Exhibit 2(a)
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
Dated as of September 22, 1995
Among
TIME WARNER INC.,
TW INC.,
TIME WARNER ACQUISITION CORP.,
TW ACQUISITION CORP.
And
▇▇▇▇▇▇ BROADCASTING SYSTEM, INC.
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TABLE OF CONTENTS
Page
Parties and Recitals...................................... 1
ARTICLE I
The Mergers
SECTION 1.01. The Mergers................................ 2
SECTION 1.02. Closing.................................... 3
SECTION 1.03. Effective Time............................. 3
SECTION 1.04. Effects of the Mergers..................... 4
SECTION 1.05. Charter and By-Laws........................ 4
SECTION 1.06. Directors.................................. 4
SECTION 1.07. Officers................................... 4
ARTICLE II
Effect of the Mergers on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Parent Capital Stock............. 5
SECTION 2.02. Effect on Company Capital Stock............ 12
SECTION 2.03. Exchange of Shares and Certificates........ 16
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of
the Company.............................. 20
SECTION 3.02. Representations and Warranties of
Parent................................... 33
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business........................ 44
SECTION 4.02. No Solicitation............................ 49
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of Form S-4 and the
Proxy Statement; Shareholders
Meeting and Parent's Stockholders
Meeting.................................. 50
SECTION 5.02. Letter of the Company's
Accountants ............................. 51
SECTION 5.03. Letter of Parent's Accountants............. 52
SECTION 5.04. Access to Information;
Confidentiality.......................... 52
SECTION 5.05. Best Efforts; Notification................. 53
SECTION 5.06. Board Authority............................ 54
SECTION 5.07. Public Announcements....................... 55
SECTION 5.08. Benefit Plans.............................. 55
SECTION 5.09. Indemnification............................ 57
SECTION 5.10. Fees and Expenses.......................... 57
SECTION 5.11. Affiliates................................. 57
SECTION 5.12. Stock Exchange Listing..................... 58
SECTION 5.13. Execution of the Registration
Rights Agreement......................... 58
SECTION 5.14. Tax Treatment.............................. 58
SECTION 5.15. Transfer and Real Property Transfer
Gains Taxes.............................. 58
SECTION 5.16. Material Transactions by Parent............ 59
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's
Obligation To Effect the
Mergers.................................. 60
SECTION 6.02. Conditions to Obligations of
Parent, Holdco, Delaware Sub and
Georgia Sub.............................. 62
SECTION 6.03. Conditions to Obligation of the
Company.................................. 64
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination ............................... 65
SECTION 7.02. Effect of Termination...................... 68
SECTION 7.03. Amendment.................................. 70
SECTION 7.04. Extension; Waiver.......................... 70
SECTION 7.05. Procedure for Termination,
Amendment, Extension or Waiver........... 70
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and
Warranties............................... 71
SECTION 8.02. Notices.................................... 72
SECTION 8.03. Definitions................................ 73
SECTION 8.04. Interpretation............................. 73
SECTION 8.05. Counterparts............................... 73
SECTION 8.06. Entire Agreement; No Third-Party
Beneficiaries............................ 73
SECTION 8.07. Governing Law.............................. 74
SECTION 8.08. Assignment................................. 74
SECTION 8.09. Enforcement................................ 74
SECTION 8.10. Waivers.................................... 75
EXHIBITS
Exhibit A-1 Form of TBS Affiliate Letter
Exhibit A-2 Form of Parent Affiliate Letter
Exhibit B Form of Registration Rights Agreement
Exhibit C-1 Form of Investors' Agreement with
Principal Shareholder and Related
Parties
Exhibit C-2 Form of Investors' Agreement with
Qualified Stockholders
Exhibit D Form of Certificates and Letters of
Representation regarding Tax Matters
Index of Defined Terms
In
Amended and Restated Agreement and Plan of Merger
Term Section
"affiliate" 8.03(a)
"Appraisal Shares" 2.01(d)
"Approved Matters" 4.01(a)
"Benefit Plans" 3.01(i)
"Certificates" 2.03(b)
"Certificates of Merger" 1.03
"Changed Parent Stock" 2.01(c)
"Class A Common Stock" 2.02(a)
"Class A Preferred Stock" 3.01(c)
"Class B Common Stock" 2.02(a)
"Class B Preferred Stock" 3.01(c)
"Class C Preferred Stock" 2.02(a)
"Class C Shareholders" 3.01(c)
"Class D Preferred Stock" 3.01(c)
"Closing" 1.02
"Closing Date" 1.02
"Code" Recitals
"Common Conversion Number" 2.02(c)
"Common Stock Equivalents" 5.16
"Communications Act" 3.01(d)
"Company" Recitals
"Company Capital Stock" 2.02(a)
"Company Common Stock" 2.02(a)
"Company Disclosure Letter" 3.01(a)
"Company Material Adverse Effect" 3.01(a)
Term Section
"Company Programming Subsidiary" 3.01(a)
"Company Stock Options" 3.01(c)
"Company Stock Plans" 3.01(c)
"Company Subsidiary" 3.01(a)
"Company Warrant" 2.02(e)
"Confidentiality Agreement" 5.04
"Corporation" 1.05
"D&O Insurance" 5.09
"Delaware Sub" Recitals
"DGCL" 1.01(a)
"Dissenting Shares" 2.02(d)
"Effective Time of the Mergers" 1.03
"employee benefit plan" 3.02(m)
"employee pension benefit plan" 5.08(b)
"ERISA" 3.01(j)
"Exchange Act" 3.01(d)
"Exchange Agent" 2.03(a)
"Exchange Fund" 2.03(a)
"FCC" 3.01(d)
"Filed Parent SEC Documents" 3.02(g)
"Filed SEC Documents" 3.01(g)
"Form S-4" 3.01(f)
"Georgia BCC" 1.01(b)
"Georgia Sub" Recitals
"Governmental Entity" 3.01(d)
"Holdco" Recitals
"Holdco Capital Stock" 2.01(c)
"Holdco Common Stock" 2.01(b)
"Holdco LMC Class Stock" 2.01(c)
Term Section
"Holdco LMCN-V Stock" 2.01(c)
"Holdco Series B Preferred Stock" 2.01(c)
"Holdco Series D Preferred Stock" 2.01(c)
"Holdco Series E Preferred Stock" 2.01(c)
"Holdco Series F Preferred Stock" 2.01(c)
"Holdco Series G Preferred Stock" 2.01(c)
"Holdco Series H Preferred Stock" 2.01(c)
"Holdco Series I Preferred Stock" 2.01(c)
"Holdco Series L Preferred Stock" 2.01(c)
"HSR Act" 3.01(d)
"incentive stock option" 2.01(e)
"Liens" 3.01(b)
"LMC" Recitals
"LMC Agreement" Recitals
"Material Breach" 7.01(b)(v)
"Material Company Subsidiary" 3.01(a)
"Material Parent Subsidiary" 3.02(a)
"Material Transaction" 5.16
"Maximum Premium" 5.09
"Mergers" Recitals
"New Line" 3.01(c)
"New Line Debentures" 3.01(c)
"New Line Options" 3.01(c)
"New Line Plans" 3.01(c)
"NYSE" 5.12
"Original Agreement" Recitals
"Parent" Recitals
"Parent Capital Stock" 2.01(a)
"Parent Common Stock" 2.01(a)
Term Section
"Parent Disclosure Letter" 3.02(c)
"Parent Material Adverse Effect" 3.02(a)
"Parent Options" 3.02(c)
"Parent Preferred Stock" 3.02(c)
"Parent SEC Documents" 3.02(e)
"Parent Series B Preferred Stock" 2.01(a)
"Parent Series C Preferred Stock" 2.01(a)
"Parent Series D Preferred Stock" 2.01(a)
"Parent Series E Preferred Stock" 2.01(a)
"Parent Series F Preferred Stock" 2.01(a)
"Parent Series G Preferred Stock" 2.01(a)
"Parent Series H Preferred Stock" 2.01(a)
"Parent Series I Preferred Stock" 2.01(a)
"Parent Series J Preferred Stock" 2.01(a)
"Parent Series K Preferred Stock" 2.01(a)
"Parent Series L Preferred Stock" 2.01(a)
"Parent Stockholder Approvals" 3.02(i)
"Parent Stock Plans" 3.02(c)
"Parent Subsidiary" 3.02(a)
"Parent Warrant" 2.01(e)
"Parent's Stockholders Meeting" 5.01(c)
"person" 8.03(b)
"Principal Shareholder" Recitals
"Programming Agreement" 3.01(d)
"Proxy Statement" 3.01(d)
"Registration Rights Agreement" 5.13
"Rights Agreement" 3.02(c)
"SEC" 3.01(a)
"SEC Documents" 3.01(e)
Term Section
"Section 262" 2.01(d)
"Securities Act" 3.01(e)
"Shareholder Approvals" 3.01(d)
"Shareholders Meeting" 5.01(b)
"subsidiary" 8.03(c)
"Support Agreement" Recitals
"takeover proposal" 4.02(a)
"Taxes" 3.01(n)
"Tax Returns" 3.01(n)
"TBS Merger" Recitals
"TCI" 3.01(m)
"TBS Surviving Corporation" 1.01(b)
"TW Merger" Recitals
"TW Surviving Corporation" 1.01(a)
"TWE" 3.02(a)
"Voting Agreements" Recitals
AMENDED AND RESTATED AGREEMENT AND PLAN
OF MERGER (this "Agreement") dated as of
September 22, 1995, among TIME WARNER INC., a
Delaware corporation ("Parent"), TW INC., a
Delaware corporation ("Holdco") and a direct
wholly owned subsidiary of Parent, TIME
WARNER ACQUISITION CORP., a Delaware
corporation ("Delaware Sub") and a direct
wholly owned subsidiary of Holdco, TW
ACQUISITION CORP., a Georgia corporation
("Georgia Sub") and a direct wholly owned
subsidiary of Holdco, and ▇▇▇▇▇▇ BROADCASTING
SYSTEM, INC., a Georgia corporation (the
"Company").
WHEREAS Parent, Delaware Sub and the Company have
entered into an Agreement and Plan of Merger dated as of
September 22, 1995 (the "Original Agreement"), providing for
the merger of the Company with and into Delaware Sub;
WHEREAS Section 1.01 of the Original Agreement
contemplated that the parties thereto may amend the Original
Agreement to provide for a tax-free incorporation
transaction under Section 351 of the Internal Revenue Code
of 1986, as amended (the "Code");
WHEREAS, Parent, Delaware Sub and the Company wish
to amend and restate the Original Agreement in its entirety
to provide for such a transaction and to make certain other
amendments to the Original Agreement, and Holdco and Georgia
Sub wish to become parties thereto;
WHEREAS, the respective Boards of Directors of
Parent, Holdco and Delaware Sub have approved the merger
(the "TW Merger") of Delaware Sub into Parent, upon the
terms and subject to the conditions set forth in this
Agreement, and have approved this Agreement;
WHEREAS, the respective Boards of Directors of
Holdco, Georgia Sub and the Company have approved the merger
(the "TBS Merger" and, together, with the TW Merger, the
"Mergers") of Georgia Sub into the Company, upon the terms
and subject to the conditions set forth in this Agreement,
and have adopted this Agreement;
WHEREAS Parent and the Company desire to make
certain representations, warranties, covenants and
agreements in connection with the Mergers and also to
prescribe various conditions to the Mergers;
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WHEREAS for Federal income tax purposes it is
intended that the Mergers qualify as exchanges under Section
351 of the Code or, in the alternative, as reorganizations
within the meaning of Section 368(a) of the Code; and
WHEREAS R. E. ▇▇▇▇▇▇, III (the "Principal
Shareholder"), and certain of his associates and affiliates
have entered into a Shareholders' Agreement with Parent,
dated as of September 22, 1995 (the "Support Agreement") and
Liberty Media Corporation ("LMC") and certain of its
subsidiaries and affiliates have entered into an LMC
Agreement with Parent, dated as of September 22, 1995 (as
amended, the "LMC Agreement" and, together with the Support
Agreement, the "Voting Agreements"), in each case providing,
among other things, that such persons will vote their shares
of Company Capital Stock (as defined in Section 2.02(a)) in
favor of the TBS Merger and the approval and adoption of
this Agreement.
NOW, THEREFORE, in consideration of the represen-
tations, warranties, covenants and agreements contained in
this Agreement, the parties agree as follows:
ARTICLE I
The Mergers
SECTION 1.01. The Mergers. (a) Upon the terms and
subject to the conditions set forth in this Agreement, and
in accordance with the Delaware General Corporation Law (the
"DGCL"), Delaware Sub shall be merged into Parent at the
Effective Time of the Mergers (as defined in Section 1.03).
Following the TW Merger, the separate corporate existence of
Delaware Sub shall cease and Parent shall continue as the
surviving corporation (the "TW Surviving Corporation") and
shall succeed to and assume all the rights, properties,
liabilities and obligations of Delaware Sub in accordance
with the DGCL. At the election of Parent, any direct wholly
owned corporate subsidiary of Holdco may be substituted for
Delaware Sub as a constituent corporation in the TW Merger
(provided that any such substitution is consistent with the
treatment of the TW Merger as an exchange under Section 351
of the Code). In such event, the parties agree to execute an
appropriate
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amendment to this Agreement in order to reflect such
substitution.
(b) Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the
Georgia Business Corporation Code (the "Georgia BCC"),
Georgia Sub shall be merged into the Company at the
Effective Time of the Mergers. Following the TBS Merger, the
separate corporate existence of Georgia Sub shall cease and
the Company shall continue as the surviving corporation (the
"TBS Surviving Corporation") and shall succeed to and assume
all the rights, properties, liabilities and obligations of
Georgia Sub in accordance with the Georgia BCC. At the
election of Parent, any direct wholly owned corporate
subsidiary of Holdco may be substituted for Georgia Sub as a
constituent corporation in the TBS Merger (provided that any
such substitution is consistent with the treatment of the
TBS Merger as an exchange under Section 351 of the Code). In
such event, the parties agree to execute an appropriate
amendment to this Agreement in order to reflect such
substitution.
SECTION 1.02. Closing. The closing of the Mergers
(the "Closing") shall take place at 10:00 a.m. on a date to
be specified by the parties (the "Closing Date"), which
(subject to satisfaction or waiver of the conditions set
forth in Sections 6.02 and 6.03) shall be no later than the
second business day after satisfaction of the conditions set
forth in Section 6.01 (other than the condition set forth in
Section 6.01(d)), at the offices of Cravath, Swaine & ▇▇▇▇▇,
Worldwide Plaza, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇,
unless another time, date or place is agreed to in writing
by the parties hereto.
SECTION 1.03. Effective Time. As soon as
practicable following the satisfaction or waiver of the
conditions set forth in Article VI, the parties shall file
such certifi- ▇▇▇▇▇ of merger, articles of merger or other
appropriate documents (in any such case, the "Certificates
of Merger") executed in accordance with the relevant
provisions of the DGCL and the Georgia BCC and shall make
all other filings, recordings or publications required by
the DGCL and the Georgia BCC in connection with the Mergers.
Each Merger shall become effective at the time specified in
the Certificates of Merger, which specified time shall be
the same in each Certificate of Merger (the time the Mergers
become effective being the "Effective Time of the Mergers").
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SECTION 1.04. Effects of the Mergers. The TW
Merger shall have the effects set forth in Section 259 of
the DGCL. The TBS Merger shall have the effects set forth in
Section 14-2-1106 of the Georgia BCC.
SECTION 1.05. Charter and By-laws. (a) The
Certificate of Incorporation of Parent as in effect
immediately prior to the Effective Time of the Mergers shall
be amended at the Effective Time of the Mergers so that
Article I thereof reads in its entirety as follows: "The
name of the corporation (hereinafter called the
"Corporation") is TIME WARNER COMPANIES INC." and, as so
amended, such Certificate of Incorporation shall be the
Certificate of Incorporation of the TW Surviving Corporation
until thereafter changed or amended as provided therein or
by applicable law.
(b) The By-Laws of Delaware Sub as in effect at
the Effective Time of the Mergers shall be the By-Laws of
the TW Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law.
(c) The Articles of Incorporation of the Company
as in effect immediately prior to the Effective Time of the
Mergers shall be the Articles of Incorporation of the TBS
Surviving Corporation until thereafter changed or amended as
provided therein or by applicable law.
(d) The By-laws of the Company as in effect at the
Effective Time of the Mergers shall be the By-laws of the
TBS Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law.
SECTION 1.06. Directors. The directors of Delaware
Sub and Georgia Sub at the Effective Time of the Mergers
shall be the directors of the TW Surviving Corporation and
the TBS Surviving Corporation, respectively, until the
earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the
case may be. Immediately after the Effective Time of the
Mergers, Holdco shall take all action necessary to elect,
among others, the Chief Executive Officer of the Company and
four other persons to be agreed upon between Parent and the
Chief Executive Officer of the Company, as directors of the
TBS Surviving Corporation.
SECTION 1.07. Officers. The officers of Parent and
the Company at the Effective Time of the Mergers shall
5
be the officers of the TW Surviving Corporation and the TBS
Surviving Corporation, respectively, until the earlier of
their resignation or removal or until their respective
successors are duly elected and qualified, as the case may
be.
ARTICLE II
Effects of the Mergers on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Parent Capital Stock. As
of the Effective Time of the Mergers, by virtue of the TW
Merger and without any action on the part of the holder of
any shares of Parent Capital Stock (as defined in Section
2.01(a)) or any shares of capital stock of Delaware Sub:
(a) Capital Stock of Delaware Sub. Each issued and
outstanding share of Common Stock, par value $1.00 per
share, of Delaware Sub shall be converted into (i) one
one-millionth (1/1,000,000th) of a fully paid and
nonassessable share of Common Stock, par value $1.00 per
share, of the TW Surviving Corporation for each share of
Common Stock, par value $1.00 per share, of Parent ("Parent
Common Stock") issued and outstanding immediately prior to
the Effective Time of the Mergers, (ii) one one-millionth
(1/1,000,000th) of a fully paid and nonassessable share of
Series B 6.40% Preferred Stock, par value $1.00 per share,
of the TW Surviving Corporation for each share of Series B
6.40% Preferred Stock, par value $1.00 per share, of Parent
("Parent Series B Preferred Stock") issued and outstanding
immediately prior to the Effective Time of the Mergers,
(iii) one one-millionth (1/1,000,000th) of a fully paid and
nonassessable share of Series C Convertible Preferred Stock,
par value $1.00 per share, of the TW Surviving Corporation
for each share of Series C Convertible Preferred Stock, par
value $1.00 per share, of Parent ("Parent Series C Preferred
Stock"), if any, issued and outstanding immediately prior to
the Effective Time of the Mergers, (iv) one one-millionth
(1/1,000,000th) of a fully paid and nonassessable share of
Series D Convertible Preferred Stock, par value $1.00 per
share, of the TW Surviving Corporation for each share of
Series D Convertible Preferred Stock, par value $1.00 per
share, of Parent ("Parent Series D Preferred Stock") issued
and outstanding immediately prior to the Effective Time of
the Mergers, (v) one one-millionth (1/1,000,000th) of a
6
fully paid and nonassessable share of Series E Convertible
Preferred Stock, par value $1.00 per share, of the TW
Surviving Corporation for each share of Series E Convertible
Preferred Stock, par value $1.00 per share, of Parent
("Parent Series E Preferred Stock") issued and outstanding
immediately prior to the Effective Time of the Mergers, (vi)
one one-millionth (1/1,000,000th) of a fully paid and
nonassessable share of Series F Convertible Preferred Stock,
par value $1.00 per share, of the TW Surviving Corporation
for each share of Series F Convertible Preferred Stock, par
value $1.00 per share, of Parent ("Parent Series F Preferred
Stock") issued and outstanding immediately prior to the
Effective Time of the Mergers, (vii) one one-millionth
(1/1,000,000th) of a fully paid and nonassessable share of
Series G Convertible Preferred Stock, par value $1.00 per
share, of the TW Surviving Corporation for each share of
Series G Convertible Preferred Stock, par value $1.00 per
share, of Parent ("Parent Series G Preferred Stock") issued
and outstanding immediately prior to the Effective Time of
the Mergers, (viii) one one-millionth (1/1,000,000th) of a
fully paid and nonassessable share of Series H Convertible
Preferred Stock, par value $1.00 per share, of the TW
Surviving Corporation for each share of Series H Convertible
Preferred Stock, par value $1.00 per share, of Parent
("Parent Series H Preferred Stock") issued and outstanding
immediately prior to the Effective Time of the Mergers, (ix)
one one-millionth (1/1,000,000th) of a fully paid and
nonassessable share of Series I Convertible Preferred Stock,
par value $1.00 per share, of the TW Surviving Corporation
for each share of Series I Convertible Preferred Stock, par
value $1.00 per share, of Parent ("Parent Series I Preferred
Stock") issued and outstanding immediately prior to the
Effective Time of the Mergers, (x) one one-millionth
(1/1,000,000th) of a fully paid and nonassessable share of
Series J Convertible Preferred Stock, par value $1.00 per
share, of the TW Surviving Corporation for each share of
Series J Convertible Preferred Stock, par value $1.00 per
share, of Parent ("Parent Series J Preferred Stock"), if
any, issued and outstanding immediately prior to the
Effective Time of the Mergers, (xi) one one-millionth
(1/1,000,000th) of a fully paid and nonassessable share of
Series K Convertible Preferred Stock, par value $1.00 per
share, of the TW Surviving Corporation for each share of
Series K Convertible Preferred Stock, par value $1.00 per
share, of Parent ("Parent Series K Preferred Stock"), if
any, issued and outstanding immediately prior to the
Effective Time of the Mergers and (xii) one one-millionth
(1/1,000,000th) of a fully paid and nonassessable share of
7
Series L Convertible Preferred Stock, par value $1.00 per
share, of the TW Surviving Corporation for each share of
Series L Convertible Preferred Stock, par value $1.00 per
share, of Parent ("Parent Series L Preferred Stock" and,
together with the Parent Common Stock, the Parent Series B
Preferred Stock, the Parent Series C Preferred Stock, the
Parent Series D Preferred Stock, the Parent Series E
Preferred Stock, the Parent Series F Preferred Stock, the
Parent Series G Preferred Stock, the Parent Series H
Preferred Stock, the Parent Series I Preferred Stock, the
Parent Series J Preferred Stock and the Parent Series K
Preferred Stock, the "Parent Capital Stock") issued and
outstanding immediately prior to the Effective Time of the
Mergers. For the purposes of this Section 2.01(a), shares of
Parent Capital Stock, other than Parent Series C Preferred
Stock, held by Parent Subsidiaries (as defined in Section
3.02(a)) shall be deemed to be not outstanding.
(b) Cancellation of Treasury Stock. Each share of
Parent Capital Stock that is owned by Parent shall
automatically be canceled and retired and shall cease to
exist, and no shares of Common Stock, par value $0.01 per
share, of Holdco (the "Holdco Common Stock") or other
consideration shall be delivered in exchange therefor.
(c) Conversion of Parent Capital Stock. Subject to
Section 2.01(d), each issued share of Parent Capital Stock
(other than shares to be canceled in accordance with Section
2.01(b) and other than shares subject to Section 2.01(f))
shall be converted into fully paid and nonassessable shares
of the capital stock of Holdco ("Holdco Capital Stock") in
accordance with the following table (it being acknowledged
that as of November 30, 1995 (the date of execution of this
Agreement), (x) no shares of Parent Series E Preferred
Stock, Parent Series F Preferred Stock, Parent Series J
Preferred Stock, Parent Series K Preferred Stock or Parent
Series L Preferred Stock are outstanding and (y) it is
anticipated that no shares of Parent Series C Preferred
Stock, Parent Series J Preferred Stock or Series K Parent
Preferred Stock will be outstanding immediately prior to the
Effective Time of the Mergers):
Each Share of the Number and Class or Series
Specified Class or Series of Shares of Holdco Capital
of Parent Capital Stock Stock Into Which Converted
Parent Common Stock One Share of Holdco Common
Stock
8
Parent Series B Preferred One Share of Series B 6.40%
Stock Preferred Stock, par value
$0.10 per share, of Holdco
("Holdco Series B Preferred
Stock")
Parent Series C Preferred 2.08264 shares of Holdco
Stock Common Stock
Parent Series D Preferred One share of Series D
Stock Convertible Preferred Stock,
par value $0.10 per share, of
Holdco ("Holdco Series D
Preferred Stock")
Parent Series E Preferred One share of Series E
Stock Convertible Preferred Stock,
par value $0.10 per share, of
Holdco ("Holdco Series E
Preferred Stock")
Parent Series F Preferred One share of Series F
Stock Convertible Preferred Stock,
par value $0.10 per share, of
Holdco ("Holdco Series F
Preferred Stock")
Parent Series G Preferred One share of Series G
Stock Convertible Preferred Stock,
par value $0.10 per share, of
Holdco ("Holdco Series G
Preferred Stock")
Parent Series H Preferred One share of Series H
Stock Convertible Preferred Stock,
par value $0.10 per share, of
Holdco ("Holdco Series H
Preferred Stock")
Parent Series I Preferred One share of Series I
Stock Convertible Preferred Stock,
par value $0.10 per share, of
Holdco ("Holdco Series I
Preferred Stock")
Parent Series J Preferred 1,000 shares of Series LMCN-V
Stock Common Stock, par value $0.01
per share, of Holdco ("Holdco
LMCN-V Stock")
9
Parent Series K Preferred 1,000 shares of Series LMC
Stock Common Stock, par value $0.01
per share, of Holdco ("Holdco
LMC Class Stock")
Parent Series L Preferred One share of Series L
Stock Preferred Stock, par value
$0.10 per share, of Holdco
("Holdco Series L Preferred
Stock")
As of the Effective Time of the Mergers, all such shares of
Parent Capital Stock shall no longer be outstanding and
shall automatically be canceled and retired and shall cease
to exist. As of the Effective Time of the Mergers, each
certificate theretofore representing shares of Parent
Capital Stock (other than each certificate theretofore
representing Parent Series C Preferred Stock, Parent Series
J Preferred Stock or Parent Series K Preferred Stock (the
"Changed Parent Stock")), without any action on the part of
Holdco, Parent or the holder thereof, shall be deemed to
represent an equivalent number of shares of the class or
series of Holdco Capital Stock set forth above next to the
class or series of Parent Capital Stock formerly represented
by such certificate and shall cease to represent any rights
in any shares of Parent Capital Stock. As of the Effective
Time of the Mergers, each holder of a certificate
representing any shares of Changed Parent Stock shall cease
to have any rights with respect thereto, except the right to
receive, upon the surrender of any such certificates,
certificates representing the number of shares of the class
or series of Holdco Capital Stock, and in the case of any
Parent Series C Preferred Stock any cash in lieu of
fractional shares of Holdco Common Stock, set forth above
next to the series of Changed Parent Stock formerly
represented by such certificate to be issued or paid in
consideration therefor upon surrender of such certificate in
accordance with Section 2.03, without interest.
(d) Appraisal Rights. Notwithstanding anything in
this Agreement to the contrary, shares ("Appraisal Shares")
of Parent Capital Stock (other than Parent Common Stock)
that are outstanding immediately prior to the Effective Time
of the Mergers and that are held by any stockholder of
Parent who is entitled to demand and properly demands
appraisal of such Appraisal Shares pursuant to, and who
complies in all respects with, the provisions of Section 262
of the DGCL ("Section 262") shall not be
10
converted into Holdco Capital Stock as provided in Section
2.01(c), but rather the holders of Appraisal Shares shall be
entitled to payment of the fair value of such Appraisal
Shares in accordance with the provisions of Section 262;
provided, however, that if any such holder shall fail to
perfect or otherwise shall waive, withdraw or lose the right
to appraisal under Section 262 or a court of competent
jurisdiction shall determine that such holder is not
entitled to the relief provided by Section 262, then the
right of such holder of Appraisal Shares to be paid the fair
value of such holder's Appraisal Shares shall cease and such
Appraisal Shares shall be treated as if they had been
converted as of the Effective Time of the Mergers into
shares of Holdco Capital Stock as provided in Section
2.01(c).
(e) Exchange Ratio for Parent Options and Parent
Warrants. (i) As of the Effective Time of the Mergers, each
outstanding Parent Option (as defined in Section 3.02(c))
and each outstanding warrant (a "Parent Warrant") to
purchase Parent Common Stock, originally issued in
connection with the first issuance of Parent Series B
Preferred Stock, shall be assumed by Holdco and converted
into an option or warrant, as the case may be, to purchase
shares of Holdco Common Stock, as provided below. Following
the Effective Time of the Mergers, each Parent Option shall
continue to have, and shall be subject to, the same terms
and conditions set forth in the applicable Parent Stock Plan
(as defined in Section 3.02(c)) pursuant to which such
Parent Option was granted, and each Parent Warrant shall
continue to have, and shall be subject to, the same terms
and conditions, in each case as in effect immediately prior
to the Effective Time of the Mergers, except that each such
Parent Option or Parent Warrant shall be exercisable for the
same number of shares of Holdco Common Stock as the number
of shares of Parent Common Stock for which such Parent
Option or Parent Warrant was exercisable immediately prior
to the Effective Time of the Mergers.
(ii) As of the Effective Time of the Mergers,
Holdco shall enter into an assumption agreement with respect
to each Parent Option and each Parent Warrant, which, in the
case of any Parent Option, shall provide for Holdco's
assumption of the obligations of Parent under the applicable
Parent Stock Plan. Prior to the Effective Time of the
Mergers, Parent shall make such amendments, if any, to the
Parent Stock Plans as shall be necessary to permit such
assumption in accordance with this Section 2.01(e).
11
(iii) It is the intention of the parties that, to
the extent that any Parent Option constitutes an "incentive
stock option" (within the meaning of Section 422 of the
Code) immediately prior to the Effective Time of the
Mergers, such Parent Option shall continue to qualify as an
incentive stock option to the maximum extent permitted by
Section 422 of the Code, and that the assumption of the
Parent Option provided by this Section 2.01(e) shall satisfy
the conditions of Section 424(a) of the Code.
(f) Treatment of Parent Capital Stock Held by
Parent Subsidiaries. Notwithstanding anything in this
Agreement to the contrary, each share of Parent Capital
Stock (other than Parent Series C Preferred Stock) held by
any Parent Subsidiary shall be converted into (i) in the
case of each share of Parent Common Stock, one
one-thousandth (1/1,000th) of a fully paid and nonassessable
share of Common Stock of the TW Surviving Corporation, (ii)
in the case of each share of Parent Series B Preferred
Stock, one one-thousandth (1/1,000th) of a fully paid and
nonassessable share of Series B 6.40% Preferred Stock of the
TW Surviving Corporation, (iii) in the case of each share of
Parent Series L Preferred Stock, one one-thousandth
(1/1,000th) of a fully paid and nonassessable share of
Series L Convertible Preferred Stock of the TW Surviving
Corporation, (iv) in the case of each share of Parent Series
D Preferred Stock, one one-thousandth (1/1,000th) of a fully
paid and nonassessable share of Series D Convertible
Preferred Stock of the TW Surviving Corporation, (v) in the
case of each share of Parent Series E Preferred Stock, one
one-thousandth (1/1,000th) of a fully paid and nonassessable
share of Series E Convertible Preferred Stock of the TW
Surviving Corporation, (vi) in the case of each share of
Parent Series F Preferred Stock, one one-thousandth
(1/1,000th) of a fully paid and nonassessable share of
Series F Convertible Preferred Stock of the TW Surviving
Corporation, (vii) in the case of each share of Parent
Series G Preferred Stock, one one-thousandth (1/1,000th) of
a fully paid and nonassessable share of Series G Convertible
Preferred Stock of the TW Surviving Corporation, (viii) in
the case of each share of Parent Series H Preferred Stock,
one one-thousandth (1/1,000th) of a fully paid and
nonassessable share of Series H Convertible Preferred Stock
of the TW Surviving Corporation and (ix) in the case of each
share of Parent Series I Preferred Stock, one one-thousandth
(1/1,000th) of a fully paid and nonassessable share of
Series I Convertible Preferred Stock of the TW Surviving
Corporation.
12
SECTION 2.02. Effect on Company Capital Stock. As
of the Effective Time of the Mergers, by virtue of the TBS
Merger and without any action on the part of the holder of
any shares of Company Capital Stock or any shares of capital
stock of Georgia Sub:
(a) Capital Stock of Georgia Sub. Each issued and
outstanding share of capital stock of Georgia Sub shall be
converted into (i) one one-millionth (1/1,000,000th) of a
fully paid and nonassessable share of Class A Common Stock,
par value $.0625 per share, of the TBS Surviving Corporation
for each share of Class A Common Stock, par value $.0625 per
share, of the Company ("Class A Common Stock") issued and
outstanding immediately prior to the Effective Time of the
Mergers, other than shares of Class A Common Stock subject
to Section 2.02(f), (ii) one one-millionth (1/1,000,000th)
of a share of Class B Common Stock, par value $.0625 per
share, of the TBS Surviving Corporation for each share of
Class B Common Stock, par value $.0625 per share, of the
Company ("Class B Common Stock" and, together with the Class
A Common Stock, the "Company Common Stock") issued and
outstanding immediately prior to the Effective Time of the
Mergers, other than shares of Class B Common Stock subject
to Section 2.02(f), and (iii) one one-millionth
(1/1,000,000th) of a share of Class C Convertible Preferred
Stock, par value $.125 per share, of the TBS Surviving
Corporation for each share of Class C Convertible Preferred
Stock, par value $.125 per share, of the Company ("Class C
Preferred Stock" and, together with the Company Common
Stock, the "Company Capital Stock") issued and outstanding
immediately prior to the Effective Time of the Mergers,
other than Class C Preferred Stock subject to Section
2.02(f).
(b) Cancellation of Treasury Stock. Each share of
Company Capital Stock that is owned by the Company shall
automatically be canceled and retired and shall cease to
exist, and no Holdco Common Stock or other consideration
shall be delivered in exchange therefor.
(c) Conversion of Company Capital Stock. Subject
to Sections 2.02(d), 2.02(f) and 2.03(e), (i) each issued
and outstanding share of Company Common Stock (other than
shares to be canceled in accordance with Section 2.02(b)),
shall be converted into the right to receive 0.75 (the
"Common Conversion Number") of a fully paid and
nonassessable share of Holdco Common Stock and (ii) each
issued and outstanding share of Class C Preferred Stock
13
(other than shares to be canceled in accordance with Section
2.02(b)) shall be converted into the right to receive 4.80
fully paid and nonassessable shares of Holdco Common Stock.
As of the Effective Time of the Mergers, all such shares of
Company Capital Stock shall no longer be outstanding and
shall automatically be canceled and retired and shall cease
to exist, and each holder of a certificate representing any
such shares of Company Capital Stock shall cease to have any
rights with respect thereto, except the right to receive,
upon the surrender of any such certificates, certificates
representing the shares of Holdco Common Stock and any cash
in lieu of fractional shares of Holdco Common Stock to be
issued or paid in consideration therefor upon surrender of
such certificate in accordance with Section 2.03, without
interest.
(d) Dissenting Shares. (i) The Board of Directors
of the Company has adopted a resolution pursuant to Section
1302(c)(2) of the Georgia BCC conferring dissenters' rights
with respect to the Company Common Stock in connection with
the TBS Merger. Notwithstanding anything in this Agreement
to the contrary, shares of Company Capital Stock that are
outstanding immediately prior to the Effective Time of the
Mergers and that are held by any shareholder who has
delivered to the Company, prior to the Shareholder Approvals
(as defined in Section 3.01(d)), a written notice of such
shareholder's intent to demand payment for such holder's
shares of Company Capital Stock if the TBS Merger is
effected, in accordance with Article 13 of the Georgia BCC,
and who shall have not voted such shares in favor of the
approval and adoption of this Agreement ("Dissenting
Shares") shall not be converted into the right to receive
Holdco Common Stock as provided in Section 2.02(c), but the
holders of Dissenting Shares shall be entitled to payment of
the fair value of such Dissenting Shares in accordance with
the provisions of such Article 13; provided, however, that
if any such holder shall fail to perfect or shall otherwise
waive the right to demand payment under Article 13 of the
Georgia BCC or a court of competent jurisdiction shall
determine that such holder is not entitled to the relief
provided by such Article 13, then the right of such holder
of Dissenting Shares to be paid the fair value of such
holder's Dissenting Shares shall cease and such Dissenting
Shares shall be treated as if they had been converted as of
the Effective Time of the Mergers into the right to receive
the shares of Holdco Common Stock as provided in Section
2.02(c) and any cash in lieu of
14
fractional shares of Holdco Common Stock as provided in
Section 2.03(e), without any interest thereon.
(ii) The Company shall give Holdco (A) prompt
notice of any notices or other instruments received by the
Company pursuant to Article 13 of the Georgia BCC and (B)
the opportunity to direct all negotiations and proceedings
with respect to demands for payment for Dissenting Shares.
The Company shall not, except with the prior written consent
of Holdco, voluntarily offer to make or make any payment
with respect to any demands for payment for Dissenting
Shares or offer to settle or settle any such demands.
(e) Exchange Ratio for Company Options and Company
Warrants. (i) As of the Effective Time of the Mergers, each
outstanding Company Stock Option (as defined in Section
3.01(c)), each outstanding New Line Option (as defined in
Section 3.01(c)) and each outstanding warrant (a "Company
Warrant") to purchase Class B Common Stock shall be assumed
by Holdco and converted into an option or warrant, as the
case may be, to purchase shares of Holdco Common Stock, as
provided below. Following the Effective Time of the Mergers,
each Company Stock Option shall continue to have, and shall
be subject to, the same terms and conditions set forth in
the applicable Company Stock Plan (as defined in Section
3.01(c)) pursuant to which such Company Stock Option was
granted, as in effect immediately prior to the Effective
Time of the Mergers, each New Line Option shall continue to
have, and shall be subject to, the same terms and conditions
set forth in the applicable New Line Plan (as defined in
Section 3.01(c)) pursuant to which such New Line Option was
granted, as in effect immediately prior to the Effective
Time of the Mergers, and each Company Warrant shall continue
to have, and shall be subject to, the same terms and
conditions as in effect immediately prior to the Effective
Time of the Mergers, except that (i) each such Company Stock
Option, New Line Option and Company Warrant shall be
exercisable for that number of shares of Holdco Common Stock
equal to the product of (x) the number of shares of Class B
Common Stock for which such Company Stock Option, New Line
Option or Company Warrant was exercisable immediately prior
to the Effective Time of the Mergers and (y) the Common
Conversion Number, rounded, in the case of any Company
Warrant or any Company Stock Option or New Line Option other
than any incentive stock option, up and, in the case of any
incentive stock option, down to the nearest whole share, if
necessary, and (ii) the exercise price per share of such
Company Stock Option, New Line Option or
15
Company Warrant shall be equal to the aggregate exercise
price of such Company Stock Option, New Line Option or
Company Warrant immediately prior to the Effective Time of
the Mergers divided by the number of shares of Holdco Common
Stock for which such Company Stock Option, New Line Option
or Company Warrant shall be exercisable as determined in
accordance with the preceding clause (i), rounded up to the
next highest cent, if necessary.
(ii) As of the Effective Time of the Mergers,
Holdco shall enter into an assumption agreement with respect
to each Company Stock Option, New Line Option and Company
Warrant, which shall provide for Holdco's assumption of the
obligations of the Company under the applicable Company
Stock Plan, New Line Plan or Warrant Agreement. Prior to the
Effective Time of the Mergers, the Company shall make such
amendments, if any, to the Company Stock Plans and the New
Line Plans and each such Warrant Agreement as shall be
necessary to permit such assumption in accordance with this
Section 2.02(e).
(iii) It is the intention of the parties that, to
the extent that any Company Stock Option or New Line Option
constitutes an incentive stock option immediately prior to
the Effective Time of the Mergers, such Company Stock Option
or New Line Option shall continue to qualify as an incentive
stock option to the maximum extent permitted by Section 422
of the Code, and that the assumption of the Company Stock
Options and New Line Options provided by this Section
2.02(e) shall satisfy the conditions of Section 424(a) of
the Code.
(f) Treatment of Company Capital Stock Held By
Parent, Parent Subsidiaries and Company Subsidiaries.
Notwithstanding anything in this Agreement to the contrary,
each issued and outstanding share of Company Capital Stock
held by Parent, Holdco or any of their subsidiaries
(including any such shares acquired by Holdco simultaneously
with the Effective Time of the Mergers and any such shares
held by corporations (other than the Company, but including
the Company Subsidiaries) that become subsidiaries of Holdco
simultaneously with the Effective Time of the Mergers but
excluding any shares acquired pursuant to Section 2.02(a))
shall be converted into (i) in the case of each share of
Class A Common Stock, one one-thousandth (1/1,000th) of a
fully paid and nonassessable share of Class A Common Stock
of the TBS Surviving Corporation, (ii) in the case of each
share of Class B Common Stock, one one-thousandth
16
(1/1,000th) of a fully paid and nonassessable share of Class
B Common Stock of the TBS Surviving Corporation and (iii) in
the case of each share of Class C Preferred Stock, one
one-thousandth (1/1,000th) of a fully paid and nonassessable
share of Class C Preferred Stock of the TBS Surviving
Corporation.
SECTION 2.03. Exchange of Shares and Certificates.
(a) Exchange Agent. As of the Effective Time of the Mergers,
Holdco shall deposit with Chemical Bank or such other bank
or trust company as may be designated by Holdco (the
"Exchange Agent"), for the benefit of the holders of shares
of Changed Parent Stock and Company Capital Stock, for
exchange in accordance with this Article II, through the
Exchange Agent, certificates representing the shares of
Holdco Capital Stock (such shares of Holdco Capital Stock,
together with any dividends or distributions with respect
thereto with a record date after the Effective Time of the
Mergers, being hereinafter referred to as the "Exchange
Fund") issuable pursuant to Sections 2.01 and 2.02 in
exchange for outstanding shares of Changed Parent Stock and
Company Capital Stock.
(b) Exchange Procedures. As soon as reasonably
practicable after the Effective Time of the Mergers, the
Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the
Effective Time of the Mergers represented outstanding shares
of Changed Parent Stock or Company Capital Stock (the
"Certificates") whose shares were converted into the right
to receive shares of Holdco Capital Stock pursuant to
Section 2.01 or 2.02, (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent and shall
be in such form and have such other provisions as Holdco may
reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for
certificates representing shares of Holdco Capital Stock.
Upon surrender of a Certificate for cancellation to the
Exchange Agent or to such other agent or agents as may be
appointed by Holdco, together with such letter of
transmittal, duly executed, and such other documents as may
reasonably be required by the Exchange Agent, the holder of
such Certificate shall be entitled to receive in exchange
therefor a certificate representing that number of whole
shares of Holdco Capital Stock which such holder has the
right to receive pursuant to the provisions of this
17
Article II, and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of
ownership of Changed Parent Stock or Company Capital Stock
which is not registered in the transfer records of Parent or
the Company, as applicable, a certificate representing the
proper number of shares of Holdco Capital Stock may be
issued to a person other than the person in whose name the
Certificate so surrendered is registered, if such
Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the person requesting such
payment shall pay any transfer or other taxes required by
reason of the issuance of shares of Holdco Capital Stock to
a person other than the registered holder of such
Certificate or establish to the satisfaction of Holdco that
such tax has been paid or is not applicable. Until
surrendered as contemplated by this Section 2.03, each
Certificate shall be deemed at any time after the Effective
Time of the Mergers to represent only the right to receive
upon such surrender the certificate representing shares of
Holdco Capital Stock and cash in lieu of any fractional
shares of Holdco Capital Stock as contemplated by this
Section 2.03. No interest shall be paid or accrue on any
cash payable in lieu of any fractional shares of Holdco
Capital Stock.
(c) Distributions with Respect to Unexchanged
Shares. No dividends or other distributions with respect to
Holdco Capital Stock with a record date after the Effective
Time of the Mergers shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of
Holdco Capital Stock represented thereby, and no cash
payment in lieu of fractional shares shall be paid to any
such holder pursuant to Section 2.03(e), until the surrender
of such Certificate in accordance with this Article II.
Subject to the effect of applicable laws, following
surrender of any such Certificate, there shall be paid to
the holder of the certificate representing whole shares of
Holdco Capital Stock issued in exchange therefor, without
interest, (i) at the time of such surrender, the amount of
any cash payable in lieu of a fractional share of Holdco
Capital Stock to which such holder is entitled pursuant to
Section 2.03(e) and the amount of dividends or other
distributions with a record date after the Effective Time of
the Mergers theretofore paid with respect to such whole
shares of Holdco Capital Stock, and (ii) at the appropriate
payment date, the amount of dividends or other distributions
with a record date after the Effective Time of the Mergers
but prior to such surrender and a payment date subsequent to
18
such surrender payable with respect to such whole shares of
Holdco Capital Stock.
(d) No Further Ownership Rights in Changed Parent
Stock and Company Capital Stock. All shares of Holdco
Capital Stock issued upon the surrender for exchange of
Certificates in accordance with the terms of this Article II
(including any cash paid pursuant to Section 2.03(c) or
2.03(e)) shall be deemed to have been issued (and paid) in
full satisfaction of all rights pertaining to the shares of
Changed Parent Stock or Company Capital Stock theretofore
represented by such Certificates, subject, however, to the
obligation of the TW Surviving Corporation or the TBS
Surviving Corporation, as applicable, to pay any dividends
or make any other distributions with a record date prior to
the Effective Time of the Mergers which may have been
declared or made by Parent or the Company, as applicable, on
such shares of Changed Parent Stock and Company Capital
Stock in accordance with the terms of this Agreement or
prior to September 22, 1995, and which remain unpaid at the
Effective Time of the Mergers, and there shall be no further
registration of transfers on the stock transfer books of the
TW Surviving Corporation or the TBS Surviving Corporation,
as applicable, of the shares of Changed Parent Stock or
Company Capital Stock which were outstanding immediately
prior to the Effective Time of the Mergers. If, after the
Effective Time of the Mergers, Certificates are presented to
the TW Surviving Corporation or the TBS Surviving
Corporation or the Exchange Agent for any reason, they shall
be canceled and exchanged as provided in this Article II,
except as otherwise provided by law.
(e) Fractional Shares. (i) No certificates or
scrip representing fractional shares of Holdco Common Stock
shall be issued upon the surrender for exchange of
Certificates, and such fractional share interests shall not
entitle the owner thereof to vote or to any other rights of
a stockholder of Holdco.
(ii) Notwithstanding any other provision of this
Agreement, each holder of shares of Changed Parent Stock or
Company Capital Stock converted pursuant to the Mergers who
would otherwise have been entitled to receive a fraction of
a share of Holdco Common Stock (after taking into account
all Certificates delivered by such holder) shall receive, in
lieu thereof, cash (without interest) in an amount equal to
such fractional part of a share of Holdco Common Stock
multiplied by the closing price of a share of Parent Common
19
Stock on the Closing Date as reported on the NYSE-Composite
Transactions Tape (as reported by The Wall Street Journal
or, if not reported thereby, any other authoritative
source).
(iii) Certificates shall be issued by the TW
Surviving Corporation and the TBS Surviving Corporation to
evidence any fractional shares of the TW Surviving
Corporation and the TBS Surviving Corporation, as the case
may be, issued pursuant to Section 2.01(a), 2.01(f), 2.02(a)
or 2.02(f).
(iv) Certificates shall be issued by Holdco to
evidence any fractional shares of Holdco LMC Class Stock or
Holdco LMCN-V Stock issued pursuant to Section 2.01(c).
(f) Termination of Exchange Fund. Any portion of
the Exchange Fund which remains undistributed to the holders
of the Certificates for six months after the Effective Time
of the Mergers shall be delivered to Holdco, upon demand,
and any holders of the Certificates who have not theretofore
complied with this Article II shall thereafter look only to
Holdco for payment of their claim for Holdco Capital Stock,
any cash in lieu of fractional shares of Holdco Common Stock
and any dividends or distributions with respect to Holdco
Capital Stock.
(g) No Liability. None of Parent, Holdco, Delaware
Sub, Georgia Sub, the Company or the Exchange Agent shall be
liable to any person in respect of any shares of Holdco
Capital Stock (or dividends or distributions with respect
thereto) or cash from the Exchange Fund delivered to a
public official pursuant to any applicable abandoned
property, escheat or similar law. If any Certificates shall
not have been surrendered prior to seven years after the
Effective Time of the Mergers (or immediately prior to such
earlier date on which any shares of Holdco Capital Stock,
any cash in lieu of fractional shares of Holdco Capital
Stock or any dividends or distributions with respect to
Holdco Capital Stock in respect of such Certificate would
otherwise escheat to or become the property of any
Governmental Entity (as defined in Section 3.01(d)), any
such shares, cash, dividends or distributions in respect of
such Certificate shall, to the extent permitted by
applicable law, become the property of the TW Surviving
Corporation or the TBS Surviving Corporation, as applicable,
free and clear of all claims or interest of any person
previously entitled thereto.
20
(h) Investment of Exchange Fund. The Exchange
Agent shall invest any cash included in the Exchange Fund,
as directed by Holdco, on a daily basis. Any interest and
other income resulting from such investments shall be paid
to Holdco.
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of
the Company. The Company represents and warrants to Parent
as follows:
(a) Organization, Standing and Corporate Power.
Each of the Company and each of the Material Company
Subsidiaries (as defined below) is a corporation,
partnership or other legal entity duly organized,
validly existing and in good standing under the laws of
the jurisdiction in which it is organized and has the
requisite power and authority to carry on its business
as now being conducted. Each of the Company and its
subsidiaries (each a "Company Subsidiary") is duly
qualified or licensed to do business and in good
standing in each jurisdiction in which the nature of
its business or the ownership or leasing of its
properties makes such qualification or licensing
necessary, other than in such jurisdictions where the
failure to be so qualified or licensed (individually or
in the aggregate) would not have a material adverse
effect on the business, properties, assets, condition
(financial or otherwise), results of operations or
prospects of the Company and the Company Subsidiaries,
taken as a whole (a "Company Material Adverse Effect").
The Company has delivered to Parent complete and
correct copies of its Restated Articles of
Incorporation and By-laws and the certificates of
incorporation and by-laws or comparable organizational
documents of the Material Company Subsidiaries, in each
case as amended to the date of this Agreement. For
purposes of this Agreement, a "Material Company
Subsidiary" means each Company Subsidiary that (i)
constitutes a significant subsidiary within the meaning
of Rule 1-02 of Regulation S-X of the Securities and
Exchange Commission (the "SEC") or (ii) is party to an
agreement pursuant to which such Company Subsidiary or
another Company Subsidiary distributes programming or
21
licenses programming from any person other than a
Company Subsidiary and is listed in Section 3.01(a) of
the letter from the Company, dated September 22, 1995
addressed to Parent (the "Company Disclosure Letter")
(a "Company Programming Subsidiary"). The Company is
not in violation of any provision of its Restated
Articles of Incorporation or By-laws and no Material
Company Subsidiary is in violation of any provision of
its certificate of incorporation, by-laws or comparable
organizational documents, except to the extent that
such violations would not, individually or in the
aggregate, have a Company Material Adverse Effect.
(b) Subsidiaries. Section 3.01(b) of the Company
Disclosure Letter sets forth each Material Company
Subsidiary and the ownership or interest therein of the
Company. All the outstanding shares of capital stock of
each such Material Company Subsidiary have been validly
issued and are fully paid and nonassessable and, except
as set forth in Section 3.01(b) of the Company
Disclosure Letter, are owned by the Company, by another
Company Subsidiary or by the Company and another
Company Subsidiary, free and clear of all pledges,
claims, liens, charges, encumbrances and security
interests of any kind or nature whatsoever
(collectively, "Liens"). Except for the capital stock
of the Company Subsidiaries and except for the
ownership interests set forth in Section 3.01(b) of the
Company Disclosure Letter, the Company does not own,
directly or indirectly, any capital stock or other
ownership interest, with a fair market value as of
September 22, 1995, greater than $2,000,000, in any
corporation, partnership, limited liability company,
joint venture or other entity.
(c) Capital Structure. (i) The authorized capital
stock of the Company consists of 75,000,000 shares of
Class A Common Stock, 300,000,000 shares of Class B
Common Stock, 500,000 shares of Class A Serial
Preferred Stock, par value $.10 per share (the "Class A
Preferred Stock"), 12,600,000 shares of Class B
Cumulative Preferred Stock, par value $.125 per share
(the "Class B Preferred Stock"), 12,600,000 shares of
Class C Preferred Stock and 100,000,000 shares of Class
D Serial Preferred Stock, par value $.0625 per share
(the "Class D Preferred Stock"). Each share of Class C
Preferred Stock is convertible into six shares of Class
B Common Stock. At the close of business on
▇▇
▇▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇)(▇) 68,330,388 shares of Class A
Common Stock were outstanding, all of which were
validly issued, fully paid and nonassessable, (II)
137,819,078 shares of Class B Common Stock were
outstanding, all of which were validly issued, fully
paid and nonassessable, (III) 12,396,976 shares of
Class C Preferred Stock were outstanding, all of which
were validly issued, fully paid and nonassessable, and
(iv) no shares of Class A Preferred Stock, Class B
Preferred Stock or Class D Preferred Stock were issued
or outstanding; and (B)(I) 81,822,278 shares of Class B
Common Stock were reserved for issuance upon conversion
of the Class C Preferred Stock and the Company's Zero
Coupon Subordinated Convertible Notes due 2007, (II)
13,904,724 shares of Class B Common Stock were reserved
for issuance upon the exercise of outstanding stock
options (the "Company Stock Options") granted pursuant
to the Company's 1988 Stock Option Plan, the Company's
1993 Stock Option and Equity Award Plan and the
agreement, dated June 1, 1993, among CNN America, Inc.,
the Company, ▇▇▇▇▇ ▇▇▇▇ Enterprises, Inc., and ▇▇▇▇▇
▇▇▇▇ (the "Company Stock Plans") and (III) 4,892,214
shares of Class B Common Stock were reserved for
issuance upon conversion of the 6-1/2% Convertible
Subordinated Debentures (the "New Line Debentures") of
New Line Cinema Corporation ("New Line"), upon the
exercise of outstanding stock options (the "New Line
Options") granted pursuant to the New Line 1986 Stock
Option Plan, the New Line 1990 Stock Option Plan, the
New Line 1991 Stock Option Plan, the Stock Option
Agreements, dated January 17, 1986, and February 14,
1990, among New Line, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇, the Stock Option Agreements, dated February
14, 1990, September 27, 1990, and January 22, 1993,
between New Line and ▇▇▇▇▇▇▇ ▇▇▇▇▇, and the Stock
Option Agreement, dated October 6, 1993, between New
Line and ▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "New Line Plans") or upon
the exercise of outstanding warrants issued by New Line
pursuant to the Warrant to Purchase Common Stock of New
Line, dated May 31, 1991, initially issued to ▇▇▇
▇▇▇▇▇▇ Holdings International Ltd. Except as set forth
above, at the close of business on August 29, 1995, no
shares of capital stock or other voting securities of
the Company were issued, reserved for issuance or
outstanding and, since such date, no shares of capital
stock or other voting securities or options in respect
thereof have been issued except upon the conversion of
the securities or the exercise of the
23
Company Stock Options or other options and warrants
referred to in clauses (B)(I) through (III) above.
Except as set forth in this Section 3.01(c) or in
Section 3.01(c) of the Company Disclosure Letter and
except for Company Stock Options granted in the
ordinary course of business to employees of the Company
and the Company Subsidiaries who are not senior
executive officers and covering not in excess of an
aggregate of 1,000,000 shares of Class B Common Stock
for all such grants during the period from September
22, 1995, through the Effective Time of the Mergers,
there were not on September 22, 1995, and at the
Effective Time of the Mergers there will not be, any
options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to
which the Company or any Company Subsidiary is a party
or by which any of them is bound relating to the issued
or unissued capital stock of the Company or any Company
Subsidiary, or obligating the Company or any Company
Subsidiary to issue, transfer, grant or sell any shares
of capital stock of, or other equity interests in, or
securities convertible into or exchangeable for any
capital stock or other equity interests in, the Company
or any Company Subsidiary or obligating the Company or
any Company Subsidiary to issue, grant, extend or enter
into any such option, warrant, call, right, commitment,
agreement, arrangement or undertaking. All shares of
Class B Common Stock subject to issuance as aforesaid,
upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and
nonassessable. There are not any outstanding
contractual obligations of the Company or any Company
Subsidiary to repurchase, redeem or otherwise acquire
any shares of capital stock of the Company or any
Company Subsidiary, or make any material investment (in
the form of a loan, capital contribution or otherwise)
in, any Company Subsidiary or any other person.
(ii) The Company has previously delivered to
Parent (A) a true and complete list of the holders of
record of the Class C Preferred Stock (the "Class C
Shareholders") and the number of shares of Class C
Preferred Stock owned of record by each such Class C
Shareholder, (B) a true and complete list of the number
of shares of each class of capital stock of the Company
owned of record by the Principal Shareholder and each
person known by the Company to be an affiliate of the
24
Principal Shareholder and (C) true and complete copies
of any agreement relating to the ownership or voting of
the Class C Preferred Stock to which the Company is a
party.
(d) Authority; Noncontravention. The Company has
the requisite corporate power and authority to enter
into this Agreement and, subject to approval of this
Agreement by the holders of (i) a majority of the
voting power of the outstanding Company Capital Stock,
voting as a single class, (ii) a majority of the voting
power of the outstanding Class A Common Stock and the
Class B Common Stock, voting as a single class, and
(iii) the holders of a majority of the outstanding
shares of Class C Preferred Stock, voting as a separate
class (the "Shareholder Approvals"), to consummate the
transactions contemplated by this Agreement. The
execution and delivery of this Agreement by the Company
and the consummation by the Company of the transactions
contemplated by this Agreement have been duly
authorized by all necessary corporate action on the
part of the Company, subject to the Shareholder
Approvals. This Agreement has been duly executed and
delivered by the Company and constitutes a valid and
binding obligation of the Company, enforceable against
the Company in accordance with its terms. Except as set
forth in Section 3.01(d) of the Company Disclosure
Letter, the execution and delivery of this Agreement by
the Company do not, and the consummation of the
transactions contemplated by this Agreement and
compliance with the provisions of this Agreement will
not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to
loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or
assets of the Company or any Company Subsidiary under,
(i) the Restated Articles of Incorporation or By-laws
of the Company or the comparable organizational
documents of any Company Subsidiary, (ii) any agreement
pursuant to which the Company or any Company
Programming Subsidiary distributes programming or
licenses programming from a person other than a Company
Subsidiary individually involving annual payments to or
by the Company and the Company Subsidiaries of
$20,000,000 or more (any such agreement, a "Programming
Agreement"), (iii) any loan or credit agreement, note,
▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, lease or other agreement
(but excluding any Programming Agreement), instrument,
permit, concession, franchise or license applicable to
the Company or any Company Subsidiary or their
respective properties or assets or (iv) subject to the
governmental filings and other matters referred to in
the following sentence, any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable
to the Company or any Company Subsidiary or their
respective properties or assets, other than, in the
case of clauses (iii) and (iv), any such conflicts,
violations, defaults, rights or Liens that individually
or in the aggregate would not (x) have a Company
Material Adverse Effect, (y) prevent the Company from
performing its obligations under this Agreement in any
material respect or (z) prevent or delay in any
material respect the consummation of any of the
transactions contemplated by this Agreement. No
consent, approval, order or authorization of, or
registration, declaration or filing with, any Federal,
state or local government or any court, administrative
agency or commission or other governmental authority or
agency, domestic or foreign, including the European
Union (a "Governmental Entity"), is required by or with
respect to the Company or any of the Company
Subsidiaries in connection with the execution and
delivery of this Agreement by the Company or the
consummation by the Company of the transactions
contemplated by this Agreement, except for (i) the
filing of a premerger notification and report form by
the Principal Shareholder as the ultimate parent entity
of the Company under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇"), (▇▇) the
filing with the SEC of (A) a joint proxy statement
relating to the meetings of the Company's shareholders
and Parent's stockholders to be held in connection with
the Mergers and the transactions contemplated by this
Agreement (as amended or supplemented from time to
time, the "Proxy Statement"), and (B) such reports
under Section 13(a) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as may be
required in connection with this Agreement and the
transactions contemplated by this Agreement, (iii) the
filing of the Certificates of Merger with the Delaware
Secretary of State and the Georgia Secretary of State
and appropriate documents with the relevant authorities
of other states in which the Company is qualified to do
business, (iv) such filings with, and orders of, the
26
Federal Communications Commission (the "FCC") as may be
required under the Communications Act of 1934, as
amended (the "Communications Act"), and the FCC's rules
and regulations in connection with this Agreement and
the transactions contemplated by this Agreement and (v)
such other consents, approvals, orders, authorizations,
registrations, declarations and filings (x) as may be
required under the laws of any foreign country in which
the Company or any of the Company Subsidiaries conducts
any business or owns any property or assets or (y)
which, if not obtained or made, would not prevent or
delay in any material respect the consummation of any
of the transactions contemplated by this Agreement or
otherwise prevent the Company from performing its
obligations under this Agreement in any material
respect or have, individually or in the aggregate, a
Company Material Adverse Effect.
(e) SEC Documents; Undisclosed Liabilities. The
Company has filed all required reports, schedules,
forms, statements and other documents with the SEC
since December 31, 1992 (the "SEC Documents"; such
term, when used with respect to such documents filed
prior to September 22, 1995, shall mean such documents
as amended prior to September 22, 1995). As of their
respective dates, the SEC Documents complied in all
material respects with the requirements of the
Securities Act of 1933 (the "Securities Act"), or the
Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder
applicable to such SEC Documents, and none of the SEC
Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be
stated therein or necessary in order to make the
statements therein, in light of the circumstances under
which they were made, not misleading, except to the
extent such statements have been modified or superseded
by a later Filed SEC Document (as defined in Section
3.01(g)). Except to the extent that information
contained in any SEC Document has been revised or
superseded by a later filed SEC Document, neither the
Company's Annual Report on Form 10-K for the year ended
December 31, 1994, nor any SEC Document filed after
December 31, 1994, contains any untrue statement of a
material fact or omits to state any material fact
required to be stated therein or necessary in order to
make the statements therein, in light of the
circumstances under which they were made,
27
not misleading. The consolidated financial statements
of the Company included in the SEC Documents comply as
to form in all material respects with applicable
accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted account-
ing principles (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis during the periods
involved (except as may be indicated in the notes
thereto) and fairly present the consolidated financial
position of the Company and the consolidated Company
Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit
adjustments). Except as set forth in the Filed SEC
Documents, neither the Company nor any Company
Subsidiary has any liabilities or obligations of any
nature (whether accrued, absolute, contingent or
otherwise) required by generally accepted accounting
principles to be set forth on a consolidated balance
sheet of the Company and the consolidated Company
Subsidiaries or in the notes thereto and which,
individually or in the aggregate, could reasonably be
expected to have a Company Material Adverse Effect.
(f) Information Supplied. None of the information
supplied or to be supplied by the Company for inclusion
or incorporation by reference in (i) the registration
statement on Form S-4 to be filed with the SEC by
Holdco in connection with the issuance of Holdco
Capital Stock in the Mergers (the "Form S-4") will, at
the time the Form S-4 is filed with the SEC, at any
time it is amended or supplemented or at the time it
becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state
any material fact required to be stated therein or
necessary to make the statements therein not
misleading, or (ii) the Proxy Statement will, at the
date the Proxy Statement is first mailed to the
Company's shareholders or Parent's stockholders or at
the time of the Shareholders Meeting (as defined in
Section 5.01(b)) or the Parent's Stockholders Meeting
(as defined in Section 5.01(c)), contain any untrue
statement of a material fact or omit to state any
material fact required to be stated therein or
necessary in order to make the statements therein, in
28
light of the circumstances under which they are made,
not misleading. The Proxy Statement will comply as to
form in all material respects with the requirements of
the Exchange Act and the rules and regulations
promulgated thereunder, except that no representation
is made by the Company with respect to statements made
or incorporated by reference therein based on
information supplied by Parent specifically for
inclusion or incorporation by reference in the Proxy
Statement.
(g) Absence of Certain Changes or Events. Except
as disclosed in the SEC Documents filed and publicly
available prior to September 22, 1995 (the "Filed SEC
Documents"), since the date of the most recent audited
financial statements included in the Filed SEC
Documents, the Company has conducted its business only
in the ordinary course, and there has not been:
(i) any change or effect (or any development
that, insofar as can reasonably be foreseen, is
likely to result in a change or effect) which,
individually or in the aggregate, has had or is
likely to have, a Company Material Adverse Effect;
(ii) except for regular quarterly dividends
not in excess of $.0175 per share of Class A
Common Stock, $.0175 per share of Class B Common
Stock and $.105 per share of Class C Preferred
Stock, with customary record and payment dates,
any declaration, setting aside or payment of any
dividend or other distribution (whether in cash,
stock or property) with respect to any of the
Company Capital Stock;
(iii) any split, combination or
reclassification of any of the Company's capital
stock or any issuance or the authorization of any
issuance of any other securities in exchange or in
substitution for shares of the Company's capital
stock;
(iv) except as disclosed in Section 3.01(g)
of the Company Disclosure Letter, (A) any granting
by the Company or any Company Subsidiary to any
executive officer of the Company or any of the
Company Subsidiaries of any increase in
compensation, except in the ordinary course of
business consistent with prior practice or as was
required
29
under employment agreements in effect as of the
date of the most recent audited financial
statements included in the Filed SEC Documents,
(B) any granting by the Company or any of the
Company Subsidiaries to any such executive officer
of any increase in severance or termination pay,
except as was required under any employment,
severance or termination agreements in effect as
of the date of the most recent audited financial
statements included in the Filed SEC Documents, or
(C) any entry by the Company or any of the Company
Subsidiaries into any employment, severance or
termination agreement with any such executive
officer (other than, in the case of clauses (B)
and (C), for any such item entered into after
September 22, 1995, in compliance with Section
4.01(a)(ix));
(v) any damage, destruction or loss, whether
or not covered by insurance, that has had or is
likely to have a Company Material Adverse Effect;
or
(vi) any change in accounting methods,
principles or practices by the Company or any
Material Company Subsidiary materially affecting
its assets, liabilities or business, except
insofar as may have been required by a change in
generally accepted accounting principles.
(h) Litigation. Except as disclosed in the Filed
SEC Documents or in Section 3.01(h) of the Company
Disclosure Letter, there is no suit, action or
proceeding (including any proceeding by or before the
FCC) pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of
the Company Subsidiaries (and the Company is not aware
of any basis for any such suit, action or proceeding)
that, individually or in the aggregate, could
reasonably be expected to (i) have a Company Material
Adverse Effect or (ii) prevent the Company from
performing its obligations under this Agreement in any
material respect, and there is not any judgment,
decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against the Company or
any of the Company Subsidiaries having, or which,
insofar as reasonably can be foreseen, in the future
would have, any Company Material Adverse Effect. As of
30
September 22, 1995, except as disclosed in the Filed
SEC Documents or in Section 3.01(h) of the Company
Disclosure Letter, there was no suit, action or
proceeding pending, or, to the knowledge of the
Company, threatened, against the Company or any of the
Company Subsidiaries (and the Company is not aware of
any basis for any such suit, action or proceeding)
that, individually or in the aggregate, could
reasonably be expected to prevent or delay in any
material respect the consummation of the Mergers or any
of the transactions contemplated by this Agreement.
(i) Absence of Changes in Benefit Plans. Except as
disclosed in the Filed SEC Documents or in Section
3.01(i) of the Company Disclosure Letter, since the
date of the most recent audited financial statements
included in the Filed SEC Documents, there has not been
any adoption or amendment in any material respect by
the Company or any of the Company Subsidiaries of any
collective bargaining agreement or any bonus, pension,
profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock
option, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical or
other plan, arrangement or understanding (whether or
not legally binding) providing benefits to any current
or former employee, officer or director of the Company
or any of the Company Subsidiaries (collectively,
"Benefit Plans").
(j) ERISA Compliance. Except as described in the
Filed SEC Documents or in Section 3.01(j) of the
Company Disclosure Letter or as would not have a
Company Material Adverse Effect, (i) all employee
benefit plans or programs maintained for the benefit of
the current or former employees or directors of the
Company or any Company Subsidiary that are sponsored,
maintained or contributed to by the Company or any
Company Subsidiary, or with respect to which the
Company or any Company Subsidiary has any liability,
including any such plan that is an "employee benefit
plan" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974 ("ERISA"), are
in compliance with all applicable requirements of law,
including ERISA and the Code, and (ii) neither the
Company nor any Company Subsidiary has any liabilities
or obligations with respect to any such employee
31
benefit plans or programs, whether accrued, contingent
or otherwise, nor to the knowledge of the executive
officers of the Company are any such liabilities or
obligations expected to be incurred. Except as set
forth in Section 3.01(j) of the Company Disclosure
Letter, the execution of, and performance of the
transactions contemplated in, this Agreement will not
(either alone or upon the occurrence of any additional
or subsequent events) constitute an event under any
benefit plan, policy, arrangement or agreement or any
trust or loan that will or may result in any payment
(whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution,
increase in benefits or obligation to fund benefits
with respect to any employee. The only severance
agreements or severance policies applicable to the
Company or the Company Subsidiaries are the agreements
and policies specifically referred to in Section
3.01(j) of the Company Disclosure Letter.
(k) Voting Requirements. The Shareholder Approvals
are the only votes of the holders of any class or
series of the Company's capital stock necessary to
approve this Agreement and the transactions
contemplated by this Agreement.
(l) Brokers; Schedule of Fees and Expenses. Except
as set forth in Section 3.01(l) of the Company
Disclosure Letter, no broker, investment banker,
financial advisor or other person is entitled to any
broker's, finder's, financial advisor's or other
similar fee or commission in connection with the
transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. The
Company will pay the fees and expenses of the persons
listed in Section 3.01(1) of the Company Disclosure
Letter. The fees incurred and to be incurred by the
Company in connection with this Agreement and the
transactions contemplated by this Agreement for the
persons listed in Section 3.01(l) of the Company
Disclosure Letter are set forth in Section 3.01(l) of
the Company Disclosure Letter. The Company has
furnished to Parent true and complete copies of all the
agreements referred to in Section 3.01(l) of the
Company Disclosure Letter and all indemnification and
other agreements related to the engagement of the
persons so listed.
32
(m) Opinions of Financial Advisors. The Company
has received the opinions of CS First Boston
Corporation and ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated to the effect that, as of the respective
dates of such opinions (i) in the case of the CS First
Boston Corporation opinion, the consideration to be
received by the Company's shareholders in the TBS
Merger is fair to the Company's shareholders (other
than Parent) from a financial point of view, and (ii)
in the case of the ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ &
▇▇▇▇▇ Incorporated opinion, the consideration to be
received by shareholders of the Company (other than
Tele-Communications, Inc. ("TCI"), and its affiliates
and Parent) is fair to such shareholders from a
financial point of view and, in the context of the
governance arrangements relating to the Company's
ability to consummate the TBS Merger, the financial
terms of the transactions to be entered into between
the Company, Parent and their respective affiliates, on
the one hand, and TCI, on the other hand, are fair from
a financial point of view to the Company and its
shareholders (other than TCI and its affiliates and
Parent), a signed copy of which opinions have been
delivered to Parent.
(n) Taxes. (i) The Company and each Company
Subsidiary have timely filed (or have had timely filed
on their behalf) or will file or cause to be timely
filed, all material Tax Returns required by applicable
law to be filed by any of them prior to or as of the
Effective Time of the Mergers. All such Tax Returns
are, or will be at the time of filing, true, complete
and correct in all material respects.
(ii) The Company and each Company Subsidiary have
paid (or have had paid on their behalf), or where
payment is not yet due, have established (or have had
established on their behalf and for their sole benefit
and recourse), or will establish or cause to be
established on or before the Effective Time of the
Mergers, an adequate accrual for the payment of, all
material Taxes due with respect to any period ending
prior to or as of the Effective Time of the Mergers.
(iii) For purposes of this Agreement, the
following terms shall have the following meanings:
33
(A) "Taxes" shall mean all Federal, state,
local and foreign taxes, and other assessments of a similar
nature (whether imposed directly or through withholding),
including any interest, additions to tax, or penalties
applicable thereto.
(B) "Tax Returns" shall mean all Federal,
state, local and foreign tax returns, declarations,
statements, reports, schedules, forms and information
returns and any amended tax return relating to Taxes.
(o) Compliance with Laws. Neither the Company nor
any of the Company Subsidiaries has violated or failed to
comply with any statute, law, ordinance, regulation, rule,
judgment, decree or order of any Governmental Entity
applicable to its business or operations (including the
Communications Act and the FCC's rules and regulations),
except for violations and failures to comply that could not,
individually or in the aggregate, reasonably be expected to
result in a Company Material Adverse Effect.
SECTION 3.02. Representations and Warranties of
Parent. Parent represents and warrants to the Company as
follows:
(a) Organization, Standing and Corporate Power.
Each of Parent, Holdco and Delaware Sub and each of the
Material Parent Subsidiaries (as defined below) is a
corporation, partnership or other legal entity duly
organized, validly existing and in good standing under the
laws of the jurisdiction in which it is organized and has
the requisite power and authority to carry on its business
as now being conducted. Each of Parent and Parent's
subsidiaries, including Holdco and Delaware Sub (each a
"Parent Subsidiary"), is duly qualified or licensed to do
business and in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the
failure to be so qualified or licensed (individually or in
the aggregate) would not have a material adverse effect on
the business, properties, assets, condition (financial or
otherwise), results of operations or prospects of Parent and
the Parent Subsidiaries, taken as a whole (a "Parent
Material Adverse Effect"). As of
34
the date of execution of this Agreement, Georgia Sub
is, and on the Closing Date Georgia Sub will be, a
corporation duly organized, validly existing and in
good standing under the laws of the State of Georgia.
As of the date of execution of this Agreement, Georgia
Sub has, and on the Closing Date Georgia Sub will have,
the requisite power and authority to carry on its
business as now conducted. As of the date of execution
of this Agreement, Georgia Sub is, and on the Closing
Date Georgia Sub will be, duly qualified or licensed to
do business and in good standing in each jurisdiction
in which the nature of its business or the ownership or
leasing of its properties makes such qualification or
licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed
(individually or in the aggregate) would not have a
Parent Material Adverse Effect. Prior to the date of
execution of this Agreement, Parent has delivered to
the Company complete and correct copies of its Restated
Certificate of Incorporation and By-laws and the
certificates of incorporation and by-laws or comparable
organizational documents of Holdco, Delaware Sub,
Georgia Sub and the Material Parent Subsidiaries, in
each case as amended to the date of delivery. None of
Parent, Holdco, Delaware Sub and Georgia Sub is in
violation of any provision of its certificate of
incorporation or by-laws and no Material Parent
Subsidiary is in violation of any provision of its
certificate of incorporation, by-laws or comparable
organizational documents, except to the extent that
such violations would not, individually or in the
aggregate, have a Parent Material Adverse Effect. Time
Warner Entertainment Company, L.P. ("TWE"), and each
other Parent Subsidiary that constitutes a significant
subsidiary of Parent within the meaning of Rule 1-02 of
Regulation S-X of the SEC (determined without regard to
paragraph (3) of the definition thereof) is referred to
herein as a "Material Parent Subsidiary".
(b) Subsidiaries. Section 3.02(b) of the Parent
Disclosure Letter (as defined in Section 3.02(c)) sets
forth as of September 22, 1995, each Material Parent
Subsidiary and the ownership or interest therein of
Parent. All the outstanding shares of capital stock of
each such Material Parent Subsidiary have been validly
issued and are fully paid and nonassessable and, except
as set forth in Section 3.02(b) of the Parent
Disclosure Letter, are owned by Parent, by another
35
Parent Subsidiary or by Parent and another Parent
Subsidiary, free and clear of all Liens. Except for the
ownership interests in the Parent Subsidiaries and
except for the ownership interests set forth in Section
3.02(b) of the Parent Disclosure Letter, as of
September 22, 1995, Parent did not own, directly or
indirectly, any capital stock or other ownership
interest, with a fair market value as of September 22,
1995, greater than $5,000,000, in any corporation,
partnership, limited liability company, joint venture
or other entity.
(c) Capital Structure. As of September 22, 1995,
the authorized capital stock of Parent consisted of
750,000,000 shares of Parent Common Stock and
250,000,000 shares of preferred stock, par value $1.00
per share ("Parent Preferred Stock"). At the close of
business on August 31, 1995, (i) (A) 387,166,475 shares
of Parent Common Stock were outstanding, all of which
were validly issued, fully paid and nonassessable, (B)
43,739,664 shares of Parent Common Stock were held by
Parent Subsidiaries and (C) 1,988,026 shares of Parent
Common Stock were held by Parent in treasury, (ii)
464,638 shares of Parent Series B Preferred Stock were
outstanding, all of which were validly issued, fully
paid and nonassessable, (iii) 3,264,508 shares of
Parent Series C Preferred Stock were outstanding, all
of which were validly issued, fully paid and
nonassessable, (iv) 11,000,000 shares of Parent Series
D Preferred Stock were outstanding, all of which were
validly issued, fully paid and nonassessable, (v)
82,786,025 shares of Parent Common Stock were reserved
for issuance pursuant to the Time Warner 1981 Stock
Option Plan, the Time Warner 1986 Stock Option Plan,
the 1988 Stock Incentive Plan of Time Warner Inc., the
Time Warner 1989 Stock Incentive Plan, the Time Warner
1989 WCI Replacement Stock Option Plan, the Time Warner
1989 Lorimar Non-Employee Replacement Stock Option
Plan, the Time Warner 1993 Stock Option Plan, the Time
Warner 1994 Stock Option Plan, the Time Warner
Corporate Group Stock Incentive Plan, the Time Warner
Cable Television Group Stock Incentive Plan, the Time
Warner Filmed Entertainment Group Stock Incentive Plan,
the Time Warner Music Group Stock Incentive Plan, the
Time Warner Programming Group Stock Incentive Plan, the
Time Warner Publishing Group Stock Incentive Plan and
the Time Warner 1988 Restricted Stock Plan for
Non-Employee
36
Directors (the "Parent Stock Plans" and the options
granted thereunder being the "Parent Options"), (vi)
4,000,000 shares of Parent Preferred Stock were
reserved for issuance in connection with the rights to
purchase shares of Parent Common Stock pursuant to the
Rights Agreement dated as of January 20, 1994 (the
"Rights Agreement"), between Parent and Chemical Bank,
as Rights Agent, and (vii) additional shares of capital
stock of Parent were reserved for issuance as described
in Section 3.02(c) of the letter from Parent, dated
September 22, 1995, addressed to the Company (the
"Parent Disclosure Letter"). Except as set forth above,
at the close of business on August 31, 1995, no shares
of capital stock or other voting securities of Parent
were issued, reserved for issuance or outstanding. All
shares of Holdco Capital Stock which may be issued
pursuant to this Agreement will be, when issued, duly
authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights.
Except as set forth above or in Section 3.02(c) of the
Parent Disclosure Letter, as of September 22, 1995,
there were not any options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings
of any kind to which Parent or any Parent Subsidiary is
a party or by which any of them is bound relating to
the issued or unissued capital stock of Parent or any
Parent Subsidiary, or obligating Parent or any Parent
Subsidiary to issue, transfer, grant or sell, or cause
to be issued, transferred, granted or sold, additional
shares of capital stock or other voting securities of
Parent or any Material Parent Subsidiary or obligating
Parent or any Parent Subsidiary to issue, grant, extend
or enter into any such option, warrant, call, right,
commitment, agreement, arrangement or undertaking.
Except as set forth in Section 3.02(c) of the Parent
Disclosure Letter, as of September 22, 1995, there were
not any outstanding contractual obligations of Parent
or any Parent Subsidiary to repurchase, redeem or
otherwise acquire any shares of capital stock of Parent
or any Material Parent Subsidiary or make any material
investment (in the form of a loan, capital contribution
or otherwise) in any person (other than a wholly owned
Parent Subsidiary). The authorized capital stock of
Holdco consists of 100 shares of common stock, par
value $1.00 per share, all of which have been validly
issued, are fully paid and nonassessable and are owned
by Parent free and clear of any Lien. The authorized
capital stock of Delaware Sub consists of 1,000 shares
37
of Common Stock, par value $1.00 per share, all of
which have been validly issued, are fully paid and
nonassessable and on the date of execution of this
Agreement are, and will on the Closing Date be, owned
by Holdco free and clear of any Lien. The authorized
capital stock of Georgia Sub on the date of execution
of this Agreement consists, and on the Closing Date
will consist, of 1,000 shares of Common Stock, par
value $1.00 per share, all of which on the date of
execution of this Agreement have been, and on the
Closing Date will have been, validly issued and on the
date of execution of this Agreement are, and on the
Closing Date will be, fully paid and nonassessable and
owned by Holdco free and clear of any Lien.
(d) Authority; Noncontravention. Parent, Holdco,
Delaware Sub and Georgia Sub have all requisite
corporate power and authority to enter into this
Agreement and, subject to the Parent Stockholder
Approvals (as defined in Section 3.02(i)), to
consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement
by Parent, Holdco, Delaware Sub and Georgia Sub and the
consummation by Parent, Holdco, Delaware Sub and
Georgia Sub of the transactions contemplated by this
Agreement have been duly authorized by all necessary
corporate action on the part of Parent, Holdco,
Delaware Sub and Georgia Sub, subject to the Parent
Stockholder Approvals. This Agreement has been duly
executed and delivered by Parent, Holdco, Delaware Sub
and Georgia Sub and constitutes a valid and binding
obligation of each such party, enforceable against each
such party in accordance with its terms. Except as set
forth in Section 3.02(d) of the Parent Disclosure
Letter, the execution and delivery of this Agreement by
Parent, Holdco, Delaware Sub and Georgia Sub do not,
and the consummation of the transactions contemplated
by this Agreement and compliance with the provisions of
this Agreement will not, conflict with, or result in
any violation of, or default (with or without notice or
lapse of time, or both) under, or give rise to a right
of termination, cancellation or acceleration of any
obligation or to loss of a material benefit under, or
result in the creation of any Lien upon any of the
properties or assets of Parent, Holdco, Delaware Sub,
Georgia Sub or any other Parent Subsidiary under, (i)
the Restated Certificate of Incorporation or by-laws of
Parent or the certificate of incorporation
38
or by-laws or comparable organizational documents of
Holdco, Delaware Sub, Georgia Sub or any other Parent
Subsidiary, (ii) any loan or credit agreement, note,
bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license
applicable to Parent, Holdco, Delaware Sub, Georgia Sub
or any other Parent Subsidiary or their respective
properties or assets or (iii) subject to the
governmental filings and other matters referred to in
the following sentence, any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable
to Parent, Holdco, Delaware Sub, Georgia Sub or any
other Parent Subsidiary or their respective properties
or assets, other than, in the case of clauses (ii) and
(iii), any such conflicts, violations, defaults, rights
or Liens that individually or in the aggregate would
not (x) have a Parent Material Adverse Effect, (y)
prevent Parent, Holdco, Delaware Sub or Georgia Sub
from performing their respective obligations under this
Agreement in any material respect or (z) prevent or
delay in any material respect the consummation of any
of the transactions contemplated by this Agreement. No
consent, approval, order or authorization of, or
registration, declaration or filing with, any
Governmental Entity is required by or with respect to
Parent, Holdco, Delaware Sub, Georgia Sub or any other
Parent Subsidiary in connection with the execution and
delivery of this Agreement by Parent and Sub or the
consummation by Parent, Holdco, Delaware Sub or Georgia
Sub, as the case may be, of any of the transactions
contemplated by this Agreement, except for (i) the
filing of a premerger notification and report form by
Parent under the HSR Act and possible filings of
premerger notification and report forms by shareholders
of the Company under the HSR Act with respect to the
acquisition of shares of Holdco Common Stock pursuant
to the Mergers, (ii) the filing with the SEC of the
Proxy Statement and the Form S-4 and such reports under
Sections 13 and 16(a) of the Exchange Act as may be
required in connection with this Agreement and the
transactions contemplated by this Agreement and the
receipt of all state securities or "blue sky"
authorizations necessary to issue Holdco Capital Stock
as contemplated by this Agreement, (iii) the filing of
the Certificates of Merger with the Delaware Secretary
of State and the Georgia Secretary of State and
appropriate documents with the relevant authorities of
other states in which the Company is qualified to do
39
business, (iv) such filings with, and orders of, the
FCC under the Communications Act and the FCC's rules
and regulations as may be required in connection with
this Agreement and the transactions contemplated by
this Agreement, (v) such filings with, and orders of,
cable franchising authorities as may be required in
connection with this Agreement and the transactions
contemplated by this Agreement, (vi) the filing of a
Restated Certificate of Incorporation for Holdco (as
contemplated by Section 4.01(b)) with the Delaware
Secretary of State, (vii) such filings by Holdco as may
be necessary for Holdco to qualify to do business in
appropriate jurisdictions and (viii) such other
consents, approvals, orders, authorizations,
registrations, declarations and filings (x) as may be
required under the laws of any foreign country in which
Parent or any of the Parent Subsidiaries conducts any
business or owns any property or assets or (y) which,
if not obtained or made, would not prevent or delay in
any material respect the consummation of any of the
transactions contemplated by this Agreement or
otherwise prevent Parent, Holdco, Delaware Sub or
Georgia Sub from performing their respective
obligations under this Agreement in any material
respect or have, individually or in the aggregate, a
Parent Material Adverse Effect.
(e) SEC Documents; Undisclosed Liabilities. Parent
has filed all required reports, schedules, forms,
statements and other documents with the SEC since
December 31, 1992 (the "Parent SEC Documents"; such
term, when used with respect to such documents filed
prior to September 22, 1995, shall mean such documents
as amended prior to September 22, 1995). As of their
respective dates, the Parent SEC Documents complied in
all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be,
and the rules and regulations of the SEC promulgated
thereunder applicable to such Parent SEC Documents, and
none of the Parent SEC Documents contained any untrue
statement of a material fact or omitted to state a
material fact required to be stated therein or
necessary in order to make the statements therein, in
light of the circumstances under which they were made,
not misleading, except to the extent such statements
have been modified or superseded by a later Filed
Parent SEC Document (as defined in Section 3.02(g)).
Except to the extent that
40
information contained in any Parent SEC Document has
been revised or superseded by a later filed Parent SEC
Document, neither Parent's Annual Report on Form 10-K
for the year ended December 31, 1994, nor any Parent
SEC Document filed after December 31, 1994, contains
any untrue statement of a material fact or omits to
state any material fact required to be stated therein
or necessary in order to make the statements therein,
in light of the circumstances under which they were
made, not misleading. The consolidated financial
statements of Parent included in the Parent SEC
Documents comply as to form in all material respects
with applicable accounting requirements and the
published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with
generally accepted accounting principles (except, in
the case of unaudited statements, as permitted by Form
10-Q of the SEC) applied on a consistent basis during
the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated
financial position of Parent and the consolidated
Parent Subsidiaries as of the dates thereof and the
▇▇▇▇▇▇▇- dated results of their operations and cash
flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit
adjustments). Except as set forth in the Filed Parent
SEC Documents, neither Parent nor any Parent Subsidiary
has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise)
required by generally accepted accounting principles to
be set forth on a consolidated balance sheet of Parent
and the consolidated Parent Subsidiaries or in the
notes thereto and which, individually or in the
aggregate, could reasonably be expected to have a
Parent Material Adverse Effect.
(f) Information Supplied. None of the information
supplied or to be supplied by Parent, Holdco, Delaware
Sub or Georgia Sub for inclusion or incorporation by
reference in (i) the Form S-4 will, at the time the
Form S-4 is filed with the SEC, at any time it is
amended or supplemented or at the time it becomes
effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any
material fact required to be stated therein or
necessary to make the statements therein not
misleading, or (ii) the Proxy Statement will, at the
date the Proxy Statement is first mailed to the
Com-
41
pany's shareholders or Parent's stockholders or at the
time of the Shareholders Meeting or the Parent's
Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact
required to be stated therein or necessary in order to
make the statements therein, in light of the
circumstances under which they are made, not
misleading. The Form S-4 and the Proxy Statement will
comply as to form in all material respects with the
requirements of the Securities Act and the Exchange
Act, as applicable, and the rules and regulations
promulgated thereunder, except that no representation
or warranty is made by Parent with respect to
statements made or incorporated by reference therein
based on information supplied by the Company
specifically for inclusion or incorporation by
reference in the Form S-4 or the Proxy Statement.
(g) Absence of Certain Changes or Events. Except
as disclosed in the Parent SEC Documents filed and
publicly available prior to September 22, 1995 (the
"Filed Parent SEC Documents"), or in Section 3.02(g) of
the Parent Disclosure Letter, since the date of the
most recent audited financial statements included in
the Filed Parent SEC Documents, Parent has conducted
its business only in the ordinary course, and there has
not been:
(i) any change or effect (or any development
that, insofar as can reasonably be foreseen, is
likely to result in a change or effect) which,
individually or in the aggregate, has had or is
likely to have, a Parent Material Adverse Effect;
(ii) except for regular quarterly dividends
not in excess of $0.09 per share of Parent Common
Stock and the stated or required amount of
dividends on any series of Parent Preferred Stock,
in each case with customary record and payment
dates, any declaration, setting aside or payment
of any dividend or other distribution (whether in
cash, stock or property) with respect to the
Parent Common Stock or any series of Parent
Preferred Stock;
(iii) any split, combination or
reclassification of the Parent Common Stock or any
issuance or, except as contemplated by this
42
Agreement, the authorization of any issuance
of any other securities in exchange or in
substitution for shares of the Parent Common
Stock;
(iv) any damage, destruction or loss, whether
or not covered by insurance, that has had or is
likely to have a Parent Material Adverse Effect;
or
(v) any change in accounting methods,
principles or practices by Parent or any Material
Parent Subsidiary materially affecting its assets,
liabilities or business, except insofar as may
have been required by a change in generally
accepted accounting principles.
(h) Litigation. Except as disclosed in the Filed
Parent SEC Documents or in Section 3.02(h) of the
Parent Disclosure Letter, there is no suit, action or
proceeding (including any proceeding by or before the
FCC) pending or, to the knowledge of Parent, threatened
against or affecting Parent or any of the Parent
Subsidiaries (and Parent is not aware of any basis for
any such suit, action or proceeding) that, individually
or in the aggregate, could reasonably be expected to
(i) have a Parent Material Adverse Effect or (ii)
prevent Parent, Holdco, Delaware Sub or Georgia Sub
from performing their respective obligations under this
Agreement in any material respect, and there is not any
judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against
Parent or any of the Parent Subsidiaries having, or
which, insofar as reasonably can be foreseen, in the
future would have, any Parent Material Adverse Effect.
As of September 22, 1995, except as disclosed in the
Filed Parent SEC Documents or in Section 3.02(h) of the
Parent Disclosure Letter, there was no suit, action or
proceeding pending, or, to the knowledge of Parent,
threatened, against Parent or any of the Parent
Subsidiaries (and Parent is not aware of any basis for
any such suit, action or proceeding) that, individually
or in the aggregate, could reasonably be expected to
prevent or delay in any material respect the
consummation of the Mergers or any of the transactions
contemplated by this Agreement.
43
(i) Voting Requirements. The adoption of this
Agreement by the holders of a majority in voting power
of the outstanding Parent Common Stock and the
outstanding voting Parent Preferred Stock, voting
together as a single class (the "Parent Stockholder
Approvals"), is the only vote of the holders of any
class or series of Parent's capital stock necessary to
approve this Agreement and the transactions
contemplated by this Agreement.
(j) Brokers. No broker, investment banker,
financial advisor or other person, other than ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co. Incorporated and Bear, ▇▇▇▇▇▇▇ & Co.
Incorporated, the fees and expenses of which will be
paid by Parent, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission
in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on
behalf of Parent or any Parent Subsidiary.
(k) Taxes. (i) Parent and each Parent Subsidiary
have timely filed (or have had timely filed on their
behalf) or will file or cause to be timely filed, all
material Tax Returns required by applicable law to be
filed by any of them prior to or as of the Effective
Time of the Mergers. All such Tax Returns are, or will
be at the time of filing, true, complete and correct in
all material respects.
(ii) Parent and each Parent Subsidiary have paid
(or have had paid on their behalf), or where payment is
not yet due, have established (or have had established
on their behalf and for their sole benefit and
recourse), or will establish or cause to be established
on or before the Effective Time of the Mergers, an
adequate accrual for the payment of, all material Taxes
due with respect to any period ending prior to or as of
the Effective Time of the Mergers.
(l) Compliance with Laws. Neither Parent nor any
of the Parent Subsidiaries has violated or failed to
comply with any statute, law, ordinance, regulation,
rule, judgment, decree or order of any Governmental
Entity applicable to its business or operations
(including the Communications Act and the FCC's rules
and regulations), except for violations and failures to
comply that could not, individually or in the
44
aggregate, reasonably be expected to result in a Parent
Material Adverse Effect.
(m) ERISA Compliance. Except as described in the
Parent Filed SEC Documents or as would not have a
Parent Material Adverse Effect, (i) all employee
benefit plans or programs maintained for the benefit of
the current or former employees or directors of Parent
or any Parent Subsidiary that are sponsored, maintained
or contributed to by Parent or any Parent Subsidiary,
or with respect to which Parent or any Parent
Subsidiary has any liability, including any such plan
that is an "employee benefit plan" as defined in
Section 3(3) of ERISA, are in compliance with all
applicable requirements of law, including ERISA and the
Code, and (ii) neither Parent nor any Parent Subsidiary
has any liabilities or obligations with respect to any
such employee benefit plans or programs, whether
accrued, contingent or otherwise, nor to the knowledge
of the executive officers of Parent are any such
liabilities or obligations expected to be incurred.
(n) Operations of Holdco, Delaware Sub and Georgia
Sub. Holdco does not, and will not prior to the
Closing, engage in any significant business activities
or conduct any significant operations other than in
connection with the transactions contemplated by this
Agreement. Each of Delaware Sub and Georgia Sub was
formed solely for the purpose of engaging in the
transactions contemplated by this Agreement and has not
engaged in any business activities or conducted any
operations other than in connection with the
transactions contemplated by this Agreement.
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business. (a) Conduct of
Business by the Company. During the period from September
22, 1995, to the Effective Time of the Mergers, the Company
shall, and shall cause the Company Subsidiaries to, carry on
their respective businesses in the usual, regular and
ordinary course in substantially the same manner as
heretofore conducted and in compliance in all material
respects with all applicable laws and regulations (including
the Communications Act and the FCC's rules and regulations)
45
and, to the extent consistent therewith, use commercially
reasonable efforts to preserve intact their current business
organizations, keep available the services of their current
officers and employees and preserve their relationships with
customers, suppliers, licensors, licensees, distributors and
others having business dealings with them. Without limiting
the generality of the foregoing, during the period from
September 22, 1995, to the Effective Time of the Mergers,
except for Approved Matters (as defined below) the Company
shall not, and shall not permit any of the Company
Subsidiaries to:
(i) (x) declare, set aside or pay any dividends
on, or make any other distributions in respect of, any
of its capital stock, other than dividends and
distributions by a direct or indirect wholly owned
Company Subsidiary to its parent and regular quarterly
cash dividends on the Company Capital Stock in an
amount per share per quarter for each class of Company
Capital Stock not in excess of the amount paid for the
quarter immediately preceding September 22, 1995, (y)
split, combine or reclassify any of its capital stock
or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution
for shares of its capital stock, or (z) purchase,
redeem or otherwise acquire any shares of capital stock
of the Company or any of the Company Subsidiaries or
any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities
(other than, in the case of this clause (z), for the
redemption of New Line Debentures following a call by
the Company for redemption of all the New Line
Debentures);
(ii) issue, deliver, sell, pledge or otherwise
encumber any shares of its capital stock, any other
voting securities or any securities convertible into,
or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities
(other than (x) the issuance of shares of Class B
Common Stock upon the exercise of Company Stock Options
outstanding on September 22, 1995, and in accordance
with their then terms, (y) the issuance of shares of
Class B Common Stock reserved for issuance as described
in clauses (B)(I) and (B)(III) of Section 3.01(c) and
(z) the grant of Company Stock Options permitted under
Section 3.01(c)(i) and the issuance of shares of Class
B Common Stock upon the exercise thereof);
46
(iii) amend its articles of incorporation, by-laws
or other comparable organizational documents;
(iv) acquire or agree to acquire (x) by merging or
consolidating with, or by purchasing a substantial
portion of the assets of, or by any other manner, any
business or any corporation, partnership, limited
liability company, joint venture, association or other
business organization or division thereof or (y) any
assets that are material, individually or in the
aggregate, to the Company and the Company Subsidiaries
taken as a whole;
(v) sell, lease, license, mortgage or otherwise
encumber or subject to any Lien or otherwise dispose of
any of its properties or assets, other than
encumbrances and Liens that are incurred in the
ordinary course of business;
(vi) (y) incur any indebtedness for borrowed money
or guarantee any such indebtedness of another person,
issue or sell any debt securities or warrants or other
rights to acquire any debt securities of the Company or
any of the Company Subsidiaries, guarantee any debt
securities of another person, enter into any "keep
well" or other agreement to maintain any financial
statement condition of another person or enter into any
arrangement having the economic effect of any of the
foregoing, except for short-term borrowings incurred in
the ordinary course of business consistent with past
practice, or (z) make any loans, advances (other than
advances to employees in the ordinary course of
business consistent with prior practice) or capital
contributions to, or investments in, any other person,
other than to the Company or any direct or indirect
wholly owned Company Subsidiary;
(vii) make or agree to make any new capital
expenditure or expenditures;
(viii) make any material Tax election or settle or
compromise any material Tax liability or refund;
(ix) except in the ordinary course of business
pursuant to employment agreements or Benefit Plans
existing on September 22, 1995, or as required by
applicable laws, (A) increase the compensation payable
or to become payable to its executive officers or
47
employees, (B) grant any severance or termination pay
to, or enter into any employment or severance agreement
with, any director, executive officer or employee of
the Company or any Company Subsidiary or (C) establish,
adopt, enter into or amend in any material respect or
take action to accelerate any rights or benefits under
any collective bargaining agreement (other than any
collective bargaining agreement for the film production
operations of the Company and the Company Subsidiaries)
or any stock option, employee benefit plan, agreement
or policy except as contemplated by this Agreement;
provided, however, that this clause (ix) shall not
prohibit the Company or any Company Subsidiary from (1)
entering into any employment agreement with any
employee (other than any executive officer of the
Company) (x) whose current employment agreement is
expiring, (y) contemporaneously with the hiring of such
employee or (z) contemporaneously with the promotion of
such employee, if, in each case, such employment
agreement does not provide for salary in excess of
$200,000 in any year, does not have a term in excess of
five years and is entered into in the ordinary course
of business consistent with prior practice, in the case
of clause (x) above, such new employment agreement is
substantially similar to the expiring agreement and, in
the case of clause (y) or (z) above, such employment
agreement is substantially similar to current
employment agreements for employees of the Company and
the Company Subsidiaries at the applicable level, (2)
entering into talent agreements in the ordinary course
of its film production operations consistent with prior
practice, or (3) making any severance payment,
including any payment in settlement of litigation
arising out of or resulting from the cessation of
employment, to any employee or former employee (other
than any executive officer or former executive officer
of the Company) in excess of the amounts otherwise
permitted under this clause (ix) if the excess amount
of such payment does not, in any case, exceed $50,000;
(x) except as contemplated by Section 2.02(e), and
without limiting the generality of clause (ix) above,
make any amendment to any Company Stock Plan or New
Line Plan as a result of this Agreement or in
contemplation of the Mergers;
48
(xi) terminate or amend on terms less favorable to
the Company any agreement filed as an exhibit to any
SEC Document or any Programming Agreement; or
(xii) authorize any of, or commit or agree to take
any of, the foregoing actions.
For purposes of this Agreement, "Approved Matters"
means matters that are (x) expressly included in a Master
Budget contemplated by Section 3 of Article XII of the
By-Laws of the Company as in effect on September 22, 1995,
or as approved by Parent after September 22, 1995, and prior
to its approval by the Board of Directors of the Company or
(y) otherwise approved in writing by Parent. Each matter
subject to Section 3 of Article XII of the By-laws of the
Company shall first be submitted to Parent for its approval
and shall only thereafter be submitted to the Board of
Directors of the Company to the extent Parent shall have
approved such matter.
(b) Certificate of Incorporation and By-Laws of
Holdco. Simultaneously with or prior to the Effective Time
of the Mergers, Parent shall cause the certificate of
incorporation of Holdco to be amended to read in the form of
the Restated Certificate of Incorporation of Parent, and
shall cause the By-laws of Holdco to be amended to read in
the form of the By-laws of Parent, in each case as in effect
immediately prior to the Effective Time of the Mergers,
together with such changes thereto as Parent and the Company
may from time to time agree; provided, however, that changes
reasonably necessary to give effect to the creation of the
Holdco LMC Class Stock and the Holdco LMCN-V Stock in
accordance with the LMC Agreement, to increase the
authorized Holdco Capital Stock and to reduce the par value
per share of Holdco Capital Stock shall not require the
agreement of the Company. During the period from September
22, 1995, to the Effective Time of the Mergers, except as
contemplated by this Agreement, Parent shall not amend its
Restated Certificate of Incorporation or By-laws in any
manner that would be materially adverse to the holders of
Parent Common Stock.
(c) Other Actions. The Company and Parent shall
not, and shall not permit any of their respective
subsidiaries to, take any action that would, or that could
reasonably be expected to, result in (i) any of the
representations and warranties of such party set forth in
this Agreement that are qualified as to materiality becoming
49
untrue, (ii) any of such representations and warranties that
are not so qualified becoming untrue in any material respect
or (iii) any of the conditions to the Mergers set forth in
Article VI not being satisfied.
(d) Advice of Changes. The Company and Parent
shall promptly advise the other orally and in writing of any
change or event having, or which, insofar as can reasonably
be foreseen, would have, a Company Material Adverse Effect
or a Parent Material Adverse Effect, as applicable.
SECTION 4.02. No Solicitation. (a) The Company
shall not, nor shall it permit any of the Company
Subsidiaries to, nor shall it authorize or permit any
officer, director or employee of or any investment banker,
attorney or other advisor or representative of, the Company
or any Company Subsidiary to, (i) solicit, initiate or
encourage the submission of any takeover proposal (as
defined below), (ii) enter into any agreement with respect
to any takeover proposal or (iii) participate in any
discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other
action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to
lead to, any takeover proposal; provided, however, that
nothing contained in this Agreement shall prevent the
Company or its Board of Directors from (A) furnishing
nonpublic information to, or entering into discussions or
negotiations with, any person in connection with an
unsolicited bona fide written takeover proposal to the
Company or its shareholders, if and only to the extent that
(1) the Board of Directors of the Company determines in good
faith based on written advice of its outside legal counsel
that such action is necessary for the Board of Directors of
the Company to comply with its fiduciary duties to
shareholders under applicable law and (2) prior to
furnishing such nonpublic information to, or entering into
discussions or negotiations with, such person, the Board of
Directors of the Company receives from such person or entity
an executed confidentiality agreement with terms no less
favorable to the Company than those contained in the
Confidentiality Agreement (as defined in Section 5.04), or
(B) complying with Rule 14e-2 promulgated under the Exchange
Act with regard to a takeover proposal. Without limiting the
foregoing, it is understood that any violation of the
restrictions set forth in the preceding sentence by any
executive officer of the Company or any of the Company
Subsidiaries or any investment banker, attorney or other
50
advisor or representative of the Company or any of the
Company Subsidiaries, whether or not such person is
purporting to act on behalf of the Company or any of the
Company Subsidiaries or otherwise, shall be deemed to be a
breach of this Section 4.02(a) by the Company. For purposes
of this Agreement, "takeover proposal" means any proposal
for a merger, consolidation or other business combination
involving the Company or any of the Material Company
Subsidiaries or any proposal or offer to acquire in any
manner, directly or indirectly, more than 15% of any class
of voting securities of the Company or any of the Material
Company Subsidiaries, or assets representing a substantial
portion of the assets of the Company and the Company
Subsidiaries, taken as a whole, other than the transactions
contemplated by this Agreement. The Company shall
immediately cease and cause to be terminated any existing
activities, discussions or negotiations by the Company or
any of its officers, investment bankers, attorneys or other
advisors or representatives with any parties conducted
heretofore with respect to any of the foregoing.
(b) Subject to Section 7.01(e), neither the Board
of Directors of the Company nor any committee thereof shall
(i) withdraw or modify, or propose to withdraw or modify, in
a manner adverse to Parent, the adoption, approval or
recommendation by such Board of Directors or any such
committee of this Agreement or the TBS Merger or (ii)
approve or recommend, or propose to approve or recommend,
any takeover proposal.
(c) The Company promptly shall advise Parent
orally and in writing of any takeover proposal or any
inquiry with respect to or which could lead to any takeover
proposal and the identity of the person making any such
takeover proposal or inquiry. The Company shall keep Parent
promptly and fully informed in all material respects of the
status and details of any such takeover proposal or inquiry.
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of Form S-4 and the
Proxy Statement; Shareholders Meeting and Parent's
Stockholders Meeting. (a) As soon as practicable following
September 22, 1995, the Company and Parent shall prepare and
file with the SEC the Proxy Statement and Parent and Holdco
51
shall prepare and file with the SEC the Form S-4, in which
the Proxy Statement shall be included as a prospectus. Each
of the Company, Parent and Holdco shall use its best efforts
to have the Form S-4 declared effective under the Securities
Act as promptly as practicable after such filing. Each of
the Company and Parent shall use its best efforts to cause
the Proxy Statement to be mailed to the Company's
shareholders or Parent's stockholders, respectively, as
promptly as practicable after the Form S-4 is declared
effective under the Securities Act. Holdco shall take any
action (other than qualifying to do business in any
jurisdiction in which Parent is not now so qualified)
required to be taken under any applicable state securities
or "blue sky" laws in connection with the issuance of Holdco
Capital Stock pursuant to the Mergers, and the Company shall
furnish all information concerning the Company and the
holders of the Company Capital Stock and rights to acquire
Company Capital Stock pursuant to the Company Stock Plans or
the New Line Plans as may be reasonably requested in
connection with any such action.
(b) The Company shall, as soon as practicable,
duly call, give notice of, convene and hold a meeting of its
shareholders (the "Shareholders Meeting") for the purpose of
obtaining the Shareholder Approvals. Subject to Section
7.01(e), the Company shall, through its Board of Directors,
recommend to its shareholders approval of this Agreement and
the transactions contemplated by this Agreement. Without
limiting the generality of the foregoing, the Company agrees
that its obligations pursuant to the first sentence of this
Section 5.01(b) shall not be altered by the commencement,
public proposal, public disclosure or communication to the
Company of any takeover proposal. Parent shall vote or cause
to be voted all the shares of Company Capital Stock owned of
record by Parent or any Parent Subsidiary in favor of the
Shareholder Approvals.
(c) Parent shall, as soon as practicable, duly
call, give notice of, convene and hold a meeting of its
stockholders (the "Parent's Stockholders Meeting") for the
purpose of obtaining the Parent Stockholder Approvals.
Subject to any contrary fiduciary obligations, Parent shall,
through its Board of Directors, recommend to its
stockholders approval of the matters submitted to them for
such purpose.
SECTION 5.02. Letter of the Company's Accountants.
The Company shall use its best efforts to
52
cause to be delivered to Parent and Holdco a letter of Price
Waterhouse LLP, the Company's independent public
accountants, dated a date within two business days before
the date on which the Form S-4 shall become effective and
addressed to Parent and Holdco, in form and substance
reasonably satisfactory to Parent and customary in scope and
substance for letters delivered by independent public
accountants in connection with registration statements
similar to the Form S-4.
SECTION 5.03. Letter of Parent's Accountants.
Parent shall use its best efforts to cause to be delivered
to the Company a letter of Ernst & Young LLP, Parent's
independent public accountants, and, with respect to persons
or assets acquired by Parent, one or more other independent
public accountants, dated a date within two business days
before the date on which the Form S-4 shall become effective
and addressed to the Company, in form and substance
reasonably satisfactory to the Company and customary in
scope and substance for letters delivered by independent
public accountants in connection with registration
statements similar to the Form S-4.
SECTION 5.04. Access to Information;
Confidentiality. Each of the Company and Parent shall, and
shall cause each of its respective subsidiaries to, afford
to the other party and to the officers, employees,
accountants, counsel, financial advisors and other
representatives of such other party, reasonable access
during normal business hours during the period prior to the
Effective Time of the Mergers to all their respective
properties, books, contracts, commitments, personnel and
records and, during such period, each of the Company and
Parent shall, and shall cause each of its respective
subsidiaries to, furnish promptly to the other party (a) a
copy of each report, schedule, registration statement and
other document filed by it during such period pursuant to
the requirements of Federal or state securities laws and (b)
all other information concerning its business, properties
and personnel as such other party may reasonably request.
Except as required by law, each of the Company and Parent
shall hold, and shall cause its respective officers,
employees, accountants, counsel, financial advisors and
other representatives and affiliates to hold, any nonpublic
information in confidence to the extent required by, and in
accordance with, the provisions of the letter dated August
26, 1995, between the Company and Parent (the
"Confidentiality Agreement").
53
SECTION 5.05. Best Efforts; Notification. (a) Upon
the terms and subject to the conditions set forth in this
Agreement and, in the case of Parent, in the LMC Agreement,
each of the parties agrees to use its best efforts to take,
or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious
manner practicable, the Mergers and the other transactions
contemplated by this Agreement and the Voting Agreements,
including (i) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from
Governmental Entities and the making of all necessary
registrations and filings (including filings with
Governmental Entities, if any) and the taking of all
reasonable steps as may be necessary to obtain an approval
or waiver from, or to avoid an action or proceeding by, any
Governmental Entity, (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the
defending of any lawsuits or other legal proceedings,
whether judicial or administrative, challenging this
Agreement or the Voting Agreements or the consummation of
the transactions contemplated by this Agreement or the
Voting Agreements, including seeking to have any stay or
temporary restraining order entered by any court or other
Governmental Entity vacated or reversed, and (iv) the
execution and delivery of any additional instruments
necessary to consummate the transactions contemplated by,
and to fully carry out the purposes of, this Agreement;
provided, however, that a party shall not be obligated to
take any action pursuant to the foregoing if the taking of
such action or the obtaining of any waiver, consent,
approval or exemption is reasonably likely (x) to be
materially burdensome to such party and its subsidiaries
taken as a whole or to impact in a materially adverse manner
the economic or business benefits of the transactions
contemplated by this Agreement, the Voting Agreements and
the Investors' Agreements referred to in Section 6.02(f) so
as to render inadvisable the consummation of the Mergers or
(y) to result in the imposition of a condition or
restriction of the type referred to in clause (ii), (iii) or
(iv) of Section 6.02(e). In connection with and without
limiting the foregoing, the Company and its Board of
Directors shall (i) take all reasonable action necessary so
that no state takeover statute or similar statute or
regulation is or becomes applicable to the TBS Merger, this
Agreement or any of the other transactions contemplated by
this Agreement or the Voting Agreements and (ii) if any
54
state takeover statute or similar statute or regulation
becomes applicable to the TBS Merger, this Agreement or any
other transaction contemplated by this Agreement or any
Voting Agreement, take all action necessary so that the TBS
Merger and the other transactions contemplated by this
Agreement and the Voting Agreements may be consummated as
promptly as practicable on the terms contemplated by this
Agreement and the Voting Agreements and otherwise to
minimize the effect of such statute or regulation on the TBS
Merger and the other transactions contemplated by this
Agreement and the Voting Agreements.
(b) The Company shall give prompt notice to
Parent, and Parent shall give prompt notice to the Company,
of (i) any representation or warranty made by it contained
in this Agreement that is qualified as to materiality
becoming untrue or inaccurate in any respect or any such
representation or warranty that is not so qualified becoming
untrue or inaccurate in any material respect or (ii) the
failure by it to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied
with or satisfied by it under this Agreement; provided,
however, that no such notification shall affect the
representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties
under this Agreement.
SECTION 5.06. Board Authority. The Company
represents and warrants to Parent that (a) on or prior to
September 22, 1995, the Board of Directors of the Company
has adopted resolutions providing that (i) any action to be
subsequently taken by the Board of Directors of the Company
to implement the transactions contemplated by this Agreement
(excluding any amendment to this Agreement or to the other
agreements entered into in connection with the Mergers to
which the Company is a party) shall be authorized if
approved by a majority vote of the directors of the Company
(other than any directors that are interested directors
under Section 3 of Article XII of the Company's By-laws)
present and voting at a meeting at which a quorum is
present, without regard to class, and (ii) any action to be
subsequently taken by the Company to implement the
transactions contemplated by this Agreement (excluding any
amendment to this Agreement or to the other agreements
entered into in connection with the Mergers to which the
Company is a party) that otherwise requires the approval of
the Board of Directors of the Company shall be authorized if
approved by a majority vote of the directors of the Company
55
(other than any directors that are interested directors
under Section 3 of Article XII of the Company's By-laws)
present and voting at a meeting at which a quorum is
present, without regard to class, and (b) such resolutions
were validly adopted, are in full force and effect, do not
conflict with any provision of the Company's Articles of
Incorporation or By-laws or any contract, agreement or other
instrument to which the Company is a party and are effective
in accordance with their terms. The Board of Directors of
the Company shall not amend, rescind or repeal any of such
resolutions. The Company shall not enter into any contract,
agreement or other instrument, or adopt any resolution,
that, directly or indirectly, would (A) result in any action
to be taken by the Board of Directors of the Company to
implement the transactions contemplated by this Agreement
(excluding any amendment to this Agreement or to the other
agreements entered into in connection with the Mergers to
which the Company is a party) requiring any approval other
than the approval by the majority vote of all the directors
of the Company (other than any directors that are interested
directors under Section 3 of Article XII of the Company's
By-laws) present and voting at a meeting at which a quorum
is present, without regard to class, or (B) result in any
action to be taken by the Company to implement the
transactions contemplated by this Agreement requiring the
approval (if not required as of September 22, 1995) of the
directors of the Company or any group or committee thereof.
The Company represents and warrants to Parent that neither
the Company nor its Board of Directors was subject to any
such contract, agreement or other instrument as of
September 22, 1995.
SECTION 5.07. Public Announcements. Parent,
Holdco, Delaware Sub and Georgia Sub, on the one hand, and
the Company, on the other hand, shall consult with each
other before issuing, and provide each other the opportunity
to review and comment upon, any press release or other
public statements with respect to the transactions
contemplated by this Agreement, including the Mergers, and
shall not issue any such press release or make any such
public statement prior to such consultation, except as may
be required by applicable law, court process or by
obligations pursuant to any listing agreement with any
national securities exchange.
SECTION 5.08. Benefit Plans. (a) Maintenance of
Benefits. For a period of two years after the Effective Time
of the Mergers, Holdco shall (i) either (A) maintain or
56
cause the TBS Surviving Corporation (or in the case of a
transfer of all or substantially all the assets and business
of the TBS Surviving Corporation, its successors or assigns)
to maintain the Benefit Plans (other than medical plans) at
the benefit levels in effect on September 22, 1995 or (B)
provide or cause the TBS Surviving Corporation (or, in such
case, its successors or assigns) to provide benefits to
employees of the Company and the Company Subsidiaries that
are not materially less favorable in the aggregate to such
employees than those in effect on September 22, 1995 and
(ii) provide or cause to be provided medical benefits to
employees of the Company and the Company Subsidiaries that
are substantially equivalent to those provided to similarly
situated employees of the TW Surviving Corporation.
(b) Service. With respect to any "employee benefit
plan", as defined in Section 3(3) of ERISA, maintained by
Parent, Holdco or any other Parent Subsidiary (including any
severance plan), for purposes of determining eligibility to
participate, vesting, entitlement to benefits, benefit
accrual (but in the case of any "employee pension benefit
plan", as defined in Section 3(2) of ERISA, solely to the
extent necessary to comply with Section 5.08(a)) and in all
other respects where length of service is relevant, service
with the Company or any Company Subsidiary shall be treated
as service with Parent, Holdco or the other Parent
Subsidiaries; provided, however, that such service need not
be recognized to the extent that such recognition would
result in any duplication of benefits.
(c) Third Party Beneficiaries. This Section 5.08
is intended to be for the benefit of and shall be
enforceable by each person who is an employee of the Company
or any Company Subsidiary as of the Effective Time of the
Mergers (but only with respect to those provisions
applicable to such employee), and his heirs and personal
representatives and, to the extent set forth above, shall be
binding on all successors and assigns of Parent, Holdco, the
other Parent Subsidiaries, the Company and the Company
Subsidiaries. To the extent that any provision of this
Section 5.08 shall be reflected in a plan or arrangement
subject to ERISA, the exclusive remedy of any employee
referred to in the preceding sentence with respect to such
provisions or request for a related benefit provided by such
plan or arrangement shall be the claims procedure under such
plan or arrangement.
57
SECTION 5.09. Indemnification. Parent, Holdco and
Georgia Sub agree that all rights to indemnification for
acts or omissions occurring prior to the Effective Time of
the Mergers existing as of September 22, 1995, in favor of
the current or former directors or officers of the Company
as provided in its Restated Articles of Incorporation or
By-laws shall survive the TBS Merger and shall continue in
full force and effect in accordance with their terms from
the Effective Time of the Mergers until the expiration of
the applicable statute of limitations with respect to any
claims against the current or former directors or officers
of the Company arising out of such acts or omissions. Holdco
shall cause to be maintained for a period of not less than
six years from the Effective Time of the Mergers the
Company's directors' and officers' insurance and
indemnification policy in effect as of September 22, 1995,
to the extent that it provides coverage for events occurring
prior to the Effective Time of the Mergers (the "D&O
Insurance") for all persons who are directors and officers
of the Company who are covered persons under the Company's
D&O insurance policies in effect on September 22, 1995, so
long as the annual premium therefor would not be in excess
of 150% of the last annual premium paid prior to September
22, 1995 (the "Maximum Premium"). If the existing D&O
Insurance expires, is terminated or canceled during such
six-year period, Holdco shall use all reasonable efforts to
cause to be obtained as much D&O Insurance as can be
obtained for the remainder of such period for an annualized
premium not in excess of the Maximum Premium, on terms and
conditions no less advantageous to the covered persons than
the existing D&O Insurance. The Company represents to
Parent that the Maximum Premium is $947,602.
SECTION 5.10. Fees and Expenses. Except as
provided in Sections 5.15, 7.02(a), 7.02(b) and 7.02(c), all
fees and expenses incurred in connection with the Mergers,
this Agreement and the transactions contemplated by this
Agreement shall be paid by the party incurring such fees or
expenses, whether or not the Mergers are consummated, except
that expenses incurred in connection with printing and
mailing the Proxy Statement and the Form S-4 shall be shared
equally by Parent and the Company.
SECTION 5.11. Affiliates. Prior to the Closing
Date, the Company shall deliver to each of Parent and Holdco
a letter identifying all persons who are, at the time this
Agreement is submitted for approval to the shareholders of
the Company, "affiliates" of the Company for purposes of
58
Rule 145 under the Securities Act. The Company shall use its
best efforts to cause each such person, and Parent shall use
its best efforts to cause each of its "affiliates", to
deliver to Holdco on or prior to the Closing Date a written
agreement substantially in the form attached as Exhibit A.
SECTION 5.12. Stock Exchange Listing. Parent shall
use its best efforts to cause the shares of Holdco Common
Stock to be issued in the Mergers and pursuant to the
Company Stock Options, the New Line Options, the notes
referred to in Section 3.01(c)(i)(B)(I) and the other
securities referred to in Section 3.01(c)(i)(B)(III) to be
approved for listing on the New York Stock Exchange (the
"NYSE"), subject to official notice of issuance, prior to
the Closing Date.
SECTION 5.13. Execution of the Registration Rights
Agreement. Holdco shall execute and deliver to the other
parties thereto the Registration Rights Agreement in the
form of Exhibit B (the "Registration Rights Agreement") at
or prior to the Closing.
SECTION 5.14. Tax Treatment. Each of Parent,
Holdco and the Company shall use its reasonable best efforts
to cause the Mergers to qualify as exchanges governed by
Section 351 of the Code and to obtain the opinions of
counsel referred to in Sections 6.02(d) and 6.03(d).
SECTION 5.15. Transfer and Real Property Transfer
Gains Taxes. Holdco shall be responsible for any
liabilities, without deduction or withholding from any
amount payable to the holders of Parent Capital Stock or
Company Capital Stock, arising under any New York State Real
Estate Transfer Tax, New York State Tax on Gains Derived
from certain Real Property Transfers, New York City Real
Property Transfer Tax, New York State Stock Transfer Tax and
any similar taxes imposed by any other city or State of the
United States (and any penalties and interest with respect
to such Taxes), to the extent any such Taxes become payable
in connection with the transactions contemplated by this
Agreement, on behalf of the holders of Parent Capital Stock
or Company Capital Stock. The Company and Holdco shall
cooperate in complying with the requirements of such Taxes.
Holders of Parent Capital Stock or Company Capital Stock
shall be bound by the values and allocations established by
Holdco and the Company on any Tax Returns relating to any
such Taxes.
59
SECTION 5.16. Material Transactions by Parent.
Parent shall promptly notify the Company if, after September
22, 1995, and prior to the Effective Time of the Mergers,
Parent or any Parent Subsidiary enters into a definitive
agreement providing for the implementation of a Material
Transaction (as defined below). In such event, the Board of
Directors of the Company may request the Company's financial
advisor, CS First Boston Corporation, to deliver a written
opinion, substantially in the same form as the opinion
referred to in Section 3.01(m), that, after giving effect to
the Material Transaction, the consideration to be received
by the Company's shareholders in the TBS Merger is fair to
the Company's shareholders (other than Parent) from a
financial point of view. The Company and Parent shall
cooperate in furnishing such information to CS First Boston
Corporation as shall be reasonably required in order for
such opinion to be delivered as promptly as practicable, and
the Company shall use all commercially reasonable efforts to
cause such opinion or the written advice referred to in the
following sentence to be delivered within 15 days following
request therefor from the Company. In the event that CS
First Boston Corporation advises the Company and Parent in
writing that it is unable to deliver such opinion, the
Company shall be entitled to terminate this Agreement
pursuant to Section 7.01(f), if such termination is approved
by the Board of Directors of the Company. For purposes of
this Agreement, "Material Transaction" means (i) the
issuance by Parent of more than 90,000,000 "common stock
equivalents" (one common stock equivalent being equal to one
share of Parent Common Stock, including any share of Parent
Common Stock issuable by Parent upon conversion, exercise or
exchange of any other capital stock, warrant or other
security or right of Parent, any Parent Subsidiary or any
other controlled affiliate of Parent) in any single
transaction or in any series of individual transactions
(excluding (A) any transaction involving an exchange by
Parent on a one-for-one basis of newly issued shares of
Parent Series L Preferred Stock for outstanding shares of
Parent Series C Preferred Stock and (B) any transaction
contemplated by the elective merger letter agreement dated
as of September 22, 1995, between Parent and LMC, if, in the
case of this clause (B), such transaction is not reasonably
likely to (1) cause the satisfaction of any condition set
forth in Article VI to be delayed in any material respect or
(2) make the satisfaction of any such condition materially
more difficult or costly or otherwise more disadvantageous
to the Company, Parent or Holdco in any material respect),
each of which involves the issuance of more than 20,000,000
60
common stock equivalents, whether or not such individual
transactions are related to each other, or (ii) the sale or
other disposition in any transaction or series of
transactions, whether or not related to each other, by
Parent or any Parent Subsidiary of any business or assets
with an aggregate fair market value in excess of
$3,500,000,000, excluding from such amount (x) sales of
inventory in the ordinary course of business consistent with
prior practice and (y) the sale or disposition, in a single
transaction or series of related transactions, of assets
with an aggregate fair market value of $500,000,000 or less.
The fair market value of any cable television systems
disposed of by Parent or any Parent Subsidiary in exchange
for cable television systems owned by third parties shall be
included in such amount only to the extent, if any, in
excess of the fair market value of the cable televisions
systems acquired in such exchange by Parent or any Parent
Subsidiary.
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's
Obligation To Effect the Mergers. The respective obligation
of each party to effect the Mergers is subject to the
satisfaction or waiver on or prior to the Closing Date of
the following conditions:
(a) Shareholder Approvals and Parent Stockholder
Approvals. The Company shall have obtained the
Shareholder Approvals and Parent shall have obtained
the Parent Stockholder Approvals.
(b) NYSE Listing. The shares of Holdco Common
Stock issuable pursuant to this Agreement shall have
been approved for listing on the NYSE, subject to
official notice of issuance.
(c) Antitrust. The waiting periods (and any exten-
sions thereof) applicable to the transactions
contemplated by this Agreement under the HSR Act shall
have been terminated or shall have expired. Any
consents, approvals and filings under any foreign
antitrust law the absence of which would prohibit the
consummation of the Mergers shall have been obtained or
made.
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(d) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction
or other order issued by any court of competent juris-
diction or other legal restraint or prohibition
preventing the consummation of either Merger or
preventing LMC or any of its subsidiaries from voting,
as contemplated by the LMC Agreement, shares of Company
Capital Stock that LMC or any such subsidiary is
otherwise entitled to vote, shall be in effect;
provided, however, that, subject to the proviso in
Section 5.05(a), each of the parties shall have used
its best efforts to prevent the entry of any such
injunction or other order and to appeal as promptly as
possible any such injunction or other order that may be
entered.
(e) Form S-4. The Form S-4 shall have become
effective under the Securities Act and shall not be the
subject of any stop order or proceedings seeking a stop
order, and Holdco shall have received all state
securities or "blue sky" authorizations necessary to
issue the Holdco Capital Stock issuable pursuant to
this Agreement.
(f) FCC Approvals. All orders and approvals of the
FCC required in connection with the consummation of the
transactions contemplated by this Agreement shall have
been obtained without the imposition of any conditions
or restrictions of the type referred to in Section
6.02(e)(ii), (iii) or (iv) that are not acceptable to
Parent in its sole discretion.
(g) Certain Proceedings. Each action or proceeding
relating to the issue of whether the transactions
contemplated by this Agreement violate, or require the
consent of any person under, the TWE Partnership
Agreement shall either (i) have been dismissed with
prejudice or (ii) be subject to a final judgment that
remains unstayed for a period of 60 days; provided,
however, that this condition shall cease to be
effective on December 23, 1996.
(h) Voting Trust Approval. Either (A) Parent and
the Company shall be satisfied that, and the FCC shall
have confirmed that, the Voting Trust (as defined in
the LMC Agreement) will be effective to prevent the
beneficiaries thereunder from having an attributable
interest, within the meaning of the FCC's rules and
62
regulations, in the assets and businesses of Holdco by
reason of the Holdco Capital Stock subject thereto or
(B) the parties to the LMC Agreement (other than Parent
and Time TBS Holdings, Inc.) shall have acknowledged
that the procedures set forth in Section 4.1 of the LMC
Agreement relating to exchange for nonvoting Holdco
securities are applicable.
SECTION 6.02. Conditions to Obligations of Parent,
Holdco, Delaware Sub and Georgia Sub. The obligations of
Parent, Holdco, Delaware Sub and Georgia Sub to effect the
Mergers are further subject to the satisfaction or waiver by
Parent on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. The repre-
sentations and warranties of the Company set forth in
this Agreement that are qualified as to materiality
shall be true and correct, and the representations and
warranties of the Company set forth in this Agreement
that are not so qualified shall be true and correct in
all material respects, in each case as of the date of
this Agreement, and as of the Closing Date as though
made on and as of the Closing Date, except to the
extent any such representation or warranty expressly
relates to an earlier date (in which case as of such
date), and Parent shall have received a certificate
signed on behalf of the Company by the Chief Executive
Officer (or the Executive Vice President) and the Chief
Financial Officer of the Company to such effect.
(b) Performance of Obligations of the Company. The
Company shall have performed in all material respects
all obligations required to be performed by it under
this Agreement at or prior to the Closing Date, and
Parent shall have received a certificate signed on
behalf of the Company by the Chief Executive Officer
(or the Executive Vice President) and the Chief
Financial Officer of the Company to such effect.
(c) Letters from Company Affiliates. Holdco shall
have received from each person named in the letter
referred to in Section 5.11 an executed copy of an
agreement substantially in the form of Exhibit A.
(d) Tax Opinion. Parent and Holdco shall have
received an opinion dated the Closing Date from
Cravath, Swaine & ▇▇▇▇▇, based upon certificates and
63
letters, which letters and certificates are
substantially in the form set forth in Exhibit D and
dated the Closing Date, to the effect that the TW
Merger will qualify as an exchange governed by the
provisions of Section 351 of the Code.
(e) No Litigation. There shall not be pending any
suit, action or proceeding by any Governmental Entity
(i) challenging the acquisition by Parent or Holdco of
any shares of capital stock of the Company or the TBS
Surviving Corporation, seeking to restrain or prohibit
the consummation of the Mergers or any of the other
transactions contemplated by this Agreement or the LMC
Agreement or seeking to obtain from the Company,
Parent, Holdco or any of their respective subsidiaries
any damages that are material in relation to the
Company and its subsidiaries taken as a whole, (ii)
seeking to prohibit or limit the ownership or operation
by the Company, Parent, Holdco, any Material Company
Subsidiary or any Material Parent Subsidiary of any
material portion of the business or assets of the
Company, Parent, Holdco, any Material Company
Subsidiary or any Material Parent Subsidiary or to
compel the Company, Parent, Holdco, or any of their
respective subsidiaries to dispose of or hold separate
any material portion of the business or assets of the
Company, Parent, Holdco, any Material Company
Subsidiary or any Material Parent Subsidiary as a
result of the Mergers or any of the other transactions
contemplated by this Agreement, (iii) seeking to impose
limitations on the ability of Holdco to acquire or
hold, or exercise full rights of ownership of, any
shares of capital stock of the TW Surviving Corporation
or the TBS Surviving Corporation, including, without
limitation, the right to vote such capital stock on all
matters properly presented to the stockholders of the
TW Surviving Corporation or the TBS Surviving
Corporation, (iv) seeking to prohibit Parent or Holdco
from effectively controlling in any material respect
the business or operations of the Company or any
Material Company Subsidiary or (v) which otherwise is
reasonably likely to have a Company Material Adverse
Effect or a Parent Material Adverse Effect.
(f) Investors' Agreements. Each of the other
parties thereto shall have executed and delivered to
Holdco an Investors' Agreement in the form of Exhibit
C-1 or C-2, as applicable.
64
(g) Cable Franchise Authorities. All necessary
orders and permits approving the transactions
contemplated by this Agreement from all applicable
cable franchising authorities having jurisdiction over
all or any portion of any material cable system
operated by Parent or any Parent Subsidiary shall have
been received.
(h) Dissenters' Rights. The Company shall not have
received pursuant to Section 1321(a)(1) of the Georgia
BCC written notices of intent to demand payment in
connection with the TBS Merger with respect to shares
of Company Capital Stock representing more than
28,000,000 Company Common Stock equivalents (calculated
on the basis that each share of Company Common Stock
represents one Company Common Stock equivalent and each
share of Class C Preferred Stock represents six Company
Common Stock equivalents).
SECTION 6.03. Conditions to Obligation of the
Company. The obligation of the Company to effect the TBS
Merger is further subject to the satisfaction or waiver by
the Company on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. The repre-
sentations and warranties of Parent set forth in this
Agreement that are qualified as to materiality shall be
true and correct, and the representations and
warranties of Parent set forth in this Agreement that
are not so qualified shall be true and correct in all
material respects, in each case as of the date of this
Agreement and as of the Closing Date as though made on
and as of the Closing Date, except to the extent any
such representation or warranty expressly relates to
another date (in which case as of such date), and the
Company shall have received a certificate signed on
behalf of Parent by the chief executive officer (or any
executive vice president) and the chief financial
officer of Parent to such effect.
(b) Performance of Obligations. Parent, Holdco,
Delaware Sub and Georgia Sub shall have performed in
all material respects all obligations required to be
performed by them under this Agreement at or prior to
the Closing Date, and the Company shall have received a
certificate signed on behalf of Parent by the chief
65
executive officer (or any executive vice president) and
the chief financial officer of Parent to such effect.
(c) No Litigation. There shall not be pending any
suit, action or proceeding by any Governmental Entity
(i) seeking to obtain from the Company, Parent, Holdco
or any of their respective subsidiaries any damages
that are material in relation to Holdco and its
subsidiaries taken as a whole (determined after giving
effect to the Mergers), (ii) seeking to prohibit or
limit the ownership or operation by Parent, Holdco or
any of their respective subsidiaries of any material
portion of the business or assets of Holdco and its
subsidiaries taken as a whole (determined after giving
effect to the Mergers), or to compel Parent, Holdco or
any of their respective subsidiaries to dispose of or
hold separate any material portion of the business or
assets of Holdco and its subsidiaries, taken as a whole
(determined after giving effect to the Mergers), as a
result of the Mergers or any of the other transactions
contemplated by this Agreement, or (iii) which
otherwise is reasonably likely to have a material
adverse effect on Holdco and its subsidiaries, taken as
a whole (determined after giving effect to the
Mergers).
(d) Tax Opinion. The Company shall have received
an opinion dated the Closing Date from Skadden, Arps,
Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇, based upon certificates and
letters, which letters and certificates are
substantially in the form set forth in Exhibit D and
dated the Closing Date, to the effect that the TBS
Merger will qualify as an exchange governed by the
provisions of Section 351 of the Code.
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination. This Agreement may be
terminated at any time prior to the Effective Time of the
Mergers, whether before or after the Shareholder Approvals
or the Parent Stockholder Approvals:
(a) by mutual written consent of Parent and the
Company;
66
(b) by either Parent or the Company:
(i) if, at a duly held shareholders meeting
of the Company or any adjournment thereof at which
the Shareholder Approvals are voted upon, the
Shareholder Approvals shall not have been
obtained;
(ii) if, at a duly held stockholders meeting
of Parent or any adjournment thereof at which the
Parent Stockholder Approvals are voted upon, the
Parent Stockholder Approvals shall not have been
obtained;
(iii) if the Mergers shall not have been
consummated on or before September 30, 1996,
unless the failure to consummate the Mergers is
the result of a wilful and material breach of this
Agreement by the party seeking to terminate this
Agreement; provided, however, that if all the
conditions set forth in Sections 6.01 (other than
6.01(g)), 6.02 and 6.03 have been satisfied at
such date, either Parent or the Company may, by
notice to the other prior to such date, extend
such date to the latest date so extended by either
party but in no event later than December 31,
1996;
(iv) if any court of competent jurisdiction
or other Governmental Entity shall have issued an
order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise
prohibiting the Mergers and such order, decree,
ruling or other action shall have become final and
non-appealable;
(v) in the event of a breach by the other
party of any representation, warranty, covenant or
other agreement contained in this Agreement which
(A) would give rise to the failure of a condition
set forth in Section 6.02(a) or 6.02(b) or Section
6.03(a) or 6.03(b), as applicable, and (B) cannot
be or has not been cured within 30 days after the
giving of written notice to the breaching party of
such breach (a "Material Breach") (provided that
the terminating party is not then in breach of any
representation, warranty, covenant or other
agreement that would
67
give rise to a failure of a condition as
described in clause (A) above); or
(vi) if the FCC shall have issued an order or
ruling or taken other action denying approval of
the transactions contemplated by this Agreement,
and such order, ruling or other action shall have
become final and non-appealable;
(c) by either Parent or the Company in the event
that (i) all the conditions to the obligation of such
party to effect the Mergers set forth in Section 6.01
shall have been satisfied and (ii) any condition to the
obligation of such party to effect the Mergers set
forth in Section 6.02 (in the case of Parent) or
Section 6.03 (in the case of the Company) is not
capable of being satisfied prior to the end of the
period referred to in Section 7.01(b)(iii);
(d) by Parent, if any order or approval of the FCC
contemplated by Section 6.01(f) when obtained shall
have included any conditions or restrictions of the
type referred to in Section 6.02(e)(ii), (iii) or (iv)
that are not acceptable to Parent in its sole
discretion and such order or approval shall have become
final and non-appealable;
(e) by the Company, subject to Section 7.05(b), if
the Board of Directors of the Company shall
concurrently approve, and the Company shall
concurrently enter into, a definitive agreement
providing for the implementation of the transactions
contemplated by a takeover proposal; provided, however,
that (i) the Company is not then in breach of Section
4.02 or in breach of any other representation,
warranty, covenant or agreement that would give rise to
a failure of a condition set forth in Section 6.02(a)
or 6.02(b), (ii) the Board of Directors of the Company
shall have complied with Section 7.05(b) in connection
with such takeover proposal and (iii) no termination
pursuant to this Section 7.01(e) shall be effective
unless the Company shall simultaneously make the
payment required by Section 7.02(a);
(f) by the Company, as contemplated by
Section 5.16;
68
(g) by the Company within 30 days of (i) Parent
entering into any agreement providing for any merger or
consolidation of Parent with or into any other person
in which the shares of capital stock of Parent are to
be exchanged for or converted into the right to receive
anything other than Parent Common Stock, (ii) any
person becoming an Acquiring Person (as defined in the
Rights Agreement, as in effect on September 22, 1995),
other than with the prior approval of the Board of
Directors of Parent, or (iii) any person becoming an
Acquiring Person (as defined in the Rights Agreement,
as in effect on September 22, 1995, but determined, for
purposes of this clause (iii), as if the reference
therein to "15%" were to "30%"), in the case of clauses
(ii) and (iii) above, (x) including any person excluded
from the definition of "Acquiring Person" in the Rights
Agreement by virtue of the acquisition of shares
pursuant to a Qualifying Offer (as defined in the
Rights Agreement, as in effect on September 22, 1995)
and (y) regardless of whether the Rights Agreement is
then in effect (and excluding, in all cases, this
Agreement); or
(h) by Parent to the extent required by Section
2.3 of the LMC Agreement.
SECTION 7.02. Effect of Termination. (a) In the
event that any person shall make a takeover proposal and
thereafter (i) this Agreement is terminated (A) pursuant to
Section 7.01(b)(i), (B) pursuant to Section 7.01(b)(iii) (if
at the time of termination (x) the Company is in breach of
any representation, warranty, covenant or other agreement
that would give rise to a failure of a condition set forth
in Section 6.02(a) or 6.02(b) and (y) such breach cannot be
or has not been cured within 30 days after the Company
becomes aware of such breach or such shorter period as may
elapse between the date the Company becomes aware of such
breach and the time of termination), (C) by the Company
pursuant to Section 7.01(b)(iv) (if at the time of
termination (x) the Company is in breach of any
representation, warranty, covenant or other agreement that
69
would give rise to a failure of a condition set forth in
Section 6.02(a) or 6.02(b) and (y) such breach cannot be or
has not been cured within 30 days after the Company becomes
aware of such breach), (D) by Parent pursuant to Section
7.01(b)(v), (E) pursuant to Section 7.01(b)(vi) (if at the
time of termination (x) the Company is in breach of any
representation, warranty, covenant or other agreement that
would give rise to a failure of a condition set forth in
Section 6.02(a) or 6.02(b) and (y) such breach cannot be or
has not been cured within 30 days after the Company becomes
aware of such breach), (F) by the Company pursuant to
Section 7.01(c) or (G) pursuant to Section 7.01(e), and
(ii) a definitive agreement with respect to a takeover
proposal is executed, or a takeover proposal is consummated,
at or within eighteen months after such termination, then
the Company shall pay to Parent a fee of $175,000,000
(reduced by any amount actually paid by the Company pursuant
to Section 7.02(b) in connection with such termination),
which amount shall be payable by wire transfer of same day
funds on the date such agreement is executed, or such
takeover proposal is consummated, as applicable. The
Company acknowledges that the agreements contained in this
Section 7.02(a) are an integral part of the transactions
contemplated by this Agreement, and that, without these
agreements, Parent would not enter into this Agreement;
accordingly, if the Company fails to promptly pay the amount
due pursuant to this Section 7.02(a), and, in order to
obtain such payment, Parent commences a suit which results
in a judgment against the Company for the fee set forth in
this Section 7.02(a), the Company shall also pay to Parent
its costs and expenses (including reasonable attorneys'
fees) in connection with such suit.
(b) In the event of termination of this Agreement
by either Parent or the Company pursuant to Section
7.01(b)(i) or by Parent pursuant to Section 7.01(b)(v), then
the Company shall reimburse Parent for all its reasonable
out-of-pocket expenses actually incurred in connection with
this Agreement and the transactions contemplated hereby, up
to a maximum amount of $15,000,000, which amount shall be
payable by wire transfer of same day funds within three
business days of written demand, accompanied by a reasonably
detailed statement of such expenses and appropriate
supporting documentation, therefor.
(c) In the event of termination of this Agreement
by either Parent or the Company pursuant to
Section 7.01(b)(ii) or by the Company pursuant to
Section 7.01(b)(v), then Parent shall reimburse the Company
for all its reasonable out-of-pocket expenses actually
incurred in connection with this Agreement and the
transactions contemplated hereby, up to a maximum amount of
$15,000,000, which amount shall be payable by wire transfer
of same day funds within three business days of written
demand, accompanied by a reasonably detailed statement of
70
such expenses and appropriate supporting documentation,
therefor.
(d) In the event of termination of this Agreement
by either the Company or Parent as provided in Section 7.01,
this Agreement shall forthwith become void and have no
effect, without any liability or obligation on the part of
Parent, Holdco, Delaware Sub, Georgia Sub or the Company,
other than the provisions of Sections 3.01(l) and 3.02(j),
the second sentence of Section 5.04, Section 5.10, this
Section 7.02 and Article VIII and except to the extent that
such termination results from the wilful and material breach
by a party of any of its representations, warranties,
covenants or other agreements set forth in this Agreement.
SECTION 7.03. Amendment. This Agreement may be
amended by the parties at any time before or after the
Shareholder Approvals or the Parent Stockholder Approvals;
provided, however, that (i) after the Shareholder Approvals,
there shall be made no amendment that pursuant to the
Georgia BCC requires further approval by the shareholders of
the Company without the further approval of such
shareholders and (ii) after the Parent Stockholder
Approvals, there shall be made no amendment that pursuant to
the DGCL requires further approval by the stockholders of
Parent without the further approval of such stockholders.
This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.
SECTION 7.04. Extension; Waiver. At any time prior
to the Effective Time of the Mergers, the parties may (a)
extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive
any inaccuracies in the representations and warranties
contained in this Agreement or in any document delivered
pursuant to this Agreement or (c) subject to the proviso of
Section 7.03, waive compliance with any of the agreements or
conditions contained in this Agreement. Any agreement on the
part of a party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed
on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement
or otherwise shall not constitute a waiver of such rights.
SECTION 7.05. Procedure for Termination,
Amendment, Extension or Waiver. (a) A termination of this
Agreement pursuant to Section 7.01, an amendment of this
71
Agreement pursuant to Section 7.03 or an extension or waiver
pursuant to Section 7.04 shall, in order to be effective,
require, in the case of Parent, Holdco, Delaware Sub,
Georgia Sub or the Company, action by its Board of Directors
or, in the case of an extension or waiver pursuant to
Section 7.04, the duly authorized designee of its Board of
Directors.
(b) The Company shall provide to Parent written
notice prior to any termination of this Agreement pursuant
to Section 7.01(e) advising Parent (i) that the Board of
Directors of the Company in the exercise of its good faith
judgment as to its fiduciary duties to the shareholders of
the Company under applicable law, after receipt of written
advice of outside legal counsel, has determined (on the
basis of such takeover proposal and the terms of this
Agreement, as then in effect) that such termination is
required in connection with a takeover proposal that is more
favorable to the shareholders of the Company than the
transactions contemplated by this Agreement (taking into
account all terms of such takeover proposal and this
Agreement, including all conditions) and (ii) as to the
material terms of any such takeover proposal. At any time
after two business days following receipt of such notice,
the Company may terminate this Agreement as provided in
Section 7.01(e) only if the Board of Directors of the
Company determines that such proposal is more favorable to
the shareholders of the Company than the transactions
contemplated by this Agreement (taking into account all
terms of such takeover proposal and this Agreement,
including all conditions, and which determination shall be
made in light of any revised proposal made by Parent prior
to the expiration of such two business day period) and
concurrently enters into a definitive agreement providing
for the implementation of the transactions contemplated by
such takeover proposal.
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and
Warranties. None of the representations and warranties in
this Agreement or in any instrument delivered pursuant to
this Agreement shall survive the Effective Time of the
Mergers. This Section 8.01 shall not limit any covenant or
72
agreement of the parties which by its terms contemplates
performance after the Effective Time of the Mergers.
SECTION 8.02. Notices. All notices, requests,
claims, demands and other communications under this Agree-
ment shall be in writing and shall be deemed given if
delivered personally or sent by overnight courier (providing
proof of delivery) to the parties at the following addresses
(or at such other address for a party as shall be specified
by like notice):
(a) if to Parent, Holdco, Delaware Sub or Georgia
Sub, to
Time Warner Inc.
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
with a copy to:
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(b) if to the Company, to
▇▇▇▇▇▇ Broadcasting System, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esq.
73
SECTION 8.03. Definitions. For purposes of this
Agreement:
(a) an "affiliate" of any person means another
person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under
common control with, such first person;
(b) "person" means an individual, corporation,
partnership, limited liability company, joint venture,
association, trust, unincorporated organization or
other entity; and
(c) a "subsidiary" of any person means another
person, an amount of the voting securities or other
voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its
Board of Directors or other governing body (or, if
there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or
indirectly by such first person.
SECTION 8.04. Interpretation. When a reference is
made in this Agreement to a Section or Exhibit such
reference shall be to a Section of, or an Exhibit to, this
Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words
"without limitation".
SECTION 8.05. Counterparts. This Agreement may be
executed in two or more counterparts, all of which shall be
considered one and the same agreement and shall become
effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 8.06. Entire Agreement; No Third-Party
Beneficiaries. This Agreement (including the documents
referred to herein) (a) constitutes the entire agreement,
and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the
subject matter of this Agreement and (b) except for the
provisions of Article II, Section 5.08 and Section 5.09, are
not intended to confer upon any person other than the
parties any rights or remedies.
74
SECTION 8.07. Governing Law. This Agreement shall
be governed by, and construed in accordance with, the laws
of the State of Delaware, regardless of the laws that might
otherwise govern under applicable principles of conflicts of
laws thereof (except to the extent that the provisions of
the Georgia BCC shall be mandatorily applicable to the TBS
Merger or this Agreement).
SECTION 8.08. Assignment. Neither this Agreement
nor any of the rights, interests or obligations under this
Agreement shall be assigned, in whole or in part, by opera-
tion of law or otherwise by any of the parties without the
prior written consent of the other parties, except that
either Delaware Sub or Georgia Sub may assign, in its sole
discretion, any of or all its rights, interests and
obligations under this Agreement to Holdco or to any direct
wholly owned subsidiary of Holdco, but no such assignment
shall relieve Delaware Sub or Georgia Sub, as the case may
be, of any of its obligations under this Agreement. Subject
to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
SECTION 8.09. Enforcement. The parties agree that
irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be
entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the
terms and provisions of this Agreement in any court of the
United States located in the State of Delaware or in
Delaware state court, this being in addition to any other
remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of any Federal court
located in the State of Delaware or any Delaware state court
in the event any dispute arises out of this Agreement or any
of the transactions contemplated by this Agreement, (b)
agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave
from any such court and (c) agrees that it will not initiate
any action relating to this Agreement or any of the
transactions contemplated by this Agreement in any court
other than a Federal court sitting in the State of Delaware
or a Delaware state court. Each of Georgia Sub and the
Company hereby appoints the ▇▇▇▇▇▇▇▇-▇▇▇▇ Corporation
System, Inc., ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇, ▇▇▇▇▇,
▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as its agent for service of process in
Delaware.
SECTION 8.10. Waivers. Except as provided in this
Agreement or any waiver pursuant to Section 7.04, no action
taken pursuant to this Agreement, including any
investigation by or on behalf of any party, shall be deemed
to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants
or agreements contained in this Agreement. The waiver by any
party hereto of a breach of any provision hereunder shall
not operate or be construed as a waiver of any prior or
subsequent breach of the same or any other provision
hereunder.
IN WITNESS WHEREOF, Parent, Holdco, Delaware Sub,
Georgia Sub and the Company have caused this Agreement to be
signed by their respective officers thereunto duly
authorized, all as of the date first written above.
TIME WARNER INC.,
by
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Executive Vice President
TW INC.,
by
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
TIME WARNER ACQUISITION CORP.,
by
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
76
TW ACQUISITION CORP.,
by
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇▇ BROADCASTING SYSTEM, INC.,
by
/s/ R. E. ▇▇▇▇▇▇
--------------------------
Name: R. E. ▇▇▇▇▇▇
Title: President
EXHIBIT A-1
FORM OF AFFILIATE LETTER
Time Warner Inc.
TW Inc.
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
I have been advised that as of the date of this letter agreement
I may be deemed to be an "affiliate" of ▇▇▇▇▇▇ Broadcasting System, Inc., a
Georgia corporation (the "Company"), as such term is (i) defined for
purposes of paragraphs (c) and (d) of Rule 145 of the rules and regulations
(the "Rules and Regulations") of the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended (the
"Act"), or (ii) used in and for purposes of Accounting Series Releases 130
and 135, as amended, of the Commission. Pursuant to the terms of the
Amended and Restated Agreement and Plan of Merger, dated as of September
22, 1995 (as amended from time to time, the "Merger Agreement"), by and
among Time Warner Inc., a Delaware corporation ("Parent"), TW Inc., a
Delaware corporation and a direct wholly owned subsidiary of Parent
("Holdco"), Time Warner Acquisition Corp., a Delaware corporation and a
direct wholly owned subsidiary of Holdco, TW Acquisition Corp., a Georgia
corporation and a direct wholly owned subsidiary of Holdco ("Georgia Sub"),
and the Company, Georgia Sub will be merged into the Company (the "TBS
Merger").
Pursuant to the TBS Merger, each share of Class A Common Stock,
par value $.0625 per share, of the Company owned by the undersigned, and
each share of Class B Common Stock, par value $.0625 per share, of the
Company owned by the undersigned, will be converted into the right to
receive 0.75 of a share of Common Stock, par value $.01 per share, of
Holdco ("Holdco Common Stock"), and each share of Class C Convertible
Preferred Stock, par value $.125 per share, of the Company owned by the
undersigned, will be converted into the right to receive 4.80 shares of
Holdco Common Stock.
I represent, warrant and covenant to Parent that, with respect to
all Holdco Common Stock received as a result of the TBS Merger:
1. I shall not make any sale, transfer or other disposition of
Holdco Common Stock in violation of the Act or the Rules and Regulations.
2. I have carefully read this letter and the Merger Agreement and
have had an opportunity to discuss the requirements of such documents and
any other applicable limitations upon my ability to sell, transfer or
otherwise dispose of Holdco Common Stock with my counsel or counsel for the
Company.
3. I have been advised that the issuance of Holdco Common Stock
to me pursuant to the TBS Merger has been registered with the Commission
under the Act. However, I have also been advised that, since at the time
the TBS Merger was submitted for a vote of the shareholders of the Company,
I may be deemed to have been an affiliate of the Company and the
distribution by me of Holdco Common Stock has not been registered under the
Act, I may not offer to sell, sell, transfer or otherwise dispose of Holdco
Common Stock issued to me in the TBS Merger unless (i) such offer, sale,
transfer or other disposition has been registered under the Act or is made
in conformity with Rule 145 under the Act, or (ii) in the opinion of
counsel reasonably acceptable to Holdco, or pursuant to a "no action"
letter obtained by the undersigned from the staff of the Commission, such
sale, transfer or other disposition is otherwise exempt from registration
under the Act.
4. I understand that, except as provided in the Registration
Rights Agreement to be entered into by Holdco and the undersigned as
contemplated by the Merger Agreement, Holdco is under no obligation to
register under the Act the sale, transfer or other disposition of Holdco
Common Stock by me or on my behalf or to take any other action necessary in
order to make compliance with an exemption from such registration
available.
5. I understand that Holdco will give stop transfer instructions
to Holdco's transfer agents with respect to Holdco Common Stock issued to
me, that such Holdco Common Stock will all be in certificated form and that
the certificates
therefor, or any substitutions therefor, will bear a legend substantially to
the following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE
ISSUED IN A TRANSACTION TO WHICH RULE 145 UNDER THE
SECURITIES ACT OF 1933 APPLIES. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE MAY ONLY BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT, DATED
______________, 199_, BETWEEN THE REGISTERED HOLDER
HEREOF AND TIME WARNER INC., A COPY OF WHICH
AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF TIME
WARNER."
6. I also understand that unless the transfer by me of my Holdco
Common Stock has been registered under the Act or is a sale made in
conformity with the provisions of Rule 145, Holdco reserves the right to
place a legend substantially to the following effect on the certificates
issued to any transferee:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
AND WERE ACQUIRED FROM A PERSON WHO RECEIVED
SUCH SECURITIES IN A TRANSACTION TO WHICH RULE 145
UNDER THE SECURITIES ACT OF 1933 APPLIES. THE
SECURITIES HAVE NOT BEEN ACQUIRED BY THE HOLDER
WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH,
ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE
SECURITIES ACT OF 1933 AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
IN ACCORDANCE WITH AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933."
It is understood and agreed that the legends set forth in
paragraphs 5 and 6 above shall be removed by delivery of substitute
certificates without such legend if such legend is not required for purpose
of the Act. It is understood and agreed that such legends and the stop
orders referred to above will be removed if (i) two years shall have
elapsed from the date the undersigned acquired Holdco
Common Stock received in the TBS Merger and the provisions of Rule
145(d)(2) are then available to the undersigned, (ii) three years shall
have elapsed from the date the undersigned acquired Holdco Common Stock
received in the TBS Merger and the provisions of Rule 145(d)(3) are then
available to the undersigned, or (iii) Holdco has received either an
opinion of counsel, which opinion and counsel shall be reasonably
satisfactory to Holdco, or a "no action" letter obtained by the undersigned
from the staff of the Commission, to the effect that the restrictions
imposed by Rule 145 under the Act no longer apply to the undersigned.
Execution of this letter should not be considered an admission on
my part that I am an "affiliate" of the Company as described in the first
paragraph of this letter.
Sincerely,
--------------------------
Name:
Accepted this ___ day of
_______________, 199_:
Time Warner Inc.
By: ________________
Name:
Title:
EXHIBIT A-2
FORM OF AFFILIATE LETTER
TW Inc.
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
I have been advised that as of the date of this letter agreement
I may be deemed to be an "affiliate" of Time Warner Inc., a Delaware
corporation (the "Parent"), as such term is (i) defined for purposes of
paragraphs (c) and (d) of Rule 145 of the rules and regulations (the "Rules
and Regulations") of the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act"), or
(ii) used in and for purposes of Accounting Series Releases 130 and 135, as
amended, of the Commission. Pursuant to the terms of the Amended and
Restated Agreement and Plan of Merger, dated as of September 22, 1995 (as
amended from time to time, the "Merger Agreement"), by and among Parent, TW
Inc., a Delaware corporation and a direct wholly owned subsidiary of Parent
("Holdco"), Time Warner Acquisition Corp., a Delaware corporation and a
direct wholly owned subsidiary of Holdco ("Delaware Sub"), TW Acquisition
Corp., a Georgia corporation and a direct wholly owned subsidiary of
Holdco, and ▇▇▇▇▇▇ Broadcasting System, Inc., a Georgia corporation (the
"Company"), Delaware Sub will be merged into Parent (the "TW Merger").
Pursuant to the TW Merger, each share of Parent Common Stock, par
value $1.00 per share, owed by the undersigned will be converted into one
share of Holdco Common Stock, par value $.01 per share ("Holdco Common
Stock"), and each share of each series of Parent Preferred Stock owned by
the undersigned will be converted into one share of a substantially
identical series of preferred stock of Holdco ("Holdco Preferred Stock,"
and together with Holdco Common Stock, "Holdco Capital Stock").
I represent, warrant and covenant to the Company that, with
respect to all Holdco Capital Stock received as a result of the TW Merger:
1. I shall not make any sale, transfer or other disposition of
Holdco Capital Stock in violation of the Act or the Rules and Regulations.
2. I have carefully read this letter and the Merger Agreement and
have had an opportunity to discuss the requirements of such documents and
any other applicable limitations upon my ability to sell, transfer or
otherwise dispose of Holdco Common Stock with my counsel or counsel for
Parent.
3. I have been advised that the issuance of Holdco Capital Stock
to me pursuant to the TW Merger has been registered with the Commission
under the Act. However, I have also been advised that, since at the time
the TW Merger was submitted for a vote of the shareholders of the Parent, I
may be deemed to have been an affiliate of Parent and the distribution by
me of Holdco Capital Stock has not been registered under the Act, I may not
offer to sell, sell, transfer or otherwise dispose of Holdco Capital Stock
issued to me in the TW Merger unless (i) such offer, sale, transfer or
other disposition has been registered under the Act or is made in
conformity with Rule 145 under the Act, or (ii) in the opinion of counsel
reasonably acceptable to the Company, or pursuant to a "no action" letter
obtained by the undersigned from the staff of the Commission, such sale,
transfer or other disposition is otherwise exempt from registration under
the Act.
4. I understand that Holdco will give stop transfer instructions
to Holdco's transfer agents with respect to Holdco Capital Stock issued to
me and that the certificates representing such Holdco Capital Stock (to the
extent that such Holdco Capital Stock is in certificated from), or any
substitutions therefor, will bear a legend substantially to the following
effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE
ISSUED IN A TRANSACTION TO WHICH RULE 145 UNDER THE
SECURITIES ACT OF 1933 APPLIES. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE MAY ONLY BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT, DATED
______________, 199_, BETWEEN THE REGISTERED HOLDER
HEREOF AND TIME WARNER INC., A COPY OF
WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF
TIME WARNER."
5. I also understand that unless the transfer by me of my Holdco
Captial Stock has been registered under the Act or is a sale made in
conformity with the provisions of Rule 145, Holdco reserves the right to
place a legend substantially to the following effect on the certificates
issued to any transferee:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
AND WERE ACQUIRED FROM A PERSON WHO RECEIVED
SUCH SECURITIES IN A TRANSACTION TO WHICH RULE 145
UNDER THE SECURITIES ACT OF 1933 APPLIES. THE
SECURITIES HAVE NOT BEEN ACQUIRED BY THE HOLDER
WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH,
ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE
SECURITIES ACT OF 1933 AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
IN ACCORDANCE WITH AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933."
It is understood and agreed that the legends set forth in
paragraphs 4 and 5 above shall be removed by delivery of substitute
certificates without such legend if such legend is not required for purpose
of the Act. It is understood and agreed that such legends and the stop
orders referred to above will be removed if (i) two years shall have
elapsed from the date the undersigned acquired Holdco Captial Stock
received in the TW Merger and the provisions of Rule 145(d)(2) are then
available to the undersigned, (ii) three years shall have elapsed from the
date the undersigned acquired Holdco Capital Stock received in the TW
Merger and the provisions of Rule 145(d)(3) are then available to the
undersigned, or (iii) the Company has received either an opinion of
counsel, which opinion and counsel shall be reasonably satisfactory to the
Company or a "no action" letter obtained by the undersigned from the staff
of the Commission, to the effect that the restrictions imposed by Rule 145
under the Act no longer apply to the undersigned.
Execution of this letter should not be considered an admission on
my part that I am an "affiliate" of Parent as described in the first
paragraph of this letter.
Sincerely,
--------------------------
Name:
Accepted this ___ day of
_______________, 199_:
▇▇▇▇▇▇ Broadcasting System, Inc.
By: ________________
Name:
Title:
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT, dated as
of , 1996, among TW INC. (to be renamed TIME
WARNER INC.), a Delaware corporation (the "Company"),
and the Holders (as defined below).
WHEREAS, in connection with the Amended and Restated Agreement
and Plan of Merger, dated as of September 22, 1995 (the "Amended and
Restated Merger Agreement"), among Time Warner Inc., a Delaware corporation
("Parent"), the Company, Time Warner Acquisition Corp., a Delaware
corporation and a direct wholly owned subsidiary of the Company, TW
Acquisition Corp., a Georgia corporation and a direct wholly owned
subsidiary of the Company, and ▇▇▇▇▇▇ Broadcasting System, Inc., a Georgia
corporation, each initial Holder will receive shares of Common Stock (as
defined below); and
WHEREAS, in order to induce the initial Holders to execute and
deliver to the Company the letters contemplated by Section 5.11 of the
Amended and Restated Merger Agreement, the Company has agreed to provide
each Holder with the registration rights set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties
hereto, intending to be legally bound hereby, agree as follows:
SECTION 1. Definitions. As used in this Agreement, the following
terms shall have the following meanings:
"Advice" shall have the meaning set forth in Section 5 hereof.
"Affiliate" means, with respect to any specified person, any
other person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified person. For the
purposes of this definition, "control" when used with respect to any
specified person means the power to direct the management and policies of
such person, directly or indirectly, whether through the ownership of
voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Amended and Restated Merger Agreement" shall have the meaning
set forth in the introductory clauses hereof.
"Business Day" means any day that is not a Saturday, a Sunday or
a legal holiday on which banking institutions in the State of New York are
not required to be open.
"Capital Stock" means, with respect to any person, any and all
shares, interests, participations or other equivalents (however designated)
of corporate stock issued by such person, including each class of common
stock and preferred stock of such person.
"Common Stock" means the Common Stock, par value $0.01 per share,
of the Company issued to any Holder named on the signature pages hereof or
any other shares of capital stock or other securities of the Company into
which such shares of Common Stock shall be reclassified or changed,
including, by reason of a merger, consolidation, reorganization or
recapitalization. If the Common Stock has been so reclassified or changed,
or if the Company pays a dividend or makes a distribution on the Common
Stock in shares of capital stock, or subdivides (or combines) its
outstanding shares of Common Stock into a greater (or smaller) number of
shares of Common Stock, a share of Common Stock shall be deemed to be such
number of shares of stock and amount of other securities to which a holder
of a share of Common Stock outstanding immediately prior to such change,
reclassification, exchange, dividend, distribution, subdivision or
combination would be entitled.
"Company" shall have the meaning set forth in the introductory
clauses hereof.
"Delay Period" shall have the meaning set forth in Section 2(d)
hereof.
"Demand Notice" shall have the meaning set forth in Section 2(a)
hereof.
"Demand Registration" shall have the meaning set forth in Section
2(b) hereof.
"Effectiveness Period" shall have the meaning set forth in
Section 2(d) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"Hold Back Period" shall have the meaning set forth in Section 4
hereof.
"Holder" means a person who owns Registrable Shares and is either
(i) named on the signature pages hereof as a Holder, or (ii) a person who
has agreed to be bound by the terms of this Agreement as if such person
were a Holder and is (A) a person to whom a Holder has transferred
Registrable Shares pursuant to Rule "4(1-1/2)" (or any similar private
transfer exemption), (B) upon the death of any Holder, the executor of the
estate of such Holder or any of such Holder's heirs, devisees, legatees or
assigns or (C) upon the disability of any Holder, any guardian or
conservator of such Holder.
"Interruption Period" shall have the meaning set forth in Section
5 hereof.
"person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Piggyback Registration" shall have the meaning set forth in
Section 3 hereof.
"Prospectus" means the prospectus included in any Registration
Statement (including a prospectus that discloses information previously
omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Shares covered by such Registration Statement
and all other amendments and supplements to such prospectus, including
post-effective amendments, and all material incorporated by reference or
deemed to be incorporated by reference in such prospectus.
"Registrable Shares" means shares of Common Stock unless (i) they
have been effectively registered under Section 5 of the Securities Act and
disposed of pursuant to
an effective Registration Statement, (ii) such securities can be freely
sold and transferred without restriction under Rule 145 or any other
restrictions under the Securities Act or (iii) such securities have been
transferred pursuant to Rule 144 under the Securities Act or any successor
rule such that, after any such transfer referred to in this clause (iii),
such securities may be freely transferred without restriction under the
Securities Act.
"Registration" means registration under the Securities Act of an
offering of Registrable Shares pursuant to a Demand Registration or a
Piggyback Registration.
"Registration Period" shall have the meaning set forth in Section
2(a) hereof.
"Registration Statement" means any registration statement under
the Securities Act of the Company that covers any of the Registrable Shares
pursuant to the provisions of this Agreement, including the related
Prospectus, all amendments and supplements to such registration statement,
including pre- and post-effective amendments, all exhibits thereto and all
material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Shelf Registration" shall have the meaning set forth in Section
2(b) hereof.
"underwritten registration or underwritten offering" means a
registration under the Securities Act in which securities of the Company
are sold to an underwriter for reoffering to the public.
SECTION 2. Demand Registration. (a) The Holders shall have the
right, during the period (the "Registration Period") commencing on the date
of this Agreement and ending on the third anniversary of the date of this
Agreement, by written notice (the "Demand Notice") given to the Company, to
request the Company to register under and in accordance with the provisions
of the
Securities Act all or any portion of the Registrable Shares designated by
such Holders; provided, however, that the aggregate number of Registrable
Shares requested to be registered pursuant to any Demand Notice and
pursuant to any related Demand Notices received pursuant to the following
sentence shall be at least 5,000,000. Upon receipt of any such Demand
Notice, the Company shall promptly notify all other Holders of the receipt
of such Demand Notice and allow them the opportunity to include Registrable
Shares held by them in the proposed registration by submitting their own
Demand Notice. In connection with any Demand Registration in which more
than one Holder participates, in the event that such Demand Registration
involves an underwritten offering and the managing underwriter or
underwriters participating in such offering advise in writing the Holders
of Registrable Shares to be included in such offering that the total number
of Registrable Shares to be included in such offering exceeds the amount
that can be sold in (or during the time of) such offering without delaying
or jeopardizing the success of such offering (including the price per share
of the Registrable Shares to be sold), then the amount of Registrable
Shares to be offered for the account of such Holders shall be reduced pro
rata on the basis of the number of Registrable Shares to be registered by
each such Holder. The Holders as a group shall be entitled to three Demand
Registrations pursuant to this Section 2 unless any Demand Registration
does not become effective or is not maintained for a period (whether or not
continuous) of at least 120 days (or such shorter period as shall terminate
when all the Registrable Shares covered by such Demand Registration have
been sold pursuant thereto), in which case the Holders will be entitled to
an additional Demand Registration pursuant hereto.
(b) The Company, within 45 days of the date on which the Company
receives a Demand Notice given by Holders in accordance with Section 2(a)
hereof, shall file with the SEC, and the Company shall thereafter use its
best efforts to cause to be declared effective, a Registration Statement on
the appropriate form for the registration and sale, in accordance with the
intended method or methods of distribution, of the total number of
Registrable Shares specified by the Holders in such Demand Notice, which
may include a "shelf" registration (a "Shelf Registration") pursuant to
Rule 415 under the Securities Act (a "Demand Registration").
(c) The Company shall use commercially reasonable efforts to keep
each Registration Statement filed pursuant to this Section 2 continuously
effective and usable for the resale of the Registrable Shares covered
thereby (i) in the case of a Registration that is not a Shelf Registration,
for a period of 120 days from the date on which the SEC declares such
Registration Statement effective and (ii) in the case of a Shelf
Registration, for a period of 180 days from the date on which the SEC
declares such Registration Statement effective, in either case (x) until
all the Registrable Shares covered by such Registration Statement have been
sold pursuant to such Registration Statement), and (y) as such period may
be extended pursuant to this Section 2.
(d) The Company shall be entitled to postpone the filing of any
Registration Statement otherwise required to be prepared and filed by the
Company pursuant to this Section 2, or suspend the use of any effective
Registration Statement under this Section 2, for a reasonable period of
time, but not in excess of 90 days (a "Delay Period"), if any executive
officer of the Company determines that in such executive officer's
reasonable judgment and good faith the registration and distribution of the
Registrable Shares covered or to be covered by such Registration Statement
would materially interfere with any pending material financing, acquisition
or corporate reorganization or other material corporate development
involving the Company or any of its subsidiaries or would require premature
disclosure thereof and promptly gives the Holders written notice of such
determination, containing a general statement of the reasons for such
postponement and an approximation of the period of the anticipated delay;
provided, however, that (i) the aggregate number of days included in all
Delay Periods during any consecutive 12 months shall not exceed the
aggregate of (x) 180 days minus (y) the number of days occurring during all
Hold Back Periods and Interruption Periods during such consecutive 12
months and (ii) a period of at least 60 days shall elapse between the
termination of any Delay Period, Hold Back Period or Interruption Period
and the commencement of the immediately succeeding Delay Period. If the
Company shall so postpone the filing of a Registration Statement, the
Holders of Registrable Shares to be registered shall have the right to
withdraw the request for registration by giving written notice from the
Holders of a majority of the Registrable Shares that were to be registered
to the Company within 45 days after receipt of the notice of postponement
or, if earlier, the termination of such Delay Period (and, in the event of
such withdrawal,
such request shall not be counted for purposes of determining the number of
requests for registration to which the Holders of Registrable Shares are
entitled pursuant to this Section 2). The time period for which the Company
is required to maintain the effectiveness of any Registration Statement
shall be extended by the aggregate number of days of all Delay Periods, all
Hold Back Periods and all Interruption Periods occurring during such
Registration and such period and any extension thereof is hereinafter
referred to as the "Effectiveness Period". The Company shall not be
entitled to initiate a Delay Period unless it shall (A) to the extent
permitted by agreements with other security holders of the Company,
concurrently prohibit sales by such other security holders under
registration statements covering securities held by such other security
holders and (B) in accordance with the Company's policies from time to time
in effect, forbid purchases and sales in the open market by senior
executives of the Company.
(e) Except to the extent required by agreements with other
security holders of the Company or Parent entered into prior to September
22, 1995, the Company shall not include any securities that are not
Registrable Shares in any Registration Statement filed pursuant to this
Section 2 without the prior written consent of the Holders of a majority in
number of the Registrable Shares covered by such Registration Statement.
(f) Holders of a majority in number of the Registrable Shares to
be included in a Registration Statement pursuant to this Section 2 may, at
any time prior to the effective date of the Registration Statement relating
to such Registration, revoke such request by providing a written notice to
the Company revoking such request. The Holders of Registrable Shares who
revoke such request shall reimburse the Company for all its out-of-pocket
expenses incurred in the preparation, filing and processing of the
Registration Statement; provided, however, that, if such revocation was
based on the Company's failure to comply in any material respect with its
obligations hereunder, such reimbursement shall not be required.
SECTION 3. Piggyback Registration. (a) Right To Piggyback. If at
any time during the Registration Period the Company proposes to file a
registration statement under the Securities Act with respect to a public
offering of securities of the same type as the Registrable Shares pursuant
to a firm commitment underwritten offering solely
for cash for its own account (other than a registration statement (i) on
Form S-8 or any successor forms thereto, or (ii) filed solely in connection
with a dividend reinvestment plan or employee benefit plan covering
officers or directors of the Company or its Affiliates) or for the account
of any holder of securities of the same type as the Registrable Shares (to
the extent that the Company has the right to include Registrable Shares in
any registration statement to be filed by the Company on behalf of such
holder), then the Company shall give written notice of such proposed filing
to the Holders at least 15 days before the anticipated filing date. Such
notice shall offer the Holders the opportunity to register such amount of
Registrable Shares as they may request (a "Piggyback Registration").
Subject to Section 3(b) hereof, the Company shall include in each such
Piggyback Registration all Registrable Shares with respect to which the
Company has received written requests for inclusion therein within 10 days
after notice has been given to the Holders. Each Holder shall be permitted
to withdraw all or any portion of the Registrable Shares of such Holder
from a Piggyback Registration at any time prior to the effective date of
such Piggyback Registration; provided, however, that if such withdrawal
occurs after the filing of the Registration Statement with respect to such
Piggyback Registration, the withdrawing Holders shall reimburse the Company
for the portion of the registration expenses payable with respect to the
Registrable Shares so withdrawn.
(b) Priority on Piggyback Registrations. The Company shall permit
the Holders to include all such Registrable Shares on the same terms and
conditions as any similar securities, if any, of the Company included
therein. Notwithstanding the foregoing, if the Company or the managing
underwriter or underwriters participating in such offering advise the
Holders in writing that the total amount of securities requested to be
included in such Piggyback Registration exceeds the amount which can be
sold in (or during the time of) such offering without delaying or
jeopardizing the success of the offering (including the price per share of
the securities to be sold), then the amount of securities to be offered for
the account of the Holders and other holders of securities who have
piggyback registration rights with respect thereto shall be reduced (to
zero if necessary) pro rata on the basis of the number of common stock
equivalents requested to be registered by each such Holder or holder
participating in such offering.
(c) Right To Abandon. Nothing in this Section 3 shall create any
liability on the part of the Company to the Holders if the Company in its
sole discretion should decide not to file a registration statement proposed
to be filed pursuant to Section 3(a) hereof or to withdraw such
registration statement subsequent to its filing, regardless of any action
whatsoever that a Holder may have taken, whether as a result of the
issuance by the Company of any notice hereunder or otherwise.
SECTION 4. Holdback Agreement. If (i) during the Effectiveness
Period, the Company shall file a registration statement (other than in
connection with the registration of securities issuable pursuant to an
employee stock option, stock purchase or similar plan or pursuant to a
merger, exchange offer or a transaction of the type specified in Rule
145(a) under the Securities Act) with respect to the Common Stock or
similar securities or securities convertible into, or exchangeable or
exercisable for, such securities and (ii) with reasonable prior notice, the
Company (in the case of a nonunderwritten public offering by the Company
pursuant to such registration statement) advises the Holders in writing
that a public sale or distribution of such Registrable Shares would
materially adversely affect such offering or the managing underwriter or
underwriters (in the case of an underwritten public offering by the Company
pursuant to such registration statement) advises the Company in writing (in
which case the Company shall notify the Holders) that a public sale or
distribution of Registrable Shares would materially adversely impact such
offering, then each Holder shall, to the extent not inconsistent with
applicable law, refrain from effecting any public sale or distribution of
Registrable Shares during the 10 days prior to the effective date of such
registration statement and until the earliest of (A) the abandonment of
such offering, (B) 90 days from the effective date of such registration
statement and (C) if such offering is an underwritten offering, the
termination in whole or in part of any "hold back" period obtained by the
underwriter or underwriters in such offering from the Company in connection
therewith (each such period, a "Hold Back Period").
SECTION 5. Registration Procedures. In connection with the
registration obligations of the Company pursuant to and in accordance with
Sections 2 and 3 hereof (and subject to Sections 2 and 3 hereof), the
Company shall use commercially reasonable efforts to effect such
registration to permit the sale of such Registrable Shares
in accordance with the intended method or methods of disposition thereof,
and pursuant thereto the Company shall as expeditiously as possible (but
subject to Sections 2 and 3 hereof):
(a) prepare and file with the SEC a Registration Statement for
the sale of the Registrable Shares on any form for which the Company
then qualifies or which counsel for the Company shall deem appropriate
in accordance with such Holders' intended method or methods of
distribution thereof, subject to Section 2(b) hereof, and, subject to
the Company's right to terminate or abandon a registration pursuant to
Section 3(c) hereof, use commercially reasonable efforts to cause such
Registration Statement to become effective and remain effective as
provided herein;
(b) prepare and file with the SEC such amendments (including
post-effective amendments) to such Registration Statement, and such
supplements to the related Prospectus, as may be required by the
rules, regulations or instructions applicable to the Securities Act
during the applicable period in accordance with the intended methods
of disposition specified by the Holders of the Registrable Shares
covered by such Registration Statement, make generally available
earnings statements satisfying the provisions of Section 11(a) of the
Securities Act (provided that the Company shall be deemed to have
complied with this clause if it has complied with Rule 158 under the
Securities Act), and cause the related Prospectus as so supplemented
to be filed pursuant to Rule 424 under the Securities Act; provided,
however, that before filing a Registration Statement or Prospectus, or
any amendments or supplements thereto (other than reports required to
be filed by it under the Exchange Act), the Company shall furnish to
the Holders of Registrable Shares covered by such Registration
Statement and their counsel for review and comment, copies of all
documents required to be filed;
(c) notify the Holders of any Registrable Shares covered by such
Registration Statement promptly and (if requested) confirm such notice
in writing, (i) when a Prospectus or any Prospectus supplement or
post- effective amendment has been filed, and, with respect to such
Registration Statement or any post-effective amendment, when the same
has become effective, (ii) of
any request by the SEC for amendments or supplements to such
Registration Statement or the related Prospectus or for additional
information regarding such Holders, (iii) of the issuance by the SEC
of any stop order suspending the effectiveness of such Registration
Statement or the initiation of any proceedings for that purpose, (iv)
of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any
of the Registrable Shares for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose, and (v)
of the happening of any event that requires the making of any changes
in such Registration Statement, Prospectus or documents incorporated
or deemed to be incorporated therein by reference so that they will
not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading:
(d) use commercially reasonable efforts to obtain the withdrawal
of any order suspending the effectiveness of such Registration
Statement, or the lifting of any suspension of the qualification or
exemption from qualification of any Registrable Shares for sale in any
jurisdiction in the United States;
(e) furnish to the Holder of any Registrable Shares covered by
such Registration Statement, each counsel for such Holders and each
managing underwriter, if any, without charge, one conformed copy of
such Registration Statement, as declared effective by the SEC, and of
each post-effective amendment thereto, in each case including
financial statements and schedules and all exhibits and reports
incorporated or deemed to be incorporated therein by reference; and
deliver, without charge, such number of copies of the preliminary
prospectus, any amended preliminary prospectus, each final Prospectus
and any post- effective amendment or supplement thereto, as such
Holder may reasonably request in order to facilitate the disposition
of the Registrable Shares of such Holder covered by such Registration
Statement in conformity with the requirements of the Securities Act;
(f) prior to any public offering of Registrable Shares covered by
such Registration Statement, use
commercially reasonable efforts to register or qualify such
Registrable Shares for offer and sale under the securities or Blue Sky
laws of such jurisdictions as the Holders of such Registrable Shares
shall reasonably request in writing; provided, however, that the
Company shall in no event be required to qualify generally to do
business as a foreign corporation or as a dealer in any jurisdiction
where it is not at the time so qualified or to execute or file a
general consent to service of process in any such jurisdiction where
it has not theretofore done so or to take any action that would
subject it to general service of process or taxation in any such
jurisdiction where it is not then subject;
(g) upon the occurrence of any event contemplated by paragraph
5(c)(v) above, prepare a supplement or post-effective amendment to
such Registration Statement or the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference and
file any other required document so that, as thereafter delivered to
the purchasers of the Registrable Shares being sold thereunder
(including upon the termination of any Delay Period), such Prospectus
will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading;
(h) use commercially reasonable efforts to cause all Registrable
Shares covered by such Registration Statement to be listed on each
securities exchange or automated interdealer quotation system, if any,
on which similar securities issued by the Company are then listed or
quoted;
(i) on or before the effective date of such Registration
Statement, provide the transfer agent of the Company for the
Registrable Shares with printed certificates for the Registrable
Shares covered by such Registration Statement, which are in a form
eligible for deposit with The Depository Trust Company;
(j) if such offering is an underwritten offering, make available
for inspection by any Holder of Registrable Shares included in such
Registration Statement, any underwriter participating in any
offering pursuant to such Registration Statement, and any attorney,
accountant or other agent retained by any such Holder or underwriter
(collectively, the "Inspectors"), all financial and other records and
other information, pertinent corporate documents and properties of any
of the Company and its subsidiaries and affiliates (collectively, the
"Records"), as shall be reasonably necessary to enable them to
exercise their due diligence responsibilities; provided, however, that
the Records that the Company determines, in good faith, to be
confidential and which it notifies the Inspectors in writing are
confidential shall not be disclosed to any Inspector unless such
Inspector signs a confidentiality agreement reasonably satisfactory to
the Company (which shall permit the disclosure of such Records in such
Registration Statement or the related Prospectus if necessary to avoid
or correct a material misstatement in or material omission from such
Registration Statement or Prospectus) or either (i) the disclosure of
such Records is necessary to avoid or correct a misstatement or
omission in such Registration Statement or (ii) the release of such
Records is ordered pursuant to a subpoena or other order from a court
of competent jurisdiction; provided further, however, that (A) any
decision regarding the disclosure of information pursuant to subclause
(i) shall be made only after consultation with counsel for the
applicable Inspectors and the Company and (B) with respect to any
release of Records pursuant to subclause (ii), each Holder of
Registrable Shares agrees that it shall, promptly after learning that
disclosure of such Records is sought in a court having jurisdiction,
give notice to the Company so that the Company, at the Company's
expense, may undertake appropriate action to prevent disclosure of
such Records; and
(k) if such offering is an underwritten offering, enter into such
agreements (including an underwriting agreement in form, scope and
substance as is customary in underwritten offerings) and take all such
other appropriate and reasonable actions requested by the Holders of a
majority of the Registrable Shares being sold in connection therewith
(including those reasonably requested by the managing underwriters) in
order to expedite or facilitate the disposition of such Registrable
Shares, and in such connection, (i) use commercially reasonable
efforts to obtain opinions of counsel to the Company and updates
thereof (which
counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the managing underwriters and counsel to
the Holders of the Registrable Shares being sold), addressed to each
selling Holder of Registrable Shares covered by such Registration
Statement and each of the underwriters as to the matters customarily
covered in opinions requested in underwritten offerings and such other
matters as may be reasonably requested by such counsel and
underwriters, (ii) use commercially reasonable efforts to obtain "cold
comfort" letters and updates thereof from the independent certified
public accountants of the Company (and, if necessary, any other
independent certified public accountants of any subsidiary of the
Company or of any business acquired by the Company for which financial
statements and financial data are, or are required to be, included in
the Registration Statement), addressed to each selling holder of
Registrable Shares covered by the Registration Statement (unless such
accountants shall be prohibited from so addressing such letters by
applicable standards of the accounting profession) and each of the
underwriters, such letters to be in customary form and covering
matters of the type customarily covered in "cold comfort" letters in
connection with underwritten offerings, (iii) if requested and if an
underwriting agreement is entered into, provide indemnification
provisions and procedures substantially to the effect set forth in
Section 8 hereof with respect to all parties to be indemnified
pursuant to said Section. The above shall be done at each closing
under such underwriting or similar agreement, or as and to the extent
required thereunder.
The Company may require each Holder of Registrable Shares covered
by a Registration Statement to furnish such information regarding such
Holder and such Holder's intended method of disposition of such Registrable
Shares as it may from time to time reasonably request in writing. If any
such information is not furnished within a reasonable period of time after
receipt of such request, the Company may exclude such Holder's Registrable
Shares from such Registration Statement.
Each Holder of Registrable Shares covered by a Registration
Statement agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 5(c)(ii),
5(c)(iii), 5(c)(iv) or
5(c)(v) hereof, that such Holder shall forthwith discontinue disposition of
any Registrable Shares covered by such Registration Statement or the
related Prospectus until receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 5(g) hereof, or until such
Holder is advised in writing (the "Advice") by the Company that the use of
the applicable Prospectus may be resumed, and has received copies of any
amended or supplemented Prospectus or any additional or supplemental
filings which are incorporated, or deemed to be incorporated, by reference
in such Prospectus (such period during which disposition is discontinued
being an "Interruption Period") and, if requested by the Company, the
Holder shall deliver to the Company (at the expense of the Company) all
copies then in its possession, other than permanent file copies then in
such holder's possession, of the Prospectus covering such Registrable
Shares at the time of receipt of such request.
Each Holder of Registrable Shares covered by a Registration
Statement further agrees not to utilize any material other than the
applicable current preliminary prospectus or Prospectus in connection with
the offering of such Registrable Shares.
SECTION 6. Registration Expenses. Whether or not any Registration
Statement is filed or becomes effective, the Company shall pay all costs,
fees and expenses incident to the Company's performance of or compliance
with this Agreement, including (i) all registration and filing fees,
including NASD filing fees, (ii) all fees and expenses of compliance with
securities or Blue Sky laws, including reasonable fees and disbursements of
counsel in connection therewith, (iii) printing expenses (including
expenses of printing certificates for Registrable Shares and of printing
prospectuses if the printing of prospectuses is requested by the Holders or
the managing underwriter, if any), (iv) messenger, telephone and delivery
expenses, (v) fees and disbursements of counsel for the Company, (vi) fees
and disbursements of all independent certified public accountants of the
Company (including expenses of any "cold comfort" letters required in
connection with this Agreement) and all other persons retained by the
Company in connection with such Registration Statement, (vii) fees and
disbursements of one counsel, other than the Company's counsel, selected by
Holders of a majority of the Registrable Shares being registered, to
represent all such Holders, (viii) fees and disbursements of underwriters
customarily paid by the issuers or sellers of securities and (ix) all other
costs, fees and expenses incident to the Company's performance or
compliance with this Agreement. Notwithstanding the foregoing, the fees and
expenses of any persons retained by any Holder, other than one counsel for
all such Holders, and any discounts, commissions or brokers' fees or fees
of similar securities industry professionals and any transfer taxes
relating to the disposition of the Registrable Shares by a Holder, will be
payable by such Holder and the Company will have no obligation to pay any
such amounts.
SECTION 7. Underwriting Requirements. (a) Subject to Section 7(b)
hereof, any Holder shall have the right, by written notice, to request that
any Demand Registration provide for an underwritten offering.
(b) In the case of any underwritten offering pursuant to a Demand
Registration, the Holders of a majority of the Registrable Shares to be
disposed of in connection therewith shall select the institution or
institutions that shall manage or lead such offering, which institution or
institutions shall be reasonably satisfactory to the Company. In the case
of any underwritten offering pursuant to a Piggyback Registration, the
Company shall select the institution or institutions that shall manage or
lead such offering. No Holder shall be entitled to participate in an
underwritten offering unless and until such Holder has entered into an
underwriting or other agreement with such institution or institutions for
such offering in such form as the Company and such institution or
institutions shall determine.
SECTION 8. Indemnification. (a) Indemnification by the Company.
The Company shall, without limitation as to time, indemnify and hold
harmless, to the full extent permitted by law, each Holder of Registrable
Shares whose Registrable Shares are covered by a Registration Statement or
Prospectus, the officers, directors and agents and employees of each of
them, each Person who controls each such Holder (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) and the
officers, directors, agents and employees of each such controlling person,
to the fullest extent lawful, from and against any and all losses, claims,
damages, liabilities, judgment, costs (including, without limitation, costs
of preparation and reasonable attorneys' fees) and expenses (collectively,
"Losses"), as incurred, arising out of or
based upon any untrue or alleged untrue statement of a material fact
contained in such Registration Statement or Prospectus or in any amendment
or supplement thereto or in any preliminary prospectus, or arising out of
or based upon any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein not
misleading, except insofar as the same are based upon information furnished
in writing to the Company by or on behalf of such Holder expressly for use
therein; provided, however, that the Company shall not be liable to any
such Holder to the extent that any such Losses arise out of or are based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in any preliminary prospectus if (i) having previously been
furnished by or on behalf of the Company with copies of the Prospectus,
such Holder failed to send or deliver a copy of the Prospectus with or
prior to the delivery of written confirmation of the sale of Registrable
Shares by such Holder to the person asserting the claim from which such
Losses arise and (ii) the Prospectus would have corrected in all material
respects such untrue statement or alleged untrue statement or such omission
or alleged omission; and provided further, however, that the Company shall
not be liable in any such case to the extent that any such Losses arise out
of or are based upon an untrue statement or alleged untrue statement or
omission or alleged omission in the Prospectus, if (x) such untrue
statement or alleged untrue statement, omission or alleged omission is
corrected in all material respects in an amendment or supplement to the
Prospectus and (y) having previously been furnished by or on behalf of the
Company with copies of the Prospectus as so amended or supplemented, such
Holder thereafter fails to deliver such Prospectus as so amended or
supplemented, prior to or concurrently with the sale of Registrable Shares.
(b) Indemnification by Holder of Registrable Shares. In
connection with any Registration Statement in which a Holder is
participating, such Holder shall furnish to the Company in writing such
information as the Company reasonably requests for use in connection with
such Registration Statement or the related Prospectus and agrees to
indemnify, to the full extent permitted by law, the Company, its directors,
officers, agents or employees, each Person who controls the Company (within
the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act) and the directors, officers, agents or employees of such
controlling Persons, from and against all Losses arising out of or based
upon any untrue or alleged
untrue statement of a material fact contained in such Registration
Statement or the related Prospectus or any amendment or supplement thereto,
or any preliminary prospectus, or arising out of or based upon any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, to the extent, but
only to the extent, that such untrue or alleged untrue statement or
omission or alleged omission is based upon any information so furnished in
writing by or on behalf of such Holder to the Company expressly for use in
such Registration Statement or Prospectus.
(c) Conduct of Indemnification Proceedings. If any Person shall
be entitled to indemnity hereunder (an "indemnified party"), such
indemnified party shall give prompt notice to the party from which such
indemnity is sought (the "indemnifying party") of any claim or of the
commencement of any proceeding with respect to which such indemnified party
seeks indemnification or contribution pursuant hereto; provided, however,
that the delay or failure to so notify the indemnifying party shall not
relieve the indemnifying party from any obligation or liability except to
the extent that the indemnifying party has been prejudiced by such delay or
failure. The indemnifying party shall have the right, exercisable by giving
written notice to an indemnified party promptly after the receipt of
written notice from such indemnified party of such claim or proceeding, to
assume, at the indemnifying party's expense, the defense of any such claim
or proceeding, with counsel reasonably satisfactory to such indemnified
party; provided, however, that (i) an indemnified party shall have the
right to employ separate counsel in any such claim or proceeding and to
participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless: (1) the
indemnifying party agrees to pay such fees and expenses; (2) the
indemnifying party fails promptly to assume the defense of such claim or
proceeding or fails to employ counsel reasonably satisfactory to such
indemnified party; or (3) the named parties to any proceeding (including
impleaded parties) include both such indemnified party and the indemnifying
party, and such indemnified party shall have been advised by counsel that
there may be one or more legal defenses available to it that are
inconsistent with those available to the indemnifying party or that a
conflict of interest is likely to exist among such indemnified party and
any other indemnified parties (in which case the
indemnifying party shall not have the right to assume the defense of such
action on behalf of such indemnified party); and (ii) subject to clause (3)
above, the indemnifying party shall not, in connection with any one such
claim or proceeding or separate but substantially similar or related claims
or proceedings in the same jurisdiction, arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more
than one firm of attorneys (together with appropriate local counsel) at any
time for all of the indemnified parties, or for fees and expenses that are
not reasonable. Whether or not such defense is assumed by the indemnifying
party, such indemnified party shall not be subject to any liability for any
settlement made without its consent. The indemnifying party shall not
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release, in form and substance
reasonably satisfactory to the indemnified party, from all liability in
respect of such claim or litigation for which such indemnified party would
be entitled to indemnification hereunder.
(d) Contribution. If the indemnification provided for in this
Section 8 is unavailable to an indemnified party in respect of any Losses
(other than in accordance with its terms), then each applicable
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a
result of such Losses, in such proportion as is appropriate to reflect the
relative fault of the indemnifying party, on the one hand, and such
indemnified party, on the other hand, in connection with the actions,
statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of such indemnifying
party, on the one hand, and indemnified party, on the other hand, shall be
determined by reference to, among other things, whether any action in
question, including any untrue statement of a material fact or omission or
alleged omission to state a material fact, has been taken by, or relates to
information supplied by, such indemnifying party or indemnified party, and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent any such action, statement or omission.
The amount paid or payable by a party as a result of any Losses shall be
deemed to include any legal or other fees or expenses incurred by such
party in connection with any
investigation or proceeding. The parties hereto agree that it would not be
just and equitable if contribution pursuant to this Section 8(d) were
determined by pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provision of this
Section 8(d), an indemnifying party that is a Holder shall not be required
to contribute any amount which is in excess of the amount by which the
total proceeds received by such Holder from the sale of the Registrable
Shares sold by such Holder (net of all underwriting discounts and
commissions) exceeds the amount of any damages that such indemnifying party
has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
SECTION 9. Miscellaneous. (a) Termination. This Agreement and the
obligations of the Company and the Holders hereunder (other than Section 8
hereof) shall terminate on the first date on which no Registrable Shares
remain outstanding.
(b) Notices. All notices or communications hereunder shall be in
writing (including telecopy or similar writing), addressed as follows:
To the Company:
Time Warner Inc.
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
With a copy to:
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
To the Holders:
R.E. ▇▇▇▇▇▇, III
In care of ▇▇▇▇▇▇ Broadcasting System, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
For Courier delivery
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
With a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esq.
Any such notice or communication shall be deemed given (i) when
made, if made by hand delivery, (ii) upon transmission, if sent by
confirmed telecopier, (iii) one business day after being deposited with a
next-day courier, postage prepaid, or (iv) three business days after being
sent certified or registered mail, return receipt requested, postage
prepaid, in each case addressed as above (or to such other address or to
such other telecopier number as such party may designate in writing from
time to time).
(c) Separability. If any provision of this Agreement shall be
declared to be invalid or unenforceable, in whole or in part, such
invalidity or unenforceability shall not affect the remaining provisions
hereof which shall remain in full force and effect.
(d) Assignment. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, devisees,
legatees, legal representatives, successors and assigns.
(e) Entire Agreement. This Agreement represents the entire
agreement of the parties and shall supersede any
and all previous contracts, arrangements or understandings between the
parties hereto with respect to the subject matter hereof.
(f) Amendments and Waivers. Except as otherwise provided herein,
the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not be given, unless the Company has obtained the written
consent of Holders of at least a majority in number of the Registrable
Shares then outstanding.
(g) Publicity. No public release or announcement concerning the
transactions contemplated hereby shall be issued by any party without the
prior consent of the other parties, except to the extent that such party is
advised by counsel that such release or announcement is necessary or
advisable under applicable law or the rules or regulations of any
securities exchange, in which case the party required to make the release
or announcement shall to the extent practicable provide the other party
with an opportunity to review and comment on such release or announcement
in advance of its issuance.
(h) Expenses. Whether or not the transactions contemplated hereby
are consummated, except as otherwise provided herein, all costs and
expenses incurred in connection with the execution of this Agreement shall
be paid by the party incurring such costs or expenses, except as otherwise
set forth herein.
(i) Interpretation. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(j) Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be one and the same agreement, and shall
become effective when counterparts have been signed by each of the parties
and delivered to each other party.
(k) Governing Law. This Agreement shall be construed,
interpreted, and governed in accordance with the internal laws of New York.
(l) Calculation of Time Periods. Except as otherwise indicated,
all periods of time referred to herein
shall include all Saturdays, Sundays and holidays; provided, however, that
if the date to perform the act or give any notice with respect to this
Agreement shall fall on a day other than a Business Day, such act or notice
may be timely performed or given if performed or given on the next
succeeding Business Day.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first written above.
TW INC.,
by
---------------------------
Name:
Title:
---------------------------
R.E. ▇▇▇▇▇▇, III
▇▇▇▇▇▇ OUTDOOR, INC.,
by
---------------------------
Name:
Title:
▇▇▇▇▇▇ FOUNDATION, INC.,
by
---------------------------
Name:
Title:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ CHARITABLE
REMAINDER UNITRUST NO. 2,
by
--------------------------
Name:
Title:
EXHIBIT C-1
INVESTORS' AGREEMENT (NO. 1) dated as of
, among TW INC. (to be renamed TIME
WARNER INC.), a Delaware corporation ("Holdco"), and
the other parties signatory hereto (each an
"Investor").
This Agreement is entered into pursuant to Se ction 6.02(f) of
the Amended and Restated Agreement and Plan of Merger, dated as of
September 22, 1995 (the "Amended and Restated Merger Agreement"), among
Time Warner Inc., a Delaware corporation ("Parent"), Holdco, Time Warner
Acquisition Corp., a Delaware corporation ("Delaware Sub") and a direct
wholly owned subsidiary of Holdco, TW Acquisition Corp., a Georgia
corporation ("Georgia Sub") and a direct wholly owned subsidiary of Holdco,
and ▇▇▇▇▇▇ Broadcasting System, Inc., a Georgia corporation (the
"Company"). In connection with the TBS Merger (as defined in the Amended
and Restated Merger Agreement), subject to certain exceptions, (a) each
share of Class A Common Stock, par value $.0625 per share, of the Company
and each share of Class B Common Stock, par value $.0625 per share, of the
Company will be converted into the right to receive 0.75 shares of Common
Stock, par value $0.01 per share, of Holdco ("Holdco Common Stock") and (b)
each share of Class C Convertible Preferred Stock, par value $.125 per
share, of the Company will be converted into the right to receive 4.80
shares of Holdco Common Stock. As a condition to the obligations of Parent,
Holdco, Delaware Sub and Georgia Sub to effect the Mergers (as defined in
the Amended and Restated Merger Agreement), Parent, Holdco, Delaware Sub
and Georgia Sub have required that each initial Investor enter into this
Agreement.
Accordingly, it is hereby agreed as follows:
ARTICLE I
Definitions
SECTION 1.01. Definitions. Capitalized terms used but not defined
herein shall have the meanings assigned to such terms in the Amended and
Restated Merger Agreement. For purposes of this Agreement, the following
terms shall have the following meanings:
"Affiliate" and "Associate", when used with reference to any
person, shall have the respective meanings ascribed to such terms in Rule
12b-2 of the Exchange Act, as in effect on the date of this Agreement.
Neither Holdco nor any of its subsidiaries or controlled Affiliates, on the
one hand, nor the Principal Investor, on the other hand, shall be an
"Affiliate" or an "Associate" of the other. The ▇▇▇▇▇▇ Foundation, Inc. and
the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Charitable Foundation Unitrust No. 2 shall be deemed
not to be Affiliate or Associates of any Investor.
A person shall be deemed the "beneficial owner" of, and shall be
deemed to "beneficially own", and shall be deemed to have "beneficial
ownership" of:
(i) any securities that such person or any of such person's
Affiliates or Associates is deemed to "beneficially own" within the
meaning of Rule 13d-3 under the Exchange Act, as in effect on the date
of this Agreement; and
(ii) any securities (the "underlying securities") that such
person or any of such person's Affiliates or Associates has the right
to acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement, arrangement or
understanding (written or oral), or upon the exercise of conversion
rights, exchange rights, rights, warrants or options, or otherwise (it
being understood that such person shall also be deemed to be the
beneficial owner of the securities convertible into or exchangeable
for the underlying securities).
"Board" shall mean the board of directors of Holdco.
"Charitable Transferee" shall mean any charitable organization
described in Section 501(c)(3) of the Code.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
in effect on the date in question, unless otherwise specifically provided.
"Investor" shall mean each person that executes this Agreement in
such capacity and each successor, assign and other person that pursuant to
the terms hereof is required to become a party hereto as an Investor.
"Investors' Agreement (No. 2)" shall mean an Investors' Agreement
(No. 2), substantially in the form of Exhibit C-2 to the Amended and
Restated Merger Agreement.
"permitted transferee" of any natural person shall mean (i) in
the case of the death of such person, such person's executors,
administrators, testamentary trustees, heirs, devisees and legatees and
(ii) such person's current or future spouse, parents, siblings or
descendants or such parents', siblings' or descendants' spouses (the
"Family Members").
"person" shall have the meaning given such term in the Amended
and Restated Merger Agreement.
"Principal Investor" shall mean R.E. ▇▇▇▇▇▇, III.
"Qualified Stockholder" shall mean any Charitable Transferee or
Qualified Trust from time to time bound as an "Investor" under an
Investors' Agreement (No. 2).
"Qualified Trust" shall mean any trust described in Section 664
of the Code of which the Principal Investor or members of his family are
income beneficiaries.
"Voting Power", when used with reference to any class or series
of securities of Holdco, or any classes or series of securities of Holdco
entitled to vote together as a single class or series, shall mean the power
of such class or series (or such classes or series) to vote for the
election of directors. For purposes of determining the percentage of Voting
Power of any class or series (or classes or series) beneficially owned by
any person, any securities not outstanding which are subject to conversion
rights, exchange rights, rights, warrants, options or similar securities
held by such person shall be deemed to be outstanding for the purpose of
computing the percentage of outstanding securities of the class or series
(or classes or series) beneficially owned by such person, but shall not be
deemed to be outstanding for the purpose of computing the percentage of the
class or series (or classes or series) beneficially owned by any other
person.
"Voting Securities", when used with reference to any person,
shall mean any securities of such person having Voting Power or any
securities convertible into or exchangeable for any securities having
Voting Power.
ARTICLE II
Securities Act; Legend
SECTION 2.01. Transfers of Holdco Common Stock. None of the
Investors may offer for sale or sell any shares of Holdco Common Stock
acquired pursuant to the Amended and Restated Merger Agreement, or any
interest therein, except (a) pursuant to a registration of such shares
under the Securities Act and applicable state securities laws or (b) in a
transaction as to which such Investor has delivered an opinion of counsel
or other evidence reasonably satisfactory to Holdco, to the effect that
such transaction is exempt from, or not subject to, the registration
requirements of, the Securities Act and applicable state securities laws.
SECTION 2.02. Legends on Certificates. Each Investor shall hold
in certificate form all shares of Holdco Common Stock owned by such
Investor. Each certificate for shares of Holdco Common Stock issued to or
beneficially owned by a person that is subject to the provisions of this
Agreement shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO AN INVESTORS' AGREEMENT (NO. 1) DATED AS OF
(THE "INVESTORS' AGREEMENT"), AMONG
THE CORPORATION, THE ORIGINAL HOLDER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE AND CERTAIN OTHER
STOCKHOLDERS OF THE CORPORATION. A COPY OF THE
INVESTORS' AGREEMENT MAY BE OBTAINED FROM THE
CORPORATION FREE OF CHARGE. BY ITS ACCEPTANCE HEREOF,
THE HOLDER OF THIS CERTIFICATE AGREES TO COMPLY IN ALL
RESPECTS WITH THE REQUIREMENTS OF THE INVESTORS'
AGREEMENT.
ARTICLE III
Covenants of the Parties
SECTION 3.01. Standstill. None of the Investors may (and each
Investor shall cause its Affiliates and Associates that it controls, and
use reasonable efforts to
cause its other Affiliates and Associates, not to), without the prior
written consent of the Board:
(a) publicly propose that any Investor or Qualified Stockholder
or any Affiliate or Associate of any Investor or Qualified Stockholder
enter into, directly or indirectly, any merger or other business
combination involving Holdco or propose to purchase, directly or
indirectly, a material portion of the assets of Holdco or any material
subsidiary of Holdco, or make any such proposal privately if it would
reasonably be expected to require Holdco to make a public announcement
regarding such proposal;
(b) make, or in any way participate in, directly or indirectly,
any "solicitation" of "proxies" (as such terms are used in Regulation
14A promulgated under the Exchange Act) to vote or consent with
respect to any Voting Securities of Holdco or become a "participant"
in any "election contest" (as such terms are defined or used in Rule
14a-11 under the Exchange Act) with respect to Holdco;
(c) form, join or participate in or encourage the formation of a
"group" (within the meaning of Section 13(d)(3) of the Exchange Act)
with respect to any Voting Securities of Holdco, other than a group
consisting solely of Investors and Qualified Stockholders;
(d) deposit any Voting Securities of Holdco into a voting trust
or subject any such Voting Securities to any arrangement or agreement
with respect to the voting thereof, other than any such trust,
arrangement or agreement (i) the only parties to, or beneficiaries of,
which are Investors and Qualified Stockholders and (ii) the terms of
which do not require or expressly permit any party thereto to act in a
manner inconsistent with this Agreement;
(e) initiate, propose or otherwise solicit stockholders of Holdco
for the approval of one or more stockholder proposals with respect to
Holdco as described in Rule 14a-8 under the Exchange Act, or induce or
attempt to induce any other person to initiate any stockholder
proposal with respect to Holdco;
(f) except in accordance with Section 3.04, seek election to or
seek to place a representative on the Board or seek the removal of any
member of the Board;
(g) call or seek to have called any meeting of the stockholders
of Holdco;
(h)(A) solicit, seek to effect, negotiate with or provide
non-public information to any other person with respect to, (B) make
any statement or proposal, whether written or oral, to the Board or
any director or officer of Holdco with respect to, or (C) otherwise
make any public announcement or proposal whatsoever with respect to
any form of business combination transaction (with any person)
involving a change of control of Holdco or the acquisition of a
substantial portion of the equity securities or assets of Holdco or
any material subsidiary of Holdco, including a merger, consolidation,
tender offer, exchange offer or liquidation of Holdco's assets, or any
restructuring, recapitalization or similar transaction with respect to
Holdco or any material subsidiary of Holdco; provided, however, that
the foregoing shall not (x) apply to any discussion between or among
the Investors and the Qualified Stockholders or any of their
respective officers, employees, agents or representatives or (y) in
the case of clause (B) above, be interpreted to limit the ability of
any Investor or Qualified Stockholder, or any designee of any Investor
or Qualified Stockholder, on the Board to make any such statement or
proposal or to discuss any such proposal with any officer or director
of or advisor to Holdco or advisor to the Board unless, in either
case, it would reasonably be expected to require Holdco to make a
public announcement regarding such discussion, statement or proposal;
(i) otherwise act, alone or in concert with others, to seek to
control or influence the management or policies of Holdco (except for
(A) voting as a holder of Voting Securities in accordance with the
terms of such Voting Securities and (B) actions taken as a director or
officer of Holdco);
(j) publicly disclose any intention, plan or arrangement
inconsistent with the foregoing, or make any such disclosure privately
if it would reasonably be expected to require Holdco to make a public
announcement regarding such intention, plan or
arrangement; or
(k) advise, assist (including by knowingly providing or arranging
financing for that purpose) or knowingly encourage any other person in
connection with any of the foregoing.
SECTION 3.02. Transfer Restrictions. None of the Investors may,
without the prior written consent of Holdco, sell, transfer, pledge,
encumber or otherwise dispose of, or agree to sell, transfer, pledge,
encumber or otherwise dispose of, any Voting Securities of Holdco, or any
rights or options to acquire such Voting Securities, except in a
transaction complying with any of the following clauses:
(a) to the underwriters in connection with an underwritten public
offering of shares of such securities on a firm commitment basis
registered under the Securities Act, pursuant to which the sale of
such securities is in a manner that is intended to effect a broad
distribution;
(b) to any wholly owned subsidiary of such Investor; provided,
however, that such transferee becomes a party to this Agreement as an
Investor;
(c) to any person in a transaction that complies with the volume
and manner of sale provisions contained in Rules 144(e) and Rule
144(f) as in effect on the date hereof under the Securities Act
(whether or not Rule 144 is in effect on the date of such
transaction); provided, however, that dispositions pursuant to this
clause (c) may not be made during any period that a person has made
and not withdrawn or terminated a tender or exchange offer for Voting
Securities of Holdco or announced its intention to make such an offer;
(d) to any person (including any pledgee of shares of Voting
Securities), other than a person that such Investor, or any of its
Affiliates or Associates, knows or, after commercially reasonable
inquiry should have known, beneficially owns or, after giving effect
to such sale, will beneficially own more than 5% of the aggregate
Voting Power of the Voting Securities of Holdco;
(e) in the case of a natural person, to any permitted transferee
of such person; provided, however, that such transferee becomes a
party to this Agreement as an Investor;
(f) in a bona fide pledge of shares of Voting Securities of
Holdco to a financial institution to secure borrowings as permitted by
applicable laws, rules and regulations; provided, however, that (i)
such financial institution agrees to be bound by this Section 3.02 and
(ii) the borrowings so secured are full recourse obligations of the
pledgor and are entered into substantially simultaneously with such
pledge;
(g) upon five Business Days' prior notice to Holdco, pursuant to
the terms of any tender or exchange offer for Voting Securities of
Holdco made pursuant to the applicable provisions of the Exchange Act
or pursuant to any merger or consolidation of Holdco (but in the case
of any tender or exchange offer, only so long as each Investor and
Qualified Stockholder is at the time in substantial compliance with
the provisions of Sections 3.01 and 3.05(c), whether or not bound by
such provisions, and such tender or exchange offer is not materially
related to any past noncompliance with such provisions by any Investor
or Qualified Stockholder (whether or not bound by such provisions));
(h) a gift to a Charitable Transferee or Qualified Trust;
provided, however, that (i) at the time of such gift, the Principal
Investor and his Family Members constitute a sufficient number of the
directors or trustees, as appropriate, of such Charitable Transferee
or Qualified Trust to permit approval of matters by such Charitable
Transferee or Qualified Trust without the approval of any other
director or trustee of such Charitable Transferee or Qualified Trust
and (ii) such Charitable Transferee or Qualified Trust is or
simultaneously becomes a Qualified Stockholder (and Holdco agrees upon
request to enter into an Investors' Agreement (No. 2) with such
Charitable Transferee or Qualified Trust);
(i) to TCI ▇▇▇▇▇▇ Preferred, Inc. ("TCITP") or its designee in
accordance with the Stockholders' Agreement
dated as of the same date as this Agreement among TCITP, Holdco
and certain stockholders of Holdco; or
(j) to Holdco.
SECTION 3.03. Additional Agreements. None of the Investors may
(and each Investor shall cause its Affiliates and Associates that it
controls, and use reasonable efforts to cause its other Affiliates and
Associates, not to) (a) publicly request Holdco or any of its agents,
directly or indirectly, to amend or waive any provision of this Agreement
or (b) knowingly take any action that would reasonably be expected to
require Holdco to make a public announcement regarding the possibility of a
transaction with such Investor.
SECTION 3.04. Board Representation. (a) Upon execution of this
Agreement, Holdco shall use reasonable efforts to cause to be elected to
the Board two persons designated by the Principal Investor who are Eligible
Persons. "Eligible Person" means (i) the Principal Investor and (ii) any
other individual (A) who is reasonably acceptable to the Board, (B) whose
election to the Board would not, in the opinion of counsel for Holdco,
violate or be in conflict with, or result in any material limitation on the
ownership or operation of any business or assets of Holdco or any of its
subsidiaries under, any statute, law, ordinance, regulation, rule,
judgment, decree or order of any Governmental Entity and (C) who has agreed
in writing with Holdco to comply with Section 3.01 and to resign as a
director of Holdco if requested to do so pursuant to this Section 3.04.
With respect to each meeting of stockholders of Holdco at which any
designee of the Principal Investor on the Board comes up for reelection,
Holdco shall use reasonable efforts to cause such designee (or another
Eligible Person designated by the Principal Investor) to be included in the
list of candidates recommended by the Board for election to the Board. Upon
the death, resignation or removal of any designee of the Principal Investor
on the Board, Holdco shall use reasonable efforts to have the vacancy
thereby created filled with an Eligible Person designated by the Principal
Investor.
(b) Upon the Investors and (subject to Section 3.06) the
Qualified Stockholders, taken together, ceasing to own of record and
beneficially at least 50% of the Voting Securities of Holdco owned by the
Investors and the Qualified Stockholders, taken together, immediately
following the Mergers (appropriately adjusted for stock dividends, stock
splits, reverse stock splits and similar transactions), the number of
persons that the Principal Investor shall be entitled to designate for
election to the Board shall be reduced to one. If at such time there are
two designees of the Principal Investor on the Board, the Principal
Investor shall specify which of such designees shall continue to be
entitled to the benefits of Section 3.04(a), and the other designee shall
thereafter cease to constitute a designee of the Principal Investor for the
purposes of Section 3.04(a) (and, if requested by Holdco, such other
designee shall resign from the Board).
(c) Upon (i) (A) the Investors and (subject to Section 3.06) the
Qualified Stockholders, taken together, ceasing to own of record and
beneficially at least one-third of the Voting Securities of Holdco owned by
the Investors and the Qualified Stockholders, taken together, immediately
following the Mergers (appropriately adjusted for stock dividends, stock
splits, reverse stock splits and similar transactions) and (B) the
Principal Investor ceasing to be an employee of Holdco or any subsidiary of
Holdco, (ii) the death or incapacity of the Principal Investor, (iii) the
wilful violation in any material respect of this Article by any Investor or
(iv) five business days' prior written notice of termination from the
Principal Investor, the number of persons that the Principal Investor shall
be entitled to designate for election to the Board shall be reduced to
zero. At such time, if requested by Holdco, each designee of the Principal
Investor shall resign from the Board.
(d) The right of the Principal Investor to membership on the
Board, as set forth in his employment agreement with Holdco to be entered
into at the Effective Time of the Mergers, is not in addition to his rights
under this Section 3.04.
(e) For the purposes of the calculations required by the first
sentence of Section 3.04(b) and by Section 3.04(c)(i)(A), any Exempt Stock
(as defined below) shall be excluded from the calculation of each of (i)
the Voting Securities of Holdco owned of record and beneficially by the
Qualified Stockholders on the date of such calculation and (ii) the Voting
Securities of Holdco owned by the Qualified Stockholders immediately
following the Mergers. "Exempt Stock" shall mean (A) any Holdco Common
Stock acquired by any Qualified Stockholder pursuant to the
TBS Merger in exchange for Company Capital Stock owned by such Qualified
Stockholder on September 22, 1995, and (B) any Holdco Common Stock acquired
after the Effective Time of the Mergers by any Qualified Stockholder other
than pursuant to Section 3.02(h).
SECTION 3.05. Additional Covenants. (a) None of the Investors
shall permit any other Investor that is at any time after the date hereof a
wholly owned subsidiary of such Investor to cease to be a wholly owned
subsidiary of such Investor for so long as such other Investor owns any
Voting Securities of Holdco.
(b) None of the Investors shall permit any of its subsidiaries,
other than any such subsidiaries that are Investors, to hold, directly or
indirectly, any shares of Voting Securities of Holdco.
(c) Each Investor shall use reasonable efforts to cause each of
its officers, employees, agents and representatives not to take any action
that would be prohibited under Section 3.01 if taken by such Investor.
SECTION 3.06. Certain Special Provisions. If at any time the
Principal Investor and his Family Members cease to constitute a sufficient
number of the directors or trustees, as applicable, of any Qualified
Stockholder to permit approval of matters by such Qualified Stockholder
without the approval of any other director or trustee of such Qualified
Stockholder, the Voting Securities of Holdco held by such Qualified
Stockholder shall thereafter be deemed not to be owned of record and
beneficially by such Qualified Stockholder (or any Investor) for the
purposes of Sections 3.04(b) and 3.04(c). The Principal Investor shall be
liable to Holdco under this Agreement for any actions taken by any
Qualified Stockholder that would have been violations of Section 3.01, 3.03
or 3.05(c) had such Qualified Stockholder been bound by such Sections.
ARTICLE IV
Miscellaneous
SECTION 4.01. Termination. (a) The covenants and agreements of
the Investors in Sections 3.01, 3.03 and 3.05(c) shall terminate, except
with respect to liability for prior breaches thereof, upon the last to
occur of
(i) the Principal Investor ceasing to be an employee of Holdco or any
subsidiary of Holdco, (ii) the Principal Investor ceasing to be a member of
the Board, and (iii) the Principal Investor ceasing pursuant to Section
3.04(c) to be entitled to designate any Eligible Persons for election to
the Board.
(b) The covenants and agreements of the Investors in Section 3.02
shall terminate, except with respect to liability for prior breaches
thereof, on the fifth anniversary of the Effective Time of the Mergers.
(c) The covenants and agreements of Holdco in Section 3.04 shall
terminate, except with respect to liability for prior breaches thereof,
upon the Principal Investor ceasing pursuant to Section 3.04(c) to be
entitled to designate any Eligible Persons for election to the Board.
(d) Without limiting Sections 4.01(a) and 4.01(b), the covenants
and agreements of the Investors in Article III shall terminate, except with
respect to liability for prior breaches thereof, if the Board does not (i)
on the date of execution of this Agreement, elect to the Board the two
Eligible Persons designated by the Principal Investor, (ii) recommend for
election by the stockholders of Holdco to the Board any Eligible Person
designated by the Principal Investor in accordance with Section 3.04 or
(iii) reasonably promptly after request from the Principal Investor, fill
any vacancy created on the Board upon the death, resignation or removal of
any designee of the Principal Investor on the Board with another Eligible
Person designated by the Principal Investor, in each case if the effect of
such failure is that the Principal Investor does not have the
representation on the Board to which he is entitled under Section 3.04.
(e) The other covenants and agreements set forth in this
Agreement shall terminate, except with respect to liability for prior
breaches thereof, upon the later of (i) the termination of Section 3.01
pursuant to Section 4.01(a) or 4.01(d) and (ii) the termination of Section
3.02 pursuant to Section 4.01(b) or 4.01(d).
SECTION 4.02. Entire Agreement; Assignment. This Agreement (i)
constitutes the entire agreement between the parties with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, among the parties with respect to
the
subject matter hereof and (ii) except as provided in Section 3.02, shall
not be assigned by operation of law or otherwise without the prior written
consent of the other parties. Any person who agrees pursuant to Section
3.02 to become a party to this Agreement as an Investor shall thereupon
become, and have all the rights and obligations of, an Investor hereunder.
Any attempted assignment or transfer in violation of this Section 4.02
shall be void and of no effect. Subject to the foregoing, the provisions of
this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective estates, heirs, successors and assigns.
SECTION 4.03. Amendments; Waivers. This Agreement may not be
modified, amended, altered or supplemented, except upon the execution and
delivery of a written agreement executed by the parties hereto. The waiver
by any party of a breach of any provision of this Agreement shall not
operate, or be construed, as a waiver of any subsequent breach thereof.
SECTION 4.04. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed
given (i) on the first Business Day following the date received, if
delivered personally or by telecopy (with telephonic confirmation of
receipt by the addressee), (ii) on the Business Day following timely
deposit with an overnight courier service, if sent by overnight courier
specifying next day delivery and (iii) on the first Business Day that is at
least five days following deposit in the mails, if sent by first class
mail, to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
If to any Investor, to:
R.E. ▇▇▇▇▇▇, III
In care of ▇▇▇▇▇▇ Broadcasting System, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
For Courier delivery:
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
If to Holdco, to:
Time Warner Inc.
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy (which shall not constitute notice) to:
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
SECTION 4.05. Governing Law. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of
Delaware.
SECTION 4.06. Specific Performance. Each party recognizes and
acknowledges that a breach by it of Article III would cause the other
parties to sustain damages for which they would not have an adequate remedy
at law for money damages, and therefore each party agrees that in the event
of any such breach any of the other parties shall be entitled to seek the
remedy of specific performance of such Article III and injunctive and other
equitable relief in addition to any other remedy to which it may be
entitled, at law or in equity.
SECTION 4.07. Counterparts; Effectiveness. This Agreement may be
executed in two or more counterparts, all of which shall be considered one
and the same agreement, and shall become effective when two or more
counterparts have been signed by each of the parties and delivered to the
other parties.
SECTION 4.08. Descriptive Headings. The descriptive headings used
herein are inserted for
convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
SECTION 4.09. Severability. Whenever possible, each provision or
portion of any provision of this Agreement shall be interpreted in such
manner as to be effective but if any provision or portion of any provision
of this Agreement is held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect
any other provision or portion of any provision, and this Agreement will be
reformed, construed and enforced as if such invalid, illegal or
unenforceable provision or portion of any provision had never been
contained herein. The parties shall endeavor in good faith negotiations to
replace any invalid, illegal or unenforceable provision with a valid
provision the effects of which come as close as possible to those of such
invalid, illegal or unenforceable provision.
SECTION 4.10. Attorneys' Fees. If any action at law or in equity
is necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements, in addition to any other relief to which such
party may be entitled.
IN WITNESS WHEREOF, Holdco and each Investor have caused this
Agreement to be duly executed as of the day and year first above written.
TW INC.,
by
-------------------------------
Name:
Title:
-------------------------------
R.E. ▇▇▇▇▇▇, III
▇▇▇▇▇▇ OUTDOOR, INC.,
by
-------------------------------
Name:
Title:
EXHIBIT C-2
INVESTORS' AGREEMENT (NO. 2) dated as of
, among TW INC. (to be renamed TIME WARNER
INC.), a Delaware corporation ("Holdco"), and the
other parties signatory hereto (each an "Investor").
This Agreement is entered into pursuant to Section 6.02(f) of the
Amended and Restated Agreement and Plan of Merger (the "Amended and
Restated Merger A greement"), among Time Warner Inc., a Delaware
corporation ("Parent"), Holdco, Time Warner Acquisition Corp., a Delaware
corporation and a direct wholly owned subsidiary of Holdco, TW Acquisition
Corp., a Georgia corporation and a direct wholly owned subsidiary of
Holdco, and ▇▇▇▇▇▇ Broadcasting System, Inc., a Georgia corporation (the
"Company"). In connection with the TBS Merger (as defined in the Amended
and Restated Merger Agreement), subject to certain exceptions, (a) each
share of Class A Common Stock, par value $.0625 per share, of the Company
and each share of Class B Common Stock, par value $.0625 per share, of the
Company will be converted into the right to receive 0.75 shares of Common
Stock, par value $0.01 per share, of Holdco ("Holdco Common Stock") and (b)
each share of Class C Convertible Preferred Stock, par value $.125 per
share, of the Company will be converted into the right to receive 4.80
shares of Holdco Common Stock.
Accordingly, it is hereby agreed as follows:
ARTICLE I
Definitions
SECTION 1.01. Definitions. Capitalized terms used but not defined
herein shall have the meanings assigned to such terms in the Amended and
Restated Merger Agreement. For purposes of this Agreement, the following
terms shall have the following meanings:
"Affiliate" and "Associate", when used with reference to any
person, shall have the respective meanings ascribed to such terms in Rule
12b-2 of the Exchange Act, as in effect on the date of this Agreement.
A person shall be deemed the "beneficial owner" of, and shall be
deemed to "beneficially own", and shall be deemed to have "beneficial
ownership" of:
(i) any securities that such person or any of such person's
Affiliates or Associates is deemed to "beneficially own" within the
meaning of Rule 13d-3 under the Exchange Act, as in effect on the date
of this Agreement; and
(ii) any securities (the "underlying securities") that such
person or any of such person's Affiliates or Associates has the right
to acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement, arrangement or
understanding (written or oral), or upon the exercise of conversion
rights, exchange rights, rights, warrants or options, or otherwise (it
being understood that such person shall also be deemed to be the
beneficial owner of the securities convertible into or exchangeable
for the underlying securities).
"Covered Holdco Common Stock" shall mean (i) any shares of Holdco
Common Stock transferred to an Investor pursuant to Section 3.02(h) of the
Investors' Agreement (No. 1) dated as of [ ] among Holdco and certain
stockholders of Holdco and (ii) any shares of Holdco Common Stock acquired
by any Investor pursuant to the TBS Merger otherwise than in exchange for
Company Common Stock owned by such Investor on September 22, 1995.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
in effect on the date in question, unless otherwise specifically provided.
"Investor" shall mean each person that executes this Agreement in
such capacity.
"person" shall have the meaning given such term in the Amended
and Restated Merger Agreement.
"Voting Power", when used with reference to any class or series
of securities of Holdco, or any classes or series of securities of Holdco
entitled to vote together as a single class or series, shall mean the power
of such class or series (or such classes or series) to vote for the
election of directors. For purposes of determining the percentage of Voting
Power of any class or series (or
classes or series) beneficially owned by any person, any securities not
outstanding which are subject to conversion rights, exchange rights,
rights, warrants, options or similar securities held by such person shall
be deemed to be outstanding for the purpose of computing the percentage of
outstanding securities of the class or series (or classes or series)
beneficially owned by such person, but shall not be deemed to be
outstanding for the purpose of computing the percentage of the class or
series (or classes or series) beneficially owned by any other person.
"Voting Securities", when used with reference to any person,
shall mean any securities of such person having Voting Power or any
securities convertible into or exchangeable for any securities having
Voting Power.
ARTICLE II
Securities Act; Legend
SECTION 2.01. Transfers of Holdco Common Stock. None of the
Investors may offer for sale or sell any shares of Holdco Common Stock
acquired pursuant to the Amended and Restated Merger Agreement, or any
interest therein, except (a) pursuant to a registration of such shares
under the Securities Act and applicable state securities laws or (b) in a
transaction as to which such Investor has delivered an opinion of counsel
or other evidence reasonably satisfactory to Holdco, to the effect that
such transaction is exempt from, or not subject to, the registration
requirements of, the Securities Act and applicable state securities laws.
SECTION 2.02. Legends on Certificates. Each Investor shall hold
in certificate form all shares of Covered Holdco Common Stock owned by such
Investor. Each certificate for shares of Covered Holdco Common Stock issued
to or beneficially owned by a person that is subject to the provisions of
this Agreement shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO AN INVESTORS' AGREEMENT (NO. 2) DATED AS OF
, (THE "INVESTORS' AGREEMENT"),
BETWEEN THE CORPORATION AND THE HOLDER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE. A COPY OF
THE INVESTORS' AGREEMENT MAY BE OBTAINED FROM THE
CORPORATION FREE OF CHARGE. BY ITS ACCEPTANCE HEREOF,
THE HOLDER OF THIS CERTIFICATE AGREES TO COMPLY IN ALL
RESPECTS WITH THE REQUIREMENTS OF THE INVESTORS'
AGREEMENT.
ARTICLE III
Covenants of the Investors
SECTION 3.01. Transfer Restrictions. None of the Investors may,
without the prior written consent of Holdco, sell, transfer, pledge,
encumber or otherwise dispose of, or agree to sell, transfer, pledge,
encumber or otherwise dispose of, any Covered Holdco Common Stock, or any
rights or options to acquire Covered Holdco Common Stock, except in a
transaction complying with any of the following clauses:
(a) to the underwriters in connection with an underwritten public
offering of shares of such securities on a firm commitment basis
registered under the Securities Act, pursuant to which the sale of
such securities is in a manner that is intended to effect a broad
distribution;
(b) to any person in a transaction that complies with the volume
and manner of sale provisions contained in Rules 144(e) and Rule
144(f) as in effect on the date hereof under the Securities Act
(whether or not Rule 144 is in effect on the date of such
transaction); provided, however, that dispositions pursuant to this
clause (b) may not be made during any period that a person has made
and not withdrawn or terminated a tender or exchange offer for Voting
Securities of Holdco or announced its intention to make such an offer;
(c) to any person (including any pledgee of Covered Holdco Common
Stock), other than a person that such Investor, or any of its
Affiliates, Associates, directors or trustees, knows or, after
commercially reasonable inquiry should have known, beneficially owns
or, after giving effect to such sale, will beneficially own more than
5% of the aggregate Voting Power of the Voting Securities of Holdco;
(d) in a bona fide pledge of shares of Covered
Holdco Common Stock to a financial institution to secure borrowings as
permitted by applicable laws, rules and regulations; provided,
however, that (i) such financial institution agrees to be bound by
this Section 3.01 and (ii) the borrowings so secured are full recourse
obligations of the pledgor and are entered into substantially
simultaneously with such pledge;
(e) upon five Business Days' prior notice to Holdco, pursuant to
the terms of any tender or exchange offer for Covered Holdco Common
Stock made pursuant to the applicable provisions of the Exchange Act
or pursuant to any merger or consolidation of Holdco;
(f) to TCI ▇▇▇▇▇▇ Preferred, Inc. ("TCITP") or its designee in
accordance with the Stockholders' Agreement dated as of [ ] among
TCITP, Holdco and certain stockholders of Holdco; or
(g) to Holdco.
ARTICLE IV
Miscellaneous
SECTION 4.01. Termination. The covenants and agreements of the
Investors in Section 3.01 shall terminate, except with respect to liability
for prior breaches thereof, on the earlier of (a) the fifth anniversary of
the Effective Time of the Mergers and (b) the date on which the covenants
and agreements contained in Section 3.02 of the Investors' Agreement (No.
1) dated as of [ ], among Holdco and certain of its other stockholders,
have been terminated.
SECTION 4.02. Entire Agreement; Assignment. This Agreement (i)
constitutes the entire agreement between the parties with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, among the parties with respect to
the subject matter hereof and (ii) shall not be assigned by operation of
law or otherwise without the prior written consent of the other parties.
Any attempted assignment or transfer in violation of this Section 4.02
shall be void and of no effect. Subject to the foregoing, the provisions of
this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective
successors and assigns.
SECTION 4.03. Amendments; Waivers. This Agreement may not be
modified, amended, altered or supplemented, except upon the execution and
delivery of a written agreement executed by the parties hereto. The waiver
by any party of a breach of any provision of this Agreement shall not
operate, or be construed, as a waiver of any subsequent breach thereof.
SECTION 4.04. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed
given (i) on the first Business Day following the date received, if
delivered personally or by telecopy (with telephonic confirmation of
receipt by the addressee), (ii) on the Business Day following timely
deposit with an overnight courier service, if sent by overnight courier
specifying next day delivery and (iii) on the first Business Day that is at
least five days following deposit in the mails, if sent by first class
mail, to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
If to any Investor, to:
R.E. ▇▇▇▇▇▇, III
In care of ▇▇▇▇▇▇ Broadcasting System, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
For Courier delivery:
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
If to Holdco, to:
Time Warner Inc.
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy (which shall not constitute notice) to:
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
SECTION 4.05. Governing Law. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of
Delaware.
SECTION 4.06. Specific Performance. Each party recognizes and
acknowledges that a breach by it of Article III would cause the other
parties to sustain damages for which they would not have an adequate remedy
at law for money damages, and therefore each party agrees that in the event
of any such breach any of the other parties shall be entitled to seek the
remedy of specific performance of such Article III and injunctive and other
equitable relief in addition to any other remedy to which it may be
entitled, at law or in equity.
SECTION 4.07. Counterparts; Effectiveness. This Agreement may be
executed in two or more counterparts, all of which shall be considered one
and the same agreement, and shall become effective when two or more
counterparts have been signed by each of the parties and delivered to the
other parties.
SECTION 4.08. Descriptive Headings. The descriptive headings used
herein are inserted for convenience of reference only and are not intended
to be part of or to affect the meaning or interpretation of this Agreement.
SECTION 4.09. Severability. Whenever possible, each provision or
portion of any provision of this Agreement shall be interpreted in such
manner as to be effective but if any provision or portion of any provision
of this Agreement is held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect
any other provision or portion of any provision, and this Agreement will be
reformed, construed and enforced as if such invalid, illegal or
unenforceable
provision or portion of any provision had never been contained herein. The
parties shall endeavor in good faith negotiations to replace any invalid,
illegal or unenforceable provision with a valid provision the effects of
which come as close as possible to those of such invalid, illegal or
unenforceable provision.
SECTION 4.10. Attorneys' Fees. If any action at law or in equity
is necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements, in addition to any other relief to which such
party may be entitled.
IN WITNESS WHEREOF, Holdco and each Investor have caused this
Agreement to be duly executed as of the day and year first above written.
TW INC.,
by
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Name:
Title:
INITIAL INVESTORS:
▇▇▇▇▇▇ FOUNDATION, INC.,
by
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Name:
Title:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ CHARITABLE
FOUNDATION UNITRUST NO. 2,
by
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Name:
Title: