SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
December 1, 1995
TIME WARNER INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-8637 13-1388520
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(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
75 Rockefeller Plaza, New York, NY 10019
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(Address of principal executive offices) (zip code)
(212) 484-8000
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(Registrant's telephone number, including area code)
Not Applicable
- -------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
As previously reported, Time Warner Inc. ("Time
Warner") entered into an Agreement and Plan of Merger (the
"Merger Agreement") dated as of September 22, 1995, among
Time Warner, Time Warner Acquisition Corp. ("Delaware Sub"),
a Delaware corporation and a wholly owned subsidiary of Time
Warner, and Turner Broadcasting System, Inc. ("TBS"), a
Georgia corporation, that provided for the combination of
Time Warner and TBS. As contemplated by the Merger
Agreement, Time Warner and TBS have agreed to amend the
Merger Agreement to provide for a transaction in which both
Time Warner and TBS will become wholly owned subsidiaries of
a new holding company (the "Holding Company Transaction").
Time Warner, TW Inc. a Delaware corporation and currently a
wholly owned subsidiary of Time Warner ("New Time Warner"),
Delaware Sub, TW Acquisition Corp., a Georgia corporation
("Georgia Sub"), and TBS have entered into an Amended and
Restated Agreement and Plan of Merger (the "Amended and
Restated Merger Agreement") dated as of September 22, 1995,
pursuant to which (a) Delaware Sub will be merged (the "Time
Warner Merger") into Time Warner, (b) each outstanding share
of Common Stock, par value $1.00 per share, of Time Warner,
other than shares held directly or indirectly by Time
Warner, will be converted into one share of Common Stock,
par value $.01 per share, of New Time Warner ("New Time
Warner Common Stock"), (c) each outstanding share of each
series of preferred stock of Time Warner, other than shares
held directly or indirectly by Time Warner and shares with
respect to which appraisal rights are properly exercised,
will be converted into one share of a substantially
identical series of preferred stock of New Time Warner
having the same designation as the shares of preferred stock
of Time Warner so converted, (d) Georgia Sub will be merged
(the "TBS Merger") into TBS, (e) each outstanding share of
Class A Common Stock, par value $.0625 per share, of TBS
("TBS Class A Common Stock") and Class B Common Stock, par
value $.0625 per share, of TBS ("TBS Class B Common Stock"),
other than shares held directly or indirectly by Time Warner
or New Time Warner or in the treasury of TBS and shares with
respect to which dissenters' rights are properly exercised,
will be converted into 0.75 of a share of New Time Warner
Common Stock, (f) each outstanding share of Class C
Preferred Stock, par value $.125 per share, of TBS ("TBS
Class C Preferred Stock"), other than shares held directly
or indirectly by Time Warner or New Time Warner or in the
treasury of TBS and shares with respect to which dissenters'
rights are properly exercised, will be converted into 4.80
shares of New Time Warner Common Stock, (g) each of Time
Warner and TBS will become a wholly owned subsidiary of New
Time Warner and (h) New Time Warner will be renamed "Time
Warner Inc." A copy of the Amended and Restated Merger
Agreement is attached as Exhibit 2(a) hereto and
incorporated herein by reference.
The Holding Company Transaction is subject to
customary closing conditions, including the approval of the
shareholders of TBS, the approval of the stockholders of
Time Warner, all necessary approvals of the Federal
Communications Commission and appropriate antitrust
approvals. There can be no assurance that all these
approvals can be obtained in a timely fashion
<PAGE>
or, in the case of governmental approvals, if obtained, will
not be conditioned upon changes to the terms of the Amended
and Restated Merger Agreement or the related agreements
described below.
Time Warner has entered into a Shareholders'
Agreement dated as of September 22, 1995 (the "Shareholders'
Agreement"), with R. E. Turner ("Turner") and certain
associates and affiliates of Turner (together with Turner,
the "Turner Shareholders"), a copy of which is attached as
Exhibit 10(a) to Time Warner's Current Report on Form 8-K
dated as of September 22, 1995, and incorporated herein by
reference. Time Warner and New Time Warner have entered into
an Amended and Restated LMC Agreement dated as of September
22, 1995, with Liberty Media Corporation ("LMC") and certain
direct and indirect wholly owned subsidiaries of LMC (the
"Amended and Restated LMC Agreement"), a copy of which is
attached as Exhibit 10(a) hereto and incorporated herein by
reference. In addition, LMC has agreed to grant Time Warner
an option, exercisable under certain conditions, to acquire
all the TBS shares owned by LMC and its wholly owned
subsidiaries at the same price that would be payable for
such TBS shares in the TBS Merger.
Pursuant to the Shareholders' Agreement, the
Turner Shareholders have agreed to vote all their TBS shares
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 and adoption
of the Amended and Restated Merger Agreement. In addition,
pursuant to the Amended and Restated Merger Agreement and
the Shareholders' Agreement, New Time Warner and the Turner
Shareholders have agreed that, upon consummation of the
Holding Company Transaction, New Time Warner and the Turner
Shareholders will enter into Investors' Agreements and a
Registration Rights Agreement (the forms of which are
attached as Exhibits C-1 and C-2 and B, respectively, to the
Amended and Restated Merger Agreement and incorporated
herein by reference), pursuant to which (a) Turner will,
subject to certain conditions, be entitled to designate two
people for election to the Board of Directors of New Time
Warner, (b) certain of the Turner Shareholders will be
subject to certain restrictions on transfer of New Time
Warner Common Stock and certain restrictions on other
activities relating to New Time Warner and (c) New Time
Warner will grant to the Turner Shareholders rights to
require the registration of sales of shares of New Time
Warner Common Stock received in the TBS Merger under the
Securities Act of 1933, as amended (the "Securities Act").
Pursuant to the Amended and Restated LMC
Agreement, LMC and certain of its subsidiaries have agreed,
subject to certain conditions, to vote all their TBS shares
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 and adoption
of the Amended and Restated Merger Agreement. Time Warner
has agreed with LMC that Time Warner will terminate the
Amended and Restated Merger Agreement and abandon the
Holding Company Transaction under certain circumstances,
<PAGE>
including (a) the imposition by any regulatory authority of
certain restrictions or burdens on LMC and its affiliates as
a condition to approval of the Holding Company Transaction
and related transactions and (b) if New Time Warner adopts a
stockholder rights agreement and such agreement differs from
the Time Warner stockholder rights agreement in any material
respect except as set forth in Exhibit G to the Amended and
Restated LMC Agreement, which is incorporated herein by
reference.
In addition, the Amended and Restated LMC
Agreement contemplates that (a) substantially all the shares
of New Time Warner Common Stock issued in the TBS Merger to
LMC and its affiliates will be exchanged for shares of a new
series of common stock of New Time Warner economically
equivalent to the New Time Warner Common Stock ("LMC Voting
Common Stock") at a ratio of one share of New Time Warner
Common Stock for each share of LMC Voting Common Stock and
(b) subject to limited exceptions, all the shares of LMC
Voting Common Stock received by LMC and its subsidiaries,
together with all other voting securities of New Time Warner
from time to time held by LMC or any of its controlled
affiliates (and, for so long as LMC is a controlled
affiliate of Tele-Communications, Inc. ("TCI"), all voting
securities of New Time Warner from time to time held by TCI
or any of its controlled affiliates) will be deposited in a
voting trust (the "Voting Trust") to be established pursuant
to the Voting Trust Agreement (the form of which is attached
as Exhibit J to the Amended and Restated LMC Agreement and
incorporated herein by reference) to be voted by the trustee
thereunder, who initially shall be Gerald M. Levin, the
Chairman and Chief Executive Officer of Time Warner. The
terms of the LMC Voting Common Stock are set forth in the
form of certificate of designation for such security, which
is attached as Exhibit L to the Amended and Restated LMC
Agreement and incorporated herein by reference. The LMC
Voting Common Stock is the economic equivalent of the New
Time Warner Common Stock, with identical rights, except that
the LMC Voting Common Stock may not be redeemed by New Time
Warner pursuant to Section 5 of Article IV of the proposed
Restated Certificate of Incorporation of New Time Warner
(which will be substantially identical to Section 5 of
Article IV of the Restated Certificate of Incorporation of
Time Warner, as amended to date).
The Amended and Restated LMC Agreement also
provides that (a) if the Voting Trust is terminated under
certain circumstances, all shares of New Time Warner Common
Stock and LMC Voting Common Stock distributed out of the
Voting Trust will be exchanged for shares of another series
of common stock of New Time Warner ("LMC Non-voting Common
Stock") and (b) if the FCC conditions its required consent
or approval in connection with the Holding Company
Transaction upon any changes to the terms of the Voting
Trust or the identity of the trustee thereunder, or does not
accept that the Voting Trust, without such changes, would be
sufficient to preclude LMC and its subsidiaries from having
an attributable interest in the assets and businesses of New
Time Warner, and LMC is unwilling to agree to such changes,
then at the request of either Time Warner or LMC, in lieu of
entering into the Voting Trust, the shares of New Time
Warner Common Stock issued
<PAGE>
to LMC and its subsidiaries pursuant to the TBS Merger and
the shares of LMC Voting Common Stock issued as
consideration for the Option (as defined below) will be
exchanged for shares of LMC Non-voting Common Stock. The
terms of the LMC Non-voting Common Stock are set forth in
the form of certificate of designation for such security,
which is attached as Exhibit K to the Amended and Restated
LMC Agreement and incorporated herein by reference. The LMC
Non-voting Common Stock is equivalent to the LMC Voting
Common Stock except that the holders of the LMC Non-voting
Common Stock will not be entitled to vote except on very
limited matters affecting them.
Pursuant to the Amended and Restated LMC
Agreement, if the Holding Company Transaction is
consummated, New Time Warner or TBS, on the one hand, and
LMC or one of its subsidiaries, on the other hand, will
enter into certain other agreements, and additional
agreements between TBS and LMC will take effect. These
agreements include:
(a) a Stockholders' Agreement among New Time
Warner, the Turner Shareholders, LMC and certain
subsidiaries of LMC, pursuant to which Turner and
the Turner-related stockholders, on the one hand,
and LMC and the LMC-related stockholders, on the
other hand, grant first to the other group and
then to New Time Warner a right of first refusal
with respect to dispositions of voting securities
of New Time Warner (the form of the Stockholders'
Agreement is attached as Exhibit B to the Amended
and Restated LMC Agreement and incorporated herein
by reference);
(b) an Option Agreement, for which New Time
Warner will issue to LMC 5,000,000 shares of LMC
Voting Common Stock, pursuant to which New Time
Warner will have an option (the "Option"),
exercisable for six years, to purchase for $160
million (payable in the form of additional shares
of LMC Voting Common Stock) a subsidiary of LMC
that currently provides satellite uplink services
for WTBS (the form of the Option Agreement is
attached as Exhibit D to the Amended and Restated
LMC Agreement and incorporated herein by
reference);
(c) the existing affiliation agreements
between TCI and TBS relating to the carriage by
TCI-owned cable systems of TBS-produced
programming will be amended and extended;
(d) an LMC Registration Rights Agreement,
pursuant to which New Time Warner will grant to
LMC rights to require the registration under the
Securities Act of sales of New Time Warner Common
Stock received in the TBS Merger or pursuant to
the Option, or upon conversion of LMC Voting
Common Stock or LMC Non-voting Common Stock so
received (the form of the LMC Registration Rights
Agreement is attached as Exhibit F to the Amended
and Restated LMC Agreement and incorporated herein
by reference);
<PAGE>
(e) a SportSouth Stock Purchase Agreement,
pursuant to which TBS has agreed to sell its
interest in SportSouth, a regional sports cable
network, to LMC for approximately $60 million; and
(f) a Sunshine Option Agreement pursuant to
which Time Warner Entertainment Company, L.P.
("TWE") will grant to LMC an option to purchase
the interests of TWE and certain of its affiliates
in the Sunshine Network, a Florida-based sports
cable network, for $14 million.
Pursuant to the Amended and Restated LMC
Agreement, New Time Warner has agreed that, under certain
circumstances, if LMC or any of its controlled affiliates
(and, for so long as LMC is a controlled affiliate of TCI,
TCI and each controlled affiliate of TCI) is required as a
result of actions taken by New Time Warner to dispose of
shares of New Time Warner or suffer certain other adverse
consequences by reason of continued ownership of shares of
New Time Warner, New Time Warner will indemnify such person
for certain income tax liabilities incurred in the
disposition of shares of New Time Warner.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired:
See Time Warner's Current Report on Form 8-K dated
as of November 14, 1995.
(b) Pro Forma Financial Information:
See Time Warner's Current Report on Form 8-K dated
as of November 14, 1995.
(c) Exhibits:
(i) Exhibit 2(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.
(ii) Exhibit 10(a): Amended and Restated LMC
Agreement dated as of September 22, 1995, among
Time Warner Inc., TW Inc., Liberty Media
Corporation, TCI Turner Preferred, Inc.,
Communication Capital Corp. and United Turner
Investment, Inc.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of
New York, on December 7, 1995.
TIME WARNER INC.,
By: /s/ Peter R. Haje
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Name: Peter R. Haje
Title: Executive Vice President
<PAGE>
EXHIBIT INDEX
Sequential
Exhibit No. Description of Exhibit Page Number
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2(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.
10(a) Amended and Restated LMC
Agreement dated as of
September 22, 1995, among Time
Warner Inc., TW Inc., Liberty
Media Corporation, TCI Turner
Preferred, Inc., Communication
Capital Corp. and United
Turner Investment, Inc.
Exhibit 2(a)
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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.
=============================================================================
<PAGE>
TABLE OF CONTENTS
Page
Parties and Recitals...................................... 1
ARTICLE I
The Mergers
SECTION 1.01. The Mergers................................ 2
SECTION 1.02. Closing.................................... 3
SECTION 1.03. Effective Time............................. 3
SECTION 1.04. Effects of the Mergers..................... 4
SECTION 1.05. Charter and By-Laws........................ 4
SECTION 1.06. Directors.................................. 4
SECTION 1.07. Officers................................... 4
ARTICLE II
Effect of the Mergers on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Parent Capital Stock............. 5
SECTION 2.02. Effect on Company Capital Stock............ 12
SECTION 2.03. Exchange of Shares and Certificates........ 16
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of
the Company.............................. 20
SECTION 3.02. Representations and Warranties of
Parent................................... 33
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business........................ 44
SECTION 4.02. No Solicitation............................ 49
<PAGE>
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of Form S-4 and the
Proxy Statement; Shareholders
Meeting and Parent's Stockholders
Meeting.................................. 50
SECTION 5.02. Letter of the Company's
Accountants ............................. 51
SECTION 5.03. Letter of Parent's Accountants............. 52
SECTION 5.04. Access to Information;
Confidentiality.......................... 52
SECTION 5.05. Best Efforts; Notification................. 53
SECTION 5.06. Board Authority............................ 54
SECTION 5.07. Public Announcements....................... 55
SECTION 5.08. Benefit Plans.............................. 55
SECTION 5.09. Indemnification............................ 57
SECTION 5.10. Fees and Expenses.......................... 57
SECTION 5.11. Affiliates................................. 57
SECTION 5.12. Stock Exchange Listing..................... 58
SECTION 5.13. Execution of the Registration
Rights Agreement......................... 58
SECTION 5.14. Tax Treatment.............................. 58
SECTION 5.15. Transfer and Real Property Transfer
Gains Taxes.............................. 58
SECTION 5.16. Material Transactions by Parent............ 59
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's
Obligation To Effect the
Mergers.................................. 60
SECTION 6.02. Conditions to Obligations of
Parent, Holdco, Delaware Sub and
Georgia Sub.............................. 62
SECTION 6.03. Conditions to Obligation of the
Company.................................. 64
<PAGE>
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination ............................... 65
SECTION 7.02. Effect of Termination...................... 68
SECTION 7.03. Amendment.................................. 70
SECTION 7.04. Extension; Waiver.......................... 70
SECTION 7.05. Procedure for Termination,
Amendment, Extension or Waiver........... 70
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and
Warranties............................... 71
SECTION 8.02. Notices.................................... 72
SECTION 8.03. Definitions................................ 73
SECTION 8.04. Interpretation............................. 73
SECTION 8.05. Counterparts............................... 73
SECTION 8.06. Entire Agreement; No Third-Party
Beneficiaries............................ 73
SECTION 8.07. Governing Law.............................. 74
SECTION 8.08. Assignment................................. 74
SECTION 8.09. Enforcement................................ 74
SECTION 8.10. Waivers.................................... 75
EXHIBITS
Exhibit A-1 Form of TBS Affiliate Letter
Exhibit A-2 Form of Parent Affiliate Letter
Exhibit B Form of Registration Rights Agreement
Exhibit C-1 Form of Investors' Agreement with
Principal Shareholder and Related
Parties
Exhibit C-2 Form of Investors' Agreement with
Qualified Stockholders
Exhibit D Form of Certificates and Letters of
Representation regarding Tax Matters
<PAGE>
Index of Defined Terms
In
Amended and Restated Agreement and Plan of Merger
Term Section
"affiliate" 8.03(a)
"Appraisal Shares" 2.01(d)
"Approved Matters" 4.01(a)
"Benefit Plans" 3.01(i)
"Certificates" 2.03(b)
"Certificates of Merger" 1.03
"Changed Parent Stock" 2.01(c)
"Class A Common Stock" 2.02(a)
"Class A Preferred Stock" 3.01(c)
"Class B Common Stock" 2.02(a)
"Class B Preferred Stock" 3.01(c)
"Class C Preferred Stock" 2.02(a)
"Class C Shareholders" 3.01(c)
"Class D Preferred Stock" 3.01(c)
"Closing" 1.02
"Closing Date" 1.02
"Code" Recitals
"Common Conversion Number" 2.02(c)
"Common Stock Equivalents" 5.16
"Communications Act" 3.01(d)
"Company" Recitals
"Company Capital Stock" 2.02(a)
"Company Common Stock" 2.02(a)
"Company Disclosure Letter" 3.01(a)
"Company Material Adverse Effect" 3.01(a)
<PAGE>
Term Section
"Company Programming Subsidiary" 3.01(a)
"Company Stock Options" 3.01(c)
"Company Stock Plans" 3.01(c)
"Company Subsidiary" 3.01(a)
"Company Warrant" 2.02(e)
"Confidentiality Agreement" 5.04
"Corporation" 1.05
"D&O Insurance" 5.09
"Delaware Sub" Recitals
"DGCL" 1.01(a)
"Dissenting Shares" 2.02(d)
"Effective Time of the Mergers" 1.03
"employee benefit plan" 3.02(m)
"employee pension benefit plan" 5.08(b)
"ERISA" 3.01(j)
"Exchange Act" 3.01(d)
"Exchange Agent" 2.03(a)
"Exchange Fund" 2.03(a)
"FCC" 3.01(d)
"Filed Parent SEC Documents" 3.02(g)
"Filed SEC Documents" 3.01(g)
"Form S-4" 3.01(f)
"Georgia BCC" 1.01(b)
"Georgia Sub" Recitals
"Governmental Entity" 3.01(d)
"Holdco" Recitals
"Holdco Capital Stock" 2.01(c)
"Holdco Common Stock" 2.01(b)
"Holdco LMC Class Stock" 2.01(c)
<PAGE>
Term Section
"Holdco LMCN-V Stock" 2.01(c)
"Holdco Series B Preferred Stock" 2.01(c)
"Holdco Series D Preferred Stock" 2.01(c)
"Holdco Series E Preferred Stock" 2.01(c)
"Holdco Series F Preferred Stock" 2.01(c)
"Holdco Series G Preferred Stock" 2.01(c)
"Holdco Series H Preferred Stock" 2.01(c)
"Holdco Series I Preferred Stock" 2.01(c)
"Holdco Series L Preferred Stock" 2.01(c)
"HSR Act" 3.01(d)
"incentive stock option" 2.01(e)
"Liens" 3.01(b)
"LMC" Recitals
"LMC Agreement" Recitals
"Material Breach" 7.01(b)(v)
"Material Company Subsidiary" 3.01(a)
"Material Parent Subsidiary" 3.02(a)
"Material Transaction" 5.16
"Maximum Premium" 5.09
"Mergers" Recitals
"New Line" 3.01(c)
"New Line Debentures" 3.01(c)
"New Line Options" 3.01(c)
"New Line Plans" 3.01(c)
"NYSE" 5.12
"Original Agreement" Recitals
"Parent" Recitals
"Parent Capital Stock" 2.01(a)
"Parent Common Stock" 2.01(a)
<PAGE>
Term Section
"Parent Disclosure Letter" 3.02(c)
"Parent Material Adverse Effect" 3.02(a)
"Parent Options" 3.02(c)
"Parent Preferred Stock" 3.02(c)
"Parent SEC Documents" 3.02(e)
"Parent Series B Preferred Stock" 2.01(a)
"Parent Series C Preferred Stock" 2.01(a)
"Parent Series D Preferred Stock" 2.01(a)
"Parent Series E Preferred Stock" 2.01(a)
"Parent Series F Preferred Stock" 2.01(a)
"Parent Series G Preferred Stock" 2.01(a)
"Parent Series H Preferred Stock" 2.01(a)
"Parent Series I Preferred Stock" 2.01(a)
"Parent Series J Preferred Stock" 2.01(a)
"Parent Series K Preferred Stock" 2.01(a)
"Parent Series L Preferred Stock" 2.01(a)
"Parent Stockholder Approvals" 3.02(i)
"Parent Stock Plans" 3.02(c)
"Parent Subsidiary" 3.02(a)
"Parent Warrant" 2.01(e)
"Parent's Stockholders Meeting" 5.01(c)
"person" 8.03(b)
"Principal Shareholder" Recitals
"Programming Agreement" 3.01(d)
"Proxy Statement" 3.01(d)
"Registration Rights Agreement" 5.13
"Rights Agreement" 3.02(c)
"SEC" 3.01(a)
"SEC Documents" 3.01(e)
<PAGE>
Term Section
"Section 262" 2.01(d)
"Securities Act" 3.01(e)
"Shareholder Approvals" 3.01(d)
"Shareholders Meeting" 5.01(b)
"subsidiary" 8.03(c)
"Support Agreement" Recitals
"takeover proposal" 4.02(a)
"Taxes" 3.01(n)
"Tax Returns" 3.01(n)
"TBS Merger" Recitals
"TCI" 3.01(m)
"TBS Surviving Corporation" 1.01(b)
"TW Merger" Recitals
"TW Surviving Corporation" 1.01(a)
"TWE" 3.02(a)
"Voting Agreements" Recitals
<PAGE>
AMENDED AND RESTATED AGREEMENT AND PLAN
OF MERGER (this "Agreement") dated as of
September 22, 1995, among TIME WARNER INC., a
Delaware corporation ("Parent"), TW INC., a
Delaware corporation ("Holdco") and a direct
wholly owned subsidiary of Parent, TIME
WARNER ACQUISITION CORP., a Delaware
corporation ("Delaware Sub") and a direct
wholly owned subsidiary of Holdco, TW
ACQUISITION CORP., a Georgia corporation
("Georgia Sub") and a direct wholly owned
subsidiary of Holdco, and TURNER BROADCASTING
SYSTEM, INC., a Georgia corporation (the
"Company").
WHEREAS Parent, Delaware Sub and the Company have
entered into an Agreement and Plan of Merger dated as of
September 22, 1995 (the "Original Agreement"), providing for
the merger of the Company with and into Delaware Sub;
WHEREAS Section 1.01 of the Original Agreement
contemplated that the parties thereto may amend the Original
Agreement to provide for a tax-free incorporation
transaction under Section 351 of the Internal Revenue Code
of 1986, as amended (the "Code");
WHEREAS, Parent, Delaware Sub and the Company wish
to amend and restate the Original Agreement in its entirety
to provide for such a transaction and to make certain other
amendments to the Original Agreement, and Holdco and Georgia
Sub wish to become parties thereto;
WHEREAS, the respective Boards of Directors of
Parent, Holdco and Delaware Sub have approved the merger
(the "TW Merger") of Delaware Sub into Parent, upon the
terms and subject to the conditions set forth in this
Agreement, and have approved this Agreement;
WHEREAS, the respective Boards of Directors of
Holdco, Georgia Sub and the Company have approved the merger
(the "TBS Merger" and, together, with the TW Merger, the
"Mergers") of Georgia Sub into the Company, upon the terms
and subject to the conditions set forth in this Agreement,
and have adopted this Agreement;
WHEREAS Parent and the Company desire to make
certain representations, warranties, covenants and
agreements in connection with the Mergers and also to
prescribe various conditions to the Mergers;
<PAGE>
2
WHEREAS for Federal income tax purposes it is
intended that the Mergers qualify as exchanges under Section
351 of the Code or, in the alternative, as reorganizations
within the meaning of Section 368(a) of the Code; and
WHEREAS R. E. Turner, III (the "Principal
Shareholder"), and certain of his associates and affiliates
have entered into a Shareholders' Agreement with Parent,
dated as of September 22, 1995 (the "Support Agreement") and
Liberty Media Corporation ("LMC") and certain of its
subsidiaries and affiliates have entered into an LMC
Agreement with Parent, dated as of September 22, 1995 (as
amended, the "LMC Agreement" and, together with the Support
Agreement, the "Voting Agreements"), in each case providing,
among other things, that such persons will vote their shares
of Company Capital Stock (as defined in Section 2.02(a)) in
favor of the TBS Merger and the approval and adoption of
this Agreement.
NOW, THEREFORE, in consideration of the represen-
tations, warranties, covenants and agreements contained in
this Agreement, the parties agree as follows:
ARTICLE I
The Mergers
SECTION 1.01. The Mergers. (a) Upon the terms and
subject to the conditions set forth in this Agreement, and
in accordance with the Delaware General Corporation Law (the
"DGCL"), Delaware Sub shall be merged into Parent at the
Effective Time of the Mergers (as defined in Section 1.03).
Following the TW Merger, the separate corporate existence of
Delaware Sub shall cease and Parent shall continue as the
surviving corporation (the "TW Surviving Corporation") and
shall succeed to and assume all the rights, properties,
liabilities and obligations of Delaware Sub in accordance
with the DGCL. At the election of Parent, any direct wholly
owned corporate subsidiary of Holdco may be substituted for
Delaware Sub as a constituent corporation in the TW Merger
(provided that any such substitution is consistent with the
treatment of the TW Merger as an exchange under Section 351
of the Code). In such event, the parties agree to execute an
appropriate
<PAGE>
3
amendment to this Agreement in order to reflect such
substitution.
(b) Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the
Georgia Business Corporation Code (the "Georgia BCC"),
Georgia Sub shall be merged into the Company at the
Effective Time of the Mergers. Following the TBS Merger, the
separate corporate existence of Georgia Sub shall cease and
the Company shall continue as the surviving corporation (the
"TBS Surviving Corporation") and shall succeed to and assume
all the rights, properties, liabilities and obligations of
Georgia Sub in accordance with the Georgia BCC. At the
election of Parent, any direct wholly owned corporate
subsidiary of Holdco may be substituted for Georgia Sub as a
constituent corporation in the TBS Merger (provided that any
such substitution is consistent with the treatment of the
TBS Merger as an exchange under Section 351 of the Code). In
such event, the parties agree to execute an appropriate
amendment to this Agreement in order to reflect such
substitution.
SECTION 1.02. Closing. The closing of the Mergers
(the "Closing") shall take place at 10:00 a.m. on a date to
be specified by the parties (the "Closing Date"), which
(subject to satisfaction or waiver of the conditions set
forth in Sections 6.02 and 6.03) shall be no later than the
second business day after satisfaction of the conditions set
forth in Section 6.01 (other than the condition set forth in
Section 6.01(d)), at the offices of Cravath, Swaine & Moore,
Worldwide Plaza, 825 Eighth Avenue, New York, N.Y. 10019,
unless another time, date or place is agreed to in writing
by the parties hereto.
SECTION 1.03. Effective Time. As soon as
practicable following the satisfaction or waiver of the
conditions set forth in Article VI, the parties shall file
such certifi- cates of merger, articles of merger or other
appropriate documents (in any such case, the "Certificates
of Merger") executed in accordance with the relevant
provisions of the DGCL and the Georgia BCC and shall make
all other filings, recordings or publications required by
the DGCL and the Georgia BCC in connection with the Mergers.
Each Merger shall become effective at the time specified in
the Certificates of Merger, which specified time shall be
the same in each Certificate of Merger (the time the Mergers
become effective being the "Effective Time of the Mergers").
<PAGE>
4
SECTION 1.04. Effects of the Mergers. The TW
Merger shall have the effects set forth in Section 259 of
the DGCL. The TBS Merger shall have the effects set forth in
Section 14-2-1106 of the Georgia BCC.
SECTION 1.05. Charter and By-laws. (a) The
Certificate of Incorporation of Parent as in effect
immediately prior to the Effective Time of the Mergers shall
be amended at the Effective Time of the Mergers so that
Article I thereof reads in its entirety as follows: "The
name of the corporation (hereinafter called the
"Corporation") is TIME WARNER COMPANIES INC." and, as so
amended, such Certificate of Incorporation shall be the
Certificate of Incorporation of the TW Surviving Corporation
until thereafter changed or amended as provided therein or
by applicable law.
(b) The By-Laws of Delaware Sub as in effect at
the Effective Time of the Mergers shall be the By-Laws of
the TW Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law.
(c) The Articles of Incorporation of the Company
as in effect immediately prior to the Effective Time of the
Mergers shall be the Articles of Incorporation of the TBS
Surviving Corporation until thereafter changed or amended as
provided therein or by applicable law.
(d) The By-laws of the Company as in effect at the
Effective Time of the Mergers shall be the By-laws of the
TBS Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law.
SECTION 1.06. Directors. The directors of Delaware
Sub and Georgia Sub at the Effective Time of the Mergers
shall be the directors of the TW Surviving Corporation and
the TBS Surviving Corporation, respectively, until the
earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the
case may be. Immediately after the Effective Time of the
Mergers, Holdco shall take all action necessary to elect,
among others, the Chief Executive Officer of the Company and
four other persons to be agreed upon between Parent and the
Chief Executive Officer of the Company, as directors of the
TBS Surviving Corporation.
SECTION 1.07. Officers. The officers of Parent and
the Company at the Effective Time of the Mergers shall
<PAGE>
5
be the officers of the TW Surviving Corporation and the TBS
Surviving Corporation, respectively, until the earlier of
their resignation or removal or until their respective
successors are duly elected and qualified, as the case may
be.
ARTICLE II
Effects of the Mergers on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Parent Capital Stock. As
of the Effective Time of the Mergers, by virtue of the TW
Merger and without any action on the part of the holder of
any shares of Parent Capital Stock (as defined in Section
2.01(a)) or any shares of capital stock of Delaware Sub:
(a) Capital Stock of Delaware Sub. Each issued and
outstanding share of Common Stock, par value $1.00 per
share, of Delaware Sub shall be converted into (i) one
one-millionth (1/1,000,000th) of a fully paid and
nonassessable share of Common Stock, par value $1.00 per
share, of the TW Surviving Corporation for each share of
Common Stock, par value $1.00 per share, of Parent ("Parent
Common Stock") issued and outstanding immediately prior to
the Effective Time of the Mergers, (ii) one one-millionth
(1/1,000,000th) of a fully paid and nonassessable share of
Series B 6.40% Preferred Stock, par value $1.00 per share,
of the TW Surviving Corporation for each share of Series B
6.40% Preferred Stock, par value $1.00 per share, of Parent
("Parent Series B Preferred Stock") issued and outstanding
immediately prior to the Effective Time of the Mergers,
(iii) one one-millionth (1/1,000,000th) of a fully paid and
nonassessable share of Series C Convertible Preferred Stock,
par value $1.00 per share, of the TW Surviving Corporation
for each share of Series C Convertible Preferred Stock, par
value $1.00 per share, of Parent ("Parent Series C Preferred
Stock"), if any, issued and outstanding immediately prior to
the Effective Time of the Mergers, (iv) one one-millionth
(1/1,000,000th) of a fully paid and nonassessable share of
Series D Convertible Preferred Stock, par value $1.00 per
share, of the TW Surviving Corporation for each share of
Series D Convertible Preferred Stock, par value $1.00 per
share, of Parent ("Parent Series D Preferred Stock") issued
and outstanding immediately prior to the Effective Time of
the Mergers, (v) one one-millionth (1/1,000,000th) of a
<PAGE>
6
fully paid and nonassessable share of Series E Convertible
Preferred Stock, par value $1.00 per share, of the TW
Surviving Corporation for each share of Series E Convertible
Preferred Stock, par value $1.00 per share, of Parent
("Parent Series E Preferred Stock") issued and outstanding
immediately prior to the Effective Time of the Mergers, (vi)
one one-millionth (1/1,000,000th) of a fully paid and
nonassessable share of Series F Convertible Preferred Stock,
par value $1.00 per share, of the TW Surviving Corporation
for each share of Series F Convertible Preferred Stock, par
value $1.00 per share, of Parent ("Parent Series F Preferred
Stock") issued and outstanding immediately prior to the
Effective Time of the Mergers, (vii) one one-millionth
(1/1,000,000th) of a fully paid and nonassessable share of
Series G Convertible Preferred Stock, par value $1.00 per
share, of the TW Surviving Corporation for each share of
Series G Convertible Preferred Stock, par value $1.00 per
share, of Parent ("Parent Series G Preferred Stock") issued
and outstanding immediately prior to the Effective Time of
the Mergers, (viii) one one-millionth (1/1,000,000th) of a
fully paid and nonassessable share of Series H Convertible
Preferred Stock, par value $1.00 per share, of the TW
Surviving Corporation for each share of Series H Convertible
Preferred Stock, par value $1.00 per share, of Parent
("Parent Series H Preferred Stock") issued and outstanding
immediately prior to the Effective Time of the Mergers, (ix)
one one-millionth (1/1,000,000th) of a fully paid and
nonassessable share of Series I Convertible Preferred Stock,
par value $1.00 per share, of the TW Surviving Corporation
for each share of Series I Convertible Preferred Stock, par
value $1.00 per share, of Parent ("Parent Series I Preferred
Stock") issued and outstanding immediately prior to the
Effective Time of the Mergers, (x) one one-millionth
(1/1,000,000th) of a fully paid and nonassessable share of
Series J Convertible Preferred Stock, par value $1.00 per
share, of the TW Surviving Corporation for each share of
Series J Convertible Preferred Stock, par value $1.00 per
share, of Parent ("Parent Series J Preferred Stock"), if
any, issued and outstanding immediately prior to the
Effective Time of the Mergers, (xi) one one-millionth
(1/1,000,000th) of a fully paid and nonassessable share of
Series K Convertible Preferred Stock, par value $1.00 per
share, of the TW Surviving Corporation for each share of
Series K Convertible Preferred Stock, par value $1.00 per
share, of Parent ("Parent Series K Preferred Stock"), if
any, issued and outstanding immediately prior to the
Effective Time of the Mergers and (xii) one one-millionth
(1/1,000,000th) of a fully paid and nonassessable share of
<PAGE>
7
Series L Convertible Preferred Stock, par value $1.00 per
share, of the TW Surviving Corporation for each share of
Series L Convertible Preferred Stock, par value $1.00 per
share, of Parent ("Parent Series L Preferred Stock" and,
together with the Parent Common Stock, the Parent Series B
Preferred Stock, the Parent Series C Preferred Stock, the
Parent Series D Preferred Stock, the Parent Series E
Preferred Stock, the Parent Series F Preferred Stock, the
Parent Series G Preferred Stock, the Parent Series H
Preferred Stock, the Parent Series I Preferred Stock, the
Parent Series J Preferred Stock and the Parent Series K
Preferred Stock, the "Parent Capital Stock") issued and
outstanding immediately prior to the Effective Time of the
Mergers. For the purposes of this Section 2.01(a), shares of
Parent Capital Stock, other than Parent Series C Preferred
Stock, held by Parent Subsidiaries (as defined in Section
3.02(a)) shall be deemed to be not outstanding.
(b) Cancellation of Treasury Stock. Each share of
Parent Capital Stock that is owned by Parent shall
automatically be canceled and retired and shall cease to
exist, and no shares of Common Stock, par value $0.01 per
share, of Holdco (the "Holdco Common Stock") or other
consideration shall be delivered in exchange therefor.
(c) Conversion of Parent Capital Stock. Subject to
Section 2.01(d), each issued share of Parent Capital Stock
(other than shares to be canceled in accordance with Section
2.01(b) and other than shares subject to Section 2.01(f))
shall be converted into fully paid and nonassessable shares
of the capital stock of Holdco ("Holdco Capital Stock") in
accordance with the following table (it being acknowledged
that as of November 30, 1995 (the date of execution of this
Agreement), (x) no shares of Parent Series E Preferred
Stock, Parent Series F Preferred Stock, Parent Series J
Preferred Stock, Parent Series K Preferred Stock or Parent
Series L Preferred Stock are outstanding and (y) it is
anticipated that no shares of Parent Series C Preferred
Stock, Parent Series J Preferred Stock or Series K Parent
Preferred Stock will be outstanding immediately prior to the
Effective Time of the Mergers):
Each Share of the Number and Class or Series
Specified Class or Series of Shares of Holdco Capital
of Parent Capital Stock Stock Into Which Converted
Parent Common Stock One Share of Holdco Common
Stock
<PAGE>
8
Parent Series B Preferred One Share of Series B 6.40%
Stock Preferred Stock, par value
$0.10 per share, of Holdco
("Holdco Series B Preferred
Stock")
Parent Series C Preferred 2.08264 shares of Holdco
Stock Common Stock
Parent Series D Preferred One share of Series D
Stock Convertible Preferred Stock,
par value $0.10 per share, of
Holdco ("Holdco Series D
Preferred Stock")
Parent Series E Preferred One share of Series E
Stock Convertible Preferred Stock,
par value $0.10 per share, of
Holdco ("Holdco Series E
Preferred Stock")
Parent Series F Preferred One share of Series F
Stock Convertible Preferred Stock,
par value $0.10 per share, of
Holdco ("Holdco Series F
Preferred Stock")
Parent Series G Preferred One share of Series G
Stock Convertible Preferred Stock,
par value $0.10 per share, of
Holdco ("Holdco Series G
Preferred Stock")
Parent Series H Preferred One share of Series H
Stock Convertible Preferred Stock,
par value $0.10 per share, of
Holdco ("Holdco Series H
Preferred Stock")
Parent Series I Preferred One share of Series I
Stock Convertible Preferred Stock,
par value $0.10 per share, of
Holdco ("Holdco Series I
Preferred Stock")
Parent Series J Preferred 1,000 shares of Series LMCN-V
Stock Common Stock, par value $0.01
per share, of Holdco ("Holdco
LMCN-V Stock")
<PAGE>
9
Parent Series K Preferred 1,000 shares of Series LMC
Stock Common Stock, par value $0.01
per share, of Holdco ("Holdco
LMC Class Stock")
Parent Series L Preferred One share of Series L
Stock Preferred Stock, par value
$0.10 per share, of Holdco
("Holdco Series L Preferred
Stock")
As of the Effective Time of the Mergers, all such shares of
Parent Capital Stock shall no longer be outstanding and
shall automatically be canceled and retired and shall cease
to exist. As of the Effective Time of the Mergers, each
certificate theretofore representing shares of Parent
Capital Stock (other than each certificate theretofore
representing Parent Series C Preferred Stock, Parent Series
J Preferred Stock or Parent Series K Preferred Stock (the
"Changed Parent Stock")), without any action on the part of
Holdco, Parent or the holder thereof, shall be deemed to
represent an equivalent number of shares of the class or
series of Holdco Capital Stock set forth above next to the
class or series of Parent Capital Stock formerly represented
by such certificate and shall cease to represent any rights
in any shares of Parent Capital Stock. As of the Effective
Time of the Mergers, each holder of a certificate
representing any shares of Changed Parent Stock shall cease
to have any rights with respect thereto, except the right to
receive, upon the surrender of any such certificates,
certificates representing the number of shares of the class
or series of Holdco Capital Stock, and in the case of any
Parent Series C Preferred Stock any cash in lieu of
fractional shares of Holdco Common Stock, set forth above
next to the series of Changed Parent Stock formerly
represented by such certificate to be issued or paid in
consideration therefor upon surrender of such certificate in
accordance with Section 2.03, without interest.
(d) Appraisal Rights. Notwithstanding anything in
this Agreement to the contrary, shares ("Appraisal Shares")
of Parent Capital Stock (other than Parent Common Stock)
that are outstanding immediately prior to the Effective Time
of the Mergers and that are held by any stockholder of
Parent who is entitled to demand and properly demands
appraisal of such Appraisal Shares pursuant to, and who
complies in all respects with, the provisions of Section 262
of the DGCL ("Section 262") shall not be
<PAGE>
10
converted into Holdco Capital Stock as provided in Section
2.01(c), but rather the holders of Appraisal Shares shall be
entitled to payment of the fair value of such Appraisal
Shares in accordance with the provisions of Section 262;
provided, however, that if any such holder shall fail to
perfect or otherwise shall waive, withdraw or lose the right
to appraisal under Section 262 or a court of competent
jurisdiction shall determine that such holder is not
entitled to the relief provided by Section 262, then the
right of such holder of Appraisal Shares to be paid the fair
value of such holder's Appraisal Shares shall cease and such
Appraisal Shares shall be treated as if they had been
converted as of the Effective Time of the Mergers into
shares of Holdco Capital Stock as provided in Section
2.01(c).
(e) Exchange Ratio for Parent Options and Parent
Warrants. (i) As of the Effective Time of the Mergers, each
outstanding Parent Option (as defined in Section 3.02(c))
and each outstanding warrant (a "Parent Warrant") to
purchase Parent Common Stock, originally issued in
connection with the first issuance of Parent Series B
Preferred Stock, shall be assumed by Holdco and converted
into an option or warrant, as the case may be, to purchase
shares of Holdco Common Stock, as provided below. Following
the Effective Time of the Mergers, each Parent Option shall
continue to have, and shall be subject to, the same terms
and conditions set forth in the applicable Parent Stock Plan
(as defined in Section 3.02(c)) pursuant to which such
Parent Option was granted, and each Parent Warrant shall
continue to have, and shall be subject to, the same terms
and conditions, in each case as in effect immediately prior
to the Effective Time of the Mergers, except that each such
Parent Option or Parent Warrant shall be exercisable for the
same number of shares of Holdco Common Stock as the number
of shares of Parent Common Stock for which such Parent
Option or Parent Warrant was exercisable immediately prior
to the Effective Time of the Mergers.
(ii) As of the Effective Time of the Mergers,
Holdco shall enter into an assumption agreement with respect
to each Parent Option and each Parent Warrant, which, in the
case of any Parent Option, shall provide for Holdco's
assumption of the obligations of Parent under the applicable
Parent Stock Plan. Prior to the Effective Time of the
Mergers, Parent shall make such amendments, if any, to the
Parent Stock Plans as shall be necessary to permit such
assumption in accordance with this Section 2.01(e).
<PAGE>
11
(iii) It is the intention of the parties that, to
the extent that any Parent Option constitutes an "incentive
stock option" (within the meaning of Section 422 of the
Code) immediately prior to the Effective Time of the
Mergers, such Parent Option shall continue to qualify as an
incentive stock option to the maximum extent permitted by
Section 422 of the Code, and that the assumption of the
Parent Option provided by this Section 2.01(e) shall satisfy
the conditions of Section 424(a) of the Code.
(f) Treatment of Parent Capital Stock Held by
Parent Subsidiaries. Notwithstanding anything in this
Agreement to the contrary, each share of Parent Capital
Stock (other than Parent Series C Preferred Stock) held by
any Parent Subsidiary shall be converted into (i) in the
case of each share of Parent Common Stock, one
one-thousandth (1/1,000th) of a fully paid and nonassessable
share of Common Stock of the TW Surviving Corporation, (ii)
in the case of each share of Parent Series B Preferred
Stock, one one-thousandth (1/1,000th) of a fully paid and
nonassessable share of Series B 6.40% Preferred Stock of the
TW Surviving Corporation, (iii) in the case of each share of
Parent Series L Preferred Stock, one one-thousandth
(1/1,000th) of a fully paid and nonassessable share of
Series L Convertible Preferred Stock of the TW Surviving
Corporation, (iv) in the case of each share of Parent Series
D Preferred Stock, one one-thousandth (1/1,000th) of a fully
paid and nonassessable share of Series D Convertible
Preferred Stock of the TW Surviving Corporation, (v) in the
case of each share of Parent Series E Preferred Stock, one
one-thousandth (1/1,000th) of a fully paid and nonassessable
share of Series E Convertible Preferred Stock of the TW
Surviving Corporation, (vi) in the case of each share of
Parent Series F Preferred Stock, one one-thousandth
(1/1,000th) of a fully paid and nonassessable share of
Series F Convertible Preferred Stock of the TW Surviving
Corporation, (vii) in the case of each share of Parent
Series G Preferred Stock, one one-thousandth (1/1,000th) of
a fully paid and nonassessable share of Series G Convertible
Preferred Stock of the TW Surviving Corporation, (viii) in
the case of each share of Parent Series H Preferred Stock,
one one-thousandth (1/1,000th) of a fully paid and
nonassessable share of Series H Convertible Preferred Stock
of the TW Surviving Corporation and (ix) in the case of each
share of Parent Series I Preferred Stock, one one-thousandth
(1/1,000th) of a fully paid and nonassessable share of
Series I Convertible Preferred Stock of the TW Surviving
Corporation.
<PAGE>
12
SECTION 2.02. Effect on Company Capital Stock. As
of the Effective Time of the Mergers, by virtue of the TBS
Merger and without any action on the part of the holder of
any shares of Company Capital Stock or any shares of capital
stock of Georgia Sub:
(a) Capital Stock of Georgia Sub. Each issued and
outstanding share of capital stock of Georgia Sub shall be
converted into (i) one one-millionth (1/1,000,000th) of a
fully paid and nonassessable share of Class A Common Stock,
par value $.0625 per share, of the TBS Surviving Corporation
for each share of Class A Common Stock, par value $.0625 per
share, of the Company ("Class A Common Stock") issued and
outstanding immediately prior to the Effective Time of the
Mergers, other than shares of Class A Common Stock subject
to Section 2.02(f), (ii) one one-millionth (1/1,000,000th)
of a share of Class B Common Stock, par value $.0625 per
share, of the TBS Surviving Corporation for each share of
Class B Common Stock, par value $.0625 per share, of the
Company ("Class B Common Stock" and, together with the Class
A Common Stock, the "Company Common Stock") issued and
outstanding immediately prior to the Effective Time of the
Mergers, other than shares of Class B Common Stock subject
to Section 2.02(f), and (iii) one one-millionth
(1/1,000,000th) of a share of Class C Convertible Preferred
Stock, par value $.125 per share, of the TBS Surviving
Corporation for each share of Class C Convertible Preferred
Stock, par value $.125 per share, of the Company ("Class C
Preferred Stock" and, together with the Company Common
Stock, the "Company Capital Stock") issued and outstanding
immediately prior to the Effective Time of the Mergers,
other than Class C Preferred Stock subject to Section
2.02(f).
(b) Cancellation of Treasury Stock. Each share of
Company Capital Stock that is owned by the Company shall
automatically be canceled and retired and shall cease to
exist, and no Holdco Common Stock or other consideration
shall be delivered in exchange therefor.
(c) Conversion of Company Capital Stock. Subject
to Sections 2.02(d), 2.02(f) and 2.03(e), (i) each issued
and outstanding share of Company Common Stock (other than
shares to be canceled in accordance with Section 2.02(b)),
shall be converted into the right to receive 0.75 (the
"Common Conversion Number") of a fully paid and
nonassessable share of Holdco Common Stock and (ii) each
issued and outstanding share of Class C Preferred Stock
<PAGE>
13
(other than shares to be canceled in accordance with Section
2.02(b)) shall be converted into the right to receive 4.80
fully paid and nonassessable shares of Holdco Common Stock.
As of the Effective Time of the Mergers, all such shares of
Company Capital Stock shall no longer be outstanding and
shall automatically be canceled and retired and shall cease
to exist, and each holder of a certificate representing any
such shares of Company Capital Stock shall cease to have any
rights with respect thereto, except the right to receive,
upon the surrender of any such certificates, certificates
representing the shares of Holdco Common Stock and any cash
in lieu of fractional shares of Holdco Common Stock to be
issued or paid in consideration therefor upon surrender of
such certificate in accordance with Section 2.03, without
interest.
(d) Dissenting Shares. (i) The Board of Directors
of the Company has adopted a resolution pursuant to Section
1302(c)(2) of the Georgia BCC conferring dissenters' rights
with respect to the Company Common Stock in connection with
the TBS Merger. Notwithstanding anything in this Agreement
to the contrary, shares of Company Capital Stock that are
outstanding immediately prior to the Effective Time of the
Mergers and that are held by any shareholder who has
delivered to the Company, prior to the Shareholder Approvals
(as defined in Section 3.01(d)), a written notice of such
shareholder's intent to demand payment for such holder's
shares of Company Capital Stock if the TBS Merger is
effected, in accordance with Article 13 of the Georgia BCC,
and who shall have not voted such shares in favor of the
approval and adoption of this Agreement ("Dissenting
Shares") shall not be converted into the right to receive
Holdco Common Stock as provided in Section 2.02(c), but the
holders of Dissenting Shares shall be entitled to payment of
the fair value of such Dissenting Shares in accordance with
the provisions of such Article 13; provided, however, that
if any such holder shall fail to perfect or shall otherwise
waive the right to demand payment under Article 13 of the
Georgia BCC or a court of competent jurisdiction shall
determine that such holder is not entitled to the relief
provided by such Article 13, then the right of such holder
of Dissenting Shares to be paid the fair value of such
holder's Dissenting Shares shall cease and such Dissenting
Shares shall be treated as if they had been converted as of
the Effective Time of the Mergers into the right to receive
the shares of Holdco Common Stock as provided in Section
2.02(c) and any cash in lieu of
<PAGE>
14
fractional shares of Holdco Common Stock as provided in
Section 2.03(e), without any interest thereon.
(ii) The Company shall give Holdco (A) prompt
notice of any notices or other instruments received by the
Company pursuant to Article 13 of the Georgia BCC and (B)
the opportunity to direct all negotiations and proceedings
with respect to demands for payment for Dissenting Shares.
The Company shall not, except with the prior written consent
of Holdco, voluntarily offer to make or make any payment
with respect to any demands for payment for Dissenting
Shares or offer to settle or settle any such demands.
(e) Exchange Ratio for Company Options and Company
Warrants. (i) As of the Effective Time of the Mergers, each
outstanding Company Stock Option (as defined in Section
3.01(c)), each outstanding New Line Option (as defined in
Section 3.01(c)) and each outstanding warrant (a "Company
Warrant") to purchase Class B Common Stock shall be assumed
by Holdco and converted into an option or warrant, as the
case may be, to purchase shares of Holdco Common Stock, as
provided below. Following the Effective Time of the Mergers,
each Company Stock Option shall continue to have, and shall
be subject to, the same terms and conditions set forth in
the applicable Company Stock Plan (as defined in Section
3.01(c)) pursuant to which such Company Stock Option was
granted, as in effect immediately prior to the Effective
Time of the Mergers, each New Line Option shall continue to
have, and shall be subject to, the same terms and conditions
set forth in the applicable New Line Plan (as defined in
Section 3.01(c)) pursuant to which such New Line Option was
granted, as in effect immediately prior to the Effective
Time of the Mergers, and each Company Warrant shall continue
to have, and shall be subject to, the same terms and
conditions as in effect immediately prior to the Effective
Time of the Mergers, except that (i) each such Company Stock
Option, New Line Option and Company Warrant shall be
exercisable for that number of shares of Holdco Common Stock
equal to the product of (x) the number of shares of Class B
Common Stock for which such Company Stock Option, New Line
Option or Company Warrant was exercisable immediately prior
to the Effective Time of the Mergers and (y) the Common
Conversion Number, rounded, in the case of any Company
Warrant or any Company Stock Option or New Line Option other
than any incentive stock option, up and, in the case of any
incentive stock option, down to the nearest whole share, if
necessary, and (ii) the exercise price per share of such
Company Stock Option, New Line Option or
<PAGE>
15
Company Warrant shall be equal to the aggregate exercise
price of such Company Stock Option, New Line Option or
Company Warrant immediately prior to the Effective Time of
the Mergers divided by the number of shares of Holdco Common
Stock for which such Company Stock Option, New Line Option
or Company Warrant shall be exercisable as determined in
accordance with the preceding clause (i), rounded up to the
next highest cent, if necessary.
(ii) As of the Effective Time of the Mergers,
Holdco shall enter into an assumption agreement with respect
to each Company Stock Option, New Line Option and Company
Warrant, which shall provide for Holdco's assumption of the
obligations of the Company under the applicable Company
Stock Plan, New Line Plan or Warrant Agreement. Prior to the
Effective Time of the Mergers, the Company shall make such
amendments, if any, to the Company Stock Plans and the New
Line Plans and each such Warrant Agreement as shall be
necessary to permit such assumption in accordance with this
Section 2.02(e).
(iii) It is the intention of the parties that, to
the extent that any Company Stock Option or New Line Option
constitutes an incentive stock option immediately prior to
the Effective Time of the Mergers, such Company Stock Option
or New Line Option shall continue to qualify as an incentive
stock option to the maximum extent permitted by Section 422
of the Code, and that the assumption of the Company Stock
Options and New Line Options provided by this Section
2.02(e) shall satisfy the conditions of Section 424(a) of
the Code.
(f) Treatment of Company Capital Stock Held By
Parent, Parent Subsidiaries and Company Subsidiaries.
Notwithstanding anything in this Agreement to the contrary,
each issued and outstanding share of Company Capital Stock
held by Parent, Holdco or any of their subsidiaries
(including any such shares acquired by Holdco simultaneously
with the Effective Time of the Mergers and any such shares
held by corporations (other than the Company, but including
the Company Subsidiaries) that become subsidiaries of Holdco
simultaneously with the Effective Time of the Mergers but
excluding any shares acquired pursuant to Section 2.02(a))
shall be converted into (i) in the case of each share of
Class A Common Stock, one one-thousandth (1/1,000th) of a
fully paid and nonassessable share of Class A Common Stock
of the TBS Surviving Corporation, (ii) in the case of each
share of Class B Common Stock, one one-thousandth
<PAGE>
16
(1/1,000th) of a fully paid and nonassessable share of Class
B Common Stock of the TBS Surviving Corporation and (iii) in
the case of each share of Class C Preferred Stock, one
one-thousandth (1/1,000th) of a fully paid and nonassessable
share of Class C Preferred Stock of the TBS Surviving
Corporation.
SECTION 2.03. Exchange of Shares and Certificates.
(a) Exchange Agent. As of the Effective Time of the Mergers,
Holdco shall deposit with Chemical Bank or such other bank
or trust company as may be designated by Holdco (the
"Exchange Agent"), for the benefit of the holders of shares
of Changed Parent Stock and Company Capital Stock, for
exchange in accordance with this Article II, through the
Exchange Agent, certificates representing the shares of
Holdco Capital Stock (such shares of Holdco Capital Stock,
together with any dividends or distributions with respect
thereto with a record date after the Effective Time of the
Mergers, being hereinafter referred to as the "Exchange
Fund") issuable pursuant to Sections 2.01 and 2.02 in
exchange for outstanding shares of Changed Parent Stock and
Company Capital Stock.
(b) Exchange Procedures. As soon as reasonably
practicable after the Effective Time of the Mergers, the
Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the
Effective Time of the Mergers represented outstanding shares
of Changed Parent Stock or Company Capital Stock (the
"Certificates") whose shares were converted into the right
to receive shares of Holdco Capital Stock pursuant to
Section 2.01 or 2.02, (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent and shall
be in such form and have such other provisions as Holdco may
reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for
certificates representing shares of Holdco Capital Stock.
Upon surrender of a Certificate for cancellation to the
Exchange Agent or to such other agent or agents as may be
appointed by Holdco, together with such letter of
transmittal, duly executed, and such other documents as may
reasonably be required by the Exchange Agent, the holder of
such Certificate shall be entitled to receive in exchange
therefor a certificate representing that number of whole
shares of Holdco Capital Stock which such holder has the
right to receive pursuant to the provisions of this
<PAGE>
17
Article II, and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of
ownership of Changed Parent Stock or Company Capital Stock
which is not registered in the transfer records of Parent or
the Company, as applicable, a certificate representing the
proper number of shares of Holdco Capital Stock may be
issued to a person other than the person in whose name the
Certificate so surrendered is registered, if such
Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the person requesting such
payment shall pay any transfer or other taxes required by
reason of the issuance of shares of Holdco Capital Stock to
a person other than the registered holder of such
Certificate or establish to the satisfaction of Holdco that
such tax has been paid or is not applicable. Until
surrendered as contemplated by this Section 2.03, each
Certificate shall be deemed at any time after the Effective
Time of the Mergers to represent only the right to receive
upon such surrender the certificate representing shares of
Holdco Capital Stock and cash in lieu of any fractional
shares of Holdco Capital Stock as contemplated by this
Section 2.03. No interest shall be paid or accrue on any
cash payable in lieu of any fractional shares of Holdco
Capital Stock.
(c) Distributions with Respect to Unexchanged
Shares. No dividends or other distributions with respect to
Holdco Capital Stock with a record date after the Effective
Time of the Mergers shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of
Holdco Capital Stock represented thereby, and no cash
payment in lieu of fractional shares shall be paid to any
such holder pursuant to Section 2.03(e), until the surrender
of such Certificate in accordance with this Article II.
Subject to the effect of applicable laws, following
surrender of any such Certificate, there shall be paid to
the holder of the certificate representing whole shares of
Holdco Capital Stock issued in exchange therefor, without
interest, (i) at the time of such surrender, the amount of
any cash payable in lieu of a fractional share of Holdco
Capital Stock to which such holder is entitled pursuant to
Section 2.03(e) and the amount of dividends or other
distributions with a record date after the Effective Time of
the Mergers theretofore paid with respect to such whole
shares of Holdco Capital Stock, and (ii) at the appropriate
payment date, the amount of dividends or other distributions
with a record date after the Effective Time of the Mergers
but prior to such surrender and a payment date subsequent to
<PAGE>
18
such surrender payable with respect to such whole shares of
Holdco Capital Stock.
(d) No Further Ownership Rights in Changed Parent
Stock and Company Capital Stock. All shares of Holdco
Capital Stock issued upon the surrender for exchange of
Certificates in accordance with the terms of this Article II
(including any cash paid pursuant to Section 2.03(c) or
2.03(e)) shall be deemed to have been issued (and paid) in
full satisfaction of all rights pertaining to the shares of
Changed Parent Stock or Company Capital Stock theretofore
represented by such Certificates, subject, however, to the
obligation of the TW Surviving Corporation or the TBS
Surviving Corporation, as applicable, to pay any dividends
or make any other distributions with a record date prior to
the Effective Time of the Mergers which may have been
declared or made by Parent or the Company, as applicable, on
such shares of Changed Parent Stock and Company Capital
Stock in accordance with the terms of this Agreement or
prior to September 22, 1995, and which remain unpaid at the
Effective Time of the Mergers, and there shall be no further
registration of transfers on the stock transfer books of the
TW Surviving Corporation or the TBS Surviving Corporation,
as applicable, of the shares of Changed Parent Stock or
Company Capital Stock which were outstanding immediately
prior to the Effective Time of the Mergers. If, after the
Effective Time of the Mergers, Certificates are presented to
the TW Surviving Corporation or the TBS Surviving
Corporation or the Exchange Agent for any reason, they shall
be canceled and exchanged as provided in this Article II,
except as otherwise provided by law.
(e) Fractional Shares. (i) No certificates or
scrip representing fractional shares of Holdco Common Stock
shall be issued upon the surrender for exchange of
Certificates, and such fractional share interests shall not
entitle the owner thereof to vote or to any other rights of
a stockholder of Holdco.
(ii) Notwithstanding any other provision of this
Agreement, each holder of shares of Changed Parent Stock or
Company Capital Stock converted pursuant to the Mergers who
would otherwise have been entitled to receive a fraction of
a share of Holdco Common Stock (after taking into account
all Certificates delivered by such holder) shall receive, in
lieu thereof, cash (without interest) in an amount equal to
such fractional part of a share of Holdco Common Stock
multiplied by the closing price of a share of Parent Common
<PAGE>
19
Stock on the Closing Date as reported on the NYSE-Composite
Transactions Tape (as reported by The Wall Street Journal
or, if not reported thereby, any other authoritative
source).
(iii) Certificates shall be issued by the TW
Surviving Corporation and the TBS Surviving Corporation to
evidence any fractional shares of the TW Surviving
Corporation and the TBS Surviving Corporation, as the case
may be, issued pursuant to Section 2.01(a), 2.01(f), 2.02(a)
or 2.02(f).
(iv) Certificates shall be issued by Holdco to
evidence any fractional shares of Holdco LMC Class Stock or
Holdco LMCN-V Stock issued pursuant to Section 2.01(c).
(f) Termination of Exchange Fund. Any portion of
the Exchange Fund which remains undistributed to the holders
of the Certificates for six months after the Effective Time
of the Mergers shall be delivered to Holdco, upon demand,
and any holders of the Certificates who have not theretofore
complied with this Article II shall thereafter look only to
Holdco for payment of their claim for Holdco Capital Stock,
any cash in lieu of fractional shares of Holdco Common Stock
and any dividends or distributions with respect to Holdco
Capital Stock.
(g) No Liability. None of Parent, Holdco, Delaware
Sub, Georgia Sub, the Company or the Exchange Agent shall be
liable to any person in respect of any shares of Holdco
Capital Stock (or dividends or distributions with respect
thereto) or cash from the Exchange Fund delivered to a
public official pursuant to any applicable abandoned
property, escheat or similar law. If any Certificates shall
not have been surrendered prior to seven years after the
Effective Time of the Mergers (or immediately prior to such
earlier date on which any shares of Holdco Capital Stock,
any cash in lieu of fractional shares of Holdco Capital
Stock or any dividends or distributions with respect to
Holdco Capital Stock in respect of such Certificate would
otherwise escheat to or become the property of any
Governmental Entity (as defined in Section 3.01(d)), any
such shares, cash, dividends or distributions in respect of
such Certificate shall, to the extent permitted by
applicable law, become the property of the TW Surviving
Corporation or the TBS Surviving Corporation, as applicable,
free and clear of all claims or interest of any person
previously entitled thereto.
<PAGE>
20
(h) Investment of Exchange Fund. The Exchange
Agent shall invest any cash included in the Exchange Fund,
as directed by Holdco, on a daily basis. Any interest and
other income resulting from such investments shall be paid
to Holdco.
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of
the Company. The Company represents and warrants to Parent
as follows:
(a) Organization, Standing and Corporate Power.
Each of the Company and each of the Material Company
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 the Company and its
subsidiaries (each a "Company Subsidiary") is duly
qualified or licensed to do business and 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 the Company and the Company Subsidiaries,
taken as a whole (a "Company Material Adverse Effect").
The Company has delivered to Parent complete and
correct copies of its Restated Articles of
Incorporation and By-laws and the certificates of
incorporation and by-laws or comparable organizational
documents of the Material Company Subsidiaries, in each
case as amended to the date of this Agreement. For
purposes of this Agreement, a "Material Company
Subsidiary" means each Company Subsidiary that (i)
constitutes a significant subsidiary within the meaning
of Rule 1-02 of Regulation S-X of the Securities and
Exchange Commission (the "SEC") or (ii) is party to an
agreement pursuant to which such Company Subsidiary or
another Company Subsidiary distributes programming or
<PAGE>
21
licenses programming from any person other than a
Company Subsidiary and is listed in Section 3.01(a) of
the letter from the Company, dated September 22, 1995
addressed to Parent (the "Company Disclosure Letter")
(a "Company Programming Subsidiary"). The Company is
not in violation of any provision of its Restated
Articles of Incorporation or By-laws and no Material
Company Subsidiary is in violation of any provision of
its certificate of incorporation, by-laws or comparable
organizational documents, except to the extent that
such violations would not, individually or in the
aggregate, have a Company Material Adverse Effect.
(b) Subsidiaries. Section 3.01(b) of the Company
Disclosure Letter sets forth each Material Company
Subsidiary and the ownership or interest therein of the
Company. All the outstanding shares of capital stock of
each such Material Company Subsidiary have been validly
issued and are fully paid and nonassessable and, except
as set forth in Section 3.01(b) of the Company
Disclosure Letter, are owned by the Company, by another
Company Subsidiary or by the Company and another
Company Subsidiary, free and clear of all pledges,
claims, liens, charges, encumbrances and security
interests of any kind or nature whatsoever
(collectively, "Liens"). Except for the capital stock
of the Company Subsidiaries and except for the
ownership interests set forth in Section 3.01(b) of the
Company Disclosure Letter, the Company does not own,
directly or indirectly, any capital stock or other
ownership interest, with a fair market value as of
September 22, 1995, greater than $2,000,000, in any
corporation, partnership, limited liability company,
joint venture or other entity.
(c) Capital Structure. (i) The authorized capital
stock of the Company consists of 75,000,000 shares of
Class A Common Stock, 300,000,000 shares of Class B
Common Stock, 500,000 shares of Class A Serial
Preferred Stock, par value $.10 per share (the "Class A
Preferred Stock"), 12,600,000 shares of Class B
Cumulative Preferred Stock, par value $.125 per share
(the "Class B Preferred Stock"), 12,600,000 shares of
Class C Preferred Stock and 100,000,000 shares of Class
D Serial Preferred Stock, par value $.0625 per share
(the "Class D Preferred Stock"). Each share of Class C
Preferred Stock is convertible into six shares of Class
B Common Stock. At the close of business on
<PAGE>
22
August 29, 1995, (A)(I) 68,330,388 shares of Class A
Common Stock were outstanding, all of which were
validly issued, fully paid and nonassessable, (II)
137,819,078 shares of Class B Common Stock were
outstanding, all of which were validly issued, fully
paid and nonassessable, (III) 12,396,976 shares of
Class C Preferred Stock were outstanding, all of which
were validly issued, fully paid and nonassessable, and
(iv) no shares of Class A Preferred Stock, Class B
Preferred Stock or Class D Preferred Stock were issued
or outstanding; and (B)(I) 81,822,278 shares of Class B
Common Stock were reserved for issuance upon conversion
of the Class C Preferred Stock and the Company's Zero
Coupon Subordinated Convertible Notes due 2007, (II)
13,904,724 shares of Class B Common Stock were reserved
for issuance upon the exercise of outstanding stock
options (the "Company Stock Options") granted pursuant
to the Company's 1988 Stock Option Plan, the Company's
1993 Stock Option and Equity Award Plan and the
agreement, dated June 1, 1993, among CNN America, Inc.,
the Company, Larry King Enterprises, Inc., and Larry
King (the "Company Stock Plans") and (III) 4,892,214
shares of Class B Common Stock were reserved for
issuance upon conversion of the 6-1/2% Convertible
Subordinated Debentures (the "New Line Debentures") of
New Line Cinema Corporation ("New Line"), upon the
exercise of outstanding stock options (the "New Line
Options") granted pursuant to the New Line 1986 Stock
Option Plan, the New Line 1990 Stock Option Plan, the
New Line 1991 Stock Option Plan, the Stock Option
Agreements, dated January 17, 1986, and February 14,
1990, among New Line, Michael Lynne and Richard L.
Blumenthal, the Stock Option Agreements, dated February
14, 1990, September 27, 1990, and January 22, 1993,
between New Line and Michael Lynne, and the Stock
Option Agreement, dated October 6, 1993, between New
Line and Mitch Goldman (the "New Line Plans") or upon
the exercise of outstanding warrants issued by New Line
pursuant to the Warrant to Purchase Common Stock of New
Line, dated May 31, 1991, initially issued to NHI
Nelson Holdings International Ltd. Except as set forth
above, at the close of business on August 29, 1995, no
shares of capital stock or other voting securities of
the Company were issued, reserved for issuance or
outstanding and, since such date, no shares of capital
stock or other voting securities or options in respect
thereof have been issued except upon the conversion of
the securities or the exercise of the
<PAGE>
23
Company Stock Options or other options and warrants
referred to in clauses (B)(I) through (III) above.
Except as set forth in this Section 3.01(c) or in
Section 3.01(c) of the Company Disclosure Letter and
except for Company Stock Options granted in the
ordinary course of business to employees of the Company
and the Company Subsidiaries who are not senior
executive officers and covering not in excess of an
aggregate of 1,000,000 shares of Class B Common Stock
for all such grants during the period from September
22, 1995, through the Effective Time of the Mergers,
there were not on September 22, 1995, and at the
Effective Time of the Mergers there will not be, any
options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to
which the Company or any Company Subsidiary is a party
or by which any of them is bound relating to the issued
or unissued capital stock of the Company or any Company
Subsidiary, or obligating the Company or any Company
Subsidiary 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, the Company
or any Company Subsidiary or obligating the Company or
any Company Subsidiary to issue, grant, extend or enter
into any such option, warrant, call, right, commitment,
agreement, arrangement or undertaking. All shares of
Class B Common Stock subject to issuance as aforesaid,
upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and
nonassessable. There are not any outstanding
contractual obligations of the Company or any Company
Subsidiary to repurchase, redeem or otherwise acquire
any shares of capital stock of the Company or any
Company Subsidiary, or make any material investment (in
the form of a loan, capital contribution or otherwise)
in, any Company Subsidiary or any other person.
(ii) The Company has previously delivered to
Parent (A) a true and complete list of the holders of
record of the Class C Preferred Stock (the "Class C
Shareholders") and the number of shares of Class C
Preferred Stock owned of record by each such Class C
Shareholder, (B) a true and complete list of the number
of shares of each class of capital stock of the Company
owned of record by the Principal Shareholder and each
person known by the Company to be an affiliate of the
<PAGE>
24
Principal Shareholder and (C) true and complete copies
of any agreement relating to the ownership or voting of
the Class C Preferred Stock to which the Company is a
party.
(d) Authority; Noncontravention. The Company has
the requisite corporate power and authority to enter
into this Agreement and, subject to approval of this
Agreement by the holders of (i) a majority of the
voting power of the outstanding Company Capital Stock,
voting as a single class, (ii) a majority of the voting
power of the outstanding Class A Common Stock and the
Class B Common Stock, voting as a single class, and
(iii) the holders of a majority of the outstanding
shares of Class C Preferred Stock, voting as a separate
class (the "Shareholder Approvals"), to consummate the
transactions contemplated by this Agreement. The
execution and delivery of this Agreement by the Company
and the consummation by the Company of the transactions
contemplated by this Agreement have been duly
authorized by all necessary corporate action on the
part of the Company, subject to the Shareholder
Approvals. This Agreement has been duly executed and
delivered by the Company and constitutes a valid and
binding obligation of the Company, enforceable against
the Company in accordance with its terms. Except as set
forth in Section 3.01(d) of the Company Disclosure
Letter, the execution and delivery of this Agreement by
the Company do not, and the consummation of the
transactions contemplated by this Agreement and
compliance with the provisions of this Agreement 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
loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or
assets of the Company or any Company Subsidiary under,
(i) the Restated Articles of Incorporation or By-laws
of the Company or the comparable organizational
documents of any Company Subsidiary, (ii) any agreement
pursuant to which the Company or any Company
Programming Subsidiary distributes programming or
licenses programming from a person other than a Company
Subsidiary individually involving annual payments to or
by the Company and the Company Subsidiaries of
$20,000,000 or more (any such agreement, a "Programming
Agreement"), (iii) any loan or credit agreement, note,
<PAGE>
25
bond, mortgage, indenture, lease or other agreement
(but excluding any Programming Agreement), instrument,
permit, concession, franchise or license applicable to
the Company or any Company Subsidiary or their
respective properties or assets or (iv) subject to the
governmental filings and other matters referred to in
the following sentence, any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable
to the Company or any Company Subsidiary or their
respective properties or assets, other than, in the
case of clauses (iii) and (iv), any such conflicts,
violations, defaults, rights or Liens that individually
or in the aggregate would not (x) have a Company
Material Adverse Effect, (y) prevent the Company 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 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 the Company or any of the Company
Subsidiaries in connection with the execution and
delivery of this Agreement by the Company or the
consummation by the Company of the transactions
contemplated by this Agreement, except for (i) the
filing of a premerger notification and report form by
the Principal Shareholder as the ultimate parent entity
of the Company under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act"), (ii) the
filing with the SEC of (A) a joint proxy statement
relating to the meetings of the Company's shareholders
and Parent's stockholders to be held in connection with
the Mergers and the transactions contemplated by this
Agreement (as amended or supplemented from time to
time, the "Proxy Statement"), and (B) such reports
under Section 13(a) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as may be
required in connection with this Agreement and the
transactions contemplated by this Agreement, (iii) the
filing of the Certificates of Merger with the Delaware
Secretary of State and the Georgia Secretary of State
and appropriate documents with the relevant authorities
of other states in which the Company is qualified to do
business, (iv) such filings with, and orders of, the
<PAGE>
26
Federal Communications Commission (the "FCC") as may be
required under the Communications Act of 1934, as
amended (the "Communications Act"), and the FCC's rules
and regulations in connection with this Agreement and
the transactions contemplated by this Agreement and (v)
such other consents, approvals, orders, authorizations,
registrations, declarations and filings (x) as may be
required under the laws of any foreign country in which
the Company or any of the Company Subsidiaries conducts
any business or owns any property or assets or (y)
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 or
otherwise prevent the Company from performing its
obligations under this Agreement in any material
respect or have, individually or in the aggregate, a
Company Material Adverse Effect.
(e) SEC Documents; Undisclosed Liabilities. The
Company has filed all required reports, schedules,
forms, statements and other documents with the SEC
since December 31, 1992 (the "SEC Documents"; such
term, when used with respect to such documents filed
prior to September 22, 1995, shall mean such documents
as amended prior to September 22, 1995). As of their
respective dates, the SEC Documents complied in all
material respects with the requirements of the
Securities Act of 1933 (the "Securities Act"), or the
Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder
applicable to such SEC Documents, and none of the SEC
Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be
stated therein or necessary in order to make the
statements therein, in light of the circumstances under
which they were made, not misleading, except to the
extent such statements have been modified or superseded
by a later Filed SEC Document (as defined in Section
3.01(g)). Except to the extent that information
contained in any SEC Document has been revised or
superseded by a later filed SEC Document, neither the
Company's Annual Report on Form 10-K for the year ended
December 31, 1994, nor any SEC Document filed after
December 31, 1994, contains any untrue statement of a
material fact or omits to state any material fact
required to be stated therein or necessary in order to
make the statements therein, in light of the
circumstances under which they were made,
<PAGE>
27
not misleading. The consolidated financial statements
of the Company included in the SEC Documents comply as
to form in all material respects with applicable
accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted account-
ing principles (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis during the periods
involved (except as may be indicated in the notes
thereto) and fairly present the consolidated financial
position of the Company and the consolidated Company
Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit
adjustments). Except as set forth in the Filed SEC
Documents, neither the Company nor any Company
Subsidiary has any liabilities or obligations of any
nature (whether accrued, absolute, contingent or
otherwise) required by generally accepted accounting
principles to be set forth on a consolidated balance
sheet of the Company and the consolidated Company
Subsidiaries or in the notes thereto and which,
individually or in the aggregate, could reasonably be
expected to have a Company Material Adverse Effect.
(f) Information Supplied. None of the information
supplied or to be supplied by the Company for inclusion
or incorporation by reference in (i) the registration
statement on Form S-4 to be filed with the SEC by
Holdco in connection with the issuance of Holdco
Capital Stock in the Mergers (the "Form S-4") will, at
the time the Form S-4 is filed with the SEC, at any
time it is amended or supplemented or at the time it
becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state
any material fact required to be stated therein or
necessary to make the statements therein not
misleading, or (ii) the Proxy Statement will, at the
date the Proxy Statement is first mailed to the
Company's shareholders or Parent's stockholders or at
the time of the Shareholders Meeting (as defined in
Section 5.01(b)) or the Parent's Stockholders Meeting
(as defined in Section 5.01(c)), contain any untrue
statement of a material fact or omit to state any
material fact required to be stated therein or
necessary in order to make the statements therein, in
<PAGE>
28
light of the circumstances under which they are made,
not misleading. The Proxy Statement will comply as to
form in all material respects with the requirements of
the Exchange Act and the rules and regulations
promulgated thereunder, except that no representation
is made by the Company with respect to statements made
or incorporated by reference therein based on
information supplied by Parent specifically for
inclusion or incorporation by reference in the Proxy
Statement.
(g) Absence of Certain Changes or Events. Except
as disclosed in the SEC Documents filed and publicly
available prior to September 22, 1995 (the "Filed SEC
Documents"), since the date of the most recent audited
financial statements included in the Filed SEC
Documents, the Company has conducted its business only
in the ordinary course, and there has not been:
(i) any change or effect (or any development
that, insofar as can reasonably be foreseen, is
likely to result in a change or effect) which,
individually or in the aggregate, has had or is
likely to have, a Company Material Adverse Effect;
(ii) except for regular quarterly dividends
not in excess of $.0175 per share of Class A
Common Stock, $.0175 per share of Class B Common
Stock and $.105 per share of Class C Preferred
Stock, with customary record and payment dates,
any declaration, setting aside or payment of any
dividend or other distribution (whether in cash,
stock or property) with respect to any of the
Company Capital Stock;
(iii) any split, combination or
reclassification of any of the Company's capital
stock or any issuance or the authorization of any
issuance of any other securities in exchange or in
substitution for shares of the Company's capital
stock;
(iv) except as disclosed in Section 3.01(g)
of the Company Disclosure Letter, (A) any granting
by the Company or any Company Subsidiary to any
executive officer of the Company or any of the
Company Subsidiaries of any increase in
compensation, except in the ordinary course of
business consistent with prior practice or as was
required
<PAGE>
29
under employment agreements in effect as of the
date of the most recent audited financial
statements included in the Filed SEC Documents,
(B) any granting by the Company or any of the
Company Subsidiaries to any such executive officer
of any increase in severance or termination pay,
except as was required under any employment,
severance or termination agreements in effect as
of the date of the most recent audited financial
statements included in the Filed SEC Documents, or
(C) any entry by the Company or any of the Company
Subsidiaries into any employment, severance or
termination agreement with any such executive
officer (other than, in the case of clauses (B)
and (C), for any such item entered into after
September 22, 1995, in compliance with Section
4.01(a)(ix));
(v) any damage, destruction or loss, whether
or not covered by insurance, that has had or is
likely to have a Company Material Adverse Effect;
or
(vi) any change in accounting methods,
principles or practices by the Company or any
Material Company Subsidiary materially affecting
its assets, liabilities or business, except
insofar as may have been required by a change in
generally accepted accounting principles.
(h) Litigation. Except as disclosed in the Filed
SEC Documents or in Section 3.01(h) of the Company
Disclosure Letter, there is no suit, action or
proceeding (including any proceeding by or before the
FCC) pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of
the Company Subsidiaries (and the Company 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) have a Company Material
Adverse Effect or (ii) prevent the Company from
performing its obligations under this Agreement in any
material respect, and there is not any judgment,
decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against the Company or
any of the Company Subsidiaries having, or which,
insofar as reasonably can be foreseen, in the future
would have, any Company Material Adverse Effect. As of
<PAGE>
30
September 22, 1995, except as disclosed in the Filed
SEC Documents or in Section 3.01(h) of the Company
Disclosure Letter, there was no suit, action or
proceeding pending, or, to the knowledge of the
Company, threatened, against the Company or any of the
Company Subsidiaries (and the Company 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 the Mergers or any
of the transactions contemplated by this Agreement.
(i) Absence of Changes in Benefit Plans. Except as
disclosed in the Filed SEC Documents or in Section
3.01(i) of the Company Disclosure Letter, since the
date of the most recent audited financial statements
included in the Filed SEC Documents, there has not been
any adoption or amendment in any material respect by
the Company or any of the Company Subsidiaries of any
collective bargaining agreement or any bonus, pension,
profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock
option, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical or
other plan, arrangement or understanding (whether or
not legally binding) providing benefits to any current
or former employee, officer or director of the Company
or any of the Company Subsidiaries (collectively,
"Benefit Plans").
(j) ERISA Compliance. Except as described in the
Filed SEC Documents or in Section 3.01(j) of the
Company Disclosure Letter or as would not have a
Company Material Adverse Effect, (i) all employee
benefit plans or programs maintained for the benefit of
the current or former employees or directors of the
Company or any Company Subsidiary that are sponsored,
maintained or contributed to by the Company or any
Company Subsidiary, or with respect to which the
Company or any Company Subsidiary has any liability,
including any such plan that is an "employee benefit
plan" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974 ("ERISA"), are
in compliance with all applicable requirements of law,
including ERISA and the Code, and (ii) neither the
Company nor any Company Subsidiary has any liabilities
or obligations with respect to any such employee
<PAGE>
31
benefit plans or programs, whether accrued, contingent
or otherwise, nor to the knowledge of the executive
officers of the Company are any such liabilities or
obligations expected to be incurred. Except as set
forth in Section 3.01(j) of the Company Disclosure
Letter, the execution of, and performance of the
transactions contemplated in, this Agreement will not
(either alone or upon the occurrence of any additional
or subsequent events) constitute an event under any
benefit plan, policy, arrangement or agreement or any
trust or loan that will or may result in any payment
(whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution,
increase in benefits or obligation to fund benefits
with respect to any employee. The only severance
agreements or severance policies applicable to the
Company or the Company Subsidiaries are the agreements
and policies specifically referred to in Section
3.01(j) of the Company Disclosure Letter.
(k) Voting Requirements. The Shareholder Approvals
are the only votes of the holders of any class or
series of the Company's capital stock necessary to
approve this Agreement and the transactions
contemplated by this Agreement.
(l) Brokers; Schedule of Fees and Expenses. Except
as set forth in Section 3.01(l) of the Company
Disclosure Letter, 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 the Company. The
Company will pay the fees and expenses of the persons
listed in Section 3.01(1) of the Company Disclosure
Letter. The fees incurred and to be incurred by the
Company in connection with this Agreement and the
transactions contemplated by this Agreement for the
persons listed in Section 3.01(l) of the Company
Disclosure Letter are set forth in Section 3.01(l) of
the Company Disclosure Letter. The Company has
furnished to Parent true and complete copies of all the
agreements referred to in Section 3.01(l) of the
Company Disclosure Letter and all indemnification and
other agreements related to the engagement of the
persons so listed.
<PAGE>
32
(m) Opinions of Financial Advisors. The Company
has received the opinions of CS First Boston
Corporation and Merrill Lynch, Pierce, Fenner & Smith
Incorporated to the effect that, as of the respective
dates of such opinions (i) in the case of the CS First
Boston Corporation opinion, the consideration to be
received by the Company's shareholders in the TBS
Merger is fair to the Company's shareholders (other
than Parent) from a financial point of view, and (ii)
in the case of the Merrill Lynch, Pierce, Fenner &
Smith Incorporated opinion, the consideration to be
received by shareholders of the Company (other than
Tele-Communications, Inc. ("TCI"), and its affiliates
and Parent) is fair to such shareholders from a
financial point of view and, in the context of the
governance arrangements relating to the Company's
ability to consummate the TBS Merger, the financial
terms of the transactions to be entered into between
the Company, Parent and their respective affiliates, on
the one hand, and TCI, on the other hand, are fair from
a financial point of view to the Company and its
shareholders (other than TCI and its affiliates and
Parent), a signed copy of which opinions have been
delivered to Parent.
(n) Taxes. (i) The Company and each Company
Subsidiary have timely filed (or have had timely filed
on their behalf) or will file or cause to be timely
filed, all material Tax Returns required by applicable
law to be filed by any of them prior to or as of the
Effective Time of the Mergers. All such Tax Returns
are, or will be at the time of filing, true, complete
and correct in all material respects.
(ii) The Company and each Company Subsidiary 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 Effective Time of the
Mergers, an adequate accrual for the payment of, all
material Taxes due with respect to any period ending
prior to or as of the Effective Time of the Mergers.
(iii) For purposes of this Agreement, the
following terms shall have the following meanings:
<PAGE>
33
(A) "Taxes" shall 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.
(B) "Tax Returns" shall 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.
(o) Compliance with Laws. Neither the Company nor
any of the Company Subsidiaries has violated or failed to
comply with any statute, law, ordinance, regulation, rule,
judgment, decree or order of any Governmental Entity
applicable to its business or operations (including the
Communications Act and the FCC's rules and regulations),
except for violations and failures to comply that could not,
individually or in the aggregate, reasonably be expected to
result in a Company Material Adverse Effect.
SECTION 3.02. Representations and Warranties of
Parent. Parent represents and warrants to the Company as
follows:
(a) Organization, Standing and Corporate Power.
Each of Parent, Holdco and Delaware Sub and each of the
Material 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 Parent and Parent's
subsidiaries, including Holdco and Delaware Sub (each a
"Parent Subsidiary"), is duly qualified or licensed to do
business and 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 Parent and
the Parent Subsidiaries, taken as a whole (a "Parent
Material Adverse Effect"). As of
<PAGE>
34
the date of execution of this Agreement, Georgia Sub
is, and on the Closing Date Georgia Sub will be, a
corporation duly organized, validly existing and in
good standing under the laws of the State of Georgia.
As of the date of execution of this Agreement, Georgia
Sub has, and on the Closing Date Georgia Sub will have,
the requisite power and authority to carry on its
business as now conducted. As of the date of execution
of this Agreement, Georgia Sub is, and on the Closing
Date Georgia Sub will be, duly qualified or licensed to
do business and 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
Parent Material Adverse Effect. Prior to the date of
execution of this Agreement, Parent has delivered to
the Company 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 Holdco, Delaware Sub,
Georgia Sub and the Material Parent Subsidiaries, in
each case as amended to the date of delivery. None of
Parent, Holdco, Delaware Sub and Georgia Sub is in
violation of any provision of its certificate of
incorporation or by-laws and no Material Parent
Subsidiary is in violation of any provision of its
certificate of incorporation, by-laws or comparable
organizational documents, except to the extent that
such violations would not, individually or in the
aggregate, have a Parent Material Adverse Effect. Time
Warner Entertainment Company, L.P. ("TWE"), and each
other Parent Subsidiary that constitutes a significant
subsidiary of Parent within the meaning of Rule 1-02 of
Regulation S-X of the SEC (determined without regard to
paragraph (3) of the definition thereof) is referred to
herein as a "Material Parent Subsidiary".
(b) Subsidiaries. Section 3.02(b) of the Parent
Disclosure Letter (as defined in Section 3.02(c)) sets
forth as of September 22, 1995, each Material Parent
Subsidiary and the ownership or interest therein of
Parent. All the outstanding shares of capital stock of
each such Material Parent Subsidiary have been validly
issued and are fully paid and nonassessable and, except
as set forth in Section 3.02(b) of the Parent
Disclosure Letter, are owned by Parent, by another
<PAGE>
35
Parent Subsidiary or by Parent and another Parent
Subsidiary, free and clear of all Liens. Except for the
ownership interests in the Parent Subsidiaries and
except for the ownership interests set forth in Section
3.02(b) of the Parent Disclosure Letter, as of
September 22, 1995, Parent did not own, directly or
indirectly, any capital stock or other ownership
interest, with a fair market value as of September 22,
1995, greater than $5,000,000, in any corporation,
partnership, limited liability company, joint venture
or other entity.
(c) Capital Structure. As of September 22, 1995,
the authorized capital stock of Parent consisted of
750,000,000 shares of Parent Common Stock and
250,000,000 shares of preferred stock, par value $1.00
per share ("Parent Preferred Stock"). At the close of
business on August 31, 1995, (i) (A) 387,166,475 shares
of Parent Common Stock were outstanding, all of which
were validly issued, fully paid and nonassessable, (B)
43,739,664 shares of Parent Common Stock were held by
Parent Subsidiaries and (C) 1,988,026 shares of Parent
Common Stock were held by Parent in treasury, (ii)
464,638 shares of Parent Series B Preferred Stock were
outstanding, all of which were validly issued, fully
paid and nonassessable, (iii) 3,264,508 shares of
Parent Series C Preferred Stock were outstanding, all
of which were validly issued, fully paid and
nonassessable, (iv) 11,000,000 shares of Parent Series
D Preferred Stock were outstanding, all of which were
validly issued, fully paid and nonassessable, (v)
82,786,025 shares of Parent Common Stock were reserved
for issuance pursuant to the Time Warner 1981 Stock
Option Plan, the Time Warner 1986 Stock Option Plan,
the 1988 Stock Incentive Plan of Time Warner Inc., the
Time Warner 1989 Stock Incentive Plan, the Time Warner
1989 WCI Replacement Stock Option Plan, the Time Warner
1989 Lorimar Non-Employee Replacement Stock Option
Plan, the Time Warner 1993 Stock Option Plan, the Time
Warner 1994 Stock Option Plan, the Time Warner
Corporate Group Stock Incentive Plan, the Time Warner
Cable Television Group Stock Incentive Plan, the Time
Warner Filmed Entertainment Group Stock Incentive Plan,
the Time Warner Music Group Stock Incentive Plan, the
Time Warner Programming Group Stock Incentive Plan, the
Time Warner Publishing Group Stock Incentive Plan and
the Time Warner 1988 Restricted Stock Plan for
Non-Employee
<PAGE>
36
Directors (the "Parent Stock Plans" and the options
granted thereunder being the "Parent Options"), (vi)
4,000,000 shares of Parent Preferred Stock were
reserved for issuance in connection with the rights to
purchase shares of Parent Common Stock pursuant to the
Rights Agreement dated as of January 20, 1994 (the
"Rights Agreement"), between Parent and Chemical Bank,
as Rights Agent, and (vii) additional shares of capital
stock of Parent were reserved for issuance as described
in Section 3.02(c) of the letter from Parent, dated
September 22, 1995, addressed to the Company (the
"Parent Disclosure Letter"). Except as set forth above,
at the close of business on August 31, 1995, no shares
of capital stock or other voting securities of Parent
were issued, reserved for issuance or outstanding. All
shares of Holdco Capital Stock which 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.
Except as set forth above or in Section 3.02(c) of the
Parent Disclosure Letter, as of September 22, 1995,
there were not any options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings
of any kind to which Parent or any Parent Subsidiary is
a party or by which any of them is bound relating to
the issued or unissued capital stock of Parent or any
Parent Subsidiary, or obligating Parent or any Parent
Subsidiary to issue, transfer, grant or sell, or cause
to be issued, transferred, granted or sold, additional
shares of capital stock or other voting securities of
Parent or any Material Parent Subsidiary or obligating
Parent or any Parent Subsidiary to issue, grant, extend
or enter into any such option, warrant, call, right,
commitment, agreement, arrangement or undertaking.
Except as set forth in Section 3.02(c) of the Parent
Disclosure Letter, as of September 22, 1995, there were
not any outstanding contractual obligations of Parent
or any Parent Subsidiary to repurchase, redeem or
otherwise acquire any shares of capital stock of Parent
or any Material Parent Subsidiary or make any material
investment (in the form of a loan, capital contribution
or otherwise) in any person (other than a wholly owned
Parent Subsidiary). The authorized capital stock of
Holdco consists of 100 shares of common stock, par
value $1.00 per share, all of which have been validly
issued, are fully paid and nonassessable and are owned
by Parent free and clear of any Lien. The authorized
capital stock of Delaware Sub consists of 1,000 shares
<PAGE>
37
of Common Stock, par value $1.00 per share, all of
which have been validly issued, are fully paid and
nonassessable and on the date of execution of this
Agreement are, and will on the Closing Date be, owned
by Holdco free and clear of any Lien. The authorized
capital stock of Georgia Sub on the date of execution
of this Agreement consists, and on the Closing Date
will consist, of 1,000 shares of Common Stock, par
value $1.00 per share, all of which on the date of
execution of this Agreement have been, and on the
Closing Date will have been, validly issued and on the
date of execution of this Agreement are, and on the
Closing Date will be, fully paid and nonassessable and
owned by Holdco free and clear of any Lien.
(d) Authority; Noncontravention. Parent, Holdco,
Delaware Sub and Georgia Sub have all requisite
corporate power and authority to enter into this
Agreement and, subject to the Parent Stockholder
Approvals (as defined in Section 3.02(i)), to
consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement
by Parent, Holdco, Delaware Sub and Georgia Sub and the
consummation by Parent, Holdco, Delaware Sub and
Georgia Sub of the transactions contemplated by this
Agreement have been duly authorized by all necessary
corporate action on the part of Parent, Holdco,
Delaware Sub and Georgia Sub, subject to the Parent
Stockholder Approvals. This Agreement has been duly
executed and delivered by Parent, Holdco, Delaware Sub
and Georgia Sub and constitutes a valid and binding
obligation of each such party, enforceable against each
such party in accordance with its terms. Except as set
forth in Section 3.02(d) of the Parent Disclosure
Letter, the execution and delivery of this Agreement by
Parent, Holdco, Delaware Sub and Georgia Sub do not,
and the consummation of the transactions contemplated
by this Agreement and compliance with the provisions of
this Agreement 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 loss of a material benefit under, or
result in the creation of any Lien upon any of the
properties or assets of Parent, Holdco, Delaware Sub,
Georgia Sub or any other Parent Subsidiary under, (i)
the Restated Certificate of Incorporation or by-laws of
Parent or the certificate of incorporation
<PAGE>
38
or by-laws or comparable organizational documents of
Holdco, Delaware Sub, Georgia Sub or any other Parent
Subsidiary, (ii) any loan or credit agreement, note,
bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license
applicable to Parent, Holdco, Delaware Sub, Georgia Sub
or any other Parent Subsidiary or their respective
properties or assets or (iii) subject to the
governmental filings and other matters referred to in
the following sentence, any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable
to Parent, Holdco, Delaware Sub, Georgia Sub or any
other Parent Subsidiary or their respective properties
or assets, 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 Parent, Holdco, Delaware Sub or Georgia Sub
from performing their respective 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
Governmental Entity is required by or with respect to
Parent, Holdco, Delaware Sub, Georgia Sub or any other
Parent Subsidiary in connection with the execution and
delivery of this Agreement by Parent and Sub or the
consummation by Parent, Holdco, Delaware Sub or Georgia
Sub, as the case may be, of any of the transactions
contemplated by this Agreement, except for (i) the
filing of a premerger notification and report form by
Parent under the HSR Act and possible filings of
premerger notification and report forms by shareholders
of the Company under the HSR Act with respect to the
acquisition of shares of Holdco Common Stock pursuant
to the Mergers, (ii) the filing with the SEC of the
Proxy Statement and the Form S-4 and such reports under
Sections 13 and 16(a) of the Exchange Act as may be
required in connection with this Agreement and the
transactions contemplated by this Agreement and the
receipt of all state securities or "blue sky"
authorizations necessary to issue Holdco Capital Stock
as contemplated by this Agreement, (iii) the filing of
the Certificates of Merger with the Delaware Secretary
of State and the Georgia Secretary of State and
appropriate documents with the relevant authorities of
other states in which the Company is qualified to do
<PAGE>
39
business, (iv) such filings with, and orders of, the
FCC under the Communications Act and the FCC's rules
and regulations as may be required in connection with
this Agreement and the transactions contemplated by
this Agreement, (v) such filings with, and orders of,
cable franchising authorities as may be required in
connection with this Agreement and the transactions
contemplated by this Agreement, (vi) the filing of a
Restated Certificate of Incorporation for Holdco (as
contemplated by Section 4.01(b)) with the Delaware
Secretary of State, (vii) such filings by Holdco as may
be necessary for Holdco to qualify to do business in
appropriate jurisdictions and (viii) such other
consents, approvals, orders, authorizations,
registrations, declarations and filings (x) as may be
required under the laws of any foreign country in which
Parent or any of the Parent Subsidiaries conducts any
business or owns any property or assets or (y) 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 or
otherwise prevent Parent, Holdco, Delaware Sub or
Georgia Sub from performing their respective
obligations under this Agreement in any material
respect or have, individually or in the aggregate, a
Parent Material Adverse Effect.
(e) SEC Documents; Undisclosed Liabilities. Parent
has filed all required reports, schedules, forms,
statements and other documents with the SEC since
December 31, 1992 (the "Parent SEC Documents"; such
term, when used with respect to such documents filed
prior to September 22, 1995, shall mean such documents
as amended prior to September 22, 1995). As of their
respective dates, the Parent SEC Documents complied in
all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be,
and the rules and regulations of the SEC promulgated
thereunder applicable to such Parent SEC Documents, and
none of the Parent SEC Documents contained any untrue
statement of a material fact or omitted to state a
material fact required to be stated therein or
necessary in order to make the statements therein, in
light of the circumstances under which they were made,
not misleading, except to the extent such statements
have been modified or superseded by a later Filed
Parent SEC Document (as defined in Section 3.02(g)).
Except to the extent that
<PAGE>
40
information contained in any Parent SEC Document has
been revised or superseded by a later filed Parent SEC
Document, neither Parent's Annual Report on Form 10-K
for the year ended December 31, 1994, nor any Parent
SEC Document filed after December 31, 1994, contains
any untrue statement of a material fact or omits to
state any material fact required to be stated therein
or necessary in order to make the statements therein,
in light of the circumstances under which they were
made, not misleading. The consolidated financial
statements of Parent included in the Parent SEC
Documents comply as to form in all material respects
with applicable accounting requirements and the
published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with
generally accepted accounting principles (except, in
the case of unaudited statements, as permitted by Form
10-Q of the SEC) applied on a consistent basis during
the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated
financial position of Parent and the consolidated
Parent Subsidiaries as of the dates thereof and the
consoli- dated results of their operations and cash
flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit
adjustments). Except as set forth in the Filed Parent
SEC Documents, neither Parent nor any Parent Subsidiary
has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise)
required by generally accepted accounting principles to
be set forth on a consolidated balance sheet of Parent
and the consolidated Parent Subsidiaries or in the
notes thereto and which, individually or in the
aggregate, could reasonably be expected to have a
Parent Material Adverse Effect.
(f) Information Supplied. None of the information
supplied or to be supplied by Parent, Holdco, Delaware
Sub or Georgia Sub for inclusion or incorporation by
reference in (i) the Form S-4 will, at the time the
Form S-4 is filed with the SEC, at any time it is
amended or supplemented or at the time it becomes
effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any
material fact required to be stated therein or
necessary to make the statements therein not
misleading, or (ii) the Proxy Statement will, at the
date the Proxy Statement is first mailed to the
Com-
<PAGE>
41
pany's shareholders or Parent's stockholders or at the
time of the Shareholders Meeting or the Parent's
Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact
required to be stated therein or necessary in order to
make the statements therein, in light of the
circumstances under which they are made, not
misleading. The Form S-4 and the Proxy Statement will
comply as to form in all material respects with the
requirements of the Securities Act and the Exchange
Act, as applicable, and the rules and regulations
promulgated thereunder, except that no representation
or warranty is made by Parent with respect to
statements made or incorporated by reference therein
based on information supplied by the Company
specifically for inclusion or incorporation by
reference in the Form S-4 or the Proxy Statement.
(g) Absence of Certain Changes or Events. Except
as disclosed in the Parent SEC Documents filed and
publicly available prior to September 22, 1995 (the
"Filed Parent SEC Documents"), or in Section 3.02(g) of
the Parent Disclosure Letter, since the date of the
most recent audited financial statements included in
the Filed Parent SEC Documents, Parent has conducted
its business only in the ordinary course, and there has
not been:
(i) any change or effect (or any development
that, insofar as can reasonably be foreseen, is
likely to result in a change or effect) which,
individually or in the aggregate, has had or is
likely to have, a Parent Material Adverse Effect;
(ii) except for regular quarterly dividends
not in excess of $0.09 per share of Parent Common
Stock and the stated or required amount of
dividends on any series of Parent Preferred Stock,
in each case with customary record and payment
dates, any declaration, setting aside or payment
of any dividend or other distribution (whether in
cash, stock or property) with respect to the
Parent Common Stock or any series of Parent
Preferred Stock;
(iii) any split, combination or
reclassification of the Parent Common Stock or any
issuance or, except as contemplated by this
<PAGE>
42
Agreement, the authorization of any issuance
of any other securities in exchange or in
substitution for shares of the Parent Common
Stock;
(iv) any damage, destruction or loss, whether
or not covered by insurance, that has had or is
likely to have a Parent Material Adverse Effect;
or
(v) any change in accounting methods,
principles or practices by Parent or any Material
Parent Subsidiary materially affecting its assets,
liabilities or business, except insofar as may
have been required by a change in generally
accepted accounting principles.
(h) Litigation. Except as disclosed in the Filed
Parent SEC Documents or in Section 3.02(h) of the
Parent Disclosure Letter, there is no suit, action or
proceeding (including any proceeding by or before the
FCC) pending or, to the knowledge of Parent, threatened
against or affecting Parent or any of the Parent
Subsidiaries (and 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
(i) have a Parent Material Adverse Effect or (ii)
prevent Parent, Holdco, Delaware Sub or Georgia Sub
from performing their respective obligations under this
Agreement in any material respect, and there is not any
judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against
Parent or any of the Parent Subsidiaries having, or
which, insofar as reasonably can be foreseen, in the
future would have, any Parent Material Adverse Effect.
As of September 22, 1995, except as disclosed in the
Filed Parent SEC Documents or in Section 3.02(h) of the
Parent Disclosure Letter, there was no suit, action or
proceeding pending, or, to the knowledge of Parent,
threatened, against Parent or any of the Parent
Subsidiaries (and 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 the Mergers or any of the transactions
contemplated by this Agreement.
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43
(i) Voting Requirements. The adoption of this
Agreement by the holders of a majority in voting power
of the outstanding Parent Common Stock and the
outstanding voting Parent Preferred Stock, voting
together as a single class (the "Parent Stockholder
Approvals"), is the only vote of the holders of any
class or series of Parent's capital stock necessary to
approve this Agreement and the transactions
contemplated by this Agreement.
(j) Brokers. No broker, investment banker,
financial advisor or other person, other than Morgan
Stanley & Co. Incorporated and Bear, Stearns & Co.
Incorporated, the fees and expenses of which will be
paid by 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 Parent or any Parent Subsidiary.
(k) Taxes. (i) Parent and each Parent Subsidiary
have timely filed (or have had timely filed on their
behalf) or will file or cause to be timely filed, all
material Tax Returns required by applicable law to be
filed by any of them prior to or as of the Effective
Time of the Mergers. All such Tax Returns are, or will
be at the time of filing, true, complete and correct in
all material respects.
(ii) Parent and each Parent Subsidiary 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 Effective Time of the Mergers, an
adequate accrual for the payment of, all material Taxes
due with respect to any period ending prior to or as of
the Effective Time of the Mergers.
(l) Compliance with Laws. Neither Parent nor any
of the Parent Subsidiaries has violated or failed to
comply with any statute, law, ordinance, regulation,
rule, judgment, decree or order of any Governmental
Entity applicable to its business or operations
(including the Communications Act and the FCC's rules
and regulations), except for violations and failures to
comply that could not, individually or in the
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44
aggregate, reasonably be expected to result in a Parent
Material Adverse Effect.
(m) ERISA Compliance. Except as described in the
Parent Filed SEC Documents or as would not have a
Parent Material Adverse Effect, (i) all employee
benefit plans or programs maintained for the benefit of
the current or former employees or directors of Parent
or any Parent Subsidiary that are sponsored, maintained
or contributed to by Parent or any Parent Subsidiary,
or with respect to which Parent or any Parent
Subsidiary has any liability, including any such plan
that is an "employee benefit plan" as defined in
Section 3(3) of ERISA, are in compliance with all
applicable requirements of law, including ERISA and the
Code, and (ii) neither Parent nor any Parent Subsidiary
has 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 Parent are any such
liabilities or obligations expected to be incurred.
(n) Operations of Holdco, Delaware Sub and Georgia
Sub. Holdco does not, and will not prior to the
Closing, engage in any significant business activities
or conduct any significant operations other than in
connection with the transactions contemplated by this
Agreement. Each of Delaware Sub and Georgia Sub was
formed solely for the purpose of engaging in the
transactions contemplated by this Agreement and has not
engaged in any business activities or conducted any
operations other than in connection with the
transactions contemplated by this Agreement.
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business. (a) Conduct of
Business by the Company. During the period from September
22, 1995, to the Effective Time of the Mergers, the Company
shall, and shall cause the Company Subsidiaries to, carry on
their respective businesses in the usual, regular and
ordinary course in substantially the same manner as
heretofore conducted and in compliance in all material
respects with all applicable laws and regulations (including
the Communications Act and the FCC's rules and regulations)
<PAGE>
45
and, to the extent consistent therewith, use commercially
reasonable efforts to preserve intact their current business
organizations, keep available the services of their current
officers and employees and preserve their relationships with
customers, suppliers, licensors, licensees, distributors and
others having business dealings with them. Without limiting
the generality of the foregoing, during the period from
September 22, 1995, to the Effective Time of the Mergers,
except for Approved Matters (as defined below) the Company
shall not, and shall not permit any of the Company
Subsidiaries to:
(i) (x) declare, set aside or pay any dividends
on, or make any other distributions in respect of, any
of its capital stock, other than dividends and
distributions by a direct or indirect wholly owned
Company Subsidiary to its parent and regular quarterly
cash dividends on the Company Capital Stock in an
amount per share per quarter for each class of Company
Capital Stock not in excess of the amount paid for the
quarter immediately preceding September 22, 1995, (y)
split, combine or reclassify any of its capital stock
or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution
for shares of its capital stock, or (z) purchase,
redeem or otherwise acquire any shares of capital stock
of the Company or any of the Company Subsidiaries or
any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities
(other than, in the case of this clause (z), for the
redemption of New Line Debentures following a call by
the Company for redemption of all the New Line
Debentures);
(ii) issue, deliver, sell, pledge or otherwise
encumber any shares of its capital stock, any other
voting securities or any securities convertible into,
or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities
(other than (x) the issuance of shares of Class B
Common Stock upon the exercise of Company Stock Options
outstanding on September 22, 1995, and in accordance
with their then terms, (y) the issuance of shares of
Class B Common Stock reserved for issuance as described
in clauses (B)(I) and (B)(III) of Section 3.01(c) and
(z) the grant of Company Stock Options permitted under
Section 3.01(c)(i) and the issuance of shares of Class
B Common Stock upon the exercise thereof);
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46
(iii) amend its articles of incorporation, by-laws
or other comparable organizational documents;
(iv) acquire or agree to acquire (x) by merging or
consolidating with, or by purchasing a substantial
portion of the assets of, or by any other manner, any
business or any corporation, partnership, limited
liability company, joint venture, association or other
business organization or division thereof or (y) any
assets that are material, individually or in the
aggregate, to the Company and the Company Subsidiaries
taken as a whole;
(v) sell, lease, license, mortgage or otherwise
encumber or subject to any Lien or otherwise dispose of
any of its properties or assets, other than
encumbrances and Liens that are incurred in the
ordinary course of business;
(vi) (y) incur any indebtedness for borrowed money
or guarantee any such indebtedness of another person,
issue or sell any debt securities or warrants or other
rights to acquire any debt securities of the Company or
any of the Company Subsidiaries, guarantee any debt
securities of another person, enter into any "keep
well" or other agreement to maintain any financial
statement condition of another person or enter into any
arrangement having the economic effect of any of the
foregoing, except for short-term borrowings incurred in
the ordinary course of business consistent with past
practice, or (z) make any loans, advances (other than
advances to employees in the ordinary course of
business consistent with prior practice) or capital
contributions to, or investments in, any other person,
other than to the Company or any direct or indirect
wholly owned Company Subsidiary;
(vii) make or agree to make any new capital
expenditure or expenditures;
(viii) make any material Tax election or settle or
compromise any material Tax liability or refund;
(ix) except in the ordinary course of business
pursuant to employment agreements or Benefit Plans
existing on September 22, 1995, or as required by
applicable laws, (A) increase the compensation payable
or to become payable to its executive officers or
<PAGE>
47
employees, (B) grant any severance or termination pay
to, or enter into any employment or severance agreement
with, any director, executive officer or employee of
the Company or any Company Subsidiary or (C) establish,
adopt, enter into or amend in any material respect or
take action to accelerate any rights or benefits under
any collective bargaining agreement (other than any
collective bargaining agreement for the film production
operations of the Company and the Company Subsidiaries)
or any stock option, employee benefit plan, agreement
or policy except as contemplated by this Agreement;
provided, however, that this clause (ix) shall not
prohibit the Company or any Company Subsidiary from (1)
entering into any employment agreement with any
employee (other than any executive officer of the
Company) (x) whose current employment agreement is
expiring, (y) contemporaneously with the hiring of such
employee or (z) contemporaneously with the promotion of
such employee, if, in each case, such employment
agreement does not provide for salary in excess of
$200,000 in any year, does not have a term in excess of
five years and is entered into in the ordinary course
of business consistent with prior practice, in the case
of clause (x) above, such new employment agreement is
substantially similar to the expiring agreement and, in
the case of clause (y) or (z) above, such employment
agreement is substantially similar to current
employment agreements for employees of the Company and
the Company Subsidiaries at the applicable level, (2)
entering into talent agreements in the ordinary course
of its film production operations consistent with prior
practice, or (3) making any severance payment,
including any payment in settlement of litigation
arising out of or resulting from the cessation of
employment, to any employee or former employee (other
than any executive officer or former executive officer
of the Company) in excess of the amounts otherwise
permitted under this clause (ix) if the excess amount
of such payment does not, in any case, exceed $50,000;
(x) except as contemplated by Section 2.02(e), and
without limiting the generality of clause (ix) above,
make any amendment to any Company Stock Plan or New
Line Plan as a result of this Agreement or in
contemplation of the Mergers;
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48
(xi) terminate or amend on terms less favorable to
the Company any agreement filed as an exhibit to any
SEC Document or any Programming Agreement; or
(xii) authorize any of, or commit or agree to take
any of, the foregoing actions.
For purposes of this Agreement, "Approved Matters"
means matters that are (x) expressly included in a Master
Budget contemplated by Section 3 of Article XII of the
By-Laws of the Company as in effect on September 22, 1995,
or as approved by Parent after September 22, 1995, and prior
to its approval by the Board of Directors of the Company or
(y) otherwise approved in writing by Parent. Each matter
subject to Section 3 of Article XII of the By-laws of the
Company shall first be submitted to Parent for its approval
and shall only thereafter be submitted to the Board of
Directors of the Company to the extent Parent shall have
approved such matter.
(b) Certificate of Incorporation and By-Laws of
Holdco. Simultaneously with or prior to the Effective Time
of the Mergers, Parent shall cause the certificate of
incorporation of Holdco to be amended to read in the form of
the Restated Certificate of Incorporation of Parent, and
shall cause the By-laws of Holdco to be amended to read in
the form of the By-laws of Parent, in each case as in effect
immediately prior to the Effective Time of the Mergers,
together with such changes thereto as Parent and the Company
may from time to time agree; provided, however, that changes
reasonably necessary to give effect to the creation of the
Holdco LMC Class Stock and the Holdco LMCN-V Stock in
accordance with the LMC Agreement, to increase the
authorized Holdco Capital Stock and to reduce the par value
per share of Holdco Capital Stock shall not require the
agreement of the Company. During the period from September
22, 1995, to the Effective Time of the Mergers, except as
contemplated by this Agreement, Parent shall not amend its
Restated Certificate of Incorporation or By-laws in any
manner that would be materially adverse to the holders of
Parent Common Stock.
(c) Other Actions. The Company and Parent shall
not, and shall not permit any of their respective
subsidiaries to, take any action that would, or that could
reasonably be expected to, result in (i) any of the
representations and warranties of such party set forth in
this Agreement that are qualified as to materiality becoming
<PAGE>
49
untrue, (ii) any of such representations and warranties that
are not so qualified becoming untrue in any material respect
or (iii) any of the conditions to the Mergers set forth in
Article VI not being satisfied.
(d) Advice of Changes. The Company and 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 Company Material Adverse Effect
or a Parent Material Adverse Effect, as applicable.
SECTION 4.02. No Solicitation. (a) The Company
shall not, nor shall it permit any of the Company
Subsidiaries to, nor shall it authorize or permit any
officer, director or employee of or any investment banker,
attorney or other advisor or representative of, the Company
or any Company Subsidiary to, (i) solicit, initiate or
encourage the submission of any takeover proposal (as
defined below), (ii) enter into any agreement with respect
to any takeover proposal or (iii) participate in any
discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other
action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to
lead to, any takeover proposal; provided, however, that
nothing contained in this Agreement shall prevent the
Company or its Board of Directors from (A) furnishing
nonpublic information to, or entering into discussions or
negotiations with, any person in connection with an
unsolicited bona fide written takeover proposal to the
Company or its shareholders, if and only to the extent that
(1) the Board of Directors of the Company determines in good
faith based on written advice of its outside legal counsel
that such action is necessary for the Board of Directors of
the Company to comply with its fiduciary duties to
shareholders under applicable law and (2) prior to
furnishing such nonpublic information to, or entering into
discussions or negotiations with, such person, the Board of
Directors of the Company receives from such person or entity
an executed confidentiality agreement with terms no less
favorable to the Company than those contained in the
Confidentiality Agreement (as defined in Section 5.04), or
(B) complying with Rule 14e-2 promulgated under the Exchange
Act with regard to a takeover proposal. Without limiting the
foregoing, it is understood that any violation of the
restrictions set forth in the preceding sentence by any
executive officer of the Company or any of the Company
Subsidiaries or any investment banker, attorney or other
<PAGE>
50
advisor or representative of the Company or any of the
Company Subsidiaries, whether or not such person is
purporting to act on behalf of the Company or any of the
Company Subsidiaries or otherwise, shall be deemed to be a
breach of this Section 4.02(a) by the Company. For purposes
of this Agreement, "takeover proposal" means any proposal
for a merger, consolidation or other business combination
involving the Company or any of the Material Company
Subsidiaries or any proposal or offer to acquire in any
manner, directly or indirectly, more than 15% of any class
of voting securities of the Company or any of the Material
Company Subsidiaries, or assets representing a substantial
portion of the assets of the Company and the Company
Subsidiaries, taken as a whole, other than the transactions
contemplated by this Agreement. The Company shall
immediately cease and cause to be terminated any existing
activities, discussions or negotiations by the Company or
any of its officers, investment bankers, attorneys or other
advisors or representatives with any parties conducted
heretofore with respect to any of the foregoing.
(b) Subject to Section 7.01(e), neither the Board
of Directors of the Company nor any committee thereof shall
(i) withdraw or modify, or propose to withdraw or modify, in
a manner adverse to Parent, the adoption, approval or
recommendation by such Board of Directors or any such
committee of this Agreement or the TBS Merger or (ii)
approve or recommend, or propose to approve or recommend,
any takeover proposal.
(c) The Company promptly shall advise Parent
orally and in writing of any takeover proposal or any
inquiry with respect to or which could lead to any takeover
proposal and the identity of the person making any such
takeover proposal or inquiry. The Company shall keep Parent
promptly and fully informed in all material respects of the
status and details of any such takeover proposal or inquiry.
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of Form S-4 and the
Proxy Statement; Shareholders Meeting and Parent's
Stockholders Meeting. (a) As soon as practicable following
September 22, 1995, the Company and Parent shall prepare and
file with the SEC the Proxy Statement and Parent and Holdco
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51
shall prepare and file with the SEC the Form S-4, in which
the Proxy Statement shall be included as a prospectus. Each
of the Company, Parent and Holdco shall use its best efforts
to have the Form S-4 declared effective under the Securities
Act as promptly as practicable after such filing. Each of
the Company and Parent shall use its best efforts to cause
the Proxy Statement to be mailed to the Company's
shareholders or Parent's stockholders, respectively, as
promptly as practicable after the Form S-4 is declared
effective under the Securities Act. Holdco shall take any
action (other than qualifying to do business in any
jurisdiction in which Parent is not now so qualified)
required to be taken under any applicable state securities
or "blue sky" laws in connection with the issuance of Holdco
Capital Stock pursuant to the Mergers, and the Company shall
furnish all information concerning the Company and the
holders of the Company Capital Stock and rights to acquire
Company Capital Stock pursuant to the Company Stock Plans or
the New Line Plans as may be reasonably requested in
connection with any such action.
(b) The Company shall, as soon as practicable,
duly call, give notice of, convene and hold a meeting of its
shareholders (the "Shareholders Meeting") for the purpose of
obtaining the Shareholder Approvals. Subject to Section
7.01(e), the Company shall, through its Board of Directors,
recommend to its shareholders approval of this Agreement and
the transactions contemplated by this Agreement. Without
limiting the generality of the foregoing, the Company agrees
that its obligations pursuant to the first sentence of this
Section 5.01(b) shall not be altered by the commencement,
public proposal, public disclosure or communication to the
Company of any takeover proposal. Parent shall vote or cause
to be voted all the shares of Company Capital Stock owned of
record by Parent or any Parent Subsidiary in favor of the
Shareholder Approvals.
(c) Parent shall, as soon as practicable, duly
call, give notice of, convene and hold a meeting of its
stockholders (the "Parent's Stockholders Meeting") for the
purpose of obtaining the Parent Stockholder Approvals.
Subject to any contrary fiduciary obligations, Parent shall,
through its Board of Directors, recommend to its
stockholders approval of the matters submitted to them for
such purpose.
SECTION 5.02. Letter of the Company's Accountants.
The Company shall use its best efforts to
<PAGE>
52
cause to be delivered to Parent and Holdco a letter of Price
Waterhouse LLP, the Company's independent public
accountants, dated a date within two business days before
the date on which the Form S-4 shall become effective and
addressed to Parent and Holdco, in form and substance
reasonably satisfactory to Parent and customary in scope and
substance for letters delivered by independent public
accountants in connection with registration statements
similar to the Form S-4.
SECTION 5.03. Letter of Parent's Accountants.
Parent shall use its best efforts to cause to be delivered
to the Company a letter of Ernst & Young LLP, Parent's
independent public accountants, and, with respect to persons
or assets acquired by Parent, one or more other independent
public accountants, dated a date within two business days
before the date on which the Form S-4 shall become effective
and addressed to the Company, in form and substance
reasonably satisfactory to the Company and customary in
scope and substance for letters delivered by independent
public accountants in connection with registration
statements similar to the Form S-4.
SECTION 5.04. Access to Information;
Confidentiality. Each of the Company and Parent shall, and
shall cause each of its respective subsidiaries to, afford
to the other party and to the officers, employees,
accountants, counsel, financial advisors and other
representatives of such other party, reasonable access
during normal business hours during the period prior to the
Effective Time of the Mergers to all their respective
properties, books, contracts, commitments, personnel and
records and, during such period, each of the Company and
Parent shall, and shall cause each of its respective
subsidiaries to, furnish promptly to the other party (a) a
copy of each report, schedule, registration statement and
other document filed by it during such period pursuant to
the requirements of Federal or state securities laws and (b)
all other information concerning its business, properties
and personnel as such other party may reasonably request.
Except as required by law, each of the Company and Parent
shall hold, and shall cause its respective officers,
employees, accountants, counsel, financial advisors and
other representatives and affiliates to hold, any nonpublic
information in confidence to the extent required by, and in
accordance with, the provisions of the letter dated August
26, 1995, between the Company and Parent (the
"Confidentiality Agreement").
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53
SECTION 5.05. Best Efforts; Notification. (a) Upon
the terms and subject to the conditions set forth in this
Agreement and, in the case of Parent, in the LMC Agreement,
each of the parties agrees to use its best efforts to take,
or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious
manner practicable, the Mergers and the other transactions
contemplated by this Agreement and the Voting Agreements,
including (i) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from
Governmental Entities and the making of all necessary
registrations and filings (including filings with
Governmental Entities, if any) and the taking of all
reasonable steps as may be necessary to obtain an approval
or waiver from, or to avoid an action or proceeding by, any
Governmental Entity, (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the
defending of any lawsuits or other legal proceedings,
whether judicial or administrative, challenging this
Agreement or the Voting Agreements or the consummation of
the transactions contemplated by this Agreement or the
Voting Agreements, including seeking to have any stay or
temporary restraining order entered by any court or other
Governmental Entity vacated or reversed, and (iv) the
execution and delivery of any additional instruments
necessary to consummate the transactions contemplated by,
and to fully carry out the purposes of, this Agreement;
provided, however, that a party shall not be obligated to
take any action pursuant to the foregoing if the taking of
such action or the obtaining of any waiver, consent,
approval or exemption is reasonably likely (x) to be
materially burdensome to such party and its subsidiaries
taken as a whole or to impact in a materially adverse manner
the economic or business benefits of the transactions
contemplated by this Agreement, the Voting Agreements and
the Investors' Agreements referred to in Section 6.02(f) so
as to render inadvisable the consummation of the Mergers or
(y) to result in the imposition of a condition or
restriction of the type referred to in clause (ii), (iii) or
(iv) of Section 6.02(e). In connection with and without
limiting the foregoing, the Company and its Board of
Directors shall (i) take all reasonable action necessary so
that no state takeover statute or similar statute or
regulation is or becomes applicable to the TBS Merger, this
Agreement or any of the other transactions contemplated by
this Agreement or the Voting Agreements and (ii) if any
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54
state takeover statute or similar statute or regulation
becomes applicable to the TBS Merger, this Agreement or any
other transaction contemplated by this Agreement or any
Voting Agreement, take all action necessary so that the TBS
Merger and the other transactions contemplated by this
Agreement and the Voting Agreements may be consummated as
promptly as practicable on the terms contemplated by this
Agreement and the Voting Agreements and otherwise to
minimize the effect of such statute or regulation on the TBS
Merger and the other transactions contemplated by this
Agreement and the Voting Agreements.
(b) The Company shall give prompt notice to
Parent, and Parent shall give prompt notice to the Company,
of (i) any representation or warranty made by it contained
in this Agreement that is qualified as to materiality
becoming untrue or inaccurate in any respect or any such
representation or warranty that is not so qualified becoming
untrue or inaccurate in any material respect or (ii) the
failure by it to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied
with or satisfied by it under this Agreement; provided,
however, that no such notification shall affect the
representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties
under this Agreement.
SECTION 5.06. Board Authority. The Company
represents and warrants to Parent that (a) on or prior to
September 22, 1995, the Board of Directors of the Company
has adopted resolutions providing that (i) any action to be
subsequently taken by the Board of Directors of the Company
to implement the transactions contemplated by this Agreement
(excluding any amendment to this Agreement or to the other
agreements entered into in connection with the Mergers to
which the Company is a party) shall be authorized if
approved by a majority vote of the directors of the Company
(other than any directors that are interested directors
under Section 3 of Article XII of the Company's By-laws)
present and voting at a meeting at which a quorum is
present, without regard to class, and (ii) any action to be
subsequently taken by the Company to implement the
transactions contemplated by this Agreement (excluding any
amendment to this Agreement or to the other agreements
entered into in connection with the Mergers to which the
Company is a party) that otherwise requires the approval of
the Board of Directors of the Company shall be authorized if
approved by a majority vote of the directors of the Company
<PAGE>
55
(other than any directors that are interested directors
under Section 3 of Article XII of the Company's By-laws)
present and voting at a meeting at which a quorum is
present, without regard to class, and (b) such resolutions
were validly adopted, are in full force and effect, do not
conflict with any provision of the Company's Articles of
Incorporation or By-laws or any contract, agreement or other
instrument to which the Company is a party and are effective
in accordance with their terms. The Board of Directors of
the Company shall not amend, rescind or repeal any of such
resolutions. The Company shall not enter into any contract,
agreement or other instrument, or adopt any resolution,
that, directly or indirectly, would (A) result in any action
to be taken by the Board of Directors of the Company to
implement the transactions contemplated by this Agreement
(excluding any amendment to this Agreement or to the other
agreements entered into in connection with the Mergers to
which the Company is a party) requiring any approval other
than the approval by the majority vote of all the directors
of the Company (other than any directors that are interested
directors under Section 3 of Article XII of the Company's
By-laws) present and voting at a meeting at which a quorum
is present, without regard to class, or (B) result in any
action to be taken by the Company to implement the
transactions contemplated by this Agreement requiring the
approval (if not required as of September 22, 1995) of the
directors of the Company or any group or committee thereof.
The Company represents and warrants to Parent that neither
the Company nor its Board of Directors was subject to any
such contract, agreement or other instrument as of
September 22, 1995.
SECTION 5.07. Public Announcements. Parent,
Holdco, Delaware Sub and Georgia Sub, on the one hand, and
the Company, on the other hand, shall 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, including the Mergers, 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.
SECTION 5.08. Benefit Plans. (a) Maintenance of
Benefits. For a period of two years after the Effective Time
of the Mergers, Holdco shall (i) either (A) maintain or
<PAGE>
56
cause the TBS Surviving Corporation (or in the case of a
transfer of all or substantially all the assets and business
of the TBS Surviving Corporation, its successors or assigns)
to maintain the Benefit Plans (other than medical plans) at
the benefit levels in effect on September 22, 1995 or (B)
provide or cause the TBS Surviving Corporation (or, in such
case, its successors or assigns) to provide benefits to
employees of the Company and the Company Subsidiaries that
are not materially less favorable in the aggregate to such
employees than those in effect on September 22, 1995 and
(ii) provide or cause to be provided medical benefits to
employees of the Company and the Company Subsidiaries that
are substantially equivalent to those provided to similarly
situated employees of the TW Surviving Corporation.
(b) Service. With respect to any "employee benefit
plan", as defined in Section 3(3) of ERISA, maintained by
Parent, Holdco or any other Parent Subsidiary (including any
severance plan), for purposes of determining eligibility to
participate, vesting, entitlement to benefits, benefit
accrual (but in the case of any "employee pension benefit
plan", as defined in Section 3(2) of ERISA, solely to the
extent necessary to comply with Section 5.08(a)) and in all
other respects where length of service is relevant, service
with the Company or any Company Subsidiary shall be treated
as service with Parent, Holdco or the other Parent
Subsidiaries; provided, however, that such service need not
be recognized to the extent that such recognition would
result in any duplication of benefits.
(c) Third Party Beneficiaries. This Section 5.08
is intended to be for the benefit of and shall be
enforceable by each person who is an employee of the Company
or any Company Subsidiary as of the Effective Time of the
Mergers (but only with respect to those provisions
applicable to such employee), and his heirs and personal
representatives and, to the extent set forth above, shall be
binding on all successors and assigns of Parent, Holdco, the
other Parent Subsidiaries, the Company and the Company
Subsidiaries. To the extent that any provision of this
Section 5.08 shall be reflected in a plan or arrangement
subject to ERISA, the exclusive remedy of any employee
referred to in the preceding sentence with respect to such
provisions or request for a related benefit provided by such
plan or arrangement shall be the claims procedure under such
plan or arrangement.
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57
SECTION 5.09. Indemnification. Parent, Holdco and
Georgia Sub agree that all rights to indemnification for
acts or omissions occurring prior to the Effective Time of
the Mergers existing as of September 22, 1995, in favor of
the current or former directors or officers of the Company
as provided in its Restated Articles of Incorporation or
By-laws shall survive the TBS Merger and shall continue in
full force and effect in accordance with their terms from
the Effective Time of the Mergers until the expiration of
the applicable statute of limitations with respect to any
claims against the current or former directors or officers
of the Company arising out of such acts or omissions. Holdco
shall cause to be maintained for a period of not less than
six years from the Effective Time of the Mergers the
Company's directors' and officers' insurance and
indemnification policy in effect as of September 22, 1995,
to the extent that it provides coverage for events occurring
prior to the Effective Time of the Mergers (the "D&O
Insurance") for all persons who are directors and officers
of the Company who are covered persons under the Company's
D&O insurance policies in effect on September 22, 1995, so
long as the annual premium therefor would not be in excess
of 150% of the last annual premium paid prior to September
22, 1995 (the "Maximum Premium"). If the existing D&O
Insurance expires, is terminated or canceled during such
six-year period, Holdco shall use all reasonable efforts to
cause to be obtained as much D&O Insurance as can be
obtained for the remainder of such period for an annualized
premium not in excess of the Maximum Premium, on terms and
conditions no less advantageous to the covered persons than
the existing D&O Insurance. The Company represents to
Parent that the Maximum Premium is $947,602.
SECTION 5.10. Fees and Expenses. Except as
provided in Sections 5.15, 7.02(a), 7.02(b) and 7.02(c), all
fees and expenses incurred in connection with the Mergers,
this Agreement and the transactions contemplated by this
Agreement shall be paid by the party incurring such fees or
expenses, whether or not the Mergers are consummated, except
that expenses incurred in connection with printing and
mailing the Proxy Statement and the Form S-4 shall be shared
equally by Parent and the Company.
SECTION 5.11. Affiliates. Prior to the Closing
Date, the Company shall deliver to each of Parent and Holdco
a letter identifying all persons who are, at the time this
Agreement is submitted for approval to the shareholders of
the Company, "affiliates" of the Company for purposes of
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58
Rule 145 under the Securities Act. The Company shall use its
best efforts to cause each such person, and Parent shall use
its best efforts to cause each of its "affiliates", to
deliver to Holdco on or prior to the Closing Date a written
agreement substantially in the form attached as Exhibit A.
SECTION 5.12. Stock Exchange Listing. Parent shall
use its best efforts to cause the shares of Holdco Common
Stock to be issued in the Mergers and pursuant to the
Company Stock Options, the New Line Options, the notes
referred to in Section 3.01(c)(i)(B)(I) and the other
securities referred to in Section 3.01(c)(i)(B)(III) to be
approved for listing on the New York Stock Exchange (the
"NYSE"), subject to official notice of issuance, prior to
the Closing Date.
SECTION 5.13. Execution of the Registration Rights
Agreement. Holdco shall execute and deliver to the other
parties thereto the Registration Rights Agreement in the
form of Exhibit B (the "Registration Rights Agreement") at
or prior to the Closing.
SECTION 5.14. Tax Treatment. Each of Parent,
Holdco and the Company shall use its reasonable best efforts
to cause the Mergers to qualify as exchanges governed by
Section 351 of the Code and to obtain the opinions of
counsel referred to in Sections 6.02(d) and 6.03(d).
SECTION 5.15. Transfer and Real Property Transfer
Gains Taxes. Holdco shall be responsible for any
liabilities, without deduction or withholding from any
amount payable to the holders of Parent Capital Stock or
Company Capital Stock, 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 become payable
in connection with the transactions contemplated by this
Agreement, on behalf of the holders of Parent Capital Stock
or Company Capital Stock. The Company and Holdco shall
cooperate in complying with the requirements of such Taxes.
Holders of Parent Capital Stock or Company Capital Stock
shall be bound by the values and allocations established by
Holdco and the Company on any Tax Returns relating to any
such Taxes.
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59
SECTION 5.16. Material Transactions by Parent.
Parent shall promptly notify the Company if, after September
22, 1995, and prior to the Effective Time of the Mergers,
Parent or any Parent Subsidiary enters into a definitive
agreement providing for the implementation of a Material
Transaction (as defined below). In such event, the Board of
Directors of the Company may request the Company's financial
advisor, CS First Boston Corporation, to deliver a written
opinion, substantially in the same form as the opinion
referred to in Section 3.01(m), that, after giving effect to
the Material Transaction, the consideration to be received
by the Company's shareholders in the TBS Merger is fair to
the Company's shareholders (other than Parent) from a
financial point of view. The Company and Parent shall
cooperate in furnishing such information to CS First Boston
Corporation as shall be reasonably required in order for
such opinion to be delivered as promptly as practicable, and
the Company shall use all commercially reasonable efforts to
cause such opinion or the written advice referred to in the
following sentence to be delivered within 15 days following
request therefor from the Company. In the event that CS
First Boston Corporation advises the Company and Parent in
writing that it is unable to deliver such opinion, the
Company shall be entitled to terminate this Agreement
pursuant to Section 7.01(f), if such termination is approved
by the Board of Directors of the Company. For purposes of
this Agreement, "Material Transaction" means (i) the
issuance by Parent of more than 90,000,000 "common stock
equivalents" (one common stock equivalent being equal to one
share of Parent Common Stock, including any share of Parent
Common Stock issuable by Parent upon conversion, exercise or
exchange of any other capital stock, warrant or other
security or right of Parent, any Parent Subsidiary or any
other controlled affiliate of Parent) in any single
transaction or in any series of individual transactions
(excluding (A) any transaction involving an exchange by
Parent on a one-for-one basis of newly issued shares of
Parent Series L Preferred Stock for outstanding shares of
Parent Series C Preferred Stock and (B) any transaction
contemplated by the elective merger letter agreement dated
as of September 22, 1995, between Parent and LMC, if, in the
case of this clause (B), such transaction is not reasonably
likely to (1) cause the satisfaction of any condition set
forth in Article VI to be delayed in any material respect or
(2) make the satisfaction of any such condition materially
more difficult or costly or otherwise more disadvantageous
to the Company, Parent or Holdco in any material respect),
each of which involves the issuance of more than 20,000,000
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60
common stock equivalents, whether or not such individual
transactions are related to each other, or (ii) the sale or
other disposition in any transaction or series of
transactions, whether or not related to each other, by
Parent or any Parent Subsidiary of any business or assets
with an aggregate fair market value in excess of
$3,500,000,000, excluding from such amount (x) sales of
inventory in the ordinary course of business consistent with
prior practice and (y) the sale or disposition, in a single
transaction or series of related transactions, of assets
with an aggregate fair market value of $500,000,000 or less.
The fair market value of any cable television systems
disposed of by Parent or any Parent Subsidiary in exchange
for cable television systems owned by third parties shall be
included in such amount only to the extent, if any, in
excess of the fair market value of the cable televisions
systems acquired in such exchange by Parent or any Parent
Subsidiary.
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's
Obligation To Effect the Mergers. The respective obligation
of each party to effect the Mergers is subject to the
satisfaction or waiver on or prior to the Closing Date of
the following conditions:
(a) Shareholder Approvals and Parent Stockholder
Approvals. The Company shall have obtained the
Shareholder Approvals and Parent shall have obtained
the Parent Stockholder Approvals.
(b) NYSE Listing. The shares of Holdco Common
Stock issuable pursuant to this Agreement shall have
been approved for listing on the NYSE, subject to
official notice of issuance.
(c) Antitrust. The waiting periods (and any exten-
sions thereof) applicable to the transactions
contemplated by this Agreement under the HSR Act shall
have been terminated or shall have expired. Any
consents, approvals and filings under any foreign
antitrust law the absence of which would prohibit the
consummation of the Mergers shall have been obtained or
made.
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61
(d) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction
or other order issued by any court of competent juris-
diction or other legal restraint or prohibition
preventing the consummation of either Merger or
preventing LMC or any of its subsidiaries from voting,
as contemplated by the LMC Agreement, shares of Company
Capital Stock that LMC or any such subsidiary is
otherwise entitled to vote, shall be in effect;
provided, however, that, subject to the proviso in
Section 5.05(a), each of the parties shall have used
its best 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.
(e) Form S-4. The Form S-4 shall have become
effective under the Securities Act and shall not be the
subject of any stop order or proceedings seeking a stop
order, and Holdco shall have received all state
securities or "blue sky" authorizations necessary to
issue the Holdco Capital Stock issuable pursuant to
this Agreement.
(f) FCC Approvals. All orders and approvals of the
FCC required in connection with the consummation of the
transactions contemplated by this Agreement shall have
been obtained without the imposition of any conditions
or restrictions of the type referred to in Section
6.02(e)(ii), (iii) or (iv) that are not acceptable to
Parent in its sole discretion.
(g) Certain Proceedings. Each action or proceeding
relating to the issue of whether the transactions
contemplated by this Agreement violate, or require the
consent of any person under, the TWE Partnership
Agreement shall either (i) have been dismissed with
prejudice or (ii) be subject to a final judgment that
remains unstayed for a period of 60 days; provided,
however, that this condition shall cease to be
effective on December 23, 1996.
(h) Voting Trust Approval. Either (A) Parent and
the Company shall be satisfied that, and the FCC shall
have confirmed that, the Voting Trust (as defined in
the LMC Agreement) will be effective to prevent the
beneficiaries thereunder from having an attributable
interest, within the meaning of the FCC's rules and
<PAGE>
62
regulations, in the assets and businesses of Holdco by
reason of the Holdco Capital Stock subject thereto or
(B) the parties to the LMC Agreement (other than Parent
and Time TBS Holdings, Inc.) shall have acknowledged
that the procedures set forth in Section 4.1 of the LMC
Agreement relating to exchange for nonvoting Holdco
securities are applicable.
SECTION 6.02. Conditions to Obligations of Parent,
Holdco, Delaware Sub and Georgia Sub. The obligations of
Parent, Holdco, Delaware Sub and Georgia Sub to effect the
Mergers are further subject to the satisfaction or waiver by
Parent on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. The repre-
sentations and warranties of the Company set forth in
this Agreement that are qualified as to materiality
shall be true and correct, and the representations and
warranties of the Company 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 Parent shall have received a certificate
signed on behalf of the Company by the Chief Executive
Officer (or the Executive Vice President) and the Chief
Financial Officer of the Company to such effect.
(b) Performance of Obligations of the Company. The
Company shall have performed in all material respects
all obligations required to be performed by it under
this Agreement at or prior to the Closing Date, and
Parent shall have received a certificate signed on
behalf of the Company by the Chief Executive Officer
(or the Executive Vice President) and the Chief
Financial Officer of the Company to such effect.
(c) Letters from Company Affiliates. Holdco shall
have received from each person named in the letter
referred to in Section 5.11 an executed copy of an
agreement substantially in the form of Exhibit A.
(d) Tax Opinion. Parent and Holdco shall have
received an opinion dated the Closing Date from
Cravath, Swaine & Moore, based upon certificates and
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63
letters, which letters and certificates are
substantially in the form set forth in Exhibit D and
dated the Closing Date, to the effect that the TW
Merger will qualify as an exchange governed by the
provisions of Section 351 of the Code.
(e) No Litigation. There shall not be pending any
suit, action or proceeding by any Governmental Entity
(i) challenging the acquisition by Parent or Holdco of
any shares of capital stock of the Company or the TBS
Surviving Corporation, seeking to restrain or prohibit
the consummation of the Mergers or any of the other
transactions contemplated by this Agreement or the LMC
Agreement or seeking to obtain from the Company,
Parent, Holdco or any of their respective subsidiaries
any damages that are material in relation to the
Company and its subsidiaries taken as a whole, (ii)
seeking to prohibit or limit the ownership or operation
by the Company, Parent, Holdco, any Material Company
Subsidiary or any Material Parent Subsidiary of any
material portion of the business or assets of the
Company, Parent, Holdco, any Material Company
Subsidiary or any Material Parent Subsidiary or to
compel the Company, Parent, Holdco, or any of their
respective subsidiaries to dispose of or hold separate
any material portion of the business or assets of the
Company, Parent, Holdco, any Material Company
Subsidiary or any Material Parent Subsidiary as a
result of the Mergers or any of the other transactions
contemplated by this Agreement, (iii) seeking to impose
limitations on the ability of Holdco to acquire or
hold, or exercise full rights of ownership of, any
shares of capital stock of the TW Surviving Corporation
or the TBS Surviving Corporation, including, without
limitation, the right to vote such capital stock on all
matters properly presented to the stockholders of the
TW Surviving Corporation or the TBS Surviving
Corporation, (iv) seeking to prohibit Parent or Holdco
from effectively controlling in any material respect
the business or operations of the Company or any
Material Company Subsidiary or (v) which otherwise is
reasonably likely to have a Company Material Adverse
Effect or a Parent Material Adverse Effect.
(f) Investors' Agreements. Each of the other
parties thereto shall have executed and delivered to
Holdco an Investors' Agreement in the form of Exhibit
C-1 or C-2, as applicable.
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64
(g) Cable Franchise Authorities. All necessary
orders and permits approving the transactions
contemplated by this Agreement from all applicable
cable franchising authorities having jurisdiction over
all or any portion of any material cable system
operated by Parent or any Parent Subsidiary shall have
been received.
(h) Dissenters' Rights. The Company shall not have
received pursuant to Section 1321(a)(1) of the Georgia
BCC written notices of intent to demand payment in
connection with the TBS Merger with respect to shares
of Company Capital Stock representing more than
28,000,000 Company Common Stock equivalents (calculated
on the basis that each share of Company Common Stock
represents one Company Common Stock equivalent and each
share of Class C Preferred Stock represents six Company
Common Stock equivalents).
SECTION 6.03. Conditions to Obligation of the
Company. The obligation of the Company to effect the TBS
Merger is further subject to the satisfaction or waiver by
the Company on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. The repre-
sentations and warranties of Parent set forth in this
Agreement that are qualified as to materiality shall be
true and correct, and the representations and
warranties of Parent 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
another date (in which case as of such date), and the
Company shall have received a certificate signed on
behalf of Parent by the chief executive officer (or any
executive vice president) and the chief financial
officer of Parent to such effect.
(b) Performance of Obligations. Parent, Holdco,
Delaware Sub and Georgia Sub 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 the Company shall have received a
certificate signed on behalf of Parent by the chief
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65
executive officer (or any executive vice president) and
the chief financial officer of Parent to such effect.
(c) No Litigation. There shall not be pending any
suit, action or proceeding by any Governmental Entity
(i) seeking to obtain from the Company, Parent, Holdco
or any of their respective subsidiaries any damages
that are material in relation to Holdco and its
subsidiaries taken as a whole (determined after giving
effect to the Mergers), (ii) seeking to prohibit or
limit the ownership or operation by Parent, Holdco or
any of their respective subsidiaries of any material
portion of the business or assets of Holdco and its
subsidiaries taken as a whole (determined after giving
effect to the Mergers), or to compel Parent, Holdco or
any of their respective subsidiaries to dispose of or
hold separate any material portion of the business or
assets of Holdco and its subsidiaries, taken as a whole
(determined after giving effect to the Mergers), as a
result of the Mergers or any of the other transactions
contemplated by this Agreement, or (iii) which
otherwise is reasonably likely to have a material
adverse effect on Holdco and its subsidiaries, taken as
a whole (determined after giving effect to the
Mergers).
(d) Tax Opinion. The Company shall have received
an opinion dated the Closing Date from Skadden, Arps,
Slate, Meagher & Flom, based upon certificates and
letters, which letters and certificates are
substantially in the form set forth in Exhibit D and
dated the Closing Date, to the effect that the TBS
Merger will qualify as an exchange governed by the
provisions of Section 351 of the Code.
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination. This Agreement may be
terminated at any time prior to the Effective Time of the
Mergers, whether before or after the Shareholder Approvals
or the Parent Stockholder Approvals:
(a) by mutual written consent of Parent and the
Company;
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66
(b) by either Parent or the Company:
(i) if, at a duly held shareholders meeting
of the Company or any adjournment thereof at which
the Shareholder Approvals are voted upon, the
Shareholder Approvals shall not have been
obtained;
(ii) if, at a duly held stockholders meeting
of Parent or any adjournment thereof at which the
Parent Stockholder Approvals are voted upon, the
Parent Stockholder Approvals shall not have been
obtained;
(iii) 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 the party seeking to terminate this
Agreement; provided, however, that if all the
conditions set forth in Sections 6.01 (other than
6.01(g)), 6.02 and 6.03 have been satisfied at
such date, either Parent or the Company may, by
notice to the other prior to such date, extend
such date to the latest date so extended by either
party but in no event later than December 31,
1996;
(iv) if any court of competent jurisdiction
or other Governmental Entity shall have issued an
order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise
prohibiting the Mergers and such order, decree,
ruling or other action shall have become final and
non-appealable;
(v) in the event of a breach by the other
party of any representation, warranty, covenant or
other agreement contained in this Agreement which
(A) would give rise to the failure of a condition
set forth in Section 6.02(a) or 6.02(b) or Section
6.03(a) or 6.03(b), as applicable, and (B) cannot
be or has not been cured within 30 days after the
giving of written notice to the breaching party of
such breach (a "Material Breach") (provided that
the terminating party is not then in breach of any
representation, warranty, covenant or other
agreement that would
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67
give rise to a failure of a condition as
described in clause (A) above); or
(vi) if the FCC shall have issued an order or
ruling or taken other action denying approval of
the transactions contemplated by this Agreement,
and such order, ruling or other action shall have
become final and non-appealable;
(c) by either Parent or the Company in the event
that (i) all the conditions to the obligation of such
party to effect the Mergers set forth in Section 6.01
shall have been satisfied and (ii) any condition to the
obligation of such party to effect the Mergers set
forth in Section 6.02 (in the case of Parent) or
Section 6.03 (in the case of the Company) is not
capable of being satisfied prior to the end of the
period referred to in Section 7.01(b)(iii);
(d) by Parent, if any order or approval of the FCC
contemplated by Section 6.01(f) when obtained shall
have included any conditions or restrictions of the
type referred to in Section 6.02(e)(ii), (iii) or (iv)
that are not acceptable to Parent in its sole
discretion and such order or approval shall have become
final and non-appealable;
(e) by the Company, subject to Section 7.05(b), if
the Board of Directors of the Company shall
concurrently approve, and the Company shall
concurrently enter into, a definitive agreement
providing for the implementation of the transactions
contemplated by a takeover proposal; provided, however,
that (i) the Company is not then in breach of Section
4.02 or in breach of any other representation,
warranty, covenant or agreement that would give rise to
a failure of a condition set forth in Section 6.02(a)
or 6.02(b), (ii) the Board of Directors of the Company
shall have complied with Section 7.05(b) in connection
with such takeover proposal and (iii) no termination
pursuant to this Section 7.01(e) shall be effective
unless the Company shall simultaneously make the
payment required by Section 7.02(a);
(f) by the Company, as contemplated by
Section 5.16;
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68
(g) by the Company within 30 days of (i) Parent
entering into any agreement providing for any merger or
consolidation of Parent with or into any other person
in which the shares of capital stock of Parent are to
be exchanged for or converted into the right to receive
anything other than Parent Common Stock, (ii) any
person becoming an Acquiring Person (as defined in the
Rights Agreement, as in effect on September 22, 1995),
other than with the prior approval of the Board of
Directors of Parent, or (iii) any person becoming an
Acquiring Person (as defined in the Rights Agreement,
as in effect on September 22, 1995, but determined, for
purposes of this clause (iii), as if the reference
therein to "15%" were to "30%"), in the case of clauses
(ii) and (iii) above, (x) including any person 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)
and (y) regardless of whether the Rights Agreement is
then in effect (and excluding, in all cases, this
Agreement); or
(h) by Parent to the extent required by Section
2.3 of the LMC Agreement.
SECTION 7.02. Effect of Termination. (a) In the
event that any person shall make a takeover proposal and
thereafter (i) this Agreement is terminated (A) pursuant to
Section 7.01(b)(i), (B) pursuant to Section 7.01(b)(iii) (if
at the time of termination (x) the Company is in breach of
any representation, warranty, covenant or other agreement
that would give rise to a failure of a condition set forth
in Section 6.02(a) or 6.02(b) and (y) such breach cannot be
or has not been cured within 30 days after the Company
becomes aware of such breach or such shorter period as may
elapse between the date the Company becomes aware of such
breach and the time of termination), (C) by the Company
pursuant to Section 7.01(b)(iv) (if at the time of
termination (x) the Company is in breach of any
representation, warranty, covenant or other agreement that
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69
would give rise to a failure of a condition set forth in
Section 6.02(a) or 6.02(b) and (y) such breach cannot be or
has not been cured within 30 days after the Company becomes
aware of such breach), (D) by Parent pursuant to Section
7.01(b)(v), (E) pursuant to Section 7.01(b)(vi) (if at the
time of termination (x) the Company is in breach of any
representation, warranty, covenant or other agreement that
would give rise to a failure of a condition set forth in
Section 6.02(a) or 6.02(b) and (y) such breach cannot be or
has not been cured within 30 days after the Company becomes
aware of such breach), (F) by the Company pursuant to
Section 7.01(c) or (G) pursuant to Section 7.01(e), and
(ii) a definitive agreement with respect to a takeover
proposal is executed, or a takeover proposal is consummated,
at or within eighteen months after such termination, then
the Company shall pay to Parent a fee of $175,000,000
(reduced by any amount actually paid by the Company pursuant
to Section 7.02(b) in connection with such termination),
which amount shall be payable by wire transfer of same day
funds on the date such agreement is executed, or such
takeover proposal is consummated, as applicable. The
Company acknowledges that the agreements contained in this
Section 7.02(a) are an integral part of the transactions
contemplated by this Agreement, and that, without these
agreements, Parent would not enter into this Agreement;
accordingly, if the Company fails to promptly pay the amount
due pursuant to this Section 7.02(a), and, in order to
obtain such payment, Parent commences a suit which results
in a judgment against the Company for the fee set forth in
this Section 7.02(a), the Company shall also pay to Parent
its costs and expenses (including reasonable attorneys'
fees) in connection with such suit.
(b) In the event of termination of this Agreement
by either Parent or the Company pursuant to Section
7.01(b)(i) or by Parent pursuant to Section 7.01(b)(v), then
the Company shall reimburse Parent for all its reasonable
out-of-pocket expenses actually incurred in connection with
this Agreement and the transactions contemplated hereby, up
to a maximum amount of $15,000,000, which amount shall be
payable by wire transfer of same day funds within three
business days of written demand, accompanied by a reasonably
detailed statement of such expenses and appropriate
supporting documentation, therefor.
(c) In the event of termination of this Agreement
by either Parent or the Company pursuant to
Section 7.01(b)(ii) or by the Company pursuant to
Section 7.01(b)(v), then Parent shall reimburse the Company
for all its reasonable out-of-pocket expenses actually
incurred in connection with this Agreement and the
transactions contemplated hereby, up to a maximum amount of
$15,000,000, which amount shall be payable by wire transfer
of same day funds within three business days of written
demand, accompanied by a reasonably detailed statement of
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70
such expenses and appropriate supporting documentation,
therefor.
(d) In the event of termination of this Agreement
by either the Company or Parent as provided in Section 7.01,
this Agreement shall forthwith become void and have no
effect, without any liability or obligation on the part of
Parent, Holdco, Delaware Sub, Georgia Sub or the Company,
other than the provisions of Sections 3.01(l) and 3.02(j),
the second sentence of Section 5.04, Section 5.10, this
Section 7.02 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.
SECTION 7.03. Amendment. This Agreement may be
amended by the parties at any time before or after the
Shareholder Approvals or the Parent Stockholder Approvals;
provided, however, that (i) after the Shareholder Approvals,
there shall be made no amendment that pursuant to the
Georgia BCC requires further approval by the shareholders of
the Company without the further approval of such
shareholders and (ii) after the Parent Stockholder
Approvals, there shall be made no amendment that pursuant to
the DGCL requires further approval by the stockholders of
Parent without the further approval of such stockholders.
This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.
SECTION 7.04. Extension; Waiver. At any time prior
to the Effective Time of the Mergers, 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 any document delivered
pursuant to this Agreement or (c) subject to the proviso of
Section 7.03, 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.
SECTION 7.05. Procedure for Termination,
Amendment, Extension or Waiver. (a) A termination of this
Agreement pursuant to Section 7.01, an amendment of this
<PAGE>
71
Agreement pursuant to Section 7.03 or an extension or waiver
pursuant to Section 7.04 shall, in order to be effective,
require, in the case of Parent, Holdco, Delaware Sub,
Georgia Sub or the Company, action by its Board of Directors
or, in the case of an extension or waiver pursuant to
Section 7.04, the duly authorized designee of its Board of
Directors.
(b) The Company shall provide to Parent written
notice prior to any termination of this Agreement pursuant
to Section 7.01(e) advising Parent (i) that the Board of
Directors of the Company in the exercise of its good faith
judgment as to its fiduciary duties to the shareholders of
the Company under applicable law, after receipt of written
advice of outside legal counsel, has determined (on the
basis of such takeover proposal and the terms of this
Agreement, as then in effect) that such termination is
required in connection with a takeover proposal that is more
favorable to the shareholders of the Company than the
transactions contemplated by this Agreement (taking into
account all terms of such takeover proposal and this
Agreement, including all conditions) and (ii) as to the
material terms of any such takeover proposal. At any time
after two business days following receipt of such notice,
the Company may terminate this Agreement as provided in
Section 7.01(e) only if the Board of Directors of the
Company determines that such proposal is more favorable to
the shareholders of the Company than the transactions
contemplated by this Agreement (taking into account all
terms of such takeover proposal and this Agreement,
including all conditions, and which determination shall be
made in light of any revised proposal made by Parent prior
to the expiration of such two business day period) and
concurrently enters into a definitive agreement providing
for the implementation of the transactions contemplated by
such takeover proposal.
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and
Warranties. None of the representations and warranties in
this Agreement or in any instrument delivered pursuant to
this Agreement shall survive the Effective Time of the
Mergers. This Section 8.01 shall not limit any covenant or
<PAGE>
72
agreement of the parties which by its terms contemplates
performance after the Effective Time of the Mergers.
SECTION 8.02. Notices. All notices, requests,
claims, demands and other communications under this Agree-
ment shall be in writing and shall be deemed given 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 Parent, Holdco, Delaware Sub or Georgia
Sub, to
Time Warner Inc.
75 Rockefeller Plaza
New York, NY 10019
Attention: General Counsel
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Attention: Peter S. Wilson, Esq.
(b) if to the Company, to
Turner Broadcasting System, Inc.
One CNN Center
Atlanta, GA 30303
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue
Suite 3400
Los Angeles, CA 90071
Attention: Thomas C. Janson, Jr., Esq.
<PAGE>
73
SECTION 8.03. Definitions. For purposes of this
Agreement:
(a) an "affiliate" of any person means another
person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under
common control with, such first person;
(b) "person" means an individual, corporation,
partnership, limited liability company, joint venture,
association, trust, unincorporated organization or
other entity; and
(c) a "subsidiary" of any person means another
person, an amount of the voting securities or other
voting ownership or voting partnership interests of
which is 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.
SECTION 8.04. Interpretation. When a reference is
made in this Agreement to a Section or Exhibit such
reference shall be to a Section of, or an Exhibit to, this
Agreement unless otherwise indicated. 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. Whenever the words
"include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words
"without limitation".
SECTION 8.05. Counterparts. 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 8.06. Entire Agreement; No Third-Party
Beneficiaries. This Agreement (including the documents
referred to herein) (a) constitutes the entire agreement,
and supersedes 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 II, Section 5.08 and Section 5.09, are
not intended to confer upon any person other than the
parties any rights or remedies.
<PAGE>
74
SECTION 8.07. Governing Law. This Agreement shall
be governed by, and construed in accordance with, the laws
of the State of Delaware, regardless of the laws that might
otherwise govern under applicable principles of conflicts of
laws thereof (except to the extent that the provisions of
the Georgia BCC shall be mandatorily applicable to the TBS
Merger or this Agreement).
SECTION 8.08. Assignment. Neither this Agreement
nor any of the rights, interests or obligations under this
Agreement shall be assigned, in whole or in part, by opera-
tion of law or otherwise by any of the parties without the
prior written consent of the other parties, except that
either Delaware Sub or Georgia Sub may assign, in its sole
discretion, any of or all its rights, interests and
obligations under this Agreement to Holdco or to any direct
wholly owned subsidiary of Holdco, but no such assignment
shall relieve Delaware Sub or Georgia Sub, as the case may
be, of any of its obligations under this Agreement. Subject
to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
SECTION 8.09. 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, this being in addition to any other
remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit
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 initiate
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. Each of Georgia Sub and the
Company hereby appoints the Prentice-Hall Corporation
System, Inc., 32 Loockerman Square, Suite L-100, Dover,
<PAGE>
75
Delaware 19901, as its agent for service of process in
Delaware.
SECTION 8.10. Waivers. Except as provided in this
Agreement or any waiver pursuant to Section 7.04, 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.
IN WITNESS WHEREOF, Parent, Holdco, Delaware Sub,
Georgia Sub and the Company 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
TIME WARNER ACQUISITION CORP.,
by
/s/ Thomas W. McEnerney
--------------------------
Name: Thomas W. McEnerney
Title: Vice President
<PAGE>
76
TW ACQUISITION CORP.,
by
/s/ Thomas W. McEnerney
--------------------------
Name: Thomas W. McEnerney
Title: Vice President
TURNER BROADCASTING SYSTEM, INC.,
by
/s/ R. E. Turner
--------------------------
Name: R. E. Turner
Title: President
<PAGE>
EXHIBIT A-1
FORM OF AFFILIATE LETTER
Time Warner Inc.
TW Inc.
75 Rockefeller Plaza
New York, New York 10019
Ladies and Gentlemen:
I have been advised that as of the date of this letter agreement
I may be deemed to be an "affiliate" of Turner Broadcasting System, Inc., a
Georgia corporation (the "Company"), as such term is (i) defined for
purposes of paragraphs (c) and (d) of Rule 145 of the rules and regulations
(the "Rules and Regulations") of the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended (the
"Act"), or (ii) used in and for purposes of Accounting Series Releases 130
and 135, as amended, of the Commission. Pursuant to the terms of the
Amended and Restated Agreement and Plan of Merger, dated as of September
22, 1995 (as amended from time to time, the "Merger Agreement"), by and
among Time Warner Inc., a Delaware corporation ("Parent"), TW Inc., a
Delaware corporation and a direct wholly owned subsidiary of Parent
("Holdco"), Time Warner Acquisition Corp., a Delaware corporation and a
direct wholly owned subsidiary of Holdco, TW Acquisition Corp., a Georgia
corporation and a direct wholly owned subsidiary of Holdco ("Georgia Sub"),
and the Company, Georgia Sub will be merged into the Company (the "TBS
Merger").
Pursuant to the TBS Merger, each share of Class A Common Stock,
par value $.0625 per share, of the Company owned by the undersigned, and
each share of Class B Common Stock, par value $.0625 per share, of the
Company owned by the undersigned, will be converted into the right to
receive 0.75 of a share of Common Stock, par value $.01 per share, of
Holdco ("Holdco Common Stock"), and each share of Class C Convertible
Preferred Stock, par value $.125 per share, of the Company owned by the
undersigned, will be converted into the right to receive 4.80 shares of
Holdco Common Stock.
<PAGE>
I represent, warrant and covenant to Parent that, with respect to
all Holdco Common Stock received as a result of the TBS Merger:
1. I shall not make any sale, transfer or other disposition of
Holdco Common Stock in violation of the Act or the Rules and Regulations.
2. I have carefully read this letter and the Merger Agreement and
have had an opportunity to discuss the requirements of such documents and
any other applicable limitations upon my ability to sell, transfer or
otherwise dispose of Holdco Common Stock with my counsel or counsel for the
Company.
3. I have been advised that the issuance of Holdco Common Stock
to me pursuant to the TBS Merger has been registered with the Commission
under the Act. However, I have also been advised that, since at the time
the TBS Merger was submitted for a vote of the shareholders of the Company,
I may be deemed to have been an affiliate of the Company and the
distribution by me of Holdco Common Stock has not been registered under the
Act, I may not offer to sell, sell, transfer or otherwise dispose of Holdco
Common Stock issued to me in the TBS Merger unless (i) such offer, sale,
transfer or other disposition has been registered under the Act or is made
in conformity with Rule 145 under the Act, or (ii) in the opinion of
counsel reasonably acceptable to Holdco, or pursuant to a "no action"
letter obtained by the undersigned from the staff of the Commission, such
sale, transfer or other disposition is otherwise exempt from registration
under the Act.
4. I understand that, except as provided in the Registration
Rights Agreement to be entered into by Holdco and the undersigned as
contemplated by the Merger Agreement, Holdco is under no obligation to
register under the Act the sale, transfer or other disposition of Holdco
Common Stock by me or on my behalf or to take any other action necessary in
order to make compliance with an exemption from such registration
available.
5. I understand that Holdco will give stop transfer instructions
to Holdco's transfer agents with respect to Holdco Common Stock issued to
me, that such Holdco Common Stock will all be in certificated form and that
the certificates
<PAGE>
therefor, or any substitutions therefor, will bear a legend substantially to
the following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE
ISSUED IN A TRANSACTION TO WHICH RULE 145 UNDER THE
SECURITIES ACT OF 1933 APPLIES. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE MAY ONLY BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT, DATED
______________, 199_, BETWEEN THE REGISTERED HOLDER
HEREOF AND TIME WARNER INC., A COPY OF WHICH
AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF TIME
WARNER."
6. I also understand that unless the transfer by me of my Holdco
Common Stock has been registered under the Act or is a sale made in
conformity with the provisions of Rule 145, Holdco reserves the right to
place a legend substantially to the following effect on the certificates
issued to any transferee:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
AND WERE ACQUIRED FROM A PERSON WHO RECEIVED
SUCH SECURITIES IN A TRANSACTION TO WHICH RULE 145
UNDER THE SECURITIES ACT OF 1933 APPLIES. THE
SECURITIES HAVE NOT BEEN ACQUIRED BY THE HOLDER
WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH,
ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE
SECURITIES ACT OF 1933 AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
IN ACCORDANCE WITH AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933."
It is understood and agreed that the legends set forth in
paragraphs 5 and 6 above shall be removed by delivery of substitute
certificates without such legend if such legend is not required for purpose
of the Act. It is understood and agreed that such legends and the stop
orders referred to above will be removed if (i) two years shall have
elapsed from the date the undersigned acquired Holdco
<PAGE>
Common Stock received in the TBS Merger and the provisions of Rule
145(d)(2) are then available to the undersigned, (ii) three years shall
have elapsed from the date the undersigned acquired Holdco Common Stock
received in the TBS Merger and the provisions of Rule 145(d)(3) are then
available to the undersigned, or (iii) Holdco has received either an
opinion of counsel, which opinion and counsel shall be reasonably
satisfactory to Holdco, or a "no action" letter obtained by the undersigned
from the staff of the Commission, to the effect that the restrictions
imposed by Rule 145 under the Act no longer apply to the undersigned.
Execution of this letter should not be considered an admission on
my part that I am an "affiliate" of the Company as described in the first
paragraph of this letter.
Sincerely,
--------------------------
Name:
Accepted this ___ day of
_______________, 199_:
Time Warner Inc.
By: ________________
Name:
Title:
<PAGE>
EXHIBIT A-2
FORM OF AFFILIATE LETTER
TW Inc.
75 Rockefeller Plaza
New York, New York 10019
Ladies and Gentlemen:
I have been advised that as of the date of this letter agreement
I may be deemed to be an "affiliate" of Time Warner Inc., a Delaware
corporation (the "Parent"), as such term is (i) defined for purposes of
paragraphs (c) and (d) of Rule 145 of the rules and regulations (the "Rules
and Regulations") of the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act"), or
(ii) used in and for purposes of Accounting Series Releases 130 and 135, as
amended, of the Commission. Pursuant to the terms of the Amended and
Restated Agreement and Plan of Merger, dated as of September 22, 1995 (as
amended from time to time, the "Merger Agreement"), by and among Parent, TW
Inc., a Delaware corporation and a direct wholly owned subsidiary of Parent
("Holdco"), Time Warner Acquisition Corp., a Delaware corporation and a
direct wholly owned subsidiary of Holdco ("Delaware Sub"), TW Acquisition
Corp., a Georgia corporation and a direct wholly owned subsidiary of
Holdco, and Turner Broadcasting System, Inc., a Georgia corporation (the
"Company"), Delaware Sub will be merged into Parent (the "TW Merger").
Pursuant to the TW Merger, each share of Parent Common Stock, par
value $1.00 per share, owed by the undersigned will be converted into one
share of Holdco Common Stock, par value $.01 per share ("Holdco Common
Stock"), and each share of each series of Parent Preferred Stock owned by
the undersigned will be converted into one share of a substantially
identical series of preferred stock of Holdco ("Holdco Preferred Stock,"
and together with Holdco Common Stock, "Holdco Capital Stock").
<PAGE>
I represent, warrant and covenant to the Company that, with
respect to all Holdco Capital Stock received as a result of the TW Merger:
1. I shall not make any sale, transfer or other disposition of
Holdco Capital Stock in violation of the Act or the Rules and Regulations.
2. I have carefully read this letter and the Merger Agreement and
have had an opportunity to discuss the requirements of such documents and
any other applicable limitations upon my ability to sell, transfer or
otherwise dispose of Holdco Common Stock with my counsel or counsel for
Parent.
3. I have been advised that the issuance of Holdco Capital Stock
to me pursuant to the TW Merger has been registered with the Commission
under the Act. However, I have also been advised that, since at the time
the TW Merger was submitted for a vote of the shareholders of the Parent, I
may be deemed to have been an affiliate of Parent and the distribution by
me of Holdco Capital Stock has not been registered under the Act, I may not
offer to sell, sell, transfer or otherwise dispose of Holdco Capital Stock
issued to me in the TW Merger unless (i) such offer, sale, transfer or
other disposition has been registered under the Act or is made in
conformity with Rule 145 under the Act, or (ii) in the opinion of counsel
reasonably acceptable to the Company, or pursuant to a "no action" letter
obtained by the undersigned from the staff of the Commission, such sale,
transfer or other disposition is otherwise exempt from registration under
the Act.
4. I understand that Holdco will give stop transfer instructions
to Holdco's transfer agents with respect to Holdco Capital Stock issued to
me and that the certificates representing such Holdco Capital Stock (to the
extent that such Holdco Capital Stock is in certificated from), or any
substitutions therefor, will bear a legend substantially to the following
effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE
ISSUED IN A TRANSACTION TO WHICH RULE 145 UNDER THE
SECURITIES ACT OF 1933 APPLIES. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE MAY ONLY BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT, DATED
______________, 199_, BETWEEN THE REGISTERED HOLDER
HEREOF AND TIME WARNER INC., A COPY OF
<PAGE>
WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF
TIME WARNER."
5. I also understand that unless the transfer by me of my Holdco
Captial Stock has been registered under the Act or is a sale made in
conformity with the provisions of Rule 145, Holdco reserves the right to
place a legend substantially to the following effect on the certificates
issued to any transferee:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
AND WERE ACQUIRED FROM A PERSON WHO RECEIVED
SUCH SECURITIES IN A TRANSACTION TO WHICH RULE 145
UNDER THE SECURITIES ACT OF 1933 APPLIES. THE
SECURITIES HAVE NOT BEEN ACQUIRED BY THE HOLDER
WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH,
ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE
SECURITIES ACT OF 1933 AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
IN ACCORDANCE WITH AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933."
It is understood and agreed that the legends set forth in
paragraphs 4 and 5 above shall be removed by delivery of substitute
certificates without such legend if such legend is not required for purpose
of the Act. It is understood and agreed that such legends and the stop
orders referred to above will be removed if (i) two years shall have
elapsed from the date the undersigned acquired Holdco Captial Stock
received in the TW Merger and the provisions of Rule 145(d)(2) are then
available to the undersigned, (ii) three years shall have elapsed from the
date the undersigned acquired Holdco Capital Stock received in the TW
Merger and the provisions of Rule 145(d)(3) are then available to the
undersigned, or (iii) the Company has received either an opinion of
counsel, which opinion and counsel shall be reasonably satisfactory to the
Company or a "no action" letter obtained by the undersigned from the staff
of the Commission, to the effect that the restrictions imposed by Rule 145
under the Act no longer apply to the undersigned.
<PAGE>
Execution of this letter should not be considered an admission on
my part that I am an "affiliate" of Parent as described in the first
paragraph of this letter.
Sincerely,
--------------------------
Name:
Accepted this ___ day of
_______________, 199_:
Turner Broadcasting System, Inc.
By: ________________
Name:
Title:
<PAGE>
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT, dated as
of , 1996, among TW INC. (to be renamed TIME
WARNER INC.), a Delaware corporation (the "Company"),
and the Holders (as defined below).
WHEREAS, in connection with the Amended and Restated Agreement
and Plan of Merger, dated as of September 22, 1995 (the "Amended and
Restated Merger Agreement"), among Time Warner Inc., a Delaware corporation
("Parent"), the Company, Time Warner Acquisition Corp., a Delaware
corporation and a direct wholly owned subsidiary of the Company, TW
Acquisition Corp., a Georgia corporation and a direct wholly owned
subsidiary of the Company, and Turner Broadcasting System, Inc., a Georgia
corporation, each initial Holder will receive shares of Common Stock (as
defined below); and
WHEREAS, in order to induce the initial Holders to execute and
deliver to the Company the letters contemplated by Section 5.11 of the
Amended and Restated Merger Agreement, the Company has agreed to provide
each Holder with the registration rights set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties
hereto, intending to be legally bound hereby, agree as follows:
SECTION 1. Definitions. As used in this Agreement, the following
terms shall have the following meanings:
"Advice" shall have the meaning set forth in Section 5 hereof.
"Affiliate" means, with respect to any specified person, any
other person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified person. For the
purposes of this definition, "control" when used with respect to any
specified person means the power to direct the management and policies of
such person, directly or indirectly, whether through the ownership of
voting securities, by contract or
<PAGE>
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Amended and Restated Merger Agreement" shall have the meaning
set forth in the introductory clauses hereof.
"Business Day" means any day that is not a Saturday, a Sunday or
a legal holiday on which banking institutions in the State of New York are
not required to be open.
"Capital Stock" means, with respect to any person, any and all
shares, interests, participations or other equivalents (however designated)
of corporate stock issued by such person, including each class of common
stock and preferred stock of such person.
"Common Stock" means the Common Stock, par value $0.01 per share,
of the Company issued to any Holder named on the signature pages hereof or
any other shares of capital stock or other securities of the Company into
which such shares of Common Stock shall be reclassified or changed,
including, by reason of a merger, consolidation, reorganization or
recapitalization. If the Common Stock has been so reclassified or changed,
or if the Company pays a dividend or makes a distribution on the Common
Stock in shares of capital stock, or subdivides (or combines) its
outstanding shares of Common Stock into a greater (or smaller) number of
shares of Common Stock, a share of Common Stock shall be deemed to be such
number of shares of stock and amount of other securities to which a holder
of a share of Common Stock outstanding immediately prior to such change,
reclassification, exchange, dividend, distribution, subdivision or
combination would be entitled.
"Company" shall have the meaning set forth in the introductory
clauses hereof.
"Delay Period" shall have the meaning set forth in Section 2(d)
hereof.
"Demand Notice" shall have the meaning set forth in Section 2(a)
hereof.
"Demand Registration" shall have the meaning set forth in Section
2(b) hereof.
<PAGE>
"Effectiveness Period" shall have the meaning set forth in
Section 2(d) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"Hold Back Period" shall have the meaning set forth in Section 4
hereof.
"Holder" means a person who owns Registrable Shares and is either
(i) named on the signature pages hereof as a Holder, or (ii) a person who
has agreed to be bound by the terms of this Agreement as if such person
were a Holder and is (A) a person to whom a Holder has transferred
Registrable Shares pursuant to Rule "4(1-1/2)" (or any similar private
transfer exemption), (B) upon the death of any Holder, the executor of the
estate of such Holder or any of such Holder's heirs, devisees, legatees or
assigns or (C) upon the disability of any Holder, any guardian or
conservator of such Holder.
"Interruption Period" shall have the meaning set forth in Section
5 hereof.
"person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Piggyback Registration" shall have the meaning set forth in
Section 3 hereof.
"Prospectus" means the prospectus included in any Registration
Statement (including a prospectus that discloses information previously
omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Shares covered by such Registration Statement
and all other amendments and supplements to such prospectus, including
post-effective amendments, and all material incorporated by reference or
deemed to be incorporated by reference in such prospectus.
"Registrable Shares" means shares of Common Stock unless (i) they
have been effectively registered under Section 5 of the Securities Act and
disposed of pursuant to
<PAGE>
an effective Registration Statement, (ii) such securities can be freely
sold and transferred without restriction under Rule 145 or any other
restrictions under the Securities Act or (iii) such securities have been
transferred pursuant to Rule 144 under the Securities Act or any successor
rule such that, after any such transfer referred to in this clause (iii),
such securities may be freely transferred without restriction under the
Securities Act.
"Registration" means registration under the Securities Act of an
offering of Registrable Shares pursuant to a Demand Registration or a
Piggyback Registration.
"Registration Period" shall have the meaning set forth in Section
2(a) hereof.
"Registration Statement" means any registration statement under
the Securities Act of the Company that covers any of the Registrable Shares
pursuant to the provisions of this Agreement, including the related
Prospectus, all amendments and supplements to such registration statement,
including pre- and post-effective amendments, all exhibits thereto and all
material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Shelf Registration" shall have the meaning set forth in Section
2(b) hereof.
"underwritten registration or underwritten offering" means a
registration under the Securities Act in which securities of the Company
are sold to an underwriter for reoffering to the public.
SECTION 2. Demand Registration. (a) The Holders shall have the
right, during the period (the "Registration Period") commencing on the date
of this Agreement and ending on the third anniversary of the date of this
Agreement, by written notice (the "Demand Notice") given to the Company, to
request the Company to register under and in accordance with the provisions
of the
<PAGE>
Securities Act all or any portion of the Registrable Shares designated by
such Holders; provided, however, that the aggregate number of Registrable
Shares requested to be registered pursuant to any Demand Notice and
pursuant to any related Demand Notices received pursuant to the following
sentence shall be at least 5,000,000. Upon receipt of any such Demand
Notice, the Company shall promptly notify all other Holders of the receipt
of such Demand Notice and allow them the opportunity to include Registrable
Shares held by them in the proposed registration by submitting their own
Demand Notice. In connection with any Demand Registration in which more
than one Holder participates, in the event that such Demand Registration
involves an underwritten offering and the managing underwriter or
underwriters participating in such offering advise in writing the Holders
of Registrable Shares to be included in such offering that the total number
of Registrable Shares to be included in such offering exceeds the amount
that can be sold in (or during the time of) such offering without delaying
or jeopardizing the success of such offering (including the price per share
of the Registrable Shares to be sold), then the amount of Registrable
Shares to be offered for the account of such Holders shall be reduced pro
rata on the basis of the number of Registrable Shares to be registered by
each such Holder. The Holders as a group shall be entitled to three Demand
Registrations pursuant to this Section 2 unless any Demand Registration
does not become effective or is not maintained for a period (whether or not
continuous) of at least 120 days (or such shorter period as shall terminate
when all the Registrable Shares covered by such Demand Registration have
been sold pursuant thereto), in which case the Holders will be entitled to
an additional Demand Registration pursuant hereto.
(b) The Company, within 45 days of the date on which the Company
receives a Demand Notice given by Holders in accordance with Section 2(a)
hereof, shall file with the SEC, and the Company shall thereafter use its
best efforts to cause to be declared effective, a Registration Statement on
the appropriate form for the registration and sale, in accordance with the
intended method or methods of distribution, of the total number of
Registrable Shares specified by the Holders in such Demand Notice, which
may include a "shelf" registration (a "Shelf Registration") pursuant to
Rule 415 under the Securities Act (a "Demand Registration").
<PAGE>
(c) The Company shall use commercially reasonable efforts to keep
each Registration Statement filed pursuant to this Section 2 continuously
effective and usable for the resale of the Registrable Shares covered
thereby (i) in the case of a Registration that is not a Shelf Registration,
for a period of 120 days from the date on which the SEC declares such
Registration Statement effective and (ii) in the case of a Shelf
Registration, for a period of 180 days from the date on which the SEC
declares such Registration Statement effective, in either case (x) until
all the Registrable Shares covered by such Registration Statement have been
sold pursuant to such Registration Statement), and (y) as such period may
be extended pursuant to this Section 2.
(d) The Company shall be entitled to postpone the filing of any
Registration Statement otherwise required to be prepared and filed by the
Company pursuant to this Section 2, or suspend the use of any effective
Registration Statement under this Section 2, for a reasonable period of
time, but not in excess of 90 days (a "Delay Period"), if any executive
officer of the Company determines that in such executive officer's
reasonable judgment and good faith the registration and distribution of the
Registrable Shares covered or to be covered by such Registration Statement
would materially interfere with any pending material financing, acquisition
or corporate reorganization or other material corporate development
involving the Company or any of its subsidiaries or would require premature
disclosure thereof and promptly gives the Holders written notice of such
determination, containing a general statement of the reasons for such
postponement and an approximation of the period of the anticipated delay;
provided, however, that (i) the aggregate number of days included in all
Delay Periods during any consecutive 12 months shall not exceed the
aggregate of (x) 180 days minus (y) the number of days occurring during all
Hold Back Periods and Interruption Periods during such consecutive 12
months and (ii) a period of at least 60 days shall elapse between the
termination of any Delay Period, Hold Back Period or Interruption Period
and the commencement of the immediately succeeding Delay Period. If the
Company shall so postpone the filing of a Registration Statement, the
Holders of Registrable Shares to be registered shall have the right to
withdraw the request for registration by giving written notice from the
Holders of a majority of the Registrable Shares that were to be registered
to the Company within 45 days after receipt of the notice of postponement
or, if earlier, the termination of such Delay Period (and, in the event of
such withdrawal,
<PAGE>
such request shall not be counted for purposes of determining the number of
requests for registration to which the Holders of Registrable Shares are
entitled pursuant to this Section 2). The time period for which the Company
is required to maintain the effectiveness of any Registration Statement
shall be extended by the aggregate number of days of all Delay Periods, all
Hold Back Periods and all Interruption Periods occurring during such
Registration and such period and any extension thereof is hereinafter
referred to as the "Effectiveness Period". The Company shall not be
entitled to initiate a Delay Period unless it shall (A) to the extent
permitted by agreements with other security holders of the Company,
concurrently prohibit sales by such other security holders under
registration statements covering securities held by such other security
holders and (B) in accordance with the Company's policies from time to time
in effect, forbid purchases and sales in the open market by senior
executives of the Company.
(e) Except to the extent required by agreements with other
security holders of the Company or Parent entered into prior to September
22, 1995, the Company shall not include any securities that are not
Registrable Shares in any Registration Statement filed pursuant to this
Section 2 without the prior written consent of the Holders of a majority in
number of the Registrable Shares covered by such Registration Statement.
(f) Holders of a majority in number of the Registrable Shares to
be included in a Registration Statement pursuant to this Section 2 may, at
any time prior to the effective date of the Registration Statement relating
to such Registration, revoke such request by providing a written notice to
the Company revoking such request. The Holders of Registrable Shares who
revoke such request shall reimburse the Company for all its out-of-pocket
expenses incurred in the preparation, filing and processing of the
Registration Statement; provided, however, that, if such revocation was
based on the Company's failure to comply in any material respect with its
obligations hereunder, such reimbursement shall not be required.
SECTION 3. Piggyback Registration. (a) Right To Piggyback. If at
any time during the Registration Period the Company proposes to file a
registration statement under the Securities Act with respect to a public
offering of securities of the same type as the Registrable Shares pursuant
to a firm commitment underwritten offering solely
<PAGE>
for cash for its own account (other than a registration statement (i) on
Form S-8 or any successor forms thereto, or (ii) filed solely in connection
with a dividend reinvestment plan or employee benefit plan covering
officers or directors of the Company or its Affiliates) or for the account
of any holder of securities of the same type as the Registrable Shares (to
the extent that the Company has the right to include Registrable Shares in
any registration statement to be filed by the Company on behalf of such
holder), then the Company shall give written notice of such proposed filing
to the Holders at least 15 days before the anticipated filing date. Such
notice shall offer the Holders the opportunity to register such amount of
Registrable Shares as they may request (a "Piggyback Registration").
Subject to Section 3(b) hereof, the Company shall include in each such
Piggyback Registration all Registrable Shares with respect to which the
Company has received written requests for inclusion therein within 10 days
after notice has been given to the Holders. Each Holder shall be permitted
to withdraw all or any portion of the Registrable Shares of such Holder
from a Piggyback Registration at any time prior to the effective date of
such Piggyback Registration; provided, however, that if such withdrawal
occurs after the filing of the Registration Statement with respect to such
Piggyback Registration, the withdrawing Holders shall reimburse the Company
for the portion of the registration expenses payable with respect to the
Registrable Shares so withdrawn.
(b) Priority on Piggyback Registrations. The Company shall permit
the Holders to include all such Registrable Shares on the same terms and
conditions as any similar securities, if any, of the Company included
therein. Notwithstanding the foregoing, if the Company or the managing
underwriter or underwriters participating in such offering advise the
Holders in writing that the total amount of securities requested to be
included in such Piggyback Registration exceeds the amount which can be
sold in (or during the time of) such offering without delaying or
jeopardizing the success of the offering (including the price per share of
the securities to be sold), then the amount of securities to be offered for
the account of the Holders and other holders of securities who have
piggyback registration rights with respect thereto shall be reduced (to
zero if necessary) pro rata on the basis of the number of common stock
equivalents requested to be registered by each such Holder or holder
participating in such offering.
<PAGE>
(c) Right To Abandon. Nothing in this Section 3 shall create any
liability on the part of the Company to the Holders if the Company in its
sole discretion should decide not to file a registration statement proposed
to be filed pursuant to Section 3(a) hereof or to withdraw such
registration statement subsequent to its filing, regardless of any action
whatsoever that a Holder may have taken, whether as a result of the
issuance by the Company of any notice hereunder or otherwise.
SECTION 4. Holdback Agreement. If (i) during the Effectiveness
Period, the Company shall file a registration statement (other than in
connection with the registration of securities issuable pursuant to an
employee stock option, stock purchase or similar plan or pursuant to a
merger, exchange offer or a transaction of the type specified in Rule
145(a) under the Securities Act) with respect to the Common Stock or
similar securities or securities convertible into, or exchangeable or
exercisable for, such securities and (ii) with reasonable prior notice, the
Company (in the case of a nonunderwritten public offering by the Company
pursuant to such registration statement) advises the Holders in writing
that a public sale or distribution of such Registrable Shares would
materially adversely affect such offering or the managing underwriter or
underwriters (in the case of an underwritten public offering by the Company
pursuant to such registration statement) advises the Company in writing (in
which case the Company shall notify the Holders) that a public sale or
distribution of Registrable Shares would materially adversely impact such
offering, then each Holder shall, to the extent not inconsistent with
applicable law, refrain from effecting any public sale or distribution of
Registrable Shares during the 10 days prior to the effective date of such
registration statement and until the earliest of (A) the abandonment of
such offering, (B) 90 days from the effective date of such registration
statement and (C) if such offering is an underwritten offering, the
termination in whole or in part of any "hold back" period obtained by the
underwriter or underwriters in such offering from the Company in connection
therewith (each such period, a "Hold Back Period").
SECTION 5. Registration Procedures. In connection with the
registration obligations of the Company pursuant to and in accordance with
Sections 2 and 3 hereof (and subject to Sections 2 and 3 hereof), the
Company shall use commercially reasonable efforts to effect such
registration to permit the sale of such Registrable Shares
<PAGE>
in accordance with the intended method or methods of disposition thereof,
and pursuant thereto the Company shall as expeditiously as possible (but
subject to Sections 2 and 3 hereof):
(a) prepare and file with the SEC a Registration Statement for
the sale of the Registrable Shares on any form for which the Company
then qualifies or which counsel for the Company shall deem appropriate
in accordance with such Holders' intended method or methods of
distribution thereof, subject to Section 2(b) hereof, and, subject to
the Company's right to terminate or abandon a registration pursuant to
Section 3(c) hereof, use commercially reasonable efforts to cause such
Registration Statement to become effective and remain effective as
provided herein;
(b) prepare and file with the SEC such amendments (including
post-effective amendments) to such Registration Statement, and such
supplements to the related Prospectus, as may be required by the
rules, regulations or instructions applicable to the Securities Act
during the applicable period in accordance with the intended methods
of disposition specified by the Holders of the Registrable Shares
covered by such Registration Statement, make generally available
earnings statements satisfying the provisions of Section 11(a) of the
Securities Act (provided that the Company shall be deemed to have
complied with this clause if it has complied with Rule 158 under the
Securities Act), and cause the related Prospectus as so supplemented
to be filed pursuant to Rule 424 under the Securities Act; provided,
however, that before filing a Registration Statement or Prospectus, or
any amendments or supplements thereto (other than reports required to
be filed by it under the Exchange Act), the Company shall furnish to
the Holders of Registrable Shares covered by such Registration
Statement and their counsel for review and comment, copies of all
documents required to be filed;
(c) notify the Holders of any Registrable Shares covered by such
Registration Statement promptly and (if requested) confirm such notice
in writing, (i) when a Prospectus or any Prospectus supplement or
post- effective amendment has been filed, and, with respect to such
Registration Statement or any post-effective amendment, when the same
has become effective, (ii) of
<PAGE>
any request by the SEC for amendments or supplements to such
Registration Statement or the related Prospectus or for additional
information regarding such Holders, (iii) of the issuance by the SEC
of any stop order suspending the effectiveness of such Registration
Statement or the initiation of any proceedings for that purpose, (iv)
of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any
of the Registrable Shares for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose, and (v)
of the happening of any event that requires the making of any changes
in such Registration Statement, Prospectus or documents incorporated
or deemed to be incorporated therein by reference so that they will
not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading:
(d) use commercially reasonable efforts to obtain the withdrawal
of any order suspending the effectiveness of such Registration
Statement, or the lifting of any suspension of the qualification or
exemption from qualification of any Registrable Shares for sale in any
jurisdiction in the United States;
(e) furnish to the Holder of any Registrable Shares covered by
such Registration Statement, each counsel for such Holders and each
managing underwriter, if any, without charge, one conformed copy of
such Registration Statement, as declared effective by the SEC, and of
each post-effective amendment thereto, in each case including
financial statements and schedules and all exhibits and reports
incorporated or deemed to be incorporated therein by reference; and
deliver, without charge, such number of copies of the preliminary
prospectus, any amended preliminary prospectus, each final Prospectus
and any post- effective amendment or supplement thereto, as such
Holder may reasonably request in order to facilitate the disposition
of the Registrable Shares of such Holder covered by such Registration
Statement in conformity with the requirements of the Securities Act;
(f) prior to any public offering of Registrable Shares covered by
such Registration Statement, use
<PAGE>
commercially reasonable efforts to register or qualify such
Registrable Shares for offer and sale under the securities or Blue Sky
laws of such jurisdictions as the Holders of such Registrable Shares
shall reasonably request in writing; provided, however, that the
Company shall in no event be required to qualify generally to do
business as a foreign corporation or as a dealer in any jurisdiction
where it is not at the time so qualified or to execute or file a
general consent to service of process in any such jurisdiction where
it has not theretofore done so or to take any action that would
subject it to general service of process or taxation in any such
jurisdiction where it is not then subject;
(g) upon the occurrence of any event contemplated by paragraph
5(c)(v) above, prepare a supplement or post-effective amendment to
such Registration Statement or the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference and
file any other required document so that, as thereafter delivered to
the purchasers of the Registrable Shares being sold thereunder
(including upon the termination of any Delay Period), such Prospectus
will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading;
(h) use commercially reasonable efforts to cause all Registrable
Shares covered by such Registration Statement to be listed on each
securities exchange or automated interdealer quotation system, if any,
on which similar securities issued by the Company are then listed or
quoted;
(i) on or before the effective date of such Registration
Statement, provide the transfer agent of the Company for the
Registrable Shares with printed certificates for the Registrable
Shares covered by such Registration Statement, which are in a form
eligible for deposit with The Depository Trust Company;
(j) if such offering is an underwritten offering, make available
for inspection by any Holder of Registrable Shares included in such
Registration Statement, any underwriter participating in any
<PAGE>
offering pursuant to such Registration Statement, and any attorney,
accountant or other agent retained by any such Holder or underwriter
(collectively, the "Inspectors"), all financial and other records and
other information, pertinent corporate documents and properties of any
of the Company and its subsidiaries and affiliates (collectively, the
"Records"), as shall be reasonably necessary to enable them to
exercise their due diligence responsibilities; provided, however, that
the Records that the Company determines, in good faith, to be
confidential and which it notifies the Inspectors in writing are
confidential shall not be disclosed to any Inspector unless such
Inspector signs a confidentiality agreement reasonably satisfactory to
the Company (which shall permit the disclosure of such Records in such
Registration Statement or the related Prospectus if necessary to avoid
or correct a material misstatement in or material omission from such
Registration Statement or Prospectus) or either (i) the disclosure of
such Records is necessary to avoid or correct a misstatement or
omission in such Registration Statement or (ii) the release of such
Records is ordered pursuant to a subpoena or other order from a court
of competent jurisdiction; provided further, however, that (A) any
decision regarding the disclosure of information pursuant to subclause
(i) shall be made only after consultation with counsel for the
applicable Inspectors and the Company and (B) with respect to any
release of Records pursuant to subclause (ii), each Holder of
Registrable Shares agrees that it shall, promptly after learning that
disclosure of such Records is sought in a court having jurisdiction,
give notice to the Company so that the Company, at the Company's
expense, may undertake appropriate action to prevent disclosure of
such Records; and
(k) if such offering is an underwritten offering, enter into such
agreements (including an underwriting agreement in form, scope and
substance as is customary in underwritten offerings) and take all such
other appropriate and reasonable actions requested by the Holders of a
majority of the Registrable Shares being sold in connection therewith
(including those reasonably requested by the managing underwriters) in
order to expedite or facilitate the disposition of such Registrable
Shares, and in such connection, (i) use commercially reasonable
efforts to obtain opinions of counsel to the Company and updates
thereof (which
<PAGE>
counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the managing underwriters and counsel to
the Holders of the Registrable Shares being sold), addressed to each
selling Holder of Registrable Shares covered by such Registration
Statement and each of the underwriters as to the matters customarily
covered in opinions requested in underwritten offerings and such other
matters as may be reasonably requested by such counsel and
underwriters, (ii) use commercially reasonable efforts to obtain "cold
comfort" letters and updates thereof from the independent certified
public accountants of the Company (and, if necessary, any other
independent certified public accountants of any subsidiary of the
Company or of any business acquired by the Company for which financial
statements and financial data are, or are required to be, included in
the Registration Statement), addressed to each selling holder of
Registrable Shares covered by the Registration Statement (unless such
accountants shall be prohibited from so addressing such letters by
applicable standards of the accounting profession) and each of the
underwriters, such letters to be in customary form and covering
matters of the type customarily covered in "cold comfort" letters in
connection with underwritten offerings, (iii) if requested and if an
underwriting agreement is entered into, provide indemnification
provisions and procedures substantially to the effect set forth in
Section 8 hereof with respect to all parties to be indemnified
pursuant to said Section. The above shall be done at each closing
under such underwriting or similar agreement, or as and to the extent
required thereunder.
The Company may require each Holder of Registrable Shares covered
by a Registration Statement to furnish such information regarding such
Holder and such Holder's intended method of disposition of such Registrable
Shares as it may from time to time reasonably request in writing. If any
such information is not furnished within a reasonable period of time after
receipt of such request, the Company may exclude such Holder's Registrable
Shares from such Registration Statement.
Each Holder of Registrable Shares covered by a Registration
Statement agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 5(c)(ii),
5(c)(iii), 5(c)(iv) or
<PAGE>
5(c)(v) hereof, that such Holder shall forthwith discontinue disposition of
any Registrable Shares covered by such Registration Statement or the
related Prospectus until receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 5(g) hereof, or until such
Holder is advised in writing (the "Advice") by the Company that the use of
the applicable Prospectus may be resumed, and has received copies of any
amended or supplemented Prospectus or any additional or supplemental
filings which are incorporated, or deemed to be incorporated, by reference
in such Prospectus (such period during which disposition is discontinued
being an "Interruption Period") and, if requested by the Company, the
Holder shall deliver to the Company (at the expense of the Company) all
copies then in its possession, other than permanent file copies then in
such holder's possession, of the Prospectus covering such Registrable
Shares at the time of receipt of such request.
Each Holder of Registrable Shares covered by a Registration
Statement further agrees not to utilize any material other than the
applicable current preliminary prospectus or Prospectus in connection with
the offering of such Registrable Shares.
SECTION 6. Registration Expenses. Whether or not any Registration
Statement is filed or becomes effective, the Company shall pay all costs,
fees and expenses incident to the Company's performance of or compliance
with this Agreement, including (i) all registration and filing fees,
including NASD filing fees, (ii) all fees and expenses of compliance with
securities or Blue Sky laws, including reasonable fees and disbursements of
counsel in connection therewith, (iii) printing expenses (including
expenses of printing certificates for Registrable Shares and of printing
prospectuses if the printing of prospectuses is requested by the Holders or
the managing underwriter, if any), (iv) messenger, telephone and delivery
expenses, (v) fees and disbursements of counsel for the Company, (vi) fees
and disbursements of all independent certified public accountants of the
Company (including expenses of any "cold comfort" letters required in
connection with this Agreement) and all other persons retained by the
Company in connection with such Registration Statement, (vii) fees and
disbursements of one counsel, other than the Company's counsel, selected by
Holders of a majority of the Registrable Shares being registered, to
represent all such Holders, (viii) fees and disbursements of underwriters
<PAGE>
customarily paid by the issuers or sellers of securities and (ix) all other
costs, fees and expenses incident to the Company's performance or
compliance with this Agreement. Notwithstanding the foregoing, the fees and
expenses of any persons retained by any Holder, other than one counsel for
all such Holders, and any discounts, commissions or brokers' fees or fees
of similar securities industry professionals and any transfer taxes
relating to the disposition of the Registrable Shares by a Holder, will be
payable by such Holder and the Company will have no obligation to pay any
such amounts.
SECTION 7. Underwriting Requirements. (a) Subject to Section 7(b)
hereof, any Holder shall have the right, by written notice, to request that
any Demand Registration provide for an underwritten offering.
(b) In the case of any underwritten offering pursuant to a Demand
Registration, the Holders of a majority of the Registrable Shares to be
disposed of in connection therewith shall select the institution or
institutions that shall manage or lead such offering, which institution or
institutions shall be reasonably satisfactory to the Company. In the case
of any underwritten offering pursuant to a Piggyback Registration, the
Company shall select the institution or institutions that shall manage or
lead such offering. No Holder shall be entitled to participate in an
underwritten offering unless and until such Holder has entered into an
underwriting or other agreement with such institution or institutions for
such offering in such form as the Company and such institution or
institutions shall determine.
SECTION 8. Indemnification. (a) Indemnification by the Company.
The Company shall, without limitation as to time, indemnify and hold
harmless, to the full extent permitted by law, each Holder of Registrable
Shares whose Registrable Shares are covered by a Registration Statement or
Prospectus, the officers, directors and agents and employees of each of
them, each Person who controls each such Holder (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) and the
officers, directors, agents and employees of each such controlling person,
to the fullest extent lawful, from and against any and all losses, claims,
damages, liabilities, judgment, costs (including, without limitation, costs
of preparation and reasonable attorneys' fees) and expenses (collectively,
"Losses"), as incurred, arising out of or
<PAGE>
based upon any untrue or alleged untrue statement of a material fact
contained in such Registration Statement or Prospectus or in any amendment
or supplement thereto or in any preliminary prospectus, or arising out of
or based upon any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein not
misleading, except insofar as the same are based upon information furnished
in writing to the Company by or on behalf of such Holder expressly for use
therein; provided, however, that the Company shall not be liable to any
such Holder to the extent that any such Losses arise out of or are based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in any preliminary prospectus if (i) having previously been
furnished by or on behalf of the Company with copies of the Prospectus,
such Holder failed to send or deliver a copy of the Prospectus with or
prior to the delivery of written confirmation of the sale of Registrable
Shares by such Holder to the person asserting the claim from which such
Losses arise and (ii) the Prospectus would have corrected in all material
respects such untrue statement or alleged untrue statement or such omission
or alleged omission; and provided further, however, that the Company shall
not be liable in any such case to the extent that any such Losses arise out
of or are based upon an untrue statement or alleged untrue statement or
omission or alleged omission in the Prospectus, if (x) such untrue
statement or alleged untrue statement, omission or alleged omission is
corrected in all material respects in an amendment or supplement to the
Prospectus and (y) having previously been furnished by or on behalf of the
Company with copies of the Prospectus as so amended or supplemented, such
Holder thereafter fails to deliver such Prospectus as so amended or
supplemented, prior to or concurrently with the sale of Registrable Shares.
(b) Indemnification by Holder of Registrable Shares. In
connection with any Registration Statement in which a Holder is
participating, such Holder shall furnish to the Company in writing such
information as the Company reasonably requests for use in connection with
such Registration Statement or the related Prospectus and agrees to
indemnify, to the full extent permitted by law, the Company, its directors,
officers, agents or employees, each Person who controls the Company (within
the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act) and the directors, officers, agents or employees of such
controlling Persons, from and against all Losses arising out of or based
upon any untrue or alleged
<PAGE>
untrue statement of a material fact contained in such Registration
Statement or the related Prospectus or any amendment or supplement thereto,
or any preliminary prospectus, or arising out of or based upon any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, to the extent, but
only to the extent, that such untrue or alleged untrue statement or
omission or alleged omission is based upon any information so furnished in
writing by or on behalf of such Holder to the Company expressly for use in
such Registration Statement or Prospectus.
(c) Conduct of Indemnification Proceedings. If any Person shall
be entitled to indemnity hereunder (an "indemnified party"), such
indemnified party shall give prompt notice to the party from which such
indemnity is sought (the "indemnifying party") of any claim or of the
commencement of any proceeding with respect to which such indemnified party
seeks indemnification or contribution pursuant hereto; provided, however,
that the delay or failure to so notify the indemnifying party shall not
relieve the indemnifying party from any obligation or liability except to
the extent that the indemnifying party has been prejudiced by such delay or
failure. The indemnifying party shall have the right, exercisable by giving
written notice to an indemnified party promptly after the receipt of
written notice from such indemnified party of such claim or proceeding, to
assume, at the indemnifying party's expense, the defense of any such claim
or proceeding, with counsel reasonably satisfactory to such indemnified
party; provided, however, that (i) an indemnified party shall have the
right to employ separate counsel in any such claim or proceeding and to
participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless: (1) the
indemnifying party agrees to pay such fees and expenses; (2) the
indemnifying party fails promptly to assume the defense of such claim or
proceeding or fails to employ counsel reasonably satisfactory to such
indemnified party; or (3) the named parties to any proceeding (including
impleaded parties) include both such indemnified party and the indemnifying
party, and such indemnified party shall have been advised by counsel that
there may be one or more legal defenses available to it that are
inconsistent with those available to the indemnifying party or that a
conflict of interest is likely to exist among such indemnified party and
any other indemnified parties (in which case the
<PAGE>
indemnifying party shall not have the right to assume the defense of such
action on behalf of such indemnified party); and (ii) subject to clause (3)
above, the indemnifying party shall not, in connection with any one such
claim or proceeding or separate but substantially similar or related claims
or proceedings in the same jurisdiction, arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more
than one firm of attorneys (together with appropriate local counsel) at any
time for all of the indemnified parties, or for fees and expenses that are
not reasonable. Whether or not such defense is assumed by the indemnifying
party, such indemnified party shall not be subject to any liability for any
settlement made without its consent. The indemnifying party shall not
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release, in form and substance
reasonably satisfactory to the indemnified party, from all liability in
respect of such claim or litigation for which such indemnified party would
be entitled to indemnification hereunder.
(d) Contribution. If the indemnification provided for in this
Section 8 is unavailable to an indemnified party in respect of any Losses
(other than in accordance with its terms), then each applicable
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a
result of such Losses, in such proportion as is appropriate to reflect the
relative fault of the indemnifying party, on the one hand, and such
indemnified party, on the other hand, in connection with the actions,
statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of such indemnifying
party, on the one hand, and indemnified party, on the other hand, shall be
determined by reference to, among other things, whether any action in
question, including any untrue statement of a material fact or omission or
alleged omission to state a material fact, has been taken by, or relates to
information supplied by, such indemnifying party or indemnified party, and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent any such action, statement or omission.
The amount paid or payable by a party as a result of any Losses shall be
deemed to include any legal or other fees or expenses incurred by such
party in connection with any
<PAGE>
investigation or proceeding. The parties hereto agree that it would not be
just and equitable if contribution pursuant to this Section 8(d) were
determined by pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provision of this
Section 8(d), an indemnifying party that is a Holder shall not be required
to contribute any amount which is in excess of the amount by which the
total proceeds received by such Holder from the sale of the Registrable
Shares sold by such Holder (net of all underwriting discounts and
commissions) exceeds the amount of any damages that such indemnifying party
has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
SECTION 9. Miscellaneous. (a) Termination. This Agreement and the
obligations of the Company and the Holders hereunder (other than Section 8
hereof) shall terminate on the first date on which no Registrable Shares
remain outstanding.
(b) Notices. All notices or communications hereunder shall be in
writing (including telecopy or similar writing), addressed as follows:
To the Company:
Time Warner Inc.
75 Rockefeller Plaza
New York, NY 10019
Telecopier: (212) 765-0899
Attention: General Counsel
With a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Telecopier: (212) 474-3700
Attention: Peter S. Wilson, Esq.
<PAGE>
To the Holders:
R.E. Turner, III
In care of Turner Broadcasting System, Inc.
One CNN Center
Box 105366
Atlanta, GA 30348-5366
Telecopier: (404) 827-3000
For Courier delivery
One CNN Center
Atlanta, GA 30303
Attention: General Counsel
With a copy to:
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue, Suite 3400
Los Angeles, CA 90071
Telecopier: (213) 687-5600
Attention: Thomas C. Janson, Jr., Esq.
Any such notice or communication shall be deemed given (i) when
made, if made by hand delivery, (ii) upon transmission, if sent by
confirmed telecopier, (iii) one business day after being deposited with a
next-day courier, postage prepaid, or (iv) three business days after being
sent certified or registered mail, return receipt requested, postage
prepaid, in each case addressed as above (or to such other address or to
such other telecopier number as such party may designate in writing from
time to time).
(c) Separability. If any provision of this Agreement shall be
declared to be invalid or unenforceable, in whole or in part, such
invalidity or unenforceability shall not affect the remaining provisions
hereof which shall remain in full force and effect.
(d) Assignment. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, devisees,
legatees, legal representatives, successors and assigns.
(e) Entire Agreement. This Agreement represents the entire
agreement of the parties and shall supersede any
<PAGE>
and all previous contracts, arrangements or understandings between the
parties hereto with respect to the subject matter hereof.
(f) Amendments and Waivers. Except as otherwise provided herein,
the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not be given, unless the Company has obtained the written
consent of Holders of at least a majority in number of the Registrable
Shares then outstanding.
(g) Publicity. No public release or announcement concerning the
transactions contemplated hereby shall be issued by any party without the
prior consent of the other parties, except to the extent that such party is
advised by counsel that such release or announcement is necessary or
advisable under applicable law or the rules or regulations of any
securities exchange, in which case the party required to make the release
or announcement shall to the extent practicable provide the other party
with an opportunity to review and comment on such release or announcement
in advance of its issuance.
(h) Expenses. Whether or not the transactions contemplated hereby
are consummated, except as otherwise provided herein, all costs and
expenses incurred in connection with the execution of this Agreement shall
be paid by the party incurring such costs or expenses, except as otherwise
set forth herein.
(i) Interpretation. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(j) Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be one and the same agreement, and shall
become effective when counterparts have been signed by each of the parties
and delivered to each other party.
(k) Governing Law. This Agreement shall be construed,
interpreted, and governed in accordance with the internal laws of New York.
(l) Calculation of Time Periods. Except as otherwise indicated,
all periods of time referred to herein
<PAGE>
shall include all Saturdays, Sundays and holidays; provided, however, that
if the date to perform the act or give any notice with respect to this
Agreement shall fall on a day other than a Business Day, such act or notice
may be timely performed or given if performed or given on the next
succeeding Business Day.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first written above.
TW INC.,
by
---------------------------
Name:
Title:
---------------------------
R.E. Turner, III
TURNER OUTDOOR, INC.,
by
---------------------------
Name:
Title:
TURNER FOUNDATION, INC.,
by
---------------------------
Name:
Title:
ROBERT E. TURNER CHARITABLE
REMAINDER UNITRUST NO. 2,
by
--------------------------
Name:
Title:
<PAGE>
EXHIBIT C-1
INVESTORS' AGREEMENT (NO. 1) dated as of
, among TW INC. (to be renamed TIME
WARNER INC.), a Delaware corporation ("Holdco"), and
the other parties signatory hereto (each an
"Investor").
This Agreement is entered into pursuant to Se ction 6.02(f) of
the Amended and Restated Agreement and Plan of Merger, dated as of
September 22, 1995 (the "Amended and Restated Merger Agreement"), among
Time Warner Inc., a Delaware corporation ("Parent"), Holdco, Time Warner
Acquisition Corp., a Delaware corporation ("Delaware Sub") and a direct
wholly owned subsidiary of Holdco, TW Acquisition Corp., a Georgia
corporation ("Georgia Sub") and a direct wholly owned subsidiary of Holdco,
and Turner Broadcasting System, Inc., a Georgia corporation (the
"Company"). In connection with the TBS Merger (as defined in the Amended
and Restated Merger Agreement), subject to certain exceptions, (a) each
share of Class A Common Stock, par value $.0625 per share, of the Company
and each share of Class B Common Stock, par value $.0625 per share, of the
Company will be converted into the right to receive 0.75 shares of Common
Stock, par value $0.01 per share, of Holdco ("Holdco Common Stock") and (b)
each share of Class C Convertible Preferred Stock, par value $.125 per
share, of the Company will be converted into the right to receive 4.80
shares of Holdco Common Stock. As a condition to the obligations of Parent,
Holdco, Delaware Sub and Georgia Sub to effect the Mergers (as defined in
the Amended and Restated Merger Agreement), Parent, Holdco, Delaware Sub
and Georgia Sub have required that each initial Investor enter into this
Agreement.
Accordingly, it is hereby agreed as follows:
ARTICLE I
Definitions
SECTION 1.01. Definitions. Capitalized terms used but not defined
herein shall have the meanings assigned to such terms in the Amended and
Restated Merger Agreement. For purposes of this Agreement, the following
terms shall have the following meanings:
<PAGE>
"Affiliate" and "Associate", when used with reference to any
person, shall have the respective meanings ascribed to such terms in Rule
12b-2 of the Exchange Act, as in effect on the date of this Agreement.
Neither Holdco nor any of its subsidiaries or controlled Affiliates, on the
one hand, nor the Principal Investor, on the other hand, shall be an
"Affiliate" or an "Associate" of the other. The Turner Foundation, Inc. and
the Robert E. Turner Charitable Foundation Unitrust No. 2 shall be deemed
not to be Affiliate or Associates of any Investor.
A person shall be deemed the "beneficial owner" of, and shall be
deemed to "beneficially own", and shall be deemed to have "beneficial
ownership" of:
(i) any securities that such person or any of such person's
Affiliates or Associates is deemed to "beneficially own" within the
meaning of Rule 13d-3 under the Exchange Act, as in effect on the date
of this Agreement; and
(ii) any securities (the "underlying securities") that such
person or any of such person's Affiliates or Associates has the right
to acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement, arrangement or
understanding (written or oral), or upon the exercise of conversion
rights, exchange rights, rights, warrants or options, or otherwise (it
being understood that such person shall also be deemed to be the
beneficial owner of the securities convertible into or exchangeable
for the underlying securities).
"Board" shall mean the board of directors of Holdco.
"Charitable Transferee" shall mean any charitable organization
described in Section 501(c)(3) of the Code.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
in effect on the date in question, unless otherwise specifically provided.
"Investor" shall mean each person that executes this Agreement in
such capacity and each successor, assign and other person that pursuant to
the terms hereof is required to become a party hereto as an Investor.
<PAGE>
"Investors' Agreement (No. 2)" shall mean an Investors' Agreement
(No. 2), substantially in the form of Exhibit C-2 to the Amended and
Restated Merger Agreement.
"permitted transferee" of any natural person shall mean (i) in
the case of the death of such person, such person's executors,
administrators, testamentary trustees, heirs, devisees and legatees and
(ii) such person's current or future spouse, parents, siblings or
descendants or such parents', siblings' or descendants' spouses (the
"Family Members").
"person" shall have the meaning given such term in the Amended
and Restated Merger Agreement.
"Principal Investor" shall mean R.E. Turner, III.
"Qualified Stockholder" shall mean any Charitable Transferee or
Qualified Trust from time to time bound as an "Investor" under an
Investors' Agreement (No. 2).
"Qualified Trust" shall mean any trust described in Section 664
of the Code of which the Principal Investor or members of his family are
income beneficiaries.
"Voting Power", when used with reference to any class or series
of securities of Holdco, or any classes or series of securities of Holdco
entitled to vote together as a single class or series, shall mean the power
of such class or series (or such classes or series) to vote for the
election of directors. For purposes of determining the percentage of Voting
Power of any class or series (or classes or series) beneficially owned by
any person, any securities not outstanding which are subject to conversion
rights, exchange rights, rights, warrants, options or similar securities
held by such person shall be deemed to be outstanding for the purpose of
computing the percentage of outstanding securities of the class or series
(or classes or series) beneficially owned by such person, but shall not be
deemed to be outstanding for the purpose of computing the percentage of the
class or series (or classes or series) beneficially owned by any other
person.
"Voting Securities", when used with reference to any person,
shall mean any securities of such person having Voting Power or any
securities convertible into or exchangeable for any securities having
Voting Power.
<PAGE>
ARTICLE II
Securities Act; Legend
SECTION 2.01. Transfers of Holdco Common Stock. None of the
Investors may offer for sale or sell any shares of Holdco Common Stock
acquired pursuant to the Amended and Restated Merger Agreement, or any
interest therein, except (a) pursuant to a registration of such shares
under the Securities Act and applicable state securities laws or (b) in a
transaction as to which such Investor has delivered an opinion of counsel
or other evidence reasonably satisfactory to Holdco, to the effect that
such transaction is exempt from, or not subject to, the registration
requirements of, the Securities Act and applicable state securities laws.
SECTION 2.02. Legends on Certificates. Each Investor shall hold
in certificate form all shares of Holdco Common Stock owned by such
Investor. Each certificate for shares of Holdco Common Stock issued to or
beneficially owned by a person that is subject to the provisions of this
Agreement shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO AN INVESTORS' AGREEMENT (NO. 1) DATED AS OF
(THE "INVESTORS' AGREEMENT"), AMONG
THE CORPORATION, THE ORIGINAL HOLDER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE AND CERTAIN OTHER
STOCKHOLDERS OF THE CORPORATION. A COPY OF THE
INVESTORS' AGREEMENT MAY BE OBTAINED FROM THE
CORPORATION FREE OF CHARGE. BY ITS ACCEPTANCE HEREOF,
THE HOLDER OF THIS CERTIFICATE AGREES TO COMPLY IN ALL
RESPECTS WITH THE REQUIREMENTS OF THE INVESTORS'
AGREEMENT.
ARTICLE III
Covenants of the Parties
SECTION 3.01. Standstill. None of the Investors may (and each
Investor shall cause its Affiliates and Associates that it controls, and
use reasonable efforts to
<PAGE>
cause its other Affiliates and Associates, not to), without the prior
written consent of the Board:
(a) publicly propose that any Investor or Qualified Stockholder
or any Affiliate or Associate of any Investor or Qualified Stockholder
enter into, directly or indirectly, any merger or other business
combination involving Holdco or propose to purchase, directly or
indirectly, a material portion of the assets of Holdco or any material
subsidiary of Holdco, or make any such proposal privately if it would
reasonably be expected to require Holdco to make a public announcement
regarding such proposal;
(b) make, or in any way participate in, directly or indirectly,
any "solicitation" of "proxies" (as such terms are used in Regulation
14A promulgated under the Exchange Act) to vote or consent with
respect to any Voting Securities of Holdco or become a "participant"
in any "election contest" (as such terms are defined or used in Rule
14a-11 under the Exchange Act) with respect to Holdco;
(c) form, join or participate in or encourage the formation of a
"group" (within the meaning of Section 13(d)(3) of the Exchange Act)
with respect to any Voting Securities of Holdco, other than a group
consisting solely of Investors and Qualified Stockholders;
(d) deposit any Voting Securities of Holdco into a voting trust
or subject any such Voting Securities to any arrangement or agreement
with respect to the voting thereof, other than any such trust,
arrangement or agreement (i) the only parties to, or beneficiaries of,
which are Investors and Qualified Stockholders and (ii) the terms of
which do not require or expressly permit any party thereto to act in a
manner inconsistent with this Agreement;
(e) initiate, propose or otherwise solicit stockholders of Holdco
for the approval of one or more stockholder proposals with respect to
Holdco as described in Rule 14a-8 under the Exchange Act, or induce or
attempt to induce any other person to initiate any stockholder
proposal with respect to Holdco;
<PAGE>
(f) except in accordance with Section 3.04, seek election to or
seek to place a representative on the Board or seek the removal of any
member of the Board;
(g) call or seek to have called any meeting of the stockholders
of Holdco;
(h)(A) solicit, seek to effect, negotiate with or provide
non-public information to any other person with respect to, (B) make
any statement or proposal, whether written or oral, to the Board or
any director or officer of Holdco with respect to, or (C) otherwise
make any public announcement or proposal whatsoever with respect to
any form of business combination transaction (with any person)
involving a change of control of Holdco or the acquisition of a
substantial portion of the equity securities or assets of Holdco or
any material subsidiary of Holdco, including a merger, consolidation,
tender offer, exchange offer or liquidation of Holdco's assets, or any
restructuring, recapitalization or similar transaction with respect to
Holdco or any material subsidiary of Holdco; provided, however, that
the foregoing shall not (x) apply to any discussion between or among
the Investors and the Qualified Stockholders or any of their
respective officers, employees, agents or representatives or (y) in
the case of clause (B) above, be interpreted to limit the ability of
any Investor or Qualified Stockholder, or any designee of any Investor
or Qualified Stockholder, on the Board to make any such statement or
proposal or to discuss any such proposal with any officer or director
of or advisor to Holdco or advisor to the Board unless, in either
case, it would reasonably be expected to require Holdco to make a
public announcement regarding such discussion, statement or proposal;
(i) otherwise act, alone or in concert with others, to seek to
control or influence the management or policies of Holdco (except for
(A) voting as a holder of Voting Securities in accordance with the
terms of such Voting Securities and (B) actions taken as a director or
officer of Holdco);
(j) publicly disclose any intention, plan or arrangement
inconsistent with the foregoing, or make any such disclosure privately
if it would reasonably be expected to require Holdco to make a public
<PAGE>
announcement regarding such intention, plan or
arrangement; or
(k) advise, assist (including by knowingly providing or arranging
financing for that purpose) or knowingly encourage any other person in
connection with any of the foregoing.
SECTION 3.02. Transfer Restrictions. None of the Investors may,
without the prior written consent of Holdco, sell, transfer, pledge,
encumber or otherwise dispose of, or agree to sell, transfer, pledge,
encumber or otherwise dispose of, any Voting Securities of Holdco, or any
rights or options to acquire such Voting Securities, except in a
transaction complying with any of the following clauses:
(a) to the underwriters in connection with an underwritten public
offering of shares of such securities on a firm commitment basis
registered under the Securities Act, pursuant to which the sale of
such securities is in a manner that is intended to effect a broad
distribution;
(b) to any wholly owned subsidiary of such Investor; provided,
however, that such transferee becomes a party to this Agreement as an
Investor;
(c) to any person in a transaction that complies with the volume
and manner of sale provisions contained in Rules 144(e) and Rule
144(f) as in effect on the date hereof under the Securities Act
(whether or not Rule 144 is in effect on the date of such
transaction); provided, however, that dispositions pursuant to this
clause (c) may not be made during any period that a person has made
and not withdrawn or terminated a tender or exchange offer for Voting
Securities of Holdco or announced its intention to make such an offer;
(d) to any person (including any pledgee of shares of Voting
Securities), other than a person that such Investor, or any of its
Affiliates or Associates, knows or, after commercially reasonable
inquiry should have known, beneficially owns or, after giving effect
to such sale, will beneficially own more than 5% of the aggregate
Voting Power of the Voting Securities of Holdco;
<PAGE>
(e) in the case of a natural person, to any permitted transferee
of such person; provided, however, that such transferee becomes a
party to this Agreement as an Investor;
(f) in a bona fide pledge of shares of Voting Securities of
Holdco to a financial institution to secure borrowings as permitted by
applicable laws, rules and regulations; provided, however, that (i)
such financial institution agrees to be bound by this Section 3.02 and
(ii) the borrowings so secured are full recourse obligations of the
pledgor and are entered into substantially simultaneously with such
pledge;
(g) upon five Business Days' prior notice to Holdco, pursuant to
the terms of any tender or exchange offer for Voting Securities of
Holdco made pursuant to the applicable provisions of the Exchange Act
or pursuant to any merger or consolidation of Holdco (but in the case
of any tender or exchange offer, only so long as each Investor and
Qualified Stockholder is at the time in substantial compliance with
the provisions of Sections 3.01 and 3.05(c), whether or not bound by
such provisions, and such tender or exchange offer is not materially
related to any past noncompliance with such provisions by any Investor
or Qualified Stockholder (whether or not bound by such provisions));
(h) a gift to a Charitable Transferee or Qualified Trust;
provided, however, that (i) at the time of such gift, the Principal
Investor and his Family Members constitute a sufficient number of the
directors or trustees, as appropriate, of such Charitable Transferee
or Qualified Trust to permit approval of matters by such Charitable
Transferee or Qualified Trust without the approval of any other
director or trustee of such Charitable Transferee or Qualified Trust
and (ii) such Charitable Transferee or Qualified Trust is or
simultaneously becomes a Qualified Stockholder (and Holdco agrees upon
request to enter into an Investors' Agreement (No. 2) with such
Charitable Transferee or Qualified Trust);
(i) to TCI Turner Preferred, Inc. ("TCITP") or its designee in
accordance with the Stockholders' Agreement
<PAGE>
dated as of the same date as this Agreement among TCITP, Holdco
and certain stockholders of Holdco; or
(j) to Holdco.
SECTION 3.03. Additional Agreements. None of the Investors may
(and each Investor shall cause its Affiliates and Associates that it
controls, and use reasonable efforts to cause its other Affiliates and
Associates, not to) (a) publicly request Holdco or any of its agents,
directly or indirectly, to amend or waive any provision of this Agreement
or (b) knowingly take any action that would reasonably be expected to
require Holdco to make a public announcement regarding the possibility of a
transaction with such Investor.
SECTION 3.04. Board Representation. (a) Upon execution of this
Agreement, Holdco shall use reasonable efforts to cause to be elected to
the Board two persons designated by the Principal Investor who are Eligible
Persons. "Eligible Person" means (i) the Principal Investor and (ii) any
other individual (A) who is reasonably acceptable to the Board, (B) whose
election to the Board would not, in the opinion of counsel for Holdco,
violate or be in conflict with, or result in any material limitation on the
ownership or operation of any business or assets of Holdco or any of its
subsidiaries under, any statute, law, ordinance, regulation, rule,
judgment, decree or order of any Governmental Entity and (C) who has agreed
in writing with Holdco to comply with Section 3.01 and to resign as a
director of Holdco if requested to do so pursuant to this Section 3.04.
With respect to each meeting of stockholders of Holdco at which any
designee of the Principal Investor on the Board comes up for reelection,
Holdco shall use reasonable efforts to cause such designee (or another
Eligible Person designated by the Principal Investor) to be included in the
list of candidates recommended by the Board for election to the Board. Upon
the death, resignation or removal of any designee of the Principal Investor
on the Board, Holdco shall use reasonable efforts to have the vacancy
thereby created filled with an Eligible Person designated by the Principal
Investor.
(b) Upon the Investors and (subject to Section 3.06) the
Qualified Stockholders, taken together, ceasing to own of record and
beneficially at least 50% of the Voting Securities of Holdco owned by the
Investors and the Qualified Stockholders, taken together, immediately
<PAGE>
following the Mergers (appropriately adjusted for stock dividends, stock
splits, reverse stock splits and similar transactions), the number of
persons that the Principal Investor shall be entitled to designate for
election to the Board shall be reduced to one. If at such time there are
two designees of the Principal Investor on the Board, the Principal
Investor shall specify which of such designees shall continue to be
entitled to the benefits of Section 3.04(a), and the other designee shall
thereafter cease to constitute a designee of the Principal Investor for the
purposes of Section 3.04(a) (and, if requested by Holdco, such other
designee shall resign from the Board).
(c) Upon (i) (A) the Investors and (subject to Section 3.06) the
Qualified Stockholders, taken together, ceasing to own of record and
beneficially at least one-third of the Voting Securities of Holdco owned by
the Investors and the Qualified Stockholders, taken together, immediately
following the Mergers (appropriately adjusted for stock dividends, stock
splits, reverse stock splits and similar transactions) and (B) the
Principal Investor ceasing to be an employee of Holdco or any subsidiary of
Holdco, (ii) the death or incapacity of the Principal Investor, (iii) the
wilful violation in any material respect of this Article by any Investor or
(iv) five business days' prior written notice of termination from the
Principal Investor, the number of persons that the Principal Investor shall
be entitled to designate for election to the Board shall be reduced to
zero. At such time, if requested by Holdco, each designee of the Principal
Investor shall resign from the Board.
(d) The right of the Principal Investor to membership on the
Board, as set forth in his employment agreement with Holdco to be entered
into at the Effective Time of the Mergers, is not in addition to his rights
under this Section 3.04.
(e) For the purposes of the calculations required by the first
sentence of Section 3.04(b) and by Section 3.04(c)(i)(A), any Exempt Stock
(as defined below) shall be excluded from the calculation of each of (i)
the Voting Securities of Holdco owned of record and beneficially by the
Qualified Stockholders on the date of such calculation and (ii) the Voting
Securities of Holdco owned by the Qualified Stockholders immediately
following the Mergers. "Exempt Stock" shall mean (A) any Holdco Common
Stock acquired by any Qualified Stockholder pursuant to the
<PAGE>
TBS Merger in exchange for Company Capital Stock owned by such Qualified
Stockholder on September 22, 1995, and (B) any Holdco Common Stock acquired
after the Effective Time of the Mergers by any Qualified Stockholder other
than pursuant to Section 3.02(h).
SECTION 3.05. Additional Covenants. (a) None of the Investors
shall permit any other Investor that is at any time after the date hereof a
wholly owned subsidiary of such Investor to cease to be a wholly owned
subsidiary of such Investor for so long as such other Investor owns any
Voting Securities of Holdco.
(b) None of the Investors shall permit any of its subsidiaries,
other than any such subsidiaries that are Investors, to hold, directly or
indirectly, any shares of Voting Securities of Holdco.
(c) Each Investor shall use reasonable efforts to cause each of
its officers, employees, agents and representatives not to take any action
that would be prohibited under Section 3.01 if taken by such Investor.
SECTION 3.06. Certain Special Provisions. If at any time the
Principal Investor and his Family Members cease to constitute a sufficient
number of the directors or trustees, as applicable, of any Qualified
Stockholder to permit approval of matters by such Qualified Stockholder
without the approval of any other director or trustee of such Qualified
Stockholder, the Voting Securities of Holdco held by such Qualified
Stockholder shall thereafter be deemed not to be owned of record and
beneficially by such Qualified Stockholder (or any Investor) for the
purposes of Sections 3.04(b) and 3.04(c). The Principal Investor shall be
liable to Holdco under this Agreement for any actions taken by any
Qualified Stockholder that would have been violations of Section 3.01, 3.03
or 3.05(c) had such Qualified Stockholder been bound by such Sections.
ARTICLE IV
Miscellaneous
SECTION 4.01. Termination. (a) The covenants and agreements of
the Investors in Sections 3.01, 3.03 and 3.05(c) shall terminate, except
with respect to liability for prior breaches thereof, upon the last to
occur of
<PAGE>
(i) the Principal Investor ceasing to be an employee of Holdco or any
subsidiary of Holdco, (ii) the Principal Investor ceasing to be a member of
the Board, and (iii) the Principal Investor ceasing pursuant to Section
3.04(c) to be entitled to designate any Eligible Persons for election to
the Board.
(b) The covenants and agreements of the Investors in Section 3.02
shall terminate, except with respect to liability for prior breaches
thereof, on the fifth anniversary of the Effective Time of the Mergers.
(c) The covenants and agreements of Holdco in Section 3.04 shall
terminate, except with respect to liability for prior breaches thereof,
upon the Principal Investor ceasing pursuant to Section 3.04(c) to be
entitled to designate any Eligible Persons for election to the Board.
(d) Without limiting Sections 4.01(a) and 4.01(b), the covenants
and agreements of the Investors in Article III shall terminate, except with
respect to liability for prior breaches thereof, if the Board does not (i)
on the date of execution of this Agreement, elect to the Board the two
Eligible Persons designated by the Principal Investor, (ii) recommend for
election by the stockholders of Holdco to the Board any Eligible Person
designated by the Principal Investor in accordance with Section 3.04 or
(iii) reasonably promptly after request from the Principal Investor, fill
any vacancy created on the Board upon the death, resignation or removal of
any designee of the Principal Investor on the Board with another Eligible
Person designated by the Principal Investor, in each case if the effect of
such failure is that the Principal Investor does not have the
representation on the Board to which he is entitled under Section 3.04.
(e) The other covenants and agreements set forth in this
Agreement shall terminate, except with respect to liability for prior
breaches thereof, upon the later of (i) the termination of Section 3.01
pursuant to Section 4.01(a) or 4.01(d) and (ii) the termination of Section
3.02 pursuant to Section 4.01(b) or 4.01(d).
SECTION 4.02. Entire Agreement; Assignment. This Agreement (i)
constitutes the entire agreement between the parties with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, among the parties with respect to
the
<PAGE>
subject matter hereof and (ii) except as provided in Section 3.02, shall
not be assigned by operation of law or otherwise without the prior written
consent of the other parties. Any person who agrees pursuant to Section
3.02 to become a party to this Agreement as an Investor shall thereupon
become, and have all the rights and obligations of, an Investor hereunder.
Any attempted assignment or transfer in violation of this Section 4.02
shall be void and of no effect. Subject to the foregoing, the provisions of
this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective estates, heirs, successors and assigns.
SECTION 4.03. Amendments; Waivers. 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 waiver
by any party of a breach of any provision of this Agreement shall not
operate, or be construed, as a waiver of any subsequent breach thereof.
SECTION 4.04. 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 any Investor, to:
R.E. Turner, III
In care of Turner Broadcasting System, Inc.
One CNN Center
Box 105366
Atlanta, GA 30348-5366
Facsimile: (404) 827-3000
<PAGE>
For Courier delivery:
One CNN Center
Atlanta, GA 30303
Attention: General Counsel
If to Holdco, to:
Time Warner Inc.
75 Rockefeller Plaza
New York, NY 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: Peter S. Wilson, Esq.
SECTION 4.05. Governing Law. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of
Delaware.
SECTION 4.06. Specific Performance. Each party recognizes and
acknowledges that a breach by it of Article III would cause the other
parties to sustain damages for which they would not have an adequate remedy
at law for money damages, and therefore each party agrees that in the event
of any such breach any of the other parties shall be entitled to seek the
remedy of specific performance of such Article III and injunctive and other
equitable relief in addition to any other remedy to which it may be
entitled, at law or in equity.
SECTION 4.07. 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 4.08. Descriptive Headings. The descriptive headings used
herein are inserted for
<PAGE>
convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
SECTION 4.09. Severability. Whenever possible, each provision or
portion of any provision of this Agreement shall be interpreted in such
manner as to be effective but if any provision or portion of any provision
of this Agreement is held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect
any other provision or portion of any provision, and this Agreement will be
reformed, construed and enforced 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 provision.
<PAGE>
SECTION 4.10. Attorneys' 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 attorneys' fees, costs and
necessary disbursements, in addition to any other relief to which such
party may be entitled.
IN WITNESS WHEREOF, Holdco and each Investor have caused this
Agreement to be duly executed as of the day and year first above written.
TW INC.,
by
-------------------------------
Name:
Title:
-------------------------------
R.E. Turner, III
TURNER OUTDOOR, INC.,
by
-------------------------------
Name:
Title:
<PAGE>
EXHIBIT C-2
INVESTORS' AGREEMENT (NO. 2) dated as of
, among TW INC. (to be renamed TIME WARNER
INC.), a Delaware corporation ("Holdco"), and the
other parties signatory hereto (each an "Investor").
This Agreement is entered into pursuant to Section 6.02(f) of the
Amended and Restated Agreement and Plan of Merger (the "Amended and
Restated Merger A greement"), among Time Warner Inc., a Delaware
corporation ("Parent"), Holdco, Time Warner Acquisition Corp., a Delaware
corporation and a direct wholly owned subsidiary of Holdco, TW Acquisition
Corp., a Georgia corporation and a direct wholly owned subsidiary of
Holdco, and Turner Broadcasting System, Inc., a Georgia corporation (the
"Company"). In connection with the TBS Merger (as defined in the Amended
and Restated Merger Agreement), subject to certain exceptions, (a) each
share of Class A Common Stock, par value $.0625 per share, of the Company
and each share of Class B Common Stock, par value $.0625 per share, of the
Company will be converted into the right to receive 0.75 shares of Common
Stock, par value $0.01 per share, of Holdco ("Holdco Common Stock") and (b)
each share of Class C Convertible Preferred Stock, par value $.125 per
share, of the Company will be converted into the right to receive 4.80
shares of Holdco Common Stock.
Accordingly, it is hereby agreed as follows:
ARTICLE I
Definitions
SECTION 1.01. Definitions. Capitalized terms used but not defined
herein shall have the meanings assigned to such terms in the Amended and
Restated Merger Agreement. For purposes of this Agreement, the following
terms shall have the following meanings:
"Affiliate" and "Associate", when used with reference to any
person, shall have the respective meanings ascribed to such terms in Rule
12b-2 of the Exchange Act, as in effect on the date of this Agreement.
<PAGE>
A person shall be deemed the "beneficial owner" of, and shall be
deemed to "beneficially own", and shall be deemed to have "beneficial
ownership" of:
(i) any securities that such person or any of such person's
Affiliates or Associates is deemed to "beneficially own" within the
meaning of Rule 13d-3 under the Exchange Act, as in effect on the date
of this Agreement; and
(ii) any securities (the "underlying securities") that such
person or any of such person's Affiliates or Associates has the right
to acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement, arrangement or
understanding (written or oral), or upon the exercise of conversion
rights, exchange rights, rights, warrants or options, or otherwise (it
being understood that such person shall also be deemed to be the
beneficial owner of the securities convertible into or exchangeable
for the underlying securities).
"Covered Holdco Common Stock" shall mean (i) any shares of Holdco
Common Stock transferred to an Investor pursuant to Section 3.02(h) of the
Investors' Agreement (No. 1) dated as of [ ] among Holdco and certain
stockholders of Holdco and (ii) any shares of Holdco Common Stock acquired
by any Investor pursuant to the TBS Merger otherwise than in exchange for
Company Common Stock owned by such Investor on September 22, 1995.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
in effect on the date in question, unless otherwise specifically provided.
"Investor" shall mean each person that executes this Agreement in
such capacity.
"person" shall have the meaning given such term in the Amended
and Restated Merger Agreement.
"Voting Power", when used with reference to any class or series
of securities of Holdco, or any classes or series of securities of Holdco
entitled to vote together as a single class or series, shall mean the power
of such class or series (or such classes or series) to vote for the
election of directors. For purposes of determining the percentage of Voting
Power of any class or series (or
<PAGE>
classes or series) beneficially owned by any person, any securities not
outstanding which are subject to conversion rights, exchange rights,
rights, warrants, options or similar securities held by such person shall
be deemed to be outstanding for the purpose of computing the percentage of
outstanding securities of the class or series (or classes or series)
beneficially owned by such person, but shall not be deemed to be
outstanding for the purpose of computing the percentage of the class or
series (or classes or series) beneficially owned by any other person.
"Voting Securities", when used with reference to any person,
shall mean any securities of such person having Voting Power or any
securities convertible into or exchangeable for any securities having
Voting Power.
ARTICLE II
Securities Act; Legend
SECTION 2.01. Transfers of Holdco Common Stock. None of the
Investors may offer for sale or sell any shares of Holdco Common Stock
acquired pursuant to the Amended and Restated Merger Agreement, or any
interest therein, except (a) pursuant to a registration of such shares
under the Securities Act and applicable state securities laws or (b) in a
transaction as to which such Investor has delivered an opinion of counsel
or other evidence reasonably satisfactory to Holdco, to the effect that
such transaction is exempt from, or not subject to, the registration
requirements of, the Securities Act and applicable state securities laws.
SECTION 2.02. Legends on Certificates. Each Investor shall hold
in certificate form all shares of Covered Holdco Common Stock owned by such
Investor. Each certificate for shares of Covered Holdco Common Stock issued
to or beneficially owned by a person that is subject to the provisions of
this Agreement shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO AN INVESTORS' AGREEMENT (NO. 2) DATED AS OF
, (THE "INVESTORS' AGREEMENT"),
BETWEEN THE CORPORATION AND THE HOLDER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE. A COPY OF
THE INVESTORS' AGREEMENT MAY BE OBTAINED FROM THE
<PAGE>
CORPORATION FREE OF CHARGE. BY ITS ACCEPTANCE HEREOF,
THE HOLDER OF THIS CERTIFICATE AGREES TO COMPLY IN ALL
RESPECTS WITH THE REQUIREMENTS OF THE INVESTORS'
AGREEMENT.
ARTICLE III
Covenants of the Investors
SECTION 3.01. Transfer Restrictions. None of the Investors may,
without the prior written consent of Holdco, sell, transfer, pledge,
encumber or otherwise dispose of, or agree to sell, transfer, pledge,
encumber or otherwise dispose of, any Covered Holdco Common Stock, or any
rights or options to acquire Covered Holdco Common Stock, except in a
transaction complying with any of the following clauses:
(a) to the underwriters in connection with an underwritten public
offering of shares of such securities on a firm commitment basis
registered under the Securities Act, pursuant to which the sale of
such securities is in a manner that is intended to effect a broad
distribution;
(b) to any person in a transaction that complies with the volume
and manner of sale provisions contained in Rules 144(e) and Rule
144(f) as in effect on the date hereof under the Securities Act
(whether or not Rule 144 is in effect on the date of such
transaction); provided, however, that dispositions pursuant to this
clause (b) may not be made during any period that a person has made
and not withdrawn or terminated a tender or exchange offer for Voting
Securities of Holdco or announced its intention to make such an offer;
(c) to any person (including any pledgee of Covered Holdco Common
Stock), other than a person that such Investor, or any of its
Affiliates, Associates, directors or trustees, knows or, after
commercially reasonable inquiry should have known, beneficially owns
or, after giving effect to such sale, will beneficially own more than
5% of the aggregate Voting Power of the Voting Securities of Holdco;
(d) in a bona fide pledge of shares of Covered
<PAGE>
Holdco Common Stock to a financial institution to secure borrowings as
permitted by applicable laws, rules and regulations; provided,
however, that (i) such financial institution agrees to be bound by
this Section 3.01 and (ii) the borrowings so secured are full recourse
obligations of the pledgor and are entered into substantially
simultaneously with such pledge;
(e) upon five Business Days' prior notice to Holdco, pursuant to
the terms of any tender or exchange offer for Covered Holdco Common
Stock made pursuant to the applicable provisions of the Exchange Act
or pursuant to any merger or consolidation of Holdco;
(f) to TCI Turner Preferred, Inc. ("TCITP") or its designee in
accordance with the Stockholders' Agreement dated as of [ ] among
TCITP, Holdco and certain stockholders of Holdco; or
(g) to Holdco.
ARTICLE IV
Miscellaneous
SECTION 4.01. Termination. The covenants and agreements of the
Investors in Section 3.01 shall terminate, except with respect to liability
for prior breaches thereof, on the earlier of (a) the fifth anniversary of
the Effective Time of the Mergers and (b) the date on which the covenants
and agreements contained in Section 3.02 of the Investors' Agreement (No.
1) dated as of [ ], among Holdco and certain of its other stockholders,
have been terminated.
SECTION 4.02. Entire Agreement; Assignment. This Agreement (i)
constitutes the entire agreement between the parties with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, among the parties with respect to
the subject matter hereof and (ii) shall not be assigned by operation of
law or otherwise without the prior written consent of the other parties.
Any attempted assignment or transfer in violation of this Section 4.02
shall be void and of no effect. Subject to the foregoing, the provisions of
this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective
<PAGE>
successors and assigns.
SECTION 4.03. Amendments; Waivers. 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 waiver
by any party of a breach of any provision of this Agreement shall not
operate, or be construed, as a waiver of any subsequent breach thereof.
SECTION 4.04. 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 any Investor, to:
R.E. Turner, III
In care of Turner Broadcasting System, Inc.
One CNN Center
Box 105366
Atlanta, GA 30348-5366
Facsimile: (404) 827-3000
For Courier delivery:
One CNN Center
Atlanta, GA 30303
Attention: General Counsel
If to Holdco, to:
Time Warner Inc.
75 Rockefeller Plaza
New York, NY 10019
Facsimile: (212) 956-7281
Attention: General Counsel
<PAGE>
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: Peter S. Wilson, Esq.
SECTION 4.05. Governing Law. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of
Delaware.
SECTION 4.06. Specific Performance. Each party recognizes and
acknowledges that a breach by it of Article III would cause the other
parties to sustain damages for which they would not have an adequate remedy
at law for money damages, and therefore each party agrees that in the event
of any such breach any of the other parties shall be entitled to seek the
remedy of specific performance of such Article III and injunctive and other
equitable relief in addition to any other remedy to which it may be
entitled, at law or in equity.
SECTION 4.07. 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 4.08. 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 4.09. Severability. Whenever possible, each provision or
portion of any provision of this Agreement shall be interpreted in such
manner as to be effective but if any provision or portion of any provision
of this Agreement is held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect
any other provision or portion of any provision, and this Agreement will be
reformed, construed and enforced as if such invalid, illegal or
unenforceable
<PAGE>
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 provision.
SECTION 4.10. Attorneys' 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 attorneys' fees, costs and
necessary disbursements, in addition to any other relief to which such
party may be entitled.
IN WITNESS WHEREOF, Holdco and each Investor have caused this
Agreement to be duly executed as of the day and year first above written.
TW INC.,
by
-------------------------------
Name:
Title:
INITIAL INVESTORS:
TURNER FOUNDATION, INC.,
by
-------------------------------
Name:
Title:
ROBERT E. TURNER CHARITABLE
FOUNDATION UNITRUST NO. 2,
by
-------------------------------
Name:
Title:
Exhibit 10(a)
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
Page
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions................................................2
SECTION 1.2 Terms Generally...........................................11
ARTICLE II
COVENANTS WITH RESPECT TO THE MERGER
SECTION 2.1 Agreement to Vote; Related Matters........................11
SECTION 2.2 Reasonable Efforts........................................14
SECTION 2.3 Agreement to Abandon......................................14
SECTION 2.4 Closing Deliveries........................................15
SECTION 2.5 Dissenters' Rights........................................16
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of LMC Parent and the
Shareholders..............................................16
SECTION 3.2 Representations and Warranties of Old TW..................18
SECTION 3.3 Representations and Warranties of Holdco..................20
ARTICLE IV
CERTAIN POST-CLOSING COVENANTS
SECTION 4.1 Voting Trust; Share Exchange..............................22
SECTION 4.2 No Redemption.............................................24
SECTION 4.3 Certain Post-Closing Compensation Obligations.............24
2
<PAGE>
ARTICLE V
AMENDMENTS TO CERTAIN EXHIBITS
SECTION 5.1 Form of First Refusal Agreement...........................27
SECTION 5.2 Form of Option Agreement..................................27
SECTION 5.3 Form of LMC Registration Rights Agreement.................27
SECTION 5.4 Form of Voting Trust Agreement............................28
SECTION 5.5 Assignment to and Assumption by Holdco....................28
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 Expenses..................................................28
SECTION 6.2 Specific Performance......................................29
SECTION 6.3 Amendments; Termination...................................29
SECTION 6.4 Successors and Assigns....................................29
SECTION 6.5 Entire Agreement..........................................29
SECTION 6.6 Notices...................................................29
SECTION 6.7 Governing Law.............................................31
SECTION 6.8 Counterparts; Effectiveness...............................31
SECTION 6.9 Descriptive Headings......................................31
SECTION 6.10 Severability..............................................31
SECTION 6.11 Attorney's Fees...........................................32
SECTION 6.12 Obligations of Old TW and Holdco Joint and Several........32
SECTION 6.13 Agreement by LMC Parent with Respect to
Authorized Shares of Holdco LMC Common Stock............32
3
<PAGE>
EXHIBITS AND SCHEDULES ATTACHED HERETO
EXHIBIT K Terms of Non-Voting Holdco LMC Common Stock
EXHIBIT L Terms of Voting Holdco LMC Common Stock
Schedule I Schedule of Shareholder Shares
Schedule 3.1 Litigation
EXHIBITS TO THE ORIGINAL LMC AGREEMENT
DEEMED TO BE EXHIBITS HERETO
EXHIBIT A Terms of Non-Voting Exchange Preferred Stock
EXHIBIT B Form of First Refusal Agreement
EXHIBIT C Terms of Voting Exchange Preferred Stock
EXHIBIT D Form of Option Agreement
EXHIBIT E Program Service Agreement
EXHIBIT F Form of LMC Registration Rights Agreement
EXHIBIT G Form of Rights Amendment
EXHIBIT H SportSouth Agreement
EXHIBIT I Form of Sunshine Agreement
EXHIBIT J Form of Voting Trust Agreement
4
<PAGE>
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 ("LMC Sub") and certain other
subsidiaries of LMC Parent listed with LMC Sub
under "Subsidiaries of LMC Parent" on the
signature pages hereto (LMC Sub and such
subsidiaries collectively, the "Shareholders").
Recitals
A. This Agreement amends and restates 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. Concurrently with the execution and delivery of this
Amendment, (1) the Original Merger Agreement is being amended and
restated (as so amended and restated, 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"), are 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 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.
5
<PAGE>
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. Old TW, LMC Parent and the Shareholders desire to amend
and restate the Original LMC Agreement as provided herein and to add
Holdco as a party thereto, and Holdco desires to become a party to
this 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 do hereby agree as follows:
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
6
<PAGE>
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 Voting Trust, the
Registration Rights Agreement, the First Refusal Agreement, the Option
Agreement, the Program Service Agreement, the Rights Amendment (if
entered into), the TW/LMC Letter Agreement, the SportSouth Agreement
and the Sunshine Agreement, and shall also include the Contribution
and Exchange Agreement and the Elective Merger Agreement, at all times
from and after the execution and delivery of such agreements,
respectively.
"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, 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, no Liberty 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. Prior to the effective time of the 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.
"Blended Rate", as to any Liberty Party 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 during such taxable year as
contemplated by Section 4.3, 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) 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) for such
taxable year. Such tax rate shall be determined taking into account
such Liberty 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
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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 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, and December 1, 1995, 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 that
certain Contribution and Exchange Agreement, to be dated as of
September 22, 1995, relating to the Contribution Election, as such
term is defined in the drafts of the Elective Merger Agreement
attached to the TW/LMC Letter Agreement.
"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
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(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.
"Covered TW Securities" shall mean:
(i) (A) if the TBS Merger is consummated, 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) if the Contribution Election (as defined in the
drafts of the Elective Merger Agreement attached to the
TW/LMC Letter Agreement) is made and LMC Sub makes the
contribution of its assets described therein, the
shares of TW Parent Common Stock received by LMC Sub in
connection with such contribution, determined in
accordance with the Contribution and Exchange
Agreement, assuming that the shares of Company Capital
Stock so contributed by LMC Sub or owned by the
subsidiaries of LMC Sub so contributed did not include
any shares of Company Capital Stock not beneficially
owned by LMC Parent on September 22, 1995; and
(C) if the Elective Merger is consummated, the shares
of TW Parent Common Stock received by LMC Parent or its
designee in connection with the consummation of the
Elective Merger (determined in accordance with the
Elective Merger Agreement assuming that the shares of
Company Capital Stock owned by LMC Sub and its
subsidiaries immediately prior to the consummation of
the Elective Merger did not include any shares of
Company Capital Stock not beneficially owned by LMC
Parent on September 22, 1995), plus,
(x) if the TBS Merger is thereafter consummated, such
additional number of shares of TW Parent Common Stock, if any,
issuable to
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LMC Parent or its designee pursuant to Section 3.3 of the
Elective Merger Agreement; and
(y) if the TW Merger is thereafter consummated, any shares
of Holdco LMC Common Stock beneficially owned by LMC Parent
immediately following the consummation of the TW Merger as a
result of the conversion in the TW Merger of any then outstanding
Covered TW Securities; and
(ii) the shares of Voting Exchange Stock issued
pursuant to the Option Agreement; and
(iii) all shares of Exchange Stock for which the shares
of TW Parent Common Stock and Exchange Stock referred to in
clauses (i) and (ii) above and this clause (iii) 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.
"Elective Merger" shall mean the merger of LMC Sub into Old
TW or, at the election of Old TW, into a wholly owned subsidiary of
Old TW, as contemplated by the Elective Merger Agreement.
"Elective Merger Agreement" shall mean that certain
Agreement and Plan of Merger, to be dated as of September 22, 1995,
among Old TW, LMC Parent and LMC Sub, as contemplated by the TW/LMC
Letter Agreement.
"Exchange Stock" shall mean (i) the Exchange Preferred
Stock, with respect to all times prior to the Closing and (ii) the
Holdco LMC Common Stock, with respect to all times from and after the
Closing.
"Exchange Preferred Stock" shall mean the Non-Voting
Exchange Preferred Stock and the Voting Exchange Preferred Stock,
collectively.
"FCC" shall mean the Federal Communications Commission and
any successor agency or other agency charged with the administration
of any Communications Law.
"First Refusal Agreement" shall mean that certain
Stockholders Agreement substantially in the form of Exhibit B to the
Original LMC Agreement, as amended hereby, to be entered into by TW
Parent, the Shareholders and certain other shareholders of the Company
at or prior to the Closing.
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"Holdco LMC Common Stock" shall mean the Non-Voting Holdco
LMC 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.
"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 that is controlled by
TCI, shall also mean TCI and each Affiliate of TCI that is controlled
by TCI.
"Non-Voting Exchange Stock" shall mean (i) the Non-Voting
Exchange Preferred Stock, with respect to all times prior to the
Closing and (ii) the Non-Voting Holdco LMC Common Stock, with respect
to all times from and after the Closing.
"Non-Voting Exchange Preferred Stock" shall mean the Series
J Non-Voting Participating Convertible Preferred Stock of Old TW,
having the terms set forth on Exhibit A to the Original LMC Agreement.
"Non-Voting Holdco LMC Common Stock" shall mean the Series
LMCN-V Common Stock of Holdco, having the terms set forth in Exhibit K
hereto.
"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 Agreement" shall mean that certain Option Agreement
substantially in the form of Exhibit D to the Original LMC Agreement,
as amended hereby, to be entered into by TW Parent and LMC Parent at
or prior to the Closing.
"Option Consideration" shall mean the shares of Voting
Exchange Stock to be issued and delivered by TW Parent pursuant to the
Option Agreement.
"person" shall have the meaning ascribed to such term in the
Amended and Restated Merger Agreement and shall include any
Governmental Entity.
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"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) 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 (b) of imposing or resulting
in the imposition under any Specified Law on the Liberty Parties or
any of them of damages or penalties by reason of or as a result of
such continued ownership or (c) of requiring the divestiture of, or
resulting in the requirement to divest, any of such TW Securities by
any Liberty Party under any Specified Law, or (d) of requiring, or
resulting in the requirement, under any Specified Law that any Liberty
Party discontinue any business or divest of any business or assets or
that any license that such Liberty 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.
"Program Service Agreement" shall mean the letter agreement,
dated September 15, 1995 between Satellite Services, Inc. ("SSI") and
the Company with respect to the provision of certain program services
to SSI, a copy of which is annexed as Exhibit E to the Original LMC
Agreement.
"Registration Rights Agreement" shall mean the LMC
Registration Rights Agreement substantially in the form of Exhibit F
to the Original LMC Agreement, as amended hereby, to be entered into
by TW Parent, LMC Parent and the Shareholders 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
continuing until the first time that the ownership or deemed ownership
by the Liberty Parties of the TW Parent Common Stock and other voting
securities of TW Parent then owned by the Liberty Parties (assuming
conversion in full of all Non-Voting Exchange Stock) would, assuming
the absence of any restrictions on the exercise by the Liberty Parties
of the rights of a holder of TW Common Stock or other voting
securities of TW Parent provided by a voting trust or other
arrangement satisfactory to the FCC, not 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). Notwithstanding
the foregoing, (a) if the Voting Trust is terminated prior to the
expiration of the Restriction Period and the TW Securities held by the
trustee thereunder are released to the Liberty Parties, then unless
LMC Parent complies with its covenant pursuant to Section 4.1 to
deliver such TW Securities to TW Parent for exchange for Non-Voting
Exchange
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Stock within five business days thereafter, the Restriction Period
shall be deemed to terminate upon the expiration of such five business
day period, and (b) if any Non-Voting Exchange Stock is converted into
TW Parent Common Stock or into Voting Exchange Stock by the Liberty
Parties, then the Restriction Period shall be deemed to terminate upon
such conversion.
"Rights Amendment" shall mean those amendments described on
Exhibit G to the Original LMC Agreement to the terms of the Rights
Agreement.
"Specified Law", when used with respect to the Liberty
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 and (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 to which a Liberty Party, any of its
assets or any business conducted by it is subject. 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.
"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 as Exhibit H to the Original LMC Agreement.
"Sunshine Agreement" shall mean an agreement substantially
in the form of Exhibit I 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.
"Turner Letter" shall mean those certain letters dated
September 22, 1995, and December 1, 1995, from R.E. Turner, III to Old
TW and LMC Parent.
"TW/LMC Letter Agreement" shall mean the letter dated
September 22, 1995 from Old TW to LMC Parent with respect to the
negotiation, execution and delivery of the Elective Merger Agreement.
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"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 Exchange Stock and the
Non-Voting Exchange Stock.
"Voting Exchange Stock" shall mean (i) the Voting Exchange
Preferred Stock, with respect to all times prior to the Closing and
(ii) the Voting Holdco LMC Common Stock, with respect to all times
from and after the Closing.
"Voting Exchange Preferred Stock" shall mean the Series K
Voting Participating Convertible Preferred Stock of Old TW, having the
terms set forth on Exhibit C to the Original LMC Agreement.
"Voting Holdco LMC Common Stock" shall mean the Series LMC
Common Stock of Holdco, having the terms set forth in Exhibit L
hereto.
"Voting Trust" shall mean the Voting Trust Agreement
substantially in the form of Exhibit J to the Original LMC Agreement,
as amended hereby, to be entered into by the Shareholders and the
Trustee named therein at the Closing, subject however to Section 4.1.
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
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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
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 and shall not have been 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
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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 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"),
Tele-Communications, Inc. ("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, the Amended and Restated Merger Agreement, the
Elective Merger Agreement and the Contribution and Exchange 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, the Elective Merger Agreement, the Contribution and
Exchange Agreement 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.
(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 of assets or with respect
to any existing or future business or activities or its
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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
Exchange Stock pursuant to the Amended and Restated Merger Agreement,
the Option 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 Exchange Stock or
Non-Voting Exchange 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, the holding of TW Parent
Common Stock and other TW Securities in the voting trust created by,
and in accordance with the terms of, the Voting Trust, the required
exchange of TW Parent Common Stock for Voting or Non-Voting Exchange
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 existing pledge of any shares of
capital stock of the Company held by LMC Parent, such Shareholder or
Affiliate until the Closing.
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, or (iii) subject to Section 4.1, to agree to
any change to the terms of the Voting Trust (including the identity of
the Trustee), this Agreement or any of the other Additional
Agreements.
SECTION 2.3 Agreement to Abandon. Unless the Elective Merger
has theretofore occurred, 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:
(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
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or any other Transaction shall be illegal, (ii) the consummation of
the Mergers or any other Transaction would result in the imposition on
the Liberty Parties of damages or penalties (other than any such
damages or penalties arising out of a breach of this Agreement or any
Additional Agreement 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) or (iii) 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); 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, 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; 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 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 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
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(h) as of the date fixed for the Closing, any required
approval by the stockholders of Old TW of the issuance 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 Program Service 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. Immediately following the
Effective Time of the Mergers (or the effective time of the Elective
Merger, as applicable), TW Parent shall deliver to LMC Parent, or to
LMC Parent's designee (which shall be a wholly-owned subsidiary of LMC
Parent) the Option Consideration. LMC Parent and TW Parent shall each
deliver to the other at the Closing (or the closing of the Elective
Merger, as applicable), 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.
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.
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
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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 (a) the Investors Agreement
dated as of June 3, 1987, among the Company and the original holders
of the 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 the Company, R.E. Turner, III, and the original
holders of the Class C Preferred Stock; (c) the Voting Agreement dated
as of June 3, 1987, among certain holders of Class C Preferred Stock
and (d) 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.
(b) LMC Parent and the Shareholders each have the 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 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 has 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 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
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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, (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 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
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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. All shares of Voting Exchange Preferred
Stock and Non-Voting Exchange Preferred Stock which may be issued
pursuant to Sections 4.1 or 4.2 of this Agreement or pursuant to the
Option Agreement will be, when issued, duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive
rights.
(b) Old TW 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 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 has 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 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,
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 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
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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, (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 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 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
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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 September 22, 1995,
including, without limitation, all certificates of designation. As of
September 22, 1995, 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) to effect any such amendment.
All shares of Holdco LMC Common Stock which may be issued pursuant to
Sections 4.1 or 4.2 of this Agreement or pursuant to the Option
Agreement will be, when issued, duly authorized, validly issued, fully
paid and nonassessable and not subject to preemptive rights.
(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
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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, (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 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
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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 Voting Trust; Share Exchange. Immediately
following the Effective Time of the Mergers and, if earlier, the
effective time of the Elective Merger (and subject to the third
sentence of this Section), 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 Voting Exchange Stock. Each
Shareholder shall deposit the shares of Voting Exchange Stock received
for such Covered TW Securities with the Trustee under the Voting Trust
and take such other action as may be required of it pursuant to the
Voting Trust. Notwithstanding the foregoing, if the FCC conditions its
required consent or approval in connection with the Mergers upon any
changes to the terms of the Voting Trust or the identity of the
Trustee thereunder, or does not accept that the Voting Trust, without
such changes, would be sufficient to preclude the Liberty Parties from
having an attributable interest in the assets and businesses of TW
Parent, and LMC Parent is unwilling to agree to such changes, then at
the request of either TW Parent or LMC Parent, in lieu of entering
into the Voting Trust, each Shareholder will cause to be delivered to
TW Parent all such Covered TW Securities for exchange into, and TW
Parent shall issue in exchange therefor, shares of Non- Voting
Exchange Stock. The rate of any exchange pursuant to the foregoing
provisions of this Section 4.1 shall be (i) in the case of an exchange
of TW Parent Common Stock for Exchange Preferred Stock, 1,000 shares
of TW Parent Common Stock for each whole share of Voting Exchange
Preferred Stock or Non-Voting Exchange Preferred Stock (and fractional
shares of Exchange Preferred Stock, as the case may be, will be issued
to each Shareholder for the balance of its shares of TW Parent Common
Stock) and (ii) in the case of an exchange of TW Parent Common Stock
for Holdco LMC Common Stock, one share of TW Parent Common Stock for
each whole share of Voting Holdco LMC Common Stock or Non-Voting
Holdco LMC Common Stock. An exchange for Voting Exchange Stock or
Non-Voting Exchange 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 Election or the Elective Merger,
such other agent of Holdco or Old TW, respectively, exercising a
similar function) to register all of the shares of TW Common Stock
issuable to such Shareholder in the Mergers (or the transactions
relating to the Contribution Election or the Elective Merger, 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 Voting Exchange
Stock or Non-Voting Exchange Stock, as the case may be. All shares of
Voting Exchange Stock and Non-Voting Exchange Stock delivered to the
Liberty Parties shall be duly authorized, validly issued, fully paid
and nonassessable and free of preemptive rights. If any shares of
Voting Exchange Stock are deposited under the Voting Trust, then until
the
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Voting Trust shall have terminated in accordance with its terms (and
irrespective of the termination of any other provision of this
Agreement), all voting securities of TW Parent from time to time owned
beneficially or of record by LMC Parent or any of its Controlled
Affiliates shall be deposited with the Trustee under the Voting Trust
and, for so long as LMC Parent is a Controlled Affiliate of TCI, all
voting securities of TW Parent owned beneficially or of record by TCI
or any of its Controlled Affiliates, other than 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, shall be deposited with the Trustee unless TCI has
made alternative arrangements for the voting of such shares that are
satisfactory to the FCC. If the Voting Trust is terminated prior to
the expiration of the Restriction Period, LMC Parent shall as promptly
as practicable notify TW Parent of such termination in writing and
shall cause to be delivered to TW Parent all TW Parent Common Stock
and Voting Exchange Stock distributed to the Liberty Parties from the
trust, for exchange for Non-Voting Exchange Stock. For so long prior
to the expiration of the Restriction Period as the Liberty Parties
hold any Non- Voting Exchange Stock, then until the expiration of the
Restriction Period all of the TW Parent Common Stock and Voting
Exchange Stock from time to time owned beneficially or of record by
LMC Parent or any of its Controlled Affiliates shall be delivered to
TW Parent for exchange for Non-Voting Exchange Stock and for so long
as LMC Parent is a Controlled Affiliate of TCI all TW Parent Common
Stock and Voting Exchange Stock owned beneficially or of record by TCI
or any of its Controlled Affiliates (other than any Excluded Shares)
shall also be delivered to TW Parent for exchange for Non-Voting
Exchange Stock. TW Parent shall issue, in exchange for the TW Parent
Common Stock delivered to it pursuant to the two immediately preceding
sentences, a number of shares of Non-Voting Exchange 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 Non-Voting Exchange Stock, and, in exchange for each
share of Voting Exchange Stock delivered to it at any time pursuant to
the two immediately preceding sentences, one share of Non-Voting
Exchanged Preferred Stock.
SECTION 4.2 No Redemption.
The Voting Exchange Stock and the Non-Voting Exchange Stock
shall not be redeemable at the option of TW Parent, including pursuant
to Section 5 of Article IV of Old TW's Restated Certificate of
Incorporation, as amended, as in effect on September 22, 1995 (or any
equivalent provision in any further amendment to or restatement of Old
TW's Restated Certificate of Incorporation or 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 of any of its shares of TW Common
Stock unless it has first given at least 10 business days prior
written notice of such redemption to each Liberty Party (which notice
shall state that TW Parent intends to effect the redemption of shares
of TW Common Stock by such Liberty 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 shall
have the right at any time prior to the redemption date to exchange
the shares
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<PAGE>
to be redeemed for a number of shares of Voting Exchange Stock that
are convertible into the same number of shares of TW Parent Common
Stock so called for redemption.
SECTION 4.3 Certain Post-Closing Compensation Obligations.
(a) If, after the Effective Time of the Mergers and during
the Restriction Period,
(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 by LMC Parent or any Applicable LMC Affiliate
or any breach by them of the Voting Trust,
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 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 compensate the Liberty Parties
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 shall notify TW Parent
thereof. Following the giving of such notice, LMC Parent 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 LMC Parent 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 compensate the Liberty Parties pursuant to this
Section 4.3 if a Prohibited Effect described in Section 4.3(a) occurs;
provided, however, that if LMC Parent and TW Parent also agree that
certain actions could be taken by LMC Parent and its Controlled
Affiliates to eliminate the Prohibited Effect which would be
substantially less burdensome to LMC Parent 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
28
<PAGE>
and its Controlled Affiliates and the costs to effect such actions
would be substantially less than the cost to compensate the Liberty
Parties pursuant to this Section 4.3, then subject to the following
sentence the Liberty Parties shall, at TW Parent's expense, use
reasonable efforts to take such actions. Notwithstanding the
foregoing, unless such Liberty Party otherwise agrees, no Liberty
Party shall be required to dispose of any of its TW Securities (other
than by way of exchange of TW Securities held pursuant to the Voting
Trust for Non-Voting Exchange Stock), to dispose of any assets or
discontinue any business or investments that LMC Parent determines in
good faith are material to the Liberty Parties or their respective
strategic objectives, or to agree to any restrictions or limitations
that LMC Parent 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 Liberty Parties, as
agreed by TW Parent and LMC Parent, 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 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 Liberty Parties pursuant to this Section 4.3.
(e) If TW Parent becomes obligated to compensate the Liberty
Parties pursuant to this Section 4.3, then TW Parent shall be required
to (i) compensate any Liberty 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 Liberty Parties
pursuant to clause (i) above equals or exceeds (on an as converted
basis, if applicable) 5% of the number of Covered TW Securities of all
Shareholders immediately after the Effective Time of the Mergers or,
if earlier, the effective time of the Elective Merger (including the
Option Consideration) (as such number 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 (exercised by notice in writing to TW
Parent within 60 days of the first disposition pursuant to clause (i)
above), compensate all Liberty Parties for the disposition of all the
Covered TW Securities if all TW Securities of all Liberty Parties are
disposed of within 12 months of such notice. If TW Parent becomes
obligated to compensate any Liberty Party pursuant to this Section
4.3, then such Liberty 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 disposition occurred and the estimated Adjustment Amount owed to
such Liberty Party with respect to its TW Securities so disposed of.
Within 30 days after delivery of such statement, TW Parent shall pay
to such
29
<PAGE>
Liberty Party the estimated Adjustment Amount by wire transfer of
immediately available funds to such account and in accordance with
such instructions as such Liberty Party shall have previously advised
TW Parent in writing. Within 30 days after the end of the taxable year
in which the disposition of TW Securities by such Liberty Party
occurred, such Liberty 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 Liberty Party. Within five days
after delivery of such statement, (i) TW Parent shall pay to Liberty
Party an amount equal to the amount by which the Adjustment Amount
exceeds the estimated Adjustment Amount, or (ii) such Liberty 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.
(g) LMC Parent 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 obtaining
actual knowledge of such occurrence. Terms used in this Section 4.3(g)
in quotation marks have the meanings given such terms (i) prior to the
Closing, in the Rights Agreement, as amended by the Rights Amendment,
and (ii) from and after the Closing, the Holdco Rights Plan, in each
case as the same may be subsequently amended to the actual knowledge
of LMC Parent from time to time.
ARTICLE V
AMENDMENTS TO CERTAIN EXHIBITS
SECTION 5.1 Form of First Refusal Agreement. Exhibit B to
the Original LMC Agreement, "Form of First Refusal Agreement", is
hereby amended so that the term "TW" used therein shall mean and refer
to (A) Old TW with respect to all times prior to the Closing, and (B)
Holdco, with respect to all times from and after the Closing.
SECTION 5.2 Form of Option Agreement. Exhibit D to the
Original LMC Agreement, "Form of Option Agreement", is hereby amended
so that:
(i) the term "Buyer" used therein shall mean and refer
to (A) Old TW, with respect to all times prior to the
Closing, and (B) Holdco, with respect to all times from and
after the Closing; and
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(ii) the term "Buyer Preferred Stock" used therein
shall be deleted and replaced with the term "Voting Exchange
Stock", which shall have the meaning given to such term in
this Agreement.
SECTION 5.3 Form of LMC Registration Rights Agreement.
Exhibit F to the Original LMC Agreement, "Form of LMC Registration
Rights Agreement" is amended so that:
(i) the term "Company" used therein shall mean and
refer to (A) Old TW, with respect to all times prior to the
Closing, and (B) Holdco, with respect to all times from and
after the Closing; and
(ii) the terms "Exchange Preferred Stock", "Non-Voting
Exchange Preferred Stock" and "Voting Exchange Preferred
Stock" used therein shall be deleted and replaced with the
terms "Exchange Stock", "Non-Voting Exchange Stock" and
"Voting Exchange Stock", respectively, which shall have the
meanings given to such terms in this Agreement.
SECTION 5.4 Form of Voting Trust Agreement. Exhibit J to the
Original LMC Agreement, "Form of Voting Trust Agreement", is amended
so that:
(i) the term "Company" used therein shall mean and
refer to (A) Old TW, with respect to all times prior to the
Closing, and (B) Holdco, with respect to all times from and
after the Closing;
(ii) the terms "Preferred Stock" and "Non-Voting
Preferred Stock" used therein shall be deleted and replaced
with the terms "Exchange Stock" and "Non- Voting Exchange
Stock", respectively, which shall have the meanings given to
such terms in this Agreement;
(iii) the term "Preferred Shares" used therein shall be
deleted and replaced with the term "Exchange Shares", which
shall mean "any shares of Exchange Stock to which the
Liberty Subsidiaries become entitled in connection with the
Acquisition or otherwise"; and
(iv) the term "Series K Voting Participating
Convertible Preferred Stock" used in the second and third
sentences of the "Trust Certificate" attached to the Form of
Voting Trust Agreement as Exhibit A thereto, shall, after
the Closing, be deleted and replaced with the term "Series
LMC Common Stock".
SECTION 5.5 Assignment to and Assumption by Holdco. Each of
Exhibits B, D and F to the Original LMC Agreement is hereby amended to
provide that, if such agreements are executed by Old TW in connection
with the consummation of the Elective Merger
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<PAGE>
and subsequently the Closing occurs, all rights and obligations of Old
TW thereunder shall be assigned to and assumed by Holdco.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 Expenses. All costs and expenses incurred in
connection with this Agreement shall be paid by the party incurring
such cost or expense.
SECTION 6.2 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 6.3 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 unless the
Elective Merger has theretofore been consummated 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
hereof unless the Elective Merger has theretofore been consummated (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 (and, if applicable, the effective time
of the Elective Merger).
SECTION 6.4 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 from time to time, provided
that it is a Liberty Party as of the relevant time, shall be an
intended third party beneficiary of the covenants of TW Parent
contained in Article IV.
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<PAGE>
SECTION 6.5 Entire Agreement. This Agreement (including the
Exhibits and Schedules attached hereto and the Exhibits to the
Original LMC Agreement deemed to be Exhibits hereto), the TW/LMC
Letter Agreement and the Elective Merger Agreement and Contribution
and Exchange Agreement contemplated thereby and hereby, 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. The
Exhibits to the Original LMC Agreement shall be deemed to be Exhibits
to this Agreement (as amended hereby in the case of such Exhibits as
are amended hereby).
SECTION 6.6 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: Peter S. Wilson, Esq.
33
<PAGE>
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
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.
885 Third Avenue
New York, New York 10022
Facsimile: (212) 705-5125
Attention: Elizabeth M. Markowski, Esq.
SECTION 6.7 Governing Law. This Agreement shall be governed
by and construed in accordance with the internal laws of the State of
Delaware.
SECTION 6.8 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 6.9 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 6.10 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
34
<PAGE>
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.
SECTION 6.11 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 6.12 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.
SECTION 6.13 Agreement by LMC Parent with Respect to
Authorized Shares of Holdco LMC Common Stock. In the event that the
number of shares of Holdco LMC Common Stock that are authorized but
unissued by Holdco or held in treasury by Holdco as shares of Holdco
LMC Common Stock are at any time not sufficient to enable Holdco to
comply with its obligations to issue Holdco LMC Common Stock to any
Liberty Party pursuant to this Agreement or any agreement contemplated
hereby, at the request of Holdco, LMC Parent shall vote its shares of
capital stock of Holdco (or execute and deliver a written consent in
lieu of such a vote), and shall cause each Liberty Party that then
holds shares of capital stock of Holdco to vote such shares (or
execute and deliver a written consent in lieu of such a vote) in favor
of an amendment to the certificate of incorporation of Holdco
increasing the authorized number of shares of the Holdco LMC Common
Stock; provided, however, that such additional shares shall only be
issued only to a Liberty Party as contemplated hereby.
35
<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.
By: /s/ Peter R. Haje
------------------------------
Name: Peter R. Haje
Title: Executive Vice President
TW INC.
With respect to
Sections 2.1(c), 2.2, 3.1 (c)
and 4.1 only: By: /s/ Peter R. Haje
------------------------------
TELE-COMMUNICATIONS, INC. Name: Peter R. Haje
Title:
By:/s/ Stephen M. Brett LIBERTY MEDIA CORPORATION
--------------------------
Name: Stephen M. Brett
Title: Executive Vice President and By: /s/ Stephen M. Brett
Secretary ------------------------------
Name: Stephen M. Brett
With respect to Title: Vice President and
Section 2.1 (c) only: Assistant Secretary
SUBSIDIARIES OF LMC PARENT:
TCI COMMUNICATIONS, INC. TCI TURNER PREFERRED, INC.
By:/s/ Stephen M. Brett By: /s/ Stephen M. Brett
-------------------------- ------------------------------
Name: Stephen M. Brett Name: Stephen M. Brett
Title: Executive Vice President and Title: Vice President and
Secretary Assistant Secretary
TIME TBS HOLDINGS, INC. COMMUNICATIONS CAPITAL CORP.
By: /s/ Thomas W. McEnerney By: /s/ Stephen M. Brett
--------------------------- ------------------------------
Name: Thomas W. McEnerney Name: Stephen M. Brett
Title: Title: Vice President and
Assistant Secretary
36
<PAGE>
UNITED CABLE TURNER INVESTMENT INC.
By: /s/ Stephen M. Brett
------------------------------
Name: Stephen M. Brett
Title: Vice President and
Assistant Secretary
37
<PAGE>
EXHIBIT A TO
LMC AGREEMENT
CERTIFICATE OF THE VOTING POWERS, DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL AND OTHER SPECIAL
RIGHTS AND QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS THEREOF, OF SERIES J
NON-VOTING PARTICIPATING
CONVERTIBLE PREFERRED STOCK
OF
TIME WARNER INC.
--------------------
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
--------------------
TIME WARNER INC., a corporation organized and existing
by virtue of the General Corporation Law of the State of Delaware
(the "Corporation"), does hereby certify that the following
resolution was duly adopted by action of the Board of Directors
of the Corporation (the "Board of Directors") at a meeting duly
held on September 22, 1995.
RESOLVED that pursuant to the authority expressly
granted to and vested in the Board of Directors by the provisions
of Section 2 of Article IV of the Restated Certificate of
Incorporation of the Corporation, as amended from time to time
(the "Certificate of Incorporation"), and Section 151(g) of the
General Corporation Law of the State of Delaware (the "DGCL"),
the Board of Directors hereby creates, from the authorized
shares of Preferred Stock, par value $1.00 per share (the
"Preferred Stock"), of the Corporation authorized to be issued
pursuant to the Certificate of Incorporation, a series of
Preferred Stock, and hereby fixes the voting powers,
designations, preferences and relative, participating, optional
or other special rights, and qualifications, limitations or
restrictions thereof, of the shares of such series as follows:
The series of Preferred Stock hereby established shall
consist of [ ] shares designated as Series J Non-Voting
Participating Convertible Preferred Stock. The number of shares
constituting such series may be increased or decreased from time
to time by a resolution or resolutions of the Board of Directors.
The rights, preferences and limitations of such series shall be
as follows:
<PAGE>
1. Definitions. As used herein, the following terms shall
have the indicated meanings:
1.1 "Board of Directors" shall mean the Board of
Directors of the Corporation or, with respect to any action to be
taken by the Board of Directors, any committee of the Board of
Directors duly authorized to take such action.
1.2 "Capital Stock" shall mean any and all shares of
corporate stock of a Person (however designated and whether
representing rights to vote, rights to participate in dividends or
distributions upon liquidation or otherwise with respect to such
Person, or any division or subsidiary thereof, or any joint venture,
partnership, corporation or other entity).
1.3 "Certificate" shall mean the Certificate of the
Voting Powers, Designations, Preferences and Relative, Participating,
Optional or Other Special Rights, and Qualifications, Limitations or
Restrictions Thereof, of Series J Non-Voting Participating Convertible
Preferred Stock filed with respect to this resolution with the
Secretary of State of the State of Delaware pursuant to Section 151 of
the DGCL.
1.4 "Certificate of Incorporation" shall mean the
Restated Certificate of Incorporation of the Corporation, as amended
from time to time.
1.5 "Closing Price" of the Common Stock shall mean the
last reported sale price of the Common Stock (regular way) as shown on
the Composite Tape of the NYSE, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices on the
NYSE, or, if the Common Stock is not listed or admitted to trading on
the NYSE, on the principal national securities exchange on which such
stock is listed or admitted to trading, or, if it is not listed or
admitted to trading on any national securities exchange, the last
reported sale price of the Common Stock, or, in case no such sale
takes place on such day, the average of the closing bid and asked
prices, in either case as reported by NASDAQ.
1.6 "Common Stock" shall mean the class of Common
Stock, par value $1.00 per share, of the Corporation authorized at the
date of the Certificate, or any other class of stock resulting from
(x) successive changes or reclassifications of such Common Stock
consisting of changes in par value, or from par value to no par value,
(y) a subdivision or combination or (z) any other changes for which
an adjustment is made under Section 2.4(a) hereof, and in any such
case including any shares thereof authorized after the date of the
Certificate, together with any associated rights to purchase other
securities of the Corporation which
<PAGE>
are at the time represented by the certificates representing such
shares of Common Stock.
1.7 "Communications Laws" shall mean 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 Federal Communications Commission (the
"FCC"). All references herein to 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) or promulgated with a delayed
effective date.
1.8 "Conversion Date" shall have the meaning set forth
in Section 3.5 hereof.
1.9 "Corporation" shall mean Time Warner Inc., a
Delaware corporation, and any of its successors by operation of law,
including by merger or consolidation.
1.10 "DGCL" shall mean the General Corporation Law of
the State of Delaware.
1.11 "Dividend Payment Date" shall have the meaning set
forth in Section 2.1 hereof.
1.12 "Effective Time of the Merger" shall have the
meaning given to such term in the Merger Agreement.
1.13 "Formula Number" shall have the meaning set forth
in Section 2.1 hereof.
1.14 "Junior Stock" shall mean the Common Stock, the
Series A Stock and the shares of any other class or series of Capital
Stock of the Corporation which, by the terms of the Certificate of
Incorporation or of the instrument by which the Board of Directors,
acting pursuant to authority granted in the Certificate of
Incorporation, shall fix the relative rights, preferences and
limitations thereof, shall be junior to the shares of this Series in
respect of the right to receive dividends or to participate in any
distribution of assets other than by way of dividends.
<PAGE>
1.15 "LMC Agreement" shall mean the Agreement dated as
of September 22, 1995, among the Corporation, Liberty Media
Corporation, a Delaware corporation ("LMC Parent"), and certain
subsidiaries of LMC Parent listed under "Subsidiaries of LMC Parent"
on the signature pages thereto, as the same may be amended from time
to time.
1.16 "Merger Agreement" shall mean the Agreement and
Plan of Merger dated as of September 22, 1995, among the Corporation,
Time Warner Acquisition Corp., a Delaware corporation and a wholly
owned subsidiary of the Corporation, and Turner Broadcasting System,
Inc., a Georgia corporation, as the same may be amended from time to
time.
1.17 "NASDAQ" shall mean The Nasdaq Stock Market.
1.18 "NYSE" shall mean the New York Stock Exchange,
Inc.
1.19 "Parity Stock" shall mean the Series K Stock and
the shares of any other class or series of Capital Stock of the
Corporation which, by the terms of the Certificate of Incorporation
or of the instrument by which the Board of Directors, acting pursuant
to authority granted in the Certificate of Incorporation, shall fix
the relative rights, preferences and limitations thereof, shall, in
the event that the stated dividends thereon are not paid in full, be
entitled to share ratably with the shares of this Series in the
payment of dividends in accordance with the sums which would be
payable on such shares if all dividends were declared and paid in
full, or shall, in the event that the amounts payable thereon in
liquidation are not paid in full, be entitled to share ratably with
the shares of this Series in any distribution of assets other than by
way of dividends in accordance with the sums which would be payable in
such distribution if all sums payable were discharged in full;
provided, however, that the term "Parity Stock" shall be deemed to
refer in Section 5.4 hereof to any stock which is Parity Stock in
respect of the distribution of assets.
1.20 "Permitted Transferee" shall mean any Liberty
Party, as such term is defined in the LMC Agreement.
1.21 "Person" shall mean an individual, corporation,
partnership, limited liability company, joint
<PAGE>
venture, association, trust, unincorporated organization or other
entity.
1.22 "Preferred Stock" shall mean the class of
Preferred Stock, par value $1.00 per share, of the Corporation
authorized at the date of the Certificate, including any shares
thereof authorized after the date of the Certificate.
1.23 "Record Date" shall have the meaning set forth in
Section 2.1 hereof.
1.24 "Senior Stock" shall mean the Series B Stock, the
Series C Stock, the Series D Stock, the Series E Stock, the Series F
Stock, the Series G Stock, the Series H Stock and the shares of any
class or series of Capital Stock of the Corporation which, by the
terms of the Certificate of Incorporation or of the instrument by
which the Board of Directors, acting pursuant to authority granted in
the Certificate of Incorporation, shall fix the relative rights,
preferences and limitations thereof, shall be senior to the shares of
this Series in respect of the right to receive dividends or to
participate in any distribution of assets other than by way of
dividends.
1.25 "Series A Stock" shall mean the series of
Preferred Stock authorized and designated as Series A Participating
Cumulative Preferred Stock at the date of the Certificate, including
any shares thereof authorized and designated after the date of the
Certificate.
1.26 "Series B Stock" shall mean the series of
Preferred Stock authorized and designated as Series B 6.40% Preferred
Stock at the date of the Certificate, including any shares thereof
authorized and designated after the date of the Certificate.
1.27 "Series C Stock" shall mean the series of
Preferred Stock authorized and designated as Series C Convertible
Preferred Stock at the date of the Certificate, including any shares
thereof authorized and designated after the date of the Certificate.
1.28 "Series D Stock" shall mean the series of
Preferred Stock authorized and designated as Series D Convertible
Preferred Stock at the date of the Certificate, including any shares
thereof authorized and designated after the date of the Certificate.
<PAGE>
1.29 "Series E Stock" shall mean the series of
Preferred Stock authorized and designated as the Series E Convertible
Preferred Stock issued or issuable pursuant to the Agreement and Plan
of Merger dated as of February 6, 1995, among Cablevision Industries
Corporation, Alan Gerry, the Corporation and TW CVI Acquisition Sub
(the "Cablevision Merger Agreement"), including any shares thereof
authorized and designated after the date of the Certificate.
1.30 "Series F Stock" shall mean the series of
Preferred Stock authorized and designated as the Series F Convertible
Preferred Stock issued or issuable pursuant to the Cablevision Merger
Agreement, including any shares thereof authorized and designated
after the date of the Certificate.
1.31 "Series G Stock" shall mean the series of
Preferred Stock authorized and designated as the Series G Convertible
Preferred Stock issued or issuable pursuant to the Restructuring
Agreement, dated as of August 31, 1995, among the Corporation, ITOCHU
Corporation and ITOCHU Entertainment Inc. and the Restructuring
Agreement dated as of August 31, 1995, between the Corporation and
Toshiba Corporation (together, the "Restructuring Agreements"),
including any shares thereof authorized and designated after the date
of the Certificate.
1.32 "Series H Stock" shall mean the series of
Preferred Stock authorized and designated as the Series H Convertible
Preferred Stock issued or issuable pursuant to the Restructuring
Agreements, including any shares thereof authorized and designated
after the date of the Certificate.
1.33 "Series I Stock" shall mean the series of
Preferred Stock authorized and designated as the Series I Convertible
Preferred Stock issued or issuable pursuant to the Restructuring
Agreements, including any shares thereof authorized and designated
after the date of the Certificate.
1.34 "Series J Stock" and "this Series" shall mean the
series of Preferred Stock authorized and designated as Series J
Non-Voting Participating Convertible Preferred Stock at the date of
the Certificate, including any shares thereof authorized and
designated after the date of the Certificate.
1.35 "Series K Stock" shall mean the series of
Preferred Stock authorized and designated as Series K
<PAGE>
Voting Participating Convertible Preferred Stock at the date of the
Certificate, including any shares thereof authorized and designated
after the date of the Certificate.
1.36 "Trading Day" shall mean, so long as the Common
Stock is listed or admitted to trading on the NYSE, a day on which the
NYSE is open for the transaction of business, or, if the Common Stock
is not listed or admitted to trading on the NYSE, a day on which the
principal national securities exchange on which the Common Stock is
listed is open for the transaction of business, or, if the Common
Stock is not so listed or admitted for trading on any national
securities exchange, a day on which the National Market System of
NASDAQ is open for the transaction of business.
2. Dividends.
2.1 The holders of shares of this Series shall be
entitled to receive dividends, if, as and when declared by the Board
of Directors, out of funds legally available therefor, payable on such
dates as may be set by the Board of Directors for payment of cash
dividends on the Common Stock (each such date being referred to herein
as a "Dividend Payment Date"), in cash, in an amount per share equal
to the product of (i) the Formula Number in effect as of such Dividend
Payment Date multiplied by (ii) the amount of the regularly scheduled
cash dividend to be paid on one share of Common Stock on such Dividend
Payment Date; provided, however, dividends on the shares of this
Series shall be payable pursuant to this Section 2.1 only to the
extent that regularly scheduled cash dividends are declared and paid
on the Common Stock. As used herein, the "Formula Number" shall
initially be 1,000, which shall be adjusted from time to time pursuant
to Section 2.4 hereof. The dividends payable on any Dividend Payment
Date shall be paid to the holders of record of shares of this Series
at the close of business on the record date for the related regularly
scheduled cash dividend on the Common Stock (each such date being
referred to herein as a "Record Date"). The amount of dividends that
are paid to each holder of record on any Dividend Payment Date shall
be rounded to the nearest cent.
2.2 In case the Corporation shall at any time
distribute (other than a distribution in liquidation of the
Corporation) to the holders of its shares of Common
<PAGE>
Stock any assets or property, including evidences of indebtedness or
securities of the Corporation (other than Common Stock subject to a
distribution or reclassification covered by Section 2.4 hereof) or of
any other Person (including common stock of such Person) or cash (but
excluding regularly scheduled cash dividends payable on shares of
Common Stock) or in case the Corporation shall at any time distribute
(other than a distribution in liquidation of the Corporation) to such
holders rights, options or warrants to subscribe for or purchase
shares of Common Stock (including shares held in the treasury of the
Corporation), or rights, options or warrants to subscribe for or
purchase any other security or rights, options or warrants to
subscribe for or purchase any assets or property (in each case,
whether of the Corporation or otherwise, but other than any
distribution of rights to purchase securities of the Corporation if
the holder of shares of this Series would otherwise be entitled to
receive such rights upon conversion of shares of this Series for
Common Stock pursuant to Section 3 hereof; provided, however, that if
such rights are subsequently redeemed by the Corporation, such
redemption shall be treated for purposes of this Section 2.2 as a cash
dividend (but not a regularly scheduled cash dividend) on the Common
Stock), the Corporation shall simultaneously distribute such assets,
property, securities, rights, options or warrants to the holders of
shares of this Series on the record date fixed for determining the
holders of Common Stock entitled to participate in such distribution
(or, if no such record date shall be established, the effective time
thereof) in an amount per share of this Series equal to the amount
that a holder of one share of this Series would have been entitled to
receive had such share of this Series been converted into Common Stock
immediately prior to such record date (or effective time). In the
event of a distribution to holders of shares of this Series pursuant
to this Section 2.2, such holders shall be entitled to receive
fractional shares or interests only to the extent that holders of
Common Stock are entitled to receive the same. The holders of shares
of this Series on the applicable record date (or effective time) shall
be entitled to receive in lieu of such fractional shares or interests
the same consideration as is payable to holders of Common Stock with
respect thereto. If there are no fractional shares or interests
payable to holders of Common Stock, the holders of shares of this
Series on the applicable record date (or effective time) shall receive
in lieu of such fractional shares or interests
<PAGE>
the fair value thereof as determined by the Board of Directors.
2.3 In the event that the holders of Common Stock are
entitled to make any election with respect to the kind or amount of
securities or other property receivable by them in any distribution
that is subject to Section 2.2 hereof, the kind and amount of
securities or other property that shall be distributable to the
holders of shares of this Series shall be based on (i) the election,
if any, made by the holder of record (as of the date used for
determining the holders of Common Stock entitled to make such
election) of the largest number of shares of this Series in writing to
the Corporation on or prior to the last date on which a holder of
Common Stock may make such an election or (ii) if no such election is
timely made, an assumption that such holder failed to exercise any
such rights (provided that if the kind or amount of securities or
other property is not the same for each nonelecting holder, then the
kind and amount of securities or other property receivable by holders
of shares of this Series shall be based on the kind or amount of
securities or other property receivable by a plurality of the shares
held by the nonelecting holders of Common Stock). Concurrently with
the mailing to holders of Common Stock of any document pursuant to
which such holders may make an election of the type referred to in
this Section 2.3, the Corporation shall mail a copy thereof to the
holders of record of shares of this Series as of the date used for
determining the holders of record of Common Stock entitled to such
mailing, which document shall be used by the holders of record of
shares of this Series to make such an election.
2.4 The Formula Number shall be adjusted from time to
time as follows, whether or not any shares of this Series have been
issued by the Corporation, for events occurring on or after [ ]:[F1]
(a) In case the Corporation shall (i) pay a dividend in
shares of its Common Stock, (ii) combine its outstanding shares
of Common Stock into a smaller number of shares, (iii) subdivide
its outstanding shares of Common Stock or (iv) reclassify (other
than by way of a merger or consolidation that is subject to
[F1] Insert the date of filing of the Certificate or the relevant
effective time.
<PAGE>
Section 3.6 hereof) its shares of Common Stock, then the Formula
Number in effect immediately before such event shall be
appropriately adjusted so that immediately following such event
the holders of shares of this Series shall be entitled to receive
upon conversion thereof the kind and amount of shares of Capital
Stock of the Corporation which they would have owned or been
entitled to receive upon or by reason of such event if such
shares of this Series had been con- verted immediately before the
record date (or, if no record date, the effective date) for such
event (it being understood that any distribution of cash or
Capital Stock (other than Common Stock) that shall accompany a
reclassification of the Common Stock, shall be subject to Section
2.2 hereof rather than this Section 2.4(a)). An adjustment made
pursuant to this Section 2.4(a) shall become effective
retroactively immediately after the record date in the case of a
dividend or distribution and shall become effective retroactively
immediately after the effective date in the case of a
subdivision, combination or reclassification. For the purposes of
this Section 2.4(a), in the event that the holders of Common
Stock are entitled to make any election with respect to the kind
or amount of securities receivable by them in any transaction
that is subject to this Section 2.4(a) (including any election
that would result in all or a portion of the transaction becoming
subject to Section 2.2 hereof), the kind and amount of securities
that shall be distributable to the holders of shares of this
Series shall be based on (i) the election, if any, made by the
holder of record (as of the date used for determining the holders
of Common Stock entitled to make such election) of the largest
number of shares of this Series in writing to the Corporation on
or prior to the last date on which a holder of Common Stock may
make such an election or (ii) if no such election is timely made,
an assumption that such holder failed to exercise any such rights
(provided that if the kind or amount of securities is not the
same for each nonelecting holder, then the kind and amount of
securities receivable shall be based on the kind or amount of
securities receivable by a plurality of nonelecting holders of
Common Stock). Concurrently with the mailing to holders of Common
Stock of any document pursuant to which such holders may make an
election of the type referred to in this Section 2.4(a), the
Corporation shall mail a copy thereof to
<PAGE>
the holders of record of shares of this Series as of the date
used for determining the holders of record of Common Stock
entitled to such mailing, which document shall be used by the
holders of record of shares of this Series to make such an
election.
(b) The Corporation shall be entitled to make such
additional adjustments in the Formula Number, in addition to
those required by Section 2.4(a) hereof as shall be necessary in
order that any dividend or distribution in Common Stock or any
subdivision, reclassification or combination of shares of Common
Stock referred to above, shall not be taxable to the holders of
Common Stock for United States Federal income tax purposes, so
long as such additional adjustments pursuant to this Section
2.4(b) do not decrease the Formula Number.
(c) All calculations under this Section 2 and Section 3
hereof shall be made to the nearest cent, one-hundredth of a
share or, in the case of the Formula Number, one
hundred-thousandth. Notwithstanding any other provision of this
Section 2.4, the Corporation shall not be required to make any
adjustment of the Formula Number unless such adjustment would
require an increase or decrease of at least one percent (1%) of
the Formula Number. Any lesser adjustment shall be carried
forward and shall be made at the time of and together with the
next subsequent adjustment that, together with any adjustment or
adjustments so carried forward, shall amount to an increase or
decrease of at least one percent (1%) of the Formula Number. Any
adjustments under this Section 2.4 shall be made successively
whenever an event requiring such an adjustment occurs.
(d) Promptly after an adjustment in the Formula Number
is required, the Corporation shall provide written notice to each
of the holders of shares of this Series, which notice shall state
the adjusted Formula Number.
(e) If a distribution is made in accordance with the
provisions of Section 2.2 hereof, anything in this Section 2.4 to
the contrary notwithstanding, no adjustment pursuant to this
Section 2.4 shall be effected by reason of the distribution of
such assets, property, securities, rights, options or warrants or
<PAGE>
the subsequent modification, exercise, expiration or termination
of such securities, rights, options or warrants.
3. Conversion at the Option of the Holder.
3.1 Each holder of a share of this Series shall have
the right at any time to convert such share of this Series into
either: (i) a number of shares of Common Stock per share of this
Series equal to the Formula Number in effect on the Conversion Date or
(ii) one share of Series K Stock per share of this Series; provided,
however, that such holder may convert shares of this Series only to
the extent that the ownership by such holder or its designee of the
shares of Common Stock or Series K Stock issuable upon such conversion
would not violate the Communications Laws.
3.2 No adjustments in respect of payments of dividends
on shares of this Series surrendered for conversion or any dividend on
the Common Stock or Series K Stock issued upon conversion shall be
made upon the conversion of any shares of this Series (it being
understood that if the Conversion Date for shares of this Series
occurs after the Record Date and prior to the Dividend Payment Date of
any such dividend, the holders of record on such Record Date shall be
entitled to receive the dividend payable with respect to such shares
on the related Dividend Payment Date pursuant to Section 2.1 hereof).
3.3 The Corporation may, but shall not be required to,
in connection with any conversion of shares of this Series into shares
of Common Stock, issue a fraction of a share of Common Stock, and if
the Corporation shall determine not to issue any such fraction, the
Corporation shall make a cash payment (rounded to the nearest cent)
equal to such fraction multiplied by the Closing Price of the Common
Stock on the last Trading Day prior to the Conversion Date. The
Corporation shall issue a fraction of a share of Series K Stock in
order to effect a conversion of a fraction of a share of this Series
into Series K Stock.
3.4 Any holder of shares of this Series electing to
convert such shares into Common Stock or Series K Stock shall
surrender the certificate or certificates for such shares at the
principal executive office of the Corporation (or at such other place
as the Corporation may designate by notice to the holders of shares of
this Series)
<PAGE>
during regular business hours, duly endorsed to the Corporation or in
blank, or accompanied by instruments of transfer to the Corporation or
in blank, or in form satisfactory to the Corporation, and shall give
written notice to the Corporation at such office that such holder
elects to convert such shares of this Series, which notice shall state
whether the shares of this Series delivered for conversion shall be
converted into shares of Common Stock or shares of Series K Stock. If
any such certificate or certificates shall have been lost, stolen or
destroyed, the holder shall, in lieu of delivering such certificate or
certificates, deliver to the Corporation (or such other place) an
indemnification agreement and bond satisfactory to the Corporation.
The Corporation shall, as soon as practicable (subject to Section 3.8
hereof) after such deposit of certificates for shares of this Series
or delivery of the indemnification agreement and bond, accompanied by
the written notice above prescribed, issue and deliver at such office
(or such other place) to the holder for whose account such shares were
surrendered, or a designee of such holder, certificates representing
either (i) the number of shares of Common Stock and the cash, if any,
or (ii) the number of shares of Series K Stock, as the case may be, to
which such holder is entitled upon such conversion. Each share of
Common Stock delivered to a holder or its designee as a result of
conversion of shares of this Series pursuant to this Section 3 shall
be accompanied by any rights associated generally with each other
share of Common Stock outstanding as of the Conversion Date.
3.5 Conversion shall be deemed to have been made as of
the date (the "Conversion Date") that the certificate or certificates
for the shares of this Series to be converted and the written notice
prescribed in Section 3.4 hereof are received by the Corporation; and
the Person entitled to receive the Common Stock or Series K Stock
issuable upon such conversion shall be treated for all purposes as the
holder of record of such Common Stock or Series K Stock, as the case
may be, on such date. The Corporation shall not be required to deliver
certificates for shares of Common Stock or Series K Stock while the
stock transfer books for such stock or for this Series are duly closed
for any purpose, but certificates for shares of Common Stock or Series
K Stock, as the case may be, shall be delivered as soon as practicable
after the opening of such books.
<PAGE>
3.6 In the event that on or after [ ][F2] , whether or
not any shares of this Series have been issued by the Corporation,
either (a) any consolidation or merger to which the Corporation is a
party, other than a merger or consolidation in which the Corporation
is the surviving or continuing corporation and which does not result
in any reclassification of, or change (other than a change in par
value or from par value to no par value or from no par value to par
value, or as a result of a subdivision or combination) in, outstanding
shares of Common Stock or (b) any sale or conveyance of all or
substantially all of the property and assets of the Corporation, then
lawful provision shall be made as part of the terms of such
transaction whereby the holder of each share of this Series shall have
the right thereafter, during the period such share shall be
convertible, to convert such share into the kind and amount of shares
of stock or other securities and property receivable upon such
consolidation, merger, sale or conveyance by a holder of the number of
shares of Common Stock into which such shares of this Series could
have been converted immediately prior to such consolidation, merger,
sale or conveyance, subject to adjustment which shall be as nearly
equivalent as may be practicable to the adjustments provided for in
Section 2.4 hereof and this Section 3 (based on (i) the election, if
any, made in writing to the Corporation by the holder of record (as of
the date used for determining holders of Common Stock entitled to make
such election) of the largest number of shares of this Series on or
prior to the last date on which a holder of Common Stock may make an
election regarding the kind or amount of securities or other property
receivable by such holder in such transaction or (ii) if no such
election is timely made, an assumption that such holder failed to
exercise any such rights (provided that if the kind or amount of
securities or other property is not the same for each nonelecting
holder, then the kind and amount of securities or other property
receivable shall be based upon the kind and amount of securities or
other property receivable by a plurality of the nonelecting holders of
Common Stock)). In the event that any of the transactions referred to
in clause (a) or (b) of the first sentence of this Section 3.6
involves the distribution of cash or property (other than equity
securities) to a holder of Common Stock, lawful provision shall be
made as part of the
[F2] Insert the date of filing of the Certificate or the relevant
effective time.
<PAGE>
terms of the transaction whereby the holder of each share of this
Series on the record date fixed for determining holders of Common
Stock entitled to receive such cash or property (or if no such record
date is established, the effective date of such transaction) shall be
entitled to receive the amount of cash or property that such holder
would have been entitled to receive had such holder converted his
shares of this Series into Common Stock immediately prior to such
record date (or effective date) (based on the election or nonelection
made by the holder of record of the largest number of shares of this
Series, as provided above). Concurrently with the mailing to holders
of Common Stock of any document pursuant to which such holders may
make an election regarding the kind or amount of securities or other
property that will be receivable by such holders in any transaction
described in clause (a) or (b) of the first sentence of this Section
3.6, the Corporation shall mail a copy thereof to the holders of
record of the shares of this Series as of the date used for
determining the holders of record of Common Stock entitled to such
mailing, which document shall be used by the holders of shares of this
Series to make such an election. The Corporation shall not enter into
any of the transactions referred to in clauses (a) or (b) of the first
sentence of this Section 3.6 unless effective provision shall be made
in the certificate or articles of incorporation or other constituent
documents of the Corporation or the entity surviving the consolidation
or merger, if other than the Corporation, or the entity acquiring the
Corporation's assets, as the case may be, so as to give effect to the
provisions set forth in this Section 3.6. The provisions of this
Section 3.6 shall apply similarly to successive consolidations,
mergers, sales or conveyances. For purposes of this Section 3.6, the
term "Corporation" shall refer to the Corporation as constituted
immediately prior to the merger, consolidation or other transaction
referred to in this Section 3.6.
3.7 The Corporation shall at all times reserve and keep
available, free from preemptive rights, out of its authorized but
unissued stock, for the purpose of effecting the conversion of the
shares of this Series, such number of its duly authorized shares of
Common Stock and Series K Stock as shall from time to time be
sufficient to effect the conversion of all outstanding shares of this
Series into shares of Common Stock or Series K Stock at any time
(assuming that, at the time of the computation of such number of
shares, all such Common Stock or Series K Stock would be held by a
single holder); provided, however, that
<PAGE>
nothing contained herein shall preclude the Corporation from
satisfying its obligations in respect of the conversion of the shares
by delivery of purchased shares of Common Stock or Series K Stock that
are held in the treasury of the Corporation. All shares of Common
Stock or Series K Stock that shall be deliverable upon conversion of
the shares of this Series shall be duly and validly issued, fully paid
and nonassessable. For purposes of this Section 3, any shares of this
Series at any time outstanding shall not include shares held in the
treasury of the Corporation.
3.8 In any case in which Section 2.4 hereof shall
require that any adjustment be made effective as of or retroactively
immediately following a record date, the Corporation may elect to
defer (but only for five (5) Trading Days following the occurrence
of the event which necessitates the notice referred to in Section
2.4(d) hereof) issuing to the holder of any shares of this Series
converted after such record date (i) the shares of Common Stock
issuable upon such conversion over and above (ii) the shares of Common
Stock issuable upon such conversion on the basis of the Formula Number
prior to adjustment; provided, however, that the Corporation shall
deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares upon
the occurrence of the event requiring such adjustment.
3.9 If any shares of Common Stock or Series K Stock
that would be issuable upon conversion pursuant to this Section 3
require registration with or approval of any governmental authority
before such shares may be issued upon conversion (other than any such
registration or approval required to avoid a violation of the
Communications Laws), the Corporation will in good faith and as
expeditiously as possible cause such shares to be duly registered or
approved, as the case may be. The Corporation will use commercially
reasonable efforts to list the shares of (or depositary shares
representing fractional interests in) Common Stock required to be
delivered upon conversion of shares of this Series prior to such
delivery upon the principal national securities exchange, if any, upon
which the outstanding Common Stock is listed at the time of such
delivery. Nothing in the Certificate shall require the Corporation to
register under the Securities Act of 1933, as amended, or the
securities laws of any state or any other jurisdiction, any shares of
Series K Stock or, except as provided in the Registration Rights
Agreement (as defined in
<PAGE>
the LMC Agreement), any shares of Common Stock issued upon conversion
pursuant to this Section 3.
3.10 The Corporation shall pay any and all issue or
other taxes that may be payable in respect of any issue or delivery of
shares of Common Stock or Series K Stock on conversion of shares of
this Series pursuant hereto. The Corporation shall not, however, be
required to pay any tax which is payable in respect of any transfer
involved in the issue or delivery of Common Stock or Series K Stock in
a name other than that in which the shares of this Series so converted
were registered, and no such issue or delivery shall be made unless
and until the Person requesting such issue has paid to the Corporation
the amount of such tax, or has established, to the satisfaction of the
Corporation, that such tax has been paid.
3.11 In case of (i) the voluntary or involuntary
dissolution, liquidation or winding up of the Corporation or (ii) any
action triggering an adjustment to the Formula Number pursuant to
Section 2.4 hereof or Section 3.6 hereof, then, in each case, the
Corporation shall cause to be mailed, first-class postage prepaid, to
the holders of record of the outstanding shares of this Series, at
least fifteen (15) days prior to the applicable record date for any
such transaction (or if no record date will be established, the
effective date thereof), a notice stating (x) the date, if any, on
which a record is to be taken for the purpose of any such transaction
(or, if no record date will be established, the date as of which
holders or record of Common Stock entitled to participate in such
transaction are determined), and (y) the expected effective date
thereof. Failure to give such notice or any defect therein shall not
affect the legality or validity of the proceedings described in this
Section 3.11.
4. Voting.
4.1 The shares of this Series shall have no rights to
vote in the election of directors or with respect to any other matter
except as expressly provided in this Section 4 or as required by law.
4.2 So long as any shares of this Series remain
outstanding, unless a greater percentage shall then be required by
law, the Corporation shall not, without the affirmative vote at a
meeting or the written consent with or
<PAGE>
without a meeting of the holders of shares of this Series representing
at least 66-2/3% of the aggregate voting power of shares of this
Series then outstanding, amend, alter or repeal any of the provisions
of the Certificate, or the Certificate of Incorporation, so as in any
such case to adversely affect the voting powers, designations,
preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions thereof, of
the shares of this Series.
4.3 So long as any shares of this Series remain
outstanding, the Corporation shall not, without the affirmative vote
at a meeting or the written consent with or without a meeting of the
holders of shares of this Series representing 100% of the aggregate
voting power of shares of this Series then outstanding, amend, alter
or repeal the provisions of Section 7.8 hereof.
4.4 No consent of holders of shares of this Series
shall be required for (i) the creation of any indebtedness of any
kind of the Corporation, (ii) the authorization or issuance of any
class or series of Junior Stock, Parity Stock or Senior Stock, (iii)
the authorization of any increase or decrease in the number of shares
constituting this Series or (iv) the approval of any amendment to the
Certificate of Incorporation that would increase or decrease the
aggregate number of authorized shares of Preferred Stock or Common
Stock, except to the extent expressly required by the DGCL.
5. Liquidation Rights.
5.1 Upon the liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, no distribution
shall be made to the holders of shares of Junior Stock (either as to
dividends or upon liquidation, dissolution or winding up) unless,
prior thereto, the holders of shares of this Series shall have
received an amount equal to the greater of (i) $.01 per whole share of
this Series or (ii) an aggregate amount per share equal to the product
of the Formula Number then in effect multiplied by the aggregate
amount to be distributed per share to holders of Common Stock.
5.2 Neither the sale, exchange or other conveyance (for
cash, shares of stock, securities or other consideration) of all or
substantially all the property and
<PAGE>
assets of the Corporation nor the merger or consolidation of the
Corporation into or with any other corporation, or the merger or
consolidation of any other corporation into or with the Corporation,
shall be deemed to be a dissolution, liquidation or winding up,
voluntary or involuntary, for the purposes of this Section 5.
5.3 After the payment to the holders of the shares of
this Series of full preferential amounts provided for in this Section
5, the holders of this Series as such shall have no right or claim to
any of the remaining assets of the Corporation.
5.4 In the event the assets of the Corporation
available for distribution to the holders of shares of this Series
upon any dissolution, liquidation or winding up of the Corporation,
whether voluntary or involuntary, shall be insufficient to pay in full
all amounts to which such holders and the holders of all Parity Stock
are entitled, no such distribution shall be made on account of any
shares of any Parity Stock upon such dissolution, liquidation or
winding up unless proportionate distributive amounts shall be paid on
account of the shares of this Series, ratably, in proportion to the
full distributable amounts for which holders of all Parity Stock are
entitled upon such dissolution, liquidation or winding up.
6. Transfer Restrictions.
6.1 Without the prior written consent of the
Corporation, no holder of shares of this Series shall offer,
sell, transfer, pledge, encumber or otherwise dispose of, or
agree to offer, sell, transfer, pledge, encumber or otherwise
dispose of, any shares of this Series or interests in any shares
of this Series except to a Permitted Transferee that shall agree
that, prior to such Permitted Transferee ceasing to be a
Permitted Transferee, such Permitted Transferee must transfer
ownership of any shares of this Series, and all interests
therein, held by such Permitted Transferee to the initial holder
who received such shares pursuant to the LMC Agreement. For the
avoidance of doubt, the preceding sentence is not intended to
prohibit a holder of shares of this Series from entering into, or
offering to enter into, any arrangement under which such holder
agrees to promptly convert shares of this Series and sell,
transfer or otherwise dispose of the Common Stock issuable upon
such the conversion.
<PAGE>
6.2 Certificates for shares of this Series shall bear
such legends as the Corporation shall from time to time deem
appropriate.
7. Other Provisions.
7.1 All notices from the Corporation to the holders of
shares of this Series shall be given by one of the methods specified
in Section 7.2 hereof. With respect to any notice to a holder of
shares of this Series required to be provided hereunder, neither
failure to give such notice, nor any defect therein or in the
transmission thereof, to any particular holder shall affect the
sufficiency of the notice or the validity of the proceedings referred
to in such notice with respect to the other holders or affect the
legality or validity of any distribution, right, warrant,
reclassification, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up, or the vote upon any such
action. Any notice which was mailed in the manner herein provided
shall be conclusively presumed to have been duly given whether or not
the holder receives the notice.
7.2 All notices and other communications hereunder
shall be deemed given (i) on the first Trading Day following the date
received, if delivered personally, (ii) on the Trading Day following
timely deposit with an overnight courier service, if sent by overnight
courier specifying next day delivery and (iii) on the first Trading
Day that is at least five days following deposit in the mails, if sent
by first class mail to (x) a holder at its last address as it appears
on the transfer records or registry for the shares of this Series and
(y) the Corporation at the following address (or at such other address
as the Corporation shall specify in a notice pursuant to this Section
7.2): Time Warner Inc., 75 Rockefeller Plaza, New York, New York
10019, Attention: General Counsel.
7.3 Any shares of this Series which have been converted
or otherwise acquired by the Corporation shall, after such conversion
or acquisition, as the case may be, be retired and promptly cancelled
and the Corporation shall take all appropriate action to cause such
shares to obtain the status of authorized but unissued shares of Pre-
ferred Stock, without designation as to series, until such shares are
once more designated as part of a particular
<PAGE>
series by the Board of Directors. The Corporation may cause a
certificate setting forth a resolution adopted by the Board of
Directors that none of the authorized shares of this Series are
outstanding to be filed with the Secretary of State of the State of
Delaware. When such certificate becomes effective, all references to
this Series shall be eliminated from the Certificate of Incorporation
and the shares of Preferred Stock designated hereby as Series J Non-
Voting Participating Convertible Preferred Stock shall have the status
of authorized and unissued shares of Preferred Stock and may be
reissued as part of any new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors.
7.4 The shares of this Series shall be issuable in
whole shares, in such fraction of a whole share as may be required in
order to effect any exchange of shares of Common Stock for shares of
this Series required by the terms of the LMC Agreement or, if
authorized by the Board of Directors (or any authorized committee
thereof), in any other fraction of a whole share so authorized.
7.5 The Corporation shall be entitled to recognize the
exclusive right of a Person registered on its records as the holder of
shares of this Series, and such holder of record shall be deemed the
holder of such shares for all purposes.
7.6 All notice periods referred to in the Certificate
shall commence on the date of the mailing of the applicable notice.
7.7 Any registered holder of shares of this Series may
proceed to protect and enforce its rights by any available remedy by
proceeding at law or in equity to protect and enforce any such rights,
whether for the specific enforcement of any provision in the
Certificate or in aid of the exercise of any power granted herein, or
to enforce any other proper remedy.
7.8 The shares of this Series shall not be subject to
redemption at the option of the Corporation, including pursuant to
Section 5 of Article IV of the Certificate of Incorporation (or any
equivalent provision in any further amendment to or restatement of the
Certificate of Incorporation).
<PAGE>
IN WITNESS WHEREOF, Time Warner Inc. has caused this
certificate to be signed and attested this [ ] day of [ ].
TIME WARNER INC.,
by
-----------------------------
Name:
Title:
Attest:
----------------------
Name:
Title:
<PAGE>
EXHIBIT B TO LMC AGREEMENT
[FIRST REFUSAL]
STOCKHOLDERS' AGREEMENT
Stockholders' Agreement, dated ___________, ____, by
and among TCI Turner Preferred, Inc., a Colorado corporation
("TCITP"), United Cable Turner Investment, Inc.
("UC-Turner") and Communications Capital Corp. ("CCC" and,
together with UC- Turner and TCITP, the "TCITP
Stockholders"), R.E. Turner, III ("Turner") and Turner
Outdoor, Inc. ("TOI" and, together with Turner, the "Turner
Stockholders"), and Time Warner Inc., a Delaware corporation
("TW").
Each of the TCITP Stockholders, Turner and the Turner
Stockholders is or may become a beneficial owner of shares of capital stock
of TW. Turner, the Turner Stockholders, TW, and the TCITP Stockholders
desire to enter into the arrangements set forth in this Agreement regarding
future dispositions of shares of TW capital stock which Turner, the Turner
Stockholders or the TCITP Stockholders now or may in the future
beneficially own.
Therefore, in consideration of the premises and the mutual
benefits to be derived hereunder and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereby agree as follows:
1. Definitions: The following terms shall have the following
respective meanings:
Affiliate: With respect to any Person, 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) the Turner Foundation, Inc. (the "Turner Foundation"), the
R.E. Turner Charitable Remainder Unitrust No. 2 (the "Turner Unitrust") and
any other Charitable Transferee or Qualified Trust shall be deemed not to
be Affiliates of any Turner Stockholder and (ii) (A) no TCITP Affiliate
shall be deemed to be an Affiliate of any Turner Affiliate, or vice versa,
and (B) no TCITP Affiliate or Turner Affiliate shall be deemed to be an
Affiliate of any TW Affiliate, or vice versa.
Affiliated Group: With respect to any Stockholder, the group
consisting of such Stockholder and all Controlled Affiliates of such
Stockholder.
<PAGE>
Agreement: This Agreement as the same may be amended from time to
time in accordance with its terms.
Appraised Value: As defined in Section 4.1 hereof.
The "beneficial owner" of any security means a direct or indirect
beneficial owner of such security within the meaning of Rule 13d-3 under
the Exchange Act, as in effect on and as interpreted by the Commission
through the date of this Agreement, and the terms (whether or not
capitalized) "beneficially own," "beneficially owned" and "owned
beneficially" shall have correlative meanings; provided, however, that any
Person who at any time beneficially owns any Option or Convertible Security
shall also be deemed to beneficially own the Underlying Securities, whether
or not such Option or Convertible Security then is or within 60 days will
be exercisable, exchangeable or convertible.
Board of Directors: The Board of Directors of TW.
Bona Fide Offer: As defined in Section 3.1 hereof.
Broker Transactions: "Broker's transactions" within the meaning
of paragraph (g) of Rule 144 of the General Rules and Regulations under the
Securities Act.
Charitable Transfer: Any Disposition of Covered Securities by a
Turner Stockholder to the Turner Foundation, any other Charitable
Transferee, the Turner Unitrust or any other Qualified Trust that is not an
Exempt Transfer pursuant to clause (viii) of the definition of Exempt
Transfer; provided, however, that any such transferee shall, by a written
instrument in form and substance reasonably satisfactory to TCITP, agree to
be bound by the provisions of this Agreement with respect to the Covered
Securities that are the subject of such Charitable Transfer to the same
extent as the Turner Stockholder making such Disposition.
Charitable Transferee: Any charitable organization described in
Section 501(c)(3) of the Code.
Code: The Internal Revenue Code of 1986, as amended.
<PAGE>
Commission: The Securities and Exchange Commission, or any other
Federal agency at the time administering the Securities Act or the Exchange
Act.
Common Stock: The common stock, par value $1.00 per share, of TW
or any other shares of capital stock of TW into which the Common Stock may
be reclassified or changed.
Contract: Any agreement, contract, commitment, indenture, lease,
license, instrument, note, bond or security.
Control: As to any Person, 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, or
otherwise). The terms "Controlled," "Controlling" and similar variations
shall have correlative meanings.
Controlled Affiliate: When used with respect to a specified
Person, means each Affiliate of such Person which is Controlled by such
Person and which is not Controlled by or under common Control with any
other Person (except one or more other Controlled Affiliates of such
specified Person); provided, however, that for purposes of any provision of
this Agreement which requires any Stockholder to cause one or more of its
Controlled Affiliates to take or refrain from taking any action (including
any action relating to the Disposition of any Covered Securities) or which
otherwise purports to be applicable to any Covered Securities owned or held
by one or more Controlled Affiliates of such Stockholder, no Affiliate of
such Stockholder which otherwise would be a Controlled Affiliate of such
Stockholder shall be deemed to be a Controlled Affiliate of such
Stockholder unless such Stockholder possesses, directly or indirectly, the
power to direct decisions regarding such action or the Disposition of such
Covered Securities.
Convertible Securities: Evidences of indebtedness, shares of
stock or other securities or obligations which are convertible into or
exchangeable, with or without payment of additional consideration in cash
or property, for any TW Shares, either immediately or upon the occurrence
of a specified date or a specified event, the satisfaction of or failure to
satisfy any condition or the happening or failure to happen of any other
contingency.
<PAGE>
Covered Securities: Any and all TW Shares, Convertible Securities
and Options.
Current Market Price: As to any share of Common Stock at any
date, the average of the daily closing prices for shares of the Common
Stock for the 5 consecutive trading days ending on the trading day
immediately before the day in question. The closing price for such shares
for each day shall be the last reported sale price or, in case no such
reported sale takes place on such day, the average of the reported closing
bid and asked prices, in either case on the principal United States
securities exchange on which such shares are listed or admitted to trading,
or if they are not listed or admitted to trading on any such exchange, the
last reported sale price (or the average of the quoted closing bid and
asked prices if no sale is reported) as reported on the Nasdaq Stock
Market, or any comparable system, or if such shares are not quoted on the
Nasdaq Stock Market, or any comparable system, the average of the closing
bid and asked prices as furnished by any member of the National Association
of Securities Dealers, Inc. selected by TW.
Defensive Provision: (i) any control share acquisition,
interested stockholder, business combination or other similar antitakeover
statute (including the Delaware Statute) applicable to TW, (ii) any
provision of the Restated Certificate of Incorporation or Bylaws of TW
(including Article V of such Restated Certificate of Incorporation), and
(iii) any plan or agreement to which TW is a party (including the Rights
Plan), whether now or hereafter existing, which would constitute a "poison
pill" or similar antitakeover device.
Delaware Statute: Section 203 of the Delaware General Corporation
Law or any successor statutory provision.
Disadvantageous Result: (i) The breach or violation of any
Restriction applicable to any member of the Group of such Stockholder or
its Affiliates, (ii) any member of the Group of such Stockholder or its
Affiliates becoming subject to any Restriction to which it was not
previously subject, or (iii) the occurrence of any Rights Plan Triggering
Event.
Disposition: When used with respect to any Covered Security, any
sale, assignment, alienation, gift, exchange, conveyance, transfer,
hypothecation or other
<PAGE>
disposition whatsoever, whether voluntary or involuntary and whether
direct or indirect, of such Covered Security or of dispositive control
over such Covered Security. "Disposition" shall not include (i) a
transfer of voting control of a Covered Security to the extent required to
avoid imposition of any prohibition, restriction, limitation or condition
on or requirement under any Requirement of Law or Defensive Provision
having any of the effects described in clauses (A) and (B) of the
definition of Restriction herein, or (ii) delivery of a revocable proxy in
the ordinary course of business. The term "dispose" (whether or not
capitalized) shall mean to make a Disposition. Without limiting the
generality of the foregoing:
(i) any redemption, purchase or other acquisition in any manner
(whether or not for any consideration) by TW of any Covered Securities
shall be deemed to be a Disposition of such Covered Securities; and
(ii) none of the conversion or exchange of a Convertible
Security, the exercise of any Option or the failure to convert or
exchange a Convertible Security or to exercise any Option prior to the
expiration of the right of conversion, exchange or exercise shall be
deemed to be a Disposition of such Convertible Security or such
Option.
For purposes of this Agreement any Disposition of any Option or
Convertible Security shall also constitute a Disposition of the Underlying
Securities.
Effective Time: "Effective Time of the Merger", as defined in the
Merger Agreement.
Encumbrance: As defined in Section 3.1(f) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended, or
any successor Federal statute, and the rules and regulations of the
Commission promulgated thereunder, as from time to time in effect.
Exempt Transfer: Any Disposition that falls within any one of the
following clauses: (i) An exchange or conversion of Covered Securities
which occurs by operation of law in connection with a merger, consolidation
of TW with or into another corporation, or a recapitalization,
reclassification or similar event that has been duly authorized and
approved by the required vote of the Board of
<PAGE>
Directors and the stockholders of TW pursuant to the Restated Certificate
of Incorporation of TW and the law of the jurisdiction of incorporation
of TW; (ii) any surrender by a Stockholder to TW of Covered Securities
upon redemption by TW of such Covered Securities pursuant to any right
or obligation under the express terms of such Covered Securities that
is made on a proportionate basis from all holders of such Covered
Securities and is not at the option of such Stockholder; (iii) any
Permitted Pledge and any transfer of such pledged Covered Securities to the
Pledgee upon default of the obligations secured by such pledge; (iv) any
transfer solely from one member of the Affiliated Group of a Stockholder to
another member of the Affiliated Group of a Stockholder; (v) any (A)
deposit of Covered Securities into a trust under the Voting Trust
Agreement, (B) transfer or other disposition of Covered Securities so
deposited from any trustee thereunder to a successor trustee pursuant to
Section 5(i) of the Voting Trust Agreement or (C) transfer or other
disposition of Covered Securities so deposited from the trustee to TCITP or
any Controlled Affiliate of TCITP pursuant to Section 4(e) of the Voting
Trust Agreement; (vi) any transfer by a Stockholder who is an individual to
(A) a spouse, (B) any other member of his immediate family (i.e., parents,
children, including those adopted before the age of 18, grandchildren,
brothers, sisters, and the spouses or children of the foregoing), (C)
Qualified Trust or (D) a custodian under the Uniform Gifts to Minors Act or
similar fiduciary for the exclusive benefit of his children during their
lives; (vii) subject to Section 4, any transfer to the legal representatives
of a Stockholder who is an individual upon his death or adjudication of
incompetency or by any such legal representatives to any Person to whom
such Stockholder could have transferred such Covered Securities
pursuant to any clause of this definition; (viii) a transfer by the Turner
Stockholders of up to an aggregate of 12 million shares (less the
product of (A) the number of shares of Class A Common Stock and Class B
Common Stock of TBS that are the subject of a Disposition (as such term is
defined in the TBS Shareholders' Agreement) effected by Turner that is
contemplated by Section 3(a) of the TBS Shareholders' Agreement after
September 22, 1995 and (B) the Common Conversion Number (as defined in the
Merger Agreement)) of Common Stock (appropriately adjusted to take into
account any stock split, reverse stock split, reclassification,
recapitalization, conversion, reorganization, merger or other change in
such Common Stock) to any Charitable Transferee if, in the written opinion
of legal counsel reasonably acceptable to TCITP, requiring such Charitable
<PAGE>
Transferee to become a party to this Agreement would limit by a material
amount the amount of the deduction for federal income tax purposes that
would be available to the applicable Turner Stockholder in the absence
of such requirement, and any subsequent transfer by any such Charitable
Transferee of any such shares; (ix) any exchange, conversion or transfer of
Covered Securities pursuant to Section 4.1 of the LMC Agreement; and (x)
any sale or transfer permitted by and made in accordance with Section 3 or
4 hereof; provided, however, that no Disposition pursuant to clause (iii),
(iv), (v)(C), (vi) or (vii) shall be an Exempt Transfer, unless each Person
to whom any such Disposition is made, unless already a party to this
Agreement and bound by such provisions or a Controlled Affiliate of a party
to this Agreement who is bound by such provisions, shall by a written
instrument become a party to this Agreement bound by all of the provisions
hereof applicable to the Stockholder making such Disposition.
Exercise Notice: Either an Other Stockholder Exercise Notice or a
TW Exercise Notice, as the context requires.
Fast-Track Offer Notice: As defined in Section 3.3(a) hereof.
Fast-Track Sale: Any sale of shares of Common Stock for the
account of any Stockholder which meets all of the following requirements as
of the date a Fast-Track Offer Notice is given with respect thereto
pursuant to Section 3.3:
(i) such Stockholder has a bona fide intention to sell such
shares of Common Stock within a period of 115 days after such date and
such sale is not being undertaken as a result of any offer to buy, bid
or request, invitation or solicitation to sell made by any Person
(other than any such offer, bid, request, invitation or solicitation
from a registered broker-dealer or investment banker not intended to
circumvent the provisions of Section 3.1);
(ii) the Common Stock is registered under Section 12(b) or 12(g)
of the Exchange Act and is listed for trading on a national securities
exchange registered under the Exchange Act or traded in the
over-the-counter market and quoted in an automated quotation
<PAGE>
system of the National Association of Securities Dealers, Inc.;
(iii) such sale is to be effected through Broker Transactions or
pursuant to a registration statement covering such shares in effect at
the date of the Fast-Track Offer Notice; and
(iv) the following sum does not exceed $100 million:
(A) the aggregate Current Market Price of the shares of
Common Stock to be sold (determined as of the date a
Fast-Track Offer Notice with respect thereto is given
pursuant to Section 3.3), plus
(B) the aggregate sale price of all shares of Common
Stock sold pursuant to Section 3.3 by any member or former
member of the same Group as such Stockholder during the 90
days immediately preceding the date of such Fast Track Offer
Notice, plus
(C) without duplication, the aggregate Current Market
Price, determined as of the date specified in subclause (A)
of this clause (iv), of all shares of Common Stock as to
which any Fast-Track Offer Notice is given by any other
Stockholder who is a member of the same Group as such
Stockholder within two business days before or two business
days after such date.
Fast-Track Shares: As defined in Section 3.3(a) hereof.
Free to Sell Date: As defined in Section 3.1(j) hereof.
Governmental Authority: Any nation or government, any state or
other political subdivision thereof and any court, commission, agency or
other body exercising executive, legislative, judicial or regulatory
functions.
<PAGE>
Group: Either the TCITP Stockholders considered collectively as a
group or the Turner Stockholders considered collectively as a group, as the
context requires.
Initial Trigger: As of a given time, for either Stockholder, with
respect to the Subject Shares covered by any Offer Notice or Tender Notice,
the greatest number of such Subject Shares as may then be acquired by such
Stockholder (or its Affiliates) without causing a Disadvantageous Result.
Involuntary Event: As defined in Section 4.1 hereof.
Judgment: Any order, judgment, writ, decree, award or other
determination, decision or ruling of any court, judge, justice or
magistrate, any other Governmental Authority or any arbitrator.
LMC Agreement: The LMC Agreement dated as of September 22, 1995,
among TW, Liberty Media Corporation and certain subsidiaries of Liberty
Media Corporation.
Merger Agreement: The Agreement and Plan of Merger dated as of
September 22, 1995, among Time Warner Inc., Time Warner Acquisition Corp.
and TBS.
Offer Notice: As defined in Section 3.1(a) hereof.
Options: Any options, warrants or other rights (except
Convertible Securities), however denominated, to subscribe for, purchase or
otherwise acquire any TW Shares or Convertible Securities, with or without
payment of additional consideration in cash or property, either immediately
or upon the occurrence of a specified date or a specified event or the
satisfaction or failure to satisfy any condition or the happening or
failure to happen of any other contingency.
Original Rights Plan: As defined in Section 5.2 hereof.
Other Stockholder: With respect to a Turner Stockholder, the
"Other Stockholder" shall be TCITP, and with respect to a TCITP
Stockholder, the "Other Stockholder" shall be Turner.
<PAGE>
Other Stockholder Elected Shares: As defined in Section 3.1(e)
hereof.
Other Stockholder Exercise Notice: As defined in Section 3.1(e)
hereof.
Other Stockholder Group: With respect to any Other Stockholder,
the Group of which such Other Stockholder is a member.
Permitted Pledge: A bona fide pledge of Covered Securities by a
Stockholder to a financial institution to secure borrowings permitted by
applicable law; provided that such financial institution agrees in writing
to be bound by the provisions of Sections 2, 3 and 4 of this Agreement to
the same extent and with the same effect as such Stockholder and the
borrowings so secured are with full recourse against other assets of such
Stockholder or other collateral.
Per-Share Offer Consideration: As defined in Section 3.1(a)
hereof.
Person: Any individual, corporation, limited liability company,
general or limited partnership, joint venture, association, joint stock
company, trust, unincorporated business or organization, governmental
authority or other legal entity or legal person, whether acting in an
individual, fiduciary or other capacity. The term "Person" also includes
any group of two or more Persons formed for any purpose.
Prospective Purchaser: As defined in Section 3.1 hereof.
Public Sale: Any sale to the public for the account of any
Stockholder, (i) in Broker Transactions, (ii) otherwise pursuant to Rule
144 or (iii) through a registered offering pursuant to an effective
registration statement under the Securities Act which in any case meets
both of the following requirements (to the extent applicable) as of the
date an Offer Notice is given:
(A) such Stockholder has a bona fide intention to sell such
shares of Common Stock as promptly as practicable after all applicable
requirements of the Securities Act are satisfied, and such sale is not
being undertaken as a result of any offer to buy, bid or request,
invitation or solicitation to sell made by
<PAGE>
any Person (other than any such offer, bid, request, invitation or
solicitation from a registered broker-dealer or investment banker
not intended to circumvent the provisions of Section 3.1); and
(B) in the case of a registered offering, such shares either have
been registered under the Securities Act or such Stockholder has the
immediate right to require TW to register such shares under the
Securities Act.
Purchase Price: As defined in Section 3.1(a) hereof.
Purchase Right: As defined in Section 3.1(c) hereof.
Purchased Shares: When used with reference to a Purchaser which
is the Other Stockholder, the Other Stockholder Elected Shares, and when
used with respect to a Purchaser which is a TW Affiliate, the TW Elected
Shares.
Purchaser: The term "Purchaser" means TCITP, in the case of any
purchase of TCITP Elected Shares pursuant to any Other Stockholder Exercise
Notice, Turner, in the case of any purchase of Turner Elected Shares
pursuant to any Other Stockholder Exercise Notice, and TW, in the case of
any purchase of TW Elected Shares pursuant to any TW Exercise Notice.
Qualified Trust: Any trust described in Section 664 of the Code
of which a Stockholder, members of his family or a Charitable Transferee
(and no other persons) are income beneficiaries.
Related Party: As to any Person, any Affiliate of such Person
and, if such Person is a natural person, such Person's parents, children,
siblings and spouse, the parents and siblings of such Person's spouse and
the spouses of such Person's children who become parties to this Agreement.
Requirement of Law: With respect to any Person, all federal,
state and local laws, rules, regulations, Judgments, injunctions and orders
of a court or other Governmental Authority or an arbitrator, applicable to
or binding upon such Person, any of its property or any business conducted
by it or to which such Person, any of its assets or any business conducted
by it is subject.
<PAGE>
Restriction: Any prohibition, restriction, limitation or
condition on or requirement under any Defensive Provision or Requirement of
Law (A) that (i) limits the ability of any Stockholder to acquire
additional TW Shares or hold or dispose of any TW Shares or to participate
in any material right or benefit otherwise available or to be distributed
to security holders of the same class as the TW Shares, generally, or
requires such Stockholder to Dispose of any TW Shares, (ii) reduces or
otherwise limits the ability to exercise the voting or other rights of all
or a portion of the TW Shares beneficially owned by such Stockholder below
that applicable to TW Shares generally, or (iii) limits the ability of any
Stockholder to consummate any merger, consolidation, business combination
or other transaction with, TW or any of its subsidiaries or other
Affiliates or substantially increases the cost of consummation or (B) under
which the acquisition or ownership of additional TW Shares (i) would result
in a material violation of applicable law, (ii) would require the
discontinuance of any material business or activity or the divestiture of
any material portion of any business or property, or (iii) would make the
continuation of any such business or activity or the ownership of such
property illegal or subject to material damages or penalties.
Rights: The rights issued to the holders of record of the Common
Stock outstanding on January 20, 1994, or issued thereafter, with each
right entitling the holder thereof to purchase, on the terms and subject to
the conditions contained in the Rights Plan, one one-thousandth of a share
of Series A Participating Cumulative Preferred Stock, par value $1.00 per
share, of TW, as the same may have been or may be amended or modified from
time to time, and any other security or right which may be issued or
granted in exchange or substitution therefor or in replacement or upon
exercise thereof.
Rights Plan: The Rights Agreement, dated as of January 20, 1994,
between TW and Chemical Bank, as Rights Agent, as the same may have been or
may be amended from time to time.
Rights Plan Trigger: As of a given time, for either Stockholder,
with respect to the Subject Shares covered by any Offer Notice or Tender
Notice, the greatest number of such Subject Shares as may then be acquired
by such Stockholder (or its Affiliates) without causing a Rights Plan
Triggering Event.
<PAGE>
Rights Plan Triggering Event: Any member of either Group becoming
an "Acquiring Person" within the meaning of the Rights Plan (as then in
effect) or the Rights becoming transferable separately from shares of the
Common Stock, as determined in accordance with Section 3.1(d) (or an
analogous event under any subsequent "poison pill" adopted by TW).
Sale Agreement: As defined in Section 3.1(f) hereof.
Securities Act: The Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder, as from
time to time in effect.
Selling Stockholder: As defined in Section 3.1 hereof.
Stockholder: Any TCITP Stockholder or Turner Stockholder.
Subject Shares: As defined in Section 3.1 hereof.
TBS: Turner Broadcasting System, Inc.
TBS Shareholders' Agreement: The Shareholders' Agreement dated as
of June 3, 1987, among TBS, Turner and the Original Investors named
therein.
TCITP: As defined in the opening paragraphs of this Agreement.
TCITP Affiliates: TCITP and the Affiliates of TCITP.
TCITP Stockholders: TCITP and all Controlled Affiliates of TCITP,
in each case so long as such Person is or is required to be a party to this
Agreement or is the beneficial owner of any TCITP TW Shares.
TCITP TW Shares: Any and all Covered Securities of which any
TCITP Stockholder becomes the direct or indirect beneficial owner at the
Effective Time or thereafter.
Tendering Stockholder: As defined in Section 3.4(a) hereof.
<PAGE>
Tender Notice: As defined in Section 3.4(a) hereof.
Tender Shares: As defined in Section 3.4(a) hereof.
Turner: As defined in the opening paragraphs of this Agreement.
Turner Affiliates: The Turner Stockholders and the Affiliates of
the Turner Stockholders.
Turner Stockholders: Turner and all Affiliates of Turner, in each
case so long as such Person is the beneficial owner of any Covered
Securities, the Turner Foundation, the Turner Unitrust or any other
Charitable Transferee if such entity is required to become a party to this
Agreement as a result of a Charitable Transfer (provided, however, that any
such entity shall be deemed a Turner Stockholder only with respect to
Turner TW Shares acquired by such entity in a Charitable Transfer) and any
Turner Related Party who is required to become a party to this Agreement
pursuant to the terms hereof.
Turner TW Shares: Any and all Covered Securities of which any
Turner Stockholder becomes the direct or indirect beneficial owner at the
Effective Time or thereafter; provided, however, that Covered Securities
beneficially owned by the Turner Foundation or the Turner Unitrust
immediately after the Effective Time shall not be Turner TW Shares.
TW: As defined in the opening paragraphs of this Agreement.
TW Affiliate: TW and Affiliates of TW.
TW Elected Shares: In the case of any Offer Notice, any Subject
Shares covered thereby as to which TW exercises its right of purchase
pursuant to Section 3.1(e).
TW Exercise Notice: As defined in Section 3.1(e).
TW Shares: Any and all shares of capital stock of TW of any class
or series, whether now or hereafter authorized or existing.
<PAGE>
TW Stockholders Agreement: Any stockholders' agreement between TW
or any one or more Turner Stockholders in effect on the date hereof.
Underlying Securities: When used with reference to any Option or
Convertible Security as of any time, the Covered Securities issuable or
deliverable upon exercise, exchange or conversion of such Option or
Convertible Security (whether or not such Option or Convertible Security is
then exercisable, exchangeable or convertible). In the case of an Option to
acquire a Convertible Security, the Underlying Securities of such Option
shall include the Underlying Securities of such Convertible Security.
2. Restrictions on Dispositions of Covered Securities. No Turner
Stockholder shall Dispose of any Turner TW Shares, except in an Exempt
Transfer or a Charitable Transfer. No TCITP Stockholder shall Dispose of
any TCITP TW Shares, except in an Exempt Transfer. Any purported
Disposition of Covered Securities in violation of this Agreement shall be
null and void and of no force or effect, and, if TW has actual knowledge of
such violation, TW shall (and shall direct each registrar and transfer
agent, if any, for the Covered Securities to) refuse to register or record
any such purported Disposition on its transfer and registration books and
records or to otherwise recognize such purported Disposition. Subject to
Section 4, if any Involuntary Event affecting any Stockholder shall occur,
such Stockholder's legal representatives, heirs, successors or transferees,
as the case may be, and all Covered Securities beneficially owned by them
shall be bound by all the terms and provisions of this Agreement. The
Turner Stockholders shall, and shall cause each Related Party of Turner to,
comply with the provisions of this Agreement intended to be applicable to
the Turner Stockholders or any Turner TW Shares. The TCITP Stockholders
shall, and shall cause each Related Party of each TCITP Stockholder to,
comply with the provisions of this Agreement intended to be applicable to
the TCITP Stockholders or any TCITP TW Shares.
3. Right of First Refusal:
3.1. If any Stockholder (the "Selling Stockholder") desires to
accept an offer (other than with respect to a Public Sale or a Fast-Track
Sale, consistent with the definitions thereof, or a tender or exchange
offer to which Section 3.4 is applicable) (a "Bona Fide Offer")
<PAGE>
from a Person which is not a Related Party of such Selling Stockholder
(the "Prospective Purchaser") to purchase any or all of the Covered
Covered Securities beneficially owned by such Selling Stockholder (the
"Subject Shares"), such Selling Stockholder shall, in accordance with the
following procedures, terms and conditions, first offer to sell the Subject
Shares to the Other Stockholder for a consideration (subject to subsections
(g) and (h) of this Section 3.1) and on terms no more favorable to the
Selling Stockholder than those which would apply if the Selling Stockholder
accepted the Bona Fide Offer:
(a) The Selling Stockholder shall deliver to the Other
Stockholder a written notice (the "Offer Notice", which term shall include
any Offer Notice delivered pursuant to Section 3.2(a)) which shall (i) state
the number of shares or other appropriate unit of Covered Securities of each
class, series or other type that comprise the Subject Shares; (ii) identify
the Prospective Purchaser; and (iii) state the aggregate purchase price to
be paid by the Prospective Purchaser for the Subject Shares (the "Purchase
Price") and the kind and amount of consideration proposed to be paid or
delivered by the Prospective Purchaser for the Subject Shares of each
class, series or other type and the amount thereof allocable to each share
or other appropriate unit of the Subject Shares of that class, series or
other type (the "Per-Share Offer Consideration" for the Covered Securities
of that class, series or other type), the timing and manner of the payment
or other delivery thereof and any other material terms of such Bona Fide
Offer. The Selling Stockholder shall deliver a copy of the Offer Notice to
TW at the same time it is delivered to the Other Stockholder.
(b) The Offer Notice shall be accompanied by a true and
complete copy of the Bona Fide Offer.
(c) If an Offer Notice is given by a Selling Stockholder, the
Other Stockholder shall have the right (the "Purchase Right"), exercisable
in the manner hereinafter provided, to require the Selling Stockholder to
sell to the Other Stockholder the number or other amount of the Subject
Shares determined in accordance with this Section 3.1(c). If there is no
Defensive Provision or Requirement of Law in effect at the time any Offer
Notice is given that imposes any Restriction on the Other Stockholder (or
that would impose a Restriction if the Other Stockholder were to exercise
the Purchase Right as to all the Subject Shares), the Other Stockholder may
exercise the Purchase Right only
<PAGE>
as to all, but not less than all of the Subject Shares. If there are one or
more Defensive Provisions or Requirements of Law in effect at the time such
Offer Notice is given that impose any Restriction on the Other Stockholder
(or that would impose such a Restriction if the Other Stockholder were to
exercise the Purchase Right as to all the Subject Shares), the Other
Stockholder may exercise the Purchase Right only as to a number of Subject
Shares that is greater than or equal to the Initial Trigger relating to the
Other Stockholder at such time and less than or equal to the Rights Plan
Trigger relating to the Other Stockholder at such time. For purposes of
this Section 3.1(c), the Initial Trigger and the Rights Plan Trigger will
be determined as provided in Section 3.1(d).
(d) Commencing not later than the second business day after
an Offer Notice is given if there are one or more Defensive Provisions in
effect at such time, the Selling Stockholder and the Other Stockholder
shall consult with each other and TW in an effort to agree with respect to
the Initial Trigger and the Rights Plan Trigger, and upon request TW will
provide the Stockholders with information relating thereto pursuant to
Section 3.5. If agreement is not reached by the Selling Stockholder and the
Other Stockholder on or prior to the fifth business day after the Offer
Notice was given, then, within two business days after such fifth business
day, the Selling Stockholder and the Other Stockholder shall jointly
designate an independent law firm of recognized national standing, which
firm will be directed to submit a written report regarding its conclusions
as to the Initial Trigger and the Rights Plan Trigger within 5 business
days. The number of Subject Shares as to which the Other Stockholder may
exercise the Purchase Right shall be determined as follows:
(i) upon such law firm rendering a written report within
such 5 business day period as to the Initial Trigger and the
Rights Plan Trigger, if the Other Stockholder elects to exercise
its Purchase Right, the Other Stockholder may exercise such
Purchase Right only as to a number of Subject Shares equal to or
greater than the Initial Trigger and less than or equal to the
Rights Plan Trigger, as such amounts shall be specified in such
report; and
(ii) if such law firm does not render a written report as to
the Initial Trigger and the
<PAGE>
Rights Plan Trigger within such 5 business day period, if
the Other Stockholder elects to exercise its Purchase Right, the
Other Stockholder may exercise such Purchase Right only as to a
number of Subject Shares equal to or greater than the Initial
Trigger and less than or equal to the Rights Plan Trigger, as
determined by such Other Stockholder.
If any law firm is so retained, TW, the Other Stockholder and the
Selling Stockholder shall provide such law firm with such information as
may be reasonably requested in connection with the preparation of such
report and shall otherwise cooperate with each other and such law firm with
the goal of allowing such law firm to render such report as promptly as
reasonably practicable. Each of TW, the Other Stockholder and the Selling
Stockholder shall be responsible for the payment of one-third of the fees
and disbursements of such law firm, except that if, at the time such law
firm is retained, TW waives its right to purchase any Subject Shares
covered by the current Offer Notice, TW shall not be responsible for any
such fees and disbursements, which shall in such case be borne equally by
the Selling Stockholder and the Other Stockholder. If the Selling
Stockholder and the Other Stockholder are unable to agree upon the
selection of an independent law firm within the two business day period
provided for in this Section 3.1(d), either such Stockholder may apply to
the American Arbitration Association (or another nationally-recognized
organization that provides alternative dispute resolution services) to
appoint an independent law firm to prepare and submit the report provided
for in this Section 3.1(d), and any law firm so appointed shall constitute
the law firm contemplated by this Section 3.1(d). Anything contained herein
to the contrary notwithstanding, no determination relating to the Initial
Trigger or the Rights Plan Trigger pursuant to this Section 3.1(d) shall be
binding upon TW in the absence of a written instrument signed by TW
agreeing to such determination (it being understood that TW has no
obligation to provide the Stockholders with any such written instrument).
(e) If the Other Stockholder desires to exercise the Purchase
Right with respect to any Subject Shares covered by any Offer Notice, it
shall do so by a written notice (an "Other Stockholder Exercise Notice")
delivered to the Selling Stockholder by the Other Stockholder prior to 5:00
P.M., New York City time, on the eighth business day following the receipt
of an Offer Notice
<PAGE>
or, if there is any dispute as to the Initial Trigger or the Rights Plan
Trigger, within 3 business days after the resolution of such dispute.
The Other Stockholder Exercise Notice shall state the aggregate
number or other appropriate amount of each class, series or other type of
the Subject Shares to be purchased (the "Other Stockholder Elected
Shares"). A copy of the Other Stockholder Exercise Notice shall be sent to
TW at the same time it is given to the Selling Stockholder. If an Other
Stockholder Exercise Notice is given within such period but, in accordance
with Sections 3.1(c) and 3.1(d), such Other Stockholder Exercise Notice
specifies that only a portion of the Subject Shares are elected to be
purchased (a "Partial Exercise Notice"), then the Selling Stockholder shall
have the right, exercisable by written notice to each of the Other
Stockholder and TW given within five business days after the Partial
Exercise Notice was given, to terminate the Offer Notice and abandon the
proposed sale pursuant to the Bona Fide Offer, in which case the provisions
of this Section 3.1 shall be reinstated with respect to any and all
proposed future Dispositions of the same or any Subject Shares pursuant to
any subsequent Bona Fide Offer by the same or any other Prospective
Purchaser. If no Other Stockholder Exercise Notice is delivered within the
applicable number of business days, or if an Other Stockholder Exercise
Notice is delivered but the number of Other Stockholder Elected Shares is
less than the number of Covered Securities that are the subject of such
Offer Notice and the Selling Stockholder does not exercise its right to
terminate the Offer Notice and abandon the proposed sale pursuant to the
preceding sentence, TW shall have the right, exercisable by a written
notice (a "TW Exercise Notice") given to the Selling Stockholder by TW
prior to 5:00 P.M., New York City time, on the second business day
following the expiration of such period of 8 or 3 business days, as the
case may be, to elect to purchase all, but not less than all of the Subject
Shares which are not Other Stockholder Elected Shares, in accordance with
the procedures, terms and conditions set forth below in this Section 3.1
and for a consideration (subject to subsections (g) and (h) of this Section
3.1) and on terms no more favorable to the Selling Stockholder than those
which would apply if the Selling Stockholder accepted the Bona Fide Offer
with respect to the TW Elected Shares. A copy of the TW Exercise Notice
shall be sent to the Other Stockholder at the same time it is given to the
Selling Stockholder. The Selling Stockholder shall have the right to
condition the closing of the sale of the Other Stockholder Elected Shares
to the Other Stockholder upon the
<PAGE>
closing of the sale of any TW Elected Shares and the closing of the sale
of any TW Elected Shares on the closing of the sale of the Other
Stockholder Elected Shares.
(f) If an Exercise Notice is given in accordance with Section
3.1(e), within 5 business days thereafter the Purchaser and the Selling
Stockholder shall enter into a binding agreement (the "Sale Agreement") for
the sale of the Purchased Shares to the Purchaser, which agreement shall
contain such representations, warranties, covenants and conditions no less
favorable to the Selling Stockholder than the terms contemplated by the
Bona Fide Offer, except with respect to the kind and number or other amount
of Subject Shares to be purchased and the aggregate purchase price payable
in the event that the Purchased Shares constitute fewer than all the
Subject Shares. The Sale Agreement shall provide for the closing of the
purchase and sale of the Purchased Shares to be held at the offices of the
Selling Stockholder at 11:00 a.m. local time on the 60th day after the
Offer Notice was given (subject to extension in accordance with Sections
3.1(i) and 5.1) or at such other place or on such earlier date as the
parties to the Sale Agreement may agree. At such closing, the Purchaser
shall (subject to subsections (e), (g) and (h) of this Section 3.1)
purchase the Purchased Shares for cash by wire transfer of immediately
available funds in an account at a bank designated by the Selling
Stockholder, such designation to be made no less than three days prior to
closing. At the closing, the Selling Stockholder shall deliver the
certificates and other evidences of the Purchased Shares to the Purchaser,
against payment in full for the Purchased Shares, free and clear of any
pledge, claim, lien, option, restriction, charge, shareholders' agreement,
voting trust or other encumbrance of any nature whatsoever to which the
Purchased Shares are subject in the hands of the Selling Stockholder other
than restrictions on transfer arising under federal and state securities
laws and claims, restrictions, options and encumbrances arising under this
Agreement (an "Encumbrance"). Without limiting the generality of the
immediately preceding sentence, if such Purchased Shares are Other
Stockholder Elected Shares and if the Other Stockholder is TCITP, such
Purchased Shares shall be free and clear of all Encumbrances existing or
arising under any TW Stockholders Agreement, and TW shall release all such
Encumbrances upon the closing of the purchase and sale of such Purchased
Shares pursuant hereto. The certificates evidencing the Purchased Shares
will be in proper form for transfer, with appropriate stock powers
<PAGE>
executed in blank attached and documentary or transfer tax stamps affixed.
The Selling Stockholder shall execute such other documents as shall be
necessary to effectuate the sale of the Purchased Shares and such
additional documents as may be contemplated by the Bona Fide Offer or as
may reasonably be requested by any purchaser. The Other Stockholder may
assign any or all of its rights, and delegate any or all of its
obligations, under any Sale Agreement to which it is a party with respect
to the purchase and sale of any or all of the Other Stockholder Elected
Shares to any Controlled Affiliate of the Other Stockholder, provided that
no such assignment or delegation shall release the Other Stockholder from
its obligations thereunder without the written consent of the Selling
Stockholder. TW may assign any or all of its rights, and delegate any or
all of its obligations, under any Sale Agreement to which it is a party or
otherwise with respect to the purchase and sale of any or all of the TW
Elected Shares to any Controlled Affiliate of TW, provided that no such
assignment or delegation shall release TW from its obligations thereunder
without the written consent of the Selling Stockholders.
(g) Subject to Section 3.1(h), if the Bona Fide Offer
contemplated that the Purchase Price for the Subject Shares proposed to be
Disposed of by the Selling Stockholder would be paid, in whole or in part,
other than in cash, then the Purchaser shall pay for its Purchased Shares
in cash in lieu of such other consideration in an amount equal to the fair
market value of such other consideration as agreed by the Selling
Stockholder and the Other Stockholder. In the event of any disagreement
between the Other Stockholder and the Selling Stockholder as to the fair
market value of any non-cash consideration payable to the Selling
Stockholder, then at the request of either such party given within 5
business days following the delivery of the Offer Notice such determination
shall be conclusively made by a panel of appraisers, one of whom shall be
selected by the Other Stockholder, the second of whom shall be selected by
the Selling Stockholder and the third of whom shall be selected by the
first two appraisers. The Other Stockholder and the Selling Stockholder
shall each designate their appraiser within 3 business days after receipt
of any request for appraisal, and such appraisers shall designate the third
appraiser within 3 business days thereafter. Each appraiser shall submit
its determination of the fair market value of such non-cash consideration
to the Other Stockholder, TW and the Selling Stockholder within 5 business
days after the panel is empaneled and such fair
<PAGE>
market value shall be the average of the two closest valuations (or the
middle valuation, if the highest and lowest valuation differ from
the middle valuation by an equal amount). Each appraiser appointed shall be
a nationally recognized investment banking, appraisal or accounting firm
which is not directly or indirectly a Related Party of any party to this
Agreement or any Prospective Purchaser and which has no interest (other
than the receipt of customary fees) in the event giving rise to the need
for the appraisal. Each of the Other Stockholder and the Selling
Stockholder shall be responsible for the payment of one-half of the costs
of such appraisal.
(h) If the Bona Fide Offer contemplated that any part of the
Purchase Price for any Subject Shares would be paid in debt securities,
each purchaser of any of such Subject Shares may, in its discretion, elect
to pay the equivalent portion of its allocable share of the Purchase Price
for the Purchased Shares through the issuance of debt securities with
substantially similar terms in an amount the fair market value of which is
equal to the fair market value of the equivalent portion of the debt
securities specified in the Bona Fide Offer, in each case as agreed by such
purchaser and the Selling Stockholder or, failing such agreement, as
determined in accordance with the appraisal procedures specified in Section
3.1(g), taking into consideration relevant credit factors relating to the
Prospective Purchaser and each such purchaser and the marketability and
liquidity of such debt securities.
(i) All time periods specified in subsection (e) or (f) of this
Section 3.1 shall be extended for a number of days equal to the number of
days in the period from the date the request for appraisal is made pursuant
to subsection (g) or (h) of this Section 3.1 or Section 4 (as the case may
be) through and including the date of submission of the last to be
submitted of the required appraisals. Each of the Other Stockholder, the
Selling Stockholder and TW shall be responsible for the payment of
one-third of the costs of each appraisal pursuant to subsection (h) of this
Section 3.1 (including the fees of all appraisers appointed in accordance
with subsection (h) of this Section 3.1), except that, if, at the time such
appraisal is requested, TW waives its right to purchase any Subject Shares
covered by the current Offer Notice, TW shall not be responsible for any
such fees and disbursements, which shall in such case be borne equally by
the Selling Stockholder and the Other Stockholder.
<PAGE>
(j) The Selling Stockholder shall have the right to sell
Subject Shares to the Prospective Purchaser only in the following
circumstances:
(i) If neither an Other Stockholder Exercise Notice nor a TW
Exercise Notice is given in accordance with Section 3.1(e) within the
applicable time period specified therein (as such period may extended
pursuant to subsection (i) of this Section 3.1), the Selling
Stockholder shall have the right (within the period specified below in
this subsection) to sell all but not less than all of the Subject
Shares to the Prospective Purchaser, and in such case the "Free to
Sell Date" shall be the business day following the expiration of the
last to expire of all time periods provided for in Section 3.1(e).
(ii) If an Other Stockholder Exercise Notice is given but the
number of Other Stockholder Elected Shares is less than the number of
Covered Securities that are subject to the relevant Offer Notice, and
if no TW Exercise Notice is given in accordance with Section 3.1(e)
within the applicable time period specified therein (as such period
may be extended pursuant to subsection (i) of this Section 3.1), then
the Selling Stockholder shall have the right (within the period
specified below in this subsection) to sell all, but not less than all
of the Subject Shares which are not Other Stockholder Elected Shares
to the Prospective Purchaser, and in such case the "Free to Sell Date"
shall be the earlier of the fifth business day following the date the
Other Stockholder Exercise Notice was given and the date that TW
notifies the Selling Stockholder that it has determined not to
purchase any such Subject Shares.
(iii) If an Other Stockholder Exercise Notice is given but a Sale
Agreement for the Other Stockholder Elected Shares is not executed by
the Purchaser and tendered to the Selling Stockholder for execution
within the 5 business day period specified in the first sentence of
Section 3.1(f) (as such period may be extended pursuant to subsection (i)
of this Section 3.1), then the Selling Stockholder shall have the
right (within the period specified below in this subsection) to sell
all, but not less than all of the Subject Shares to the Prospective
Purchaser, and in such case
<PAGE>
the "Free to Sell Date" shall be the business day after
expiration of such 5 business day period.
(iv) If a TW Exercise Notice is given but a Sale Agreement for
the TW Elected Shares is not executed by the Purchaser and tendered to
the Selling Stockholder for execution within the 5 business day period
specified in the first sentence of Section 3.1(f) (as such period may be
extended pursuant to subsection (i) of this Section 3.1), then the
Selling Stockholder shall have the right (within the period specified
below in this subsection) to sell all, but not less than all of the TW
Elected Shares to the Prospective Purchaser, and in such case the
"Free to Sell Date" shall be the business day after the expiration of
such 5 business day period.
(v) If a Sale Agreement for either Other Stockholder Elected
Shares or TW Elected Shares is executed by the Purchaser and the
Selling Stockholder, but the closing of the purchase and sale
thereunder shall not occur by the latest date for such closing
determined in accordance with Sections 3.1(f), 3.1(i) and 5.1 for any
reason other than a breach or violation by the Selling Stockholder of
any of such Selling Stockholder's representations, warranties,
covenants or agreements that are a condition to such closing, then the
Selling Stockholder shall have the right (within the period specified
below in this subsection) to sell all, but not less than all of such
Other Stockholder Elected Shares or the TW Elected Shares covered by
such Sale Agreement to the Prospective Purchaser, and in such case the
"Free to Sell Date" shall be the business day after such latest date
for such closing as so determined.
(vi) If between the date an Other Stockholder Election Notice is
given with respect to any Other Stockholder Elected Shares and the
closing of the purchase and sale of such Other Stockholder Elected
Shares, there shall be any amendment or modification adverse to the
Other Stockholder of any Defensive Provision in effect on the date the
Other Stockholder Election Notice was given, adoption of any other
Defensive Provision adverse to the Other Stockholder, waiver adverse
to the Other Stockholder of any term or provision of or exercise
adverse to the Other Stockholder of any other discretionary right or
power
<PAGE>
under any Defensive Provision (whether then or thereafter in
effect), any reorganization, transfer of assets, consolidation,
merger, share exchange, dissolution, issue or sale of securities or
any other action or event which in the opinion of the Other
Stockholder would, if such purchase and sale were consummated, have a
Disadvantageous Result, then notwithstanding any other provision of
this Agreement or any provision of any Sale Agreement to which any
member of the Other Stockholder Group may be a party and without any
liability or obligation to the Selling Stockholder, TW, any other
party to this Agreement or any Prospective Purchaser, the Other
Stockholder may, by written notice given to the Selling Stockholder
and TW within five business days after the Other Stockholder acquires
actual knowledge of such action or event, rescind the Other
Stockholder Election Notice and any Sale Agreement which any member of
the Other Stockholder Group may be a party and abandon the purchase
and sale of the Other Stockholder Elected Shares pursuant thereto. In
such event, the Selling Stockholder shall have the right to sell all
or any portion of the Subject Shares to the Prospective Purchaser and
the "Free to Sell Date" shall be the business day following receipt by
the Selling Stockholder of such written notice of abandonment.
Any sale of Subject Shares to the Prospective Purchaser permitted by
this Section shall be for the Purchase Price (or a greater price),
payable in the manner specified in the Bona Fide Offer, and otherwise on
terms and conditions no more favorable to the Prospective Purchaser than
those contained in the Bona Fide Offer; provided, however, that if such
Subject Shares constitute fewer than all the Subject Shares, the purchase
price therefor shall be equal to or greater than the portion of the
Purchase Price allocable to such Subject Shares (determined by multiplying
each share or other appropriate unit of such Subject Shares of each class,
series or other type by the Per-Share Offer Consideration for the Subject
Shares of that class, series or other type). In the event that (i) the
Prospective Purchaser has not entered into a binding agreement with the
Selling Stockholder for the purchase of such Subject Shares within the
30-day period following the Free to Sell Date or (ii) the Prospective
Purchaser has not purchased such Subject Shares within the time period
which would be applicable to a purchase thereof by a Purchaser under the
second sentence of Section 3.1(f) as if calculated from the Free to Sell
Date
<PAGE>
(except that the 60-day period referred to therein shall be construed
as a 120-day period for this purpose), then, in either such case, the
Selling Stockholder's right to sell Subject Shares to the Prospective
Purchaser pursuant to this Section 3.1(j) shall expire and the provisions
of this Section 3.1 shall be reinstated with respect to any and all
proposed future Dispositions of the same or any other Subject Shares
pursuant to any subsequent Bona Fide Offer by the same or any other
Prospective Purchaser.
3.2. Public Sales.
(a) If any Stockholder at any time intends to effect a Public Sale
of Covered Securities (other than a Fast-Track Sale), such Stockholder may
deliver to the Other Stockholder an Offer Notice pursuant to Section 3.1
offering to sell such Covered Securities to the Other Stockholder at a
price equal to the aggregate Current Market Price thereof on the date on
which such Offer Notice is given. A copy of such Offer Notice shall be sent
to TW at the same time it is given to the Other Stockholder. If any such
Offer Notice with respect to any Covered Securities is given, the
Stockholder giving the Offer Notice shall have all rights and obligations
of a "Selling Stockholder" under Section 3.1 and each of the Other
Stockholder and TW shall have all of their respective rights and
obligations provided for in Section 3.1, in each case with the same effect
as if such Covered Securities were "Subject Shares" proposed to be sold by
the Selling Stockholder to a Prospective Purchaser for "Per-Share Offer
Consideration" consisting of cash in an amount equal to the Current Market
Price of the Covered Securities on the date such Offer Notice is given and
for a "Purchase Price" equal to the total Current Market Price on such date
of all such Subject Shares, and as if the other terms of the Public Sale
were the terms of the "Bona Fide Offer" made by such assumed Prospective
Purchaser, except that subsections (g), (h) and (i) of Section 3.1 shall
not apply and the provisions of subsection (j) of Section 3.1 shall apply
only as modified by subsection (b) of this Section 3.2.
(b) Subject Shares covered by any Offer Notice given pursuant to
this Section 3.2 may be sold (after full compliance with this Section 3.2
and the applicable provisions of Section 3.1) by the Selling Stockholder at
any available price in a Public Sale of the type described in such Offer
Notice, provided that such sale or sales are completed within the period of
120 days after the applicable
<PAGE>
Free to Sell Date; provided, however, that if the issuer of any Covered
Securities exercises any right to delay the filing or effectiveness
of a registration statement relating to such Covered Securities or to
suspend sales under such registration statement, then the period shall be
extended by the number of days in any such delay or suspension period. If
any Subject Shares covered by such Offer Notice which such Selling
Stockholder becomes obligated under this Section 3.2 to sell to one or more
purchasers or their permitted assignees are not, for any reason, sold to
such Persons within any applicable period determined pursuant to Section
3.1, or if any such Subject Shares which such Selling Stockholder is
entitled, pursuant to the first sentence of this Section 3.2(c), to sell in
the Public Sale are not so sold within the period provided in such
sentence, then in each case the right of such Selling Stockholder to sell
such unsold Subject Shares shall terminate and such Subject Shares shall
thereafter continue to be subject to the restriction on Dispositions of
Covered Securities contained in Section 2.
3.3 Fast-Track Sales.
(a) Any Stockholder who proposes to make a Fast-Track Sale may
deliver to each of the Other Stockholder and TW a written notice (the
"Fast-Track Offer Notice") to such effect which states the number of shares
of Common Stock proposed to be sold (the "Fast-Track Shares"). The delivery
of any such notice shall constitute the offer by such Stockholder to sell
to the Other Stockholder, TW or both all or such portion of the Fast-Track
Shares as it or they may have the right to purchase in accordance with this
Section 3.3 at a price payable in cash equal to the aggregate Current
Market Price thereof on the date on which such Fast-Track Offer Notice is
given.
(b) The Other Stockholder shall have the right to elect to
purchase (or to designate any one or more of the members of the Other
Stockholder Group as purchasers of) all or any number of the Fast-Track
Shares. The Other Stockholder and TW shall consult with each other in an
effort to resolve any questions as to the Initial Trigger and the Rights
Plan Trigger; provided, that if the Other Stockholder and TW cannot resolve
such issue, then the Other Stockholder shall have the right to purchase
only the number of Fast-Track Shares that TW shall specify. Anything
contained herein to the contrary notwithstanding, no determination relating
to the Initial Trigger or the Rights
<PAGE>
Plan Trigger pursuant to this Section 3.3(b) shall be binding upon TW in
the absence of a written instrument signed by TW agreeing to such
determination (it being understood that TW has no obligation to
provide the Other Stockholder with any such written instrument). If the
Other Stockholder desires to exercise its purchase right under this Section
3.3, it shall do so by a written notice specifying the number of the
Fast-Track Shares to be purchased and identifying the purchasers thereof,
given to the Stockholder who gave the Fast-Track Offer Notice prior to 5:00
P.M., New York City time, on the third business day following the receipt
by the Other Stockholder of the Fast-Track Offer Notice (provided that any
Fast-Track Offer Notice received on a day that is not a business day or
after 12 noon, New York City time, on a business day, shall be deemed to
have been received on the next following business day). TW shall have the
right to elect to purchase any or all of the Fast-Track Shares that the
Other Stockholder does not elect to purchase or have one or more other
members of the Other Stockholder Group purchase in accordance with the
immediately preceding sentence, which right shall be exercisable by a
written notice specifying the number of such Fast-Track Shares to be
purchased, which notice shall be given by TW to the Stockholder proposing
to sell such Fast-Track Shares and the Other Stockholder prior to 5:00
P.M., New York City time, on the fifth business day following the receipt
by the Other Stockholder and TW of the Fast-Track Offer Notice. If any such
notice is given by either the Other Stockholder or TW, the closing of the
purchase and sale of the Fast-Track Shares covered thereby shall be held at
the offices in the continental United States of the Other Stockholder or TW
(as the case may be) specified in such notice, 11:00 A.M., New York City
time, on the fourth business day after such notice was given or at such
other place or date as the Stockholder selling the Fast-Track Shares and
the purchasers thereof may agree, and such closing date shall not be
subject to extension pursuant to Section 5.1 or otherwise unless such
Selling Stockholder and such purchasers agree to such extension. At such
closing, the purchasers shall purchase such Fast-Track Shares for cash by
wire transfer of immediately available funds in an account at a bank
designated by the Selling Stockholder, such designation to be made no less
than three business days prior to closing, against delivery at the closing
by the Selling Stockholder of the certificates evidencing the Fast-Track
Shares to be sold to such purchasers, in proper form for transfer, with
appropriate stock powers executed in blank attached and documentary or
<PAGE>
transfer tax stamps affixed. Such delivery of such certificates shall
constitute the representation and warranty of such selling Stockholder that
upon such delivery, such selling Stockholder duly transferred good and
marketable title to the shares evidenced thereby, clear of any Encumbrance.
Without limiting the generality of the immediately preceding sentence, if
the Other Stockholder is TCITP, such purchased Fast-Track Shares shall be
free and clear of all Encumbrances existing or arising under any TW
Stockholders Agreement, and TW shall release all such Encumbrances upon the
closing of the purchase and sale thereof. The purchase price payable for
each Fast-Track Share purchased pursuant to this Section 3.3 shall be the
Current Market Price determined as of the date the Fast-Track Offer Notice
was given.
(c) Any Fast-Track Shares not purchased pursuant to Section 3.3(b)
may be sold by the selling Stockholder at any available price in one or
more Fast-Track Sales within the 90-day period following the twelfth
business day after the receipt by both TW and the Other Stockholder of the
Fast-Track Offer Notice, and all Fast-Track Shares which for any reason are
not sold within such period either pursuant to Section 3.3(b) or in one or
more Fast-Track Sales, then the right to sell such Fast-Track Shares shall
terminate and such Fast-Track Shares shall thereafter continue to be
subject to the restrictions on Dispositions of Covered Securities contained
in Section 2.
3.4. Tender or Exchange Offer Sales.
(a) If any Person shall make a tender or exchange offer to acquire
any Covered Securities, and if any Stockholder (a "Tendering Stockholder")
intends to tender any Covered Securities, such Tendering Stockholder shall
give the Other Stockholder written notice (the "Tender Notice") of such
intention not later than ten calendar days prior to the latest time by
which securities must be tendered in order to be accepted pursuant to such
offer as such date may from time to time be extended (the "Tender Date"),
specifying the Covered Securities proposed to be tendered (the "Tender
Shares"), together with copies of all written materials by which such offer
is being made. A copy of such Tender Notice shall be sent to TW at the same
time it is given to the Other Stockholder.
(b) Any Tender Notice given by any Tendering Stockholder shall
constitute an offer by such Tendering
<PAGE>
Stockholder to sell to the Other Stockholder the Tender Shares. The
Other Stockholder shall have the right to elect to purchase (or to
designate any one or more of the members of the Other Stockholder Group as
purchasers of) all or any number of the Tender Shares in accordance with
this Section 3.4. The Other Stockholder and TW shall consult with each
other in an effort to resolve any questions as to the Initial Trigger and
the Rights Plan Trigger, but the rights of the Other Stockholder under this
Section 3.4 shall not be affected by the failure of TW to concur in any
conclusion of the Other Stockholder with respect to any such matter.
Anything contained herein to the contrary notwithstanding, no determination
relating to the Initial Trigger or the Rights Plan Trigger pursuant to this
Section 3.4(b) shall be binding upon TW in the absence of a written
instrument signed by TW agreeing to such determination (it being understood
that TW has no obligation to provide the Other Stockholder with any such
written instrument). If the Other Stockholder desires to exercise its
purchase right under this Section 3.4, it shall do so by a written notice
specifying the number of the Tender Shares to be purchased and identifying
the purchasers thereof, given to the Tendering Stockholder at least three
business days prior to the Tender Date. If any such notice is given by the
Other Stockholder, the closing of the purchase and sale of the Tender
Shares covered thereby shall be held at the offices of the Other
Stockholder within the continental United States specified in such notice
at 11:00 A.M., New York City time, on a date specified in such notice that
is not later than two business days prior to the Tender Date, or at such
other place or date as the Tendering Stockholder and the Other Stockholder
may agree, and such closing date shall not be subject to extension pursuant
to Section 5.1 or otherwise unless the Tendering Stockholder and the Other
Stockholder agree to such extension. At such closing, the purchasers
identified by the Other Stockholder shall purchase such Tender Shares for
cash by wire transfer of immediately available funds to an account at a
bank designated by the Tendering Stockholder in the Tender Notice, against
delivery at the closing by the Tendering Stockholder of the certificates or
other instruments evidencing the Tender Shares to be sold to such
purchasers, in proper form for transfer, with appropriate stock powers
executed in blank attached and documentary or transfer tax stamps affixed.
Such delivery of such certificates shall constitute the representation and
warranty of such Tendering Stockholder that upon such delivery, such
Tendering Stockholder duly transferred good and marketable title to the
shares
<PAGE>
evidenced thereby, free and clear of any Encumbrance. Without
limiting the generality of the immediately preceding sentence, such
purchased Tender Shares shall be free and clear of all Encumbrances
existing or arising under any TW Stockholders Agreement, and TW shall
release all such Encumbrances upon the closing of the purchase and sale
thereof. The total purchase price to be paid by such purchasers for such
Tender Shares shall be (i) if such tender or exchange offer is consummated,
the purchase price that the Tendering Stockholder would have received if it
had tendered such Tender Shares and all such Tender Shares had been
purchased in such tender or exchange offer, including any increases in the
price paid by the offeror after exercise by the Other Stockholder of its
right of first refusal under this Section 3.4 or after the closing of the
purchase of Tender Shares pursuant to such exercise, (ii) if such tender or
exchange offer is not consummated, the highest price offered pursuant
thereto, or (iii) if any other tender or exchange offer is commenced prior
to the expiration or termination of such tender or exchange offer, the
highest price offered in either such tender or exchange offers in each case
with any offered securities or other property except cash to be valued as
provided in Section 3.4(c).
(c) If the consideration offered in such tender or exchange offer
consists, in whole or in part, of securities or other property except cash,
then the purchasers identified by the Other Stockholder shall pay for the
Tender Shares cash in lieu of such other consideration in an amount equal
to the fair market value of such other consideration as agreed by the
Tendering Stockholder and the Other Stockholder. In the event the Tendering
Stockholder and the Other Stockholder do not agree as to the fair market
value of any such non-cash consideration by the beginning of the second
business day after the Offer Notice is given, then such determination shall
be conclusively made by a panel of appraisers, one of whom shall be
selected by the Other Stockholder, the second of whom shall be selected by
the Tendering Stockholder and the third of whom shall be selected by the
first two appraisers. The Other Stockholder and the Tendering Stockholder
shall each designate their appraiser within three business days after such
Offer Notice is given, and such appraisers shall designate the third
appraiser within three business days thereafter. Each appraiser shall
submit its determination of the fair market value of such non-cash
consideration within three business days after the panel is empaneled and
such fair market value
<PAGE>
shall be the average of the two closest valuations (or the middle
valuation, if the highest and lowest valuation differ from the middle
valuation by an equal amount). Each appraiser appointed shall be a
nationally recognized investment banking, appraisal or accounting firm
which is not directly or indirectly a Related Party of any party to this
Agreement or the Person making the tender or exchange offer and which has
no interest (other than the receipt of customary fees) in the event giving
rise to the need for the appraisal. Each of the Other Stockholder and the
Tendering Stockholder shall be responsible for the payment of one-half of
the costs of such appraisal.
(d) If the Other Stockholder does not exercise its right of first
refusal under this Section 3.4 by giving a notice of exercise in accordance
with Section 3.4(b) or, having given such notice, fails to purchase and pay
for (or have one or more of its designees purchase and pay for) such Tender
Shares on or prior to the business day prior to the Tender Date, then the
Tendering Stockholder shall be free to accept the tender or exchange offer
with respect to which the Tender Notice was given or any other tender or
exchange offer commenced during the pendency of the tender or exchange
offer with respect to which the Tender Notice was given.
3.5. TW to Provide Certain Information. If requested at any time
or from time to time by any Stockholder, TW shall promptly provide to
such Stockholder in writing (i) all information which such Stockholder
reasonably may request for the purpose of determining whether, based on the
facts set forth by such Stockholder in such request, any acquisition of
beneficial ownership by such Stockholder or the Other Stockholder would
result in the occurrence of a Disadvantageous Result under or in respect of
any Defensive Provision and (ii) such other non-confidential information
known to TW as such Stockholder may reasonably request regarding (A) the
number of Covered Securities issued and outstanding at any time, (B) the
number of Covered Securities owned of record by any person at any time, or
(C) the terms and conditions of any Defensive Provision.
3.6. Certain Actions by TW. In the event that TW shall (i) amend or
modify any Defensive Provision in effect on the date hereof, or (ii) adopt
any Defensive Provision after the date hereof, or (iii) purchase, redeem or
otherwise acquire any outstanding Covered Securities,
<PAGE>
directly or indirectly through any Controlled Affiliate of TW, and the
result of any such action is to reduce the Initial Trigger or the
Rights Plan Trigger with respect to any Stockholder Group, then, in the
case of any Offer Notice or Tender Notice delivered after such action, if
such action shall have had the effect of reducing the number of Subject
Shares covered by such Offer Notice that may then be purchased by the Other
Stockholder pursuant to this Agreement, TW shall have no right under this
Agreement to purchase any Subject Shares covered by such Offer Notice.
4. Involuntary Event; Death or Incapacity.
4.1. In the event that (i) any Stockholder shall be adjudicated
bankrupt or insolvent or file a voluntary petition for bankruptcy (or an
involuntary petition for bankruptcy shall have been filed against any
Stockholder and the same shall not have been dismissed within 60 days after
the date of filing), or file a pleading in any court of record admitting
his inability to pay his debts as they become due, or make a general
assignment for the benefit of creditors, or (ii) a receiver, administrator,
guardian, legal committee or other legal custodian of any Stockholder's
property shall be appointed (other than in connection with his death or
incapacity) and not discharged within 60 days, or (iii) a writ of
attachment or levy or other similar court order shall prevent any
Stockholder from exercising his or its right to vote or Dispose of any of
his or its Covered Securities and such writ or levy is not dismissed (or
such court order is not reversed) within 60 days, then such Stockholder
shall promptly notify the Other Stockholder of the occurrence of any such
event (the "Involuntary Event"). Simultaneously with the delivery of any
such notice required by this Section 4.1, such Stockholder shall deliver an
Offer Notice to such Other Stockholder pursuant to Section 3.1, offering to
sell all Covered Securities beneficially owned by such Stockholder to such
Other Stockholder at the Appraised Value. Each Stockholder giving such an
Offer Notice shall have, in respect of such Offer Notice, all rights and
obligations under Section 3.1 of a Selling Stockholder, except that if such
Stockholder is a Turner Stockholder, for so long as such Turner Stockholder
is subject to the restrictions on transfer contained in the TW
Stockholders' Agreement, it shall not be entitled to sell any Covered
Securities to any Person other than the Purchasers, if any; each
Stockholder and TW shall have, in respect of such Offer Notice, all rights
and obligations under Section 3.1 which are provided
<PAGE>
for therein in the case of any Offer Notice given pursuant thereto.
For the purpose hereof, the term "Appraised Value" means the fair
market value of the Covered Securities to be sold as determined by
appraisal in the same manner as provided in Section 3.1(h) with respect to
appraisals of non-cash consideration. Each of such Stockholder, the Other
Stockholder and TW shall be responsible for the payment of one-third of the
costs of such appraisal, except that, if, at the time such appraisal is
requested, TW waives its right to purchase any Subject Shares covered by
the current Offer Notice, TW shall not be responsible for any such fees and
disbursements, which shall in such case be borne equally by such
Stockholder and the Other Stockholder. All time periods specified in
subsection (e) or (f) of Section 3.1 shall be extended for a number of days
equal to the number of days in the period from the delivery of the Offer
Notice pursuant to this Section 4.1 through and including the date of
submission of the last to be submitted of the required appraisals.
4.2. Any Sale Agreement entered into by any Stockholder and the
Purchaser pursuant to an Offer Notice required by Section 4.1 shall provide
that the closing of the sale of the Covered Securities to be sold and
purchased thereunder may be postponed for such period as may be necessary
to effect the purchase of such Covered Securities free from any claims of a
trustee in bankruptcy, any garnishee or any court order. In the event that
any Covered Securities subject to such Offer Notice are not purchased for
any reason, such Covered Securities shall continue to be subject to this
Agreement.
4.3. In the event of Turner's incapacity or death, his legal
representative or the executor or administrator of his estate, as the case
may be, shall be bound by all the terms and provisions of this Agreement as
fully as if such representative, executor or administrator were a party
hereto and his or its name were substituted for Turner's name herein and
shall be entitled to exercise Turner's rights and required to perform his
obligations hereunder.
5. Regulatory Approvals; Certain Representations, Warranties and
Covenants.
5.1. Regulatory Approvals. If any sale of Covered Securities to
any Stockholder, TW or any permitted assignee of any Stockholder or TW in
accordance with Section 3.1, 3.2 or 4 requires, as a condition to the legal
and valid
<PAGE>
transfer thereof to such Purchaser, any consent, approval, waiver, or
authorization of, notice to or filing with, any Governmental Authority
or the expiration of any waiting period imposed by applicable law
and if Section 3.1, 3.2 or 4 (as the case may be) provides for the closing
of such sale to be held before some fixed or ascertainable date, then such
date shall be extended for the period of time during which efforts to
obtain each such consent, approval, waiver, or authorization, to give such
notice or make such filing and to obtain the termination of each such
waiting period at the earliest reasonably practicable time are diligently
being made; provided, however, that in no event shall the extension of any
such closing date pursuant to this Section 5.1 exceed 90 days. Each party
shall (and shall cause such party's Controlled Affiliates to) reasonably
cooperate with the other parties in obtaining any such consent, approval,
waiver, or authorization, to give any such notice or make any such filing
and in obtaining the termination of any such waiting period at the earliest
practicable time.
5.2. Representation and Warranty of TW. TW represents and warrants
to each of TCITP and Turner that, other than the Rights Plan, the
provisions of TW's Restated Certificate of Incorporation and By-laws and
the Delaware Statute, there were no Defensive Provisions in effect on the
date of the Merger Agreement; provided, however, that no representation is
made as to the laws of any jurisdiction other than Delaware.
6. Legend on Stock Certificates; No Recordation of Transfer.
6.1. Each certificate or instrument representing Covered Securities
directly or indirectly beneficially owned by any Stockholder shall bear the
following legend until such time as the shares represented thereby are no
longer subject to this Agreement:
"THE SALE, TRANSFER, ASSIGNMENT, PLEDGE OR ENCUMBRANCE OF
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND
CONDITIONS OF A STOCKHOLDERS' AGREEMENT DATED AS OF SEPTEMBER
---, 1995, AMONG R.E. TURNER, III, TCI TURNER PREFERRED, INC.,
TIME WARNER INC. AND CERTAIN OTHER PERSONS. A COPY OF SUCH
AGREEMENT IS ON FILE AT THE OFFICES OF TIME WARNER INC.
<PAGE>
TW shall not be responsible for placing the above legend on any
certificate representing Covered Securities, except to the extent that it
has actual knowledge that such certificate has been issued in the name of
any Stockholder.
6.2. TW agrees not to knowingly effect a transfer of any Covered
Securities which to TW's actual knowledge are directly or indirectly
beneficially owned by any Stockholder on its books except as permitted by
the terms of this Agreement. A copy of this Agreement shall be filed with
the Secretary of TW.
7. Representations and Warranties; Certain Additional Covenants.
7.1. Certain Representations and Covenants of the TCITP
Stockholders. Each of the TCITP Stockholders represents and warrants to the
Turner Stockholders and TW as follows:
(a) Neither such TCITP Stockholder nor any of its
Controlled Affiliates that hold TW Shares is a party to or bound by,
any Contract, Requirement of Law or Judgment, other than Requirements
of Law referred to in Section 7.3(d), that does or may prevent,
impede or delay the due and punctual performance by any such
Person of its agreements, obligations and commitments contained
in this Agreement, and such TCITP Stockholder will not enter into
or permit any of its Controlled Affiliates to enter into any such
Contract or take any other voluntary action or voluntarily omit
to take any action that would have any such effect.
(b) Except for this Agreement, there is no option, warrant,
right, call, proxy, or Contract that directly or indirectly
provides for the sale, pledge or other Disposition of any of such
TCITP TW Shares or any interest therein or any rights with
respect thereto, relates to the voting, Disposition or control of
any thereof or obligates or may obligate such TCITP Stockholder
or any of its Controlled Affiliates to grant, offer or enter into
any of the foregoing.
No breach or violation of any of the foregoing representations,
warranties or covenants shall result or be deemed to result directly or
indirectly from or by reason of any Contract between TCITP and any of its
Affiliates and TW and any of its Affiliates, directors or officers, whether
<PAGE>
now existing or hereafter entered into, and including the Voting Trust (as
such term is defined in the LMC Agreement), as the same may be amended from
time to time, nor from or by reason of the execution, delivery or
performance of or action taken or omitted to be taken pursuant to the terms
of any such Contract or the consummation of any transaction contemplated
thereby, nor from or by reason of any option, warrant, right, call, proxy
or other right granted, covenant made or obligation incurred under any such
Contract that directly or indirectly provides for the sale, pledge or other
Disposition of any of the TCITP TW Shares or any interest therein or any
rights with respect thereto.
7.2. Certain Representations and Covenants of the Turner
Stockholders. Each of the Turner Stockholders represents and warrants to
the TCITP Stockholders and TW as follows:
(a) Neither such Turner Stockholder nor any of his or its
Controlled Affiliates that hold TW Shares is a party to or bound
by, any Contract, Requirement of Law or Judgment, other than any
Requirements of Law referred to in Section 7.3(d), that does or
may prevent, impede or delay the due and punctual performance by
any such Person of his or its agreements, obligations and
commitments contained in this Agreement, and such Turner
Stockholder will not enter into or permit any of his or its
Controlled Affiliates to enter into any such Contract or take any
other voluntary action or voluntarily omit to take any action
that would have any such effect.
(b) Except for this Agreement and any TW Stockholders
Agreement, there is no option, warrant, right, call, proxy, or
Contract that directly or indirectly provides for the sale,
pledge or other Disposition of any of such Turner TW Shares or
any interest therein or any rights with respect thereto, relates
to the voting, Disposition or control of any thereof or obligates
or may obligate such Turner Stockholder or any of his or its
Controlled Affiliates to grant, offer or enter into any of the
foregoing. Each of the Turner Stockholders has delivered to TCITP
a true and complete copy of each TW Stockholders Agreement to
which it is a party, if any, as amended through and in effect on
the date of this Agreement.
<PAGE>
No Turner Stockholder shall permit the amendment of any TW Stockholders
Agreement to which it is a party in any manner that would have
any effect referred to in Section 7.2(a).
7.3. Representations and Warranties of Each Party. Each party,
severally and not jointly, represents and warrants to each of the other
parties as follows:
(a) If such party is a corporation or partnership, such party has
all requisite corporate power and authority or partnership power and
authority (as the case may be) to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance by such party
of, and the consummation of the transactions contemplated by, this
Agreement have been duly and validly authorized by all necessary corporate
action or partnership action (as the case may be) on the part of such
party.
(b) If such party is a natural person (whether acting
individually or in a fiduciary capacity), such party has full legal
capacity, right, power and authority to execute, deliver and perform his or
her obligations under this Agreement and to consummate the transactions
contemplated hereby.
(c) This Agreement has been duly executed and delivered by such
party. This Agreement constitutes a legal, valid and binding obligation of
such party enforceable in accordance with its terms, except that (i) such
enforceability may be subject to bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights and (ii) such
enforceability may be subject to general principles of equity (regardless
of whether enforcement is considered in a proceeding in equity or at law).
(d) The execution, delivery and performance of this Agreement by
such party do not, either with or without the giving of notice or the
passage of time or both, (i) assuming compliance with the requirements
referred to in clause (ii) of this sentence, violate or conflict with any
Requirement of Law or Judgment applicable to such party, (ii) except for
(A) requirements, if any, arising out of any required pre-merger
notification and related filings with the Federal Trade Commission and the
Antitrust Division of
<PAGE>
the Department of Justice pursuant to the Hart-Scott-Rodino Antritrust
Improvements Act of 1976, as amended, and (B) requirements, if any,
arising out of the rules and regulations adopted by the Federal
Communications Commission, require the consent or authorization of or
waiver by or filing with any Governmental Authority or (iii) conflict with,
result in the breach of any provision of, result in the modification or
termination of, require the consent or authorization of or waiver by or
filing with any other parties to, or result in the creation or imposition
of any Encumbrance pursuant to, or constitute a default under, any material
agreement, permit, indenture, note, lease, license or franchise or any
other material instrument to which such party is a party or by which such
party's properties or assets are bound or from which such party derives
benefit. For purposes of this Section 7.3(d), the word "party" includes (i)
in the case of TW, TW and its Affiliates and (ii) in the case of any Turner
Stockholder, such Turner Stockholder and his or its Related Parties.
8. No Assignment.
This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors and permitted assigns
and, in the event of the incapacity or death of any Turner Stockholder who
is a natural person, his legal representatives, the executor or
administrator of his estate, and his heirs and beneficiaries, as provided
in Section 4 hereof. Except as specifically provided herein, this Agreement
and the rights and obligations of the parties hereunder may not be assigned
or delegated, in whole or in part. Without prejudice to the rights of TW
under any other provision of this Agreement, none of the provisions of
Section 2 (other than the third sentence of Section 2) of this Agreement
are intended to be for the benefit of or enforceable by TW, and TW shall
not have any right, remedy or claim against any Stockholder by reason of
any breach or violation thereof.
9. Specific Performance. The parties hereto acknowledge that the
benefits to them under this Agreement are unique, that they are willing to
enter into this Agreement only upon performance by each other of all of
their obligations hereunder and that monetary damage would not afford
adequate remedy for failure to perform any such obligations hereunder.
<PAGE>
Accordingly, the parties hereby consent to specific performance of their
obligations hereunder and waive any requirement for securing or posting of
any bond in connection with the obtaining of any injunctive or other
equitable relief to enforce their rights hereunder.
10. Termination, Amendment and Waiver. This Agreement shall
terminate as to all parties on the first to occur of (i) the date on which
no TCITP Stockholder beneficially owns any Covered Securities (otherwise
than by reason of any Disposition made in violation of this Agreement),
(ii) the date on which no Turner Stockholder beneficially owns any Covered
Securities (otherwise than by reason of any Disposition made in violation
of this Agreement) and (iii) any date of termination agreed to by TCITP and
Turner. If, by reason of one or more Dispositions, the number of TW Shares
directly or indirectly beneficially owned by the TCITP Stockholders, as a
group, or the Turner Stockholders, as a group, is less than one-third of
the number of the shares beneficially owned by such Group immediately after
the Effective Time, then such group shall no longer have any right of first
refusal under Section 3 or Section 4, but shall continue to be subject to
all obligations and restrictions arising under this Agreement with respect
to all Covered Securities which the members of that group continue to
beneficially own. This Agreement may be amended by the parties hereto only
by an instrument in writing signed by each party; provided, however, that
execution of any such amendment by or on behalf of TW shall not be required
unless such amendment adversely affects the rights or obligations of TW
hereunder. Any term or provisions of this Agreement may be waived in
writing at any time by the party which is entitled to the benefits thereof.
11. General Provisions.
11.1. All periods of time referred to in this Agreement (other than
references to business days) shall include all Saturdays, Sundays or State
of New York holidays provided that if the date or last date to perform the
act or give any notice with respect to this Agreement shall fall on a
Saturday, Sunday or State of New York holiday, such act or notice may be
timely performed or given if performed or given on the next succeeding day
which is not a Saturday, Sunday or State of New York holiday.
11.2. All notices, requests, consents and other communications
required or permitted hereunder shall be in writing and shall be deemed
effectively given or delivered upon confirmed facsimile transmission,
personal delivery or
<PAGE>
the day following delivery to a courier service which guarantees
overnight delivery of such notice or five (5) days after deposit with the
U.S. Post Office, by registered or certified mail, return receipt
requested, postage prepaid, and, in the case of courier or mail delivery,
addressed to the intended recipient at his or its address as shown on
Schedule I attached hereto or such other address as a party may specify in
writing.
11.3. This Agreement constitutes the entire agreement and
understanding of the parties relating to the subject matter hereof, and
supersedes all prior agreements, whether oral or written, relating to the
subject matter hereof (it being understood that this Section 11.3 is not
intended to obviate the respective rights and obligations of Turner, TW and
the other parties thereto under the Investors Agreement (No. 1) dated as of
the same date as this Agreement among TW, Turner and TOI).
11.4. Any provision hereof which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or thereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11.5. The headings of the articles and sections contained in this
Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not affect the meaning or interpretation
of this Agreement. The definitions in Section 1 and elsewhere 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 Sections, Exhibits and Schedules shall be deemed
references to and Sections of, and Exhibits and Schedules to, this
Agreement unless the context shall otherwise require. Unless otherwise
expressly provided herein or unless the context shall otherwise require,
any references as of any time to the "Certificate of Incorporation",
<PAGE>
"Articles of Incorporation", "charter", "organizational or governing
documents" or "By-laws" of any Entity, to any agreement (including this
Agreement) or other Contract, instrument or document or to any statute or
regulation or any specific section or other provision thereof are to it as
amended and supplemented through such time (and, in the case of a statute
or regulation or specific section or other provision thereof, to any
successor of such statute, regulation, section or other provision). Unless
otherwise expressly provided herein or unless the context shall otherwise
require, any provision of this Agreement using a defined term (by way of
example and without limitation, such as "Controlled Affiliate") which is
based on a specified characteristic, qualification, feature, relationship
or status shall, as of any time, refer only to such Persons who have the
specified characteristic, qualification, feature, relationship or status as
of that particular time.
11.6. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but which together shall
constitute but one and the same instrument.
11.7. This Agreement and the validity, interpretation and
performance of the terms and provisions hereof shall be governed by, and
construed in accordance with, the laws of the State of New York, without
regard to the provisions thereof relating to choice or conflict of laws,
except to the extent that the laws of the jurisdiction of incorporation of
TW shall be mandatorily applicable.
11.8. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY
HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY (I) SUBMITS, FOR ITSELF AND
ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE OR
FEDERAL COURT SITTING IN NEW YORK CITY (AND OF ANY APPELLATE COURT TO WHICH
AN APPEAL OF ANY JUDGMENT, ORDER, DECREE OR DECISION OF ANY SUCH COURT MAY
BE TAKEN) IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT RENDERED
IN ANY SUCH SUIT, ACTION OR PROCEEDING, (II) WAIVES ANY OBJECTION WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION
OR PROCEEDING IN ANY SUCH COURT, INCLUDING ANY CLAIM THAT ANY SUCH SUIT,
ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND (III)
WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR
PROCEEDING.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement in
two or more counterparts as of the day and year first above written.
TCI TURNER PREFERRED, INC.
By: --------------------------------
Name:
Title:
UNITED CABLE TURNER INVESTMENT, INC.
By: --------------------------------
Name:
Title:
COMMUNICATIONS CAPITAL CORP.
By: --------------------------------
Name:
Title:
------------------------------------
R. E. TURNER, III
TURNER OUTDOOR, INC.
By: --------------------------------
Name:
Title:
TIME WARNER INC.
By: --------------------------------
Name:
Title:
<PAGE>
EXHIBIT C TO
LMC AGREEMENT
CERTIFICATE OF THE VOTING POWERS, DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL AND OTHER SPECIAL
RIGHTS AND QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS THEREOF, OF SERIES K
VOTING PARTICIPATING CONVERTIBLE
PREFERRED STOCK
OF
TIME WARNER INC.
--------------------
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
--------------------
TIME WARNER INC., a corporation organized and existing by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify that the following resolution was
duly adopted by action of the Board of Directors of the Corporation
(the "Board of Directors") at a meeting duly held on September 22,
1995.
RESOLVED that pursuant to the authority expressly granted to
and vested in the Board of Directors by the provisions of Section 2 of
Article IV of the Restated Certificate of Incorporation of the
Corporation, as amended from time to time (the "Certificate of
Incorporation"), and Section 151(g) of the General Corporation Law of
the State of Delaware (the "DGCL"), the Board of Directors hereby
creates, from the authorized shares of Preferred Stock, par value
$1.00 per share (the "Preferred Stock"), of the Corporation authorized
to be issued pursuant to the Certificate of Incorporation, a series of
Preferred Stock, and hereby fixes the voting powers, designations,
preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions thereof, of
the shares of such series as follows:
The series of Preferred Stock hereby established shall
consist of [ ] shares designated as Series K Voting Participating
Convertible Preferred Stock. The number of shares constituting such
series may be increased or decreased from time to time by a resolution
or
<PAGE>
resolutions of the Board of Directors. The rights, preferences
and limitations of such series shall be as follows:
1. Definitions. As used herein, the following terms shall
have the indicated meanings:
1.1 "Board of Directors" shall mean the Board of
Directors of the Corporation or, with respect to any action to be
taken by the Board of Directors, any committee of the Board of
Directors duly authorized to take such action.
1.2 "Capital Stock" shall mean any and all shares of
corporate stock of a Person (however designated and whether
representing rights to vote, rights to participate in dividends or
distributions upon liquidation or otherwise with respect to such
Person, or any division or subsidiary thereof, or any joint venture,
partnership, corporation or other entity).
1.3 "Certificate" shall mean the Certificate of the
Voting Powers, Designations, Preferences and Relative, Participating,
Optional or Other Special Rights, and Qualifications, Limitations or
Restrictions Thereof, of Series K Voting Participating Convertible
Preferred Stock filed with respect to this resolution with the
Secretary of State of the State of Delaware pursuant to Section 151 of
the DGCL.
1.4 "Certificate of Incorporation" shall mean the
Restated Certificate of Incorporation of the Corporation, as amended
from time to time.
1.5 "Closing Price" of the Common Stock shall mean the
last reported sale price of the Common Stock (regular way) as shown on
the Composite Tape of the NYSE, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices on the
NYSE, or, if the Common Stock is not listed or admitted to trading on
the NYSE, on the principal national securities exchange on which such
stock is listed or admitted to trading, or, if it is not listed or
admitted to trading on any national securities exchange, the last
reported sale price of the Common Stock, or, in case no such sale
takes place on such day, the average of the closing bid and asked
prices, in either case as reported by NASDAQ.
<PAGE>
1.6 "Common Stock" shall mean the class of Common
Stock, par value $1.00 per share, of the Corporation authorized
at the date of the Certificate, or any other class of stock
resulting from (x) successive changes or reclassifications of
such Common Stock consisting of changes in par value, or from par
value to no par value, (y) a subdivision or combination or
(z) any other changes for which an adjustment is made under
Section 2.4(a) hereof, and in any such case including any shares
thereof authorized after the date of the Certificate, together
with any associated rights to purchase other securities of the
Corporation which are at the time represented by the certificates
representing such shares of Common Stock.
1.7 "Communications Laws" shall mean 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 Federal
Communications Commission (the "FCC"). All references herein to
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) or promulgated with a delayed effective date.
1.8 "Conversion Date" shall have the meaning set
forth in Section 3.5 hereof.
1.9 "Corporation" shall mean Time Warner Inc., a
Delaware corporation, and any of its successors by operation of law,
including by merger or consolidation.
1.10 "DGCL" shall mean the General Corporation Law of
the State of Delaware.
1.11 "Dividend Payment Date" shall have the meaning set
forth in Section 2.1 hereof.
1.12 "Effective Time of the Merger" shall have the
meaning given to such term in the Merger Agreement.
1.13 "Formula Number" shall have the meaning set forth
in Section 2.1 hereof.
<PAGE>
1.14 "Junior Stock" shall mean the Common Stock, the
Series A Stock and the shares of any other class or series of Capital
Stock of the Corporation which, by the terms of the Certificate of
Incorporation or of the instrument by which the Board of Directors,
acting pursuant to authority granted in the Certificate of
Incorporation, shall fix the relative rights, preferences and
limitations thereof, shall be junior to the shares of this Series in
respect of the right to receive dividends or to participate in any
distribution of assets other than by way of dividends.
1.15 "LMC Agreement" shall mean the Agreement dated as
of September 22, 1995, among the Corporation, Liberty Media
Corporation, a Delaware corporation ("LMC Parent"), and certain
subsidiaries of LMC Parent listed under "Subsidiaries of LMC Parent"
on the signature pages thereto, as the same may be amended from time
to time.
1.16 "Merger Agreement" shall mean the Agreement and
Plan of Merger dated as of September 22, 1995, among the Corporation,
Time Warner Acquisition Corp., a Delaware corporation and a wholly
owned subsidiary of the Corporation and Turner Broadcasting System,
Inc., a Georgia corporation, as the same may be amended from time to
time.
1.17 "NASDAQ" shall mean The Nasdaq Stock Market.
1.18 "NYSE" shall mean the New York Stock Exchange,
Inc.
1.19 "Parity Stock" shall mean the Series J Stock and
the shares of any other class or series of Capital Stock of the
Corporation which, by the terms of the Certificate of Incorporation
or of the instrument by which the Board of Directors, acting pursuant
to authority granted in the Certificate of Incorporation, shall fix
the relative rights, preferences and limitations thereof, shall, in
the event that the stated dividends thereon are not paid in full, be
entitled to share ratably with the shares of this Series in the
payment of dividends in accordance with the sums which would be
payable on such shares if all dividends were declared and paid in
full, or shall, in the event that the amounts payable thereon in
liquidation are not paid in full, be entitled to share ratably with
the shares of this Series in any distribution of assets other than by
way of
<PAGE>
dividends in accordance with the sums which would be payable in
such distribution if all sums payable were discharged in full;
provided, however, that the term "Parity Stock" shall be deemed to
refer in Section 5.4 hereof to any stock which is Parity Stock in
respect of the distribution of assets.
1.20 "Permitted Transferee" shall mean any Liberty
Party, as such term is defined in the LMC Agreement.
1.21 "Person" shall mean an individual, corporation,
partnership, limited liability company, joint venture, association,
trust, unincorporated organization or other entity.
1.22 "Preferred Stock" shall mean the class of
Preferred Stock, par value $1.00 per share, of the Corporation
authorized at the date of the Certificate, including any shares
thereof authorized after the date of the Certificate.
1.23 "Record Date" shall have the meaning set forth in
Section 2.1 hereof.
1.24 "Senior Stock" shall mean the Series B Stock, the
Series C Stock, the Series D Stock, the Series E Stock, the Series F
Stock, the Series G Stock, the Series H Stock and the shares of any
class or series of Capital Stock of the Corporation which, by the
terms of the Certificate of Incorporation or of the instrument by
which the Board of Directors, acting pursuant to authority granted in
the Certificate of Incorporation, shall fix the relative rights,
preferences and limitations thereof, shall be senior to the shares of
this Series in respect of the right to receive dividends or to
participate in any distribution of assets other than by way of
dividends.
1.25 "Series A Stock" shall mean the series of
Preferred Stock authorized and designated as Series A Participating
Cumulative Preferred Stock at the date of the Certificate, including
any shares thereof authorized and designated after the date of the
Certificate.
1.26 "Series B Stock" shall mean the series of
Preferred Stock authorized and designated as Series B 6.40% Preferred
Stock at the date of the Certificate, including any shares thereof
authorized and designated after the date of the Certificate.
<PAGE>
1.27 "Series C Stock" shall mean the series of
Preferred Stock authorized and designated as Series C Convertible
Preferred Stock at the date of the Certificate, including any shares
thereof authorized and designated after the date of the Certificate.
1.28 "Series D Stock" shall mean the series of
Preferred Stock authorized and designated as Series D Convertible
Preferred Stock at the date of the Certificate, including any shares
thereof authorized and designated after the date of the Certificate.
1.29 "Series E Stock" shall mean the series of
Preferred Stock authorized and designated as the Series E Convertible
Preferred Stock issued or issuable pursuant to the Agreement and Plan
of Merger dated as of February 6, 1995, among Cablevision Industries
Corporation, Alan Gerry, the Corporation and TW CVI Acquisition Sub
(the "Cablevision Merger Agreement"), including any shares thereof
authorized and designated after the date of the Certificate.
1.30 "Series F Stock" shall mean the series of
Preferred Stock authorized and designated as the Series F Convertible
Preferred Stock issued or issuable pursuant to the Cablevision Merger
Agreement, including any shares thereof authorized and designated
after the date of the Certificate.
1.31 "Series G Stock" shall mean the series of
Preferred Stock authorized and designated as the Series G Convertible
Preferred Stock issued or issuable pursuant to the Restructuring
Agreement, dated as of August 31, 1995, among the Corporation, ITOCHU
Corporation and ITOCHU Entertainment Inc. and the Restructuring
Agreement dated as of August 31, 1995, between the Corporation and
Toshiba Corporation (together, the "Restructuring Agreements"),
including any shares thereof authorized and designated after the date
of the Certificate.
1.32 "Series H Stock" shall mean the series of
Preferred Stock authorized and designated as the Series H Convertible
Preferred Stock issued or issuable pursuant to the Restructuring
Agreements, including any shares thereof authorized and designated
after the date of the Certificate.
1.33 "Series I Stock" shall mean the series of
Preferred Stock authorized and designated as the Series I Convertible
Preferred Stock issued or issuable pursuant to
<PAGE>
the Restructuring Agreements, including any shares thereof
authorized and designated after the date of the Certificate.
1.34 "Series J Stock" shall mean the series of
Preferred Stock authorized and designated as Series J Non-Voting
Participating Convertible Preferred Stock at the date of the
Certificate, including any shares thereof authorized and designated
after the date of the Certificate.
1.35 "Series K Stock" and "this Series" shall mean the
series of Preferred Stock authorized and designated as Series K Voting
Participating Convertible Preferred Stock at the date of the
Certificate, including any shares thereof authorized and designated
after the date of the Certificate.
1.36 "Trading Day" shall mean, so long as the Common
Stock is listed or admitted to trading on the NYSE, a day on which the
NYSE is open for the transaction of business, or, if the Common Stock
is not listed or admitted to trading on the NYSE, a day on which the
principal national securities exchange on which the Common Stock is
listed is open for the transaction of business, or, if the Common
Stock is not so listed or admitted for trading on any national
securities exchange, a day on which the National Market System of
NASDAQ is open for the transaction of business.
2. Dividends.
2.1 The holders of shares of this Series shall be
entitled to receive dividends, if, as and when declared by the Board
of Directors, out of funds legally available therefor, payable on such
dates as may be set by the Board of Directors for payment of cash
dividends on the Common Stock (each such date being referred to herein
as a "Dividend Payment Date"), in cash, in an amount per share equal
to the product of (i) the Formula Number in effect as of such Dividend
Payment Date multiplied by (ii) the amount of the regularly scheduled
cash dividend to be paid on one share of Common Stock on such Dividend
Payment Date; provided, however, dividends on the shares of this
Series shall be payable pursuant to this Section 2.1 only to the
extent that regularly scheduled cash dividends are declared and paid
on the Common Stock. As used herein, the "Formula Number" shall
initially be 1,000, which shall be adjusted
<PAGE>
from time to time pursuant to Section 2.4 hereof. The dividends
payable on any Dividend Payment Date shall be paid to the holders of
record of shares of this Series at the close of business on the record
date for the related regularly scheduled cash dividend on the Common
Stock (each such date being referred to herein as a "Record Date").
The amount of dividends that are paid to each holder of record on any
Dividend Payment Date shall be rounded to the nearest cent.
2.2 In case the Corporation shall at any time
distribute (other than a distribution in liquidation of the
Corporation) to the holders of its shares of Common Stock any assets
or property, including evidences of indebtedness or securities of the
Corporation (other than Common Stock subject to a distribution or
reclassification covered by Section 2.4 hereof) or of any other Person
(including common stock of such Person) or cash (but excluding
regularly scheduled cash dividends payable on shares of Common Stock)
or in case the Corporation shall at any time distribute (other than a
distribution in liquidation of the Corporation) to such holders
rights, options or warrants to subscribe for or purchase shares of
Common Stock (including shares held in the treasury of the
Corporation), or rights, options or warrants to subscribe for or
purchase any other security or rights, options or warrants to
subscribe for or purchase any assets or property (in each case,
whether of the Corporation or otherwise, but other than any
distribution of rights to purchase securities of the Corporation if
the holder of shares of this Series would otherwise be entitled to
receive such rights upon conversion of shares of this Series for
Common Stock pursuant to Section 3 hereof; provided, however, that if
such rights are subsequently redeemed by the Corporation, such
redemption shall be treated for purposes of this Section 2.2 as a cash
dividend (but not a regularly scheduled cash dividend) on the Common
Stock), the Corporation shall simultaneously distribute such assets,
property, securities, rights, options or warrants to the holders of
shares of this Series on the record date fixed for determining the
holders of Common Stock entitled to participate in such distribution
(or, if no such record date shall be established, the effective time
thereof) in an amount per share of this Series equal to the amount
that a holder of one share of this Series would have been entitled to
receive had such share of this Series been converted into Common Stock
immediately prior to such record date (or effective time). In the
event of a distribution to holders
<PAGE>
of shares of this Series pursuant to this Section 2.2, such
holders shall be entitled to receive fractional shares or interests
only to the extent that holders of Common Stock are entitled to
receive the same. The holders of shares of this Series on the
applicable record date (or effective time) shall be entitled to
receive in lieu of such fractional shares or interests the same
consideration as is payable to holders of Common Stock with respect
thereto. If there are no fractional shares or interests payable to
holders of Common Stock, the holders of shares of this Series on the
applicable record date (or effective time) shall receive in lieu of
such fractional shares or interests the fair value thereof as
determined by the Board of Directors.
2.3 In the event that the holders of Common Stock are
entitled to make any election with respect to the kind or amount of
securities or other property receivable by them in any distribution
that is subject to Section 2.2 hereof, the kind and amount of
securities or other property that shall be distributable to the
holders of shares of this Series shall be based on (i) the election,
if any, made by the holder of record (as of the date used for
determining the holders of Common Stock entitled to make such
election) of the largest number of shares of this Series in writing to
the Corporation on or prior to the last date on which a holder of
Common Stock may make such an election or (ii) if no such election is
timely made, an assumption that such holder failed to exercise any
such rights (provided that if the kind or amount of securities or
other property is not the same for each nonelecting holder, then the
kind and amount of securities or other property receivable by holders
of shares of this Series shall be based on the kind or amount of
securities or other property receivable by a plurality of the shares
held by the nonelecting holders of Common Stock). Concurrently with
the mailing to holders of Common Stock of any document pursuant to
which such holders may make an election of the type referred to in
this Section 2.3, the Corporation shall mail a copy thereof to the
holders of record of shares of this Series as of the date used for
determining the holders of record of Common Stock entitled to such
mailing, which document shall be used by the holders of record of
shares of this Series to make such an election.
2.4 The Formula Number shall be adjusted from time to
time as follows, whether or not any shares of
<PAGE>
this Series have been issued by the Corporation, for events
occurring on or after [ ]:[F1]
(a) In case the Corporation shall (i) pay a dividend in
shares of its Common Stock, (ii) combine its outstanding shares
of Common Stock into a smaller number of shares, (iii) subdivide
its outstanding shares of Common Stock or (iv) reclassify (other
than by way of a merger or consolidation that is subject to
Section 3.6 hereof) its shares of Common Stock, then the Formula
Number in effect immediately before such event shall be
appropriately adjusted so that immediately following such event
the holders of shares of this Series shall be entitled to receive
upon conversion thereof the kind and amount of shares of Capital
Stock of the Corporation which they would have owned or been
entitled to receive upon or by reason of such event if such
shares of this Series had been converted immediately before the
record date (or, if no record date, the effective date) for such
event (it being understood that any distribution of cash or
Capital Stock (other than Common Stock) that shall accompany a
reclassification of the Common Stock, shall be subject to Section
2.2 hereof rather than this Section 2.4(a)). An adjustment made
pursuant to this Section 2.4(a) shall become effective
retroactively immediately after the record date in the case of a
dividend or distribution and shall become effective retroactively
immediately after the effective date in the case of a
subdivision, combination or reclassification. For the purposes of
this Section 2.4(a), in the event that the holders of Common
Stock are entitled to make any election with respect to the kind
or amount of securities receivable by them in any transaction
that is subject to this Section 2.4(a) (including any election
that would result in all or a portion of the transaction becoming
subject to Section 2.2 hereof), the kind and amount of securities
that shall be distributable to the holders of shares of this
Series shall be based on (i) the election, if any, made by the
holder of record (as of the date used for determining the holders
of Common Stock entitled to make such election) of the largest
number of shares of this Series in writing to the Corporation on
or prior
[F1] Insert the date of filing of the Certificate or the relevant
effective time.
<PAGE>
to the last date on which a holder of Common Stock may
make such an election or (ii) if no such election is timely made,
an assumption that such holder failed to exercise any such rights
(provided that if the kind or amount of securities is not the
same for each nonelecting holder, then the kind and amount of
securities receivable shall be based on the kind or amount of
securities receivable by a plurality of nonelecting holders of
Common Stock). Concurrently with the mailing to holders of Common
Stock of any document pursuant to which such holders may make an
election of the type referred to in this Section 2.4(a), the
Corporation shall mail a copy thereof to the holders of record of
shares of this Series as of the date used for determining the
holders of record of Common Stock entitled to such mailing, which
document shall be used by the holders of record of shares of this
Series to make such an election.
(b) The Corporation shall be entitled to make such
additional adjustments in the Formula Number, in addition to
those required by Section 2.4(a) hereof as shall be necessary in
order that any dividend or distribution in Common Stock or any
subdivision, reclassification or combination of shares of Common
Stock referred to above, shall not be taxable to the holders of
Common Stock for United States Federal income tax purposes, so
long as such additional adjustments pursuant to this Section
2.4(b) do not decrease the Formula Number.
(c) All calculations under this Section 2 and Section 3
hereof shall be made to the nearest cent, one-hundredth of a
share or, in the case of the Formula Number, one
hundred-thousandth. Notwithstanding any other provision of this
Section 2.4, the Corporation shall not be required to make any
adjustment of the Formula Number unless such adjustment would
require an increase or decrease of at least one percent (1%) of
the Formula Number. Any lesser adjustment shall be carried
forward and shall be made at the time of and together with the
next subsequent adjustment that, together with any adjustment or
adjustments so carried forward, shall amount to an increase or
decrease of at least one percent (1%) of the Formula Number. Any
adjustments under this Section 2.4 shall be made successively
whenever an event requiring such an adjustment occurs.
<PAGE>
(d) Promptly after an adjustment in the Formula Number
is required, the Corporation shall provide written notice to each
of the holders of shares of this Series, which notice shall state
the adjusted Formula Number.
(e) If a distribution is made in accordance with the
provisions of Section 2.2 hereof, anything in this Section 2.4 to
the contrary notwithstanding, no adjustment pursuant to this
Section 2.4 shall be effected by reason of the distribution of
such assets, property, securities, rights, options or warrants or
the subsequent modification, exercise, expiration or termination
of such securities, rights, options or warrants.
3. Conversion at the Option of the Holder.
3.1 Each holder of a share of this Series shall have
the right at any time to convert such share of this Series into a
number of shares of Common Stock per share of this Series equal to the
Formula Number in effect on the Conversion Date; provided, however,
that such holder may convert shares of this Series only to the extent
that the ownership by such holder or its designee of the shares of
Common Stock issuable upon such conversion would not violate the
Communications Laws.
3.2 No adjustments in respect of payments of dividends
on shares of this Series surrendered for conversion or any dividend on
the Common Stock issued upon conversion shall be made upon the
conversion of any shares of this Series (it being understood that if
the Conversion Date for shares of this Series occurs after the Record
Date and prior to the Dividend Payment Date of any such dividend, the
holders of record on such Record Date shall be entitled to receive the
dividend payable with respect to such shares on the related Dividend
Payment Date pursuant to Section 2.1 hereof).
3.3 The Corporation may, but shall not be required to,
in connection with any conversion of shares of this Series, issue a
fraction of a share of Common Stock, and if the Corporation shall
determine not to issue any such fraction, the Corporation shall make a
cash payment (rounded to the nearest cent) equal to such fraction
multiplied by
<PAGE>
the Closing Price of the Common Stock on the last Trading Day prior to
the Conversion Date.
3.4 Any holder of shares of this Series electing to
convert such shares into Common Stock shall surrender the certificate
or certificates for such shares at the principal executive office of
the Corporation (or at such other place as the Corporation may
designate by notice to the holders of shares of this Series) during
regular business hours, duly endorsed to the Corporation or in blank,
or accompanied by instruments of transfer to the Corporation or in
blank, or in form satisfactory to the Corporation, and shall give
written notice to the Corporation at such office that such holder
elects to convert such shares of this Series. If any such certificate
or certificates shall have been lost, stolen or destroyed, the holder
shall, in lieu of delivering such certificate or certificates, deliver
to the Corporation (or such other place) an indemnification agreement
and bond satisfactory to the Corporation. The Corporation shall, as
soon as practicable (subject to Section 3.8 hereof) after such deposit
of certificates for shares of this Series or delivery of the
indemnification agreement and bond, accompanied by the written notice
above prescribed, issue and deliver at such office (or such other
place) to the holder for whose account such shares were surrendered,
or a designee of such holder, certificates representing the number of
shares of Common Stock and the cash, if any, to which such holder is
entitled upon such conversion. Each share of Common Stock delivered to
a holder or its designee as a result of conversion of shares of this
Series pursuant to this Section 3 shall be accompanied by any rights
associated generally with each other share of Common Stock outstanding
as of the Conversion Date.
3.5 Conversion shall be deemed to have been made as of
the date (the "Conversion Date") that the certificate or certificates
for the shares of this Series to be converted and the written notice
prescribed in Section 3.4 hereof are received by the Corporation; and
the Person entitled to receive the Common Stock issuable upon such
conversion shall be treated for all purposes as the holder of record
of such Common Stock on such date. The Corporation shall not be
required to deliver certificates for shares of Common Stock while the
stock transfer books for such stock or for this Series are duly closed
for any purpose, but certificates for shares of Common Stock shall
<PAGE>
be delivered as soon as practicable after the opening of such books.
3.6 In the event that on or after [ ][F2], whether or not
any shares of this Series have been issued by the Corporation, either
(a) any consolidation or merger to which the Corporation is a party,
other than a merger or consolidation in which the Corporation is the
surviving or continuing corporation and which does not result in any
reclassification of, or change (other than a change in par value or
from par value to no par value or from no par value to par value, or
as a result of a subdivision or combination) in, outstanding shares of
Common Stock or (b) any sale or conveyance of all or substantially all
of the property and assets of the Corporation, then lawful provision
shall be made as part of the terms of such transaction whereby the
holder of each share of this Series shall have the right thereafter,
during the period such share shall be convertible, to convert such
share into the kind and amount of shares of stock or other securities
and property receivable upon such consolidation, merger, sale or
conveyance by a holder of the number of shares of Common Stock into
which such shares of this Series could have been converted immediately
prior to such consolidation, merger, sale or conveyance, subject to
adjustment which shall be as nearly equivalent as may be practicable
to the adjustments provided for in Section 2.4 hereof and this Section
3 (based on (i) the election, if any, made in writing to the
Corporation by the holder of record (as of the date used for
determining holders of Common Stock entitled to make such election) of
the largest number of shares of this Series on or prior to the last
date on which a holder of Common Stock may make an election regarding
the kind or amount of securities or other property receivable by such
holder in such transaction or (ii) if no such election is timely made,
an assumption that such holder failed to exercise any such rights
(provided that if the kind or amount of securities or other property
is not the same for each nonelecting holder, then the kind and amount
of securities or other property receivable shall be based upon the
kind and amount of securities or other property receivable by a
plurality of the nonelecting holders of Common Stock)). In the event
that any of the transactions referred to in clause (a) or (b) of the
first sentence of
[F2] Insert the date of filing of the Certificate or the relevant
effective time.
<PAGE>
this Section 3.6 involves the distribution of cash or property (other
than equity securities) to a holder of Common Stock, lawful provision
shall be made as part of the terms of the transaction whereby the
holder of each share of this Series on the record date fixed for
determining holders of Common Stock entitled to receive such cash or
property (or if no such record date is established, the effective date
of such transaction) shall be entitled to receive the amount of cash
or property that such holder would have been entitled to receive had
such holder converted his shares of this Series into Common Stock
immediately prior to such record date (or effective date) (based on
the election or nonelection made by the holder of record of the
largest number of shares of this Series, as provided above).
Concurrently with the mailing to holders of Common Stock of any
document pursuant to which such holders may make an election regarding
the kind or amount of securities or other property that will be
receivable by such holders in any transaction described in clause (a)
or (b) of the first sentence of this Section 3.6, the Corporation
shall mail a copy thereof to the holders of record of the shares of
this Series as of the date used for determining the holders of record
of Common Stock entitled to such mailing, which document shall be used
by the holders of shares of this Series to make such an election. The
Corporation shall not enter into any of the transactions referred to
in clauses (a) or (b) of the first sentence of this Section 3.6 unless
effective provision shall be made in the certificate or articles of
incorporation or other constituent documents of the Corporation or the
entity surviving the consolidation or merger, if other than the
Corporation, or the entity acquiring the Corporation's assets, as the
case may be, so as to give effect to the provisions set forth in this
Section 3.6. The provisions of this Section 3.6 shall apply similarly
to successive consolidations, mergers, sales or conveyances. For
purposes of this Section 3.6, the term "Corporation" shall refer to
the Corporation as constituted immediately prior to the merger,
consolidation or other transaction referred to in this Section 3.6.
3.7 The Corporation shall at all times reserve and keep
available, free from preemptive rights, out of its authorized but
unissued stock, for the purpose of effecting the conversion of the
shares of this Series, such number of its duly authorized shares of
Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of this Series into such Common
Stock at any time (assuming that, at the time of the
<PAGE>
computation of such number of shares, all such Common Stock would be
held by a single holder); provided, however, that nothing contained
herein shall preclude the Corporation from satisfying its obligations
in respect of the conversion of the shares by delivery of purchased
shares of Common Stock that are held in the treasury of the
Corporation. All shares of Common Stock that shall be deliverable upon
conversion of the shares of this Series shall be duly and validly
issued, fully paid and nonassessable. For purposes of this Section 3,
any shares of this Series at any time outstanding shall not include
shares held in the treasury of the Corporation.
3.8 In any case in which Section 2.4 hereof shall
require that any adjustment be made effective as of or retroactively
immediately following a record date, the Corporation may elect to
defer (but only for five (5) Trading Days following the occurrence of
the event which necessitates the notice referred to in Section 2.4(d)
hereof) issuing to the holder of any shares of this Series converted
after such record date (i) the shares of Common Stock issuable upon
such conversion over and above (ii) the shares of Common Stock
issuable upon such conversion on the basis of the Formula Number prior
to adjustment; provided, however, that the Corporation shall deliver
to such holder a due bill or other appropriate instrument evidencing
such holder's right to receive such additional shares upon the
occurrence of the event requiring such adjustment.
3.9 If any shares of Common Stock that would be
issuable upon conversion pursuant to this Section 3 require
registration with or approval of any governmental authority before
such shares may be issued upon conversion (other than any such
registration or approval required to avoid a violation of the
Communications Laws), the Corporation will in good faith and as
expeditiously as possible cause such shares to be duly registered or
approved, as the case may be. The Corporation will use commercially
reasonable efforts to list the shares of (or depositary shares
representing fractional interests in) Common Stock required to be
delivered upon conversion of shares of this Series prior to such
delivery upon the principal national securities exchange, if any, upon
which the outstanding Common Stock is listed at the time of such
delivery.
3.10 The Corporation shall pay any and all issue or
other taxes that may be payable in respect of any
<PAGE>
issue or delivery of shares of Common Stock on conversion of shares of
this Series pursuant hereto. The Corporation shall not, however, be
required to pay any tax which is payable in respect of any transfer
involved in the issue or delivery of Common Stock in a name other than
that in which the shares of this Series so converted were registered,
and no such issue or delivery shall be made unless and until the
Person requesting such issue has paid to the Corporation the amount of
such tax, or has established, to the satisfaction of the Corporation,
that such tax has been paid.
3.11 In case of (i) the voluntary or involuntary
dissolution, liquidation or winding up of the Corporation or (ii) any
action triggering an adjustment to the Formula Number pursuant to
Section 2.4 hereof or Section 3.6 hereof, then, in each case, the
Corporation shall cause to be mailed, first-class postage prepaid, to
the holders of record of the outstanding shares of this Series, at
least fifteen (15) days prior to the applicable record date for any
such transaction (or if no record date will be established, the
effective date thereof), a notice stating (x) the date, if any, on
which a record is to be taken for the purpose of any such transaction
(or, if no record date will be established, the date as of which
holders or record of Common Stock entitled to participate in such
transaction are determined), and (y) the expected effective date
thereof. Failure to give such notice or any defect therein shall not
affect the legality or validity of the proceedings described in this
Section 3.11.
4. Voting.
4.1 The shares of this Series shall have no voting
rights except as expressly provided in this Section 4 or as required
by law.
4.2 Each share of this Series shall be entitled to vote
together with the holders of shares of Common Stock upon all matters
upon which the holders of shares of Common Stock are entitled to vote.
In any such vote, the holders of shares of this Series shall be
entitled to a number of votes per share of this Series equal to the
product of (i) the Formula Number then in effect multiplied by (ii)
the maximum number of votes per share of Common Stock that any holder
of shares of Common Stock generally then has with respect to such
matter.
<PAGE>
4.3 Except as otherwise provided herein or by
applicable law, the holders of shares of this Series and the holders
of shares of Common Stock shall vote together as one class for the
election of directors of the Corporation and on all other matters
submitted to a vote of stockholders of the Corporation.
4.4 So long as any shares of this Series remain
outstanding, unless a greater percentage shall then be required by
law, the Corporation shall not, without the affirmative vote at a
meeting or the written consent with or without a meeting of the
holders of shares of this Series representing at least 66-2/3% of the
aggregate voting power of shares of this Series then outstanding,
amend, alter or repeal any of the provisions of the Certificate, or
the Certificate of Incorporation, so as in any such case to adversely
affect the voting powers, designations, preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, of the shares of this Series.
4.5 So long as any shares of this Series remain
outstanding, the Corporation shall not, without the affirmative vote
at a meeting or the written consent with or without a meeting of the
holders of shares of this Series representing 100% of the aggregate
voting power of shares of this Series then outstanding, amend, alter
or repeal the provisions of Section 7.8 hereof.
4.6 No consent of holders of shares of this Series
shall be required for (i) the creation of any indebtedness of any kind
of the Corporation, (ii) the authorization or issuance of any class or
series of Junior Stock, Parity Stock or Senior Stock, (iii) the
authorization of any increase or decrease in the number of shares
constituting this Series or (iv) the approval of any amendment to the
Certificate of Incorporation that would increase or decrease the
aggregate number of authorized shares of Preferred Stock or Common
Stock, except to the extent expressly required by the DGCL.
5. Liquidation Rights.
5.1 Upon the liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, no distribution
shall be made to the holders of shares of Junior Stock (either as to
dividends or upon
<PAGE>
liquidation, dissolution or winding up) unless, prior thereto, the
holders of shares of this Series shall have received an amount equal
to the greater of (i) $.01 per whole share of this Series or (ii) an
aggregate amount per share equal to the product of the Formula Number
then in effect multiplied by the aggregate amount to be distributed
per share to holders of Common Stock.
5.2 Neither the sale, exchange or other conveyance (for
cash, shares of stock, securities or other consideration) of all or
substantially all the property and assets of the Corporation nor the
merger or consolidation of the Corporation into or with any other
corporation, or the merger or consolidation of any other corporation
into or with the Corporation, shall be deemed to be a dissolution,
liquidation or winding up, voluntary or involuntary, for the purposes
of this Section 5.
5.3 After the payment to the holders of the shares of
this Series of full preferential amounts provided for in this Section
5, the holders of this Series as such shall have no right or claim to
any of the remaining assets of the Corporation.
5.4 In the event the assets of the Corporation
available for distribution to the holders of shares of this Series
upon any dissolution, liquidation or winding up of the Corporation,
whether voluntary or involuntary, shall be insufficient to pay in full
all amounts to which such holders and the holders of all Parity Stock
are entitled, no such distribution shall be made on account of any
shares of any Parity Stock upon such dissolution, liquidation or
winding up unless proportionate distributive amounts shall be paid on
account of the shares of this Series, ratably, in proportion to the
full distributable amounts for which holders of all Parity Stock are
entitled upon such dissolution, liquidation or winding up.
6. Transfer Restrictions.
6.1 Without the prior written consent of the
Corporation, no holder of shares of this Series shall offer, sell,
transfer, pledge, encumber or otherwise dispose of, or agree to offer,
sell, transfer, pledge, encumber or otherwise dispose of, any shares
of this Series or interests in any shares of this Series except to a
Permitted
<PAGE>
Transferee that shall agree that, prior to such Permitted
Transferee ceasing to be a Permitted Transferee, such Permitted
Transferee must transfer ownership of any shares of this Series,
and all interests therein, held by such Permitted Transferee to
the initial holder who received such shares pursuant to the LMC
Agreement. For the avoidance of doubt, the preceding sentence is
not intended to prohibit a holder of shares of this Series from
entering into, or offering to enter into, any arrangement under
which such holder agrees to promptly convert shares of this
Series and sell, transfer or otherwise dispose of the Common
Stock issuable upon such the conversion.
6.2 Certificates for shares of this Series shall bear
such legends as the Corporation shall from time to time deem
appropriate.
7. Other Provisions.
7.1 All notices from the Corporation to the holders of
shares of this Series shall be given by one of the methods specified
in Section 7.2 hereof. With respect to any notice to a holder of
shares of this Series required to be provided hereunder, neither
failure to give such notice, nor any defect therein or in the
transmission thereof, to any particular holder shall affect the
sufficiency of the notice or the validity of the proceedings referred
to in such notice with respect to the other holders or affect the
legality or validity of any distribution, right, warrant,
reclassification, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up, or the vote upon any such
action. Any notice which was mailed in the manner herein provided
shall be conclusively presumed to have been duly given whether or not
the holder receives the notice.
7.2 All notices and other communications hereunder
shall be deemed given (i) on the first Trading Day following the date
received, if delivered personally, (ii) on the Trading Day following
timely deposit with an overnight courier service, if sent by overnight
courier specifying next day delivery and (iii) on the first Trading
Day that is at least five days following deposit in the mails, if sent
by first class mail to (x) a holder at its last address as it appears
on the transfer records or registry for the shares of this Series and
(y) the Corporation at the following address (or at such other address
as the Corporation shall specify in a notice
<PAGE>
pursuant to this Section 7.2): Time Warner Inc., 75 Rockefeller Plaza,
New York, New York 10019, Attention: General Counsel.
7.3 Any shares of this Series which have been converted
or otherwise acquired by the Corporation shall, after such conversion
or acquisition, as the case may be, be retired and promptly cancelled
and the Corporation shall take all appropriate action to cause such
shares to obtain the status of authorized but unissued shares of
Preferred Stock, without designation as to series, until such shares
are once more designated as part of a particular series by the Board
of Directors. The Corporation may cause a certificate setting forth a
resolution adopted by the Board of Directors that none of the
authorized shares of this Series are outstanding to be filed with the
Secretary of State of the State of Delaware. When such certificate
becomes effective, all references to this Series shall be eliminated
from the Certificate of Incorporation and the shares of Preferred
Stock designated hereby as Series K Voting Participating Convertible
Preferred Stock shall have the status of authorized and unissued
shares of Preferred Stock and may be reissued as part of any new
series of Preferred Stock to be created by resolution or resolutions
of the Board of Directors.
7.4 The shares of this Series shall be issuable in
whole shares, in such fraction of a whole share as may be required in
order to effect any exchange of shares of Common Stock for shares of
this Series required by the terms of the LMC Agreement or, if
authorized by the Board of Directors (or any authorized committee
thereof), in any other fraction of a whole share so authorized.
7.5 The Corporation shall be entitled to recognize the
exclusive right of a Person registered on its records as the holder of
shares of this Series, and such holder of record shall be deemed the
holder of such shares for all purposes.
7.6 All notice periods referred to in the Certificate
shall commence on the date of the mailing of the applicable notice.
7.7 Any registered holder of shares of this Series may
proceed to protect and enforce its rights by any available remedy by
proceeding at law or in equity to protect and enforce any such rights,
whether for the
<PAGE>
specific enforcement of any provision in the Certificate or in aid of
the exercise of any power granted herein, or to enforce any other
proper remedy.
7.8 The shares of this Series shall not be subject to
redemption at the option of the Corporation, including pursuant to
Section 5 of Article IV of the Certificate of Incorporation (or any
equivalent provision in any further amendment to or restatement of the
Certificate of Incorporation).
IN WITNESS WHEREOF, Time Warner Inc. has caused this
certificate to be signed and attested this [ ] day of [ ].
TIME WARNER INC.,
by
--------------------
Name:
Title:
Attest:
--------------------
Name:
Title:
<PAGE>
EXHIBIT D TO THE
LMC AGREEMENT
OPTION AGREEMENT
This Option Agreement (the "Agreement") is dated as of
- -----------, 199--, and is entered into between Time Warner Inc., a
Delaware corporation ("Buyer"[F1]), and Liberty Media Corporation, a
Delaware corporation ("Seller") and, with respect to Section 11(e),
Section 11(g) and Section 11(i) only, Satellite Services, Inc. a
Delaware corporation ("Satellite"), and, with respect to the last
sentence of Section 12(a)(i) only, Tele-Communications, Inc., a
Delaware corporation ("TCI"). Buyer and Seller are referred to
collectively as the "Parties" and each, individually, is referred to
as a "Party."
WHEREAS Buyer, Seller and certain subsidiaries of Seller
have entered into an Agreement dated as of September 22, 1995 (the
"LMC Agreement"), which contemplates Buyer and Seller entering into
this Agreement;
WHEREAS Seller directly owns all the outstanding common
stock, par value $1.00 per share (the "Shares"), of Southern Satellite
Systems, Inc., a Georgia corporation (the "Subsidiary"), which is
engaged primarily in the Business (as defined in Section 24); and
WHEREAS Buyer desires to acquire from Seller an option to
acquire the Subsidiary and Seller is willing to grant the same.
NOW, THEREFORE, it is agreed as follows:
1. Option. Subject to and on the terms and conditions set forth
in this Agreement, Seller hereby grants to Buyer the right and option
(the "Option"), which may be exercised at any time during the Exercise
Period (as defined in Section 2(c)), to acquire the Subsidiary
pursuant to a merger (the "SSSI Merger") of the Subsidiary with and
into a newly-formed direct, wholly-owned subsidiary of the Buyer (the
"New Sub"), as a result of which (a) the separate existence of the
Subsidiary shall terminate and the New Sub shall continue as the
surviving corporation and (b) the Shares will be converted into the
right to receive the Merger Consideration (as defined below). The SSSI
Merger shall be effected pursuant to a merger
- --------
[F1] Which term shall mean, if applicable, the newly formed
corporation that will become the sole stockholder of Buyer and Turner
Broadcasting System, Inc., a Georgia corporation, in the event the
Merger Agreement (as defined below) is amended as contemplated by the
last sentence of Section 1.01 thereof.
<PAGE>
agreement (the "SSSI Merger Agreement") substantially in the form of
Exhibit 1 attached hereto. Each Party shall, upon the execution of
this Agreement, execute the SSSI Merger Agreement and deliver an
executed copy thereof to the other Party.
2. Exercise of and Payment for Option.
(a) Initial Payment. In consideration of Seller entering into
this Agreement, Buyer shall deliver to Seller (or its designee pursuant to
Section 15) upon the execution of this Agreement (the "Execution Date"):
(i) that number of fully paid and nonassessable shares of the
Series K Voting Participating Convertible Preferred Stock of Buyer,
having the terms set forth on Exhibit C to the LMC Agreement ("Buyer
Preferred Stock"), which, on the Execution Date, is convertible into
5,000,000 shares of the Common Stock, par value $1.00 per share
("Buyer Common Stock"), of Buyer (the "Initial Payment").[F2]
(ii) an opinion of counsel to Buyer (which counsel may be an
employee of Buyer), reasonably acceptable to Seller, addressed to
Seller and dated the Execution Date, to the effect that:
(1) Buyer is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of
incorporation. Buyer has all requisite corporate power and
authority to execute and deliver this Agreement, the SSSI Merger
Agreement and the Registration Rights Agreement (as defined in
Section 2(a)(iii)), to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby
and thereby.
(2) The execution and delivery by Buyer of this
Agreement, the SSSI Merger Agreement and the Registration
Rights Agreement, the performance by Buyer of its
obligations hereunder and thereunder and the consummation by
Buyer of the transactions contemplated hereby and thereby
have been duly and validly authorized by all necessary
corporate action on the part of Buyer. Each of this
Agreement, the SSSI Merger Agreement and the Registration
Rights Agreement have been duly executed and delivered by a
duly authorized officer of Buyer and constitutes the legal,
valid and binding obligation of Buyer enforceable against
Buyer in accordance with its terms (subject to all
applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws affecting
creditors' rights generally and subject, as to
enforceability, to general principles of equity, and except
that the indemnification obligations set forth in
- --------
[F2] To be appropriately adjusted in the event of any
reclassification, recapitalization, stock dividend, stock split or
reverse stock split or other change in the Buyer Common Stock between
September 22, 1995 and the Execution Date.
<PAGE>
Section 8 of the Registration Rights Agreement may be
subject to considerations of public policy).
(3) The execution, delivery and performance by Buyer of this
Agreement, the SSSI Merger Agreement and the Registration Rights
Agreement do not conflict with or result in a violation of the
General Corporation Law of the State of Delaware, or the
certificate of incorporation or by-laws of Buyer.
(4) The shares of Buyer Preferred Stock delivered by Buyer to
Seller in satisfaction of the Initial Payment have been duly
authorized and are validly issued, fully paid, nonassessable and
are not subject to any preemptive rights.
(iii) the duly executed LMC Registration Rights Agreement, dated
as of the Execution Date (as amended, the "Registration Rights
Agreement"), between Seller and Buyer, as contemplated by the LMC
Agreement, a copy of which is attached as Exhibit F thereto, and the
duly executed SSSI Merger Agreement.
(b) Notwithstanding any other provision of this Agreement, the
Initial Payment shall not be refunded or refundable, nor may any claim be
made for the return of the Initial Payment, in whole or in part unless the
Buyer proves in a court of law that the Seller and the Subsidiary did not
at the Execution Date have all requisite corporate power to execute,
deliver and perform its obligations under this Agreement and such lack of
power has not been cured.
(c) Exercise Period. Subject to Section 10(a), Buyer may exercise
the Option at any time during the period (the "Exercise Period") commencing
on the Execution Date and ending on the Termination Date (as defined in
Section 10(a)), by giving written notice of exercise (the "Exercise
Notice") to Seller pursuant to Section 16. By giving the Exercise Notice,
Buyer shall have consented to the filing on the Closing Date (as defined in
Section 3) of appropriate certificates of merger with the appropriate
governmental entities in order to effect the SSSI Merger (subject to
Sections 5, 6, 7, 8 and 9 of this Agreement). Buyer shall execute and
deliver to Seller any documents required to effect the SSSI Merger
simultaneously with such notice. Prior to the Closing (as defined in
Section 3), Seller shall retain all rights with respect to the Subsidiary
and the Shares, subject to Section 11.
(d) Merger Consideration. The "Merger Consideration" shall
consist of a number of fully paid and nonassessable shares of Buyer
Preferred Stock equal to the quotient of (i) the quotient obtained by
dividing $160,000,000 by the Current Market Price (as defined below)
of the Buyer Common Stock on the Closing Date, divided by (ii) the
number of shares of Buyer Common Stock into which one share of Buyer
Preferred Stock shall then be convertible. "Current Market Price", as
of any date, shall mean the average of the daily closing prices for
the shares of Buyer Common Stock for the 20 trading day period ending
on the full trading day immediately prior to the date in question,
appropriately adjusted to take into account any stock
<PAGE>
dividends, splits, reverse splits, combinations and the like, the
ex-dividend date or effective date for which occurs during (but after the
first day of) such 20 trading day period. The closing price for each
trading day shall be the last reported sale price on such day (or if no
such reported sale takes place on such day, the average of the reported
closing bid and asked prices) of the Buyer Common Stock (regular way) as
shown on the Composite Tape of the New York Stock Exchange ("NYSE"), or if
the Buyer Common Stock is not listed or admitted to trading on the NYSE, on
the principal United States national securities exchange on which the Buyer
Common Stock is listed or admitted to trading or, if the Buyer Common Stock
is not listed or admitted to trading on any such exchange, then the last
reported sale price (or the average of the quoted closing bid and asked
prices if no sale is reported) of the Buyer Common Stock as reported by the
Nasdaq Stock Market ("Nasdaq") or any other quotation system of the
National Association of Securities Dealers, Inc. ("NASD"), or if the Buyer
Common Stock is not quoted on Nasdaq, or any comparable system, the average
of the closing bid and asked prices as furnished by any member of the NASD
selected by Seller. In the event of any reclassification, recapitalization,
stock dividend, stock split or reverse stock split or other change in the
Buyer Common Stock, or any consolidation or merger of Buyer with or into
another entity affecting the Buyer Common Stock, the record date of which
(or, if no record date, the effective date of which) occurs on or after the
date Buyer exercises the Option and before the Closing Date, the Merger
Consideration shall also include such shares of stock or other
consideration to which Seller would have been entitled if Seller had been a
holder, on the record date (or effective date, as applicable) for such
occurrence, of the shares of Buyer Common Stock into which the shares of
Buyer Preferred Stock constituting the Merger Consideration as calculated
above, are convertible.
3. Closing. If the Option is exercised, the closing of the SSSI
Merger pursuant to this Agreement and the SSSI Merger Agreement (the
"Closing") shall occur as soon as practicable after the exercise of the
Option, but in no event more than 5 business days following the
satisfaction or waiver (to the extent waived by the Party entitled to do
so) of the conditions to the Closing described in Sections 5, 6, 7, 8 and 9
of this Agreement (such date for the Closing being referred to as the
"Closing Date").
4. Representations and Warranties of Seller and Buyer as of
Execution Date.
(a) Each of Seller and Buyer represents and warrants to the other
as of the Execution Date that:
<PAGE>
(i) Such Party has all requisite corporate power to execute,
deliver and perform its obligations under this Agreement, the SSSI
Merger Agreement and the Registration Rights Agreement, and such
execution, delivery and performance have been duly authorized by all
corporate action on its part required to be taken.
(ii) This Agreement, the SSSI Merger Agreement and the
Registration Rights Agreement are such Party's legal, valid and
binding obligations, enforceable in accordance with their respective
terms, except as may be affected by bankruptcy, insolvency or similar
laws affecting the rights of creditors generally and by equitable
principles of general applicability.
(iii) Neither the execution and delivery of this Agreement, the
SSSI Merger Agreement and the Registration Rights Agreement by such
Party nor, except as set forth below such Party's name on Schedule
4(a)(iii) hereto, the performance of its obligations under this
Agreement, the SSSI Merger Agreement and the Registration Rights
Agreement: (i) will violate or conflict with, or constitute a breach
or default under, (A) the certificate of incorporation or by-laws of
such Party, (B) any law, statute, regulation, rule, order or other
enactment of any Governmental Entity (as defined in Section 24(c))
applicable to such Party, or (C) any agreement or instrument to which
such Party is a party or by which it is bound or affected, except for
any violations, conflicts, breaches or defaults as would not,
individually or in the aggregate, have a material adverse effect on
the legality, validity, binding effect or enforceability of this
Agreement, the SSSI Merger Agreement or the Registration Rights
Agreement or on the material rights or ability of the other Party to
realize the material benefits intended to be created by this
Agreement, the SSSI Merger Agreement, and the Registration Rights
Agreement, and except for any violations, conflicts, breaches or
defaults as may be the result of actions taken by Buyer subsequent to
the SSSI Merger, or (ii) result in the creation or imposition of any
lien or other encumbrance on any of its assets, except for liens or
encumbrances as would not, individually or in the aggregate, have a
material adverse effect on the legality, validity, binding effect or
enforceability of this Agreement, the SSSI Merger Agreement and the
Registration Rights Agreement or on the material rights or ability of
the other Party to realize the material benefits intended to be
created hereby and thereby. No authorization, consent, approval or
other action by, and no notice to or filing with, any Governmental
Entity or other third party is required to be obtained or made in
connection with such Party's execution, delivery and, except as set
forth below such Party's name on Schedule 4(a)(iii) hereto,
performance of this Agreement, the SSSI Merger Agreement and the
Registration Rights Agreement, except any thereof the failure of which
to be obtained, given or made would not, individually or in the
aggregate, have a material adverse effect on the legality, validity,
binding effect or enforceability of this Agreement, the SSSI Merger
Agreement and the Registration Rights Agreement or on the material
rights or ability of the other Party to realize the material benefits
intended to be created hereby and thereby.
<PAGE>
(b) Seller represents and warrants to Buyer as of the Execution
Date that:
(i) Consolidated Return. As of the Execution Date, Seller (and,
if Seller shall have designated another person to receive the Initial
Payment pursuant to Section 15, 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, as defined in
the Voting Trust Agreement dated as of ________________, 199_ by and
among TCI Turner Preferred Inc., United Cable Turner Investment, Inc.,
Communications Capital Corp. and Gerald M. Levin.
(ii) No Encumbrances. Seller represents and warrants to Buyer that
Seller is the owner of all the legal and beneficial right, title and
interest in and to the Shares, free and clear of any lien, encumbrance
or other adverse claim of any nature (except as otherwise permitted by
Section 11(b)(i)); and there are no outstanding options, warrants,
rights or calls or any preemptive or other similar rights to acquire
any shares of capital stock of the Subsidiary.
(iii) Investment Intent. The shares of Buyer Preferred Stock
acquired by Seller as part of the Initial Payment are being acquired
by Seller and, if the Option is exercised the shares of Buyer
Preferred Stock constituting the Merger Consideration will be acquired
by Seller, for its own account, for investment and not with a view to
the distribution or resale thereof other than as contemplated by the
Registration Rights Agreement. Seller understands that such shares
have not been registered under the Securities Act of 1933, as amended
(the "Securities Act"), or any state securities or blue sky laws, by
reason of their issuance in a transaction exempt from the registration
requirements thereunder and may not be resold unless the subsequent
disposition thereof is registered thereunder or is exempt from
registration thereunder.
(c) Buyer represents and warrants to Seller as of the Execution
Date that:
(i) The shares of Buyer Preferred Stock delivered to Seller in
satisfaction of the Initial Payment have been duly authorized and are
validly issued, fully paid, nonassessable and free of preemptive
rights.
(ii) Neither the execution and delivery by Buyer of this
Agreement, the SSSI Merger Agreement and the Registration Rights
Agreement nor the performance of its obligations hereunder and
thereunder will result in the creation or imposition of any lien or
other encumbrance on the shares of Buyer Preferred Stock to be
delivered by Buyer to Seller in satisfaction of the Initial Payment or
the Merger Consideration.
<PAGE>
(d) In addition to the representations and warranties of Buyer
set forth in Section 4(c), the following representations and warranties of
the Buyer are hereby incorporated by reference, with the same effect as if
made in this Agreement by Buyer to Seller on and as of the Execution Date:
(i) the representations and warranties of Buyer contained in
Section 3.02(a) of the Agreement and Plan of Merger, dated as of
September 22, 1995 (the "Merger Agreement"), among Buyer, Time Warner
Acquisition Corp. and Turner Broadcasting System, Inc., under the
heading entitled "Organization, Standing and Corporate Power";
(ii) the representations and warranties of Buyer contained in
Section 3.02(c) of the Merger Agreement under the heading entitled
"Capital Structure";
(iii) the representations and warranties of Buyer contained in
Section 3.02(e) of the Merger Agreement under the heading entitled
"SEC Documents; Undisclosed Liabilities";
(iv) the representations and warranties of Buyer contained in
Section 3.02(g) of the Merger Agreement under the heading entitled
"Absence of Certain Changes or Events";
(v) the representations and warranties of Buyer contained in
Section 3.02(h) of the Merger Agreement under the heading entitled
"Litigation";
(vi) the representations and warranties of Buyer contained in
Section 3.02(j) of the Merger Agreement under the heading entitled
"Brokers"; and
(vii) the representations and warranties of Buyer contained in
Section 3.02(k) of the Merger Agreement under the heading entitled
"Taxes".
5. Representations and Warranties of Seller and Buyer as of the
Closing Date. If the Option is exercised, it shall be a condition to the
obligations of Seller to be performed hereunder on the Closing Date that,
on and as of the Closing Date, each of the following representations and
warranties, if qualified by materiality, shall be true and complete, or, if
not so qualified, shall be true and complete in all material respects, with
respect to Buyer, and it shall be a condition to the obligations of Buyer
to be performed hereunder on the Closing Date that, on and as of the
Closing Date, each of the following representations and warranties, if
qualified by materiality, shall be true and complete, or, if not so
qualified, shall be true and complete in all material respects, with
respect to Seller:
<PAGE>
(a) Such Party has all requisite corporate power to execute,
deliver and perform its obligations under this Agreement, the SSSI Merger
Agreement and the Registration Rights Agreement, and such execution,
delivery and performance have been duly authorized by all corporate action
on its part required to be taken.
(b) This Agreement, the SSSI Merger Agreement and the
Registration Rights Agreement are such Party's legal, valid and binding
obligations, enforceable in accordance with their respective terms, except
as may be affected by bankruptcy, insolvency or similar laws affecting the
rights of creditors generally and by equitable principles of general
applicability.
(c) Neither the execution and delivery of this Agreement, the
SSSI Merger Agreement and the Registration Rights Agreement by such Party
nor, except as set forth below such Party's name on Schedule 5(c) hereto,
the performance of its obligations under this Agreement, the SSSI Merger
Agreement and the Registration Rights Agreement: (i) will violate or
conflict with, or constitute a breach or default under, (A) the certificate
of incorporation or by-laws of such Party, (B) any law, statute,
regulation, rule, order or other enactment of any Governmental Entity
applicable to such Party, or (C) any agreement or instrument to which such
Party is a party or by which it is bound or affected, except for any
violations, conflicts, breaches or defaults as would not, individually or
in the aggregate, have a material adverse effect on the legality, validity,
binding effect or enforceability of this Agreement, the SSSI Merger
Agreement or the Registration Rights Agreement or on the material rights or
ability of the other Party to realize the material benefits intended to be
created by this Agreement, the SSSI Merger Agreement and the Registration
Rights Agreement or (ii) result in the creation or imposition of any lien
or other encumbrance on any of its assets, except for liens or encumbrances
as would not, individually or in the aggregate, have a material adverse
effect on the legality, validity, binding effect or enforceability of this
Agreement, the SSSI Merger Agreement and the Registration Rights Agreement
or on the material rights or ability of the other Party to realize the
material benefits intended to be created hereby and thereby. No
authorization, consent, approval or other action by, and no notice to or
filing with, any Governmental Entity or other third party is required to be
obtained or made in connection with such Party's execution, delivery and,
except as set forth below such Party's name on Schedule 5(c) hereto,
performance of this Agreement, the SSSI Merger Agreement and the
Registration Rights Agreement, except any thereof the failure of which to
be obtained, given or made would not, individually or in the aggregate,
have a material adverse effect on the legality, validity, binding effect or
enforceability of this Agreement, the SSSI Merger Agreement and the
Registration Rights Agreement or on the material rights or ability of the
other Party to realize the material benefits intended to be created hereby
and thereby.
<PAGE>
Without limiting the rights or obligations of either Party under any
provision of this Agreement: (1) if the Option is exercised, each Party
shall promptly notify the other Party of any information that should be set
forth below such Party's name on Schedule 5(c); (2) upon receipt of any
such notice, Schedule 5(c) shall automatically be amended to incorporate
such information under the name of such Party; and (3) it shall be a
condition to the obligations of each Party to be performed hereunder on the
Closing Date that such Party shall be reasonably satisfied with the
contents of Schedule 5(c) (as so amended) set forth under the name of the
other Party, to the extent such matters are materially different from the
matters set forth under the name of such other Party on Schedule 4(a)(iii).
6. (a) Representations and Warranties of Seller as of the Closing
Date. If the Option is exercised, it shall be a condition to the
obligations of Buyer to be performed hereunder on the Closing Date
that, on and as of the Closing Date, each of the following
representations and warranties of Seller, if qualified by materiality,
shall be true and complete, or, if not so qualified, shall be true and
complete in all material respects, except in each case as shall be set
forth in a letter (the "Disclosure Letter") from Seller to Buyer dated
as of a date after the exercise of the Option and not later than the
date 10 days prior to the Closing Date:
(i) Corporate Power. Except as set forth in Schedule 6(a)(i) to the
Disclosure Letter:
(A) each of Seller and the Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of its
state of incorporation; and
(B) the Subsidiary is duly qualified and in good standing to do
business as a foreign corporation in each jurisdiction in which the
conduct or nature of its business or the ownership, leasing or holding
of its properties makes such qualification necessary, except such
jurisdictions where the failure to be so qualified or in good
standing, individually or in the aggregate, would not have a Material
Adverse Effect (as defined in Section 24(e)).
(ii) No Encumbrances. Except as set forth in Schedule 6(a)(ii) to
the Disclosure Letter, Seller is the owner of all the legal and
beneficial right, title and interest in and to the Shares, free and
clear of any lien, encumbrance or other adverse claim of any nature;
there are no outstanding options, warrants, rights or calls or any
preemptive or other similar rights to acquire any shares of capital
stock of the Subsidiary.
(iii) Authorized Stock. Except as set forth in Schedule 6(a)(iii)
to the Disclosure Letter:
<PAGE>
(A) the authorized capital stock of the Subsidiary consists
of 10,000 shares of Common Stock, par value $1.00 per share of
which 1,000 shares, constituting the Shares, are duly authorized
and validly issued and outstanding, fully paid and nonassessable;
(B) Seller is the sole record and beneficial owner of the Shares;
(C) except for the Shares, there are no shares of capital stock
or other equity securities of the Subsidiary outstanding;
(D) none of the Shares have been issued in violation of, and none
of the Shares are subject to, any purchase option, call, right of
first refusal, preemptive, subscription or similar rights under any
provision of applicable law, the certificate of incorporation or
by-laws of the Subsidiary, or any contract, agreement or instrument to
which the Subsidiary is subject, bound or a party or otherwise;
(E) there are no outstanding warrants, options, rights, "phantom"
stock rights, agreements, convertible or exchangeable securities or
other commitments (other than this Agreement) (i) pursuant to which
Seller or the Subsidiary is or may become obligated to issue, sell,
purchase, return or redeem any shares of capital stock or other
securities of the Subsidiary or (ii) that give any person the right to
receive any benefits or rights similar to any rights enjoyed by or
accruing to the holders of shares of capital stock of the Subsidiary;
(F) there are no equity securities of the Subsidiary reserved for
issuance for any purpose; and
(G) there are no outstanding bonds, debentures, notes or other
indebtedness having the right to vote on any matters on which
stockholders of the Subsidiary may vote.
(iv) No Conflicts With Respect to Subsidiary. Except as set forth
in Schedule 6(a)(iv) to the Disclosure Letter, the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby, (i) will not violate or conflict with, or
constitute a breach, default or right to terminate or materially
modify under, (A) the Subsidiary's certificate of incorporation or
by-laws, (B) any law, statute, regulation, rule, order or other
enactment of any Governmental Entity applicable to the Subsidiary, or
(C) any agreement or instrument to which Subsidiary is a party or by
which it is bound (including any termination or modification of an
affiliation agreement of the Subsidiary, provided that Seller will
make no representations or warranties to the effect that Buyer's
ownership of the Subsidiary will not impair the availability of the
compulsory license under 17 U.S.C. Section 111 to cable systems) except
for any violations,
<PAGE>
conflicts, breaches or defaults as would not, individually or in
the aggregate, have a Material Adverse Effect or (ii) result in the
creation or imposition of any lien or other encumbrance on any of the
Subsidiary's assets, except for liens or encumbrances as would not,
individually or in the aggregate, have a material adverse effect on
the legality, validity, binding effect or enforceability of this
Agreement.
(v) Consents. Except as set forth in Schedule 6(a)(v) to the
Disclosure Letter, no consent, approval, license, permit, order
or authorization of, or registration, declaration or filing with,
any governmental entity is required to be obtained or made by or
with respect to the Subsidiary in connection with (I) the
execution, delivery and performance of this Agreement by Seller
and the Subsidiary or the consummation of the transactions
contemplated hereby or (II) the conduct of the business of the
Subsidiary following the Closing hereof, other than (1)
compliance with and filings under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended ("HSR Act"), if
applicable, (2) those that may be required solely by reason of
Buyer's (as opposed to any other third party's) participation in
the transactions contemplated hereby, (3) those that will be
obtained by the Closing and (4) those the failure of which to be
obtained or made by Closing would not, individually or in the
aggregate, have a Material Adverse Effect.
(vi) Financial Statements.
(A) Attached to the Disclosure Letter as Schedule 6(a)(vi) are
(I) the unaudited consolidated balance sheet of the Subsidiary as of
the end of the most recent fiscal period or calendar month prior to
the date of the Disclosure Letter (the "Balance Sheet"), and (II) the
unaudited consolidated statement of operating results of the
Subsidiary for the period ended as of the end of the most recent
fiscal period or calendar month prior to the date of the Disclosure
Letter (the financial statements described above, the "Financial
Statements").
(B) The Financial Statements have been prepared in accordance
with generally accepted accounting principles consistently applied and
on that basis fairly present (subject to normal, recurring year-end
adjustments) the consolidated financial condition and results of
operations of the Subsidiary as of the date thereof and for the
periods indicated.
(C) To the knowledge of Seller, as of the Closing Date, the
Subsidiary does not have any material liabilities or obligations of
any nature (whether accrued, absolute, contingent, unasserted or
otherwise), that are required by generally accepted accounting
principles to be reflected on a consolidated balance sheet, except (I)
as disclosed, reflected or reserved against in the Balance Sheet, (II)
for liabilities and obligations incurred in the ordinary course of
business consistent with past practice since the date of the Balance
Sheet and not in violation of this Agreement and (III) for Taxes.
<PAGE>
(vii) Taxes. Except as set forth in Schedule 6(a)(vii) to the
Disclosure Letter:
(A) as of the Closing, the Subsidiary and each subsidiary of the
Subsidiary, and each affiliated, combined or unitary group of which
the Subsidiary or such subsidiary is or has ever been a member and
which also (at the relevant time) included either Seller or TCI (a
"Subsidiary Group") have timely filed (or have had timely filed on
their behalf) or will file or cause to be timely filed, all material
Tax Returns (as defined in the LMC Agreement) required by applicable
law to be filed by any of them prior to or as of the effective time
(the "Effective Time") of the SSSI Merger;
(B) all such Tax Returns are, or will be at the time of filing,
true, complete and correct in all material respects; and
(C) the Subsidiary and each subsidiary of the Subsidiary and each
Subsidiary Group has paid (or has had paid on their behalf), or where
payment is not due as of the Closing, has established (or has had
established on their behalf and for their sole benefit and recourse),
or will establish or cause to be established on or before the
Effective Time of the SSSI Merger, an adequate accrual for the payment
of all material Taxes due with respect to any period ending prior to
or as of the Closing of the SSSI Merger.
The preceding sentence shall apply only to periods during which
the Subsidiary and/or the relevant subsidiary of the Subsidiary
was a member of a Subsidiary Group. Except as set forth in
Schedule 6(a)(vii) to the Disclosure Letter, as of the Closing of
the SSSI Merger, neither the Subsidiary nor any subsidiary of the
Subsidiary has any continuing obligation to Seller (or to any
other person other than a taxing authority) with respect to
Taxes.
(viii) Assets. Except as set forth in Schedule 6(a)(viii) to the
Disclosure Letter, the Subsidiary has good title to all material
properties and assets (which, in the case of real property owned in
fee, is marketable title) reflected on the Balance Sheet or thereafter
acquired, except as sold or otherwise disposed of for fair value since
the date of the Balance Sheet in the ordinary course of business
consistent with past practice and not in violation of this Agreement
and except for obsolete property disposed of in the usual manner of
the Subsidiary, in each case free and clear of all mortgages, liens,
security interests, options, rights of first refusal, leases,
assignments, subleases, easements, covenants, rights-of-way or
encumbrances of any kind except (A) mechanics', carriers', workmen's,
repairmen's or other like liens arising or incurred in the ordinary
course of business, (B) liens arising under equipment lease
agreements, conditional sales contracts and other liens in favor of
third parties incurred in connection with financing the purchase or
other acquisition of personal property in the ordinary course of
business, provided that, at the time incurred, the fair market value
of the property so financed
<PAGE>
exceeds the principal amount of the indebtedness secured by such
liens, determined in accordance with generally accepted accounting
principles, consistently applied, (C) liens for Taxes which are not
due and payable or which may thereafter be paid without penalty, (D)
mortgages, liens, security interests and encumbrances which secure
debt that is reflected as a liability on the Balance Sheet, (E)
easements, covenants, rights-of-way and other similar restrictions of
record, (F) any conditions that may be shown by a current, accurate
survey or physical inspection of any property of the Subsidiary made
prior to Closing and (G) other imperfections of title or encumbrances
(including, without limitation, (I) zoning, building and other similar
restrictions, (II) mortgages, liens, security interests, encumbrances,
easements, covenants, rights-of-way and other similar restrictions
that have been placed by any developer, landlord or other third party
on property over which the Subsidiary has easement rights or on any
leased property and subordination or similar agreements relating
thereto, and (III) unrecorded easements, covenants, rights-of-way and
other similar restrictions) which do not, individually or in the
aggregate, materially impair the operation of the Business taken as a
whole. Except as set forth in Schedule 6(a)(viii) to the Disclosure
Letter, the Subsidiary owns or has sufficient rights to use under
existing leases and license agreements all material properties, rights
and assets reasonably necessary for the conduct of the Business as
then conducted.
(ix) Contracts. Except as set forth in Schedule 6(a)(ix) to the
Disclosure Letter: (A) all material agreements, contracts, leases,
licenses, commitments or instruments of the Subsidiary (collectively,
the "Contracts"), as of the Closing Date that are reasonably necessary
for the conduct of the Business as then conducted are valid, binding
and in full force and effect and, as of the Closing Date, are
enforceable by the Subsidiary in accordance with their terms; and (B)
the Subsidiary, as of the Closing Date, has performed in all material
respects all material obligations required to be performed by it under
the Contracts and, as of the Closing Date, is not (with or without the
lapse of time or the giving of notice, or both) in breach or default
in any material respect thereunder and no other party to any of the
Contracts is to the knowledge of Seller as of the Closing Date (with
or without the lapse of time or the giving of notice, or both) in
breach or default in any material respect thereunder.
(x) Litigation. Except as set forth in Schedule 6(a)(x) to the
Disclosure Letter: (A) there are not, as of the Closing Date, any
pending lawsuits or claims, with respect to which Seller or the
Subsidiary has been contacted in writing by counsel for the plaintiff
or claimant, against or affecting the Subsidiary or any of its
properties, assets, operations or businesses as to which there is at
least a reasonable possibility of adverse determination, that would
have, if so determined, individually or in the aggregate, a Material
Adverse Effect; (B) to the knowledge of Seller as of the Closing Date,
the Subsidiary is not a party or subject to or in default under any
material judgment, order, injunction or decree of any Governmental
Entity applicable to it or any of its respective
<PAGE>
properties, assets, operations or business; (C) there is not, as
of the Closing Date, any material lawsuit or claim by the Subsidiary
pending, against any other person; and (D) as of the Closing Date, to
the knowledge of Seller, there is not any pending investigation of or
proceeding affecting the Subsidiary by any Governmental Entity.
(xi) Insurance. Seller or the Subsidiary, through one or more
Affiliates, maintains or has the benefit of policies of fire and
casualty, liability and other forms of insurance (including self
insurance) in such amounts, with such deductibles and against such
risks and losses as are, in Seller's judgment, reasonable for the
business and assets of the Subsidiary. Except as set forth in Schedule
6(a)(xi) to the Disclosure Letter: (A) all such policies are in full
force and effect, all premiums due and payable thereon as of the
Closing Date, have been paid (other than retroactive or retrospective
premium adjustments that may be required to be paid with respect to
any period ending prior to the Closing Date under comprehensive
general liability and workmen's compensation insurance policies), and
no notice of cancellation or termination as of the Closing Date has
been received with respect to any such policy which has not been
replaced prior to the date of such cancellation; and (B) to the
knowledge of Seller, the activities and operations of the Subsidiary,
as of the Closing Date, have been conducted in a manner so as to
conform in all material respects to all applicable provisions of such
insurance policies.
(xii) Compliance with Applicable Laws. Except as set forth in
Schedule 6(a)(xii), neither Seller nor the Subsidiary as of the
Closing Date has received any written communication during the past
two years from a Governmental Entity that alleges that the Subsidiary
is not in compliance in any material respect with any applicable
statutes, laws, ordinances, rules, orders and regulations of any
Governmental Entity, other than any such communications alleging any
failures to be in compliance that, if true, would not, individually or
in the aggregate, have a Material Adverse Effect.
(xiii) Licenses; Permits. Except as set forth in Schedule
6(a)(xiii) to the Disclosure Letter, the Subsidiary has full corporate
power and authority and possesses all governmental franchises,
licenses, permits, authorizations and approvals necessary to enable it
to own, lease or otherwise hold its properties and assets and to carry
on its business as presently conducted, other than such franchises,
licenses, permits, authorizations and approvals the lack of which,
individually or in the aggregate, would not have a Material Adverse
Effect.
(xiv) Absence of Changes or Events. Except as set forth in
Schedule 6(a)(xiv) to the Disclosure Letter: (A) since the date of the
Balance Sheet, there has not been any material adverse change in the
business, assets, condition (financial or otherwise) or results of
operations of the Subsidiary taken as a whole; and (B) since the date
of the Balance Sheet, Seller has caused the business of the Subsidiary
to be
<PAGE>
conducted in the ordinary course and in substantially the same
manner as previously conducted (except for such changes in the
day-to-day operations of the Business as the management of Seller and
the Subsidiary, in the good faith exercise of their business judgment,
shall from time to time determine to be in the best interests of the
Subsidiary) and has made all reasonable efforts consistent with past
practices to preserve the Subsidiary's relationships with customers,
suppliers and others with whom the Subsidiary deals.
(b) Certain Representations and Warranties of Buyer as of Closing
Date. If the Option is exercised, it shall be a condition to the
obligations of Seller to be performed hereunder on the Closing Date
that, on and as of the Closing Date, each of the following
representations and warranties of Buyer, if qualified by materiality,
shall be true and complete, or, if not so qualified, shall be true and
complete in all material respects:
(i) At the Closing Date, the shares of Buyer Preferred Stock
to be received by Seller (or its designee pursuant to Section 15)
in the SSSI Merger will be duly authorized, validly issued, fully
paid and nonassessable and free of preemptive rights.
(ii) Neither the execution and delivery by Buyer of this
Agreement, the SSSI Merger Agreement and the Registration Rights
Agreement nor the performance of its obligations hereunder and
thereunder will result in the creation or imposition of any lien
or other encumbrance on the shares of Buyer Preferred Stock to be
delivered by Buyer to Seller in satisfaction of the Initial
Payment or the Merger Consideration.
(iii) Buyer has filed all required reports, schedules,
forms, statements and other documents with the Securities and
Exchange Commission ("SEC") since December 31, 1992 (as such
documents have been amended prior to the Closing Date, the "Buyer
SEC Documents"). As of their respective dates, the Buyer SEC
Documents complied in all material respects with the requirements
of the Securities Act or the Securities Exchange Act of 1934, as
amended, as the case may be, and the rules and regulations of the
SEC promulgated thereunder applicable to such Buyer SEC
Documents, and none of the Buyer SEC Documents contained any
untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances
under which they were made, not misleading, except to the extent
such statements have been modified or superseded by a later Buyer
SEC Document. Except to the extent that information contained in
any Buyer SEC Document has been revised or superseded by a later
Buyer SEC Document, neither Buyer's Annual Report on
<PAGE>
Form 10-K for the year ended December 31, 1994, nor any
Buyer SEC Document filed after December 31, 1994, contains any
untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances
under which they were made, not misleading. The consolidated
financial statements of Buyer included in the Buyer SEC Documents
comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance
with generally accepted accounting principles (except, in the
case of unaudited statements, as permitted by Form 10-Q of the
SEC) applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly
present the consolidated financial position of Buyer and its
consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments). Except as set forth in the
Buyer SEC Documents, neither Buyer nor any subsidiary of Buyer
has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) required by generally
accepted accounting principles to be set forth on a consolidated
balance sheet of Buyer and its consolidated subsidiaries or in
the notes thereto and which, individually or in the aggregate,
could reasonably be expected to have a Parent Material Adverse
Effect (as defined in the Merger Agreement).
(iv) Except as disclosed in any Buyer SEC Document, since
the date of the most recent audited financial statements included
in the Buyer SEC Documents, Buyer has conducted its business only
in the ordinary course, and there has not been:
(A) any change or effect (or any development that, insofar
as can reasonably be foreseen, is likely to result in a change or
effect) which, individually or in the aggregate, has had or is
likely to have, a Parent Material Adverse Effect;
(B) except for regular quarterly dividends not in excess of
$0.09 per share of Buyer Common Stock and the stated or required
amount of dividends on any series of Parent Preferred Stock (as
defined in the Merger Agreement), in each case with customary
record and payment dates, any declaration, setting aside or
payment of any dividend or other distribution (whether in cash,
stock or property) with respect to the Buyer Common Stock or any
series of Parent Preferred Stock;
<PAGE>
(C) any split, combination or reclassification of the Buyer
Common Stock or any issuance or the authorization of any issuance
of any other securities in exchange or in substitution for shares
of the Buyer Common Stock;
(D) any damage, destruction or loss, whether or not covered
by insurance that has had or is likely to have a Parent Material
Adverse Effect; or
(E) any change in accounting methods, principles or
practices by Buyer or any Material Parent Subsidiary (as defined
in the Merger Agreement) materially affecting its assets,
liabilities or business, except insofar as may have been required
by a change in generally accepted accounting principles.
(c) Representations and Warranties of Buyer Incorporated by
Reference as of the Closing Date. In addition to the
representations and warranties of Buyer set forth in Section
6(b), the following representations and warranties of Buyer are
hereby incorporated by reference, with the same effect as if made
in this Agreement by Buyer to Seller on and as of the Closing
Date:
(i) the representations and warranties of Buyer contained in
Section 3.02(a) of the Merger Agreement under the heading
entitled "Organization, Standing and Corporate Power";
(ii) the representations and warranties of Buyer contained
in Section 3.02(j) of the Merger Agreement under the heading
entitled "Brokers"; and
(iii) the representations and warranties of Buyer contained
in Section 3.02(k) of the Merger Agreement under the heading
entitled "Taxes";
and it shall be a condition to the obligations of Seller to
be performed hereunder on the Closing Date that each of the
representations and warranties so incorporated by reference, if
qualified by materiality, shall be true and complete, or, if not
so qualified, shall be true and complete in all material
respects, on and as of the Closing Date.
7. Conditions to the Obligation of Each Party. The obligations of
Seller and Buyer to consummate the SSSI Merger (if the Option is exercised)
are conditioned upon the satisfaction, prior to or on the Closing Date, of
the following conditions:
(a) on the Closing Date, no action, proceeding or investigation
commenced or brought by any U.S. Federal Governmental Entity shall be
pending, the purpose of which is to set aside or modify in any
material respect the authorizations of
<PAGE>
any of the transactions provided for in this Agreement and the SSSI
Merger Agreement or to enjoin or prevent consummation of any of such
transactions, nor shall any restraining order or preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or any other legal restraint or prohibition preventing
the consummation of the transactions contemplated hereby be in effect;
(b) the receipt of all required regulatory approvals and
authorizations (including from the Federal Communications Commission)
and the making of all filings (other than filing of certificates of
merger pursuant to Section 2(c)) and the termination of all waiting
periods required in connection with the Closing, including all waiting
periods under the HSR Act, with the understanding that, if the Option
is exercised, Buyer and Seller will use their commercially reasonable
efforts to secure all such required regulatory approvals and
authorizations prior to the Closing; provided, however, that nothing
in this Agreement shall require Buyer or Seller (or any of their
respective Affiliates) (i) to agree to, approve or otherwise be bound
by or satisfy any condition of any kind referred to in the second or
third sentences of Section 2.1(d) of the LMC Agreement, (ii) to agree
to or enter into or be bound by any settlement or judgment, or (iii)
subject to Section 4.1 of the LMC Agreement, to agree to any change to
the terms of the Voting Trust (including the identity of the Trustee),
this Agreement or any of the other Additional Agreements (as defined
in the LMC Agreement).
8. Conditions to Obligation of Buyer. The obligation of Buyer to
consummate the SSSI Merger (if the Option is exercised) is also subject to
the satisfaction, prior to or on the Closing Date, of each of the following
additional conditions (unless waived by Buyer):
(a) Seller shall have performed in all material respects all its
obligations hereunder which are required to be performed prior to the
Closing Date.
(b) Buyer shall have received a certificate from an officer of
Seller (i) to the effect that Seller has complied, in all material
respects, with all its obligations under this Agreement and the SSSI
Merger Agreement, (ii) as to the incumbency of certain officers of
Seller, (iii) as to the satisfaction of the conditions to Closing set
forth in Section 5 (with respect to the representations and warranties
of Seller contained therein) and Section 6(a), (iv) attaching all
resolutions of Seller's board of directors authorizing the
transactions contemplated by this Agreement and the SSSI Merger
Agreement, and (v) any other customary matters as may be reasonably
requested by Buyer.
(c) The Carriage Agreement (as defined in Section 11(g)) shall be
in full force and effect, subject to satisfaction of the conditions
set forth therein.
<PAGE>
(d) The Program Services Agreement (as defined in Section 11(i))
shall be in full force and effect, assuming consummation of the
transactions contemplated by the Merger Agreement.
(e) The Subsidiary shall have received all material third party
consents, approvals and authorizations required for the consummation
of the SSSI Merger.
(f) Buyer shall have received an opinion of counsel to Seller
(which counsel may be an employee of Seller), reasonably acceptable to
Buyer, addressed to Buyer and dated the Closing Date, to the effect
that:
(i) Each of Seller and the Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation. Seller has all requisite
corporate power and authority to execute and deliver the
Agreement, to perform its obligations thereunder and to
consummate the transactions contemplated thereby.
(ii) The execution and delivery by Seller of the Agreement,
the performance by Seller of its obligations thereunder and the
consummation by Seller of the transactions contemplated thereby
have been duly and validly authorized by all necessary corporate
action on the part of Seller. The Agreement has been duly
executed and delivered by a duly authorized officer of Seller and
constitutes the legal, valid and binding obligation of Seller
enforceable against Seller in accordance with its terms (subject
to all applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws affecting creditors'
rights generally and subject, as to enforceability, to general
principles of equity).
(iii) The Shares constitute all the issued and outstanding
shares of capital stock of the Subsidiary.
(iv) The execution, delivery and performance of the
Agreement by Seller and the consummation of the SSSI Merger in
accordance herewith and with the SSSI Merger Agreement does not
conflict with or result in a violation of the General Corporation
Law of the State of Delaware, or the Certificate of Incorporation
or By-laws of Seller or the Subsidiary.
(g) Buyer shall have received the Disclosure Letter from Seller
at least 10 days prior to the scheduled Closing Date and shall be
reasonably satisfied with the contents thereof and of all attachments
thereto.
<PAGE>
(h) Buyer shall be reasonably satisfied with the results of its
due diligence investigation of the Subsidiary provided for in Section
11(b)(ii).
9. Conditions to Obligation of Seller. The obligation of Seller
to consummate the SSSI Merger (if the Option is exercised) is also subject
to the satisfaction, prior to or on the Closing Date, of each of the
following conditions (unless waived by Seller):
(a) Buyer shall have performed in all material respects all its
obligations hereunder which are required to be performed prior to the
Closing Date.
(b) No petition or similar document shall have been filed by or
with respect to Buyer under any bankruptcy, insolvency or similar law.
(c) The shares of Buyer Common Stock underlying the shares of
Buyer Preferred Stock constituting the Merger Consideration delivered
by Buyer to Seller shall be subject to the Registration Rights
Agreement, until such shares of Buyer Common Stock are freely
transferable by Seller without registration or other restriction under
the Securities Act or other applicable law; the Registration Rights
Agreement shall be in full force and effect; and Buyer shall not be in
default of its obligations thereunder.
(d) Seller shall have received an opinion of counsel to Buyer
(which counsel may be an employee of Buyer), reasonably acceptable to
Seller, addressed to Seller and dated the Closing Date, to the effect
that:
(1) Buyer is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation. Buyer has all requisite corporate power and
authority to perform its obligations under this Agreement, the
SSSI Merger Agreement and the Registration Rights Agreement and
to consummate the transactions contemplated hereby and thereby.
(2) The performance by Buyer of its obligations under this
Agreement, the SSSI Merger Agreement and the Registration Rights
Agreement, and the consummation by Buyer of the transactions
contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of
Buyer. Each of this Agreement, the SSSI Merger Agreement and the
Registration Rights Agreement constitutes the legal, valid and
binding obligation of Buyer enforceable against Buyer in
accordance with its terms (subject to all applicable bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
similar laws affecting creditors' rights generally and subject,
as to enforceability, to general principles of equity, and except
that the indemnification obligations set forth in Section 8 of
the Registration Rights Agreement may be subject to
considerations of public policy).
<PAGE>
(3) The performance by Buyer of this Agreement, the SSSI
Merger Agreement and the Registration Rights Agreement do not
conflict with or result in a violation of the General Corporation
Law of the State of Delaware, or the certificate of incorporation
or by-laws of Buyer.
(4) The shares of Buyer Preferred Stock constituting the
Merger Consideration have been duly authorized and are validly
issued, fully paid, nonassessable and are not subject to any
preemptive rights;
(e) Seller shall have received a certificate from an officer of
Buyer (i) to the effect that Buyer has complied, in all material
respects, with all its obligations under this Agreement, the SSSI
Merger Agreement and the Registration Rights Agreement, (ii) as to the
incumbency of certain officers of Buyer, (iii) as to the satisfaction
of the conditions to Closing set forth in Section 5 (with respect to
the representations and warranties of Buyer contained therein),
Section 6(b) and Section 6(c), (iv) attaching all resolutions of
Buyer's board of directors authorizing the transactions contemplated
by this Agreement, and (v) any other customary matters as may be
reasonably requested by Seller.
10. Termination.
(a) Subject to the last sentence of Section 14, Buyer's rights
and obligations and Seller's rights and obligations under this
Agreement and the SSSI Merger Agreement will terminate on the last to
occur of (i) the sixth anniversary of the date of this Agreement, (ii)
the first anniversary of the date of any Exercise Notice given by
Buyer prior to the sixth anniversary of the date of this Agreement and
(iii) if as a result of any action or failure to act by any unrelated
third party, including any Governmental Entity, the conditions to the
Closing have not been satisfied in full on or prior to the first
anniversary of the date of any Exercise Notice, the earlier of (x) 5
business days after the date as of which all such conditions have been
satisfied in full and (y) the second anniversary of the date of such
Exercise Notice (the last of such dates, the "Termination Date"),
provided that the Closing has not occurred on or prior to such last
date.
(b) The termination of this Agreement will in no way limit any
obligation or liability of any Party based on or arising from a breach
or default by such Party prior to such termination with respect to any
of its representations, warranties or agreements contained in this
Agreement, the SSSI Merger Agreement or the Registration Rights
Agreement.
<PAGE>
11. Covenants.
(a) Covenants of Each Party. If the Option is exercised, each of
Seller and Buyer agrees to use its commercially reasonable efforts to
cause the conditions to the Closing described in Sections 7, 8 and 9
of this Agreement to be satisfied as promptly as practicable following
the exercise of the Option.
(b) Covenants of Seller.
(i) Disposition of Shares. During the period from the
Execution Date through the earlier to occur of the Closing
Date or the Termination Date, Seller shall not transfer or
otherwise dispose of any of the Shares (other than a
transfer of all, but not less than all, the Shares to any
member of the affiliated group (within the meaning of
Section 1504(a) of the Code) of which Seller is (at the time
of such transfer or disposition) a member; provided, that
(A) such transferee is, at the time of such transfer or
disposition, a Liberty Party (as defined in the LMC
Agreement) and (B) the transferee agrees to be bound by this
Agreement to the same effect as Seller); provided, further,
that Seller shall be entitled to pledge or otherwise
hypothecate the Shares in connection with the incurrence of
bona fide indebtedness to the extent that the applicable
pledgee of the Shares agrees to be bound by the terms of
this Agreement.
(ii) Access. Upon Seller's receipt of the Exercise Notice,
Seller shall, and shall cause the Subsidiary to, give Buyer and
its representatives, employees, counsel and accountants
reasonable access, during normal business hours and upon
reasonable notice, and subject to the obligations of Seller and
the Subsidiary under any then existing confidentiality or
non-disclosure agreements, to the personnel, properties, books
and records of the Subsidiary, so that Buyer may confirm the
satisfaction of all conditions precedent to its obligations to be
performed hereunder and under the SSSI Merger Agreement on the
Closing Date; provided, however, that such access does not
unreasonably disrupt the normal operations of Seller or the
Subsidiary. Seller agrees to use commercially reasonable efforts
in good faith to obtain all waivers and consents necessary under
any existing confidentiality or non-disclosure agreement to
afford full access to Buyer; provided, however, that nothing in
this Agreement shall require Seller or the Subsidiary (or any of
their respective Affiliates) (i) to agree to any material
modification or amendment to any agreement between Seller, the
Subsidiary or any such Affiliate and any third party, or any
other onerous or burdensome condition or requirement or (ii) to
make any payment of money or deliver any other consideration to
any third party, as a condition to the receipt of any waiver or
consent hereunder. Upon Seller's receipt of the Exercise Notice,
Seller shall also give Buyer a list of the WTBS Distributors (as
defined in Section 24).
<PAGE>
During the period from the Execution Date through the earlier to
occur of the Closing Date or the Termination Date, if the
Subsidiary proposes to enter into any agreement with a WTBS
Distributor or other third party, which agreement will contain a
confidentiality or non-disclosure covenant relating to the
existence, terms and/or conditions of any material agreement to
which the Subsidiary is or will be a party, or any other material
matter relating to the Business or the Subsidiary, Seller shall,
and shall cause the Subsidiary to, use commercially reasonable
efforts in good faith to negotiate a provision in such agreement
or covenant to permit the Subsidiary to disclose the matters
subject to such confidentiality or non-disclosure agreement to
Buyer and its representatives, employees, counsel and accountant,
subject to Seller's prior receipt of the Exercise Notice;
provided, however, that nothing in this Agreement shall require
Seller or the Subsidiary (or any of their respective Affiliates)
(i) to agree to any material concession, condition or other
provision in any agreement that, in the good faith business
judgment of Seller, is in any respect materially less favorable
to Seller, the Subsidiary or the Business than the comparable
provision that could have been negotiated by Seller and the
Subsidiary if this sentence did not apply or (ii) to make any
payment of money or deliver any other consideration to any third
party, as a condition to receipt of any provision permitting any
disclosure to Buyer or any such other person.
(iii) Ordinary Conduct. During the period from the Execution
Date through the earlier to occur of the Closing Date or the
Termination Date, Seller shall cause the Subsidiary to operate
the Business in the ordinary course in substantially the same
manner as currently conducted (except for such changes in the
day-to-day operations of the Business as the management of Seller
and the Subsidiary, in the good faith exercise of their business
judgment, shall from time to time determine to be in the best
interests of the Subsidiary). In that connection, Seller shall
cause Subsidiary to use its reasonable efforts to preserve their
relationships with customers, suppliers and others with whom the
Subsidiary deals. In addition, Seller shall not permit the
Subsidiary to take any action that could reasonably be expected
to materially impair the business, assets and financial condition
of the Subsidiary at the time of the SSSI Merger (provided, that
Seller shall be permitted to discontinue the operations of the
Subsidiary if because of an act of God, significant change in law
or other occurrence, it would not be reasonable to continue such
operations). Anything contained herein to the contrary
notwithstanding, subject to approval of the Federal
Communications Commission, Seller and the Subsidiary may take
such action as is reasonably necessary to change the status of
the Subsidiary from a common carrier to a private carrier, if, in
the business judgment of Seller and the Subsidiary, such change
is in the best interests of the Business and the Subsidiary,
provided that such action does not impair the availability of the
exception under 17 U.S.C.
<PAGE>
Section 111(a)(3) and does not materially and adversely affect the
Subsidiary's existing agreements with WTBS Distributors.
(iv) Resignations. On the Closing Date, Seller shall cause to
be delivered to Buyer duly signed resignations, effective
immediately after the Closing, of all directors of the Subsidiary
and shall take such other action as is necessary to accomplish
the foregoing.
(v) Insurance. At all times during the period from the
Execution Date through the earlier of the Closing Date and the
Termination Date, Subsidiary shall maintain (and Seller shall
cause Subsidiary to maintain) in full force and effect, insurance
policies meeting the requirements of Section 6(a)(xi).
(vi) Other Transactions. Neither Seller nor the Subsidiary
shall, nor shall they permit any of their respective officers,
directors, stockholders or other representatives to, directly or
indirectly, encourage, solicit, initiate or participate in
discussions or negotiations with, or provide any information or
assistance to, any person or group (other than Buyer and its
representatives) concerning any merger, sale of securities, sale
of substantial assets or similar transaction involving the
Subsidiary, except for such a transaction involving Seller or
TCI, provided that any entity engaging in such a transaction with
Seller or TCI agrees to be bound by this Agreement. In the event
that Seller or the Subsidiary receives a proposal relating to any
such transaction specifically relating to the Subsidiary, Seller
shall promptly notify Buyer of such proposal.
(vii) Closing Schedules. Upon Buyer's exercise of the Option,
Seller shall as soon as practicable prepare and deliver to Buyer
the Disclosure Letter and all required schedules to this
Agreement that have not previously been delivered.
(viii) Supplemental Disclosure. Seller shall promptly notify
Buyer of, and furnish Buyer any information it may reasonably
request with respect to, the occurrence to Seller's knowledge of
any event or condition or the existence to Seller's knowledge of
any fact that causes any of the conditions to Buyer's obligation
to consummate the SSSI Merger not to be fulfilled, provided that
no such notification shall be required with respect to any
representation or warranty of Seller hereunder prior to delivery
of the Disclosure Letter.
(ix) Restricted Activities. Seller hereby covenants and
agrees that (A) during the period from the Execution Date through
the earlier of the Closing Date and the Termination Date, Seller
shall not (and shall cause its Affiliates not to) engage in the
Business, other than through the Subsidiary, and
<PAGE>
(B) during the period from the Closing Date to the seventh
anniversary of the Closing Date, Seller shall not (and shall
cause its Affiliates not to) engage in the Business.
(c) Covenants Regarding Certain Indebtedness. Each of Seller and
the Subsidiary hereby covenants with and for the benefit of Buyer and
New Sub as follows:
(i) In the event that the Subsidiary incurs any indebtedness
for borrowed money after the Execution Date, the Subsidiary shall
(and Seller shall cause the Subsidiary to) cause such
indebtedness to be satisfied and discharged on or before the
Closing Date, other than any equipment lease agreement,
conditional sales contract, purchase money indebtedness or other
indebtedness incurred to finance the purchase or acquisition of
personal property in the ordinary course of business, provided
that, at the time incurred, the fair market value of the property
so financed exceeds the principal amount of such indebtedness,
determined in accordance with generally accepted accounting
principles, consistently applied.
(ii) In the event that the Shares, or any of them, or any
other capital stock of the Subsidiary is at any time pledged to
secure any indebtedness of the Subsidiary or any other Affiliate
of Seller, Seller shall cause such indebtedness to be repaid when
due and otherwise to be satisfied and discharged in full on or
prior to the Closing Date. In that connection, Seller shall not
permit any pledgee of shares of capital stock of the Subsidiary
to sell such shares in foreclosure or otherwise. At the Closing,
Seller shall deliver the Shares (and any other outstanding
capital stock of the Company) to Buyer pursuant to the SSSI
Merger, the SSSI Merger Agreement and this Agreement, free and
clear of all liens and encumbrances whatsoever.
(d) Confidentiality. Until the Closing Date (or if the Closing
does not occur, until the second anniversary of the Termination Date)
Buyer agrees to use the same efforts that it uses with respect to its
own confidential and proprietary information to retain in strict
confidence all proprietary and confidential information concerning the
Subsidiary which is conveyed to it by Seller or any Affiliate of
Seller, or any representative of Seller or any such Affiliate
("Confidential Information"). Notwithstanding the foregoing, the term
"Confidential Information" does not include: (i) information which is,
at the time of its disclosure to Buyer or any Affiliate of Buyer or
their respective representatives, already in Buyer's, its Affiliates'
or their representatives' possession (without violation, to Buyer's
knowledge, of any legally enforceable confidentiality agreement with
Seller or any Affiliate of Seller relating to such information), (ii)
information which is or becomes generally available to the public
other than as a result of a disclosure by Buyer or any Affiliate of
Buyer or their
<PAGE>
respective representatives, (iii) information which was or becomes
available to Buyer or any Affiliate of Buyer or their respective
representatives on a non-confidential basis from a source other than
Seller, an Affiliate of Seller or their respective representatives,
provided that such source was not known by Buyer to be bound by the
terms of a legally enforceable confidentiality agreement with Seller
or any Affiliate of Seller relating to such information, (iv)
information which is information that is independently developed by
Buyer or its Affiliates or their respective representatives or (v) any
oral information, unless such information is stated to be proprietary
and confidential at the time of disclosure and such statement and
information is summarized in writing within 30 days after such
disclosure. In the event that Buyer, any of its Affiliates or any of
their respective representatives is requested or required (by oral
questions, interrogatories, requests for information or documents,
subpoena, civil investigative demand or other process) to disclose any
Confidential Information, it is agreed that Buyer will provide Seller
with prompt notice of any such request or requirement (written if
practical) so that Seller may seek at its own expense an appropriate
protective order or waive Buyer's compliance with the provisions of
this Agreement. If, failing the entry of a protective order or the
receipt of a waiver hereunder, Buyer, any of its Affiliates or any of
their respective representatives is, in the opinion of its counsel,
compelled to disclose any Confidential Information, Buyer or such
Affiliate or representative may disclose that portion of any
Confidential Information which its counsel advises that it is
compelled to disclose and will upon written request and at the expense
of Seller cooperate with Seller in Seller's efforts to obtain a
protective order or other reasonable assurance that confidential
treatment will be accorded to that portion of such Confidential
Information which is being disclosed. Buyer will use the Confidential
Information only in connection with its due diligence review of the
Subsidiary as contemplated by this Agreement and will not otherwise
use it in its business or disclose it to others, except to its
employees, representatives and Affiliates (and their employees and
representatives) who require such Confidential Information to perform
their duties in connection with, or exercise Buyer's rights under,
this Agreement and agree not to disclose or use such Confidential
Information except as provided herein. Buyer agrees that it shall be
responsible for any breach of this Section 11(d) by such persons. In
the event that the Closing does not occur under this Agreement, Buyer
shall, at its option, either (i) return all Confidential Information
provided or made available to it hereunder relating to the Subsidiary,
whether in written, computer-readable or other form, together with all
copies thereof in the possession of Buyer or (ii) destroy all such
Confidential Information and certify such destruction to Seller;
provided, however, that Buyer's sole obligation with respect to the
disposition of any internal notes, memoranda or other materials
prepared by it that incorporate any Confidential Information shall be
to redact or otherwise expunge all such Confidential Information from
such materials.
(e) Covenant by Satellite Relating to Carriage of WTBS. During
the period from the Execution Date through the earlier of the Closing
Date and the
<PAGE>
Termination Date, provided that Buyer or any Managed Subsidiary of
Buyer then owns the programming service currently known as "WTBS" (as
it may be renamed in the future) ("WTBS"), Satellite shall cause each
of its affiliates (as such term is defined in Section 1(a) of
Satellite's existing affiliation agreement, dated as of July 15, 1992,
with The Cartoon Network, Inc., a copy of the pertinent provisions of
which was attached to a letter dated as of October 2, 1995, from Baker
& Botts, L.L.P., counsel to Seller, to Peter R. Haje, the general
counsel of Buyer) (and each affiliate of any other intermediary (as
contemplated by the second sentence of the definition of "Business" in
Section 24(b))) that carries WTBS, and each other entity to which
Satellite (or such other intermediary) provides (or arranges for the
provision of) the WTBS signal, to carry the WTBS signal transmitted by
the Subsidiary (provided that the Subsidiary is able to transmit such
signal), on a non-exclusive basis, it being understood that nothing in
this Agreement shall prohibit any such affiliate or other person or
entity from deleting carriage of the WTBS signal transmitted by the
Subsidiary, provided that upon such deletion such affiliate or other
person or entity does not carry the WTBS signal from any other source
(it being understood that nothing in this Section 11(e) shall limit
the effects of the Carriage Agreement, or the rights and obligations
of the parties thereunder, when that agreement becomes effective in
accordance with its terms).
(f) Acknowledgement by Seller. Seller acknowledges and agrees for
itself and each of its Affiliates that, from and after the closing of
the Merger (as defined in the LMC Agreement), Buyer intends to (and
may) communicate directly with cable, MMDS, DBS or other multichannel
video or other distribution systems (including any of the foregoing
that are WTBS Distributors) regarding the transformation of WTBS into
a copyright paid, satellite delivered, twenty-four hour per day cable
television programming service, it being understood that, until
receipt of the Exercise Notice, nothing in this Agreement shall
constitute a waiver by Seller, the Subsidiary or any of their
respective Affiliates of, or an agreement by Seller, the Subsidiary or
any such Affiliate to waive any non-disclosure or confidentiality
agreement between Seller, the Subsidiary, or any such Affiliate and
any WTBS Distributor.
(g) Buyer's Right to Assign Carriage Agreement to Managed
Subsidiaries. Seller and Satellite hereby acknowledge and agree
that the rights of Buyer under the Carriage Agreement attached
hereto as Exhibit 2A (the "Carriage Agreement") may be assigned
by Buyer to any Managed Subsidiary of Buyer (including, after the
SSSI Merger and without limitation, the Subsidiary), provided
that any such assignment shall terminate if the assignee ceases
to be a Managed Subsidiary. This Section 11(g) amends and
modifies the Carriage Agreement, and Exhibit 2 and this Section
11(g) shall survive the exercise of the Option and any
termination of this Agreement. Exhibit 2 is not intended to amend
or modify the Carriage Agreement or the Program Services
Agreement, but is merely intended to clarify the
interrelationship between the Carriage Agreement and the Program
Services Agreement.
<PAGE>
(h) Effectiveness of the Carriage Agreement. The Parties hereby
acknowledge and agree that upon the satisfaction of the conditions set
forth in Exhibit 2, as described in the last sentence of Section
11(g), and in the Carriage Agreement, the Carriage Agreement and
Exhibit 2, as described in the last sentence of Section 11(g), shall
become effective.
(i) Non-Exclusive Right to Digitize, Compress and Reuplink.
Reference is made to Paragraph 7 of the Program Services
Agreement attached hereto as Exhibit 2B (the "Program Services
Agreement"). The Parties hereby consent to any action taken by
Satellite during the term of this Agreement that would be
permitted by Paragraph 7 of the Program Services Agreement, as if
the Program Services Agreement were then in effect with respect
to WTBS and (i) all references therein to "TBS" referred to the
Subsidiary, (ii) all references therein to "TBS services"
referred to WTBS, and (iii) the reference in the third line to
"licensed by TBS" meant "authorized by the Subsidiary pursuant to
contractual relationships." In that connection, and on the same
basis, Satellite shall comply with clause (iii) of such Paragraph
7.
12. Allocation of Tax Liability.
(a) Obligation to Indemnify. (i) Seller shall be liable for, and
shall indemnify and hold Buyer and each Affiliate of Buyer (including,
after the Closing, the Subsidiary and each subsidiary of the
Subsidiary) (collectively, the "Buyer Group") harmless from and
against (A) all liability for any federal, state or local income or
non-income tax liability (a "Tax") of the Subsidiary or any
subsidiary of the Subsidiary for taxable years or portions thereof
ending on or prior to the Effective Time (as defined in Section
6(a)(vii) hereof), (B) all liability (as a result of Treasury
Regulation Section 1.1502-6(a) or any comparable provision of state or
local tax law or otherwise) for Taxes of any person which is or has
ever been affiliated with the Subsidiary or any subsidiary of the
Subsidiary or with which the Subsidiary or any subsidiary of the
Subsidiary otherwise joins or has ever joined (or is or has ever been
required to join) in filing any consolidated, combined, unitary or
aggregate return, prior to the Effective Time and (C) all liability
for Taxes of Seller or Subsidiary or any subsidiary of the Subsidiary
arising as a result of the granting of the Option, the receipt of the
Initial Payment or the SSSI Merger, in each case on an after-Tax
basis. TCI shall be jointly and severally liable for all obligations
and liabilities assumed by Seller pursuant to this Section 12 to the
extent (and only to the extent) that such obligations and liabilities
are attributable to periods in which Seller is a member of the
affiliated group (within the meaning of Section 1504(a) of the
Internal Revenue Code of 1986, as amended (the "Code")) of which TCI
is the parent.
<PAGE>
(ii) All Taxes of any member of the Buyer Group for which Seller
is not required to indemnify the Buyer Group pursuant to Section
12(a)(i) shall be the obligation of Buyer, and Buyer shall be liable
for, and shall indemnify and hold the members of the Seller Group
harmless from and against, all such liabilities on an after-Tax
basis.
(iii) For purposes of this Agreement, each Tax liability for a
taxable year that includes, but does not end on, the date of the SSSI
Merger (a "Straddle Period") shall be allocated (on an interim
"closing of the books" basis) between the period ending on the date of
the SSSI Merger and the period beginning the day after the date of the
SSSI Merger by allocating Tax liability as if each such period were a
taxable year.
(b) Refunds. Any refunds of Taxes or any credit against Taxes
(when and to the extent applied by any member of the Buyer Group
against any Tax liability that Seller has not assumed pursuant to
Section 12(a)(i) resulting in a Tax benefit to any member of the Buyer
Group that it otherwise would not have realized in the absence of such
credit) (including any interest relating to such refunds or credits)
of the Subsidiary or any subsidiary of the Subsidiary with respect to
taxable years or portions thereof ending on or prior to the Effective
Time of the SSSI Merger shall be for the account of Seller (and in the
case of refunds or credits of the Subsidiary or any subsidiary of the
Subsidiary, have been or shall be assigned to Seller), and any other
refunds of Taxes or credits against Taxes of any member of the Buyer
Group shall be for the account of New Sub. Any refunds or credits with
respect to Straddle Periods shall be allocated under the principles
set forth in Section 12(a)(iii). Buyer shall promptly forward to, or
reimburse Seller for, any such refunds or credits and interest due
Seller after receipt thereof, and Seller shall promptly forward to, or
reimburse New Sub for, any such refunds or credits and interest due
New Sub 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.
(c) Final Returns. Seller shall prepare or cause to be prepared
any Tax Returns to be filed that relate to any period ending on or
prior to the Effective Time. All such Tax Returns shall be prepared in
a manner consistent with prior years. Seller and Buyer shall jointly
prepare and control any Tax Return of the Subsidiary or any subsidiary
of the Subsidiary 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.
<PAGE>
(d) Conduct of Audits and Disputes. (i) Contest Rights. A Party
who has "contest rights" with respect to an asserted Tax liability or
a refund claim shall have the right (but not the obligation), at its
own expense, to negotiate, settle or contest such asserted Tax
liability or refund 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 12(d). Such contest rights shall include, but
not be limited to, the determination (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.
(ii) Claims Controlled by Seller. Subject to paragraphs (iv), (v)
and (vi) hereof, Seller (and not Buyer) shall have the right to
control the contest with respect to any asserted Tax liability or
refund claim of any member of the Buyer Group to the extent that
Seller is required to indemnify against such asserted Tax liability
pursuant to Section 12(a)(i) or is entitled to such refund or credit
pursuant to Section 12(b). Buyer and its Affiliates have the right to
be consulted with respect to such contest but shall have no right to
participate in any such contest undertaken by Seller. Seller shall not
settle any Tax liability or refund claim without the written consent
of Buyer, which consent shall not be unreasonably withheld.
(iii) Claims Controlled by Buyer. Subject to paragraphs (iv), (v)
and (vi) hereof, Buyer (and not Seller) shall have the right to
control the contest with respect to any asserted Tax liability or
refund claim of any member of the Buyer Group to the extent that Buyer
is required to indemnify against such asserted Tax liability pursuant
to Section 12(a)(ii) or is entitled to such refund or credit pursuant
to Section 12(b). Seller and its Affiliates have the right to be
consulted with respect to such contest but shall have no right to
participate in any such contest undertaken by Buyer. Buyer shall not
settle any Tax liability or refund claim without the written consent
of Seller, which consent shall not be unreasonably withheld.
(iv) Contests Involving Multiple Issues. If any contest shall
involve issues with respect to which both Seller and Buyer 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 such 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.
<PAGE>
(v) Notice; Cooperation. If any member of the Buyer Group or the
affiliated group of corporations which includes the Seller and its
Affiliates (but, after the Closing, not including the Subsidiary and
any subsidiaries of the Subsidiary) (collectively, the "Seller 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 Tax liability or Tax refund
claim for any period for which Seller or Buyer, respectively (the "Tax
Indemnifying Party"), may be liable (in the case of a liability) or
for which Seller or New Sub, respectively, 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 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 forbear 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 liabilities
or the Tax refund claim. The Parties hereto agree to cooperate with
each other in connection with any examination process with respect to
any asserted Tax liability or Tax refund 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.
(vi) Payment. If a Tax Indemnified Party elects to contest an
asserted Tax by paying the deficiency asserted and then seeking a
refund thereof or is otherwise required to pay a Tax, the Tax
Indemnified Party shall give written notice to the Tax Indemnifying
Party and such Tax Indemnifying Party shall remit the amount of the
deficiency or Tax, as the case may be, to such Tax Indemnified Party
within 10 days of the date of such notice. Otherwise, such Tax
Indemnifying Party shall pay the amount of any indemnification
obligation to such Tax Indemnified Party within 10 days after any
Final Determination (as defined in Section 13(b)(vii) of this
Agreement) with respect to the Tax giving rise to such indemnity
obligation.
(vii) Failure to Comply. The failure of a Party to comply with any
of its obligations under this Section 12(d) shall not relieve the
other Party of its indemnity obligations hereunder, except to the
extent (and only to the extent) that the other Party is materially
prejudiced by such failure.
<PAGE>
13. Indemnification for SSSI Merger Tax Liability. (a) General.
It is the intention of the Parties that the SSSI Merger qualify as a
"reorganization" within the meaning of Section 368 of the Code.
Notwithstanding the provisions of Section 12, if solely as a result of any
action taken after the Effective Time by Buyer or any Affiliate of Buyer,
except for any actions or transactions expressly contemplated by this
Agreement, the SSSI Merger Agreement, the Registration Rights Agreement,
the LMC Agreement, or any other Additional Agreement (as such term is
defined in the LMC Agreement) (other than the formation of a new holding
company with respect to Buyer pursuant to Section 351 of the Code),
including without limitation any merger by Buyer or such affiliate with, or
acquisition by Buyer or such Affiliate of any other corporation, taking
place after or simultaneously with the SSSI Merger, the SSSI Merger fails
to so qualify as a "reorganization," then Buyer shall be liable for, and
shall indemnify and hold each member of the Seller Group harmless on an
after-Tax basis from and against, any Federal, state or local income or
franchise Tax liability arising as a result of the SSSI Merger (but only to
the extent such Tax liability exceeds the Tax liability that would have
been imposed on such member if the SSSI Merger had qualified as a
"reorganization" and only to the extent such Tax liability exceeds the Tax
liability that would have been imposed on such member if Buyer or such
Affiliate of Buyer had not taken such action after the Effective Time) and
any expenses incurred in good faith (including, without limitation, legal
fees) to the extent incurred in conducting any contest of such excess Tax
liability. As used in this Section 13(a), the term "SSSI Merger" means and
includes the SSSI Merger, the execution and delivery of this Agreement, the
SSSI Merger Agreement and the Registration Rights Agreement and the
consummation of the transactions contemplated by this Agreement and the
SSSI Merger Agreement, including the grant of the Option. Buyer shall have
no liability pursuant to this Section 13(a) solely because of its failure
to exercise the Option.
(b) Conduct of Audits and Disputes.
(i) Contest Provisions. If Seller receives written notice of
a position taken on audit or a claim by the Internal Revenue
Service or other relevant taxing authority which, if sustained,
would require the Buyer to indemnify the Seller Group pursuant to
Section 13(a), Seller will notify Buyer in writing of such
determination within 30 days after receipt of such written
notice, and Seller shall be required to take further action to
contest such position or claim only if requested in good faith by
Buyer in writing.
(ii) Control.
(A) As long as Buyer confirms to Seller in writing
Buyer's liability under this Agreement in the event that the
position or claim referred to in Section 13(b)(i) is
sustained, Buyer shall have sole control over any contest
undertaken pursuant to this Section 13(b); otherwise, Seller
shall have sole control of such contest, provided that
Seller shall not
<PAGE>
settle any such contest without Buyer's consent, which shall
not be unreasonably withheld.
(B) If Buyer has sole control over any contest pursuant
to Section 13(b)(ii)(A), Buyer shall have sole discretion to
determine (x) whether any such action shall initially be by
way of judicial or administrative proceedings, or both, (y)
whether any such position or claim shall be contested by
resisting payment thereof or by paying the same and seeking
a refund thereof and (z) if Buyer shall undertake judicial
action with respect to such asserted Tax liability, the
court or other judicial body before which such action shall
be commenced. Each Party shall keep the other fully advised
of the progress of the contest and shall confer with such
other Party and its independent tax counsel upon request.
Seller and Buyer shall provide to each other, upon request,
such reasonably obtainable information and such other
reasonable assistance as may be necessary or advisable for
the effective evaluation or conduct of any contest pursuant
to this Section 13(b).
(iii) Contest of Adverse Determinations. If Seller receives
notice of an adverse determination by any court with respect to a
contest undertaken pursuant to this Section 13(b), Seller will
notify Buyer in writing of such determination within 10 days
after receipt of such notice, and Seller shall be required to
take further action to contest such claim only if the following
conditions are satisfied within 30 days after Seller gives such
written notice to Buyer (or, if less, within a period ending 5
days prior to the date on which Seller is required to take
further action to contest such determination):
(A) Buyer shall have requested Seller in writing to
contest such determination; and
(B) If such further action requires posting any bond or
satisfying any other similar requirements, Buyer shall, at
its own expense, post such bond or satisfy such other
requirements.
(iv) Payment. If Seller elects to contest an asserted Tax
liability by paying the deficiency asserted and then seeking a
refund thereof, Seller shall give written notice to Buyer and
Buyer shall remit the amount of the deficiency to Seller within
10 days of the date of such notice and Seller shall timely pay
such Tax to the relevant taxing authority. Otherwise, Buyer shall
pay the amount of any indemnification obligation to Seller within
10 days after any Final Determination (as defined below) with
respect to the Tax giving rise to such
<PAGE>
indemnity obligation and Seller shall timely pay such Tax to the
relevant taxing authority.
(v) Refunds. If Seller or any of its Affiliates receives a
refund or credit of all or any part of the amount paid by Seller
as Tax pursuant to the first sentence of Section 13(b)(iv),
Seller will reimburse to Buyer, within 15 days after receipt by
Seller of any such refund or credit, any amounts paid by Buyer to
Seller pursuant to the first sentence of Section 13(b)(iv), up to
the amount of any such refund or credit (including interest
thereon) so received by Seller or any of its Affiliates.
(vi) Failure to Comply. The failure by Seller to comply with
any of its obligations under this Section 13(b) shall not relieve
Buyer of its indemnity obligations hereunder, except to the
extent (and only to the extent) that Buyer is materially
prejudiced by such failure.
(vii) "Final Determination" shall mean (1) 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 provisions of the contest
provisions with respect to the indemnification obligation and
permitted by applicable law) or the time for filing such appeal
has expired, (2) 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, without
limitation, any settlement entered into in accordance with the
contest provisions with respect to the indemnification
obligation), or (3) 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.
14. Survival. The representations, warranties and agreements of
the Parties in this Agreement and in the other documents and instruments to
be delivered by any Party pursuant to this Agreement will continue in full
force and effect from the time made or deemed to have been made until the
Closing, whereupon such representations, warranties and agreements shall
terminate. Notwithstanding any other provision of this Agreement, the
indemnification obligations provided for in Sections 12 and 13, and the
representations and warranties of Buyer contained in Sections 4(c)(i) and
(ii) and Sections 6(b)(i) and (ii) shall survive the Execution Date, the
Closing and the termination of this Agreement pursuant to Section 10 and
shall continue in full force and effect indefinitely.
<PAGE>
15. Parties Obligated and Benefited; Seller's Right to Designate
Recipient. Subject to the limitations set forth below, this Agreement will
be binding upon the Parties and their respective assigns and successors in
interest and will inure solely to the benefit of the Parties and their
respective assigns and successors in interest, and no other person will be
entitled to any of the benefits conferred by this Agreement. Without the
prior written consent of the other Party, no Party will assign any of its
rights or delegate any of its duties under this Agreement or the SSSI
Merger Agreement, except that Seller may assign (without the consent of
Buyer) any of its rights (including, without limitation, the right to
receive the Initial Payment and/or the Merger Consideration) under this
Agreement and/or the SSSI Merger Agreement to any person that, at the time
of such assignment (and, in the case of any such person designated to
receive the Initial Payment, at the Execution Date), is (i) a Liberty Party
(as defined in the LMC Agreement) and (ii) a member of the affiliated group
(within the meaning of Section 1504(a) of the Code) of which Seller is (at
such time) a member.
16. Notices. Any notice, request, demand, waiver or other
communication required or permitted to be given under this Agreement will
be in writing and will be deemed to have been duly given only if delivered
in person or by first class, postage prepaid, registered or certified mail,
or sent by courier or, if receipt is confirmed, by telecopier:
If to Buyer:
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 (which shall not constitute notice) to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Attention: Peter S. Wilson, Esq.
<PAGE>
If to Seller:
Liberty Media Corporation
8101 East Prentice Avenue
Suite 500
Englewood, Colorado 80111
Attention: President
with copies (which shall not constitute notice) 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.
885 Third Avenue
Suite 1900
New York, New York 10022
Attention: Elizabeth Markowski, Esq.
Any party may change the address to which notices are required to be sent
by giving notice of such change in the manner provided in this Section 16.
All notices will be deemed to have been received on the date of delivery or
on the fifth business day after mailing in accordance with this Section,
except that any notice of a change of address will be effective only upon
actual receipt.
17. Waiver. This Agreement or any of its provisions may not be
waived except in writing. The failure of any Party to enforce any right
arising under this Agreement on one or more occasions will not operate as a
waiver of that or any other right on that or any other occasion.
18. Interpretation. The section captions of this Agreement are
for convenience only and do not constitute a part of this Agreement. When a
reference is made in this Agreement to a Section or Exhibit such reference
shall be to a Section of, or an Exhibit to, this Agreement, unless
otherwise indicated. Whenever the words "include", "includes" or
<PAGE>
"including" are used in this Agreement, they shall be deemed to be followed
by the words "without limitation".
19. Choice of Law. This Agreement and the rights of the Parties
under it will be governed by and construed in all respects in accordance
with (a) the laws of the State of New York applicable to contracts made and
performed wholly therein and (b) as applicable, the Delaware General
Corporation Law and the corporate law of the State of Georgia.
20. Time. If the last day permitted for the giving of any notice
or the performance of any act required or permitted under this Agreement
falls on a day which is not a business day, the time for the giving of such
notice or the performance of such act will be extended to the next
succeeding business day.
21. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which
together shall constitute a single instrument.
22. Entire Agreement. This Agreement (including all Exhibits and
Schedules attached to this Agreement, the Registration Rights Agreement,
the LMC Agreement and the agreements referenced herein and therein, each of
which shall be deemed to constitute a part of this Agreement) contains the
entire agreement of the Parties, and supersedes all prior oral or written
agreements and understandings with respect to the subject matter hereof.
This Agreement may not be amended or modified except by a writing signed by
the Parties.
23. Severability. Any term or provision of this Agreement which
is held to be invalid or unenforceable in any jurisdiction, as to such
jurisdiction, will be ineffective only to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction, and in the event any provision of this Agreement is
held to be invalid or unenforceable in any jurisdiction, such provision
will be reformed with respect to, and enforced as fully as possible in,
such jurisdiction, consistent (to the extent possible) with the purposes
and intents of the parties expressed herein.
24. Certain Definitions.
As used in this Agreement, the following terms have the
corresponding meanings:
(a) An "Affiliate" of a person means another person that directly
or indirectly, through one or more intermediaries, controls, is controlled
by, or is under common control with, such first person;
<PAGE>
(b) "Business" means the business of uplinking and distributing
the signal of WTBS to cable, MMDS, DBS and other multichannel video and
other distribution systems. Anything contained herein to the contrary
notwithstanding, neither (i) the existence of an agreement between the
Subsidiary or any unrelated third party and any intermediary (such as
Satellite) pursuant to which such intermediary arranges for the WTBS signal
transmitted by the Subsidiary or such unrelated third party to be received
by any "affiliate" of such intermediary as defined in Section 11(e) of this
Agreement (or an analogous definition, if the intermediary is not
Satellite), and any other person to whom such intermediary is authorized to
arrange for the transmission of such signal, as contemplated by Section
11(e), nor (ii) any activities by any intermediary of the type contemplated
by Section 11(i) hereof, shall in itself cause such an intermediary to be
construed as engaging in the "Business" as defined herein.
(c) "Governmental Entity" means a court, administrative agency or
commission or other governmental authority or instrumentality;
(d) "Managed Subsidiary" means, as to Buyer, an Affiliate of
Buyer (i) in which Buyer has, directly or indirectly, a majority ownership
interest and (ii) as to which Buyer has day-to-day management control,
specifically including, without limitation, as of the date hereof, Time
Warner Entertainment Company L.P. and Time Warner Entertainment/Advance
Newhouse Partnership.
(e) "Material Adverse Effect" means a material adverse effect on
the business, assets, financial condition or results of operations of the
Subsidiary or on the ability of Seller to consummate the transaction
contemplated herein or hereby; and
(f) "WTBS Distributors" means those persons and entities with
whom the Subsidiary has an affiliation agreement or other arrangement or
agreement for the distribution of WTBS.
25. 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 States of Colorado, Delaware
or New York or in Delaware or Colorado 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
non-exclusive personal jurisdiction of any Federal court located in the
States of Colorado, Delaware and New York or any Delaware or Colorado state
court in the event any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement, and (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.
<PAGE>
IN WITNESS WHEREOF, the Parties have caused this Agreement
to be duly executed and delivered as of the date first written above.
TIME WARNER INC.
By:
----------------------------
Name:
Title:
LIBERTY MEDIA CORPORATION
By:
----------------------------
Name:
Title:
With respect to the last sentence
of Section 12(a)(i) only:
TELE-COMMUNICATIONS, INC.
By:
----------------------------
Name:
Title:
With respect to Section 11(e),
Section 11(g) and Section 11(i)
only:
SATELLITE SERVICES, INC.
By:
----------------------------
Name
Title:
<PAGE>
Schedule 4(a)(iii)
Exceptions to "No Conflicts" Representations and Warranties
(to be attached at time of execution)
Buyer
Seller
<PAGE>
Exhibit 1 to
the Option Agreement
AGREEMENT AND PLAN OF MERGER, dated as
of --------------------, among TIME
WARNER INC., a Delaware corporation
("TW"), [TIME WARNER SUB], a -----------
corporation ("Sub"), LIBERTY MEDIA
CORPORATION, a Delaware corporation
("LMC"), and SOUTHERN SATELLITE SYSTEMS,
INC., a Georgia corporation
("Southern"), (collectively, the
"Parties").
The respective boards of directors of the Parties have duly
adopted and approved this Agreement, whereby, among other things, the
issued and outstanding shares of common stock, par value $1.00 per
share ("Southern Common Stock"), of Southern, will be converted into
shares of Series K Voting Participating Convertible Preferred Stock,
par value $1.00 per share (the "Voting Exchange Preferred Stock"), of
TW in accordance with Article II of this Agreement.
NOW, THEREFORE, in consideration of the mutual benefits, the
Parties agree as follows:
ARTICLE I
1.1 The Merger. In accordance with and subject to the
provisions of this Agreement, Southern shall be merged with and into
Sub which, at and after the Effective Time, shall be and is herein
sometimes referred to as the "Surviving Corporation". Southern and Sub
are herein sometimes collectively referred to as the "Constituent
Corporations".
1.2 Effective Time of the Merger. The merger of Southern
with and into Sub as provided herein (the "Merger") shall become
effective upon the filing by the Constituent Corporations with the
appropriate governmental entity or entities a Certificate or
Certificates of Merger, which shall be executed and delivered in the
manner provided under the appropriate laws of the jurisdictions of
incorporation of Southern and Sub. The date and time when the Merger
shall become effective as aforesaid is herein called the "Effective
Time".
<PAGE>
1.3 Effect of Merger.
(a) At the Effective Time, the separate existence of
Southern shall cease and Southern shall be merged with and into the
Surviving Corporation, and the Surviving Corporation shall possess all
of the properties, rights, privileges, power and franchises, subject
to all the restrictions, disabilities and duties, of each of the
Constituent Corporations.
(b) The Merger shall have the effects specified under
applicable law of the jurisdictions of incorporation of Southern and
Sub. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the properties, rights, privileges,
powers and franchises of the Constituent Corporations shall vest in
the Surviving Corporation, and all debts, liabilities and duties of
the Constituent Corporations shall become the debts, liabilities and
duties of the Surviving Corporation. If, at any time after the
Effective Time, the Surviving Corporation considers or is advised that
any deeds, bills of sale, assignments, assurances or any other actions
or things are necessary or desirable to vest, perfect or confirm of
record or otherwise in the Surviving Corporation its right, title or
interest in, to or under any of the rights, properties or assets of
either Sub or Southern, or otherwise to carry out the intent and
purposes of this Agreement, the officers and directors of the
Surviving Corporation will be authorized to execute and deliver, in
the name and on behalf of each of Sub and Southern, all such other
instruments and do such other actions and things, as may be necessary
or desirable to vest, perfect or confirm any and all right, title and
interest in, to and under such rights, properties or assets in the
Surviving Corporation or otherwise to carry out the intent and
purposes of this Agreement.
1.4 Certificate of Incorporation and By-Laws of Surviving
Corporation. At the Effective Time, (i) the certificate of
incorporation of Sub shall become the certificate of incorporation of
the Surviving Corporation until altered, amended or repealed as
provided by applicable law, (ii) the by-laws of Sub shall become the
by-laws of the Surviving Corporation until altered, amended or
repealed as provided by applicable law or in the certificate of
incorporation or by-laws of the Surviving Corporation, (iii) the
directors of Sub shall become the directors of the Surviving
Corporation and (iv) the officers of Sub shall become the officers of
the Surviving Corporation.
<PAGE>
1.5 Taking of Necessary Action. Prior to the Effective Time,
the Parties shall take, or cause to be taken (as the case may be), all
such reasonable actions as may be necessary or appropriate in order to
effectuate the Merger, as expeditiously as reasonably practicable.
1.6 Certain Definitions. As used herein, the following terms
have the corresponding meanings:
(a) "Current Market Price" means the average of the daily
closing prices of the TW Common Stock for the 20 trading day period
ending on the full trading day immediately prior to the Closing Date
(as defined in the Option Agreement) appropriately adjusted to take
into account any stock dividends, stock splits, reverse stock splits,
combinations and other changes in the TW Common Stock, including
without limitation any consolidation or merger affecting the TW Common
Stock, the ex-dividend date or effective date for which occurs during
(but after the first day of) such 20 trading day period. The closing
price for each trading day shall be the last reported sale price on
such day (or if no such reported sale takes place on such day, the
average of the reported closing bid and asked prices) of the TW Common
Stock (regular way) as shown on the Composite Tape of the New York
Stock Exchange ("NYSE"), or, if the TW Common Stock is not listed or
admitted to trading on the NYSE, on the principal United States
national securities exchange on which the TW Common Stock is listed or
admitted to trading or, if the TW Common Stock is not listed or
admitted to trading on any such exchange, then the last reported sale
price (or the average of the quoted closing bid and asked prices if no
sale is reported) of the TW Common Stock as reported by the Nasdaq
Stock Market ("Nasdaq") or any other quotation system of the National
Association of Securities Dealers, Inc. (the "NASD") or if the TW
Common Stock is not quoted on Nasdaq or any comparable system, the
average of the closing bid and asked prices as furnished by any member
of the NASD selected by LMC.
(b) "Merger Consideration" means that number of fully paid
and non-assessable shares of Voting Exchange Preferred Stock
(including any fraction of a share) equal to the number derived by
dividing (i) the quotient obtained by dividing $160,000,000 by the
Current Market Price, by (ii) the number of shares of TW Common Stock
into which one share of Voting Exchange Preferred Stock shall then be
convertible. Anything contained herein to the contrary
notwithstanding, in the event of any reclassification,
recapitalization, stock dividend, stock split, reverse stock split or
other change in the TW Common Stock, including without limitation any
consolidation or merger effecting
<PAGE>
the TW Common Stock, the record date of which (or, if no record date,
the effective date of which) occurs on or after the Option Exercise
Date and before the Effective Time, the Merger Consideration shall
also include such shares of stock or other consideration to which LMC
would have been entitled if LMC had been a holder, on the record date
(or effective date, as applicable) for such occurrence, of the shares
of Voting Exchange Preferred Stock constituting the Merger
Consideration, as calculated above.
(c) "Option" means the right and option of TW to acquire
Southern by merger pursuant to the Option Agreement and this
Agreement.
(d) "Option Agreement" means the Option Agreement among TW, LMC,
Satellite Services, Inc. and Tele-Communications, Inc.
(e) "Option Exercise Date" means the date on which TW shall have
given written notice to LMC exercising the option pursuant to Section 2(c)
of the Option Agreement.
(f) "TW Common Stock" means the common stock, par value $1.00 per
share, of TW.
1.7 Conditions to Merger. It shall be a condition to the
effectiveness of the Merger and to the obligations of the Parties hereunder
(a) that TW shall have exercised the Option and (b) that the conditions to
the obligations of TW and LMC, respectively, set forth in Sections 5, 6, 7,
8 and 9 of the Option Agreement be satisfied or, to the extent such
conditions may be waived, waived by the Party entitled to do so.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATION; EXCHANGE OF CERTIFICATES
2.1 Effect on Capital Stock. At the Effective Time, pursuant to
the terms and subject to the conditions of this Agreement, by virtue of the
Merger and without any action on the part of the Constituent Corporations
or the holders of the capital stock of the Constituent Corporations:
<PAGE>
(a) Capital Stock of Sub. The issued and outstanding shares
of the common stock, par value $1.00 per share, of Sub shall
continue to be outstanding and held of record by the record
holders thereof as of immediately prior to the Effective Time,
and as such shall constitute the issued and outstanding shares of
common stock, par value $1.00 per share, of the Surviving
Corporation.
(b) Southern Common Stock. Subject to Section 2.2, the
issued and outstanding shares of Southern Common Stock shall be
converted, in the aggregate, into the right to receive the Merger
Consideration.
2.2 Exchange of Certificates.
Promptly after the Effective Time, TW or its agent shall
deliver to LMC or, at the discretion of LMC, to a permitted designee
specified in Section 15 of the Option Agreement which has been
designated by LMC to receive the Merger Consideration (the "Designated
Holder") duly executed certificates, registered in the name of the
Designated Holder, representing in the aggregate that number of shares
of Voting Exchange Preferred Stock as shall constitute, in the
aggregate, the Merger Consideration, against receipt of a certificate
or certificates representing all the shares of Southern Common Stock
issued and outstanding at the Effective Time (together with duly
executed stock powers or other instruments of assignment reasonably
requested by TW).
2.3 [intentionally omitted]
2.4 Authorization of the Merger and this Agreement. By execution
and delivery of this Agreement, but subject to the exercise of the Option
by TW, TW, as the sole stockholder of Sub, and LMC, as the sole stockholder
of Southern, hereby authorize, approve and adopt this Agreement and the
Merger, and TW and LMC shall execute written consents to that effect
simultaneously with the execution and delivery of this Agreement.
ARTICLE III
TERMINATION
This Agreement shall be terminated, and the Merger abandoned,
notwithstanding the approval by the respective boards of directors and
stockholders of Southern and Sub of this
<PAGE>
Agreement and the Merger, in the event of and simultaneously with a
termination (at any time prior to the Effective Time) of the Option
Agreement in accordance with its terms.
ARTICLE IV
APPROVAL OF AGREEMENT; FILINGS
The respective boards of directors of the Constituent
Corporations have, by resolutions duly adopted, unanimously approved
and adopted this Agreement and the Merger, subject to the exercise of
the Option by TW. Upon satisfaction or waiver (by the Party so
entitled) of all conditions of the Merger contained in the Option
Agreement and herein, the Parties shall cause a certificate or
certificates of merger (and this Agreement, if required) to be
delivered to and filed with the appropriate governmental entity or
entities pursuant to applicable law and the Merger shall thereupon
become effective.
ARTICLE V
MISCELLANEOUS
5.1 Amendment. This Agreement may be amended by the Parties, by
action taken by the respective boards of directors of the Consistent
Corporations, at any time prior to the Effective Time. TW and LMC, as sole
stockholders of the Consistent Corporations, hereby consent to any such
amendment that by law requires the approval of the stockholders of either
or both of the Constituent Corporations. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the Parties.
5.2 Entire Agreement. This Agreement and the Option Agreement
(including the agreements referenced in the Option Agreement and all
schedules and exhibits hereto and thereto) contain the entire agreement
between the Parties with respect to the subject matter hereof and supersede
all prior arrangements and understandings, both written and oral, with
respect thereto.
5.3 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement,
and shall become
<PAGE>
effective when one or more counterparts have been signed by each of the
Parties and delivered to the other Parties, it being understood that both
Parties need not sign the same counterpart.
5.4 Benefits; Assignment. This Agreement is not intended to
confer upon any person other than the parties any rights or remedies
hereunder and shall not be assigned by operation of law or otherwise,
except to the extent otherwise provided in the Option Agreement.
5.5 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware and, to the
extent applicable, the corporate law of the State of Georgia.
<PAGE>
IN WITNESS WHEREOF, each of the Parties has caused this Agreement
to be executed on its behalf as of the day and year first above written.
TIME WARNER INC.
By:
Name:
Title:
[TIME WARNER SUB]
By:
Name:
Title:
LIBERTY MEDIA CORPORATION
By:
Name:
Title:
SOUTHERN SATELLITE SYSTEMS,
INC.
By:
Name:
Title:
<PAGE>
TABLE OF CONTENTS
ARTICLE I
1.1 The Merger................................................ 1
1.2 Effective Time of the Merger.............................. 1
1.3 Effect of Merger.......................................... 2
1.4 Certificate of Incorporation and By-Laws of Surviving
Corporation............................................... 2
1.5 Taking of Necessary Action................................ 3
1.6 Certain Definitions....................................... 3
(a) "Current Market Price".............................. 3
(b) "Merger Consideration".............................. 3
(c) "Option"............................................ 4
(d) "Option Agreement".................................. 4
(e) "Option Exercise Date".............................. 4
(f) "TW Common Stock"................................... 4
1.7 Conditions to Merger...................................... 4
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATION; EXCHANGE OF CERTIFICATES
2.1 Effect on Capital Stock................................... 4
(a) Capital Stock of Sub................................. 5
(b) Southern Common Stock................................ 5
2.2 Exchange of Certificates.................................. 5
2.3 [intentionally omitted]................................... 5
<PAGE>
2.4 Authorization of the Merger and this Agreement........... 5
ARTICLE III
TERMINATION
ARTICLE IV
APPROVAL OF AGREEMENT; FILINGS
ARTICLE V
MISCELLANEOUS
5.1 Amendment................................................ 6
5.2 Entire Agreement......................................... 6
5.3 Counterparts............................................. 6
5.4 Benefits; Assignment..................................... 7
5.5 Governing Law............................................ 7
<PAGE>
EXHIBIT F TO
LMC AGREEMENT
LMC REGISTRATION RIGHTS AGREEMENT, dated
as of [ ], among TIME WARNER INC., a
Delaware corporation (the "Company"), and the
Holders (as defined below).
WHEREAS, in connection with the Agreement and Plan of
Merger, dated as of September [ ], 1995 (the "Merger Agreement"),
among the Company, Time Warner Acquisition Corp., a Delaware
corporation, and Turner Broadcasting System, Inc., a Georgia
corporation <F1>, each initial Holder will receive shares of Common
Stock (as defined below); and
WHEREAS, in connection with the Merger Agreement, the Company,
Liberty Media Corporation and the other initial Holders have entered into
the LMC Agreement (as hereinafter defined); and
WHEREAS this is the Registration Rights Agreement provided for by
the LMC Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties
hereto, intending to be legally bound hereby, agree as follows:
SECTION 1. Definitions. As used in this Agreement, the following
terms shall have the following meanings:
"Advice" shall have the meaning set forth in Section 5 hereof.
"Affiliate" means, with respect to any specified person, any
other person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified person. For the
purposes of this definition, "control" when used with respect to any
specified person means the power to direct the management and policies of
such person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms "controlling"
and "controlled" have meanings correlative to the foregoing.
"Affiliated Holder" means any Holder that is an affiliate of the
Company within the meaning of Rule 144 under the Securities Act. For the
purposes of this definition, in determining whether or not any Holder is an
affiliate of the Company within the meaning of such Rule 144, any
limitation on the voting or other
<F1> If the transactions contemplated by the Elective Merger
Agreement are consummated, reference to the Elective Merger Agreement
will be substituted for this reference to the Merger Agreement.
<PAGE>
rights of such Holder with respect to Registrable Shares owned by such
Holder arising under the Voting Trust shall not be considered and
Registrable Shares issuable upon conversion of Exchange Preferred
Stock owned by such Holder shall be deemed to have been issued.
"Business Day" means any day that is not a Saturday, a Sunday or
a legal holiday on which banking institutions in the State of New York are
not required to be open.
"Capital Stock" means, with respect to any person, any and all
shares, interests, participations or other equivalents (however designated)
of corporate stock issued by such person, including each class of common
stock and preferred stock of such person.
"Common Stock" means the Common Stock, par value $1.00 per
share, of the Company (i) issued to any of the initial Holders
pursuant to the Merger Agreement, (ii) issuable upon conversion of any
Voting Exchange Preferred Stock referred to in clause (i) above may be
exchanged pursuant to the LMC Agreement, (iii) issuable upon
conversion of any Voting Exchange Preferred Stock issued pursuant to
the Option Agreement dated ----------, 199 , between the Company and
Liberty Media Corporation, (iv) issued to any Turner Stockholder (as
such term is defined in the First Refusal Agreement) and acquired by
any Holder pursuant to the First Refusal Agreement, or (v) issuable
upon conversion of any Exchange Preferred Stock for which any Common
Stock, Voting Exchange Preferred Stock of Non-Voting Exchange
Preferred Stock referred in clauses (i) through (iv) above may be
exchanged from time to time, and any other shares of capital stock or
other securities of the Company into which such shares of Common Stock
shall be reclassified or changed, including by reason of a merger,
consolidation, reorganization or recapitalization; provided, however,
that in the case of any Demand Registration pursuant to Section
2(a)(ii) hereof, "Common Stock" shall include all Common Stock, par
value $1.00 per share, of the Company, and any other shares of capital
stock or other securities of the Company into which such shares of
Common Stock shall be reclassified or changed, including by reason of
a merger, consolidation, reorganization or recapitalization, held at
the time of such Demand Registration by any Holder that is a Liberty
Party or issuable upon conversion of any Exchange Preferred Stock held
at the time of such Demand Registration by any Holder that is a
Liberty Party. If the Common Stock has been reclassified or changed,
or if the Company pays a dividend or makes a distribution on the
Common Stock in shares of capital stock, or subdivides (or combines)
its outstanding shares of Common Stock into a greater (or smaller)
number of shares of Common Stock, a share of Common Stock shall be
deemed to be such number of shares of stock and amount of other
securities to which a holder of a share of Common Stock outstanding
immediately prior to such change, reclassification, exchange,
dividend, distribution, subdivision or combination would be entitled.
"Company" shall have the meaning set forth in the introductory
clauses hereof.
"Delay Period" shall have the meaning set forth in Section 2(d)
hereof.
<PAGE>
"Demand Notice" shall have the meaning set forth in Section 2(a)
hereof.
"Demand Registration" shall have the meaning set forth in Section
2(b) hereof.
"Effectiveness Period" shall have the meaning set forth in
Section 2(d) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"Exchange Preferred Stock" shall mean the Non-Voting
Exchange Preferred stock and the Voting Exchange Preferred Stock.
"First Refusal Agreement" has the meaning set forth in the LMC
Agreement.
"Hold Back Period" shall have the meaning set forth in Section 4
hereof.
"Holder" means a person who owns Registrable Shares or
Exchange Preferred Stock that is convertible into Registrable Shares
and is either (i) named on the signature pages hereof as a Holder, or
(ii) a person who has agreed to be bound by the terms of this
Agreement as if such person were a Holder and is (A) a person to whom
a Holder has transferred Registrable Shares pursuant to Rule
"4(1-1/2)" (or any similar private transfer exemption), (B) upon the
death of any Holder, the executor of the estate of such Holder or any
of such Holder's heirs, devisees, legatees or assigns, (C) upon the
disability of any Holder, any guardian or conservator of such Holder
or (D) an Affiliate of a Holder to which a Holder has transferred any
Common Stock or Exchange Preferred Stock.
"Interruption Period" shall have the meaning set forth in Section
5 hereof.
"Liberty Party" has the meaning set forth in the LMC Agreement.
"LMC Agreement" means the Agreement dated as of September
22, 1995, among the Company, Liberty Media Corporation and certain
subsidiaries of Liberty Media Corporation.
"Merger Agreement" shall have the meaning set forth in the
introductory clauses hereof.
<PAGE>
"Non-Voting Exchange Preferred Stock" shall mean the Series
J Non-Voting Participating Convertible Preferred Stock of the Company.
"person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Piggyback Registration" shall have the meaning set forth in
Section 3 hereof.
"Prospectus" means the prospectus included in any Registration
Statement (including a prospectus that discloses information previously
omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Shares covered by such Registration Statement
and all other amendments and supplements to such prospectus, including
post-effective amendments, and all material incorporated by reference or
deemed to be incorporated by reference in such prospectus.
"Registrable Shares" means shares of Common Stock unless (i) they
have been effectively registered under Section 5 of the Securities Act and
disposed of pursuant to an effective Registration Statement, (ii) such
securities can be freely sold and transferred without restriction under
Rule 145 or any other restrictions under the Securities Act or (iii) such
securities have been transferred pursuant to Rule 144 under the Securities
Act or any successor rule such that, after any such transfer referred to in
this clause (iii), such securities may be freely transferred without
restriction under the Securities Act.
"Registration" means registration under the Securities Act of an
offering of Registrable Shares pursuant to a Demand Registration or a
Piggyback Registration.
"Registration Period" shall have the meaning set forth in Section
2(a) hereof.
"Registration Statement" means any registration statement under
the Securities Act of the Company that covers any of the Registrable Shares
pursuant to the provisions of this Agreement, including the related
Prospectus, all amendments and supplements to such registration statement,
including pre- and post-effective amendments, all exhibits thereto and all
material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
"SEC" means the Securities and Exchange Commission.
<PAGE>
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Shelf Registration" shall have the meaning set forth in Section
2(b) hereof.
"underwritten registration or underwritten offering" means a
registration under the Securities Act in which securities of the Company
are sold to an underwriter for reoffering to the public.
"Voting Exchange Preferred Stock" shall mean the Series K
Voting Participating Convertible Preferred Stock of the Company.
SECTION 2. Demand Registration. (a) (i) The Holders of not
less than a majority of the Registrable Shares then held by all
Holders shall have the right, during the period (the "Registration
Period") commencing on the date of this Agreement and ending as to
each Holder on the later of (x) the third anniversary of the date of
this Agreement and (y) if such Holder is an Affiliated Holder, the
date such Holder shall cease to be an Affiliated Holder, by written
notice (the "Demand Notice") given to the Company, to request the
Company to register under and in accordance with the provisions of the
Securities Act all or any portion of the Registrable Shares designated
by such Holders; provided, however, that the aggregate number of
Registrable Shares requested to be registered pursuant to any Demand
Notice and pursuant to any related Demand Notices received pursuant to
the following sentence shall be at least 4,000,000 or the remaining
Registrable Shares, if less. For purposes of this Agreement, a Holder
shall be deemed to hold as of any relevant date all Registrable Shares
issuable upon conversion of any Exchange Preferred Stock then held by
such Holder. Upon receipt of any such Demand Notice, the Company shall
promptly notify all other Holders of the receipt of such Demand Notice
and allow them the opportunity to include Registrable Shares held by
them in the proposed registration by submitting their own Demand
Notice. In connection with any Demand Registration in which more than
one Holder participates, in the event that such Demand Registration
involves an underwritten offering and the managing underwriter or
underwriters participating in such offering advise in writing the
Holders of Registrable Shares to be included in such offering that the
total number of Registrable Shares to be included in such offering
exceeds the amount that can be sold in (or during the time of) such
offering without delaying or jeopardizing the success of such offering
(including the price per share of the Registrable Shares to be sold),
then the amount of Registrable Shares to be offered for the account of
such Holders shall be reduced pro rata on the basis of the number of
Registrable Shares to be registered by each such Holder or on such
other basis as the Holders may agree. The Holders as a group shall be
entitled to three Demand Registrations pursuant to this Section
2(a)(i). Any Demand Registration that does not become effective or is
not maintained for the period (whether or not continuous) specified in
Section 2(c) (or such shorter period as shall terminate when all the
Registrable Shares covered by such Demand Registration have
<PAGE>
been sold pursuant thereto) shall not reduce the number of Demand
Registrations available to the Holders hereunder.
(ii) If, at any time during the Registration Period or
thereafter, a Prohibited Effect (as defined in the LMC Agreement) shall
occur which would give rise to an obligation of the Company to compensate
the Liberty Parties (as defined in the LMC Agreement) pursuant to Section
4.3 of the LMC Agreement, any Holders that are Liberty Parties shall be
immediately entitled to a Demand Registration, exercisable at any time that
such Prohibited Effect shall have occurred and be continuing, whether or
not a Demand Registration would then be available pursuant to clause (i) of
this Section 2(a).
(b) The Company, within 45 days of the date on which the Company
receives a Demand Notice given by Holders in accordance with Section 2(a)
hereof, shall file with the SEC, and the Company shall thereafter use its
best efforts to cause to be declared effective, a Registration Statement on
the appropriate form for the registration and sale, in accordance with the
intended method or methods of distribution, of the total number of
Registrable Shares specified by the Holders in such Demand Notice, which
may include a "shelf" registration (a "Shelf Registration") pursuant to
Rule 415 under the Securities Act (a "Demand Registration").
(c) The Company shall use commercially reasonable efforts to keep
each Registration Statement filed pursuant to this Section 2 continuously
effective and usable for the resale of the Registrable Shares covered
thereby (i)(A) in the case of a Registration that is not a Shelf
Registration, for a period of 120 days from the date on which the SEC
declares such Registration Statement effective and (B) in the case of a
Shelf Registration, for a period of two years from the date on which the
SEC declares such Registration Statement effective (or such shorter period
of time as shall be applicable to such Shelf Registration pursuant to the
next two sentences) or (ii) until all the Registrable Shares covered by
such Registration Statement have been sold pursuant to such Registration
Statement, if earlier, in either case, as such period may be extended
pursuant to this Section 2. Notwithstanding clause (i)(B) of the preceding
sentence, if the Company in good faith determines that the number of
Registrable Shares to be included in any Shelf Registration would have a
material adverse effect on the public market price of the Company's Common
Stock, par value $1.00 per share, the Company may, within 5 days after
receipt of the Demand Notice relating thereto, notify the Holders of such
determination, stating the basis for such determination. Upon receipt of
any such notice, the Holders and the Company will discuss in good faith the
basis for a mutually acceptable compromise, which may include (1) a
reduction in the period provided for in clause (i)(B) of this Section 2(c),
<PAGE>
(2) a reduction in the number of Registrable Shares included in
such Shelf Registration, or (3) a combination of the foregoing, as the
Company and Holders of a majority of the Registrable Shares shall agree;
provided, however, that if the Company and such Holders are unable to agree
on such a mutually acceptable compromise within 10 days after the Company
delivers such notice, the period provided for in clause (i)(B) shall be
reduced to 180 days; and provided further that there shall be no reduction
in the number of Registrable Shares included in such Shelf Registration
without the consent of the Holders of a majority of the Registrable Shares.
(d) The Company shall be entitled to postpone the filing of any
Registration Statement otherwise required to be prepared and filed by the
Company pursuant to this Section 2, or suspend the use of any effective
Registration Statement under this Section 2, for a reasonable period of
time, but not in excess of 90 days (a "Delay Period"), if any executive
officer of the Company determines that in such executive officer's
reasonable judgment and good faith the registration and distribution of the
Registrable Shares covered or to be covered by such Registration Statement
would materially interfere with any pending financing, acquisition or
corporate reorganization or other corporate development involving the
Company or any of its subsidiaries or would require premature disclosure
thereof and promptly gives the Holders written notice of such
determination, containing a general statement of the reasons for such
postponement and an approximation of the anticipated delay; provided,
however, that (i) the aggregate number of days included in all Delay
Periods and Hold Back Periods during any consecutive 12 months shall not
exceed 180 days and (ii) a period of at least 60 days shall elapse between
the termination of any Delay Period or Hold Back Period and the
commencement of the immediately succeeding Delay Period or Hold Back
Period. The Company shall promptly notify the Holders of the expiration of
any Delay Period. If the Company shall so postpone the filing of a
Registration Statement, the Holders of Registrable Shares to be registered
shall have the right to withdraw the request for registration by giving
written notice from the Holders of a majority of the Registrable Shares
that were to be registered to the Company within 45 days after receipt of
the notice of postponement or, if earlier, the termination of such Delay
Period (and, in the event of such withdrawal, such request shall not be
counted for purposes of determining the number of requests for registration
to which the Holders of Registrable Shares are entitled pursuant to this
Section 2). The time period for which the Company is required to maintain
the effectiveness of any Registration Statement shall be extended by the
aggregate number of days of all Delay Periods, all Hold Back Periods and
all Interruption Periods occurring during such Registration and such period
and any extension thereof is hereinafter referred to as the "Effectiveness
Period".
<PAGE>
(e) In the case of a proposed firm commitment underwritten
offering pursuant to a Demand Registration, the Company may include other
Company securities in the related Registration Statement, if of the same
type as the Registrable Shares covered by such Registration Statement, for
the account of other security holders, if any, who have piggyback
registration rights with respect thereto, on the same terms and conditions
as the Registrable Shares. The Company shall give the managing underwriter
or underwriters participating in such offering written notice of its intent
to include any such Company securities in such Registration within 10 days
of receipt of the initial Demand Notice applicable to such Registration.
Notwithstanding the foregoing, if the managing underwriter or underwriters
participating in such offering conclude that the total amount of the
Company securities proposed to be included in such Demand Registration
exceeds the amount which can be sold in (or during the time of) such
offering without delaying or jeopardizing the success of such offering
(including the price per share of the Registrable Shares to be sold), then
the amount of securities to be offered for the account of all holders other
than the Holders shall be reduced (to zero if necessary) to an amount
recommended by such managing underwriter or underwriters before any
reduction in the number of Registrable Shares proposed to be offered by the
Holders.
(f) Holders of a majority in number of the Registrable Shares to
be included in a Registration Statement pursuant to this Section 2 may, at
any time prior to the effective date of the Registration Statement relating
to such Registration, revoke such request by providing a written notice to
the Company revoking such request. The Holders of Registrable Shares who
revoke such request shall reimburse the Company for all its out-of-pocket
expenses incurred in the preparation, filing and processing of the
Registration Statement; provided, however, that, if such revocation was
based on the Company's failure to comply in any material respect with its
obligations hereunder or if such revocation results from a material adverse
change in the operating results, financial condition or business of the
Company of which the Holders were not aware at the time of delivery of a
Demand Notice pursuant to Section 2(a), such reimbursement shall not be
required.
SECTION 3. Piggyback Registration. (a) Right to Piggyback. If at
any time during the Registration Period the Company proposes to file a
registration statement under the Securities Act with respect to a public
offering of securities of the same type as the Registrable Shares pursuant
to a firm commitment underwritten offering solely for cash for its own
account (other than a registration statement (i) on Form S-8 or any
successor forms thereto, or (ii) filed solely in connection with a dividend
reinvestment plan or employee benefit plan covering officers or directors
of the Company or its Affiliates), then the Company shall give written
notice of such proposed filing to the Holders at least 15 days before the
anticipated filing date. Such
<PAGE>
notice shall offer the Holders the opportunity to register such amount
of Registrable Shares as they may request (a "Piggyback Registration").
Subject to Section 3(b) hereof, the Company shall include in each such
Piggyback Registration all Registrable Shares with respect to which
the Company has received written requests for inclusion therein within
10 days after notice has been given to the Holders. Each Holder shall
be permitted to withdraw all or any portion of the Registrable Shares
of such Holder from a Piggyback Registration at any time prior to the
effective date of such Piggyback Registration; provided, however, that if
such withdrawal occurs after the filing of the Registration Statement with
respect to such Piggyback Registration and the Company does not exercise
its right to abandon the Registration Statement under Section 3(c), the
withdrawing Holders shall reimburse the Company for the portion of the SEC
registration fee payable with respect to the Registrable Shares so
withdrawn and all other registration expenses allocable to such Registrable
Shares of the types described in clauses (i), (ii) and (vii) of Section 6
hereof.
(b) Priority on Piggyback Registrations. The Company shall permit
the Holders to include all such Registrable Shares on the same terms and
conditions as any similar securities, if any, of the Company included
therein. Notwithstanding the foregoing, if the Company or the managing
underwriter or underwriters participating in such offering advise the
Holders in writing that the total amount of securities requested to be
included in such Piggyback Registration exceeds the amount which can be
sold in (or during the time of) such offering without delaying or
jeopardizing the success of the offering (including the price per share of
the securities to be sold), then the amount of securities to be offered for
the account of the Holders and other holders of securities who have
piggyback registration rights with respect thereto shall be reduced (to
zero if necessary) pro rata on the basis of the number of common stock
equivalents requested to be registered by each such Holder or holder
participating in such offering.
(c) Right To Abandon. Nothing in this Section 3 shall create any
liability on the part of the Company to the Holders if the Company in its
sole discretion should decide not to file a registration statement proposed
to be filed pursuant to Section 3(a) hereof or to withdraw such
registration statement subsequent to its filing, regardless of any action
whatsoever that a Holder may have taken, whether as a result of the
issuance by the Company of any notice hereunder or otherwise.
SECTION 4. Holdback Agreement. If (i) during the Effective
Period, the Company shall file a registration statement (other than in
connection with the registration of securities issuable pursuant to an
employee stock option, stock purchase or similar plan or pursuant to a
merger, exchange offer or a transaction of
<PAGE>
the type specified in Rule 145(a) under the Securities Act) with
respect to an issuance by the Company of Common Stock or similar
securities or securities convertible into, or exchangeable or exercisable
for, such securities and (ii) with reasonable prior notice, the Company (in
the case of a non-underwritten public offering by the Company pursuant to
such registration statement) advises the Holders in writing that a public
sale or distribution of such Registrable Shares would materially adversely
affect such offering or the managing underwriter or underwriters (in the
case of an underwritten public offering by the Company pursuant to such
registration statement) advises the Company in writing (in which case the
Company shall notify the Holders) that a public sale or distribution of
Registrable Shares would materially adversely impact such offering, then
each Holder shall, to the extent not inconsistent with applicable law,
refrain from effecting any public sale or distribution of Registrable
Shares pursuant to any then effective Shelf Registration during the ten
days prior to, and during the 90-day period beginning on, the effective
date of such registration statement or such shorter period as may be
requested by such underwriters (each such period, a "Hold Back Period"),
and any public sale by a Holder of Registrable Shares during such Hold Back
Period shall be made in accordance with the volume limitations set forth in
Rule 144(e) under the Securities Act (determined without regard for Rule
144(k)). Notwithstanding the foregoing, a Holder shall not be obligated to
refrain from effecting an underwritten public offering of Registrable
Shares during a Hold Back period if, at least five Business Days prior to
receiving the notice from the Company contemplated by clause (ii) above,
the Holder shall have notified the Company of its current intention to
effect an underwritten public offering of Registrable Shares (with a view
to consummating such an offering within 45 days after the date of such
notice) pursuant to a then effective Shelf Registration during such
Hold Back Period.
SECTION 5. Registration Procedures. In connection with the
registration obligations of the Company pursuant to and in accordance with
Sections 2 and 3 hereof (and subject to Sections 2 and 3 hereof), the
Company shall use commercially reasonable efforts to effect such
registration to permit the sale of such Registrable Shares in accordance
with the intended method or methods of disposition thereof, and pursuant
thereto the Company shall as expeditiously as possible (but subject to
Sections 2 and 3 hereof):
(a) prepare and file with the SEC a Registration Statement for
the sale of the Registrable Shares on any form for which the Company
then qualifies and which counsel for the Company shall deem
appropriate in accordance with the intended method or methods of
distribution specified by the Holders thereof, and, subject to the
Company's right to terminate or abandon a Piggyback Registration
pursuant to Section 3(c) hereof, use commercially
<PAGE>
reasonable efforts to cause such Registration Statement to become
effective and remain effective as provided herein;
(b) prepare and file with the SEC such amendments (including
post-effective amendments) to such Registration Statement, and such
supplements to the related Prospectus, as may be required by the
rules, regulations or instructions applicable to such Registration
Statement under the Securities Act during the applicable period in
accordance with the intended methods of disposition specified by the
Holders of the Registrable Shares covered by such Registration
Statement, make generally available earnings statements satisfying the
provisions of Section 11(a) of the Securities Act (provided that the
Company shall be deemed to have complied with this clause if it has
complied with Rule 158 under the Securities Act), and cause the
related Prospectus as so supplemented to be filed pursuant to Rule 424
under the Securities Act; provided, however, that before filing a
Registration Statement or Prospectus, or any amendments or supplements
thereto (other than reports required to be filed by it under the
Exchange Act), the Company shall furnish to the Holders of Registrable
Shares covered by such Registration Statement and their counsel for
review and comment, copies of all documents required to be filed;
(c) notify the Holders of any Registrable Shares covered by such
Registration Statement promptly and (if requested) confirm such notice
in writing, (i) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to such
Registration Statement or any post-effective amendment, when the same
has become effective, (ii) of any request by the SEC for amendments or
supplements to such Registration Statement or the related Prospectus
or for additional information regarding such Holders, (iii) of the
issuance by the SEC of any stop order suspending the effectiveness of
such Registration Statement or the initiation of any proceedings for
that purpose, (iv) of the receipt by the Company of any notification
with respect to the suspension of the qualification or exemption from
qualification of any of the Registrable Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose, and (v) of the happening of any event that requires the
making of any changes in such Registration Statement, Prospectus or
documents incorporated or deemed to be incorporated therein by
reference so that they will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading:
(d) use commercially reasonable efforts to obtain the withdrawal
of any order suspending the effectiveness of such Registration
Statement, or the lifting
<PAGE>
of any suspension of the qualification or exemption from
qualification of any Registrable Shares for sale in any jurisdiction
in the United States;
(e) furnish to the Holder of any Registrable Shares covered by
such Registration Statement, each counsel for such Holders and each
managing underwriter, if any, without charge, one conformed copy of
such Registration Statement, as declared effective by the SEC, and of
each post-effective amendment thereto, in each case including
financial statements and schedules and all exhibits and reports
incorporated or deemed to be incorporated therein by reference; and
deliver, without charge, such number of copies of the preliminary
prospectus, any amended preliminary prospectus, each final Prospectus
and any post-effective amendment or supplement thereto, as such Holder
may reasonably request in order to facilitate the disposition of the
Registrable Shares of such Holder covered by such Registration
Statement in conformity with the requirements of the Securities Act;
(f) prior to any public offering of Registrable Shares covered by
such Registration Statement, use commercially reasonable efforts to
register or qualify such Registrable Shares for offer and sale under
the securities or Blue Sky laws of such jurisdictions as the Holders
of such Registrable Shares shall reasonably request in writing;
provided, however, that the Company shall in no event be required to
qualify generally to do business as a foreign corporation or as a
dealer in any jurisdiction where it is not at the time so qualified or
to execute or file a general consent to service of process in any such
jurisdiction where it has not theretofore done so or to take any
action that would subject it to general service of process or taxation
in any such jurisdiction where it is not then subject;
(g) upon the occurrence of any event contemplated by paragraph
5(c)(v) above, prepare a supplement or post-effective amendment to
such Registration Statement or the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference and
file any other required document so that, as thereafter delivered to
the purchasers of the Registrable Shares being sold thereunder
(including upon the termination of any Delay Period), such Prospectus
will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading;
(h) use commercially reasonable efforts to cause all Registrable
Shares covered by such Registration Statement to be listed on each
securities exchange
<PAGE>
or automated interdealer quotation system, if any, on which
similar securities issued by the Company are then listed or quoted;
(i) on or before the effective date of such Registration
Statement, provide the transfer agent of the Company for the
Registrable Shares with printed certificates for the Registrable
Shares covered by such Registration Statement, which are in a form
eligible for deposit with The Depository Trust Company;
(j) if such offering is an underwritten offering, make available
for inspection by any Holder of Registrable Shares included in such
Registration Statement, any underwriter participating in any offering
pursuant to such Registration Statement, and any attorney, accountant
or other agent retained by any such Holder or underwriter
(collectively, the "Inspectors"), all financial and other records and
other information, pertinent corporate documents and properties of any
of the Company and its subsidiaries and affiliates (collectively, the
"Records"), as shall be reasonably necessary to enable them to
exercise their due diligence responsibilities; provided, however, that
the Records that the Company determines, in good faith, to be
confidential and which it notifies the Inspectors in writing are
confidential shall not be disclosed to any Inspector unless such
Inspector signs a confidentiality agreement reasonably satisfactory to
the Company (which shall permit the disclosure of such Records in such
Registration Statement or the related Prospectus if necessary to avoid
or correct a material misstatement in or material omission from such
Registration Statement or Prospectus) or either (i) the disclosure of
such Records is necessary to avoid or correct a misstatement or
omission in such Registration Statement or (ii) the release of such
Records is ordered pursuant to a subpoena or other order from a court
of competent jurisdiction; provided further, however, that (A) any
decision regarding the disclosure of information pursuant to subclause
(i) shall be made only after consultation with counsel for the
applicable Inspectors and the Company and (B) with respect to any
release of Records pursuant to subclause (ii), each Holder of
Registrable Shares agrees that it shall, promptly after learning that
disclosure of such Records is sought in a court having jurisdiction,
give notice to the Company so that the Company, at the Company's
expense, may undertake appropriate action to prevent disclosure of
such Records; and
(k) if such offering is an underwritten offering, enter into such
agreements (including an underwriting agreement in form, scope and
substance as is customary in underwritten offerings) and take all such
other appropriate
<PAGE>
and reasonable actions requested by the Holders of a majority of
the Registrable Shares being sold in connection therewith (including
those reasonably requested by the managing underwriters) in order to
expedite or facilitate the disposition of such Registrable Shares, and
in such connection, (i) use commercially reasonable efforts to obtain
opinions of counsel to the Company and updates thereof (which counsel
and opinions (in form, scope and substance) shall be reasonably
satisfactory to the managing underwriters and counsel to the Holders
of the Registrable Shares being sold), addressed to each selling
Holder of Registrable Shares covered by such Registration Statement
and each of the underwriters as to the matters customarily covered in
opinions requested in underwritten offerings and such other matters as
may be reasonably requested by such counsel and underwriters, (ii) use
commercially reasonable efforts to obtain "cold comfort" letters and
updates thereof from the independent certified public accountants of
the Company (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any business
acquired by the Company for which financial statements and financial
data are, or are required to be, included in the Registration
Statement), addressed to each selling Holder of Registrable Shares
covered by the Registration Statement (unless such accountants shall
be prohibited from so addressing such letters by applicable standards
of the accounting profession in which case such letters shall be
addressed to the extent permissible in a manner permitting such Holder
to rely thereon) and each of the underwriters, such letters to be in
customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with underwritten offerings,
(iii) if requested and if an underwriting agreement is entered into,
provide indemnification provisions and procedures substantially to the
effect set forth in Section 8 hereof with respect to all parties to be
indemnified pursuant to said Section. The above shall be done at each
closing under such underwriting or similar agreement, or as and to the
extent required thereunder.
The Company may request in writing each Holder of Registrable
Shares covered by a Registration Statement to furnish such information
regarding such Holder and such Holder's intended method of disposition of
such Registrable Shares as is required by the form of such Registration
Statement, applicable law or the SEC. If any such information is not
furnished within a reasonable period of time after receipt of such request,
the Company may exclude such Holder's Registrable Shares from such
Registration Statement.
Each Holder of Registrable Shares covered by a Registration
Statement agrees that, upon receipt of any notice from the Company of the
happening of any
<PAGE>
event of the kind described in Section 5(c)(ii), 5(c)(iii), 5(c)(iv) or
5(c)(v) hereof, that such Holder shall forthwith discontinue
disposition of any Registrable Shares covered by such Registration
Statement or the related Prospectus until receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 5(g) hereof, or
until such Holder is advised in writing (the "Advice") by the Company that
the use of the applicable Prospectus may be resumed, and has received
copies of any amended or supplemented Prospectus or any additional or
supplemental filings which are incorporated, or deemed to be incorporated,
by reference in such Prospectus (such period during which disposition is
discontinued being an "Interruption Period") and, if requested by the
Company, the Holder shall deliver to the Company (at the expense of the
Company) all copies then in its possession, other than permanent file
copies then in such holder's possession, of the Prospectus covering such
Registrable Shares at the time of receipt of such request.
Each Holder of Registrable Shares covered by a Registration
Statement further agrees not to utilize any material other than the
applicable current preliminary prospectus or Prospectus in connection with
the offering of such Registrable Shares.
SECTION 6. Registration Expenses. Whether or not any Registration
Statement is filed or becomes effective, the Company shall pay all costs,
fees and expenses incident to the Company's performance of or compliance
with this Agreement, including (i) all registration and filing fees,
including NASD filing fees and any applicable stock exchange or interdealer
quotation system listing fees, (ii) all fees and expenses of compliance
with securities or Blue Sky laws, including reasonable fees and
disbursements of counsel in connection therewith, (iii) printing and
photocopying expenses (including expenses of printing certificates for
Registrable Shares and of printing prospectuses if the printing of
prospectuses is requested by the Holders or the managing underwriter, if
any), (iv) messenger, telephone and delivery expenses, (v) fees and
disbursements of counsel for the Company, (vi) fees and disbursements of
all independent certified public accountants of the Company (including
expenses of any "cold comfort" letters required in connection with this
Agreement) and all other persons retained by the Company in connection with
such Registration Statement, (vii) fees and disbursements of one counsel,
other than the Company's counsel, selected by Holders of a majority of the
Registrable Shares being registered, to represent all such Holders, (viii)
fees and disbursements of underwriters customarily paid by the issuers or
sellers of securities and (ix) all other costs, fees and expenses incident
to the Company's performance or compliance with this Agreement.
Notwithstanding the foregoing, the fees and expenses of any persons
retained by any Holder, other than one counsel for all such Holders, and
any discounts, commissions or brokers' fees or fees of similar securities
industry professionals and any transfer taxes relating to the disposition
of the Registrable
<PAGE>
Shares by a Holder, will be payable by such Holder and the Company will
have no obligation to pay any such amounts.
SECTION 7. Underwriting Requirements. (a) Subject to Section 7(b)
hereof, any Holder shall have the right, by written notice, to request that
any Demand Registration provide for an underwritten offering.
(b) In the case of any underwritten offering pursuant to a Demand
Registration, the Holders of a majority of the Registrable Shares to be
disposed of in connection therewith shall select the institution or
institutions that shall manage or lead such offering, which institution or
institutions shall be reasonably satisfactory to the Company. In the case
of any underwritten offering pursuant to a Piggyback Registration, the
Company shall select the institution or institutions that shall manage or
lead such offering. No Holder shall be entitled to participate in an
underwritten offering unless and until such Holder has entered into an
underwriting or other agreement with such institution or institutions for
such offering in such form as the Company, the Holders of a majority of the
Registrable Shares included in any Demand Registration and such institution
or institutions shall mutually determine.
SECTION 8. Indemnification. (a) Indemnification by the Company.
The Company shall, without limitation as to time, indemnify and hold
harmless, to the full extent permitted by law, each Holder of Registrable
Shares whose Registrable Shares are covered by a Registration Statement or
Prospectus, the officers, directors and agents and employees of each of
them, each Person who controls each such Holder (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) and the
officers, directors, agents and employees of each such controlling person,
to the fullest extent lawful, from and against any and all losses, claims,
damages, liabilities, judgment, costs (including, without limitation, costs
of preparation and reasonable attorneys' fees) and expenses (collectively,
"Losses"), as incurred, arising out of or based upon any untrue or alleged
untrue statement of a material fact contained in such Registration
Statement or Prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or based upon any omission or
alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as
the same are based upon information furnished in writing to the Company by
or on behalf of such Holder expressly for use therein; provided, however,
that the Company shall not be liable to any such Holder to the extent that
any such Losses arise out of or are based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any
preliminary prospectus if (i) having previously been furnished by or on
behalf of the Company with copies of the Prospectus, such Holder failed to
send or deliver a copy of the Prospectus with or
<PAGE>
prior to the delivery of written confirmation of the sale of Registrable
Shares by such Holder to the person asserting the claim from which such
Losses arise and (ii) the Prospectus would have corrected in all material
respects such untrue statement or alleged untrue statement or such
omission or alleged omission; and provided further, however, that the
Company shall not be liable in any such case to the extent that any such
Losses arise out of or are based upon an untrue statement or alleged untrue
statement or omission or alleged omission in the Prospectus, if (x) such
untrue statement or alleged untrue statement, omission or alleged omission
is corrected in all material respects in an amendment or supplement to the
Prospectus and (y) having previously been furnished by or on behalf of the
Company with copies of the Prospectus as so amended or supplemented, such
Holder thereafter fails to deliver such Prospectus as so amended or
supplemented, prior to or concurrently with the sale of Registrable Shares.
(b) Indemnification by Holder of Registrable Shares. In
connection with any Registration Statement in which a Holder is
participating, such Holder shall furnish to the Company in writing such
information as the Company reasonably requests for use in connection with
such Registration Statement or the related Prospectus and agrees to
indemnify, to the full extent permitted by law, the Company, its directors,
officers, agents or employees, each Person who controls the Company (within
the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act) and the directors, officers, agents or employees of such
controlling Persons, from and against all Losses arising out of or based
upon any untrue or alleged untrue statement of a material fact contained in
such Registration Statement or the related Prospectus or any amendment or
supplement thereto, or any preliminary prospectus, or arising out of or
based upon any omission or alleged omission of a material fact required to
be stated therein or necessary to make the statements therein not
misleading, to the extent, but only to the extent, that such untrue or
alleged untrue statement or omission or alleged omission is based upon any
information so furnished in writing by or on behalf of such Holder to the
Company expressly for use in such Registration Statement or Prospectus;
provided, however, that such Holder shall not be liable in any such case
(i) to the extent that such untrue statement or alleged untrue statement or
omission or alleged omission was made in any Prospectus used by any person
(other than such Holder or an Affiliate of such Holder) after such time as
such Holder advised the Company of the need for a correction thereof or
(ii) in an amount that exceeds the net proceeds received by such Holder
from the sale of Registrable Shares pursuant to such Registration
Statement.
(c) Conduct of Indemnification Proceedings. If any Person shall
be entitled to indemnity hereunder (an "indemnified party"), such
indemnified party shall give prompt notice to the party from which such
indemnity is sought (the
<PAGE>
"indemnifying party") of any claim or of the commencement of any
proceeding with respect to which such indemnified party seeks
indemnification or contribution pursuant hereto; provided, however, that
the delay or failure to so notify the indemnifying party shall not relieve
the indemnifying party from any obligation or liability except to the
extent that the indemnifying party has been prejudiced by such delay or
failure. The indemnifying party shall have the right, exercisable by giving
written notice to an indemnified party promptly after the receipt of
written notice from such indemnified party of such claim or proceeding, to
assume, at the indemnifying party's expense, the defense of any such claim
or proceeding, with counsel reasonably satisfactory to such indemnified
party; provided, however, that (i) an indemnified party shall have the
right to employ separate counsel in any such claim or proceeding and to
participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless: (1) the
indemnifying party agrees to pay such fees and expenses; (2) the
indemnifying party fails promptly to assume the defense of such claim or
proceeding or fails to employ counsel reasonably satisfactory to such
indemnified party; or (3) the named parties to any proceeding (including
impleaded parties) include both such indemnified party and the indemnifying
party, and such indemnified party shall have been advised by counsel that
there may be one or more legal defenses available to it that are
inconsistent with those available to the indemnifying party or that a
conflict of interest is likely to exist among such indemnified party and
any other indemnified parties (in which case the indemnifying party shall
not have the right to assume the defense of such action on behalf of such
indemnified party); and (ii) subject to clause (3) above, the indemnifying
party shall not, in connection with any one such claim or proceeding or
separate but substantially similar or related claims or proceedings in the
same jurisdiction, arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one firm of
attorneys (together with appropriate local counsel) at any time for all of
the indemnified parties, or for fees and expenses that are not reasonable.
Whether or not such defense is assumed by the indemnifying party, such
indemnified party shall not be subject to any liability for any settlement
made without its consent. The indemnifying party shall not consent to entry
of any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release, in form and substance reasonably
satisfactory to the indemnified party, from all liability in respect of
such claim or litigation for which such indemnified party would be entitled
to indemnification hereunder.
(d) Contribution. If the indemnification provided for in this
Section 8 is unavailable to an indemnified party in respect of any Losses
(other than in accordance with its terms), then each applicable
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable
<PAGE>
by such indemnified party as a result of such Losses, in such proportion
as is appropriate to reflect the relative fault of the indemnifying
party, on the one hand, and such indemnified party, on the other hand,
in connection with the actions, statements or omissions that resulted
in such Losses as well as any other relevant equitable considerations.
The relative fault of such indemnifying party, on the one hand, and
indemnified party, on the other hand, shall be determined by reference
to, among other things, whether any action in question, including
any untrue statement of a material fact or omission or alleged omission to
state a material fact, has been taken by, or relates to information
supplied by, such indemnifying party or indemnified party, and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent any such action, statement or omission. The amount paid
or payable by a party as a result of any Losses shall be deemed to include
any legal or other fees or expenses incurred by such party in connection
with any investigation or proceeding. The parties hereto agree that it
would not be just and equitable if contribution pursuant to this Section
8(d) were determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable considerations
referred to in this Section 8(d). Notwithstanding the provision of this
Section 8(d), an indemnifying party that is a Holder shall not be required
to contribute any amount which is in excess of the amount by which the
total proceeds received by such Holder from the sale of the Registrable
Shares sold by such Holder (net of all underwriting discounts and
commissions) exceeds the amount of any damages that such indemnifying party
has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
SECTION 9. Miscellaneous. (a) Termination. This Agreement and the
obligations of the Company and the Holders hereunder (other than Section 8
hereof) shall terminate on the first date on which no Registrable Shares
remain outstanding.
(b) Notices. All notices or communications hereunder shall be in
writing (including telecopy or similar writing), addressed as follows:
To the Company:
[ ]
<PAGE>
With a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Attention: Peter S. Wilson, Esq.
Telecopier no.: (212) 474-3700
To the Holder[s]:
[ ]
With a copy to:
Baker & Botts, L.L.P.
885 Third Avenue
19th Floor
New York, New York 10022
Attention: Elizabeth Markowski, Esq.
Telecopier no.: (212) 705-5032
Any such notice or communication shall be deemed given (i)
when made, if made by hand delivery, (ii) upon transmission, if sent
by confirmed telecopier, (iii) one business day after being deposited
with a next-day courier, postage prepaid, or (iv) three business days
after being sent certified or registered mail, return receipt
requested, postage prepaid, in each case addressed as above (or to
such other address or to such other telecopier number as such party
may designate in writing from time to time).
(c) Separability. If any provision of this Agreement shall
be declared to be invalid or unenforceable, in whole or in part,
such invalidity or unenforceability shall not affect the remaining
provisions hereof which shall remain in full force and effect.
(d) Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
devisees, legatees, legal representatives, successors and assigns.
<PAGE>
(e) Entire Agreement. This Agreement, the Merger Agreement,
the LMC Agreement and the agreements referred to herein and
therein together represent the entire agreement of the parties
with respect to the subject matter hereof and supersede any and
all prior contracts, arrangements or understandings between the
parties hereto with respect to such subject matter.
(f) Amendments and Waivers. Except as otherwise provided
herein, the provisions of this Agreement may not be amended, modified
or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Company has obtained
the written consent of Holders of at least a majority in number of the
Registrable Shares then outstanding.
(g) Publicity. No public release or announcement concerning
the transactions contemplated hereby shall be issued by any party
without the prior consent of the other parties, except to the extent
that such party is advised by counsel that such release or announcement
is necessary or advisable under applicable law or the rules or
regulations of any securities exchange, in which case the party
required to make the release or announcement shall to the extent
practicable provide the other party with an opportunity to review and
comment on such release or announcement in advance of its issuance.
(h) Expenses. Whether or not the transactions contemplated
hereby are consummated, except as otherwise provided herein, all costs
and expenses incurred in connection with the execution of this Agreement
shall be paid by the party incurring such costs or expenses, except as
otherwise set forth herein.
(i) Interpretation. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
(j) Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be one and the same agreement,
and shall become effective when counterparts have been signed by
each of the parties and delivered to each other party.
(k) Governing Law. This Agreement shall be construed,
interpreted, and governed in accordance with the internal laws of New
York.
(l) Calculation of Time Periods. Except as otherwise indicated,
all periods of time referred to herein shall include all Saturdays,
Sundays and holidays; provided, however, that if the date to perform
the act or give any notice with respect
<PAGE>
to this Agreement shall fall on a day other than a Business Day,
such act or notice may be timely performed or given if performed or
given on the next succeeding Business Day.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first written above.
TIME WARNER INC.
By: ------------------------
Name:
Title:
LIBERTY MEDIA CORPORATION
By: ------------------------
Name:
Title:
<PAGE>
EXHIBIT G TO
LMC AGREEMENT
RIGHTS PLAN AMENDMENTS
"Acquiring Person" shall mean, as of any time, any
Person who or which, alone or together with all Affiliates and
Associates of such Person, shall be the Beneficial Owner of more
than 15% of the Common Shares outstanding as of such time, other
than (a) the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any of its Subsidiaries, or any
Person holding Common Shares for or pursuant to the terms of any
such employee benefit plan, or (b) any Person who or which, alone
or together with one or more of its Affiliates or Associates,
becomes or became the Beneficial Owner of more than 15% of the
Common Shares outstanding as of such time pursuant to a
Qualifying Offer. Notwithstanding the foregoing, the term
"Acquiring Person" shall not include any Person who or which as
of any time becomes the Beneficial Owner of more than 15% of the
Common Shares outstanding as of such time (i) solely as the
result of a change in the number of Common Shares outstanding
since the most recent preceding date on which such Person
acquired Beneficial Ownership of any Common Shares or (ii) solely
as the result of the acquisition by such Person or one or more of
its Affiliates or Associates of Beneficial Ownership of
additional Common Shares if such acquisition was made in the good
faith belief that such acquisition would not cause either the
number of Common Shares beneficially owned by such Person,
together with its Affiliates and Associates, to exceed 15% of the
Common Shares outstanding at the time of such acquisition or
otherwise cause a Distribution Date or the adjustment provided in
Section 11(a) to occur and such good faith belief was based on
the good faith reliance on information contained in publicly
filed reports or documents of the Company which were inaccurate
or out-of-date or (iii) solely as the result of the acquisition
of beneficial ownership of any Common Shares by any of such
Person's Affiliates or Associates who or which are not Controlled
Related Parties of such Person or (iv) solely as the result of
any transaction or event pursuant to which any Person who or
which beneficially owns any Common Shares and was not previously
an Affiliate or Associate of such Person becomes an Affiliate or
Associate of such Person or (v) solely as the result of the
acquisition by such Person or one or more of its Affiliates or
Associates of Beneficial Ownership of additional Common Shares if
such acquisition was made in the good faith belief that such
acquisition would not cause the number of Common Shares
beneficially owned by such Person, together with its Affiliates
and Associates, to exceed 15% of the Common Shares outstanding at
the time of such acquisition or otherwise cause a Distribution
Date or the adjustment provided in Section 11(a) to occur and
such good faith belief was based on the good faith reliance on
inaccurate or out-of-date information concerning the number of
Common Shares beneficially owned by any Affiliates or Associates
of such Person who or which are not Controlled Related Parties of
such Person; provided, however, that in the case of any of
clauses (i) through (v), the percentage of the Common Shares
outstanding represented by the number of Common Shares
beneficially owned by such Person is reduced to 15% or less
within the applicable cure period. For purposes of the
immediately preceding sentence, the "applicable cure period"
shall be the period commencing on (and including) the date that
such Person becomes aware that the number of Common Shares
beneficially owned by such Person exceeds 15% of the Common
Shares outstanding (except that if such Person has separately
agreed in writing with the Company to notify the Company once
such Person becomes aware of such fact,
<PAGE>
the cure period shall commence on (and include) the date of
receipt by such Person of written notice from the Company that
the number of Common Shares beneficially owned by such Person
exceeds, as of the date such notice is given, 15% of the Common
Shares outstanding as of such date) and ending upon the Close of
Business on (i) the fifth Business Day after such date in the
case of any Person described in clause (i) or (ii) of the
immediately preceding sentence or (ii) the tenth Business Day
after such date in the case of any Person described in clause
(iii), (iv) or (v) of the immediately preceding sentence;
provided, however, that if such reduction would require the
disposition by such Person or any of its Affiliates or Associates
of any Common Shares and such Person notifies the Company in
writing that, in such Person's good faith belief, such
disposition within such period could not reasonably be
accomplished without violation of applicable law or could
reasonably be accomplished only for consideration or on terms
materially disadvantageous as compared to the consideration or
terms on which such disposition could be accomplished during some
longer period of time, then such period shall be extended for
such time as the directors of the Company whose approval would be
required to redeem the Rights under Section 24 shall reasonably
deem to be required in order to prevent such violation of
applicable law or shall reasonably deem to be sufficient to
minimize such disadvantageous effect (as the case may be),
subject to the condition that such Person shall during the cure
period, as extended (or until such earlier time at which such
Person, together with its Affiliates and Associates, otherwise
ceases to beneficially own more than 15% of the outstanding
Common Shares), diligently and in good faith proceed to effect
the required disposition as expeditiously as reasonably
practicable and comply with any arrangements regarding the voting
of a number of Common Shares beneficially owned by such Person,
together with its Affiliates and Associates, equal to the number
so required to be disposed of pending completion of such
disposition as such directors of the Company shall request
(including arrangements not to vote such number of Common Shares
or only to vote such number of Common Shares in a manner approved
by such directors of the Company). For purposes of this
definition, the determination of whether any Person (other than a
director of the Company, in his or her capacity as a director of
the Company) acted in "good faith" shall be conclusively
determined in good faith by those directors of the Company whose
approval would be required to redeem the Rights under Section 24.
A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own", and shall be deemed to
have "Beneficial Ownership" of, any securities:
(i) which such Person or any of such Person's
Affiliates or Associates is deemed to 'beneficially own'
within the meaning of Rule 13d-3 of the General Rules and
Regulations under the Exchange Act, as in effect on the date
of this Rights Agreement;
(ii) which such Person or any of such Person's
Affiliates or Associates has: (A) the right to acquire
(whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement
or understanding (written or oral), or upon the exercise of
conversion rights, exchange rights, rights (other than the
Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed under this clause
(A) to be the Beneficial Owner of, or to beneficially own,
or to have Beneficial Ownership of, any securities tendered
pursuant to a tender or exchange offer made by or on behalf
of such Person or any of such Person's Affiliates
<PAGE>
or Associates until such tendered securities are accepted
for purchase or exchange thereunder; or (B) the right to
vote pursuant to any agreement, arrangement or understanding
(written or oral); provided, however, that a Person shall
not be deemed under this clause (B) to be the Beneficial
Owner of, or to beneficially own, any security if (1) the
agreement, arrangement or understanding (written or oral) to
vote such security arises solely from a revocable proxy or
consent given to such Person in response to a public proxy
or consent solicitation made pursuant to, and in accordance
with, the applicable rules and regulations under the
Exchange Act and (2) the beneficial ownership of such
security is not also then reportable on Schedule 13D under
the Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or
any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding (written or oral)
for the purpose of acquiring, holding, voting or disposing
of any Common Shares, any other securities of the Company
generally entitled to vote together with the Common Shares
or any rights, warrants, options or other securities
exercisable or exchangeable for, or convertible into, Common
Shares or other securities of the Company generally entitled
to vote together with the Common Shares.
A Person shall also be deemed to be the "Beneficial
Owner" of, and to "beneficially own", and to have "Beneficial
Ownership" of, Common Shares of the Company if such Person is the
Beneficial Owner of, or beneficially owns, or has Beneficial
Ownership of (as the case may be), any other securities of the
Company (whether or not convertible into or exchangeable for
Common Shares) generally entitled to vote together with the
Common Shares. If the preceding sentence is applicable in any
case, such Person shall be deemed by virtue of Beneficial
Ownership of such other securities to be the "Beneficial Owner"
of, and to "beneficially own", and to have "Beneficial Ownership"
of, that number of Common Shares of the Company equal to the
greater of (x) the number of votes entitled to be cast in respect
of such other securities upon any matter being voted upon by the
holders of Common Shares and the holders of such other
securities, voting together as a single class, and (y) if
applicable, the number of Common Shares of the Company issuable
upon conversion in full into, or exchange in full for, Common
Shares of the Company of such other securities.
In the event any Common Shares are subject to a voting
trust approved by the directors of the Company whose approval
would be required to redeem the Rights under Section 24, than (x)
the trustee or trustees under such voting trust shall be deemed
not to be the "Beneficial Owner" of any such Common Shares and
(y) each beneficiary of such voting trust shall be deemed to be
the "Beneficial Owner" of all such Common Shares.
<PAGE>
Notwithstanding the foregoing, (a) no Person ordinarily engaged
in business as an underwriter of securities shall be deemed to be
the "Beneficial Owner" of, to "beneficially own", or to have any
"Beneficial Ownership" of, any securities acquired in a bona fide
firm commitment underwriting pursuant to an underwriting
agreement with the Company; and (b) no Person shall be deemed to
be the "Beneficial Owner" of, to "beneficially own", or to have
any "Beneficial Ownership" of, any securities by reason of such
Person or any of such Person's Affiliates or Associates having
the right to acquire (whether such right is exercisable
immediately or only after the passage of time) such securities
pursuant to a right of first refusal, right of first offer or
similar agreement, arrangement or understanding (written or oral)
granted by another Person (the "subject Person") (I) that does
not provide any direct or indirect limitations or restrictions on
the ability of the subject Person to exercise (or refrain from
exercising) any voting rights associated with such securities or
contain any other agreement, arrangement or understanding with
respect to such voting rights, (II) that does not contain any
incentive for the subject Person to support or oppose any
particular Business Combination or otherwise to exercise (or
refrain from exercising) any voting rights associated with such
securities in a manner advantageous to such Person or any of such
Person's Affiliates or Associates and (III) prior written notice
of which shall have been given to the Company.
"Common Shares outstanding" or "outstanding Common
Shares" when used in this Section 1 in the definition of
"Acquiring Person" and when used in Section 3(b), with respect to
any Person who is, as of any time, the Beneficial Owner of,
beneficially owns, or has Beneficial Ownership of, any specified
percentage of "Common Shares outstanding" or "outstanding Common
Shares", shall mean the sum of (i) all Common Shares and any
other securities generally entitled to vote together with the
Common Shares (in the case of such other securities, counted as a
number of Common Shares equal to the greater of (x) the number of
votes entitled to be cast in respect of such other securities
upon any matter being voted upon by the holders of Common Shares
and the holders of such other voting securities, voting together
as a single class and (y), if applicable, the number of Common
Shares issuable upon conversion in full into, or exchangeable in
full for, Common Shares of such other securities) actually issued
as of such time, except Common Shares or such other securities,
if any, then owned by the Company or any Subsidiary of the
Company which, under the laws of the
<PAGE>
jurisdiction of incorporation of the Company, could not then be
voted at a meeting of the holders of Common Shares called for the
purpose of electing directors of the Company plus (ii) the
maximum aggregate number of Common Shares and such other
securities which would be issued upon the exercise in full of all
then outstanding options, warrants and rights, however
denominated (but in each case only if issued by the Company or
any of its Subsidiaries, and excluding the Rights and excluding
any securities included in clause (i) of this calculation), to
subscribe for, purchase or otherwise acquire any Common Shares or
such other securities, and the conversion into, or exchange for,
Common Shares or such other securities in full of all then
outstanding securities of the Company or any of its Subsidiaries
that are convertible into or exchangeable for Common Shares or
such other securities (excluding any securities included in
clause (i) of this calculation), in each case with or without
payment of additional consideration in cash or property, whether
or not such options, warrants, rights or securities are then
exercisable, convertible or exchangeable, as the case may be,
regardless of whether or not any of such Common Shares or such
other securities would be deemed to be outstanding under
generally accepted accounting principles for purposes of
determining book value or net income per share and regardless of
whether or not any of such Common Shares or such other securities
would be deemed to be outstanding under paragraph (d)(1)(i) of
Rule 13d-3 of the General Rules and Regulations under the
Exchange Act (either as in effect on the date of this Rights
Agreement or as subsequently amended) or under any other rule,
regulation or statute for the purpose of computing the percentage
of Common Shares outstanding owned by any particular Person as of
any time or for any other purpose.
"Controlled Related Party" means, when used with
respect to any specified Person, each Affiliate or Associate of
such Person if such Person possesses, directly or indirectly, by
or through stock ownership, agency or otherwise, or pursuant to
or in connection with an agreement, arrangement or understanding
(written or oral) with one or more other persons, the power to
direct decisions regarding the acquisition, disposition or voting
by such Affiliate or Associate of Common Shares or rights to
acquire or vote Common Shares.
<PAGE>
Exhibit J to
LMC Agreement
VOTING TRUST AGREEMENT
THIS VOTING TRUST AGREEMENT (the "Trust Agreement") is entered
into as of ----------------- by and among TCI Turner Preferred, Inc.
("TCITP"), United Cable Turner Investment, Inc. ("UCT"), Communication
Capital Corp. ("CCC", and together with TCITP and UCT; the "Liberty
Subsidiaries"), and Gerald M. Levin (the "Trustee").
WHEREAS, Time Warner Inc. ("Time Warner") has entered into
various agreements pursuant to which Time Warner will acquire Turner
Broadcasting System, Inc. (the "Acquisition"); and
WHEREAS, in connection with the Acquisition and various related
transactions the Liberty Subsidiaries will be entitled to receive shares of
the Series K Voting Participating Convertible Preferred Stock (the
"Preferred Stock") of Time Warner; and
WHEREAS, in connection with the Acquisition, Time Warner,
Liberty Media Corporation ("LMC") and certain subsidiaries of LMC have
executed the LMC Agreement (the "LMC Agreement") pursuant to which,
among other things, LMC and such subsidiaries have agreed that any
shares of Preferred Stock to which the Liberty Subsidiaries become
entitled in connection with the Acquisition or otherwise (the
"Preferred Shares") shall be transferred to the Trustee pursuant to
this Trust Agreement; and
WHEREAS, the LMC Agreement provides that all voting
securities of Time Warner from time to time held beneficially or of
record by LMC or any of its Controlled Affiliates
<PAGE>
(as defined in the LMC Agreement) shall be deposited in the trust
established hereby and, for so long as LMC is a Controlled Affiliate
of Tele-Communications, Inc. ("TCI"), all voting securities of Time
Warner held beneficially or of record by TCI or any of its Controlled
Affiliates (with certain exceptions set forth in the LMC Agreement)
shall be deposited in the trust established hereby, and pursuant
thereto it is intended that this Trust Agreement be amended to provide
for the deposits of such voting securities (all such voting
securities, together with the Preferred Shares, the "Shares") and to
add as a party hereto the record owner of the Shares so deposited (in
any such case, the record owners of the Shares so deposited, together
with the Liberty Subsidiaries, the "Liberty Entities"); and
WHEREAS, the Liberty Entities desire to enter into this Trust
Agreement to assure that under the rules, regulations and policies of the
Federal Communications Commission (the "FCC"), there will be no attribution
to the Liberty Entities of any interest in Time Warner;
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants and agreements hereinafter set forth, the parties hereto
hereby agree as follows:
1. Creation and Purpose of Trust. Subject to the terms and
conditions hereof, a voting trust in respect of the Shares is hereby
created and established, and the Trustee hereby accepts the trust created
hereby and agrees to serve as trustee hereunder. The trust created hereby
shall be irrevocable, and shall not terminate except in accordance with the
terms set forth herein.
2. Deposit and Transfer of the Shares; Trust Certificates
(a) At the closing of the Acquisition and at any other time
that any Liberty Entity receives beneficial ownership of any Shares,
such Liberty Entity will cause certificates representing such Shares
to be delivered to the
<PAGE>
Trustee. Each certificate delivered to the Trustee pursuant to this
Section 2(a) shall be surrendered to Time Warner for cancellation and
new certificates evidencing the Shares represented thereby shall be
issued and registered in the name of the Trustee. All of the
certificates for the Shares issued in the name of the Trustee shall
bear a legend to the effect that such Shares are held subject to the
terms and conditions of this Trust Agreement in accordance with
Section 218 of the Delaware General Corporation Law (the "DGCL"). Upon
the issuance and registration of such certificates, the Trustee shall
deliver a voting trust certificate evidencing the underlying Shares
(the "Certificate") to the applicable Liberty Entity, substantially in
the form of Exhibit A attached hereto.
(b) The Trustee shall retain and hold the Shares only in
accordance with, and subject to the terms and conditions set forth in,
this Trust Agreement. Except as hereinafter provided, all the Shares
shall at all times be and remain in the possession of the Trustee.
3. Maintenance of Records; Replacement of Trust
Certificates.
In case any Certificate shall become mutilated, lost, stolen
or destroyed, the Trustee, under such conditions with respect to
indemnity and otherwise as the Trustee in the Trustee's sole
discretion may prescribe, may provide for the issuance of a new
Certificate in lieu of such lost, stolen or destroyed Certificate or
in exchange for such mutilated Certificate.
4. Voting, Management and Other Actions by Trustee.
(a) During the term of this Trust Agreement, all voting
rights with respect to the Shares shall be vested in the Trustee, who
shall vote the Shares with the objective to maximize the value of the
Shares consistent with his discretion pursuant to Section 5(e) and
subject to Section 4(c).
<PAGE>
(b) No person other than the Trustee shall have any voting
rights in respect of the Shares so long as this Trust Agreement is in
effect. The Trustee shall have no beneficial interest in the Shares.
(c) The Trustee shall not:
(i) sell or otherwise transfer or encumber any of the
Shares except as specifically provided for in this Trust Agreement; or
(ii) vote the Shares in favor of certain extraordinary
events, as follows: (A) any sale, lease transfer or other disposition
of all or substantially all of the assets or stock of Time Warner; (B)
any merger, consolidation, reorganization, dissolution, liquidation or
recapitalization of Time Warner; or (C) any amendment to the Restated
Certificate of Incorporation or Bylaws of Time Warner that would
materially adversely affect the rights, benefits, powers or privileges
of the holders of the Shares or of the Common Stock of Time Warner
generally. The limitations imposed by clauses (A) and (B) of this
Section 4(c)(ii) shall not apply to any transaction contemplated
thereunder that (x) would constitute a tax-free transaction under the
Internal Revenue Code of 1986 (as from time to time amended) for the
Liberty Entities or any other person or entity with which a Liberty
Entity would be consolidated for Federal income tax purposes and (y)
provides identical consideration (including, without limitation, for
any consideration consisting of securities, par value, principal or
face amount, interest or dividend rate and any preferences,
privileges, priorities or rights (including voting rights)) for each
security of Time Warner of the same class as the Shares.
<PAGE>
(d) If any Liberty Entity notifies the Trustee in writing
that it desires to sell Shares and the Trustee acting in his
reasonable discretion agrees that such sale is consistent with the
requirements of applicable law, then the Trustee, acting for the
benefit of such Liberty Entity, shall sell such Shares in a
commercially reasonable manner with the objective to maximize the
proceeds to such Liberty Entity to the extent reasonably practicable;
provided however, that any such sale shall be subject to and
consistent with the rights and obligations of the Liberty Subsidiaries
established under the Stockholders Agreement dated ------------, 199-
among TCITP, Time Warner, R.E. Turner III and the Related Turner
Stockholders named therein.
(e) The Trustee shall cause certificates representing all of
the Shares to be delivered to the Liberty Entities, properly endorsed
for transfer to the appropriate Liberty Entity or its designee, and
shall take all other actions appropriate to effectuate the transfer of
title to the Shares and all other property held by the Trustee
pursuant to this Trust Agreement, to the Liberty Entities or their
designees at such time as (i) legal counsel nationally recognized for
expertise in FCC matters has delivered its written opinion that such
delivery and transfer will not violate the Communications Act of 1934,
as amended, or the rules and regulations of the FCC, including any
provisions of the Communications Act, or FCC rule or regulation, the
effectiveness of which shall at that time have been stayed or which
shall have been promulgated with a delayed effective date, but which
shall in any such case be considered as if then in effect, and (ii)
the Trustee receives a written notice from the Liberty Entities
authorizing such transfer.
<PAGE>
(f) In the event the FCC holds, or legal counsel to the
Liberty Entities determines, that for any reason the Shares held in
trust under this Trust Agreement result in any Liberty Entity having
an attributable interest in Time Warner, the Trustee shall, in his
capacity as Trustee, at the direction of such Liberty Entity, take
appropriate action to eliminate such attributable interest with a view
to maximizing the value of the Shares to such Liberty Entity; provided
that if the exchange of the Shares for shares of Series J Non-Voting
Participating Convertible Preferred Stock of Time Warner ("Non-Voting
Preferred Stock") would eliminate such attributable interest, then at
the direction of such Liberty Entity such exchange shall be effected
and the shares of Non-Voting Preferred Stock distributed to the
applicable Liberty Entity or its designee.
(g) The Trustee shall, in his capacity as Trustee, have any
and all such further powers and shall take such further actions
(including, but not limited to, taking legal action) as may be
necessary to fulfill the Trustee's obligations under this Trust
Agreement.
5. Concerning the Trustee.
(a) Subject to the provisions of this Trust Agreement, the
trust created hereby shall be managed by the Trustee.
(b) The Trustee shall not receive compensation for his
services hereunder.
(c) The Trustee is expressly authorized to incur and pay all
reasonable charges and other expenses which the Trustee deems
necessary and proper in the performance of the Trustee's duties under
this Trust Agreement, including fees and charges for legal counsel of
his choosing and the cost of any necessary secretarial staff. The
Liberty Entities hereby agree to promptly reimburse the Trustee for
all costs, expenses and liabilities incurred
<PAGE>
by the Trustee in connection with the performance of the Trustee's
duties under this Trust Agreement.
(d) The Liberty Entities jointly and severally assume,
indemnify and agree to hold the Trustee harmless, from, against, and
in respect of, any and all losses, liabilities, claims, damages,
expenses (including costs of investigation and defense, costs incurred
in enforcing this indemnity, and reasonable legal fees and expenses),
assessments, fines, penalties, settlements or judgments, whether or
not involving a third party claim (collectively "Losses"), suffered or
incurred by the Trustee arising from, relating to or otherwise in
respect of, any provision of this Trust Agreement, any action or
omission by the Trustee in his capacity as such or any certificate,
document or instrument delivered by the Trustee pursuant thereto,
except that the Liberty Entities shall not be required to indemnify
the Trustee in respect of any Loss to the extent such Loss is
determined by a court of competent jurisdiction in a final
nonappealable order to be the direct result of the gross negligence,
intentional wrongful action or willful misconduct of the Trustee.
(e) For purposes of Sections 4(a) and 4(f) of this Trust
Agreement, the Trustee shall be deemed to have acted to maximize the
value of the Shares if, in the exercise of his business judgment, he
is acting in the best interests of the holders of Common Stock of Time
Warner generally and the Trustee shall have no liability hereunder to
the extent that he is exculpated from liability to holders of the
Common Stock of Time Warner pursuant to the provisions of its
Certificate of Incorporation which are consistent with Section
102(b)(7) of the DGCL. In any action against the Trustee in connection
with the performance of his duties hereunder, the Trustee shall be
entitled to the presumption that he acted in good
<PAGE>
faith in his reasonable business judgment, and he shall not be deemed
an "interested party" by reason of his being an officer and/or
director of Time Warner.
(f) The Trustee shall be free from liability in acting upon
any paper, document or signature believed by the Trustee to be genuine
and to have been signed by the proper party. The Trustee shall not be
liable for any error of judgment in any act done or omitted, nor for
any mistake of fact or law, nor for anything which the Trustee may do
or refrain from doing in good faith. The Trustee may consult with
legal counsel of his own choosing and any action under this Trust
Agreement taken or suffered in good faith by the Trustee and in
accordance with the opinion of the Trustee's counsel (if such opinion
shall have been obtained by Trustee) shall be conclusive on the
parties to this Trust Agreement and the Trustee shall be fully
protected and be subject to no liability in respect thereof. So long
as the Trustee is Gerald M. Levin, if the Trustee is required to take
any action hereunder which the Trustee believes raises substantial
issues as to whether such action would be inconsistent with the best
interests of the holders of the Common Stock of Time Warner generally
or Time Warner, the Trustee may, in lieu of taking such action,
deliver a notice of resignation as Trustee hereunder in accordance
with Section 5(h) and, upon delivery of such notice, the Trustee shall
not be obligated to take any further action hereunder and shall not
incur any liability to any Liberty Entity or any other person
(including any government agency) for failing to take such action.
(g) The rights and duties of the Trustee hereunder shall
terminate upon the Trustee's disqualification, which disqualification
shall occur upon any of the following: the Trustee's incapacity to
act, death, insolvency, or, so long as the Trustee is Gerald M. Levin,
if
<PAGE>
the Trustee for any other reason ceases to serve as the Chief
Executive Officer and Chairman of Time Warner. No interest in any of
the Shares directly or indirectly held by the Trustee nor any of the
rights and duties of a disqualified Trustee may be transferred by
will, devise, succession or in any manner except as provided in this
Trust Agreement. The heirs, administrators, executors or other
representatives of a disqualified Trustee shall, however, have the
right and duty to convey any Shares held by the Trustee to one or more
successor Trustees, as designated under Section 5(i) of this Trust
Agreement.
(h) The Trustee may resign by giving not less than 60 days'
advance written notice of resignation to the Liberty Entities,
provided that a successor Trustee has been appointed as provided for
in Section 5(i) of this Trust Agreement. The Liberty Entities shall
cooperate fully by prompt appointment of a successor Trustee pursuant
to Section 5(i) of this Trust Agreement and shall not unreasonably
interfere with or delay the effectiveness of such resignation.
(i) In the event of the resignation or disqualification of
the Trustee, he shall be succeeded by a successor Trustee chosen by
the Liberty Entities. Any successor Trustee shall succeed to all of
the rights and obligations of the Trustee replaced hereunder upon
execution by such successor Trustee of a counterpart of this Trust
Agreement. Notwithstanding the above, in the sole discretion of the
Liberty Entities, and consistent with FCC rules and regulations, the
resignation or disqualification of Gerald M. Levin as Trustee may
trigger the termination of this Trust Agreement and the underlying
trust. In that case, the Liberty Entities shall appoint a successor
trustee whose sole right, duty and obligation shall be
<PAGE>
to accomplish the termination of the trust in accordance with the
terms of this Trust Agreement.
(j) The Trustee and any successor Trustee designated
pursuant to Section 5(i) shall not be a partner, officer, employee,
director or 1% or greater shareholder of any Liberty Entity or of any
entity controlled by, controlling, or under common control with any
Liberty Entity, and may not have any business or familial relationship
with any Liberty Entity or any entity controlled by, controlling or
under common control with any Liberty Entity or with any officer,
employee, or director thereof. The Trustee or any successor Trustee
shall not serve as a partner, officer, employee, or director of any
Liberty Entity or of any entity controlled by, controlling, or under
common control with any Liberty Entity.
(k) Notwithstanding any other provision of this Trust
Agreement, the rights of the Trustee set forth in Sections 5(c), 5(d),
5(e) and 5(f) of this Trust Agreement shall survive any termination of
this Trust Agreement or the trust created hereby or the
disqualification, resignation or other removal of the Trustee.
6. Distribution of Proceeds of Sale of Shares.
In the event of (i) the sale of the Shares pursuant to
Section 4(d) of this Trust Agreement, or (ii) the sale of all or
substantially all of the stock of Time Warner or any merger,
consolidation, reorganization, dissolution, recapitalization or
liquidation of Time Warner and regardless of whether the Trustee has
voted the Shares in favor of such transaction, the Trustee shall sell,
transfer, surrender or otherwise dispose of the Shares in accordance
with the terms of the applicable transaction and receive the money,
securities, rights or property which are distributed or are
distributable in respect of the Shares, or which
<PAGE>
are received in exchange or in payment for the Shares and, after
paying (or reserving for payment thereof) any expenses incurred
pursuant to this Trust Agreement, shall distribute or cause the
distribution of such money, securities, rights or property to the
Liberty Entities or their designees in proportion to their respective
ownership interests.
7. Termination of Trust Agreement.
(a) This Trust Agreement and the trust created hereby shall
terminate upon the first to occur of the following: (i) the
distribution to Liberty Entities or their designees of the Shares as
contemplated by Section 4(e) of this Trust Agreement; (ii) the sale of
the Shares as contemplated under Section 4(d) or Section 6 of this
Trust Agreement; or (iii) upon exercise by the Liberty Entities of
their rights under Section 5(i) to terminate this Agreement in the
event of the disqualification or resignation of the Trustee.
(b) Upon the termination of this Trust Agreement pursuant to
Section 7(a) hereof and consistent with the requirements of the FCC,
the Trustee shall deliver to the Liberty Entities or their designees
the stock certificates representing the Shares which shall be duly
endorsed for transfer or with duly executed stock powers attached,
together with all other property held by the Trustee pursuant to this
Trust Agreement except that in the case of a distribution under
Section 6, all of the proceeds (net of expenses and necessary
reserves) therefrom will be delivered to the Liberty Entities or their
designees in accordance with the provisions of Section 6.
<PAGE>
8. Communications
(a) The Trustee may communicate with, and provide reports to
the Liberty Entities or their designees concerning the implementation
of the trust and the acquisition of the Shares.
(b) Neither the Liberty Entities, nor any of the officers,
directors, or employees thereof shall communicate with the Trustee
regarding the operation or management of Time Warner or with respect
to the Trustee's decisions as to how to vote the Shares on any matter.
The Liberty Entities may communicate with the Trustee concerning the
transfer of the Shares or other information on the mechanics of
implementing such transfer.
(c) Any communications permitted by Section 8(a) or 8(b)
shall be in writing.
(d) All notices and other communications given under this
Trust Agreement shall be deemed to have been duly given when delivered
in person or by overnight express or mailed by first-class, registered
or certified mail, postage prepaid, or transmitted by telefax and
addressed to the Parties as follows:
(i) If to any Liberty Entity:
In care of Liberty Media Corporation
8101 East Prentice Avenue
Suite 500
Englewood, Colorado 80111
Attention: President
with copies to:
Stephen M. Brett, Esq.
General Counsel
<PAGE>
Tele-Communications, Inc.
Terrace Towers II
5619 DTC Parkway
Englewood, Colorado 80111-3000
and
Baker & Botts, L.L.P.
885 Third Avenue
Suite 1900
New York, New York 10022
Attention: Elizabeth Markowski, Esq.
(ii) If to the Trustee:
Gerald M. Levin
Time Warner Inc.
75 Rockefeller Plaza
New York, New York 10019
Fax: (212) 333-3987
with copies to:
General Counsel
Time Warner Inc.
75 Rockefeller Plaza
New York, New York 10019
Fax: (212) 956-7281
and
William P. Rogers, Jr.
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Fax: (212) 765-0993
or to such other address as either of them by written notice to the other
may from time to time designate. Each notice or other communication which
shall be delivered, mailed or transmitted in the manner described above
shall be deemed sufficiently received for all
<PAGE>
purposes at such time as it is delivered to the addressee (with any
return receipt, delivery receipt or (with respect to a telefax) answer
back being deemed conclusive evidence of such delivery) or at such
time as delivery is refused by the addressee upon presentation.
9. Miscellaneous.
(a) This Trust Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof
and supersedes all prior oral or other written agreements, commitments
or understandings with respect to the matters provided for herein.
This Trust Agreement shall not be amended, altered or modified except
by an instrument in writing duly executed by each of the parties
hereto.
(b) This Trust Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective
permitted successors and permitted assigns. Subject to Section 5(i)
hereof, this Trust Agreement shall not be assignable by the Trustee.
(c) If any part of any provision of this Trust Agreement or
any other agreement, document or writing given pursuant to or in
connection with this Trust Agreement shall be invalid or unenforceable
under applicable law, said part shall be ineffective to the extent of
such invalidity only, without in any way affecting the remaining part
of said provision or the remaining provisions of this Trust Agreement.
(d) The headings of the sections of this Trust Agreement are
inserted for convenience of reference only and do not form a part or
affect the meaning hereof.
(e) This Trust Agreement, the rights and obligations of the
parties hereto, and any claims and disputes relating thereto, shall be
governed by and construed in
<PAGE>
accordance with the laws of the State of Delaware (not including the
choice of law rules thereof).
(f) This Trust Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of
which together shall be deemed to be one and the same instrument.
(g) The Trustee shall comply with all rules, regulations and
policies of the FCC.
(h) A copy of this Trust Agreement shall be filed in the
registered office of Time Warner in the State of Delaware and shall be
available for inspection in accordance with the provisions of Section
218 of the DGCL.
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Trust
Agreement or caused this Trust Agreement to be duly executed on their
behalf as of the date and year first herein above set forth.
TCI TURNER PREFERRED, INC.
By:
-----------------------
Name:
Title
UNITED CABLE TURNER INVESTMENT, INC.
By:
-----------------------
Name:
Title
COMMUNICATION CAPITAL CORP.
By:
-----------------------
Name:
Title
-----------------------
Gerald M. Levin
<PAGE>
Exhibit A
No. Shares
TRUST CERTIFICATE
This certifies that the undersigned, Gerald M. Levin, as
Trustee (the "Trustee") has received certificates representing
- ------------ shares of Series K Voting Participating Convertible
Preferred Stock (the "Shares") of Time Warner Inc. a Delaware
corporation, which Shares are held for the benefit of [Liberty Entity]
("Liberty Entity"), a corporation, in accordance with Section 2 of the
Voting Trust Agreement, dated ------------, 1995, among the Trustee,
TCI Turner Preferred, Inc., United Cable Turner Investments, Inc., and
Communication Capital Corp. (the "Trust Agreement"). The Shares are
being held by the Trustee on the following terms and conditions:
Rights of Liberty Entity
Liberty Entity, by its acceptances hereof, agrees to,
accepts and ratifies all of the terms, conditions and covenants of the
Trust Agreement. Liberty Entity shall possess and be entitled to
rights of ownership in the Shares only to the limited extent provided
in the Trust Agreement.
<PAGE>
Voting Rights
The Trustee, during the term of the Trust Agreement, is the
owner of the Shares for all purposes provided for in the Trust
Agreement, and shall have all voting rights with respect to the
Shares, and the right to take part in or consent to any corporate or
Stockholder's actions of any kind, as provided in the Trust Agreement.
Restriction on Transfers
This Trust Certificate is not transferable. The Shares of
stock for which it was issued are not transferable during the term of
the Trust Agreement, except as provided in the Trust Agreement.
Trust Agreement
This Trust Certificate is governed in all respects by the
Trust Agreement. In the event of any inconsistency between the terms
and conditions of this Certificate and the Trust Agreement, the Trust
Agreement shall control.
TRUSTEE:
Dated:
------------------ ------------------------------------
Gerald M. Levin
<PAGE>
EXHIBIT K
CERTIFICATE OF THE VOTING POWERS, DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL
RIGHTS, AND QUALIFICATIONS, LIMITATIONS
OR RESTRICTIONS THEREOF, OF
SERIES LMCN-V COMMON STOCK
OF
TW INC.
--------------------
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
--------------------
TW INC., a corporation organized and existing by virtue
of the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify that the following resolution was
duly adopted by action of the Board of Directors of the Corporation
(the "Board of Directors") at a meeting duly held on [ ], 1996.
RESOLVED that pursuant to the authority expressly
granted to and vested in the Board of Directors by the provisions of
Section 3 of Article IV of the Certificate of Incorporation of the
Corporation, as amended (the "Certificate of Incorporation"), and
Section 151(g) of the General Corporation Law of the State of Delaware
(the "DGCL"), the Board of Directors hereby creates, from the
authorized shares of Series Common Stock, par value $1.00 per share
(the "Series Common Stock"), of the Corporation authorized to be
issued pursuant to the Certificate of Incorporation, a series of
Series Common Stock, and hereby fixes the voting powers, designations,
preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions thereof, of
the shares of such series as follows:
The series of Series Common Stock hereby established
shall consist of [ ] shares designated as Series LMCN-V Common Stock.
The number of shares constituting such series may be increased or
decreased from time to time by a resolution or resolutions of the
Board of Directors. The terms of such series shall be as follows:
<PAGE>
1. Definitions. As used herein, the following terms
shall have the indicated meanings:
1.1 "Board of Directors" shall mean the Board of
Directors of the Corporation or, with respect to any action to be
taken by the Board of Directors, any committee of the Board of
Directors duly authorized to take such action.
1.2 "Capital Stock" shall mean any and all shares of
corporate stock of a Person (however designated and whether
representing rights to vote, rights to participate in dividends or
distributions upon liquidation or otherwise with respect to such
Person, or any division or subsidiary thereof, or any joint venture,
partnership, corporation or other entity).
1.3 "Certificate" shall mean the Certificate of the
Voting Powers, Designations, Preferences and Relative, Participating,
Optional or Other Special Rights, and Qualifications, Limitations or
Restrictions Thereof, of Series LMCN-V Common Stock filed with the
Secretary of State of the State of Delaware pursuant to Section 151 of
the DGCL.
1.4 "Certificate of Incorporation" shall mean the
Certificate of Incorporation of the Corporation, as amended from time
to time.
1.5 "Closing Price" of the Common Stock shall mean the
last reported sale price of the Common Stock (regular way) as shown on
the Composite Tape of the NYSE, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices on the
NYSE, or, if the Common Stock is not listed or admitted to trading on
the NYSE, on the principal national securities exchange on which such
stock is listed or admitted to trading, or, if it is not listed or
admitted to trading on any national securities exchange, the last
reported sale price of the Common Stock, or, in case no such sale
takes place on such day, the average of the closing bid and asked
prices, in either case as reported by NASDAQ.
1.6 "Common Stock" shall mean the class of Common
Stock, par value $1.00 per share, of the Corporation authorized at the
date of the Certificate, or any other class of stock resulting from
(x) successive changes or reclassifications of such Common Stock
consisting of changes
<PAGE>
in par value, or from par value to no par value, (y) a
subdivision or combination or (z) any other changes for which an
adjustment is made under Section 2.4(a), and in any such case
including any shares thereof authorized after the date of the
Certificate, together with any associated rights to purchase other
securities of the Corporation which are at the time represented by the
certificates representing such shares of Common Stock.
1.7 "Communications Laws" shall mean 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 Federal Communications Commission (the
"FCC"). All references herein to 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 or promulgated with a delayed
effective date).
1.8 "Conversion Date" shall have the meaning set forth
in Section 3.5.
1.9 "Corporation" shall mean TW Inc., a Delaware
corporation, and any of its successors by operation of law, including
by merger or consolidation.
1.10 "DGCL" shall mean the General Corporation Law of
the State of Delaware, as amended from time to time.
1.11 "Dividend Payment Date" shall have the meaning set
forth in Section 2.1.
1.12 "Formula Number" shall have the meaning set forth
in Section 2.1.
1.13 "LMC Agreement" shall mean the Agreement dated as
of September 22, 1995, among a Delaware corporation known on the date
of the Certificate as "Time Warner Inc.", Liberty Media Corporation, a
Delaware corporation ("LMC Parent"), and certain subsidiaries of LMC
Parent listed under "Subsidiaries of LMC Parent" on the signature
pages thereto, as amended from time to time.
<PAGE>
1.14 "NASDAQ" shall mean The Nasdaq Stock Market.
1.15 "NYSE" shall mean the New York Stock Exchange,
Inc.
1.16 "Parity Stock" shall mean shares of Common Stock
and shares of any other class or series of Capital Stock of the
Corporation which, by the terms of the Certificate of Incorporation or
of the instrument by which the Board of Directors, acting pursuant to
authority granted in the Certificate of Incorporation, shall fix the
relative rights, preferences and limitations thereof, shall, in the
event that the stated dividends thereon are not paid in full, be
entitled to share ratably with the shares of this Series in the
payment of dividends in accordance with the sums which would be
payable on such shares if all dividends were declared and paid in
full, or shall, in the event that the amounts payable thereon in
liquidation are not paid in full, be entitled to share ratably with
the shares of this Series in any distribution of assets other than by
way of dividends in accordance with the sums which would be payable in
such distribution if all sums payable were discharged in full.
1.17 "Permitted Transferee" shall mean any Liberty
Party, as such term is defined in the LMC Agreement.
1.18 "Person" shall mean an individual, corporation,
partnership, limited liability company, joint venture, association,
trust, unincorporated organization or other entity.
1.19 "Preferred Stock" shall mean the class of
Preferred Stock, par value $1.00 per share, of the Corporation
authorized at the date of the Certificate, including any shares
thereof authorized after the date of the Certificate.
1.20 "Record Date" shall have the meaning set forth in
Section 2.1.
1.21 "Senior Stock" shall mean shares of any class or
series of Capital Stock of the Corporation which, by the terms of the
Certificate of Incorporation or of the instrument by which the Board
of Directors, acting pursuant to authority granted in the Certificate
of Incorporation, shall fix the relative rights, preferences and
limitations
<PAGE>
thereof, shall be senior to the shares of this Series in
respect of the right to receive dividends or to participate in any
distribution of assets other than by way of dividends.
1.22 "Series Common Stock" shall mean the class of
Series Common Stock, par value $1.00 per share, of the Corporation
authorized at the date of the Certificate, including any shares
thereof authorized after the date of the Certificate.
1.23 "Series LMC Common Stock" shall mean the series of
Series Common Stock authorized and designated as Series LMC Common
Stock at the date of the Certificate, including any shares thereof
authorized and designated after the date of the Certificate.
1.24 "Series LMCN-V Common Stock" and "this Series"
shall mean the series of Series Common Stock authorized and designated
as Series LMCN-V Common Stock at the date of the Certificate,
including any shares thereof authorized and designated after the date
of the Certificate.
1.25 "Trading Day" shall mean, so long as the Common
Stock is listed or admitted to trading on the NYSE, a day on which the
NYSE is open for the transaction of business, or, if the Common Stock
is not listed or admitted to trading on the NYSE, a day on which the
principal national securities exchange on which the Common Stock is
listed is open for the transaction of business, or, if the Common
Stock is not so listed or admitted for trading on any national
securities exchange, a day on which the National Market System of
NASDAQ is open for the transaction of business.
2. Dividends.
2.1 The holders of shares of this Series shall be
entitled to receive dividends, if, as and when declared by the Board
of Directors, out of funds legally available therefor, payable on such
dates as may be set by the Board of Directors for payment of cash
dividends on the Common Stock (each such date being referred to herein
as a "Dividend Payment Date"), in cash, in an amount per share equal
to the product of (i) the Formula Number in effect as of such Dividend
Payment Date multiplied by (ii) the amount
<PAGE>
of the regularly scheduled cash dividend to be paid on one share
of Common Stock on such Dividend Payment Date; provided,
however, dividends on the shares of this Series shall be payable
pursuant to this Section 2.1 only to the extent that regularly
scheduled cash dividends are declared and paid on the Common Stock. As
used herein, the "Formula Number" shall initially be 1.0000, which
shall be adjusted from time to time pursuant to Section 2.4. The
dividends payable on any Dividend Payment Date shall be paid to the
holders of record of shares of this Series at the close of business on
the record date for the related regularly scheduled cash dividend on
the Common Stock (each such date being referred to herein as a "Record
Date"). The amount of dividends that are paid to each holder of record
on any Dividend Payment Date shall be rounded to the nearest cent.
2.2 In case the Corporation shall at any time
distribute (other than a distribution in liquidation of the
Corporation and other than a distribution as a result of which an
adjustment to the Formula Number is made pursuant to Section 2.4) to
the holders of its shares of Common Stock any assets or property,
including evidences of indebtedness or securities of the Corporation
or of any other Person (including common stock of such Person) or cash
(but excluding regularly scheduled cash dividends payable on shares of
Common Stock), or in case the Corporation shall at any time distribute
(other than a distribution in liquidation of the Corporation) to such
holders rights, options or warrants to subscribe for or purchase
shares of Common Stock (including shares held in the treasury of the
Corporation), or rights, options or warrants to subscribe for or
purchase any other security or rights, options or warrants to
subscribe for or purchase any assets or property (in each case,
whether of the Corporation or otherwise, but other than any
distribution of rights to purchase securities of the Corporation if
the holder of shares of this Series would otherwise be entitled to
receive such rights upon conversion of shares of this Series for
Common Stock pursuant to Section 3, provided, however, that if such
rights are subsequently redeemed by the Corporation, such redemption
shall be treated for purposes of this Section 2.2 as a cash dividend
(but not a regularly scheduled cash dividend) on the Common Stock),
the Corporation shall simultaneously distribute such assets, property,
securities, rights, options or warrants to the holders of shares of
this Series on the record date fixed for determining the holders of
Common Stock entitled to participate in such distribution (or, if no
such record date shall be established, the
<PAGE>
effective time thereof) in an amount per share of this Series
equal to the amount that a holder of one share of this Series
would have been entitled to receive had such share of this Series been
converted into Common Stock immediately prior to such record date (or
effective time). In the event of a distribution to holders of shares
of this Series pursuant to this Section 2.2, such holders shall be
entitled to receive fractional shares or interests only to the extent
that holders of Common Stock are entitled to receive the same. The
holders of shares of this Series on the applicable record date (or
effective time) shall be entitled to receive in lieu of such
fractional shares or interests the same consideration as is payable to
holders of Common Stock with respect thereto. If there are no
fractional shares or interests payable to holders of Common Stock, the
holders of shares of this Series on the applicable record date (or
effective time) shall receive in lieu of such fractional shares or
interests the fair value thereof as determined by the Board of
Directors.
2.3 In the event that the holders of Common Stock are
entitled to make any election with respect to the kind or amount of
securities or other property receivable by them in any distribution
that is subject to Section 2.2, the kind and amount of securities or
other property that shall be distributable to the holders of shares of
this Series shall be based on (i) the election, if any, made by the
holder of record (as of the date used for determining the holders of
Common Stock entitled to make such election) of the largest number of
shares of this Series in writing to the Corporation on or prior to the
last date on which a holder of Common Stock may make such an election
or (ii) if no such election is timely made, an assumption that such
holder failed to exercise any such rights (provided that if the kind
or amount of securities or other property is not the same for each
nonelecting holder, then the kind and amount of securities or other
property receivable by holders of shares of this Series shall be based
on the kind or amount of securities or other property receivable by a
plurality of the shares held by the nonelecting holders of Common
Stock). Concurrently with the mailing to holders of Common Stock of
any document pursuant to which such holders may make an election of
the type referred to in this Section 2.3, the Corporation shall mail a
copy thereof to the holders of record of shares of this Series as of
the date used for determining the holders of record of Common Stock
entitled to such mailing, which document shall be used
<PAGE>
by the holders of record of shares of this Series to make such an election.
2.4 The Formula Number shall be adjusted from time to
time as follows, whether or not any shares of this Series have been
issued by the Corporation, for events occurring on or after [ ]: (F1)
(a) In case the Corporation shall (i) pay a dividend in
shares of its Common Stock, (ii) combine its outstanding shares
of Common Stock into a smaller number of shares, (iii) subdivide
its outstanding shares of Common Stock or (iv) reclassify (other
than by way of a merger or consolidation that is subject to
Section 3.6) its shares of Common Stock, then the Formula Number
in effect immediately before such event shall be appropriately
adjusted so that immediately following such event the holders of
shares of this Series shall be entitled to receive upon
conversion thereof the kind and amount of shares of Capital Stock
of the Corporation which they would have owned or been entitled
to receive upon or by reason of such event if such shares of this
Series had been converted immediately before the record date (or,
if no record date, the effective date) for such event (it being
understood that any distribution of cash or Capital Stock (other
than Common Stock) that shall accompany a reclassification of the
Common Stock, shall be subject to Section 2.2 rather than this
Section 2.4(a)). An adjustment made pursuant to this Section
2.4(a) shall become effective retroactively immediately after the
record date in the case of a dividend or distribution and shall
become effective retroactively immediately after the effective
date in the case of a subdivision, combination or
reclassification. For the purposes of this Section 2.4(a), in the
event that the holders of Common Stock are entitled to make any
election with respect to the kind or amount of securities
receivable by them in any transaction that is subject to this
Section 2.4(a) (including any election that would result in all
or a portion of the transaction becoming subject to Section 2.2),
the kind and amount of securities that shall be distributable to
the holders
- ------------------------
(F1) Insert the date of filing
of the Certificate or, if earlier, the date of filing of the
certificate for the Series LMC Common Stock.
<PAGE>
of shares of this Series shall be based on (i) the
election, if any, made by the holder of record (as of the date
used for determining the holders of Common Stock entitled to make
such election) of the largest number of shares of this Series in
writing to the Corporation on or prior to the last date on which
a holder of Common Stock may make such an election or (ii) if no
such election is timely made, an assumption that such holder
failed to exercise any such rights (provided that if the kind or
amount of securities is not the same for each nonelecting holder,
then the kind and amount of securities receivable shall be based
on the kind or amount of securities receivable by a plurality of
nonelecting holders of Common Stock). Concurrently with the
mailing to holders of Common Stock of any document pursuant to
which such holders may make an election of the type referred to
in this Section 2.4(a), the Corporation shall mail a copy thereof
to the holders of record of shares of this Series as of the date
used for determining the holders of record of Common Stock
entitled to such mailing, which document shall be used by the
holders of record of shares of this Series to make such an
election.
(b) The Corporation shall be entitled to make such
additional adjustments in the Formula Number, in addition to
those required by Section 2.4(a) as shall be necessary in order
that any dividend or distribution in Common Stock or any
subdivision, reclassification or combination of shares of Common
Stock referred to above, shall not be taxable to the holders of
Common Stock for United States Federal income tax purposes, so
long as such additional adjustments pursuant to this Section
2.4(b) do not decrease the Formula Number.
(c) All calculations under this Section 2 and Section 3
shall be made to the nearest cent, one-hundredth of a share or,
in the case of the Formula Number, one hundred-thousandth.
Notwithstanding any other provision of this Section 2.4, the
Corporation shall not be required to make any adjustment of the
Formula Number unless such adjustment would require an increase
or decrease of at least one percent (1%) of the Formula Number.
Any lesser adjustment shall be carried forward and shall be made
at the time of and together with the next subsequent adjustment
that, together with any adjustment or adjustments so carried
<PAGE>
forward, shall amount to an increase or decrease of at
least one percent (1%) of the Formula Number. Any adjustments
under this Section 2.4 shall be made successively whenever an
event requiring such an adjustment occurs.
(d) Promptly after an adjustment in the Formula Number
is required, the Corporation shall provide written notice to each
of the holders of shares of this Series, which notice shall state
the adjusted Formula Number.
(e) If a distribution is made in accordance with the
provisions of Section 2.2, anything in this Section 2.4 to the
contrary notwithstanding, no adjustment pursuant to this Section
2.4 shall be effected by reason of the distribution of such
assets, property, securities, rights, options or warrants or the
subsequent modification, exercise, expiration or termination of
such securities, rights, options or warrants.
3. Conversion at the Option of the Holder.
3.1 Each holder of a share of this Series shall have
the right at any time to convert such share of this Series into
either: (i) a number of shares of Common Stock per share of this
Series equal to the Formula Number in effect on the Conversion Date or
(ii) one share of Series LMC Common Stock per share of this Series;
provided, however, that such holder may convert shares of this Series
only to the extent that the ownership by such holder or its designee
of the shares of Common Stock or Series LMC Common Stock issuable upon
such conversion would not violate the Communications Laws.
3.2 No adjustments in respect of payments of dividends
on shares of this Series surrendered for conversion or any dividend on
the Common Stock or Series LMC Common Stock issued upon conversion
shall be made upon the conversion of any shares of this Series (it
being understood that if the Conversion Date for shares of this Series
occurs after the Record Date and prior to the Dividend Payment Date of
any such dividend, the holders of record on such Record Date shall be
entitled to receive the dividend payable with respect to such shares
on the related Dividend Payment Date pursuant to Section 2.1).
<PAGE>
3.3 The Corporation may, but shall not be required to,
in connection with any conversion of shares of this Series into shares
of Common Stock, issue a fraction of a share of Common Stock, and if
the Corporation shall determine not to issue any such fraction, the
Corporation shall make a cash payment (rounded to the nearest cent)
equal to such fraction multiplied by the Closing Price of the Common
Stock on the last Trading Day prior to the Conversion Date. The
Corporation shall issue a fraction of a share of Series LMC Common
Stock in order to effect a conversion of a fraction of a share of this
Series into Series LMC Common Stock.
3.4 Any holder of shares of this Series electing to
convert such shares into Common Stock or Series LMC Common Stock shall
surrender the certificate or certificates for such shares at the
principal executive office of the Corporation (or at such other place
as the Corporation may designate by notice to the holders of shares of
this Series) during regular business hours, duly endorsed to the
Corporation or in blank, or accompanied by instruments of transfer to
the Corporation or in blank, or in form satisfactory to the
Corporation, and shall give written notice to the Corporation at such
office that such holder elects to convert such shares of this Series,
which notice shall state whether the shares of this Series delivered
for conversion shall be converted into shares of Common Stock or
shares of Series LMC Common Stock. If any such certificate or
certificates shall have been lost, stolen or destroyed, the holder
shall, in lieu of delivering such certificate or certificates, deliver
to the Corporation (or such other place) an indemnification agreement
and bond satisfactory to the Corporation. The Corporation shall, as
soon as practicable (subject to Section 3.8) after such deposit of
certificates for shares of this Series or delivery of the
indemnification agreement and bond, accompanied by the written notice
above prescribed, issue and deliver at such office (or such other
place) to the holder for whose account such shares were surrendered,
or a designee of such holder, certificates representing either (i) the
number of shares of Common Stock and the cash, if any, or (ii) the
number of shares of Series LMC Common Stock, as the case may be, to
which such holder is entitled upon such conversion. Each share of
Common Stock delivered to a holder or its designee as a result of
conversion of shares of this Series pursuant to this Section 3 shall
be accompanied by any rights associated generally with each
<PAGE>
other share of Common Stock outstanding as of the Conversion Date.
3.5 Conversion shall be deemed to have been made as of
the date (the "Conversion Date") that the certificate or certificates
for the shares of this Series to be converted and the written notice
prescribed in Section 3.4 are received by the Corporation; and the
Person entitled to receive the Common Stock or Series LMC Common Stock
issuable upon such conversion shall be treated for all purposes as the
holder of record of such Common Stock or Series LMC Common Stock, as
the case may be, on such date. The Corporation shall not be required
to deliver certificates for shares of Common Stock or Series LMC
Common Stock while the stock transfer books for such stock or for this
Series are duly closed for any purpose, but certificates for shares of
Common Stock or Series LMC Common Stock, as the case may be, shall be
delivered as soon as practicable after the opening of such books.
3.6 In the event that on or after [ ](F2), whether or
not any shares of this Series have been issued by the Corporation,
either (a) any consolidation or merger to which the Corporation is a
party, other than a merger or consolidation in which the Corporation
is the surviving or continuing corporation and which does not result
in any reclassification of, or change (other than a change in par
value or from par value to no par value or from no par value to par
value, or as a result of a subdivision or combination) in, outstanding
shares of Common Stock or (b) any sale or conveyance of all or
substantially all of the property and assets of the Corporation, then
lawful provision shall be made as part of the terms of such
transaction whereby the holder of each share of this Series shall have
the right thereafter, during the period such share shall be
convertible, to convert such share into the kind and amount of shares
of stock or other securities and property receivable upon such
consolidation, merger, sale or conveyance by a holder of the number of
shares of Common Stock into which such shares of this Series could
have been converted immediately prior to such consolidation, merger,
sale or conveyance, subject to adjustment which shall be as nearly
equivalent as may be practicable to the
- ---------------------
(F2) Insert the date of filing of the Certificate or, if earlier, the date
of filing of the certificate for the Series LMC Common Stock.
<PAGE>
adjustments provided for in Section 2.4 and this Section 3
(based on (i) the election, if any, made in writing to the
Corporation by the holder of record (as of the date used for
determining holders of Common Stock entitled to make such election) of
the largest number of shares of this Series on or prior to the last
date on which a holder of Common Stock may make an election regarding
the kind or amount of securities or other property receivable by such
holder in such transaction or (ii) if no such election is timely made,
an assumption that such holder failed to exercise any such rights
(provided that if the kind or amount of securities or other property
is not the same for each nonelecting holder, then the kind and amount
of securities or other property receivable shall be based upon the
kind and amount of securities or other property receivable by a
plurality of the nonelecting holders of Common Stock)). In the event
that any of the transactions referred to in clause (a) or (b) of the
first sentence of this Section 3.6 involves the distribution of cash
or property (other than equity securities) to a holder of Common
Stock, lawful provision shall be made as part of the terms of the
transaction whereby the holder of each share of this Series on the
record date fixed for determining holders of Common Stock entitled to
receive such cash or property (or if no such record date is
established, the effective date of such transaction) shall be entitled
to receive the amount of cash or property that such holder would have
been entitled to receive had such holder converted his shares of this
Series into Common Stock immediately prior to such record date (or
effective date) (based on the election or nonelection made by the
holder of record of the largest number of shares of this Series, as
provided above). Concurrently with the mailing to holders of Common
Stock of any document pursuant to which such holders may make an
election regarding the kind or amount of securities or other property
that will be receivable by such holders in any transaction described
in clause (a) or (b) of the first sentence of this Section 3.6, the
Corporation shall mail a copy thereof to the holders of record of the
shares of this Series as of the date used for determining the holders
of record of Common Stock entitled to such mailing, which document
shall be used by the holders of shares of this Series to make such an
election. The Corporation shall not enter into any of the transactions
referred to in clause (a) or (b) of the first sentence of this Section
3.6 unless effective provision shall be made in the certificate or
articles of incorporation or other constituent documents of the
Corporation or the entity surviving the consolidation or merger, if
other than the
<PAGE>
Corporation, or the entity acquiring the Corporation's assets,
as the case may be, so as to give effect to the provisions set
forth in this Section 3.6. The provisions of this Section 3.6 shall
apply similarly to successive consolidations, mergers, sales or
conveyances. For purposes of this Section 3.6, the term "Corporation"
shall refer to the Corporation as constituted immediately prior to the
merger, consolidation or other transaction referred to in this Section
3.6.
3.7 The Corporation shall at all times reserve and keep
available, free from preemptive rights, out of its authorized but
unissued stock, for the purpose of effecting the conversion of the
shares of this Series, such number of its duly authorized shares of
Common Stock and Series LMC Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding shares of this
Series into shares of Common Stock or Series LMC Common Stock at any
time (assuming that, at the time of the computation of such number of
shares, all such Common Stock or Series LMC Common Stock would be held
by a single holder); provided, however, that nothing contained herein
shall preclude the Corporation from satisfying its obligations in
respect of the conversion of the shares by delivery of purchased
shares of Common Stock or Series LMC Common Stock that are held in the
treasury of the Corporation. All shares of Common Stock or Series LMC
Common Stock that shall be deliverable upon conversion of the shares
of this Series shall be duly and validly issued, fully paid and
nonassessable. For purposes of this Section 3, any shares of this
Series at any time outstanding shall not include shares held in the
treasury of the Corporation.
3.8 In any case in which Section 2.4 shall require that
any adjustment be made effective as of or retroactively immediately
following a record date, the Corporation may elect to defer (but only
for five (5) Trading Days following the occurrence of the event which
necessitates the notice referred to in Section 2.4(d)) issuing to the
holder of any shares of this Series converted after such record date
(i) the shares of Common Stock issu- able upon such conversion over
and above (ii) the shares of Common Stock issuable upon such
conversion on the basis of the Formula Number prior to adjustment;
provided, however, that the Corporation shall deliver to such holder a
due bill or other appropriate instrument evidencing such holder's
<PAGE>
right to receive such additional shares upon the occurrence of the
event requiring such adjustment.
3.9 If any shares of Common Stock or Series LMC Common
Stock that would be issuable upon conversion pursuant to this Section
3 require registration with or approval of any governmental authority
before such shares may be issued upon conversion (other than any such
registration or approval required to avoid a violation of the
Communications Laws), the Corporation will in good faith and as
expeditiously as possible cause such shares to be duly registered or
approved, as the case may be. The Corporation will use commercially
reasonable efforts to list the shares of (or depositary shares
representing fractional interests in) Common Stock required to be
delivered upon conversion of shares of this Series prior to such
delivery upon the principal national securities exchange, if any, upon
which the outstanding Common Stock is listed at the time of such
delivery.
3.10 The Corporation shall pay any and all issue or
other taxes that may be payable in respect of any issue or delivery of
shares of Common Stock or Series LMC Common Stock on conversion of
shares of this Series pursuant hereto. The Corporation shall not,
however, be required to pay any tax which is payable in respect of any
transfer involved in the issue or delivery of Common Stock or Series
LMC Common Stock in a name other than that in which the shares of this
Series so converted were registered, and no such issue or delivery
shall be made unless and until the Person requesting such issue has
paid to the Corporation the amount of such tax, or has established, to
the satisfaction of the Corporation, that such tax has been paid.
3.11 In case of (i) the voluntary or involuntary
dissolution, liquidation or winding up of the Corporation or (ii) any
action triggering an adjustment to the Formula Number pursuant to
Section 2.4 or Section 3.6, then, in each case, the Corporation shall
cause to be mailed, first-class postage prepaid, to the holders of
record of the outstanding shares of this Series, at least fifteen (15)
days prior to the applicable record date for any such transaction (or
if no record date will be established, the effective date thereof), a
notice stating (x) the date, if any, on which a record is to be taken
for the purpose of any such transaction (or, if no record date will be
established, the date as of which holders of record of Common Stock
entitled to participate in such transaction
<PAGE>
are determined), and (y) the expected effective date thereof.
Failure to give such notice or any defect therein shall not
affect the legality or validity of the proceedings described in this
Section 3.11.
4. Voting.
4.1 The shares of this Series shall have no rights to
vote in the election of directors or with respect to any other matter
except as expressly provided in this Section 4 or as required by law.
4.2 So long as any shares of this Series remain
outstanding, unless a greater percentage shall then be required by
law, the Corporation shall not, without the affirmative vote of the
holders of shares of this Series representing at least 66-2/3% of the
aggregate voting power of shares of this Series then outstanding,
amend, alter or repeal any of the provisions of the Certificate or the
Certificate of Incorporation so as, in any such case, as applicable,
to (i) amend, alter or repeal any of the powers, preferences or rights
of the Series Common Stock or (ii) adversely affect the voting powers,
designations, preferences and relative, participating, optional or
other special rights, and qualifications, limitations or restrictions
thereof, of the shares of this Series or the Series LMC Common Stock;
provided, however, that no affirmative vote of any shares of this
Series shall be required to amend, alter or repeal any of the powers,
preferences or rights of any series of Series Common Stock other than
this Series and the Series LMC Common Stock.
4.3 So long as any shares of this Series remain
outstanding, the Corporation shall not, without the affirmative vote
of the holders of shares of this Series representing 100% of the
aggregate voting power of shares of this Series then outstanding,
amend, alter or repeal the provisions of Section 7.7.
4.4 No consent of holders of shares of this Series
shall be required for (i) the creation of any indebtedness of any kind
of the Corporation, (ii) the authorization or issuance of any class or
series of Parity Stock or Senior Stock, (iii) the authorization of any
decrease in the number of shares constituting this Series or (iv) the
approval of any amendment to the Certificate of Incorporation that
would increase or decrease the aggregate
<PAGE>
number of authorized shares of Series Common Stock or Common Stock,
except to the extent expressly required by the DGCL.
5. Liquidation Rights.
5.1 Upon the liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, the holders of
shares of this Series shall be entitled to receive, contemporaneously
with any distribution to holders of shares of Common Stock upon such
liquidation, dissolution or winding up, an aggregate amount per share
equal to the product of the Formula Number then in effect multiplied
by the aggregate amount to be distributed per share to holders of
Common Stock.
5.2 Neither the sale, exchange or other conveyance (for
cash, shares of stock, securities or other consideration) of all or
substantially all the property and assets of the Corporation nor the
merger or consolidation of the Corporation into or with any other
corporation, or the merger or consolidation of any other corporation
into or with the Corporation, shall be deemed to be a dissolution,
liquidation or winding up, voluntary or involuntary, for the purposes
of this Section 5.
6. Transfer Restrictions.
6.1 Without the prior written consent of the
Corporation, no holder of shares of this Series shall offer, sell,
transfer, pledge, encumber or otherwise dispose of, or agree to offer,
sell, transfer, pledge, encumber or otherwise dispose of, any shares
of this Series or interests in any shares of this Series except to a
Permitted Transferee that shall agree that, prior to such Permitted
Transferee ceasing to be a Permitted Transferee, such Permitted
Transferee must transfer ownership of any shares of this Series, and
all interests therein, held by such Permitted Transferee to the
initial holder who received such shares pursuant to the LMC Agreement.
For the avoidance of doubt, the preceding sentence is not intended to
prohibit a holder of shares of this Series from entering into, or
offering to enter into, any arrangement under which such holder agrees
to promptly convert shares of this Series and sell, transfer or
otherwise dispose of the Common Stock issuable upon such conversion.
The provisions of this Section 6.1 shall continue to be in effect with
respect to
<PAGE>
any shares of this Series received by any holder by virtue of merger,
consolidation, operation of law or otherwise.
6.2 Certificates for shares of this Series shall bear
such legends as the Corporation shall from time to time deem
appropriate.
7. Other Provisions.
7.1 All notices from the Corporation to the holders of
shares of this Series shall be given by one of the methods specified
in Section 7.2. With respect to any notice to a holder of shares of
this Series required to be provided hereunder, neither failure to give
such notice, nor any defect therein or in the transmission thereof, to
any particular holder shall affect the sufficiency of the notice or
the validity of the proceedings referred to in such notice with
respect to the other holders or affect the legality or validity of any
distribution, right, warrant, reclassification, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up, or the
vote upon any such action. Any notice which was mailed in the manner
herein provided shall be conclusively presumed to have been duly given
whether or not the holder receives the notice.
7.2 All notices and other communications hereunder
shall be deemed given (i) on the first Trading Day following the date
received, if delivered personally, (ii) on the Trading Day following
timely deposit with an overnight courier service, if sent by overnight
courier specifying next day delivery and (iii) on the first Trading
Day that is at least five days following deposit in the mails, if sent
by first class mail to (x) a holder at its last address as it appears
on the transfer records or registry for the shares of this Series and
(y) the Corporation at the following address (or at such other address
as the Corporation shall specify in a notice pursuant to this Section
7.2): Time Warner Inc., 75 Rockefeller Plaza, New York, New York
10019, Attention: General Counsel.
7.3 Any shares of this Series which have been converted
or otherwise acquired by the Corporation shall, after such conversion
or acquisition, as the case may be, be retired and promptly cancelled
and shall become
<PAGE>
authorized but unissued shares of this Series, unless the Board of
Directors determines otherwise.
7.4 The Corporation shall be entitled to recognize the
exclusive right of a Person registered on its records as the holder of
shares of this Series, and such holder of record shall be deemed the
holder of such shares for all purposes.
7.5 All notice periods referred to in the Certificate
shall commence on the date of the mailing of the applicable notice.
7.6 Any registered holder of shares of this Series may
proceed to protect and enforce its rights by any available remedy by
proceeding at law or in equity to protect and enforce any such rights,
whether for the specific enforcement of any provision in the
Certificate or in aid of the exercise of any power granted herein, or
to enforce any other proper remedy.
7.7 The shares of this Series shall not be subject to
redemption at the option of the Corporation, including pursuant to
Section 5 of Article IV of the Certificate of Incorporation (or any
equivalent provision in any further amendment to or restatement of the
Certificate of Incorporation).
IN WITNESS WHEREOF, TW Inc. has caused this certificate
to be signed and attested this [ ] day of [ ].
TW INC.,
by
--------------------------
Name:
Title:
Attest: ------------------------
Name:
Title:
<PAGE>
EXHIBIT L
CERTIFICATE OF THE VOTING POWERS, DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL
RIGHTS, AND QUALIFICATIONS, LIMITATIONS
OR RESTRICTIONS THEREOF, OF
SERIES LMC COMMON STOCK
OF
TW INC.
--------------------
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
--------------------
TW INC., a corporation organized and existing by virtue
of the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify that the following resolution was
duly adopted by action of the Board of Directors of the Corporation
(the "Board of Directors") at a meeting duly held on [ ], 1996.
RESOLVED that pursuant to the authority expressly
granted to and vested in the Board of Directors by the provisions of
Section 3 of Article IV of the Certificate of Incorporation of the
Corporation, as amended (the "Certificate of Incorporation"), and
Section 151(g) of the General Corporation Law of the State of Delaware
(the "DGCL"), the Board of Directors hereby creates, from the
authorized shares of Series Common Stock, par value $1.00 per share
(the "Series Common Stock"), of the Corporation authorized to be
issued pursuant to the Certificate of Incorporation, a series of
Series Common Stock, and hereby fixes the voting powers, designations,
preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions thereof, of
the shares of such series as follows:
The series of Series Common Stock hereby established shall
consist of [ ] shares designated as Series LMC Common Stock. The
number of shares constituting such series may be increased or
decreased from time to time by a resolution or resolutions of the
Board of Directors. The terms of such series shall be as follows:
<PAGE>
1. Definitions. As used herein, the following terms shall
have the indicated meanings:
1.1 "Board of Directors" shall mean the Board of
Directors of the Corporation or, with respect to any action to be
taken by the Board of Directors, any committee of the Board of
Directors duly authorized to take such action.
1.2 "Capital Stock" shall mean any and all shares of
corporate stock of a Person (however designated and whether
representing rights to vote, rights to participate in dividends or
distributions upon liquidation or otherwise with respect to such
Person, or any division or subsidiary thereof, or any joint venture,
partnership, corporation or other entity).
1.3 "Certificate" shall mean the Certificate of the
Voting Powers, Designations, Preferences and Relative, Participating,
Optional or Other Special Rights, and Qualifications, Limitations or
Restrictions Thereof, of Series LMC Common Stock filed with the
Secretary of State of the State of Delaware pursuant to Section 151 of
the DGCL.
1.4 "Certificate of Incorporation" shall mean the
Certificate of Incorporation of the Corporation, as amended from time
to time.
1.5 "Closing Price" of the Common Stock shall mean the
last reported sale price of the Common Stock (regular way) as shown on
the Composite Tape of the NYSE, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices on the
NYSE, or, if the Common Stock is not listed or admitted to trading on
the NYSE, on the principal national securities exchange on which such
stock is listed or admitted to trading, or, if it is not listed or
admitted to trading on any national securities exchange, the last
reported sale price of the Common Stock, or, in case no such sale
takes place on such day, the average of the closing bid and asked
prices, in either case as reported by NASDAQ.
1.6 "Common Stock" shall mean the class of Common
Stock, par value $1.00 per share, of the Corporation authorized at the
date of the Certificate, or any other class of stock resulting from
(x) successive changes or reclassifications of such Common Stock
consisting of changes in par value, or from par value to no par value,
(y) a sub-
<PAGE>
division or combination or (z) any other changes for which
an adjustment is made under Section 2.4(a), and in any such case
including any shares thereof authorized after the date of the
Certificate, together with any associated rights to purchase other
securities of the Corporation which are at the time represented by the
certificates representing such shares of Common Stock.
1.7 "Communications Laws" shall mean 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 Federal Communications Commission (the
"FCC"). All references herein to 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 or promulgated with a delayed
effective date).
1.8 "Conversion Date" shall have the meaning set forth
in Section 3.5.
1.9 "Corporation" shall mean TW Inc., a Delaware
corporation, and any of its successors by operation of law, including
by merger or consolidation.
1.10 "DGCL" shall mean the General Corporation Law of
the State of Delaware, as amended from time to time.
1.11 "Dividend Payment Date" shall have the meaning set
forth in Section 2.1.
1.12 "Formula Number" shall have the meaning set forth
in Section 2.1.
1.13 "LMC Agreement" shall mean the Agreement dated as
of September 22, 1995, among a Delaware corporation known on the date
of the Certificate as "Time Warner Inc.", Liberty Media Corporation, a
Delaware corporation ("LMC Parent"), and certain subsidiaries of LMC
Parent listed under "Subsidiaries of LMC Parent" on the signature
pages thereto, as amended from time to time.
<PAGE>
1.14 "NASDAQ" shall mean The Nasdaq Stock Market.
1.15 "NYSE" shall mean the New York Stock Exchange, Inc.
1.16 "Parity Stock" shall mean shares of Common Stock
and shares of any other class or series of Capital Stock of the
Corporation which, by the terms of the Certificate of Incorporation or
of the instrument by which the Board of Directors, acting pursuant to
authority granted in the Certificate of Incorporation, shall fix the
relative rights, preferences and limitations thereof, shall, in the
event that the stated dividends thereon are not paid in full, be
entitled to share ratably with the shares of this Series in the
payment of dividends in accordance with the sums which would be
payable on such shares if all dividends were declared and paid in
full, or shall, in the event that the amounts payable thereon in
liquidation are not paid in full, be entitled to share ratably with
the shares of this Series in any distribution of assets other than by
way of dividends in accordance with the sums which would be payable in
such distribution if all sums payable were discharged in full.
1.17 "Permitted Transferee" shall mean any Liberty
Party, as such term is defined in the LMC Agreement.
1.18 "Person" shall mean an individual, corporation,
partnership, limited liability company, joint venture, association,
trust, unincorporated organization or other entity.
1.19 "Preferred Stock" shall mean the class of
Preferred Stock, par value $1.00 per share, of the Corporation
authorized at the date of the Certificate, including any shares
thereof authorized after the date of the Certificate.
1.20 "Record Date" shall have the meaning set forth in
Section 2.1.
1.21 "Senior Stock" shall mean shares of any class or
series of Capital Stock of the Corporation which, by the terms of the
Certificate of Incorporation or of the instrument by which the Board
of Directors, acting pursuant to authority granted in the Certificate
of Incorporation, shall fix the relative rights, preferences and
limitations
<PAGE>
thereof, shall be senior to the shares of this Series in respect
of the right to receive dividends or to participate in any
distribution of assets other than by way of dividends.
1.22 "Series Common Stock" shall mean the class of
Series Common Stock, par value $1.00 per share, of the Corporation
authorized at the date of the Certificate, including any shares
thereof authorized after the date of the Certificate.
1.23 "Series LMC Common Stock" and "this Series" shall
mean the series of Series Common Stock authorized and designated as
Series LMC Common Stock at the date of the Certificate, including any
shares thereof authorized and designated after the date of the
Certificate.
1.24 "Series LMCN-V Common Stock" shall mean the series
of Series Common Stock authorized and designated as Series LMCN-V
Common Stock at the date of the Certificate, including any shares
thereof authorized and designated after the date of the Certificate.
1.25 "Trading Day" shall mean, so long as the Common
Stock is listed or admitted to trading on the NYSE, a day on which the
NYSE is open for the transaction of business, or, if the Common Stock
is not listed or admitted to trading on the NYSE, a day on which the
principal national securities exchange on which the Common Stock is
listed is open for the transaction of business, or, if the Common
Stock is not so listed or admitted for trading on any national
securities exchange, a day on which the National Market System of
NASDAQ is open for the transaction of business.
2. Dividends.
2.1 The holders of shares of this Series shall be
entitled to receive dividends, if, as and when declared by the Board
of Directors, out of funds legally available therefor, payable on such
dates as may be set by the Board of Directors for payment of cash
dividends on the Common Stock (each such date being referred to herein
as a "Dividend Payment Date"), in cash, in an amount per share equal
to the product of (i) the Formula Number in effect as of such Dividend
Payment Date multiplied by (ii) the amount
<PAGE>
of the regularly scheduled cash dividend to be paid on one share
of common Stock on such Dividend Payment Date; provided,
however, dividends on the shares of this Series shall be payable
pursuant to this Section 2.1 only to the extent that regularly
scheduled cash dividends are declared and paid on the Common Stock. As
used herein, the "Formula Number" shall initially be 1.0000, which
shall be adjusted from time to time pursuant to Section 2.4. The
dividends payable on any Dividend Payment Date shall be paid to the
holders of record of shares of this Series at the close of business on
the record date for the related regularly scheduled cash dividend on
the Common Stock (each such date being referred to herein as a "Record
Date"). The amount of dividends that are paid to each holder of record
on any Dividend Payment Date shall be rounded to the nearest cent.
2.2 In case the Corporation shall at any time
distribute (other than a distribution in liquidation of the
Corporation and other than a distribution as a result of which an
adjustment to the Formula Number is made pursuant to Section 2.4) to
the holders of its shares of Common Stock any assets or property,
including evidences of indebtedness or securities of the Corporation
or of any other Person (including common stock of such Person) or cash
(but excluding regularly scheduled cash dividends payable on shares of
Common Stock), or in case the Corporation shall at any time distribute
(other than a distribution in liquidation of the Corporation) to such
holders rights, options or warrants to subscribe for or purchase
shares of Common Stock (including shares held in the treasury of the
Corporation), or rights, options or warrants to subscribe for or
purchase any other security or rights, options or warrants to
subscribe for or purchase any assets or property (in each case,
whether of the Corporation or otherwise, but other than any
distribution of rights to purchase securities of the Corporation if
the holder of shares of this Series would otherwise be entitled to
receive such rights upon conversion of shares of this Series for
Common Stock pursuant to Section 3, provided, however, that if such
rights are subsequently redeemed by the Corporation, such redemption
shall be treated for purposes of this Section 2.2 as a cash dividend
(but not a regularly scheduled cash dividend) on the Common Stock),
the Corporation shall simultaneously distribute such assets, property,
securities, rights, options or warrants to the holders of shares of
this Series on the record date fixed for determining the holders of
Common Stock entitled to participate in such distribution (or, if no
such record date shall be established, the
<PAGE>
effective time thereof) in an amount per share of this Series
equal to the amount that a holder of one share of this Series
would have been entitled to receive had such share of this Series been
converted into Common Stock immediately prior to such record date (or
effective time). In the event of a distribution to holders of shares
of this Series pursuant to this Section 2.2, such holders shall be
entitled to receive fractional shares or interests only to the extent
that holders of Common Stock are entitled to receive the same. The
holders of shares of this Series on the applicable record date (or
effective time) shall be entitled to receive in lieu of such
fractional shares or interests the same consideration as is payable to
holders of Common Stock with respect thereto. If there are no
fractional shares or interests payable to holders of Common Stock, the
holders of shares of this Series on the applicable record date (or
effective time) shall receive in lieu of such fractional shares or
interests the fair value thereof as determined by the Board of
Directors.
2.3 In the event that the holders of Common Stock are
entitled to make any election with respect to the kind or amount of
securities or other property receivable by them in any distribution
that is subject to Section 2.2, the kind and amount of securities or
other property that shall be distributable to the holders of shares of
this Series shall be based on (i) the election, if any, made by the
holder of record (as of the date used for determining the holders of
Common Stock entitled to make such election) of the largest number of
shares of this Series in writing to the Corporation on or prior to the
last date on which a holder of Common Stock may make such an election
or (ii) if no such election is timely made, an assumption that such
holder failed to exercise any such rights (provided that if the kind
or amount of securities or other property is not the same for each
nonelecting holder, then the kind and amount of securities or other
property receivable by holders of shares of this Series shall be based
on the kind or amount of securities or other property receivable by a
plurality of the shares held by the nonelecting holders of Common
Stock). Concurrently with the mailing to holders of Common Stock of
any document pursuant to which such holders may make an election of
the type referred to in this Section 2.3, the Corporation shall mail a
copy thereof to the holders of record of shares of this Series as of
the date used for determining the holders of record of Common Stock
entitled to such mailing, which document shall be used
<PAGE>
by the holders of record of shares of this Series to make such an election.
2.4 The Formula Number shall be adjusted from time to
time as follows, whether or not any shares of this Series have been
issued by the Corporation, for events occurring on or after [ ]: (F1)
(a) In case the Corporation shall (i) pay a dividend in
shares of its Common Stock, (ii) combine its outstanding shares
of Common Stock into a smaller number of shares, (iii) subdivide
its outstanding shares of Common Stock or (iv) reclassify (other
than by way of a merger or consolidation that is subject to
Section 3.6) its shares of Common Stock, then the Formula Number
in effect immediately before such event shall be appropriately
adjusted so that immediately following such event the holders of
shares of this Series shall be entitled to receive upon
conversion thereof the kind and amount of shares of Capital Stock
of the Corporation which they would have owned or been entitled
to receive upon or by reason of such event if such shares of this
Series had been converted immediately before the record date (or,
if no record date, the effective date) for such event (it being
understood that any distribution of cash or Capital Stock (other
than Common Stock) that shall accompany a reclassification of the
Common Stock, shall be subject to Section 2.2 rather than this
Section 2.4(a)). An adjustment made pursuant to this Section
2.4(a) shall become effective retroactively immediately after the
record date in the case of a dividend or distribution and shall
become effective retroactively immediately after the effective
date in the case of a subdivision, combination or
reclassification. For the purposes of this Section 2.4(a), in the
event that the holders of Common Stock are entitled to make any
election with respect to the kind or amount of securities
receivable by them in any transaction that is subject to this
Section 2.4(a) (including any election that would result in all
or a portion of the transaction becoming subject to Section 2.2),
the kind and amount of securities that shall be distributable to
the holders
- ---------------------------
(F1) Insert the date of filing of the Certificate or, if earlier, the date
of filing of the certificate for the Series LMCN-V Common Stock.
<PAGE>
of shares of this Series shall be based on (i) the election,
if any, made by the holder of record (as of the date
used for determining the holders of Common Stock entitled to make
such election) of the largest number of shares of this Series in
writing to the Corporation on or prior to the last date on which
a holder of Common Stock may make such an election or (ii) if no
such election is timely made, an assumption that such holder
failed to exercise any such rights (provided that if the kind or
amount of securities is not the same for each nonelecting holder,
then the kind and amount of securities receivable shall be based
on the kind or amount of securities receivable by a plurality of
nonelecting holders of Common Stock). Concurrently with the
mailing to holders of Common Stock of any document pursuant to
which such holders may make an election of the type referred to
in this Section 2.4(a), the Corporation shall mail a copy thereof
to the holders of record of shares of this Series as of the date
used for determining the holders of record of Common Stock
entitled to such mailing, which document shall be used by the
holders of record of shares of this Series to make such an
election.
(b) The Corporation shall be entitled to make such
additional adjustments in the Formula Number, in addition to
those required by Section 2.4(a) as shall be necessary in order
that any dividend or distribution in Common Stock or any
subdivision, reclassification or combination of shares of Common
Stock referred to above, shall not be taxable to the holders of
Common Stock for United States Federal income tax purposes, so
long as such additional adjustments pursuant to this Section
2.4(b) do not decrease the Formula Number.
(c) All calculations under this Section 2 and Section 3
shall be made to the nearest cent, one-hundredth of a share or,
in the case of the Formula Number, one hundred-thousandth.
Notwithstanding any other provision of this Section 2.4, the
Corporation shall not be required to make any adjustment of the
Formula Number unless such adjustment would require an increase
or decrease of at least one percent (1%) of the Formula Number.
Any lesser adjustment shall be carried forward and shall be made
at the time of and together with the next subsequent adjustment
that, together with any adjustment or adjustments so carried
<PAGE>
forward, shall amount to an increase or decrease of at least
one percent (1%) of the Formula Number. Any adjustments
under this Section 2.4 shall be made successively whenever an
event requiring such an adjustment occurs.
(d) Promptly after an adjustment in the Formula Number
is required, the Corporation shall provide written notice to each
of the holders of shares of this Series, which notice shall state
the adjusted Formula Number.
(e) If a distribution is made in accordance with the
provisions of Section 2.2, anything in this Section 2.4 to the
contrary notwithstanding, no adjustment pursuant to this Section
2.4 shall be effected by reason of the distribution of such
assets, property, securities, rights, options or warrants or the
subsequent modification, exercise, expiration or termination of
such securities, rights, options or warrants.
3. Conversion at the Option of the Holder.
3.1 Each holder of a share of this Series shall have
the right at any time to convert such share of this Series into
either: (i) a number of shares of Common Stock per share of this
Series equal to the Formula Number in effect on the Conversion Date or
(ii) one share of Series LMCN-V Common Stock per share of this Series;
provided, however, that such holder may convert shares of this Series
only to the extent that the ownership by such holder or its designee
of the shares of Common Stock or Series LMCN-V Common Stock issuable
upon such conversion would not violate the Communications Laws.
3.2 No adjustments in respect of payments of dividends
on shares of this Series surrendered for conversion or any dividend on
the Common Stock or Series LMCN-V Common Stock issued upon conversion
shall be made upon the conversion of any shares of this Series (it
being understood that if the Conversion Date for shares of this Series
occurs after the Record Date and prior to the Dividend Payment Date of
any such dividend, the holders of record on such Record Date shall be
entitled to receive the dividend payable with respect to such shares
on the related Dividend Payment Date pursuant to Section 2.1).
<PAGE>
3.3 The Corporation may, but shall not be required to,
in connection with any conversion of shares of this Series into shares
of Common Stock, issue a fraction of a share of Common Stock, and if
the Corporation shall determine not to issue any such fraction, the
Corporation shall make a cash payment (rounded to the nearest cent)
equal to such fraction multiplied by the Closing Price of the Common
Stock on the last Trading Day prior to the Conversion Date. The
Corporation shall issue a fraction of a share of Series LMCN-V Common
Stock in order to effect a conversion of a fraction of a share of this
Series into Series LMCN-V Common Stock.
3.4 Any holder of shares of this Series electing to
convert such shares into Common Stock or Series LMCN-V Common Stock
shall surrender the certificate or certificates for such shares at the
principal executive office of the Corporation (or at such other place
as the Corporation may designate by notice to the holders of shares of
this Series) during regular business hours, duly endorsed to the
Corporation or in blank, or accompanied by instruments of transfer to
the Corporation or in blank, or in form satisfactory to the
Corporation, and shall give written notice to the Corporation at such
office that such holder elects to convert such shares of this Series,
which notice shall state whether the shares of this Series delivered
for conversion shall be converted into shares of Common Stock or
shares of Series LMCN-V Common Stock. If any such certificate or
certificates shall have been lost, stolen or destroyed, the holder
shall, in lieu of delivering such certificate or certificates, deliver
to the Corporation (or such other place) an indemnification agreement
and bond satisfactory to the Corporation. The Corporation shall, as
soon as practicable (subject to Section 3.8) after such deposit of
certificates for shares of this Series or delivery of the
indemnification agreement and bond, accompanied by the written notice
above prescribed, issue and deliver at such office (or such other
place) to the holder for whose account such shares were surrendered,
or a designee of such holder, certificates representing either (i) the
number of shares of Common Stock and the cash, if any, or (ii) the
number of shares of Series LMCN-V Common Stock, as the case may be, to
which such holder is entitled upon such conversion. Each share of
Common Stock delivered to a holder or its designee as a result of
conversion of shares of this Series pursuant to this Section 3 shall
be accompanied by any rights associated generally with each
<PAGE>
other share of Common Stock outstanding as of the Conversion Date.
3.5 Conversion shall be deemed to have been made as of
the date (the "Conversion Date") that the certificate or certificates
for the shares of this Series to be converted and the written notice
prescribed in Section 3.4 are received by the Corporation; and the
Person entitled to receive the Common Stock or Series LMCN-V Common
Stock issuable upon such conversion shall be treated for all purposes
as the holder of record of such Common Stock or Series LMCN-V Common
Stock, as the case may be, on such date. The Corporation shall not be
required to deliver certificates for shares of Common Stock or Series
LMCN-V Common Stock while the stock transfer books for such stock or
for this Series are duly closed for any purpose, but certificates for
shares of Common Stock or Series LMCN-V Common Stock, as the case may
be, shall be delivered as soon as practicable after the opening of
such books.
3.6 In the event that on or after [ ](F2), whether or
not any shares of this Series have been issued by the Corporation,
either (a) any consolidation or merger to which the Corporation is a
party, other than a merger or consolidation in which the Corporation
is the surviving or continuing corporation and which does not result
in any reclassification of, or change (other than a change in par
value or from par value to no par value or from no par value to par
value, or as a result of a subdivision or combination) in, outstanding
shares of Common Stock or (b) any sale or conveyance of all or
substantially all of the property and assets of the Corporation, then
lawful provision shall be made as part of the terms of such
transaction whereby the holder of each share of this Series shall have
the right thereafter, during the period such share shall be
convertible, to convert such share into the kind and amount of shares
of stock or other securities and property receivable upon such
consolidation, merger, sale or conveyance by a holder of the number of
shares of Common Stock into which such shares of this Series could
have been converted immediately prior to such consolidation, merger,
sale or conveyance, subject to adjustment which shall be as nearly
equivalent as may be practicable to the
- -------------------------
(F2) Insert the date of filing of the Certificate or, if earlier, the date
of filing of the certificate for the Series LMCN-V Common Stock.
<PAGE>
adjustments provided for in Section 2.4 and this Section 3
(based on (i) the election, if any, made in writing to the
Corporation by the holder of record (as of the date used for
determining holders of Common Stock entitled to make such election) of
the largest number of shares of this Series on or prior to the last
date on which a holder of Common Stock may make an election regarding
the kind or amount of securities or other property receivable by such
holder in such transaction or (ii) if no such election is timely made,
an assumption that such holder failed to exercise any such rights
(provided that if the kind or amount of securities or other property
is not the same for each nonelecting holder, then the kind and amount
of securities or other property receivable shall be based upon the
kind and amount of securities or other property receivable by a
plurality of the nonelecting holders of Common Stock)). In the event
that any of the transactions referred to in clause (a) or (b) of the
first sentence of this Section 3.6 involves the distribution of cash
or property (other than equity securities) to a holder of Common
Stock, lawful provision shall be made as part of the terms of the
transaction whereby the holder of each share of this Series on the
record date fixed for determining holders of Common Stock entitled to
receive such cash or property (or if no such record date is
established, the effective date of such transaction) shall be entitled
to receive the amount of cash or property that such holder would have
been entitled to receive had such holder converted his shares of this
Series into Common Stock immediately prior to such record date (or
effective date) (based on the election or nonelection made by the
holder of record of the largest number of shares of this Series, as
provided above). Concurrently with the mailing to holders of Common
Stock of any document pursuant to which such holders may make an
election regarding the kind or amount of securities or other property
that will be receivable by such holders in any transaction described
in clause (a) or (b) of the first sentence of this Section 3.6, the
Corporation shall mail a copy thereof to the holders of record of the
shares of this Series as of the date used for determining the holders
of record of Common Stock entitled to such mailing, which document
shall be used by the holders of shares of this Series to make such an
election. The Corporation shall not enter into any of the transactions
referred to in clause (a) or (b) of the first sentence of this Section
3.6 unless effective provision shall be made in the certificate or
articles of incorporation or other constituent documents of the
Corporation or the entity surviving the consolidation or merger, if
other than the
<PAGE>
Corporation, or the entity acquiring the Corporation's assets,
as the case may be, so as to give effect to the provisions set
forth in this Section 3.6. The provisions of this Section 3.6 shall
apply similarly to successive consolidations, mergers, sales or
conveyances. For purposes of this Section 3.6, the term "Corporation"
shall refer to the Corporation as constituted immediately prior to the
merger, consolidation or other transaction referred to in this Section
3.6.
3.7 The Corporation shall at all times reserve and keep
available, free from preemptive rights, out of its authorized but
unissued stock, for the purpose of effecting the conversion of the
shares of this Series, such number of its duly authorized shares of
Common Stock and Series LMCN-V Common Stock as shall from time to time
be sufficient to effect the conversion of all outstanding shares of
this Series into shares of Common Stock or Series LMCN-V Common Stock
at any time (assuming that, at the time of the computation of such
number of shares, all such Common Stock or Series LMCN-V Common Stock
would be held by a single holder); provided, however, that nothing
contained herein shall preclude the Corporation from satisfying its
obligations in respect of the conversion of the shares by delivery of
purchased shares of Common Stock or Series LMCN-V Common Stock that
are held in the treasury of the Corporation. All shares of Common
Stock or Series LMCN-V Common Stock that shall be deliverable upon
conversion of the shares of this Series shall be duly and validly
issued, fully paid and nonassessable. For purposes of this Section 3,
any shares of this Series at any time outstanding shall not include
shares held in the treasury of the Corporation.
3.8 In any case in which Section 2.4 shall require that
any adjustment be made effective as of or retroactively immediately
following a record date, the Corporation may elect to defer (but only
for five (5) Trading Days following the occurrence of the event which
necessitates the notice referred to in Section 2.4(d)) issuing to the
holder of any shares of this Series converted after such record date
(i) the shares of Common Stock issu- able upon such conversion over
and above (ii) the shares of Common Stock issuable upon such
conversion on the basis of the Formula Number prior to adjustment;
provided, however, that the Corporation shall deliver to such holder a
due bill or other appropriate instrument evidencing such holder's
<PAGE>
right to receive such additional shares upon the occurrence
of the event requiring such adjustment.
3.9 If any shares of Common Stock or Series LMCN-V
Common Stock that would be issuable upon conversion pursuant to this
Section 3 require registration with or approval of any governmental
authority before such shares may be issued upon conversion (other than
any such registration or approval required to avoid a violation of the
Communications Laws), the Corporation will in good faith and as
expeditiously as possible cause such shares to be duly registered or
approved, as the case may be. The Corporation will use commercially
reasonable efforts to list the shares of (or depositary shares
representing fractional interests in) Common Stock required to be
delivered upon conversion of shares of this Series prior to such
delivery upon the principal national securities exchange, if any, upon
which the outstanding Common Stock is listed at the time of such
delivery.
3.10 The Corporation shall pay any and all issue or
other taxes that may be payable in respect of any issue or delivery of
shares of Common Stock or Series LMCN-V Common Stock on conversion of
shares of this Series pursuant hereto. The Corporation shall not,
however, be required to pay any tax which is payable in respect of any
transfer involved in the issue or delivery of Common Stock or Series
LMCN-V Common Stock in a name other than that in which the shares of
this Series so converted were registered, and no such issue or
delivery shall be made unless and until the Person requesting such
issue has paid to the Corporation the amount of such tax, or has
established, to the satisfaction of the Corporation, that such tax has
been paid.
3.11 In case of (i) the voluntary or involuntary
dissolution, liquidation or winding up of the Corporation or (ii) any
action triggering an adjustment to the Formula Number pursuant to
Section 2.4 or Section 3.6, then, in each case, the Corporation shall
cause to be mailed, first-class postage prepaid, to the holders of
record of the outstanding shares of this Series, at least fifteen (15)
days prior to the applicable record date for any such transaction (or
if no record date will be established, the effective date thereof), a
notice stating (x) the date, if any, on which a record is to be taken
for the purpose of any such transaction (or, if no record date will be
established, the date as of which holders of record of Common Stock
entitled to participate in such transaction
<PAGE>
are determined), and (y) the expected effective date thereof.
Failure to give such notice or any defect therein shall not
affect the legality or validity of the proceedings described in this
Section 3.11.
4. Voting.
4.1 The shares of this Series shall have no voting
rights except as expressly provided in this Section 4 or as required
by law.
4.2 Except as otherwise required by law, each share of
this Series shall be entitled to vote together as one class with the
holders of shares of Common Stock upon all matters upon which the
holders of shares of Common Stock are entitled to vote. In any such
vote, the holders of shares of this Series shall be entitled to a
number of votes per share of this Series equal to the product of (i)
the Formula Number then in effect multiplied by (ii) the maximum
number of votes per share of Common Stock that any holder of shares of
Common Stock generally then has with respect to such matter.
4.3 So long as any shares of this Series remain
outstanding, unless a greater percentage shall then be required by
law, the Corporation shall not, without the affirmative vote of the
holders of shares of this Series representing at least 66-2/3% of the
aggregate voting power of shares of this Series then outstanding,
amend, alter or repeal any of the provisions of the Certificate or the
Certificate of Incorporation so as, in any such case, as applicable,
to (i) amend, alter or repeal any of the powers, preferences or rights
of the Series Common Stock or (ii) adversely affect the voting powers,
designations, preferences and relative, participating, optional or
other special rights, and qualifications, limitations or restrictions
thereof, of the shares of this Series or the Series LMCN-V Common
Stock; provided, however, that no affirmative vote of any shares of
this Series shall be required to amend, alter or repeal any of the
powers, preferences or rights of any series of Series Common Stock
other than this Series and the Series LMCN-V Common Stock.
4.4 So long as any shares of this Series remain
outstanding, the Corporation shall not, without the affirmative vote
of the holders of shares of this Series representing 100% of the
aggregate voting power of shares of
<PAGE>
this Series then outstanding, amend, alter or repeal the provisions of
Section 7.7.
4.5 No consent of holders of shares of this Series
shall be required for (i) the creation of any indebtedness of any kind
of the Corporation, (ii) the authorization or issuance of any class or
series of Parity Stock or Senior Stock, (iii) the authorization of any
decrease in the number of shares constituting this Series or (iv) the
approval of any amendment to the Certificate of Incorporation that
would increase or decrease the aggregate number of authorized shares
of Series Common Stock or Common Stock, except to the extent expressly
required by the DGCL.
5. Liquidation Rights.
5.1 Upon the liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, the holders of
shares of this Series shall be entitled to receive, contemporaneously
with any distribution to holders of shares of Common Stock upon such
liquidation, dissolution or winding up, an aggregate amount per share
equal to the product of the Formula Number then in effect multiplied
by the aggregate amount to be distributed per share to holders of
Common Stock.
5.2 Neither the sale, exchange or other conveyance (for
cash, shares of stock, securities or other consideration) of all or
substantially all the property and assets of the Corporation nor the
merger or consolidation of the Corporation into or with any other
corporation, or the merger or consolidation of any other corporation
into or with the Corporation, shall be deemed to be a dissolution,
liquidation or winding up, voluntary or involuntary, for the purposes
of this Section 5.
6. Transfer Restrictions.
6.1 Without the prior written consent of the
Corporation, no holder of shares of this Series shall offer, sell,
transfer, pledge, encumber or otherwise dispose of, or agree to offer,
sell, transfer, pledge, encumber or otherwise dispose of, any shares
of this Series or interests in any shares of this Series except to a
Permitted Transferee that shall agree that, prior to such Permitted
Transferee ceasing to be a Permitted Transferee, such
<PAGE>
Permitted Transferee must transfer ownership of any shares
of this Series, and all interests therein, held by such
Permitted Transferee to the initial holder who received such shares
pursuant to the LMC Agreement. For the avoidance of doubt, the
preceding sentence is not intended to prohibit a holder of shares of
this Series from entering into, or offering to enter into, any
arrangement under which such holder agrees to promptly convert shares
of this Series and sell, transfer or otherwise dispose of the Common
Stock issuable upon such conversion. The provisions of this Section
6.1 shall continue to be in effect with respect to any shares of this
Series received by any holder by virtue of merger, consolidation,
operation of law or otherwise.
6.2 Certificates for shares of this Series shall bear
such legends as the Corporation shall from time to time deem
appropriate.
7. Other Provisions.
7.1 All notices from the Corporation to the holders of
shares of this Series shall be given by one of the methods specified
in Section 7.2. With respect to any notice to a holder of shares of
this Series required to be provided hereunder, neither failure to give
such notice, nor any defect therein or in the transmission thereof, to
any particular holder shall affect the sufficiency of the notice or
the validity of the proceedings referred to in such notice with
respect to the other holders or affect the legality or validity of any
distribution, right, warrant, reclassification, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up, or the
vote upon any such action. Any notice which was mailed in the manner
herein provided shall be conclusively presumed to have been duly given
whether or not the holder receives the notice.
7.2 All notices and other communications hereunder
shall be deemed given (i) on the first Trading Day following the date
received, if delivered personally, (ii) on the Trading Day following
timely deposit with an overnight courier service, if sent by overnight
courier specifying next day delivery and (iii) on the first Trading
Day that is at least five days following deposit in the mails, if sent
by first class mail to (x) a holder at its last address as it appears
on the transfer records or registry for the shares of this Series and
(y) the
<PAGE>
Corporation at the following address (or at such other address
as the Corporation shall specify in a notice pursuant to this
Section 7.2): Time Warner Inc., 75 Rockefeller Plaza, New York, New
York 10019, Attention: General Counsel.
7.3 Any shares of this Series which have been converted
or otherwise acquired by the Corporation shall, after such conversion
or acquisition, as the case may be, be retired and promptly cancelled
and shall become authorized but unissued shares of this Series, unless
the Board of Directors determines otherwise.
7.4 The Corporation shall be entitled to recognize the
exclusive right of a Person registered on its records as the holder of
shares of this Series, and such holder of record shall be deemed the
holder of such shares for all purposes.
7.5 All notice periods referred to in the Certificate
shall commence on the date of the mailing of the applicable notice.
7.6 Any registered holder of shares of this Series may
proceed to protect and enforce its rights by any available remedy by
proceeding at law or in equity to protect and enforce any such rights,
whether for the specific enforcement of any provision in the
Certificate or in aid of the exercise of any power granted herein, or
to enforce any other proper remedy.
7.7 The shares of this Series shall not be subject to
redemption at the option of the Corporation, including pursuant to
Section 5 of Article IV of the Certificate of Incorporation (or any
equivalent provision in any further amendment to or restatement of the
Certificate of Incorporation).
<PAGE>
IN WITNESS WHEREOF, TW Inc. has caused this certificate
to be signed and attested this [ ] day of [ ].
TW INC.,
by
--------------------------
Name:
Title:
Attest: -----------------------
Name:
Title:
