Exhibit (13)
THE AT&T/TELEWEST TRUST
JUNE 15, 2000
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THE AT&T/TELEWEST TRUST
TABLE OF CONTENTS
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PAGE
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ARTICLE 1 - SPECIFIC DUTIES DURING THE TERM OF THE TRUST.....................1
1.1 Distributions to AT&T..................................................1
1.2 Trustee Duties.........................................................1
1.3 Irrevocable............................................................2
ARTICLE 2 - DISPOSITION UPON TERMINATION.....................................2
2.1 Termination............................................................2
2.2 Distribution upon Termination..........................................2
ARTICLE 3 - THE TRUSTEE......................................................2
3.1 Administration.........................................................2
3.2 Trustee Powers.........................................................2
3.3 Resignation and Removal................................................4
ARTICLE 4 - COMPENSATION AND INDEMNIFICATION.................................4
4.1 Compensation of Trustee................................................4
4.2 Indemnification........................................................4
ARTICLE 5 - MISCELLANEOUS....................................................5
5.1 Applicable law.........................................................5
5.2 Severability...........................................................6
5.3 Exhibits...............................................................6
5.4 Amendments.............................................................6
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THE AT&T/TELEWEST TRUST
This Trust Agreement is made as of the 15th day of June, 2000, by and
between AT&T Corp., a New York corporation ("AT&T"), as grantor, and U. S.
Trust Company, National Association, as trustee, to govern the management and
disposition of the property listed in attached Exhibit A. The trust
established by this agreement may be referred to as The AT&T/Telewest Trust.
As used in this agreement, the term "Trustee" refers to U. S. Trust Company,
National Association, and to any successor trustee.
The AT&T/Telewest Trust is set up in the context of the implementation of
the Agreement and Plan of Merger dated as of 6 May 1999 among AT&T, Merger Sub
and MediaOne Group Inc. ("MediaOne") (the "Merger Agreement").
The Merger Agreement was notified to the European Commission for review
under the European Merger Control Regulation and the European Commission decided
not to oppose to the Merger Agreement by its confidential decision in Case No.
IV/M. 1551 - AT&T / MediaOne (the "European Commission Decision"). In general,
AT&T committed in this case to the European Commission to sell MediaOne's
interest in Telewest Communications plc ("Telewest"), (the "Telewest Interest"),
described in Exhibit A, in the event that MediaOne would have been unable to do
so prior to the closing of the Merger Agreement (the "Closing") and to appoint a
trustee to hold the Telewest Interest in trust, pending the sale of this
interest.
The Closing became effective as of June 15, 2000 simultaneously with the
effectiveness of the Trust Agreement, and the Telewest Interest has not been
sold prior to Closing.
U. S. Trust Company, National Association acts in the
AT&T/Telewest Trust as the Trustee for AT&T in connection with AT&T's
commitments to the European Commission in the above-referenced case regarding
the Telewest Interest. US Trust understands the said commitments and will comply
with its mandate as required under these commitments.
In case of doubt of interpretation of the Trustee's mandate in the present
AT&T/Telewest Trust, the above-referenced European Commission decision and its
Annex Undertaking will prevail, and advice of the European Commission may be
sought.
ARTICLE 1 - SPECIFIC DUTIES DURING THE TERM OF THE TRUST
1.1 DISTRIBUTIONS TO AT&T. Until the trust terminates, after paying all
expenses of administering the trust, the Trustee will pay the entire net income
of the trust at least quarterly to AT&T.
1.2 TRUSTEE DUTIES. Notwithstanding any other provision of this agreement
to the contrary, the Trustee will perform the trustee functions set forth in the
Annex Undertakings attached to the European Commission Decision which are
attached hereto as Exhibit B. Without limiting the foregoing, the Trustee will
ensure that no employee of AT&T or any of its subsidiaries is a director or
officer of Telewest. Subject to complying with the European Commission
Decision and the European Commission instructions, if any, the Trustee shall
not take any action with respect to the Telewest Interest that is adverse to
AT&T's interests.
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1.3 IRREVOCABLE. This trust will be irrevocable, except with good casuse
shown to and accepted by the European Commission.
ARTICLE 2 - DISPOSITION UPON TERMINATION
2.1 TERMINATION. This trust will terminate when no Telewest Shares (as
defined in the attached Exhibit A) are then held in trust under this agreement
(the "Termination Date").
2.2 DISTRIBUTION UPON TERMINATION. Upon the Termination Date, the Trustee
will distribute all property then held in the trust to AT&T.
ARTICLE 3 - THE TRUSTEE
3.1 ADMINISTRATION. The Trustee will serve without bond, follow the
administrative rules and have the powers, duties and authority set forth in
Section 3.2. In exercising these powers the Trustee will observe the general
fiduciary duties of loyalty, good faith, fairness and due care.
3.2 TRUSTEE POWERS. Except as otherwise provided in this agreement, the
following administrative provisions will apply, and the Trustee will have the
following powers, duties, and authority, in addition to those provided by law,
without necessity of order or approval of a court or any applicable regulatory
body (including the European Commission):
(a) ADVISORS. The Trustee may employ, compensate, and rely upon
the advice of attorneys and advisors.
(b) CLAIMS. The Trustee may compromise, abandon, sue on or defend,
and otherwise deal with and settle, claims or demands in favor of or against the
trust, upon the terms and conditions the Trustee determine, and will be entitled
to reimbursement from the trust property for expenses so incurred.
(c) GENERAL MANAGEMENT POWERS. The Trustee will have the powers: to
manage the trust property; to collect income; to pay taxes and reasonable
expenses, including the Trustee's compensation, if any; to insure against loss
and risk; to exercise ownership rights with respect to interests in the trust;
to enter into agreements, and to execute, deliver and accept any deeds, leases,
assignments or other conveyances, general or special proxies, voting trusts,
powers of attorney and all other types of documents on behalf of the trust. It
is intended that the trust, and not the Trustee personally and in its separate
capacity, will be liable on any obligation entered into on behalf of the trust;
agreements and undertakings for the trust may so provide.
(d) INCOME AND PRINCIPAL. Allocations and adjustments will be made
to and between income and principal as the Trustee, being guided by established
legal principles, considers fair. Any trust income that is not distributable
will be accumulated and added to principal at least quarterly.
(e) INVESTMENTS.
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(i) IN GENERAL. Except as provided to the contrary in
paragraph (ii) below, the Trustee will generally have the powers: to retain any
property transferred to the trust, or received in exchange for it, including
equity or debt issued or guaranteed by any corporate Trustee, or its parent or
affiliate or common trust fund, for as long as the Trustee considers
appropriate, without liability for depreciation or for failure to diversify
investments; to sell or exchange trust property; to invest and reinvest any cash
or property in loans, bonds, notes, futures, stock or other foreign or domestic
securities of any kind and for any term (including by transactions with the
Trustee in its separate capacity, and including investment in shares of a
so-called "limited liability company" or "limited duration company"), and in
shares of, or participating interests in, any common trust fund (including those
of a corporate Trustee), partnerships (including as a general or limited
partner), mutual funds, or any other real or personal property of any kind
considered appropriate in the Trustee's discretion regardless of any duty to
diversify or any limitation on the location of fiduciary assets.
(ii) RETENTION OF TELEWEST SHARES. The Trustee is specifically
authorized to retain the Telewest Shares without liability for depreciation,
loss or risk (even so-called "uncompensated risk") incurred as a result of any
failure to diversify investments, as might otherwise be required under the
prudent investor rule of any applicable law governing investments by fiduciaries
until such shares are sold in accordance with the Annex Undertakings in Exhibit
B.
(f) RECORDS AND ACCOUNTS. The Trustee will keep and own accurate
records showing the manner in which the trust is invested, and all transactions
involving the trust. The Trustee will furnish to AT&T quarterly statements of
receipts and disbursements, and annual statements of trust assets. To the
fullest extent permitted by law, the Trustee will be relieved of any requirement
to submit accounts (including periodic accounts) for judicial settlement,
although the Trustee may do so. Even without judicial settlement, AT&T's written
consent will settle an account and release the Trustee as against a later claim
by any interested party to the same extent as would a judicial settlement before
all appropriate parties.
(g) RELIANCE ON OTHERS. Any party dealing with the trust may rely
absolutely on the representation, deed, transfer or other assurance of any party
purporting to act as Trustee, without any duty or right to question whether any
other Trustee then serving, or any other party, must agree to, or has agreed to,
the action, or to question whether there is another party who might have a prior
or joint right to serve as Trustee, and will be indemnified and held harmless by
the trust for so doing.
(h) SECURITIES. The Trustee will have the powers: to exercise, buy
or sell any exchange, conversion, option, warrant and/or subscription rights for
any securities or other property; to participate in public offerings and enter
into related indemnity or other agreements; to vote securities, including stock
of a corporate Trustee or its parent or affiliate; to consent to, or dissent
from, the reorganization, recapitalization, consolidation, merger, liquidation
or charter amendment of any corporation or other organization, or the sale,
mortgage, pledge, lease or distribution of all or any of its property; and to
deposit any securities or other trust property with any protective,
reorganization or similar committee, delegate discretionary power thereto and
pay related expenses and assessments.
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(i) SITUS. For the purpose of preserving assets, reducing taxes or
expenses, or otherwise benefiting the trust, the Trustee may, at any time or
times in the Trustee's discretion, remove to another jurisdiction all or part of
the trust property or the situs of administration of a trust.
(j) SUCCESSOR TRUSTEE. Each successor Trustee will serve without
bond, and will have all powers, duties, authority, and discretion applicable to
the predecessor Trustee. Each successor Trustee serving under this agreement
will, immediately upon written acceptance of the trust, be vested with title as
Trustee to the trust property. A Trustee replaced will cooperate in the transfer
of the trust to the successor Trustee. During the transition, the Trustee
replaced will continue to have the authority necessary to administer and
transfer the trust. A successor Trustee may accept property from a predecessor
Trustee without inquiring into the administration thereof by the predecessor
Trustee, without review of the predecessor Trustee's tax returns and accounts,
without determining if the proper property has been delivered, and without
incurring liability for acts or omissions of the predecessor Trustee. Any
institution having trust powers and resulting from any merger or consolidation
to which any institutional Trustee under this agreement is a party, or any such
institution purchasing all of the assets and assuming all the liabilities of any
such Trustee, will be substituted in place of the Trustee without any further
action by any party. Similarly, any designation of an institution to serve as
Trustee will include its successor in interest following such a merger,
consolidation or asset sale.
3.3 RESIGNATION AND REMOVAL. The Trustee may resign at any time by
giving 30 days' written notice to AT&T, such resignation to take effect upon the
appointment of a successor Trustee with the approval of any regulatory body
(including the European Commission) whose approval is required. AT&T may remove
the Trustee upon 30 days' written notice to the Trustee, such removal to take
effect upon the appointment of a successor Trustee with the approval of any
regulatory body (including the European Commission) whose approval is required.
ARTICLE 4 - COMPENSATION AND INDEMNIFICATION
4.1 COMPENSATION OF TRUSTEE. The Trustee will be entitled to the
compensation set forth in the attached Exhibit C. In addition to such
compensation, the Trustee will be reimbursed for reasonable expenses incurred in
connection with its services as Trustee.
4.2 INDEMNIFICATION. AT&T, to the extent permitted by applicable law,
will indemnify the Trustee and hold it and each of its officers, directors,
principals, shareholders, employees, and attorneys (individually an "Indemnified
Party"), harmless against any and all losses, claims, damages or liabilities,
including reasonable legal fees and expenses, to which any Indemnified Party may
become subject arising in any manner out of or in connection with the
performance of the duties of the Trustee under this agreement, except that such
Indemnified Party will not be so indemnified if such losses, claims, damages or
liabilities are finally adjudged by a court of competent jurisdiction, or are
determined by any other proceeding mutually agreeable to AT&T and the
Indemnified Parties, to have resulted from the gross negligence or willful
misconduct of such Indemnified Party. In addition, to the extent permitted by
applicable law, AT&T waives any rights or claims it may have against any
Indemnified Party for violation of fiduciary duty in connection with the
performance of services under the agreement, except to
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the extent such claims are based on the gross negligence or willful misconduct
of such Indemnified Party. Pursuant to the foregoing indemnification, AT&T will,
upon notice, advance or pay promptly to or on behalf of any Indemnified Party,
all reasonable attorneys' fees and other expenses and disbursements as they are
incurred; provided, however, that the Trustee will promptly reimburse to AT&T
all amounts paid to an Indemnified Party pursuant to this Section 4.2 in the
event that the Indemnified Party is finally adjudged to have acted with gross
negligence or willful misconduct with respect to the services performed pursuant
to this agreement.
If for any reason the foregoing indemnification is determined to be
unavailable to any Indemnified Party or insufficient fully to indemnify an
Indemnified Party, then AT&T will contribute to the amount paid or payable by
such Indemnified Party as a result of any such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect (i) the relative
benefits received (or anticipated to be received) by the Indemnified Parties, on
the one hand, and by AT&T, on the other hand, with respect to the services
performed by the Trustee under this agreement, or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, not only such
relative benefit but also the relative fault of the Indemnified Parties, on the
one hand, and of AT&T, on the other hand, and any other relevant equitable
considerations in connection with the maters as to which such losses, claims,
damages or liabilities relate.
If any Indemnified Party receives notice of the assertion of any
claim or of the commencement of any action or proceeding involving the
Indemnified Party, in any capacity, that arises in any manner out of or in
connection with the performance of the duties of the Trustee under this
agreement (a "Claim"), the Indemnified Party will give AT&T reasonably prompt
written notice thereof, although failure to do so will not relieve AT&T from any
liability hereunder or otherwise unless such failure materially prejudices
AT&T's rights. Each Indemnified Party will have the right to employ separate
counsel, at AT&T's expense, to represent the Indemnified Party in connection
with any Claim, and the Indemnified Party and such counsel will have the
exclusive right to control such representation. AT&T will cooperate in good
faith in the Indemnified Party's defense of any Claim. Without the prior written
consent of AT&T, the Indemnified Party will not enter into any settlement
relating to any Claim which would create any financial or other obligation on
the part of AT&T under this agreement. Without the prior written consent of the
Indemnified Party, AT&T will not enter into any settlement relating to any Claim
which would lead to liability or create any financial or other obligation on the
part of the Indemnified Party.
If during the period of, or subsequent to the termination of, this
agreement, any Indemnified Party is required to participate in any legal or
other proceeding (other than as a named party to such proceeding) in connection
with the Proposed Transaction, AT&T will compensate the Indemnified Party for
such services or time required at the Indemnified Party's per diem rates then in
effect, plus any reasonable legal fees and out-of-pocket expenses incurred to
the same extent and in the same manner as specified in this Section.
ARTICLE 5 - MISCELLANEOUS
5.1 APPLICABLE LAW. The laws of the state of New York will apply as to
the validity, interpretation and administration of this agreement, without
regard to conflict of laws principles.
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5.2 SEVERABILITY. Each Article, Exhibit, section, subsection and lesser
section of this agreement constitutes a separate and distinct provision. If any
provision of this agreement will finally be determined by a court to be
unlawful, unenforceable or otherwise contrary to public policy, that provision
will be deemed severed from this agreement, but every other provision of this
agreement will remain in full force and effect, and in substitution for any
provision held unlawful, unenforceable or otherwise contrary to public policy,
there will be substituted a provision of similar import reflecting the grantor's
original intent to the extent permissible under law and as determined by the
court that makes the determination that the provision in question was unlawful,
unenforceable or otherwise contrary to public policy.
5.3 EXHIBITS. The Exhibits attached to this agreement will be considered
part of this agreement just as if written in it, but the provisions set forth
above will prevail in the event of any direct conflict with the provisions in
the Exhibits.
5.4 AMENDMENTS. Subject to Section 1.3 and the trustee functions set
forth in the Annex Undertakings in Exhibit B, this agreement may be amended from
time to time by a written instrument executed by AT&T and the Trustee.
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IN TESTIMONY WHEREOF, AT&T and the Trustee have executed this
agreement as of June 15, 2000.
AT&T CORP.
By: /s/ Robert S. Feit
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Name: Robert S. Feit
Title: Assistant Secretary
U. S. TRUST COMPANY, NATIONAL
ASSOCIATION
By: /s/ Charles E. Wert
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Name: Charles E. Wert
Title: Executive Vice President
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ANNEX UNDERTAKINGS
1. In the event that MediaOne has not disposed of its interest in Telewest
(herefinafter the "Telewest Interest") prior to the closing of the
notified concentration (hereafter the "Closing"), AT&T undertakes
(hereinafter the "Undertaking") to enter into a binding agreement to
sell the Telewest Interest to a purchaser within three months following
the Closing. In the event AT&T fails to enter into a binding agreement
with a purchaser within such three month period, it shall use its
commercially reasonable efforts to do so as soon as possible thereafter.
2. On Closing, AT&T shall appoint a Trustee in accordance with the provisions
of paragraph 3 to exercise the functions set out in paragraphs 5 and 6
below.
3. (a) Prior to the Closing, AT&T shall propose to the Commission the names
of at least two institutions, independent from AT&T, and either of
whom AT&T considers appropriate to be appointed as Trustee.
(b) The Commission shall have the discretion to approve or reject one or
both of the names submitted. If only one name is approved, AT&T shall
appoint the institution concerned as Trustee. If more than one name is
approved, AT&T shall be free to choose the Trustee to be appointed
from among the names approved.
(c) If all names submitted are rejected, AT&T will submit the names of at
least two further such institutions ("the further names") within seven
days of being informed of the rejection. If only one further name is
approved by the Commission, AT&T shall appoint the institution
concerned as Trustee. If more than one further name is approved, AT&T
shall be free to choose the Trustee to be appointed from among the
names approved.
(d) If all further names are rejected by the Commission, the Commission
shall nominate a Trustee to be appointed by AT&T.
4. As soon as the Commission has given approval to one or more names
submitted, or nominated a Trustee, AT&T shall appoint the Trustee
concerned within seven days thereafter.
5. The Trustee's mandate shall include the following functions:
(a) to hold the Telewest Interest on trust for AT&T so that AT&T will not
be involved in any way in the management of Telewest and will not be
entitled to receive information regarding Telewest;
(b) to monitor the satisfactory discharge by AT&T of the obligations
entered into by AT&T in this Undertaking;
(c) to provide written reports ("the Trustee reports") to the Commission
on progress with the discharge of the Trustee's mandate, identifying
any respects in which the Trustee has been unable to discharge his/her
mandate. Such reports shall be provided at regular monthly intervals
commencing one month after the date of his/her appointment, or at such
other time(s) or time periods as the Commission may specify.
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6. If AT&T fails to enter into a binding agreement with a purchaser within
six months following the Closing despite having used commercially
reasonable efforts to do so, the Trustee shall carry out the following
additional functions ("the Request"), and the Trustee's mandate shall be
deemed to be extended accordingly. The Trustee shall give priority to the
discharge of these additional functions:
(a) to ensure the proper sale of the Telewest Interest;
(b) in the Trustee's reports, or in any event within no later than one
month of being notified of the Request, to submit to the Commission a
proposal for the method and timescale proposed by the Trustee for the
sale of the Telewest Interest. The Commission will, as soon as
reasonably practicable, approve the proposal or indicate any changes
that it may require;
(c) within six months (or such other date as the Commission may specify)
of being notified of the Request, to submit to the Commission for
approval an agreement for sale of the Telewest Interest to a
purchaser, such agreement to be unconditional on both purchaser and
seller and irrevocable except for the approvals of any appropriate
regulatory body and customary closing conditions.
If the Commission requests the Trustee to carry out the functions set forth in
this paragraph 6, the Trustee shall perform such functions subject to the legal
and contractual obligations of AT&T and/or MediaOne existing at the date hereof.
7. AT&T undertakes to provide the Trustee with all such assistance and
information, including copies of all relevant documents, as he may require
in carrying out his mandate, and to pay reasonable remuneration for his
services.
8. AT&T notes the following for the Commission's information. In the
United Kingdom, MediaOne owns a 50% interest in Mercury Personal
Communications ("One2One"). The remaining 50% interest is held by Cable
& Wireless plc. On 24 March 1999 MediaOne and Cable & Wireless issued a
joint press release announcing that they are jointly exploring
strategic alternatives regarding their ownership of One2One. Following
a recent auction process, MediaOne is currently evaluating bids and
negotiating final terms with prospective buyers. It is the intention of
MediaOne to dispose of its interest in One2 One prior to the Closing
under the Merger Agreeement with AT&T. In the event that MediaOne has
not disposed of its One2One interest prior to the Closing, however, AT&T
intends to sell this interest to an unrelated third party as soon as
possible after the Closing.
