Closing,
each Transferee will be granted a non-exclusive, non-transferable license to use
the trademarks, trade names, service marks, service names, logos and similar
proprietary rights of the applicable Transferor to the extent incorporated in or
on the Assets transferred to it at the Closing on a royalty-free basis, provided
that each Transferee will exercise commercially reasonable efforts to remove all
such names, marks, logos and similar proprietary rights of such Transferor
(except to the extent otherwise permitted by such Transferor) from such Assets
as soon as reasonably practicable, and in any event within 180 days, following
the Closing. Notwithstanding the foregoing, nothing in this Section 7.11 will
require any Transferee to remove or discontinue using any such name or mark that
is affixed to converters or other items already installed in or to be used in
customer homes or properties and transferred to such Transferee as of the
Closing, or as are already installed and used in a similar fashion as of the
Closing, making such removal or discontinuation impracticable.
7.12. Transitional Billing Services. Each Transferor will provide to
the Transferee of its Systems, upon written request delivered a reasonable
amount of time in advance, access to and the right to use its billing system
computers, software and related fixed assets in connection with the Systems
transferred for a period of up to 180 days following the Closing to allow for
conversion of existing billing arrangements, including billing and related
arrangements (such as refunds) regarding internet access and telephony services
being provided to customers of a System on the Closing Date ("Transitional
Billing Services"). Each Transferee will notify such Transferor at least thirty
(30) days prior to the Closing as to whether it desires Transitional Billing
Services from such Transferor. All Transitional Billing Services, if any, that
are requested by a Transferee will be provided on terms and conditions
reasonably satisfactory to the Transferor and the Transferee; provided, however,
that the amount to be paid by the Transferee receiving Transitional Billing
Services will not exceed the cost to such Transferor of providing such
Transitional Billing Services. Each Transferor will notify the other of the cost
to such Transferor of providing such Transitional Billing Services within 10
Business Days after receiving the Transferee's notice requesting the provision
of such Transitional Billing Services. The Parties agree that the parties'
respective rights to receive Transitional Billing Services pursuant to this
Section 7.12 have nominal value.
7.13. Confidentiality and Publicity.
7.13.1. Prior to the Closing, each Inspecting Party will keep
confidential any non-public information that such Inspecting Party may obtain
from the Disclosing Party in connection with this Agreement, and, following the
Closing, each Inspecting Party will keep confidential any non-public information
that such Inspecting Party may obtain from the Disclosing Party in connection
with this Agreement unrelated to the Cable Business and Systems transferred by
the Disclosing Party pursuant to this Agreement as well as any non-public
information in the possession of such Inspecting Party related to the Cable
Business and Systems transferred by such Inspecting Party to the Disclosing
Party pursuant to this Agreement (any
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such information that an Inspecting Party is required to keep confidential
pursuant to this sentence shall be referred to as "Confidential Information").
Each Inspecting Party will not disclose any Confidential Information to any
other Person (other than its directors, officers and employees and
representatives of its advisers and lenders (collectively, "Representatives"),
in each case, whose knowledge thereof is necessary in order to facilitate the
consummation of the transactions contemplated hereby, in which event such
Inspecting Party shall be responsible for any breach hereof by any such Person)
or use such Confidential Information to the detriment of the Disclosing Party;
provided that (i) such Inspecting Party may use and disclose any such
Confidential Information once it has been publicly disclosed (other than by such
Inspecting Party or its Representatives in breach of the obligations under this
Section 7.13.1) or which, in the case of information provided by the Disclosing
Party, has come into the possession of such Inspecting Party (other than from
the Disclosing Party and other than from another Person in violation of any duty
or obligation of confidentiality known to the Inspecting Party) and (ii) to the
extent that such Inspecting Party may, in the opinion of its counsel, be
compelled by Legal Requirements to disclose any of such Confidential
Information, such Inspecting Party may disclose such Confidential Information if
it uses all reasonable efforts, and affords the Disclosing Party the
opportunity, to obtain an appropriate protective order or other satisfactory
assurance of confidential treatment, for the Confidential Information compelled
to be disclosed. In the event of termination of this Agreement, each Inspecting
Party will cause to be delivered to the Disclosing Party, and retain no copies
of, any documents, work papers and other materials obtained by such Inspecting
Party or on its behalf from the other, whether so obtained before or after the
execution hereof.
7.13.2. No Parent nor its Affiliates will issue any press
releases or make any other public announcement concerning this Agreement and the
transactions contemplated hereby, except as required by applicable Legal
Requirements or by any national securities exchange or quotation system without
the prior written consent and approval of the other Parent, which consent and
approval may not be unreasonably withheld.
7.14. Bulk Transfer. Each Transferor waives compliance by each
Transferee with Legal Requirements relating to bulk transfers applicable to the
transactions contemplated hereby.
7.15. Lien Searches. Each Transferor will, at its expense, obtain and
disclose to the applicable Transferee the results of a Lien search conducted by
a professional search company of records in the offices of the secretaries of
state in each state and county clerks in each county where there exist any of
its Owned Property or Tangible Personal Property included among its Assets, and
in the state and county where such Transferor's principal offices are located,
including copies of all financing statements or similar notices or filings (and
any continuation statements) discovered by such search company.
7.16. Reasonable Best Efforts; Further Assurances. Subject to the terms
and conditions of this Agreement, each Party hereto will use reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary or desirable to satisfy all conditions and to
consummate the transactions contemplated by this Agreement. Each Parent agrees
to cause each of its Affiliates party hereto to perform, pay and satisfy all of
such Affiliate's obligations under this Agreement. At or after the Closing, each
Parent and its Affiliates party hereto at the request of the other Parent, will
promptly execute and deliver, or
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cause to be executed and delivered, to the other Parent all such documents and
instruments, in addition to those otherwise required by this Agreement, in form
and substance reasonably satisfactory to the other Parent as the other Parent
may reasonably request in order to carry out or evidence the terms of this
Agreement or to collect any accounts receivable or other claims included in the
Assets transferred to the other Parent or its Affiliates. Without limiting the
generality of the foregoing, the Comcast Parties and the AT&T Parties will take,
or cause to be taken, all actions consistent with the terms of this Agreement,
including execution and delivery of any documents or instruments, as the other
may reasonably request to effect the qualification of the transactions
contemplated hereby as a like-kind exchange under Section 1031 of the Code.
7.17. Cooperation as to Rates.
7.17.1. Each of the AT&T Entities and the Comcast Entities will
cooperate with and assist the other by providing, upon reasonable request, all
information in their possession (and not previously made available to the
requesting Party) relating directly to the rates set forth on Schedule 5.15 or
6.15, as applicable, or on any of FCC Forms 1200, 1205, 1210, 1220, 1225, 1235
or 1240 or any other FCC Form filed with respect to the Systems that the
requesting Party may reasonably require to justify such rates in response to any
inquiry, order or requirements of any Governmental Authority.
7.17.2. Prior to the Closing, neither Parent nor its Affiliates
shall settle or permit to be settled any rate (including late fees) proceeding
with respect to its Systems without consulting with the other Parent; provided
that neither Parent nor its Affiliates shall agree to any forward-looking rate
adjustment with respect to its former Systems without the prior written consent
of the other Parent.
7.17.3. After the Closing, each Transferor will be responsible
for and follow to conclusion any rate order of any Governmental Authority or
proceeding with respect to rates (including late fees) of any of its Systems
charged by it immediately prior to the Closing; provided, however, that with
respect to its former Systems the Transferor shall not: (i) agree to any refund
of past overcharges; (ii) submit any refund plan to a Governmental Authority;
(iii) appeal or take any other action with regard to such proceeding, in each
case without consulting with the Transferee of such System; or (iv) agree to any
forward-looking rate adjustment without the prior written consent of the
Transferee. Each Party will cooperate with and assist the other Parties by
providing, upon reasonable request, all information in its possession (and not
previously made available to the requesting Party) that the requesting Party may
reasonably require to justify rates, charges, late fees and similar payments in
response to any inquiry, order or requirements of any Governmental Agency.
7.17.4. If, following the Closing any System is required pursuant
to any Legal Requirement, settlement or otherwise to refund to subscribers any
payments, in whole or in part, made by such subscribers prior to the Closing,
including fees for cable television service, equipment charges, late fees and
similar payments, then, at the election of the Transferee of such System: (i)
the Transferor must fulfill such refund obligation through a one-time cash
payment to subscribers, in which case the Transferor shall provide funds for
such payment to the Transferee, the Transferee shall cooperate with the
Transferor or implement and administer such refund payment through the
Transferee's billing system, and the Transferor shall reimburse the
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Transferee for all reasonable expenses incurred by the Transferee in connection
therewith; or (ii) the Transferee may fulfill such refund obligation through a
cash payment, credit or in-kind or other form of consideration, at its
discretion and subject to any required approval by a Governmental Authority, and
the Transferor shall reimburse the Transferee in the amount of any payment or in
the amount of the cost to the Transferee of any credit or in-kind or other form
of consideration and all reasonable expenses incurred by the Transferee in
connection therewith. Without limiting the foregoing, the Transferee will
provide the Transferor with all information in the Transferee's possession that
is reasonably required by the Transferor in connection with such reimbursement.
7.17.5. If a Transferee is permitted following the Closing to
pass through to subscribers of Systems acquired by it at Closing, the amount of
any "franchise fees on franchise fees" paid by a Transferor to the appropriate
local franchising authority with respect to the period prior to the Closing, the
Transferee agrees that it will collect, for the benefit of the Transferor, such
amounts specified no later than the Six-Month Date as paid by the Transferor
and, except as specified below, will promptly remit such amounts to the
Transferor; provided, however, that if a Transferee is provided by counsel with
an opinion that the pass through to subscribers of such fees under the rules and
regulations of the FCC and the Communications Act (either with respect to the
cable industry as a whole or the particular Systems in question) is subject to
administrative or judicial review, then the Transferee shall not remit the fees
to the Transferor but shall hold such fees until the final resolution of such
administrative or judicial proceedings. After such final resolution, the
Transferee will remit to Transferor as appropriate, such fees. The Transferor
agrees to provide the Transferee with such documentation as necessary to
demonstrate its payment of the "franchise fees on franchise fees" and to enable
the Transferee to collect the pass through amounts from subscribers. No amount
collectible for the benefit of a Transferor under this Section 7.17.5 will be
taken into account in determining the Working Capital Adjustment Amount.
7.18. Cooperation as to Late Fee Cases.
7.18.1. (a) Notwithstanding anything to the contrary in this
Agreement, and without limiting any other provisions of this Agreement, from and
after Closing, the Comcast Entities will comply with the obligations of the AT&T
Entities and their Affiliates under paragraph 18 of the Settlement Agreement and
Release entered into by them effective as of March 17, 2000, a final executed
copy of which has been provided to Comcast Corporation (the "Settlement
Agreement"), to the extent such obligations relate to Systems that are "Class
Systems" within the meaning of the Settlement Agreement and to litigation that
is covered by the Settlement Agreement. The AT&T Entities will reimburse the
Comcast Entities for any payments made by them to subscribers in accordance with
the terms of the Settlement Agreement, for any direct out-of-pocket costs to
them of providing any credit or in-kind or other form of consideration to
subscribers in accordance with the terms of the Settlement and for their
reasonable expenses incurred in connection with fulfilling their obligations
under this Section. The Comcast Entities will keep the AT&T Entities and their
Affiliates fully informed regarding the implementation of Section 18 of the
Settlement Agreement insofar as it relates to the Systems, will provide the AT&T
Entities and their Affiliates with such information as they may reasonably
request in connection therewith, and will be subject to the general direction of
the
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AT&T Entities in connection therewith. The Comcast Entities acknowledge that
they have received a copy of the final, executed Settlement Agreement.
(b) In regard to Washington, D.C., if necessary, the Comcast
Entities will similarly assist and cooperate regarding the Final Judgment
entered on October 20, 1998 by the Superior Court of the District of Columbia in
Bassin v. District Cablevision Limited Partnership, which is currently on
appeal.
Further, the Comcast Entities will similarly assist, if necessary, in
regard to any late fee cases that may be pending or settled in connection with
MediaOne Group's properties in Naples/Ft. Myers, Florida and in Michigan.
The AT&T Entities will similarly assist and cooperate, if necessary, in
regard to any late fee cases that may be pending or settled in connection with
the Comcast Entities' properties in Atlanta, Georgia.
The provisions of paragraph (a) above (including as to reimbursement of
payments, costs and expenses) will apply mutatis mutandis to any settlement
agreement entered into with respect to any matter addressed in this paragraph
(b); provided that as to any such matter, neither a Transferor nor any of its
Affiliates will enter into any settlement agreement that would govern the
operation of Systems after the Closing, unless the applicable Transferee has
given its prior written consent to such settlement agreement.
7.19. Distant Broadcast Signals. Unless otherwise restricted or
prohibited by any Governmental Authority, applicable Legal Requirements or
Contract, each Transferor will, if requested by the applicable Transferee,
delete, prior to the Closing, any distant broadcast signals which such
Transferee determines will result in unacceptable liability on the part of the
Transferee for copyright payments with respect to continued carriage of such
signals after the Closing. Each Transferee will use reasonable efforts to
deliver notice of the requested deletions to the applicable Transferor at least
60 days prior to the Closing.
7.20. Offers. Each Parent and its Affiliates party hereto (and its and
their directors, officers, employees, representatives and agents) shall not,
directly or indirectly, (i) offer its Cable Business or Systems for sale, (ii)
solicit, encourage or entertain offers for such Cable Business or Systems, (iii)
initiate negotiations or discussions for the sale of such Cable Business or
Systems or (iv) make information about such Cable Business or Systems available
to any Third Party in connection with the possible sale of such Cable Business
or Systems prior to the Closing Date or the date this Agreement is terminated in
accordance with its terms.
7.21. [Intentionally Omitted].
7.22. Cooperation with Financial Statements. The AT&T Entities agree to
use reasonable efforts to provide Comcast Corporation, and the Comcast Entities
agree to use reasonable efforts to provide AT&T Corp., with information about
the AT&T Systems, or Comcast Systems, as applicable, to the extent needed (but
only to the extent needed) for preparation of financial statements to be
included in Comcast Corporation's, or AT&T Corp.'s, as applicable, filings with
Securities and Exchange Commission under federal securities laws;
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provided that the Party requesting such information shall bear all costs
(including any internal cost) associated with the provision of such information.
7.23. Accounts Payable and Franchise Fees. Each Transferor shall pay in
the ordinary course of business, consistent with past practices, all accounts
payables and franchise fees incurred in or attributable to periods or portions
thereof ending on or prior to the Closing Time with respect to the Systems that
it transfers (which accounts payables and franchise fees will not be transferred
with the Systems), subject to contesting any payments pursuant to a bona fide
dispute.
7.24. Termination of Certain Affiliate Contracts. All contracts listed
on Schedule 7.24 will be terminated prior to Closing.
7.25. Capital Management Committee. AT&T Corp. and Comcast Corporation
agree that a capital management committee will be formed to efficiently and
effectively monitor capital spending in the affected Systems and to address
capital budget issues as they arise.
7.26. INET. To the extent a Comcast Entity pays AT&T or its Affiliates
prior to the Closing for costs (the "INET Costs") incurred for the Atlanta,
Georgia System with respect to the Institutional Network (commonly known as
"INET"), AT&T Corp. or its Affiliates shall reimburse such Comcast Entity at
Closing. After the Closing, Comcast Corporation and the Comcast Entities shall
have no obligation to pay for the INET Costs.
8. CONDITIONS PRECEDENT.
8.1. [Intentionally Omitted].
8.2. Conditions to Comcast's Obligations. The obligations of the
Comcast Entities to consummate the transactions contemplated by this Agreement
will be subject to the satisfaction, at or before the Closing, of the following
conditions, one or more of which may be waived by Comcast Corporation:
8.2.1. Accuracy of Representations and Warranties. The
representations and warranties of AT&T Corp. and the AT&T Parties in this
Agreement (including those made by operation of Section 2.1.2) and in the
Transaction Documents, without giving effect to any materiality or Material
Adverse Effect qualification contained therein and without giving effect to any
scheduled exceptions to such representations and warranties, shall be true,
complete and accurate as of the Closing (or, if given as of a specific date, as
of such date) with the same effect as if made at and as of the Closing (or such
date) except to the extent that any misstatements, omissions and inaccuracies to
such representations and warranties would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on AT&T's Cable
Business.
8.2.2. Performance of Agreements. The AT&T Entities shall have
performed in all material respects all material obligations and agreements and
complied in all material respects with all material covenants in this Agreement
and in any Transaction Document to be performed and complied with by them before
the Closing.
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8.2.3. Deliveries. The AT&T Entities shall have delivered the
items and documents required to be delivered by it pursuant to this Agreement,
including those required to be delivered to the Comcast Entities under Section
9.2.
8.2.4. Legal Proceedings. No material Legal Requirement and no
judgment, injunction, order or decree shall prohibit consummation of any of the
transactions contemplated by this Agreement.
8.2.5. Consents.
(a) Franchise. The aggregate number of Equivalent Basic
Subscribers in the Service Areas of the AT&T Systems that are, as of the Closing
Time, Transferable Service Areas shall be at least 90% of Equivalent Basic
Subscribers in all Service Areas of the AT&T Systems at such time (the "AT&T 90%
Threshold"); provided that this condition will be deemed not to have been
satisfied until the earliest of (i) the date upon which this condition would be
satisfied if the percentage used for the AT&T 90% Threshold was 100% rather than
90%, (ii) 30 days after the date upon which the AT&T 90% Threshold is met and
(iii) September 30, 2001.
(b) FCC. All material AT&T Required Consents from the FCC shall
have been obtained in form and substance reasonably satisfactory to Comcast
Corporation.
(c) Other. All other AT&T Required Consents identified with an
asterisk (*) on Schedule 6.3 shall have been obtained; provided however if any
such consents have not been obtained, this condition nonetheless will be deemed
satisfied if either (i) Comcast Corporation agrees to waive such condition, in
which case, subject to Section 7.5, the Comcast Entities shall bear all costs
and other Losses arising out of or resulting from the failure of such consent or
consents to have been obtained or (ii) AT&T Corp. provides satisfactory
arrangements, including an enforceable indemnity to the extent monetary damages
is an adequate remedy, which are reasonably acceptable to the Comcast Entities,
such that the Comcast Entities shall not suffer any costs or other Losses
arising out of or resulting from the failure of such consent or consents to have
been obtained.
8.2.6. No Material Adverse Changes. There shall not have been any
changes or occurrences that, individually or in the aggregate, have had or would
reasonably be expected to have, a Material Adverse Effect on AT&T's Cable
Business since May 4, 1999.
8.2.7. HSR Act. All filings required under the HSR Act shall have
been made and the applicable waiting period shall have expired or been earlier
terminated.
8.3. Conditions to AT&T's Obligations. The obligations of the AT&T
Entities to consummate the transactions contemplated by this Agreement will be
subject to the satisfaction, at or before the Closing, of the following
conditions, one or more of which may be waived by AT&T Corp.:
8.3.1. Accuracy of Representations and Warranties. The
representations and warranties of Comcast Corporation and the Comcast Parties in
this Agreement (including those made by operation of Section 2.1.2) and in the
Transaction Documents, without giving
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effect to any materiality or Material Adverse Effect qualification contained
therein and without giving effect to any scheduled exceptions to such
representations and warranties, shall be true, complete and accurate as of the
Closing (or, if given as of a specific date, as of such date) with the same
effect as if made at and as of the Closing (or such date) except to the extent
that any misstatements, omissions and inaccuracies to such representations and
warranties would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect on Comcast's Cable Business.
8.3.2. Performance of Agreements. The Comcast Entities shall have
performed in all material respects all material obligations and agreements and
complied in all material respects with all material covenants in this Agreement
and in any Transaction Document to be performed and complied with by them before
the Closing.
8.3.3. Deliveries. The Comcast Entities shall have delivered the
items and documents required to be delivered by it pursuant to this Agreement,
including those required to be delivered to the AT&T Entities under Section 9.3.
8.3.4. Legal Proceedings. No material Legal Requirement and no
judgment, injunction, order or decree shall prohibit consummation of any of the
transactions contemplated by this Agreement.
8.3.5. Consents.
(a) Franchise. The aggregate number of Equivalent Basic
Subscribers in the Service Areas of the Comcast Systems that are, as of the
Closing Time, Transferable Service Areas shall be at least 90% of the Equivalent
Basic Subscribers in all Service Areas of the Comcast Systems at such time (the
"Comcast 90% Threshold"); provided that this condition will be deemed not to
have been satisfied until the earliest of (i) the date upon which this condition
would be satisfied if the percentage used for the Comcast 90% Threshold was 100%
rather than 90%, (ii) 30 days after the date upon which the Comcast 90%
Threshold is met and (iii) September 30, 2001.
(b) FCC. All material Comcast Required Consents from the FCC
shall have been obtained in form and substance reasonably satisfactory to AT&T
Corp.
(c) Other. All other Comcast Required Consents identified with an
asterisk (*) on Schedule 5.3 shall have been obtained; provided, however, if any
such consents have not been obtained this condition nonetheless will be deemed
satisfied if either (i) AT&T Corp. agrees to waive such condition, in which
case, subject to Section 7.5, the AT&T Entities shall bear all costs and other
Losses arising out of or resulting from the failure of such consent or consents
to have been obtained or (ii) Comcast Corporation provides satisfactory
arrangements, including an enforceable indemnity to the extent monetary damages
is an adequate remedy, which are reasonably acceptable to the AT&T Entities,
such that the AT&T Entities shall not suffer any costs or other Losses arising
out of or resulting from the failure of such consent or consents to have been
obtained.
8.3.6. No Material Adverse Changes. There shall not have been any
changes or occurrences that, individually or in the aggregate, have had or would
reasonably be expected to have, a Material Adverse Effect on Comcast's Cable
Business since May 4, 1999.
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8.3.7. HSR Act. All filings required under the HSR Act shall have
been made and the applicable waiting period shall have expired or been earlier
terminated.
9. THE CLOSING.
9.1. The Closing; Time and Place. Subject to the terms and conditions
of this Agreement, the Closing shall be held at the office of Wachtell, Lipton,
Rosen & Katz, New York, New York (or be conducted via facsimile) at 10:00 a.m.,
local time, on the last calendar day of the calendar month in which the
conditions set forth in Article 8 (other than Sections 8.2.3 and 8.3.3) shall
have been satisfied or waived (provided that each party shall have at least 10
days' prior notice of the scheduled Closing Date in order to prepare for the
Closing), or at such other place, date and time as may be mutually agreed upon
by the Parties (the "Closing Date"). The transactions to be consummated at the
Closing shall be deemed to have been consummated as of the Closing Time.
9.2. AT&T's Delivery Obligations. At the Closing, each AT&T Party will
deliver or cause to be delivered to the applicable Comcast Parties the
following:
9.2.1. Payment Obligation. If applicable, consideration in
respect of Additional Consideration, Working Capital Adjustment Amounts and the
Overall Adjustment Amount will be paid pursuant to Section 3.1.2, Section 3.3
and Section 3.1.3, respectively.
9.2.2. Bill of Sale and Assignment and Assumption Agreement. The
Bill of Sale and Assignment and Assumption Agreement in the form of Exhibit
9.2.2.
9.2.3. Deeds. Special warranty deeds, in recordable form,
conveying to the applicable Comcast Parties each parcel of such AT&T Party's
AT&T Owned Property, and assignments of leases, in recordable form, with respect
to such AT&T Party's AT&T Leased Property, and assignments of easements, in
recordable form or such other documents as may be necessary to convey AT&T Other
Real Property Interests, in each case in form and substance reasonably
satisfactory to the Comcast Parties.
9.2.4. Lien Releases. Evidence reasonably satisfactory to the
Comcast Entities that all Liens (other than Permitted Liens that are not
required to be terminated) affecting or encumbering such AT&T Party's Assets
have been terminated, released or waived, as appropriate, or original, executed
instruments in form and substance reasonably satisfactory to the Comcast
Entities effecting such terminations, releases or waivers.
9.2.5. Vehicle Titles. Title certificates to all vehicles
included among the AT&T Assets, endorsed for transfer of title to the applicable
Comcast Parties, and separate bills of sale therefor or other transfer
documentation, if required by the laws of the states in which such vehicles are
titled.
9.2.6. Evidence of Authorization Actions. Evidence reasonably
satisfactory to the Comcast Entities that such AT&T Party is in existence and in
good standing, and has taken all action necessary to authorize the execution and
delivery of this Agreement and the Transaction Documents and the consummation of
the transactions contemplated hereby.
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9.2.7. FIRPTA Certificate. FIRPTA Non-Foreign Seller Certificate
certifying that such AT&T Party is not a foreign person (within the meaning of
Section 1445 of the Code) reasonably satisfactory in form and substance to
Comcast Corporation.
9.2.8. Officer's Certificate. The Comcast Entities will have
received a certificate executed by an officer of each AT&T Entity, dated the
date of the Closing, reasonably satisfactory in form and substance to the
Comcast Entities certifying, in his or her capacity as an officer, that the
conditions specified in Sections 8.2.1 and 8.2.2 have been satisfied.
9.2.9. Power of Attorney for Accounts Receivable. The limited,
irrevocable right, in such AT&T Party's name, place and stead, as such AT&T
Party's attorney-in-fact, to cash, deposit, endorse or negotiate checks received
on or after the Closing Date made out to such AT&T Party in payment for cable
television and related services provided by the AT&T Systems and written
instructions to such AT&T's lock-box service provider or similar agents to
forward to the applicable Comcast Party, as promptly as reasonably practicable
after processing, all such cash, deposits and checks representing accounts
receivable of the AT&T Systems that it may receive. From and after the Closing,
such AT&T Party shall not deposit but shall remit to the applicable Comcast
Party any payment received by such AT&T Party on or after the Closing Date in
respect of any such account receivable, as promptly as reasonably practicable
after processing.
9.2.10. Other. Such other documents and instruments as may be
necessary to effect the intent of this Agreement and to consummate the
transactions contemplated hereby.
9.3. Comcast's Delivery Obligations. At the Closing, each Comcast
Party will deliver or cause to be delivered to the applicable AT&T Parties the
following:
9.3.1. Payment Obligation. If applicable, consideration in
respect of Additional Consideration, Working Capital Adjustment Amounts and the
Overall Adjustment Amount will be paid pursuant to Section 3.1.2, Section 3.3
and Section 3.1.3, respectively.
9.3.2. Bill of Sale and Assignment and Assumption Agreement. The
Bill of Sale and Assignment and Assumption Agreement in the form of Exhibit
9.3.2.
9.3.3. Deeds. Special warranty deeds, in recordable form,
conveying to the applicable AT&T Parties each parcel of such Comcast Party's
Comcast Owned Property, and assignments of leases, in recordable form, with
respect to such Comcast Party's Comcast Leased Property, and assignments of
easements, in recordable form or such other documents as may be necessary to
convey Comcast Other Real Property Interests, in each case in form and substance
reasonably satisfactory to the AT&T Parties.
9.3.4. Lien Releases. Evidence reasonably satisfactory to the
AT&T Entities that all Liens (other than Permitted Liens that are not required
to be terminated) affecting or encumbering such Comcast Party's Assets have been
terminated, released or waived, as appropriate, or original, executed
instruments in form and substance reasonably satisfactory to the AT&T Entities
effecting such terminations, releases or waivers.
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9.3.5. Vehicle Titles. Title certificates to all vehicles
included among the Comcast Assets, endorsed for transfer of title to the
applicable AT&T Parties, and separate bills of sale therefor or other transfer
documentation, if required by the laws of the states in which such vehicles are
titled.
9.3.6. Evidence of Authorization Actions. Evidence reasonably
satisfactory to the AT&T Entities that such Comcast Party is in existence and in
good standing, and has taken all action necessary to authorize the execution and
delivery of this Agreement and the Transaction Documents and the consummation of
the transactions contemplated hereby.
9.3.7. FIRPTA Certificate. FIRPTA Non-Foreign Seller Certificate
certifying that such Comcast Party is not a foreign person (within the meaning
of Section 1445 of the Code) reasonably satisfactory in form and substance to
AT&T Corp.
9.3.8. Officer's Certificate. The AT&T Entities will have
received a certificate executed by an officer of each Comcast Entity, dated the
date of the Closing, reasonably satisfactory in form and substance to the AT&T
Entities certifying, in his or her capacity as an officer, that the conditions
specified in Sections 8.3.1 and 8.3.2 have been satisfied.
9.3.9. Power of Attorney for Accounts Receivable. The limited,
irrevocable right, in such Comcast Party's name, place and stead, as such
Comcast Party's attorney-in-fact, to cash, deposit, endorse or negotiate checks
received on or after the Closing Date made out to such Comcast Party in payment
for cable television and related services provided by the Comcast Systems and
written instructions to such Comcast's lock-box service provider or similar
agents to forward to the applicable AT&T Party, as promptly as reasonably
practicable after processing, all such cash, deposits and checks representing
accounts receivable of the Comcast Systems that it may receive. From and after
the Closing, such Comcast Party shall not deposit but shall remit to the
applicable AT&T Party any payment received by such Comcast Party on or after the
Closing Date in respect of any such account receivable, as promptly as
reasonably practicable after processing.
9.3.10. Other. Such other documents and instruments as may be
necessary to effect the intent of this Agreement and to consummate the
transactions contemplated hereby.
10. TERMINATION AND DEFAULT.
10.1. Termination Events. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned:
10.1.1. At any time, by the mutual agreement of Comcast
Corporation and AT&T Corp.;
10.1.2. By either Comcast Corporation or AT&T Corp. upon written
notice to the other, if any of the conditions to its or its Affiliates'
obligations set forth in Sections 8.1, 8.2 and 8.3, respectively, are not or
could not be satisfied such that Closing occurs on or before October 31, 2001
for any reason other than a breach or default by such Parent or its Affiliates
of their covenants, agreements or other obligations under this Agreement, or any
of such Parent's
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representations herein not being true and accurate when made or when otherwise
required by this Agreement to be true and accurate; or
10.1.3. By either Comcast Corporation or AT&T Corp. if an
injunction, restraining order or decree of any nature of any Governmental
Authority of competent jurisdiction is issued that prohibits the consummation of
any of the transactions contemplated hereby and such injunction, restraining
order or decree is final and nonappealable; provided, however, that the Party
seeking to terminate this Agreement pursuant to this Section 10.1.3 has, subject
to the terms hereof, used commercially reasonable efforts to have such
injunction, order or decree vacated or denied.
10.2. Effect of Termination. If this Agreement is terminated pursuant
to Section 10.1, all obligations of the Parties under this Agreement will
terminate, except for the obligations set forth in Sections 7.13 and 12.13.
Termination of this Agreement pursuant to Sections 10.1.2 or 10.1.3 will not
limit or impair any remedies that any of the AT&T Entities or the Comcast
Entities may have pursuant to the terms of this Agreement with respect to a
breach or default by the other of their covenants, agreements or obligations
under this Agreement.
11. SURVIVAL; INDEMNIFICATION.
11.1. Indemnification by the AT&T Entities. From and after the Closing,
the AT&T Entities, jointly and severally, will indemnify and hold harmless
Comcast Corporation and its Affiliates, and its and their respective
shareholders, officers, directors, partners, employees, agents, successors and
assigns, and any Person claiming by or through any of them, as the case may be,
from and against any and all Losses to the extent arising out of or resulting
from:
(a) any representations and warranties made by any AT&T Entity in
this Agreement or in any Transaction Document not being true and accurate when
made or as of the Closing (or, if given as of a certain date, not being true as
of such certain date) with the same effect as if made as of the Closing (or such
date);
(b) any failure by any AT&T Entity to perform any of its
covenants, agreements, or obligations in this Agreement or in any Transaction
Document (other than Losses to the extent arising out of or resulting from AT&T
Excluded Liabilities);
(c) the AT&T Excluded Liabilities;
(d) the AT&T Assumed Obligations and Liabilities; and
(e) the AT&T Excluded Assets.
11.2. Indemnification by the Comcast Entities. From and after the
Closing, the Comcast Entities, jointly and severally, will indemnify and hold
harmless AT&T Corp. and its Affiliates, and its and their respective
shareholders, officers, directors, partners, employees, agents, successors and
assigns, and any Person claiming by or through any of them, as the case may be,
from and against any and all Losses to the extent arising out of or resulting
from:
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(a) any representations and warranties made by any Comcast Entity
in this Agreement or in any Transaction Document not being true and accurate
when made or as of the Closing (or, if given as of a certain date, not being
true as of such certain date) with the same effect as if made as of the Closing
(or such date);
(b) any failure by any Comcast Entity to perform any of its
covenants, agreements, or obligations in this Agreement or in any Transaction
Document (other than Losses to the extent arising out of or resulting from
Comcast Excluded Liabilities);
(c) the Comcast Excluded Liabilities;
(d) the Comcast Assumed Obligations and Liabilities; and
(e) the Comcast Excluded Assets.
11.3. Third Party Claims. Upon receipt by any Person of notice of any
claim, action, suit or proceeding by any Third Party (collectively, an
"Action"), which Action is subject to indemnification under this Agreement, such
Person (the "Indemnified Party") will give reasonable written notice to the
Party from whom indemnification is claimed (the "Indemnifying Party"); provided
that the failure of any Indemnified Party to so deliver notice shall not relieve
the Indemnifying Party of its obligations under this Article 11, except to the
extent the Indemnifying Party is prejudiced by such failure. The Indemnified
Party will be entitled, at the sole expense and liability of the Indemnifying
Party, to exercise full control of the defense, compromise or settlement of any
such Action unless the Indemnifying Party, within a reasonable time after the
giving of such notice by the Indemnified Party, (i) notifies the Indemnified
Party in writing of the Indemnifying Party's intention to assume such defense,
(ii) retains legal counsel reasonably satisfactory to the Indemnified Party to
conduct the defense of such Action and (iii) admits in writing to the
Indemnified Party the Indemnifying Party's liability to the Indemnified Party
for such Action to the extent provided in this Agreement. The other Party will
cooperate with the Party assuming the defense, compromise or settlement of any
such Action in accordance with this Agreement in any manner that such party
reasonably may request. The Party controlling the defense, compromise or
settlement of an Action shall act in good faith with respect thereto. If the
Indemnifying Party so assumes the defense of any such Action, the Indemnified
Party will have the right to employ separate counsel and to participate in (but
not control) the defense, compromise or settlement of the Action (in which case
the Indemnifying Party shall cooperate in providing information to the
Indemnified Party about the Action), but the fees and expenses of such counsel
will be at the expense of the Indemnified Party unless (i) the Indemnifying
Party has agreed to pay such fees and expenses, (ii) any relief other than the
payment of money damages is sought against the Indemnified Party or (iii) the
Indemnified Party has been advised by independent counsel that there may be one
or more defenses available to it which are different from or additional to those
available to the Indemnifying Party, and in any such case that portion of the
fees and expenses of such separate counsel that are reasonably related to
matters covered by the indemnity provided in this Article 11 will be paid by the
Indemnifying Party, provided that the Indemnifying Party shall not be obligated
to pay the expenses of more than one separate counsel in each jurisdiction for
each Indemnified Party so entitled to separate counsel. No Indemnified Party
will settle or compromise any such Action for which it is entitled to
indemnification under this Agreement
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without the prior written consent of the Indemnifying Party. No Indemnifying
Party will settle or compromise any such Action in which any relief other than
the payment of money damages is sought against any Indemnified Party, unless the
Indemnified Party consents in writing to such compromise or settlement.
Notwithstanding the foregoing in this Section 11.3, if an Action
includes or could reasonably be expected to include both a claim for Taxes
(other than income Taxes) that are the responsibility of any AT&T Entity
hereunder, on the one hand, and a claim for Taxes (other than income Taxes) that
are the responsibility of any Comcast Entity hereunder, on the other hand, then
Comcast Corporation (if the claim for Taxes that are the responsibility and
liability of the Comcast Entities exceeds the claim for Taxes that are the
responsibility and liability of the AT&T Entities) or otherwise AT&T Corp. (as
the case may be, the "Controlling Party") shall be entitled to control the
defense of such Action (such Action, a "Tax Action"). In such case, the other
Party (the "Non-Controlling Party") shall be entitled to participate fully (at
the Non-Controlling Party's sole expense) in the conduct of such Tax Action and
the Controlling Party shall not settle such Tax Action without the consent of
the Non-Controlling Party (which consent shall not be unreasonably withheld).
The costs and expenses of conducting the defense of such Tax claim shall be
reasonably apportioned based on the relative amounts of the claim for Taxes that
are the responsibility of any AT&T Entity hereunder and Taxes that are the
responsibility of any Comcast Entity hereunder based on the relative amounts of
such claims.
For purposes of Sections 4.1(w) and 4.3(w) and this Article 11, all
real property taxes, personal property taxes and similar ad valorem obligations
in respect of any System or Asset for any taxable period that includes but does
not end on the Closing Date shall be apportioned between the Transferor and the
Transferee based on the number of days of such taxable period on or prior to the
Closing Date and the number thereof after the Closing Date.
For purposes of this Agreement, an Escheat Payment shall be
attributable to a period (or portion thereof) ending on or prior to the Closing
Date if the relevant abandoned or unclaimed property was or should have been
accrued as an unclaimed property liability in the normal course of the
Indemnifying Party's operations in such pre-Closing period. For purposes of the
foregoing, the Parties agree that unclaimed property liabilities should in all
events be accrued in the ordinary course within one year after the date the
relevant abandoned or unclaimed property is first proffered.
11.4. Limitations on Indemnification.
(a) The AT&T Entities will have no liability under Section
11.1(a) unless the amount of Losses otherwise subject to their indemnification
obligations thereunder exceeds $17,500,000 (the "AT&T Minimum Damage
Requirement"), in which case the AT&T Entities shall be liable only for such
excess provided that the AT&T Minimum Damage Requirement will not apply to any
Losses resulting from or arising out of breaches of the representations and
warranties in Sections 6.1, 6.2, 6.3(a), 6.3(b) or 6.17. The maximum liability
of the AT&T Entities under Section 11.1(a) shall not exceed $150,000,000 (the
"AT&T Cap"); provided that the AT&T Cap shall not apply to breaches of the
representations and warranties in Sections 6.1, 6.2, 6.3(a), 6.3(b) or 6.17.
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(b) The Comcast Entities will have no liability under Section
11.2(a) unless the amount of Losses otherwise subject to their indemnification
obligations thereunder exceeds $17,500,000 (the "Comcast Minimum Damage
Requirement"), in which case the Comcast Entities shall be liable only for such
excess; provided that the Comcast Minimum Damage Requirement will not apply to
any Losses resulting from or arising out of breaches of the representations and
warranties in Sections 5.1, 5.2, 5.3(a), 5.3(b) or 5.17. The maximum liability
of the Comcast Entities under Section 11.2(a) shall not exceed $150,000,000 (the
"Comcast Cap"); provided that the Comcast Cap shall not apply to breaches of the
representations and warranties in Sections 5.1, 5.2, 5.3(a), 5.3(b) or 5.17.
(c) The representations and warranties of any Comcast Entity and
any AT&T Entity in this Agreement and any Transaction Document, and the
corresponding indemnification obligations under Sections 11.1(a) and 11.2(a)
will survive Closing for a period of nine months. Notwithstanding the foregoing,
the liability of the parties will extend beyond the nine-month period following
Closing with respect to any claim which has been asserted in a bona fide written
notice before the expiration of such nine-month period specifying in reasonable
detail the facts and circumstances giving rise to such right.
The indemnification obligations under Sections 11.1(b) and 11.2(b) (in
each case, other than the covenants, agreements and obligations which by their
terms are to be performed after the Closing) and under Sections 11.1(c) and
11.2(c) will survive Closing for a period of 12 months. Notwithstanding the
foregoing, the liability of the parties will extend beyond the 12-month period
following Closing with respect to any claim which has been asserted in a bona
fide written notice before the expiration of such 12-month period specifying in
reasonable detail the facts and circumstances giving rise to such right. For
this purpose, proper and timely notice shall be deemed given by all indemnified
persons on the date hereof, and no further notice shall be required, with
respect to all items set forth on the disclosure schedules provided by the
Parties in connection with this Agreement and with respect to pre-Closing
accounts payable and franchise fees for which a Transferor is responsible under
Section 7.23.
11.5. Payments for Indemnification Amounts. Amounts payable by a Party
in respect of any Losses that are subject to the indemnification obligations of
such Party under Section 11.1 or 11.2 will be payable by the Indemnifying Party
within five days of receiving written notice of such Losses from the Indemnified
Party, and will bear interest at the rate per annum publicly announced from time
to time by The Bank of New York as its prime rate (the "Prime Rate") plus three
percent (3%) beginning on the sixth day after receipt of such written notice and
ending on the date of payment of indemnification by the Indemnifying Party.
11.6. Exclusive Remedy. The Parties hereby agree that the rights set
forth in this Article 11 shall be each Party's sole and exclusive remedies
against the other Party for any claims arising after the Closing Time and
relating to any liability of a System arising prior to the Closing Time.
12. MISCELLANEOUS PROVISIONS.
12.1. Parties Obligated and Benefited. Subject to the limitations set
forth below, this Agreement will be binding upon each of the Parties and their
respective assigns and successors
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in interest and will inure solely to the benefit of the Parties and their
respective assigns and successors in interest, and no other Person will be
entitled to any of the benefits conferred by this Agreement. Without the prior
written consent of the other Parties, no Party will assign any of its rights
under this Agreement or delegate any of its duties under this Agreement,
provided that the appropriate Party may assign any or all of its rights under
this Agreement to a "qualified intermediary" engaged by such Party to effectuate
a deferred like-kind exchange under Section 1031 of the Code, and the other
Party agrees, in connection with such an assignment, to take such actions and
execute such documents as may be reasonably requested by the assigning Party in
order to facilitate such Party's intent to effectuate a deferred like-kind
exchange; provided, however, that no such assignment will affect the assigning
Party's liabilities or obligations pursuant to this Agreement.
12.2. Notices. Any notice, request, demand, waiver or other
communication required or permitted to be given under this Agreement to any
Party will be in writing and will be deemed to have been duly given only if
delivered in person or by first class, prepaid, registered or certified mail, or
delivered by courier or, if receipt is confirmed, delivery by telecopier:
To any AT&T Entity:
295 North Maple Avenue
Basking Ridge, New Jersey 07920
Attention: Marilyn Wasser
Telecopy: 908-221-6618
With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Richard D. Katcher
Steven A. Rosenblum
Telecopy: 212-403-2000
With copies (which shall not constitute notice) addressed to:
AT&T Broadband, LLC
188 Inverness Drive West
Englewood, CO 80112
Attention: Fred DiBlasio
Telecopy: 303-858-5044
To any Comcast Entity:
1500 Market Street
Philadelphia, PA 19102-4735
Attention: General Counsel
Telecopy: 215-981-7779
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<PAGE>
With copies (which shall not constitute notice) to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: William L. Taylor
Telecopy: 212-450-4800
Any Party may change the address to which notices are required to be
sent by giving notice of such change in the manner provided in this Section
12.2. All notices will be deemed to have been given on the date of delivery
which in the case of deliveries by telecopier will be the date of the sender's
confirmation (or, if delivered after business hours, on the next Business Day).
12.3. Right to Specific Performance. Each Party acknowledges that the
unique nature of the Assets to be exchanged hereunder pursuant to this Agreement
renders money damages an inadequate remedy for the breach by any Party of its
obligations under this Agreement, and the Parties agree that in the event of
such breach, the Parties will upon proper action instituted by either of them,
be entitled to a decree of specific performance of this Agreement or other
equitable relief.
12.4. Waiver. This Agreement or any of its provisions may not be waived
except in writing. The failure of any Party to enforce any right arising under
this Agreement on one or more occasions will not operate as a waiver of that or
any other right on that or any other occasion.
12.5. Captions. The captions of this Agreement are for convenience only
and do not constitute a part of this Agreement.
12.6. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York (other than its rules of
conflicts of law to the extent that the application of the laws of another
jurisdiction would be required thereby).
12.7. Time. Time is of the essence under this Agreement. If the last
day permitted for the giving of any notice or the performance of any act
required or permitted under this Agreement falls on a day which is not a
Business Day, the time for the giving of such notice or the performance of such
act will be extended to the next succeeding Business Day.
12.8. Late Payments. Except as otherwise provided herein, if any Party
fails to pay the other any amounts when due under this Agreement, the amounts
due will bear interest from the due date to the date of payment at the Prime
Rate plus 2%, adjusted as and when changes in the Prime Rate are made.
12.9. Counterparts. This Agreement may be executed in counterparts,
each of which will be deemed an original.
12.10. Entire Agreement. This Agreement (including the Transaction
Documents and the Schedules and Exhibits referred to in this Agreement, which
are incorporated in and
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<PAGE>
constitute a part of this Agreement), contains the entire agreement of the
Parties with respect to the subject matter hereof, and supersedes all prior oral
or written agreements and understandings with respect to such subject matter,
including, without limitation, (i) the letter agreement, dated May 4, 1999,
between AT&T Corp. and Comcast Corporation (but shall not supersede the
following paragraphs thereof: paragraph 2 {Termination of the Merger Agreement},
paragraph 11.(b) {No Trading During Valuation Period}, paragraph 12 {Telephony
Agreements} and, to the extent related to the foregoing, paragraphs 14, 15, 17,
and 19-24) and (ii) the Amendment to such letter agreement dated as of November
16, 1999 (but shall not supersede paragraph 4 thereof). This Agreement does not
supersede the Letter Agreement to the extent relating to the Group Three Systems
and the transactions with respect thereto. The cable systems that are referenced
in the Letter Agreement as Group Two Systems and Group Three Systems (other than
Chesterfield, Virginia) that are not Systems for purposes hereof will be treated
as Group Three Systems for purposes of the Letter Agreement and for purposes of
Section 8.1 hereof and this Section 12.10. This Agreement may not be amended or
modified, except by a writing signed by all of the Parties hereto. This Section
12.10 is subject to Section 10.1.4.
12.11. Severability. Any term or provision of this Agreement that is
invalid or unenforceable will be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining rights
of the Person intended to be benefitted by such provision or any other
provisions of this Agreement.
12.12. Construction. This Agreement has been negotiated by the Parties
and their respective legal counsel, and legal or other equitable principles that
might require the construction of this Agreement or any provision of this
Agreement against the Party drafting this Agreement will not apply in any
construction or interpretation of this Agreement.
12.13. Expenses. Except as otherwise expressly provided in this
Agreement, each Party will pay all of its expenses, including attorneys' and
accountants' fees, in connection with the negotiation of this Agreement, the
performance of its obligations and the consummation of the transactions
contemplated by this Agreement.
12.14. Risk of Loss. The risk of any loss or damage to the Comcast
Assets or the AT&T Assets resulting from fire, theft or other casualty (except
reasonable wear and tear) will be borne by the owner thereof at all times prior
to the Closing Time. In the event of any such loss or damage after May 4, 1999,
Comcast Corporation or AT&T Corp., as appropriate, will immediately notify the
other in writing of that fact and the System Value for the applicable System or
Systems will be reduced in the amount of the deductible under the casualty
insurance policies insuring such Assets, and all insurance proceeds paid or
payable as a result of the occurrence of the event resulting in such loss or
damage will be delivered at the Closing by the Party transferring such Assets to
the Party receiving such Assets, or the rights thereto will be assigned, if not
yet paid over by the insurer, to the Party transferring such Assets. If such
loss is not fully insured for replacement cost, then the System Value for the
applicable System or Systems will further be reduced by the cost to repair or
replace such Assets, less any insurance proceeds paid or payable with respect
thereto. In either case, the obligations under this Section 12.14 to make
adjustment or pay or assign insurance proceeds will not apply to the extent that
any insurance proceeds or deductibles are applied to replace or restore such
loss or damage prior to Closing.
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<PAGE>
If, on or prior to the Closing Time, all or any part of or interest in
the Comcast Assets or the AT&T Assets, as appropriate, is taken or condemned as
a result of a Governmental Authority's exercise of its powers of eminent domain,
or if a Governmental Authority having such power informs a Party that it intends
to condemn all or any part of such Party's Assets (such event being called, in
either case, a "Taking"), then (i) AT&T Corp., in the case of a Taking of
Comcast Assets, or Comcast Corporation, in the case of a Taking of AT&T Assets,
may elect, in the name of the other Party, to negotiate for, claim, contest and
receive all damages with respect to the Taking, (ii) the Party whose Assets were
the subject of the Taking will be relieved of its obligation to convey to the
other Party those of its Assets that were the subject of the Taking, (iii) at
the Closing, the Party whose Assets were the subject of the Taking will assign
to the other Party all of its rights to damages payable as a result of the
Taking, and will pay to the other Party all damages previously paid to it in
connection with the Taking, and (iv) following the Closing, the Party whose
Assets were the subject of the Taking will give to the other Party any further
assurances of such rights and assignment with respect to the Taking as the other
Party reasonably may request from time to time.
No amount payable under this Section 12.14 will be taken into account
in calculating the Working Capital Adjustment Amount.
12.15. Tax Consequences. No Party makes any representation or warranty,
express or implied, with respect to the Tax implications of any aspect of this
Agreement on any other Party, and each Party expressly disclaims any such
representation or warranty with respect to any Tax consequences arising under
this Agreement. Each Party has relied solely on its own Tax advisors with
respect to the Tax implications of this Agreement.
12.16. Jurisdiction. Except as otherwise expressly provided in this
Agreement, the Parties agree that any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement, the Transaction Documents or the transactions contemplated
hereby or thereby may be brought in the United States District Court for the
Southern District of New York or any other New York State court sitting in New
York City, and each of the Parties hereby consents to the jurisdiction of such
courts (and of the appropriate appellate courts therefrom) in any such suit,
action or proceeding and irrevocably waives, to the fullest extent permitted by
law, any objection which it may now or hereafter have to the laying of the venue
of any such suit, action or proceeding in any such court or that any such suit,
action or proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each Party agrees that
service of process on such Party as provided in Section 12.2 shall be deemed
effective service of process on such Party.
12.17. 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, THE TRANSACTION DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
[the remainder of this page intentionally left blank]
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<PAGE>
The parties have executed this Agreement as of the day and year first above
written.
AT&T CORP.
By: /s/ Michael Berg
----------------------------------------
Name: Michael Berg
Title: Assistant Secretary
DISTRICT CABLEVISION LIMITED
PARTNERSHIP
By: District Cablevision, Inc., its General
Partner
By: /s/ Michael P. Huseby
------------------------------------
Name: Michael P. Huseby
Title: Vice President
INDEPENDENCE CABLE TV COMPANY
By: United Cable T.V. of Oakland County,
Inc., its General Partner
By: /s/ Michael P. Huseby
------------------------------------
Name: Michael P. Huseby
Title: Vice President
By: Tribune-United Cable of Oakland County,
its General Partner
By: /s/ Michael P. Huseby
------------------------------------
Name: Michael P. Huseby
Title: Vice President
UNITED CABLE T.V. OF OAKLAND COUNTY, INC.
By: /s/ Michael P. Huseby
----------------------------------------
Name: Michael P. Huseby
Title: Vice President
<PAGE>
TRIBUNE-UNITED CABLE OF OAKLAND COUNTY
By: Tribune Company Cable of Michigan, Inc.,
its General Partner
By: /s/ Michael P. Huseby
------------------------------------
Name: Michael P. Huseby
Title: Vice President
By: United Cable Television of Oakland
County, Ltd., its General Partner
By: United Cable T.V. of Oakland County,
Inc., its General Partner
By: /s/ Michael P. Huseby
---------------------------------
Name: Michael P. Huseby
Title: Vice President
By: United of Oakland, Inc., its General
Partner
By: /s/ Michael P. Huseby
--------------------------------
Name: Michael P. Huseby
Title: Vice President
COMMUNITY CABLE TELEVISION
By: TCI Cable Partners, Inc., its General
Partner
By: /s/ Michael P. Huseby
------------------------------------
Name: Michael P. Huseby
Title: Vice President
<PAGE>
By: Tele-Communications of Colorado, Inc.,
its General Partner
By: /s/ Michael P. Huseby
------------------------------------
Name: Michael P. Huseby
Title: Vice President
UNITED CABLE TELEVISION CORPORATION
OF MICHIGAN
By: /s/ Michael P. Huseby
----------------------------------------
Name: Michael P. Huseby
Title: Vice President
TCI ATLANTIC, INC.
By: /s/ Michael P. Huseby
----------------------------------------
Name: Michael P. Huseby
Title: Vice President
TCI TKR OF THE GULF PLAINS, INC.
By: /s/ Michael P. Huseby
----------------------------------------
Name: Michael P. Huseby
Title: Vice President
TCI OF DAYTON, INC.
By: /s/ Michael P. Huseby
----------------------------------------
Name: Michael P. Huseby
Title: Vice President
TCI CABLEVISION OF OHIO, INC.
By: /s/ Michael P. Huseby
----------------------------------------
Name: Michael P. Huseby
Title: Vice President
<PAGE>
MEDIAONE ENTERPRISES, INC.
By: /s/ Stephen E. Brilz
----------------------------------------
Name: Stephen E. Brilz
Title: Assistant Secretary
MEDIAONE OF EASTERN MICHIGAN, INC.
By: /s/ Stephen E. Brilz
----------------------------------------
Name: Stephen E. Brilz
Title: Assistant Secretary
MEDIAONE OF SOUTHEAST MICHIGAN, INC.
By: /s/ Stephen E. Brilz
----------------------------------------
Name: Stephen E. Brilz
Title: Assistant Secretary
MEDIAONE OF MICHIGAN, INC.
By: /s/ Stephen E. Brilz
----------------------------------------
Name: Stephen E. Brilz
Title: Assistant Secretary
MEDIAONE OF METROPOLITAN DETROIT, INC.
By: /s/ Stephen E. Brilz
----------------------------------------
Name: Stephen E. Brilz
Title: Assistant Secretary
<PAGE>
COMCAST CORPORATION
By: /s/ Robert S. Pick
----------------------------------------
Name: Robert S. Pick
Title: Senior Vice President
COMCAST CABLEVISION OF BROWARD
COUNTY, INC.
By: /s/ Robert S. Pick
----------------------------------------
Name: Robert S. Pick
Title: Senior Vice President
COMCAST CABLEVISION OF HALLANDALE, INC.
By: /s/ Robert S. Pick
----------------------------------------
Name: Robert S. Pick
Title: Senior Vice President
COMCAST CABLEVISION OF SACRAMENTO
By: Comcast Cablevision of Sacramento, Inc.,
its General Partner
By: /s/ Robert S. Pick
------------------------------------
Name: Robert S. Pick
Title: Senior Vice President
COMCAST CABLEVISION OF THE SOUTH
By: COM South, Inc., its General Partner
By: /s/ Robert S. Pick
------------------------------------
Name: Robert S. Pick
Title: Senior Vice President
<PAGE>
COMCAST CABLEVISION OF CHICAGO, INC.
By: /s/ Robert S. Pick
----------------------------------------
Name: Robert S. Pick
Title: Senior Vice President
COMCAST SCH HOLDINGS, INC.
By: /s/ Robert S. Pick
----------------------------------------
Name: Robert S. Pick
Title: Senior Vice President
COMCAST CABLEVISION OF
WESTMORELAND, INC.
By: /s/ Robert S. Pick
----------------------------------------
Name: Robert S. Pick
Title: Senior Vice President
<PAGE>
Exhibits:
Exhibit 7.9 - Form of Programming Letter
Exhibit 9.2.2 - Form of Bill of Sale and Assignment and Assumption
Agreement
Schedules:
Schedule 2.1.1 - Systems to be Exchanged in the Swap
Schedule 2.3 - System List
Schedule 3.1.1-A - Systems Other Than Appraised Systems
Schedule 3.1.1-B - Appraised Systems
Schedule 3.1.1-C - MediaOne Group Detroit System
Schedule 4.2 - Exceptions to AT&T Excluded Assets
Schedule 4.4 - Exceptions to Comcast Excluded Assets
Schedule 5.3 - Comcast Conflicts and Required Consents
Schedule 5.4.1 - Comcast Assets Information
Schedule 5.4.3 - Other Cable Operations
Schedule 5.4.4(a) - Comcast Tangible Personal Property
Schedule 5.4.4(b) - Comcast Owned Property
Schedule 5.4.4(c) - Comcast Leased Property
Schedule 5.4.4(d) - Comcast Other Real Property Interests
Schedule 5.4.4(e) - Comcast Systems Franchises
Schedule 5.4.4(f) - Comcast Systems Licenses
Schedule 5.4.4(g) - Comcast Systems Contracts
Schedule 5.5.1 - Information Relating to Comcast Systems Franchises,
Systems Licenses, Systems Contracts & Other Real
Property Interests
Schedule 5.5.2 - Comcast Franchise Matters
Schedule 5.5.3 - Comcast Contract Matters
Schedule 5.5.4 - Comcast Systems Subject to Comcast System Options
Schedule 5.6 - Comcast Real Property Information
Schedule 5.7 - Comcast Environmental Matters
Schedule 5.8 - Comcast Compliance with Legal Requirements
Schedule 5.9 - Comcast Intellectual Property
<PAGE>
Schedule 5.11 - Comcast Changes and Events
Schedule 5.12 - Comcast Litigation
Schedule 5.13 - Comcast Tax Information
Schedule 5.14 - Comcast Employees; Employee Matters
Schedule 5.15 - Comcast Systems Information
Schedule 5.16 - Comcast Parties' Taxpayers Identification Numbers
Schedule 5.18 - Comcast Related-Party Transactions
Schedule 5.20 - Comcast Bonds
Schedule 6.3 - AT&T Conflicts and Required Consents
Schedule 6.4.1 - AT&T Assets Information
Schedule 6.4.3 - Other Cable Operations
Schedule 6.4.4(a) - AT&T Tangible Personal Property
Schedule 6.4.4(b) - AT&T Owned Property
Schedule 6.4.4(c) - AT&T Leased Property
Schedule 6.4.4(d) - AT&T Other Real Property Interests
Schedule 6.4.4(e) - AT&T Systems Franchises
Schedule 6.4.4(f) - AT&T Systems Licenses
Schedule 6.4.4(g) - AT&T Systems Contracts
Schedule 6.5.1 - Information Relating to AT&T Systems Franchises,
Systems Licenses, Systems Contracts & Other Real
Property Interests
Schedule 6.5.2 - AT&T Franchise Matters
Schedule 6.5.3 - AT&T Contract Matters
Schedule 6.5.4 - AT&T Systems Subject to AT&T System Options
Schedule 6.6 - AT&T Real Property Information
Schedule 6.7 - AT&T Environmental Matters
Schedule 6.7.5 - Connecticut and New Jersey Properties
Schedule 6.8 - AT&T Compliance with Legal Requirements
Schedule 6.9 - AT&T Intellectual Property
Schedule 6.11 - AT&T Changes and Events
Schedule 6.12 - AT&T Litigation
Schedule 6.13 - AT&T Tax Information
ii
<PAGE>
Schedule 6.14 - AT&T Employees; Employee Matters
Schedule 6.15 - AT&T Systems Information
Schedule 6.16 - AT&T Parties' Taxpayer Identification Numbers
Schedule 6.18 - AT&T Related-Party Transactions
Schedule 6.20 - AT&T Bonds
Schedule 7.2 - Continuity and Maintenance of Operations; Certain
Deliveries and Notice
Schedule 7.2.17(a) - Comcast Systems Channel Alignment Changes
Schedule 7.2.17(b) - AT&T Systems Channel Alignment Changes
Schedule 7.3.9 - Term Employees
Schedule 7.24 - Terminated Affiliate Contracts
iii
