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):
AUGUST 31, 1995
TIME WARNER INC.
(Exact name of registrant as specified in its
certificate of incorporation)
DELAWARE 1-8637 13-1388520
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
75 ROCKEFELLER PLAZA, NEW YORK, NY 10019
(Address of principal executive offices) (zip code)
(212) 484-8000
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name or former address, if changed since last report)
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Page 2
ITEMS 2 AND 5.
On August 31, 1995, Time Warner Inc. ("Time Warner" or the
"Company") announced that it had signed definitive agreements (the
"Restructuring Agreements") with each of Itochu Corporation ("Itochu") and
Toshiba Corporation ("Toshiba"), pursuant to which each of Itochu and Toshiba
agreed to exchange, directly or indirectly, (i) its 5.61% pro rata priority
capital and residual equity interests in Time Warner Entertainment Company,
L.P. ("TWE"), (ii) its 6.25% residual equity interests in TW Service Holding I,
L.P. and TW Service Holding II, L.P. (which own certain assets related to the
TWE businesses) (the "Time Warner Service Partnerships"), and (iii) its option
to increase its interest in TWE under certain circumstances, for preferred
stock of the Company and cash. The Restructuring Agreements provide that,
depending on which of two alternative transaction structures is elected (each
of which has different tax consequences for the parties), each of Itochu and
Toshiba would receive either (i) 7 million shares of a new series of voting
convertible preferred stock of the Company ("Voting Preferred Stock") and $10
million in cash or (ii) 8 million shares of convertible preferred stock of the
Company, consisting of 6.2 million shares of Voting Preferred Stock and 1.8
million shares of a new series of non-voting convertible preferred stock ("Non-
Voting Preferred Stock" and together with the Voting Preferred Stock, the
"Preferred Stock"). The transactions contemplated by the Restructuring
Agreements are referred to herein as the "Itochu/Toshiba Transaction."
On September 5, 1995, Itochu exchanged its TWE and related
interests for 8 million shares of Preferred Stock pursuant to the applicable
Restructuring Agreement. Toshiba has elected to exchange the stock of TAE
Holding, Inc. (which owns its TWE and Time Warner Service Partnership
interests) and its TWE option for 7 million shares of Voting Preferred Stock
and $10 million in cash. The Toshiba transaction is expected to close
shortly.
After giving effect to both transactions, the Company will own,
directly or indirectly, 74.49% of the pro rata priority capital and residual
equity interests in TWE and certain priority capital interests of TWE. The
Company will also own, directly or indirectly, 100% of the equity of the Time
Warner Service Partnerships. U S WEST, Inc. indirectly owns the remaining
25.51% pro rata priority capital and residual equity interests in TWE.
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Page 3
ITEM 7.(a) PRO FORMA FINANCIAL INFORMATION
PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The following pro forma consolidated condensed balance sheet of Time
Warner at June 30, 1995 gives effect to the KBLCOM Acquisition, the CVI
Acquisition, the Unclustered Cable Disposition and the 1995 Debt Refinancings,
as more fully described in Time Warner's Current Report on Form 8-K dated
August 14, 1995, and the Itochu/Toshiba Transaction, as if such transactions
occurred on such date. The following pro forma consolidated statements of
operations of Time Warner for the six months ended June 30, 1995 and the year
ended December 31, 1994 give effect to the Summit Acquisition, the KBLCOM
Acquisition, the CVI Acquisition, the Asset Sale Transactions, the TWE-A/N
Transaction and the 1995 Debt Refinancings, as more fully described in Time
Warner's Current Report on Form 8-K dated August 14, 1995, and the
Itochu/Toshiba Transaction, as if each applicable transaction had occurred at
the beginning of such periods. The pro forma consolidated condensed financial
statements should be read in conjunction with the historical financial
statements of Time Warner and TWE, including the notes thereto, which are
contained in the Time Warner Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995 and the Time Warner Annual Report on Form 10-K for the year
ended December 31, 1994, as well as the historical financial statements and pro
forma consolidated condensed financial statements included or incorporated by
reference in Time Warner's Current Report on Form 8-K dated August 14, 1995.
Capitalized terms are as defined and described in such financial statements,
or elsewhere herein.
The pro forma consolidated condensed financial statements are presented
for informational purposes only and are not necessarily indicative of the
financial position or operating results that would have occurred if the
transactions had been consummated as of the date indicated, nor are they
necessarily indicative of future financial conditions or operating results.
Pro forma adjustments for the Itochu/Toshiba Transaction reflect the
exchange by each of Itochu and Toshiba of (1) its 5.61% pro rata priority
capital and residual equity interests in TWE, (2) its 6.25% residual equity
interests in the Time Warner Service Partnerships and (3) its option to
increase its interests in TWE under certain circumstances, for an aggregate
13.2 million shares of Voting Preferred Stock, 1.8 million shares of Non-
Voting Preferred Stock and $10 million in cash.
The Voting Preferred Stock and Non-Voting Preferred Stock (i) have a
liquidation value of $100 per share, (ii) are convertible, immediately with
respect to the Voting Preferred Stock and after five years (or earlier under
certain circumstances) with respect to the Non-Voting Preferred Stock, into an
aggregate 31.2 million shares of common stock, par value $1.00 per share, of
Time Warner (the "Common Stock") at a conversion price of $48 per share (based
on their liquidation value) and (iii) entitle the holder thereof to receive,
for a period of four years, an annual dividend per share equal to the greater
of $3.75 and an amount equal to the dividends paid on the Common Stock into
which a share of Voting Preferred Stock or Non-Voting Preferred Stock may be
converted. Time Warner has the right to exchange each of the Voting Preferred
Stock and Non-Voting Preferred Stock for Common Stock at the stated conversion
price after four years and five years, respectively, and is permitted to redeem
each series, in whole or in part, for cash at the liquidation value plus
accrued dividends, in each case after four years.
To the extent that any of the Preferred Stock remains outstanding at the
end of the period in which the minimum $3.75 per share dividend is to be paid,
the holders thereafter will receive dividends equal to the dividend declared on
shares of Common Stock multiplied by the number of shares into which their
shares are convertible. Holders of the Voting Preferred Stock are entitled to
vote with the Common Stock on all matters on which the Common Stock is entitled
to vote, and each share of Voting Preferred Stock is entitled to two votes on
any such matter. Time Warner has agreed, under certain circumstances, to
register the Common Stock into which the shares of Preferred Stock may be
converted or exchanged.
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TIME WARNER INC.
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
JUNE 30, 1995
(millions, unaudited)
<TABLE>
<CAPTION>
Itochu/ Adjusted
Time Warner Toshiba Pro
Pro Forma(a) Transaction(b) Forma
------------ -------------- ---------
<S> <C> <C> <C>
ASSETS
Cash and equivalents $ 147 $ (10) $ 137
Other current assets 2,628 - 2,628
----- ------- ------
Total current assets 2,775 (10) 2,765
Investments in and amounts due to and from 5,340 1,596 6,936
Entertainment Group
Other investments 2,441 - 2,441
Property, plant and equipment 1,479 - 1,479
Goodwill 6,326 - 6,326
Cable television franchises 4,270 - 4,270
Other assets 1,684 - 1,684
------- ------- -------
Total assets $24,315 $ 1,586 $25,901
======= ======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Total current liabilities $3,203 $ - $ 3,203
Long-term debt 11,794 - 11,794
Deferred income taxes 4,454 86 4,540
Other long-term liabilities 1,078 - 1,078
Company obligated mandatorily redeemable 374 - 374
preferred securities of subsidiary(1)
Shareholders' equity:
Preferred stock 22 15 37
Common stock 387 - 387
Paid-in capital 4,885 1,485 6,370
Unrealized gains on certain marketable
securities 134 - 134
Accumulated deficit (2,016) - (2,016)
------ ----- ------
Total shareholders' equity 3,412 1,500 4,912
------ ----- ------
Total liabilities and shareholders' equity $24,315 $ 1,586 $25,901
======= ======== =======
</TABLE>
____________________
(1) The sole assets of the subsidiary that is the obligor on the preferred
securities are $385 million principal amount of subordinated notes of Time
Warner due December 23, 1997.
See accompanying notes.
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TIME WARNER INC.
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1995
(millions, unaudited)
<TABLE>
<CAPTION>
Itochu/ Adjusted
Time Warner Toshiba Pro
Pro Forma(c) Transaction(d) Forma
------------ -------------- --------
<S> <C> <C> <C>
Revenues $4,138 $ - $4,138
Cost of revenues* 2,433 - 2,433
Selling, general and administrative* 1,387 - 1,387
----- ------ -----
Operating expenses 3,820 - 3,820
----- ------ -----
Business segment operating income 318 - 318
Equity in pretax income of Entertainment
Group 130 - 130
Interest and other, net (459) (23) (482)
Corporate expenses (39) - (39)
----- ------- ----
Loss before income taxes (50) (23) (73)
Income tax (provision) benefit (63) 9 (54)
----- -------- ----
Net loss (113) (14) (127)
Preferred dividend requirements (45) (28) (73)
----- -------- ----
Net loss applicable to common shares $(158) $ (42) $(200)
===== ======== =====
Net loss per common share ($.41) $ (.11) $ (.52)
===== ======== ======
Average common shares 385.0 - 385.0
===== ======== ======
______________
* Includes depreciation and amortization expense of: $465 $ - $ 465
==== ==== ======
</TABLE>
See accompanying notes.
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Page 6
<TABLE>
<CAPTION>
TIME WARNER INC.
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF
OPERATIONS
YEAR ENDED DECEMBER 31, 1994
(millions, unaudited)
Adjusted
Time Warner Itochu/ Pro
Pro Forma(c) Toshiba Transaction(d) Forma
------------ ---------------------- -------
<S> <C> <C> <C>
Revenues $8,217 $ - $8,217
Cost of revenues* 4,979 - 4,979
Selling, general and administrative* 2,590 - 2,590
----- ---- -----
Operating expenses 7,569 - 7,569
----- ---- -----
Business segment operating income 648 - 648
Equity in pretax income of Entertainment Group 208 - 208
Interest and other, net (902) (47) (949)
Corporate expenses (76) - (76)
----- ----- ----
Loss before income taxes (122) (47) (169)
Income tax (provision) benefit (123) 18 (105)
----- ----- ----
Net loss (245) (29) (274)
Preferred dividend requirements (90) (56) (146)
------- --------- ------
Net loss applicable to common shares $ (335) $ (85) $ (420)
======= ========= ======
Net loss per common share $ (.87) $ (.22) $(1.09)
======= ========= ======
Average common shares 384.0 - 384.0
======= ========= ======
_______________
* Includes depreciation and amortization expense of: $ 916 - $ 916
======= ========= ======
</TABLE>
See accompanying notes.
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Page 7
TIME WARNER INC.
NOTES TO THE TIME WARNER PRO FORMA CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS
(a)Reflects Time Warner's pro forma consolidated condensed
balance sheet at June 30, 1995 as previously reported
in Time Warner's Current Report on Form 8-K dated
August 14, 1995, which gives effect to the KBLCOM
Acquisition, the CVI Acquisition, the Unclustered Cable
Disposition and the 1995 Debt Refinancings, as if such
transactions occurred on such date.
(b)Pro forma adjustments to record the Itochu/Toshiba
Transaction reflect (1) a $1.5 billion increase in
shareholders' equity due to the issuance of an
aggregate 13.2 million shares of Voting Preferred Stock
and 1.8 million shares of Non-Voting Preferred Stock,
(2) the payment of $10 million in cash, (3) a $1.51
billion increase in Time Warner's investment in and
amounts due to and from the Entertainment Group and (4)
an $86 million increase in deferred income tax
liabilities and Time Warner's investment in and amounts
due to and from the Entertainment Group relating to
book-tax basis differences as a result of the
transaction.
(c)Reflects Time Warner's pro forma consolidated condensed
statements of operations for the six months ended June
30, 1995 and the year ended December 31, 1994 as
previously reported in Time Warner's Current Report on
Form 8-K dated August 14, 1995, which give effect to
the Summit Acquisition, the KBLCOM Acquisition, the CVI
Acquisition, the Asset Sale Transactions, the TWE-A/N
Transaction and the 1995 Debt Refinancings, as if each
applicable transaction had occurred at the beginning of
such periods.
(d)Pro forma adjustments to record the Itochu/Toshiba
Transaction for the six months ended June 30, 1995 and
the year ended December 31, 1994 reflect (1) an increase
of $23 million and $47 million, respectively, in interest
and other, net, consisting of, (i) an increase of $15 million
and $30 million, respectively, with respect to the amortization
of the $596 million aggregate excess cost to acquire the
minority interests in TWE held by Itochu and Toshiba,
which will be amortized on a straight-line basis over a
twenty-year period and (ii) an increase of $8 million and
$17 million, respectively, with respect to the elimination of
historical amortization related to Time Warner's excess interest
in the net assets of TWE over the net book value of its
investment in TWE, which resulted from the initial
investments in TWE by Itochu and Toshiba, (2) a
decrease of $9 million and $18 million, respectively,
in income tax expense as a result of income tax
benefits provided at a 41% tax rate and (3) an increase
of $28 million and $56 million, respectively, in
preferred dividend requirements of the Preferred Stock
to be issued in the Itochu/Toshiba Transaction.
<PAGE>
(b) EXHIBITS
2(a) Restructuring Agreement, dated as
of August 31, 1995, among Time
Warner Inc., Itochu Corporation and
Itochu Entertainment Inc.
2(b) Restructuring Agreement, dated as
of August 31, 1995, between Time
Warner Inc. and Toshiba Corporation
(including Form of Registration
Rights Agreement, between Time
Warner Inc. and Toshiba
Corporation).
4(a) Certificate of Designations for
Series G Convertible Preferred
Stock of Time Warner Inc.
4(b) Certificate of Designations for
Series H Convertible Preferred
Stock of Time Warner Inc.
<PAGE>
Page 8
10(a) Registration Rights Agreement,
dated as of September 5, 1995,
among Time Warner Inc., Itochu
Corporation and Itochu
Entertainment Inc.
99(a) Press Release, dated August 31,
1995.
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Page 9
SIGNATURES
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 September 19, 1995.
TIME WARNER INC.
By: /s/ Peter R. Haje
------------------------
Name: Peter R. Haje
Title: Executive Vice President
<PAGE>
Page 10
EXHIBIT INDEX
Pursuant to Item 601 of Regulation S-K
EXHIBIT NO. DESCRIPTION OF EXHIBIT SEQUENTIALLY
NUMBERED
2(a) Restructuring Agreement, dated as of August 31,
1995, among Time Warner Inc., Itochu Corporation
and Itochu Entertainment Inc.
2(b) Restructuring Agreement, dated as of August 31,
1995, between Time Warner Inc. and Toshiba
Corporation (including Form of Registration Rights
Agreement, between Time Warner Inc. and Toshiba
Corporation).
4(a) Certificate of Designations for Series G
Convertible Preferred Stock of Time Warner Inc.
4(b) Certificate of Designations for Series H
Convertible Preferred Stock of Time Warner Inc.
10(a) Registration Rights Agreement, dated as of
September 5, 1995, among Time Warner Inc., Itochu
Corporation and Itochu Entertainment Inc.
99(a) Press Release, dated August 31, 1995.
==========================================================================
RESTRUCTURING AGREEMENT
AMONG
TIME WARNER INC.,
ITOCHU CORPORATION
AND
ITOCHU ENTERTAINMENT INC.
DATED AS OF AUGUST 31, 1995
=============================================================================
<PAGE>
Page i
TABLE OF CONTENTS
Page
ARTICLE 1 RESTRUCTURING.................................2
Section 1.1 Exchange of Itochu Interests for
Exchange Consideration.................2
Section 1.2 Deliveries.............................2
Section 1.3 Valuation .............................3
ARTICLE 2 CLOSING; CLOSING DATE.........................3
ARTICLE 3 REPRESENTATIONS AND WARRANTIES................3
Section 3.1 Representations and
Warranties of TWX......................3
(a) Organization, Standing and Power.......3
(b) Capital Structure......................4
(c) SEC Documents; Financial Statements....4
(d) Authority; Non-Contravention...........5
(e) Litigation.............................6
(f) TWX Preferred Stock....................7
Section 3.2 Representations and Warranties of
Itochu and Itochu Entertainment........7
(a) Organization; Standing and Power.......7
(b) Authority; Noncontravention............7
(c) Title to Itochu Interests..............8
(d) Investment Intent......................9
ARTICLE 4 COVENANTS.....................................9
(a) Publicity..............................9
(b) Satisfaction of Conditions.............9
(c) Additional Agreements..................9
(d) Other Actions..........................9
(e) Tax Matters...........................10
ARTICLE 5 CONDITIONS PRECEDENT.........................10
Section 5.1 Conditions to the Obligations
of TWX................................10
(a) Accuracy of Representations and Warranties10
(b) Performance of Agreements.............10
(c) No Injunctions........................11
(d) Required Consents.....................11
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Page ii
Section 5.2 Conditions to the Obligations of
Itochu and Itochu Entertainment.......11
(a) Accuracy of Representations and
Warranties............................11
(b) Performance of Agreements.............11
(c) No Injunctions........................11
(d) Required Consents.....................12
(e) Registration Rights...................12
ARTICLE 6 GENERAL INDEMNIFICATION......................12
Section 6.1 Survival of Representations and
Warranties............................12
Section 6.2 Obligation of Itochu and Itochu
Entertainment to Indemnify............12
Section 6.3 Obligation of TWX to Indemnify........13
Section 6.4 Notice and Opportunity to Defend......13
ARTICLE 7 CONTINUING RIGHTS AND OBLIGATIONS OFITOCHU AND ITOCHU
ENTERTAINMENT.....................................14
Section 7.1 Termination of Rights as Partner......14
Section 7.2 Other Ventures........................14
Section 7.3 Standstill; Confidentiality...........14
Section 7.4 Continuing Strategic Relationship.....14
(a) Board Representation..................14
(b) Exchange of Personnel.................15
(c) Preferred Vendor/Supplier Status......15
(d) Covenant Against Competition..........15
(e) Additional Consultation Rights........16
Section 7.5 Statement of Enhanced Global
Strategic Alliance....................16
ARTICLE 8 RESTRICTIONS ON TRANSFERS....................16
Section 8.1 Restrictions on Transfer..............16
Section 8.2 Additional Restrictions on
Transfer..............................18
Section 8.3 Legends on Certificates of
TWX Stock.............................18
ARTICLE 9 GENERAL PROVISIONS...........................19
Section 9.1 Certain Definitions...................19
Section 9.2 Notices...............................20
Section 9.3 Alternative Transaction Option........22
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Page iii
Section 9.4 Termination...........................22
Section 9.5 Interpretation........................22
Section 9.6 Waivers and Amendments................22
Section 9.7 Expenses..............................23
Section 9.8 Assignment............................23
Section 9.9 Entire Agreement; No Third Party
Beneficiaries.........................23
Section 9.10 Governing Law........................23
Section 9.11 Counterparts.........................23
EXHIBITS
Exhibit A-1 Certificate of Designations of Series G Preferred Stock
Exhibit A-2 Certificate of Designations of Series H Preferred Stock
Exhibit B Registration Rights Agreement
<PAGE>
Page 1
RESTRUCTURING AGREEMENT
RESTRUCTURING AGREEMENT, dated as of August 31, 1995, among
TIME WARNER INC., a Delaware corporation ("TWX"), ITOCHU CORPORATION, a
corporation organized under the laws of Japan ("Itochu"), and ITOCHU
ENTERTAINMENT INC., a Delaware corporation and an indirect wholly-owned
subsidiary of Itochu ("Itochu Entertainment").
WHEREAS, TWX and Itochu, together with Toshiba Corporation
("Toshiba") and U S WEST, Inc. ("USW") are parties to an Agreement of
Limited Partnership, dated as of October 29, 1991, as amended (the "TWE
Partnership Agreement"), pursuant to which the parties thereto formed and
capitalized Time Warner Entertainment Company, L.P. ("TWE"), a strategic
global limited partnership created for the purpose of exploiting the
products, expertise and resources of the partners of TWE to maximize the
performance of the filmed entertainment, programming, cable and related
business previously owned and operated by TWX;
WHEREAS, Itochu Entertainment is currently a limited partner of
TWE and owns a partnership interest therein (the "Itochu TWE Partnership
Interest") consisting of a Common Sub-Account (as defined in the TWE
Partnership Agreement), entitling it to a Participating Percentage Share
(as defined in the TWE Partnership Agreement) of 5.61%, and an A Sub-
Account (as defined in the TWE Partnership Agreement), representing 5.61%
of the total A Sub-Accounts of TWE;
WHEREAS, pursuant to a Letter Agreement, dated May16, 1993,
between Itochu and TWX, Itochu has the right to increase its interest in
TWE under certain circumstances (the "Itochu Option");
WHEREAS, Itochu Entertainment is also a limited partner of TW
Service Holding I, L.P., a Delaware limited partnership ("TWSH I"), and
TW Service Holding II, L.P., a Delaware limited partnership ("TWSH II"),
and owns a partnership interest in each of TWSH I and TWSH II consisting
of a Common Sub-Account, entitling it to a Participating Percentage Share
of 6.25% (the "Itochu TWSH Partnership Interests", and together with the
Itochu TWE Partnership Interest and the Itochu Option, the "Itochu
Interests");
WHEREAS, TWX and Itochu believe that as the entertainment,
telecommunications and information services businesses continue to
evolve, the mutual ownership of TWE's current businesses and TWX's music,
publishing and other businesses will enhance the strategic value of their
relationship; and
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Page 2
WHEREAS, TWX and Itochu accordingly wish to expand the scope of
their strategic alliance to encompass all such businesses through an
exchange of the Itochu Interests for a direct equity interest in TWX.
NOW, THEREFORE, in consideration of the premises and other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged by each of the parties hereto, the parties hereby agree as
follows:
ARTICLE 1
RESTRUCTURING
Section 1.1 EXCHANGE OF ITOCHU INTERESTS FOR EXCHANGE
CONSIDERATION. At the Closing (as defined below), (a) Itochu
Entertainment shall (and Itochu shall cause Itochu Entertainment to)
transfer, assign and convey the Itochu TWE Partnership Interest and the
Itochu TWSH Partnership Interests to TWX or its designee free and clear
of all liens and other encumbrances, and in consideration therefor TWX
shall issue to Itochu Entertainment 6.0 million shares of Series G
Convertible Preferred Stock, par value $1.00 per share, of TWX, having
the rights, preferences and terms set forth in a Certificate of
Designations substantially in the form of Exhibit A-1 hereto (or an
otherwise designated series of preferred stock of TWX having the same
rights, preferences and terms) (the "Series G Preferred Stock") and 1.8
million shares of Series H Convertible Preferred Stock, par value $1.00
per share, of TWX, having the rights, preferences and terms set forth in
a Certificate of Designations substantially in the form of Exhibit A-2
hereto (or an otherwise designated series of preferred stock of TWX
having the same rights, preferences and terms) (the "Series H Preferred
Stock" and together with the Series G Preferred Stock, the "TWX Preferred
Stock") and (b) Itochu shall transfer, assign and convey the Itochu
Option to TWX or its designee free and clear of all liens and other
encumbrances, and in consideration therefor TWX shall issue to Itochu
200,000 shares of Series G Preferred Stock. The Series G Preferred Stock
and the Series H Preferred Stock issued pursuant to this Section 1.1 are
referred to herein as the "Exchange Consideration".
Section 1.2 DELIVERIES.
(a) At the Closing, (i) Itochu Entertainment shall (and
Itochu shall cause Itochu Entertainment to) deliver to TWX or its
designee instruments executed by it and reasonably satisfactory to TWX,
transferring, assigning and conveying the Itochu TWE Partnership Interest
and the Itochu TWSH Partnership Interests to TWX or its designee and
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Page 3
(ii) Itochu shall deliver to TWX or its designee instruments executed by it
and reasonably satisfactory to TWX, transferring, assigning and conveying
the Itochu Option to TWX or its designee.
(b) At the Closing, TWX shall deliver to Itochu
Entertainment and Itochu, as applicable, stock certificates representing
the number of shares of Series G Preferred Stock and Series H Preferred
Stock provided for in Section1.1, issued in the name of Itochu
Entertainment or Itochu, as applicable.
Section 1.3 VALUATION. At the Closing, Itochu, Itochu
Entertainment and TWX shall endeavor to agree on the value of the
Exchange Consideration and, if they shall agree on such value, neither
Itochu, Itochu Entertainment nor TWX shall take any position in its tax
return or in any tax proceeding that is contrary to such agreed upon
value, unless the value is otherwise determined pursuant to a Final
Determination (as defined in the TWE Partnership Agreement).
ARTICLE 2
CLOSING; CLOSING DATE
The closing of the restructuring transactions contemplated
hereby (the "Closing") shall take place at the offices of Paul, Weiss,
Rifkind, Wharton & Garrison, 1285 Avenue of the Americas, New York, New
York 10019, at 10:00 A.M. New York time on Tuesday, September5, 1995
or, if the conditions set forth in Article5 have not been satisfied or
waived as of such date, on the fifth Business Day following their
satisfaction (or at such other place or such other time as TWX and Itochu
agree in writing). Each of TWX, on the one hand, and Itochu and Itochu
Entertainment, on the other hand, shall promptly notify the other parties
upon the satisfaction or waiver of the conditions set forth in Article 5
with respect to itself. The time and date upon which the Closing occurs
herein is called the "Closing Date."
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.1 REPRESENTATIONS AND WARRANTIES OF TWX. TWX
represents and warrants to each of Itochu and Itochu Entertainment as
follows:
(a) ORGANIZATION, STANDING AND POWER. Each of TWX and
its Significant Subsidiaries (as defined below)
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Page 4
is a corporation or partnership duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation or
organization, has all requisite power and authority to carry on its
business as now being conducted, and is duly qualified 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
necessary, other than in such jurisdictions where the failure so to qualify
would not have a Material Adverse Effect (as defined below) on TWX. TWX has
delivered to Itochu complete and correct copies of its Certificate of
Incorporation and By-Laws, each as amended to date.
(b) CAPITAL STRUCTURE. As of the date of this Agreement,
the authorized capital stock of TWX consists of 750,000,000 shares of
common stock, par value $1.00 per share, of TWX ("TWX Common Stock") and
250,000,000 shares of preferred stock, par value $1.00 per share (the
"Additional TWX Preferred Stock"). As of the close of business on
July31, 1995, 386,174,888 shares (excluding 45,712,535 shares held by
TWX in its treasury (or by wholly-owned subsidiaries of TWX)) of TWX
Common Stock were outstanding. As of the close of business on July 31,
1995, 14,729,146 shares of Additional TWX Preferred Stock were
outstanding (consisting of 464,638 shares of Series B 6.40% Preferred
Stock, 3,264,508 shares of Series C Convertible Preferred Stock, and
11,000,000 shares of Series D Convertible Preferred Stock), and 4,000,000
shares of Series A Participating Preferred Stock were reserved for
issuance pursuant to the Rights Agreement, dated as of January20, 1994,
between TWX and Chemical Bank, as Rights Agent. As of July31, 1995, TWX
had reserved (i) 95,831,405 shares of TWX Common Stock for issuance upon
the conversion of 8.75% convertible subordinated debentures, zero coupon
convertible notes and other convertible securities of TWX, and
(ii)78,632,660 shares of TWX Common Stock for issuance upon the exercise
of outstanding options to purchase shares of TWX. All outstanding shares
of capital stock of TWX have been duly authorized, validly issued, fully
paid and non-assessable, not subject to, or issued in violation of, any
preemptive rights and have not been issued in violation of any federal or
state securities laws.
(c) SEC DOCUMENTS; FINANCIAL STATEMENTS. TWX has filed
with the Securities and Exchange Commission (the "SEC") all required
reports, schedules, registration statements and definitive proxy
statements since January1, 1993 (as such documents have since the time
of their filing been amended, the "TWX SEC Documents"). As of their
respective dates, the TWX SEC Documents complied in all material respects
with the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), or the Securities
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Page 5
Exchange Act of 1934, as amended (the "Exchange Act"), as applicable, and the
rules and regulations of the SEC thereunder applicable to such TWX SEC
Documents, and none of such TWX SEC Documents contained any untrue statement
of a material fact or omitted to state a 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. Except to the extent
that information contained in any TWX SEC Document has been revised or
superseded by later filed TWX SEC Documents filed and publicly available
prior to the date this representation is made or deemed made, none of the
TWX SEC Documents 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 financial
statements of TWX included in the TWX SEC Documents comply as to form in
all material respects with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited financial statements, as permitted by the Exchange Act
Form10-Q) and fairly present the consolidated financial position of TWX
and its consolidated Subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the periods
then ended (subject, in the case of the unaudited financial statements,
to normal, recurring audit adjustments, which were not individually or in
the aggregate material). Except as set forth in the TWX SEC Documents or
on Schedule3.1(c), and except for liabilities and obligations incurred
in the ordinary course of business consistent with past practice since
the date of the most recent consolidated balance sheet contained in the
TWX SEC Documents, as of the date hereof, TWX and its Subsidiaries have
no liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by GAAP to be disclosed or recognized
on a consolidated balance sheet of TWX and its consolidated Subsidiaries
or in the notes thereto.
(d) AUTHORITY; NON-CONTRAVENTION. TWX has all requisite
corporate power and authority to enter into this Agreement and the
Registration Rights Agreement (the "Agreements"), to perform its
obligations thereunder and to consummate the transactions contemplated
thereby. The execution and delivery of the Agreements and the
consummation of the transactions contemplated thereby have been duly
authorized by all necessary corporate action on the part of TWX and no
other corporate proceedings on the part of TWX are necessary to authorize
the Agreements or to
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consummate the transactions contemplated thereby. Each of the Agreements has
been duly executed and delivered by TWX and constitutes the valid and binding
obligation of TWX, enforceable against TWX in accordance with its terms,
subject to (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or transfer or similar laws affecting creditors' rights generally
and (ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or equity) and except as
rights to indemnity may be limited by federal or state securities laws or the
public policies embodied therein. The execution and delivery of each of the
Agreements by TWX do not, and the consummation of the transactions contemplated
thereby will not, (i)result in any violation of any provision of the
Certificate of Incorporation or By-laws or equivalent organizational
documents of TWX or any of its Subsidiaries; (ii)require TWX or any of
its Subsidiaries to obtain any consent, approval or action of, or make
any filing with, or give any notice to, any Governmental Entity or any
other Person, except as set forth on Schedule3.1(d) (the "TWX Required
Consents"); (iii)if the TWX Required Consents are obtained, result in
any violation or breach of, or result in a material modification of the
effect of, or constitute (with or without notice or lapse of time or
both) a default under or give rise to any right of termination,
cancellation or acceleration under, any contract, agreement, indenture,
note, bond, loan, mortgage, lease, instrument, license, permit,
concession, franchise, commitment or other binding arrangement
(collectively, "contracts") to which TWX or any of its Subsidiaries is a
party or by or to which any of them or any of their properties may be
bound or subject, or result in the creation of any lien or encumbrance
upon the properties of TWX or any of its Subsidiaries, in each case
pursuant to the terms of any such contract, other than any violations,
breaches, modifications, defaults, terminations, cancellations,
accelerations, liens or encumbrances which, individually and in the
aggregate, would not have a Material Adverse Effect on TWX; or (iv)if
the TWX Required Consents are obtained, result in any violation of any
law, statute, regulation, order, judgment or decree of any Governmental
Entity applicable to TWX.
(e) LITIGATION. As of the date of this Agreement, except
as disclosed in the TWX SEC Documents or in Schedule3.1(e), there is no
suit, action or proceeding pending, or, to the knowledge of TWX,
threatened against or affecting TWX or any Subsidiary of TWX, which,
individually or in the aggregate with any other such suits, actions or
proceedings, would have a Material Adverse Effect on TWX, nor is there
any judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against TWX or any Subsidiary of TWX,
which, individually or in the
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Page 7
aggregate with any other such judgments, decrees, injunctions, rules or
orders, would have a Material Adverse Effect on TWX.
(f) TWX PREFERRED STOCK. The TWX Preferred Stock
comprising the Exchange Consideration, when issued to Itochu
Entertainment at the Closing in accordance with Article 1, will be duly
authorized, validly issued, fully paid and non-assessable. The shares of
TWX Common Stock reserved for issuance upon conversion or exchange of the
shares of TWX Preferred Stock have been duly authorized and reserved for
issuance, and when issued upon such conversion or exchange in accordance
with the terms of the Certificate of Designations of the TWX Preferred
Stock will have been validly issued, fully paid and non-assessable, and
the issuance of such shares of TWX Common Stock is not subject to
preemptive or similar rights.
Section 3.2 REPRESENTATIONS AND WARRANTIES OF ITOCHU AND ITOCHU
ENTERTAINMENT. Itochu represents and warrants to TWX, on behalf of
itself and Itochu Entertainment, and Itochu Entertainment represents and
warrants to TWX, on behalf of itself only, as follows:
(a) ORGANIZATION; STANDING AND POWER. Each of Itochu and
Itochu Entertainment is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation
and has all requisite power and authority to carry on its business as now
being conducted.
(b) AUTHORITY; NONCONTRAVENTION. Each of Itochu and
Itochu Entertainment has all requisite corporate power and authority to
enter into this Agreement, to perform its obligations thereunder and to
consummate the transactions contemplated thereby. The execution and
delivery of the Agreements and the consummation of the transactions
contemplated thereby have been duly and validly authorized by all
necessary corporate action on the part of Itochu and Itochu Entertainment
and no other corporate proceedings on the part of Itochu or Itochu
Entertainment are necessary to authorize the Agreements or to consummate
the transactions contemplated thereby. Each of the Agreements has been
duly and validly executed and delivered by each of Itochu and Itochu
Entertainment and constitutes a valid and binding obligation of each of
Itochu and Itochu Entertainment enforceable against each of Itochu and
Itochu Entertainment in accordance with its terms, subject to (i)
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
or transfer or similar laws affecting creditors' rights generally and (ii)
general principles of equity (regardless of whether such enforceability is
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Page 8
considered in a proceeding at law or equity) and except as rights
to indemnity may be limited by federal or state securities laws
or the public policies embodied therein. The execution and delivery of
each of the Agreements by each of Itochu and Itochu Entertainment do not,
and the consummation of the transactions contemplated thereby will not,
(i) result in any violation of any provision of the Certificate of
Incorporation or By-laws or equivalent organizational documents of Itochu
or Itochu Entertainment; (ii) require Itochu or Itochu Entertainment to
obtain any consent, approval or action of, or make any filing with, or
give any notice to, any Governmental Entity or any other Person, except
as set forth on Schedule 3.2(b) (the "Itochu Required Consents" and
together with the TWX Required Consents, the "Required Consents"), and
except for such consents, approvals, actions, filings or notices the
failure to obtain or give which would not have a Material Adverse Effect
on Itochu; (iii) if the Itochu Required Consents are obtained, result in
any violation or breach of, or result in a material modification of the
effect of, or constitute (with or without notice or lapse of time or
both) a default under, or give rise to any right of termination,
cancellation or acceleration under any contract to which Itochu or Itochu
Entertainment is a party or by or to which any of them or any of their
properties may be bound or subject, or result in the creation of any lien
or encumbrance upon the properties of Itochu or Itochu Entertainment
pursuant to the terms of any such contract other than any violations,
breaches, modifications, defaults, terminations, cancellations,
accelerations, liens or encumbrances which, individually and in the
aggregate, would not have a Material Adverse Effect on Itochu; (iv) if
the Itochu Required Consents are obtained, result in the violation of any
law, statute, regulation, order, judgment or decree of any Governmental
Entity applicable to Itochu.
(c) TITLE TO ITOCHU INTERESTS. Except as provided in the
TWE Partnership Agreement, the Itochu Option or the TWSH Partnership
Agreements (as defined below), (i) Itochu Entertainment owns the Itochu
TWE Partnership Interest and the Itochu TWSH Partnership Interests free
and clear of any lien or other encumbrance and has full power and authority to
convey the Itochu TWE Partnership Interest and the Itochu TWSH Partnership
Interests free and clear of any lien or other encumbrance and, upon the
consummation of the transactions contemplated hereby, TWX will acquire
good and valid title to the Itochu TWE Partnership Interest and the
Itochu TWSH Partnership Interests free and clear of any lien or other
encumbrance and (ii) Itochu owns the Itochu
Option free and clear of any lien or other encumbrance and has full power
and authority to convey the Itochu Option free and clear of any lien or
other encumbrance and, upon the consummation of the transactions
contemplated hereby,
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TWX will acquire good and valid title to the Itochu Option free and clear of
any lien or other encumbrance.
(d) INVESTMENT INTENT. Each of Itochu and Itochu
Entertainment is acquiring the TWX Preferred Stock comprising the
Exchange Consideration for investment and is not acquiring such TWX
Preferred Stock with a view to, or for sale in connection with any,
distribution thereof within the meaning of the Securities Act.
ARTICLE 4
COVENANTS
(a) PUBLICITY. Except as otherwise required by law or
the rules or regulations of any securities exchange on which the
securities of such party or any Affiliate of such party are listed or
traded, so long as this Agreement is in effect, no party shall (and each
party shall cause its Subsidiaries not to) issue or cause the publication
of any press release or other public announcement with respect to the
transactions contemplated by this Agreement without the consent of the
other parties, which consent shall not be unreasonably withheld.
(b) SATISFACTION OF CONDITIONS. Each party shall use its
respective reasonable best efforts to cause the conditions set forth in
Article 5 to be satisfied as promptly as practicable.
(c) ADDITIONAL AGREEMENTS. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees to use
all reasonable efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including cooperating fully
with the other parties. In case at any time after the Closing Date any
further action is necessary or desirable to carry out the purposes of
this Agreement, each party shall take all such necessary action.
(d) OTHER ACTIONS. No party shall (and each party shall
cause its Subsidiaries not to) take any action that would or is
reasonably likely to result in any of the representations and warranties
of such party set forth in this Agreement being untrue as of the date
made (to the extent so limited), or in any of the conditions to the
Closing set forth in Article5 not being satisfied.
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Page 10
(e) TAX MATTERS.
(i) Itochu hereby agrees that it shall (and shall
cause its Subsidiaries to) report the transaction contemplated by Section
1.1 above as a taxable sale of the Itochu Interests for income tax
purposes and Itochu shall not (and shall cause its Subsidiaries not to)
take any position in any tax return or tax proceeding contrary to the
foregoing.
(ii) No later than September30, 1995 TWX shall cause
TWE to prepare and deliver to Itochu Entertainment an estimate of Itochu
Entertainment's share of the income or loss of TWE for the period from
January1, 1995 through the Closing Date. In addition, TWX shall cause
TWE to prepare and deliver to Itochu Entertainment in accordance with
Section 9.4(a) of the TWE Partnership Agreement a preliminary draft
Schedule K-1 of TWE and a final statement setting forth Itochu
Entertainment's share of the income or loss of TWE for the period from
January 1, 1995 through the Closing Date.
ARTICLE 5
CONDITIONS PRECEDENT
Section 5.1 CONDITIONS TO THE OBLIGATIONS OF TWX. The
obligations of TWX under this Agreement to consummate the transactions
contemplated hereby are subject to the satisfaction of the following
conditions, the imposition of which is solely for the benefit of TWX and
any one of more of which may be expressly waived by TWX, in its sole
discretion, except as otherwise required by law:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Itochu and Itochu Entertainment
contained herein shall have been true and correct when made, and shall be
true and correct at and as of the Closing Date as though made on and as
of the Closing Date (except to the extent that any such representation or
warranty had by its terms been made as of a specific date in which case
such representation or warranty shall have been true and correct as of
such specific date). TWX shall have received a certificate dated the
Closing Date signed by an officer of each of Itochu and Itochu
Entertainment certifying to the fulfillment of this condition.
(b) PERFORMANCE OF AGREEMENTS. Itochu and Itochu
Entertainment shall have performed all obligations and agreements and
complied with all covenants and conditions contained in this Agreement to
be performed and com-
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plied with by them at or prior to the Closing Date.
TWX shall have received a certificate dated the Closing Date signed by an
officer of each of Itochu and Itochu Entertainment certifying to the
fulfillment of this condition.
(c) NO INJUNCTIONS. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the transactions
contemplated hereby shall be in effect.
(d) REQUIRED CONSENTS. The Required Consents shall have
been obtained and TWX shall have received evidence thereof reasonably
satisfactory to it.
Section 5.2 CONDITIONS TO THE OBLIGATIONS OF ITOCHU AND ITOCHU
ENTERTAINMENT. The obligations of Itochu and Itochu Entertainment to
consummate the transactions contemplated hereby are subject to the
satisfaction of the following conditions, the imposition of which is
solely for the benefit of Itochu and Itochu Entertainment and any one or
more of which may be expressly waived by Itochu and Itochu Entertainment,
in their sole discretion, except as otherwise required by law:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of TWX contained herein shall have been
true and correct when made, and shall be true and correct at and as of
the Closing Date as though made on and as of the Closing Date (except to
the extent that any such representation or warranty had by its terms been
made as of a specific date, in which case such representation or warranty
shall have been true and correct as of such specific date). Itochu and
Itochu Entertainment shall have received a certificate dated the Closing
Date signed by an officer of TWX certifying to the fulfillment of this
condition.
(b) PERFORMANCE OF AGREEMENTS. TWX shall have performed
all obligations and agreements and complied with all covenants and
conditions contained in this Agreement to be performed and complied with
by it at or prior to the Closing Date. Itochu and Itochu Entertainment
shall have received a certificate dated the Closing Date signed by an
officer of TWX certifying to the fulfillment of this condition.
(c) NO INJUNCTIONS. No Injunction preventing the
consummation of the transactions contemplated hereby shall be in effect.
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(d) REQUIRED CONSENTS. The Required Consents shall have
been obtained and Itochu shall have received evidence thereof reasonably
satisfactory to it.
(e) REGISTRATION RIGHTS. TWX shall have executed and
delivered a registration rights agreement, substantially in the form of
Exhibit B, relating to the registration of resales by Itochu or Itochu
Entertainment of the TWX Common Stock into which the TWX Preferred Stock
comprising the Exchange Consideration is convertible or exchangeable.
ARTICLE 6
GENERAL INDEMNIFICATION
Section 6.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations, warranties, covenants and agreements of the parties
contained in this Agreement, or in any Exhibit or Schedule, or in any
other document delivered pursuant to this Agreement, shall survive the
Closing and shall survive any investigation at any time made by or on
behalf of the party to whom any such representations, warranties,
covenants and agreements were made; provided, however, that, (i) except
as provided in clause (ii) of this Section 6.1, all unasserted claims
with respect to a breach of the representations and warranties of TWX,
Itochu and Itochu Entertainment shall expire on the close of business on
the first anniversary of the Closing Date and cannot thereafter be
asserted; and (ii) all unasserted claims with respect to a breach of the
representations and warranties of (A) Itochu and Itochu Entertainment set
forth in Sections 3.2(b) and 3.2(c) relating to Itochu Entertainment's
ownership and title to the Itochu TWE Partnership Interest and the Itochu
TWSH Partnership Interests and Itochu's ownership and title to the Itochu
Option, and the authority of Itochu and Itochu Entertainment to execute
and deliver this Agreement and to perform their obligations hereunder and
(B) TWX set forth in Section 3.1(d) relating to the authority of TWX to
execute and deliver this Agreement and to perform its obligations
hereunder, shall survive indefinitely.
Section 6.2 OBLIGATION OF ITOCHU AND ITOCHU ENTERTAINMENT TO
INDEMNIFY. Subject to the limitations contained in Section 6.1, Itochu
and Itochu Entertainment jointly and severally agree to indemnify, defend
and hold harmless TWX (and its directors, officers, employees,
Affiliates, successors and assigns) from and against all losses,
liabilities, damages, deficiencies, demands, claims, actions, judgments
or causes of action, assessments, costs or expenses (including, without
limitation, interest, penal-
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Page 13
ties and reasonable attorneys' fees and disbursements whether arising out of a
suit or proceeding between the indemnitee and the indemnitor or between the
indemnitee and a third party) ("Losses") based upon, arising out of or
otherwise in respect of any inaccuracy in or any breach of any
representation, warranty, covenant or agreement of Itochu and Itochu
Entertainment contained in this Agreement or in any documents delivered
pursuant
to this Agreement.
Section 6.3 OBLIGATION OF TWX TO INDEMNIFY. Subject to the
limitations contained in Section 6.1, TWX agrees to indemnify, defend and
hold harmless Itochu and Itochu Entertainment (and their respective
directors, officers, employees, Affiliates, successors or assigns) from
and against all Losses based upon, arising out of or otherwise in respect
of any inaccuracy in or any breach of any representation, warranty,
covenant or agreement of TWX contained in this Agreement or in any
documents delivered pursuant to this Agreement.
Section 6.4 NOTICE AND OPPORTUNITY TO DEFEND. Promptly after
receipt by any party hereto (the "Indemnified Party") of notice or
knowledge of any demand, claim or circumstances which, with the lapse of
time, would or might give rise to a claim or the commencement (or
threatened commencement) of any action, proceeding or investigation (an
"Asserted Liability") that may result in a Loss, the Indemnified Party
shall give notice thereof (the "Claims Notice") to any other party (or
parties) obligated to provide indemnification pursuant to Section 6.2 or
6.3 (the "Indemnifying Party"); provided that subject to Section 6.1 the
delay or failure to give prompt notice shall not affect the rights of any
Indemnified Party unless and to the extent such delay or failure shall be
prejudicial or otherwise adversely affect the Indemnifying Party. The
Claims Notice shall describe the Asserted Liability in reasonable detail,
and shall indicate the amount (estimated, if necessary and to the extent
feasible) of the Loss that has been or may be suffered by an Indemnified
Party. The Indemnifying Party may assume the defense of such Asserted
Liability at its own expense and by its own counsel, and after notice
from the Indemnifying Party to the Indemnified Party of its election to
assume the defense of such Asserted Liability, the Indemnifying Party
shall not be liable hereunder for any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the
defense of such Asserted Liability, except as set forth below. At the
request of, and at the expense of, the Indemnifying Party, the
Indemnified Party shall cooperate in the defense of any such Asserted
Liability and shall make available to the Indemnifying Party any books,
records or other documents within its control necessary or appropriate
for such defense. No Indemnifying Party shall, without the consent
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Page 14
of the Indemnified Party, consent to the entry of judgment or enter into any
settlement that does not include a release of the Indemnified Party from
all liability in respect of such Asserted Liability. No Indemnified
Party shall consent to the entry of such judgment or enter into any
settlement without the consent of the Indemnifying Party.
ARTICLE 7
CONTINUING RIGHTS AND OBLIGATIONS OF
ITOCHU AND ITOCHU ENTERTAINMENT
Section 7.1 TERMINATION OF RIGHTS AS PARTNER. Upon the
consummation of the transactions contemplated hereby, Itochu
Entertainment shall cease to be a Partner (as defined in the TWE
Partnership Agreement) of TWE, TWSH I and TWSH II, Itochu shall cease to
be a Participant (as defined in the TWE Partnership Agreement) and,
except as provided below, Itochu Entertainment and Itochu shall cease to
have any rights or obligations under (a) the TWE Partnership Agreement,
(b) the Itochu Option or (c) the TWSH Partnership Agreements.
Section 7.2 OTHER VENTURES. Nothing contained herein shall
modify, amend or otherwise affect the agreements, understandings and
arrangements of TWX, Itochu, Toshiba, USW and their respective Affiliates
relating to Time Warner Entertainment Japan Inc. ("TWE Japan"), Titus
Communications Corp. and Chofu Cable Kabushiki Kaisha.
Section 7.3 STANDSTILL; CONFIDENTIALITY. Itochu shall continue
to be bound by and entitled to the benefits of the "Confidentiality"
provisions set forth in Section 5.3 of the TWE Partnership Agreement and,
for so long as Itochu directly or indirectly owns at least 50 percent of
the Exchange Consideration, whether in the form of TWX Preferred Stock or
TWX Common Stock received upon conversion or exchange thereof (the
"Itochu Minimum Interest"), Itochu shall be bound by the "Standstill"
provisions set forth in Section5.6 of the TWE Partnership Agreement.
Section 7.4 CONTINUING STRATEGIC RELATIONSHIP. Itochu and
Itochu Entertainment shall have the additional rights and obligations set
forth in this Section 7.4.
(a) BOARD REPRESENTATION. For so long as Itochu directly
or indirectly owns an interest in TWX at least equal to the Itochu
Minimum Interest, (i)Itochu shall be entitled to designate one Non-
Voting Class A Representative to the Board of Representatives of TWE (in
accordance with Section 12.2(a) of the TWE Partnership
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Page 15
Agreement) and shall continue to be bound by the provisions of Article XII of
the TWE Partnership Agreement as it relates to the appointment, removal and
conduct of such Non-Voting Class A Representative, and (ii) Itochu shall
be entitled to designate representatives to serve on the committees of
the Board of Representatives of TWE (including without limitation the
Full Service Network Management Committee) existing as of the date hereof
to the same extent as it is entitled as of the date hereof.
(b) EXCHANGE OF PERSONNEL. For so long as Itochu
directly or indirectly owns an interest in TWX at least equal to the
Itochu Minimum Interest, Itochu shall have the rights and obligations of
a Class A Partner with respect to the "Exchange of Personnel"
arrangements provided in Section 12.7 of the TWE Partnership Agreement,
and TWX shall cause similar arrangements to be effectuated with respect
to the music and publishing businesses of TWX.
(c) PREFERRED VENDOR/SUPPLIER STATUS. For so long as
Itochu directly or indirectly owns an interest in TWX at least equal to
the Itochu Minimum Interest, Itochu Entertainment shall continue to be
entitled to the benefits of the "Preferred Vendor/Supplier Status"
provisions set forth in Section 5.8 of the TWE Partnership Agreement to
the same extent as if Itochu Entertainment were a Partner; provided that
for purposes of determining Itochu Entertainment's (or its Affiliate's)
pro rata share of any supply arrangement (in the event more than one
Partner (or Affiliate of a Partner) provides the relevant product or
service) its Participating Percentage Share shall be deemed to equal
5.61% multiplied by the percentage of the Exchange Consideration then
owned directly or indirectly by Itochu, whether in the form of Series G
Preferred Stock or TWX Common Stock received upon conversion or exchange
thereof (the "Itochu Participating Percentage Share"); and provided
further, that for purposes of Section 5.8 of the TWE Partnership
Agreement only, for so long as Itochu is entitled to any rights under
such Section the Participating Percentage Share of the TW Partners (as
defined in the TWE Partnership Agreement) shall be reduced by an amount
equal to the Itochu Participating Percentage Share. In addition, TWX
shall cause similar arrangements to be effectuated with respect to the
music and publishing business of TWX. If and for so long as TWX controls
any successor to the assets of TWE, TWX shall cause such successor to
grant Itochu rights comparable to those provided by this Section 7.4(c),
and if TWX shall not control any such successor then TWX shall use its
reasonable best efforts to cause such successor to grant Itochu such
rights.
(d) COVENANT AGAINST COMPETITION. Notwithstanding the
provisions of Section 5.5(a)(i) and (ii)
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of the TWE Partnership Agreement, for so long as Itochu directly or indirectly
owns at least 15% of the equity of TWE Japan, Itochu shall be subject to the
restrictions, and entitled to the benefits, of the "Covenants Against
Competition" set forth in Section 5.5 of the TWE Partnership Agreement, but
only to the extent such provisions restrict any party from engaging, directly
or indirectly (whether by operation, investment or otherwise), in any
Restricted Business in Japan. In addition, for so long as TWX shall
control TWE, TWX shall cause TWE to comply with Sections 5 and 6 of the
TWE Japan Agreement (as defined below) in accordance with the terms
thereof.
(e) ADDITIONAL CONSULTATION RIGHTS. Following the
Closing, members of the senior management of TWX and Itochu shall consult
regularly with respect to the cable, programming, filmed entertainment,
music and publishing businesses and shall explore possible areas of joint
cooperation in connection with such businesses. In addition, (i)
representatives of TWX and Itochu shall meet quarterly to exchange
information and ideas regarding markets, products, technologies and
opportunities in the cable, programming, filmed entertainment, music and
publishing businesses and (ii) representatives of TWX and Itochu shall
meet quarterly to discuss new business opportunities in the areas of
music and publishing in Japan.
Section 7.5 STATEMENT OF ENHANCED GLOBAL STRATEGIC ALLIANCE.
Following the execution of this Agreement, the parties will consider
preparing a statement intended to formalize the terms and objectives of
their enhanced long-term global strategic relationship.
ARTICLE 8
RESTRICTIONS ON TRANSFERS
Section 8.1 RESTRICTIONS ON TRANSFER. Itochu agrees that it
shall not (and shall cause its Subsidiaries not to), without the prior
written consent of the board of directors of TWX, directly or indirectly,
sell, transfer, pledge, encumber or otherwise dispose of, or agree to
sell, transfer, pledge, encumber or otherwise dispose of, any shares of
TWX Preferred Stock acquired pursuant to this Agreement, any TWX Common
Stock issued upon conversion or exchange of such TWX Preferred Stock, or
any interest therein (collectively, "TWX Stock"), except that such
consent shall not be necessary if any such disposition is:
(i) to the underwriters in connection with an
underwritten public offering of shares of TWX Stock on a firm commitment
basis registered under the Securities Act,
<PAGE>
Page 17
pursuant to which the sale of such securities is effected in a manner
that will result in a broad distribution thereof;
(ii) to a third party in a transaction that complies with
the volume and manner of sale provisions contained in Rule 144(e) and (f)
as in effect on the date hereof under the Securities Act (whether or not
applicable in accordance with the terms thereof);
(iii) to a third party in a transaction or series of
related transactions whenever occurring (provided that this paragraph
(iii) will be unavailable where the senior executives or Agents of Itochu
or any of its Subsidiaries know or, after reasonable inquiry should have
known, that such third party directly or indirectly beneficially owns or,
after giving effect to such sale will beneficially own, more than five
percent of the aggregate Voting Power of any class or series of Voting
Securities of TWX or, if such class or series votes together with any
other classes or series as a single class or series, more than five
percent of the aggregate Voting Power of such classes or series);
(iv) to a financial institution as a bona fide pledge as
security for money borrowed;
(v) pursuant to the terms of any tender or exchange offer
for Voting Securities of TWX not opposed by the board of directors of TWX
(provided that Itochu or Itochu Entertainment shall not be permitted to
make any such transfer prior to the date on which TWX files a
Schedule14D-9 with respect to such tender or exchange offer); and
(vi) to Itochu or an Affiliate of Itochu;
provided, however, that the restrictions set forth in this Section 8.1
shall not apply to (A)the transfer of any Voting Securities of TWX to
TWX and (B)Voting Securities of TWX held by one or more employee benefit
plans (or trusts for such plans) of Itochu and its Subsidiaries, provided
that all decisions whether to purchase or sell such shares are made by
Persons independent of Itochu and its Affiliates. Notwithstanding
anything in the first sentence of this Section 8.1 to the contrary, any
transfer pursuant to clause (iv) of this Section 8.1, and any transfer or
series of related transfers to any Person pursuant to clause (iii) of
this Section 8.1 of Voting Securities representing (on an as-converted
basis) three percent (3%) or more of the outstanding shares of TWX Common
Stock (determined on the basis of the most recent Annual Report on Form
10-K or Quarterly Report on Form 10-Q, as applicable), shall include the
written agreement of the transferee in a form reasonably
<PAGE>
Page 18
satisfactory to TWX to be bound by the terms of this Section 8.1.
Section 8.2 ADDITIONAL RESTRICTIONS ON TRANSFER. Itochu shall
not (and Itochu shall cause its subsidiaries not to), directly or
indirectly, offer, sell, assign, pledge, encumber, transfer, or otherwise
dispose of any TWX Stock, except pursuant to a registration of such
securities under the Securities Act and applicable state securities laws
or in a transaction that, in the opinion of Davis Polk & Wardwell or
other counsel reasonably satisfactory to TWX, is exempt from, or not
subject to, the registration requirements of the Securities Act and
applicable state securities laws.
Section 8.3 LEGENDS ON CERTIFICATES OF TWX STOCK.
(a) Each of Itochu and Itochu Entertainment agrees that
each certificate for shares of TWX Stock shall bear the following
legends:
(A) THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY
NOR ANY INTEREST HEREIN MAY BE OFFERED, SOLD, ASSIGNED,
PLEDGED, ENCUMBERED, TRANSFERRED OR OTHERWISE DISPOSED OF
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATING THERETO OR
AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
ACT.
(B) THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
RESTRUCTURING AGREEMENT, DATED AS OF AUGUST 31, 1995, AS THE
SAME MAY BE AMENDED FROM TIME TO TIME (THE "RESTRUCTURING
AGREEMENT"), BETWEEN THE CORPORATION AND THE ORIGINAL HOLDER OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE. A COPY OF THE
RESTRUCTURING 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 RESTRUCTURING AGREEMENT.
(b) In connection with any transfer in accordance with
Sections 8.1(i) and (ii), TWX shall deliver new certificates for the
shares of TWX Stock without the legends specified in paragraph (a) above,
and, in connection with any transfer in accordance with Section 8.1(v),
TWX shall deliver new certificates for the shares of TWX Stock without
the legend specified in paragraph (a)(B) above, in each case, in exchange
for the surrender of existing certi-
<PAGE>
Page 19
ficates representing TWX Stock and, in the case of Section 8.1(ii), evidence
reasonably satisfactory to TWX (consisting of an officer's certificate or an
opinion of counsel, as reasonably determined by TWX) that the provisions of
Rule 144(e) and (f) under the Securities Act have been followed.
ARTICLE 9
GENERAL PROVISIONS
Section 9.1 CERTAIN DEFINITIONS. As used in this Agreement, the
following terms will have the meanings set forth in this Section:
(a) "Affiliate" means, with respect to any Person, any
other Person that, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control
with, such first Person.
(b) "Agent" means, with respect to any Person, such
Person's officers, directors, employees, attorneys, accountants,
representatives and agents.
(c) "beneficially owned" has the meaning ascribed to such
term in Rule 13d-3 of the Exchange Act, as in effect, on the date of this
Agreement.
(d) "Business Day" means any day other than a Saturday,
Sunday or other day on which banks in the State of New York are
authorized or obligated to be closed.
(e) "Governmental Entity" means any foreign, Federal,
state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality.
(f) "Material Adverse Effect" means, with respect to any
Person, any effect that is or is reasonably likely to be materially
adverse to (x) the business, results of operations, properties, assets,
liabilities or condition (financial or otherwise) of such Person and its
Subsidiaries taken as a whole, (y) such Person's or its Subsidiaries'
ability to consummate the transactions contemplated hereby or (z) in the
case of Itochu or Itochu Entertainment, the Itochu Interests.
(g) "Person" means any individual, corporation,
partnership, firm, group (as such term is used in this Section 13(d)(3)
of the Exchange Act), joint venture, association, trust, limited
liability company, unincorporated organization, estate, trust or other
entity.
<PAGE>
Page 20
(h) "Significant Subsidiary" of any Person (as defined
below) means any Subsidiary (as defined below) of such Person that would
constitute a "significant subsidiary" of such Person within the meaning
of Rule1-02(v)(1) or (2) of RegulationS-X promulgated by the SEC.
(i) "Subsidiary" of any Person means any corporation,
partnership, joint venture or other legal entity of which such Person
(either directly or through or together with any other Subsidiary of such
Person), owns, directly or indirectly, 50% or more of the stock or other
equity interests the holders of which are generally entitled to vote for
the election of the board of directors or similar governing body of such
corporation or other legal entity.
(j) "TWE Japan Agreement" means the TWE Japan Agreement,
dated as of October29, 1991, as amended, among Itochu, Toshiba, TWX and
Warner Bros. Inc.
(k) "TWSH Partnership Agreements" means the Agreements of
Limited Partnership, each dated as of September 14, 1993, governing TWSH
I and TWSH II.
(l) "Voting Power" means, with respect to any class or
series of securities of TWX, or any classes or series of securities of
TWX generally entitled to vote together as a single class or series, 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, warrants, options or similar
securities held by such Person shall be deemed to be outstanding, but
shall not be deemed to be outstanding for the purposes of computing the
percentage of the class or series (or classes or series) beneficially
owned by any other Person.
(m) "Voting Securities" means, with respect to any
Person, any securities of such Person having Voting Power or any
securities convertible into or exchangeable for any securities having
Voting Power.
Section 9.2 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given when delivered
personally, upon a receipt of a transmittal confirmation if sent by
telecopy or like transmission, and on the next Business Day when sent by
Federal Express, Express Mail or similar overnight courier service to the
parties at the following addresses or facsimile
<PAGE>
Page 21
numbers (or at such other address or facsimile number for a party as shall be
specified by like notice):
(a) If to TWX to:
Time Warner Inc.
75 Rockefeller Plaza
New York, New York 10019
Attention: Peter R. Haje,
General Counsel
Facsimile: (212) 956-7281
with a copy to:
Paul, Weiss, Rifkind, Wharton
& Garrison
1285 Avenue of the Americas
New York, New York 10019
Attention: Robert B. Schumer
Facsimile: (212) 757-3990
(b) If to Itochu, to:
Itochu Corporation
5-1, Kita-Aoyama 2 chome
Minato-ku, Tokyo 107-77, Japan
Attention: S. Abe
Facsimile: 81-3-3497-4033
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: John A. Bick
Facsimile: (212) 450-4800
(c) If to Itochu Entertainment, to:
Itochu Entertainment Inc.
10 Skyline Drive
Hawthorne, New York 10532
Attention: Yutaka Tanaka
Facsimile: (914) 347-4049
with a copy to:
Itochu Corporation
5-1, Kita-Aoyama 2 chome
Minato-ku, Tokyo 107-77, Japan
Attention: S. Abe
<PAGE>
Page 22
Facsimile: 81-3-3497-4033
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: John A. Bick
Facsimile: (212) 450-4800
Section 9.3 ALTERNATIVE TRANSACTION OPTION. Itochu shall have
the option, exercisable by delivering a written notice to TWX within ten
days after the date hereof (but in any event prior to the Closing), to
transfer the Itochu Option and the capital stock of its Subsidiary that
indirectly owns the Itochu Partnership Interest (in lieu of transferring
the Itochu Interests in accordance with this Agreement) in a transaction
identical to the transaction contemplated by the Restructuring Agreement,
dated as of the date hereof, between TWX and Toshiba (but for the parties
thereto and such other changes as are necessary or appropriate to reflect
the different parties).
Section 9.4 TERMINATION. This Agreement may be terminated
(i)upon the written agreement of the parties or (ii)by either TWX or
Itochu if the transactions contemplated hereby shall not have occurred by
December31, 1995 upon written notice delivered by such party to the
other.
Section 9.5 INTERPRETATION. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of 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. The
term "reasonable best efforts" as used throughout this Agreement with
respect to actions to be taken by any party shall not be construed to
require any party to make any material expenditure in connection with
such actions. Whenever the words "include," "includes" or "including"
are used in this Agreement, they shall be deemed to be followed by the
words "without limitation." The phrases "the date of this Agreement,"
"the date hereof," and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to August 31, 1995.
Section 9.6 WAIVERS AND AMENDMENTS. This Agreement may be
amended, superseded, cancelled, renewed or extended, and the terms hereof
may be waived, only by written instruments signed by the parties to this
Agreement, or in the case of a waiver, by the party waiving compliance.
Except where a specific period for action or inaction is
<PAGE>
Page 23
provided herein, no delay on the part of a party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof. Neither any
waiver on the part of a party of any such right, power or privilege, nor
any single or partial exercise of any such right, power or privilege,
shall preclude any further exercise thereof or the exercise of any other
such right, power or privilege.
Section 9.7 EXPENSES. The parties to this Agreement shall
bear their respective expenses incurred in connection with the
preparation, execution and performance of this Agreement and the
transactions contemplated hereby, including, without limitation, all fees
and expenses of agents, representatives, counsel and accountants.
Section 9.8 ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of
the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. 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 9.9 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES.
This Agreement (including the documents and the instruments 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 hereof and (b)is not intended to
confer upon any person other than the parties hereto any rights or
remedies hereunder.
Section 9.10 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York (other
than its rules of conflicts of law to the extent the application of the
laws of another jurisdiction would be required thereby).
Section 9.11 COUNTERPARTS. This Agreement may be executed in
one or more counterparts, each of which shall be an original and all of
which, when taken together, shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
TIME WARNER INC.
By:/s/ Gerald M. Levin
--------------------------
Name: Gerald M. Levin
Title: Chairman and Chief
Executive Officer
ITOCHU CORPORATION
By:/s/ Minoru Murofushi
-------------------------
Name: Minoru Murofushi
Title: President and
Chief Executive Officer
ITOCHU ENTERTAINMENT INC.
By:/s/ Hiromi Sugiyama
--------------------------
Name: Hiromi Sugiyama
Title: President
<PAGE>
Schedule 3.1(c)
UNDISCLOSED LIABILITIES
None.
<PAGE>
Schedule 3.1(d)
TWX REQUIRED CONSENTS
None.
<PAGE>
Schedule 3.1(e)
MATERIAL LITIGATION
None.
<PAGE>
Schedule 3.2(c)
ITOCHU REQUIRED CONSENTS
1. Japanese Export-Import Bank.
=============================================================================
RESTRUCTURING AGREEMENT
BETWEEN
TIME WARNER INC.
AND
TOSHIBA CORPORATION
DATED AS OF AUGUST 31, 1995
============================================================================
<PAGE>
Page i
TABLE OF CONTENTS
Page
ARTICLE 1 RESTRUCTURING.................................2
Section 1.1 Exchange of Toshiba Interests for Exchange
Consideration..........................2
Section 1.2 Deliveries............................2
ARTICLE 2 CLOSING; CLOSING DATE.........................3
ARTICLE 3 REPRESENTATIONS AND WARRANTIES................3
Section 3.1 Representations and Warranties
of TWX.............................................3
(a) Organization, Standing and Power.......3
(b) Capital Structure......................3
(c) SEC Documents; Financial Statements....4
(d) Authority; Non-Contravention...........5
(e) Litigation.............................6
(f) TWX Preferred Stock....................6
Section 3.2 Representations and Warranties of
Toshiba................................7
(a) Organization; Standing and Power.......7
(b) Ownership and Capital Structure
of TAE and Toshiba Entertainment.......7
(c) Authority; Noncontravention............8
(d) Title to Toshiba Partnership
Interests and Toshiba Option...........9
(e)Investment Intent..........................9
(f)No Liabilities of TAE and Toshiba
Entertainment..........................9
(g)Tax Matters...............................10
ARTICLE 4 COVENANTS....................................11
(a) Publicity.............................11
(b) Satisfaction of Conditions............11
(c) Additional Agreements.................11
(d) Other Actions.........................11
(e) Tax Matters...........................12
(f) Cable/Telephony Business..............12
(g) "Toshiba" Name........................12
(h) Certain Liabilities...................12
<PAGE>
Page ii
ARTICLE 5 CONDITIONS PRECEDENT.........................13
Section 5.1 Conditions to the Obligations
of TWX................................13
(a) Accuracy of Representations and
Warranties............................13
(b) Performance of Agreements.............13
(c) No Injunctions........................13
(d) Required Consents.....................13
(e) HSR Act...............................13
Section 5.2 Conditions to the Obligations
of Toshiba............................13
(a) Accuracy of Representations and
Warranties............................14
(b) Performance of Agreements.............14
(c) No Injunctions........................14
(d) Required Consents.....................14
(e) Registration Rights...................14
(f) HSR Act...............................14
ARTICLE 6 GENERAL INDEMNIFICATION......................14
Section 6.1 Survival of Representations and
Warranties............................14
Section 6.2 Obligation of Toshiba to Indemnify....15
Section 6.3 Obligation of TWX to Indemnify........16
Section 6.4 Notice and Opportunity to Defend......16
ARTICLE 7 CONTINUING RIGHTS ANDOBLIGATIONS OF TOSHIBA..17
Section 7.1 Termination of Rights Under
Partnership Agreements................17
Section 7.2 Other Ventures........................17
Section 7.3 Standstill; Confidentiality...........17
Section 7.4 Continuing Strategic Relationship.....17
(a) Board Representation..................17
(b) Exchange of Personnel.................18
(c)Preferred Vendor/Supplier Status..........18
(d) Covenant Against Competition..........18
(e)Additional Consultation Rights............19
Section 7.5 Statement of Enhanced Global
Strategic Alliance....................19
<PAGE>
Page iii
ARTICLE 8 RESTRICTIONS ON TRANSFERS....................19
Section 8.1 Restrictions on Transfer.............19
Section 8.2 Additional Restrictions
on Transfer..........................20
Section 8.3 Legends on Certificates of
TWX Stock............................21
ARTICLE 9 GENERAL PROVISIONS...........................22
Section 9.1 Certain Definitions..................22
Section 9.2 Notices..............................23
Section 9.3 Alternative Transaction Option.......24
Section 9.4 Termination..........................25
Section 9.5 Interpretation.......................25
Section 9.6 Waivers and Amendments...............25
Section 9.7 Expenses.............................25
Section 9.8 Assignment...........................25
Section 9.9 Entire Agreement; No Third Party
Beneficiaries........................26
Section 9.10 Governing Law........................26
Section 9.11 Counterparts.........................26
EXHIBITS
Exhibit A Certificate of Designations of Series G Preferred Stock
Exhibit B Registration Rights Agreement
<PAGE>
RESTRUCTURING AGREEMENT
RESTRUCTURING AGREEMENT, dated as of August 31, 1995, between
TIME WARNER INC., a Delaware corporation ("TWX"), and TOSHIBA
CORPORATION, a corporation organized under the laws of Japan ("Toshiba").
WHEREAS, TWX and Toshiba, together with Itochu Corporation
("Itochu") and U S WEST, Inc. ("USW") are parties to an Agreement of
Limited Partnership, dated as of October 29, 1991, as amended (the "TWE
Partnership Agreement"), pursuant to which the parties thereto formed and
capitalized Time Warner Entertainment Company, L.P. ("TWE"), a strategic
global limited partnership created for the purpose of exploiting the
products, expertise and resources of the partners of TWE to maximize the
performance of the filmed entertainment, programming, cable and related
business previously owned and operated by TWX;
WHEREAS, Toshiba America Entertainment, Inc. ("Toshiba
Entertainment"), a Delaware corporation and a direct wholly owned
subsidiary of TAE Holding, Inc. ("TAE"), a Delaware corporation and an
indirect wholly owned subsidiary of Toshiba, is currently a limited
partner of TWE and owns a partnership interest therein (the "Toshiba TWE
Partnership Interest") consisting of a Common Sub-Account (as defined in
the TWE Partnership Agreement), entitling it to a Participating
Percentage Share (as defined in the TWE Partnership Agreement) of 5.61%,
and an A Sub-Account (as defined in the TWE Partnership Agreement),
representing 5.61% of the total A Sub-Accounts of TWE;
WHEREAS, pursuant to a Letter Agreement, dated May16, 1993,
between Toshiba and TWX, Toshiba has the right to increase its interest
in TWE under certain circumstances (the "Toshiba Option");
WHEREAS, Toshiba Entertainment is also a limited partner of TW
Service Holding I, L.P., a Delaware limited partnership ("TWSH I"), and
TW Service Holding II, L.P., a Delaware limited partnership ("TWSH II"),
and owns a partnership interest in each of TWSH I and TWSH II consisting
of a Common Sub-Account, entitling it to a Participating Percentage Share
of 6.25% (the "Toshiba TWSH Partnership Interests", and together with the
Toshiba TWE Partnership Interest, the "Toshiba Partnership Interests");
WHEREAS, TWX and Toshiba believe that as the entertainment,
telecommunications and information services businesses continue to
evolve, the mutual ownership of TWE's current businesses and TWX's music,
publishing and other
<PAGE>
Page 2
businesses will enhance the strategic value of their relationship; and
WHEREAS, TWX and Toshiba accordingly wish to expand the scope
of their strategic alliance to encompass all such businesses through an
exchange of the capital stock of TAE and the Toshiba Option for a direct
equity interest in TWX.
NOW, THEREFORE, in consideration of the premises and other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged by each of the parties hereto, the parties hereby agree as
follows:
ARTICLE 1
RESTRUCTURING
Section 1.1 EXCHANGE OF TOSHIBA INTERESTS FOR EXCHANGE
CONSIDERATION. At the Closing (as defined below), Toshiba shall (or
shall cause its Subsidiaries (as defined below) to) transfer, assign and
convey 100% of the capital stock of TAE and the Toshiba Option to TWX or
its designee free and clear of all liens and other encumbrances, and in
consideration therefor TWX shall issue to Toshiba and its designee 7.0
million shares of Series G Convertible Preferred Stock, par value $1.00
per share, of TWX, having the rights, preferences and terms set forth in
a Certificate of Designations substantially in the form of Exhibit A
hereto (or an otherwise designated series of preferred stock of TWX
having the same rights, preferences and terms) (the "TWX Preferred
Stock"), and TWX shall pay to Toshiba and its designee cash in an amount
equal to $10 million. The TWX Preferred Stock issued and the cash paid
pursuant to this Section 1.1 are referred to herein as the "Exchange
Consideration". Each share of capital stock of TAE and the Toshiba
Option shall be exchanged for Exchange Consideration comprised of a
proportionate amount of TWX Preferred Stock and cash.
Section 1.2 DELIVERIES.
(a) At the Closing, Toshiba shall (and Toshiba shall
cause its Subsidiaries to) deliver to TWX or its designee (i)stock
certificates representing 100% of the capital stock of TAE, duly endorsed
in blank or accompanied by stock powers duly executed in blank, in proper
form for transfer and (ii) instruments executed by it and reasonably
satisfactory to TWX, transferring, assigning and conveying the Toshiba
Option to TWX or its designee.
<PAGE>
Page 3
(b) At the Closing, TWX shall deliver to Toshiba or its
designee (i)stock certificates representing the number of shares of TWX
Preferred Stock provided for in Section1.1, issued in the name of
Toshiba or such designee and (ii)by wire transfer to a bank account
designated in a written notice delivered to TWX at least three days prior
to the Closing Date, an amount, in immediately available funds, equal to
the amount of cash provided for in Section 1.1.
ARTICLE 2
CLOSING; CLOSING DATE
The closing of the restructuring transactions contemplated
hereby (the "Closing") shall take place at the offices of Paul, Weiss,
Rifkind, Wharton & Garrison, 1285 Avenue of the Americas, New York, New
York 10019, at 10:00 A.M. New York time on the fifth Business Day
following the date on which the conditions set forth in Article 5 have
been satisfied or waived (or at such other place or such other time as
TWX and Toshiba agree in writing). Each of TWX and Toshiba, shall
promptly notify the other parties upon the satisfaction or waiver of the
conditions set forth in Article 5 with respect to itself. The time and
date upon which the Closing occurs herein is called the "Closing Date."
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.1 REPRESENTATIONS AND WARRANTIES OF TWX. TWX
represents and warrants to Toshiba as follows:
(a) ORGANIZATION, STANDING AND POWER. Each of TWX and
its Significant Subsidiaries (as defined below) is a corporation or
partnership duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation or organization, has all
requisite power and authority to carry on its business as now being
conducted, and is duly qualified 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 necessary, other than
in such jurisdictions where the failure so to qualify would not have a
Material Adverse Effect (as defined below) on TWX. TWX has delivered to
Toshiba complete and correct copies of its Certificate of Incorporation
and By-Laws, each as amended to date.
(b) CAPITAL STRUCTURE. As of the date of this Agreement,
the authorized capital stock of TWX consists
<PAGE>
Page 4
of 750,000,000 shares of common stock, par value $1.00 per share, of TWX
("TWX Common Stock") and 250,000,000 shares of preferred stock, par value
$1.00 per share (the "Additional TWX Preferred Stock"). As of the close of
business on July31, 1995, 386,174,888 shares (excluding 45,712,535 shares held
by TWX in its treasury (or by wholly-owned subsidiaries of TWX)) of TWX
Common Stock were outstanding. As of the close of business on July 31,
1995, 14,729,146 shares of Additional TWX Preferred Stock were
outstanding (consisting of 464,638 shares of Series B 6.40% Preferred
Stock, 3,264,508 shares of Series C Convertible Preferred Stock, and
11,000,000 shares of Series D Convertible Preferred Stock), and 4,000,000
shares of Series A Participating Preferred Stock were reserved for
issuance pursuant to the Rights Agreement, dated as of January20, 1994,
between TWX and Chemical Bank, as Rights Agent. As of July31, 1995, TWX
had reserved (i) 95,831,405 shares of TWX Common Stock for issuance upon
the conversion of 8.75% convertible subordinated debentures, zero coupon
convertible notes and other convertible securities of TWX, and
(ii)78,632,660 shares of TWX Common Stock for issuance upon the exercise
of outstanding options to purchase shares of TWX. All outstanding shares
of capital stock of TWX have been duly authorized, validly issued, fully
paid and non-assessable, not subject to, or issued in violation of, any
preemptive rights and have not been issued in violation of any federal or
state securities laws.
(c) SEC DOCUMENTS; FINANCIAL STATEMENTS. TWX has filed
with the Securities and Exchange Commission (the "SEC") all required
reports, schedules, registration statements and definitive proxy
statements since January1, 1993 (as such documents have since the time
of their filing been amended, the "TWX SEC Documents"). As of their
respective dates, the TWX SEC Documents complied in all material respects
with the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), or the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as applicable, and the rules and regulations of the
SEC thereunder applicable to such TWX SEC Documents, and none of such TWX
SEC Documents contained any untrue statement of a material fact or
omitted to state a 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. Except to the extent that
information contained in any TWX SEC Document has been revised or
superseded by later filed TWX SEC Documents filed and publicly available
prior to the date this representation is made or deemed made, none of the
TWX SEC Documents 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.
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The financial statements of TWX included in the TWX SEC Documents comply as to
form in all material respects with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited financial statements, as permitted by the Exchange Act
Form10-Q) and fairly present the consolidated financial position of TWX
and its consolidated Subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the periods
then ended (subject, in the case of the unaudited financial statements,
to normal, recurring audit adjustments, which were not individually or in
the aggregate material). Except as set forth in the TWX SEC Documents or
on Schedule3.1(c), and except for liabilities and obligations incurred
in the ordinary course of business consistent with past practice since
the date of the most recent consolidated balance sheet contained in the
TWX SEC Documents, as of the date hereof, TWX and its Subsidiaries have
no liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by GAAP to be disclosed or recognized
on a consolidated balance sheet of TWX and its consolidated Subsidiaries
or in the notes thereto.
(d) AUTHORITY; NON-CONTRAVENTION. TWX has all requisite
corporate power and authority to enter into this Agreement and the
Registration Rights Agreement (the "Agreements"), to perform its
obligations thereunder and to consummate the transactions contemplated
thereby. The execution and delivery of the Agreements and the
consummation of the transactions contemplated thereby have been duly
authorized by all necessary corporate action on the part of TWX and no
other corporate proceedings on the part of TWX are necessary to authorize
the Agreements or to consummate the transactions contemplated thereby.
Each of the Agreements has been duly executed and delivered by TWX and
constitutes the valid and binding obligation of TWX, enforceable against
TWX in accordance with its terms, subject to (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or transfer or similar
laws affecting creditors' rights generally and (ii) general principles of
equity (regardless of whether such enforceability is considered in a
proceeding at law or equity) and except as rights to indemnity may be
limited by federal or state securities laws or the public policies
embodied therein. The execution and delivery of each of the Agreements
by TWX do not, and the consummation of the transactions contemplated
thereby will not, (i)result in any violation of any provision of the
Certificate of Incorporation or By-laws or equivalent organizational
documents of TWX or any of its
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Subsidiaries; (ii)require TWX or any of its Subsidiaries to obtain any
consent, approval or action of, or make any filing with, or give any notice
to, any Governmental Entity or any other Person, except as set forth on
Schedule3.1(d) (the "TWX Required Consents"); (iii)if the TWX Required
Consents are obtained, result in any violation or breach of, or result in
a material modification of the effect of, or constitute (with or without
notice or lapse of time or both) a default under or give rise to any right
of termination, cancellation or acceleration under, any contract, agreement,
indenture, note, bond, loan, mortgage, lease, instrument, license, permit,
concession, franchise, commitment or other binding arrangement
(collectively, "contracts") to which TWX or any of its Subsidiaries is a
party or by or to which any of them or any of their properties may be
bound or subject, or result in the creation of any lien or encumbrance
upon the properties of TWX or any of its Subsidiaries, in each case
pursuant to the terms of any such contract, other than any violations,
breaches, modifications, defaults, terminations, cancellations,
accelerations, liens or encumbrances which, individually and in the
aggregate, would not have a Material Adverse Effect on TWX; or (iv)if
the TWX Required Consents are obtained, result in any violation of any
law, statute, regulation, order, judgment or decree of any Governmental
Entity applicable to TWX.
(e) LITIGATION. As of the date of this Agreement, except
as disclosed in the TWX SEC Documents or in Schedule3.1(e), there is no
suit, action or proceeding pending, or, to the knowledge of TWX,
threatened against or affecting TWX or any Subsidiary of TWX, which,
individually or in the aggregate with any other such suits, actions or
proceedings, would have a Material Adverse Effect on TWX, nor is there
any judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against TWX or any Subsidiary of TWX,
which, individually or in the aggregate with any other such judgments,
decrees, injunctions, rules or orders, would have a Material Adverse
Effect on TWX.
(f) TWX PREFERRED STOCK. The TWX Preferred Stock
comprising the Exchange Consideration, when issued to Toshiba and its
designee at the Closing in accordance with Article1, will be duly
authorized, validly issued, fully paid and non-assessable. The shares of
TWX Common Stock reserved for issuance upon conversion or exchange of the
shares of TWX Preferred Stock have been duly authorized and reserved for
issuance, and when issued upon such conversion or exchange in accordance
with the terms of the Certificate of Designations of the TWX Preferred
Stock will have been validly issued, fully paid and non-assessable, and
the issuance of such shares of TWX Common Stock is not subject to
preemptive or similar rights.
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Section 3.2 REPRESENTATIONS AND WARRANTIES OF TOSHIBA. Toshiba
represents and warrants to TWX, on behalf of itself and its Designated
Subsidiaries (as defined below), as follows:
(a) ORGANIZATION; STANDING AND POWER. Each of Toshiba
and each of its Designated Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction
of incorporation and has all requisite power and authority to carry on
its business as now being conducted, and each of TAE and Toshiba
Entertainment is duly qualified to do business and in good standing in
each jurisdiction in which the nature of its business or the ownership or
the leasing of its properties make such qualification necessary, other
than in such jurisdictions where the failure so to qualify would not have
a Material Adverse Effect on TAE. Toshiba has delivered to TWX complete
and correct copies of the Certificate of Incorporation and By-Laws of
each of TAE and Toshiba Entertainment, each as amended to date.
(b) OWNERSHIP AND CAPITAL STRUCTURE OF TAE AND TOSHIBA
ENTERTAINMENT. The authorized capital stock of TAE consists of 100
shares of common stock, par value $.01 per share ("TAE Common Stock"),
and 4,950 shares of preferred stock, par value $.01 per share ("TAE
Preferred Stock"). 100 shares of TAE Common Stock are outstanding and
4,950 shares of TAE Preferred Stock are outstanding, all of which shares
of TAE Common Stock and TAE Preferred Stock are owned directly or
indirectly by Toshiba free and clear of any liens or other encumbrances.
The authorized capital stock of Toshiba Entertainment consists of 100
shares of common stock, par value $.01 per share and 2,000 shares of
preferred stock, par value $.01 per share, of which 100shares of common
stock and 1,200 shares of preferred stock are outstanding, all of which
are owned directly by TAE free and clear of any liens or other
encumbrances. Except as described in this Section 3.2(b), no shares of
capital stock or other equity securities of TAE or Toshiba Entertainment
are authorized, issued or outstanding, or reserved for any other purpose,
and there are no options, warrants or other rights, agreements,
arrangements or commitments of any character to which TAE or Toshiba
Entertainment is a party relating to the issued or unissued capital stock
or other equity securities or ownership interests of TAE or Toshiba
Entertainment or obligating TAE or Toshiba Entertainment to grant, issue
or sell any shares of capital stock or other equity securities or
ownership interests of TAE or Toshiba Entertainment. Neither TAE nor
Toshiba Entertainment has any outstanding bonds, debentures, notes or
other obligations the holders of which have the right to vote or that are
convertible into or exercisable for securities having the right to vote
with the stock-
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holders of TAE or Toshiba Entertainment on any matter.
Upon the consummation of the transactions contemplated hereby, TWX will
acquire good and valid title to shares representing 100% of the capital
stock of TAE free and clear of any liens or other encumbrances.
(c) AUTHORITY; NONCONTRAVENTION. Each of Toshiba and
each of its Designated Subsidiaries has all requisite corporate power and
authority to enter into the Agreements, to perform its obligations
thereunder and to consummate the transactions contemplated thereby. The
execution and delivery of the Agreements and the consummation of the
transactions contemplated thereby have been duly and validly authorized
by all necessary corporate action on the part of Toshiba and each of its
Designated Subsidiaries and no other corporate proceedings on the part of
Toshiba or any of its Designated Subsidiaries are necessary to authorize
the Agreements or to consummate the transactions contemplated thereby.
Each of the Agreements has been duly and validly executed and delivered
by Toshiba and constitutes a valid and binding obligation of Toshiba
enforceable against Toshiba in accordance with its terms, subject to
(i)bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or transfer or similar laws affecting creditors' rights
generally and (ii)general principles of equity (regardless of whether
such enforceability is considered in a proceeding at law or equity) and
except as rights to indemnity may be limited by federal or state
securities laws or the public policies embodied therein. The execution
and delivery of each of the Agreements by Toshiba do not, and the
consummation of the transactions contemplated thereby will not, (i)
result in any violation of any provision of the Certificate of
Incorporation or By-laws or equivalent organizational documents of
Toshiba or any of its Designated Subsidiaries; (ii) require Toshiba or
any of its Designated Subsidiaries to obtain any consent, approval or
action of, or make any filing with, or give any notice to, any
Governmental Entity or any other Person, except as set forth on Schedule
3.2(b) (the "Toshiba Required Consents" and together with the TWX
Required Consents, the "Required Consents"), and except for such
consents, approvals, actions, filings or notices the failure to obtain or
give which would not have a Material Adverse Effect on Toshiba or TAE;
(iii) if the Toshiba Required Consents are obtained, result in any
violation or breach of, or result in a material modification of the
effect of, or constitute (with or without notice or lapse of time or
both) a default under, or give rise to any right of termination,
cancellation or acceleration under any contract to which Toshiba or any
of its Designated Subsidiaries is a party or by or to which any of them
or any of their properties may be bound or subject, or result in the creation
of any lien or encumbrance upon the properties of Toshiba or any of its
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Designated Subsidiaries pursuant to the terms of any such contract
other than any violations, breaches, modifications, defaults,
terminations, cancellations, accelerations, liens or encumbrances which,
individually and in the aggregate, would not have a Material Adverse
Effect on Toshiba or TAE; (iv) if the Toshiba Required Consents are
obtained, result in the violation of any law, statute, regulation, order,
judgment or decree of any Governmental Entity applicable to Toshiba or
any of its Designated Subsidiaries.
(d) TITLE TO TOSHIBA PARTNERSHIP INTERESTS AND TOSHIBA
OPTION. Except as provided in the TWE Partnership Agreement, the Toshiba
Option or the TWSH Partnership Agreements (as defined below), (i) Toshiba
Entertainment owns the Toshiba TWE Partnership Interest and the Toshiba
TWSH Partnership Interests free and clear of any lien or other
encumbrance and (ii) Toshiba owns the Toshiba Option free and clear of
any lien or other encumbrance and has full power and authority to convey
the Toshiba Option free and clear of any lien or other encumbrance and,
upon the consummation of the transactions contemplated hereby, TWX will
acquire good and valid title to the Toshiba Option free and clear of any
lien or other encumbrance.
(e) INVESTMENT INTENT. Each of Toshiba and its designee
is acquiring the TWX Preferred Stock issued pursuant to Section1.1 for
investment and is not acquiring such TWX Preferred Stock with a view to,
or for sale in connection with any, distribution thereof within the
meaning of the Securities Act.
(f) NO LIABILITIES OF TAE AND TOSHIBA ENTERTAINMENT.
(i) TAE does not have any assets or liabilities
other than (A) 100% of the capital stock of Toshiba Entertainment, (B)
those assets and liabilities set forth on the consolidated balance sheet
of TAE and its Subsidiary at December31, 1994 or disclosed in the notes
thereto, (C) liabilities for United Stated federal, state and local
income and franchise taxes that are imposed on Toshiba Entertainment's
distributive share of TWE's income, losses, credits and other items for
the taxable period beginning on January 1, 1995, (D) contingent
liabilities for United States federal, state and local income and
franchise taxes for periods ending on or prior to December 31, 1994 to
the extent such liabilities result from adjustments to Toshiba
Entertainment's distributive share of TWE's income, losses, credits and
other items shown on the Schedule K-1s of TWE for such periods, and (E)
other liabilities incurred in the ordinary course of business since
December31, 1994. TAE has conducted no business other than the
ownership of such capital stock and activities incidental thereto.
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(ii) Toshiba Entertainment does not have any assets
or liabilities other than (A) the Toshiba Partnership Interests, (B)
those assets and liabilities set forth on the balance sheet of Toshiba
Entertainment at December31, 1994 or disclosed in the notes thereto,
(C)liabilities for United States federal, state and local income and
franchise taxes that are imposed on Toshiba Entertainment's distributive
share of TWE's income, losses, credits and other items for the taxable
period beginning on January 1, 1995, (D) contingent liabilities for
United States federal, state and local income and franchise taxes for
periods ending on or prior to December 31, 1994 to the extent such
liabilities result from adjustments to Toshiba Entertainment's
distributive share of TWE's income, losses, credits and other items shown
on the Schedule K-1s of TWE for such periods, and (E) other liabilities
incurred in the ordinary course of business since December31, 1994.
Toshiba Entertainment has conducted no business other than the ownership
of the Toshiba Partnership Interests and activities incidental thereto.
(g) TAX MATTERS.
(i) TAE and Toshiba Entertainment are the only
members of the affiliated or combined group of which they are a part for
United States federal, state and local income and franchise tax purposes,
except that they are members of the California unitary return of Toshiba
America, Inc.
(ii) The only income, losses, credits, deductions
or other allowances of TAE and Toshiba Entertainment for United States
federal, state and local income and franchise tax purposes are those
which are attributable to their distributive share of the income, losses,
credits, deductions or other allowances of TWE, TWSHI and TWSH II and
any interest payments with respect to the Acquisition Debt (as defined
below).
(iii) The aggregate of Toshiba Entertainment's basis
in the Toshiba TWE Partnership Interest for United States federal, state
and local income tax purposes and the "net operating loss" carryovers
("NOLs") of Toshiba Entertainment for United States federal, state and
local income tax purposes is not less than $500million.
(iv) TAE's initial basis in the capital stock of
Toshiba Entertainment for United States income tax purposes was
$125million and as a result of the cancellation of indebtedness owed by
Toshiba Entertainment to TAE (the "Acquisition Debt"), TAE's basis will
be increased by $375 million. There have been no distributions
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from Toshiba Entertainment to TAE (other than interest payments with respect
to the Acquisition Debt).
(v) TAE and Toshiba Entertainment have filed all
of their United States federal, state and local income and franchise tax
returns that are required to be filed on or prior to the Closing Date in
accordance with the Schedule K-1s of TWE provided by TWE to Toshiba and
in a manner consistent with the tax returns previously filed by such
parties, and have paid all taxes shown to be due on such returns, and
Toshiba has furnished TWX with true and complete copies of all such tax
returns.
ARTICLE 4
COVENANTS
(a) PUBLICITY. Except as otherwise required by law or
the rules or regulations of any securities exchange on which the
securities of such party or any Affiliate of such party are listed or
traded, so long as this Agreement is in effect, no party shall (and each
party shall cause its Subsidiaries not to) issue or cause the publication
of any press release or other public announcement with respect to the
transactions contemplated by this Agreement without the consent of the
other parties, which consent shall not be unreasonably withheld.
(b) SATISFACTION OF CONDITIONS. Each party shall use its
respective reasonable best efforts to cause the conditions set forth in
Article 5 to be satisfied as promptly as practicable.
(c) ADDITIONAL AGREEMENTS. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees to use
all reasonable efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including cooperating fully
with the other party, including by provision of information and making of
all necessary filings in connection with, among other things, the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and applicable Japanese regulations. In case at any time after
the Closing Date any further action is necessary or desirable to carry
out the purposes of this Agreement, each party shall take all such
necessary action.
(d) OTHER ACTIONS. No party shall (and each party shall
cause its Subsidiaries not to) take any action that would or is
reasonably likely to result in any of the representations and warranties
of such party set forth in
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this Agreement being untrue as of the date made (to the extent so limited), or
in any of the conditions to the Closing set forth in Article5 not being
satisfied.
(e) TAX MATTERS. Toshiba hereby agrees that it shall
(and shall cause its Subsidiaries to) report the transaction contemplated
by Section 1.1 above as a taxable sale of the capital stock of TAE and
the Toshiba Option for United States federal, state and local income and
franchise tax purposes and Toshiba shall not (and shall cause its
Subsidiaries not to) take any position in any tax return or tax
proceeding that is contrary to the foregoing.
(f) CABLE/TELEPHONY BUSINESS.
(i) If during the period from the date hereof
through the date that is 30months from the Closing Date TWX shall reach
a basic understanding with USW or any other party to effect a transaction
involving a significant change in TWX's ownership in, control of or
management rights with respect to in excess of two-thirds of the fair
market value of TWE's direct or indirect interests in the cable/
telephony business (a "Significant Cable Transaction"), then TWX shall
use its reasonable best efforts to permit Toshiba to have an equity
participation in such Significant Cable Transaction on terms to be
negotiated with and agreed upon by Toshiba and the parties to such
transaction; provided that such equity participation is accomplished on
reasonable terms, on a tax efficient basis and in a manner consistent
with the scheduled timing of the transaction.
(ii) In connection with Toshiba's equity
participation in any Significant Cable Transaction contemplated by
paragraph (i), TWX shall use its reasonable best efforts to permit
Toshiba to invest up to 50% of the Exchange Consideration received by
Toshiba and its Designated Subsidiaries as consideration for such equity
participation; provided that such investment is effectuated on a tax
efficient basis.
(g) "TOSHIBA" NAME. Promptly after Closing, TWX shall
change the name of TAE and Toshiba Entertainment to a name that does not
use "Toshiba" or derivations thereof.
(h) CERTAIN LIABILITIES. On or prior to the Closing,
Toshiba shall cause each of TAE and Toshiba Entertainment to repay or
otherwise cause to be cancelled or extinguished all liabilities due to
its affiliates.
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ARTICLE 5
CONDITIONS PRECEDENT
Section 5.1 CONDITIONS TO THE OBLIGATIONS OF TWX. The
obligations of TWX under this Agreement to consummate the transactions
contemplated hereby are subject to the satisfaction of the following
conditions, the imposition of which is solely for the benefit of TWX and
any one or more of which may be expressly waived by TWX, in its sole
discretion, except as otherwise required by law:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Toshiba contained herein shall have
been true and correct when made, and shall be true and correct at and as
of the Closing Date as though made on and as of the Closing Date (except
to the extent that any such representation or warranty had by its terms
been made as of a specific date in which case such representation or
warranty shall have been true and correct as of such specific date). TWX
shall have received a certificate dated the Closing Date signed by an
officer of Toshiba certifying to the fulfillment of this condition.
(b) PERFORMANCE OF AGREEMENTS. Toshiba shall have
performed all obligations and agreements and complied with all covenants
and conditions contained in this Agreement to be performed and complied
with by it at or prior to the Closing Date. TWX shall have received a
certificate dated the Closing Date signed by an officer of Toshiba
certifying to the fulfillment of this condition.
(c) NO INJUNCTIONS. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the transactions
contemplated hereby shall be in effect.
(d) REQUIRED CONSENTS. The Required Consents shall have
been obtained and TWX shall have received evidence thereof reasonably
satisfactory to it.
(e) HSR ACT. All waiting periods under the HSR Act shall
have expired or been terminated.
Section 5.2 CONDITIONS TO THE OBLIGATIONS OF TOSHIBA. The
obligations of Toshiba to consummate the transactions contemplated hereby
are subject to the satisfaction of the following conditions, the
imposition of which is solely for the benefit of Toshiba and any one or
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more of which may be expressly waived by Toshiba, in its sole discretion,
except as otherwise required by law:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of TWX contained herein shall have been
true and correct when made, and shall be true and correct at and as of
the Closing Date as though made on and as of the Closing Date (except to
the extent that any such representation or warranty had by its terms been
made as of a specific date, in which case such representation or warranty
shall have been true and correct as of such specific date). Toshiba
shall have received a certificate dated the Closing Date signed by an
officer of TWX certifying to the fulfillment of this condition.
(b) PERFORMANCE OF AGREEMENTS. TWX shall have performed
all obligations and agreements and complied with all covenants and
conditions contained in this Agreement to be performed and complied with
by it at or prior to the Closing Date. Toshiba shall have received a
certificate dated the Closing Date signed by an officer of TWX certifying
to the fulfillment of this condition.
(c) NO INJUNCTIONS. No Injunction preventing the
consummation of the transactions contemplated hereby shall be in effect.
(d) REQUIRED CONSENTS. The Required Consents shall have
been obtained and Toshiba shall have received evidence thereof reasonably
satisfactory to it.
(e) REGISTRATION RIGHTS. TWX shall have executed and
delivered a registration rights agreement, substantially in the form of
Exhibit B, relating to the registration of resales by Toshiba of the TWX
Common Stock into which the TWX Preferred Stock issued pursuant to
Section1.1 is convertible or exchangeable.
(f) HSR ACT. All waiting periods under the HSR Act shall
have expired or have been terminated.
ARTICLE 6
GENERAL INDEMNIFICATION
Section 6.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations, warranties, covenants and agreements of the parties
contained in this Agreement, or in any Exhibit or Schedule, or in any
other document delivered pursuant to this Agreement, shall survive the
Closing and shall survive any investigation at any time made by or on
behalf of the party to whom any such representations,
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warranties, covenants and agreements were made; provided, however, that, (i)
except as provided in clause (ii) of this Section 6.1, all unasserted claims
with respect to a breach of the representations and warranties of TWX and
Toshiba shall expire on the close of business on the first anniversary of
the Closing Date and cannot thereafter be asserted; and (ii) all
unasserted claims with respect to a breach of the representations and
warranties of (A) Toshiba set forth in Sections 3.2(b), (c), (d), (f) and
(g) and (B)TWX set forth in Section 3.1(d) shall survive for the
relevant statutes of limitations and any extensions thereof.
Section 6.2 OBLIGATION OF TOSHIBA TO INDEMNIFY. Subject in the
case of clause(ii) to the limitations contained in Section 6.1, Toshiba
agrees to indemnify, defend and hold harmless TWX (and its directors,
officers, employees, Affiliates, successors and assigns) from and against
all (i)losses, liabilities (including, without limitation, tax
liabilities), damages, deficiencies, demands, claims, actions, judgments
or causes of action, assessments, costs or expenses (including, without
limitation, interest, penalties and reasonable attorneys' fees and
disbursements whether arising out of a suit or proceeding between the
indemnitee and the indemnitor or between the indemnitee and a third
party) ("Losses") of TAE or Toshiba Entertainment attributable to periods
(or portions thereof) ending on or prior to the Closing Date, (ii)Losses
based upon, arising out of or otherwise in respect of any inaccuracy in
or any breach of any representation, warranty, covenant or agreement of
Toshiba contained in this Agreement or in any documents delivered
pursuant to this Agreement and (iii)Losses with respect to state or
local taxes of any other member of any combined or unitary group in which
TAE or Toshiba Entertainment is included for state or local tax purposes.
Notwithstanding the foregoing, Toshiba's indemnification obligations with
respect to liabilities described in clause(i) of the preceding sentence
shall not include (x)Losses with respect to United States federal income
taxes that are imposed on Toshiba Entertainment's distributive share of
TWE's income, losses, credits and other items for the taxable period
beginning on January 1, 1995, or state and local income or franchise
taxes for such period to the extent such taxes are imposed as a result of
Toshiba Entertainment having a positive distributive share (as computed
for United States federal income tax purposes) of TWE's net taxable
income for such period, (y) Losses with respect to United States federal,
state and local income and franchise taxes for periods ending on or prior
to December 31, 1994 to the extent such Losses result from adjustments to
Toshiba Entertainment's distributive share of TWE's income, losses,
credits and other items shown on the Schedule K-1s of TWE for such
periods, and (z) Losses with respect to United States federal, state and
local taxes on
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income resulting from any action taken by TWX, TAE or Toshiba Entertainment
after the Closing. Any payments made pursuant to this Section shall be
treated as adjustments to the purchase price.
Section 6.3 OBLIGATION OF TWX TO INDEMNIFY. Subject to the
limitations contained in Section 6.1, TWX agrees to indemnify, defend and
hold harmless Toshiba (and its directors, officers, employees,
Affiliates, successors or assigns) from and against all Losses based
upon, arising out of or otherwise in respect of any inaccuracy in or any
breach of any representation, warranty, covenant or agreement of TWX
contained in this Agreement or in any documents delivered pursuant to
this Agreement. Any payments made pursuant to this Section shall be
treated as adjustments to the purchase price.
Section 6.4 NOTICE AND OPPORTUNITY TO DEFEND. Promptly after
receipt by any party hereto (the "Indemnified Party") of notice or
knowledge of any demand, claim or circumstances which, with the lapse of
time, would or might give rise to a claim or the commencement (or
threatened commencement) of any action, proceeding or investigation (an
"Asserted Liability") that may result in a Loss, the Indemnified Party
shall give notice thereof (the "Claims Notice") to any other party (or
parties) obligated to provide indemnification pursuant to Section 6.2 or
6.3 (the "Indemnifying Party"); provided that subject to Section 6.1 the
delay or failure to give prompt notice shall not affect the rights of any
Indemnified Party unless and to the extent such delay or failure shall be
prejudicial or otherwise adversely affect the Indemnifying Party. The
Claims Notice shall describe the Asserted Liability in reasonable detail,
and shall indicate the amount (estimated, if necessary and to the extent
feasible) of the Loss that has been or may be suffered by an Indemnified
Party. The Indemnifying Party may assume the defense of such Asserted
Liability at its own expense and by its own counsel, and after notice
from the Indemnifying Party to the Indemnified Party of its election to
assume the defense of such Asserted Liability, the Indemnifying Party
shall not be liable hereunder for any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the
defense of such Asserted Liability, except as set forth below. At the
request of, and at the expense of, the Indemnifying Party, the
Indemnified Party shall cooperate in the defense of any such Asserted
Liability and shall make available to the Indemnifying Party any books,
records or other documents within its control necessary or appropriate
for such defense. No Indemnifying Party shall, without the consent of
the Indemnified Party, consent to the entry of judgment or enter into any
settlement that does not include a release of the Indemnified Party from
all liability in respect of
<PAGE>
Page 17
such Asserted Liability. No Indemnified Party shall consent to the entry of
such judgment or enter into any settlement without the consent of the
Indemnifying Party.
ARTICLE 7
CONTINUING RIGHTS AND
OBLIGATIONS OF TOSHIBA
Section 7.1 TERMINATION OF RIGHTS UNDER PARTNERSHIP AGREEMENTS.
Upon the consummation of the transactions contemplated hereby, Toshiba
shall cease to be a Participant (as defined in the TWE Partnership
Agreement) and, except as provided below, Toshiba and its Subsidiaries
shall cease to have any rights or obligations under (a) the TWE
Partnership Agreement, (b) the Toshiba Option or (c) the TWSH Partnership
Agreements.
Section 7.2 OTHER VENTURES. Nothing contained herein shall
modify, amend or otherwise affect the agreements, understandings and
arrangements of TWX, Toshiba, Itochu, USW and their respective Affiliates
relating to Time Warner Entertainment Japan Inc. ("TWE Japan"), Titus
Communications Corp. and Chofu Cable Kabushiki Kaisha.
Section 7.3 STANDSTILL; CONFIDENTIALITY. Toshiba shall continue
to be bound by and entitled to the benefits of the "Confidentiality"
provisions set forth in Section 5.3 of the TWE Partnership Agreement and,
for so long as Toshiba directly or indirectly owns at least 50 percent of
the TWX Preferred Stock issued pursuant to Section1.1 (including any TWX
Common Stock received upon conversion or exchange thereof) (the "Toshiba
Minimum Interest"), Toshiba shall be bound by the "Standstill" provisions
set forth in Section5.6 of the TWE Partnership Agreement.
Section 7.4 CONTINUING STRATEGIC RELATIONSHIP. Toshiba shall
have the additional rights and obligations set forth in this Section 7.4.
(a) BOARD REPRESENTATION. For so long as Toshiba directly
or indirectly owns an interest in TWX at least equal to the Toshiba
Minimum Interest, (i)Toshiba shall be entitled to designate one Non-
Voting Class A Representative to the Board of Representatives of TWE (in
accordance with Section 12.2(a) of the TWE Partnership Agreement) and
shall continue to be bound by the provisions of Article XII of the TWE
Partnership Agreement as it relates to the appointment, removal and
conduct of such Non-Voting Class A Representative, and (ii)Toshiba shall
be entitled to designate representatives to serve on the
<PAGE>
Page 18
committees of the Board of Representatives of TWE (including without limitation
the Full Service Network Management Committee) existing as of the date hereof
to the same extent as it is entitled as of the date hereof.
(b) EXCHANGE OF PERSONNEL. For so long as Toshiba
directly or indirectly owns an interest in TWX at least equal to the
Toshiba Minimum Interest, Toshiba shall have the rights and obligations
of a Class A Partner with respect to the "Exchange of Personnel"
arrangements provided in Section 12.7 of the TWE Partnership Agreement,
and TWX shall cause similar arrangements to be effectuated with respect
to the music and publishing businesses of TWX.
(c) PREFERRED VENDOR/SUPPLIER STATUS. For so long as
Toshiba directly or indirectly owns an interest in TWX at least equal to
the Toshiba Minimum Interest, Toshiba shall be entitled to the benefits
of the "Preferred Vendor/Supplier Status" provisions set forth in Section
5.8 of the TWE Partnership Agreement to the same extent as if Toshiba
were a Partner; provided that for purposes of determining Toshiba's (or
its Affiliate's) pro rata share of any supply arrangement (in the event
more than one Partner (or Affiliate of a Partner) provides the relevant
product or service) its Participating Percentage Share shall be deemed to
equal 5.61% multiplied by the percentage of the TWX Preferred Stock
issued pursuant to Section1.1 (including any TWX Common Stock received
upon conversion or exchange thereof) then owned directly or indirectly by
Toshiba (the "Toshiba Participating Percentage Share"); and provided
further, that for purposes of Section 5.8 of the TWE Partnership
Agreement only, for so long as Toshiba is entitled to any rights under
such Section the Participating Percentage Share of the TW Partners (as
defined in the TWE Partnership Agreement) shall be reduced by an amount
equal to the Toshiba Participating Percentage Share. In addition, TWX
shall cause similar arrangements to be effectuated with respect to the
music and publishing businesses of TWX. If and for so long as TWX
controls any successor to the assets of TWE, TWX shall cause such
successor to grant Toshiba rights comparable to those provided by this
Section7.4(c), and if TWX shall not control any such successor then TWX
shall use its reasonable best efforts to cause such successor to grant
Toshiba such rights.
(d) COVENANT AGAINST COMPETITION. Notwithstanding the
provisions of Section 5.5(a)(i) and (ii) of the TWE Partnership
Agreement, for so long as Toshiba directly or indirectly owns at least
15% of the equity of TWE Japan, Toshiba shall be subject to the
restrictions, and entitled to the benefits, of the "Covenants Against
Competition" set forth in Section 5.5 of the TWE Partnership Agreement,
but only to the extent such provisions restrict any party from
<PAGE>
Page 19
engaging, directly or indirectly (whether by operation, investment or
otherwise), in any Restricted Business in Japan. In addition, for so long
as TWX controls TWE, TWX shall cause TWE to continue to comply with Sections5
and 6 of the TWE Japan Agreement (as defined below) in accordance with
the terms thereof.
(e) ADDITIONAL CONSULTATION RIGHTS. Following the
Closing, members of the senior management of TWX and Toshiba shall
consult regularly with respect to the cable, programming, filmed
entertainment, music and publishing businesses and shall explore possible
areas of joint cooperation in connection with such businesses on a global
basis. In addition, (i)representatives of TWX and Toshiba shall meet
quarterly to exchange information and ideas regarding markets, products,
technologies and opportunities in the cable, programming, filmed
entertainment, music and publishing businesses and (ii)representatives
of TWX and Toshiba shall meet quarterly to discuss new business
opportunities in the areas of music and publishing in Japan.
Section 7.5 STATEMENT OF ENHANCED GLOBAL STRATEGIC ALLIANCE.
Following the execution of this Agreement, the parties will consider
preparing a statement intended to formalize the terms and objectives of
their enhanced long-term global strategic relationship.
ARTICLE 8
RESTRICTIONS ON TRANSFERS
Section 8.1 RESTRICTIONS ON TRANSFER. Toshiba agrees that it
shall not (and shall cause its Subsidiaries not to), without the prior
written consent of the board of directors of TWX, directly or indirectly,
sell, transfer, pledge, encumber or otherwise dispose of, or agree to
sell, transfer, pledge, encumber or otherwise dispose of, any shares of
TWX Preferred Stock acquired pursuant to this Agreement, any TWX Common
Stock issued upon conversion or exchange of such TWX Preferred Stock, or
any interest therein (collectively, "TWX Stock"), except that such
consent shall not be necessary if any such disposition is:
(i) to the underwriters in connection with an
underwritten public offering of shares of TWX Stock on a firm commitment
basis registered under the Securities Act, pursuant to which the sale of
such securities is effected in a manner that will result in a broad
distribution thereof;
(ii) to a third party in a transaction that complies with
the volume and manner of sale provisions con-
<PAGE>
Page 20
tained in Rule 144(e) and (f) as in effect on the date hereof under the
Securities Act (whether or not applicable in accordance with the terms
thereof);
(iii) to a third party in a transaction or series of
related transactions whenever occurring (provided that this paragraph
(iii) will be unavailable where the senior executives or Agents of
Toshiba or any of its Subsidiaries know or, after reasonable inquiry
should have known, that such third party directly or indirectly
beneficially owns or, after giving effect to such sale will beneficially
own, more than five percent of the aggregate Voting Power of any class or
series of Voting Securities of TWX or, if such class or series votes
together with any other classes or series as a single class or series,
more than five percent of the aggregate Voting Power of such classes or
series);
(iv) to a financial institution as a bona fide pledge as
security for money borrowed;
(v) pursuant to the terms of any tender or exchange
offer for Voting Securities of TWX not opposed by the board of directors
of TWX (provided that Toshiba shall not be permitted to make any such
transfer prior to the date on which TWX files a Schedule14D-9 with
respect to such tender or exchange offer); and
(vi) to an Affiliate of Toshiba;
provided, however, that the restrictions set forth in this Section 8.1
shall not apply to (A)the transfer of any Voting Securities of TWX to
TWX and (B)Voting Securities of TWX held by one or more employee benefit
plans (or trusts for such plans) of Toshiba and its Subsidiaries,
provided that all decisions whether to purchase or sell such shares are
made by Persons independent of Toshiba and its Affiliates.
Notwithstanding anything in the first sentence of this Section 8.1 to the
contrary, any transfer pursuant to clause (iv) of this Section 8.1, and
any transfer or series of related transfers to any Person pursuant to
clause (iii) of this Section 8.1 of Voting Securities representing (on an
as-converted basis) three percent (3%) or more of the outstanding shares
of TWX Common Stock (determined on the basis of the most recent Annual
Report on Form 10-K or Quarterly Report on Form 10-Q, as applicable),
shall include the written agreement of the transferee in a form
reasonably satisfactory to TWX to be bound by the terms of this Section
8.1.
Section 8.2 ADDITIONAL RESTRICTIONS ON TRANSFER. Toshiba
shall not (and Toshiba shall cause its Subsidiaries not to), directly or
indirectly, offer, sell, assign,
<PAGE>
Page 21
pledge, encumber, transfer, or otherwise dispose of any TWX Stock, except
pursuant to a registration of such securities under the Securities Act and
applicable state securities laws or in a transaction that, in the opinion of
Davis Polk & Wardwell or other counsel reasonably satisfactory to TWX, is
exempt from, or not subject to, the registration requirements of the
Securities Act and applicable state securities laws.
Section 8.3 LEGENDS ON CERTIFICATES OF TWX STOCK.
(a) Toshiba agrees (and will cause each of its designees
to agree) that each certificate for shares of TWX Stock shall bear the
following legends:
(A) THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY
NOR ANY INTEREST HEREIN MAY BE OFFERED, SOLD, ASSIGNED,
PLEDGED, ENCUMBERED, TRANSFERRED OR OTHERWISE DISPOSED OF
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATING THERETO OR
AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
ACT.
(B) THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
RESTRUCTURING AGREEMENT, DATED AS OF AUGUST 31, 1995, AS THE
SAME MAY BE AMENDED FROM TIME TO TIME (THE "RESTRUCTURING
AGREEMENT"), BETWEEN THE CORPORATION AND THE ORIGINAL HOLDER OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE. A COPY OF THE
RESTRUCTURING 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 RESTRUCTURING AGREEMENT.
(b) In connection with any transfer in accordance with
Sections 8.1(i) and (ii), TWX shall deliver new certificates for the
shares of TWX Stock without the legends specified in paragraph (a) above,
and, in connection with any transfer in accordance with Section 8.1(v),
TWX shall deliver new certificates for the shares of TWX Stock without
the legend specified in paragraph (a)(B) above, in each case, in exchange
for the surrender of existing certificates representing TWX Stock and, in
the case of Section 8.1(ii), evidence reasonably satisfactory to TWX
(consisting of an officer's certificate or an opinion of counsel, as
reasonably determined by TWX) that the provisions of Rule144(e) and (f)
under the Securities Act have been followed.
<PAGE>
Page 22
ARTICLE 9
GENERAL PROVISIONS
Section 9.1 CERTAIN DEFINITIONS. As used in this Agreement,
the following terms will have the meanings set forth in this Section:
(a) "Affiliate" means, with respect to any Person, any
other Person that, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control
with, such first Person.
(b) "Agent" means, with respect to any Person, such
Person's officers, directors, employees, attorneys, accountants,
representatives and agents.
(c) "beneficially owned" has the meaning ascribed to such
term in Rule 13d-3 of the Exchange Act, as in effect, on the date of this
Agreement.
(d) "Business Day" means any day other than a Saturday,
Sunday or other day on which banks in the State of New York are
authorized or obligated to be closed.
(e) "Designated Subsidiaries" of Toshiba means Toshiba
America, Inc., a Delaware corporation and a direct wholly owned
Subsidiary of Toshiba, TAE and Toshiba Entertainment.
(f) "Governmental Entity" means any foreign, Federal,
state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality.
(g) "Material Adverse Effect" means, with respect to any
Person, any effect that is or is reasonably likely to be materially
adverse to (x) the business, results of operations, properties, assets,
liabilities or condition (financial or otherwise) of such Person and its
Subsidiaries taken as a whole, (y) such Person's or its Subsidiaries'
ability to consummate the transactions contemplated hereby or (z) in the
case of Toshiba or TAE, the Toshiba Partnership Interests.
(h) "Person" means any individual, corporation,
partnership, firm, group (as such term is used in this Section 13(d)(3)
of the Exchange Act), joint venture, association, trust, limited
liability company, unincorporated organization, estate, trust or other
entity.
(i) "Significant Subsidiary" of any Person (as defined
below) means any Subsidiary (as defined below)
<PAGE>
Page 23
of such Person that would constitute a "significant subsidiary" of such Person
within the meaning of Rule1-02(v)(1) or (2) of RegulationS-X promulgated by
the SEC.
(j) "Subsidiary" of any Person means any corporation,
partnership, joint venture or other legal entity of which such Person
(either directly or through or together with any other Subsidiary of such
Person), owns, directly or indirectly, 50% or more of the stock or other
equity interests the holders of which are generally entitled to vote for
the election of the board of directors or similar governing body of such
corporation or other legal entity.
(k) "TWE Japan Agreement" means the TWE Japan Agreement,
dated as of October29, 1991, as amended, among Itochu, Toshiba, USW, TWX
and Warner Bros. Inc.
(l) "TWSH Partnership Agreements" means the Agreements of
Limited Partnership, each dated as of September 14, 1993, governing TWSH
I and TWSH II.
(m) "Voting Power" means, with respect to any class or
series of securities of TWX, or any classes or series of securities of
TWX generally entitled to vote together as a single class or series, 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, warrants, options or similar
securities held by such Person shall be deemed to be outstanding, but
shall not be deemed to be outstanding for the purposes of computing the
percentage of the class or series (or classes or series) beneficially
owned by any other Person.
(n) "Voting Securities" means, with respect to any
Person, any securities of such Person having Voting Power or any
securities convertible into or exchangeable for any securities having
Voting Power.
Section 9.2 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given when delivered
personally, upon a receipt of a transmittal confirmation if sent by
telecopy or like transmission, and on the next Business Day when sent by
Federal Express, Express Mail or similar overnight courier service to the
parties at the following addresses or facsimile numbers (or at such other
address or facsimile number for a party as shall be specified by like
notice):
<PAGE>
Page 24
(a) If to TWX to:
Time Warner Inc.
75 Rockefeller Plaza
New York, New York 10019
Attention: Peter R. Haje,
General Counsel
Facsimile: (212) 956-7281
with a copy to:
Paul, Weiss, Rifkind, Wharton
& Garrison
1285 Avenue of the Americas
New York, New York 10019
Attention: Robert B. Schumer
Facsimile: (212) 757-3990
(b) If to Toshiba, to:
Toshiba Corporation
1-1, Shibaura 1-chome
Minato-ku, Tokyo 105, Japan
Attention: Akira Kuwahara
Facsimile: 81-3-5444-9288
with a copy to:
Toshiba Corporation
1-1 Shibaura 1-chome
Minato-ku, Tokyo 105, Japan
Attention: General Manager
Legal Affairs Division
Facsimile: 81-3-5444-9214
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: John A. Bick
Facsimile: (212) 450-4800
Section 9.3 ALTERNATIVE TRANSACTION OPTION. Toshiba shall
have the option, exercisable by delivering a written notice to TWX within
ten days after the date hereof (but in any event prior to the Closing),
to transfer the Toshiba Partnership Interest and the Toshiba Option to
TWX (in lieu of transferring the capital stock of TAE and the Toshiba
Option in accordance with this Agreement) in a transaction identical to
the transaction contemplated by the Restructuring Agreement, dated as of
the date hereof, among TWX, Itochu and Itochu Entertainment Inc. (but for the
<PAGE>
Page 25
parties thereto and such other changes as are necessary or
appropriate to reflect the different parties).
Section 9.4 TERMINATION. This Agreement may be terminated
(i)upon the written agreement of the parties or (ii)by either TWX or
Toshiba if the transactions contemplated hereby shall not have occurred
by December31, 1995 upon written notice delivered by such party to the
other.
Section 9.5 INTERPRETATION. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of 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. The
term "reasonable best efforts" as used throughout this Agreement with
respect to actions to be taken by any party shall not be construed to
require any party to make any material expenditure in connection with
such actions. Whenever the words "include," "includes" or "including"
are used in this Agreement, they shall be deemed to be followed by the
words "without limitation." The phrases "the date of this Agreement,"
"the date hereof," and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to August 31, 1995.
Section 9.6 WAIVERS AND AMENDMENTS. This Agreement may be
amended, superseded, cancelled, renewed or extended, and the terms hereof
may be waived, only by written instruments signed by the parties to this
Agreement, or in the case of a waiver, by the party waiving compliance.
Except where a specific period for action or inaction is provided herein,
no delay on the part of a party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof. Neither any
waiver on the part of a party of any such right, power or privilege, nor
any single or partial exercise of any such right, power or privilege,
shall preclude any further exercise thereof or the exercise of any other
such right, power or privilege.
Section 9.7 EXPENSES. The parties to this Agreement shall
bear their respective expenses incurred in connection with the
preparation, execution and performance of this Agreement and the
transactions contemplated hereby, including, without limitation, all fees
and expenses of agents, representatives, counsel and accountants.
Section 9.8 ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of
the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the
<PAGE>
Page 26
benefit of and be enforceable by the parties and their respective successors
and assigns.
Section 9.9 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES.
This Agreement (including the documents and the instruments 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 hereof and (b)is not intended to
confer upon any person other than the parties hereto any rights or
remedies hereunder.
Section 9.10 GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York
(other than its rules of conflicts of law to the extent the application
of the laws of another jurisdiction would be required thereby).
Section 9.11 COUNTERPARTS. This Agreement may be executed in
one or more counterparts, each of which shall be an original and all of
which, when taken together, shall constitute one and the same instrument.
<PAGE>
Page 27
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
TIME WARNER INC.
By:/s/ Gerald M. Levin
---------------------------
Name: Gerald M. Levin
Title: Chairman and Chief
Executive Officer
TOSHIBA CORPORATION
By:/s/ Fumio Sato
--------------------------
Name: Fumio Sato
Title: President and
Chief Executive Officer
<PAGE>
Schedule 3.1(c)
UNDISCLOSED LIABILITIES
None.
<PAGE>
Schedule 3.1(d)
TWX REQUIRED CONSENTS
1. Filing of Premerger Notification and Report Form under the HSR Act.
<PAGE>
Schedule 3.1(e)
MATERIAL LITIGATION
None.
<PAGE>
Schedule 3.2(c)
TOSHIBA REQUIRED CONSENTS
1. Japanese Export-Import Bank.
2. Bank of Japan.
<PAGE>
Exhibit A
CERTIFICATE OF DESIGNATIONS
OF SERIES G 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 (as
defined below, the "Corporation"), does hereby certify that the following
resolution was duly adopted by action of the Board of Directors of the
Corporation at a meeting duly held on [August __, 1995].
RESOLVED that pursuant to the authority expressly granted to
and vested in the Board of Directors of the Corporation 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, such 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 G Convertible Preferred Stock.
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:
<PAGE>
Page 2
1.1 "Accrued Dividend Amount" shall mean the aggregate
amount of accrued and unpaid dividends on a share of Series G Stock to
and including the Conversion Date, except that if the Conversion Date
shall occur after a Record Date and prior to a related Dividend Payment
Date, the Accrued Dividend Amount shall not include any accrued and
unpaid dividends for the period from and after the most recent Dividend
Payment Date.
1.2 "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.
1.3 "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).
1.4 "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 G 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 General Corporation Law of the
State of Delaware.
1.5 "Change of Control" and "Change of Control Date"
shall have the following meanings: "Change of Control" shall mean the
occurrence of one or both of the following events: (a) individuals who
would constitute a majority of the members of the Board of Directors
elected at any meeting of stockholders or by written consent (without
regard to any members of the Board of Directors elected pursuant to the
terms of any series of Preferred Stock) shall be elected to the Board of
Directors and the election or the nomination for election by the
Corporation's stockholders of such directors was not approved by a vote
of at least a majority of the directors in office immediately prior to
such election (in which event "Change of Control Date" shall mean the
date of such election) or (b) a Person or group of Persons acting in
concert as a partnership, limited partnership, syndicate or other group
within the meaning of Rule 13d-3 under the Exchange Act (the "Acquiring
Person") shall, as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases, share repurchases or
redemptions or otherwise, have become the beneficial owner (within the
meaning of Rule 13d-3 under the
<PAGE>
Page 3
Exchange Act) of 40% or more of the outstanding shares of Common Stock (in
which event "Change of Control Date" shall mean the date of the event
resulting in such 40% ownership).
1.6 "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.
1.7 "Common Dividend Deficiency" shall be applicable in
the event that a Conversion Date shall fall after a record date and prior
to the related payment date for a regularly scheduled cash dividend on
the Common Stock (the "Common Dividend Payment Date"), and in such event
shall mean the product of (i) the Conversion Rate, (ii) the amount per
share of Common Stock of the regularly scheduled cash dividend for which
the record date has been set but a payment date has not yet occurred and
(ii) a fraction (A) the numerator of which is the number of calendar days
from and excluding the Conversion Date (or in the event the Conversion
Date falls after a Record Date and on or prior to a related Dividend
Payment Date, from and excluding the Dividend Payment Date) to and
including the Common Dividend Payment Date and (B) the denominator of
which is 91 (provided that such fraction shall not be greater than one
(1)).
1.8 "Common Dividend Excess" shall be applicable in all
circumstances where a Common Dividend Deficiency is not applicable, and
in such event shall mean the product of (i) the Conversion Rate, (ii) the
regular quarterly cash dividend per share, if any, paid by the
Corporation on the Common Stock (the "Historical Dividend") on the most
recent dividend payment date for the Common Stock (the "Prior Dividend
Payment Date") occurring during the four months immediately preceding the
Conversion Date and (iii) a fraction (A) the numerator of which is the
number of calendar days from and excluding (1) the Prior Dividend Payment
Date to and including (2) the Conversion Date (or in the event the
Conversion Date falls after a Record Date and on or prior to a related
Dividend Payment Date, to and including the Dividend Payment Date) and
(B)the denominator of which is 91 days (provided that in no event shall
the fraction be greater than one (1)).
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1.9 "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 3.6(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.
1.10 "Conversion Date" shall have the meaning set forth in
Section 3.5 hereof.
1.11 "Conversion Price" at any time shall mean the
Liquidation Value per share divided by the Conversion Rate in effect at
such time (rounded to the nearest one hundredth of a cent).
1.12 "Conversion Rate" shall have the meaning set forth in
Section 3.1 hereof.
1.13 "Converting Holder" shall have the meaning set forth
in Section 3.5 hereof.
1.14 "Corporation" shall mean Time Warner Inc., a Delaware
corporation, and any of its successors by operation of law, including by
merger, consolidation or sale or conveyance of all or substantially all
of its property and assets.
1.15 "Current Market Price" of the Common Stock on any date
shall mean the average of the daily Closing Prices per share of the
Common Stock for the five (5)consecutive Trading Days ending on the
Trading Day immediately preceding the applicable record date, conversion
date, redemption date or exchange date referred to in Section 3 or
Section 4.
1.16 "Dividend Payment Date" shall have the meaning set
forth in Section 2.1 hereof.
1.17 "Effective Time" shall mean the date on which the
Series G Stock.
1.18 "Exchange Act" shall mean Securities Exchange Act of
1934, as amended.
1.19 "Exchange Price" shall have the meaning set forth in
Section 4.1 hereof.
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1.20 "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 Series G Stock in respect of the right to receive dividends or to
participate in any distribution of assets other than by way of dividends.
1.21 "Liquidation Value" shall have the meaning set forth
in Section 7.1 hereof.
1.22 "NASDAQ" shall mean the National Association of
Securities Dealers Automated Quotation System.
1.23 "Net Dividend Amount" shall have the meaning set forth
in Section 3.1 hereof.
1.24 "NYSE" shall mean the New York Stock Exchange, Inc.
1.25 "Parity Stock" shall mean the Series B Stock, the
Series C Stock, the Series D Stock, the SeriesH 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
Series G Stock in the payment of dividends, including accumulations, if
any, 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 on liquidation are not paid in full, be
entitled to share ratably with the Series G Stock 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 (i) in Section2.2 hereof, to any stock which is Parity Stock in
respect of dividend rights; (ii) in Section 7 hereof, to any stock which
is Parity Stock in respect of the distribution of assets; and (iii) in
Sections 6.2 and 6.3 hereof, to any stock which is Parity Stock in
respect of either dividend rights or the distribution of assets and
which, pursuant to the Certificate of Incorporation or any instrument in
which the Board of Directors, acting pursuant to authority granted
<PAGE>
Page 6
in the Certificate of Incorporation, shall so designate, is entitled to vote
with the holders of Series G Stock.
1.26 "Person" shall mean an individual, corporation,
partnership, joint venture, association, trust, unincorporated
organization or other entity.
1.27 "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.
1.28 "Pro Rata Portion" shall have the meaning set forth
in Section 5.6 hereof.
1.29 "Pro Rata Repurchase" shall mean the purchase of
shares of Common Stock by the Corporation or by any of its subsidiaries,
whether for cash or other property or securities of the Corporation,
which purchase is subject to Section 13(e) of the Exchange Act or is made
pursuant to an offer made available to all holders of Common Stock, but
excluding any purchase made in open market transactions that satisfies
the conditions of clause (b) of Rule 10b-18 under the Exchange Act or has
been designed (as reasonably determined by the Board of Directors or a
committee thereof) to prevent such purchase from having a material effect
on the trading market of the Common Stock. The "Effective Date" of a Pro
Rata Repurchase shall mean the applicable expiration date (including all
extensions thereof) of any tender or exchange offer which is a Pro Rata
Repurchase or the date of purchase with respect to any Pro Rata
Repurchase which is not a tender or exchange offer.
1.30 "Record Date" shall have the meaning set forth in
Section 2.1 hereof.
1.31 "Redemption Price" shall have the meaning set forth
in Section 4.1 hereof.
1.32 "Redemption Rescission Event" shall mean the
occurrence of (a) any general suspension of trading in, or limitation on
prices for, securities on the principal national securities exchange on
which shares of Common Stock are registered and listed for trading (or,
if shares of Common Stock are not registered and listed for trading on
any such exchange, in the over-the-counter market) for more than six-and-
one-half (6-1/2) consecutive trading hours, (b)any decline in either the
Dow Jones Industrial Average or the Standard & Poor's Index of 400
Industrial Companies (or any successor index published by Dow Jones &
Company, Inc. or Standard & Poor's Corporation) by either (i) an amount
in excess of 10%, measured from the close of business
<PAGE>
Page 7
on any Trading Day to the close of business on the next succeeding Trading Day
during the period commencing on the Trading Day preceding the day notice of any
redemption of shares of this Series is given (or, if such notice is given
after the close of business on a Trading Day, commencing on such Trading
Day) and ending at the earlier of (x) the time and date fixed for
redemption in such notice and (y) the time and date at which the
Corporation shall have irrevocably deposited funds with a designated bank
or trust company pursuant to Section 4.4 or (ii) an amount in excess of
15% (or, if the time and date fixed for redemption is more than 15 days
following the date on which notice of redemption is given, 20%), measured
from the close of business on the Trading Day preceding the day notice of
such redemption is given (or, if such notice is given after the close of
business on a Trading Day, from such Trading Day) to the close of
business on any Trading Day on or prior to the earlier of the dates
specified in clauses (x) and (y) above, (c) a declaration of a banking
moratorium or any suspension of payments in respect of banks by Federal
or state authorities in the United States or (d) the commencement of a
war or armed hostilities or other national or international calamity
directly or indirectly involving the United States which in the
reasonable judgment of the Corporation could have a material adverse
effect on the market for the Common Stock.
1.33 "Rescission Date" shall have the meaning set forth in
Section 4.5 hereof.
1.34 "Senior Stock" shall mean 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 Series G Stock in respect of the right to
receive dividends or to participate in any distribution of assets other
than by way of dividends.
1.35 "Series A Stock" shall mean the series of Preferred
Stock authorized and designated as Series A Participating Preferred Stock
at the date of the Certificate, including any shares thereof authorized
and designated after the date of the Certificate.
1.36 "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.
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Page 8
1.37 "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.
1.38 "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.
1.39 "Series G Stock" and "this Series" shall mean the
series of Preferred Stock authorized and designated as the Series G
Convertible Preferred Stock, including any shares thereof authorized and
designated after the date of the Certificate.
1.40 "SeriesH Stock" shall mean the series of Preferred
Stock authorized and designated as SeriesH Convertible Preferred Stock
at the date of the Certificate, including any shares thereof authorized
and designated after the date of the Certificate.
1.41 "Surrendered Shares" shall have the meaning set forth
in Section 3.5 hereof.
1.42 "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. CASH DIVIDENDS.
2.1 The holders of the outstanding Series G Stock shall
be entitled to receive quarter-annual dividends, as and when declared by
the Board of Directors out of funds legally available therefor. Each
quarter-annual dividend shall be an amount per share equal to (i) in the
case of each Dividend Payment Date (as defined below) occurring after the
Effective Time through the Dividend Payment Date coinciding with the
fourth anniversary of the Effective Time, the greater of (A) $.9375 per
$100 of Liquidation Value of Series G Stock (which is equivalent to $3.75
per annum), and (B) an amount per $100 of Liquidation Value of Series G
Stock equal to the product of (1) the Conversion
<PAGE>
Page 9
Rate and (2) the aggregate per share amount of regularly scheduled dividends
paid in cash on the Common Stock during the period from but excluding the
immediately preceding Dividend Payment Date to and including such Dividend
Payment Date and (ii) in the case of each Dividend Payment Date occurring
thereafter, an amount per $100 of Liquidation Value of Series G Stock
equal to the product of (1) the Conversion Rate and (2) the aggregate per
share amount of regularly scheduled dividends paid in cash on the Common
Stock during the period from but excluding the immediately preceding
Dividend Payment Date to and including such Dividend Payment Date. All
dividends shall be payable in cash on or about the first day of [January,
April, July and October]{1} in each year, beginning on the first such
date that is more than 15 days after the Effective Time, as fixed by the
Board of Directors, or such other dates as are fixed by the Board of
Directors (provided that the fourth anniversary of the Effective Time
shall be a Dividend Payment Date) (each a "Dividend Payment Date"), to
the holders of record of Series G Stock at the close of business on or
about the Trading Day next preceding such first day of [January, April,
July or October] (or fourth anniversary of the Effective Time) as the
case may be, as fixed by the Board of Directors, or such other dates as
are fixed by the Board of Directors (each a "Record Date"). In the case
of dividends payable in respect of periods prior to the fourth
anniversary of the Effective Time, (i) such dividends shall accrue on
each share on a daily basis, whether or not there are unrestricted funds
legally available for the payment of such dividends and whether or not
earned or declared, from and after the day immediately succeeding the
Effective Time and (ii) any such dividends that become payable for any
partial dividend period shall be computed on the basis of the actual days
elapsed in such period. From and after the fourth anniversary of the
Effective Time, dividends on the Series G Stock (determined as to amount
as provided herein) shall accrue to the extent, but only to the extent,
that regularly scheduled cash dividends are declared by the Board of
Directors on the Common Stock with a payment date after the fourth
anniversary of the Effective Time (or, in the case of Series G Stock
originally issued after the fourth anniversary of the Effective Time,
after the Dividend Payment Date next preceding such date of original
issuance). All dividends that accrue in accordance with the foregoing
provisions shall be cumulative from and after the day immediately
succeeding the Effective Time (or such date of issuance). The amount
payable to each holder of record on any Dividend Payment Date shall be
rounded to the nearest cent.
-----------------------------
{1} To be revised so that the first Dividend Payment Date will be
approximately 3 months following the Effective Time.
<PAGE>
Page 10
2.2 Except as hereinafter provided in this Section 2.2,
unless all dividends on the outstanding shares of Series G Stock and any
Parity Stock that shall have accrued and become payable as of any date
shall have been paid, or declared and funds set apart for payment
thereof, no dividend or other distribution (payable other than in shares
of Junior Stock) shall be paid to the holders of Junior Stock or Parity
Stock, and no shares of Series G Stock, Parity Stock or Junior Stock
shall be purchased, redeemed or otherwise acquired by the Corporation or
any of its subsidiaries (except by conversion into or exchange for Junior
Stock), nor shall any monies be paid or made available for a purchase,
redemption or sinking fund for the purchase or redemption of any Series G
Stock, Junior Stock or Parity Stock. When dividends are not paid in full
upon the shares of this Series and any Parity Stock, all dividends
declared upon shares of this Series and all Parity Stock shall be
declared pro rata so that the amount of dividends declared per share on
this Series and all such Parity Stock shall in all cases bear to each
other the same ratio that accrued dividends per share on the shares of
this Series and all such Parity Stock bear to each other. No interest,
or sum of money in lieu of interest, shall be payable in respect of any
dividend payment or payments on this Series which may be in arrears.
2.3 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
debt or equity securities of the Corporation (other than Common Stock
subject to a distribution or reclassification covered by Section 3.6(a))
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; PROVIDED, HOWEVER, that if such
rights are subsequently redeemed by the Corporation, such redemption
shall be treated for purposes of this Section 2.3 as a cash dividend (but
not a regularly scheduled cash dividend) on the Common Stock), the
Corporation shall simultaneously distribute such assets, property,
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Page 11
securities, rights, options or warrants pro rata to the holders of Series
G Stock on the record date fixed for determining 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 equal to
the amount that such holders of Series G Stock would have been entitled
to receive had their shares of Series G Stock been converted into Common
Stock immediately prior to such record date (or effective time). In the
event of a distribution to holders of Series G Stock pursuant to this
Section 2.3, 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 Series G Stock 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 Series G Stock 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.
2.4 If a distribution is made in accordance with the
provisions of Section 2.3, anything in Section 3 to the contrary
notwithstanding, no adjustment pursuant to Section 3 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.
2.5 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 2.3, the kind and amount of securities or other
property that shall be distributable to the holders of the Series G Stock
shall be based on (i) the election, if any, made by the record holder (as
of the date used for determining the holders of Common Stock entitled to
make such election) of the largest number of shares of Series G Stock 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 the
Series G Stock shall be based on the kind or amount of securities or
other property receivable by a plurality of shares held by the
nonelecting holders of Common Stock). Concurrently with the mailing to
holders of Common Stock of
<PAGE>
Page 12
any document pursuant to which such holders may make an election of the type
referred to in this Section, the Corporation shall mail a copy thereof to the
record holders of the Series G Stock as of the date used for determining the
holders of record of Common Stock entitled to such mailing.
3. CONVERSION RIGHTS.
3.1 Each holder of a share of this Series shall have the
right at any time or as to any share of this Series called for redemption
or exchange, at any time prior to the close of business on the date fixed
for redemption or exchange (unless the Corporation defaults in the
payment of the Redemption Price or fails to exchange the shares of this
Series for the applicable number of shares of Common Stock and any cash
portion of the Exchange Price or exercises its right to rescind such
redemption pursuant to Section 4.5, in which case such right shall not
terminate at the close of business on such date), to convert such share
into (i) a number of shares of Common Stock equal to 2.08264 shares of
Common Stock for each share of this Series, subject to adjustment as
provided in this Section 3 (such rate, as so adjusted from time to time,
is herein called the "Conversion Rate") plus (ii) a number of shares of
Common Stock equal to
(A) (1) the Accrued Dividend Amount MINUS (2) the
Common Dividend Excess, if applicable, or PLUS (3) the Common
Dividend Deficiency, if applicable (the "Net Dividend Amount"),
DIVIDED BY
(B) the Closing Price of the Common Stock on the
last Trading Day prior to the Conversion Date;
PROVIDED, HOWEVER, that in the event that the Net Dividend Amount is a
negative number, the number of shares deliverable upon conversion of a
share of Series G Stock shall be equal to
(I) the number of shares determined pursuant to
clause (i) MINUS
(II) a number of shares equal to (x)the absolute
value of the Net Dividend Amount DIVIDED BY (y) the Closing Price of
the Common Stock on the last Trading Day prior to the Conversion
Date;
AND PROVIDED FURTHER THAT, in the event that the Net Dividend Amount is a
positive number, the Corporation shall have the right to deliver cash
equal to the Net Dividend Amount or any portion thereof, in which case
its obligation to deliver shares of Common Stock pursuant to clause(ii)
<PAGE>
Page 13
shall be reduced by a number of shares equal to (x)the aggregate amount
of cash so delivered DIVIDED BY (y)the Closing Price of the Common Stock
on the last Trading Day prior to the Conversion Date, unless the
Corporation shall deliver cash equal to the entire Net Dividend Amount,
in which case its entire obligation under clause (ii) shall be
discharged. The obligations of the Corporation to issue the Common Stock
or make the cash payments provided by this Section 3.1 shall be absolute
whether or not any accrued dividend by which such issuance or payment is
measured has been declared by the Board of Directors and whether or not
the Corporation would have adequate surplus or net profits to pay such
dividend if declared or is otherwise restricted from making such
dividend.
3.2 Except as provided in this Section 3, no adjustments
in respect of payments of dividends on shares 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 Series G Stock occurs after a
Record Date and on or prior to a Dividend Payment Date, the holder 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, subject to Section
3.6(c), 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.
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 office of the transfer agent or
agents therefor (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. The Corporation shall, as soon as practicable
(subject to Section 3.6(d)) after such deposit of certificates for shares
of this Series, accompanied by the written notice above prescribed, issue
and deliver at such office to the holder for whose account such shares
were surrendered, or to his nominee, certifi-
<PAGE>
Page 14
cates representing the number of shares of Common Stock and the cash, if any,
to which such holder is entitled upon such conversion.
3.5 Conversion shall be deemed to have been made as of
the date (the "Conversion Date") that certificates for the shares of this
Series to be converted, and the written notice prescribed in Section 3.4
are received by the transfer agent or agents for this Series; and the
Person entitled to receive the Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder of such Common
Stock on such date. Notwithstanding anything to the contrary contained
herein, in the event the Corporation shall have rescinded a redemption of
shares of this Series pursuant to Section 4.5, any holder of shares of
this Series that shall have surrendered shares of this Series for
conversion following the day on which notice of the subsequently
rescinded redemption shall have been given but prior to the close of
business on the later of (a) the Trading Day next succeeding the date on
which public announcement of the rescission of such redemption shall have
been made and (b) the Trading Day on which the notice of rescission
required by Section 4.5 is deemed given pursuant to Section 8.2 (a
"Converting Holder"), may rescind the conversion of such shares
surrendered for conversion by (i)properly completing a form prescribed
by the Corporation and mailed to holders of shares of this Series
(including Converting Holders) with the Corporation's notice of
rescission, which form shall provide for the certification by any
Converting Holder rescinding a conversion on behalf of any beneficial
owner (within the meaning of Rule 13d-3 under the Exchange Act) of shares
of this Series that the beneficial ownership (within the meaning of such
Rule) of such shares shall not have changed from the date on which such
shares were surrendered for conversion to the date of such certification
and (ii) delivering such form to the Corporation no later than the close
of business on that date which is ten (10) Trading Days following the
date on which the Corporation's notice of rescission is deemed given
pursuant to Section 8.2. The delivery of such form by a Converting
Holder shall be accompanied by (x) any certificates representing shares
of Common Stock issued to such Converting Holder upon a conversion of
shares of this Series that shall be rescinded by the proper delivery of
such form (the "Surrendered Shares"), (y) any securities, evidences of
indebtedness or assets (other than cash) distributed by the Corporation
to such Converting Holder by reason of such Converting Holder's being a
record holder of Surrendered Shares and (z) payment in New York Clearing
House funds or other funds acceptable to the Corporation of an amount
equal to the sum of (I) any cash such Converting Holder may have received
in lieu of the issuance of fractional shares upon conversion and (II) any
cash paid or payable by the Corpora-
<PAGE>
Page 15
tion to such Converting Holder by reason of such Converting Holder being a
record holder of Surrendered Shares. Upon receipt by the Corporation of any
such form properly completed by a Converting Holder and any certificates,
securities, evidences of indebtedness, assets or cash payments required to be
returned or made by such Converting Holder to the Corporation as set
forth above, the Corporation shall instruct the transfer agent or agents
for shares of Common Stock and shares of this Series to cancel any
certificates representing Surrendered Shares (which Surrendered Shares
shall be deposited in the treasury of the Corporation) and reissue
certificates representing shares of this Series to such Converting Holder
(which shares of this Series shall be deemed to have been outstanding at
all times during the period following their surrender for conversion).
The Corporation shall, as promptly as practicable, and in no event more
than five (5) Trading Days, following the receipt of any such properly
completed form and any such certificates, securities, evidences of
indebtedness, assets or cash payments required to be so returned or made,
pay to the Converting Holder or as otherwise directed by such Converting
Holder any dividend or other payment made on such shares during the
period from the time such shares shall have been surrendered for
conversion to the rescission of such conversion. All questions as to the
validity, form, eligibility (including time or receipt) and acceptance of
any form submitted to the Corporation to rescind the conversion of shares
of this Series, including questions as to the proper completion or
execution of any such form or any certification contained therein, shall
be resolved by the Corporation, whose determination shall be final and
binding. 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 or during any period
commencing at a Redemption Rescission Event and ending at either (i) the
time and date at which the Corporation's right of rescission shall expire
pursuant to Section 4.5 if the Corporation shall not have exercised such
right or (ii) the close of business on that day which is ten (10) Trading
Days following the date on which notice of rescission pursuant to Section
4.4 is deemed given pursuant to Section 8.2 if the Corporation shall have
exercised such right of rescission, but certificates for shares of Common
Stock shall be delivered as soon as practicable after the opening of such
books or the expiration of such period.
3.6 The Conversion Rate shall be adjusted from time to
time as follows for events occurring after August31, 1995:
(a) In case the Corporation shall, at any time or
from time to time while any of the Series G
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Page 16
Stock is outstanding, (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 that is subject to Section
3.7) its shares of Common Stock, then the Conversion Rate in effect
immediately before such action shall be adjusted so that immediately
following such event the holders of the Series G Stock shall be
entitled to receive upon conversion or exchange 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 Series G Stock had been converted or
exchanged 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 of Capital Stock (other than Common Stock),
including any distribution of Capital Stock (other than Common
Stock) that shall accompany a reclassification of the Common Stock,
shall be subject to Section 2.3 rather than this Section 3.6(a)).
An adjustment made pursuant to this Section 3.6(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 3.6(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 3.6(a) (including any election that would result in
all or a portion of the transaction becoming subject to
Section2.3), the kind and amount of securities that shall be
distributable to the holders of the Series G Stock shall be based on
(i) the election, if any, made by the record holder (as of the date
used for determining the holders of Common Stock entitled to make
such election) of the largest number of shares of Series G Stock 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, the
Corporation shall mail a copy thereof to
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the record holders of the Series G Stock as of the date used for
determining the holders of record of Common Stock entitled to such
mailing.
(b) In case a Change of Control shall occur, the
Conversion Rate in effect immediately prior to the Change of Control
Date shall be increased (but not decreased) by multiplying such rate
by a fraction as follows: (i) in the case of a Change of Control
specified in Section 1.5(a), a fraction in which the numerator is
the Conversion Price prior to adjustment pursuant hereto and the
denominator is the Current Market Price of the Common Stock at the
Change of Control Date, (ii) in the case of a Change of Control
specified in Section 1.5(b), the greater of the following fractions:
(x) a fraction the numerator of which is the highest price per share
of Common Stock paid by the Acquiring Person in connection with the
transaction giving rise to the Change of Control or in any
transaction within six months prior to or after the Change of
Control Date (the "Highest Price"), and the denominator of which is
the Current Market Price of the Common Stock as of the date (but not
earlier than six months prior to the Change of Control Date) on
which the first public announcement is made by the Acquiring Person
that it intends to acquire or that it has acquired 40% or more of
the outstanding shares of Common Stock (the "Announcement Date") or
(y) a fraction the numerator of which is the Conversion Price prior
to adjustment pursuant hereto and the denominator of which is the
Current Market Price of the Common Stock on the Announcement Date
and (iii) in the case where there co-exists a Change of Control
specified in both Section 1.5(a) and Section 1.5(b), the greatest of
the fractions determined pursuant to clauses (i) and (ii). Such
adjustment shall become effective immediately after the Change of
Control Date and shall be made, in the case of clauses (ii) and
(iii) above, successively for six months thereafter in the event and
at the time of any increase in the Highest Price after the Change of
Control Date; PROVIDED, HOWEVER, that no such successive adjustment
shall be made with respect to the Conversion Rate of the shares of
this Series in respect of any event occurring after the Conversion
Date.
(c) The Corporation shall be entitled to make such
additional adjustments in the Conversion Rate, in addition to those
required by subsections3.6(a) and 3.6(b), 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
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taxable to the holders of Common Stock for United States Federal income
tax purposes so long as such additional adjustments pursuant to this
Section 3.6(c) do not decrease the Conversion Rate.
(d) In any case in which this Section3.6 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 filing of the statement referred
to in Section 3.6(f)) issuing to the holder of any shares of this
Series converted after such record date (i) the shares of Common
Stock and other Capital Stock of the Corporation issuable upon such
conversion over and above (ii) the shares of Common Stock and other
Capital Stock of the Corporation issuable upon such conversion on
the basis of the Conversion Rate 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.
(e) All calculations under this Section3 shall be
made to the nearest cent, one-hundredth of a share or, in the case
of the Conversion Rate, one hundred-thousandth. Notwithstanding any
other provision of this Section 3, the Corporation shall not be
required to make any adjustment of the Conversion Rate unless such
adjustment would require an increase or decrease of at least
1.00000% of such Conversion Rate. Any lesser adjustment shall be
carried forward and shall be made at the time of and together with
the next subsequent adjustment which, together with any adjustment
or adjustments so carried forward, shall amount to an increase or
decrease of at least 1.00000% in such rate. Any adjustments under
this Section 3 shall be made successively whenever an event
requiring such an adjustment occurs.
(f) Whenever an adjustment in the Conversion Rate is
required, the Corporation shall forthwith place on file with its
transfer agent or agents for this Series a statement signed by a
duly authorized officer of the Corporation, stating the adjusted
Conversion Rate determined as provided herein. Such statements
shall set forth in reasonable detail such facts as shall be
necessary to show the reason for and the manner of computing such
adjustment. Promptly after the adjustment of the Conversion Rate,
the Corporation shall mail a notice thereof to each holder of shares
of this Series.
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(g) In the event that at any time as a result of an
adjustment made pursuant to this Section3, the holder of any share
of this Series thereafter surrendered for conversion shall become
entitled to receive any shares of Capital Stock of the Corporation
other than shares of Common Stock, the conversion rate of such other
shares so receivable upon conversion of any such share of this
Series shall be subject to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the provisions
with respect to Common Stock contained in subparagraphs (a) through
(f) and (h) of this Section3.6, and the provisions of Section 3.1
through 3.5 and 3.7 through 3.10 shall apply on like or similar
terms to any such other shares and the determination of the Board of
Directors as to any such adjustment shall be conclusive.
(h) No adjustment shall be made pursuant to this
Section 3.6 (i) if the effect thereof would be to reduce the
Conversion Price below the par value of the Common Stock or (ii)
subject to Section3.6(c) hereof, with respect to any share of
Series G Stock that is converted, prior to the time such adjustment
otherwise would be made.
3.7 In case after August31, 1995 (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 Series G Stock shall
have the right thereafter, during the period such share shall be
convertible or exchangeable, to convert such share into or have such
share exchanged for 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 or exchanged
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 this Section 3 (based on
(i)the election, if any, made in writing to the Corporation by the
record holder (as of the date used for determining holders of Common
Stock entitled to make such election) of the largest number of shares of
Series G Stock on or prior
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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 clauses (a)
or (b) 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 Series G Stock 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 Series G Stock into Common Stock immediately prior to such record date
(or effective date) (based on the election or nonelection made by the
record holder of the largest number of shares of Series G Stock, 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 holder in any transaction described in clause (a) or
(b) of the first sentence of this Section 3.7, the Corporation shall mail
a copy thereof to the holders of the Series G Stock as of the date used
for determining the holders of record of Common Stock entitled to such
mailing. The Corporation shall not enter into any of the transactions
referred to in clauses (a) or (b) of the preceding sentence 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 3.7. The provisions of this Section 3.7 shall apply similarly to
successive consolidations, mergers, sales or conveyances. For purposes
of this Section 3.7 the term "Corporation" shall refer to the Corporation
(as defined in Section 1.14) as constituted immediately prior to the
merger, consolidation or other transaction referred to in this Section.
3.8 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
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Page 21
effecting the conversion of the shares of this Series, such number of its duly
authorized shares of Common Stock (or, if applicable, any other shares of
Capital Stock of the Corporation) as shall from time to time be sufficient to
effect the conversion of all outstanding shares of this Series into such Common
Stock (or such other shares of Capital Stock) at any time (assuming that, at
the time of the computation of such number of shares, all such Common Stock (or
such other shares of Capital 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 such
other shares of Capital Stock) that are held in the treasury of the
Corporation. All shares of Common Stock (or such other shares of Capital
Stock of the Corporation) which 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 Common
Stock at any time outstanding shall not include shares held in the
treasury of the Corporation.
3.9 If any shares of Common Stock or other shares of
Capital Stock of the Corporation which would be issuable upon conversion
of shares of this Series hereunder require registration with or approval
of any governmental authority before such shares may be issued upon
conversion, 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 or other shares of Capital Stock of the Corporation required
to be delivered upon conversion of shares of this Series prior to such
delivery upon the principal national securities exchange upon which the
outstanding Common Stock or such other shares of Capital 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 other shares of Capital Stock of the Corporation 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 such other shares of Capital 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.
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3.11 In case of (i) the voluntary or involuntary
dissolution, liquidation or winding up of the Corporation, (ii)any Pro
Rata Repurchase or (iii)any action triggering an adjustment to the
Conversion Rate pursuant to this Section 3, then, in each case, the
Corporation shall cause to be filed with the transfer agent or agents for
the Series G Stock, and shall cause to be mailed, first-class postage
prepaid, to the holders of record of the outstanding shares of Series G
Stock, 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 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. REDEMPTION OR EXCHANGE.
4.1 (a) The Corporation may, at its sole option, subject to
Section 2.2 hereof, from time to time on and after the fourth anniversary
of the Effective Time, redeem, out of funds legally available therefor,
or, as provided below, exchange shares of Common Stock for, all or (in
the case of Section 4.1(b)(i), any part) of the outstanding shares of
this Series. The redemption price for each share of this Series called
for redemption pursuant to clause (i)of Section 4.1(b) shall be the
Liquidation Value together with an amount equal to the accrued and unpaid
dividends to the date fixed for redemption (hereinafter collectively
referred to as the "Redemption Price"). The exchange price for each
share of this Series called for exchange pursuant to clause (ii)of
Section 4.1(b) shall be a number of shares of Common Stock equal to the
Conversion Rate, together with, at the option of the Corporation, either
(x)cash or (y)a number of shares of Common Stock, valued at the Closing
Price on the Trading Day immediately preceding the date fixed for
exchange, equal, in either case, to the aggregate amount of accrued and
unpaid dividends on the Series G Stock to the date fixed for exchange
(provided that any dividends which are in arrears must be paid in cash)
(hereinafter collectively referred to as the "Exchange Price").
(b) On the date fixed for redemption or exchange the
Corporation shall, at its option, effect either
(i) a redemption of the shares of this Series
to be redeemed by way of payment, out of
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Page 23
funds legally available therefor, of cash equal to the aggregate
Redemption Price for the shares of this Series then being redeemed;
(ii) an exchange of the shares of this Series
for the Exchange Price in shares of Common Stock (PROVIDED that the
Corporation (A) shall be entitled to deliver cash (1) in lieu of any
fractional share of Common Stock (determined in a manner consistent
with Section 3.3) and (2) equal to accrued and unpaid dividends to
the date fixed for exchange in lieu of shares of Common Stock and
(B) shall be required to deliver cash in respect of any dividends
that are in arrears); or
(iii) any combination thereof with respect to
each share of this Series called for redemption or exchange.
(c) Notwithstanding clauses (ii) and (iii) of
Section 4.1(b), the Corporation shall be entitled to effect an exchange
of shares of Series G Stock for Common Stock or other shares of Capital
Stock of the Corporation only to the extent that duly and validly issued,
fully paid and nonassessable shares of Common Stock (or such other shares
of Capital Stock) shall be available for issuance (including delivery of
previously issued shares of Common Stock held in the Corporation's
treasury on the date fixed for exchange). The Corporation shall comply
with Sections3.9 and 3.10 with respect to shares of Common Stock or
other shares of Capital Stock of the Corporation which would be issuable
upon exchange of shares of this Series. Certificates for shares of
Common Stock issued in exchange for surrendered shares of this Series
pursuant to this Section4.1 shall be made available by the Corporation
not later than the fifth Trading Day following the date for exchange.
4.2 In the event that fewer than all the outstanding
shares of this Series are to be redeemed pursuant to Section 4.1(b)(i),
the number of shares to be redeemed from each holder of shares of this
Series shall be determined by the Corporation by lot or pro rata or by
any other method as may be determined by the Board of Directors in its
sole discretion to be equitable, and the certificate of the Corporation's
Secretary or an Assistant Secretary filed with the transfer agent or
transfer agents for this Series in respect of such determination by the
Board of Directors shall be conclusive.
4.3 In the event the Corporation shall redeem or exchange
shares of this Series pursuant to Section4.1, notice of such redemption
or exchange shall be
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Page 24
given by first class mail, postage prepaid, mailed not less than fifteen (15)
nor more than sixty (60) days prior to the date fixed for redemption or
exchange, as the case may be, to each record holder of the shares to be
redeemed or exchanged, at such holder's address as the same appears on the
books of the Corporation. Each such notice shall state: (i) whether the
shares of this Series are to be redeemed or exchanged; (ii) the time and
date as of which the redemption or exchange shall occur; (iii) the total
number of shares of this Series to be redeemed or exchanged and, if fewer
than all the shares held by such holder are to be redeemed, the number of such
shares to be redeemed from such holder; (iv)the Redemption Price or the
Exchange Price, as the case may be; (v) that shares of this Series called for
redemption or exchange may be converted at any time prior to the time and date
fixed for redemption or exchange (unless the Corporation shall, in the case of
a redemption, default in payment of the Redemption Price or, in the case
of an exchange, fail to exchange the shares of this Series for the
applicable number of shares of Common Stock and any cash portion of the
Exchange Price or shall exercise its right to rescind such redemption
pursuant to Section 4.5, in which case such right of conversion shall not
terminate at such time and date); (vi)the applicable Conversion Price
and Conversion Rate; (vii)the place or places where certificates for
such shares are to be surrendered for payment of the Redemption Price, in
the case of redemption, or for delivery of certificates representing the
shares of Common Stock and the payment of any cash portion of the
Exchange Price, in the case of exchange; and (viii) that dividends on the
shares of this Series to be redeemed or exchanged will cease to accrue on
such redemption or exchange date.
4.4 If notice of redemption or exchange shall have been
given by the Corporation as provided in Section 4.3, dividends on the
shares of this Series so called for redemption or exchange shall cease to
accrue, such shares shall no longer be deemed to be outstanding, and all
rights of the holders thereof as stockholders of the Corporation with
respect to shares so called for redemption or exchange (except (i) in the
case of redemption, the right to receive from the Corporation the
Redemption Price without interest and in the case of exchange, the right
to receive from the Corporation the Exchange Price without interest and
(ii) the right to convert such shares in accordance with Section 3) shall
cease (including any right to receive dividends otherwise payable on any
Dividend Payment Date that would have occurred after the time and date of
redemption or exchange) either (i) in the case of a redemption or
exchange pursuant to Section 4.1, from and after the time and date fixed
in the notice of redemption or exchange as the time and date of
redemption or exchange (unless the Corporation shall (x) in the case of a
redemption, default
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Page 25
in the payment of the Redemption Price, (y)in the case of an exchange, fail to
exchange the applicable number of shares of Common Stock and any cash portion
of the Exchange Price or (z) exercise its right to rescind such redemption
pursuant to Section 4.5, in which case such rights shall not terminate at such
time and date) or (ii) if the Corporation shall so elect and state in the
notice of redemption or exchange, from and after the time and date (which date
shall be the date fixed for redemption or exchange or an earlier date not less
than fifteen (15) days after the date of mailing of the redemption or exchange
notice) on which the Corporation shall irrevocably deposit with a designated
bank or trust company doing business in the Borough of Manhattan, City and
State of New York, as paying agent, money sufficient to pay at the office
of such paying agent, on the redemption date, the Redemption Price, in
the case of redemption, or certificates representing the shares of Common
Stock to be so exchanged and any cash portion of the Exchange Price, in
the case of an exchange. Any money or certificates so deposited with any
such paying agent which shall not be required for such redemption or
exchange because of the exercise of any right of conversion or otherwise
shall be returned to the Corporation forthwith. Upon surrender (in
accordance with the notice of redemption or exchange) of the certificate
or certificates for any shares of this Series to be so redeemed or
exchanged (properly endorsed or assigned for transfer, if the Corporation
shall so require and the notice of redemption or exchange shall so
state), such shares shall be redeemed or exchanged by the Corporation at
the Redemption Price or the Exchange Price, as applicable, as set forth
in Section 4.1 (unless the Corporation shall have exercised its right to
rescind such redemption pursuant to Section 4.5). In case fewer than all
the shares represented by any such certificate are to be redeemed, a new
certificate shall be issued representing the unredeemed shares (or
fractions thereof as provided in Section 8.4), without cost to the holder
thereof, together with the amount of cash, if any, in lieu of fractional
shares other than those issuable in accordance with Section8.4. Subject
to applicable escheat laws, any moneys so set aside by the Corporation in
the case of redemption and unclaimed at the end of one year from the
redemption date shall revert to the general funds of the Corporation,
after which reversion the holders of such shares so called for redemption
or exchange shall look only to the general funds of the Corporation for
the payment of the Redemption Price or the Exchange Price, as applicable,
without interest. Any interest accrued on funds so deposited shall be
paid to the Corporation from time to time.
4.5 In the event that a Redemption Rescission Event shall
occur following any day on which a notice of redemption shall have been
given pursuant to
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Section 4.3 but at or prior to the earlier of (a) the time and date fixed for
redemption as set forth in such notice of redemption and (b) the time and date
at which the Corporation shall have irrevocably deposited funds or
certificates with a designated bank or trust company pursuant to Section 4.4,
the Corporation may, at its sole option, at any time prior to the earliest of
(i) the close of business on that day which is two (2) Trading Days following
such Redemption Rescission Event, (ii) the time and date fixed for redemption
as set forth in such notice and (iii) the time and date on which the
Corporation shall have irrevocably deposited such funds with a designated bank
or trust company, rescind the redemption to which such notice of redemption
shall have related by making a public announcement of such rescission
(the date on which such public announcement shall have been made being
hereinafter referred to as the "Rescission Date"). The Corporation shall
be deemed to have made such announcement if it shall issue a release to
the Dow Jones News Service, Reuters Information Services or any successor
news wire service. From and after the making of such announcement, the
Corporation shall have no obligation to redeem shares of this Series
called for redemption pursuant to such notice of redemption or to pay the
redemption price therefor and all rights of holders of shares of this
Series shall be restored as if such notice of redemption had not been
given. The Corporation shall give notice of any such rescission by one
of the means specified in Section 8.2 as promptly as practicable, but in
no event later than the close of business on that date which is five (5)
Trading Days following the Rescission Date to each record holder of
shares of this Series at the close of business on the Rescission Date and
to any other Person or entity that was a record holder of shares of this
Series and that shall have surrendered shares of this Series for
conversion following the giving of notice of the subsequently rescinded
redemption. Each notice of rescission shall (w) state that the
redemption described in the notice of redemption has been rescinded, (x)
state that any Converting Holder shall be entitled to rescind the
conversion of shares of this Series surrendered for conversion following
the day on which notice of redemption was given but prior to the close of
business on the later of (1) the Trading Day next succeeding the date on
which public announcement of the rescission of such redemption shall have
been made and (2) the Trading Day on which the Corporation's notice of
rescission is deemed given pursuant to Section 8.2, (y) be accompanied by
a form prescribed by the Corporation to be used by any Converting Holder
rescinding the conversion of shares so surrendered for conversion (and
instructions for the completion and delivery of such form, including
instructions with respect to payments that may be required to accompany
such delivery shall be in accordance with Section 3.5) and (z) state that
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Page 27
such form must be properly completed and received by the Corporation no
later than the close of business on a date that shall be ten (10) Trading
Days following the date of the mailing of such notice of rescission is
deemed given pursuant to Section 8.2.
4.6 The shares of this Series shall not be subject to the
provisions of Section 5 of Article IV of the Certificate of
Incorporation.
5. PRO RATA REPURCHASE.
5.1 Upon a Pro Rata Repurchase, each holder of shares of
this Series shall have the right to require that the Corporation
repurchase, out of funds legally available therefor, a Pro Rata Portion
(as defined below) of the shares of such holder, or any lesser number
requested by the holder, at a price per share equal to the highest price
per share of Common Stock paid in the Pro Rata Repurchase multiplied by
the Conversion Rate then in effect plus an amount equal to the accrued
but unpaid dividends on such shares to the date of repurchase.
5.2 At any time prior to or within thirty (30) days
following any Pro Rata Repurchase, the Corporation shall mail a notice to
each holder of shares of this Series stating:
(a) that a Pro Rata Repurchase will occur or has
occurred and that such holder will have (upon such Pro Rata
Repurchase) or has the right to require the Corporation to
repurchase such holder's shares in an amount not in excess of the
Pro Rata Portion at a repurchase price in cash determined as set
forth above plus an amount equal to accrued and unpaid dividends, if
any, to the date of repurchase;
(b) the repurchase date for the Series G Stock
(which shall be no earlier than fifteen (15) days nor later than
sixty (60) days from the date such notice is mailed); and
(c) the instructions determined by the Corporation,
consistent with this Section, that a holder must follow in order to
have its shares repurchased.
5.3 Holders electing to have any shares repurchased will
be required to surrender such shares, with an appropriate form duly
completed, to the Corporation at the address specified in the notice at
least five (5) days prior to the repurchase date. Holders will be
entitled to withdraw their election if the Corporation receives, not
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Page 28
later than three (3) days prior to the repurchase date, a telegram,
telex, facsimile transmission or letter setting forth the name of the
holder, the certificate numbers of the shares delivered for purchase by
the holder and a statement that such holder is withdrawing his election
to have such shares repurchased. Holders will have such additional
withdrawal and other rights as may be required pursuant to applicable
law.
5.4 On the repurchase date, the Corporation shall (i)
pay the repurchase price plus an amount equal to accrued and unpaid
dividends as provided in Section 5.1, if any, to the holders entitled
thereto and (ii) issue to such holders any equity securities of the
Corporation (other than Common Stock) that would at the time be issuable
upon conversion of the shares of Series G Stock which are then being
repurchased pursuant hereto.
5.5 The Board of Directors will not approve any tender
or exchange offer by the Corporation or a third party for shares of
Common Stock or recommend that the holders of Common Stock accept any
offer or tender their shares into any offer unless a Pro Rata Portion of
the shares of this Series of all holders are entitled to be tendered into
such offer at a price not less than the price per share for shares of
Common Stock pursuant to such offer multiplied by the Conversion Rate
then in effect plus an amount equal to accrued but unpaid dividends on
such shares to the date of payment for such shares in such tender or
exchange offer.
5.6 For purposes hereof, "Pro Rata Portion" with respect
to the shares of this Series held by any holder shall mean all the shares
of this Series then owned by such holder times a fraction, the numerator
of which is the number of outstanding shares of Common Stock
(a)purchased in the applicable Pro Rata Repurchase or (b)for which a
tender or exchange offer referred to in Section 5.5 is made, as the case
may be, and the denominator of which is the number of outstanding shares
of Common Stock immediately prior to such Pro Rata Repurchase or the
commencement of such tender or exchange offer, as the case may be.
6. VOTING. The shares of this Series shall have no voting
rights except as required by law or as set forth below.
6.1 Each share of this Series shall be entitled to vote
together with holders of the shares of Common Stock (and any other class
or series which may similarly be entitled to vote with the shares of
Common Stock) as a single class upon all matters upon which holders of
Common Stock are entitled to vote. In any such vote, the
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Page 29
holders of this Series shall be entitled to two (2) votes per $100 of
Liquidation Value of Series G Stock, subject to adjustment at the same time
and in the same manner as each adjustment of the Conversion Rate pursuant to
Section 3, so that the holders of this Series shall be entitled following such
adjustment to the number of votes equal to the number of votes such
holders were entitled to under this Section 6.1 immediately prior to such
adjustment multiplied by a fraction (x) the numerator of which is the
Conversion Rate as adjusted pursuant to Section 3 and (y) the denominator
of which is the Conversion Rate immediately prior to such adjustment.
6.2 (a) 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 (i) authorize any Senior Stock
or reclassify (by merger, consolidation or otherwise) any Junior Stock or
Parity Stock as Senior Stock, (ii) merge into or consolidate with any
Person where the surviving or continuing corporation will have any
authorized Senior Stock other than capital stock corresponding to shares
of Senior Stock of the Corporation existing immediately before such
merger or consolidation) or (iii)amend, alter or repeal (by operation of
law or otherwise) 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 of the shares of this Series.
(b) 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 of
Junior Stock or Parity Stock, (iii)the authorization, designation or
issuance of additional shares of Series G Stock or (iv)subject to
Section 6.2(a), the authorization or issuance of any other shares of
Preferred Stock.
6.3 (a) If and whenever at any time or times dividends
payable on shares of this Series shall have been in arrears and unpaid in
an aggregate amount equal to or exceeding the amount of dividends payable
thereon for six quarterly dividend periods, then the number of directors
constituting the Board of Directors shall be increased by two and the
holders of shares of this Series, together with the holders of any shares
of any Parity Stock as to which in each case dividends are in arrears and
unpaid in an aggre-
<PAGE>
Page 30
gate amount equal to or exceeding the amount of dividends payable thereon for
six quarterly dividend periods, shall have the exclusive right, voting
separately as a class with such other series, to elect two directors of the
Corporation.
(b) Such voting right may be exercised initially
either by written consent or at a special meeting of the holders of the
Preferred Stock having such voting right, called as hereinafter provided,
or at any annual meeting of stockholders held for the purpose of electing
directors, and thereafter at each such annual meeting until such time as
all dividends in arrears on the shares of this Series shall have been
paid in full and all dividends payable on the shares of this Series on
four subsequent consecutive Dividend Payment Dates shall have been paid
in full on such dates or funds shall have been set aside for the payment
thereof, at which time such voting right and the term of the directors
elected pursuant to Section 6.3(a) shall terminate.
(c) At any time when such voting right shall have
vested in holders of shares of such series of Preferred Stock described
in Section 6.3(a), and if such right shall not already have been
exercised by written consent, a proper officer of the Corporation may
call, and, upon the written request, addressed to the Secretary of the
Corporation, of the record holders of shares representing ten percent
(10%) of the voting power of the shares then outstanding of such
Preferred Stock having such voting right, shall call, a special meeting
of the holders of such Preferred Stock having such voting right. Such
meeting shall be held at the earliest practicable date upon the notice
required for annual meetings of stockholders at the place for holding
annual meetings of stockholders of the Corporation, or, if none, at a
place designated by the Board of Directors. Notwithstanding the
provisions of this Section 6.3(c), no such special meeting shall be
called during a period within 60 days immediately preceding the date
fixed for the next annual meeting of stockholders.
(d) At any meeting held for the purpose of electing
directors at which the holders of such Preferred Stock shall have the
right to elect directors as provided herein, the presence in Person or by
proxy of the holders of shares representing more than fifty percent (50%)
in voting power of the then outstanding shares of such Preferred Stock
having such right shall be required and shall be sufficient to constitute
a quorum of such class for the election of directors by such class.
(e) Any director elected by holders of Preferred
Stock pursuant to the voting right created under
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Page 31
this Section 6.3 shall hold office until the next annual meeting of
stockholders (unless such term has previously terminated pursuant to Section
6.3(b)) and any vacancy in respect of any such director shall be filled only
by vote of the remaining director so elected, or if there be no such remaining
director, by the holders of such Preferred Stock, entitled to elect such
director or directors by written consent or at a special meeting called
in accordance with the procedures set forth in Section 6.3(c), or, if no
special meeting is called or written consent executed, at the next annual
meeting of stockholders. Upon any termination of such voting right,
subject to applicable law, the term of office of all directors elected by
holders of such Preferred Stock voting separately as a class pursuant to
this Section 6.3 shall terminate.
(f) In exercising the voting rights set forth in
this Section 6.3, each share of this Series shall have a number of votes
equal to its Liquidation Value.
7. LIQUIDATION RIGHTS.
7.1. Upon the dissolution, liquidation or winding up of
the Corporation, whether voluntary or involuntary, the holders of the
shares of this Series shall be entitled to receive out of the assets of
the Corporation available for distribution to stockholders, in preference
to the holders of, and before any payment or distribution shall be made
on, Junior Stock, the amount of $100 per share (the "Liquidation Value"),
plus an amount equal to all accrued and unpaid dividends to the date of
final distribution.
7.2. 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
7.
7.3. After the payment to the holders of the shares of
this Series of full preferential amounts provided for in this Section 7,
the holders of this Series as such shall have no right or claim to any of
the remaining assets of the Corporation.
7.4. 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
<PAGE>
Page 32
holders are entitled pursuant to Section 7.1, 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.
8. OTHER PROVISIONS.
8.1 All notices from the Corporation to the holders shall
be given by one of the methods specified in Section 8.2. 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.
8.2 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 Series G Stock 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): Time Warner Inc., 75
Rockefeller Plaza, New York, New York 10019, Attention: General Counsel.
8.3 Any shares of this Series which have been converted,
redeemed, exchanged or otherwise acquired by the Corporation shall, after
such conversion, redemption, exchange 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
<PAGE>
Page 33
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 Series G Stock shall be
eliminated from the Certificate of Incorporation and the shares of
Preferred Stock designated hereby as Series G 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.
8.4 The shares of this Series shall be issuable in whole
shares or, if authorized by the Board of Directors (or any authorized
committee thereof), in any fraction of a whole share so authorized or any
integral multiple of such fraction.
8.5 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 record holder shall be deemed the holder
of such shares for all purposes.
8.6 All notice periods referred to in the Certificate
shall commence on the date of the mailing of the applicable notice.
<PAGE>
8.7 Certificates for shares of this Series shall bear
such legends as the Corporation shall from time to time deem appropriate.
IN WITNESS WHEREOF, Time Warner Inc. has caused this
certificate to be signed and attested this [ ]
day of [ ], 1995.
TIME WARNER INC.
By: _________________________
Name:
Title:
Attest:
________________________
Name:
Title:
<PAGE>
Exhibit B
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of [_________], 1995,
between TIME WARNER INC., a Delaware corporation (the "Company"), and
Toshiba Corporation, a corporation organized under the laws of Japan (the
"Stockholder").
This Agreement is made pursuant to Section5.2(e) of the
Restructuring Agreement, dated as of August 31, 1995 (as such agreement
may be amended from time to time, the "Restructuring Agreement"), between
the Stockholder and the Company. In order to induce the Stockholder to
consummate the transactions contemplated by the Restructuring Agreement,
and in further consideration therefor, the Company has agreed to execute
and deliver this Agreement and provide the registration rights set forth
in this Agreement.
Accordingly, it is hereby agreed as follows:
1. DEFINITIONS. Capitalized terms used but not otherwise defined
herein shall have the meanings assigned to such terms in the
Restructuring Agreement. For purposes of this Agreement, the following
terms shall have the following meanings:
"BLACKOUT PERIOD" means any Section 6(a) Period and any Section
6(b) Period.
"COUNSEL TO THE HOLDERS" means the single law firm from time to
time representing the Holders, as appointed by the Holders of a majority
in number of the Registrable Securities.
"DESIGNATED SHELF REGISTRATION" has the meaning specified in
Section 4(b).
"EFFECTIVE PERIOD" means a period commencing on the date of
this Agreement and ending on the earliest of (i)the first date as of
which all Registrable Securities cease to be Registrable Securities and
no Holder holds any shares of TWX Preferred Stock and (ii) the date on
which Toshiba shall cease to own at least 25% of the TWX Preferred Stock
issued pursuant to Section1.1 of the Restructuring Agreement (including
TWX Common Stock issued upon conversion thereof or exchange therefor).
"HOLDER" means (i) the Stockholder or any Affiliate of the
Stockholder that is a holder of Registrable Securities or TWX Preferred
Stock and (ii) each Person that
<PAGE>
Page 2
is a registered holder of Registrable Securities or TWX Preferred Stock that
(A) acquired such Registrable Securities or TWX Preferred Stock in accordance
with Section 8.1 of the Restructuring Agreement and (B) received or will
receive certificates for Registrable Securities bearing a legend pursuant to
Section 8.3 of the Restructuring Agreement; PROVIDED, HOWEVER, that, if such
Person is not the Stockholder, such Person has agreed in writing to become a
Holder hereunder and to be bound by the terms and conditions of this Agreement.
"NASD" means the National Association of Securities Dealers,
Inc.
"PROSPECTUS" means the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with
respect to the terms of the offering of any portion of the Registrable
Securities covered by any Registration Statement and by all other
amendments and supplements to the prospectus, including post-effective
amendments and all material incorporated by reference in such prospectus.
"REGISTRABLE SECURITIES" means, collectively, (i)the shares of
TWX Common Stock issued pursuant to the conversion or exchange provisions
of the TWX Preferred Stock issued pursuant to Section 1.1 of the
Restructuring Agreement (the securities referred to in (i) are the
"Shares") and (ii) any securities paid, issued or distributed in respect
of any Shares by way of stock dividend or distribution or stock split or
in connection with a combination of shares, recapitalization,
reorganization, merger, consolidation or otherwise. Securities will
cease to be Registrable Securities in accordance with Section 2 hereof.
"REGISTRATION EXPENSES" means any and all expenses incident to
performance of or compliance with this Agreement, including, without
limitation, (i) all SEC, NASD and securities exchange registration and
filing fees, (ii)all fees and expenses of complying with state
securities or blue sky laws (including fees and disbursements of counsel
for any underwriters in connection with blue sky qualifications of the
Registrable Securities), (iii) all printing, messenger and delivery
expenses, (iv)all fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities exchange pursuant
to Section 7(h), (v) the fees and disbursements of counsel for the
Company and of its independent public accountants, (vi) the reasonable
fees and expenses of any special experts retained in connection with the
requested registration and (vii) the reasonable fees and expenses of
Counsel to the Holders, but excluding
<PAGE>
Page 3
(x)underwriting discounts and commissions and transfer taxes, if any, and
(y) any fees or disbursements of counsel to the Holders or any Holder (other
than Counsel to the Holders).
"REGISTRATION STATEMENT" means any registration statement
(including a Shelf Registration) of the Company referred to in Section 3
or 4, including any Prospectus, amendments and supplements to any such
registration statement, including post-effective amendments, and all
exhibits and all material incorporated by reference in any such
registration statement.
"RELATED SECURITIES" means any securities of the Company
similar or identical to any of the Registrable Securities, including,
without limitation, TWX Common Stock and all options, warrants, rights
and other securities convertible into, or exchangeable or exercisable
for, TWX Common Stock.
"SALE PERIOD" has the meaning specified in Section4(b).
"SECTION 6(A) PERIOD" has the meaning specified in Section
6(a).
"SECTION 6(B) PERIOD" has the meaning specified in Section
6(b).
"SHELF REGISTRATION" means a "shelf" registration statement on
an appropriate form pursuant to Rule 415 under the Securities Act (or any
successor rule that may be adopted by the SEC).
"UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING" shall mean
an underwritten offering in which securities of the Company are sold to
an underwriter for reoffering to the public.
2. SECURITIES SUBJECT TO THIS AGREEMENT. The securities
entitled to the benefits of this Agreement are the Registrable
Securities. For the purposes of this Agreement, Registrable Securities
will cease to be Registrable Securities when and to the extent that (i)a
Registration Statement covering Registrable Securities shall have been
declared effective under the Securities Act and Registrable Securities
have been disposed of pursuant to such effective Registration Statement,
(ii)Registrable Securities shall have been distributed to the public
pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act, (iii)Registrable Securities shall have been otherwise
transferred to a party that is not an Affiliate of the Stockholder and new
<PAGE>
Page 4
certificates for such Registrable Securities not bearing the legend
specified in Section 8.2 of the Restructuring Agreement shall have been
delivered by the Company, (iv)the Effective Period shall have ended or
(v)Registrable Securities shall have ceased to be outstanding.
3. PIGGY-BACK REGISTRATION RIGHTS.
(a)Whenever during the Effective Period the Company
shall propose to file a registration statement under the Securities Act
relating to the public offering of TWX Common Stock for cash pursuant to
a firm commitment underwritten offering (other than pursuant to a
registration statement on Form S-4 or Form S-8 or any successor forms, or
filed in connection with an exchange offer or an offering of securities
solely to existing stockholders or employees of the Company), for sale
for its own account, the Company shall (i)give written notice at least
ten Business Days prior to the filing thereof to each Holder of
Registrable Securities then outstanding, specifying the approximate date
on which the Company proposes to file such registration statement and
advising such Holder of his right to have any or all of the Registrable
Securities then held by such Holder included among the securities to be
covered thereby and (ii)at the written request of any such Holder given
to the Company at least two Business Days prior to the proposed filing
date, include among the securities covered by such registration statement
the number of Registrable Securities which such Holder shall have
requested be so included (subject, however, to reduction in accordance
with paragraph(b) of this Section). The Company shall use its
commercially reasonable efforts to cause the managing underwriter of the
proposed underwritten offering to permit the Holders of Registrable
Securities requested to be included in the Registration Statement for
such offering to include such securities in such offering on the same
terms and conditions as any similar securities of the Company included
therein.
(b) Each Holder of Registrable Securities desiring to
participate in an offering pursuant to Section 3(a) may include shares of
TWX Common Stock in any TWX Registration Statement relating to such
offering to the extent that the inclusion of such shares of TWX Common
Stock shall not reduce the number of shares of TWX Common Stock to be
offered and sold by the Company pursuant thereto. If the lead managing
underwriter selected by the Company for an underwritten offering pursuant
to Section3(a) determines that marketing factors require a limitation on
the number of shares of TWX Common Stock to be offered and sold by the
stockholders of the Company in such offering, there shall be included in
the offering only that number of shares of TWX Common Stock, if any, that
such lead managing underwriter
<PAGE>
Page 5
reasonably and in good faith believes will not jeopardize the success of the
offering of all the shares of TWX Common Stock that the Company desires to sell
for its own account. In such event and provided the lead managing underwriter
has so notified the Company in writing, the number of shares of TWX Common
Stock to be offered and sold by stockholders of the Company, including Holders
of Registrable Securities, desiring to participate in such offering shall be
allocated among such stockholders of the Company on a pro rata basis
based on their holdings of TWX Common Stock (subject to any written
agreements requiring a different priority).
(c) Nothing in this Section 3 shall create any liability
on the part of the Company to the Holders of Registrable Securities if
the Company for any reason should decide not to file a registration
statement proposed to be filed under Section 3(a) 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.
(d) A request by Holders to include Registrable
Securities in a proposed underwritten offering pursuant to Section 3(a)
shall not be deemed to be a request for a demand registration pursuant to
Section 4.
4. DEMAND REGISTRATION RIGHT.
(a)Upon the written request of Holders of at least 25%
of the Registrable Securities that the Company effect the registration
with the SEC under and in accordance with the provisions of the
Securities Act of all or part of such Holder's or Holders' Registrable
Securities and specifying the aggregate number of shares of Registrable
Securities requested to be registered and the name or names of the
proposed managing underwriter or underwriters (or in the case of a
Designated Shelf Registration, the intended method of distribution and
the name or names of any managing underwriters or agents), the Company
will use all commercially reasonable efforts to file a Registration
Statement covering such Holder's or Holders' Registrable Securities
requested to be registered within 20 Business Days after receipt of such
request for disposition pursuant to an underwritten offering (or, in the
case of a Designated Shelf Registration, the intended method of
distribution) (the terms of such underwritten offering or other
distribution to be determined by the Holders of a majority of the
Registrable Securities so requested to be registered); PROVIDED, HOWEVER,
that the Company shall not be required to take any action pursuant to
this Section 4:
<PAGE>
Page 6
(1) if prior to the date of such request the Company
shall have effected three (3) registrations pursuant to this Section
4;
(2) if the Company has effected a registration (other
than a Designated Shelf Registration) pursuant to this Section 4
within the 120-day period immediately preceding such request which
permitted Holders of Registrable Securities to register Registrable
Securities;
(3) if the Company shall at the time have effective a
Shelf Registration pursuant to which the Holder or Holders that
requested registration could effect the disposition of such Holder's
or Holders' Registrable Securities in the manner requested;
(4) if the Registrable Securities which the Company
shall have been requested to register shall have a then current
market value of less than $50,000,000, unless such registration
request is for all remaining Registrable Securities; or
(5) during the pendency of any Blackout Period;
PROVIDED FURTHER, HOWEVER, that the Company shall be permitted to satisfy
its obligations under this Section 4(a) by amending (to the extent
permitted by applicable law) any registration statement (including any
Shelf Registration) previously filed by the Company under the Securities
Act so that such registration statement (as amended) shall permit the
disposition (in accordance with the intended methods of disposition
specified as aforesaid) of all of the Registrable Securities for which a
demand for registration has been made under this Section 4(a). If the
Company shall so amend a previously filed registration statement, it
shall be deemed to have effected a registration for purposes of this
Section 4.
(b) The holders of a majority in number of the
Registrable Securities shall be entitled to specify in a request that one
registration that is effected pursuant to this Section 4 shall be for a
Shelf Registration (a "Designated Shelf Registration"). Subject to any
Blackout Period, a Designated Shelf Registration shall be available for
sales of Registrable Securities during the 15 Business Day period
beginning on the third Business Day after the Company's public
announcement of its quarterly or year-end financial results (each a "Sale
Period"); PROVIDED, HOWEVER, that dispositions pursuant to this Section
4(b), together with all other sales made in accordance with the volume
and manner of sale limitations of rule 144(e) and (f) under the
<PAGE>
Page 7
Securities Act within the same three month period, shall not exceed 1% of
the outstanding shares of TWX Common Stock as reported on the Company's
most recent Form 10-K or 10-Q, as applicable. Notwithstanding the
foregoing, if a Blackout Period or a suspension by the Company of the use
by the Holders of the Designated Shelf Registration or any related
Prospectus pursuant to Section 7(e), eliminates more than seven Business
Days in any Sale Period, then (i)the length of the next Sale Period
shall be thirty Business Days and (ii) the volume restriction specified
in the preceding sentence shall be 2% of the outstanding shares of TWX
Common Stock for the three month period which includes such extended Sale
Period. Notwithstanding the provisions of Section 7(b), the Company
shall be required to maintain the effectiveness of the Designated Shelf
Registration for at least 36 calendar months (which period shall be
extended if necessary to cover any and all extended Sale Periods provided
for under the immediately preceding sentence), or, if earlier, until all
Registrable Securities covered thereby have ceased to be Registrable
Securities.
(c) A registration requested pursuant to this Section 4
shall not be deemed to be effected for purposes of this Section 4 if it
has not been declared effective by the SEC or become effective in
accordance with the Securities Act and the rules and regulations
thereunder.
(d) Holders of a majority in number of the Registrable
Securities to be included in a Registration Statement pursuant to this
Section 4 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 Securities 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 (x) the
Company's failure to comply in all material respects with its obligations
hereunder or (y) the occurrence of a Blackout Period, such reimbursement
shall not be required and the remaining provisions of this Section 4(d)
shall not apply. If such reimbursement is made within 10 Business Days
following a request therefor, such registration shall not be deemed to
have been effected for purposes of this Section 4. If such reimbursement
is not so received within such time (i) such registration shall be deemed
to have been effected for purposes of this Section 4 and (ii) the Company
shall have no further obligations to such Holders with respect to
piggyback registrations pursuant to Section 3 or demand registrations
pursuant to this Section 4 until such reimbursement is made.
<PAGE>
Page 8
(e) The Company will not include any securities which are
not Registrable Securities in any Registration Statement filed pursuant
to a demand made under this Section 4 without the prior written consent
of the Holders of a majority in number of the Registrable Securities
covered by such Registration Statement.
5. SELECTION OF UNDERWRITERS. In connection with any
underwritten offering pursuant to a Registration Statement filed pursuant
to a demand made pursuant to Section 4, Holders of a majority in number
of the Registrable Securities to be included in the Registration
Statement shall have the right to select a managing underwriter or
underwriters to administer the offering, so long as such managing
underwriter or underwriters shall be reasonably satisfactory to the
Company; PROVIDED, HOWEVER, that the Company shall have the right to
select one co-managing underwriter, so long as such co-managing
underwriter shall be reasonably satisfactory to Holders of a majority in
number of the Registrable Securities to be included in the Registration
Statement. The managing underwriter or underwriters selected by the
Holders of a majority in number of the Registrable Securities to be
registered shall be deemed satisfactory to the Company unless the Company
sends a written notice of objection to such Holders within 10 days of
receipt of notice from such Holders of the appointment of a managing
underwriter or underwriters and the co-managing underwriter selected by
the Company shall be deemed to be satisfactory to the Holders of a
majority in number of the Registrable Securities to be included in the
Registration Statement unless such Holders send a written notice of
objection to the Company within 10 days of receipt of notice from the
Company of the appointment of a co-managing underwriter.
6. BLACKOUT PERIODS FOR HOLDERS.
(a)If the Company determines in good faith that the
registration and distribution of Registrable Securities (or the use of
the Registration Statement or related Prospectus) would interfere with
any pending financing, acquisition, corporate reorganization or any other
corporate development involving the Company or any of its subsidiaries or
would require premature disclosure thereof and promptly gives the Holders
of Registrable Securities written notice of such determination, the
Company shall be entitled to (i) postpone the filing of the Registration
Statement otherwise required to be prepared and filed by the Company
pursuant to Section3 or 4 or (ii) elect that the Registration Statement
not be used, in either case, for a reasonable period of time, but not to
exceed 90 days (a "Section 6(a) Period"). Any such written notice shall
be signed by an officer of the Company and contain a
<PAGE>
Page 9
general statement of the reasons for such postponement or restriction on use
and an estimate of the anticipated delay. The Company shall promptly notify
each Holder of the expiration or earlier termination of a Section 6(a) Period.
(b) 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 a continuous "at the
market offering" pursuant to Rule 415(a)(4) under the Securities Act, an
employee stock option, stock purchase, dividend reinvestment plan 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 any Related Securities and (ii)with reasonable prior notice, (A)the
Company (in the case of a non-underwritten offering pursuant to such
registration statement) advises the Holders in writing that a sale or
distribution of Registrable Securities would adversely affect such
offering or (B)the managing underwriter or underwriters (in the case of
an underwritten offering) advise the Company in writing (in which case
the Company shall notify the Holders), that a sale or distribution of
Registrable Securities would adversely affect such offering, then each
Holder of Registrable Securities shall, to the extent not inconsistent
with applicable law, refrain from effecting any sale or distribution of
Registrable Securities, including sales pursuant to Rule 144 or Rule 144A
under the Securities Act, during the 10-day period prior to, and during
(x) the 60-day period, in the case of sales or distributions pursuant to
a Designated Shelf Registration or pursuant to Rule 144 or Rule 144A
under the Securities Act, and (y) the 90-day period, in all other cases,
in each case beginning on the effective date of such registration
statement (a "Section 6(b) Period").
(c) The Effective Period and, in the case where the use
of an effective Registration Statement (other than a Designated Shelf
Registration) is prohibited under Section 6(a), the period for which a
Registration Statement shall be kept effective pursuant to Section 7(b),
as the case may be, shall be extended by a number of days equal to the
number of days of any Blackout Period occurring during such period
(except that, in the case of the occurrence of a Blackout Period during
the effectiveness of a Designated Shelf Registration, the Effective
Period will only be extended to the extent, if any, necessary to comply
with Section 4(b)). Except as provided below, the beginning of any
Blackout Period shall be at least 120 days after the end of the prior
Blackout Period and the aggregate number of days included in all Blackout
Periods during any consecutive 12 month period during the Effective
Period shall not exceed 180 days; PROVIDED, HOWEVER, that once during any
<PAGE>
Page 10
consecutive 12 month period during the Effective Period a Section 6(b)
Period may begin on or within five days of the last day of a Section 6(a)
Period.
(d) Without limiting the rights of the Company under
Section 6(a), unless the Company shall exercise its right to declare a
Section 6(b) Period prior to the 10th day preceding the effectiveness of
a Registration effected pursuant to Section 4 (other than a Designated
Shelf Registration), it shall not, during the period beginning on such
10th day and continuing during the period of the offering covered by such
Registration Statement (other than a Designated Shelf Registration) file
or effect a registration statement of the type for which it would be
entitled to declare a Section 6(b) Period.
7. REGISTRATION PROCEDURES. If and whenever the Company is
required to use commercially reasonable efforts to effect or cause the
registration of any Registrable Securities under the Securities Act as
provided in this Agreement, the Company will, as expeditiously as
possible:
(a) prepare and file with the SEC a Registration
Statement with respect to such Registrable Securities on any form for
which the Company then qualifies or which counsel for the Company shall
deem appropriate, and which form shall be available for the sale of the
Registrable Securities in accordance with the intended methods of
distribution thereof, and use its best efforts to cause such Registration
Statement to become and remain effective;
(b) prepare and file with the SEC amendments and post-
effective amendments to such Registration Statement and such amendments
and supplements to the Prospectus used in connection therewith as may be
necessary to maintain the effectiveness of such registration or as may be
required by the rules, regulations or instructions applicable to the
registration form utilized by the Company or by the Securities Act or
rules and regulations thereunder for shelf registration or otherwise
necessary to keep such Registration Statement effective for up to 90 days
(except to the extent otherwise provided in Section 4(b) with respect to
a Designated Shelf Registration) and cause the Prospectus as so
supplemented to be filed pursuant to Rule 424 under the Securities Act,
and to otherwise comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Securities covered by such
Registration Statement until the earlier of (x) such 90th day (except to
the extent otherwise provided in Section 4(b) with respect to a Designated
Shelf Registration) and (y) such time as all Registrable Securities covered
by such Registration Statement have ceased to be Registrable
<PAGE>
Page 11
Securities (it being understood that the Company at its
option may determine to maintain such effectiveness for a longer period,
whether pursuant to a Shelf Registration or otherwise); PROVIDED that a
reasonable time 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 and the rules and regulations adopted
by the SEC thereunder), the Company will furnish to the Holders, the
managing underwriter and their respective counsel for review and comment,
copies of all documents proposed to be filed and will not file any such
documents (other than as aforesaid) to which any of them reasonably
object prior to the filing thereof;
(c) furnish to each Holder of such Registrable Securities
such number of copies of such Registration Statement and of each
amendment and post-effective amendment thereto (in each case including
all exhibits), any Prospectus or Prospectus supplement and such other
documents as such Holder may reasonably request in order to facilitate
the disposition of the Registrable Securities by such Holder (the Company
hereby consenting to the use (subject to the limitations set forth in the
last paragraph of this Section 7) of the Prospectus or any amendment or
supplement thereto in connection with such disposition);
(d) use its best efforts to register or qualify such
Registrable Securities covered by such Registration Statement under such
other securities or blue sky laws of such jurisdictions as each Holder
shall reasonably request, and do any and all other acts and things which
may be reasonably necessary or advisable to enable such Holder to
consummate the disposition in such jurisdictions of the Registrable
Securities owned by such Holder, except that the Company shall not for
any such purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction where, but for the requirements
of this Section 7(d), it would not be obligated to be so qualified, to
subject itself to taxation in any such jurisdiction, or to consent to
general service of process in any such jurisdiction;
(e) notify each Holder of any such Registrable Securities
covered by such Registration Statement, at any time when a Prospectus
relating thereto is required to be delivered under the Securities Act
within the appropriate period mentioned in Section 7(b), of the Company's
becoming aware that the Prospectus included in such Registration
Statement, as then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
<PAGE>
Page 12
circumstances then existing, and at the request of any such Holder,
prepare and furnish to such Holder a reasonable number of copies of an
amendment or supplement to such Registration Statement or related
Prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such Prospectus shall not
include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then
existing;
(f) notify each Holder of Registrable Securities covered
by such Registration Statement at any time,
(1) when the Prospectus or any Prospectus supplement
or post-effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the
same has become effective;
(2) of any request by the SEC for amendments or
supplements to the Registration Statement or the Prospectus or for
additional information;
(3) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or any
order preventing the use of a related Prospectus, or the initiation
or any overt threats of any proceedings for such purposes;
(4) of the receipt by the Company of any written
notification of the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction or the
initiation or any overt threats of any proceeding for that purpose;
and
(5) if at any time the representations and warranties
of the Company contemplated by paragraph(i)(1) below cease to be
true and correct;
(g) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its
security holders an earnings statement which shall satisfy the provisions
of Section 11(a) of the Securities Act, provided that the Company shall
be deemed to have complied with this paragraph if it has complied with
Rule 158 under the Securities Act;
(h) use commercially reasonable efforts to cause all such
Registrable Securities to be listed on any securities exchange on which
the TWX Common Stock is then listed, if such Registrable Securities are
not already so
<PAGE>
Page 13
listed and if such listing is then permitted under the rules of such exchange,
and to provide a transfer agent and registrar for such Registrable Securities
covered by such Registration Statement no later than the effective date of
such Registration Statement;
(i) enter into agreements (including underwriting
agreements) and take all other appropriate and all commercially
reasonable actions in order to expedite or facilitate the disposition of
such Registrable Securities and in such connection, whether or not an
underwriting agreement is entered into and whether or not the
registration is an underwritten registration:
(1) make such representations and warranties to the
Holders of such Registrable Securities and the underwriters, if any,
in form, scope and substance as are customarily made by issuers to
underwriters in firm commitment underwritten offerings;
(2) 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, if any, and the Holders of a majority in number of the
Registrable Securities being sold) addressed to such Holders and the
underwriters covering the matters customarily covered in opinions
requested in firm commitment underwritten offerings and such other
matters as may be reasonably requested by the Holders of a majority
in number of the Registrable Securities being sold and the managing
underwriter, if any;
(3) obtain "cold comfort" letters and updates thereof
from the Company's independent certified public accountants
addressed to the selling Holders of Registrable Securities and the
underwriters, if any, such letters to be in customary form and
covering matters of the type customarily covered in "cold comfort"
letters by independent accountants in connection with firm
commitment underwritten offerings on such date or dates as may be
reasonably requested by the Holder of a majority in number of the
Registrable Securities being sold and the managing underwriter, if
any;
(4) if requested, provide indemnification in
accordance with the provisions and procedures of Section 10 hereof
to all parties to be indemnified pursuant to said Section; and
(5) deliver such documents and certificates as may be
reasonably requested by the
<PAGE>
Page 14
Holders of a majority in number of the Registrable Securities being
sold and the managing underwriters, if any, to evidence compliance
with clause (f) above and with any customary conditions contained
in the underwriting agreement or other agreement entered into by the
Company (the matters set forth in this Section 7(i) to be effected
at each closing under any underwriting or similar agreement as and to
the extent required thereunder);
(j) cooperate with the Holders of Registrable Securities
covered by such Registration Statement and the managing underwriter or
underwriters or agents, if any, to facilitate, to the extent commercially
reasonable under the circumstances, the timely preparation and delivery
of certificates (not bearing any restrictive legends) representing the
securities to be sold under such Registration Statement, and enable such
securities to be in such denominations and registered in such names as
the managing underwriter or underwriters or agents, if any, or such
Holders may request;
(k) if reasonably requested by the managing underwriter
or underwriters or a Holder of Registrable Securities being sold in
connection with an underwritten offering, incorporate in a Prospectus
supplement or post-effective amendment such information as the managing
underwriters and the Holders of a majority in number of the Registrable
Securities being sold agree should be included therein relating to the
plan of distribution with respect to such Registrable Securities,
including, without limitation, information with respect to the principal
amount of Registrable Securities being sold to such underwriters, the
purchase price being paid therefor by such underwriters and with respect
to any other terms of the underwritten offering of the Registrable
Securities to be sold in such offering and make all required filings of
such Prospectus supplement or post-effective amendment promptly upon
being notified of the matters to be incorporated in such Prospectus
supplement or post-effective amendment;
(l) make available for inspection by any Holder of
Registrable Securities included in such Registration Statement, any
underwriter participating in any disposition pursuant to such
Registration Statement and any attorney, accountant or other agent
retained by any such Holder or underwriter (collectively, the
"Inspectors"), reasonable access to appropriate officers of the Company
and the Company's subsidiaries to ask questions and to obtain information
reasonably requested by any such Inspector and all financial and other
records and other information, pertinent corporate documents and properties
of any of the Company and its subsidiaries and affiliates (collectively,
<PAGE>
Page 15
the "Records"), as shall be reasonably necessary to enable
them to exercise their due diligence responsibility; 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 and either (i)the disclosure of such Records is necessary to
avoid or correct a misstatement or omission of a material fact 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 any decision regarding the
disclosure of information pursuant to subclause (i) shall be made only
after consultation with counsel for the applicable Inspectors. Each
Holder of Registrable Securities agrees that it will, promptly after
learning that disclosure of such Records is sought in a court having
jurisdiction, give notice to the Company and allow the Company, at the
Company's expense, to undertake appropriate action to prevent disclosure
of such Records; and
(m) in the event of the issuance of any stop order
suspending the effectiveness of the Registration Statement or of any
order suspending or preventing the use of any related Prospectus or
suspending the qualification of any Registrable Securities included in
the Registration Statement for sale in any jurisdiction, the Company will
use all commercially reasonable efforts promptly to obtain its
withdrawal.
The Company may require each Holder of Registrable Securities
as to which any registration is being effected to furnish the Company
with such information regarding such Holder and pertinent to the
disclosure requirements relating to the registration and the distribution
of such securities as the Company may from time to time reasonably
request in writing.
Each Holder of Registrable Securities agrees that, upon receipt
of any notice from the Company of the happening of any event of the kind
described in Section 7(e), such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the Prospectus or
Registration Statement covering such Registrable Securities until such
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 7(e), and, if so directed by the Company, such
Holder will deliver to the Company (at the Company's expense) all copies,
other than permanent file copies then in such Holder's possession, of the
Prospectus covering such Registrable Securities current at the time of
receipt of such notice. In the event the Company shall give any such
notice, the Effective Period
<PAGE>
Page 16
and, in the case where the use of an effective Registration Statement (other
than a Designated Shelf Registration) or any related Prospectus is prohibited
under Section 7(e), the period mentioned in Section 7(b), as the case may be,
shall be extended by the number of days during the period from the date of the
giving of such notice pursuant to Section 7(e) and through the date when
each seller of Registrable Securities covered by such Registration
Statement shall have received the copies of the supplemented or amended
Prospectus contemplated by Section 7(e) (except that, in the case of such
a prohibition during the effectiveness of a Designated Shelf
Registration, the Effective Period will only be extended to the extent
necessary to comply with Section 4(b)).
8. REGISTRATION EXPENSES. The Company will pay all
Registration Expenses in connection with all registrations of Registrable
Securities pursuant to Sections 3 and 4 upon the written request of any
of the Holders, and each Holder shall pay (x) any fees or disbursements
of counsel to such Holder (other than Counsel to the Holders) and (y) all
underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of such Holder's Registrable
Securities pursuant to the Registration Statement.
9. REPORTS UNDER THE EXCHANGE ACT. The Company agrees to:
(a) file with the SEC in a timely manner all reports and
other documents required of the Company under the Exchange Act, and
(b) furnish to any Holder, during the Effective Period,
forthwith upon request (A)a written statement by the Company that it has
complied with the current public information and reporting requirements
of Rule 144 under the Securities Act and the Exchange Act and (B)a copy
of the most recent annual or quarterly report of the Company and such
other reports and documents so filed by the Company.
10. INDEMNIFICATION; CONTRIBUTION.
(a)INDEMNIFICATION BY THE COMPANY. The Company agrees
to indemnify and hold harmless each Holder of Registrable Securities, its
officers and directors and each Person who controls such Holder (within
the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act), and any agent or investment adviser thereof against all
losses, claims, damages, liabilities and expenses (including reasonable
attorneys' fees and expenses) incurred by such party pursuant to any
actual or threatened
<PAGE>
Page 17
action, suit, proceeding or investigation arising out of or based upon (i)
any untrue or alleged untrue statement of material fact contained in the
Registration Statement, any Prospectus or preliminary Prospectus, or any
amendment or supplement to any of the foregoing or (ii)any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a Prospectus or a
preliminary Prospectus, in light of the circumstances then existing) not
misleading, except in each case insofar as the same arise out of or are based
upon any such untrue statement or omission made in reliance on and in
conformity with information with respect to such indemnified party
furnished in writing to the Company by such indemnified party or its
counsel expressly for use therein. In connection with an underwritten
offering, the Company will indemnify the underwriters thereof, their
officers, directors and agents and each Person who controls such
underwriters (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) to the same extent as provided above with
respect to the indemnification of the Holders of Registrable Securities.
Notwithstanding the foregoing provisions of this Section 10(a), the
Company will not be liable to any Holder of Registrable Securities, any
Person who participates as an underwriter in the offering or sale of
Registrable Securities or any other Person, if any, who controls such
Holder or underwriter (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act), under the indemnity agreement in
this Section10(a) for any such loss, claim, damage, liability (or action
or proceeding in respect thereof) or expense that arises out of such
Holder's or other Person's failure to send or deliver a copy of the final
Prospectus to the Person asserting an untrue statement or alleged untrue
statement or omission or alleged omission at or prior to the written
confirmation of the sale of the Registrable Securities to such Person if
such statement or omission was corrected in such final Prospectus and the
Company has previously furnished copies thereof to such Holder or other
Person in accordance with this Agreement.
(b) INDEMNIFICATION BY HOLDERS OF REGISTRABLE SECURITIES.
In connection with the Registration Statement, each Holder will furnish
to the Company in writing such information, including the name, address
and the amount of Registrable Securities held by such Holder, as the
Company reasonably requests for use in such Registration Statement or the
related Prospectus and agrees to indemnify and hold harmless (in the same
manner and to the same extent as set forth in Section 10(a)) the Company,
all other Holders or any underwriter, as the case may be, and any of
their respective affiliates, directors, officers and controlling Persons
(within the meaning of Section 15 of the
<PAGE>
Page 18
Securities Act or Section 20 of the Exchange Act), against any losses, claims,
damages, liabilities and expenses resulting from any untrue or alleged untrue
statement of a material fact contained in, or any omission or alleged omission
of a material fact required to be stated in, such Registration Statement or
Prospectus or any amendment or supplement to either of them or necessary
to make the statements therein (in the case of a Prospectus, in the light
of the circumstances then existing) not misleading, but only to the
extent that any such untrue statement or omission is made in reliance on
and in conformity with information with respect to such Holder furnished
in writing to the Company by such Holder or its counsel specifically for
inclusion therein.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person
entitled to indemnification hereunder agrees to give prompt written
notice to the indemnifying party after the receipt by such indemnified
party of any written notice of the commencement of any action, suit,
proceeding or investigation or threat thereof made in writing for which
such indemnified party may claim indemnification or contribution pursuant
to this Section 10 (provided that failure to give such notification shall
not affect the obligations of the indemnifying party pursuant to this
Section 10 except to the extent the indemnifying party shall have been
actually prejudiced as a result of such failure). In case any such
action shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
shall wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and after
notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under these indemnification
provisions for any legal expenses of other counsel or any other expenses,
in each case subsequently incurred by such indemnified party, in
connection with the defense thereof other than reasonable costs of
investigation, unless in the reasonable judgment of any indemnified party
a conflict of interest is likely to exist between such indemnified party
and any other of such indemnified parties with respect to such claim, in
which event the indemnifying party shall be obligated to pay the
reasonable fees and expenses of such additional counsel or counsels. No
indemnifying party, in defense of any such action, suit, proceeding or
investigation, shall, except with the consent of each indemnified party,
consent to the entry of any judgment or entry into any settlement which
<PAGE>
Page 19
does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all
liability in respect to such action, suit, proceeding or investigation to
the extent the same is covered by the indemnity obligation set forth in
this Section 10. No indemnified party shall consent to entry of any
judgment or enter into any settlement without the consent of each
indemnifying party.
(d) CONTRIBUTION. If the indemnification from the
indemnifying party provided for in this Section 10 is unavailable to an
indemnified party hereunder in respect of any losses, claims, damages,
liabilities or expenses referred to herein, then the 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, claims, damages, liabilities and expenses in such proportion as
is appropriate to reflect the relative fault of the indemnifying party
and indemnified party in connection with the actions which resulted in
such losses, claims, damages, liabilities and expenses, as well as any
other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference
to, among other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact, has been made 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 such action. The amount paid or
payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 10(c), any legal and
other fees and expenses reasonably incurred by such indemnified 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 10(d) were determined
by pro rata allocation or by any other method of allocation which does
not take account of the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this
Section 10(d), no underwriter shall be required to contribute any amount
in excess of the amount by which the total price at which the Registrable
Securities underwritten by it and distributed to the public were offered
to the public exceeds the amount of any damages which such underwriter
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
<PAGE>
Page 20
the Securities Act) shall be entitled to contribution from any Person who
was not guilty of such fraudulent misrepresentation. Each Holder's
obligation to contribute is several in the proportion that the proceeds
of the offering received by such Holder bears to the total proceeds of
the offering, and not joint.
If indemnification is available under this Section10, the
indemnifying parties shall indemnify each indemnified party to the full
extent provided in Section10(a) or (b), as the case may be, without
regard to the relative fault of said indemnifying parties or indemnified
party or any other equitable consideration provided for in this Section
10(d).
(e) LIMITATION ON LIABILITY AND CONTRIBUTION OF A HOLDER.
In no event shall any Holder of Registrable Securities be liable or
required to contribute any amount under this Section 10 or otherwise in
respect of any untrue or alleged untrue statement or omission or alleged
omission for amounts in excess of the amount by which the total price at
which the Registrable Securities of such Holder were offered to the
public exceeds the amount of any damages which such Holder has otherwise
been required to pay by reason of such untrue statement or omission.
(f) The provisions of this Section 10 shall be in
addition to any liability which any indemnifying party may have to any
indemnified party and shall survive the termination of this Agreement.
11. PARTICIPATION IN UNDERWRITTEN OFFERINGS. No
Holder of Registrable Securities may participate in any underwritten
offering hereunder unless such Holder (a)agrees to sell such Holder's
securities on the basis provided in any underwriting arrangements
approved by the Company in its reasonable discretion and (b) completes
and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the
terms of such underwriting arrangements.
12. MISCELLANEOUS.
(a)REMEDIES. Each Holder of Registrable Securities in
addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance
of its rights under this Agreement.
(b) AMENDMENTS AND WAIVERS. Except as otherwise provided
herein, the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or
<PAGE>
Page 21
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 Securities then outstanding.
(c) NOTICES. All notices, requests, claims, demands and
other communications hereunder 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 any party as shall be specified by like notice).
(i)(A)If to the Stockholder to:
Toshiba Corporation
1-1, Shibaura 1-chome
Minato-ku, Tokyo 105, Japan
Facsimile: 81-3-5444-9288
Attention: Akira Kuwahara
with a copy (which shall not constitute notice) to:
Toshiba Corporation
1-1, Shibaura 1-chome
Minato-ku, Tokyo 105, Japan
Facsimile: 81-3-5444-9214
Attention: General Manager
Legal Affairs Division
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Facsimile: (212) 450-4800
Attention: John A. Bick
(B) if to a Holder of Registrable Securities, other than the
Stockholder, at the address of such Holder as such Holder may
designate to the Company in writing; and
(ii) if to the Company to:
Time Warner Inc.
75 Rockefeller Plaza
New York, NY 10019
Facsimile: (212) 956-7281
Attention: Peter R. Haje, General Counsel
<PAGE>
Page 22
with a copy (which shall not constitute notice) to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019
Facsimile: (212) 757-3990
Attention: Robert B. Schumer
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure
to the benefit of and be binding upon the parties hereto, any Holder
other than the Stockholder and any successors thereof; PROVIDED, HOWEVER,
that (i)any Holder (other than the Stockholder) shall have agreed in
writing to become a Holder under this Agreement and to be bound by the
terms and conditions hereof and (ii)subject to clause (i), this
Agreement and the provisions of this Agreement that are for the benefit
of the Holders shall not be assignable by any Holder to any Person that
is not so permitted to be a Holder, and any such purported assignment
shall be null and void.
(e) 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 effective when one or more counterparts have
been signed by each of the parties and delivered to the other parties.
(f) 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.
(g) GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York,
regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof.
(h) SEVERABILITY. In the event that any one or more of
the provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect
for any reason, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions
contained herein shall not be in any way impaired thereby and that all
remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the
Stockholder shall be enforceable to the fullest extent permitted by law.
<PAGE>
Page 23
(i) ENTIRE AGREEMENT. This Agreement is intended by the
parties as a final expression and a complete and exclusive statement of
the agreement and understanding of the parties hereto in respect of the
subject matter hereof. There are no restrictions, promises, warranties
or undertakings with respect to the subject matter hereof, other than
those set forth or referred to herein and therein. This Agreement
supersedes all prior agreements and understandings between the parties
with respect to such subject matter.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
TIME WARNER INC.
By:______________________
Name:
Title:
TOSHIBA CORPORATION
By:__________________________
Name:
Title:
CERTIFICATE OF DESIGNATIONS
OF SERIES G 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 (as
defined below, the "Corporation"), does hereby certify that the following
resolution was duly adopted by action of the Board of Directors of the
Corporation at a meeting duly held on August28, 1995.
RESOLVED that pursuant to the authority expressly granted to
and vested in the Board of Directors of the Corporation 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, such 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 6.2million shares designated as Series G Convertible Preferred Stock.
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:
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1.1 "Accrued Dividend Amount" shall mean the aggregate
amount of accrued and unpaid dividends on a share of Series G Stock to
and including the Conversion Date, except that if the Conversion Date
shall occur after a Record Date and prior to a related Dividend Payment
Date, the Accrued Dividend Amount shall not include any accrued and
unpaid dividends for the period from and after the most recent Dividend
Payment Date.
1.2 "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.
1.3 "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).
1.4 "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 G 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 General Corporation Law of the
State of Delaware.
1.5 "Change of Control" and "Change of Control Date"
shall have the following meanings: "Change of Control" shall mean the
occurrence of one or both of the following events: (a) individuals who
would constitute a majority of the members of the Board of Directors
elected at any meeting of stockholders or by written consent (without
regard to any members of the Board of Directors elected pursuant to the
terms of any series of Preferred Stock) shall be elected to the Board of
Directors and the election or the nomination for election by the
Corporation's stockholders of such directors was not approved by a vote
of at least a majority of the directors in office immediately prior to
such election (in which event "Change of Control Date" shall mean the
date of such election) or (b) a Person or group of Persons acting in
concert as a partnership, limited partnership, syndicate or other group
within the meaning of Rule 13d-3 under the Exchange Act (the "Acquiring
Person") shall, as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases, share repurchases or
redemptions or otherwise, have become the beneficial owner (within the
meaning of Rule 13d-3 under the
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Exchange Act) of 40% or more of the outstanding shares of Common Stock (in
which event "Change of Control Date" shall mean the date of the event
resulting in such 40% ownership).
1.6 "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.
1.7 "Common Dividend Deficiency" shall be applicable in
the event that a Conversion Date shall fall after a record date and prior
to the related payment date for a regularly scheduled cash dividend on
the Common Stock (the "Common Dividend Payment Date"), and in such event
shall mean the product of (i) the Conversion Rate, (ii) the amount per
share of Common Stock of the regularly scheduled cash dividend for which
the record date has been set but a payment date has not yet occurred and
(ii) a fraction (A) the numerator of which is the number of calendar days
from and excluding the Conversion Date (or in the event the Conversion
Date falls after a Record Date and on or prior to a related Dividend
Payment Date, from and excluding the Dividend Payment Date) to and
including the Common Dividend Payment Date and (B) the denominator of
which is 91 (provided that such fraction shall not be greater than one
(1)).
1.8 "Common Dividend Excess" shall be applicable in all
circumstances where a Common Dividend Deficiency is not applicable, and
in such event shall mean the product of (i) the Conversion Rate, (ii) the
regular quarterly cash dividend per share, if any, paid by the
Corporation on the Common Stock (the "Historical Dividend") on the most
recent dividend payment date for the Common Stock (the "Prior Dividend
Payment Date") occurring during the four months immediately preceding the
Conversion Date and (iii) a fraction (A) the numerator of which is the
number of calendar days from and excluding (1) the Prior Dividend Payment
Date to and including (2) the Conversion Date (or in the event the
Conversion Date falls after a Record Date and on or prior to a related
Dividend Payment Date, to and including the Dividend Payment Date) and
(B)the denominator of which is 91 days (provided that in no event shall
the fraction be greater than one (1)).
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1.9 "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 3.6(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.
1.10 "Conversion Date" shall have the meaning set forth in
Section 3.5 hereof.
1.11 "Conversion Price" at any time shall mean the
Liquidation Value per share divided by the Conversion Rate in effect at
such time (rounded to the nearest one hundredth of a cent).
1.12 "Conversion Rate" shall have the meaning set forth in
Section 3.1 hereof.
1.13 "Converting Holder" shall have the meaning set forth
in Section 3.5 hereof.
1.14 "Corporation" shall mean Time Warner Inc., a Delaware
corporation, and any of its successors by operation of law, including by
merger, consolidation or sale or conveyance of all or substantially all
of its property and assets.
1.15 "Current Market Price" of the Common Stock on any date
shall mean the average of the daily Closing Prices per share of the
Common Stock for the five (5)consecutive Trading Days ending on the
Trading Day immediately preceding the applicable record date, conversion
date, redemption date or exchange date referred to in Section 3 or
Section 4.
1.16 "Dividend Payment Date" shall have the meaning set
forth in Section 2.1 hereof.
1.17 "Effective Time" shall mean the date on which the
Series G Stock.
1.18 "Exchange Act" shall mean Securities Exchange Act of
1934, as amended.
1.19 "Exchange Price" shall have the meaning set forth in
Section 4.1 hereof.
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1.20 "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 Series G Stock in respect of the right to receive dividends or to
participate in any distribution of assets other than by way of dividends.
1.21 "Liquidation Value" shall have the meaning set forth
in Section 7.1 hereof.
1.22 "NASDAQ" shall mean the National Association of
Securities Dealers Automated Quotation System.
1.23 "Net Dividend Amount" shall have the meaning set forth
in Section 3.1 hereof.
1.24 "NYSE" shall mean the New York Stock Exchange, Inc.
1.25 "Parity Stock" shall mean the Series B Stock, the
Series C Stock, the Series D Stock, the SeriesH 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
Series G Stock in the payment of dividends, including accumulations, if
any, 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 on liquidation are not paid in full, be
entitled to share ratably with the Series G Stock 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 (i) in Section2.2 hereof, to any stock which is Parity Stock in
respect of dividend rights; (ii) in Section 7 hereof, to any stock which
is Parity Stock in respect of the distribution of assets; and (iii) in
Sections 6.2 and 6.3 hereof, to any stock which is Parity Stock in
respect of either dividend rights or the distribution of assets and
which, pursuant to the Certificate of Incorporation or any instrument in
which the Board of Directors, acting pursuant to authority granted
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in the Certificate of Incorporation, shall so designate, is entitled to vote
with the holders of Series G Stock.
1.26 "Person" shall mean an individual, corporation,
partnership, joint venture, association, trust, unincorporated
organization or other entity.
1.27 "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.
1.28 "Pro Rata Portion" shall have the meaning set forth
in Section 5.6 hereof.
1.29 "Pro Rata Repurchase" shall mean the purchase of
shares of Common Stock by the Corporation or by any of its subsidiaries,
whether for cash or other property or securities of the Corporation,
which purchase is subject to Section 13(e) of the Exchange Act or is made
pursuant to an offer made available to all holders of Common Stock, but
excluding any purchase made in open market transactions that satisfies
the conditions of clause (b) of Rule 10b-18 under the Exchange Act or has
been designed (as reasonably determined by the Board of Directors or a
committee thereof) to prevent such purchase from having a material effect
on the trading market of the Common Stock. The "Effective Date" of a Pro
Rata Repurchase shall mean the applicable expiration date (including all
extensions thereof) of any tender or exchange offer which is a Pro Rata
Repurchase or the date of purchase with respect to any Pro Rata
Repurchase which is not a tender or exchange offer.
1.30 "Record Date" shall have the meaning set forth in
Section 2.1 hereof.
1.31 "Redemption Price" shall have the meaning set forth
in Section 4.1 hereof.
1.32 "Redemption Rescission Event" shall mean the
occurrence of (a) any general suspension of trading in, or limitation on
prices for, securities on the principal national securities exchange on
which shares of Common Stock are registered and listed for trading (or,
if shares of Common Stock are not registered and listed for trading on
any such exchange, in the over-the-counter market) for more than six-and-
one-half (6-1/2) consecutive trading hours, (b)any decline in either the
Dow Jones Industrial Average or the Standard & Poor's Index of 400
Industrial Companies (or any successor index published by Dow Jones &
Company, Inc. or Standard & Poor's Corporation) by either (i) an amount
in excess of 10%, measured from the close of business
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on any Trading Day to the close of business on the next succeeding Trading
Day during the period commencing on the Trading Day preceding the day notice
of any redemption of shares of this Series is given (or, if such notice is
given after the close of business on a Trading Day, commencing on such Trading
Day) and ending at the earlier of (x) the time and date fixed for
redemption in such notice and (y) the time and date at which the
Corporation shall have irrevocably deposited funds with a designated bank
or trust company pursuant to Section 4.4 or (ii) an amount in excess of
15% (or, if the time and date fixed for redemption is more than 15 days
following the date on which notice of redemption is given, 20%), measured
from the close of business on the Trading Day preceding the day notice of
such redemption is given (or, if such notice is given after the close of
business on a Trading Day, from such Trading Day) to the close of
business on any Trading Day on or prior to the earlier of the dates
specified in clauses (x) and (y) above, (c) a declaration of a banking
moratorium or any suspension of payments in respect of banks by Federal
or state authorities in the United States or (d) the commencement of a
war or armed hostilities or other national or international calamity
directly or indirectly involving the United States which in the
reasonable judgment of the Corporation could have a material adverse
effect on the market for the Common Stock.
1.33 "Rescission Date" shall have the meaning set forth in
Section 4.5 hereof.
1.34 "Senior Stock" shall mean 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 Series G Stock in respect of the right to
receive dividends or to participate in any distribution of assets other
than by way of dividends.
1.35 "Series A Stock" shall mean the series of Preferred
Stock authorized and designated as Series A Participating Preferred Stock
at the date of the Certificate, including any shares thereof authorized
and designated after the date of the Certificate.
1.36 "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.
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1.37 "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.
1.38 "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.
1.39 "Series G Stock" and "this Series" shall mean the
series of Preferred Stock authorized and designated as the Series G
Convertible Preferred Stock, including any shares thereof authorized and
designated after the date of the Certificate.
1.40 "SeriesH Stock" shall mean the series of Preferred
Stock authorized and designated as SeriesH Convertible Preferred Stock
at the date of the Certificate, including any shares thereof authorized
and designated after the date of the Certificate.
1.41 "Surrendered Shares" shall have the meaning set forth
in Section 3.5 hereof.
1.42 "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. CASH DIVIDENDS.
2.1 The holders of the outstanding Series G Stock shall
be entitled to receive quarter-annual dividends, as and when declared by
the Board of Directors out of funds legally available therefor. Each
quarter-annual dividend shall be an amount per share equal to (i) in the
case of each Dividend Payment Date (as defined below) occurring after the
Effective Time through the Dividend Payment Date coinciding with the
fourth anniversary of the Effective Time, the greater of (A) $.9375 per
$100 of Liquidation Value of Series G Stock (which is equivalent to $3.75
per annum), and (B) an amount per $100 of Liquidation Value of Series G
Stock equal to the product of (1) the Conversion
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Rate and (2) the aggregate per share amount of regularly scheduled dividends
paid in cash on the Common Stock during the period from but excluding the
immediately preceding Dividend Payment Date to and including such Dividend
Payment Date and (ii) in the case of each Dividend Payment Date occurring
thereafter, an amount per $100 of Liquidation Value of Series G Stock
equal to the product of (1) the Conversion Rate and (2) the aggregate per
share amount of regularly scheduled dividends paid in cash on the Common
Stock during the period from but excluding the immediately preceding
Dividend Payment Date to and including such Dividend Payment Date. All
dividends shall be payable in cash on or about the first day of March,
June, September and December in each year, beginning on the first such
date that is more than 15 days after the Effective Time, as fixed by the
Board of Directors, or such other dates as are fixed by the Board of
Directors (provided that the fourth anniversary of the Effective Time
shall be a Dividend Payment Date) (each a "Dividend Payment Date"), to
the holders of record of Series G Stock at the close of business on or
about the Trading Day next preceding such first day of March, June,
September and December (or fourth anniversary of the Effective Time) as
the case may be, as fixed by the Board of Directors, or such other dates
as are fixed by the Board of Directors (each a "Record Date"). In the
case of dividends payable in respect of periods prior to the fourth
anniversary of the Effective Time, (i) such dividends shall accrue on
each share on a daily basis, whether or not there are unrestricted funds
legally available for the payment of such dividends and whether or not
earned or declared, from and after the day immediately succeeding the
Effective Time and (ii) any such dividends that become payable for any
partial dividend period shall be computed on the basis of the actual days
elapsed in such period. From and after the fourth anniversary of the
Effective Time, dividends on the Series G Stock (determined as to amount
as provided herein) shall accrue to the extent, but only to the extent,
that regularly scheduled cash dividends are declared by the Board of
Directors on the Common Stock with a payment date after the fourth
anniversary of the Effective Time (or, in the case of Series G Stock
originally issued after the fourth anniversary of the Effective Time,
after the Dividend Payment Date next preceding such date of original
issuance). All dividends that accrue in accordance with the foregoing
provisions shall be cumulative from and after the day immediately
succeeding the Effective Time (or such date of issuance). The amount
payable to each holder of record on any Dividend Payment Date shall be
rounded to the nearest cent.
B. Except as hereinafter provided in this Section 2.2,
unless all dividends on the outstanding shares of Series G Stock and any
Parity Stock that shall have accrued and become payable as of any date
shall have been
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paid, or declared and funds set apart for payment thereof, no dividend or other
distribution (payable other than in shares of Junior Stock) shall be paid to
the holders of Junior Stock or Parity Stock, and no shares of Series G Stock,
Parity Stock or Junior Stock shall be purchased, redeemed or otherwise acquired
by the Corporation or any of its subsidiaries (except by conversion into or
exchange for Junior Stock), nor shall any monies be paid or made available for
a purchase, redemption or sinking fund for the purchase or redemption of any
Series G Stock, Junior Stock or Parity Stock. When dividends are not paid in
full upon the shares of this Series and any Parity Stock, all dividends
declared upon shares of this Series and all Parity Stock shall be
declared pro rata so that the amount of dividends declared per share on
this Series and all such Parity Stock shall in all cases bear to each
other the same ratio that accrued dividends per share on the shares of
this Series and all such Parity Stock bear to each other. No interest,
or sum of money in lieu of interest, shall be payable in respect of any
dividend payment or payments on this Series which may be in arrears.
2.3 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
debt or equity securities of the Corporation (other than Common Stock
subject to a distribution or reclassification covered by Section 3.6(a))
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; PROVIDED, HOWEVER, that if such
rights are subsequently redeemed by the Corporation, such redemption
shall be treated for purposes of this Section 2.3 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 pro rata to the holders of Series G Stock on the
record date fixed for determining holders of Common Stock entitled to
participate in such distribution (or, if no such record date shall be
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established, the effective time thereof) in an amount equal to
the amount that such holders of Series G Stock would have been entitled
to receive had their shares of Series G Stock been converted into Common
Stock immediately prior to such record date (or effective time). In the
event of a distribution to holders of Series G Stock pursuant to this
Section 2.3, 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 Series G Stock 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 Series G Stock 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.
2.4 If a distribution is made in accordance with the
provisions of Section 2.3, anything in Section 3 to the contrary
notwithstanding, no adjustment pursuant to Section 3 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.
2.5 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 2.3, the kind and amount of securities or other
property that shall be distributable to the holders of the Series G Stock
shall be based on (i) the election, if any, made by the record holder (as
of the date used for determining the holders of Common Stock entitled to
make such election) of the largest number of shares of Series G Stock 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 the
Series G Stock shall be based on the kind or amount of securities or
other property receivable by a plurality of 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, the
Corporation shall mail a copy thereof to the record holders of the Series
G Stock as of the date used for determining
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the holders of record of Common Stock entitled to such mailing.
3. CONVERSION RIGHTS.
3.1 Each holder of a share of this Series shall have the
right at any time or as to any share of this Series called for redemption
or exchange, at any time prior to the close of business on the date fixed
for redemption or exchange (unless the Corporation defaults in the
payment of the Redemption Price or fails to exchange the shares of this
Series for the applicable number of shares of Common Stock and any cash
portion of the Exchange Price or exercises its right to rescind such
redemption pursuant to Section 4.5, in which case such right shall not
terminate at the close of business on such date), to convert such share
into (i) a number of shares of Common Stock equal to 2.08264 shares of
Common Stock for each share of this Series, subject to adjustment as
provided in this Section 3 (such rate, as so adjusted from time to time,
is herein called the "Conversion Rate") plus (ii) a number of shares of
Common Stock equal to
(A) (1) the Accrued Dividend Amount MINUS (2) the
Common Dividend Excess, if applicable, or PLUS (3) the Common
Dividend Deficiency, if applicable (the "Net Dividend Amount"),
DIVIDED BY
(B) the Closing Price of the Common Stock on the
last Trading Day prior to the Conversion Date;
PROVIDED, HOWEVER, that in the event that the Net Dividend Amount is a
negative number, the number of shares deliverable upon conversion of a
share of Series G Stock shall be equal to
(I) the number of shares determined pursuant to
clause (i) MINUS
(II) a number of shares equal to (x)the absolute
value of the Net Dividend Amount DIVIDED BY (y) the Closing Price of
the Common Stock on the last Trading Day prior to the Conversion
Date;
AND PROVIDED FURTHER THAT, in the event that the Net Dividend Amount is a
positive number, the Corporation shall have the right to deliver cash
equal to the Net Dividend Amount or any portion thereof, in which case
its obligation to deliver shares of Common Stock pursuant to clause(ii)
shall be reduced by a number of shares equal to (x)the aggregate amount of
cash so delivered DIVIDED BY (y)the Closing Price of the Common Stock on the
last Trading Day prior to the Conversion Date, unless the Corporation shall
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deliver cash equal to the entire Net Dividend Amount, in which case its entire
obligation under clause (ii) shall be discharged. The obligations of the
Corporation to issue the Common Stock or make the cash payments provided by
this Section 3.1 shall be absolute whether or not any accrued dividend by
which such issuance or payment is measured has been declared by the Board of
Directors and whether or not the Corporation would have adequate surplus or
net profits to pay such dividend if declared or is otherwise restricted from
making such dividend.
3.2 Except as provided in this Section 3, no adjustments
in respect of payments of dividends on shares 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 Series G Stock occurs after a
Record Date and on or prior to a Dividend Payment Date, the holder 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, subject to Section
3.6(c), 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.
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 office of the transfer agent or
agents therefor (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. The Corporation shall, as soon as practicable
(subject to Section 3.6(d)) after such deposit of certificates for shares
of this Series, accompanied by the written notice above prescribed, issue
and deliver at such office to the holder for whose account such shares
were surrendered, or to his nominee, certificates representing the number
of shares of Common Stock and the cash, if any, to which such holder is
entitled upon such conversion.
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3.5 Conversion shall be deemed to have been made as of
the date (the "Conversion Date") that certificates for the shares of this
Series to be converted, and the written notice prescribed in Section 3.4
are received by the transfer agent or agents for this Series; and the
Person entitled to receive the Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder of such Common
Stock on such date. Notwithstanding anything to the contrary contained
herein, in the event the Corporation shall have rescinded a redemption of
shares of this Series pursuant to Section 4.5, any holder of shares of
this Series that shall have surrendered shares of this Series for
conversion following the day on which notice of the subsequently
rescinded redemption shall have been given but prior to the close of
business on the later of (a) the Trading Day next succeeding the date on
which public announcement of the rescission of such redemption shall have
been made and (b) the Trading Day on which the notice of rescission
required by Section 4.5 is deemed given pursuant to Section 8.2 (a
"Converting Holder"), may rescind the conversion of such shares
surrendered for conversion by (i)properly completing a form prescribed
by the Corporation and mailed to holders of shares of this Series
(including Converting Holders) with the Corporation's notice of
rescission, which form shall provide for the certification by any
Converting Holder rescinding a conversion on behalf of any beneficial
owner (within the meaning of Rule 13d-3 under the Exchange Act) of shares
of this Series that the beneficial ownership (within the meaning of such
Rule) of such shares shall not have changed from the date on which such
shares were surrendered for conversion to the date of such certification
and (ii) delivering such form to the Corporation no later than the close
of business on that date which is ten (10) Trading Days following the
date on which the Corporation's notice of rescission is deemed given
pursuant to Section 8.2. The delivery of such form by a Converting
Holder shall be accompanied by (x) any certificates representing shares
of Common Stock issued to such Converting Holder upon a conversion of
shares of this Series that shall be rescinded by the proper delivery of
such form (the "Surrendered Shares"), (y) any securities, evidences of
indebtedness or assets (other than cash) distributed by the Corporation
to such Converting Holder by reason of such Converting Holder's being a
record holder of Surrendered Shares and (z) payment in New York Clearing
House funds or other funds acceptable to the Corporation of an amount
equal to the sum of (I) any cash such Converting Holder may have received
in lieu of the issuance of fractional shares upon conversion and (II) any
cash paid or payable by the Corporation to such Converting Holder by
reason of such Converting Holder being a record holder of Surrendered
Shares. Upon receipt by the Corporation of any such form properly
completed by a Converting Holder and any certificates, securi-
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Page 15
ties, evidences of indebtedness, assets or cash payments required to be
returned or made by such Converting Holder to the Corporation as set
forth above, the Corporation shall instruct the transfer agent or agents
for shares of Common Stock and shares of this Series to cancel any
certificates representing Surrendered Shares (which Surrendered Shares
shall be deposited in the treasury of the Corporation) and reissue
certificates representing shares of this Series to such Converting Holder
(which shares of this Series shall be deemed to have been outstanding at
all times during the period following their surrender for conversion).
The Corporation shall, as promptly as practicable, and in no event more
than five (5) Trading Days, following the receipt of any such properly
completed form and any such certificates, securities, evidences of
indebtedness, assets or cash payments required to be so returned or made,
pay to the Converting Holder or as otherwise directed by such Converting
Holder any dividend or other payment made on such shares during the
period from the time such shares shall have been surrendered for
conversion to the rescission of such conversion. All questions as to the
validity, form, eligibility (including time or receipt) and acceptance of
any form submitted to the Corporation to rescind the conversion of shares
of this Series, including questions as to the proper completion or
execution of any such form or any certification contained therein, shall
be resolved by the Corporation, whose determination shall be final and
binding. 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 or during any period
commencing at a Redemption Rescission Event and ending at either (i) the
time and date at which the Corporation's right of rescission shall expire
pursuant to Section 4.5 if the Corporation shall not have exercised such
right or (ii) the close of business on that day which is ten (10) Trading
Days following the date on which notice of rescission pursuant to Section
4.4 is deemed given pursuant to Section 8.2 if the Corporation shall have
exercised such right of rescission, but certificates for shares of Common
Stock shall be delivered as soon as practicable after the opening of such
books or the expiration of such period.
3.6 The Conversion Rate shall be adjusted from time to
time as follows for events occurring after August31, 1995:
(a) In case the Corporation shall, at any time or
from time to time while any of the Series G Stock is outstanding,
(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
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Page 16
or (iv) reclassify (other than by way of a merger that is subject to
Section 3.7) its shares of Common Stock, then the Conversion Rate in
effect immediately before such action shall be adjusted so that
immediately following such event the holders of the Series G Stock shall
be entitled to receive upon conversion or exchange 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 Series G Stock had been converted or
exchanged 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 of Capital Stock (other than Common Stock),
including any distribution of Capital Stock (other than Common
Stock) that shall accompany a reclassification of the Common Stock,
shall be subject to Section 2.3 rather than this Section 3.6(a)).
An adjustment made pursuant to this Section 3.6(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 3.6(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 3.6(a) (including any election that would result in
all or a portion of the transaction becoming subject to
Section2.3), the kind and amount of securities that shall be
distributable to the holders of the Series G Stock shall be based on
(i) the election, if any, made by the record holder (as of the date
used for determining the holders of Common Stock entitled to make
such election) of the largest number of shares of Series G Stock 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, the
Corporation shall mail a copy thereof to the record holders of the
Series G Stock as of the date used for determining the holders of
record of Common Stock entitled to such mailing.
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Page 17
(b) In case a Change of Control shall occur, the
Conversion Rate in effect immediately prior to the Change of Control
Date shall be increased (but not decreased) by multiplying such rate
by a fraction as follows: (i) in the case of a Change of Control
specified in Section 1.5(a), a fraction in which the numerator is
the Conversion Price prior to adjustment pursuant hereto and the
denominator is the Current Market Price of the Common Stock at the
Change of Control Date, (ii) in the case of a Change of Control
specified in Section 1.5(b), the greater of the following fractions:
(x) a fraction the numerator of which is the highest price per share
of Common Stock paid by the Acquiring Person in connection with the
transaction giving rise to the Change of Control or in any
transaction within six months prior to or after the Change of
Control Date (the "Highest Price"), and the denominator of which is
the Current Market Price of the Common Stock as of the date (but not
earlier than six months prior to the Change of Control Date) on
which the first public announcement is made by the Acquiring Person
that it intends to acquire or that it has acquired 40% or more of
the outstanding shares of Common Stock (the "Announcement Date") or
(y) a fraction the numerator of which is the Conversion Price prior
to adjustment pursuant hereto and the denominator of which is the
Current Market Price of the Common Stock on the Announcement Date
and (iii) in the case where there co-exists a Change of Control
specified in both Section 1.5(a) and Section 1.5(b), the greatest of
the fractions determined pursuant to clauses (i) and (ii). Such
adjustment shall become effective immediately after the Change of
Control Date and shall be made, in the case of clauses (ii) and
(iii) above, successively for six months thereafter in the event and
at the time of any increase in the Highest Price after the Change of
Control Date; PROVIDED, HOWEVER, that no such successive adjustment
shall be made with respect to the Conversion Rate of the shares of
this Series in respect of any event occurring after the Conversion
Date.
(c) The Corporation shall be entitled to make such
additional adjustments in the Conversion Rate, in addition to those
required by subsections3.6(a) and 3.6(b), 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 3.6(c) do
not decrease the Conversion Rate.
<PAGE>
Page 18
(d) In any case in which this Section3.6 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 filing of the statement referred
to in Section 3.6(f)) issuing to the holder of any shares of this
Series converted after such record date (i) the shares of Common
Stock and other Capital Stock of the Corporation issuable upon such
conversion over and above (ii) the shares of Common Stock and other
Capital Stock of the Corporation issuable upon such conversion on
the basis of the Conversion Rate 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.
(e) All calculations under this Section3 shall be
made to the nearest cent, one-hundredth of a share or, in the case
of the Conversion Rate, one hundred-thousandth. Notwithstanding any
other provision of this Section 3, the Corporation shall not be
required to make any adjustment of the Conversion Rate unless such
adjustment would require an increase or decrease of at least
1.00000% of such Conversion Rate. Any lesser adjustment shall be
carried forward and shall be made at the time of and together with
the next subsequent adjustment which, together with any adjustment
or adjustments so carried forward, shall amount to an increase or
decrease of at least 1.00000% in such rate. Any adjustments under
this Section 3 shall be made successively whenever an event
requiring such an adjustment occurs.
(f) Whenever an adjustment in the Conversion Rate is
required, the Corporation shall forthwith place on file with its
transfer agent or agents for this Series a statement signed by a
duly authorized officer of the Corporation, stating the adjusted
Conversion Rate determined as provided herein. Such statements
shall set forth in reasonable detail such facts as shall be
necessary to show the reason for and the manner of computing such
adjustment. Promptly after the adjustment of the Conversion Rate,
the Corporation shall mail a notice thereof to each holder of shares
of this Series.
(g) In the event that at any time as a result of an
adjustment made pursuant to this Section3, the holder of any share
of this Series thereafter surrendered for conversion shall become
<PAGE>
Page 19
entitled to receive any shares of Capital Stock of the Corporation
other than shares of Common Stock, the conversion rate of such other
shares so receivable upon conversion of any such share of this
Series shall be subject to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the provisions
with respect to Common Stock contained in subparagraphs (a) through
(f) and (h) of this Section3.6, and the provisions of Section 3.1
through 3.5 and 3.7 through 3.10 shall apply on like or similar
terms to any such other shares and the determination of the Board of
Directors as to any such adjustment shall be conclusive.
(h) No adjustment shall be made pursuant to this
Section 3.6 (i) if the effect thereof would be to reduce the
Conversion Price below the par value of the Common Stock or (ii)
subject to Section3.6(c) hereof, with respect to any share of
Series G Stock that is converted, prior to the time such adjustment
otherwise would be made.
3.7 In case after August31, 1995 (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 Series G Stock shall
have the right thereafter, during the period such share shall be
convertible or exchangeable, to convert such share into or have such
share exchanged for 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 or exchanged
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 this Section 3 (based on
(i)the election, if any, made in writing to the Corporation by the
record holder (as of the date used for determining holders of Common
Stock entitled to make such election) of the largest number of shares of
Series G Stock 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
<PAGE>
Page 20
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 clauses (a) or
(b) 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 Series G Stock 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 Series G Stock into Common Stock immediately prior to such record date
(or effective date) (based on the election or nonelection made by the
record holder of the largest number of shares of Series G Stock, 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 holder in any transaction described in clause (a) or
(b) of the first sentence of this Section 3.7, the Corporation shall mail
a copy thereof to the holders of the Series G Stock as of the date used
for determining the holders of record of Common Stock entitled to such
mailing. The Corporation shall not enter into any of the transactions
referred to in clauses (a) or (b) of the preceding sentence 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 3.7. The provisions of this Section 3.7 shall apply similarly to
successive consolidations, mergers, sales or conveyances. For purposes
of this Section 3.7 the term "Corporation" shall refer to the Corporation
(as defined in Section 1.14) as constituted immediately prior to the
merger, consolidation or other transaction referred to in this Section.
3.8 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
(or, if applicable, any other shares of Capital Stock of the Corporation)
as shall from time to time be sufficient to
<PAGE>
Page 21
effect the conversion of all outstanding shares of this Series into such Common
Stock (or such other shares of Capital Stock) at any time (assuming that, at
the time of the computation of such number of shares, all such Common Stock (or
such other shares of Capital 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 such
other shares of Capital Stock) that are held in the treasury of the
Corporation. All shares of Common Stock (or such other shares of Capital
Stock of the Corporation) which 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 Common
Stock at any time outstanding shall not include shares held in the
treasury of the Corporation.
3.9 If any shares of Common Stock or other shares of
Capital Stock of the Corporation which would be issuable upon conversion
of shares of this Series hereunder require registration with or approval
of any governmental authority before such shares may be issued upon
conversion, 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 or other shares of Capital Stock of the Corporation required
to be delivered upon conversion of shares of this Series prior to such
delivery upon the principal national securities exchange upon which the
outstanding Common Stock or such other shares of Capital 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 other shares of Capital Stock of the Corporation 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 such other shares of Capital 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, (ii)any Pro
Rata Repurchase or (iii)any
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Page 22
action triggering an adjustment to the Conversion Rate pursuant to this Section
3, then, in each case, the Corporation shall cause to be filed with the
transfer agent or agents for the Series G Stock, and shall cause to be mailed,
first-class postage prepaid, to the holders of record of the outstanding shares
of Series G Stock, 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 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. REDEMPTION OR EXCHANGE.
4.1 (a) The Corporation may, at its sole option, subject to
Section 2.2 hereof, from time to time on and after the fourth anniversary
of the Effective Time, redeem, out of funds legally available therefor,
or, as provided below, exchange shares of Common Stock for, all or (in
the case of Section 4.1(b)(i), any part) of the outstanding shares of
this Series. The redemption price for each share of this Series called
for redemption pursuant to clause (i)of Section 4.1(b) shall be the
Liquidation Value together with an amount equal to the accrued and unpaid
dividends to the date fixed for redemption (hereinafter collectively
referred to as the "Redemption Price"). The exchange price for each
share of this Series called for exchange pursuant to clause (ii)of
Section 4.1(b) shall be a number of shares of Common Stock equal to the
Conversion Rate, together with, at the option of the Corporation, either
(x)cash or (y)a number of shares of Common Stock, valued at the Closing
Price on the Trading Day immediately preceding the date fixed for
exchange, equal, in either case, to the aggregate amount of accrued and
unpaid dividends on the Series G Stock to the date fixed for exchange
(provided that any dividends which are in arrears must be paid in cash)
(hereinafter collectively referred to as the "Exchange Price").
(b) On the date fixed for redemption or exchange the
Corporation shall, at its option, effect either
(i) a redemption of the shares of this Series
to be redeemed by way of payment, out of funds legally available
therefor, of cash equal to the aggregate Redemption Price for the
shares of this Series then being redeemed;
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Page 23
(ii) an exchange of the shares of this Series
for the Exchange Price in shares of Common Stock (PROVIDED that the
Corporation (A) shall be entitled to deliver cash (1) in lieu of any
fractional share of Common Stock (determined in a manner consistent
with Section 3.3) and (2) equal to accrued and unpaid dividends to
the date fixed for exchange in lieu of shares of Common Stock and
(B) shall be required to deliver cash in respect of any dividends
that are in arrears); or
(iii) any combination thereof with respect to
each share of this Series called for redemption or exchange.
(c) Notwithstanding clauses (ii) and (iii) of
Section 4.1(b), the Corporation shall be entitled to effect an exchange
of shares of Series G Stock for Common Stock or other shares of Capital
Stock of the Corporation only to the extent that duly and validly issued,
fully paid and nonassessable shares of Common Stock (or such other shares
of Capital Stock) shall be available for issuance (including delivery of
previously issued shares of Common Stock held in the Corporation's
treasury on the date fixed for exchange). The Corporation shall comply
with Sections3.9 and 3.10 with respect to shares of Common Stock or
other shares of Capital Stock of the Corporation which would be issuable
upon exchange of shares of this Series. Certificates for shares of
Common Stock issued in exchange for surrendered shares of this Series
pursuant to this Section4.1 shall be made available by the Corporation
not later than the fifth Trading Day following the date for exchange.
4.2 In the event that fewer than all the outstanding
shares of this Series are to be redeemed pursuant to Section 4.1(b)(i),
the number of shares to be redeemed from each holder of shares of this
Series shall be determined by the Corporation by lot or pro rata or by
any other method as may be determined by the Board of Directors in its
sole discretion to be equitable, and the certificate of the Corporation's
Secretary or an Assistant Secretary filed with the transfer agent or
transfer agents for this Series in respect of such determination by the
Board of Directors shall be conclusive.
4.3 In the event the Corporation shall redeem or exchange
shares of this Series pursuant to Section4.1, notice of such redemption
or exchange shall be given by first class mail, postage prepaid, mailed
not less than fifteen (15) nor more than sixty (60) days prior to the
date fixed for redemption or exchange, as the case may be, to each record
holder of the shares to be redeemed or
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Page 24
exchanged, at such holder's address as the same appears on the books of the
Corporation. Each such notice shall state: (i) whether the shares of this
Series are to be redeemed or exchanged; (ii) the time and date as of which
the redemption or exchange shall occur; (iii) the total number of shares of
this Series to be redeemed or exchanged and, if fewer than all the shares held
by such holder are to be redeemed, the number of such shares to be redeemed
from such holder; (iv)the Redemption Price or the Exchange Price, as the
case may be; (v) that shares of this Series called for redemption or
exchange may be converted at any time prior to the time and date fixed
for redemption or exchange (unless the Corporation shall, in the case of
a redemption, default in payment of the Redemption Price or, in the case
of an exchange, fail to exchange the shares of this Series for the
applicable number of shares of Common Stock and any cash portion of the
Exchange Price or shall exercise its right to rescind such redemption
pursuant to Section 4.5, in which case such right of conversion shall not
terminate at such time and date); (vi)the applicable Conversion Price
and Conversion Rate; (vii)the place or places where certificates for
such shares are to be surrendered for payment of the Redemption Price, in
the case of redemption, or for delivery of certificates representing the
shares of Common Stock and the payment of any cash portion of the
Exchange Price, in the case of exchange; and (viii) that dividends on the
shares of this Series to be redeemed or exchanged will cease to accrue on
such redemption or exchange date.
4.4 If notice of redemption or exchange shall have been
given by the Corporation as provided in Section 4.3, dividends on the
shares of this Series so called for redemption or exchange shall cease to
accrue, such shares shall no longer be deemed to be outstanding, and all
rights of the holders thereof as stockholders of the Corporation with
respect to shares so called for redemption or exchange (except (i) in the
case of redemption, the right to receive from the Corporation the
Redemption Price without interest and in the case of exchange, the right
to receive from the Corporation the Exchange Price without interest and
(ii) the right to convert such shares in accordance with Section 3) shall
cease (including any right to receive dividends otherwise payable on any
Dividend Payment Date that would have occurred after the time and date of
redemption or exchange) either (i) in the case of a redemption or
exchange pursuant to Section 4.1, from and after the time and date fixed
in the notice of redemption or exchange as the time and date of
redemption or exchange (unless the Corporation shall (x) in the case of a
redemption, default in the payment of the Redemption Price, (y)in the
case of an exchange, fail to exchange the applicable number of shares of
Common Stock and any cash portion of the Exchange Price or (z) exercise
its right to rescind such redemption
<PAGE>
Page 25
pursuant to Section 4.5, in which case such rights shall not terminate at such
time and date) or (ii) if the Corporation shall so elect and state in the
notice of redemption or exchange, from and after the time and date (which date
shall be the date fixed for redemption or exchange or an earlier date not less
than fifteen (15) days after the date of mailing of the redemption or exchange
notice) on which the Corporation shall irrevocably deposit with a designated
bank or trust company doing business in the Borough of Manhattan, City and
State of New York, as paying agent, money sufficient to pay at the office
of such paying agent, on the redemption date, the Redemption Price, in
the case of redemption, or certificates representing the shares of Common
Stock to be so exchanged and any cash portion of the Exchange Price, in
the case of an exchange. Any money or certificates so deposited with any
such paying agent which shall not be required for such redemption or
exchange because of the exercise of any right of conversion or otherwise
shall be returned to the Corporation forthwith. Upon surrender (in
accordance with the notice of redemption or exchange) of the certificate
or certificates for any shares of this Series to be so redeemed or
exchanged (properly endorsed or assigned for transfer, if the Corporation
shall so require and the notice of redemption or exchange shall so
state), such shares shall be redeemed or exchanged by the Corporation at
the Redemption Price or the Exchange Price, as applicable, as set forth
in Section 4.1 (unless the Corporation shall have exercised its right to
rescind such redemption pursuant to Section 4.5). In case fewer than all
the shares represented by any such certificate are to be redeemed, a new
certificate shall be issued representing the unredeemed shares (or
fractions thereof as provided in Section 8.4), without cost to the holder
thereof, together with the amount of cash, if any, in lieu of fractional
shares other than those issuable in accordance with Section8.4. Subject
to applicable escheat laws, any moneys so set aside by the Corporation in
the case of redemption and unclaimed at the end of one year from the
redemption date shall revert to the general funds of the Corporation,
after which reversion the holders of such shares so called for redemption
or exchange shall look only to the general funds of the Corporation for
the payment of the Redemption Price or the Exchange Price, as applicable,
without interest. Any interest accrued on funds so deposited shall be
paid to the Corporation from time to time.
4.5 In the event that a Redemption Rescission Event shall
occur following any day on which a notice of redemption shall have been
given pursuant to Section 4.3 but at or prior to the earlier of (a) the
time and date fixed for redemption as set forth in such notice of
redemption and (b) the time and date at which the Corporation shall have
irrevocably deposited funds or
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Page 26
certificates with a designated bank or trust company pursuant to Section 4.4,
the Corporation may, at its sole option, at any time prior to the earliest of
(i) the close of business on that day which is two (2) Trading Days following
such Redemption Rescission Event, (ii) the time and date fixed for redemption
as set forth in such notice and (iii) the time and date on which the
Corporation shall have irrevocably deposited such funds with a designated bank
or trust company, rescind the redemption to which such notice of redemption
shall have related by making a public announcement of such rescission
(the date on which such public announcement shall have been made being
hereinafter referred to as the "Rescission Date"). The Corporation shall
be deemed to have made such announcement if it shall issue a release to
the Dow Jones News Service, Reuters Information Services or any successor
news wire service. From and after the making of such announcement, the
Corporation shall have no obligation to redeem shares of this Series
called for redemption pursuant to such notice of redemption or to pay the
redemption price therefor and all rights of holders of shares of this
Series shall be restored as if such notice of redemption had not been
given. The Corporation shall give notice of any such rescission by one
of the means specified in Section 8.2 as promptly as practicable, but in
no event later than the close of business on that date which is five (5)
Trading Days following the Rescission Date to each record holder of
shares of this Series at the close of business on the Rescission Date and
to any other Person or entity that was a record holder of shares of this
Series and that shall have surrendered shares of this Series for
conversion following the giving of notice of the subsequently rescinded
redemption. Each notice of rescission shall (w) state that the
redemption described in the notice of redemption has been rescinded, (x)
state that any Converting Holder shall be entitled to rescind the
conversion of shares of this Series surrendered for conversion following
the day on which notice of redemption was given but prior to the close of
business on the later of (1) the Trading Day next succeeding the date on
which public announcement of the rescission of such redemption shall have
been made and (2) the Trading Day on which the Corporation's notice of
rescission is deemed given pursuant to Section 8.2, (y) be accompanied by
a form prescribed by the Corporation to be used by any Converting Holder
rescinding the conversion of shares so surrendered for conversion (and
instructions for the completion and delivery of such form, including
instructions with respect to payments that may be required to accompany
such delivery shall be in accordance with Section 3.5) and (z) state that
such form must be properly completed and received by the Corporation no
later than the close of business on a date that shall be ten (10) Trading
Days following the date of
<PAGE>
Page 27
the mailing of such notice of rescission is deemed given pursuant to Section
8.2.
4.6 The shares of this Series shall not be subject to the
provisions of Section 5 of Article IV of the Certificate of
Incorporation.
5.0 PRO RATA REPURCHASE.
5.1 Upon a Pro Rata Repurchase, each holder of shares of
this Series shall have the right to require that the Corporation
repurchase, out of funds legally available therefor, a Pro Rata Portion
(as defined below) of the shares of such holder, or any lesser number
requested by the holder, at a price per share equal to the highest price
per share of Common Stock paid in the Pro Rata Repurchase multiplied by
the Conversion Rate then in effect plus an amount equal to the accrued
but unpaid dividends on such shares to the date of repurchase.
5.2 At any time prior to or within thirty (30) days
following any Pro Rata Repurchase, the Corporation shall mail a notice to
each holder of shares of this Series stating:
(a) that a Pro Rata Repurchase will occur or has
occurred and that such holder will have (upon such Pro Rata
Repurchase) or has the right to require the Corporation to
repurchase such holder's shares in an amount not in excess of the
Pro Rata Portion at a repurchase price in cash determined as set
forth above plus an amount equal to accrued and unpaid dividends, if
any, to the date of repurchase;
(b) the repurchase date for the Series G Stock
(which shall be no earlier than fifteen (15) days nor later than
sixty (60) days from the date such notice is mailed); and
(c) the instructions determined by the Corporation,
consistent with this Section, that a holder must follow in order to
have its shares repurchased.
5.3 Holders electing to have any shares repurchased will
be required to surrender such shares, with an appropriate form duly
completed, to the Corporation at the address specified in the notice at
least five (5) days prior to the repurchase date. Holders will be
entitled to withdraw their election if the Corporation receives, not
later than three (3) days prior to the repurchase date, a telegram,
telex, facsimile transmission or letter setting forth the name of the
holder, the certificate numbers of the
<PAGE>
Page 28
shares delivered for purchase by the holder and a statement that such holder
is withdrawing his election to have such shares repurchased. Holders will
have such additional withdrawal and other rights as may be required pursuant
to applicable law.
5.4 On the repurchase date, the Corporation shall (i)
pay the repurchase price plus an amount equal to accrued and unpaid
dividends as provided in Section 5.1, if any, to the holders entitled
thereto and (ii) issue to such holders any equity securities of the
Corporation (other than Common Stock) that would at the time be issuable
upon conversion of the shares of Series G Stock which are then being
repurchased pursuant hereto.
5.5 The Board of Directors will not approve any tender
or exchange offer by the Corporation or a third party for shares of
Common Stock or recommend that the holders of Common Stock accept any
offer or tender their shares into any offer unless a Pro Rata Portion of
the shares of this Series of all holders are entitled to be tendered into
such offer at a price not less than the price per share for shares of
Common Stock pursuant to such offer multiplied by the Conversion Rate
then in effect plus an amount equal to accrued but unpaid dividends on
such shares to the date of payment for such shares in such tender or
exchange offer.
5.6 For purposes hereof, "Pro Rata Portion" with respect
to the shares of this Series held by any holder shall mean all the shares
of this Series then owned by such holder times a fraction, the numerator
of which is the number of outstanding shares of Common Stock
(a)purchased in the applicable Pro Rata Repurchase or (b)for which a
tender or exchange offer referred to in Section 5.5 is made, as the case
may be, and the denominator of which is the number of outstanding shares
of Common Stock immediately prior to such Pro Rata Repurchase or the
commencement of such tender or exchange offer, as the case may be.
6. VOTING. The shares of this Series shall have no voting
rights except as required by law or as set forth below.
6.1 Each share of this Series shall be entitled to vote
together with holders of the shares of Common Stock (and any other class
or series which may similarly be entitled to vote with the shares of
Common Stock) as a single class upon all matters upon which holders of
Common Stock are entitled to vote. In any such vote, the holders of this
Series shall be entitled to two (2) votes per $100 of Liquidation Value
of Series G Stock, subject to adjustment at the same time and in the same
manner as each
<PAGE>
Page 29
adjustment of the Conversion Rate pursuant to Section 3, so that
the holders of this Series shall be entitled following such
adjustment to the number of votes equal to the number of votes such
holders were entitled to under this Section 6.1 immediately prior to such
adjustment multiplied by a fraction (x) the numerator of which is the
Conversion Rate as adjusted pursuant to Section 3 and (y) the denominator
of which is the Conversion Rate immediately prior to such adjustment.
6.2 (a) 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 (i) authorize any Senior Stock
or reclassify (by merger, consolidation or otherwise) any Junior Stock or
Parity Stock as Senior Stock, (ii) merge into or consolidate with any
Person where the surviving or continuing corporation will have any
authorized Senior Stock other than capital stock corresponding to shares
of Senior Stock of the Corporation existing immediately before such
merger or consolidation) or (iii)amend, alter or repeal (by operation of
law or otherwise) 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 of the shares of this Series.
(b) 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 of
Junior Stock or Parity Stock, (iii)the authorization, designation or
issuance of additional shares of Series G Stock or (iv)subject to
Section 6.2(a), the authorization or issuance of any other shares of
Preferred Stock.
6.3 (a) If and whenever at any time or times dividends
payable on shares of this Series shall have been in arrears and unpaid in
an aggregate amount equal to or exceeding the amount of dividends payable
thereon for six quarterly dividend periods, then the number of directors
constituting the Board of Directors shall be increased by two and the
holders of shares of this Series, together with the holders of any shares
of any Parity Stock as to which in each case dividends are in arrears and
unpaid in an aggregate amount equal to or exceeding the amount of
dividends payable thereon for six quarterly dividend periods, shall have
the exclusive right, voting separately as a class with
<PAGE>
Page 30
such other series, to elect two directors of the Corporation.
(b) Such voting right may be exercised initially
either by written consent or at a special meeting of the holders of the
Preferred Stock having such voting right, called as hereinafter provided,
or at any annual meeting of stockholders held for the purpose of electing
directors, and thereafter at each such annual meeting until such time as
all dividends in arrears on the shares of this Series shall have been
paid in full and all dividends payable on the shares of this Series on
four subsequent consecutive Dividend Payment Dates shall have been paid
in full on such dates or funds shall have been set aside for the payment
thereof, at which time such voting right and the term of the directors
elected pursuant to Section 6.3(a) shall terminate.
(c) At any time when such voting right shall have
vested in holders of shares of such series of Preferred Stock described
in Section 6.3(a), and if such right shall not already have been
exercised by written consent, a proper officer of the Corporation may
call, and, upon the written request, addressed to the Secretary of the
Corporation, of the record holders of shares representing ten percent
(10%) of the voting power of the shares then outstanding of such
Preferred Stock having such voting right, shall call, a special meeting
of the holders of such Preferred Stock having such voting right. Such
meeting shall be held at the earliest practicable date upon the notice
required for annual meetings of stockholders at the place for holding
annual meetings of stockholders of the Corporation, or, if none, at a
place designated by the Board of Directors. Notwithstanding the
provisions of this Section 6.3(c), no such special meeting shall be
called during a period within 60 days immediately preceding the date
fixed for the next annual meeting of stockholders.
(d) At any meeting held for the purpose of electing
directors at which the holders of such Preferred Stock shall have the
right to elect directors as provided herein, the presence in Person or by
proxy of the holders of shares representing more than fifty percent (50%)
in voting power of the then outstanding shares of such Preferred Stock
having such right shall be required and shall be sufficient to constitute
a quorum of such class for the election of directors by such class.
(e) Any director elected by holders of Preferred
Stock pursuant to the voting right created under this Section 6.3 shall
hold office until the next annual meeting of stockholders (unless such term
has previously terminated pursuant to Section 6.3(b)) and any vacancy in
<PAGE>
Page 31
respect of any such director shall be filled only by vote of
the remaining director so elected, or if there be no such remaining
director, by the holders of such Preferred Stock, entitled to elect such
director or directors by written consent or at a special meeting called
in accordance with the procedures set forth in Section 6.3(c), or, if no
special meeting is called or written consent executed, at the next annual
meeting of stockholders. Upon any termination of such voting right,
subject to applicable law, the term of office of all directors elected by
holders of such Preferred Stock voting separately as a class pursuant to
this Section 6.3 shall terminate.
(f) In exercising the voting rights set forth in
this Section 6.3, each share of this Series shall have a number of votes
equal to its Liquidation Value.
7. LIQUIDATION RIGHTS.
7.1 Upon the dissolution, liquidation or winding up of
the Corporation, whether voluntary or involuntary, the holders of the
shares of this Series shall be entitled to receive out of the assets of
the Corporation available for distribution to stockholders, in preference
to the holders of, and before any payment or distribution shall be made
on, Junior Stock, the amount of $100 per share (the "Liquidation Value"),
plus an amount equal to all accrued and unpaid dividends to the date of
final distribution.
7.2 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
7.
7.3 After the payment to the holders of the shares of
this Series of full preferential amounts provided for in this Section 7,
the holders of this Series as such shall have no right or claim to any of
the remaining assets of the Corporation.
7.4 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 are entitled pursuant to Section 7.1, no
such distribution shall be made on account of any shares of any Parity
Stock upon such dissolution, liquidation or winding
<PAGE>
Page 32
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.
8. OTHER PROVISIONS.
8.1 All notices from the Corporation to the holders shall
be given by one of the methods specified in Section 8.2. 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.
8.2 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 Series G Stock 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): Time Warner Inc., 75
Rockefeller Plaza, New York, New York 10019, Attention: General Counsel.
8.3 Any shares of this Series which have been converted,
redeemed, exchanged or otherwise acquired by the Corporation shall, after
such conversion, redemption, exchange 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
<PAGE>
Page 33
references to Series G Stock shall be eliminated from the Certificate of
ncorporation and the shares of Preferred Stock designated hereby as Series
G 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.
8.4 The shares of this Series shall be issuable in whole
shares or, if authorized by the Board of Directors (or any authorized
committee thereof), in any fraction of a whole share so authorized or any
integral multiple of such fraction.
8.5 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 record holder shall be deemed the holder
of such shares for all purposes.
8.6 All notice periods referred to in the Certificate
shall commence on the date of the mailing of the applicable notice.
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Page 34
8.7 Certificates for shares of this Series shall bear
such legends as the Corporation shall from time to time deem appropriate.
IN WITNESS WHEREOF, Time Warner Inc. has caused this
certificate to be signed and attested this 5th
day of September, 1995.
TIME WARNER INC.
By: /s/ Spencer B. Hays
--------------------------
Name: Spencer B. Hays
Title: Vice President
Attest:
/s/ Susan A. Waxenberg
------------------------
Name: Susan A. Waxenberg
Title: Assistant Secretary
CERTIFICATE OF DESIGNATIONS
OF SERIES H 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 (as
defined below, the "Corporation"), does hereby certify that the following
resolution was duly adopted by action of the Board of Directors of the
Corporation at a meeting duly held on August 28, 1995.
RESOLVED that pursuant to the authority expressly granted to
and vested in the Board of Directors of the Corporation 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, such 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 1.8million shares designated as SeriesH Convertible Preferred Stock.
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:
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Page
1.1 "Accrued Dividend Amount" shall mean the aggregate
amount of accrued and unpaid dividends on a share of SeriesH Stock to
and including the Conversion Date, except that if the Conversion Date
shall occur after a Record Date and prior to a related Dividend Payment
Date, the Accrued Dividend Amount shall not include any accrued and
unpaid dividends for the period from and after the most recent Dividend
Payment Date.
1.2 "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.
1.3 "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).
1.4 "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 SeriesH 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 General Corporation Law of the
State of Delaware.
1.5 "Change of Control" and "Change of Control Date"
shall have the following meanings: "Change of Control" shall mean the
occurrence of one or both of the following events: (a) individuals who
would constitute a majority of the members of the Board of Directors
elected at any meeting of stockholders or by written consent (without
regard to any members of the Board of Directors elected pursuant to the
terms of any series of Preferred Stock) shall be elected to the Board of
Directors and the election or the nomination for election by the
Corporation's stockholders of such directors was not approved by a vote
of at least a majority of the directors in office immediately prior to
such election (in which event "Change of Control Date" shall mean the
date of such election) or (b) a Person or group of Persons acting in
concert as a partnership, limited partnership, syndicate or other group
within the meaning of Rule 13d-3 under the Exchange Act (the "Acquiring
Person") shall, as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases, share repurchases or
redemptions or otherwise, have become the beneficial owner (within the
meaning of Rule 13d-3 under the
<PAGE>
Page 3
Exchange Act) of 40% or more of the outstanding shares of Common Stock (in
which event "Change of Control Date" shall mean the date of the event
resulting in such 40% ownership).
1.6 "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.
1.7 "Common Dividend Deficiency" shall be applicable in
the event that a Conversion Date shall fall after a record date and prior
to the related payment date for a regularly scheduled cash dividend on
the Common Stock (the "Common Dividend Payment Date"), and in such event
shall mean the product of (i) the Conversion Rate, (ii) the amount per
share of Common Stock of the regularly scheduled cash dividend for which
the record date has been set but a payment date has not yet occurred and
(ii) a fraction (A) the numerator of which is the number of calendar days
from and excluding the Conversion Date (or in the event the Conversion
Date falls after a Record Date and on or prior to a related Dividend
Payment Date, from and excluding the Dividend Payment Date) to and
including the Common Dividend Payment Date and (B) the denominator of
which is 91 (provided that such fraction shall not be greater than one
(1)).
1.8 "Common Dividend Excess" shall be applicable in all
circumstances where a Common Dividend Deficiency is not applicable, and
in such event shall mean the product of (i) the Conversion Rate, (ii) the
regular quarterly cash dividend per share, if any, paid by the
Corporation on the Common Stock (the "Historical Dividend") on the most
recent dividend payment date for the Common Stock (the "Prior Dividend
Payment Date") occurring during the four months immediately preceding the
Conversion Date and (iii) a fraction (A) the numerator of which is the
number of calendar days from and excluding (1) the Prior Dividend Payment
Date to and including (2) the Conversion Date (or in the event the
Conversion Date falls after a Record Date and on or prior to a related
Dividend Payment Date, to and including the Dividend Payment Date) and
(B)the denominator of which is 91 days (provided that in no event shall
the fraction be greater than one (1)).
<PAGE>
Page 4
1.9 "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 3.6(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.
1.10 "Conversion Date" shall have the meaning set forth in
Section 3.5 hereof.
1.11 "Conversion Period" shall mean (i)the period
commencing on the fifth anniversary of the Effective Time and (ii)any
period prior to the fifth anniversary of the Effective Time (A) during
which there shall remain open (within the meaning of Rule 14e-1(a) under
the Exchange Act) a tender or exchange offer for 40% or more of the
outstanding shares of Common Stock; provided that TWX shall have filed a
Schedule 14D-9 with respect to such tender or exchange offer and such
tender or exchange offer shall not have been opposed by the board of
directors of TWX or (B) immediately prior to the effective time of 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 as a result of a
division or combination) in outstanding shares of Common Stock.
1.12. "Conversion Price" at any time shall mean the
Liquidation Value per share divided by the Conversion Rate in effect at
such time (rounded to the nearest one hundredth of a cent).
1.13 "Conversion Rate" shall have the meaning set forth in
Section 3.1 hereof.
1.14 "Converting Holder" shall have the meaning set forth
in Section 3.5 hereof.
1.15 "Corporation" shall mean Time Warner Inc., a Delaware
corporation, and any of its successors by operation of law, including by
merger, consolidation or sale or conveyance of all or substantially all
of its property and assets.
<PAGE>
Page
1.16 "Current Market Price" of the Common Stock on any date
shall mean the average of the daily Closing Prices per share of the
Common Stock for the five (5)consecutive Trading Days ending on the
Trading Day immediately preceding the applicable record date, conversion
date, redemption date or exchange date referred to in Section 3 or
Section 4.
1.17 "Dividend Payment Date" shall have the meaning set
forth in Section 2.1 hereof.
1.18 "Effective Time" shall mean the date on which the
SeriesH Stock is issued.
1.19 "Exchange Act" shall mean Securities Exchange Act of
1934, as amended.
1.20 "Exchange Price" shall have the meaning set forth in
Section 4.1 hereof.
1.21 "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 SeriesH Stock in respect of the right to receive dividends or to
participate in any distribution of assets other than by way of dividends.
1.22 "Liquidation Value" shall have the meaning set forth
in Section 7.1 hereof.
1.23 "NASDAQ" shall mean the National Association of
Securities Dealers Automated Quotation System.
1.24 "Net Dividend Amount" shall have the meaning set forth
in Section 3.1 hereof.
1.25 "NYSE" shall mean the New York Stock Exchange, Inc.
1.26 "Parity Stock" shall mean the Series B Stock, the
Series C Stock, the Series D Stock, the SeriesG 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
<PAGE>
Page 6
full, be entitled to share ratably with the SeriesH Stock in the payment of
dividends, including accumulations, if any, 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 on liquidation
are not paid in full, be entitled to share ratably with the SeriesH Stock 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 (i) in Section 2.2 hereof, to any stock which is Parity Stock
in respect of dividend rights; (ii) in Section 7 hereof, to any stock which
is Parity Stock in respect of the distribution of assets; and (iii) in
Sections 6.2 and 6.3 hereof, to any stock which is Parity Stock in
respect of either dividend rights or the distribution of assets and
which, pursuant to the Certificate of Incorporation or any instrument in
which the Board of Directors, acting pursuant to authority granted in the
Certificate of Incorporation, shall so designate, is entitled to vote
with the holders of SeriesH Stock.
1.27 "Person" shall mean an individual, corporation,
partnership, joint venture, association, trust, unincorporated
organization or other entity.
1.28 "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.
1.29 "Pro Rata Portion" shall have the meaning set forth
in Section 5.6 hereof.
1.30 "Pro Rata Repurchase" shall mean the purchase of
shares of Common Stock by the Corporation or by any of its subsidiaries,
whether for cash or other property or securities of the Corporation,
which purchase is subject to Section 13(e) of the Exchange Act or is made
pursuant to an offer made available to all holders of Common Stock, but
excluding any purchase made in open market transactions that satisfies
the conditions of clause (b) of Rule 10b-18 under the Exchange Act or has
been designed (as reasonably determined by the Board of Directors or a
committee thereof) to prevent such purchase from having a material effect
on the trading market of the Common Stock. The "Effective Date" of a Pro
Rata Repurchase shall mean the applicable expiration date (including all
extensions thereof) of any tender or exchange offer which is a Pro Rata
Repurchase or the date of purchase with respect to any Pro Rata
Repurchase which is not a tender or exchange offer.
<PAGE>
Page 7
1.31 "Record Date" shall have the meaning set forth in
Section 2.1 hereof.
1.32 "Redemption Price" shall have the meaning set forth
in Section 4.1 hereof.
1.33 "Redemption Rescission Event" shall mean the
occurrence of (a) any general suspension of trading in, or limitation on
prices for, securities on the principal national securities exchange on
which shares of Common Stock are registered and listed for trading (or,
if shares of Common Stock are not registered and listed for trading on
any such exchange, in the over-the-counter market) for more than six-and-
one-half (6-1/2) consecutive trading hours, (b)any decline in either the
Dow Jones Industrial Average or the Standard & Poor's Index of 400
Industrial Companies (or any successor index published by Dow Jones &
Company, Inc. or Standard & Poor's Corporation) by either (i) an amount
in excess of 10%, measured from the close of business on any Trading Day
to the close of business on the next succeeding Trading Day during the
period commencing on the Trading Day preceding the day notice of any
redemption of shares of this Series is given (or, if such notice is given
after the close of business on a Trading Day, commencing on such Trading
Day) and ending at the earlier of (x) the time and date fixed for
redemption in such notice and (y) the time and date at which the
Corporation shall have irrevocably deposited funds with a designated bank
or trust company pursuant to Section 4.4 or (ii) an amount in excess of
15% (or, if the time and date fixed for redemption is more than 15 days
following the date on which notice of redemption is given, 20%), measured
from the close of business on the Trading Day preceding the day notice of
such redemption is given (or, if such notice is given after the close of
business on a Trading Day, from such Trading Day) to the close of
business on any Trading Day on or prior to the earlier of the dates
specified in clauses (x) and (y) above, (c) a declaration of a banking
moratorium or any suspension of payments in respect of banks by Federal
or state authorities in the United States or (d) the commencement of a
war or armed hostilities or other national or international calamity
directly or indirectly involving the United States which in the
reasonable judgment of the Corporation could have a material adverse
effect on the market for the Common Stock.
1.34 "Rescission Date" shall have the meaning set forth in
Section 4.5 hereof.
1.35 "Senior Stock" shall mean 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
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pursuant to authority granted in the Certificate of Incorporation, shall fix
the relative rights, preferences and limitations thereof, shall be senior to
the SeriesH Stock in respect of the right to receive dividends or to
participate in any distribution of assets other than by way of dividends.
1.36 "Series A Stock" shall mean the series of Preferred
Stock authorized and designated as Series A Participating Preferred Stock
at the date of the Certificate, including any shares thereof authorized
and designated after the date of the Certificate.
1.37 "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.
1.38 "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.
1.39 "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.
1.40 "SeriesG Stock" shall mean the series of Preferred
Stock authorized and designated as SeriesG Stock at the date of the
Certificate, including any shares thereof authorized and designated after
the date of the Certificate.
1.41 "SeriesH Stock" and "this Series" shall mean the
series of Preferred Stock authorized and designated as the SeriesH
Convertible Preferred Stock, including any shares thereof authorized and
designated after the date of the Certificate.
1.42 "Surrendered Shares" shall have the meaning set forth
in Section 3.5 hereof.
1.43 "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
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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. CASH DIVIDENDS.
2.1 The holders of the outstanding SeriesH Stock shall
be entitled to receive quarter-annual dividends, as and when declared by
the Board of Directors out of funds legally available therefor. Each
quarter-annual dividend shall be an amount per share equal to (i) in the
case of each Dividend Payment Date (as defined below) occurring after the
Effective Time through the Dividend Payment Date coinciding with the
fourth anniversary of the Effective Time, the greater of (A) $.9375 per
$100 of Liquidation Value of SeriesH Stock (which is equivalent to $3.75
per annum), and (B) an amount per $100 of Liquidation Value of SeriesH
Stock equal to the product of (1) the Conversion Rate and (2) the
aggregate per share amount of regularly scheduled dividends paid in cash
on the Common Stock during the period from but excluding the immediately
preceding Dividend Payment Date to and including such Dividend Payment
Date and (ii) in the case of each Dividend Payment Date occurring
thereafter, an amount per $100 of Liquidation Value of SeriesH Stock
equal to the product of (1) the Conversion Rate and (2) the aggregate per
share amount of regularly scheduled dividends paid in cash on the Common
Stock during the period from but excluding the immediately preceding
Dividend Payment Date to and including such Dividend Payment Date. All
dividends shall be payable in cash on or about the first day of March,
June, September and December in each year, beginning on the first such
date that is more than 15 days after the Effective Time, as fixed by the
Board of Directors, or such other dates as are fixed by the Board of
Directors (provided that the fourth anniversary of the Effective Time
shall be a Dividend Payment Date) (each a "Dividend Payment Date"), to
the holders of record of SeriesH Stock at the close of business on or
about the Trading Day next preceding such first day of March, June,
September and December (or fourth anniversary of the Effective Time) as
the case may be, as fixed by the Board of Directors, or such other dates
as are fixed by the Board of Directors (each a "Record Date"). In the
case of dividends payable in respect of periods prior to the fourth
anniversary of the Effective Time, (i) such dividends shall accrue on
each share on a daily basis, whether or not there are unrestricted funds
legally available for the payment of such dividends and whether or not
earned or declared, from and after the day immediately succeeding the
Effective Time and (ii) any such dividends that become payable for any
partial dividend period shall be computed on the basis of the actual days
elapsed in such period. From and after the fourth
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Page 10
anniversary of the Effective Time, dividends on the SeriesH Stock (determined
as to amount as provided herein) shall accrue to the extent, but only to the
extent, that regularly scheduled cash dividends are declared by the Board of
Directors on the Common Stock with a payment date after the fourth
anniversary of the Effective Time (or, in the case of SeriesH Stock
originally issued after the fourth anniversary of the Effective Time,
after the Dividend Payment Date next preceding such date of original
issuance). All dividends that accrue in accordance with the foregoing
provisions shall be cumulative from and after the day immediately
succeeding the Effective Time (or such date of issuance). The amount
payable to each holder of record on any Dividend Payment Date shall be
rounded to the nearest cent.
2.2 Except as hereinafter provided in this Section 2.2,
unless all dividends on the outstanding shares of SeriesH Stock and any
Parity Stock that shall have accrued and become payable as of any date
shall have been paid, or declared and funds set apart for payment
thereof, no dividend or other distribution (payable other than in shares
of Junior Stock) shall be paid to the holders of Junior Stock or Parity
Stock, and no shares of SeriesH Stock, Parity Stock or Junior Stock
shall be purchased, redeemed or otherwise acquired by the Corporation or
any of its subsidiaries (except by conversion into or exchange for Junior
Stock), nor shall any monies be paid or made available for a purchase,
redemption or sinking fund for the purchase or redemption of any SeriesH
Stock, Junior Stock or Parity Stock. When dividends are not paid in full
upon the shares of this Series and any Parity Stock, all dividends
declared upon shares of this Series and all Parity Stock shall be
declared pro rata so that the amount of dividends declared per share on
this Series and all such Parity Stock shall in all cases bear to each
other the same ratio that accrued dividends per share on the shares of
this Series and all such Parity Stock bear to each other. No interest,
or sum of money in lieu of interest, shall be payable in respect of any
dividend payment or payments on this Series which may be in arrears.
2.3 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
debt or equity securities of the Corporation (other than Common Stock
subject to a distribution or reclassification covered by Section 3.6(a))
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
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Page 11
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; PROVIDED, HOWEVER, that if such
rights are subsequently redeemed by the Corporation, such redemption
shall be treated for purposes of this Section 2.3 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 pro rata to the holders of
SeriesH Stock on the record date fixed for determining 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 equal
to the amount that such holders of SeriesH Stock would have been
entitled to receive had their shares of SeriesH Stock been converted
into Common Stock immediately prior to such record date (or effective
time). In the event of a distribution to holders of SeriesH Stock
pursuant to this Section 2.3, 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 SeriesH Stock 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 SeriesH Stock 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.
2.4 If a distribution is made in accordance with the
provisions of Section 2.3, anything in Section 3 to the contrary
notwithstanding, no adjustment pursuant to Section 3 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.
2.5 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 2.3, the kind and amount of securities or other property
that shall be distributable to the holders of the SeriesH Stock shall
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Page 12
be based on (i) the election, if any, made by the record holder (as
of the date used for determining the holders of Common Stock entitled to
make such election) of the largest number of shares of SeriesH Stock 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 the
SeriesH Stock shall be based on the kind or amount of securities or
other property receivable by a plurality of 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, the
Corporation shall mail a copy thereof to the record holders of the
SeriesH Stock as of the date used for determining the holders of record
of Common Stock entitled to such mailing.
3. CONVERSION RIGHTS.
3.1 Each holder of a share of this Series shall have the
right at any time during the Conversion Period or as to any share of this
Series called for redemption or exchange, at any time prior to the close
of business on the date fixed for redemption or exchange (unless the
Corporation defaults in the payment of the Redemption Price or fails to
exchange the shares of this Series for the applicable number of shares of
Common Stock and any cash portion of the Exchange Price or exercises its
right to rescind such redemption pursuant to Section 4.5, in which case
such right shall not terminate at the close of business on such date), to
convert such share into (i) a number of shares of Common Stock equal to
2.08264 shares of Common Stock for each share of this Series, subject to
adjustment as provided in this Section 3 (such rate, as so adjusted from
time to time, is herein called the "Conversion Rate") plus (ii) a number
of shares of Common Stock equal to
(A) (1) the Accrued Dividend Amount MINUS (2) the
Common Dividend Excess, if applicable, or PLUS (3) the Common
Dividend Deficiency, if applicable (the "Net Dividend Amount"),
DIVIDED BY
(B) the Closing Price of the Common Stock on the
last Trading Day prior to the Conversion Date;
PROVIDED, HOWEVER, that in the event that the Net Dividend Amount is a
negative number, the number of shares deliver-
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able upon conversion of a share of SeriesH Stock shall be equal to
(I) the number of shares determined pursuant to
clause (i) MINUS
(II) a number of shares equal to (x)the absolute
value of the Net Dividend Amount DIVIDED BY (y) the Closing Price of
the Common Stock on the last Trading Day prior to the Conversion
Date;
AND PROVIDED FURTHER THAT, in the event that the Net Dividend Amount is a
positive number, the Corporation shall have the right to deliver cash
equal to the Net Dividend Amount or any portion thereof, in which case
its obligation to deliver shares of Common Stock pursuant to clause(ii)
shall be reduced by a number of shares equal to (x)the aggregate amount
of cash so delivered DIVIDED BY (y)the Closing Price of the Common Stock
on the last Trading Day prior to the Conversion Date, unless the
Corporation shall deliver cash equal to the entire Net Dividend Amount,
in which case its entire obligation under clause (ii) shall be
discharged. The obligations of the Corporation to issue the Common Stock
or make the cash payments provided by this Section 3.1 shall be absolute
whether or not any accrued dividend by which such issuance or payment is
measured has been declared by the Board of Directors and whether or not
the Corporation would have adequate surplus or net profits to pay such
dividend if declared or is otherwise restricted from making such
dividend.
3.2 Except as provided in this Section 3, no adjustments
in respect of payments of dividends on shares 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 SeriesH Stock occurs after a
Record Date and on or prior to a Dividend Payment Date, the holder 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, subject to Section
3.6(c), 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.
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Page 14
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 office of the transfer agent or
agents therefor (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. The Corporation shall, as soon as practicable
(subject to Section 3.6(d)) after such deposit of certificates for shares
of this Series, accompanied by the written notice above prescribed, issue
and deliver at such office to the holder for whose account such shares
were surrendered, or to his nominee, certificates representing the number
of shares of Common Stock and the cash, if any, to which such holder is
entitled upon such conversion.
3.5 Conversion shall be deemed to have been made as of
the date (the "Conversion Date") that certificates for the shares of this
Series to be converted, and the written notice prescribed in Section 3.4
are received by the transfer agent or agents for this Series; and the
Person entitled to receive the Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder of such Common
Stock on such date. Notwithstanding anything to the contrary contained
herein, in the event the Corporation shall have rescinded a redemption of
shares of this Series pursuant to Section 4.5, any holder of shares of
this Series that shall have surrendered shares of this Series for
conversion following the day on which notice of the subsequently
rescinded redemption shall have been given but prior to the close of
business on the later of (a) the Trading Day next succeeding the date on
which public announcement of the rescission of such redemption shall have
been made and (b) the Trading Day on which the notice of rescission
required by Section 4.5 is deemed given pursuant to Section 8.2 (a
"Converting Holder"), may rescind the conversion of such shares
surrendered for conversion by (i)properly completing a form prescribed
by the Corporation and mailed to holders of shares of this Series
(including Converting Holders) with the Corporation's notice of
rescission, which form shall provide for the certification by any
Converting Holder rescinding a conversion on behalf of any beneficial
owner (within the meaning of Rule 13d-3 under the Exchange Act) of shares
of this Series that the beneficial ownership (within the meaning of such
Rule) of such shares shall not have changed from the date on which such
shares were surrendered for conversion to the date of such certification
and (ii) delivering such form to the Corporation no later than the close
of business on that date which is ten
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(10) Trading Days following the date on which the Corporation's notice of
rescission is deemed given pursuant to Section 8.2. The delivery of such
form by a Converting Holder shall be accompanied by (x) any certificates
representing shares of Common Stock issued to such Converting Holder upon
a conversion of shares of this Series that shall be rescinded by the proper
delivery of such form (the "Surrendered Shares"), (y) any securities, evidences
of indebtedness or assets (other than cash) distributed by the Corporation
to such Converting Holder by reason of such Converting Holder's being a
record holder of Surrendered Shares and (z) payment in New York Clearing
House funds or other funds acceptable to the Corporation of an amount
equal to the sum of (I) any cash such Converting Holder may have received
in lieu of the issuance of fractional shares upon conversion and (II) any
cash paid or payable by the Corporation to such Converting Holder by
reason of such Converting Holder being a record holder of Surrendered
Shares. Upon receipt by the Corporation of any such form properly
completed by a Converting Holder and any certificates, securities,
evidences of indebtedness, assets or cash payments required to be
returned or made by such Converting Holder to the Corporation as set
forth above, the Corporation shall instruct the transfer agent or agents
for shares of Common Stock and shares of this Series to cancel any
certificates representing Surrendered Shares (which Surrendered Shares
shall be deposited in the treasury of the Corporation) and reissue
certificates representing shares of this Series to such Converting Holder
(which shares of this Series shall be deemed to have been outstanding at
all times during the period following their surrender for conversion).
The Corporation shall, as promptly as practicable, and in no event more
than five (5) Trading Days, following the receipt of any such properly
completed form and any such certificates, securities, evidences of
indebtedness, assets or cash payments required to be so returned or made,
pay to the Converting Holder or as otherwise directed by such Converting
Holder any dividend or other payment made on such shares during the
period from the time such shares shall have been surrendered for
conversion to the rescission of such conversion. All questions as to the
validity, form, eligibility (including time or receipt) and acceptance of
any form submitted to the Corporation to rescind the conversion of shares
of this Series, including questions as to the proper completion or
execution of any such form or any certification contained therein, shall
be resolved by the Corporation, whose determination shall be final and
binding. 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 or during any period
commencing at a Redemption Rescission Event and ending at either (i) the
time and date at which the Corporation's right of rescission shall expire
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Page 16
pursuant to Section 4.5 if the Corporation shall not have exercised such
right or (ii) the close of business on that day which is ten (10) Trading
Days following the date on which notice of rescission pursuant to Section
4.4 is deemed given pursuant to Section 8.2 if the Corporation shall have
exercised such right of rescission, but certificates for shares of Common
Stock shall be delivered as soon as practicable after the opening of such
books or the expiration of such period.
3.6 The Conversion Rate shall be adjusted from time to
time as follows for events occurring after
August31, 1995:
(a) In case the Corporation shall, at any time or
from time to time while any of the SeriesH Stock is outstanding,
(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 that is subject to Section
3.7) its shares of Common Stock, then the Conversion Rate in effect
immediately before such action shall be adjusted so that immediately
following such event the holders of the SeriesH Stock shall be
entitled to receive upon conversion or exchange 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 SeriesH Stock had been converted or
exchanged 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 of Capital Stock (other than Common Stock),
including any distribution of Capital Stock (other than Common
Stock) that shall accompany a reclassification of the Common Stock,
shall be subject to Section 2.3 rather than this Section 3.6(a)).
An adjustment made pursuant to this Section 3.6(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 3.6(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 3.6(a) (including any election that would result in
all or a portion of the transaction becoming subject to
Section2.3), the kind and amount of securities that shall be
distributable to the holders of the SeriesH Stock shall be based on
(i) the election, if any, made by the
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Page 17
record holder (as of the date used for determining the holders of Common
Stock entitled to make such election) of the largest number of shares of
SeriesH Stock 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, the
Corporation shall mail a copy thereof to the record holders of the
SeriesH Stock as of the date used for determining the holders of
record of Common Stock entitled to such mailing.
(b) In case a Change of Control shall occur, the
Conversion Rate in effect immediately prior to the Change of Control
Date shall be increased (but not decreased) by multiplying such rate
by a fraction as follows: (i) in the case of a Change of Control
specified in Section 1.5(a), a fraction in which the numerator is
the Conversion Price prior to adjustment pursuant hereto and the
denominator is the Current Market Price of the Common Stock at the
Change of Control Date, (ii) in the case of a Change of Control
specified in Section 1.5(b), the greater of the following fractions:
(x) a fraction the numerator of which is the highest price per share
of Common Stock paid by the Acquiring Person in connection with the
transaction giving rise to the Change of Control or in any
transaction within six months prior to or after the Change of
Control Date (the "Highest Price"), and the denominator of which is
the Current Market Price of the Common Stock as of the date (but not
earlier than six months prior to the Change of Control Date) on
which the first public announcement is made by the Acquiring Person
that it intends to acquire or that it has acquired 40% or more of
the outstanding shares of Common Stock (the "Announcement Date") or
(y) a fraction the numerator of which is the Conversion Price prior
to adjustment pursuant hereto and the denominator of which is the
Current Market Price of the Common Stock on the Announcement Date
and (iii) in the case where there co-exists a Change of Control
specified in both Section 1.5(a) and Section 1.5(b), the greatest of
the fractions determined pursuant to clauses (i) and (ii). Such
adjustment shall become effective immediately after the Change of
Control Date and shall be
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made, in the case of clauses (ii) and (iii) above, successively for six
months thereafter in the event and at the time of any increase in the
Highest Price after the Change of Control Date; PROVIDED, HOWEVER, that
no such successive adjustment shall be made with respect to the Conversion
Rate of the shares of this Series in respect of any event occurring after
the Conversion Date.
(c) The Corporation shall be entitled to make such
additional adjustments in the Conversion Rate, in addition to those
required by subsections3.6(a) and 3.6(b), 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 3.6(c) do
not decrease the Conversion Rate.
(d) In any case in which this Section3.6 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 filing of the statement referred
to in Section 3.6(f)) issuing to the holder of any shares of this
Series converted after such record date (i) the shares of Common
Stock and other Capital Stock of the Corporation issuable upon such
conversion over and above (ii) the shares of Common Stock and other
Capital Stock of the Corporation issuable upon such conversion on
the basis of the Conversion Rate 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.
(e) All calculations under this Section3 shall be
made to the nearest cent, one-hundredth of a share or, in the case
of the Conversion Rate, one hundred-thousandth. Notwithstanding any
other provision of this Section 3, the Corporation shall not be
required to make any adjustment of the Conversion Rate unless such
adjustment would require an increase or decrease of at least
1.00000% of such Conversion Rate. Any lesser adjustment shall be
carried forward and shall be made at the time of and together with
the next subsequent adjustment which, together with any adjustment
or adjustments so carried forward, shall amount to an increase or
decrease of at
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least 1.00000% in such rate. Any adjustments under this Section
3 shall be made successively whenever an event requiring such an
adjustment occurs.
(f) Whenever an adjustment in the Conversion Rate is
required, the Corporation shall forthwith place on file with its
transfer agent or agents for this Series a statement signed by a
duly authorized officer of the Corporation, stating the adjusted
Conversion Rate determined as provided herein. Such statements
shall set forth in reasonable detail such facts as shall be
necessary to show the reason for and the manner of computing such
adjustment. Promptly after the adjustment of the Conversion Rate,
the Corporation shall mail a notice thereof to each holder of shares
of this Series.
(g) In the event that at any time as a result of an
adjustment made pursuant to this Section3, the holder of any share
of this Series thereafter surrendered for conversion shall become
entitled to receive any shares of Capital Stock of the Corporation
other than shares of Common Stock, the conversion rate of such other
shares so receivable upon conversion of any such share of this
Series shall be subject to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the provisions
with respect to Common Stock contained in subparagraphs (a) through
(f) and (h) of this Section3.6, and the provisions of Section 3.1
through 3.5 and 3.7 through 3.10 shall apply on like or similar
terms to any such other shares and the determination of the Board of
Directors as to any such adjustment shall be conclusive.
(h) No adjustment shall be made pursuant to this
Section 3.6 (i) if the effect thereof would be to reduce the
Conversion Price below the par value of the Common Stock or (ii)
subject to Section3.6(c) hereof, with respect to any share of
SeriesH Stock that is converted, prior to the time such adjustment
otherwise would be made.
3.7 In case after August31, 1995 (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
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lawful provision shall be made as part of the terms of such transaction
whereby the holder of each share of SeriesH Stock shall have the right
thereafter, during the period such share shall be convertible or exchangeable,
to convert such share into or have such share exchanged for 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
or exchanged 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 this Section 3 (based on
(i)the election, if any, made in writing to the Corporation by the
record holder (as of the date used for determining holders of Common
Stock entitled to make such election) of the largest number of shares of
SeriesH Stock 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 clauses (a) or
(b) 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 SeriesH Stock 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 SeriesH Stock into Common Stock immediately prior to such record date
(or effective date) (based on the election or nonelection made by the
record holder of the largest number of shares of SeriesH Stock, 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 holder in any transaction described in clause (a) or
(b) of the first sentence of this Section 3.7, the Corporation shall mail
a copy thereof to the holders of the SeriesH Stock as of the date used
for determining the holders of record of Common Stock entitled to such
mailing. The Corporation shall not enter into any of the transactions
referred to in clauses (a) or (b) of the preceding sentence
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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 3.7. The provisions of this Section 3.7 shall apply similarly to
successive consolidations, mergers, sales or conveyances. For purposes
of this Section 3.7 the term "Corporation" shall refer to the Corporation
(as defined in Section 1.14) as constituted immediately prior to the
merger, consolidation or other transaction referred to in this Section.
3.8 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
(or, if applicable, any other shares of Capital Stock of the Corporation)
as shall from time to time be sufficient to effect the conversion of all
outstanding shares of this Series into such Common Stock (or such other
shares of Capital Stock) at any time (assuming that, at the time of the
computation of such number of shares, all such Common Stock (or such
other shares of Capital 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 such
other shares of Capital Stock) that are held in the treasury of the
Corporation. All shares of Common Stock (or such other shares of Capital
Stock of the Corporation) which 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 Common
Stock at any time outstanding shall not include shares held in the
treasury of the Corporation.
3.9 If any shares of Common Stock or other shares of
Capital Stock of the Corporation which would be issuable upon conversion
of shares of this Series hereunder require registration with or approval
of any governmental authority before such shares may be issued upon
conversion, 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 or other shares of Capital Stock of the Corporation required
to be delivered upon conversion of shares of this Series prior to such
delivery upon the principal national securities exchange upon which the out-
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standing Common Stock or such other shares of Capital 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 other shares of Capital Stock of the Corporation 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 such other shares of Capital 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, (ii)any Pro
Rata Repurchase or (iii)any action triggering an adjustment to the
Conversion Rate pursuant to this Section 3, then, in each case, the
Corporation shall cause to be filed with the transfer agent or agents for
the SeriesH Stock, and shall cause to be mailed, first-class postage
prepaid, to the holders of record of the outstanding shares of SeriesH
Stock, 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 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. REDEMPTION OR EXCHANGE.
4.1 (a) The Corporation may, at its sole option, subject to
Section 2.2 hereof, from time to time on and after the fourth anniversary
of the Effective Time in the case of clause(i) of Section4.1(b), and on
and after the fifth anniversary of the Effective Time in the case of
clause(ii) or (iii) of Section4.1(b), redeem, out of funds legally
available therefor, or, as provided below, exchange shares of Common
Stock for, all or (in the case of Section 4.1(b)(i), any part) of the
outstanding shares of this Series. The redemption price for each share
of this Series called for redemption pursuant to clause (i)of
Section4.1(b) shall be the Liquidation Value together with an
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Page 23
amount equal to the accrued and unpaid dividends to the date fixed for
redemption (hereinafter collectively referred to as the "Redemption
Price"). The exchange price for each share of this Series called for
exchange pursuant to clause (ii)of Section 4.1(b) shall be a number of
shares of Common Stock equal to the Conversion Rate, together with, at
the option of the Corporation, either (x)cash or (y)a number of shares
of Common Stock, valued at the Closing Price on the Trading Day
immediately preceding the date fixed for exchange, equal, in either case,
to the aggregate amount of accrued and unpaid dividends on the SeriesH
Stock to the date fixed for exchange (provided that any dividends which
are in arrears must be paid in cash) (hereinafter collectively referred
to as the "Exchange Price").
(b) On the date fixed for redemption or exchange the
Corporation shall, at its option, effect either
(i) a redemption of the shares of this Series
to be redeemed by way of payment, out of funds legally available
therefor, of cash equal to the aggregate Redemption Price for the
shares of this Series then being redeemed;
(ii) an exchange of the shares of this Series
for the Exchange Price in shares of Common Stock (PROVIDED that the
Corporation (A) shall be entitled to deliver cash (1) in lieu of any
fractional share of Common Stock (determined in a manner consistent
with Section 3.3) and (2) equal to accrued and unpaid dividends to
the date fixed for exchange in lieu of shares of Common Stock and
(B) shall be required to deliver cash in respect of any dividends
that are in arrears); or
(iii) any combination thereof with respect to
each share of this Series called for redemption or exchange.
(c) Notwithstanding clauses (ii) and (iii) of
Section 4.1(b), the Corporation shall be entitled to effect an exchange
of shares of SeriesH Stock for Common Stock or other shares of Capital
Stock of the Corporation only to the extent that duly and validly issued,
fully paid and nonassessable shares of Common Stock (or such other shares
of Capital Stock) shall be available for issuance (including delivery of
previously issued shares of Common Stock held in the Corporation's
treasury on the date fixed for exchange). The Corporation shall comply
with Sections3.9 and 3.10 with respect to shares of Common Stock or
other shares of Capital Stock of the Corporation which would be issuable
upon exchange of shares of this Series. Certificates for shares of
Common Stock issued in exchange for
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Page 24
surrendered shares of this Series pursuant to this Section4.1 shall be made
available by the Corporation not later than the fifth Trading Day following
the date for exchange.
4.2 In the event that fewer than all the outstanding
shares of this Series are to be redeemed pursuant to Section 4.1(b)(i),
the number of shares to be redeemed from each holder of shares of this
Series shall be determined by the Corporation by lot or pro rata or by
any other method as may be determined by the Board of Directors in its
sole discretion to be equitable, and the certificate of the Corporation's
Secretary or an Assistant Secretary filed with the transfer agent or
transfer agents for this Series in respect of such determination by the
Board of Directors shall be conclusive.
4.3 In the event the Corporation shall redeem or exchange
shares of this Series pursuant to Section4.1, notice of such redemption
or exchange shall be given by first class mail, postage prepaid, mailed
not less than fifteen (15) nor more than sixty (60) days prior to the
date fixed for redemption or exchange, as the case may be, to each record
holder of the shares to be redeemed or exchanged, at such holder's
address as the same appears on the books of the Corporation. Each such
notice shall state: (i) whether the shares of this Series are to be
redeemed or exchanged; (ii) the time and date as of which the redemption
or exchange shall occur; (iii) the total number of shares of this Series
to be redeemed or exchanged and, if fewer than all the shares held by
such holder are to be redeemed, the number of such shares to be redeemed
from such holder; (iv)the Redemption Price or the Exchange Price, as the
case may be; (v) that shares of this Series called for redemption or
exchange may be converted at any time prior to the time and date fixed
for redemption or exchange (unless the Corporation shall, in the case of
a redemption, default in payment of the Redemption Price or, in the case
of an exchange, fail to exchange the shares of this Series for the
applicable number of shares of Common Stock and any cash portion of the
Exchange Price or shall exercise its right to rescind such redemption
pursuant to Section 4.5, in which case such right of conversion shall not
terminate at such time and date); (vi)the applicable Conversion Price
and Conversion Rate; (vii)the place or places where certificates for
such shares are to be surrendered for payment of the Redemption Price, in
the case of redemption, or for delivery of certificates representing the
shares of Common Stock and the payment of any cash portion of the
Exchange Price, in the case of exchange; and (viii) that dividends on the
shares of this Series to be redeemed or exchanged will cease to accrue on
such redemption or exchange date.
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4.4 If notice of redemption or exchange shall have been
given by the Corporation as provided in Section 4.3, dividends on the
shares of this Series so called for redemption or exchange shall cease to
accrue, such shares shall no longer be deemed to be outstanding, and all
rights of the holders thereof as stockholders of the Corporation with
respect to shares so called for redemption or exchange (except (i) in the
case of redemption, the right to receive from the Corporation the
Redemption Price without interest and in the case of exchange, the right
to receive from the Corporation the Exchange Price without interest and
(ii) the right to convert such shares in accordance with Section 3) shall
cease (including any right to receive dividends otherwise payable on any
Dividend Payment Date that would have occurred after the time and date of
redemption or exchange) either (i) in the case of a redemption or
exchange pursuant to Section 4.1, from and after the time and date fixed
in the notice of redemption or exchange as the time and date of
redemption or exchange (unless the Corporation shall (x) in the case of a
redemption, default in the payment of the Redemption Price, (y)in the
case of an exchange, fail to exchange the applicable number of shares of
Common Stock and any cash portion of the Exchange Price or (z) exercise
its right to rescind such redemption pursuant to Section 4.5, in which
case such rights shall not terminate at such time and date) or (ii) if
the Corporation shall so elect and state in the notice of redemption or
exchange, from and after the time and date (which date shall be the date
fixed for redemption or exchange or an earlier date not less than fifteen
(15) days after the date of mailing of the redemption or exchange notice)
on which the Corporation shall irrevocably deposit with a designated bank
or trust company doing business in the Borough of Manhattan, City and
State of New York, as paying agent, money sufficient to pay at the office
of such paying agent, on the redemption date, the Redemption Price, in
the case of redemption, or certificates representing the shares of Common
Stock to be so exchanged and any cash portion of the Exchange Price, in
the case of an exchange. Any money or certificates so deposited with any
such paying agent which shall not be required for such redemption or
exchange because of the exercise of any right of conversion or otherwise
shall be returned to the Corporation forthwith. Upon surrender (in
accordance with the notice of redemption or exchange) of the certificate
or certificates for any shares of this Series to be so redeemed or
exchanged (properly endorsed or assigned for transfer, if the Corporation
shall so require and the notice of redemption or exchange shall so
state), such shares shall be redeemed or exchanged by the Corporation at
the Redemption Price or the Exchange Price, as applicable, as set forth
in Section 4.1 (unless the Corporation shall have exercised its right to
rescind such redemption pursuant to Section 4.5). In case
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Page 26
fewer than all the shares represented by any such certificate are to be
redeemed, a new certificate shall be issued representing the unredeemed shares
(or fractions thereof as provided in Section 8.4), without cost to the holder
thereof, together with the amount of cash, if any, in lieu of fractional
shares other than those issuable in accordance with Section 8.4. Subject
to applicable escheat laws, any moneys so set aside by the Corporation in
the case of redemption and unclaimed at the end of one year from the
redemption date shall revert to the general funds of the Corporation,
after which reversion the holders of such shares so called for redemption
or exchange shall look only to the general funds of the Corporation for
the payment of the Redemption Price or the Exchange Price, as applicable,
without interest. Any interest accrued on funds so deposited shall be
paid to the Corporation from time to time.
4.5 In the event that a Redemption Rescission Event shall
occur following any day on which a notice of redemption shall have been
given pursuant to Section 4.3 but at or prior to the earlier of (a) the
time and date fixed for redemption as set forth in such notice of
redemption and (b) the time and date at which the Corporation shall have
irrevocably deposited funds or certificates with a designated bank or
trust company pursuant to Section 4.4, the Corporation may, at its sole
option, at any time prior to the earliest of (i) the close of business on
that day which is two (2) Trading Days following such Redemption
Rescission Event, (ii) the time and date fixed for redemption as set
forth in such notice and (iii) the time and date on which the Corporation
shall have irrevocably deposited such funds with a designated bank or
trust company, rescind the redemption to which such notice of redemption
shall have related by making a public announcement of such rescission
(the date on which such public announcement shall have been made being
hereinafter referred to as the "Rescission Date"). The Corporation shall
be deemed to have made such announcement if it shall issue a release to
the Dow Jones News Service, Reuters Information Services or any successor
news wire service. From and after the making of such announcement, the
Corporation shall have no obligation to redeem shares of this Series
called for redemption pursuant to such notice of redemption or to pay the
redemption price therefor and all rights of holders of shares of this
Series shall be restored as if such notice of redemption had not been
given. The Corporation shall give notice of any such rescission by one
of the means specified in Section 8.2 as promptly as practicable, but in
no event later than the close of business on that date which is five (5)
Trading Days following the Rescission Date to each record holder of
shares of this Series at the close of business on the Rescission Date and
to any other Person or
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entity that was a record holder of shares of this Series and that shall
have surrendered shares of this Series for conversion following the
giving of notice of the subsequently rescinded redemption. Each notice
of rescission shall (w)state that the redemption described in the notice
of redemption has been rescinded, (x) state that any Converting Holder shall
be entitled to rescind the conversion of shares of this Series surrendered
for conversion following the day on which notice of redemption was given but
prior to the close of business on the later of (1) the Trading Day next
succeeding the date on which public announcement of the rescission of such
redemption shall have been made and (2)the Trading Day on which the
Corporation's notice of rescission is deemed given pursuant to Section 8.2,
(y) be accompanied by a form prescribed by the Corporation to be used by any
Converting Holder rescinding the conversion of shares so surrendered for
conversion (and instructions for the completion and delivery of such form,
including instructions with respect to payments that may be required to
accompany such delivery shall be in accordance with Section3.5) and (z) state
that such form must be properly completed and received by the Corporation no
later than the close of business on a date that shall be ten (10) Trading
Days following the date of the mailing of such notice of rescission is
deemed given pursuant to Section 8.2.
4.6 The shares of this Series shall not be subject to the
provisions of Section 5 of Article IV of the Certificate of
Incorporation.
5. PRO RATA REPURCHASE.
5.1 Upon a Pro Rata Repurchase, each holder of shares of
this Series shall have the right to require that the Corporation
repurchase, out of funds legally available therefor, a Pro Rata Portion
(as defined below) of the shares of such holder, or any lesser number
requested by the holder, at a price per share equal to the highest price
per share of Common Stock paid in the Pro Rata Repurchase multiplied by
the Conversion Rate then in effect plus an amount equal to the accrued
but unpaid dividends on such shares to the date of repurchase.
5.2 At any time prior to or within thirty (30) days
following any Pro Rata Repurchase, the Corporation shall mail a notice to
each holder of shares of this Series stating:
(a) that a Pro Rata Repurchase will occur or has
occurred and that such holder will have (upon such Pro Rata
Repurchase) or has the right to require the Corporation to
repurchase such holder's shares in an amount not in excess of the
Pro Rata
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Page 28
Portion at a repurchase price in cash determined as set
forth above plus an amount equal to accrued and unpaid dividends, if
any, to the date of repurchase;
(b) the repurchase date for the SeriesH Stock
(which shall be no earlier than fifteen (15) days nor later than
sixty (60) days from the date such notice is mailed); and
(c) the instructions determined by the Corporation,
consistent with this Section, that a holder must follow in order to
have its shares repurchased.
5.3 Holders electing to have any shares repurchased will
be required to surrender such shares, with an appropriate form duly
completed, to the Corporation at the address specified in the notice at
least five (5) days prior to the repurchase date. Holders will be
entitled to withdraw their election if the Corporation receives, not
later than three (3) days prior to the repurchase date, a telegram,
telex, facsimile transmission or letter setting forth the name of the
holder, the certificate numbers of the shares delivered for purchase by
the holder and a statement that such holder is withdrawing his election
to have such shares repurchased. Holders will have such additional
withdrawal and other rights as may be required pursuant to applicable
law.
5.4 On the repurchase date, the Corporation shall (i)
pay the repurchase price plus an amount equal to accrued and unpaid
dividends as provided in Section 5.1, if any, to the holders entitled
thereto and (ii) issue to such holders any equity securities of the
Corporation (other than Common Stock) that would at the time be issuable
upon conversion of the shares of SeriesH Stock which are then being
repurchased pursuant hereto.
5.5 The Board of Directors will not approve any tender
or exchange offer by the Corporation or a third party for shares of
Common Stock or recommend that the holders of Common Stock accept any
offer or tender their shares into any offer unless a Pro Rata Portion of
the shares of this Series of all holders are entitled to be tendered into
such offer at a price not less than the price per share for shares of
Common Stock pursuant to such offer multiplied by the Conversion Rate
then in effect plus an amount equal to accrued but unpaid dividends on
such shares to the date of payment for such shares in such tender or
exchange offer.
5.6 For purposes hereof, "Pro Rata Portion" with respect
to the shares of this Series held by any holder
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Page 29
shall mean all the shares of this Series then owned by such holder times a
fraction, the numerator of which is the number of outstanding shares of Common
Stock (a)purchased in the applicable Pro Rata Repurchase or (b)for which a
tender or exchange offer referred to in Section 5.5 is made, as the case
may be, and the denominator of which is the number of outstanding shares
of Common Stock immediately prior to such Pro Rata Repurchase or the
commencement of such tender or exchange offer, as the case may be.
6 VOTING. The shares of this Series shall have no voting
rights except as required by law or as set forth below.
6.1 (a) 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 (i) authorize any Senior Stock
or reclassify (by merger, consolidation or otherwise) any Junior Stock or
Parity Stock as Senior Stock, (ii) merge into or consolidate with any
Person where the surviving or continuing corporation will have any
authorized Senior Stock other than capital stock corresponding to shares
of Senior Stock of the Corporation existing immediately before such
merger or consolidation) or (iii)amend, alter or repeal (by operation of
law or otherwise) 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 of the shares of this Series.
(b) 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 of
Junior Stock or Parity Stock, (iii)the authorization, designation or
issuance of additional shares of SeriesH Stock or (iv)subject to
Section 6.1(a), the authorization or issuance of any other shares of
Preferred Stock.
6.2 (a) If and whenever at any time or times dividends
payable on shares of this Series shall have been in arrears and unpaid in
an aggregate amount equal to or exceeding the amount of dividends payable
thereon for six quarterly dividend periods, then the number of directors
constituting the Board of Directors shall be increased by two and the
holders of shares of this Series, together with the holders of any shares
of any Parity Stock as to which in
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each case dividends are in arrears and unpaid in an aggregate amount equal to
or exceeding the amount of dividends payable thereon for six quarterly dividend
periods, shall have the exclusive right, voting separately as a class with such
other series, to elect two directors of the Corporation.
(b) Such voting right may be exercised initially
either by written consent or at a special meeting of the holders of the
Preferred Stock having such voting right, called as hereinafter provided,
or at any annual meeting of stockholders held for the purpose of electing
directors, and thereafter at each such annual meeting until such time as
all dividends in arrears on the shares of this Series shall have been
paid in full and all dividends payable on the shares of this Series on
four subsequent consecutive Dividend Payment Dates shall have been paid
in full on such dates or funds shall have been set aside for the payment
thereof, at which time such voting right and the term of the directors
elected pursuant to Section 6.2(a) shall terminate.
(c) At any time when such voting right shall have
vested in holders of shares of such series of Preferred Stock described
in Section 6.2(a), and if such right shall not already have been
exercised by written consent, a proper officer of the Corporation may
call, and, upon the written request, addressed to the Secretary of the
Corporation, of the record holders of shares representing ten percent
(10%) of the voting power of the shares then outstanding of such
Preferred Stock having such voting right, shall call, a special meeting
of the holders of such Preferred Stock having such voting right. Such
meeting shall be held at the earliest practicable date upon the notice
required for annual meetings of stockholders at the place for holding
annual meetings of stockholders of the Corporation, or, if none, at a
place designated by the Board of Directors. Notwithstanding the
provisions of this Section6.2(c), no such special meeting shall be
called during a period within 60 days immediately preceding the date
fixed for the next annual meeting of stockholders.
(d) At any meeting held for the purpose of electing
directors at which the holders of such Preferred Stock shall have the
right to elect directors as provided herein, the presence in Person or by
proxy of the holders of shares representing more than fifty percent (50%)
in voting power of the then outstanding shares of such Preferred Stock
having such right shall be required and shall be sufficient to constitute
a quorum of such class for the election of directors by such class.
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(e) Any director elected by holders of Preferred
Stock pursuant to the voting right created under this Section6.2 shall
hold office until the next annual meeting of stockholders (unless such
term has previously terminated pursuant to Section6.2(b)) and any
vacancy in respect of any such director shall be filled only by vote of
the remaining director so elected, or if there be no such remaining
director, by the holders of such Preferred Stock, entitled to elect such
director or directors by written consent or at a special meeting called
in accordance with the procedures set forth in Section6.2(c), or, if no
special meeting is called or written consent executed, at the next annual
meeting of stockholders. Upon any termination of such voting right,
subject to applicable law, the term of office of all directors elected by
holders of such Preferred Stock voting separately as a class pursuant to
this Section6.2 shall terminate.
(f) In exercising the voting rights set forth in
this Section 6.2, each share of this Series shall have a number of votes
equal to its Liquidation Value.
7. LIQUIDATION RIGHTS.
7.1 Upon the dissolution, liquidation or winding up of
the Corporation, whether voluntary or involuntary, the holders of the
shares of this Series shall be entitled to receive out of the assets of
the Corporation available for distribution to stockholders, in preference
to the holders of, and before any payment or distribution shall be made
on, Junior Stock, the amount of $100 per share (the "Liquidation Value"),
plus an amount equal to all accrued and unpaid dividends to the date of
final distribution.
7.2 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
7.
7.3 After the payment to the holders of the shares of
this Series of full preferential amounts provided for in this Section 7,
the holders of this Series as such shall have no right or claim to any of
the remaining assets of the Corporation.
7.4 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
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of the Corporation, whether voluntary or involuntary, shall be insufficient to
pay in full all amounts to which such holders are entitled pursuant to Section
7.1, 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.
8. OTHER PROVISIONS.
8.1 All notices from the Corporation to the holders shall
be given by one of the methods specified in Section 8.2. 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.
8.2 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 SeriesH Stock 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): Time Warner Inc., 75
Rockefeller Plaza, New York, New York 10019, Attention: General Counsel.
8.3 Any shares of this Series which have been converted,
redeemed, exchanged or otherwise acquired by the Corporation shall, after
such conversion, redemption, exchange 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
<PAGE>
Page 33
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 SeriesH
Stock shall be eliminated from the Certificate of Incorporation and the shares
of Preferred Stock designated hereby as SeriesH 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.
8.4 The shares of this Series shall be issuable in whole
shares or, if authorized by the Board of Directors (or any authorized
committee thereof), in any fraction of a whole share so authorized or any
integral multiple of such fraction.
8.5 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 record holder shall be deemed the holder
of such shares for all purposes.
8.6 All notice periods referred to in the Certificate
shall commence on the date of the mailing of the applicable notice.
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Page 34
8.7 Certificates for shares of this Series shall bear
such legends as the Corporation shall from time to time deem appropriate.
IN WITNESS WHEREOF, Time Warner Inc. has caused this
certificate to be signed and attested this 5th
day of September, 1995.
TIME WARNER INC.
By:/s/ Spencer B. Hays
-------------------------------
Name: Spencer B. Hays
Title: Vice President
Attest:
/s/ Susan A. Waxenberg
------------------------
Name: Susan A. Waxenberg
Title: Assistant Secretary
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of September5, 1995,
between TIME WARNER INC., a Delaware corporation (the "Company"), Itochu
Corporation, a corporation organized under the laws of Japan ("Itochu"),
and Itochu Entertainment Inc., a Delaware corporation ("Itochu
Entertainment"). Itochu and Itochu Entertainment are referred to
collectively as the "Stockholders" and individually as a "Stockholder."
This Agreement is made pursuant to Section5.2(e) of the
Restructuring Agreement, dated as of August 31, (as such agreement may be
amended from time to time, the "Restructuring Agreement"), among the
Stockholders and the Company. In order to induce the Stockholders to
consummate the transactions contemplated by the Restructuring Agreement,
and in further consideration therefor, the Company has agreed to execute
and deliver this Agreement and provide the registration rights set forth
in this Agreement.
Accordingly, it is hereby agreed as follows:
1. DEFINITIONS. Capitalized terms used but not otherwise
defined herein shall have the meanings assigned to such terms in the
Restructuring Agreement. For purposes of this Agreement, the following
terms shall have the following meanings:
"BLACKOUT PERIOD" means any Section 6(a) Period and any Section
6(b) Period.
"COUNSEL TO THE HOLDERS" means the single law firm from time to
time representing the Holders, as appointed by the Holders of a majority
in number of the Registrable Securities.
"DESIGNATED SHELF REGISTRATION" has the meaning specified in
Section 4(b).
"EFFECTIVE PERIOD" means a period commencing on the date of
this Agreement and ending on the earliest of (i)the first date as of
which all Registrable Securities cease to be Registrable Securities and
no Holder holds any shares of TWX Preferred Stock and (ii) the eighth
anniversary of the date of the Closing Date.
"HOLDER" means (i) either Stockholder or any Affiliate of
either Stockholder that is a holder of Registrable Securities or TWX
Preferred Stock and (ii) each Person that is a registered holder of
Registrable Securities
<PAGE>
Page 2
or TWX Preferred Stock that (A) acquired such Registrable Securities
or TWX Preferred Stock in accordance with Section 8.1 of the
Restructuring Agreement and (B) received or will receive certificates
for Registrable Securities bearing a legend pursuant to Section
8.3 of the Restructuring Agreement; PROVIDED, HOWEVER, that, if
such Person is not a Stockholder, such Person has agreed in writing to
become a Holder hereunder and to be bound by the terms and conditions of
this Agreement.
"NASD" means the National Association of Securities Dealers,
Inc.
"PROSPECTUS" means the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with
respect to the terms of the offering of any portion of the Registrable
Securities covered by any Registration Statement and by all other
amendments and supplements to the prospectus, including post-effective
amendments and all material incorporated by reference in such prospectus.
"REGISTRABLE SECURITIES" means, collectively, (i)the shares of
TWX Common Stock issued pursuant to the conversion or exchange provisions
of the TWX Preferred Stock issued pursuant to Section 1.1 of the
Restructuring Agreement (the securities referred to in (i) are the
"Shares") and (ii) any securities paid, issued or distributed in respect
of any Shares by way of stock dividend or distribution or stock split or
in connection with a combination of shares, recapitalization,
reorganization, merger, consolidation or otherwise. Securities will
cease to be Registrable Securities in accordance with Section 2 hereof.
"REGISTRATION EXPENSES" means any and all expenses incident to
performance of or compliance with this Agreement, including, without
limitation, (i) all SEC, NASD and securities exchange registration and
filing fees, (ii)all fees and expenses of complying with state
securities or blue sky laws (including fees and disbursements of counsel
for any underwriters in connection with blue sky qualifications of the
Registrable Securities), (iii) all printing, messenger and delivery
expenses, (iv)all fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities exchange pursuant
to Section 7(h), (v) the fees and disbursements of counsel for the
Company and of its independent public accountants, (vi) the reasonable
fees and expenses of any special experts retained in connection with the
requested registration and (vii) the reasonable fees and expenses of
Counsel to the Holders, but excluding (x)underwriting discounts and
commissions and transfer
<PAGE>
Page 3
taxes, if any, and (y) any fees or disbursements of counsel to the
Holders or any Holder (other than Counsel to the Holders).
"REGISTRATION STATEMENT" means any registration statement
(including a Shelf Registration) of the Company referred to in Section 3
or 4, including any Prospectus, amendments and supplements to any such
registration statement, including post-effective amendments, and all
exhibits and all material incorporated by reference in any such
registration statement.
"RELATED SECURITIES" means any securities of the Company
similar or identical to any of the Registrable Securities, including,
without limitation, TWX Common Stock and all options, warrants, rights
and other securities convertible into, or exchangeable or exercisable
for, TWX Common Stock.
"SALE PERIOD" has the meaning specified in Section4(b).
"SECTION 6(A) PERIOD" has the meaning specified in Section
6(a).
"SECTION 6(B) PERIOD" has the meaning specified in Section
6(b).
"SHELF REGISTRATION" means a "shelf" registration statement on
an appropriate form pursuant to Rule 415 under the Securities Act (or any
successor rule that may be adopted by the SEC).
"UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING" shall mean
an underwritten offering in which securities of the Company are sold to
an underwriter for reoffering to the public.
2. SECURITIES SUBJECT TO THIS AGREEMENT. The securities
entitled to the benefits of this Agreement are the Registrable
Securities. For the purposes of this Agreement, Registrable Securities
will cease to be Registrable Securities when and to the extent that (i)a
Registration Statement covering Registrable Securities shall have been
declared effective under the Securities Act and Registrable Securities
have been disposed of pursuant to such effective Registration Statement,
(ii)Registrable Securities shall have been distributed to the public
pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act, (iii)Registrable Securities shall have been otherwise
transferred to a party that is not an Affiliate of the transferor
Stockholder and new certificates for such Registrable Securities not
bearing
<PAGE>
Page 4
the legend specified in Section 8.2 of the Restructuring Agreement
shall have been delivered by the Company, (iv)the Effective Period
shall have ended or (v)Registrable Securities shall have ceased to
be outstanding.
3. PIGGY-BACK REGISTRATION RIGHTS.
(a)Whenever during the Effective Period the Company
shall propose to file a registration statement under the Securities Act
relating to the public offering of TWX Common Stock for cash pursuant to
a firm commitment underwritten offering (other than pursuant to a
registration statement on Form S-4 or Form S-8 or any successor forms, or
filed in connection with an exchange offer or an offering of securities
solely to existing stockholders or employees of the Company), for sale
for its own account, the Company shall (i)give written notice at least
ten Business Days prior to the filing thereof to each Holder of
Registrable Securities then outstanding, specifying the approximate date
on which the Company proposes to file such registration statement and
advising such Holder of his right to have any or all of the Registrable
Securities then held by such Holder included among the securities to be
covered thereby and (ii)at the written request of any such Holder given
to the Company at least two Business Days prior to the proposed filing
date, include among the securities covered by such registration statement
the number of Registrable Securities which such Holder shall have
requested be so included (subject, however, to reduction in accordance
with paragraph(b) of this Section). The Company shall use its
commercially reasonable efforts to cause the managing underwriter of the
proposed underwritten offering to permit the Holders of Registrable
Securities requested to be included in the Registration Statement for
such offering to include such securities in such offering on the same
terms and conditions as any similar securities of the Company included
therein.
(b) Each Holder of Registrable Securities desiring to
participate in an offering pursuant to Section 3(a) may include shares of
TWX Common Stock in any TWX Registration Statement relating to such
offering to the extent that the inclusion of such shares of TWX Common
Stock shall not reduce the number of shares of TWX Common Stock to be
offered and sold by the Company pursuant thereto. If the lead managing
underwriter selected by the Company for an underwritten offering pursuant
to Section3(a) determines that marketing factors require a limitation on
the number of shares of TWX Common Stock to be offered and sold by the
stockholders of the Company in such offering, there shall be included in
the offering only that number of shares of TWX Common Stock, if any, that
such lead managing underwriter reasonably and in good faith believes will
not jeopardize
<PAGE>
Page 5
the success of the offering of all the shares of TWX Common Stock
that the Company desires to sell for its own account. In such
event and provided the lead managing underwriter has so notified the
Company in writing, the number of shares of TWX Common Stock to be
offered and sold by stockholders of the Company, including Holders of
Registrable Securities, desiring to participate in such offering shall be
allocated among such stockholders of the Company on a pro rata basis
based on their holdings of TWX Common Stock (subject to any written
agreements requiring a different priority).
(c) Nothing in this Section 3 shall create any liability
on the part of the Company to the Holders of Registrable Securities if
the Company for any reason should decide not to file a registration
statement proposed to be filed under Section 3(a) 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.
(d) A request by Holders to include Registrable
Securities in a proposed underwritten offering pursuant to Section 3(a)
shall not be deemed to be a request for a demand registration pursuant to
Section 4.
4. DEMAND REGISTRATION RIGHT.
(a)Upon the written request of Holders of at least 25%
of the Registrable Securities that the Company effect the registration
with the SEC under and in accordance with the provisions of the
Securities Act of all or part of such Holder's or Holders' Registrable
Securities and specifying the aggregate number of shares of Registrable
Securities requested to be registered and the name or names of the
proposed managing underwriter or underwriters (or in the case of a
Designated Shelf Registration, the intended method of distribution and
the name or names of any managing underwriters or agents), the Company
will use all commercially reasonable efforts to file a Registration
Statement covering such Holder's or Holders' Registrable Securities
requested to be registered within 20 Business Days after receipt of such
request for disposition pursuant to an underwritten offering (or, in the
case of a Designated Shelf Registration, the intended method of
distribution) (the terms of such underwritten offering or other
distribution to be determined by the Holders of a majority of the
Registrable Securities so requested to be registered); PROVIDED, HOWEVER,
that the Company shall not be required to take any action pursuant to
this Section 4:
<PAGE>
Page 6
(1) if prior to the date of such request the Company
shall have effected three (3) registrations pursuant to this Section
4;
(2) if the Company has effected a registration (other
than a Designated Shelf Registration) pursuant to this Section 4
within the 120-day period immediately preceding such request which
permitted Holders of Registrable Securities to register Registrable
Securities;
(3) if the Company shall at the time have effective a
Shelf Registration pursuant to which the Holder or Holders that
requested registration could effect the disposition of such Holder's
or Holders' Registrable Securities in the manner requested;
(4) if the Registrable Securities which the Company
shall have been requested to register shall have a then current
market value of less than $50,000,000, unless such registration
request is for all remaining Registrable Securities; or
(5) during the pendency of any Blackout Period;
PROVIDED FURTHER, HOWEVER, that the Company shall be permitted to satisfy
its obligations under this Section 4(a) by amending (to the extent
permitted by applicable law) any registration statement (including any
Shelf Registration) previously filed by the Company under the Securities
Act so that such registration statement (as amended) shall permit the
disposition (in accordance with the intended methods of disposition
specified as aforesaid) of all of the Registrable Securities for which a
demand for registration has been made under this Section 4(a). If the
Company shall so amend a previously filed registration statement, it
shall be deemed to have effected a registration for purposes of this
Section 4.
(b) The holders of a majority in number of the
Registrable Securities shall be entitled to specify in a request that one
registration that is effected pursuant to this Section 4 shall be for a
Shelf Registration (a "Designated Shelf Registration"). Subject to any
Blackout Period, a Designated Shelf Registration shall be available for
sales of Registrable Securities during the 15 Business Day period
beginning on the third Business Day after the Company's public
announcement of its quarterly or year-end financial results (each a "Sale
Period"); PROVIDED, HOWEVER, that dispositions pursuant to this Section
4(b), together with all other sales made in accordance with the volume
and manner of sale limitations of rule 144(e) and (f) under the
<PAGE>
Page
Securities Act within the same three month period, shall not exceed 1% of
the outstanding shares of TWX Common Stock as reported on the Company's
most recent Form 10-K or 10-Q, as applicable. Notwithstanding the
foregoing, if a Blackout Period or a suspension by the Company of the use
by the Holders of the Designated Shelf Registration or any related
Prospectus pursuant to Section 7(e), eliminates more than seven Business
Days in any Sale Period, then (i)the length of the next Sale Period
shall be thirty Business Days and (ii) the volume restriction specified
in the preceding sentence shall be 2% of the outstanding shares of TWX
Common Stock for the three month period which includes such extended Sale
Period. Notwithstanding the provisions of Section 7(b), the Company
shall be required to maintain the effectiveness of the Designated Shelf
Registration for at least 36 calendar months (which period shall be
extended if necessary to cover any and all extended Sale Periods provided
for under the immediately preceding sentence), or, if earlier, until all
Registrable Securities covered thereby have ceased to be Registrable
Securities.
(c) A registration requested pursuant to this Section 4
shall not be deemed to be effected for purposes of this Section 4 if it
has not been declared effective by the SEC or become effective in
accordance with the Securities Act and the rules and regulations
thereunder.
(d) Holders of a majority in number of the Registrable
Securities to be included in a Registration Statement pursuant to this
Section 4 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 Securities 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 (x) the
Company's failure to comply in all material respects with its obligations
hereunder or (y) the occurrence of a Blackout Period, such reimbursement
shall not be required and the remaining provisions of this Section 4(d)
shall not apply. If such reimbursement is made within 10 Business Days
following a request therefor, such registration shall not be deemed to
have been effected for purposes of this Section 4. If such reimbursement
is not so received within such time (i) such registration shall be deemed
to have been effected for purposes of this Section 4 and (ii) the Company
shall have no further obligations to such Holders with respect to
piggyback registrations pursuant to Section 3 or demand registrations
pursuant to this Section 4 until such reimbursement is made.
<PAGE>
Page 8
(e) The Company will not include any securities which are
not Registrable Securities in any Registration Statement filed pursuant
to a demand made under this Section 4 without the prior written consent
of the Holders of a majority in number of the Registrable Securities
covered by such Registration Statement.
5. SELECTION OF UNDERWRITERS. In connection with any
underwritten offering pursuant to a Registration Statement filed pursuant
to a demand made pursuant to Section 4, Holders of a majority in number
of the Registrable Securities to be included in the Registration
Statement shall have the right to select a managing underwriter or
underwriters to administer the offering, so long as such managing
underwriter or underwriters shall be reasonably satisfactory to the
Company; PROVIDED, HOWEVER, that the Company shall have the right to
select one co-managing underwriter, so long as such co-managing
underwriter shall be reasonably satisfactory to Holders of a majority in
number of the Registrable Securities to be included in the Registration
Statement. The managing underwriter or underwriters selected by the
Holders of a majority in number of the Registrable Securities to be
registered shall be deemed satisfactory to the Company unless the Company
sends a written notice of objection to such Holders within 10 days of
receipt of notice from such Holders of the appointment of a managing
underwriter or underwriters and the co-managing underwriter selected by
the Company shall be deemed to be satisfactory to the Holders of a
majority in number of the Registrable Securities to be included in the
Registration Statement unless such Holders send a written notice of
objection to the Company within 10 days of receipt of notice from the
Company of the appointment of a co-managing underwriter.
6. BLACKOUT PERIODS FOR HOLDERS.
(a)If the Company determines in good faith that the
registration and distribution of Registrable Securities (or the use of
the Registration Statement or related Prospectus) would interfere with
any pending financing, acquisition, corporate reorganization or any other
corporate development involving the Company or any of its subsidiaries or
would require premature disclosure thereof and promptly gives the Holders
of Registrable Securities written notice of such determination, the
Company shall be entitled to (i) postpone the filing of the Registration
Statement otherwise required to be prepared and filed by the Company
pursuant to Section3 or 4 or (ii) elect that the Registration Statement
not be used, in either case, for a reasonable period of time, but not to
exceed 90 days (a "Section 6(a) Period"). Any such written notice shall
be signed by an officer of the Company and contain a
<PAGE>
Page 9
general statement of the reasons for such postponement or restriction on use
and an estimate of the anticipated delay. The Company shall promptly notify
each Holder of the expiration or earlier termination of a Section 6(a) Period.
(b) 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 a continuous "at the
market offering" pursuant to Rule 415(a)(4) under the Securities Act, an
employee stock option, stock purchase, dividend reinvestment plan 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 any Related Securities and (ii)with reasonable prior notice, (A)the
Company (in the case of a non-underwritten offering pursuant to such
registration statement) advises the Holders in writing that a sale or
distribution of Registrable Securities would adversely affect such
offering or (B)the managing underwriter or underwriters (in the case of
an underwritten offering) advise the Company in writing (in which case
the Company shall notify the Holders), that a sale or distribution of
Registrable Securities would adversely affect such offering, then each
Holder of Registrable Securities shall, to the extent not inconsistent
with applicable law, refrain from effecting any sale or distribution of
Registrable Securities, including sales pursuant to Rule 144 or Rule 144A
under the Securities Act, during the 10-day period prior to, and during
(x) the 60-day period, in the case of sales or distributions pursuant to
a Designated Shelf Registration or pursuant to Rule 144 or Rule 144A
under the Securities Act, and (y) the 90-day period, in all other cases,
in each case beginning on the effective date of such registration
statement (a "Section 6(b) Period").
(c) The Effective Period and, in the case where the use
of an effective Registration Statement (other than a Designated Shelf
Registration) is prohibited under Section 6(a), the period for which a
Registration Statement shall be kept effective pursuant to Section 7(b),
as the case may be, shall be extended by a number of days equal to the
number of days of any Blackout Period occurring during such period
(except that, in the case of the occurrence of a Blackout Period during
the effectiveness of a Designated Shelf Registration, the Effective
Period will only be extended to the extent, if any, necessary to comply
with Section 4(b)). Except as provided below, the beginning of any
Blackout Period shall be at least 120 days after the end of the prior
Blackout Period and the aggregate number of days included in all Blackout
Periods during any consecutive 12 month period during the Effective
Period shall not exceed 180 days; PROVIDED, HOWEVER, that once during any
<PAGE>
Page 10
consecutive 12 month period during the Effective Period a Section 6(b)
Period may begin on or within five days of the last day of a Section 6(a)
Period.
(d) Without limiting the rights of the Company under
Section 6(a), unless the Company shall exercise its right to declare a
Section 6(b) Period prior to the 10th day preceding the effectiveness of
a Registration effected pursuant to Section 4 (other than a Designated
Shelf Registration), it shall not, during the period beginning on such
10th day and continuing during the period of the offering covered by such
Registration Statement (other than a Designated Shelf Registration) file
or effect a registration statement of the type for which it would be
entitled to declare a Section 6(b) Period.
7. REGISTRATION PROCEDURES. If and whenever the Company is
required to use commercially reasonable efforts to effect or cause the
registration of any Registrable Securities under the Securities Act as
provided in this Agreement, the Company will, as expeditiously as
possible:
(a) prepare and file with the SEC a Registration
Statement with respect to such Registrable Securities on any form for
which the Company then qualifies or which counsel for the Company shall
deem appropriate, and which form shall be available for the sale of the
Registrable Securities in accordance with the intended methods of
distribution thereof, and use its best efforts to cause such Registration
Statement to become and remain effective;
(b) prepare and file with the SEC amendments and post-
effective amendments to such Registration Statement and such amendments
and supplements to the Prospectus used in connection therewith as may be
necessary to maintain the effectiveness of such registration or as may be
required by the rules, regulations or instructions applicable to the
registration form utilized by the Company or by the Securities Act or
rules and regulations thereunder for shelf registration or otherwise
necessary to keep such Registration Statement effective for up to 90 days
(except to the extent otherwise provided in Section 4(b) with respect to
a Designated Shelf Registration) and cause the Prospectus as so
supplemented to be filed pursuant to Rule 424 under the Securities Act,
and to otherwise comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Securities covered by such
Registration Statement until the earlier of (x) such 90th day (except to
the extent otherwise provided in Section 4(b) with respect to a
Designated Shelf Registration) and (y) such time as all Registrable
Securities covered by such Registration Statement have ceased to be
Registrable
<PAGE>
Page 11
Securities (it being understood that the Company at its option may
determine to maintain such effectiveness for a longer period, whether
pursuant to a Shelf Registration or otherwise); PROVIDED that a
reasonable time 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 and the rules and regulations adopted
by the SEC thereunder), the Company will furnish to the Holders, the
managing underwriter and their respective counsel for review and comment,
copies of all documents proposed to be filed and will not file any such
documents (other than as aforesaid) to which any of them reasonably
object prior to the filing thereof;
(c) furnish to each Holder of such Registrable Securities
such number of copies of such Registration Statement and of each
amendment and post-effective amendment thereto (in each case including
all exhibits), any Prospectus or Prospectus supplement and such other
documents as such Holder may reasonably request in order to facilitate
the disposition of the Registrable Securities by such Holder (the Company
hereby consenting to the use (subject to the limitations set forth in the
last paragraph of this Section 7) of the Prospectus or any amendment or
supplement thereto in connection with such disposition);
(d) use its best efforts to register or qualify such
Registrable Securities covered by such Registration Statement under such
other securities or blue sky laws of such jurisdictions as each Holder
shall reasonably request, and do any and all other acts and things which
may be reasonably necessary or advisable to enable such Holder to
consummate the disposition in such jurisdictions of the Registrable
Securities owned by such Holder, except that the Company shall not for
any such purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction where, but for the requirements
of this Section 7(d), it would not be obligated to be so qualified, to
subject itself to taxation in any such jurisdiction, or to consent to
general service of process in any such jurisdiction;
(e) notify each Holder of any such Registrable Securities
covered by such Registration Statement, at any time when a Prospectus
relating thereto is required to be delivered under the Securities Act
within the appropriate period mentioned in Section 7(b), of the Company's
becoming aware that the Prospectus included in such Registration
Statement, as then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
<PAGE>
Page 12
circumstances then existing, and at the request of any such Holder,
prepare and furnish to such Holder a reasonable number of copies of an
amendment or supplement to such Registration Statement or related
Prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such Prospectus shall not
include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then
existing;
(f) notify each Holder of Registrable Securities covered
by such Registration Statement at any time,
(1) when the Prospectus or any Prospectus supplement
or post-effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the
same has become effective;
(2) of any request by the SEC for amendments or
supplements to the Registration Statement or the Prospectus or for
additional information;
(3) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or any
order preventing the use of a related Prospectus, or the initiation
or any overt threats of any proceedings for such purposes;
(4) of the receipt by the Company of any written
notification of the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction or the
initiation or any overt threats of any proceeding for that purpose;
and
(5) if at any time the representations and warranties
of the Company contemplated by paragraph(i)(1) below cease to be
true and correct;
(g) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its
security holders an earnings statement which shall satisfy the provisions
of Section 11(a) of the Securities Act, provided that the Company shall
be deemed to have complied with this paragraph if it has complied with
Rule 158 under the Securities Act;
(h) use commercially reasonable efforts to cause all such
Registrable Securities to be listed on any securities exchange on which
the TWX Common Stock is then listed, if such Registrable Securities are
not already so
<PAGE>
Page 13
listed and if such listing is then permitted under the rules of such
exchange, and to provide a transfer agent and registrar for such
Registrable Securities covered by such Registration Statement no
later than the effective date of such Registration Statement;
(i) enter into agreements (including underwriting
agreements) and take all other appropriate and all commercially
reasonable actions in order to expedite or facilitate the disposition of
such Registrable Securities and in such connection, whether or not an
underwriting agreement is entered into and whether or not the
registration is an underwritten registration:
(1) make such representations and warranties to the
Holders of such Registrable Securities and the underwriters, if any,
in form, scope and substance as are customarily made by issuers to
underwriters in firm commitment underwritten offerings;
(2) 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, if any, and the Holders of a majority in number of the
Registrable Securities being sold) addressed to such Holders and the
underwriters covering the matters customarily covered in opinions
requested in firm commitment underwritten offerings and such other
matters as may be reasonably requested by the Holders of a majority
in number of the Registrable Securities being sold and the managing
underwriter, if any;
(3) obtain "cold comfort" letters and updates thereof
from the Company's independent certified public accountants
addressed to the selling Holders of Registrable Securities and the
underwriters, if any, such letters to be in customary form and
covering matters of the type customarily covered in "cold comfort"
letters by independent accountants in connection with firm
commitment underwritten offerings on such date or dates as may be
reasonably requested by the Holder of a majority in number of the
Registrable Securities being sold and the managing underwriter, if
any;
(4) if requested, provide indemnification in
accordance with the provisions and procedures of Section 10 hereof
to all parties to be indemnified pursuant to said Section; and
(5) deliver such documents and certificates as may be
reasonably requested by the
<PAGE>
Page 14
Holders of a majority in number of the Registrable Securities
being sold and the managing underwriters, if any, to evidence
compliance with clause (f) above and with any customary
conditions contained in the underwriting agreement or
other agreement entered into by the Company (the matters set forth
in this Section 7(i) to be effected at each closing under any
underwriting or similar agreement as and to the extent required
thereunder);
(j) cooperate with the Holders of Registrable Securities
covered by such Registration Statement and the managing underwriter or
underwriters or agents, if any, to facilitate, to the extent commercially
reasonable under the circumstances, the timely preparation and delivery
of certificates (not bearing any restrictive legends) representing the
securities to be sold under such Registration Statement, and enable such
securities to be in such denominations and registered in such names as
the managing underwriter or underwriters or agents, if any, or such
Holders may request;
(k) if reasonably requested by the managing underwriter
or underwriters or a Holder of Registrable Securities being sold in
connection with an underwritten offering, incorporate in a Prospectus
supplement or post-effective amendment such information as the managing
underwriters and the Holders of a majority in number of the Registrable
Securities being sold agree should be included therein relating to the
plan of distribution with respect to such Registrable Securities,
including, without limitation, information with respect to the principal
amount of Registrable Securities being sold to such underwriters, the
purchase price being paid therefor by such underwriters and with respect
to any other terms of the underwritten offering of the Registrable
Securities to be sold in such offering and make all required filings of
such Prospectus supplement or post-effective amendment promptly upon
being notified of the matters to be incorporated in such Prospectus
supplement or post-effective amendment;
(l) make available for inspection by any Holder of
Registrable Securities included in such Registration Statement, any
underwriter participating in any disposition pursuant to such
Registration Statement and any attorney, accountant or other agent
retained by any such Holder or underwriter (collectively, the "Inspectors"),
reasonable access to appropriate officers of the Company and the Company's
subsidiaries to ask questions and to obtain information reasonably
requested by any such Inspector and all financial and other records and
other information, pertinent corporate documents and properties of any of
the Company and its subsidiaries and affiliates (collectively,
<PAGE>
Page 15
the "Records"), as shall be reasonably necessary to enable
them to exercise their due diligence responsibility; 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 and either (i)the disclosure of such Records is necessary to
avoid or correct a misstatement or omission of a material fact 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 any decision regarding the
disclosure of information pursuant to subclause (i) shall be made only
after consultation with counsel for the applicable Inspectors. Each
Holder of Registrable Securities agrees that it will, promptly after
learning that disclosure of such Records is sought in a court having
jurisdiction, give notice to the Company and allow the Company, at the
Company's expense, to undertake appropriate action to prevent disclosure
of such Records; and
(m) in the event of the issuance of any stop order
suspending the effectiveness of the Registration Statement or of any
order suspending or preventing the use of any related Prospectus or
suspending the qualification of any Registrable Securities included in
the Registration Statement for sale in any jurisdiction, the Company will
use all commercially reasonable efforts promptly to obtain its
withdrawal.
The Company may require each Holder of Registrable Securities
as to which any registration is being effected to furnish the Company
with such information regarding such Holder and pertinent to the
disclosure requirements relating to the registration and the distribution
of such securities as the Company may from time to time reasonably
request in writing.
Each Holder of Registrable Securities agrees that, upon receipt
of any notice from the Company of the happening of any event of the kind
described in Section 7(e), such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the Prospectus or
Registration Statement covering such Registrable Securities until such
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 7(e), and, if so directed by the Company, such
Holder will deliver to the Company (at the Company's expense) all copies,
other than permanent file copies then in such Holder's possession, of the
Prospectus covering such Registrable Securities current at the time of
receipt of such notice. In the event the Company shall give any such
notice, the Effective Period
<PAGE>
Page 16
and, in the case where the use of an effective Registration Statement (other
than a Designated Shelf Registration) or any related Prospectus is prohibited
under Section 7(e), the period mentioned in Section 7(b), as the case may be,
shall be extended by the number of days during the period from the date of
the giving of such notice pursuant to Section 7(e) and through the date when
each seller of Registrable Securities covered by such Registration
Statement shall have received the copies of the supplemented or amended
Prospectus contemplated by Section 7(e) (except that, in the case of such
a prohibition during the effectiveness of a Designated Shelf
Registration, the Effective Period will only be extended to the extent
necessary to comply with Section 4(b)).
8. REGISTRATION EXPENSES. The Company will pay all
Registration Expenses in connection with all registrations of Registrable
Securities pursuant to Sections 3 and 4 upon the written request of any
of the Holders, and each Holder shall pay (x) any fees or disbursements
of counsel to such Holder (other than Counsel to the Holders) and (y) all
underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of such Holder's Registrable
Securities pursuant to the Registration Statement.
9. REPORTS UNDER THE EXCHANGE ACT. The Company agrees to:
(a) file with the SEC in a timely manner all reports and
other documents required of the Company under the Exchange Act, and
(b) furnish to any Holder, during the Effective Period,
forthwith upon request (A)a written statement by the Company that it has
complied with the current public information and reporting requirements
of Rule 144 under the Securities Act and the Exchange Act and (B)a copy
of the most recent annual or quarterly report of the Company and such
other reports and documents so filed by the Company.
10. INDEMNIFICATION; CONTRIBUTION.
(a)INDEMNIFICATION BY THE COMPANY. The Company agrees
to indemnify and hold harmless each Holder of Registrable Securities, its
officers and directors and each Person who controls such Holder (within
the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act), and any agent or investment adviser thereof against all
losses, claims, damages, liabilities and expenses (including reasonable
attorneys' fees and expenses) incurred by such party pursuant to any
actual or threatened
<PAGE>
Page 17
action, suit, proceeding or investigation arising out of or based
upon (i)any untrue or alleged untrue statement of material fact
contained in the Registration Statement, any Prospectus or preliminary
Prospectus, or any amendment or supplement to any of the foregoing
or (ii)any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein (in the case of a Prospectus or a preliminary
Prospectus, in light of the circumstances then existing) not misleading,
except in each case insofar as the same arise out of or are based upon
any such untrue statement or omission made in reliance on and in
conformity with information with respect to such indemnified party
furnished in writing to the Company by such indemnified party or its
counsel expressly for use therein. In connection with an underwritten
offering, the Company will indemnify the underwriters thereof, their
officers, directors and agents and each Person who controls such
underwriters (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) to the same extent as provided above with
respect to the indemnification of the Holders of Registrable Securities.
Notwithstanding the foregoing provisions of this Section 10(a), the
Company will not be liable to any Holder of Registrable Securities, any
Person who participates as an underwriter in the offering or sale of
Registrable Securities or any other Person, if any, who controls such
Holder or underwriter (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act), under the indemnity agreement in
this Section10(a) for any such loss, claim, damage, liability (or action
or proceeding in respect thereof) or expense that arises out of such
Holder's or other Person's failure to send or deliver a copy of the final
Prospectus to the Person asserting an untrue statement or alleged untrue
statement or omission or alleged omission at or prior to the written
confirmation of the sale of the Registrable Securities to such Person if
such statement or omission was corrected in such final Prospectus and the
Company has previously furnished copies thereof to such Holder or other
Person in accordance with this Agreement.
(b) INDEMNIFICATION BY HOLDERS OF REGISTRABLE SECURITIES.
In connection with the Registration Statement, each Holder will furnish
to the Company in writing such information, including the name, address
and the amount of Registrable Securities held by such Holder, as the
Company reasonably requests for use in such Registration Statement or the
related Prospectus and agrees to indemnify and hold harmless (in the same
manner and to the same extent as set forth in Section 10(a)) the Company,
all other Holders or any underwriter, as the case may be, and any of
their respective affiliates, directors, officers and controlling Persons
(within the meaning of Section 15 of the
<PAGE>
Page 18
Securities Act or Section 20 of the Exchange Act), against any
losses, claims, damages, liabilities and expenses resulting from
any untrue or alleged untrue statement of a material fact contained
in, or any omission or alleged omission of a material fact required
to be stated in, such Registration Statement or Prospectus or any
amendment or supplement to either of them or necessary to make the
statements therein (in the case of a Prospectus, in the light of
the circumstances then existing) not misleading, but only to the
extent that any such untrue statement or omission is made in reliance on
and in conformity with information with respect to such Holder furnished
in writing to the Company by such Holder or its counsel specifically for
inclusion therein.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person
entitled to indemnification hereunder agrees to give prompt written
notice to the indemnifying party after the receipt by such indemnified
party of any written notice of the commencement of any action, suit,
proceeding or investigation or threat thereof made in writing for which
such indemnified party may claim indemnification or contribution pursuant
to this Section 10 (provided that failure to give such notification shall
not affect the obligations of the indemnifying party pursuant to this
Section 10 except to the extent the indemnifying party shall have been
actually prejudiced as a result of such failure). In case any such
action shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
shall wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and after
notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under these indemnification
provisions for any legal expenses of other counsel or any other expenses,
in each case subsequently incurred by such indemnified party, in
connection with the defense thereof other than reasonable costs of
investigation, unless in the reasonable judgment of any indemnified party
a conflict of interest is likely to exist between such indemnified party
and any other of such indemnified parties with respect to such claim, in
which event the indemnifying party shall be obligated to pay the
reasonable fees and expenses of such additional counsel or counsels. No
indemnifying party, in defense of any such action, suit, proceeding or
investigation, shall, except with the consent of each indemnified party,
consent to the entry of any judgment or entry into any settlement which
<PAGE>
Page 19
does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all
liability in respect to such action, suit, proceeding or investigation to
the extent the same is covered by the indemnity obligation set forth in
this Section 10. No indemnified party shall consent to entry of any
judgment or enter into any settlement without the consent of each
indemnifying party.
(d) CONTRIBUTION. If the indemnification from the
indemnifying party provided for in this Section 10 is unavailable to an
indemnified party hereunder in respect of any losses, claims, damages,
liabilities or expenses referred to herein, then the 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, claims, damages, liabilities and expenses in such proportion as
is appropriate to reflect the relative fault of the indemnifying party
and indemnified party in connection with the actions which resulted in
such losses, claims, damages, liabilities and expenses, as well as any
other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference
to, among other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact, has been made 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 such action. The amount paid or
payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 10(c), any legal and
other fees and expenses reasonably incurred by such indemnified 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 10(d) were determined
by pro rata allocation or by any other method of allocation which does
not take account of the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this
Section 10(d), no underwriter shall be required to contribute any amount
in excess of the amount by which the total price at which the Registrable
Securities underwritten by it and distributed to the public were offered
to the public exceeds the amount of any damages which such underwriter
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
<PAGE>
Page 20
the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation. Each Holder's
obligation to contribute is several in the proportion that the proceeds
of the offering received by such Holder bears to the total proceeds of
the offering, and not joint.
If indemnification is available under this Section10, the
indemnifying parties shall indemnify each indemnified party to the full
extent provided in Section10(a) or (b), as the case may be, without
regard to the relative fault of said indemnifying parties or indemnified
party or any other equitable consideration provided for in this Section
10(d).
(e) LIMITATION ON LIABILITY AND CONTRIBUTION OF A HOLDER.
In no event shall any Holder of Registrable Securities be liable or
required to contribute any amount under this Section 10 or otherwise in
respect of any untrue or alleged untrue statement or omission or alleged
omission for amounts in excess of the amount by which the total price at
which the Registrable Securities of such Holder were offered to the
public exceeds the amount of any damages which such Holder has otherwise
been required to pay by reason of such untrue statement or omission.
(f) The provisions of this Section 10 shall be in
addition to any liability which any indemnifying party may have to any
indemnified party and shall survive the termination of this Agreement.
11. PARTICIPATION IN UNDERWRITTEN OFFERINGS. No
Holder of Registrable Securities may participate in any underwritten
offering hereunder unless such Holder (a)agrees to sell such Holder's
securities on the basis provided in any underwriting arrangements
approved by the Company in its reasonable discretion and (b) completes
and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the
terms of such underwriting arrangements.
12. MISCELLANEOUS.
(a)REMEDIES. Each Holder of Registrable Securities in
addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance
of its rights under this Agreement.
(b) AMENDMENTS AND WAIVERS. Except as otherwise provided
herein, the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or
<PAGE>
Page 21
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 Securities then outstanding.
(c) NOTICES. All notices, requests, claims, demands and
other communications hereunder 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 any party as shall be specified by like notice).
(i)(A) Itochu Corporation
5-1, Kita-Aoyama 2-chome
Minato-ku, Tokyo 107-77, Japan
Facsimile: 81-3-3497-4033
Attention: S. Abe
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Facsimile: (212) 450-4800
Attention: John A. Bick
(B) if to Itochu Entertainment to:
Itochu Entertainment Inc.
10 Skyline Drive
Hawthorne, New York 10532
Facsimile: (914) 347-4049
Attention: Yutaka Tanaka
<PAGE>
Page 22
with a copy (which shall not constitute notice) to:
Itochu Corporation
5-1, Kita-Aoyama 2-chome
Minato-ku, Tokyo 107-77, Japan
Facsimile: 81-3-3497-4033
Attention: S. Abe
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Facsimile: (212) 450-4800
Attention: John A. Bick
(C) if to a Holder of Registrable Securities, other than a
Stockholder, at the address of such Holder as such Holder may
designate to the Company in writing; and
(ii) if to the Company to:
Time Warner Inc.
75 Rockefeller Plaza
New York, NY 10019
Facsimile: (212) 956-7281
Attention: Peter R. Haje, General Counsel
with a copy (which shall not constitute notice) to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019
Facsimile: (212) 757-3990
Attention: Robert B. Schumer
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure
to the benefit of and be binding upon the parties hereto, any Holder
other than a Stockholder and any successors thereof; PROVIDED, HOWEVER,
that (i)any Holder (other than a Stockholder) shall have agreed in
writing to become a Holder under this Agreement and to be bound by the
terms and conditions hereof and (ii)subject to clause (i), this
Agreement and the provisions of this Agreement that are for the benefit
of the Holders shall not be assignable by any Holder to any Person that
is not so permitted to be a Holder, and any such purported assignment
shall be null and void.
<PAGE>
Page 23
(e) 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 effective when one or more counterparts have
been signed by each of the parties and delivered to the other parties.
(f) 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.
(g) GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York,
regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof.
(h) SEVERABILITY. In the event that any one or more of
the provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect
for any reason, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions
contained herein shall not be in any way impaired thereby and that all
remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the
Stockholders shall be enforceable to the fullest extent permitted by law.
(i) ENTIRE AGREEMENT. This Agreement is intended by the
parties as a final expression and a complete and exclusive statement of
the agreement and understanding of the parties hereto in respect of the
subject matter hereof. There are no restrictions, promises, warranties
or undertakings with respect to the subject matter hereof, other than
those set forth or referred to herein and therein. This Agreement
supersedes all prior agreements and understandings between the parties
with respect to such subject matter.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
TIME WARNER INC.
By:/s/ Spencer B. Hays
------------------------
Name: Spencer B. Hays
Title: Vice President
ITOCHU CORPORATION
By:/s/ Minoru Murofushi
-----------------------
Name: Minoru Murofushi
Title: President and
Chief Executive Officer
ITOCHU ENTERTAINMENT INC.
By:/s/ Hiromi Sugiyama
-----------------------
Name: Hiromi Sugiyama
Title: President
TIME WARNER
News Release
From:
Edward Adler
(212) 484-6630
For Immediate Release
TIME WARNER, ITOCHU AND TOSHIBA ENHANCE RELATIONSHIP
-ITOCHU and TOSHIBA To Exchange Interest in Time Warner Entertainment for
Equity in Time Warner Inc. -
NEW YORK, Sept. 1, 1995 - Time Warner Inc. announced today that it has reached
an agreement with ITOCHU Corp. and Toshiba Corp. that will enhance their
relationship with Time Warner by exchanging their interests in Time Warner
Entertainment for equity in Time Warner Inc. The agreement was announced
today by Time Warner Inc. Chairman and CEO Gerald M. Levin, ITOCHU President
and CEO Minoru Murofushi and Toshiba President and CEO Fumio Sato.
In making the announcement, Time Warner's Mr. Levin said, "We are pleased to
enhance our long-term global strategic alliance with ITOCHU and Toshiba that
began more than three and a half years ago. With today's agreement, ITOCHU
and Toshiba will now expand their relationship and financial interests to all
of our businesses. We expect to continue to use our respective strengths
jointly to pursue mutually beneficial opportunities in global markets."
ITOCHU President and CEO Minoru Murofushi said, "As the world's largest
trading company, ITOCHU has been extremely pleased with our strategic
relationship with Time Warner. Success of our partnership with Time Warner
to date includes the establishment of a cable MSO in Japan. We are very
happy to broaden and expand our role with Time Warner by becoming one of
the company's largest shareholders. We are firm believers in Time Warner's
strategy, and by acquiring an interest in all Time Warner assets, look
forward to continuing and enhancing our relationship."
Mr. Fumio Sato, President and CEO of Toshiba Corp. said, "We value our
strategic relationship with Time Warner and are pleased that we have
reached an agreement to enhance and broaden it. The relationship has
borne fruit in many areas for Toshiba including the creation of the
digital video disc which will be a future key platform to maximize
cooperation with resources of Warner Bros.,
(continues.....)
Corporate Communications Time Warner Inc. 75 Rockefeller Plaza
New York, NY 10019 Tel 212 484-6638
<PAGE>
Time Warner, ITOCHU and Toshiba, Page 2-
Warner Music Group and Time Inc. The development of new business such as
Time Warner Entertainment Japan and Titus Communications Inc., Japan's
first MSO system operator, is another vital token of our effective business
collaborations."
Under the terms of the agreement, ITOCHU and Toshiba will each exchange the
5.6% pro rata equity interest it holds in Time Warner Entertainment, a
limited partnership comprising Warner Bros., HBO and the Time Warner Cable
businesses. Depending on the form of the transaction selected by ITOCHU and
Toshiba, which will result in differing tax consequences for them and Time
Warner, each of them will receive either (i) 7 million shares of Time Warner
Convertible Preferred Stock and $10 million in cash or (ii) 8 million shares
of Time Warner Convertible Preferred. Each preferred share has a liquidation
value of $100 per share and is convertible at a stated price of $48 a share.
The preferred stock will pay a dividend for four years at the rate of $3.75 a
share. Once the transaction is consummated, Time Warner will hold 75% of
the pro rata equity interest in TWE, with partner U S WEST holding 25%.
Time Warner will continue to own 100% of the senior and junior priority
capital accounts in Time Warner Entertainment. The transactions are
expected to close shortly.
Toshiba, a world leader in high technology, is one of the world's largest
integrated manufacturer of electronics and electric equipment. The
company is committed to information/communication oriented businesses
such as multimedia, which it supports with state-of-the-art semiconductors,
computers, display devices and system integration. Toshiba has 190,000
employees worldwide and annual sales of U.S. $54 billion.
ITOCHU is the world's largest trading group with more than $186 billion in
annual sales. It operates in 90 countries and controls more than 800
affiliated companies which deal in over 50,000 different products and
services including textiles, machinery, electronics, metals, energy,
chemicals, food products, real estate and communications services.
Time Warner Inc. is the world's leading media and entertainment company,
with interests in magazine and book publishing, recorded music and music
publishing, filmed entertainment, broadcasting and theme parks and cable
television and cable television programming.
####
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Warner's Factfinder located at http://pathfinder.com/Corp/
