<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D/A
(Amendment No. 2)
Under the Securities Exchange Act of 1934*
TURNER BROADCASTING SYSTEM, INC.
______________________________________________________________________________
(Name of Issuer)
Class B Common Stock, par value $.0625 per share
______________________________________________________________________________
(Title of Class of Securities)
900262-502
______________________________________________________________________________
(CUSIP Number)
Stephen M. Brett, Esq.
Executive Vice President and General Counsel
Tele-Communications, Inc.
5619 DTC Parkway
Englewood, CO 80111
(303) 267-5500
______________________________________________________________________________
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
September 12, 1996
________________________________________________________________________________
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with this statement [ ]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of less than five percent of such class.
See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page should be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 17 pages
<PAGE>
CUSIP No. 900262-502
----------
<TABLE>
<S> <C>
________________________________________________________________________________
(1) Names of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
Tele-Communications, Inc.
84-1260157
________________________________________________________________________________
(2) Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [ ]
________________________________________________________________________________
(3) SEC Use Only
________________________________________________________________________________
(4) Source of Funds
Not Applicable
- --------------------------------------------------------------------------------
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
(6) Citizenship or Place of Organization
Delaware
- --------------------------------------------------------------------------------
Number of (7) Sole Voting Power 29,657,482 shares*
Shares Bene- -------------------------------------------------------------
ficially (8) Shared Voting Power 453,838 shares*
Owned by -------------------------------------------------------------
Each Report- (9) Sole Dispositive Power 29,657,482 shares*
ing Person -------------------------------------------------------------
With (10) Shared Dispositive Power 453,838 shares*
- --------------------------------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
30,111,320 shares*
________________________________________________________________________________
(12) Check if the Aggregate Amount in Row (11) Excludes
Certain Shares [x]
________________________________________________________________________________
(13) Percent of Class Represented by Amount in Row (11)
21.5%*
________________________________________________________________________________
(14) Type of Reporting Person (See Instructions)
CO, HC
</TABLE>
- -------------------
* Figures do not include (i) shares issuable pursuant to derivative
securities referred to in Items 1, 2 and 5 of the Report, (ii) shares
of equity securities of the Company, record title to which is in
Lenfest Communications, Inc., beneficial ownership of which is
disclaimed by the Reporting Person, or (iii) 225,000 shares of the
Company's Class A Common Stock, par value $0.0625 per share, held by a
subsidiary of the Reporting Person. Information regarding total
shares outstanding of the Company's Class B Common Stock used to
calculate the Reporting Person's percentage ownership of the Company's
Class B Common Stock set forth in this Schedule 13D was provided by a
representative of the Company.
Page 2 of 17 pages
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
(Amendment No. 2)
Statement Of
TELE-COMMUNICATIONS, INC.
Pursuant to Section 13(d) of the
Securities Exchange Act of 1934
in respect of
TURNER BROADCASTING SYSTEM, INC.
(Commission File No. 0-9334)
This Report on Schedule 13D relates to (i) shares of the Class B
common stock, par value $.0625 per share (the "Class B Common Stock"), of Turner
Broadcasting System, Inc., a Georgia corporation (the "Company" or "Issuer"),
(ii) shares of the Issuer's Class C Convertible Preferred Stock, par value $.125
per share (the "Class C Preferred Stock"), each of which is currently
convertible into six (6) shares of Class B Common Stock and (iii) shares of the
Issuer's Class A common stock, par value $.0625 per share (the "Class A Common
Stock", and together with Class B Common Stock and the Class C Preferred Stock,
the "Company Capital Stock"). The Report on Schedule 13D originally filed by
Tele-Communications, Inc., a Delaware corporation ("TCI" or the "Reporting
Person"), on August 10, 1994, and amended by Amendment No. 1 on October 19,
1995, in respect of the Issuer, is hereby amended in its entirety as set forth
herein, and this Report constitutes Amendment No. 2 to such Report on Schedule
13D.
The summary descriptions contained in this Report of certain
agreements and documents are qualified in their entirety by reference to the
complete texts of such agreements and documents, filed as Exhibits hereto and
incorporated herein by reference.
ITEM 1. SECURITY AND ISSUER
-------------------
The class of equity securities to which this Report relates is the
Class B Common Stock. The Issuer has its principal executive offices at One CNN
Center, Atlanta, Georgia 30348.
This Report also includes (a) the following derivative securities: (i)
shares of the Issuer's Class C Preferred Stock, each of which is presently
convertible into six (6) shares of the Issuer's Class B Common Stock; and (ii)
rights, if any, exercisable within 60 days, to acquire beneficial ownership of
any of the Issuer's equity securities, by way of anti-dilution or pre-emptive
rights or otherwise and, (b) shares of the Issuer's Class A Common Stock.
Page 3 of 17 pages
<PAGE>
ITEM 2. IDENTITY AND BACKGROUND
-----------------------
This statement is being filed by TCI, a Delaware corporation, whose
principal executive offices are located at 5619 DTC Parkway, Englewood, Colorado
80111.
The Reporting Person, through its subsidiaries and affiliates, is
principally engaged in the acquisition, development and operation of cable
television systems and the provision of satellite-delivered video entertainment,
information and home shopping programming services to various video distribution
media, principally cable television systems. The Reporting Person also has
investments (i) in cable and telecommunications operations and television
programming operations in certain international markets and (ii) in companies
and joint ventures involved in developing and providing programming for new
television and telecommunications technologies.
Schedule 1 attached to this Report contains the following information
concerning each director and executive officer of the Reporting Person: (i) name
and residence or business address, (ii) principal occupation or employment; and
(iii) the name, principal business and address of any corporation or other
organization in which such employment is conducted. Schedule 1 is incorporated
by reference herein.
To the knowledge of the Reporting Person, each of the persons named on
Schedule 1 (the "Schedule 1 Persons") is a United States citizen. During the
last five years, neither the Reporting Person, nor to the knowledge of the
Reporting Person, any of the Schedule 1 Persons has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors). During the
last five years, neither the Reporting Person nor, to the knowledge of the
Reporting Person, any of the Schedule 1 Persons has been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding, is or was subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
-------------------------------------------------
Not applicable.
ITEM 4. PURPOSE OF TRANSACTION
----------------------
The Company, Time Warner Inc., a Delaware corporation ("Time Warner"),
TW Inc., a Delaware corporation and wholly owned subsidiary of Time Warner
("Holdco"), Time Warner Acquisition Corp. a Delaware corporation and wholly
owned subsidiary of Holdco ("Delaware Sub"), and TW Acquisition Corp., a Georgia
corporation and wholly owned subsidiary of Holdco ("Georgia Sub") have entered
into an Amended and Restated Agreement and Plan of Merger dated as of September
22, 1995, as amended by Amendment No. 1 thereto dated as of August 8, 1996 (as
so amended, the "Merger Agreement"), which provides for the merger of Delaware
Sub into Time Warner (the"TW Merger") and the simultaneous merger of Georgia Sub
into the Company (the "Company Merger" and together with the TW Merger, the
"Mergers") in a transaction in which the outstanding capital stock of Time
Warner and the Company, respectively will be converted into capital stock of
Holdco and
Page 4 of 17 pages
<PAGE>
each of Time Warner and the Company will become a wholly owned subsidiary of
Holdco. Following the Mergers, Holdco will be renamed Time Warner Inc. A copy
of the Merger Agreement has been incorporated by reference as Exhibit A hereto.
The transactions contemplated by the Merger Agreement are referred to herein
collectively as the "Transaction."
After an extensive review of the Transaction by the staff of the
Federal Trade Commission (the "FTC") and in order to eliminate certain concerns
raised by the staff of the FTC regarding possible competitive effects of the
Transaction, Time Warner, the Company, the Reporting Person and Liberty Media
Corporation, a Delaware corporation and wholly-owned subsidiary of the Reporting
Person ("LMC") entered into the Agreement Containing Consent Order (including
the related Interim Agreement, the "FTC Consent Decree") dated August 14, 1996,
as amended on September 4, 1996 with the FTC. The FTC Consent Decree was
initially accepted by the FTC on September 12, 1996, subject to public comment,
and will terminate on the tenth anniversary of the final acceptance thereof by
the FTC.
In connection with the parties' entering into the FTC Consent Decree,
LMC and certain subsidiaries of LMC (together with LMC, the "LMC Parties"),
entered into a Second Amended and Restated LMC Agreement dated as of September
22, 1995 (the "LMC Agreement") with Time Warner and Holdco. The following
discussion is qualified in its entirety by reference to the complete text of the
LMC Agreement, a copy of which has been filed as Exhibit B hereto and is
incorporated herein by reference.
Pursuant to the LMC Agreement, subject to the conditions set forth
therein, the LMC Parties have agreed to attend the meeting of the Company's
shareholders relating to the proposal to approve the Merger Agreement (the
"Company Meeting") and to vote all shares of the Company Capital Stock owned by
them in favor of the approval of the Company Merger, the Merger Agreement and
the transactions contemplated by the Merger Agreement. This agreement of the
LMC Parties is subject to the satisfaction of the following conditions as of the
time of the Company Meeting: (a) the Merger Agreement shall not have been
amended in any respect, nor shall any right of the Company or obligation of Time
Warner thereunder have been waived, other than any amendments and waivers that
do not change the consideration to be received in exchange for Company Capital
Stock or the exchange ratio therefor and that, when taken together with all
other amendments and waivers, do not have a material adverse effect on the value
of the consideration to be received in exchange for Company Capital Stock in the
Company Merger, (b) R.E. Turner, III, as a shareholder of the Company, shall
have voted or shall simultaneously be voting all his shares of Company Capital
Stock in favor of the approval of the Company Merger, (c) Time Warner shall have
obtained approval for the Transaction from its stockholders, (d) no judgment
shall have been entered and be continuing that restrains or enjoins any LMC
Party from voting its shares of Company Capital Stock and (e) no Change of
Control Event (as defined in the LMC Agreement) shall have occurred with respect
to Time Warner or Holdco (except as contemplated by the LMC Agreement).
Pursuant to the LMC Agreement and subject to the terms and conditions set forth
therein, the LMC Parties have agreed (i) not to grant a proxy with respect to
their shares of the Company Capital Stock, and (ii) not to transfer their shares
of the Company Capital Stock to any person other than Time Warner unless such
transferee agrees to be bound by the LMC Agreement.
The LMC Parties and Time Warner have agreed to use their reasonable
efforts to take all actions, including obtaining any required consents from
governmental authorities (including entering into the FTC Consent Decree),
necessary for the consummation of the
Page 5 of 17 pages
<PAGE>
Transaction and to defend any proceedings challenging the Transaction.
Notwithstanding the foregoing, nothing in the LMC Agreement imposes any
obligation or duty on the part of the Reporting Person or any of its affiliates
(i) to agree to, approve or otherwise be bound by or satisfy, any condition to
the grant or effectiveness of any approval of any governmental agency required
in connection with the consummation of the Transaction that requires the
surrender or modification in any significant respect of any license, franchise
or permit held by the Reporting Person or any of its affiliates, the divestiture
of any assets of the Reporting Person or any of its affiliates, the holding of
any such assets in a trust or otherwise separate and apart from such person's
other assets, limitations on such person's freedom of action with respect to
future acquisitions of assets or with respect to any existing or future business
or activities or its enjoyment of the full rights of ownership, possession and
use of any asset now owned or hereafter acquired by such person (including any
requirement not to receive shares of Holdco capital stock pursuant to the Merger
Agreement or otherwise), any agreement to divest any such shares, any
requirement not to receive, or to agree to divest, shares of Holdco capital
stock to be received pursuant to the LMC Agreement, any change in such person's
ownership or in any rights of or arrangements among its equity holders or any
other restrictions, limitations, requirements or conditions which are or might
be burdensome or adverse to any such person (in any such case, other than as
provided in the FTC Consent Decree or required by the LMC Agreement), (ii) to
agree to enter into or be bound by any settlement or judgment (other than the
FTC Consent Decree), (iii) to agree to any changes to the terms of the LMC
Agreement or any of the agreements contemplated by the LMC Agreement, or (iv) to
seek or agree to any changes to the terms of the FTC Consent Decree.
Pursuant to the LMC Agreement, Time Warner has agreed, upon the
written request of LMC, to terminate the Merger Agreement and abandon the Merger
in certain circumstances, including if (a) on the date fixed for the
consummation of the Transaction (the "Closing Date"), the LMC Agreement, any
agreement contemplated by the LMC Agreement, the Merger Agreement or the
consummation of the Mergers or any other transaction contemplated by the LMC
Agreement shall be illegal or would result in the imposition on the LMC Parties
or their successors of damages or penalties or if the FTC shall have failed to
accept or denied acceptance of the FTC Consent Decree for public comment or
there shall be pending any suit by any governmental agency in which the relief
sought would have any such effects or any effect described in the last sentence
of the immediately preceding paragraph (including any proceeding with respect to
an alleged violation of the FTC Consent Decree but excluding any other
proceeding contemplated by the FTC Consent Decree), (b) on the Closing Date, any
consent or approval of any governmental agency required in connection with the
consummation of the Transactions shall be subject to any condition referred to
in the last sentence of the immediately preceding paragraph, (c) a Holdco
stockholder rights plan, if adopted at or prior to the Closing, shall differ in
any material respect from the Time Warner rights plan now in existence, as
amended in accordance with the Rights Amendment (as defined in the LMC
Agreement), (d) on or prior to the Closing Date, a Change in Control Event shall
have occurred or on the Closing Date a Takeover Proposal (as defined in the LMC
Agreement) with respect to Time Warner shall be pending, (e) any action shall
have been taken by Time Warner that if taken after the effective time of the
Merger would result in a Prohibited Effect (as such term is defined in the LMC
Agreement), (f) as of the Closing Date, any party (other than LMC and its
affiliates) shall be in breach of its obligations under the LMC Agreement or any
other agreement contemplated by the LMC Agreement or (g) as of the Closing Date,
any required approval by the stockholders of Time Warner for the consummation of
the
Page 6 of 17 pages
<PAGE>
transactions contemplated by the Merger Agreement, the LMC Agreement and the
other agreements contemplated by the LMC Agreement shall not have been obtained.
Pursuant to a Contribution and Exchange Agreement dated as of
September 22, 1995 among Time Warner, Holdco, LMC, TCI Turner Preferred, Inc., a
Colorado corporation and wholly-owned subsidiary of LMC ("TCITP"), and Liberty
Broadcasting Inc., an Oregon corporation and direct wholly-owned subsidiary of
TCITP ("LBI"), at LMC's election (the "Contribution Election"), TCITP and LBI
will contribute all of the stock of United Cable Turner Investment Inc.
("UCTI"), their subsidiary that holds a portion of the Company Capital Stock
beneficially owned by the Reporting Person, to Holdco simultaneously with the
closing of the Transaction. If LMC makes the Contribution Election, TCITP and
LBI will receive from Holdco 0.75 of a share of Holdco Common Stock for each
share of the Class B Common Stock of the Company and 4.80 shares of the Holdco
Common Stock for each share of the Class C Preferred Stock of the Company held
by UCTI, which exchange ratios are identical to those provided for the Company
Merger in the Merger Agreement. A copy of the Contribution and Exchange
Agreement is filed as Exhibit C hereto and is incorporated herein by reference.
Additionally, in connection with the Transaction, the Company and LMC
Southeast Sports, Inc., an affiliate of the Reporting Company ("Southeast"),
have entered into an agreement, dated as of September 22, 1995 (the "SportSouth
Agreement"), providing for the sale by the Company to Southeast of the Company's
interest in SportSouth Network, Ltd., a regional sports cable network, for
approximately $65,000,000. A copy of the SportSouth Agreement has been
incorporated by reference as Exhibit D hereto.
Subject to the foregoing, the Reporting Person intends to continuously
review its investment in the Company. In reaching any conclusion as to its
future course of action, the Reporting Person will take into consideration
various factors, such as the Company's business and prospects, other
developments concerning the Company generally, other business opportunities
available to the Reporting Person, developments with respect to the business of
the Reporting Person, and general industry, economic and stock market
conditions, including, but not limited to, the market price of the Class B
Common Stock of the Company. Notwithstanding anything contained herein, the
Reporting Person reserves the right, depending on other relevant factors, to
acquire additional shares of Class B Common Stock or other capital stock of the
Company in open market or privately negotiated transactions, to dispose of all
or a portion of its holdings of the Company's capital stock or to change its
intention with respect to any or all of the matters referred to in this Item.
Page 7 of 17 pages
<PAGE>
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
------------------------------------
(a) The Reporting Person has beneficial ownership, through certain
indirect subsidiaries and affiliates of 30,111,320 shares of Class B Common
Stock, which constitutes 21.5% of the Class B Common Stock outstanding, not
including, in either such case, Class B Common Stock issuable upon the
conversion of outstanding shares of Class C Preferred Stock.
The Reporting Person has beneficial ownership, through certain
indirect subsidiaries and affiliates, of 6,087,080 shares of Class C Preferred
Stock, constituting 49.1%* of the outstanding shares of such class. Each
share of Class C Preferred Stock is currently convertible into six shares of
Class B Common Stock.
Assuming the conversion of all outstanding shares of Class C Preferred
Stock into Class B Common Stock, the Reporting Person would own 66,633,800
shares of Class B Common Stock, constituting 31.1% of the Class B Common Stock
outstanding on such basis.*
The following tables indicate the legal entities through which the
Reporting Person derives its beneficial ownership of Class B Common Stock and
Class C Preferred Stock.
- -------------------
* Information regarding total shares outstanding of the Company's Class
C Preferred Stock used to calculate the Reporting Person's percentage ownership
set forth in this Schedule 13D of the Company's Class C Preferred Stock and
Class B Common Stock assuming conversion of all outstanding shares of the
Company's Class C Preferred Stock was provided by a representative of the
Company.
Page 8 of 17 pages
<PAGE>
TABLE I
SOLE VOTING AND DISPOSITIVE POWER
<TABLE>
<CAPTION>
Holdings
------------------------------
Class B Class C
Entity Common Stock Preferred Stock
------ ------------ ---------------
<S> <C> <C>
Communications Capital Corp. (1) 29,237,671 --
TCI Turner Preferred, Inc. (1) 47,100 119,099
United Cable Turner Investment, Inc. (1) -- 5,820,452
TCI TKR of Southern Kentucky, Inc. (2) 372,711 --
---------- ---------
29,657,482 5,939,551
</TABLE>
- -------------------
(1) Wholly owned subsidiary of TCI.
(2) TCI has an indirect majority (70%) interest in TCI TKR Limited Partnership,
which is the sole stockholder of TCI TKR of Southern Kentucky, Inc. A
minority (30%) interest in TCI TKR Limited Partnership is owned by SCI
Cable Partners, of which respective subsidiaries of TCI and Knight Ridder
Cablevision, Inc. each own 50%. Through its 50% interest in SCI Cable
Partners, TCI holds a further 15% beneficial interest in TCI TKR Limited
Partnership, for a total beneficial interest in TCI TKR Limited Partnership
of 85%.
TABLE II
SHARED VOTING AND DISPOSITIVE POWER
<TABLE>
<CAPTION>
Holdings
------------------------------
Class B Class C
Entity Common Stock Preferred Stock
------ ------------ ---------------
<S> <C> <C>
TKR Cable Company (3) 453,838 147,529
</TABLE>
- -------------------
(3) 50% owned subsidiary of TCI.
Page 9 of 17 pages
<PAGE>
The foregoing does not include 47,208 shares (less than 0.1%) of Class B
Common Stock owned by Lenfest Communications, Inc. ("Lenfest"), a 50% owned
subsidiary of a subsidiary of the Reporting Person, as to which the Reporting
Person disclaims beneficial ownership. Pursuant to certain existing arrangements
between Lenfest and the Reporting Person, the Reporting Person does not have any
power to vote or dispose of, or to direct the voting or disposition of, any of
the Class B Common Stock owned by Lenfest.
None of the other persons referred to in Item 2 of this Report beneficially
owns any shares of Class B Common Stock, except Peter R. Barton, who may be
deemed to have beneficial ownership with respect to 300 shares (less than
0.001%) of Class B Common Stock held in trust for his children. Jerome Kern
disclaims beneficial ownership of any shares of Class B Common Stock that may be
owned by Diane Kern, his spouse.
(b) The Reporting Person has the SOLE power to vote or to direct the voting
of 29,657,482 shares of the Class B Common Stock that it beneficially owns and
has the SOLE power to dispose of, or to direct the disposition of 29,657,482
shares of the Class B Common Stock that it beneficially owns. The Reporting
Person has SHARED power to vote or to direct the voting of 453,838 shares of the
Company's Class B Common Stock and has SHARED power to dispose of or to direct
the disposition of 453,838 shares of the Class B Common Stock that it
beneficially owns. It also has (i) SOLE voting and investment power over up to
35,637,306 shares of Class B Common Stock and (ii) SHARED voting and investment
power over up to 885,174 shares of Class B Common Stock which may hereafter be
issued by the Company upon the conversion of the shares of Class C Preferred
Stock beneficially owned by the Reporting Person, as indicated above.
(c) Except as otherwise reported herein, neither the Reporting Person nor,
to its knowledge, any other person referred to in Item 2 has effected any
transaction in the Class B Common Stock during the past sixty (60) days.
(d) There is no person that has the right to receive or the power to direct
the receipt of dividends from, or proceeds from the sale of, the Class B Common
Stock beneficially owned by the Reporting Person, except its wholly owned
subsidiaries, and then only for the benefit of the Reporting Person.
The Reporting Person also beneficially owns 225,000 shares of the Company's
Class A Common Stock, constituting less than 1% of the Class A Common Stock
outstanding. Pursuant to the Articles of Incorporation of the Company, the
shares of Class A Common Stock and Class B Common Stock vote together as a
single class on all matters as to which such shares are entitled to vote (except
as otherwise provided by law), with the holders of Class A Common Stock entitled
to two votes per share and the holders of Class B Common Stock entitled to one-
fifth of a vote per share. The Class A Common Stock is not convertible into
Class B Common Stock. The following other persons referred to in Item 2 of this
Report beneficially own the number of shares of Class A Common Stock indicated
opposite their names (in each case constituting less than 0.01% of such class):
Page 10 of 17 pages
<PAGE>
<TABLE>
<CAPTION>
Name(1) Number of Shares(1)
- ------- -------------------
<S> <C>
Peter R. Barton (2) 600
Bernard W. Schotters, II 1000
Fred A. Vierra 950
</TABLE>
- -------------------
(1) Does not include any shares that may be owned by Diane Kern as to which
Jerome Kern disclaims beneficial ownership.
(2) Held in trust for Mr. Barton's children.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
---------------------------------------------------------------------
TO SECURITIES OF ISSUER
-----------------------
The discussion contained in Item 4 hereof is hereby incorporated
herein by reference. There are presently no contracts, arrangements,
understandings or relationships among the persons named in Item 2 of this Report
or between such persons and any other person with respect to any securities of
the Company other than those described in Item 4 hereof and other than the
agreements, filed or incorporated by reference herein as Exhibits D, E, F, G, H
and I.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
--------------------------------
A. Amended and Restated Agreement and Plan of Merger dated as of
September 22, 1995, among Time Warner Inc., TW Inc., Time Warner Acquisition
Corp., TW Acquisition Corp. and Turner Broadcasting System, Inc. (incorporated
by reference to Exhibit 2 to the Company's Current Report on Form 8-K dated
December 1, 1995, Commission File No. 0-9334) as amended by Amendment No. 1
thereto dated as of August 8, 1996 (incorporated by reference to Exhibit 2.1 to
the Company's Current Report on Form 8-K dated September 6, 1996, Commission
File No. 0-9334).
B. Second Amended and Restated LMC Agreement dated as of September
22, 1995, among Time Warner Inc., TW Inc., Liberty Media Corporation and certain
subsidiaries of Liberty Media Corporation.
C. Contribution and Exchange Agreement dated as of September 22,
1995 among Time Warner Inc., TW Inc., TCI Turner Preferred, Inc., Liberty Media
Corporation and Liberty Broadcasting, Inc.
D. Stock Purchase Agreement, dated as of September 22, 1995, between
Turner Broadcasting System, Inc. and LMC Southeast Sports, Inc. (incorporated by
reference to Exhibit 99.2 to the Company's Current Report on Form 8-K, dated
October 5, 1995, Commission File No. 0-9334).
The following exhibits are hereby incorporated by reference to the
initial Schedule 13D, dated June 11, 1987, filed June 15, 1987, by Tele-
Communications, Inc. (the
Page 11 of 17 pages
<PAGE>
predecessor of the Reporting Person) in respect of the Company, under Commission
File No. 0-05550 (the "Predecessor Schedule 13D") and the amendments thereto:
E. Investors Agreement dated June 3, 1987, among Turner Broadcasting
System, Inc., TCI Turner Preferred, Inc., United Cable Turner Investment Inc.,
TKR Cable Company and the other parties named therein (collectively the
"Investors") (incorporated by reference to Exhibit F of the Predecessor Schedule
13D).
F. Shareholders' Agreement dated June 3, 1987, among Turner
Broadcasting System, Inc., R.E. Turner, III, and the Investors (the
"Shareholders' Agreement") (incorporated by reference to Exhibit G of the
Predecessor Schedule 13D).
G. Agreement dated as of June 3, 1987, among Time Incorporated, Time
TBS Holdings, Inc., Tele-Communications, Inc., TCI Turner Preferred, Inc.,
United Artists Communications, Inc., and United Cable Television Corporation
(incorporated by reference to Exhibit H of the Predecessor Schedule 13D).
H. Voting Agreement dated as of June 3, 1987, among TCI Turner
Preferred, Inc., Time TBS Holdings, Inc., United Artists Communications, Inc.,
United Cable Television Corporation, Warner Cable Communications, Inc. and
Continental Cablevision, Inc. (incorporated by reference to Exhibit I of the
Predecessor Schedule 13D).
I. First Amendment dated as of April 15, 1988, to Shareholders'
Agreement, (incorporated by reference to Exhibit (a) to Amendment No. 5 dated
August 9, 1988, to the Predecessor Schedule 13D).
Page 12 of 17 pages
<PAGE>
SIGNATURE
---------
After reasonable inquiry and to the best of his knowledge and belief, the
undersigned certifies that the information in this statement is true, complete
and correct.
Dated: September 12, 1996
TELE-COMMUNICATIONS, INC.
By: /s/ Stephen M. Brett
----------------------------------
Name: Stephen M. Brett
Title: Executive Vice President
Page 13 of 17 pages
<PAGE>
SCHEDULE 1
----------
Directors, Executive Officers and Controlling Persons
of
Tele-Communications, Inc. ("TCI")
<TABLE>
<CAPTION>
Principal Business
or Organization in
Principal Occupation and Which Such Employment
Name Business Address Is Conducted
- ---- ------------------------- ---------------------
<S> <C> <C>
Bob Magness Chairman of the Board and Cable television and
Director of TCI telecommunications; and
5619 DTC Parkway programming services
Englewood, CO 80111
John C. Malone President and Chief Executive Cable television and
Officer and Director of TCI telecommunications; and
5619 DTC Parkway programming services
Englewood, CO 80111
Donne F. Fisher Consultant and Director of TCI Cable television and
5619 DTC Parkway telecommunications; and
Englewood, CO 80111 programming services
John W. Gallivan Director of TCI; Newspaper publishing
Chairman of the Board of
Kearns-Tribune Corporation
400 Tribune Building
Salt Lake City, UT 84111
Tony Lee Coelho Director of TCI; Chairman of Investment Services
the Board and Chief Executive
Officer of ETC w/tci, Inc.;
Chairman and Chief Executive
Officer of Coelho Associates,
LLC
1325 Avenue of the Americas,
26th Floor
New York, New York 10019
Kim Magness Director of TCI and TCI Management of personal
Communications, Inc.; investments
Manages various personal
investments;
4000 E. Belleview
Englewood, CO 80111
</TABLE>
Page 14 of 17 pages
<PAGE>
<TABLE>
<S> <C> <C>
Robert A. Naify Director of TCI; Motion Picture Industry
President and C.E.O. of
Todd-AO Corporation;
172 Golden Gate Avenue
San Francisco, CA 94102
Jerome H. Kern Director of TCI; Business Business Consulting; Law
Consultant; Special Counsel to
Baker & Botts, L.L.P.
5619 DTC Parkway
Englewood, CO 80111
Gary K. Bracken Senior Vice President & Cable television and
Controller of TCI telecommunications; and
Communications, Inc. programming services
5619 DTC Parkway
Englewood, CO 80111
Stephen M. Brett Executive Vice President, Cable television and
Secretary and General Counsel telecommunications; and
of TCI programming services
5619 DTC Parkway
Englewood, CO 80111
Brendan R. Clouston Executive Vice President and Cable television and
Chief Operating Officer of TCI telecommunications; and
5619 DTC Parkway programming services
Englewood, CO 80111
Barry P. Marshall Executive Vice President of TCI Cable television and
Communications, Inc. telecommunications; and
5619 DTC Parkway programming services
Englewood, CO 80111
Larry E. Romrell Executive Vice President of TCI; Cable television and
5619 DTC Parkway telecommunications; and
Englewood, CO 80111 programming services
Bernard W. Schotters, II Senior Vice President - Finance Cable television and
& Treasurer of TCI telecommunications; and
Communications, Inc. programming services
5619 DTC Parkway
Englewood, CO 80111
Robert N. Thomson Senior Vice President - Cable television and
Government Affairs of TCI telecommunications; and
Communications, Inc. programming services
5619 DTC Parkway
Englewood, CO 80111
</TABLE>
Page 15 of 17 pages
<PAGE>
<TABLE>
<S> <C> <C>
Fred A. Vierra Executive Vice President of Cable television and
TCI; Chief Executive Officer telecommunications; and
5619 DTC Parkway programming services
Englewood, CO 80111
Peter R. Barton Executive Vice President of TCI Cable television and
5619 DTC Parkway telecommunications; and
Englewood, CO 80111 programming services
</TABLE>
Page 16 of 17 pages
<PAGE>
EXHIBIT INDEX
A. Amended and Restated Agreement and Plan of Merger dated as of
September 22, 1995, among Time Warner Inc., TW Inc., Time Warner Acquisition
Corp., TW Acquisition Corp. and Turner Broadcasting System, Inc. (incorporated
by reference to Exhibit 2 to the Company's Current Report on Form 8-K dated
December 1, 1995, Commission File No. 0-9334) as amended by Amendment No. 1
thereto dated as of August 8, 1996 (incorporated by reference to Exhibit 2.1 to
the Company's Current Report on Form 8-K dated September 6, 1996, Commission
File No. 0-9334).
B. Second Amended and Restated LMC Agreement dated as of September 22,
1995, among Time Warner Inc., TW Inc., Liberty Media Corporation and certain
subsidiaries of Liberty Media Corporation.
C. Contribution and Exchange Agreement dated as of September 22,
1995 among Time Warner Inc., TW Inc., TCI Turner Preferred, Inc., Liberty Media
Corporation and Liberty Broadcasting, Inc.
D. Stock Purchase Agreement, dated as of September 22, 1995, between
Turner Broadcasting System, Inc. and LMC Southeast Sports, Inc. (incorporated by
reference to Exhibit 99.2 to the Company's Current Report on Form 8-K, dated
October 5, 1995, Commission File No. 0-9334).
The following exhibits are hereby incorporated by reference to the
initial Schedule 13D, dated June 11, 1987, filed June 15, 1987, by
Tele-Communications, Inc. (the predecessor of the Reporting Person) in respect
of the Company, under Commission File No. 0-05550 (the "Predecessor Schedule
13D") and the amendments thereto:
E. Investors Agreement dated June 3, 1987, among Turner Broadcasting
System, Inc., TCI Turner Preferred, Inc., United Cable Turner Investment Inc.,
TKR Cable Company and the other parties named therein (collectively the
"Investors") (incorporated by reference to Exhibit F of the Predecessor Schedule
13D).
F. Shareholders' Agreement dated June 3, 1987, among Turner
Broadcasting System, Inc., R.E. Turner, III, and the Investors (the
"Shareholders' Agreement") (incorporated by reference to Exhibit G of the
Predecessor Schedule 13D).
G. Agreement dated as of June 3, 1987, among Time Incorporated, Time
TBS Holdings, Inc., Tele-Communications, Inc., TCI Turner Preferred, Inc.,
United Artists Communications, Inc., and United Cable Television Corporation
(incorporated by reference to Exhibit H of the Predecessor Schedule 13D).
H. Voting Agreement dated as of June 3, 1987, among TCI Turner
Preferred, Inc., Time TBS Holdings, Inc., United Artists Communications, Inc.,
United Cable Television Corporation, Warner Cable Communications, Inc. and
Continental Cablevision, Inc. (incorporated by reference to Exhibit I of the
Predecessor Schedule 13D).
I. First Amendment dated as of April 15, 1988, to Shareholders'
Agreement, (incorporated by reference to Exhibit (a) to Amendment No. 5 dated
August 9, 1988, to the Predecessor Schedule 13D).
Page 17 of 17 pages
<PAGE>
SECOND AMENDED AND RESTATED
LMC AGREEMENT
AMONG
TIME WARNER INC.,
TW INC.,
LIBERTY MEDIA CORPORATION,
and certain subsidiaries of
Liberty Media Corporation
Dated as of September 22, 1995
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
PAGE
----
<S> <C> <C>
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions............................................... 3
SECTION 1.2 Terms Generally........................................... 11
ARTICLE II
COVENANTS WITH RESPECT TO THE MERGER
SECTION 2.1 Agreement to Vote; Related Matters........................ 12
SECTION 2.2 Reasonable Efforts........................................ 14
SECTION 2.3 Agreement to Abandon...................................... 14
SECTION 2.4 Closing Deliveries........................................ 16
SECTION 2.5 Dissenters' Rights........................................ 16
SECTION 2.6 Abandoned and Terminated Agreements....................... 16
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of LMC Parent and the
Shareholders......................................... 17
SECTION 3.2 Representations and Warranties of Old TW.................. 19
SECTION 3.3 Representations and Warranties of Holdco.................. 21
ARTICLE IV
CERTAIN POST-CLOSING COVENANTS
SECTION 4.1 Share Exchange............................................ 23
SECTION 4.2 No Redemption............................................. 24
SECTION 4.3 Certain Post-Closing Compensation Obligations............. 25
SECTION 4.4 Certain Post-Closing Covenants............................ 27
</TABLE>
i
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE V
MISCELLANEOUS
SECTION 5.1 Expenses.................................................. 30
SECTION 5.2 Specific Performance...................................... 30
SECTION 5.3 Amendments; Termination................................... 30
SECTION 5.4 Successors and Assigns.................................... 30
SECTION 5.5 Entire Agreement.......................................... 30
SECTION 5.6 Notices................................................... 31
SECTION 5.7 Governing Law............................................. 32
SECTION 5.8 Counterparts; Effectiveness............................... 32
SECTION 5.9 Descriptive Headings...................................... 32
SECTION 5.10 Severability.............................................. 32
SECTION 5.11 Attorney's Fees........................................... 33
SECTION 5.12 Obligations of Old TW and Holdco Joint and Several........ 33
</TABLE>
ii
<PAGE>
EXHIBITS AND SCHEDULES ATTACHED HERETO
<TABLE>
<S> <C>
Exhibit A Terms of LMCN-V Common Stock
Exhibit B Form of First Refusal Agreement
Exhibit C Terms of Voting Holdco LMC Common Stock
Exhibit D Form of SSSI Agreement
Exhibit E Form of LMC Registration Rights Agreement
Exhibit F Form of Rights Amendment
Exhibit G SportSouth Agreement
Exhibit H Form of Sunshine Agreement
Exhibit I Contribution and Exchange Agreement
Schedule I Schedule of Shareholder Shares
Schedule 3.1 Litigation
</TABLE>
iii
<PAGE>
SECOND AMENDED AND RESTATED LMC AGREEMENT, dated as of
September 22, 1995 (this "Agreement"), among TIME
WARNER INC., a Delaware corporation, TW INC., a
Delaware corporation ("Holdco"), LIBERTY MEDIA
------
CORPORATION, a Delaware corporation ("LMC Parent"), TCI
----------
TURNER PREFERRED, INC., a Colorado corporation
("TCITP"), and certain, other subsidiaries of LMC
-----
Parent listed with TCITP under "Subsidiaries of LMC
Parent" on the signature pages hereto (TCITP and such
subsidiaries collectively, the "Shareholders").
------------
Recitals
--------
A. This Agreement amends and restates in its entirety the Amended and
Restated LMC Agreement, dated as of September 22, 1995 (the "Amended LMC
-----------
Agreement"), among the parties hereto, which in turn amended and restated the
- ---------
LMC Agreement dated as of September 22, 1995 (the "Original LMC Agreement"),
----------------------
among Old TW, LMC Parent, LMC Sub and the other Shareholders.
B. The Original LMC Agreement was entered into concurrently with, and in
contemplation of, the Agreement and Plan of Merger dated as of September 22,
1995 (the "Original Merger Agreement"), among Old TW, Time Warner Acquisition
-------------------------
Corp., a Delaware corporation and wholly owned subsidiary of Old TW ("Delaware
--------
Sub"), and Turner Broadcasting System, Inc., a Georgia corporation (the
- ---
"Company"), providing for the merger of the Company with and into Delaware Sub.
-------
C. The Amended LMC Agreement was entered into concurrently with, and in
contemplation of, (1) the Original Merger Agreement being amended and restated
(as so amended and restated, and as amended by Amendment No. 1 thereto dated as
of August 8, 1996, the "Amended and Restated Merger Agreement") to provide for,
-------------------------------------
among other things, a tax-free incorporation transaction under Section 351 of
the Internal Revenue Code of 1986, as amended, as contemplated by Section 1.01
of the Original Merger Agreement, and (2) both Holdco and TW Acquisition Corp.,
a Georgia corporation and direct wholly owned subsidiary of Holdco ("Georgia
-------
Sub"), becoming parties to the Amended and Restated Merger Agreement. Holdco is
- ---
currently a direct wholly owned subsidiary of Old TW, and Delaware Sub is a
direct wholly owned subsidiary of Holdco. The Amended and Restated Merger
Agreement provides for the merger of Delaware Sub
<PAGE>
into Old TW (the "TW Merger") and the simultaneous merger of Georgia Sub into
---------
the Company (the "TBS Merger" and, collectively with the TW Merger, the
----------
"Mergers"), in a transaction in which the outstanding capital stock of Old TW
-------
and the Company, respectively, will be converted into capital stock of Holdco,
and each of Old TW and the Company will become a wholly owned subsidiary of
Holdco.
D. The TBS Merger is subject to certain conditions, including the
approval of the TBS Merger and the approval and adoption of the Amended and
Restated Merger Agreement: by the holders of a majority of the outstanding
shares of Class C Convertible Preferred Stock, par value $.125 per share, of the
Company (the "Class C Preferred Stock"), voting as a separate class; by the
-----------------------
holders of a majority of the voting power of the outstanding shares of Class A
Common Stock, par value $.0625 per share, of the Company (the "Class A Common
--------------
Stock"), and Class B Common Stock, par value $.0625 per share, of the Company
- -----
(the "Class B Common Stock"; together with the Class A Common Stock, the "Common
-------------------- ------
Stock"), voting as a single class; and by the holders of a majority of the
- -----
voting power of the outstanding shares of Common Stock and Class C Preferred
Stock, voting as a single class.
E. Each Shareholder is the record and beneficial owner of the number of
shares of Class A Common Stock, Class B Common Stock and Class C Preferred
Stock, set forth opposite such Shareholder's name on Schedule I hereto (such
shares of Class A Common Stock, Class B Common Stock and Class C Preferred
Stock, together with any shares of capital stock of the Company acquired by such
Shareholder after September 22, 1995 and prior to the Effective Time of the
Mergers, being collectively referred to herein as the "Shareholder Shares").
------------------
F. The TBS Merger is also subject to the condition that the waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act") shall have expired. In connection therewith, Old TW,
Tele-Communications, Inc., a Delaware corporation ("TCI"), LMC Parent and the
---
Company have entered into an Agreement Containing Consent Order (the "ACCO")
----
dated as of August , 1996, and an Interim Agreement in the form attached as
Appendix I to the ACCO, with the Federal Trade Commission (the "FTC"), which
---
contemplates the issuance of an Order (the ACCO, together with such Order and
the Interim Agreement, in each case as the same may be amended or modified from
time to time hereafter, the "FTC Consent Decree").
------------------
G. Old TW, Holdco, LMC Parent and the Shareholders desire to amend and
restate in its entirety the Amended LMC Agreement and the Original LMC Agreement
as amended thereby, as provided herein.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties do hereby agree as follows:
2
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. Capitalized terms used but not defined
-----------
herein and the term "subsidiary" shall have the meanings assigned to such terms
in the Amended and Restated Merger Agreement. In this Agreement:
"Action" shall mean any of (i) the direct or indirect acquisition
------
(through purchase, exchange, merger or consolidation, exercise of rights or
otherwise) by TW Parent or any Controlled Affiliate of TW Parent of any assets,
securities or business; (ii) any merger or consolidation of TW Parent with or
into any other person; (iii) the commencement by TW Parent or any of its
Controlled Affiliates of any new business; (iv) any investment by TW Parent or
any Controlled Affiliate of TW Parent in any other person; and (v) the sale or
issuance by TW Parent or any Controlled Affiliate of TW Parent of TW Securities
to any person or the repurchase, redemption or other acquisition by TW Parent or
any Controlled Affiliate of TW Parent of any TW Securities; excluding, in all of
the cases, any of the foregoing actions that TW Parent or any Controlled
Affiliate of TW Parent is required to take pursuant to, or that is expressly
contemplated by, this Agreement, the Amended and Restated Merger Agreement,
(prior to the execution and delivery of the Amended and Restated Merger
Agreement) the Original Merger Agreement, any Additional Agreement or any other
agreement expressly contemplated by this Agreement, the Amended and Restated
Merger Agreement or any Additional Agreement.
"Additional Agreements" shall mean the Registration Rights Agreement,
---------------------
the First Refusal Agreement, the SSSI Agreement, the Distribution Contract, the
Rights Amendment (if entered into), the SportSouth Agreement, the Sunshine
Agreement, the Contribution and Exchange Agreement and the Program and
Digitization Agreement.
"Adjustment Amount", with respect to the disposition of any TW
-----------------
Securities as to which TW Parent is obligated to pay an Adjustment Amount to a
Liberty Party or a SpinCo Party, means an amount equal to the Nominal Tax Amount
divided by the Gross-up Factor. For purposes of this definition, the "Nominal
-------
Tax Amount" means an amount equal to the product of (i) the gain or income
- ----------
recognized for Federal income tax purposes from the disposition of such TW
Securities and (ii) the Blended Rate, and the "Gross-up Factor" is equal to 1
---------------
minus the Blended Rate.
"Affiliate", when used with respect to a specified person, means any
---------
other person which directly or indirectly Controls, is under common Control with
or is Controlled by such first person. The term "affiliated" (whether or not
capitalized) shall have a correlative meaning. For purposes of this Agreement:
(i) no Liberty Party or SpinCo Party shall be deemed to be an Affiliate of TW
Parent or any of its subsidiaries and neither TW Parent nor any of its
Affiliates shall be deemed to be an Affiliate of any Liberty Party or SpinCo
Party; prior to the effective time of the
3
<PAGE>
TBS Merger, neither TW Parent nor any of its Affiliates nor TCI, LMC Parent or
any of their respective Affiliates shall be deemed to be an Affiliate of the
Company or any of its subsidiaries; and after the effective time of the
Distribution, in determining whether any person is an Affiliate of SpinCo, the
SpinCo Convertible Preferred Stock shall be assumed to have been converted by
the holders thereof into SpinCo Series A Common Stock and SpinCo Series B Common
Stock, as applicable.
"Blended Rate", as to any Liberty Party or SpinCo Party, as
------------
applicable, for any relevant taxable year, means the tax rate that is the
highest combined corporate Federal, state and local marginal capital gain rate
(determined by taking into account any deduction for net capital gain)
applicable to gain or income upon dispositions of TW Securities beneficially
owned by such Liberty Party or SpinCo Party during such taxable year as
contemplated by Section 4.3 and Section 4.4(a), provided, however, that if the
-------- -------
tax liability of the Liberty Party (or of the consolidated group of which such
Liberty Party is a member for tax purposes) or of the SpinCo Party (or of the
consolidated group of which such SpinCo Party is a member for tax purposes) with
respect to such income or gain for such taxable year is not determined under
Section 1201 of the Internal Revenue Code of 1986, as amended (or any successor
Section), such tax rate shall be the highest combined regular corporate Federal,
state and local ordinary income tax rate applicable to such Liberty Party (or
such consolidated group) or such SpinCo Party (or such consolidated group), as
applicable, for such taxable year. Such tax rate shall be determined taking into
account such Liberty Party's (or its consolidated group's) or such SpinCo
Party's (or its consolidated group's) relevant state and local apportionment
factors with respect to such gain or income, the deductibility of state and
local taxes for Federal income tax purposes (and the deductibility of taxes
imposed by any taxing jurisdiction for purposes of computing the tax liability
to any other taxing jurisdiction), the dividends received deduction (where such
gain or income is eligible for such deduction) and any other relevant
considerations.
"Change in Control Event" shall mean any of the following events: (i)
-----------------------
any person becoming an Acquiring Person (as defined in the Rights Agreement as
in effect on September 22, 1995, as if amended in accordance with the Rights
Amendment), including any person that would otherwise be excluded from the
definition of Acquiring Person in the Rights Agreement by virtue of the
acquisition of shares pursuant to a Qualifying Offer (as defined in the Rights
Agreement as in effect on September 22, 1995, as if amended in accordance with
the Rights Amendment) and regardless of whether the Rights Agreement continues
to be in effect or is so amended, or (ii) TW Parent's entering into any
agreement (other than the Original Merger Agreement, the Amended and Restated
Merger Agreement or any amendment thereto) providing for any merger or
consolidation of TW Parent into any other person, a binding share exchange, or a
merger of TW Parent with any other person in which the shares of capital stock
of TW Parent are exchanged for or converted into the right to receive anything
other than common stock, par value $1.00 per share, of TW Parent, or (iii) prior
to the Closing, Holdco ceasing to be a wholly owned subsidiary of Old TW or
entering into
4
<PAGE>
any agreement (other than the Amended and Restated Merger Agreement or any
amendment thereto) that would result in Holdco ceasing to be a wholly owned
subsidiary of Old TW.
"Communications Laws" shall mean the Communications Act of 1934 (as
-------------------
amended and supplemented from time to time and any successor statute or statutes
regulating tele-communications companies) and the rules and regulations (and
interpretations thereof and determinations with respect thereto) promulgated,
issued or adopted from time to time by the FCC. All references herein to the
Communications Laws shall include as of any relevant date in question the
Communications Laws as then in effect (including any Communications Law or part
thereof the effectiveness of which is then stayed) and as then formally proposed
by the FCC by publication in the Federal Register or promulgated with a delayed
effective date.
"Company Letter" shall mean those certain letters dated September 22,
--------------
1995, December 1, 1995, and August 8, 1996, from the Company to Old TW and LMC
Parent.
"Contract" shall mean any agreement, contract, commitment, indenture,
--------
lease, license, instrument, note, bond, security, undertaking, promise,
covenant, or legally binding arrangement or understanding.
"Contribution and Exchange Agreement" shall mean the Contribution and
-----------------------------------
Exchange Agreement, dated as of September 22, 1995, to be entered into by
Holdco, Old TW, TCITP and LBI, concurrently with the execution and delivery of
this Agreement, and the Exhibit and Schedules thereto, a copy of which is
annexed hereto as Exhibit I.
"Control", as to any person, shall mean the possession, directly or
-------
indirectly, of the power to direct or cause the direction of the management and
policies of such person (whether through ownership of securities, partnership
interests or other ownership interests, by contract, by participation or
involvement in the board of directors, management committee or other management
structure of such person, or otherwise). The terms "Controlled", "Controlling"
---------- -----------
and similar variations shall have correlative meanings.
"Controlled Affiliate" of any specified person shall mean an Affiliate
--------------------
of such specified person that is Controlled by such specified person and is not
Controlled by another person (other than another Controlled Affiliate of the
specified person), except that as used in the definition of "Action" in this
------
Section 1.1, the term "Controlled Affiliate" shall include an Affiliate of the
--------------------
specified person that is also Controlled by another person if the specified
person has the power (by contract, ownership of voting securities or otherwise)
to cause such Affiliate to refrain from taking the Action in question.
5
<PAGE>
"Covered TW Securities" shall mean:
---------------------
(i) (A) the shares of TW Parent Common Stock beneficially owned
by LMC Parent immediately following the consummation of the
TBS Merger as a result of the conversion in the TBS Merger
of the shares of Company Capital Stock beneficially owned by
LMC Parent on September 22, 1995;
(B) the shares of TW Parent Common Stock received by TCITP
and LBI pursuant to the Contribution and Exchange Agreement
in connection with their contribution to Holdco of the
issued and outstanding shares of capital stock of UCTI,
assuming that the shares of Company Capital Stock owned by
UCTI did not include any shares of Company Capital Stock not
beneficially owned by LMC Parent on September 22, 1995; and
(ii) all shares of Holdco LMC Common Stock issued pursuant to the
SSSI Agreement; and
(iii) all shares of Holdco LMC Common Stock for which the shares
of TW Parent Common Stock referred to in clause (i) above may be
exchanged pursuant to Section 4.1;
in each case as such shares may have been changed after issuance thereof. The
number of Covered TW Securities shall be appropriately adjusted from time to
time to take into account the occurrence of any stock dividends, splits, reverse
splits, combinations and the like.
"Distribution" means the proposed distribution by TCI to the holders of
------------
shares of Tele-Communications, Inc. Series A Liberty Media Group Common Stock,
and to the holders of shares of Tele-Communications, Inc. Series B Liberty Media
Group Common Stock, of all of the issued and outstanding shares of common stock
of SpinCo.
"Distribution Contract" shall mean the Distribution Contract, substantially
---------------------
in the form of Exhibit 1 to the SSSI Agreement, to be entered into by Holdco,
SpinCo and Satellite, at or prior to the Closing (but will not become effective
until the "Closing" under the SSSI Agreement).
"Exchange Act" means the Securities Exchange Act of 1934, and the rules and
------------
regulations thereunder.
"FCC" shall mean the Federal Communications Commission and any successor
---
agency or other agency charged with the administration of any Communications
Law.
6
<PAGE>
"First Refusal Agreement" shall mean the Stockholders Agreement
-----------------------
substantially in the form of Exhibit B, to be entered into by Holdco, the
Shareholders (other than UCTI), LBI and certain other shareholders of the
Company at or prior to the Closing.
"Holdco LMC Common Stock" shall mean the LMCN-V Common Stock and the Voting
-----------------------
Holdco LMC Common Stock, collectively.
"Holdco Rights Plan" shall have the meaning given to such term in Section
------------------
2.3(c).
"Horizontal Rule" shall mean the rule promulgated by the FCC that is set
---------------
forth at 47 C.F.R. 76.503 on September 22, 1995.
"Judgment" shall mean any order, judgment, writ, decree, injunction, award
--------
or other determination, decision or ruling of any court, any other Governmental
Entity or any arbitrator.
"LBI" shall mean Liberty Broadcasting, Inc., an Oregon corporation.
---
"Liberty Party" shall mean LMC Parent and each Affiliate of LMC Parent
-------------
that is controlled by LMC Parent from time to time and, for so long as LMC
Parent is an Affiliate of TCI, shall also mean TCI and each Affiliate of TCI
that is controlled by TCI.
"Lien" shall mean any pledge, claim, lien, charge, encumbrance or security
----
interest of any kind or nature whatsoever.
"LMCN-V Common Stock" shall mean the Series LMCN-V Common Stock of Holdco,
-------------------
having the terms set forth in Exhibit A.
"Old TW" shall mean the Delaware corporation known as "Time Warner Inc." on
------
September 22, 1995, and, in the event of any merger, consolidation or binding
share exchange after such date (other than pursuant to the Amended and Restated
Merger Agreement or any amendment thereto), any successor corporation.
"Option Consideration" shall mean the shares of Holdco LMC Common Stock to
--------------------
be issued and delivered, and, if so elected by Holdco as provided in the SSSI
Agreement, the cash to be paid by TW Parent pursuant to the SSSI Agreement in
respect of the non-competition agreement and contract option contained therein
(specifically excluding any amounts to be paid under the Distribution Contract).
"person" shall have the meaning ascribed to such term in the Amended and
------
Restated Merger Agreement and shall include any Governmental Entity.
7
<PAGE>
"Program and Digitization Agreement" shall mean the letter agreement, dated
----------------------------------
August __, 1996, between Satellite and the Company with respect to, among other
things, the carriage by Satellite of certain programming services of the Company
and Satellite's non-exclusive right to digitize, compress and reuplink certain
programming services of the Company.
"Prohibited Effect" shall mean the effect or consequence (in each case
-----------------
either immediately or following any notice, demand, hearing, proceeding,
determination or other action by any Governmental Entity) (a)(i) of making the
continued ownership by the Liberty Parties or any of them of any TW Securities
then owned by the Liberty Parties or any of them illegal under any Specified Law
or (ii) of making the continued ownership by the SpinCo Parties or any of them
of any TW Securities then owned by the SpinCo Parties or any of them illegal
under any Specified Law or (b) of imposing or resulting in the imposition under
any Specified Law on the Liberty Parties or any of them or the SpinCo Parties or
any of them of damages or penalties by reason of or as a result of the ownership
by any of the Liberty Parties or SpinCo Parties of TW Securities or (c) of
requiring the divestiture of, or resulting in the requirement to divest, any TW
Securities by any Liberty Party or SpinCo Party under any Specified Law, or (d)
of requiring, or resulting in the requirement, under any Specified Law that any
Liberty Party or SpinCo Party discontinue any business or divest of any business
or assets or that any license that such Liberty Party or SpinCo Party holds or
is required to hold under the Communications Laws be modified in any significant
respect or not be renewed as a result of such continued ownership.
"Registration Rights Agreement" shall mean the LMC Registration Rights
-----------------------------
Agreement substantially in the form of Exhibit E, to be entered into by Holdco,
LMC Parent, the Shareholders (other than UCTI), LBI and SpinCo at or prior to
the Closing.
"Requirement of Law", when used with respect to any person, shall mean any
------------------
law, statute, code, rule, regulation or Judgment, and any interpretation of or
determination with respect to any of the foregoing, of any court or other
Governmental Entity applicable to or binding upon such person, or to which such
person, any of its assets or any business conducted by it is subject, whether
now existing or at any time hereafter enacted, promulgated, issued, entered or
otherwise becoming effective.
"Restriction Period" shall mean the period of time commencing on the date
------------------
any Covered TW Securities are first issued and (i) if the Distribution does not
occur, continuing until the first time that the ownership or deemed ownership by
the Liberty Parties of the TW Parent Common Stock, Voting Holdco LMC Common
Stock and other voting securities of TW Parent then owned by the Liberty Parties
(assuming conversion in full of all LMCN-V Common Stock and the absence of any
restriction on the exercise of the rights of a holder of voting securities of TW
Parent) would not either (x) have a Prohibited Effect under any Communications
Law (determined on the assumption that the Horizontal Rule, unless previously
declared invalid by a final unappealable Judgment, is in full force and effect)
or (y) violate the FTC Consent Decree; and (ii) if the
8
<PAGE>
Distribution occurs, continuing until the first time that both the ownership by
the SpinCo Parties of the TW Parent Common Stock, Voting Holdco LMC Common Stock
and other voting securities of TW Parent then owned by the SpinCo Parties
(assuming conversion in full of all LMCN-V Common Stock and the absence of any
restriction on the exercise of the rights of a holder of voting securities of TW
Parent), and any deemed ownership of such TW Parent securities (assuming such
conversion and absence of restrictions) by the Liberty Parties pursuant to any
relevant attribution rules of the Communications Laws (assuming for this purpose
the conversion of the SpinCo Convertible Preferred Stock into SpinCo Series A
Common Stock and SpinCo Series B Common Stock, as applicable, by the holders
thereof), would not either (x) have a Prohibited Effect under any Communications
Law (determined on the assumption that the Horizontal Rule, unless previously
declared invalid by a final unappealable Judgment, is in full force and effect)
or (y) violate the FTC Consent Decree. Notwithstanding the foregoing, (a) if
any LMCN-V Common Stock is converted into TW Parent Common Stock or into Voting
Holdco LMC Common Stock by any Liberty Party (other than in connection with the
transfer thereof, whether voluntary or involuntary, to a person that is not a
Liberty Party or SpinCo Party), then the Restriction Period shall be deemed to
terminate upon such conversion with respect to the Liberty Parties and if any
LMCN-V Common Stock is converted into TW Parent Common Stock or into Voting
Holdco LMC Common Stock by any SpinCo Party (other than in connection with the
transfer thereof, whether voluntary or involuntary, to a person that is not a
Liberty Party or SpinCo Party), then the Restriction Period shall be deemed to
terminate upon such conversion with respect to the SpinCo Parties.
"Rights Amendment" shall mean those amendments described on Exhibit F to
----------------
the terms of the Rights Agreement.
"Satellite" shall mean Satellite Services, Inc., a Delaware corporation
---------
"Specified Law", when used with respect to the Liberty Parties or SpinCo
-------------
Parties, shall mean (i) the Communications Laws, (ii) any United States federal
law or statute and any law or statute of any state of the United States or of
the District of Columbia, (iii) the rules and regulations (and interpretations
thereof or determinations with respect thereto) of any agency charged with the
administration of any Specified Law within the meaning of clause (ii),
applicable to or binding upon a Liberty Party or SpinCo Party or to which a
Liberty Party or SpinCo Party, any of its assets or any business conducted by it
is subject and (iv) the FTC Consent Decree. Following the Distribution,
"Specified Law" shall specifically exclude the Investment Company Act of 1940,
as amended, and the rules and regulations thereunder. All references herein to
Specified Law shall include as of any relevant date in question each Specified
Law as then in effect (including any Specified Law or part thereof the
effectiveness of which is then stayed) and as then formally proposed by the
relevant Governmental Entity or promulgated with a delayed effective date.
"SpinCo" shall mean Southern Satellite Systems, Inc., a Georgia
------
corporation, and any successor thereto by operation of law.
9
<PAGE>
"SpinCo Party" shall mean, after the effective time of the Distribution,
------------
SpinCo and each Affiliate of SpinCo that is Controlled by SpinCo from time to
time and, for so long as SpinCo is an Affiliate of TCI, shall also mean TCI and
each Affiliate of TCI that is Controlled by TCI.
"SpinCo Convertible Preferred Stock" shall mean the classes or series of
----------------------------------
preferred stock of SpinCo to be issued immediately following the Distribution to
John C. Malone, Bob Magness and Kearns-Tribune Corporation in exchange for
their shares of SpinCo Series A Common Stock and in exchange for their shares of
SpinCo Series B Common Stock, as contemplated by the FTC Consent Decree. One
class or series of the SpinCo Convertible Preferred Stock will be convertible
into SpinCo Series A Common Stock, and the other series will be convertible into
SpinCo Series B Common Stock, subject to the restrictions of the FTC Consent
Decree.
"SpinCo Series A Common Stock" shall mean that series of SpinCo's common
----------------------------
stock to be known as Series A Common Stock, [$.01] par value per share. The
Series A Common Stock will have one vote per share.
"SpinCo Series B Common Stock" shall mean that series of SpinCo's common
----------------------------
stock to be known as Series B Common Stock, [$.01] par value per share. The
Series B Common Stock will have ten votes per share.
"SportSouth Agreement" shall mean the Stock Purchase Agreement, dated as of
--------------------
September 22, 1995, between the Company and LMC Southeast Sports, Inc., and the
Exhibits and Schedules thereto, a copy of which is annexed hereto as Exhibit G.
"SSSI Agreement" shall mean the SSSI Agreement substantially in the form of
--------------
Exhibit D, to be entered into by Holdco, LMC Parent, SpinCo and Satellite at or
prior to the Closing.
"Sunshine Agreement" shall mean an agreement substantially in the form of
------------------
Exhibit H to be entered into by Time Warner Entertainment Company, L.P. and
Liberty Sports, Inc. at or prior to the Closing.
A "Takeover Proposal" shall be pending if any bona fide tender or exchange
-----------------
offer for the TW Parent Common Stock shall have been commenced or publicly
announced and not terminated or withdrawn if consummation of such offer in
accordance with its terms would result in a Change in Control Event. A tender
offer will not be deemed to be bona fide that is not fully financed unless it is
made or guaranteed by a person whose senior debt securities have investment
grade ratings in one of the four highest investment grade categories.
"Transactions" shall mean the Mergers, the other transactions contemplated
------------
by the Amended and Restated Merger Agreement and the transactions contemplated
by this Agreement and the Additional Agreements.
10
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"Turner Letter" shall mean those certain letters dated September 22, 1995,
-------------
December 1, 1995, and August 8, 1996, from R.E. Turner, III to Old TW and LMC
Parent.
"TW Parent" shall mean (i) Old TW, with respect to all times prior to the
---------
Closing, and (ii) Holdco, with respect to all times from and after the Closing.
"TW Parent Common Stock" shall mean (i) prior to the Closing, the common
----------------------
stock, par value $1.00 per share, of Old TW, as it exists on September 22, 1995,
and (ii) on and after the Closing, the Common Stock, par value $.01 per share,
of Holdco as it then exists, and shall include, in all cases, where appropriate,
in the case of any reclassification, recapitalization or other change in the TW
Parent Common Stock, or in the case of a consolidation or merger of TW Parent
with or into another person affecting the TW Parent Common Stock (other than the
TW Merger), such capital stock or other securities to which a holder of TW
Parent Common Stock shall be entitled upon the occurrence of such event.
"TW Securities" shall mean any and all shares of capital stock and any and
-------------
all other equity securities of TW Parent of any class, series, issue or other
type, whether now authorized or existing or hereafter authorized or designated
or otherwise created, including the TW Parent Common Stock, the Voting Holdco
LMC Common Stock and the LMCN-V Common Stock.
"UCTI" shall mean United Cable Turner Investment, Inc., a Colorado
----
corporation.
"Voting Holdco LMC Common Stock" shall mean the Series LMC Common Stock of
------------------------------
Holdco, having the terms set forth in Exhibit C.
SECTION 1.2 Terms Generally. The definitions of terms contained in this
---------------
Agreement 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. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation". The words "herein", "hereof" and "hereunder" and words of similar
import refer to this Agreement in its entirety and not to any part hereof unless
the context shall otherwise require. All references herein to Articles,
Sections, Exhibits and Schedules shall be deemed references to Articles and
Sections of, and Exhibits and Schedules to, this Agreement unless the context
shall otherwise require. Any reference in this Agreement to a "day" or number
of "days" (without the explicit qualification of "business") shall be
interpreted as a reference to a calendar day or number of calendar days. If any
action or notice is to be taken or given on or by a particular calendar day, and
such calendar day is not a business day, then such action or notice shall be
deferred until, or may be taken or given on, the next business day.
11
<PAGE>
ARTICLE II
COVENANTS WITH RESPECT TO THE MERGER
SECTION 2.1 Agreement to Vote; Related Matters.
----------------------------------
(a) Subject to the terms and conditions of this Agreement, each of the
Shareholders agrees that such Shareholder shall attend, and LMC Parent shall
cause the Shareholders to attend, the Shareholders Meeting and each adjournment
thereof (provided in each case that the same is held prior to the Termination
Date), in person or by proxy, and shall vote all the Shareholder Shares (and
each class thereof) of such Shareholder that such Shareholder is entitled to
vote, in favor of the approval of the TBS Merger and each of the other
transactions contemplated by the Amended and Restated Merger Agreement and in
favor of the approval of the Amended and Restated Merger Agreement (as the same
may be amended from time to time to the extent consistent with clause (i) of the
following sentence). The foregoing agreement of LMC Parent and each Shareholder
is subject to the satisfaction of the following conditions as of the time of the
Shareholders Meeting or any adjournment thereof at which the Shareholder
Approvals are sought: (i) the Amended and Restated Merger Agreement shall be in
full force and effect in the form originally executed, as amended through August
8, 1996, and shall not have been thereafter amended in any respect, nor shall
any right of the Company or obligation of Old TW thereunder (including any
condition to the obligation of the Company to consummate the TBS Merger and the
other transactions contemplated by the Amended and Restated Merger Agreement)
have been waived, other than any amendments and waivers that do not change the
consideration to be received in exchange for Company Capital Stock in the TBS
Merger or the exchange ratio therefor (except to increase the number of shares
of TW Parent Common Stock to be issued in exchange for each share of Company
Capital Stock or to provide additional consideration to all stockholders of the
Company that does not affect the tax-free nature of the transaction) and that,
when taken together with all other amendments and waivers, do not have a
material adverse effect on the value of the consideration to be received in
exchange for Company Capital Stock in the TBS Merger; (ii) R.E. Turner, III, as
a shareholder of the Company, shall have voted or shall simultaneously be voting
all his shares of Company Capital Stock in favor of the approval of the TBS
Merger; (iii) if the Parent Stockholder Approvals shall have been voted upon,
the Parent Stockholder Approvals shall have been obtained; (iv) no Judgment
shall have been entered and be continuing that restrains or enjoins
(preliminarily, temporarily or permanently) LMC Parent or any Shareholder from
voting the Shareholder Shares; and (v) no Change of Control Event shall have
occurred.
(b) While this Agreement is in effect, each Shareholder agrees that it
shall not, and LMC Parent agrees to cause each Shareholder not to, (i) grant or
permit any of its subsidiaries to grant any proxy or other right with respect to
the voting of the Shareholder Shares of such Shareholder or (ii) transfer or
permit any of its subsidiaries to transfer (including by operation of law in a
merger) any of such shares to any person (other than TW Parent) unless such
transferee agrees
12
<PAGE>
to be bound with respect to such transferred shares by this Section 2.1 to the
same extent as the transferor was so bound with respect to such transferred
shares and such transfer is made in compliance with all applicable requirements
of the Stock Agreements (as defined in Section 3.1(a)).
(c) To the extent that such consent or waiver is required by the terms
of any agreement (any "Relevant Agreement") to which the Company, Old TW, Time
------------------
TBS Holdings, Inc. ("Time-TBS"), TCI , TCI Communications, Inc. ("TCIC") and/or
-------- ----
any of the Shareholders is a party which relates to the ownership, voting or
disposition of any shares of the capital stock of the Company of any class or
series (including the Stock Agreements), each of Old TW, Time-TBS, TCI, TCIC and
each Shareholder hereby consents to the execution, delivery and performance of
the Support Agreement, this Agreement, the Additional Agreements, the Original
Merger Agreement and the Amended and Restated Merger Agreement by all parties
(and intended parties) to each such agreement and waives any inconsistent
provision of any Relevant Agreement and any rights or remedies which such party
might otherwise have under any Relevant Agreement or by virtue thereof by reason
of such execution, delivery or performance. Each of Old TW, Time-TBS, TCI,
TCIC, LMC Parent and each Shareholder confirms and agrees that the execution,
delivery and performance of this Agreement, the Original Merger Agreement, the
Amended and Restated Merger Agreement, the Additional Agreements and the Support
Agreement by all parties (and intended parties) thereto do not and will not
conflict with any provision of the Amended and Restated Articles of
Incorporation of the Company and do not and will not result in the loss of any
right, power, privilege, remedy or benefit which any holder of Class C Preferred
Stock otherwise has or might have or in the reduction, qualification or other
modification of any such right, power, privilege, remedy or benefit; none of
them shall make, join in, endorse or recognize any claim to the contrary, and
each of them shall vigorously oppose any such claim made by any other person.
Each Shareholder and LMC Parent consents to (i) the execution and delivery by
Old TW, Holdco, Delaware Sub, Georgia Sub and the Company of Amendment No. 1 to
the Amended and Restated Merger Agreement and the execution and delivery by Old
TW and the Company of the FTC Consent Decree. Old TW and Holdco each consent to
the execution and delivery by LMC Parent and TCI of the FTC Consent Decree.
(d) Nothing contained in this Agreement shall create any obligation on
the part of LMC Parent, any Shareholder or any of LMC Parent's Affiliates or
restrict LMC Parent, any Shareholder or any of LMC Parent's Affiliates in the
exercise and enjoyment of full rights of ownership of shares of capital stock of
the Company, except as expressly provided in this Section 2.1. Without limiting
the generality of the immediately preceding sentence, if the grant or
effectiveness of any consent or approval of any Governmental Entity required in
connection with the consummation of the Transactions shall be conditioned upon
the surrender or modification in any significant respect of any license,
franchise or permit held by TCI or any of its Affiliates, the divestiture or
rearrangement of the composition of any assets of TCI or any of its Affiliates,
the holding of any assets of any such person in a trust or otherwise separate
and apart from such person's other assets, limitations on any such person's
freedom of action with respect to future acquisitions
13
<PAGE>
of assets or with respect to any existing or future business or activities or
its enjoyment of the full rights of ownership, possession and use of any asset
now owned or hereafter acquired by such person (including any requirement not to
receive shares of TW Parent Common Stock or Voting Holdco LMC Common Stock
pursuant to the Amended and Restated Merger Agreement, the SSSI Agreement, the
First Refusal Agreement or otherwise), any agreement to divest of any such
shares, any requirement not to receive, or to agree to divest, shares of Voting
Holdco LMC Common Stock or LMCN-V Common Stock to be received pursuant to
Section 4.1, any change in such person's ownership or in any rights of or
arrangements among its equity holders or any other restrictions, limitations,
requirements or conditions which are or might be burdensome or adverse to any
such person (other than, in any case, as provided in the FTC Consent Decree and
other than the required exchange of TW Parent Common Stock for Holdco LMC Common
Stock, as contemplated by Section 4.1, or compliance with this Agreement and the
Additional Agreements), then nothing in this Agreement (including Section 2.2)
shall be construed as imposing any obligation or duty on the part of TCI or any
of its Affiliates to agree to, approve or otherwise be bound by or satisfy any
such condition. Nothing contained in this Agreement shall require LMC Parent,
any Shareholder or any of LMC Parent's other Affiliates to terminate or modify
the terms of any pledge of any shares of capital stock of the Company held by
LMC Parent, such Shareholder or Affiliate existing as of the date of execution
hereof (including, without limitation, either of the Pledge Agreements, as such
term is defined in the letter dated June 28, 1996, from LMC Parent to Old TW and
Holdco).
SECTION 2.2 Reasonable Efforts. Prior to the Termination Date, TCI
------------------
and LMC Parent shall, and LMC Parent shall cause each Shareholder to, and Old TW
and Holdco shall, use reasonable efforts (a) to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with each
other in good faith in doing, all things necessary to obtain, in the most
expeditious manner practicable, all actions or nonactions, waivers, consents and
approvals from Governmental Entities and the making of all necessary
registrations and filings with Governmental Entities, in each case as may be
necessary for the consummation of the Transactions or to avoid any action or
proceeding by any Governmental Entity; and (b) to defend any lawsuits or other
legal proceedings, whether judicial or administrative, challenging the Amended
and Restated Merger Agreement, this Agreement, any of the Additional Agreements
or the consummation of the Transactions, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed; provided, however, that nothing in this Section 2.2 shall
-------- -------
require any such person (i) to agree to, approve or otherwise be bound by or
satisfy any condition of any kind referred to in Section 2.1(d), (ii) to agree
to enter into or be bound by any settlement or judgment (other than the FTC
Consent Decree), (iii) to agree to any change to the terms of this Agreement or
any of the Additional Agreements or (iv) to seek or agree to any changes to the
terms of the FTC Consent Decree.
SECTION 2.3 Agreement to Abandon. Old TW and Holdco shall, upon the
--------------------
written request of LMC Parent, terminate the Amended and Restated Merger
Agreement and abandon the TBS Merger if:
14
<PAGE>
(a) on the date fixed for the Closing (i) this Agreement, any
Additional Agreement or the Amended and Restated Merger Agreement or
consummation of the Mergers or any other Transaction shall be illegal, the
consummation of the Mergers or any other Transaction would result in the
imposition on the Liberty Parties (or, after the Distribution, the SpinCo
Parties) of damages or penalties (other than any such damages or penalties
arising out of a breach of this Agreement, any Additional Agreement or the FTC
Consent Decree by LMC Parent or any of its Affiliates or for which TW Parent
and/or Holdco has agreed to indemnify LMC Parent and its Affiliates), the FTC
has failed to accept or denied acceptance of the FTC Consent Decree for public
comment or there shall be pending any suit, action or proceeding by any
Governmental Entity in which the relief sought would have any of the effects
described in clause (i) and (ii) above or in Section 2.1(d) (including any
proceeding with respect to an alleged violation of the FTC Consent Decree other
than any proceeding by or before the FTC as contemplated by the FTC Consent
Decree); or
(b) on the date fixed for the Closing, any consent or approval of
any Governmental Entity required in connection with the consummation of the
Transactions shall be subject to any condition of any kind referred to in
Section 2.1(d) and LMC Parent, any Shareholder or any other Affiliate of LMC
Parent has (without the consent of TCI or LMC Parent) become bound to comply
with such condition; or
(c) at or prior to the Closing, Holdco shall have adopted any
shareholder rights plan or other form of poison pill (any such plan (regardless
of when adopted by Holdco), the "Holdco Rights Plan"), other than a shareholder
------------------
rights plan identical in all material respects to the Rights Agreement, as
amended in accordance with the Rights Amendment (the "Amended TW Plan"); or
---------------
(d) on or prior to the date fixed for the Closing, a Change in Control
Event shall have occurred or on the Closing Date a Takeover Proposal shall be
pending; or
(e) on the date fixed for the Closing, the condition set forth in
Section 6.03(a) of the Amended and Restated Merger Agreement to the Company's
obligations has not been satisfied (determined without regard to the Company's
willingness to waive the failure of such condition); or
(f) any Action shall have been taken by Old TW or any of its
Controlled Affiliates after September 22, 1995 and prior to the Closing which if
taken after the Effective Time of the Mergers would result in a Prohibited
Effect; or
(g) as of the date fixed for the Closing, (i) the representations and
warranties of Old TW and Holdco made herein and to be made in each Additional
Agreement to which Old TW or Holdco is intended to be a party shall not be true
and correct in all material respects as of such
15
<PAGE>
date with the same force and effect as if then made, or (ii) any signatory
hereto (other than TCI, LMC Parent and the Shareholders) shall be in breach or
default in any material respect of any of its obligations hereunder, or (iii)
any party (other than TCI, LMC Parent or any of their respective Affiliates) to
any of the Additional Agreements then in effect shall be in breach or default in
any material respect of any of its obligations thereunder or any intended party
(other than TCI, LMC Parent or any of their respective Affiliates) to any of the
Additional Agreements (other than the Distribution Contract) shall have failed
to execute and deliver to the other parties thereto any such Additional
Agreement or any of the other closing deliveries contemplated by the Company
Letter or Turner Letter shall not have been made; or
(h) as of the date fixed for the Closing, any required approval by the
stockholders of Old TW of the issuance and payment of the Option Consideration
or of this Agreement, any of the Additional Agreements or the Transactions has
not been obtained.
SECTION 2.4 Closing Deliveries. At the Closing, Old TW, Holdco, LMC
------------------
Parent and the Shareholders shall (and shall cause their respective Affiliates
which are named as parties in the Additional Agreements to) execute and deliver
to the other parties thereto each Additional Agreement to which he or it is
intended to be a party or, in the case of the Contribution and Exchange
Agreement and any other Additional Agreement entered into prior to the Closing,
deliver an officer's certificate signed by its president or a senior vice
president confirming that such Additional Agreement is effective in accordance
with its terms and such party is in compliance with its obligations thereunder
in all material respects. LMC Parent and TW Parent shall each deliver to the
other at the Closing, an officer's certificate signed by its president or a
senior vice president to the effect that the representations and warranties set
forth in Section 3.1 and Sections 3.2 and 3.3, respectively, are true in all
material respects on and as of the Closing Date with the same force and effect
as if then made and that such party is in compliance in all material respects
with the FTC Consent Decree.
SECTION 2.5 Dissenters' Rights. None of the Shareholders shall, nor
------------------
shall LMC Parent permit any Shareholder to, give notice pursuant to Section
1321 of the Georgia BCC of such Shareholder's intent to demand payment for any
shares of Company Capital Stock, or take any other action to exercise
dissenters' rights under Article 13 of the Georgia BCC, if the TBS Merger is
effectuated.
SECTION 2.6 Abandoned and Terminated Agreements. The parties hereto
-----------------------------------
acknowledge that upon the initial acceptance by the FTC of the FTC Consent
Decree for public comment, the Voting Trust Agreement in the form of Exhibit J
to the Original LMC Agreement, as amended by the Amended LMC Agreement, and the
SSSI Agreement (including the related Cable Carriage Agreement) in the form of
Exhibit D to the Original LMC Agreement, as amended by the Amended LMC
Agreement, will not be entered into and have been abandoned. The TW/LMC Letter
Agreement (as defined in the Amended LMC Agreement) is hereby terminated and the
"Elective
16
<PAGE>
Merger" contemplated thereby abandoned. Upon the initial acceptance by the FTC
Consent Decree for public comment, the Program Service Agreement, dated
September 15, 1995, a copy of which was attached as Exhibit E to the Original
LMC Agreement, will automatically be terminated by the parties thereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of LMC Parent and the
----------------------------------------------------
Shareholders. Each Shareholder represents and warrants to Old TW, as to itself,
- ------------
and LMC Parent represents and warrants to Old TW as to itself and as to each
Shareholder, that (assuming that the consents, waivers and agreements given and
made by Old TW and Time-TBS pursuant to Section 2.1(c) and by the Company in the
Company Letter and by R.E. Turner, III in the Turner Letter are valid and
effective for the intended purposes):
(a) Each Shareholder is as of September 22, 1995 the record and
beneficial owner of the Shareholder Shares set forth opposite the name of such
Shareholder on Schedule I hereto, such Shareholder has the right to vote such
Shareholder Shares in the manner provided in Section 2.1(a), and such
Shareholder Shares constitute all of the shares of capital stock of the Company
owned of record or beneficially by such Shareholder. The Shareholder Shares
constitute all shares of capital stock of the Company beneficially owned by TCI,
other than the Excluded Shares (as defined in Section 4.1). None of the
Shareholder Shares owned by any Shareholder is subject to any proxy, voting
trust or other agreement, arrangement or restriction with respect to the voting
of such Shareholder Shares which is inconsistent with the agreement of such
Shareholder pursuant to Section 2.1 hereof, other than the Stock Agreements.
The "Stock Agreements" means (i) the Investors Agreement dated as of June 3,
----------------
1987, among the Company and the original holders of the Class C Preferred Stock;
(ii) the Shareholders' Agreement dated as of June 3, 1987, as amended by the
First Amendment dated as of April 15, 1988, among the Company, R.E. Turner, III,
and the original holders of the Class C Preferred Stock; (iii) the Voting
Agreement dated as of June 3, 1987, among certain holders of Class C Preferred
Stock; and (iv) the Agreement dated as of June 3, 1987 among Old TW, certain of
the Shareholders and certain other holders of Class C Preferred Stock affiliated
with Old TW and/or LMC Parent. To the knowledge of TCI and LMC Parent, none of
TCI, LMC Parent or any of their respective Affiliates are party to any agreement
with the Company, any of the Company's Affiliates, Old TW or any of Old TW's
Affiliates that would require the consent, waiver or approval of or by TCI, LMC
Parent or any of their respective Affiliates of the Mergers or for the
consummation of any of the Transactions, or the execution, delivery or
performance of the Amended and Restated Merger Agreement, this Agreement or the
Additional Agreements, other than the Stock Agreements.
17
<PAGE>
(b) LMC Parent and the Shareholders each have the requisite corporate
power and authority to enter into this Agreement, the FTC Consent Decree and
each of the Additional Agreements to which it is contemplated to be a party and
to consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement, the FTC Consent Decree and each of such
Additional Agreements by LMC Parent and the Shareholders and the consummation by
them of the Transactions have been duly authorized by all necessary corporate
action. This Agreement and the FTC Consent Decree have been, and when delivered
at or prior to the Closing each of such Additional Agreements will have been,
duly executed and delivered by LMC Parent, the Shareholders and the applicable
Affiliates of LMC Parent named as parties thereto (each, an "Applicable LMC
--------------
Affiliate") and constitutes, or in the case of such Additional Agreements will
- ---------
as of the Closing constitute, a valid and binding obligation of each such party,
enforceable against each such party in accordance with its terms (except insofar
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or by principles governing the availability of equitable remedies).
The execution and delivery of this Agreement, the FTC Consent Decree and each of
the Additional Agreements to which it is contemplated to be a party by LMC
Parent and each Applicable LMC Affiliate do not, and the performance by them of
their respective obligations hereunder and thereunder and the consummation of
the Transactions will not, conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
the loss of a material benefit under, or result in the creation of any Lien upon
any of the properties or assets of LMC Parent or any Applicable LMC Affiliate
under, (i) the Certificate of Incorporation or By-laws of LMC Parent or the
comparable organizational documents of any Applicable LMC Affiliate, (ii) any
Contract to which LMC Parent or any Applicable LMC Affiliate is a party or by
which any of them or their respective properties or assets are bound, or (iii)
subject to the governmental filings and other matters referred to in Sections
3.01(d) and 3.02(d) of the Amended and Restated Merger Agreement and in the
following sentence, any Requirement of Law applicable to LMC Parent or any
Applicable LMC Affiliate or their respective properties or assets, other than
the Horizontal Rule as to which no representation is being made, and other than,
in the case of clauses (ii) and (iii), any such conflicts, violations, defaults,
rights or Liens that individually or in the aggregate would not (x) prevent LMC
Parent or any Applicable LMC Affiliate from performing its obligations under
this Agreement or any applicable Additional Agreement in any material respect or
(y) prevent or delay in any material respect the consummation of any of the
Transactions. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to LMC Parent or any Applicable LMC Affiliate in connection with the
execution and delivery of this Agreement or any applicable Additional Agreement
by them or the consummation by them of the Transactions, except for (i) filings
under the HSR Act and the initial acceptance of the FTC Consent Decree, (ii)
such filings with, and orders of, the FCC as may be required under the
Communications Laws in connection with the Transactions and (iii) such other
consents, approvals, orders, authorizations, registrations, declarations and
filings which, if not obtained or made, would not prevent or delay in any
material respect the consummation of any of the Transactions or prevent
18
<PAGE>
LMC Parent or any Applicable LMC Affiliate from performing its obligations under
this Agreement or any applicable Additional Agreement in any material respect.
(c) Except as disclosed on Schedule 3.1, as of September 22, 1995,
there is no suit, action or proceeding (including any proceeding by or before
the FCC) pending or, to the knowledge of LMC Parent and TCI, threatened against
or affecting LMC Parent or any of its Affiliates (and LMC Parent and TCI are not
aware of any basis for any such suit, action or proceeding) that, individually
or in the aggregate, could reasonably be expected to (i) prevent LMC Parent or
any Applicable LMC Affiliate from performing its obligations under this
Agreement or any applicable Additional Agreement in any material respect or (ii)
prevent or delay in any material respect the consummation of the Mergers or any
of the other Transactions. As of September 22, 1995, and other than the
Horizontal Rule, neither LMC Parent nor any Applicable LMC Affiliate is aware of
any current or formally proposed Communications Law that would prevent any
Shareholder from receiving, or would require any Shareholder to divest all or
any part of, the TW Parent Common Stock issuable to such Shareholder in
connection with the Mergers (assuming no exchange of such TW Parent Common Stock
pursuant to Section 4.1).
(d) No broker, investment banker, financial advisor or other person is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the Transactions based upon arrangements made by
or on behalf of LMC Parent or any Shareholder.
SECTION 3.2 Representations and Warranties of Old TW. Old TW
----------------------------------------
represents and warrants to LMC Parent and each Shareholder that (assuming that
the consents, waivers and agreements given and made by TCI, LMC Parent and the
Shareholders pursuant to Section 2.1(c) and by the Company in the Company Letter
and by R.E. Turner, III in the Turner Letter are valid and effective for the
intended purposes):
(a) Old TW has delivered to LMC Parent complete and correct copies of
its Restated Certificate of Incorporation, By-laws and the Rights Agreement and
of the certificates of incorporation and by-laws or comparable organizational
documents of the Material Parent Subsidiaries, in each case as amended to
September 22, 1995. As of September 22, 1995, no amendments to the Rights
Agreement have been authorized, approved or adopted and there is no commitment,
arrangement or understanding by Old TW to effect any amendment other than the
Rights Amendment.
(b) Old TW has all requisite corporate power and authority to enter
into this Agreement, the FTC Consent Decree and each of the Additional
Agreements to which it is contemplated to be a party and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement, the FTC Consent Decree and each such Additional Agreement by Old TW
and the consummation by it of the Transactions have been duly authorized by all
necessary corporate action subject to the Parent Stockholder Approvals. This
Agreement and
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the FTC Consent Decree have been, and when delivered at or prior to the Closing
each of such Additional Agreements will have been, duly executed and delivered
by Old TW and the applicable Affiliates of Old TW named as parties thereto (if
any) (each, an "Applicable TW Affiliate", which term shall also include Holdco,
-----------------------
Delaware Sub and Georgia Sub) and constitutes, or in the case of such Additional
Agreements will as of the Closing constitute, a valid and binding obligation of
each such party, enforceable against each such party in accordance with its
terms (except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, or by principles governing the availability of equitable
remedies). Except as otherwise set forth in the Amended and Restated Merger
Agreement or in the Parent Disclosure Letter, the execution and delivery of this
Agreement, the FTC Consent Decree and each of the Additional Agreements to which
it is contemplated to be a party by Old TW and each Applicable TW Affiliate and
the consummation by them of the transactions contemplated hereby and thereby and
compliance with the provisions hereof and thereof will not, conflict with, or
result in any violation of or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to the loss of a material benefit under, or
result in the creation of any Lien upon any of the properties or assets of Old
TW or any Parent Subsidiary under, (i) the Restated Certificate of Incorporation
or By-laws of Old TW or the comparable organizational documents of any Parent
Subsidiary, (ii) any Contract to which Old TW or any Parent Subsidiary is a
party or by which any of them or their respective properties or assets are
bound, or (iii) subject to the governmental filings and other matters referred
to in Sections 3.01(d) and 3.02(d) of the Amended and Restated Merger Agreement
and in the following sentence, any Requirement of Law applicable to Old TW or
any Parent Subsidiary or their respective properties or assets, other than the
Horizontal Rule as to which no representation is being made, and other than, in
the case of clauses (ii) and (iii), any such conflicts, violations, defaults,
rights or Liens that individually or in the aggregate would not (x) have a
Parent Material Adverse Effect, (y) prevent Old TW or any Applicable TW
Affiliate from performing its obligations under this Agreement or any applicable
Additional Agreement in any material respect or (z) prevent or delay in any
material respect the consummation of any of the Transactions. Except as
otherwise set forth in the Amended and Restated Merger Agreement or in the
Parent Disclosure Letter, no consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required by
or with respect to Old TW or any Applicable TW Affiliate in connection with the
execution and delivery of this Agreement or any applicable Additional Agreement
by Old TW or any Applicable TW Affiliate or the consummation by Old TW or any
Applicable TW Affiliate, as the case may be, of any of the Transactions, except
for (i) filings under the HSR Act and the initial acceptance of the FTC Consent
Decree, (ii) such filings with, and orders of, the FCC as may be required under
the Communications Laws in connection with the Transactions, (iii) approvals of
cable franchising authorities and (iv) such other consents, approvals, orders,
authorizations, registrations, declarations and filings which, if not obtained
or made, would not prevent or delay in any material respect the consummation of
any of the Transactions or otherwise prevent Old TW or any Applicable TW
Affiliate from performing its obligations under this Agreement or any applicable
Additional Agreement in any material respect or have, individually or in the
aggregate, a Parent Material
20
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Adverse Effect. To the knowledge of Old TW, none of Old TW or any of its
Affiliates are party to any agreement with the Company, any of the Company's
Affiliates, TCI or any of TCI's Affiliates that would require the consent,
waiver or approval of or by Old TW or any of its Affiliates of the Mergers or
for the consummation of any of the Transactions, or the execution, delivery or
performance of the Amended and Restated Merger Agreement, this Agreement or the
Additional Agreements, other than the Stock Agreements.
(c) Except as disclosed in the Parent Disclosure Letter, as of
September 22, 1995, there is no suit, action or proceeding (including any
proceeding by or before the FCC) pending or, to the knowledge of Old TW,
threatened against or affecting Old TW or any of its Affiliates (and Old TW is
not aware of any basis for any such suit, action or proceeding) that,
individually or in the aggregate, could reasonably be expected to (i) prevent
Old TW or any Applicable TW Affiliate from performing its obligations under this
Agreement or any applicable Additional Agreement in any material respect, or
(ii) prevent or delay in any material respect the consummation of the Mergers or
any of the other Transactions.
(d) As of September 22, 1995, and other than the Horizontal Rule, Old
TW is not aware of any current or formally proposed Communications Law that
would prevent any Shareholder from receiving, or would require any Shareholder
to divest all or any part of, the TW Parent Common Stock issuable to such
Shareholder in connection with the Mergers (assuming no exchange of such TW
Parent Common Stock pursuant to Section 4.1).
(e) No broker, investment banker, financial advisor or other person,
other than Morgan Stanley & Co., Incorporated and Bear, Stearns & Co. Inc., the
fees and expenses of which will be paid by Old TW, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of Old TW or
Holdco.
SECTION 3.3 Representations and Warranties of Holdco. Holdco
----------------------------------------
represents and warrants to LMC Parent and each Shareholder that:
(a) Holdco has delivered to LMC Parent complete and correct copies of
its Certificate of Incorporation and By-laws and the Holdco Rights Plan, if any,
in each case as amended to the date of execution of this Agreement, including,
without limitation, all certificates of designation. As of the date of
execution hereof, no amendments to any of the foregoing have been authorized,
approved or adopted and there is no commitment, arrangement or understanding by
Holdco (other than pursuant to the Amended and Restated Merger Agreement and
this Agreement) to effect any such amendment. All shares of Holdco LMC Common
Stock which may be issued pursuant to Section 4.1 or 4.2 or pursuant to the SSSI
Agreement will be, when issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights.
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(b) Holdco has all requisite corporate power and authority to enter
into this Agreement and each of the Additional Agreements to which it is
contemplated to be a party and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and each such
Additional Agreement by Holdco and the consummation by it of the Transactions
have been duly authorized by all necessary corporate action. This Agreement has
been, and when delivered at or prior to the Closing each of such Additional
Agreements will have been, duly executed and delivered by Holdco and
constitutes, or in the case of such Additional Agreements will as of the Closing
constitute, a valid and binding obligation of Holdco, enforceable against Holdco
in accordance with its terms (except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, or by principles governing the
availability of equitable remedies). Except as otherwise set forth in the
Merger Agreement or in the Parent Disclosure Letter, the execution and delivery
of this Agreement and each of the Additional Agreements to which it is
contemplated to be a party by Holdco and the consummation by it of the
transactions contemplated hereby and thereby and compliance with the provisions
hereof and thereof will not, conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
the loss of a material benefit under, or result in the creation of any Lien upon
any of the properties or assets of Holdco or any subsidiary of Holdco under, (i)
the Certificate of Incorporation or By-laws of Holdco or the comparable
organizational documents of any subsidiary of Holdco, (ii) any Contract to which
Holdco or any subsidiary of Holdco is a party or by which any of them or their
respective properties or assets are bound, other than the Stock Agreements as to
which no representation is being made or (iii) subject to the governmental
filings and other matters referred to in Sections 3.01(d) and 3.02(d) of the
Merger Agreement and in the following sentence, any Requirement of Law
applicable to Holdco or any subsidiary of Holdco or their respective properties
or assets, other than the Horizontal Rule as to which no representation is being
made, and other than, in the case of clauses (ii) and (iii), any such conflicts,
violations, defaults, rights or Liens that individually or in the aggregate
would not (x) have a Parent Material Adverse Effect, (y) prevent Holdco or any
subsidiary of Holdco from performing its obligations under this Agreement or any
applicable Additional Agreement in any material respect or (z) prevent or delay
in any material respect the consummation of any of the Transactions. Except as
otherwise set forth in the Merger Agreement or in the Parent Disclosure Letter,
no consent, approval, order or authorization of, or registration, declaration or
filing with, any Governmental Entity is required by or with respect to Holdco or
any subsidiary of Holdco in connection with the execution and delivery of this
Agreement or any applicable Additional Agreement by Holdco or the consummation
by Holdco or any subsidiary of Holdco, as the case may be, of any of the
Transactions, except for (i) filings under the HSR Act and the initial
acceptance of the FTC Consent Decree, (ii) such filings with, and orders of, the
FCC as may be required under the Communications Laws in connection with the
Transactions, (iii) approvals of cable franchising authorities and (iv) such
other consents, approvals, orders, authorizations, registrations, declarations
and filings which, if not obtained or made, would not prevent or delay in any
material respect the consummation of any of the Transactions or otherwise
prevent Holdco or any subsidiary of Holdco from performing its
22
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obligations under this Agreement or any applicable Additional Agreement in any
material respect or have, individually or in the aggregate, a Parent Material
Adverse Effect. To the knowledge of Holdco, none of Holdco or any of its
Affiliates are party to any agreement with the Company, any of the Company's
Affiliates, TCI or any of TCI's Affiliates that would require the consent,
waiver or approval of or by Holdco or any of its Affiliates of the Mergers or
for the consummation of any of the Transactions, or the execution, delivery or
performance of the Merger Agreement, this Agreement or the Additional
Agreements, other than the Stock Agreements.
(c) Except as disclosed in the Parent Disclosure Letter, as of
September 22, 1995, there is no suit, action or proceeding (including any
proceeding by or before the FCC) pending or, to the knowledge of Holdco,
threatened against or affecting Holdco or any its Affiliates (and Holdco is not
aware of any basis for any such suit, action or proceeding) that, individually
or in the aggregate, could reasonably be expected to (i) prevent Holdco from
performing its obligations under this Agreement or any applicable Additional
Agreement in any material respect, or (ii) prevent or delay in any material
respect the consummation of the Mergers or any of the other Transactions.
(d) As of September 22, 1995, and other than the Horizontal Rule,
Holdco is not aware of any current or formally proposed Communications Law that
would prevent any Shareholder from receiving, or would require any Shareholder
to divest all or any part of, the TW Parent Common Stock issuable to such
Shareholder in connection with the Mergers (assuming no exchange of such TW
Parent Common Stock pursuant to Section 4.1).
(e) No broker, investment banker, financial advisor or other person,
other than Morgan Stanley & Co., Incorporated and Bear, Stearns & Co. Inc., the
fees and expenses of which will be paid by Old TW, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of Old TW or
Holdco.
ARTICLE IV
CERTAIN POST-CLOSING COVENANTS
SECTION 4.1 Share Exchange. Immediately following the Effective Time
--------------
of the Mergers, each Shareholder shall cause all of its Covered TW Securities
that consist of shares of TW Parent Common Stock to be delivered to TW Parent
for exchange into, and TW Parent shall issue in exchange therefor, shares of
LMCN-V Common Stock. The rate of exchange pursuant to the foregoing provisions
of this Section 4.1 shall be one share of TW Parent Common Stock for each whole
share of LMCN-V Common Stock. An exchange for LMCN-V Common Stock shall be
effected through a direction from each Shareholder to the Exchange Agent (or, in
the case of an exchange in connection with the Contribution and Exchange
Agreement, such other agent of Holdco
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exercising a similar function) to register all of the shares of TW Parent Common
Stock issuable to such Shareholder in the Mergers (or the transactions relating
to the Contribution and Exchange Agreement, as applicable) in the name of, and
to deliver the appropriate certificates to, TW Parent and, upon receipt by TW
Parent of such certificates, the issuance and delivery by TW Parent to each
Shareholder of the appropriate number of shares of LMCN-V Common Stock. All
shares of Holdco LMC Common Stock delivered to the Liberty Parties or the SpinCo
Parties from time to time in accordance with this Agreement shall be duly
authorized, validly issued, fully paid and nonassessable and free of preemptive
rights. For so long as the Liberty Parties or SpinCo Parties hold any LMCN-V
Common Stock, all of the TW Parent Common Stock and Voting Holdco LMC Common
Stock from time to time owned beneficially or of record (a) by LMC Parent or any
of its Controlled Affiliates, (b) by any SpinCo Party or (c) for so long as TCI
is a Liberty Party, by TCI or any of its Controlled Affiliates (other than any
of the shares (the "Excluded Shares") described in the letter from Baker &
---------------
Botts, L.L.P., counsel to TCI, to Peter Haje, Esq., General Counsel of Old TW
dated September 22, 1995, unless and until TCI acquires sole voting and
dispositive control of such shares) shall be delivered to TW Parent for exchange
for LMCN-V Common Stock; provided, however, that the obligations in this
-------- -------
sentence shall terminate with respect to (x) LMC Parent and its Controlled
Affiliates, and TCI and its Controlled Affiliates, upon the termination of the
Restriction Period with respect to the Liberty Parties and (y) the SpinCo
Parties, upon the termination of the Restriction Period with respect to the
SpinCo Parties. TW Parent shall issue, in exchange for the TW Parent Common
Stock delivered to it pursuant to the immediately preceding sentence, a number
of shares of LMCN-V Common Stock equal to (i) the number of shares of TW Parent
Common Stock so delivered divided by (ii) the Formula Number then in effect
pursuant to the terms of the LMCN-V Common Stock, and, in exchange for each
share of Voting Holdco LMC Common Stock delivered to it at any time pursuant to
the two immediately preceding sentences, one share of LMCN-V Common Stock.
SECTION 4.2 No Redemption. The Voting Holdco LMC Common Stock and
-------------
the LMCN-V Common Stock shall not be redeemable at the option of TW Parent,
including pursuant to any provision equivalent to Section 5 of Article IV of Old
TW's Restated Certificate of Incorporation, as amended, as in effect on
September 22, 1995 contained in Holdco's Certificate of Incorporation ("TW
--
Article IV"). TW Parent further agrees that it shall not exercise any right
- ----------
pursuant to TW Article IV to require the redemption from any Liberty Party or
SpinCo Party of any of its shares of TW Parent Common Stock unless it has first
given at least 10 business days' prior written notice of such redemption to each
Liberty Party or SpinCo Party, as applicable (which notice shall state that TW
Parent intends to effect the redemption of shares of TW Parent Common Stock held
by such Liberty Party or SpinCo Party, the number of shares to be redeemed and
the proposed redemption date (in addition to any other information required by
TW Article IV)), and each Liberty Party or SpinCo Party, as applicable, shall
have the right at any time prior to the redemption date to exchange the shares
to be redeemed for a number of shares of Voting Holdco LMC Common Stock that are
convertible into the same number of shares of TW Parent Common Stock so called
for redemption.
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SECTION 4.3 Certain Post-Closing Compensation Obligations.
---------------------------------------------
(a) If, after the Effective Time of the Mergers,
(i) any Action shall be taken by TW Parent or any of its
Controlled Affiliates (including, after the effective time of the TBS
Merger, the Company and its Controlled Affiliates) which has a
Prohibited Effect under any Specified Law then in effect (including
any Specified Law the effectiveness of which has been stayed if such
stay is subsequently lifted) or then formally proposed or promulgated
with a delayed effective date if such Specified Law becomes effective
thereafter, and
(ii) such Prohibited Effect did not exist prior to the taking of
such Action and did not result from any breach of this Agreement or
the FTC Consent Decree by LMC Parent or any Applicable LMC Affiliate
or by any SpinCo Party; and
(iii) if such Prohibited Effect relates to a Liberty Party, such
Action shall have been taken prior to the termination of the
Restriction Period with respect to the Liberty Parties; and if such
Prohibited Effect relates to a SpinCo Party, such action shall have
been taken prior to the termination of Restriction Period with respect
to the SpinCo Parties;
then, in any such case, the provisions of this Section 4.3 shall apply.
(b) As promptly as practicable after obtaining actual knowledge that
TW Parent intends to take an Action and that such Action will likely result in a
Prohibited Effect, LMC Parent, if the Prohibited Effect is with respect to a
Liberty Party, or SpinCo, if the Prohibited Effect is with respect to a SpinCo
Party, shall notify TW Parent thereof. If such notice is received by TW Parent
prior to the taking of the referenced Action, then either TW Parent and its
Controlled Affiliates shall not take such Action or if the Action is taken and a
Prohibited Effect described in Section 4.3(a) occurs, TW Parent shall be
obligated to pay compensation pursuant to this Section 4.3.
(c) As promptly as practicable after obtaining actual knowledge that a
Prohibited Effect has occurred or will likely occur (other than a Prohibited
Effect with respect to which notice has been given under Section 4.3(b)), LMC
Parent, if the Prohibited Effect is with respect to a Liberty Party, or SpinCo,
if the Prohibited Effect is with respect to a SpinCo Party (the applicable of
the foregoing being the "Notice Party"), shall notify TW Parent thereof.
------------
Following the giving of such notice, the Notice Party shall at TW Parent's
request consult with TW Parent as to such Prohibited Effect and its causes and
discuss in good faith the actions that either party might take to avoid or cure
such Prohibited Effect. If the Notice Party and TW Parent agree that certain
actions can be taken by TW Parent and its Controlled Affiliates to cure or avoid
the Prohibited Effect, then TW Parent and its Controlled Affiliates shall either
take such actions or become obligated to
25
<PAGE>
compensate the Liberty Parties (if prior to the Distribution or the Distribution
does not occur) or the SpinCo Parties (if the Distribution occurs) (the Liberty
Parties or the SpinCo Parties, as applicable, being the "Affected Parties")
----------------
pursuant to this Section 4.3 if a Prohibited Effect described in Section 4.3(a)
occurs; provided, however, that if the Notice Party and TW Parent also agree
-------- -------
that certain actions could be taken by the Notice Party and its Controlled
Affiliates (or by the Affected Party, if different from the Notice Party, and
its Controlled Affiliates) to eliminate the Prohibited Effect which would be
substantially less burdensome to the Notice Party and its Controlled Affiliates
(and to the Affected Party, if different from the Notice Party, and its
Controlled Affiliates) than the actions that TW Parent and its Controlled
Affiliates would be required to take in order to cure the Prohibited Effect
would be to TW Parent and its Controlled Affiliates and the costs to effect such
actions would be substantially less than the cost to compensate the Affected
Parties pursuant to this Section 4.3, then subject to the following sentence,
the Liberty Parties or SpinCo Parties, as the case may be, shall, at TW Parent's
expense, use reasonable efforts to take such actions. Notwithstanding the
foregoing, unless such Liberty Party or SpinCo Party otherwise agrees, no
Liberty Party or SpinCo Party shall be required to dispose of any of its TW
Securities, to dispose of any assets or discontinue any business or investments
that LMC Parent or SpinCo, as applicable, determines in good faith are material
to the Liberty Parties or SpinCo Parties or their respective strategic
objectives, or to agree to any restrictions or limitations that LMC Parent or
SpinCo, as applicable, deems significant on the future operation of its
business.
(d) If the Prohibited Effect cannot be cured or avoided, or for any
reason (including the failure of the parties to agree upon any course of action
or alternative courses of action that would cure or avoid the Prohibited Effect
or the relative burdens thereof) has not been cured or avoided (x) within 60
days after notice has been given to TW Parent pursuant to this Section 4.3
(unless prior to the expiration of such 60-day period, TW Parent or the
applicable of the Liberty Parties or SpinCo Parties, as agreed by TW Parent and
LMC Parent or SpinCo, as applicable, have commenced an agreed upon course of
action to cure such Prohibited Effect and such cure is effected within an agreed
period of time thereafter), or (y) if earlier, by such date as any Liberty Party
or SpinCo Party would be required by any Governmental Entity or pursuant to any
Judgment against it or its properties to divest of any TW Securities or suffer
any consequences of the kind enumerated in clauses (b) through (d) of the
definition of Prohibited Effect, then in any such event TW Parent shall be
obligated to compensate the Affected Parties pursuant to this Section 4.3.
(e) If TW Parent becomes obligated to compensate the Affected Parties
pursuant to this Section 4.3, then TW Parent shall be required to (i) compensate
any Affected Party that disposes of Covered TW Securities to the extent required
by or to the extent necessary to avoid the applicable Prohibited Effect and (ii)
if the aggregate number of Covered TW Securities disposed of by the Affected
Parties pursuant to clause (i) above equals or exceeds (on an as converted
basis, if applicable) 5% of the sum of the number of Covered TW Securities of
all Shareholders immediately after the Effective Time of the Mergers, plus the
number of Covered TW Securities included in the Option Consideration (as such
numbers shall be appropriately adjusted from time to time to take into
26
<PAGE>
account the occurrence of any stock dividends, splits, reverse splits,
combinations and the like), then, at the option of LMC Parent (if the Affected
Party is a Liberty Party) or SpinCo (if the Affected Party is a SpinCo Party)
(exercised by notice in writing to TW Parent within 60 days of the first
disposition pursuant to clause (i) above), compensate all Affected Parties for
the disposition of all the Covered TW Securities if all TW Securities of all
Affected Parties are disposed of within 12 months of such notice (provided that
claims for compensation may be made pursuant to the following sentences as
dispositions are made during such 12 month period and payment of such claims
shall not be delayed or deferred for such 12 month period, but rather shall be
paid as provided below, and provided, further, that if all TW Securities of the
Affected Parties are not disposed of within such 12-month period, the Affected
Parties shall reimburse TW Parent for the amount of compensation paid pursuant
to this clause (ii) that is in excess of the amount that was required to be paid
pursuant to clause (i) of this sentence). If TW Parent becomes obligated to
compensate any Affected Party pursuant to this Section 4.3, then such Affected
Party, if it desires to assert a claim for compensation hereunder, shall provide
to TW Parent a statement, certified by independent public accountants of
national standing, setting forth the estimated Blended Rate for the taxable year
in which the particular disposition occurred and the estimated Adjustment Amount
owed to such Affected Party with respect to those of its TW Securities so
disposed of. Within 30 days after delivery of such statement, TW Parent shall
pay to such Affected Party the estimated Adjustment Amount by wire transfer of
immediately available funds to such account and in accordance with such
instructions as such Affected Party shall have previously advised TW Parent in
writing. Within 30 days after the end of the taxable year in which the
particular disposition of TW Securities by such Affected Party occurred, such
Affected Party shall provide to TW Parent a statement, certified by independent
public accountants of national standing, setting forth the actual Blended Rate
for such taxable year and the actual Adjustment Amount owed to such Affected
Party with respect to such disposition. Within five days after delivery of such
statement, (i) TW Parent shall pay to such Affected Party an amount equal to the
amount by which the Adjustment Amount exceeds the estimated Adjustment Amount,
or (ii) such Affected Party shall pay to TW Parent an amount equal to the amount
by which the estimated Adjustment Amount exceeds the Adjustment Amount. Any
such payment shall be made by wire transfer of immediately available funds to
such account and in accordance with such instructions as such payee shall have
previously advised such payor in writing.
(f) LMC Parent shall upon request from time to time advise TW Parent
of the identity of each Liberty Party and, following the Distribution, SpinCo
shall upon request from time to time advise TW Parent of the identity of each
SpinCo Party.
SECTION 4.4 Certain Post-Closing Covenants.
------------------------------
(a) If a Holdco Rights Plan is in effect immediately following the
Effective Time of the Mergers or no Holdco Rights Plan is then in effect, but a
Holdco Rights Plan is thereafter adopted, then, in either such case, such Holdco
Rights Plan (the "Initial Rights Plan") shall, in all material respects, be the
-------------------
same as the Amended TW Plan. If Holdco amends the Initial Rights Plan
27
<PAGE>
or adopts a new Holdco Rights Plan after adoption of the Initial Rights Plan
(such amended or new plan, the "Subsequent Rights Plan") and the "Beneficial
----------------------
Ownership" by any Liberty Party or SpinCo Party, alone or together with all of
its "Affiliates" and "Associates", of TW Securities would, by reason of and
immediately upon such amendment or adoption, have effects ("Rights Plan
-----------
Effects") under such Subsequent Rights Plan analogous to the effects under the
- -------
Rights Agreement of a person becoming an "Acquiring Person" (as defined therein)
or of the rights issued pursuant to the Rights Agreement becoming transferable
separately from the TW Parent Common Stock, but such "Beneficial Ownership"
would not have had such effects under the Amended TW Plan, then Holdco shall be
required to (i) compensate, as provided below, any such Liberty Party or SpinCo
Party, together with its "Affiliates" and "Associates", that disposes of TW
Securities (the "Selling Parties") to the extent necessary to avoid the Rights
---------------
Plan Effects and (ii) if the aggregate number of TW Securities disposed of by
the Selling Parties pursuant to clause (i) above equals or exceeds (on an as
converted basis, if applicable) 5% of the sum of the number of Covered TW
Securities of all Shareholders immediately after the Effective Time of the
Mergers, plus the number of Covered TW Securities included in the Option
Consideration (as such numbers shall be appropriately adjusted from time to time
to take into account the occurrence of any stock dividends, splits, reverse
splits, combinations and the like), then, at the option of LMC Parent, on behalf
of the Liberty Parties, and at the option of SpinCo, on behalf of the SpinCo
Parties (exercised by notice in writing to Holdco within 60 days of the first
disposition pursuant to clause (i) above), compensate, as provided below (x) all
Selling Parties that are Liberty Parties for the disposition of all TW
Securities owned by the Liberty Parties of the type considered by the Subsequent
Rights Plan in determining the "Beneficial Ownership" that would trigger Rights
Plan Effects (the "Relevant TW Securities") and (y) all Selling Parties that are
----------------------
SpinCo Parties for the disposition of all Relevant TW Securities owned by the
SpinCo Parties, as applicable, provided, in each case, that all Relevant TW
Securities of the Liberty Parties or the SpinCo Parties, as applicable, are
disposed of within 12 months of such notice (provided that claims for
compensation may be made pursuant to the following sentences as dispositions are
made during such 12 month period and payment of such claims shall not be delayed
or deferred for such 12 month period, but rather shall be paid as provided
below, and provided, further, that if all Relevant TW Securities of the Selling
Parties are not disposed of within such 12-month period, the Selling Parties
shall reimburse TW Parent for the amount of compensation paid pursuant to this
clause (ii) that is in excess of the amount that was required to be paid
pursuant to clause (i) of this sentence). The obligation of Holdco to
compensate any Selling Party pursuant to this Section 4.4(a) shall be subject to
the condition that, as of the date of the adoption of the Subsequent Rights
Plan, (i) such Selling Party and its "Affiliates" and "Associates" shall have
made all filings on Schedule 13D with respect to their beneficial ownership of
Relevant TW Securities due on or prior to such date in compliance with
Regulation 13D-G under the Exchange Act, and (ii) LMC Parent or Spinco, as
applicable, shall be in compliance with its obligations under Section 4.4(b),
except to the extent any failure to make any such filings, and/or any failure to
be in compliance with such obligations, shall not have prejudiced Holdco. If TW
Parent becomes obligated to compensate any Selling Party pursuant to this
Section 4.4(a), then such Selling Party, if it desires to assert a claim for
compensation hereunder, shall provide to TW Parent a statement,
28
<PAGE>
certified by independent public accountants of national standing, setting forth
the estimated Blended Rate for the taxable year in which the particular
disposition occurred and the estimated Adjustment Amount owed to such Selling
Party with respect to those of its Relevant TW Securities so disposed of.
Within 30 days after delivery of such statement, TW Parent shall pay to such
Selling Party the estimated Adjustment Amount by wire transfer of immediately
available funds to such account and in accordance with such instructions as such
Selling Party shall have previously advised TW Parent in writing. Within 30 days
after the end of the taxable year in which the particular disposition of
Relevant TW Securities by such Selling Party occurred, such Selling Party shall
provide to TW Parent a statement, certified by independent public accountants of
national standing, setting forth the actual Blended Rate for such taxable year
and the actual Adjustment Amount owed to such Selling Party with respect to such
disposition. Within five days after delivery of such statement, (i) TW Parent
shall pay to such Selling Party an amount equal to the amount by which the
Adjustment Amount exceeds the estimated Adjustment Amount, or (ii) such Selling
Party shall pay to TW Parent an amount equal to the amount by which the
estimated Adjustment Amount exceeds the Adjustment Amount. Any such payment
shall be made by wire transfer of immediately available funds to such account
and in accordance with such instructions as such payee shall have previously
advised such payor in writing.
(b) Prior to the Closing, LMC Parent shall, and following the Closing,
if Holdco adopts a Holdco Rights Plan having the terms contemplated by the first
sentence of Section 4.4(a), LMC Parent and SpinCo (following the Distribution)
shall, promptly notify TW Parent in writing of (i) any acquisition of
"Beneficial Ownership" of "Common Shares" by any of its "Affiliates" or
Associates", and (ii) any "Person" who has "Beneficial Ownership" of any "Common
Shares" becoming its "Affiliate" or "Associate", in each case promptly following
LMC Parent's or SpinCo's (as applicable) obtaining actual knowledge of such
occurrence.
(c) Except as otherwise expressly indicated, terms used in Section
4.4(a) and Section 4.4(b) in quotation marks have the meanings given such terms
(i) prior to the Closing, in the Amended TW Plan, and (ii) from and after the
Closing, the Holdco Rights Plan, if any, except that the Liberty Parties or,
following the Distribution, the SpinCo Parties shall be deemed to "Beneficially
Own" any TW Securities the subject of an "Offer Notice" (under Section 3 of the
First Refusal Agreement) from any Turner Stockholder (as defined in the First
Refusal Agreement), any "Fast-Track Offer Notice" (under Section 3.3 of the
First Refusal Agreement) from any Turner Stockholder or any "Tender Notice"
(under Section 3.4 of the First Refusal Agreement) from any Turner Stockholder,
in each case until the earlier of the purchase of such TW Securities pursuant to
the First Refusal Agreement and the first date upon which such Turner
Stockholder is free to sell such TW Securities.
29
<PAGE>
ARTICLE V
MISCELLANEOUS
SECTION 5.1 Expenses. All costs and expenses incurred in connection
--------
with this Agreement shall be paid by the party incurring such cost or expense.
SECTION 5.2 Specific Performance. Each of LMC Parent and the
--------------------
Shareholders, on the one hand, and Old TW and Holdco, on the other hand, agrees
that the other parties would be irreparably damaged if for any reason such party
fails to perform any of such party's obligations under this Agreement, and that
the other parties would not have an adequate remedy at law for money damages in
such event. Accordingly, any of the other parties shall be entitled to seek
specific performance and injunctive and other equitable relief to enforce the
performance of this Agreement by such party. This provision is without
prejudice to any other rights the parties may have against each other for any
failure to perform their respective obligations under this Agreement.
SECTION 5.3 Amendments; Termination. This Agreement may not be
-----------------------
modified, amended, altered or supplemented, except upon the execution and
delivery of a written agreement executed by the parties hereto. The
representations, warranties, covenants and agreements set forth herein shall
terminate, except with respect to liability for prior breaches thereof, upon the
first to occur of (x) December 31, 1996, if the Effective Time of the Mergers
has not occurred on or prior to such date and (y) the termination of the Amended
and Restated Merger Agreement in accordance with its terms or the abandonment
thereof by TW Parent if required pursuant to Section 2.3 (the "Termination
-----------
Date"). The representations, warranties, covenants and agreements set forth
- ----
herein (other than in Article II) shall survive the Effective Time of the
Mergers.
SECTION 5.4 Successors and Assigns. The provisions of this Agreement
----------------------
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns; provided, however, that a party may
-------- -------
not assign, delegate or otherwise transfer any of such party's rights or
obligations under this Agreement without the consent of the other parties hereto
and any purported assignment, delegation or transfer without such consent shall
be null and void. Each Liberty Party and SpinCo Party from time to time,
provided that it is a Liberty Party or SpinCo Party as of the relevant time,
shall be an intended third party beneficiary of the covenants of TW Parent
contained in Article IV.
SECTION 5.5 Entire Agreement. This Agreement (including the Exhibits
----------------
and Schedules attached hereto), together with the Stock Agreements, constitute
the entire agreement among the parties with respect to the subject matter hereof
and supersede all other prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter hereof.
30
<PAGE>
SECTION 5.6 Notices. All notices, requests, claims, demands and
-------
other communications hereunder shall be in writing and shall be deemed given (i)
on the first business day following the date received, if delivered personally
or by telecopy (with telephonic confirmation of receipt by the addressee), (ii)
on the business day following timely deposit with an overnight courier service,
if sent by overnight courier specifying next day delivery and (iii) on the first
business day that is at least five days following deposit in the mails, if sent
by first class mail, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
If to TW Parent, to it at:
75 Rockefeller Plaza
New York, New York 10019
Facsimile: (212) 956-7281
Attention: General Counsel
with a copy (which shall not constitute notice) to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Facsimile: (212) 474-3700
Attention: Richard Hall, Esq.
If to LMC Parent or any Shareholder, to it at:
8101 East Prentice Avenue
Suite 500
Englewood, Colorado 80111
Facsimile: (303) 721-5415
Attention: President
31
<PAGE>
with a copy (which shall not constitute notice) to each of:
Stephen M. Brett, Esq.
General Counsel
Tele-Communications, Inc.
Terrace Tower II
5619 DTC Parkway
Englewood, Colorado 80111-3000
Facsimile: (303) 488-3245
Baker & Botts, L.L.P.
599 Lexington Avenue
New York, New York 10022
Facsimile: (212) 705-5125
Attention: Elizabeth M. Markowski, Esq.
SECTION 5.7 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the internal laws of the State of Delaware.
SECTION 5.8 Counterparts; Effectiveness. This Agreement may be
---------------------------
executed in two or more counterparts, all of which shall be considered one and
the same agreement, and shall become effective when two or more counterparts
have been signed by each of the parties and delivered to the other parties.
SECTION 5.9 Descriptive Headings. The descriptive headings used
--------------------
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
SECTION 5.10 Severability. Whenever possible, each provision or
------------
portion of any provision of this Agreement will be interpreted in such manner as
to be effective and valid under applicable law but if any provision or portion
of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision had
never been contained herein. The parties shall endeavor in good-faith
negotiations to replace any invalid, illegal or unenforceable provision with a
valid provision the effects of which come as close as possible to those of such
invalid, illegal or unenforceable provisions.
32
<PAGE>
SECTION 5.11 Attorney's Fees. If any action at law or in equity is
---------------
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorney's fees, costs and necessary
disbursements, in addition to any other relief to which such party may be
entitled.
SECTION 5.12 Obligations of Old TW and Holdco Joint and Several.
--------------------------------------------------
Each of Old TW and Holdco (collectively, the "TW Parties") covenants and
----------
agrees with LMC Parent and each Shareholder that such TW Party is and shall be
jointly and severally liable, as a primary obligor and not merely a surety, for
the full and timely payment and performance of all obligations of each other TW
Party to be paid and/or performed under this Agreement.
33
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated LMC Agreement to be duly executed and delivered as of the day and year
first above written.
TIME WARNER INC. LIBERTY MEDIA CORPORATION
By: /s/ Peter R. Haje By: /s/ Robert R. Bennett
-------------------------------- --------------------------------
Name: Peter R. Haje Name: Robert R. Bennett
Title: Executive Vice President Title: Executive Vice President
TW INC. SUBSIDIARIES OF LMC PARENT:
TCI TURNER PREFERRED, INC.
By: /s/ Thomas W. McEnerney
--------------------------------
Name: Thomas W. McEnerney
Title: Vice President By: /s/ Robert R. Bennett
--------------------------------
Name: Robert R. Bennett
Title: Executive Vice President
COMMUNICATION CAPITAL CORP.
By: /s/ Robert R. Bennett
--------------------------------
Name: Robert R. Bennett
Title: Executive Vice President
UNITED CABLE TURNER INVESTMENT INC.
By: /s/ Robert R. Bennett
--------------------------------
Name: Robert R. Bennett
Title: Executive Vice President
<PAGE>
With respect to
Sections 2.1(c), 2.2, 3.1(c) and 4.1 only:
TELE-COMMUNICATIONS, INC.
By: /s/ Stephen M. Brett
--------------------------------
Name: Stephen M. Brett
Title: Executive Vice President
With respect to
Section 2.1(c) only:
TCI COMMUNICATIONS, INC.
By: /s/ Stephen M. Brett
--------------------------------
Name: Stephen M. Brett
Title: Executive Vice President
TIME TBS HOLDINGS, INC.
By: /s/ Thomas W. McEnerney
--------------------------------
Name: Thomas W. McEnerney
Title: Vice President
<PAGE>
- --------------------------------------------------------------------------------
CONTRIBUTION AND EXCHANGE AGREEMENT
Dated as of September 22, 1995
among
TIME WARNER INC.,
TW INC.,
TCI TURNER PREFERRED, INC.,
LIBERTY MEDIA CORPORATION
AND
LIBERTY BROADCASTING, INC.
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
DEFINITIONS AND CONSTRUCTION
1.1 Certain Definitions............................... 2
1.2 Additional Definitions............................ 7
1.3 Terms Generally................................... 8
ARTICLE II
THE CONTRIBUTION
2.1 Right to Make Contribution........................ 9
2.2 Closing........................................... 9
2.3 Exchange of Certificates.......................... 9
2.4 Effectiveness of the Contribution................. 9
2.5 Scheduled Closing Date; Changes in Election....... 9
2.6 Assignment and Delegation of this Agreement....... 10
ARTICLE III
CERTAIN POST-CLOSING COVENANTS
3.1 Obligation of TCITP to Indemnify; TCI Guarantee... 10
3.2 Refunds........................................... 11
3.3 Final Returns..................................... 11
3.4 Conduct of Audits and Disputes.................... 11
(a) Contest Rights............................... 11
(b) Claims Controlled by TCITP................... 12
(c) Claims Controlled by Holdco.................. 12
(d) Contests Involving Multiple Issues........... 12
(e) Notice; Cooperation.......................... 12
(f) Payment...................................... 13
(g) Obligations of Tax Indemnified Party......... 13
3.5 Carrybacks........................................ 13
3.6 LMC Agreement; Covered TW Securities.............. 13
3.7 No Liquidation.................................... 13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of LMC Parent,
TCITP and LBI................................... 14
(a) Organization, Standing and Corporate Power... 14
(b) Ownership of TBS Shares...................... 14
(c) Capital Structure............................ 14
(d) Authority; Noncontravention.................. 15
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
(e) Assets and Liabilities....................... 16
(f) Litigation................................... 16
(g) Brokers...................................... 16
(h) Taxes........................................ 17
(i) Compliance with Laws......................... 17
(j) Consolidated Return.......................... 17
(k) ERISA Compliance............................. 17
4.2 Representations and Warranties of TW
Parent and Holdco............................... 18
(a) Organization, Standing and Corporate Power... 18
(b) Authority; Noncontravention.................. 18
(c) Litigation................................... 19
(d) Voting Requirements.......................... 20
(e) Brokers...................................... 20
(f) Holdco Charter............................... 20
ARTICLE V
CERTAIN COVENANTS
5.1 Conduct of Business............................... 20
(a) Business of UCTI............................. 20
(b) Assumption; Indemnification.................. 21
(c) Certain Actions by UCTI...................... 21
(d) Advice of Changes............................ 21
5.2 Access to Information............................. 21
5.3 Confidentiality................................... 21
5.4 Reasonable Efforts; Notification.................. 22
5.5 Public Announcements.............................. 23
5.6 Fees and Expenses................................. 23
5.7 Stock Exchange Listing............................ 23
5.8 Tax Treatment..................................... 24
5.9 Transfer and Real Property Transfer Gains Taxes... 24
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation To Effect
Contribution.................................... 24
(a) Antitrust..................................... 24
(b) No Injunctions or Restraints.................. 24
(c) Consummation of the Mergers................... 25
6.2 Conditions to Obligations of Holdco............... 25
(a) Representations and Warranties................ 25
(b) Performance of Obligations.................... 25
(c) No Litigation................................. 25
6.3 Right of LMC Parent to Withdraw Contribution
Election........................................ 25
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
<S> <C>
7.1 Termination....................................... 26
7.2 Effect of Termination............................. 26
7.3 Amendment......................................... 26
7.4 Extension; Waiver................................. 26
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-survival of Representations and Warranties.... 27
8.2 Notices........................................... 27
8.3 Descriptive Headings.............................. 28
8.4 Counterparts...................................... 28
8.5 Entire Agreement; No Third-Party Beneficiaries.... 28
8.6 Governing Law..................................... 28
8.7 Assignment........................................ 29
8.8 Enforcement....................................... 29
8.9 Waivers........................................... 29
SCHEDULES
Schedule 4.1(f) -- Litigation (LMC Parent)
Schedule 4.2(b) -- No Conflicts (TW Parent)
Schedule 4.2(c) -- Litigation (TW Parent)
</TABLE>
iii
<PAGE>
CONTRIBUTION AND EXCHANGE AGREEMENT dated as of
September 22, 1995, among TIME WARNER INC., a Delaware
corporation ("TW Parent"), TW INC., a Delaware
corporation and direct wholly-owned subsidiary of TW
Parent ("Holdco"), LIBERTY MEDIA CORPORATION, a
Delaware corporation ("LMC Parent"), TCI TURNER
PREFERRED, INC., a Colorado corporation ("TCITP"), and
LIBERTY BROADCASTING, INC., an Oregon corporation and
direct wholly-owned subsidiary of TCITP ("LBI").
Recitals
--------
A. Reference is made to that certain Amended and Restated Agreement
and Plan of Merger dated as of September 22, 1995, and as amended by Amendment
No. 1 thereto dated as of August 8, 1996 (the "Merger Agreement"), among TW
Parent, Holdco, Time Warner Acquisition Corp., a Delaware corporation and direct
wholly-owned subsidiary of Holdco ("Delaware Sub"), TW Acquisition Corp., a
Georgia corporation and direct wholly-owned subsidiary of Holdco ("Georgia
Sub"), and Turner Broadcasting System, Inc., a Georgia corporation ("TBS").
B. The Merger Agreement provides for the merger of Delaware Sub into
TW Parent (the "TW Merger") and the simultaneous merger of Georgia Sub into TBS
(the "TBS Merger" and, collectively with the TW Merger, the "Mergers"), in a
transaction in which the outstanding capital stock of TW Parent and TBS,
respectively, will be converted into capital stock of Holdco, and each of TW
Parent and TBS will become a direct wholly-owned subsidiary of Holdco. The
Mergers are intended to qualify as tax-free exchanges pursuant to Section 351 of
the Internal Revenue Code of 1986, as amended (the "Code").
C. Reference is also made to that certain Second Amended and
Restated LMC Agreement dated as of September 22, 1995 (the "LMC Agreement"),
among TW Parent, Holdco, LMC Parent, TCITP and certain subsidiaries of TCITP
named therein (TCITP and such subsidiaries, collectively, the "Shareholders").
TCITP is a direct wholly-owned subsidiary of LMC Parent. The LMC Agreement
provides for, among other things, the Shareholders to vote all shares of TBS
capital stock owned by the Shareholders in favor of the TBS Merger.
D. In order to induce LMC Parent, TCITP and the other Shareholders
to enter into the LMC Agreement, TW Parent and Holdco have agreed to enter into
this Agreement, which provides for, among other things, the Contribution
Election and the Contribution described herein.
1
<PAGE>
E. The TBS Merger is also subject to the condition that the waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), shall have expired. In connection therewith, TW
Parent, TBS, Tele-Communications, Inc., a Delaware corporation ("TCI"), and LMC
---
Parent have entered into an Agreement Containing Consent Order (the "ACCO")
----
dated as of August , 1996, with the Federal Trade Commission (the "FTC"),
---
which contemplates the issuance of an Order (the ACCO, together with such Order
and the Interim Agreement attached as Appendix I to the ACCO, in each case as
the same may be amended or modified from time to time hereafter, the "FTC
---
Consent Decree").
- --------------
F. This Agreement is the Contribution and Exchange Agreement
contemplated by the LMC Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS AND CONSTRUCTION
1.1 CERTAIN DEFINITIONS. As used in this Agreement, the following
terms have the corresponding meanings:
"Additional Agreements" means the LMC Agreement, the Registration
---------------------
Rights Agreement, the First Refusal Agreement, the Distribution Contract, the
SSSI Agreement, the Rights Amendment (if entered into), the SportSouth
Agreement, the Sunshine Agreement and the Program and Digitization Agreement.
"Affiliate", when used with respect to a specified person, means any
---------
other person that directly or indirectly Controls, is Controlled by or is under
common Control with such first person. The term "affiliated" (whether or not
capitalized) shall have a correlative meaning. Prior to the Effective Time, no
Liberty Party shall be deemed to be an Affiliate of TW Parent, Holdco or any of
their respective subsidiaries and neither TW Parent, Holdco nor any of their
respective Affiliates shall be deemed to be an Affiliate of any Liberty Party.
Prior to the Effective Time, neither TW Parent nor any of its Affiliates nor
TCI, LMC Parent nor any of their respective Affiliates shall be deemed to be an
Affiliate of TBS or any of its subsidiaries.
"Agreement" means this Contribution and Exchange Agreement, including
---------
all Schedules hereto.
"Change in Control Event" means any of the following events: (i) any
-----------------------
person becomes an Acquiring Person (as defined in the Rights Agreement as in
effect on September 22,
2
<PAGE>
1995, as if amended in accordance with the Rights Amendment), including any
person that would otherwise be excluded from the definition of Acquiring Person
in the Rights Agreement by virtue of the acquisition of shares pursuant to a
Qualifying Offer (as defined in the Rights Agreement as in effect on September
22, 1995, as if amended in accordance with the Rights Amendment) and regardless
of whether the Rights Agreement continues to be in effect or is so amended, (ii)
TW Parent enters into any agreement (other than the Elective Merger Agreement,
the Merger Agreement or any amendment thereto) providing for a merger or
consolidation of TW Parent into any other person, a binding share exchange, or a
merger of TW Parent with any other person in which the shares of capital stock
of TW Parent are exchanged for or converted into the right to receive anything
other than shares of the common stock, par value $1.00 per share, of TW Parent,
or (iii) prior to the closing of the Mergers, Holdco ceases to be a wholly-owned
subsidiary of TW Parent or enters into any agreement (other than the Merger
Agreement or any amendment thereto) that would result in Holdco ceasing to be a
wholly-owned subsidiary of TW Parent.
"Closing Date" means the date on which the Mergers are consummated,
------------
pursuant to Section 1.02 of the Merger Agreement.
"Communications Laws" means the Communications Act of 1934 (as amended
-------------------
and supplemented from time to time and any successor statute or statutes
regulating telecommunications companies) and the rules and regulations (and
interpretations thereof and determinations with respect thereto) promulgated,
issued or adopted from time to time by the FCC. All references herein to the
Communications Laws shall include as of any relevant date in question the
Communications Laws as then in effect (including any Communications Law or part
thereof the effectiveness of which is then stayed) and as then formally proposed
by the FCC by publication in the Federal Register or promulgated with a delayed
effective date.
"Consideration" means consideration that is identical in form and
-------------
value to the aggregate consideration that UCTI would have been entitled to
receive in the TBS Merger, pursuant to the Merger Agreement, in respect of all
shares of capital stock of TBS held of record by UCTI at the Effective Time, if
the Contribution Election had not been made and UCTI had not delivered timely
notice of an intent to demand appraisal rights pursuant to any applicable
statute.
"Contract" means any agreement, contract, commitment, indenture,
--------
lease, license, instrument, note, bond, security, undertaking, promise, covenant
or legally binding arrangement or understanding.
"Contributed Assets" means all the issued and outstanding shares of
------------------
capital stock of UCTI.
"Control", as to any person, means the possession, directly or
-------
indirectly, of the power to direct or cause the direction of the management and
policies of such person (whether through ownership of securities, partnership
interests or other ownership interests, by contract, by participation or
involvement in the board of directors, management committee or other management
3
<PAGE>
structure of such person, or otherwise). The terms "Controlled," "Controlling"
and similar variations (whether or not capitalized) have correlative meanings.
"Distribution Contract" means the Distribution Contract, substantially
---------------------
in the form of Exhibit 1 to the SSSI Agreement, to be entered into by Holdco,
SpinCo and Satellite at or prior to the Closing (but will not become effective
until the "Closing" under the SSSI Agreement).
"Effective Time" means the time at which the Mergers become effective
--------------
pursuant to the Merger Agreement and applicable state law.
"FCC" means the Federal Communications Commission and any successor
---
agency or other agency charged with the administration of any Communications
Law.
"Final Determination" means (i) a decision, judgment, decree or other
-------------------
order by any court of competent jurisdiction, which decision, judgment, decree
or other order has become final after all allowable appeals by either party to
the action have been exhausted (it being understood that for purposes of this
definition, the term "allowable appeals" means an appeal taken or required to be
taken under the contest provisions with respect to the applicable
indemnification obligation and permitted by applicable law) or the time for
filing such appeal has expired, (ii) a closing agreement entered into under
Section 7121 of the Code (or comparable state or local law) or any other binding
settlement agreement entered into in connection with an administrative or
judicial proceeding (including any settlement entered into in accordance with
the contest provisions with respect to the applicable indemnification obligation
hereunder) or (iii) the expiration of the time for instituting a claim for
refund, or if such a claim was filed, the expiration of the time for instituting
suit with respect thereto.
"First Refusal Agreement" means the Stockholders' Agreement
-----------------------
substantially in the form of Exhibit B to the LMC Agreement, to be entered into
by Holdco, TCITP, LBI, SpinCo and certain other shareholders of TBS at or prior
to the Closing.
"Holdco Common Stock" means the common stock, par value $.01 per
-------------------
share, of Holdco to be issued in the Mergers, and in the event of any
reclassification, recapitalization or other change in the Holdco Common Stock,
or in the event of any consolidation or merger of Holdco with or into another
person affecting the Holdco Common Stock, such capital stock or other securities
to which a holder of Holdco Common Stock would be entitled upon the occurrence
of such event.
"Horizontal Rule" means the rule promulgated by the FCC that is set
---------------
forth at 47 C.F.R. 76.503 on September 22, 1995.
"Judgment" means any order, judgment, writ, decree, injunction, award
--------
or other determination, decision or ruling of any court, any other Governmental
Entity or any arbitrator.
4
<PAGE>
"LBI Consideration" means that portion of the Consideration that bears
-----------------
the same proportion to the entire Consideration as the number of shares of UCTI
Capital Stock owned by LBI bears to the total number of shares of UCTI Capital
Stock outstanding, in each case as of the Effective Time, determined, if the
Consideration consists of consideration of more than one form, on a pro rata
basis for all forms of consideration constituting the Consideration.
"Liberty Party" means LMC Parent and each Affiliate of LMC Parent
-------------
that is controlled by LMC Parent from time to time and, for so long as LMC
Parent is an Affiliate of TCI that is controlled by TCI, also means TCI and each
Affiliate of TCI that is controlled by TCI.
"Liberty Subsidiaries" means TCITP, UCTI, LBI and Communication
--------------------
Capital Corp.
"LMC Group" means TCITP and all corporations that would join with
---------
TCITP in the filing of a consolidated return for federal income tax purposes,
other than UCTI.
"LMCN-V Common Stock" means the Series LMCN-V Common Stock of Holdco,
-------------------
having the terms set forth on Exhibit A to the LMC Agreement.
"person" has the meaning ascribed to such term in the Merger Agreement
------
and includes any Governmental Entity.
"Program and Digitization Agreement" means the letter agreement, dated
----------------------------------
as of ____________, 1996, between Satellite and TBS with respect to, among other
things, the carriage by Satellite of certain programming services of TBS and
Satellite's non-exclusive right to digitize, compress and reuplink certain
programming services of TBS.
"Registration Rights Agreement" means the LMC Registration Rights
-----------------------------
Agreement substantially in the form of Exhibit E to the LMC Agreement to be
entered into by Holdco, LMC Parent, TCITP and certain subsidiaries of TCITP at
or prior to the Closing.
"Requirement of Law", when used with respect to any person, means any
------------------
law, statute, code, rule, regulation or Judgment, and any interpretation of or
determination with respect to any of the foregoing, of any court or other
Governmental Entity applicable to or binding upon such person, or to which such
person, any of its assets or any business conducted by it is subject, whether
now existing or at any time hereafter enacted, promulgated, issued, entered or
otherwise becoming effective.
"Rights Agreement" means the Rights Agreement dated as of January 20,
----------------
1994, between TW Parent and Chemical Bank, as Rights Agent.
"Rights Amendment" means those certain amendments to the Rights
----------------
Agreement described in Exhibit F to the Original LMC Agreement.
5
<PAGE>
"Satellite means Satellite Services, Inc., a Delaware corporation
---------
"SpinCo" means Southern Satellite Systems, Inc., a Georgia
------
corporation, and any successor thereto by operation of law.
"Spin-off" means the distribution by TCI of 100% of the capital stock
--------
of SpinCo to holders of record of TCI's Tele-Communications, Inc. Series A
Liberty Media Common Stock and Tele-Communications, Inc. Series B Liberty Media
Group Common Stock.
"SportSouth Agreement" means that certain Stock Purchase Agreement
--------------------
dated as of September 22, 1995, between TBS and LMC Southeast Sports, Inc., and
the Exhibits and Schedules thereto, a copy of which is annexed as Exhibit G to
the LMC Agreement.
"SSSI Agreement" means the SSSI Agreement substantially in the form of
--------------
Exhibit D to the LMC Agreement to be entered into by Holdco and LMC Parent,
SpinCo and Satellite (with respect to certain provisions thereof) at or prior to
the Closing.
A "subsidiary" of any person means another person, an amount of the
----------
voting securities or other voting ownership or voting partnership interests of
which sufficient to elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned, directly or indirectly, by such first
person and/or one or more subsidiaries of such first person.
"Sunshine Agreement" means that certain agreement substantially in the
------------------
form of Exhibit H to the LMC Agreement, to be entered into by Time Warner
Entertainment Company, L.P., and Liberty Sports, Inc., at or prior to the
Closing.
A "Takeover Proposal" shall be pending if any bona fide tender or
-----------------
exchange offer for the TW Parent Common Stock shall have been commenced or
publicly announced and not terminated or withdrawn, if consummation of such
offer in accordance with its terms would result in a Change in Control Event.
A tender offer will not be deemed to be bona fide that is not fully financed
unless it is made or guaranteed by a person whose senior debt securities have
investment grade ratings in one of the four highest investment grade categories.
"Tax Returns" mean all Federal, state, local and foreign tax returns,
-----------
declarations, statements, reports, schedules, forms and information returns and
any amended tax return relating to Taxes.
"Taxes" mean all Federal, state, local and foreign taxes, and other
-----
assessments of a similar nature (whether imposed directly or through
withholding), including any interest, additions to tax, or penalties applicable
thereto.
6
<PAGE>
"TBS Class C Preferred Stock" means the Class C Preferred Stock, par
---------------------------
value $.125 per share, of TBS.
"TBS Stock Agreements" means, individually and collectively, (a) the
--------------------
Investors Agreement dated as of June 3, 1987, among TBS and the original holders
of the TBS Class C Preferred Stock; (b) the Shareholders' Agreement dated as of
June 3, 1987, as amended by the First Amendment dated as of April 15, 1988,
among TBS, R.E. Turner, III, and the original holders of the TBS Class C
Preferred Stock; (c) the Voting Agreement dated as of June 3, 1987, among
certain holders of TBS Class C Preferred Stock and (d) the Agreement dated as of
June 3, 1987, among TW Parent, TCITP and certain other holders of TBS Class C
Preferred Stock.
"TCI" means Tele-Communications, Inc., a Delaware corporation.
---
"TCITP Consideration" means that portion of the Consideration that
-------------------
bears the same proportion to the entire Consideration as the number of shares of
UCTI Capital Stock owned by TCITP bears to the total number of shares of UCTI
Capital Stock outstanding, in each case as of the Effective Time, determined, if
the Consideration consists of consideration of more than one form, on a pro rata
basis for all forms of consideration constituting the Consideration.
"TW Parent Common Stock" means the common stock, par value $1.00 per
----------------------
share, of TW Parent on September 22, 1995, and in the event of any
reclassification, recapitalization or other change in the TW Parent Common
Stock, or in the event of any consolidation or merger of TW Parent with or into
another person affecting the TW Parent Common Stock, such capital stock or other
securities to which a holder of TW Parent Common Stock would be entitled upon
the occurrence of such event.
"UCTI" means United Cable Turner Investment Inc., a Colorado
----
corporation.
"Voting Holdco LMC Common Stock" means the Series LMC Common Stock of
------------------------------
Holdco, having the terms set forth on Exhibit C to the LMC Agreement.
1.2 ADDITIONAL DEFINITIONS. The following additional terms have the
meaning ascribed thereto in the Section indicated below next to such term:
<TABLE>
<CAPTION>
Defined Term Section Defined In
- ------------ ------------------
<S> <C>
Closing 2.2
Code Recital B
contest rights 3.4(a)
Contribution 2.1
Contribution Election 2.1
Delaware Sub Recital A
Georgia Sub Recital A
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
Governmental Entity 4.1(d)
Holdco Preamble
HSR Act 4.1(d)
Liens 4.1(b)
LBI Preamble
LMC Agreement Recital C
LMC Parent Recital C
Material TW Parent Subsidiary 4.2(a)
Merger Agreement Recital A
Mergers Recital B
Proprietary Information 5.3
Representatives 5.3
Scheduled Closing Date 2.5
SEC 4.2(a)
Shareholders Recital C
Straddle Period 3.1(c)
Tax Indemnified Party 3.4(e)
Tax Indemnifying Party 3.4(e)
TBS Recital A
TBS Merger Recital B
TBS Shares 4.1(b)
TCITP Preamble
TW Material Adverse Effect 4.2(a)
TW Merger Recital B
TW Parent Preamble
TW Parent Subsidiary 4.2(a)
TWE 4.2(a)
UCTI Capital Stock 4.1(c)
UCTI Material Adverse Effect 4.1(a)
UCTI Stock Transfer 3.7
</TABLE>
1.3 TERMS GENERALLY. The definitions in Sections 1.1 and 1.2 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. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
The words "herein", "hereof" and "hereunder" and words of similar import refer
to this Agreement (including Schedules) in its entirety and not to any part
hereof unless the context shall otherwise require. All references herein to
Articles, Sections and Schedules shall be deemed references to Articles and
Sections of, and Schedules to, this Agreement unless the context shall otherwise
require. Unless the context shall otherwise require, any references to any
agreement or other instrument or statute or regulation are to it as amended and
supplemented from time to time (and, in the case of a statute or regulation, to
any successor provisions). Any reference in this Agreement to a "day" or number
of "days" (without the explicit qualification of "business") shall be
8
<PAGE>
interpreted as a reference to a calendar day or number of calendar days. If any
action or notice is to be taken or given on or by a particular calendar day, and
such calendar day is not a business day, then such action or notice shall be
deferred until, or may be taken or given on, the next business day.
ARTICLE II
THE CONTRIBUTION
2.1 RIGHT TO MAKE CONTRIBUTION. LMC Parent shall have the right and
option, exercisable by notice given to TW Parent and Holdco at least ten
business days prior to the Scheduled Closing Date (the "Contribution Election"),
to cause TCITP and LBI to contribute the Contributed Assets to Holdco in
exchange for the Consideration (the "Contribution"). The Contribution is
intended to qualify as a tax-free exchange pursuant to Section 351 of the Code,
upon and subject to the terms and conditions of this Agreement.
2.2 CLOSING. If LMC Parent makes the Contribution Election, the
closing of the Contribution (the "Closing") will take place on the Closing Date,
concurrently with the consummation of the Mergers.
2.3 EXCHANGE OF CERTIFICATES. At the Closing, (a) LMC Parent shall
cause TCITP to deliver to Holdco one or more stock certificates representing in
the aggregate all the Contributed Assets held of record by TCITP, and shall
cause LBI to deliver to Holdco one or more stock certificates representing in
the aggregate all the Contributed Assets held of record by LBI, in each case
duly endorsed for transfer or accompanied by stock powers duly endorsed for
transfer, and (b) Holdco shall deliver to TCITP and LBI, respectively, (i) one
or more stock certificates, duly executed and registered in the name of TCITP,
representing in the aggregate the TCITP Consideration and (ii) one or more
certificates, duly executed and registered in the name of LBI, representing in
the aggregate the LBI Consideration. Until surrendered as contemplated by this
Article II, the Contributed Assets shall be deemed from and after the Effective
Time to represent only the right to receive the Consideration. The
Consideration issued and paid in accordance with this Article II shall be deemed
to have been issued and paid in full satisfaction of all rights pertaining to
the Contributed Assets. No interest will be paid or will accrue on any cash
payable in lieu of any fractional shares constituting part of the Consideration.
2.4 EFFECTIVENESS OF THE CONTRIBUTION. The Contribution shall be
effective, and all deliveries pursuant to Section 2.3 shall be conclusively
-----------
deemed to have occurred, concurrently with the effectiveness of the Mergers at
the Effective Time.
2.5 SCHEDULED CLOSING DATE; CHANGES IN ELECTION. TW Parent shall
give LMC Parent notice of the date on which the closing of the Mergers is
scheduled to occur (the "Scheduled Closing Date"), at least 20 days prior
thereto, and shall give LMC Parent such prior notice of any changes in the
Scheduled Closing Date as shall be reasonable under the circumstances. LMC
Parent
9
<PAGE>
shall have the right to revoke its election pursuant to Section 2.1 at any time
-----------
prior to three business days prior to the Effective Time.
2.6 ASSIGNMENT AND DELEGATION OF THIS AGREEMENT. Concurrently with
the effectiveness of the Spin-off, LMC Parent shall assign and delegate to
SpinCo, and SpinCo shall assume from LMC Parent, all rights and obligations of
LMC Parent under this Agreement as of the date thereof, and SpinCo will from and
after such date be bound by, and entitled to the benefit of this Agreement, with
the same effect as if SpinCo had been an original party and signatory to this
Agreement, in lieu of LMC Parent, and as if the representations and warranties
of LMC Parent made herein, and the obligations of LMC Parent contained herein to
be performed on and after the date of the Spin-off, were in each case the
representations, warranties and obligations of SpinCo. In that connection, on
the date of the Spin-off, SpinCo shall execute and deliver to each of the other
parties hereto a counterpart of this Agreement, and SpinCo and each of the other
parties hereto shall execute and deliver to LMC Parent an unconditional release
of all obligations of LMC Parent hereunder (whether or not known or suspected),
in such form as LMC Parent and its counsel shall reasonably request. Without
limiting the generality of any of the foregoing, on the date of the Spin-off,
upon delivery to the other parties hereto of the counterpart to this Agreement
referred to in the immediately preceding sentence, SpinCo shall be deemed to
make the representation and warranty set forth in Section 4.1(d), for the
benefit of LMC Parent and each other party hereto, as of such date and as if all
references therein to LMC Parent, TCITP and LBI referred instead to SpinCo.
ARTICLE III
CERTAIN POST-CLOSING COVENANTS
3.1 OBLIGATION OF TCITP TO INDEMNIFY; TCI GUARANTEE. (a) TCITP
hereby assumes and shall be liable for, and shall indemnify and hold UCTI,
Holdco and the Affiliates of Holdco harmless from and against, (i) all liability
for Taxes of UCTI for taxable years or portions thereof ending on or prior to
the Closing Date (including any Straddle Period pursuant to Section 3.1(c)),
--------------
(ii) all liability (as a result of Treasury Regulation Section 1.1502-6(a) or
otherwise) for Taxes of any person other than UCTI with which prior to the
Closing Date UCTI joins or has ever joined (or is or ever has been required to
join) in filing any consolidated, combined, unitary or aggregate Tax Return, and
(iii) subject to the representations, warranties, covenants and agreements of
Holdco and TW Parent set forth in Section 3.7, all liability for Taxes of UCTI
-----------
arising as a result of the Contribution, in each case on an after-Tax basis.
TCI hereby unconditionally and irrevocably guarantees all obligations and
liabilities assumed by TCITP pursuant to this Section 3.1(a) (subject, in the
--------------
case of the obligations and liabilities assumed by TCITP for Taxes of UCTI
arising as a result of the Contribution, to the representations, warranties,
covenants and agreements of Holdco and TW Parent set forth in Section 3.7).
-----------
(b) All Taxes of UCTI for which TCITP is not required to indemnify
UCTI, Holdco and the Affiliates of Holdco pursuant to Section 3.1(a) shall be
--------------
the obligation of UCTI, and
10
<PAGE>
UCTI shall be liable for, and shall indemnify and hold the members of the LMC
Group harmless from and against, all such liabilities, on an after-Tax basis.
(c) For purposes of this Agreement, each Tax liability for a taxable
year that includes, but does not end on, the Closing Date (a "Straddle Period")
shall be allocated, based upon a "closing of books," between the period ending
on the Closing Date and the period beginning the day after the Closing Date, as
if each such period were a taxable year.
3.2 REFUNDS. Any refunds of Taxes or any credit against Taxes of
UCTI, Holdco and the Affiliates of Holdco with respect to taxable years or
portions thereof ending on or prior to the Closing Date (when and to the extent
applied by UCTI against any Tax liability that TCITP has not assumed pursuant to
Section 3.1(a), resulting in a tax benefit to UCTI that it otherwise would not
- --------------
have realized in the absence of such credit) (including any interest relating to
any such refunds or credits) shall be for the account of TCITP, and are hereby
and shall be assigned to TCITP, and any other refunds of Taxes or credits
against Taxes of UCTI shall be for the account of Holdco. Any refunds or
credits with respect to Straddle Periods shall be allocated under the principles
set forth in Section 3.1(c). Holdco shall forward to, or reimburse TCITP for,
--------------
any such refunds or credits and interest due TCITP, promptly after receipt
thereof, and TCITP shall forward to Holdco any such refunds or credits and
interest due Holdco, promptly after receipt thereof. In either case, the party
entitled to such refund or credit shall reimburse the other party to the extent
of any net Tax cost imposed on such other party in connection with the receipt
of such refund or credit. Each party hereto shall cooperate with the other
party as reasonably requested in making such filings as may be necessary and
appropriate to seek any such refunds or credits.
3.3 FINAL RETURNS. TCITP shall prepare or cause to be prepared any
Tax Returns to be filed that relate to any period ending on or prior to the
Closing Date. All such Tax Returns shall be prepared in a manner consistent
with prior years. TCITP and Holdco shall jointly prepare and control any Tax
Return of UCTI for Straddle Periods in a manner consistent with prior years.
Each party shall promptly respond to all reasonable requests by the other party
for information necessary to prepare and file any such Tax Returns.
3.4 CONDUCT OF AUDITS AND DISPUTES.
(a) Contest Rights. A party who has "contest rights" with respect to
--------------
an asserted Tax liability, Tax refund claim or Tax credit claim shall have the
right (but not the obligation), at its own expense, to negotiate, settle or
contest such asserted Tax liability, refund claim or credit claim, in its own
name or in the name of the other party or its Affiliates, as appropriate, all in
accordance with the terms of this Section 3.4. Such contest rights shall
-----------
include, but not be limited to, (i) the determinations (x) whether any action
shall initially be by way of judicial or administrative proceedings, or both,
(y) whether any such asserted Tax liability shall be contested by resisting
payment thereof or by paying the same and seeking a refund thereof and (z) if
judicial action is undertaken, the court or other judicial body before which
such action shall be commenced and (ii) the right to control any such
proceedings or actions.
11
<PAGE>
(b) Claims Controlled by TCITP. Subject to paragraphs (d), (e) and
-------------------------- ---------- --- ---
(f) of this Section 3.4, TCITP (and not UCTI) shall have contest rights with
- --- -----------
respect to any asserted Tax liability, refund claim or credit claim of UCTI to
the extent that TCITP is required to indemnify against such asserted Tax
liability pursuant to Section 3.1(a) or is entitled to such refund or credit
--------------
pursuant to Section 3.2. Holdco shall have the right to participate in and be
-----------
consulted with respect to any such contest undertaken by TCITP. TCITP shall not
settle any Tax liability, refund claim or credit claim without the prior written
consent of Holdco, which consent shall not be unreasonably withheld.
(c) Claims Controlled by Holdco. Subject to paragraphs (d), (e) and
--------------------------- ---------- --- ---
(f) of this Section 3.4, Holdco (and not TCITP) shall have contest rights with
- --- -----------
respect to any asserted Tax liability, refund claim or credit claim of UCTI to
the extent that UCTI is required to indemnify against such asserted Tax
liability pursuant to Section 3.1(b) or is entitled to such refund or credit
--------------
pursuant to Section 3.2. TCITP and its Affiliates shall have the right to
-----------
participate in and be consulted with respect to any such contest undertaken by
Holdco. Holdco shall not settle any Tax liability, refund claim or credit claim
without the written consent of TCITP, which consent shall not be unreasonably
withheld.
(d) Contests Involving Multiple Issues. If any contest shall involve
----------------------------------
issues with respect to which both TCITP and Holdco have contest rights
hereunder, the parties will cooperate in any such contest, and will endeavor to
permit each party to control the contest of issues for which it has contest
rights. In the event there is a disagreement among the parties over matters
(such as choice of forum) relating to issues the contest of which are controlled
by more than one party, such disagreement shall be resolved in favor of the
party who controls the contest of the issues therein which, in the aggregate,
would result in the largest Tax liability if resolved unfavorably or the largest
Tax refund if resolved favorably.
(e) Notice; Cooperation. If UCTI, Holdco, any Affiliate of Holdco or
-------------------
any member of the LMC Group (in either case the "Tax Indemnified Party")
receives any written communication from a taxing authority regarding any actual
or proposed assessment, official inquiry or proceeding that could give rise to
an official determination with respect to any asserted Tax liability or refund
claim for any period for which TCITP or UCTI, respectively (the "Tax
Indemnifying Party"), may be liable (in the case of a liability) or may be
entitled (in the case of a refund claim) pursuant to this Agreement, such Tax
Indemnified Party (i) shall within 30 days of receipt of such written
communication so notify such Tax Indemnifying Party in writing, (ii) shall
request in such notice that such Tax Indemnifying Party notify it in writing if
it intends to exercise its contest rights hereunder, and (iii) shall, prior to
and for at least 30 days after so notifying such Tax Indemnifying Party (or, if
less, within a period ending 5 days, including any extension, prior to the date
on which the Tax Indemnified Party is required to take action pursuant to such
written communication), refrain from making any payment of any Tax claimed and
forebear from any settlement negotiations or compromises with respect to such
proposed adjustment. The Tax Indemnifying Party agrees to notify the Tax
Indemnified Party in writing within such 30 day period if it intends to exercise
its contest rights hereunder with respect to the asserted Tax liability, refund
12
<PAGE>
claim or credit claim. The parties hereto agree to cooperate with each other in
connection with any examination process with respect to any asserted Tax
liability, refund claim or credit claim and shall make available on a reasonable
basis to each other any personnel, books, records or other documents necessary
or appropriate for participation in such process.
(f) Payment. If, with respect to any asserted Tax liability that is
-------
the subject of an indemnification obligation hereunder, the party with contest
rights with respect to such Tax liability elects not to contest such asserted
Tax liability or elects to contest such asserted Tax liability by causing the
Tax Indemnified Party to pay the deficiency asserted and then seek a refund
thereof, the Tax Indemnifying Party shall advance the amount of the Tax
liability so asserted to such Tax Indemnified Party to the extent that the
Indemnified Party is required to pay such contested amount. Otherwise, such Tax
Indemnifying Party shall pay the amount of any indemnification obligation (net
of any payment made pursuant to the preceding sentence) to such Tax Indemnified
Party no later than 5 days after any Final Determination with respect to the Tax
giving rise to such indemnity obligation.
(g) Obligations of Tax Indemnified Party. The failure of a Tax
------------------------------------
Indemnified Party to comply with any of its obligations under this Section 3.4
-----------
shall not relieve any Tax Indemnifying Party or any other party of its indemnity
obligations hereunder, except to the extent (and only to the extent) that such
Tax Indemnifying Party or other party is actually prejudiced by such failure.
3.5 CARRYBACKS. No losses or credits of UCTI arising in taxable
years beginning after the Closing Date may be carried back to taxable years
ending on or prior to the Closing Date, except to the extent required by law.
3.6 LMC AGREEMENT; COVERED TW SECURITIES. If the Contribution
Election is made, then upon the Closing, (a) LBI shall automatically and without
further action become a party to the LMC Agreement, as a Shareholder (as such
term is defined therein), with the same effect as if LBI were an original party
thereto and were named as a Shareholder therein, and shall be deemed to have
made the appropriate representations, warranties, covenants and agreements
contained therein, and (b) all shares of Holdco Common Stock or other securities
of Holdco issued to LBI and TCITP as Consideration hereunder (and all shares of
Voting Holdco LMC Common Stock and/or LMCN-V Common Stock for which such shares
may be exchanged pursuant to Section 4.1 of the LMC Agreement (directly or
indirectly and in one or more exchanges)) shall constitute Covered TW Securities
for all purposes of the LMC Agreement (in addition to and not in lieu of the
Holdco Common Stock to be received in the TBS Merger and Voting Holdco LMC
Common Stock and/or LMCN-V Common Stock exchanged therefor). If the
Contribution Election is made, then upon the Closing, the LMC Agreement shall be
amended to the effect of this Section 3.6 without further action by the parties
-----------
to the LMC Agreement.
3.7 NO LIQUIDATION. As of the Closing Date, TW Parent and Holdco
hereby represent, warrant, covenant and agree with LMC Parent, TCITP and LBI,
for the benefit of all members of any LMC Group, that neither TW Parent nor
Holdco has, as of the Closing Date, any
13
<PAGE>
plan or intention to liquidate or dissolve UCTI or to sell or otherwise transfer
or dispose of (or agree to sell or otherwise transfer or dispose of) any capital
stock of UCTI, or any securities exercisable or exchangeable for, or convertible
into, capital stock of UCTI, or any interest therein, (a "UCTI Stock Transfer")
and Holdco shall not, and TW Parent shall not permit Holdco to, liquidate or
dissolve UCTI for at least two years following the Closing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES OF LMC PARENT, TCITP AND LBI.
Each of LMC Parent, TCITP and LBI represents and warrants to TW Parent and
Holdco as follows:
(a) Organization, Standing and Corporate Power. UCTI is a corporation
------------------------------------------
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite corporate power and
authority to carry on its business as now being conducted. UCTI is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
any property makes such qualification or licensing necessary, other than in such
jurisdictions where the failure to be so qualified or licensed (individually or
in the aggregate) has not had and is not reasonably likely to have a material
adverse effect on the business, properties, assets, results of operations or
financial condition of UCTI (a "UCTI Material Adverse Effect"). UCTI has
delivered to TW Parent complete and correct copies of UCTI's Articles of
Incorporation and By-laws, in each case as amended to September 22, 1995. UCTI
is not in violation of any provision of its Articles of Incorporation or By-
laws, except to the extent that any such violations would not, individually or
in the aggregate, have a UCTI Material Adverse Effect. UCTI does not have any
subsidiaries.
(b) Ownership of TBS Shares. UCTI owns 5,820,452 shares of TBS Class
-----------------------
C Preferred Stock (the "TBS Shares"), free and clear of all pledges, claims,
liens, charges, encumbrances, security interests, options and restrictions of
any kind or nature whatsoever (collectively, "Liens") and the TBS Shares are not
subject, other than pursuant to this Agreement and the TBS Stock Agreements, to
any Contract restricting or otherwise relating to the disposition, transfer,
voting rights or dividend rights of the TBS Shares. Except for the TBS Shares,
UCTI does not own, directly or indirectly, any capital stock, general or limited
partnership interest or other ownership interest of any kind in any corporation,
partnership, limited liability company, joint venture or other person.
(c) Capital Structure. The authorized capital stock of UCTI consists
-----------------
of 30,000 shares of common stock, par value $.01 per share ("UCTI Capital
Stock"), of which 20,119.4 shares are outstanding. All the outstanding shares
of UCTI Capital Stock are validly issued, fully paid and nonassessable. TCITP
is the record owner of 10,000 shares of UCTI Capital Stock (approximately
50.297% of the total number of such shares outstanding) and LBI is the record
owner of 10,119.4 shares of UCTI Capital Stock (approximately 49.703% of the
total number of such shares
14
<PAGE>
outstanding), which shares are in each case owned free and clear of any Liens.
Except for the UCTI Capital Stock owned of record by TCITP and LBI, there are no
shares of capital stock or other voting securities of UCTI issued, reserved for
issuance or outstanding. There are no options, warrants, calls, rights,
commitments, agreements, arrangements, undertakings or other Contracts of any
kind to which UCTI is a party or by which it is bound relating to any issued or
unissued capital stock of UCTI, or obligating UCTI to issue, transfer, grant or
sell any shares of capital stock of, or other equity interests in, or securities
convertible into or exchangeable for any capital stock or other equity interests
in, UCTI or obligating UCTI to issue, grant, extend or enter into any such
option, warrant, call, right, commitment, agreement, arrangement or undertaking.
There are not outstanding any contractual obligations of UCTI to repurchase,
redeem or otherwise acquire any shares of capital stock of UCTI, or to make any
investment (in the form of a loan, capital contribution or otherwise) in any
other person.
(d) Authority; Noncontravention. Each of LMC Parent, TCITP and LBI
---------------------------
has the requisite corporate power and authority to enter into this Agreement and
to consummate the transactions provided for herein. The execution and delivery
of this Agreement by LMC Parent, TCITP and LBI and the consummation by them of
the transactions provided for herein have been duly authorized by all necessary
corporate action on the part of LMC Parent, TCITP and LBI. This Agreement has
been duly executed and delivered by LMC Parent, TCITP and LBI and constitutes a
valid and binding obligation of each such party, enforceable against each such
party in accordance with its terms (except insofar as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally, or by principles governing
the availability of equitable remedies). The execution and delivery of this
Agreement by LMC Parent, TCITP and LBI do not, and the performance by them of
their respective obligations hereunder and the consummation of the transactions
provided for herein will not, conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
the loss of a material benefit under, or result in the creation of any Lien upon
any of the properties or assets of LMC Parent, TCITP, LBI, UCTI or any of their
subsidiaries under, (i) the Articles of Incorporation or By-laws of LMC Parent
or TCITP or the comparable organizational documents of LBI, UCTI or any other
subsidiary of LMC Parent or TCITP, (ii) any Contract to which LMC Parent, TCITP,
LBI, UCTI or any other subsidiary of LMC Parent or TCITP is a party or by which
any of them or their respective properties or assets are bound, other than the
TBS Stock Agreements, as to which no representation is being made, or (iii)
subject to the governmental filings and other matters referred to in the
following sentence and in Sections 3.01(d) and 3.02(d) of the Merger Agreement,
any Requirement of Law applicable to LMC Parent, TCITP, LBI, UCTI or any other
subsidiary of LMC Parent or TCITP or their respective properties or assets,
other than the Horizontal Rule, as to which no representation is being made, and
other than, in the case of clauses (ii) and (iii), any such conflicts,
violations, defaults, rights or Liens that individually or in the aggregate
would not (x) have a UCTI Material Adverse Effect, (y) prevent LMC Parent, TCITP
or LBI from performing its obligations under this Agreement in any material
respect or (z) prevent or delay in any material respect the consummation of any
of the transactions contemplated by this Agreement. No consent, approval, order
or authorization of, or registration, declaration or filing with, any Federal,
state or
15
<PAGE>
local government or any court, administrative agency or commission or other
governmental authority or agency, domestic or foreign, including the European
Union (a "Governmental Entity"), is required by or with respect to LMC Parent,
TCITP or LBI in connection with the execution and delivery by them of this
Agreement or the consummation by them of the transactions provided for herein,
except for (i) the filing of notification and report forms under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and
initial acceptance by the FTC of the FTC Consent Decree for public comment, (ii)
such filings with, and orders of, the FCC as may be required under the
Communications Laws in connection with the transactions contemplated by this
Agreement and the Merger Agreement, (iii) the filing with the SEC of such
reports under Section 13 of the Exchange Act as may be required in connection
with this Agreement, the Merger Agreement and the transactions contemplated
hereby and thereby, (iv) such filings with, and orders of, cable franchising
authorities as may be required in connection with this Agreement, the Merger
Agreement and the transactions contemplated hereby and thereby and (v) such
other consents, approvals, orders, authorizations, registrations, declarations
and filings which, if not obtained or made, would not prevent or delay in any
material respect the consummation of any of the transactions contemplated by
this Agreement and the Merger Agreement or otherwise prevent LMC Parent, TCITP
or LBI from performing its obligations under this Agreement in any material
respect or have, individually or in the aggregate, a UCTI Material Adverse
Effect.
(e) Assets and Liabilities. Except for the TBS Shares, UCTI does not
----------------------
have any assets or liabilities of any nature (whether accrued, absolute,
contingent or otherwise), other than assets not required by generally accepted
accounting principles to be set forth on a balance sheet of UCTI or in the notes
thereto.
(f) Litigation. Except as disclosed on Schedule 4.1(f), there is no
---------- ---------------
suit, action or proceeding (including any proceeding by or before the FCC)
pending or, to the knowledge of LMC Parent, TCITP, threatened against or
affecting LMC Parent, TCITP or LBI (and LMC Parent is not aware of any basis for
any such suit, action or proceeding) that, individually or in the aggregate,
could reasonably be expected (i) to have a UCTI Material Adverse Effect, (ii) to
prevent LMC Parent, TCITP or LBI from performing its obligations under this
Agreement or (iii) to prevent or delay the consummation of any of the
transactions contemplated by this Agreement, and there is no Judgment
outstanding against LMC Parent, TCITP or LBI having, or which could reasonably
be expected to have in the future, a UCTI Material Adverse Effect. Except as
disclosed on Schedule 4.1(f), there is no suit, action or proceeding (including
---------------
any proceeding by or before the FCC) pending or, to the knowledge of LMC Parent,
threatened against or affecting UCTI (and LMC Parent is not aware of any basis
for any such suit, action or proceeding).
(g) Brokers. No broker, investment banker, financial advisor or other
-------
person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of LMC Parent, or
LBI or any Affiliate of LMC Parent, TCITP or LBI.
16
<PAGE>
(h) Taxes.
-----
(i) UCTI has timely filed (or has had timely filed on its
behalf) or will file or cause to be timely filed, all material
Tax Returns required by applicable law to be filed by it prior to
or as of the Closing Date, including any Tax Return of any
affiliated or combined group that includes or had included UCTI.
All such Tax Returns are, or will be at the time of filing, true,
complete and correct in all material respects.
(ii) UCTI and each affiliated or combined group that
includes or had included UCTI have paid (or have had paid on
their behalf), or where payment is not yet due, have established
(or have had established on their behalf and for their sole
benefit and recourse), or will establish or cause to be
established on or before the Closing Date, an adequate accrual
for the payment of, all material Taxes due with respect to any
period (including any Straddle Period pursuant to Section
-------
3.01(c)) ending prior to or as of the Closing Date.
(iii) As of the Closing Date, UCTI will not have any
continuing obligation to LMC Parent, TCITP or LBI (or to any
other person) with respect to any Taxes.
(i) Compliance with Laws. UCTI has not violated or failed to comply
--------------------
with any Requirement of Law, except for violations and failures to comply that
could not, individually or in the aggregate, reasonably be expected to result in
a UCTI Material Adverse Effect.
(j) Consolidated Return. As of the Effective Time, (A) each of LMC
-------------------
Parent and SpinCo (and, if LMC Parent shall have designated another person to
receive LMCN-V Common Stock pursuant to the SSSI Agreement, such designated
person) is a member of the same group of corporations filing a consolidated
return for federal income tax purposes as the Liberty Subsidiaries (the "LMC
---
Affiliated Group"), and (B) except in connection with the Spin-off (as defined
- ----------------
in the SSSI Agreement), none of LMC Parent, TCITP, SpinCo or their respective
affiliates (other than the holders of the Excluded Shares, as such term is
defined in the LMC Agreement) has any current plan or intention (i) to transfer
any Holdco equity securities held directly or indirectly by it immediately
following the Closing Date (or to be acquired by it pursuant to the SSSI
Agreement) (any such holder or acquirer, a "Holder") to any person that is not a
------
member of the LMC Affiliated Group or (ii) to cause any Holder to cease to be a
member of the LMC Affiliated Group.
(k) ERISA Compliance. Except as would not have a UCTI Material
----------------
Adverse Effect, (i) all employee benefit plans or programs maintained for the
benefit of the current or former employees or directors of UCTI that are
sponsored, maintained or contributed to by UCTI or with respect to which UCTI
may have any liability, including any such plan that is an "employee benefit
plan" as defined in Section 3(3) or ERISA, are in compliance with all applicable
requirements of
17
<PAGE>
law, including ERISA and the Code, and (ii) UCTI does not have any liabilities
or obligations with respect to any such employee benefit plans or programs,
whether accrued, contingent or otherwise, nor to the knowledge of the executive
officers of LMC Parent are any such liabilities or obligations expected to be
incurred.
4.2 REPRESENTATIONS AND WARRANTIES OF TW PARENT AND HOLDCO. Each of
TW Parent and Holdco represents and warrants to LMC Parent, TCITP and LBI as
follows:
(a) Organization, Standing and Corporate Power. Each of TW Parent,
------------------------------------------
Holdco and each of the Material TW Parent Subsidiaries (as defined below) is a
corporation, partnership or other legal entity duly organized, validly existing
and in good standing under the laws of the jurisdiction in which it is organized
and has the requisite power and authority to carry on its business as now being
conducted. Each of TW Parent and TW Parent's subsidiaries (each, a "TW Parent
---------
Subsidiary") is duly qualified or licensed to do business and is in good
- ----------
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed (individually or in the aggregate) would not have a material adverse
effect on the business, properties, assets, condition (financial or otherwise),
results of operations or prospects of TW Parent and the TW Parent Subsidiaries,
taken as a whole (a "TW Material Adverse Effect"). TW Parent has delivered to
--------------------------
LMC Parent complete and correct copies of its Restated Certificate of
Incorporation and By-laws and the certificates of incorporation and by-laws or
comparable organizational documents of the Material TW Parent Subsidiaries, in
each case as amended to September 22, 1995. Neither TW Parent nor Holdco is in
violation of any provision of its Restated Certificate of Incorporation or By-
laws and no Material TW Parent Subsidiary is in violation of any provision of
its certificate of incorporation, by-laws or comparable organizational
documents, except, in the case of the Material TW Parent Subsidiaries, to the
extent that such violations would not, individually or in the aggregate, have a
TW Material Adverse Effect. Time Warner Entertainment Company, L.P. ("TWE"),
---
and each TW Parent Subsidiary that constitutes a significant subsidiary of TW
Parent within the meaning of Rule 1-02 of Regulation S-X of the rules and
regulations promulgated by the Securities and Exchange Commission ("SEC")
---
(determined without regard to paragraph (3) of the definition thereof) is
referred to herein as a "Material TW Parent Subsidiary".
(b) Authority; Noncontravention. TW Parent and Holdco have all
---------------------------
requisite corporate power and authority to enter into this Agreement and to
consummate, subject to the stockholder vote described in Section 4.2(d), the
--------------
Mergers, the Contribution and each of the other transactions provided for in
this Agreement. The execution and delivery of this Agreement by TW Parent and
Holdco and the consummation by them of the Mergers, the Contribution and each of
the other transactions provided for herein have been duly authorized by all
necessary corporate action on the part of TW Parent and Holdco, subject to the
stockholder vote described in Section 4.2(d). This Agreement has been duly
--------------
executed and delivered by TW Parent and Holdco and constitutes a valid and
binding obligation of each TW Parent and Holdco, enforceable against each such
party in accordance with its terms (except as enforceability may be limited by
applicable bankruptcy,
18
<PAGE>
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, or by principles governing the availability of equitable
remedies). Except as set forth in Schedule 4.2(b), the execution and delivery
---------------
of this Agreement by TW Parent and Holdco and the consummation by them of the
Mergers, the Contribution and each of the other transactions provided for in
this Agreement and compliance with the provisions hereof will not conflict with,
or result in any violation of or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to the loss of a material benefit under, or
result in the creation of any Lien upon any of the properties or assets of TW
Parent or any TW Parent Subsidiary under, (i) the Restated Certificate of
Incorporation or By-laws of TW Parent or the comparable organizational documents
of any TW Parent Subsidiary, (ii) any Contract to which TW Parent or any TW
Parent Subsidiary is a party or by which any of them or their respective
properties or assets are bound, other than the TBS Stock Agreements, as to which
no representation is being made, or (iii) subject to the governmental filings
and other matters referred to in the following sentence, any Requirement of Law
applicable to TW Parent or any other TW Parent Subsidiary or their respective
properties or assets, other than the Horizontal Rule, as to which no
representation is being made, and other than, in the case of clauses (ii) and
(iii), any such conflicts, violations, defaults, rights or Liens that
individually or in the aggregate would not (x) have a TW Material Adverse
Effect, (y) prevent TW Parent or Holdco from performing its respective
obligations under this Agreement in any material respect or (z) prevent or delay
in any material respect the consummation of the Mergers or any of the
transactions provided for in this Agreement. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to TW Parent or Holdco in connection with
the execution and delivery of this Agreement by TW Parent and Holdco or the
consummation by them of the Mergers and each of the transactions provided for in
this Agreement, except for (i) the filing of notification and report forms under
the HSR Act and initial acceptance by the FTC of the FTC Consent Decree for
public comment, (ii) such filings with, and orders of, the FCC under the
Communications Laws as may be required in connection with the transactions
contemplated by this Agreement and the Merger Agreement, (iii) the filing with
the SEC of such reports under Sections 13 and 16(a) of the Exchange Act as may
be required in connection with this Agreement, the Merger Agreement and the
transactions contemplated hereby and thereby, (iv) such filings with, and orders
of, cable franchising authorities as may be required in connection with this
Agreement, the Merger Agreement and the transactions contemplated hereby and
thereby and (v) such other consents, approvals, orders, authorizations,
registrations, declarations and filings which, if not obtained or made, would
not prevent or delay in any material respect the consummation of any of the
transactions contemplated by this Agreement and the Merger Agreement or
otherwise prevent TW Parent or Holdco from performing its obligations under this
Agreement or the Merger Agreement in any material respect or have, individually
or in the aggregate, a TW Material Adverse Effect.
(c) Litigation. Except as disclosed in any required report, schedule,
----------
form, statement or other document filed with the SEC since December 31, 1992, or
in Schedule 4.2(c), there is no suit, action or proceeding (including any
---------------
proceeding by or before the FCC) pending or, to the knowledge of TW Parent,
threatened against or affecting TW Parent or any of the TW Parent Subsidiaries
(and TW Parent is not aware of any basis for any such suit, action or
proceeding) that,
19
<PAGE>
individually or in the aggregate, could reasonably be expected to prevent TW
Parent from performing its obligations under this Agreement in any material
respect. As of the date of this Agreement, except as disclosed in any required
report, schedule, form, statement or other document filed with the SEC since
December 31, 1992, or in Schedule 4.2(c), there is no suit, action or proceeding
---------------
pending, or, to the knowledge of TW Parent, threatened, against TW Parent or any
of the TW Parent Subsidiaries (and TW Parent is not aware of any basis for any
such suit, action or proceeding) that, individually or in the aggregate, could
reasonably be expected to prevent or delay in any material respect the
consummation of any of the transactions contemplated by this Agreement or the
Merger Agreement.
(d) Voting Requirements. The adoption of the Merger Agreement by the
-------------------
holders of a majority in voting power of the outstanding TW Parent Common Stock
and the outstanding voting preferred stock, par value $1.00 per share, of TW
Parent, voting together as a single class, is the only vote of the holders of
any class or series of TW Parent's capital stock necessary to approve this
Agreement, the Merger Agreement, the Additional Agreements and the transactions
contemplated hereby and thereby.
(e) Brokers. No broker, investment banker, financial advisor or other
-------
person, other than Morgan Stanley & Co Incorporated, the fees and expenses of
which will be paid by TW Parent, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of TW Parent or any Affiliate of TW Parent.
(f) Holdco Charter. Holdco has delivered to LMC Parent complete and
--------------
correct copies of its Certificate of Incorporation and By-laws and the Holdco
Rights Plan, if any, in each case as amended to September 22, 1995, including
all certificates of designation. No amendments to any of the foregoing have
been authorized, approved or adopted and there is no commitment, arrangement or
understanding by Holdco to effect any such amendment, except as provided in the
Merger Agreement. All shares of capital stock of Holdco that may be issued
pursuant to this Agreement will be, when issued, duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights.
ARTICLE V
CERTAIN COVENANTS
5.1 CONDUCT OF BUSINESS.
(a) Business of UCTI. On the Closing Date: (i) UCTI will own the TBS
----------------
Shares, free and clear of all Liens, other adverse claims or voting or other
rights of third parties other than the TBS Stock Agreements and other than any
claims or rights of TW Parent, Holdco and their respective subsidiaries under
this Agreement, the Merger Agreement or any Additional Agreement; (ii) UCTI will
not have any liabilities or obligations, other than any liabilities or
obligations under
20
<PAGE>
this Agreement, the Merger Agreement, any Additional Agreements to which it is a
party and the TBS Stock Agreements; (iii) UCTI will not have any employees; and
(iv) UCTI will not have any material properties or assets, other than the TBS
Shares, and will not be engaged in the conduct of any business or other
activities, other than the ownership, directly or indirectly, of TBS Shares.
(b) Assumption; Indemnification. Prior to or at the Closing (i) LMC
---------------------------
Parent, TCITP and/or LBI shall assume all liabilities and obligations of UCTI,
(ii) LMC Parent, TCITP and LBI shall agree to indemnify TW Parent, Holdco and
any subsidiaries of TW Parent or Holdco and the respective officers, employees,
stockholders, agents, and representatives of each of the foregoing against, and
shall hold them harmless from, any loss, liability, claim, damage or expense
arising from any liability or obligation of UCTI other than those relating to
the business of UCTI subsequent to the Closing or otherwise first arising or
accruing after the Closing, and (iii) UCTI shall transfer to LMC Parent, TCITP
and/or LBI all assets of UCTI other than the TBS Shares, in each case pursuant
to agreements in form and substance satisfactory to TW Parent.
(c) Certain Actions by UCTI. During the period from September 22,
-----------------------
1995, to the Closing, UCTI shall not (i) issue any securities (or rights to
acquire securities), (ii) incur any obligation other than any obligation to be
assumed by TCITP and/or LBI on or prior to the Closing Date; (iii) make any Tax
election or settle or compromise any Tax liability or refund or (iv) amend its
certificate of incorporation or by-laws in any respect, without in any such case
the prior approval of TW Parent, which will not be unreasonably withheld or
delayed.
(d) Advice of Changes. TCITP and TW Parent shall promptly advise the
-----------------
other orally and in writing of any change or event having, or which, insofar as
can reasonably be foreseen, would have, a UCTI Material Adverse Effect or a TW
Material Adverse Effect, as applicable.
5.2 ACCESS TO INFORMATION. During the period from the making of the
Contribution Election through the Closing Date, UCTI shall afford to TW Parent
and its officers, employees, accountants, counsel, financial advisors and other
representatives reasonable access during normal business hours to all
properties, books, contracts, commitments, personnel and records of UCTI, and
shall furnish promptly to TW Parent such information concerning its business,
properties and personnel as TW Parent may reasonably request.
5.3 CONFIDENTIALITY. TW Parent and Holdco shall, and shall cause
their affiliates, directors, officers, employees, agents and controlling persons
(collectively, "Representatives") to, (i) keep confidential all Proprietary
Information of UCTI and its Affiliates disclosed pursuant to Section 5.2 and not
-----------
disclose or reveal any such Proprietary Information (as defined below) to any
person other than those Representatives of TW Parent and Holdco who are
participating in effecting the transactions contemplated hereby or who otherwise
need to know such Proprietary Information, (ii) use such Proprietary Information
only in connection with consummating the transactions contemplated hereby and
enforcing TW Parent's and Holdco's rights hereunder, and (iii) not use
Proprietary Information in any manner detrimental to LMC Parent, TCITP or its
Affiliates. In the event that TW Parent, Holdco or any Representative is
requested pursuant to, or required by,
21
<PAGE>
applicable law or regulation or by legal process to disclose any Proprietary
Information, TW Parent shall provide LMC Parent or TCITP with prompt notice of
such request to enable LMC Parent or TCITP to seek an appropriate protective
order. TW Parent's and Holdco's obligations hereunder with respect to
Proprietary Information that (i) is disclosed to a third party with LMC Parent's
written approval, (ii) is required to be produced under order of a court of
competent jurisdiction or other similar requirements of a governmental agency,
or (iii) is required to be disclosed by applicable law or regulation, will,
subject in the case of clauses (ii) and (iii) to TW Parent's and Holdco's
compliance with the preceding sentence, cease to the extent of the disclosure so
consented to or required, except to the extent otherwise provided by the terms
of such consent or covered by a protective order. If TW Parent and Holdco use a
degree of care to prevent disclosure of the Proprietary Information that is at
least as great as the care they normally take to preserve their own information
of a similar nature, then they shall not be liable for any disclosure that
occurs despite the exercise of that degree of care, and in no event shall TW
Parent or Holdco be liable for any indirect, punitive, special or consequential
damages under this Section 5.3. In the event this Agreement is terminated, TW
-----------
Parent and Holdco shall, if so requested by LMC Parent, promptly return or
destroy all of the Proprietary Information, including all copies, reproductions,
summaries, analyses or extracts thereof or based thereon in the possession of TW
Parent, Holdco or their Representatives; provided, however, that TW Parent and
-------- -------
Holdco shall not be required to return or cause to be returned summaries,
analyses or extracts prepared by either of them or their Representatives, but
shall destroy (or cause to be destroyed) the same upon request of LMC Parent.
For purposes of this Section 5.3, "Proprietary Information" means all
-----------
proprietary or confidential information that is furnished to TW Parent or its
Representatives, pursuant to Section 5.2, regardless of the manner in which it
-----------
is furnished. "Proprietary Information" does not include, however, information
which (a) has been or in the future is published or now or in the future is
otherwise in the public domain through no fault of TW Parent, Holdco or any of
their Representatives, (b) was available to TW Parent or Holdco on a non-
confidential basis prior to its disclosure pursuant to Section 5.2, (c) becomes
-----------
available to TW Parent or Holdco on a non-confidential basis from a person other
than LMC Parent or its Representatives who is not otherwise bound by a
confidentiality agreement with LMC Parent or its Representatives, and is not
otherwise prohibited from transmitting the information to TW Parent or Holdco,
or (d) is independently developed by TW Parent or Holdco through persons who
have not had, either directly or indirectly, access to or knowledge of such
information.
Notwithstanding any other terms of this Section 5.3, after the
-----------
Closing, the terms of this Section 5.3 shall not apply to any Proprietary
-----------
Information, to the extent such Proprietary Information relates to the TBS
Shares or to the business or assets of TBS or UCTI.
5.4 REASONABLE EFFORTS; NOTIFICATION. (a) If LMC Parent makes the
Contribution Election, upon the terms and subject to the conditions set forth in
this Agreement, each of the parties agrees to use reasonable efforts (i) to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with each other in good faith in doing, all things
necessary, to obtain, in the most expeditious manner practicable, all actions or
nonactions, waivers, consents and
22
<PAGE>
approvals from Governmental Entities and the making of all necessary
registrations and filings with Governmental Entities in each case as may be
necessary for the consummation of the Contribution and the other transactions
contemplated by this Agreement or to avoid an action or proceeding by any
Governmental Entity, and (ii) to defend any lawsuits or other legal proceedings,
whether judicial or administrative, challenging this Agreement or the
consummation of the transactions contemplated by this Agreement, including
seeking to have any stay or temporary restraining order entered by any court or
other Governmental Entity vacated or reversed; provided, however, that nothing
-------- -------
in this Section 5.4 shall require any such person (i) to agree to, approve, or
-----------
otherwise be bound by or satisfy any condition of the kind referred to in
Section 2.1(d) of the LMC Agreement, (ii) to agree to enter into or be bound by
any settlement or judgment (other than the FTC Consent Decree) or (iii) subject
to Section 4.1 of the LMC Agreement, to agree to any change to the terms of this
Agreement or any of the other Additional Agreements.
(b) Between September 22, 1995 and the Closing, each party will give
prompt written notice to the other party of: (i) any information that indicates
that any of its representations or warranties contained herein was not true and
correct as of September 22, 1995, or will not be true and correct at and as of
the Closing, with the same force and effect as if made at and as of the Closing
(except for changes permitted or contemplated by this Agreement), (ii) the
occurrence of any event that will result, or has a reasonable prospect of
resulting, in the failure of any condition specified in Article VI hereof to be
----------
satisfied, (iii) any notice or other communication from any third party alleging
that the consent of such third party is or may be required in connection with
the transactions contemplated by this Agreement or that such transactions
otherwise may violate the rights of or confer remedies upon such third party and
(iv) any notice of, or other communication relating to, any litigation referred
to in Sections 6.2(c) or any order or judgment entered or rendered therein.
---------------
5.5 PUBLIC ANNOUNCEMENTS. TW Parent and Holdco, on the one hand, and
LMC Parent, TCITP and LBI, on the other hand, will consult with each other
before issuing, and provide each other the opportunity to review and comment
upon, any press release or other public statements with respect to the
transactions contemplated by this Agreement, and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by applicable law, court process or by obligations pursuant to
any listing agreement with any national securities exchange or pursuant to
applicable requirements of any national securities association.
5.6 FEES AND EXPENSES. All fees and expenses incurred in connection
with the Contribution, this Agreement and the other transactions contemplated
hereby shall be paid by the party incurring such fees or expenses, whether or
not the Contribution is consummated.
5.7 STOCK EXCHANGE LISTING. Holdco shall use reasonable efforts to
cause all shares of Holdco Common Stock to be issued as Consideration hereunder
(or issuable in exchange for or upon conversion of any Voting Holdco LMC Common
Stock or LMCN-V Common Stock issued to any Liberty Party pursuant to this
Agreement or any Additional Agreement) to be approved
23
<PAGE>
for listing on the New York Stock Exchange, subject to official notice of
issuance, prior to the Closing Date.
5.8 TAX TREATMENT. If the Contribution Election is made, each of TW
Parent, on the one hand, and LMC Parent, TCITP and LBI, on the other hand, shall
use commercially reasonable efforts to cause the Contribution to qualify as a
tax-free exchange under Section 351 of the Code.
5.9 TRANSFER AND REAL PROPERTY TRANSFER GAINS TAXES. TW Parent (and
not TBS or any Liberty Party) shall be responsible for any liabilities, without
deduction or withholding from any amount payable to any Liberty Party pursuant
to this Agreement or to the TBS stockholders pursuant to the Merger Agreement,
arising under any New York State Real Estate Transfer Tax, New York State Tax on
Gains Derived from certain Real Property Transfers, New York City Real Property
Transfer Tax, New York State Stock Transfer Tax and any similar Taxes imposed by
any other city or State of the United States (and any penalties and interest
with respect to such Taxes), to the extent any such Taxes are attributable to
the transfer of Contributed Assets and become payable in connection with the
transactions contemplated by this Agreement and the Merger Agreement, on behalf
of the Liberty Parties. Except as otherwise required by law, the Liberty
Parties shall not take a position on any Tax Return that is inconsistent with
the values and allocations established by Holdco, UCTI or any Affiliates of
Holdco on any Tax Returns relating to such Taxes.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT CONTRIBUTION.
The respective obligation of each party to consummate the Contribution is
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) Antitrust. The waiting periods (and any extensions thereof)
---------
applicable to the transactions contemplated by this Agreement under the HSR Act
shall have been terminated or shall have expired and the FTC shall have
initially accepted the FTC Consent Decree for public comment.
(b) No Injunctions or Restraints. No temporary restraining order,
----------------------------
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Mergers, the Contribution or any other material transaction
contemplated by this Agreement or the Merger Agreement shall be in effect;
provided, however, that, subject to the proviso in Section 5.4(a), each of the
- -------- ------- --------------
parties shall have used its commercially reasonable efforts to prevent the entry
of any such injunction or other order and to appeal as promptly as possible, any
such injunction or other order that may be entered.
24
<PAGE>
(c) Consummation of the Mergers. The Mergers shall be consummated and
---------------------------
become effective concurrently with the consummation and effectiveness of the
Contribution.
6.2 CONDITIONS TO OBLIGATIONS OF HOLDCO. The obligation of Holdco
to consummate the Contribution is further subject to the satisfaction or waiver
by Holdco on or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and
------------------------------
warranties of LMC Parent, TCITP and LBI set forth in this Agreement that are
qualified as to materiality shall be true and correct, and the representations
and warranties of LMC Parent, TCITP and LBI set forth in this Agreement that are
not so qualified shall be true and correct in all material respects, in each
case as of the date of this Agreement and as of the Closing Date as though made
on and as of the Closing Date, except to the extent any such representation or
warranty expressly relates to an earlier date (in which case as of such date),
and Holdco shall have received a certificate to such effect signed on behalf of
LMC Parent, TCITP and LBI by the chief executive officer (or a senior vice
president) and the chief financial officer of LMC Parent.
(b) Performance of Obligations. LMC Parent, TCITP and LBI shall have
--------------------------
performed in all material respects all obligations required to be performed by
them under this Agreement at or prior to the Closing Date, and Holdco shall have
received a certificate to such effect signed on behalf of LMC Parent, TCITP and
LBI by the chief executive officer (or a senior vice president) and the chief
financial officer of LMC Parent.
(c) No Litigation. There shall not be pending any suit, action or
-------------
proceeding by any Governmental Entity (i) seeking to restrain or prohibit the
consummation of the Contribution or any other transaction contemplated by this
Agreement or seeking to obtain from Holdco, TW Parent or any of their
subsidiaries any damages that are material in relation to UCTI, (ii) seeking to
prohibit or limit the ownership by Holdco or any of its subsidiaries (including
UCTI) of the Contributed Assets or the ownership by Holdco or any of its
subsidiaries (including UCTI) of the TBS Shares, or seeking to compel Holdco or
any of its subsidiaries (including UCTI) to dispose of or hold separate any
material portion of the Contributed Assets or the TBS Shares, (iii) seeking to
impose limitations on the ability of Holdco or any of its subsidiaries
(including UCTI) to acquire or hold, or exercise full rights of ownership of the
Contributed Assets or any TBS Shares, including the right to vote or cause the
vote of such TBS Shares on all matters properly presented to the stockholders of
TBS, or (iv) which otherwise is reasonably likely to have a UCTI Material
Adverse Effect or a TW Material Adverse Effect.
6.3 RIGHT OF LMC PARENT TO WITHDRAW CONTRIBUTION ELECTION. The
obligations of LMC Parent, TCITP and LBI to consummate the Contribution are
further subject to the right of LMC Parent to withdraw the Contribution Election
at any time prior to three business days prior to the Effective Time.
25
<PAGE>
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION. This Agreement may be terminated at any time prior
to the Closing:
(a) by mutual written consent of TW Parent and LMC Parent;
(b) by LMC Parent, at any time prior to three business days prior to
the Effective Time, by written notice to TW Parent and Holdco; and
(c) by TW Parent:
(i) if the Merger Agreement has been terminated; or
(ii) if the Mergers shall not have been consummated on or before
September 30, 1996, unless the failure to consummate the Mergers is the
result of a wilful and material breach of this Agreement by TW Parent; or
(iii) if any condition set forth in Section 6.1 or Section 6.2,
----------- -----------
is not satisfied and not capable of being satisfied prior to the end of the
period referred to in Section 7.1(c)(ii).
------------------
This Agreement will automatically terminate upon the consummation of
the TBS Merger, if no Contribution Election shall theretofore have been timely
made hereunder.
7.2 EFFECT OF TERMINATION. In the event of any termination of this
Agreement by either LMC Parent or TW Parent as provided in Section 7.1, this
-----------
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of TW Parent, LMC Parent, TCITP or LBI, other than the
provisions of Sections 4.1(g), 4.2(e), 5.3 and 5.6, this Section 7.2 and Article
--------------- ------ --- --- ----------- -------
VIII and except to the extent that such termination results from the wilful and
- ----
material breach by a party of any of its representations, warranties, covenants
or other agreements set forth in this Agreement. The Termination of this
Agreement shall not affect the enforceability of, the obligations under or the
terms of any other agreements relating to or entered into in connection with the
Mergers.
7.3 AMENDMENT. This Agreement may be amended by the parties at any
time, but only by an instrument in writing signed on behalf of each of the
parties.
7.4 EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties may (a) extend the time for the performance of any of the obligations or
other acts of the other parties, (b) waive any inaccuracies in the
representations and warranties contained in this Agreement or in
26
<PAGE>
any document delivered pursuant to this Agreement or (c) waive compliance with
any of the agreements or conditions contained in this Agreement. Any agreement
on the part of a party to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party. The
failure of any party to this Agreement to assert any of its rights under this
Agreement or otherwise shall not constitute a waiver of such rights.
ARTICLE VIII
GENERAL PROVISIONS
8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Subject to the
next sentence, none of the representations and warranties in this Agreement or
in any instrument delivered pursuant to this Agreement shall survive the
Effective Time. Notwithstanding the previous sentence or any other provision of
this Agreement, the representation and warranty provided in Section 4.1(j) shall
--------------
survive the Effective Time and shall continue in full force and effect
indefinitely. This Section 8.1 shall not limit any covenant or agreement which
-----------
by its terms contemplates performance after the Effective Time (including those
set forth in Article III and Section 5.1(b)).
----------- --------------
8.2 NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be sufficient
if delivered personally or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses (or at such other address,
for a party, as shall be specified by like notice):
(a) if to TW Parent or Holdco, to
Time Warner Inc.
75 Rockefeller Plaza
New York, New York 10019
Attention: President
with a copy similarly addressed
to the attention of General Counsel
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Attention: Richard Hall, Esq.
27
<PAGE>
(b) to LMC Parent, TCITP or LBI, to
Liberty Media Corporation
Terrace Towers II
5619 DTC Parkway
Englewood, Colorado 80111-3000
Attention: President
with copies to:
Stephen M. Brett, Esq.
General Counsel
Tele-Communications, Inc.
Terrace Towers II
5619 DTC Parkway
Englewood, Colorado 80111-3000
and
Baker & Botts, L.L.P.
599 Lexington Avenue
New York, New York 10022
Attention: Elizabeth M. Markowski, Esq.
8.3 DESCRIPTIVE HEADINGS. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
8.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts and on separate counterparts, each of which shall be an original
instrument and all of which together shall constitute one and the same
agreement.
8.5 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This Agreement
and the Additional Agreements (including the documents referred to herein and
therein) (a) constitute the entire agreement, and supersede all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement and (b) except for the provisions of Article
-------
III of this Agreement, are not intended to confer upon any person other than the
- ---
parties hereto and thereto and, on and after the date of Spin-off, SpinCo, any
rights or remedies.
8.6 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts among Delaware corporations made and to be performed wholly in the
State of Delaware, except to the extent the laws of the State of Colorado are
mandatorily applicable.
28
<PAGE>
8.7 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties, except as provided in Section 2.6.
8.8 ENFORCEMENT. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to seek an
injunction or injunctions to prevent breaches of this Agreement, and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of Delaware or in Delaware state court (in
addition to any other remedy to which they are entitled at law or in equity).
In addition, each of the parties hereto (a) hereby consents and submits itself
to the personal jurisdiction of any Federal court located in the State of
Delaware or any Delaware state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (c) agrees that it will not
bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a Federal court sitting
in the State of Delaware or a Delaware state court.
8.9 WAIVERS. Except as provided in this Agreement or any waiver
pursuant to Section 7.4, no action taken pursuant to this Agreement, including
-----------
any investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. The waiver by
any party hereto of a breach of any provision hereunder shall not operate or be
construed as a waiver of any prior or subsequent breach of the same or any other
provision hereunder.
29
<PAGE>
IN WITNESS WHEREOF, TW Parent, Holdco, TCITP and LBI have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
TIME WARNER INC.
By /s/ Peter R. Haje
--------------------------
Name: Peter R. Haje
Title: Executive Vice President
TW INC.
By /s/ Thomas W. McEnerney
------------------------------
Name: Thomas W. McEnerney
Title: Vice President
TCI TURNER PREFERRED, INC.
By /s/ Robert R. Bennett
-------------------------------
Name: Robert R. Bennett
Title: Executive Vice President
LIBERTY MEDIA CORPORATION
By /s/ Robert R. Bennett
---------------------------------
Name: Robert R. Bennett
Title: Executive Vice President
LIBERTY BROADCASTING, INC.
By /s/ Robert R. Bennett
----------------------------------
Name: Robert R. Bennett
Title: Executive Vice President
Acknowledged and agreed by
TELE-COMMUNICATIONS, INC.
(for purposes of Section 3.1(a) only)
By /s/ Stephen M. Brett
-----------------------------------------------
Name: Stephen M. Brett
Title: Executive Vice President
30
<PAGE>
The undersigned hereby agree to the amendment of the LMC Agreement as
provided in Section 3.6, above.
TIME WARNER INC. TCI TURNER PREFERRED, INC.
By /s/Peter R. Haje By /s/Robert R. Bennett
--------------------------- ----------------------------
Name: Peter R. Haje Name: Robert R. Bennett
Title: Executive Vice President Title: Executive Vice President
TW INC. COMMUNICATION CAPITAL CORP.
By /s/Thomas W. McEnerney By /s/Robert R. Bennett
---------------------------- ---------------------------
Name: Thomas W. McEnerney Name: Robert R. Bennett
Title: Vice President Title: Executive Vice President
LIBERTY MEDIA CORPORATION UNITED CABLE TURNER INVESTMENT INC.
By /s/Robert R. Bennett By /s/Robert R. Bennett
----------------------------- ------------------------------
Name: Robert R. Bennett Name: Robert R. Bennett
Title: Executive Vice President Title: Executive Vice President
To the extent necessary to approve the amendment, only
TELE-COMMUNICATIONS, INC.
By /s/Stephen M. Brett
------------------------------------------------
Name: Stephen M. Brett
Title: Executive Vice President
31
<PAGE>
To be executed on and as of the date of the Spin-off, as provided in
Section 2.6:
SOUTHERN SATELLITE SYSTEMS, INC.
By /s/Robert R. Bennett
-----------------------------------
Name: Robert R. Bennett
Title: Executive Vice President
32
<PAGE>
Schedule 4.1(f)
---------------
Litigation
----------
Meredith Joyce v. Malone, C.A. No. 14592 (Del. Ch. filed Oct. 2, 1995).
Stanley Bernard v. Time-Warner, C.A. No. 14651 (Del. Ch. filed Oct. 30, 1995).
L.J. Parnes v. Time-Warner, C.A. No. 14660 (Del. Ch. filed Oct. 30, 1995).
Trust for Benefit of Paula Rand v. Levin, C.A. No. 14890 (Del. Ch. filed March
12, 1996).
Lewis v. Turner Broadcasting Systems, Inc., No. B-41500 (Ga. Super. Ct. Fulton
County filed second amended complaint No. 1, 1995).
<PAGE>
Schedule 4.2(b)
---------------
Authority; Noncontravention
---------------------------
None.
<PAGE>
Schedule 4.2(c)
---------------
Litigation
----------
None.
