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Read This

merger_proposal.jpg (10,792 bytes) The scan at left is part of a package of information I received as an owner of a few shares of stock in AT&T.  Every holder of even one share received this package, mailed out on May 14, 2002, which weighs about one pound.

Below the scan is the text verbatim.

   "AT&T Broadband Acquisition Proposal" means any offer or proposal for, or any indication of interest in (i) a merger, consolidation, share exchange, business combination, reorganization, recapitalization or other similar transaction involving AT&T, the AT&T Broadband Group, AT&T Broadband,or any AT&T Significant Broadband Subsidiary, (ii) the acquisition, directly or indirectly, of (A) an equity interest representing greater than 25% of the voting securities of AT&T, the AT&T Broadband Group, AT&T Broadband or any AT&T Significant Broadband Subsidiary or (B) assets, securities or ownership interests representing an amount equal to or greater than 25% of the consolidated assets or EBITDA generating power of the AT&T Broadband Group, or (iii) any transaction (x) the entering into or the consummation of which would reasonably be expected to be inconsistent in any material respect with the consummation of the transactions contemplated by this Agreement and the other Transaction Agreements, on the terms set forth in this Agreement and the other Transaction Agreements, as the case may be, or (y) that would reasonably be expected to prevent or materially delay, impede or adversely affect the consummation of the transactions contemplated by this Agreement and the other Transaction Agreements other than (X) in the case of (i) or (ii), (I) the transactions contemplated by this Agreement, (II) transactions permitted pursuant to Section 8.01 or (III} transactions that would not directly or indirectly (other than indirectly by virtue of the ownership of securities of AT&T) include any of the business, assets or liabilities of, or materially affect the business of, AT&T (to the extent relating to the AT&T Broadband Group), the AT&T Broadband Group, AT&T Broadband or any AT&T Broadband Subsidiary and (Y) in the case of (i), (ii) or (iii), a transaction that does not involve the AT&T Broadband Group, AT&T Broadband or any AT&T Broadband Subsidiary (except to the extent relating to (A) the transactions contemplated by this Agreement and the other Transaction Agreement or (B) a spin-off of the AT&T Broadband Group substantially pro rata to the holders of AT&T Common Stock not in connection with any other transaction involving the AT&T Broadband Group) that in any such case is consistent with in all material respects with the consummation of the transactions contemplated by this Agreement and the other Transaction Agreements, on the terms set forth in this Agreement and the other Transaction Agreements, as the case may be, provided that each of the parties to such transaction agrees that AT&T and AT&T Broadband shall honor the terms and conditions of this Agreement (any transaction referred to in this clause (Y), an "Excepted Transaction").

The particular document from which this scan is taken, called a proxy statement/prospectus, relates to a proposed merger between Comcast and AT&T, and shareholders are asked to vote whether to approve the merger.  This bound volume runs to some 750 pages of 10-point Times text, and on the front cover the heads of those two companies say:

We urge you to read this.        

Not just the highlights, mind you, and not just the executive summary, but the whole thing.

The text below the scan is accurate, and it takes up about half a page, so imagine reading something like this 1,499 more times.

Try reading this.  Really.  I don't mean trying to understand it, of course, I mean just reading it all the way through once, no matter how quickly you get lost.

 

So, with all that out of the way, why have I gone to all this trouble (and it was a lot of trouble) to reproduce this for you?

Because it's a remarkable quote, worthy of a certain admiration.

First, understand that this extremely long paragraph is only one sentence.  I swear, I checked.

It starts with, "'AT&T Broadband Acquisition Proposal'" means," and the entire rest of the entire quoted paragraph is a definition of that one term.  This particular page (page A-20 to be exact) appears more or less in the middle of the whole book, so any time you want to know what that term means -- and it appears many, many times -- you have to refer to (and presumably understand) this one entire gargantuan sentence.

This one sentence consists of 2,343 characters comprising some 430 words.  At that rate the entire book contains roughly 3.5 million characters comprising 650,000 words.  As a shareholder I'm being instructed to read this.  And not just read this, of course, but presumably understand it.

Second, whoever wrote it is a veritable master of the English language.  It is, as far as I can tell, grammatically correct and logically sensible.  Even the punctuation is correct, down to the last jot and tittle.

Third, despite what you might think I might think about this impossibly long sentence, I think it is actually good.

 

Google's Paragraph 14

November 2007: In order to participate in Google's AdSense program you, just a regular person, must agree to certain terms and conditions proposed by Google.  Some of them are understandable in both senses of the word, i.e., you can understand what they say and you can understand why they say it.

Perhaps less understandable is paragraph 14 of that agreement between you and Google.  You are expected to read this.

As with the AT&T example above, it is one long sentence and it is grammatically correct.

And if you agree to it, as many hundreds of thousands of people have since 2001, you take on an impressively long list of oppressive obligations, obligations so ferocious they're one of the reasons I decided not to participate in the program.

Before I proceed, let me make it clear I don't have anything against Google.  In fact, as of today I own a couple three shares of Google stock.  And I don't have anything against the AdSense program.  And Google does make it perfectly plain to people considering using this program that they must read and understand and be contractually obliged by the agreement of which paragraph 14 is a part.  And I don't think Google is trying to sneak anything past us with the wording of paragraph 14.  But I also don't think they want it explained as I explain it here.  I have to think that if everyone who ever signed up for the AdSense program knew exactly what paragraph 14 says, at least a couple three who were on the fence anyway would have leaned the other way.

So, what does paragraph 14 really say?

Note first that it is written in court-tested language, which means that while the meanings of certain terms might not be familiar to you, they are familiar to the lawyers who write them and the judges and juries that interpret them.  Such language is sometimes referred to pejoratively as "legalese," but there's a reason lawyers write in legalese (and it's a good reason).

Here's what Google's paragraph 14 says.  Here's what they require you, if you participate in their program, to agree to.
 

If you breach the agreement and because of that anyone successfully sues Google, you'll reimburse Google for that amount.  If Google is ordered by a judge and jury to pay $1,000, for example, then you agree to write Google a check for that same $1,000.  By doing so -- by agreeing to pay such judgments -- you are said to indemnify Google.  Said another way, you agree to hold harmless the company called Google, which means if they suffer the harm of having to pay a jury award, you'll make it good so Google does not end up paying for that loss.  When you indemnify someone, you are that person's bank account, that person's insurance policy; you contractually agree to fix any harm that comes to that person as a result of your relationship.  The idea is that you want Google to let you participate in their program, and you are so eager to get accepted that you are willing to indemnify them and hold them harmless.

If you signed up for Google's AdSense program, did you know you were agreeing to this?

But it gets worse.

If you breach the agreement and get sued along with Google, even if a jury finds Google guilty and you not guilty, you must still indemnify Google for whatever the verdict amount is against it.

But it gets worse.

If you breach the agreement, you agree to indemnify not only Google but any of thousands of other entities that lose a lawsuit.  Here's the list:

        Google's agents,
    + Google's affiliates,
    + Google's subsidiaries,
    + Google's directors,
    + Google's officers,
    + Google's employees, and
        all applicable third parties, including but not limited to
           relevant advertisers,
        + syndication partners,
        + licensors,
        + licensees,
        + consultants
        + contractors.

If you breach the agreement and if any of these people or organizations lose a lawsuit because of that breach, you agree to pay for them too.

Because there are so many (referred to as "Indemnified Persons" in the contract language), with your permission I will henceforth refer to all of them as "Google+."  So, wherever you see Google+ on this page, that means not only Google Inc. but all those other persons listed above.  (In law, a person is defined as not only a human but any other entity that can conduct business or sue or be sued such as a company, a not-for-profit organization, or a governmental unit such as a city or nation.)

But it gets worse.

If you breach the agreement, the indemnification you agree to includes not only Google+'s loss at verdict, it also includes Google+'s decision to settle a lawsuit before a verdict is reached.  As the case progresses, the parties refine their understanding of how it would be decided by a jury.  The lawyers discuss and negotiate.  They do research.  They consult with their clients and maybe other experts.  Way more often than not, maybe 75% of the time, a settlement is reached before trial starts, and maybe 50% of the ones that go to trial settle before the verdict.

If you breach the agreement and Google+ agrees to settle a lawsuit for $1,000, paragraph 14 still requires you to indemnify Google+.  Now, if you're following this one, the deal is that Google+ can enter into negotiations and settle a lawsuit not only without your permission but even without your knowledge, and then turn around and require you to indemnify them.  You won't be asked whether you think Google+ struck a fair bargain or even tried hard to, you'll just be told to write a check for a thousand dollars or whatever other amount they agreed to.

But it gets worse.

If you breach the agreement, you agree not only to indemnify Google+ against payments arising from lawsuits, you agree to pay for any claims Google+ pays for that do not give rise to a lawsuit.  If a claim is made against Google+ and Google+ pays $1,000 to settle the claim before a lawsuit is filed, paragraph 14 requires you to pay that amount to Google+.

But it gets worse.

If you breach the agreement, you agree to pay for any other loss or expense suffered by Google+.  For example, if an Indemnified Person loses $1,000 in profits because of your breach, you are required to pay that $1,000 yourself.  As another example, if an Indemnified Person has to spend 25 man-hours at $40 an hour fixing the problem, you agree to pay that $1,000.

But it gets worse.

If you breach the agreement, you specifically agree to pay for -- in case you missed it -- "reasonable legal fees."  This means the legal fees of any and every defendant in a lawsuit who matches the long list of Indemnified Persons above (plus -- in case you forgot -- the legal fees of any Indemnified Person before any lawsuit is filed).

Legal fees include expenses such as courthouse filing fees, expert witness fees, subpoena fees, investigators' fees, copying fees at maybe a dollar per page for hundreds if not thousands of pages, postage and courier fees, long-distance fees, travel, room and board expenses, and paper clips and staples.  This is hardly an exhaustive list, but you get the idea.  Lawyers can be quite creative when it comes to charging clients for what they call expenses.

But it gets worse.

The list of "reasonable legal fees" above does not yet include the cost of the lawyers' time you will be required to pay for, which will likely be the bulk of those fees.

At one end of the spectrum is a claim against Google+ in which a lawyer spends 30 minutes at a mere $50 an hour successfully convincing a claimant to drop the whole claim.  Even though Google+ didn't have to pay that claimant, paragraph 14 requires you to to pay that $25.

At the other end of the spectrum is a full-on, hard-fought lawsuit that struggles dilatorially up each step of the way to the U.S. Supreme Court.  In this case paragraph 14 requires you to pay for lawyers' time that will almost certainly run to millions of dollars.

But it gets worse.

If you breach the agreement, you specifically agree -- in case you missed it -- to defend Google+.  This doesn't mean you get to choose which law firm is hired or at what rate per hour or for what specific purposes, it just means you get to pay for it.

But it gets worse.

If you breach the agreement, you agree to indemnify, defend and hold harmless Google+ regardless of how trivial the breach is.  The contract language specifically states, "Your breach of any term of this Agreement" [emphasis mine].

But it gets worse.

If you breach the agreement, Google+ insists on being indemnified and defended and held harmless even if your breach did not cause the problem.  The language plainly says, "arising out of, related to or which may arise from" your breach.

Also, just to pick a nit or two, I think Google's lawyers missed something here.  In the phrase "arising out of, related to or which may arise from," there's a distinction between the past and present on one hand and the future on the other hand.  "Arising out of" and "related to" clearly contemplate all of the past right up to this very moment, whereas "or which may arise from" just as clearly contemplates the future.  The language also distinguishes between "arising out of" and "related to."  And in the part relating to all of the past right up till now, they do cover both eventualities.  But they forgot to cover "related to" in the future part.  If it is worth distinguishing between "arising out of" and "related to" for the period up till now, it is worth distinguishing between them for the future.  And if it is not worth distinguishing between them with regard to the future, then it is not worth distinguishing between them for the past up till now.  Either they used too many words or too few.

Another nit has to do with the phrase "which may arise from."  As I see it, the language is unnecessarily equivocal.  Google+ isn't demanding indemnification from claims that may arise in the future, they're demanding indemnification from claims that do arise in the future.  For a better explanation go here.

Yet a third nit has to do with the word "may" in the phrase "which may arise from."  The word "may" can imply the idea of permission, e.g., "those claims which are permitted to arise in the future."  For a better explanation go here.

Anyway, the important point is that Google's Paragraph 14 doesn't limit your liability to a breach that caused the problem.
But here's the worst of all.

Remember how each bullet point above started with "If you breach the agreement," implying that none of these ferociously bad things will happen to you if you don't do anything wrong?

Well, read this about Google's paragraph 14.

You'll see that all these things can happen to you even if you do not breach any term of the agreement.

Paragraph 14 refers to "Your use of the Program, the Site(s), and/or Your breach" of the agreement [emphasis mine].  That "or" in "and/or" means just what it says:

You agree to indemnify and defend and hold harmless all the members of Google+ even if everyone agrees you did not breach the agreement.

All they have to prove is that you used the program.

If you signed up for Google's AdSense program, did you really read this?
 

If you disagree with my analysis of any of the above, or
if you think I've left anything out, please .

 

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